As the US begins to develop its own sportsbetting regulations, it is worth taking a look across the pond at one of the most developed and secure betting markets.
The European sports-betting experience, in particular that of the UK, provides an instructive model that has led the way in developing betting styles and platforms since the industry’s inception.
Unlike the overwhelmingly illegal market in the US, resulting from decades of restrictive legislation, sports betting has been widely accepted, available, and regulated in the UK.
“Understanding the social engagement within US sports will be a steep hill for foreign competitors to climb. For example, how well do European operators understand March Madness?”
Reports suggest that 99% of the British sports-betting market is currently legal, with less than 1% of wagers placed via operators still lurking in the shadows.
With the US sports-betting market opening up, many European operators are eager to bring their expertise and strong product offerings to the newly accessible North American market.
However, the European market differs in a number of ways from that of the US. There are differences in betting culture, event focus, legality and public interest. This suggests that the European model will not be a perfect fit Stateside, though structural elements can be leveraged; those who are mindful of these differences stand the greatest chance of success.
A question of culture
Gambling is part of sports culture in Europe, where retail bookmaking shops on city streets are commonplace. For instance, Britain’s 65 million bettors placed nearly $20bn in bets for the year ended March 31 2017, according to a report from the country’s regulator, the Gambling Commission. Around 56% of total bet amounts wagered for that year were generated online.
Almost every Premier League soccer team has an official betting partner, which in some cases is a multimilliondollar relationship that includes betting booths inside the stadium and dedicated websites. Allowing viewers to gamble from their mobile devices provides tens of thousands of bettors the opportunity to place wagers in real time while watching a game live.
The US, however, is an altogether different ecosystem and a far more diverse sports market, with five major professional sports leagues (NFL, NBA, MLB, NHL and MLS), not including the tremendous – and largely untapped – college sports market. The European contingencies do not have the same domain depth in these sports as they do when it comes to soccer, cricket and tennis. Additionally, understanding the social engagement within these sports will be a very steep hill for foreign competitors to climb. For example, how well do European operators really understand March Madness, team rivalries and the host of other factors that will drive wagering in the US?
A common sports-betting language, which will require an adjustment by the European operators, can reduce barriers for entry but other differences arise, including the different types of sports bets (teasers, pleasers, if-bets), wagering terminology, game-rule differences, specific sports focus (football, basketball, baseball, hockey vs soccer), and political – combined with regulatory – factors.
Most of the US public is not educated on how sports betting works and, more specifically, the types of bets that can be placed; spread, money line, parlays and props. It would also be foolish to ignore the immensely popular illegal market. Foreign entrants must devise a strategy to channel those bettors to legal platforms.
Legislating for success
With each state likely to develop its own sports-betting legislation, and with stiff resistance to a federal framework, the regulatory landscape in the US will likely be massively fragmented. Such a varying, convoluted compliance system will require agile frameworks, platforms and extensions to work efficiently while adhering to the various laws of each state.
It will be a challenge for Europeans to fully understand US culture as well as local operators do. This is a key factor in the surge in M&A activity and strategic partnerships struck recently. US casinos and gambling operators have established business infrastructures and relationships with both local regulators and politicians that European operators would struggle to develop in the short term. It makes sense to consolidate efforts rather than start from scratch – even for global betting companies that have successfully operated for years in Europe.
Calling the odds
Another major difference is in the mechanics of betting and how odds and payouts are calculated. The European style of sports betting is known as point spread betting; the spread number is different than the fixed odds or line number we usually use in the US, where one fixed number is used for the favorite or underdog.
The spread consists of two numbers, usually one number below and the other above the fixed number. The payout in points betting is based on the accuracy of the wager – the closer to being right will increase your winnings and the further from your bet will yield larger losses.
The risk/reward outcome is in multiples of your bet amount or stake (spread-bet term). Profit or loss is determined by the difference between the final score and the spread you took (buy or sell), multiplied by your money stake or bet amount.
Additionally, European betting odds are posted in decimal points rather than fractional odds (4.0 vs 3/1 or +300). Confusing, right? Needless to say, significant software upgrades will be required to convert odds to a format the US betting public will can comprehend.
Looking into the future
The influence of the European model in the US will depend on technological enhancements and the attitude of legislators, as well as how well European operators adjust to the US betting public.
More conservative states may restrict sports betting to casinos and horse racing tracks; others may allow lottery locations to accept sports bets and some will have betting kiosks at sports bars, gas stations and liquor stores. The ability to accommodate the demands of mobile and in-play betting, as well as the means to aggregate industry data feeds for popular US sports, will be central to any player who wants to fully monetize sportsbetting opportunities.
Operators will need sophisticated machine learning and AI capabilities in the race to offer competitive odds to players without sacrificing margins. Customer journey takes center stage in almost any user-facing industry these days and sports betting will not be an exception.
Bookmakers that offer personalization and customizable betting options will gain a significant competitive edge. We can see this happening in Europe, where they offer wagers on more than the outcomes of games. Some UK sportsbooks even let gamblers design their own bets on a single aspect of a game outside of the outcome, and give them personalized odds.
International sportsbooks already offer amendable bets that allow bettors to double down, cash out or reduce bets in real time in the face of new information during the game (based on adjusted odds). Flexibility and personalization appeals to bettors, and operators are looking to offer tailor-made options across their platforms as differentiators.
Peer-to-peer betting exchange is another product popular across the pond, and one that’s bound to gain momentum in the US. Exchange betting, as opposed to a traditional sportsbook model, is a betting marketplace where customers wager against each other rather than trying to beat odds set by the house. Exchanges offer some of the best odds around but require that your bet is matched by another customer for the wager to have action. This is an exciting method, familiar to the daily fantasy-sports market.
This type of betting is currently minimal in the US, though Microsoft, Sony, Reuters and others have filed patents to participate in the market, according to ESPN. Betfair, one of the largest online-betting exchanges, began operating a horse racing exchange-betting platform in New Jersey in 2017 after legal struggles.
European operators have a fight on their hands. With fewer cultural similarities than they are used to entering a new market closer to home and a fragmented regulatory framework, the US market is complex. But those that can leverage local partnerships to complement know-how gained from decades of activity across the pond will be best-placed to succeed.