When the U.S. Supreme Court issued its decision last May, striking down the Professional and Amateur Sports Protection Act, a federal ban on sports betting ended and a new arm of the U.S. gaming industry opened for business.
On the supplier side, many were ready for the development. Leaders of the British and European legal sports betting markets already had established beachheads in the U.S., notably UK’s William Hill, which had been operating books in Nevada for nearly a decade. Fantasy sports operator FanDuel was ready to power legal U.S. retail books outside of Nevada as well.
The two largest U.S.-based slot machine manufacturers, IGT and Scientific Games, however, were the most active in preparing for the legal U.S. sports betting market.
IGT, the NYSE-listed slot manufacturer, is the operational arm of London-based International Game Technology Plc., which includes legacy companies GTech Corporation, a multinational lottery supplier, and Italy’s Lottomatica. The company already had supplied European sports betting markets before the U.S. PASPA repeal. In July 2018, IGT announced it would serve as the platform provider for FanDuel Group’s retail sports books, beginning with the massive book at Meadowlands Racetrack in East Rutherford, New Jersey.
Scientific Games turned its attention to sports betting well before the Supreme Court decision. In 2017, the company acquired NYX Gaming Group and its industry-leading OpenBet Sportsbook platform. After the ruling, the company strengthened its sports betting position, acquiring sports betting data provider Don Best Sports, which supplies betting lines to more than 100 sportsbook operators worldwide.
As both companies expand their retail and online sportsbook operations in the U.S., they are working toward integration of sports betting onto the casino floor, including through their core slot and system groups. At the Global Gaming Expo last fall, IGT debuted its Crystal betting terminal, a self-contained sports betting station that essentially serves as a private sports book for the better.
Scientific Games also used G2E to showcase sports betting solutions integrated with its system technology, from the iVIEW Display Manager and its integral monitors to new ways operators can give players opportunities to wager on sports while on the casino’s slot floor.
While competing in what promises to be a huge new industry space, both companies are working on technology that ultimately is aimed at integrating sports betting into the larger casino ecosystem.
Ahead of the Curve
While suppliers across the gaming spectrum are now looking at ways to seize opportunity in the newly legal U.S. sports betting market, the big suppliers were looking at the market before there was any certainty that the federal U.S. ban on sports betting would be repealed.
“We got into this far earlier than many got into it,” said Charles Cohen, vice president of North America sports betting for IGT. “We actually started building the U.S. edition of our sports platform as part of a deal with MGM in Nevada, which we started working on in 2014.”
The task was to take a sports betting platform that had been used in half a dozen countries around the world and adapt it to the U.S. market. Cohen says the job was harder than anticipated. “Some of us had a lot of experience in localization, and we thought, how difficult can it be? We’ve done it before,” he recalls. “It works in all these other places; the U.S. can’t be that different. We couldn’t have been more wrong. The U.S. is not just a different betting culture and approach; it is also potentially fifty different jurisdictions and regulatory regimes at once.”
This head start led to an intense effort to adapt the sports betting platform to the U.S. “The way that sports betting was done in Nevada through casinos made every aspect of it unfamiliar and extraordinarily complex,” Cohen says. “We were live in Nevada for nearly two years before PASPA was repealed. So, once PASPA was repealed, we found ourselves in this fantastically fortunate position of having an up-to-date, fully Americanized, fully certified solution that we could roll out in every state.”
Thanks to this effort, IGT technology is already powering leading sportsbooks in six states, more than any other commercial platform. Its roster of partners include FanDuel, who alone accounts for over half of New Jersey retail sports revenues as of February 2019, and Pearl River Resort in Mississippi, the first Tribal sportsbook to launch post-PASPA.
Along with the FanDuel partnership, IGT now supplies MGM’s retail books everywhere except New Jersey, where its one property, the Meadowlands, constitutes over 50 percent of the retail market in the state.
Scientific Games made a smart advance bet on the emerging sports gambling market when it acquired NYX and OpenBet, which powers billions of wagers in the online and retail space around the world. Since the PASPA repeal, Scientific Games and OpenBet have powered Caesars Entertainment sports betting in New Jersey, Mississippi and Pennsylvania.
Also, Scientific Games worked on ways to integrate its sports betting technology across its other offerings on the casino floor. “Following the acquisition of NYX, we started to see an opportunity to expand the sports wagering experience,” says Ted Keenan, vice president of product management for Scientific Games.
“SG’s iVIEW Display Manager could enable a sports wagering experience at slot machines. SG’s Unified Wallet enables players to easily pay for sports wagers. The success of a sports wagering product on the slot floor will be dependent on convenience for the player. SG is working toward an easy-to-use sports wagering product for the mass market.”
Keenan says the goal is to make sports betting accessible to players in their own environments. “SG’s sports betting platform that manages the wagers is unchanged for use at a sports desk or on the slot floor,” he says. “The player experience, however, is tailored to the slot player.”
IGT also is focusing on expanding access to its sports betting product to players across a given casino floor, according to Cohen.
“To be successful in the sports betting business in the U.S., the job of the technology provider, the platform provider—which is us—is to help our customer, the sports book operator, bring the betting to the player, rather than expecting the player to always have to come to the betting,” he says.
“This is true for the land based and the online experience. Convenience, ease of use, is a really important practical principle; it influences the way you think about everything from product design to operational implementation. It says that the most important person in this entire conversation is the player. It’s not us, it’s not the casino operator, it’s the player.”
