Greg Kirstein, VP of Business Development for iGaming at Paysafe, speaks to SBC Americas about the growth of online gaming in North America and why they are optimistic about the new opportunities in the U.S. and Canadian markets.
SBCA: Can you describe Paysafe’s journey over the last 20 years and the company’s current position in the North American gaming space?
GK: We were there at the start of iGaming, and we continue to be North American operators’ go-to payments platform. Our history dates back to 1999, when the company that later became Paysafe pioneered the enablement of online credit card processing globally, while also providing proprietary risk management and gateway technology to operators. We also developed one of the first digital wallets, which was purpose-built for iGaming and transformed payments for operators across the industry.
In 2006, we withdrew from the U.S. market to comply with the Unlawful Internet Gambling Enforcement Act (UIGEA). However, we soon re-entered the North American space, when in 2010 we won the RFP to provide payment solutions to Loto Quebec, the government-operated lottery of Canada’s second largest province.
From our experience in Canada, we were well-positioned to capitalize on legislative changes taking shape at a state level in the U.S. from 2013, when Nevada, New Jersey and Delaware began regulating online casino and poker. The 2018 U.S. Supreme Court repeal of PASPA, the federal ban on single-event sports-betting, provided us with a major opportunity to support operators with our payment solutions as states began regulating online sports betting. Today, Paysafe is partnered with around 75% of American gaming operators in the market across 17 states plus Washington DC.
By leaning on our experience, we’ve maintained our position as the payment leader helping drive forward North America’s iGaming evolution. Even before online sports betting’s emergence in the U.S. and now Canada, we were first movers in the nascent daily fantasy sports (DFS) space, where we played a critical role in advising early entrants on payments and the importance of self-regulation.
In tandem, we’ve played a complementary role in the North American iLottery market. Building on our support to Loto Quebec, we now exclusively service the majority of Canada’s regulated provincial lotteries across their online gaming and lottery offerings, and we’re also a major payments player in the U.S., where we support eight state iLotteries.
SBCA: How has Paysafe responded to the major shift in the U.S. iGaming market since PASPA’s repeal, in terms of product development and in solving operators’ payments challenges? Which challenges remain?
GK: When any new iGaming market opens-up, operators entering the market focus strongly on acquiring customers and keeping them. Payments have long played a vital role in player acquisition and retention for U.S. iGaming operators. Quick and frictionless payments are the top factor for American sports bettors when choosing an online sportsbook, according to our December 2020 research.
So, when PASPA was repealed in 2018 and states started regulating sports betting, we responded with a product that would best support operators’ customer conversion with our payment solutions. On top of the significant issue of U.S. players experiencing credit and debit card declines for iGaming transactions, their online payment preferences are diverse – some prefer cards, some APMs like digital wallets, while others still favor cash and prefer online cash, or eCash, for wagering.
Therefore, we brought to market in early 2019 a payments platform that equipped an operator’s iGaming brand with all the ways their players wanted to pay when they play. After one streamlined integration (avoiding multiple separate integrations), operators that plugged into our platform could offer their players card payments processed through our gateway, a range of APMs like the Skrill USA digital wallet and eCash solutions like paysafecard and Paysafecash plus third-party products. Our platform has helped maximize customer conversions by ensuring that a player can always access their preferred payment method, and payments are never a barrier to wagering.
And our focus on innovation continues. Digital wallets are U.S. consumers’ preferred online payment method after cards, and wallets are the favorite method of high-frequency bettors (wagering daily or more), according to our Q4 2020 research. Given the importance of fast and frictionless payments and wallets to VIP players, we’ve made a major upgrade to the Skrill USA digital wallet this year.
For U.S. online sports bettors using the all-new Skrill USA, it’s never been quicker to make an instant deposit with an iGaming brand direct from their bank account or to receive payouts. With a streamlined and intuitive user experience (UX), we feel that Skrill USA 2.0 is a real next-gen digital wallet for the market and its players, especially the high-frequency and VIP sports bettors who favor wallets.
SBCA: Following the passage of Bill C-218, there is a great deal of optimism around the future of legalized single-event sports betting in Canada. Does Paysafe share that optimism and how will you support operators in what will likely be a highly competitive market?
GK: We’re very optimistic about Canadian sports-betting and the broader gaming market, which we’ve served for over a decade through our partnerships with the provincial lotteries. Before Bill C-218 was enacted, there was tremendous growth in online lottery and gaming, but regulated sports betting only represented approximately 1% of gross gaming revenue (GGR), with the rest lost to the gray market.
Before Bill C-218, sports bettors wanting to wager legally only had access to parlay betting operated by the provincial lotteries. This put these operators at a significant disadvantage against gray market operators offering a wide range of competitive, single event sports-betting products. Since the bill’s enactment in August, we’re already seeing new products launched locally. And we’re particularly excited to see Ontario open-up to private gaming companies, with Canada’s most populous province expected to be a top-five North American iGaming market by GGR at maturity.
The new regulated single-event sports-betting market is going to encourage competition and spur an evolving market that will greatly benefit players. We look forward to playing a leading payments role in the space and helping support operators’ customer conversion as the market evolves.
SBCA: When you look at the growth of online gaming, particularly in North America, what excites you the most about the future and why?
GK: What really excites me is the investment going into this industry and the way the market is reacting. Historically, the major sports leagues had certain reservations about online gambling but are now forming their own partnerships so they can be part of iGaming’s evolution and growth. The buy-in from massive, respected companies is really signaling the modernization and maturity of the North American iGaming industry. The greater that investment, the more competition we’ll have, which will result in more modern technology and better products for consumers, especially on the payment side.
After the U.S. market’s relatively slow start, the momentum that has been building over the last couple of years is paving the way for exciting developments down the road. Driven by the natural affinity between sports and betting, the U.S. is still in the early stages of an evolution that will likely see it emerge as the world’s largest gambling market – our industry’s future is bright indeed.