Delivering regulated online sports betting in the US
Jul 18, 2018
Neil Erlick explains how payments will underpin user experience and differentiation for operators
Sports betting operators, suppliers, and consumers celebrated last month, following the US Supreme Court’s monumental step forward on the journey to legalise sports betting across the country.
By a margin of six to three, Supreme Court judges ruled that the Professional and Amateur Sports Protection Act (PASPA), the federal legislation that prevented individual states from legalising sports betting, was unconstitutional. Removing this barrier to legalisation now means that each state can self-determine whether to pass legislation permitting sports betting.
Pennsylvania’s 2017 ruling that legalised sports betting upon the repealing of PASPA has come into force. In addition Delaware, New Jersey, and Rhode Island have passed new legislation since the Supreme Court judgement, and a dozen other states are seemingly poised to follow suit in the coming months.
Of course, legalising sports betting doesn’t automatically equate to permitting wagering online. For online sports betting operators that is a second legal obstacle that needs to be crossed (for example, in Rhode Island sports betting is currently only permissible inside casinos), but that doesn’t mean operators that want to capture market share in the US should not be preparing to enter those markets now instead of waiting for them to open up.
The role of payments in the success of online sports betting
The appetite for sports betting in the US is such that there is little doubt that the industry as a whole will be successful. But with so many operators being focused on the potential goldmine a legalised online sports betting market offers, there is also little doubt that competition for market share will be fierce.
And whilst odds and number of markets do vary slightly, for an essentially homogenous product offering such as sports betting sites and apps, user experience is a vital differentiator for operators. And payments – for consumers that means making deposits and withdrawals – is one of the cornerstone components of the user journey. If bettors cannot put money into their betting account or realise pay outs efficiently, they’ll quickly abandon the operator in favour of a competitor.
The value of experience: Similarities and differences for the US iGaming market
The US online sports betting market will inevitably have its idiosyncrasies, many of which will only become apparent in the months and years following its launch. Even still, for operators entering this new market, partnering with a payment service provider with the highest level of experience and insight of the gaming industry is critical. Payment service providers with a deep-rooted history in online gambling will be able to lean on the transferrable key learnings they have acquired in other markets, whilst simultaneously harnessing their developed expertise to identify and overcome the unique challenges of the US market.
With more than five years of experience in providing online payment solutions to regulated state and provincial lotteries in North America, over 15 years of providing secure payment processing to licensed iGaming operators in Europe, and a suite of auxiliary payment services such as pre-paid card paysafecard, and digital wallets Skrill and NETELLER that have been integral to the gaming since 2001, Paysafe has continuously enhanced and tailored is payment facilities from within the online gaming industry as it has evolved.
That experience of pioneering payments in online gaming extends beyond processing iGaming payments in Europe, including to regulated markets in the US. In addition to processing payments for regulated online gaming in Nevada, New Jersey, and Delaware, Paysafe also processes payments for the country’s most significant daily fantasy sports sites.
This is important because the regulatory environment in the US is complicated; for operators with ambitions to have presence in every regulated market in the US it is preferable to partner with solution providers that have experience of navigating the demands of these state-by-state regulatory requirements.
The payments landscape has also evolved significantly since Paysafe began facilitating payments for the iGaming industry in New Jersey in 2013, particularly in respect to credit card acceptance. In April 2015, Visa, Mastercard and Discover collaborated with issuers and acquiring banks to agree upon a new set of Merchant Category (MCC) codes that would simplify and improve the process the payment for a specific type of gaming: skill games, social gaming, lotteries, iGaming and ADW. Paysafe has been an active payment processor in the US gaming market during that evolution.
The importance of offering multiple deposit and cash out options
As one of the few payment companies in the industry catering to both consumers and merchants, Paysafe is in the unique position to develop innovative products that not only provide value and growth opportunities to local and global businesses, but also offers choices to consumers in terms of how and when they pay.
A critical learning from other regulated gaming markets that future US sports betting operators must acknowledge is that bettors want to deposit and recoup winnings using multiple methods, including debit and credit card payments, digital wallets, and pre-paid vouchers. These payment services are ubiquitous and popular in other regulated gaming markets.
Operators should strongly consider offering consumers these choices, but in a manner that limits the number of relationships required with different payment solution providers. PSPs such as Paysafe that offer an ‘all-in-one’ comprehensive suite of payment solutions including card processing, digital wallets Skrill and NETELLER, ACH (eCheck), pre-paid cards and cash solutions suchas as paysafecard are best-placed to offer this.
In addition, Paysafe offers comprehensive support that includes risk services, PCI DSS Compliance, and world class affiliate marketing technology and services through Income Access. Paysafe acquired Income Access in 2016 specifically to offer a greater breadth of services to the gaming sector.
“This potential for growth will drive technological innovation across the industry and further emphasise the importance of building effective digital marketing strategies. The latter of those is where affiliates and affiliate marketers will be crucial as they bring a wealth of creativity and thoughtfulness to player acquisition and retention.”Sarafina Wolde Gabriel, VP of Strategy, Income Access
What PASPA means for Income Access
Sarafina Wolde Gabriel – VP of Strategy, Income Access
“The Supreme Court’s ruling on PASPA means that the ecosystem in which we currently operate is going to evolve even more quickly than it has been. Fortunately, Income Access is well-placed to take advantage of this opportunity, largely due to its partnerships with leading daily fantasy sports (DFS) brands DraftKings and FanDuel, as well as renowned racing brands Twin Spires, which is owned and operated by Churchill Downs, and BetAmerica.
“As an innovator in Digital and Affiliate Marketing solutions, Income Access also provides its services in the casino, poker and lottery verticals in regulated states of New Jersey, Nevada, Michigan and Pennsylvania. Our established partnerships in these regions include Betfair US, Michigan Lottery, Penn National Gaming, Pennsylvania Lottery, Rush Street Interactive and Tropicana Entertainment.
“This potential for growth will drive technological innovation across the industry and further emphasise the importance of building effective digital marketing strategies. The latter of those is where affiliates and affiliate marketers will be crucial as they bring a wealth of creativity and thoughtfulness to player acquisition and retention. The global experience we have gained since 2002, the long-standing relationships forged, and our proactive approach will be beneficial as post-PASPA market growth continues at a steady but inevitable pace.”