Turnkey sports betting service Kambi has been dissecting its US market plans, after the firm announced a 25 per cent year-on-year revenue growth in its Q2 interim results.
Detailing its mid-long term strategies, which it believes will see between 25 and 32 states legalised by 2023, the importance of retail has been stressed as initial manoeuvres into market are made.
An expectation was also stressed that current operator partners Kindred Group and 888 Holdings will continue with Kambi provisions, when they ultimately make moves into the US.
Discussing two potentially highly crucial markets, Kristian Nylén, CEO of Kambi, commented: “In Pennsylvania sports betting can only be offered through an exclusive agreement with a land based casino, after the state regulator limited the number of sports betting licenses a casino can have to just one – making market entry all the more difficult.
“However, Kambi will gain entry to the market through its recent deal with Rush Street Gaming, which owns two of the states twelve casinos.
“Current legislation in New York, which is limited to retail only, will cap the number of operators that can offer sports betting to just four commercial land based casinos.
“…Potentially handing Kambi 50% of the regulated market”
“Of those four casinos, one is owned by Rush Street Gaming, while another (Del Lago Resort & Casino) has a deal in place with DraftKings, potentially handing Kambi 50% of the regulated market.
“With many other sports betting operators and suppliers likely to be blocked out.
“In both instances land based operators are an essential route into the market, for all sports betting operators and suppliers, and we expect this reliance to continue as more states prepare for regulation.”
The fierce nature of competition has already been felt in numerous instances, with SBTech claiming a number of high profile customers, and Kambi highlighting its own successes to secure agreements alongside DraftKings and Rush Street.
Nylén however welcomes such a competitive nature: “I think it’s positive and not negative that we have competition nowadays, and I think the market is definitely large enough for both (SBTech) of us. So far I am very pleased that we have been able to win our top targets.”
“I think it’s positive and not negative that we have competition nowadays”
Before discussing expectations of the US based firms: “I think so far what we have seen is that IGT has been successful on winning deals, I think Scientific Games will also probably be a big player there and then I think you will see a lot of deals that are more based on white-label solutions.
“This is where I see companies like William Hill and Paddy Power Betfair also being successful”.
Operational expenses for 2018’s second quarter came in at €15.2m ($17.7m), with an increase of between 5-7 per cent expected to be felt through Q3 due to regulatory and commercial efforts in the US.
Despite the mid-long term vision held, Kambi CFO David Kenyon gave a brief insight into the company’s more short-term thought process: “I think at this stage we need to wait and see what the regulations dictate, in terms of what we need to have in states in the given places.
“We are in the process, this calendar year it’s probably five states we are looking at, so really any cost growth or increase is going to be dependent on what the roll out in future states is after that.
“But that’s the kind of speed we are running at this year, all the available licenses.”