Kambi’s State of the Nation: A year in review for sports betting

Rounding off 2021, Kambi’s Senior Director-Sales for North America, David Bretnitz, reflects on the milestones of this year and what lies ahead in 2022.

It has been another transformational year for the sports betting industry. Faced with both exciting developments and new challenges, 2021 was notable for its abundance of new product developments, M&A activity and the launch of newly regulated markets.

These trends will no doubt lead to a major shift in how companies approach the North American market for years to come and in this edition of Kambi’s State of the Nation, we reflect on 2021 in our Year in Review for sports betting and what some of these trends could mean for the future.

  1. Mergers and acquisitions

The US sports betting market picked up the pace when it came to mergers and acquisitions in 2021, with numerous multi-billion dollar deals being completed throughout the year. These were driven by myriad of factors such as market access, company synergies and increased market share, and we expect to see similar M&A activity continue throughout 2022.

Access to proprietary sports betting technology, which is some of the most complex software imaginable, has also been a key trend and of great industry debate recently. However, while such a strategy understandably holds appeal, particularly for investors and a company’s equity story, there are many downsides too such as a lower quality product, especially if a sportsbook is reliant on third-party feeds and outsourced products such as game parlay.

In Kambi’s most recent State of the Nation, Head of Pre-Sales Solutions, James Letchford, discussed some of the downsides to vertical integration and why product and technology will ultimately be the driving force to succeed in the US moving forward.

  1. A scale-back on marketing

Three years post-PASPA and few operators have been able to turn a long-term profit in the US sports betting market. Despite some hefty revenue growth, many aren’t expected to be profitable for a number of years, prompting some operators to switch up their strategy and reduce their marketing and customer acquisition spend.

There is a growing industry debate about customer acquisition costs and lifetime value and only time will tell whether an aggressive approach to customer acquisition will prove beneficial, or if the financial implications will be too much in the long run. I believe we are already experiencing this market correction occur for some of the highest valued operators.   

As mentioned in the previous section, at Kambi, we believe the winners and losers in the US market will ultimately be decided on quality of product, where the battle for not only acquisition, but long-term retention will be fought.

  1. The next phase of parlay betting

One of the fastest growing industry trends in recent years has been parlay betting, and that showed no signs of slowing down in 2021 as operators and providers appreciate just how important it now is to give the end users even more control over their sports betting experiences. This has been a significant area of focus for Kambi too.

However, our Game Parlay product takes it a step further and allows bettors to combine main and player prop bets not just in a single game, but across multiple games and sports too. The performance of Game Parlay throughout the NFL season has been extremely positive so far with more than 40% of NFL bettors placing a Game Parlay bet.

More recently, Kambi announced the latest development to the product which allows bettors to include a large number of college bet offers in their parlays, as well as the ability to combine Game Parlays across NFL and NCAAF. Back in September, Kambi’s SVP Trading, Simon Noy, discussed the importance of combinability in depth with SBC Americas.

  1. Empire state of mind

New York has been in the crosshairs of mobile sports betting operators for a long time and as of 2021, online sports betting is legal in the state of New York. Following a competitive request for applications process, the New York Gaming Commission confirmed two groups with a total of nine mobile sports betting operators who earned a coveted 10-year mobile sports betting license. The highest scoring group during the process was the Kambi-led consortium, which included our partner Rush Street Interactive, operator of an on-property sportsbook at Rivers Casino and Resort in Schenectady, New York, where it took the first legal on-property bet in the state in 2019.

Although operating in the state includes a high tax rate of 51% for 10 years, New York will no doubt be a huge market for mobile sports betting for years to come. Kambi’s VP Sales, Sarah Robertson, discussed the potential opportunities of the market in a recent article.

  1. O Canada

Back in June, the Canadian Senate passed Bill C-218 to allow single-game sports wagering in the country. Similar to the United States, conducting single-event sports betting offerings will be determined on a province-by-province basis starting with its largest province, Ontario. 

There is widespread speculation that the Ontario market could be opened to operators and providers sometime in the first quarter of 2022. If Ontario were a US state, it would be the fifth largest with a population of 14.7 million residents (almost identical to New Jersey’s), which is almost 40% of Canada’s population. Ontario is also home to the most professional and amateur sports organizations in the country with three CFL teams, two NHL teams, and one team in each of the MLB, NBA, MLS, and NLL.The market has huge potential and all the major players in the industry will be waiting to sink their teeth into it. “We want to be ready before day one,” Rush Street Interactive CEO Richard Schwartz said of plans to launch their BetRivers product in Ontario on a panel at a recent SBC Betting on North America Summit.