What Can the US Learn from the UK Gambling Industry
Posted by Harry Kane on Wednesday, June 19, 2019
When appraising the global iGaming industry, it’s hard not to consider the influential role of the British marketplace. After all, this market boasts one of the most progressive regulatory frameworks in the world, whilst it also earned a gross gaming yield of £14.4 billion in the year ending March 2018.
The GGY for the iGaming sector in the UK grew by the incredible 13.7% year-on-year, whilst the market also increased to account for a staggering 37.3% of the gambling industry as a whole in 2018.
Whilst these trends are also prevalent in other marketplaces across the globe, there’s no doubt that the UK has blazed a trail for others to follow. At the heart of this is the nation’s stringent but forward-thinking sports betting and casino gaming laws, which empower betting whilst introducing safeguards for participating players.
Now that the sporting betting and iGaming market in the U.S. are starting to blossom, it should come as no surprise that American operators are looking to forge closer relations with their UK counterparts. British operators are welcoming this collaboration too, but what value can they add and how will U.S. firms learn from the experience?
A Look at the Online Gambling Regulatory Landscape in the U.S.
For years, the U.S. has struggled to realise the full potential of its iGaming market, thanks to a combination of archaic law-making and sustained moral objections.
Of course, there are some who believe that the market is also being undermined by the bricks-and-mortar casino sector in the U.S., with key players like Sheldon Adelson looking to outlaw online gambling and influence federal policy decisions.
This was borne out recently, after Adelson’s Coalition To Stop Internet Gambling organisation successfully lobbied the Department of Justice (DoJ) to reconsider its 2011 opinion on the controversial Wire Act.
This act is essentially a federal law that was passed back in 1961, and it imposed a nationwide ban on all interstate gambling in North America. However, the DoJ revised its interpretation of the law eight years ago, confirming that this only applied to sports betting and that casino gameplay was permittable across state lines.
This provided a much-needed shot in the arm for America’s iGaming sector under the Obama administration and led to several U.S. states legalising online gambling. It also encouraged said States to collaborate and forge lucrative pacts within the market, in a bid to pool resources and optimise profitability.
Last November, however, the DoJ decided to reconsider its 2011 opinion, and once again imposed a ban on virtual casino operators from breaching state lines. Whilst this will not stop firms from operating in their own states, it does place a cap on their growth and prevents them from targeting customers in other regions.
This is typical of America’s iGaming market in recent years, which has continued to take one step forward and two steps back in its quest to fully realise its vast potential. Still, there remains hope that the market is moving in the right direction, particularly after another federal law was overturned last year.
In May last year, the Supreme Court struck down the Professional and Amateur Sports Protection Act from 1992, which outlawed state-authorised sports gambling at a federal level (with Nevada the only exception to this rule).
In doing so, it essentially gave state and local authorities the green light to legalise online sports betting if they so desired, with the justices agreeing 7-2 that the previous legislation was unconstitutional.
This has created a huge opportunity for states nationwide to legalise, regulate and tax online sports betting, including those that have already embraced online casino gameplay (namely New Jersey, Delaware and Pennsylvania). This has also helped to create further opportunity for UK operators, although we’ll have a little more on this later.
Given that this decision has been made by the Supreme Court, it’s unlikely that it can be successfully challenged overturned. So, this represents a significant breakthrough for the iGaming sector in the U.S., even though operators will able to sell their products and verticals across state lines.
Which UK Operators Are Targeting the States?
Given the seismic nature of the decision to overturn the 1992 sports betting ban, it’s no wonder that many UK operators have moved quickly to claim their share of a rapidly growing market.
A select few have also looked to build on their existing presence on the other side of the Atlantic, with these brands having already switched their focus to the States amid dwindling revenues and increasingly stringent restrictions at home.
Take William Hill, for example, who have established a strong foundation in the States and are considered to have blazed a trail for fellow operators to follow. To this end, they currently operate 108 race and sportsbooks in Nevada, whilst boasting the state’s leading mobile sports app in an extremely competitive marketplace.
It has redoubled its efforts stateside since the Supreme Court decision from last year, however, and has seen its growth help to offset falling domestic revenues and the future impact of the FOBT cap.
In fact, the FTSE 250 gambling group has seen its net U.S. revenues increase by almost half, whilst its turnover in the domestic market has fallen by 8%. Overall, the brand’s relative reliance on the UK market has seen overall gambling revenues decline by 15%, which is why William Hill is so keen to increase its presence Stateside and overseas.
One UK operator to follow this lead is Paddy Power Betfair, who wasted no time in expanding into the U.S. after the landmark Supreme Court ruling of 2018. More specifically, it opened talks about a deal with fantasy sports website Fanduel, which is a new York-based website that awards cash prizes to players who select successful fantasy teams.
Paddy Power is also exploring more traditional markets as they open up in the U.S., and this will definitely be an interesting space to watch in the near-term.
What Can UK Firms Bring to the Market, And How Can U.S Operators Learn?
