US online sports betting in 2020: what happens next?
Four key takeaways from our recent webinar with Worldpay and Golden Nugget
Earlier this month, I took part in an iGaming Business-hosted webinar panel discussion with Worldpay Gaming’s Managing Director, Joe Pappano, and Golden Nugget’s SVP and General Manager of Online Gaming, Thomas Winter.
The final part of our three-part series with Worldpay on payments and the evolving US gaming market saw us go into detail on integrating a payment offering into sportsbook and online casino brands. We also discussed the role of payments in player acquisition and retention, challenges for operators, as well as ways in which the payments space could evolve in the future.
You can listen to the full webinar broadcast below. We’ve also outlined the main takeaways from our discussion.
Paysafe webinar: Putting the Pay into Play
1. Operators benefit from integrating a range of payment methods
Offering consumers a comprehensive range of payment methods encourages them to select their preferred payment method. By focusing on the player’s user experience (UX) and ease of depositing funds, operators can better optimize the customer journey. Beyond debit and credit cards, operators need to consider integrating alternative payment methods, including digital wallets (such as Skrill), prepaid cards, eCash solutions (such as our paysafecard product) and ACH.
Presenting players with payment options without placing preference on one method over the others supports player loyalty and decreases exclusivity.
Ultimately the end goal should be to rectify the perception of the high-risk nature of the gaming space among banks, card issuers and networks. We should also encourage better collaboration between these stakeholders and operators.
2. The payments landscape is evolving & overcoming challenges
The sports-betting industry is overcoming payments challenges amidst the wider sector’s growth. These include the major challenge of card acceptance and banks’ declining online gaming transactions. Following sports betting’s rise after PASPA’s repeal in May 2018, relationships with financial institutions have been leveraged to increase the momentum in acceptance rates. This momentum is, in turn, seeing financial institutions more inclined to enter the market.
While the issue of card acceptance rates is gradually being resolved, the situation has seen other payment methods come to the forefront to allow players to deposit and access funds. These alternative payment methods – from digital wallets to eCash products – can provide players with convenience and security when they wager.
Finally, to boost connectivity in the market, defining KPIs that help solve issues through distinct solutions on both the operator and player side is key. Keeping fund withdrawal as a primary focus is vital and driving an optimized revenue stream means looking beyond traditional payment methods while also focusing on strategies that minimize expenses.
3. PASPA’s repeal is paving the path to strong growth in the gaming market
The state-level legalization of sports betting from Q3 2018 has created a market opportunity that previously didn’t exist within the issuing community in terms of driving acceptance in new markets.
Following PASPA’s repeal and multiple states regulating sports betting, both revenue and sportsbook offerings grew fast. Because of this growth, financial institutions had to reconsider their stance on online gaming. Additionally, compared to other verticals like casino, sports betting holds a higher circulation rate. Targeting specific payment entities that respond to market and operational needs will build out the current payment ecosystem and potentially impact player acquisition strategy.
4. The future of sports betting payments is frictionless
The future of the sports-betting market in the short term will see credit and debit acceptance rates remain a highly relevant issue for players and, by extension, operators, though one which will be gradually resolved.
A player’s ability to easily make a deposit with an operator’s brand via a card is vitally important. Likewise, it’s essential for consumers to also have the choice to makie the same deposit using alternative methods such as digital wallet and prepaid eCash cards.
In the long term, acceptance rates on the debit and credit card side will continue to improve. Some consumers will prefer to use their bank accounts while others will move towards digital wallets. There will also be potential interest in eCash from players.
From an industry perspective, monitoring the discussions and outcomes related to regulation will allow operators to focus on payment entities that respond to market needs. Coupled with a user-friendly interface, payment method management and strategic partnerships, these will be instrumental in enhancing acquisition strategies.
With the fast-growing nature of the US market, stakeholders can anticipate exciting advancements moving into 2020.