In the emerging industry that is sports betting and iGaming, the landscape in the United States and Canada has transformed dramatically in a relatively short period of time. A massive shift in the regulatory environment culminated in the repeal of the Professional and Amateur Sports Protection Act of 1992 (PASPA) in 2018.
Over the past few years there has been a vigorous battle among operators to obtain market access, acquire customers, and secure market share. As new markets and addressable customers begin to plateau, operators will need to shift their focus. In this blog we explore the role that key trends in customer experience, product innovation, and business growth have in shaping the industry’s future.
Evolution of the Customer Experience
The journey for sports betting and iGaming was kickstarted by legalization and has been catapulted by technology. This shift will continue to have a profound effect on the customer experience, with regulation and legitimacy aiding in positioning the industry as a secure form of entertainment.
Mobile-First
A mobile-first approach is a notable trend as the convenience of placing bets or playing casino games on mobile devices has become a cornerstone of the customer experience. In most United States markets, more than 70% of sports betting wagers are placed online. The proliferation of mobile devices and the availability of high-speed internet provide customers with seamless access to betting platforms. Operators’ biggest challenge will continue to be delivering customer experience at scale due to app store requirements, varying regulatory requirements across jurisdictions and lack of proprietary technology.
Personalization
According to a study, 71% of consumers expect companies across all industries to deliver personalized interactions via their digital platforms. Furthermore, 76% of consumers get frustrated when personalized interactions do not occur. The study observed that fast growth companies derive 40% more of their revenue from personalization as compared to slow growth companies.
People may not necessarily associate real money gaming with technology. However, this industry is one of the fastest growing in the tech sector. Just like other technology businesses, personalization will be an essential part of the customer experience. Online sportsbooks and iGaming platforms are increasingly using data-driven approaches to enhance the customer experience. Artificial intelligence (AI) and machine learning (ML) are being leveraged for operators to better understand their customers and offer personalized recommendations, tailored promotions, customer support, and content based on user preferences and customer behavior.
Advanced levels of personalization, like highlighting the bets of customers favorite teams, or tailored parlays based upon a customer’s betting history are expected by customers. Operators that embrace personalization will be poised to outperform in key business metrics such as customer engagement, retention, and lifetime value. Personalization should be viewed as an investment that contributes to the bottom line by providing an elevated customer experience.
Social Gaming
The integration of social elements into online sports betting and iGaming has added an additional layer of engagement. Platforms are continuously incorporating social features, allowing users to share their bets, achievements, and interact with fellow bettors. This sense of community bolsters awareness, fosters loyalty, and engages customers by providing more than just a betting platform, but an immersive entertainment experience.
Social betting apps have begun to gain traction in the United States. Although these apps don’t offer real money gaming, they have a surging number of daily active users. One key differentiating factor is that these apps are not restricted to a given jurisdiction and thus allow customers everywhere to get in on the action. This trend reaffirms the thesis that gaming customers crave social interaction as a key component of digital entertainment.
Ease of Use
Simplification of the betting user interface is needed to truly evolve the customer experience. Currently, bettors are expected to possess a considerable amount of sports and gaming knowledge in order to execute a sports betting wager or play casino games online. In the future, operators will need to provide a simple betting platform that is easy for users to navigate like other high volume usage apps such as Instagram, TikTok, or even Google search. Generative AI and the use of Large Language Models in other high-traffic online platforms will evolve user expectations on the way they interact with technology using their natural language and easy prompting. Gaming operators have the opportunity to be leaders in digital interaction.
In summary, regulatory changes, mobile accessibility, personalization, sociability, and innovative offerings will play vital roles in shaping the industry’s customer experience. It is a given that as technology in this sector continues to advance so will customer expectations. The future offers even more exciting developments in this dynamic and rapidly growing sector. The journey of online sports betting and iGaming is just beginning, and the customer will be at the center of this ever-evolving industry.
Innovation Over Iteration
We are undoubtedly in the early stages of product evolution for online sports betting and iGaming platforms. As new technologies emerge, operators will be able to provide a diverse range of entertainment offerings for customers rather than small digital iterations of traditional betting products.
In-Game
The emergence of live betting and in-game experiences have begun to captivate customers in the United States and Canada. Although still trailing Europe where it is estimated that 80% of sports wagers are placed in-game, there are advantages native to the United States and Canada markets. The popular sports like The National Football League (NFL) and Major League Baseball (MLB) are ideally suited to in-game betting due to their pace of play, timeouts and commercial breaks. Also, sports on that side of the Atlantic Ocean are more statistically driven compared to Europe providing a broader range of betting options for customers.
