The vast amounts of money being poured into the sports betting market by major operators is “ungodly,” according to Rob Lekites, Gan Sports VP of North American Sports Betting.
Speaking during the panel discussion “Sports Betting: How to Be Heard in a Noisy Market” at the NIGA Tradeshow, Lekites added that investments made major operators to acquire players “seem like a complete disregard for profits. That’s one way to get noticed, right? Money.”
But Lekites noted that operators in smaller markets can take advantage of their geographical footprint and familiarity with customers. It’s paramount to find a sports-betting partner that can provide market-leading technology.
“Being able to leverage all the things that you do as a casino operator to get people through your doors to your property, such as loyalty events, that’s an added thing,” Lekites said. “That’s how you can separate yourself from another property down the street that has been partnered with a brand for a much larger opportunity statewide.”
David Sargeant, a sports betting consultant, adviser, and investor with iGaming Ideas, said operators often ask if they should launch sports betting. But Sargeant thinks operators should instead ask why they should launch sports betting.
Compared to “noisy” players in the market seeking to gain market share and drive share price, tribal operators with strong retail properties (and perhaps igaming) should view sports betting as a way to protect revenue that safeguards their communities.
“Maybe sports betting for you is a protectionist measure,” Sargeant said. “You’re using sports betting to attract new casino patrons to your casino. It might be a loss leader. … It might not drive revenue. So you have to sit down at the beginning of a process and ask what is sports betting (to the operator), because it’s not one thing. … How (operators) utilize it is very different.”
For tribes that have a mobile license, but lack brick-and-mortar casinos and databases from which to attract customers, sports betting is a “difficult proposition,” according to Haig Sakouyan, Rush Street Interactive VP Customer Success & General Manager North America. The best options for such groups might be selling their market access, Sakouyan added.
Sargeant said making a technology or partnership deal, while not optimal, can work for tribes lacking land-based operations. “They have a declining indirect revenue,” Sargeant said of such agreements, “but also declining risk. If you want to do it yourself, it’s riskier, but probably more profitable if you pull it off.”
Tribal operators considering sports betting have to recognize that they’re won’t be able to compete with the DraftKings and FanDuels in the space. But with smart, targeted marketing, they can be successful.
“I do think there’s an opportunity to be profitable,” Lekites said. “It may be a loss leader in some situations, but I think that you don’t need a 10, 15, or 20 percent market share to be profitable. You can be profitable with a 1 to 2 percent market share.”
It’s also incumbent on small operators to do their research when entering the sports betting market. In addition to understanding “where your gaps and weaknesses are,” Sargeant said, it’s important to find a trusted partner.
It’s okay to “lose a little bit of control over your product and technology and entrust it to the people who do know,” Sargeant said, adding that small operators need to ensure their partners provide “a path to ownership, and understand the right way to do it.”
