The B2B sports betting business could be worth as much as $5bn annually according to IGT’s President of Sports Betting Joe Asher.
Speaking at last week’s IGT Investor Day, he noted that while there has been a lot of discussion about the total market at the B2C level, there has been less focus on the potential of B2B.
Addressing delegates, he said: “We think the B2B market will grow from about $1.5bn to close to $5bn by 2025. Of course that’s dependent on when specific states, including California, legalize sports betting, but this clearly is a segment that will grow nicely.”
Asher was also quick to underline the importance of retail, saying: “Additionally, while the vast majority of the sports betting market will be online, we think about 30% or so of the B2B opportunity will be in retail. Retail will continue to be important, even for digital operators, as retail provides brand awareness and experience.”
Emphasizing the point, he added: “Think of the new sportsbook in the Capital One Arena in Washington DC, or what FanDuel is building in Phoenix in Connecticut. Also, it’s very beneficial from a customer service and payments perspective. So, while the world is no doubt moving online, there’s a lot of opportunity in retail as well.”
According to Asher, retail benefits from structurally higher margins for a number of reasons. “The margins are higher because most of the betting is pre-match rather than in-play,” he explained. “And there is a higher percentage of parlays in retail as opposed to online, especially parlay cards. Moreover, retail customers can be less price-sensitive.
“If you’re standing in the sportsbook at Resorts World Las Vegas and you want to bet on tonight’s game, you’re not likely to drive to another casino to get that extra half a point. But it’s very easy to do exactly that by switching to a different app on your phone.”
Beyond the margin difference, continued Asher, many operators prefer to spend their limited resources focusing on their online business and more readily outsource aspects of their retail business. “In part because of the hardware needed in a retail sportsbook – things like kiosks and the betting terminals,” he noted. “Sportsbook operators are not manufacturers. IGT is.”