David Sargeant column: The balance of power shifts to the USA

Image source: David Sargeant

David Sargeant, the high-profile igaming and sports betting consultant, advisor, investor and dealmaker, examines how the US is rapidly emerging as a new gaming powerhouse, as evidenced at the recent SBC Summit North America event.

Before 2021, the dominant forces in the global sports betting industry were UK and European operators. They are long-established, exist within well-regulated environments, and engage with consumers for whom sports betting is a normal part of life. Now, however, it’s the Americans who are taking over, and last week I saw for myself how firmly the pendulum has swung to the US side while attending the SBC North America Summit in New Jersey.

The event has always been an important one for the industry, in particular for me as so much of my work focuses on the USA, brokering deals for major league teams and leagues, media companies, tribes, racetracks and casinos with sports betting and igaming brands. For the last two years most of that work has been done virtually, so to be able to meet colleagues again in-person is a huge bonus for me and the whole industry. 

While in America, I realized that the SBC event demonstrates clearly that the balance of power in the global sports betting market has now shifted from its traditional European base to the USA. Until this year, it was the UK and European operators leading their American counterparts in how to develop their partnership and go-to-market strategies. 

Now, in late-2021, it’s the Americans who are leading the older markets, partly driven by the increasing growth and size of the US market, and partly by the need for the US market to define itself. The Americans have resisted the attempts of the Europeans and the Brits to create the US market as a mirror of its counterparts across the pond, instead building markets state-by-state that reflect the localized wants and needs of US consumers.

Shift in the balance of power

The evidence for that shift in the balance of power can be seen in several areas. One example is the SBC North America event itself. It used to be the case that everyone in the sports betting, gaming and gambling industry worldwide saw industry events in the UK and Europe as must-attend. That has now changed. This year, it’s the American industry events that cannot be missed, such is the importance of being on the ground in the largest growth market in the world. That’s not just because travel to the USA has been restricted for so long, it’s the simple fact that the US is now the epicenter of our industry.

With the national US sports betting industry only several years old the rapid expansion is creating a huge need for human capital investment. The brain drain from European and Australian operators is clear as you walk into the offices of sports betting companies in New Jersey and Colorado although the short term lack of senior staff with the right to work in America and with experience of sports betting is problematic for many.

Another example of this shift is in M&As. Previously, UK and European brands were the dominant forces, looking to acquire U.S. businesses and apply their local market business strategies to engage American audiences. The opposite is now true. Now it’s the Americans who are buying up the British and European brands, creating global operators who mirror their sports and entertainment counterparts in managing huge businesses from US bases, and, crucially, speaking authentically to US consumers – think. 

DraftKings, Bally and Caesars are great examples of American brands buying up European assets and talent. This is exacerbated by the waves of American money via funds, SPACS, and VCs all investing heavily in the new growth sector.

Change was always inevitable

It’s possible to say that this hierarchical change was always inevitable. The US market was always going to define itself. Applying European or Australian sports betting models to the US was never going to work in isolation. It needed to build itself in its own image, reflecting consumer demands and behaviors across America, and that’s what’s happening as uniquely American products are being built and America is becoming the focus for suppliers and dominating development roadmaps across the world. 

Now you’re seeing the US operators starting to flex their muscles worldwide, where once it was the other way round, and that is a trend I think we’ll see continuing to develop as more and more states in America come online, revenues grow, and participation numbers increase.

This does beg the question, why is this important? For me it’s clear. As more states come online, the might of the American market will only grow, and that will create new opportunities for the whole industry. From the application of tech to improve consumer experiences, to the integration of sports betting into the live and broadcast experience for sports fans, these innovations will be driven by the Americans, and that, in turn, will benefit us all.