Marc Brody, Senior Vice President of Business Development at Bet.Works, looks at the steep learning curve operators have ridden since the PASPA repeal
It has almost been a year since the Supreme Court repealed the Professional and Amateur Sports Protection Act (PASPA) and opened the door to legal sports betting across the US. In the 10 months since, we have seen several states legalize and regulate the activity, with New Jersey very much leading the charge. Indeed, in January, sportsbook handle topped $385m.
But legal sports betting has been far from plain sailing, and there have been a great many lessons learned since the first New Jersey wager was placed on June 14 2018.
Here are the five biggest to date:
Lesson one: Make sure your technology provider is US ready
We have already seen some very high-profile system failures that have reflected badly on the industry to date. The first was FanDuel not honoring a $110 bet that should have paid out $82,000 due to an error in its odds-making process.
Then the DraftKings $2.5m Sports Betting Championship ended in controversy after bettors were not paid out fast enough so couldn’t wager on the final game of the comp. Finally, West Virginia casinos Wheeling Island and Mardi Gras halted sports betting at their premises and via BetLucky.com over a contractual dispute between vendors.
All of these cases show just how important it is for operators to make sure their technology – whether proprietary or third-party – is ready for the unique requirements of the US market.
Lesson two: Leave trading and risk to the experts
Trading and risk management are vital factors in operating a successful sportsbook, and it seems that some of the New Jersey operators have yet to onboard the necessary expertise. For example, during last month’s Super Bowl, FanDuel reported it lost more than $5m after favorites the New England Patriots stormed to victory.
In Nevada, on the other hand, William Hill said it was “slightly up” after the Super Bowl. In short, leave trading and risk management to the experts in Las Vegas that have been doing this for many years now.
Lesson three: Choose your license partner carefully
Licensing is a complicated business, and we have already seen one casino operator switch from one licence partner to another in order to offer NBA bets. Rush Street Interactive moved its sports betting license from Golden Nugget to Monmouth Park because the former cannot take NBA wagers. This is due to state regulations that ban anyone with a major interest in a particular sport from taking wagers on that sport. Golden Nugget owner Tilman Fertitta is also the owner of the Huston Rockets.
Switching licences can be an arduous and expensive process, so it is important to get it right first-time round.
Lesson four: If in doubt, pay out
It is early days for legal US sports betting, and it is vital for operators to build trust among consumers and bettors. Operators must remember that reputation is paramount to creating a sustainable sports betting ecosystem and to ensuring player loyalty in the long term. Mistakes will be made along the way – some of them we have touched on above – but operators must own these errors and not shy away from them.
As with the FanDuel palps case, in the end of the operator decided to pay out the bet despite the error in its odds-making. If it had done this from the very start, it would have improved brand equity and value among players rather than having damaged it somewhat.
In short, your reputation is worth more than the price of paying out the wager.
Lesson five: Be quick, but don’t rush
It could be argued that many of the above lessons have been learned because companies have rushed to get to market ahead of their rivals. It is not uncommon for companies to take the approach of “we can figure this out or make it up as we go along” when looking to leverage the first-mover advantage. While this means they get to market first it can negatively impact their long-term success.
Instead, it is best to take a bit more time and ensure that your technology is up to speed, that you have the best team on board and the right licences in place. This will enable you to enter the market with the best possible product and make that first impression count – this is far more valuable than being the first out of the box.