Whilst these two operators may be leading the charge in the North American iGaming market, there are plenty of other following this trend.
The question that remains, of course, is what can UK operators bring to this burgeoning marketplace? On a similar note, what can U.S. firms learn from the successes of their British counterparts?
Here are some key things to keep in mind:
1. Make Diversity a Key Focus
In truth, diversity is crucial in most industries and marketplace, regardless of what companies are trying to sell and to whom.
This is particularly true in the incredibly competitive iGaming space, with British operators now required to create diverse games’ libraries and products across several different genres and verticals. From online slots (which account for nearly two-thirds of the online GGY in the UK market) and table games to live dealer experiences and virtual scratchcards.
This diversity has been driven by supply and demand, which remains a fundamental law of economics and compels operators to provide their customers with all they desire in a single online space. This is far more lucrative than targeting specific niches, whilst the added cost involved in building diverse games’ libraries can lead to higher profit margins.
At the same time, operators in the UK structure their offerings according to supply and demand, which is why popular and beginner-friendly slot titles account for the vast majority of their casino game libraries. They’re also investing heavily in the development of live dealer games, as these help to entice competitive and serious gamblers to a platform.
As a result, customers of all shapes and sizes can visit a single online casino and have all of their gaming needs met, whether they want to pursue games that offer higher returns or play low-variance titles during the daily commute.
This is a key lesson for U.S. operators to heed, as they look to expand and diversify their games’ libraries and develop new sports betting markets. This would also involve embracing the in-play marketplace, as they look to provide a comprehensive and varied offering that appeals to the mass market.
The key is to leverage British expertise whilst understanding the precise needs of the American audience, as it’s important to understand which games and trends are driving gameplay Stateside.
2. Prioritise Mobile Gaming, Either Through Web or Native Apps
Unless you’ve spent the last decade living under a rock, you’ll know that the global mobile app industry now represents a huge business.
This is borne out by the figures, which suggest that mobile apps will generate a staggering $188.9 billion in the year 2020. To put this into context, 2015 saw a relatively paltry $69.7 billion generated by mobile apps, whilst this figure will continue to grow markedly in the future.
Make no mistake; iGaming mobile apps are key drivers of this marketplace, especially since the Apple store has agreed to sell them through its platforms. There’s also huge and growing demands for these apps, with an estimated 60% of all online gambling now done using an Android, iPhone or iPad device.
This is why the vast majority of market-leading operators in the UK currently boast a strong mobile presence, with most having developed native apps for iOS and Android (as well as Windows) platforms.
Even in instances where these firms have yet to develop a branded mobile app, they invest heavily in the design of responsive and instant play casinos that adapt intuitively to different screen sizes. This means that players can wager whilst on the move through a mobile browser, without compromising on the overall quality of gameplay.
U.S. operators must embrace this lesson, and strive to optimise their mobile presence through heavy investment and the application of technological know-how.
Their UK counterparts can definitely help with the latter, whilst lending their web and app development teams to ensure that burgeoning U.S. brands can effectively target mobile players.
This will become increasingly important as the U.S. market grows, with mobile set to become the primary driver of traffic to online casinos throughout the States.
3. Focus on Delivering an Outstanding Level of Customer Service
Another key area of focus for UK operators is their customer service, as this plays a key role in the overall user experience and the underlying reputation of a casino brand.
This also impacts directly on the reputation of the industry as a whole, which is why the UK Gambling Commission has made the adequate support of customers a core strategic objective through 2021.
This has become a key differentiator in the market of late, with firms increasingly focused on delivering consistent and high-quality customer support that’s also available 24 hours each day.
UK operators have subsequently created a viable template for exceptional customer support, with the presence of 24-hour live chat at the centre of this. Firms have also worked on responding exceptionally quickly to email queries, whilst ensuring that they publish visible and comprehensive FAQs on their websites.
When combined as part of a clear and overarching strategy, these elements enable operators to provide the type of rapid support that online gamblers crave on a consistent basis.
From an American perspective, liaising with UK operators and tapping into this expertise can afford companies a competitive edge in what’s likely to be an exceptionally crowded market.
The most important thing is to provide at least one communication channel that’s reliable and available 24 hours a day, as this means that customers can always have their queries answered quickly and in great detail.
The Last Word
UK casino and sports betting operators have always been keen on the notion of participating in the burgeoning U.S. market, but recent events have combined to make this a more pressing priority.
Aside from the effective legalisation of sports betting in the States, UK operators are also struggling to optimise their profits against the continued backdrop of Brexit uncertainty.
These factors, along with the impending FOBT cap and Remote Gaming Duty hike, have combined to create a perfect storm that’s forcing firms to revise their international growth strategies.
Fortunately, U.S. operators can learn a great deal from their UK counterparts, whilst British firms can add considerable value to the North American market. As a result, both parties can benefit from such collaboration, and we should certainly expect more UK-based casinos to forge partnerships in the States in the near-term.