Disruptors and Outsiders Changing US Sports Betting Market

As CEO of GeoComply, David Briggs has watched the American sports betting industry develop inside the digital borders his company creates.

The repeal of the Professional and Amateur Sports Protection Act in 2018 brought new customers for his Las Vegas-born, Vancouver-raised geo-location company. GeoComply assures that bets are being placed where the practice is legal. And as the industry plunges ahead, Briggs is intrigued not only by how it will take shape, but who will shape it.

The American gaming market was once predominantly land-based casinos, aside from the legal sports betting market in Nevada, and the talent pool and institutional knowledge of the industry reflected it. Not anymore, not with sports betting legal in 22 jurisdictions and underway in 14.

"One thing that really surprised me is how the U.S. market is changing from any of the gaming markets around the world,” Briggs said.

American Market Defines Talent Need

Stepping to a sportsbook betting window remains part of the experience, predominantly in tourist-centric Las Vegas. But choosing a wager – like a ride to the airport, late-night meal or a date to share it with – is a transaction conducted on a smartphone or computer with increasing regularity. /p>

The need now is for the type of expertise that’s been matriculating for years in Europe, particularly the United Kingdom. The demand for that talent, Briggs said, is “exploding,” but there’s a problem. It’s an issue partly because of current policies for foreign nationals wishing to work in the United States, he said, and the regulatory and hiring processes that often disqualify Americans who have worked offshore in Caribbean casinos or sportsbooks.

"It's very difficult to get these (potential employees) and the Americans didn't know a lot about sports betting, unless they were doing it in the Caribbean and they weren't going to be welcomed back,” Briggs said.

“So, what has happened is you've seen this influx into the industry of people that have made incredible careers for themselves in the entertainment industry and other digital industries. And they are staffing these new online sports betting businesses in the U.S. with new expertise and new perspective.”

Briggs has seen outsiders make small incursions into the gaming sector before. They didn’t engender innovation because the newcomers were outnumbered and discounted. Now, Briggs said, the boardroom dynamic is setting the disruptors up to innovate in subtle and profound ways.

“Normally what happens in a betting company or a casino is they'll hire a token figure from a different industry. They'll come in with some pretty good ideas. They'll get squashed by the old operators and get thrown out,” Briggs related. “Nowadays, if you look around some of the boardrooms for all the operational roles for the new sports betting businesses in the U.S., the grizzled operators are outnumbered by the new kids on the block from Silicon Valley and from the entertainment industry. And their ideas are not going to get squashed. They're going to try things.”

Briggs offered DraftKings and FanDuel as proof. Certainly, both daily fantasy companies were right up against the boundary of gambling – over it according to the state of Nevada – before launching headlong into sports betting in 2018. But they weren’t a legacy gaming brand and they’ve applied their technological advantages, substantial name recognition and DFS user basis to dominate the national market.

To that end, FanDuel CEO Matt King suggested at the Consumer Electronics Show in January that sports betting companies must pull inspiration and successful practices from outside the industry.

We're here at the sports betting panel at @CES ! FanDuel's CEO, MGM Resorts among the panelists chatting size of the industry & how tangential businesses can arise from the proliferation of wagering. pic.twitter.com/5C94bw4P85 — Jennifer Booton (@jbooton) January 7, 2020

“What we have to figure out is, how do I build a user interface that makes that breadth of choice, that limitless betting, digestible to the average fan,” King said, according to SportTechie. “Personalization is one area I’d say we have to catch up to a lot of other tech companies. Over time we learn what they want to bet on and then serve them personalized content in a much easier way.

”Because as an operator, if I actually know what games somebody cares about or which players somebody cares about, there’s a much more direct connection than has ever existed before.”

American Gambling Industry Unique

The American sport betting landscape’s relatively clean slate covers an ever-growing portion of the Northeast, has established itself in the Midwest and is sprouting in the West. That allows for innovation, especially with the enterprise immediately seized upon – after years of resistance – as a means of increasing interest and revenue streams through engagement.

With so many jurisdictions opening, there will be jobs aplenty and not enough institutional knowledge from the gaming industry to fill them.

“What will come out of the U.S. gambling industry, I think, will be totally different to anything that's happened in any other industry because you have different perspectives that are there in the majority and they're not going to get squashed,” Briggs said. “So, they may fail, but they'll fail and learn with so many different ideas.

“I didn't expect that to happen. It's partly due to (President Donald) Trump's immigration policy. So not many people predicted that was going to impact the gambling industry. But it definitely will.”

Disruptors Already Changing American Gambling

Media

Both traditional and emerging media companies are helping create the American gaming sector’s new look. Those companies are staking claims to what independent research firm Eilers & Krejcik Gaming estimated as a $13.6 billion industry by 2023.

FOX Sports and theScore have sprouted sports betting platforms. Penn National Gaming, which runs 41 properties in 19 states, recently purchased a 36% stake in Barstool Sports and will develop casinos and a sports betting app around the boundary-pushing, loyal bro-centric brand. Founder and president Dave Portnoy would constitute a disruptive type of gaming executive.

In a call to investors, Penn National Gaming CEO Jay Snowden espoused the benefits Barstool both as a megaphone and as the conduit for a massive pool of expected new customers, guided by Portnoy’s influence.

“They are experts at digital and social media, very different than traditional media and I think it’s important as you think about the future of who this sports bettor is,” Snowden said. “We already discussed the alignment that's clearly critical to our success and still will significantly reduce our customer acquisition spend by serving as the primary acquisition funnel for Penn sports betting products.

“We also think Barstool can be a real catalyst for our brick-and-mortar businesses. … And they have a tremendous track record of driving visitation at live events including casinos.”

Sports team owners

Ted Leonsis was intrigued about legal sports betting as a form of next-generation, data-driven entertainment before PASPA’s repeal brought it to his doorstep. Now the founder of Monumental Sports, which includes the Washington Capitals and Wizards, will bring sports betting inside Capital One Arena, opening the first in-venue sportsbook in North America.

Real Estate Companies

The Blackstone Group, a global real estate investment firm, began spending sizeable outlays on gambling properties in the past year. First it bought a majority stake in the Bellagio in a $4.25 billion deal with MGM Resorts in 2019. Then this year Blackstone became a minority stakeholder in the real estate of the MGM Grand and Mandalay Bay resorts and casinos, also on the Las Vegas Strip, for around $4.6 billion.

Described by Fortune as potentially the world’s “largest corporate landlord,” Blackstone managed $153.6 billion in real-estate assets in the second quarter of 2019.