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IN-DEPTH 26 September 2018
How US casinos can avoid being a sportsbook flop

The recent PASPA repeal has presented US bricks and mortar casinos with an attractive opportunity. Max Meltzer, Kambi Group’s Chief Commercial Officer, wonders whether or not they will make the most of it (Extracted from July-August edition of Gambling Insider magazine)

By Gambling Insider
The date 14 May 2018 will go down in gambling folklore as the triumphant day sports wagering was re-introduced to the US. The 27-year-long federal prohibition, known as PASPA (Professional and Amateur Sports Protection Act), was finally confined to history following the US Supreme Court’s widely-anticipated judgment.

Both in the lead up to and immediately after the verdict, sports betting operators and suppliers in Europe have been eagerly planning their market entry. The same is also true of those on the other side of the pond, with major US brands keen to make the most of the newly presented business opportunity, with many hopeful of having something to offer from ‘day one’.

In the coming months and years, I believe we’ll see sports betting offered by companies of all shapes and sizes, from DFS operators to racetracks, and media companies to lotteries. However, with the potential for online sports betting being a slow burner, at least from a regulatory perspective, land-based casinos could be first in line to profit from the expansion of single-game wagering beyond Nevada.

This land-based opportunity was just one of the reasons why we recently decided to partner with Rush Street Interactive. Part of the Rush Street Gaming Group, which owns four major bricks and mortar casinos and an online casino brand, Rush Street Interactive will receive Kambi’s full online and retail products where logistically and legally possible.

MAKING A MARK

Other drivers were Rush Street’s customer-focused approach and dedication to innovation. Rush Street understands that if it is to succeed in what will quickly become an ultra-competitive sports betting industry, it will have to make sports betting part of the overall Rush Street experience. It must take what’s made them successful in casino and adapt for the sports betting vertical.

In order to do so, they realized they needed a sportsbook platform with the flexibility to mould and build upon, one that gave them the capacity to remain agile and satisfy what could be a rapidly evolving and maturing customer base. As such, they’ll be using the Kambi technology and uniquely open-APIs to develop and offer a product tailored to their specific audience. It also gives them ability to pivot into a full service B2B provider in other states, with Kambi providing the sportsbook.

I believe if casinos are to succeed in what will quickly become an ultra-competitive US sports betting industry, they’ll have to ensure they have the ability, like Rush Street, to offer their customers new and exciting products. Experiences that will increase brand loyalty and keep players out of the clutches of the growing number of competitors.

ULTIMATE FREEDOM

These experiences could be anything from augmented reality bonus hunts within the casino premises (think PokemonGo) to dedicated apps for particular sports, leagues and/or players, to the conversion of sports wagering into casino or gamification-style products, to freemium games to either act as a bridge into real-money sports betting or to build a customer base in states that have yet to regulate the activity but plan to do so.

We’ve seen these, and other innovations, activated across our customer base to great effect, giving each operator another USP to differentiate in clustered markets. The only limitation to this approach is imagination but I’m confident, over time, we’ll see the US sports betting market gravitate away from the traditional European-style sportsbook experience as innovation takes hold.

So now the Supreme Court has presented US casinos and others with the opportunity post-PASPA, it down to operators to grasp it through the selection of the partners that can provide the freedom to innovate, remain agile and become a market leader in sport betting.

DISCUSS THIS ARTICLE
IN-DEPTH 16 August 2019
Roundtable: David vs Goliath – Can startups really disrupt the industry?

(AL) Alexander Levchenko – CEO, Evoplay Entertainment

Alexander Levchenko is CEO of innovative game development studio Evoplay Entertainment. He has overseen the rapid expansion of the company since it was founded in early 2017 with the vision of revolutionising the player experience.

(RL) Ruben Loeches – CMO, R Franco

Rubén Loeches is CMO at R. Franco Group, Spain’s most established multinational gaming supplier and solutions provider. With over 10 years working in the gambling, betting and online gaming industries, he is skilled in operations management and marketing strategy.

(JB) Julian Buhagiar – Co-Founder, RB Capital:

Julian Buhagiar is an investor, CEO & board director to multiple ventures in gaming, fintech & media markets. He has lead investments, M & As and exits to date in excess of $370m.

(DM) Dominic Mansour – CEO, Bragg Gaming Group:

Dominic Mansour has an extensive background of nearly 20 years in the gaming and lottery industry. He has a deep understanding of the lottery secto,r having been CEO at the UK-based Health Lottery, as well as building bingos.com from scratch, which he sold to NetPlay TV plc.

What does it take for a startup to make waves in gaming?

DM: On the one hand, it’s a bit like brand marketing; you build an identity, a reputation and a strategy. When you know what you stand for, you then do your best to get heard. That doesn’t necessarily require a TV commercial but ensuring whatever you do stands out from the crowd. Then you have to get out there and talk to people about it. 