Technology advancements in real-time data streaming are proven and in place across several industries and use-cases; technological enhancements to reduce video latency will enable customers to combine live streaming of sporting events with real-time betting options driven by operators’ capabilities in real-time analytics. Second screen, cross-platform and ultimately single platform integration will offer an immersive and richly entertaining experience. Customers will be able to wager on various outcomes as the game progresses, providing a level of engagement that was previously unattainable.
Betting Exchanges
Another innovation that may gain traction in the industry is the establishment of sports betting marketplaces to facilitate peer-to-peer wagers. It is abundantly clear that sports betting customers crave personalized experiences. Sports betting marketplaces would allow customers to create their own wagers with operators likely receiving transaction fees. Customers may be attracted to the ability to curate a unique experience with control over types of wagers, potentially lower fees than traditional sportsbook model, and social aspect of betting against another individual as opposed to a sportsbook operator. For operators, marketplaces would alleviate the burden of establishing odds and subsequent risk management associated with running a sportsbook.
Responsible Gaming
Transparency and fairness are crucial aspects of customer trust in the industry. As a result, blockchain technology is gaining traction for its potential to ensure transparent and tamper-proof transactions. Customers are increasingly inclined to trust platforms that use blockchain to record bets and payouts, knowing that the results are verifiable and free from manipulation. Artificial intelligence and machine learning are prime innovative technologies to execute responsible gaming initiatives. Operators are investing in AI and ML tools and features that monitor customer activity, set limits, and provide virtual assistance if needed in real time. These innovations reflect a commitment to customer well-being and have a net positive impact on individual brands as well as the industry collectively.
Operators will need to stay at the forefront of technological innovation to remain competitive in such a crowded industry space. Innovations like augmented reality (AR) and virtual reality (VR) are being leveraged to provide bettors with immersive virtual environments, enhancing the thrill of betting on their favorite sports or casino games. Immersive experiences are vital for not only customer acquisition but customer retention as well.
The Growth Journey
As the sports betting and iGaming industry continues to gain momentum operators will need to embark on the quest for sustainable growth strategies. Collaboration, consolidation, and expansion can be powerful catalysts for business growth.
Partnerships
Product differentiation is a key element enabling operators to stand out from the crowd. Unlike other industries, sports betting and iGaming customers do not exhibit strong loyalty to specific operators. Thus far, promotions and free play have been the primary drivers of customer acquisition. Going forward operators will explore leveraging strategic partnerships with content providers with known branding and loyal customers to develop exclusive and differentiated product offerings to drive customer retention.
Merger and Acquisitions
As the sports betting and iGaming industry continues to mature, mergers and acquisitions will offer strategic advantages. The access to capital and liquidity will play a pivotal role in industry consolidations with those lacking sustainable business models emerging as targets to be acquired. Operators will be well served to keep an eye on potential acquisitions that align with their growth goals, such as acquiring technology firms, other operators, media companies, or innovative startups.
iGaming Expansion
While sports betting has surged with 35+ jurisdictions in the United States and all ten provinces in Canada, iGaming has been very slow to expand. Currently, there are only six US states (Connecticut, Delaware, Michigan, Pennsylvania, New Jersey, and West Virgina) and Ontario as the lone province in Canada.
Online casino games were around many years ago but came into prominence during COVID lockdowns which forced land-based casinos to close for several months in many cases. COVID lockdowns became the perfect use case for iGaming platforms and have steadily gained momentum as the casino industry recovers from the pandemic.
The iGaming market has proven its immense potential, taking in hefty gaming revenues for operators and generating substantial tax dollars albeit in only seven markets across the United States and Canada. Rhode Island became the seventh US state to legalize iGaming and is expected to go live in the first half of 2024. Otherwise, there are no meaningful legislative measures in the pipeline to legalize additional markets for the foreseeable future. This can be attributed to two key factors:
- There is a fear amongst land-based operators that online casino gaming will cannibalize their business, driving coordinated funding and efforts against new legislation, and
- There are concerns regarding adequate responsible gaming integration into iGaming platforms.
The total addressable market for iGaming is projected to be nearly $30 billion by 2025, according to a leading gaming supplier. It is highly likely that once additional markets open, operators in the United States and Canada will begin to position themselves as iGaming first and sports betting second.
How Lovelytics Can Help
Lovelytics provides a wide array of professional services with a talented team who can assist gaming industry companies assess and act on the emerging trends discussed in this post—as well as many others. We help our clients strategically navigate their data and analytics journey, design modern data environments, enable usage of predictive analytics, and transform data into actionable insights. We are helping the world’s leading gaming companies utilize data and AI to improve their customer experience, automate business reporting, integrate responsible gaming mechanisms, and accelerate time to value from digital investments.
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