Why are UK Brands Expanding into the US Marketplace?

Posted by Harry Kane on Saturday, September 23, 2023

While the recent iGaming review may have created some potential issues for online casinos and remote sportsbooks in the UK, there’s no doubt that the market continues to go from strength to strength for the time being. However, while UK-based betting brands may be continuing to record impressive growth across the board, such expansion isn’t necessarily confined to the domestic market.

In fact, a number of companies based in the UK and Ireland are growing as a result of their expansion overseas, especially into high growth markets such as the US. In this article, we’re going to appraise the impressive growth and strength of the iGaming market in North America, while asking how UK gambling brands are leveraging this to their benefit and compensate for the regulatory challenges being faced domestically.

A Quick Glance at the Online Gambling Market in the US

Online gambling stateside has enjoyed exponential growth of late, with this largely being driven by the legalisation and regulation of sports betting in more than 30 North American States. This has followed the decision of the UK Supreme Court to strike down the controversial 1992 PAPSA legislation, which had historically prohibited the practice of sports betting at federal level.

Incredibly, this helped the sports betting market in the US grow at a CAGR of 96% between 2017 and 2021, as North America emerged as the third largest sector for the vertical in the world. By the end of 2021, the US sports betting niche had achieved a cumulative value of $3.7 billion, with this accounting for around 4% of the global marketplace.

Even through the challenges of 2020, the US saw staggering sports betting growth of 180%, as the North American markets surpassed Italy and Germany in the global space. Further growth is forecast in this niche too, with a number of additional US states looking to legalise sports betting in the near-term.

While just seven US states have so far sought to legalise online casino gambling, we expect to see more jurisdictions follow suit in the coming years in line with rising local demand and the desire to tax iGaming as a viable revenue source. New York and California remain the most likely to create regulated markets for iGaming in near-term, but a handful of states have similar legislation in the pipeline.

In total, it’s projected that the online gambling market in the US is grow from $4.39 billion at the end of this year to $9.42 billion by the end of 2028. This highlights a CAGR of 16.52% during the five-year reporting period, as the US continues to become a market leader and cements its status as a mature online gambling hub.

How are UK and Irish Betting Brands Leveraging this Growth?

Ireland-based iGaming behemoth Flutter Entertainment is one company that has expanded into the US, largely through brands such as FanDuel, TVG and PokerStars. This market presence has been built through a series of high-profile acquisitions, while it drove a significant increase in revenues through 2022 and the first half of this year.

In total, US revenue jumped by 87% to £2.6billion in the year ending December 31st, while total revenues were up by 27% to £7.69 billion. At the same time, the average monthly players (AMP) metric rose by 26% to 10.2 million, as the demand for sports betting stateside continues to rise markedly.

Earnings also rose by 27% to £918 million across the board, while the firm’s pre-tax loss narrowed to £275 million during the reporting period. However, despite owning UK betting giants such as Sky Bet, Paddy Power and Betfair, Flutter Entertainment continues to benefit most significantly from its decision to penetrate the US marketplace.

Flutter also hope that this momentum will have continued through June 2023, with further figures set to be released at some point in August. At the same time, fellow British betting brand Entain are expected to reveal double-digit revenue growth when unveiling their most recent financials, with this company represented by huge entities such as BetMGM, bwin, Ladbrokes & Coral and Sportingbet.

Of course, both brands have achieved pronounced growth on the back of the FIFA World Cup, which ran between November and December in 2022. This drove significant demand among US sportsbooks, especially with both the USA and Canada in action in Qatar, with the former managing to reach the last 16 before being eliminated by the Netherlands. Canada also fared relatively well, despite appearing in just their second World Cup finals and first since 1986.

Interestingly, Flutter is edging closer to its planned joint listing in the US, which is scheduled to take place in the fourth and final quarter of 2023. According to a selected of qualified market analysts, this could help to sustain the company’s growth in higher-margin verticals and enable it to further profit from expansion in the US marketplace.

The Last Word

As previously reported in the Casino Guardian, the UK market continues to face significant uncertainty and potential constraints, with the proposed gambling reforms likely to see the introduction of targeted affordability checks and online betting caps. This could drive some players to the black market, while weakening the regulated sector and its annual revenues.

With margins potentially being squeezed at both ends in the UK, it’s little wonder that betting brands are looking to expand further afield, primarily into immature markets that are endured rapid growth and less encumbered by regulatory binds. This includes the US, where iGaming remains in a relatively early stage of its expansion and is now able to call on the tech stacks boasted by established UK firms.