H2GC Reports The US and Sports Betting | Page 17

Industry Opinion – A ‘Gold Standard’ Opportunity?
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As the final part of our ‘deep dive’, we also sought the ‘in confidence’ opinion from the industry itself – from among 3 categories of
operator:
1. The leading incumbent US mobile sports betting operators;
2. The leading global online sports betting operators; and
3. The leading US Daily Fantasy Sports operators.
Most see US online regulation as inevitable – with the NJ appeal to repeal PASPA, and the AGA’s $150bn handle figure the two main
drivers of change currently….plus the 20 States joining the American Sports Betting Coalition in filing an Amicus Brief in support of
the NJ case.
The majority also do not view the current black market offer as competition, but see the main challenge as regulatory, and whether
US States will enforce legislation against any existing unlicensed activity continuing.
As a result, operators are “cautiously optimistic” that a key change is on the way, but are beginning to “eye the opportunity”.
All saw US regulation as an opportunity to learn from the rest of the world’s mistakes, given the maturity of the online sector now,
and to introduce “gold level” standards. Some also cited the importance of learning from the New Jersey iPoker experience – “a
missed regulatory opportunity that took 2/3 years to put right”.
Most feel just repealing PASPA isn’t enough however. The strong desire is for a fresh approach to new US legislation with a core
Federal regulatory template that sets out the highest level of operator requirements in areas such as:
ü Consumer protection;
ü A sensible GGR (not handle) tax level centred on market economics;
ü Flexible technology/server location;
ü KYC (Know Your Customer) standards;
ü Responsible Gambling as a priority;
ü Advertising/marketing controls on offshore operators;
ü Strong law enforcement on all unlicensed activity; plus
ü The freedom to apply as an own entity rather than necessarily having to partner with a US land-based incumbent.
Virtually all believed the US market to be much more attractive in the long-term than the UK/Europe - mainly because:
ü It is much bigger generally;
ü Sport is on TV/stream platforms every day, all the time;
ü The US sports fans are intrinsically passionate and stats-focused.
Finally, specifically in terms of DFS, most saw its cultural significance continuing within the US, with the two activities remaining
distinct, but slowly becoming ever closer over the long-term. (Note: H2 currently values the 2016 US DFS market at $0.31bn GGR or
$3.5bn handle, noting that the US sports betting market 2016 is already as big – at $0.22bn or $4.8bn handle - even though not yet
fully regulated).
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