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The Way It Is

Preparing for sports betting in the U.S. gaming market

The Way It Is

The opportunities involving sports betting in the United States are massive. If just half the states decide they want to get involved, they are going to require large amounts of technical expertise to accomplish their goals. And the fact remains that the experts in the field are the European companies that have been involved in the operations of sports books for years.

Because sports betting has largely been legal in Europe for decades, these companies have evolved and transformed themselves into the experts. They’ve moved from the betting shops on High Street to the sophisticated paradigms that you find online when those online casinos offer things like in-running betting and wagering on non-sports events like awards and political contests.

So when the U.S. jurisdictions go looking for expertise, they should be looking toward Europe if they want to get an edge over their competition.

But then again, there’s also a barrier to that expertise, and that barrier is regulations. While sports betting in Europe is regulated, it doesn’t rise to the same level that it does in the U.S.

Three U.S. states joined the iGaming community after it was opened up by the Department of Justice memo in late 2011 that said the Wire Act only applied to sports betting and not to other forms of wagering like lotteries and casinos. European companies were also the experts in that field. But only a handful of companies decided to make the U.S. plunge at that time. The biggest complaint was the onerous regulatory schemes in all three states—New Jersey, Nevada and Delaware.

Now let’s remember that iGaming in Europe started with no government oversight. Online casinos opened and the governments were caught flat-footed. Eventually, they woke up to what was going on and tried to enforce a regulatory system, but didn’t do a very good job. Many countries have now come around to U.S.-style gaming regulations, but the horses are already out of the barn.

Some of the small island nations/territories in Europe suddenly became “experts” at regulation—Alderney, the Isle of Man, Gibraltar and Malta were later joined by Caribbean nations supposedly regulating gaming like Antigua, Curacao, Costa Rica and others. Truth be told, they were ineffective and far from transparent. The infamous Absolute Poker scandal was supposedly regulated by one of these countries.

So European iGaming companies got used to lax regulations, and most of them wouldn’t subject themselves to U.S. oversight.

Fast forward to sports betting 2018. If the companies serving the European markets think that sports betting regulation is going to be any different than iGaming regulation, think again. If there are some who believe the federal government will wave a magic wand and permit them to participate with less regulatory oversight… ain’t gonna happen.

So European companies are going to have to make a choice. If the opportunities in the U.S. are lucrative enough that you are willing to endure the regulatory scrutiny, you should go for it. While licensing in the U.S. is typically complete, exhaustive and thorough, it’s also a sign that your company is recognized as one of the best suppliers in the world. To be able to pass U.S. scrutiny gives you the ability to access the markets that could mean success or failure for your company.

Some of the biggest iGaming suppliers made the decision not to participate in the U.S. market. Some of those companies have either disappeared, shrunk to a smaller size or got swallowed up by a larger competitor.

So why are U.S. jurisdictions so tough about licensing? Exactly because of what happened in the Absolute Poker incident. Consumer protection is paramount in the U.S., coupled with the goal of keeping organized crime out of the gaming industry. When the late Governor Brendan Byrne opened up the first casino in Atlantic City, he told organized crime to keep their filthy hands off the city. But he didn’t say filthy; it was a bit more colorful than that.

There is nothing that would destroy the credibility of gaming in the U.S. more than a scandal. Good gaming regulations in the U.S. are designed to be transparent to achieve and maintain the integrity necessary to succeed.

U.S. jurisdictions have spent years honing their regulatory process. Although it is onerous, the process is logical and complete. If there are no irregularities in your background (and even if there are, they can often be overcome), any company wanting to participate in U.S. sports betting should not hesitate to apply for licensure.

Roger Gros is publisher of Global Gaming Business, the industry's leading gaming trade publication, and all its related publications. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its fourth edition. Gros was named "Businessman of the Year" for 1998 by the Greater Atlantic City Chamber of Commerce, and received the Lifetime Achievement Award from the American Gaming Association in 2012.

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