TRAFFIC
US SPORTS BETTING:
LESSONS FROM OZ
The post-PASPA scramble in the US may seem unique but a similarly radical market shift in another
federated nation, Australia, can offer valuable insights, says Mike Dodgson
THE UNITED STATES is about to usher
in the world’s largest regulated betting
market, after the Supreme Court gave states
the green light to roll out sports wagering.
The likes of New Jersey and Delaware
have already joined Nevada in offering
legal sports betting and it should eventually
develop into a behemoth of an industry.
Analysts estimate a worth of anywhere
between $5.8bn and $11.9bn per year.
That would see it vastly outstrip the UK as
the world’s largest gambling market, with
enormous potential for future growth.
Nascent legal sportsbooks in states
such as New Jersey have initially been
land-based but they will soon go online,
providing significant opportunities for
affiliates. Yet there are plenty of challenges.
States are adopting different frameworks,
wrangling reigns and nobody knows quite
what to expect from this Wild West of
an industry. There are no neat precedents
in the gaming world, given the scale and
complexity of the US market, but an
examination of the Australian experience
provides clues about the challenges the
industry will face.
Australia is a smaller market but it
too is made up of different states that
have singular views on how to serve
their residents. A decade ago, Western
Australia prohibited operators that held
licences in other states from serving its
sports fans, which Betfair contested.
The British operator argued that the law
was discriminatory, protectionist and
unconstitutional, and the High Court of
Australia agreed. That case paved the way
for a liberal Australian betting market.
It sparked a huge upswing in betting
ads across the country and unlocked
opportunities for affiliates.
You can draw parallels between the
Betfair challenge and the Murphy case,
which resulted in the US Supreme Court
striking down the Professional and
Amateur Sports Protection Act 1992.
Many states are now rubbing their hands
at the prospect of bolstering their coffers
through gaming revenue but they face a
huge challenge.
The lure of offshore
The American Gaming Association
estimates that US citizens bet $150bn a
year illegally. That exact figure has been
questioned but the black market is certainly
vast. Legal sportsbooks must now try to
essentially steal market share from offshore
bookies that do not pay tax, can offer credit
and have spent years building up goodwill
with their patrons.
The Australian operators faced a similar
problem. Sally Melissa Gainsbury at the
University of Sydney has just completed
a study into factors influencing offshore
betting and gaming habits in Australia.
“Understanding consumers’ use of offshore
gambling sites is essential to derive policies
to reduce use of these sites with the goal of
consumer protection,” she says. “Offshore
gamblers were likely to be younger, more
highly educated and work full time rather
than be retired. This may indicate that
those more familiar and comfortable
with internet technology are engaging in
offshore gambling.
and which payment methods are available.
However, offshore gamblers did seek
sites that are intended for Australians
with the ability to bet in local currency,
suggesting that they want a customised
experience but are willing to obtain this
from an offshore provider.”
Gainsbury believes that legal operators
in the US can thrive by “focusing on the
benefits of domestic sites and ensuring
that these can provide a good consumer
experience”. Yet they may struggle to
lure bettors away from offshore operators
and into their legal bosoms if they are
hamstrung by excessive fees and taxes.
Operators have been unwilling to apply
for licences in Pennsylvania due to the
$10m licensing fee and a 36% tax, putting
offshore rivals at an advantage.
Competitive risks
US operators could also be held back
by the costs of compliance if different
states impose wildly different laws. After
the Betfair ruling in Australia, it was
decided that a licence issued in any
Australian state should be recognised by
other states provided it is not protectionist.
US lawmakers will have to decide whether
a similar system is needed there. They must
also try to minimise the amount of specific
regulatory state-by-state requirements if
they want a number of bookmakers to
“States are adopting different frameworks,
wrangling reigns and nobody knows quite what
to expect from this Wild West of an industry”
“Gamblers using offsh ore sites are also
more likely to be influenced by factors
relevant to payouts and game experience,
and be less concerned with the reputation
of the operator, where the site is licensed
operate nationally. High costs, delays and
barriers to entering the market will price
out small, innovative operators, diminishing
consumer choice and driving sports fans
towards the unlicensed offshore operators.
iGB Affiliate Issue 70 AUG/SEP 2018
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