US online sportsbooks: why payments are key to player acquisition
Getting potential players to open a sports betting account is highly competitive, and in some cases costly. So getting the first deposit journey right is essential for operators to maximise the opportunity of this fast-growing industry.
As we have already seen in the more mature online gambling markets in Europe, the cost of player acquisition quickly increases as markets get more competitive. And while the US online sports betting market is still in its infancy, the same trend is already visible in states with multiple operators.
Sportsbooks still heavily rely on traditional and digital advertising for brand recognition. And the costs to remain competitive in this area are escalating; a report released earlier this year revealed that the US gambling industry’s year-on-year adverting spend has risen 82% since June 2020.
If a player signs up for an online sports betting account, but never actually makes a deposit, the overall cost per user acquisition (CAC) rises. So what can online sports betting platforms do to increase their conversion rates? The answer can be found in deposits and withdrawals.
The role of payments in player conversion
The payments experience is the final hurdle that the consumer must cross to become a player, so it is essential that no doubt is put into the player’s mind as to whether to deposit or not.
It must be an easy process too; according to research we commissioned earlier this year, only 19% of players say they always place bets well in advance of a sports event. So funding must be instant, and the user experience must not be too complicated. But it isn’t only the speed of the deposit process that makes the difference. Other factors that can shift the conversion needle include:
- Card payment acceptance rates Card acceptance rates have been an issue for the industry in its infancy. Decline rates are falling, but could still be a drag on overall conversion rates. Working with a payments partner with a strong heritage in iGaming, deep regulatory knowledge, and the right banking relationships is the best possible strategy for sports betting platforms to reduce card declines. The most experienced payments partners in iGaming also have additional tools at their disposal to proactively reduce declines, such as historical data to support BIN analysis on when declines are likely to occur.
- Accepting more payment methods When a card payment is declined, offering the player other options to make the deposit is the best chance of still converting the player. This includes proactively messaging players to let them know that their deposit is likely to be declined where possible, and offering the best alternative deposit method options. When we asked players earlier this year what they would do next if their card is declined, the most popular answer (35%) was that they would try to deposit using a digital wallet such as Skrill. eCash is another popular alternative payment solution; 63% of players told us that they would like to place bets online using cash if it was easy to do so. And alternative payment methods are often the preferred choice for players as well; operators that do not offer a wide range of deposit methods run the risk of losing these players at the point of making the first deposit.
- Deposit methods for the safety-first player As we have already discussed, if doubt about the security of the online deposit process enters the player’s mind at the last minute, the operator will lose the customer. Demonstrating the most security-conscious deposit process without compromising user experience is critical, but so too is offering players that don’t want to enter their financial details an alternative that puts their mind at ease. Over half (54%) of all players told us that they believe eCash is the most secure way of placing a bet with an online sportsbook.
- More accurate fraud detection Identifying and blocking fraudulent deposits are key, and again payments experts with proven expertise in regulated sports betting markets undoubtedly have the edge in this area. But good risk management isn’t only about preventing illegal activity, it is also about minimising false positives. If the balance isn’t struck correctly, an escalating false positive percentage can compromise conversion rates.
- Demonstrate quick withdrawal speeds Payments are not only a differentiator when it comes to deposits. According to our research, guaranteed quick and easy pay outs is the top criteria for players (cited by 37% of players) when evaluating online sportsbooks, ahead of other factors such as brand trust, promotional offers, and odds. Two thirds (66%) of players also told us that they expect their pay outs to be in their bank account with 24 hours. A reputation for delivering on that expectation could significantly impact an operator’s conversion rate.
As the sports betting industry grows across the US the opportunities are going to be huge for operators. But the market will be crowded, so being able to convert new players will be a key factor in maximising the potential level of success for any operator.
Understanding the role that payments plays in conversion is vital. Providers with knowledge and expertise to support sportsbooks at this exciting time and for the long term will play a significant role in the future of the industry alongside the sector’s leading operators.
Our latest research of US sports betting players, All the ways players pay: The game plan for growth, is available to download now.