Members of the iDevelopment and Economic Association (iDEA) aren’t prognosticators. But the national trade association for sports betting and igaming interests seems to have a good grasp on what is possible in 2022, and beyond.
According to a recent survey of its members, 2022 could see more states legalizing sports betting and a continued emphasis on player protection. And don’t look now, but cryptocurrency is on the horizon.
According to iDEA founding member and general counsel Jeff Ifrah, the organization is solely focused on advancing online gaming. Members include Entain, GeoComply, DraftKings and FanDuel, and Sightline Payments.
“We are the first trade association in the space, and we are the only one in the space,” Ifrah says. “The majority of the industry are also members supporting expansion. These additional verticals of poker and casino (online gaming) actually generate more revenue for the operator, but also generate more tax revenue for the state.”
If iDEA’s crystal ball proves true, three to five states will legalize sports gambling this year, according to 63% of members. According to Ifrah Ohio “straddles the survey” as one of the states where sports betting will probably emerge – the Buckeye State already legalized it in December, but sports betting is not yet available.
“We also are anxiously looking at and investing in Missouri,” Ifrah says. “We’re also looking at states that currently have retail but don’t have mobile, like Arkansas and Mississippi. Those are the four states we’re focused on in terms of the sports betting side.”
Ifrah also mentions Indiana and Colorado, both of which have sports betting, as possible adopters of legalized igaming in 2022.
States that are considering adopting online sports betting or gaming might want to look to New Jersey as an example of how to launch. New Jersey was cited by iDEA members as a state that “does so many things right,” according to Ifrah, in regards to online gaming.
“First of all, they’re headed by a regulator who has always encouraged innovation in the space,” Ifrah says. “That’s super important because when you believe in innovation, you believe in a broader, more expansive market. Sometimes we see states wanting to limit who can enter, limit the licensing opportunities, limit the number of licenses that are going to be issued. All of those things don’t make a lot of economic sense.”
Ifrah compared New Jersey to New York, which launched sports betting on January 8. But because New York sports betting “is so limited, and offered by only a handful of operators,” he thinks innovation will be tempered, and customers will not get a full roster of betting options.
“New Jersey is doing that right because they are obviously allowing reputable and suitable operators into the market, but they’re doing that while thinking about innovation,” Ifrah says, adding that the safeguards the state has added to prevent scandals seem to be working.
In addition to New Jersey, Michigan received high marks for its rollout of igaming and sports betting in 2021.
According to 47% of survey respondents, the use of cryptocurrency for regulated igaming and sports betting is a real possibility in 10 states within five years. And 32% of survey respondents think crypto will be used sooner.
Ifrah says that because crypto is now entering the mainstream – Matt Damon is a spokesperson for Crypto.com and Tom Brady has a stake in FTX – there’s less reluctance by gaming operators to at least consider using it.
“Exchanges in the U.S. are carrying cryptocurrencies that are regulated in part by the FTC (Federal Trade Commission) or the CFTC (Commodity Futures Trading Commission),” Ifrah says. “They’re supervised by the Treasury. No one is concerned anymore that crypto, in the U.S. trading or U.S. regulated exchanges, introduces concern about money laundering or other things, not any more than other forms of payment.”
But what needs to happen first, Ifrah says, is that operators have to ensure that banks are not only willing to accept crypto as a payment method, but also other forms of payments.
“Right now, we can’t support the introduction of a payment mechanism that is going to have banks thinking `wait a minute, do we want to onboard an entire industry that accepts crypto?’ Why do we want to introduce that additional risk to a bank that’s already worried about what they’re getting into because they have to ensure compliance on a state by state basis, which is complicated, to make sure they’re not violating UIGEA (Unlawful Internet Gambling Enforcement Act).”
But over time, Ifrah feels, that concern is going to recede because of the people using cryptocurrencies. Because the demographic of crypto users, Ifrah says, coincides with men between the ages of 22-30 who are sports bettors, “that becomes an interesting customer acquisition tool. … What if all of a sudden they can post an advertisement on an exchange and tell users coins are accepted at DraftKings. Now, all of a sudden without spending a lot of money, they’re going to have people flowing over to their site to use crypto that is the perfect demographic for them.
“I think that’s what our members think is going to happen. We just have to get over the concern that crypto is a problem and crypto introduces a risk.”