Meeting of minds
Published 24th September 2018
Rather than tackling things alone, European and US operators need to get their heads together and collaborate if they’re to seize the opportunities flowing from PASPA’s repeal. Joined-up thinking (and working) is the future, writes Sarah Robertson
WITH CHANGE COMES OPPORTUNITY. No maxim better defines the US sportsbetting market following the Supreme Court’s repeal of PASPA in May this year. PASPA’s fall has created an environment in which excitement and analysis about forthcoming state legislation and strategic frameworks abound.
As with previous regulatory shifts, stakeholders in US and European markets can increase their potential for success by working together on strategies and solutions. The list of potential areas for collaboration is extensive; here are several of the most noteworthy.
Affiliates have been important stakeholders in the growth of regulated online casino and poker in the US but sports betting is a different prospect altogether. Fortunately, the level of expertise in the European market is seasoned and well placed to provide strategic insights for both long and short-term objectives. Making the most of regulated sports betting will require partnerships founded on shared knowledge and a willingness to assume leadership roles, guiding affiliates and positioning them for enduring success.
As has been the case with casino and poker, clarifying the terms under which affiliates are able to operate within US markets is demanding but achievable. Having navigated evolving legislative frameworks when the US reopened its doors to igaming, affiliate marketing has established a presence in the sector.
US sportsbooks and affiliates hoping to leverage the channel for sports betting will need to rely on similar resourcefulness and expertise from overseas-based stakeholders. According to analytics outfit iSpot.tv, DraftKings and FanDuel spent more than $300m between them on TV ads in 2015.
While daily fantasy sports (DFS) and sports betting are distinct products, it is notable that both brands significantly scaled back their TV ad spend the following year, cutting it by more than 90% between 2015 and 2016. While new entrants to the US market will spend millions advertising through traditional media, they should also consider digital tactics. It’s here that affiliates can integrate as part of a broader digital-marketing strategy, given their potential for high acquisitions with smaller upfront costs.
State-by-state marketing strategies
According to Standard Media Index, NFL in-game advertising was down 1.2% in 2017 but it still achieved $2.42bn of revenue. This figure highlights the scope of the advertising environment within which new entrants to the US sports-betting market will operate.
The impact of legislation on traditional and digital-marketing strategies will become clearer as each state passes its own rules and regulations. Evercore ISI analyst Anthony DiClemente takes an optimistic outlook, estimating in a note to investors that sports betting could result in “$7bn incremental US ad spend in 2019”.
It will be interesting to monitor PPC advertising policies, the cost of related media buys and any surge in App Store offerings despite tight restrictions on interstate sports betting. The autonomy enjoyed by individual states should give local experts the opportunity to offer support through their knowledge of market trends and state policy. This can be leveraged by European stakeholders already equipped with strategic resources if they are effectively deployed through comprehensive planning.
This is one of several areas where the existing sports-betting market in Nevada will come into play. William Hill US, arguably the most influential name in Nevada sports betting, should inspire prospective entrants. Their priorities will presumably include mobile app development, geo-targeting requirements and creating a symbiotic relationship between land-based and online properties.
The key lesson from William Hill’s success is the importance of preparation. It’s difficult to predict which states will permit single-event wagering in casinos and which will eventually accept online wagers. But it is crucial to prepare strategies in anticipation.
Many questions regarding post-PASPA marketing strategies will also be relevant to building a positive image. Adhering to guidelines that will underpin US sports betting must be a matter of policy from the outset, regardless of when a state enters the market and, more importantly, when it goes online. While the US market is accustomed to regulatory bodies, Europe has more experience with the kind of ecosystem into which the US is venturing.
Adapting to state-by-state legislation will require the combined expertise of local lawmakers and stakeholders as well as European brands that have grown proficient at anticipating and responding to newly implemented regulations. Equally important to market perception will be buy-in from major North American sports leagues, as well as the National Collegiate Athletic Association (NCAA).
That seems inevitable considering the Nevada Gaming Control Board’s reporting that the state’s sportsbooks accepted more than $4.8bn in wagers in 2017. The NCAA will be subject to particularly close scrutiny. Between the Men’s Division 1 Basketball Tournament and college football games that already average more than three million viewers in the regular season, the potential wagering figures are considerable.
The importance of nurturing an image of transparency and honesty across all leagues is emphasised by talk of integrity fees – which, somewhat controversially, have been pushed by the NBA and MLB – and the possibility of state gaming commissions demanding accurate player injury reports.
European stakeholders will be valuable partners in establishing this image, not only with responsible-gaming initiatives but also in developing relationships with league executives to address fraud and underage gambling.
Technology will play an increasingly important role in maintaining the integrity of sports and sports betting in the US. Geo-targeting, payment processing and data collection are among the most urgent issues in regulated sports betting, giving both established and start-up solutions providers the opportunity to carve out larger places in the market.
In May, following the PASPA decision, the NCAA announced a 10-year datacollection and distribution deal with London-based Genius Sports. That was followed by the June announcement that sports-data company Sportradar had partnered with UK-based Sportech to provide commercial sports-betting solutions to the US, including Sportradar’s trading and risk-management services.
For online and mobile gaming, exact post-PASPA timelines look uncertain due to legislative proceedings. However, once legislation is passed that role should prove considerable. This will open the door for savvy providers of front-end and back-end solutions to rise to prominence and/or further solidify their leadership position.
With Paddy Power Betfair acquiring FanDuel in May and DraftKings partnering Atlantic City’s Resorts Casino in June – an announcement preceded by DraftKings hiring a head of sportsbook in February – the two DFS giants are guaranteed to have prominent roles in a regulated market.
Both brands already engage millions of Americans via their own mobile app. DraftKings and FanDuel been committed to augmenting their respective core products and both offer a companion app for player research and keeping up to date with league news.
These are informative examples for individual states developing their own sports-betting apps. While products will likely vary in quality, cumulative insights from established European brands and US influencers with similar experience will provide reason for optimism.
Patience and pragmatism will be the foundation for most US states, at least at the outset, further supported by partnering with European brands that can provide added expertise and insight on how to build an ecosystem in which sports betting can thrive.