26 September, 2022

The supplier story so far

Gambling Insider speaks with leading executives from Relax Gaming, BetConstruct, Kambi and Yggdrasil to hear how European suppliers are progressing so far in North America.

European migration to the US has been on the rise since the overturning of PASPA in 2018. But, focusing specifically on suppliers, how much progress has been made so far and what does the future hold, with so many new suppliers choosing now to make the move? Relax Gaming Chief Regulatory Officer Alexia Smilovic Rønde, Kambi Senior Director of Sales, US, David Bretnitz, Yggdrasil CEO Björn Krantz and the BetConstruct US team collectively share their thoughts with Gambling Insider.

European and North American market differences

There are, of course, plenty of similarities between the European and North American markets, though the broad differences outweigh any comparisons, with the BetConstruct US team quick to point out that the “biggest obvious difference is in the history.” The team told Gambling Insider that sports betting has been around for decades in Europe and in some cases even centuries. This is in stark contrast to the US, where legal sports betting has only been permitted for a few years and not legal in every state.

The BetConstruct US team touched on some other differences it has witnessed so far, too – such as the “sports covered and types of bets offered,” before advising that “operators will have to listen to consumers and dial in on the needs of the market to be really successful.”

Kambi’s Bretnitz agreed that the North American sports betting market is very much in its infancy, with several large states and provinces still yet to regulate. It remains a very exciting prospect for this reason alone, according to the company’s US Senior Director of Sales.

However, while noting the evident differences that such a situation brings about – from the importance of tribal gaming in the US to differences in player betting behaviour – Bretnitz adopted the stance that “the fundamentals of a high-performance sportsbook remain the same.

"Whether it’s a stable core platform, strong risk management or competitive pricing, the key is having the flexibility to provide a genuine localised offering that players can enjoy.

Bretnitz added: “It is also worth remembering that Europe and North America aren’t really markets per se as they are made up of dozens of markets all with slight differences.”

Yggdrasil CEO Krantz, meanwhile, added one important factor to the mix: European players in general are quite well educated. He explained: “Higher market maturity, combined with a higher degree of player awareness, puts high pressure on game developers to balance math and mechanics in game design and delivery. It is a win or lose battle as you don’t have the luxury of a second or a third try in a mature gaming environment.

“If you don’t deliver on player needs and motivations, players will walk away after playing just a few game rounds, meaning the lifetime value of the game will be very short.”

As noted by Krantz, it means getting the job right from the very beginning is crucial, with companies risking a return on heavy investments if they fail. Moreover, the market entry barrier for new game developers is not only high, but a costly affair. This is particularly true of mature markets such as Europe.

“A new entrant needs to compete with legacy game developers who have built their top-of-mind brand awareness, cross-player communities, customers and markets over several years,” explained Krantz.

“In a mature market, trust and confidence in your ability to consistently provide strong roadmaps with high quality and innovation is fundamental. When entering a mature market as a new player, you need to prove that you are unique, can clearly support customers in terms of differentiation and add value to the player ecosystem.”

On the other side of the spectrum is the burgeoning US market, where Yggdrasil has noticed some “fantastic growth” in key regulated states, while the underlying growth is “enormous.”

However, Krantz explained that with more actors and more games comes “higher pressure to bring consistent high value to stay relevant and not be down-prioritised. This means that you need to go 'all in,' in both mature and immature markets, creating a niche with a key focus on optimising and maximising long-term growth ambitions.”

Krantz offered the following advice to any and all interested parties out there: “Strive to be unique and don’t try to copy what everyone else is doing.”

Why go to the North American market?

The North American market is, naturally, not only limited to the United States. Canada in recent months has shown that it is a major player when it comes to this new age of sports betting. On 4 April 2022, a total of 13 sportsbook apps were granted approval to launch in the hugely influential province of Ontario, and it is a region that has continued to grow in stature since launch. That has undoubtedly been helped by the fact Ontario is the country’s most populous province, and is home to over 10 million potential players.

Relax Gaming wasted no time in taking advantage of this opportunity, with the company’s Chief Regulatory Officer Rønde saying “it made complete sense for us to announce our presence in North America via Ontario for that reason alone, as it’s very likely that Ontario will remain the largest market for some time.

“All signs indicate that neighbouring provinces will be much slower to come online, but perhaps Ontario could act as a good example.”

But it wasn’t solely the huge numbers of potential bettors that attracted the supplier to the province, as explained by Rønde.

“What's also attractive is that Ontario has already been exposed to online slots in the past as a grey market, therefore players are accustomed to European-style games,” she said. “Couple this with the Alcohol and Gaming Commission of Ontario’s (AGCO) regulatory model, that’s significantly friendlier than we’ve seen elsewhere on the continent, and I think it’s fair to say things are poised nicely for suppliers.”

Yggdrasil, meanwhile, has just started its US go-to-market journey, with the company live with one game – Vikings Go Wild – via its collaboration partnership with IGT. As noted by the company’s CEO Krantz, a second game – Cazino Zeppelin – is ready for its 7 September launch in Michigan. The group is very much in its early stages in the US, but Krantz explained that any progression will in no way impose on its European operations.

He said: “As we do not run parallel game development processes, we can manage both Europe and US go-to-market roadmaps simultaneously."

“We have been following the market developments very closely in the US and several of my colleagues have extensive experience and insights from US operations. We know that European content resides well with US player behaviour and are confident that our legacy Yggdrasil portfolio will do well once launched in the US.”

