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Meeting of minds

| By Stephen Carter | Reading Time: 5 minutes
Joined-up thinking between European and US operators is the way to grab the opportunities thrown up by the PASPA repeal with both hands, writes Sarah Robertson

Rather than tackling things alone, the best way to grab the opportunities thrown up by the great PASPA repeal is for European and US operators to get their heads together and collaborate. Joined-up thinking is the way to go, so forget going solo and partner up, says Sarah Robertson from Paysafe’s Income Access

With change comes opportunity. No maxim better defines the US sports betting market following the Supreme Court’s repeal of PASPA in May this year. Signed into law in October 1992, PASPA’s fall gives way to an environment where excitement and analysis abound regarding forthcoming state legislation and strategic frameworks.

As with previous regulatory shifts, stakeholders in US and European markets will increase their potential for success by working together on strategies and solutions that reflect each other’s needs. The list of potential areas for collaboration is extensive, and here are several of the most noteworthy.

Affiliate marketing
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 found in the European market is seasoned and well-situated 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 themselves for enduring success.

As seen with casino and poker, clarifying and understanding the terms under which affiliates are able to operate within US markets can prove demanding but achievable.

Having capably navigated evolving legislative frameworks when the US began reopening its doors to igaming, affiliate marketing has gradually established a presence within the market. US sportsbooks and affiliates hoping to leverage the channel for sports betting will need to rely on similar resourcefulness and expertise from stakeholders based overseas.

According to iSpot.tv, DraftKings and FanDuel spent more than $300 million between them on TV ads in 2015. While daily fantasy sports (DFS) and sports betting are distinct products, it is notable that each brand scaled back their TV ad spend significantly the following year, cutting it by more than 90% from 2015 to 2016.

While new entrants to the US market will spend millions advertising through traditional media, they should also consider digital tactics that can minimise such expenditures and increase ROI.

This is where 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 resulted in $2.42 billion 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 with each state that passes its own set of rules and regulations. Early outlooks are optimistic, including that of Evercore ISI analyst Anthony DiClemente who, in a note to investors following the PASPA ruling, estimated that sports betting could result in “$7bn incremental US ad spend in 2019”.

It will be especially interesting to monitor the status of PPC advertising policies, the cost of related media buys, and the likely surge in App Store offerings, despite there still being tight restrictions on interstate sports betting.

Given the autonomy enjoyed by individual states, this should provide an opportunity for local experts to provide support through knowledge of market trends and state policy. This knowledge can then be leveraged by European stakeholders already equipped with their own strategic tools and resources. Ensuring their effective deployment, however, requires a comprehensive plan of action.

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 currently evaluating their priorities. These priorities will presumably include mobile app development, geo-targeting requirements and creating a symbiotic relationship between land-based and online properties.

The greatest takeaway from William Hill’s success is the importance of preparation. It’s difficult to predict which states will permit single-event wagering in local casinos and which of those will also eventually accept online wagers. But it is crucial to prepare corresponding strategies in anticipation of such clarifications.

Preserving integrity
Many questions regarding post-PASPA marketing strategies will also be relevant while striving to build a positive image early on.

Adhering to the guidelines that will serve as the foundation for the future of US sports betting must be a matter of policy from the outset, regardless of when individual states enter the market and, more importantly, when they go online.

While the US market is accustomed to regulatory bodies such as the New Jersey Division of Gaming Enforcement (NJDGE) and Nevada Gaming Control Board (NGCB), Europe has more extensive experience with the kind of ecosystem into which the US now ventures.

As is the case with marketing strategies, adapting to state-by-state legislation will benefit from 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 buy-in seems inevitable, considering the NGCB’s reporting that Nevada sportsbooks accepted over $4.8 billion in wagers in 2017.

The NCAA, which previously launched the campaign, will be subject to particularly close scrutiny. Between the Men’s Division I Basketball Tournament (aka March Madness) and college football games that already average over 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 further 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 terms of establishing this image through their expertise with responsible gaming initiatives and developing productive relationships with league executives to address fraud and underage gambling.

Technology’s influence
Technology will also 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 showing to be among the most urgent focus areas in the context of regulated sports betting, giving both established and start-up solutions providers the opportunity to carve out a larger place for themselves in the market.

In May, immediately following the PASPA decision, the NCAA announced a 10-year data collection 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 in a deal that will see the tandem provide commercial sports betting solutions to the US, including Sportradar’s trading and risk management services.

When considering the post-PASPA role of online and mobile gaming, exact timelines are uncertain due to legislative proceedings. However, once applicable 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 reaching a deal to acquire FanDuel in May and DraftKings partnering with Atlantic City’s Resorts Casino in June – an announcement that was preceded by DraftKings hiring a head of sportsbook in February – the two DFS giants are guaranteed to have prominent roles in a regulated market.

With regards to technology, each brand already successfully engages millions of Americans via its own mobile app. And not only have DraftKings and FanDuel been committed to augmenting their respective core products, each also offers a companion app that facilitates player research and keeping up to date with league news.

These examples should be informative as individual states proceed with developing their own sports betting apps. While resulting products will likely be of varying quality, the cumulative insights from established European brands and US influencers with similar experience provide ample reason for optimism.

Based on these key focuses, patience and pragmatism will need to form the foundation for most US states, at least at the outset.

To increase the chance of success, this practicality will need to be further supported by partnering with European brands that can provide an added level of expertise and insight on how to build an ecosystem in which sports betting can thrive.

Sarah Robertson is head of business development at Paysafe’s Income Access. The company’s technology powers the affiliate programmes of over 250 global gaming brands, while its in-house affiliate team manages close to 20 programmes in multiple markets, including the US and UK. She holds bachelor and graduate business degrees from Canada’s University of New Brunswick and McGill University.

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