Daniel Kustelski: Time to consider the bigger picture? 

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Daniel Kustelski, CEO of social gaming and real-money gaming provider Chalkline, says that operators risk being too focused on sports betting and, as a consequence, could be missing out on opportunities within casino and igaming. 

When you look at the US market three years on from the momentous PASPA repeal, most of the headlines being made are around sports betting. The regulatory momentum is much greater behind sports betting than it is behind online casino, poker, lottery and bingo as too is the interest from operators and suppliers.

But revenue numbers from 2020 and the first quarter of 2021 make for interesting reading, with online casino being the main driver of GGR in the states where it is legal. 

Take Michigan, for example. Both online sports betting and online casino are legal in the state, but to date the latter is generating four times the revenue (before bonussing) than the former. This is also reflected in the tax revenues collected by the state – online sports betting has come in at $790,000 while igaming has generated $35.6m

As the market matures we may see more parity between the revenues generated by online sports betting and online casino but, for now, the latter is the bigger of the two. 

Multi-vertical brands have the largest market share 

That operators in states where both verticals are legal seem more dedicated to sports means there is a trick – or rather an opportunity – being missed. If you look to established European jurisdictions such as the UK, the operators with the lion’s share of the market are the brands that offer multiple product verticals. 

Taking this approach significantly increases a betting brand’s addressable audience which in turn drives exponential growth. It also unlocks tremendous cross-sell opportunities. 

This will be critical for US operators looking to maximize the true value of the players they acquire – especially when player acquisition costs are hitting up to $1,000 already. Some savvy operators seem to understand this; Flutter acquired TVG a number of years ago while casinos like Bally’s have added daily fantasy sports to their offerings.

A one track mind 

One of the greatest barriers to operators offering multiple verticals is of course regulation; not all US states have legalized online casino, lottery, bingo, etc as well as sports betting. But even in those that have, it could be argued that operators are putting more weight behind sports betting as they want to get ahead of the game.

While there is a first-mover advantage to be had – especially for new brands entering the fray – operators must consider the full picture if they are to truly maximize the potential on the table. 

FanDuel, for example, has reported that 41% of sports betting customers were previously daily fantasy sports players. 

Of course, this can be tough for operators in states where only sports betting is legal – more so for betting brands in states that have yet to legalize. But there are proven workarounds. 

Freeplay content engages, educates and entertains 

Freeplay content can be launched in any state – regardless of whether online gambling is legal or not – with games for sports, slots, poker, bingo, horserace betting and lotto available. This allows operators to engage and educate players and to provide them with an entertaining experience that prepares them for when online gambling is legalized and regulated. 

In states where it is online sports betting only, freeplay games allow operators to expand into additional verticals and provide players with more entertainment options than their rivals – they also act as educational tools and acclimate bettors. 

Taking a multi-vertical approach will be key for operators looking to drive the highest value out of their players – customers can and do get tired of brands offering just one form of entertainment. You just have to look at land-based casinos and how they transformed into resorts offering dining, entertainment and shopping alongside gambling. 

While online operators can’t do this to the same extent, they must realise that in order to engage the widest range of players, and retain them, a multi-vertical approach is the only way.