Has Europe made an impact in North America?

Despite the many differences between the two sports betting markets, European companies can, of course, use all their experience to thrive in these foreign lands. But as former US President Theodore Roosevelt once said, nothing worth having comes easy.

While Relax Gaming’s Rønde acknowledges that European companies are slowly starting to flourish in the North American market, she concedes it has been far from easy for suppliers, “particularly those with little to no experience in the market.”

Relax Gaming’s Chief Regulatory Officer explained: “The route to getting games certified in North America can often be long and arduous, particularly in US states. Even then, it’s vitally important that suppliers realise that content popular in markets such as Europe isn’t necessarily going to work in North America.”

She added that most providers are beginning to come to terms with this, and are consequently adapting internal roadmaps accordingly in an attempt to meet the needs of such players.

That sentiment is very much shared by the US team at BetConstruct, which told Gambling Insider: “European firms that are willing to listen and adapt to the market are meeting with a great deal of success. Firms that are doctrinaire and say ‘this is how we do it in Europe, we will train them [North America] to do it our way’ aren’t having so much success.”

The team continued by explaining that any business that wants to survive and grow must adapt and speak the local language, as it were, particularly when it comes to the hugely competitive world of sports betting.

“In our field of sportsbooks and online gaming, there are too many competitors and too many choices for customers,” said BetConstruct. “So providers need to be customer-focused and customer service-driven or they will face certain peril.”

For Kambi’s Bretnitz, European companies have undoubtedly played a “significant” role in the evolution and growth of the regulated US sports betting market. This is thanks to longstanding sports betting heritage, experience and is something particularly evident on the B2B side of things.

Interestingly, however, Bretnitz is of the belief that ‘European firms’ no longer really exist. He used Kambi as an example, saying that the company is now live in over 40 jurisdictions across six continents, with offices in Australia, the Philippines and the US. Moreover, the majority of the group’s revenue now comes from outside of Europe.

For Yggdrasil, European firms are playing a hugely supportive role in this rapidly growing market. Telling Gambling Insider how European suppliers have done in the North American market to date, Krantz said: “I would say very well, and also considering that today more than 50% of the top 25 slot games are built with a pure online focus in mind.”

He continued by notin: “European suppliers, making a difference in the US, are more or less digital natives. I believe this has supported the US online gaming market growth, attracting a new online-focused audience with an appetite for new exciting mechanics and fresh online-focused content.”

Krantz added that there is also an enhanced omnichannel opportunity, one that will "offer and convert land-based content to online and vice versa." Yggdrasil specifically sees this as an opportunity to “capture a wider ecosystem of players to support sustainable content growth and innovation.”

He concluded: “Besides that, there is a continued evolution of technology and tools supporting operators to optimise their omnichannel strategy.”

What does the future hold for North America?

Much of the current focus for European suppliers is on the here and now, with the North American market just getting started. But that is not to say there isn’t one eye on what the future holds for this hugely exciting region.

For Relax Gaming’s Chief Regulatory Officer, the future looks “extremely bright” for European companies in the US. She noted that several European studios that have already entered the market have begun to comprehend all the intricacies and quirks of player preferences in the US.

The market, she added, is “only going to get bigger and better as new states open up,” particularly if such states adopt a similar regulatory model to the one seen in Ontario.

“In the same vein, there will be lawmakers in other Canadian provinces that have watched on admirably at what the AGCO (Alcohol and Gaming Commission of Ontario) has achieved so far and how smooth market entry has proven to be for most. In time they will look to emulate this success so that they can get their own slice of the pie.”

For Kambi's Senior Director of Sales, US, “it isn’t really a case of Europe versus North America when it comes to sports betting.” But he has no doubt that ‘traditional’ European firms will “continue to play an important role in the development of sports betting in North America in collaboration with local expertise and organisations.”

Ontario does, however, differ somewhat according to Bretnitz, primarily because there was already a large grey market in place in the province, one that consisted of operators that had previously focused on Europe, “with a couple of operators commanding a large slice of the market prior to full regulation.”

The BetConstruct US team opted for a perhaps more blunt approach when asked the question of what the future holds, stating that “the strong will survive, the weak will perish; it’s the rule of the jungle.” The team added that “new markets will drive innovation and technology, which will flow around the globe.”

As for the “impressive” Canada, a hugely important aspect of the thriving North American sports betting market, BetConstruct explained that Ontario regulators are among the best in the world and are only getting started.

“Ontario took an approach of ‘let’s work with our providers, provide the appropriate protections and oversights and show the world regulation doesn’t need to be adversarial to be effective.’ Whereas the United States’ commercial, tribal and governmental can be a hodgepodge of regulations, Canada has a more uniform approach, within the individual provinces, and the industry will be better for it.”

One vertical that remains rather behind in the legalisation process in the US, at least when compared to Europe, is online casino. It’s a vertical in which Yggdrasil has a particular interest, but CEO Krantz is not currently preoccupied with how the lack of legalisation will impact the company’s strategy going forward.

As Krantz previously alluded to, the company is just starting out on its US journey, and so needs to ensure it enters with a “high level of trust and confidence that will support our long-term operational ambitions in the US.

“We have very exciting times ahead of us with highly motivated and talented colleagues that cannot wait to make a difference in the US.”

Whether it's online gaming or sportsbook, European firms entering North America will only increase in volume. But it's how they continue to fare in terms of success that remains most intriguing.