As the post-PASPA sports betting landscape continues to take shape, one of the key questions that has yet to be answered is how a legalised business can compete with black and offshore markets that are not taxed, can offer credit and are cited as being simply more convenient for bettors to use. Dial in the robust relationships that bettors enjoy with unregulated bookies and the dichotomy facing the regulated sector is all too clear to see.
A recent study by Sally Melissa Gainsbury at the University of Sydney that addresses the factors influencing offshore betting and gaming habits could well offer some useful insight for US sports betting providers. Although derived from the Australian experience, much of what is contained in the document mirrors the potential issues facing the fledgling licensed US market.
According to the report, offshore gamblers indicated that payout rates, game experience, and sites advertising themselves as “for Australians” influenced their decision on where to gamble, while domestic gamblers were more likely to pick their sites because they were licensed by a respected authority, that they were licensed in Australia, and available payment methods. Notably, consumer protection standards and the complaint / dispute process, typically indicated as an advantage of licensed sites, was not a particularly popular characteristic for site selection for either group.”
The study noted: “Understanding consumers’ use of offshore gambling sites is essential to derive policies to reduce use of these sites with the goal of consumer protection. As hypothesized, there were some differences between the cohorts of gamblers who use offshore vs domestic internet gambling sites. Although gender was not significant at a univariate level, its multivariate contribution to the prediction of using offshore gambling sites demonstrates a significant factor.
“This may be related to the use of illegal online gambling forms in the examined jurisdiction, such as casino, bingo, and electronic gaming machines, which have higher female involvement than legal sports and race wagering (McCormack et al., 2014). Offshore gamblers were likely to be younger, more highly educated, and work full time, rather than be retired. This may indicate that those more familiar and comfortable with internet technology are engaging in offshore gambling.”
It added: “As hypothesised, gamblers using offshore sites are more likely to be influenced by factors relevant to payouts and game experience, and are less concerned with the reputation of the operator, where the site is licensed, and available payment methods. However, offshore gamblers did seek sites that are intended for Australians and the ability to bet in local currency, suggesting that they want a customised experience, but are willing to obtain this from an offshore provider.”
The study suggests that a large proportion of regular internet gamblers engage with offshore gambling sites and appear largely unconcerned with regulatory status, despite an overall preference for domestic sites. “This indicates that offshore sites offer a competitive product that is not replicated by domestic sites, and that gamblers are not seriously concerned with licensing details,” it said.
In conclusion, offshore gambling appears to be primarily related to intense gambling involvement in terms of frequency and diversity of activity, and offshore gamblers are more likely to look to factors such as gambling site experience and payout rates than are users of domestic sites. “Offshore gamblers appear to represent a distinct cohort, including displaying a greater risk of experiencing gambling problems,” the report found. “This further emphasises the importance of policies to address this behavior. Continued efforts to understand consumer behavior, including perception of risks and perceived benefits, is important to enable design of effective policies.”
To read the full report, click here.
SBC Americas analysis: It’s important to bear in mind that Gainsbury’s study is dedicated to the Australian experience. But that should not preclude US operators from considering some of its key findings. For example, the suggestion that offshore gamblers are higher risk-takers with a greater propensity for problem gambling is not to be ignored. A newly regulated industry needs a surge in problem gambling like it needs a reinstatement of PASPA! Operators may also need to identify ways of engaging with bettors who place payout options and game experience over sound reputation and robust compliance in their scale of priorities.