Since 2018 online sportsbook has swept the US with more than half the country’s states choosing to regulate, set up tax regimes, and license multiple homegrown and international brands and software providers, writes Erik Nyman, President, Americas, EveryMatrix.
Our strategic market entry point has been casino and, in the last three years, we have gained license approval in all North American states and provinces that have regulated both online sportsbook and iGaming, securing relationships with several leading operators for in-house games content through our proprietary iGaming Integration Platform, CasinoEngine.
This includes New Jersey, West Virginia, Michigan, Connecticut and Ontario, Canada, with the regulatory process underway in Pennsylvania.
While online wagering has spread to 30+ states, iCasino as it’s often called here, has only managed to break through in six US jurisdictions. However, despite a frustratingly slow start there are strong indicators the tide is turning and iGaming is preparing to forge its own path to growth, an issue I will be discussing at SBC Summit North America on May 10th. Let’s look at the evidence.
The rapid growth of existing iGaming states
Sportsbook has boomed in most states in the last five years with fans becoming even more engaged, brands getting better at hitting their numbers and offering the experiences patrons want, while mobile betting has played a key role in driving volumes. But despite those factors, there have been some bumps in the road with some states such as New Jersey, Louisiana and Indiana, for example, experiencing consecutive monthly declines in wagering handle.
This is due to a variety of influences such as lower quality mobile apps, prohibitive regulation and seasonality, with many states seeing a drop in volumes with no NFL between April and August before wagering picks up in the fall with the start of the new football season.
Meanwhile, in just six states where online casino is permitted, iCasino is repeatedly smashing it out of the park. Recent data shows the combined size of the land-based and online casino gaming markets in New Jersey, Michigan and Pennsylvania was $12bn (£9.98bn/€11.30bn) over a 12-month period through June 2022, with iGaming accounting for $4.58bn (38%) of the total, $290m more than the total sportsbook revenue ($4.29bn) in 2021, according to the American Gaming Association (AGA).
In 2022 US sportsbook revenue hit a record $7.5bn, up 75% from 2021, so just imagine how much 30+ states could generate if they opted to regulate iGaming.
Cost of living, looming recession and deepening state budget deficits
The US, despite being one of the most robust economies on earth, is far from impervious to hard times and state budget deficits are widening at worrying rates across many parts of the country.
According to USGovernmentSpending.com, New York, California, and Massachusetts make up the top three states with the greatest debt piles (2022) with debt as a percentage of gross state product varying from 11.4% in Massachusetts to 8.6% in New York.
Further data, however, shows that iGaming from just six regulated states generated almost twice as much ($1bn) tax revenue than 30 states combined ($500m) in sports betting tax receipts.
State regulators looking to shore up widening deficits and boost community and social welfare funding need only look at the example of New Jersey, Pennsylvania, Michigan, Connecticut, Delaware, and West Virginia to see how a well-regulated iGaming market can significantly boost tax dollars in a short space of time.
Major brands realize iGaming potential as leading future growth driver
US sports betting is getting to the stage where competition is fiercer than ever and profitability is only achievable through best-in-class technology, best-in-class player experience, and best-in-class cost control, and several brands have either opted to pull the plug completely or fallen by the wayside.
Others such as 888, meanwhile, have switched strategy to iCasino, realizing it presents higher margins and higher growth trajectory, and I’m convinced many more will follow suit, leaving sports to those that do it best.
Introduction of more content and jackpot games
Both revenue and tax numbers show iGaming is outperforming sportsbook, but this is just the tip of the iceberg. Content is king in whatever country you operate, however in the US there is still a lack of high-quality, high-performing online games. Among others we are helping operators with the introduction of strong US-facing content, with brands such as BetMGM now offering our slots, but there is much more to come.
If gaming certification and complex rollouts, including third parties, weren’t slowing the process down, this drip feed of new content could and should be sped up. Once this process improves a new wave of casino content will take player acquisition, retention, and experience levels to new heights.
Equally, many feared iCasino would cannibalize land-based revenues, but if you enter any brick-and-mortar property you will clearly see the demographic is the complete opposite to that of any digital product, and the data shows they can flourish side-by-side.
A further key growth area will be the introduction of jackpot games that are currently limited in the US. EveryMatrix is working on some of the most game-changing jackpot concepts across not just games with added US-specific jackpot features, but also unique, fully configurable gamification features that can be added to any slot game offering instant jackpots across multiple levels.
This adds another layer of excitement to gameplay, enables brands to differentiate, and presents operators with complete control and new revenue streams. We are also working on individual personalized jackpots that are unique to a specific player, plus community jackpots where even if someone else wins the big prize, if you are also playing and have contributed then you could walk away with a slice of the action.
Betting & Gaming – the perfect growth partners
Cross selling sports bettors to casino and vice versa is a long-held strategy and a crucial marketing avenue for operators looking to increase their ROI in mature regulated markets, and the US is ideal ground to replicate this success.
The US has plenty of advantages in that it is still a young market and open to more growth, while players are keen to try new products and enhance their experiences, and despite only opening in 2018, player account management systems and customer databases are well-established.
Therefore, segmenting audiences to upsell players to casino should not be too daunting a task, as long as operators have the right strategy and technology and a deep knowledge of bettors, their behaviors towards certain sports, and knowledge of what casino games they like to play, why and how. Only then can they build cross-sell activities around it and achieve a higher value from existing players.
There are always blockers to rapid progress in whatever domain you are in, but at EveryMatrix we are confident iGaming is on the right path as clearly evidenced by the huge revenues and enormous tax levels in just a few states, the appetite for more content, the drive from many brands to offer casino wherever regulation permits, and the cross-sell potentials.
These are just a flavor of what we believe will make iGaming the leading product in North America for years to come.