He adds that this concept is already manifesting itself in the way casinos offer the sports betting project. “In the sports betting world, traditionally it’s been about putting up a big sports book area and running it in there,” Cohen says. “But consumers are asking for something else now, and casino operators are wanting to offer more. So they’re opening some of these areas up, taking out the walls. They’re putting screens everywhere; they’re placing self-service kiosks all around. They’re not just putting them in one place or against one wall.”
Traditional betting windows now mix with self-service betting kiosks, a technology that IGT has taken to the next level with its CrystalBetting Terminal. “It is a slot form factor that was made for casinos,” Cohen explains. “It’s a sit-down cabinet, and a really smart concept, because it’s like a private sports betting experience. It comes with all the video, and you can do in-play betting.
“There’s a certain segment of the sports betting customer base that really wants to spend an extended period of time immersing themselves in the experience. This is designed for that kind of solution.”
The company’s casino customers are exploring other ways to take the betting to the customer, including mobile tablets carried directly to customers wagering on other casino games. “Employees of the casino can have a tablet they can walk around the casino floor with, and they can take bets off people through this tablet and print them a ticket,” says Cohen. “So, while the player is sitting at the slot machine or roulette table, you can sell them a sports betting ticket.”
As supplier technology improves, it is fueling an evolution of how sports betting will be delivered to the slot floor. Scientific Games is integrating sports betting into its iVIEW DM system, which pumps content directly to any group of electronic gaming machines, up to an entire casino. IGT is exploring ways to incorporate a sports betting window into casino EGMs as well.
Ultimately, the way sports betting evolves on slot floors will be clear only after suppliers have answered a few important questions on how the new offering will affect traditional slot revenues.
Sports and Slots
SG’s Keenan notes that the technology already exists to beam a sports betting program directly to slot machines through the iVIEW DM monitor on each slot machine, but the company is working with its customers to determine how that feature ultimately should be delivered.
“A full sports wagering solution might put a drag on slot earnings,” Keenan says. “However, there is not a strong crossover between sports bettors and slot players. It is not clear whether a full sports wagering function will be the most optimal solution at an EGM. SG is working to build a compelling sports betting experience for slot players, rather than trying to get sports bettors to start playing slots.”
Notes IGT’s Cohen, “We’re constantly investing in new technologies and ideas which will allow players to connect to sports betting wherever they are in the wide variety of casino, racetrack and other environments out there. Some of these ideas have the potential to revolutionize the industry.”
“Rather than just going off the mountain and coming back with the tablets and saying take it or leave it, we’re preparing proof of concept,” he says. “We’ll show it to customers, revise it, refine it, go back and show it to them again.
“Because there are lots of questions people have. Will it distract people from playing slots? Is there a risk of cannibalization? How do we do the accounting? What does it involve in terms of the system, and slot accounting? We’re trying to be agile about it with a capital ‘A,’ and working with our customers to refine the proposition.”
“It’s exciting to be able to include our customers as partners in this. We’re all learning together, taking feedback and refining as we go,” he says.
SG’s Keenan adds that suppliers also must deal with regulatory roadblocks as each new state writes up its own rules for sports betting. “Payments present obvious challenges,” he says. “Slot players have funds on games, but easily using those funds for other gaming activities has been a challenge for players. Cashless solutions to easily move gaming funds from one platform to another will be an important milestone in the success of sports betting on the casino slot floor.”
Also at the forefront of sports betting growth will be mobile capabilities. “Given the rate of growth of mobile usage, it seems reasonable to include a mobile component in any sports wagering product designed for the mass market,” Keenan says.
“In the coming five to 10 years, players will increasingly expect to be able to game from a variety of devices. Just like users can engage in websites on a home computer, they can also access similar content on a mobile device. Similarly, gamers will expect full sports wagering experiences on some devices such as sports betting kiosks, and more tailored experiences for other device types.”
The suppliers also are carefully approaching the development of technology to add video of sporting events to sports betting windows on slot machines. Despite obvious concerns that such video belongs in a dedicated kiosk rather than where it can affect slot coin-in, SG’s Keenan says there are situations in which such an addition could be advantageous.
“In some cases, video of the sporting events may be an enticement to wager, and in other circumstances casino operators may use it as a reward for having placed a wager,” Keenan says. “SG is designing a sports wagering solution that will enable the casino operator to set who can access the video, for how long, and for which events.”
The research being put in now by the big slot manufacturers, along with their customers, will shape how sports betting is delivered across the casino in the coming years, but perhaps more than any area of the industry, regulation will dictate the pace.
“On the local level, there’s obviously the state and tribal regulations, which are all new, and all different,” says IGT’s Cohen. “It’s not just product specifications, either. It’s also licensing. A sports betting platform, unlike an EGM or even a system, requires significant amounts of remote support and engagement—because it’s a 24/7/365 business and it requires comprehensive data feeds and input. So, we have teams of people who are in a network that’s monitoring all the customer installations 24 hours a day as well as supporting the people on the ground working for the customer and advising them on their strategies and handling large wagers. These people are in multiple locations and all need licensing.”
A second layer of regulatory challenge comes from the recent reinterpretation of the Federal Wire Act by the U.S. Department of Justice, which holds that the 1961 law prevents any interstate transmission of sports wagers or, in some interpretations, even information like betting lines.
Cohen says that the Wire Act “requires that a sports betting engine has to be entirely in-state. But some aspects of the sports betting operation are best managed out-of-state, like the pricing feed. The Wire Act provides a safe harbor depending on the type of information and where it comes from. These are all vital considerations already. “
In the end, the power of the sports betting market in the U.S. will drive innovation, says Cohen. “I think everyone has dramatically underestimated the size of the legal U.S. sports betting market,” he says.
“I think it is going to be a phenomenon rather than a market.”
