Customer Experience

Legalized sports betting spawns opportunity amidst fragmentation

Thirty-two states have adopted some form of legal sports betting, up from 27 in 2021 and 19 in 2020, and scores of casinos have opened sportsbooks — most of which include sports betting kiosks.

Image provided by iStock.

October 19, 2022 by Elliot Maras — Editor, Kiosk Marketplace & Vending Times

When the U.S. Supreme Court legalized sports betting in all 50 states in 2018, the gaming industry envisioned sportsbooks popping up at major league sports facilities, casinos, retailers and other venues.

No one was sure how fast the states would legalize sports betting and what business models would define the industry.

Four and a half years later, 32 states have adopted some form of legal sports betting, up from 27 in 2021 and 19 in 2020, and scores of casinos have opened sportsbooks — most of which include sports betting kiosks.

A record 46.6 million U.S. adults said they plan to bet on NFL games this year, up 3% from last year and more than 40% since 2020, according to the American Gaming Association.

Kiosk hardware manufacturers, meanwhile, cited "gaming/entertainment/sports" kiosks as among the most frequent kiosk installation in 2021, according to the 2022 Kiosk Marketplace Census Report.

Industry fragmented

Sandra Slane, Joe Asher and Cathryn Lai describe the development of sports betting businesses during the Global Gaming Expo.

In the meantime, the legal sports betting industry is largely fragmented, due to variances in state regulatory structures, license fees, tax rates and other factors.

While many casinos have introduced sportsbooks, small retail outlets and online sportsbooks dominate much of the sports betting industry.

A panel of industry experts during last week's Global Gaming Expo in Las Vegas agreed the industry remains in a developmental stage.

Panelists included Joe Asher, president of sports betting at International Game Technology PLC, a gaming technology provider, and formerly CEO at William Hill, a London based provider of online betting acquired by Caesars Entertainment in 2021; the panel also included Cathryn Lai, chief commercial officer at OpenBet, a provider of gaming technology. Sandra Slane, founder, Slane Advisory, former senior vice president of public affairs at the American Gaming Association, served as moderator.

Fast paced tech adoption

In what most observers agree are the "early innings" of legal sports betting, technology providers have largely focused on helping clients get up to speed with sportsbook technology, which includes manned cages and self-serve kiosks where bettors place their bets.

"One of the challenges we've seen with the U.S. market is that it's so dynamic and so fast moving…and there's been so much demand," said Lai, whose company served the international market extensively prior to the 2018 Supreme Court decision in the U.S.

Asher, who brings the unique perspective of having been on both the operator side as well as the supplier side of sports betting, said the biggest difference prior to the Supreme Court ruling was that the U.S. industry was much less marketing-driven than it is now.

Operators initially focused on addressing whether they should work with a third party technology provider such as IGT or OpenBet or invest in their own proprietary technology. A third party technology provider makes it possible to have a sportsbook installed faster — in three or four months, Asher said.

Business models vary

The panelists agreed there is a wide variety of approaches among sports betting operators.

Tribe-operated casinos have more onsite betting compared to others that focus more on online betting.

While sports betting is growing fast, it is far from mature, the panelists agreed. One reason is that some large states such as California and Texas have not yet allowed it.

The panelists were reluctant to make generalizations about what types of approaches will become "the norm" as the industry matures.

When a state first legalizes sports betting, Asher said, a "land grab" approach takes place where sportsbooks look to attract as many customers as possible. The next phase occurs when they focus more on serving their clientele.

"The land grab phase is probably going down a little bit," Asher said, in the legalized markets.

Lai agreed.

"I think that operators, as things settle down, are thinking about their marketing strategy and their approach: how do you engage more players and how do you expand that?" Lai said.

Operators differentiate offerings

Operators are beginning to differentiate product offerings, Lai said. This includes tailoring marketing to local sports teams.

"There will continue to be more advancements that I think operators can (use to) help drive communication to really kind of engage the player," she said. "It's not going to be 'take bets' (but) creating the entertainment experience."

Technology will also allow more diverse types of bets during a game, Asher said, such as bets on touchdowns, passing yardage and rushing, that can make a more enjoyable viewing experience for fans.

Online and onsite retail

In many states, the majority of sports bets are made online as opposed to onsite in retail establishments, he said.

"But retail still serves an important purpose; the experiential aspect of it," he said. "They (customers) can go to a really nice sportsbook and have a great time…and it's a way for folks to engage with the brand."

"In tribal markets, that's really the only way for folks to bet," he said.

Lai agreed that operators need to make the retail experience special compared to the online betting experience. "It's another outlet for players to come and spend money," she said.

Having retail in addition to online also gives the operator the chance to push promotions back and forth between the two, Lai said.

Sports franchises embrace sports betting

The advertising that sports franchises are doing that now includes sports betting also creates a new focus for the sportsbooks, Asher said. The role that media — and media advertising — will play in sports betting still needs to evolve, he said.

During a Global Gaming Expo keynote, Sandra Douglass Morgan, president of the Las Vegas Raiders, and Erika Nardini, CEO of Barstool Sports, a digital media company that operates a sportsbook licensed to take bets in 13 states, cited sports betting as a key to engaging the younger demographic, according to the Las Vegas Review Journal.

Changes ahead

The panelists agreed the biggest challenges still include regulatory issues, but in the future there will be an acquisitions phase among sports betting operations.

How and when these acquisitions take place remain uncertain, Asher said.

"So many operators are just differently positioned," he said.

Meanwhile, cash is not going away.

"Some people choose the 'friction of process,'" Asher said, referring to betting with cash. "They want that friction from a responsible gaming perspective; go to the bank, take out the money and go to deposit it to your account."

"Things just take time to go from brand new to more mature," he said. "I see growth happening across the board."

"I think it's going to continue to grow," Lai agreed.

Photo: Networld Media Group