AL: Being better than the competition is no longer enough; if you’re small, new and want to make a difference – you have to turn the industry on its head. Those looking to make waves need to come up with a new concept or a ground-breaking solution. Take Elon Musk, he didn’t found Tesla to improve the existing electric cars on the market, he founded it to create the industry’s first mass-market electric sports car. It’s the same for online gaming; if you want to make waves as a startup, you have to bring something revolutionary to the table.

JB: Unique IP is key, particularly in emerging (non-EU) markets. As does the ability to release products on time, with minimal downtime and/or turnaround time when issues inevitably occur. A good salesforce capable of rapidly striking partnerships with the right players is vital, as is not getting bogged down too early on in legal, operational and admin red tape.

How easy it for startups to bring their ideas to life? How do they attract capital?

AL: It depends on the people and ideas behind the startup. Of course – the wave of ‘unicorns’ is not what it used to be. Some time ago the hype was a lot greater in terms of investing in startups, but that’s changed now. Investors now want more detail – and even more importantly, to evaluate whether the startup has the capacity (as well as the vision) to solve the problem it set out to address. That’s not to say investors are no longer interested in startups – they certainly are – but now more than ever, it’s important for startups to understand their audience as well as dreaming big.

JB: To get to market quickly, you need a great but small, team. If slots or sportsbook, the mathematical engine and UX/UI are crucial. Having a lean, agile dev team that can rapidly turn wire framing and mathematical logic into product is essential. Paying more for the right team is sometimes necessary, especially when good resources are scarce (here’s looking at you, Malta and Gibraltar).

Building capital is a different beast altogether. You won’t be able to secure any funding until you have a working proof of concept and, even then, capital is likely to be drip fed. Be prepared to get a family and friends round early on to deliver a ‘kick-ass’ demo, then start looking at early-stage VCs that specialise in growth-stage assets.

How do you react when you see startups coming in with their plan for disruption?

RL: We welcome the innovation and fresh thinking startups bring. This is particularly the case in Latin America, with a market still in its infancy. One area we’d especially like to see startups making waves is in the slot development sector. Latin America is a young market that needs local innovation suited to its unique conditions – especially in regard to mobile gaming.

Operators eyeing the market have Europe‐focused core products, which creates a struggle to work to the requirements of players and regulators. To succeed there, it has become more important than ever to work with those with a knowhow of the local area to adapt products and games to besuitable from the off; we welcome the chance for local talent to develop and grow.

Do you think it’s easier for established companies to innovate and establish new ideas? 

AL: From a financial perspective, yes. It is without a doubt easier for incumbent companies to establish a pipeline of innovation via their R & D departments, as well as having the tools to hand for data gathering and analysis.

But it stops there. Startups hold court in every other way. Not only are they flexible, they can easily switch from one idea to another, change strategy instantly as the market demands and easily move team members around. Established companies know this – and this is why we’re seeing an emerging trend for established companies to acquire small, innovative online gaming start-ups. They have the right resources and unique ideas, as well as the ability to bring a fresh approach to businesses’ thinking.

RL: For me, it’s always going to be established companies. Only with the resources, industry experience and know‐how can a company apply technology and services that truly make a difference. Of course there are exceptions. But when it comes to providing a platform that can be approved by regulators across multiple markets – as well as suiting an operators’ multiple jurisdictions – it is simply impossible for a couple of young bright minds with a few million behind them to get this done.

DM: I actually think it’s harder for established companies. It’s key to differentiate between having a good idea and executing one. That’s where the big corporates struggle most. They’re full of amazing people with all sorts of great ideas but getting them through systems and processes is nearly impossible.

Is it essential to patent-protect innovative products?

AL: It’s a very interesting subject. If we take IT for example – patents can actually become a block to the evolutionary process within the industry. Of course, getting a patent future proofs yourself from the competition copying your concept but, having said that, if you’re looking to protect yourself from someone more creative, smarter and agile, you’ve probably lost the battle already!

In our industry everything is moving faster and research takes less time than the development itself. No matter how good you are at copy pasting, you can’t copy Google or Netflix. The most important thing is not the tech itself but rather its ‘use-case’ – or in other words, does it solve what it’s meant to solve? Competition is healthy and the key to innovation. If you spend your whole time looking behind you, you’ll never be able move forwards.

JB: Tricky question, and one that depends on what and where you launch this IP. It can be difficult to patent mathematical engines and logic, mostly because they’re re-treading prior art. Branding, artwork and UX is more important and can easily be copied, but the territories you launch will determine how protectable your IP will be once patented. US/EU/Japan is easy but expensive to protect in. But China/South East Asia is a nightmare to cover adequately. Specialised patent lawyers with experience in software, and ideally gaming, can help you better.

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