Lobbying, online casino legislation, hold levels, sports betting challengers and affiliates — these are some of the themes likely to make igaming headlines in 2024.
What can the U.S. online gambling industry expect in 2024? Making predictions is always risky, but looking at the runes, some key trends that are likely to impact the sector stand out. Here are a few of mine for the year to come.
Lobbying — Key early stages
The war of words that fantasy sports betting operators such as PrizePicks and Underdog Fantasy and bookmakers like FanDuel and DraftKings have been waging against one another intensified throughout 2023 and is set to continue (and likely to get even more rancorous) in 2024.
The reasons for the sportsbooks lobbying state regulators are obvious. The consumer path that leads (mainly) young men from free-to-play fantasy to paid-for fantasy betting and onto fixed odds sports betting is well-trodden; and if DraftKings and other books are going to lose players to DFS brands in those key early years, many of which are also planning to launch their own sportsbooks, then they will lobby with all their might would to ensure those fantasy brands don’t operate at all.
New players inbound
While internecine warfare will continue to weigh on the industry, pressures from anti-gambling advocates will also increase in 2024. A recent, and likely first of many, example was a report by the lobby group Campaign for Fairer Gambling that called for further scrutiny of the social costs of online gambling in New Jersey. Those claims were countered by Jeff Ifrah, gaming lawyer and head of the iGaming trade body iDEA Growth. Expect more of this type of ‘he said-she said’ coverage in 2024 and beyond.
iCasino legislation: significant step?
Talk of expanding online casino regulation in the U.S. will continue following the announcement by Shawn Fluharty, President of the National Council of Legislator from Gaming States (NCLGS), that from March states will start working on a project to standardize legal frameworks for the regulation of online casino products. A further update will be published in time for the NCLGS summer meeting set to take place in Pittsburgh in July. Many more questions will be asked and details will need clarifying, but industry stakeholders will be hoping for positive movement on that front.
Contrasting hold levels
Sportsbooks will continue to focus on driving their players towards parlays, whether they are single-event or based on multiple outcomes across different events. As the Deutsche Bank analysts noted in their December roundup, hold levels are “largely, if not entirely, predicated on the mix of single event versus parlay/multi-outcome wagers”. This is not surprising, the average hold or margin for single bets “in the 4-6% range, while parlay wagers are holding well into double digits” and hold percentages “will essentially mirror the operators’ effectiveness in moving players into parlay wagers”, said Deutsche Bank.
Making the (s)quad
Will challenger brands succeed in their quest for a top four sports betting spot? Fanatics Betting and Gaming, Bet365 and ESPN Bet are the three brands with the resources to make a space for themselves in the upper echelons of the sports betting charts. Will they be able to sustain their push? The first two are private, but in December the JMP analysts noted that ESPN Bet was “pushing more handle for everyone”. Monthly handle was up 15% in Kansas, Indiana, Maryland and Iowa and +10% when ESPN Bet was not included. “Normalizing for a full month, PENN (ESPN Bet) holds low-double-digit share” and is “increasing the size of the market and reactivating dormant players”, noted JMP.
Are you affiliated?
Industry journalist and analyst Steve Ruddock told CDC Gaming that the role of advertising, and in particular that of gambling affiliates, is likely to be scrutinized further in 2024. This follows on from regulators in Massachusetts banning revenue share deals and New York coming very close to banning third party marketing in 2023. But as one industry contact commented: “The idea of banning affiliates is strange, especially as many U.S. affiliates actually provide quality content, whether about the industry or as betting tips and stats. They are also less prominent than any mainstream advertising activity one can think of: radio, TV or in-stadia.”
Another factor that is coming to the fore is that newer affiliates are finding it hard to establish relationships with U.S. operators. One well-established European affiliate starting out stateside told CDC Gaming that the contrast with Europe was stark. Where they are treated as an integral and very important component of the ecosystem in Europe, just making contact to initiate conversation with U.S. brands was proving difficult.
Factors influencing this state of affairs include the concentrated market share of both operators and affiliates and the broad availability of advertising channels, but Ruddock says simple speed to market and convenience also play their part, with “operators and regulators having existing relationships with several affiliate companies they can airdrop into new markets”, while paperwork and high financial burdens also “act as a barrier to entry for smaller affiliates”.
Sports betting affiliation is also highly saturated and as Ruddock notes, “smaller casino affiliates are likely to deliver more customers as casino content can run the gamut from poker news and strategy to slot and table game reviews” to recruit players. Meanwhile new sports betting affiliates will have to grind it out. “Operators are comfortable working with established, well-known affiliate companies, particularly with the regulatory scrutiny in states like Massachusetts and Ohio, where even affiliates are required to use certain terminology and logos to meet responsible gambling standards,” adds Ruddock. Operators will pay a premium for that peace of mind and since they are on the hook for any regulatory failings linked to affiliates marketing their brands, that situation is unlikely to change for the foreseeable future.
