May 14, 2021 Online, Interview

Taking Aim

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Elena Kvakova, head of US market at hosting service Internet Vikings, speaks with Peter Lynch about the intricacies of the American market and the need to adopt a strategy that aligns with a state-by-state approach.

What are the key points to consider when looking to enter the US market, or is even looking at it as one market incorrect?

I’d say US market can be regarded as one when we talk about its complexity, or federal gambling laws. However, when it comes to entering it as an operator, it must be considered on a state-by-state basis because there are so many things to consider.

When looking to enter these regional markets, operators must consider overall revenue in the market; what the trends are in terms of player spend; what competitors already exist, and what prospects are there in the market going forward.

Just due to how the US is as a country, there is a lot of power at state level, and in pure operational terms, that means that each must be approached individually and assessed as a potential growth market.

 

As seen in Michigan, players are quick to use online gaming. Why do you think this is?

I think this happened in Michigan for two reasons. First, a world-class gaming service that is legal is a very attractive prospect for both players who engaged with a grey market, and also those that were hesitant before. It means that players don’t have to worry about the legitimacy of sites and operators.

Second, I think that the events of the last year have also sped things up. In-person gambling was made unavailable for many players, and also the course of the year has made us all a lot more comfortable with technology as a whole. That said, there have been great results, not just in Michigan, but also in new markets like West Virginia and Indiana.

 

Do you think all states will eventually go fully online with multiple operators?

I think that the state-by-state approach is going to be there for at least the next three to five years. In terms of how some states approach to how to adopt gambling, I think that overall there will always be some hesitancy toward new things – it is just human nature to cautious. But I do think that the success of neighboring states, as well as time proving the idea will bring more states on board and will make it a more collective place. The progress is inevitable; it's just a matter of time.

 

The heavy regulation state by state can be seen as an obstacle. But is this a sensible move?

It sure is harder than not state-by-state approach for businesses, but it exists because of how the United States is, as a country. They decide on lot of big issues on a state level - like cannabis, gun controls and so on.

But the ways they are doing it in individual states are good and sustainable for the long term. Companies undergo vigorous background checks, and there are compliance standards and responsible gambling mechanisms in place from the very start.

And what we have seen so far as it’s become a huge market is that it proves it can be prosperous and competitive even in regulated setting.  I don't think it's going to change in the next few years, even though many states like NJ and NH are leading that battle. What I do think might happen sooner is states will start to partner, and allow interstate gambling, but it’ll probably be a handful of states at best.

 

Ultimately, do you feel the amount of regulation in place at present will set the market on sure footing for future success?

There is certainly a lot to consider when looking to enter the US market, and a lot that is different between regions and this can be time consuming. That said, what is being done now is that a lot of rigorous background checks are commonplace, technical standards are being set, and also there's a great deal of responsible gambling mechanisms put in place, so I would that the market is doing things in the right way, and that they are doing it in a very safe way.

Hopefully with these in place there is room to grow going forward. This is what government in states like New Jersey and Pennsylvania are doing. Even though they have the most advanced legislation in terms of their application and regulation processes, they are seeing that the numbers are huge, and that it is still a very prosperous industry even when abiding by these regulations.

 

Is experience in European gaming markets helping operators enter US markets?

Absolutely. A lot of big name companies are hiring talent with European gambling background because where the US is right now is where Europe was five years ago. And even though, of course, the US market has its peculiarities, input from European firms can be invaluable in terms of experience and best practices. We have already seen how consumers respond to certain products like in-play, how markets progress, and also we have the experience of what are the best ways to go about it.

 

The regulatory requirements can be complex, and differ from state to state, is this where experts like Internet Vikings come into play?

While we are not a law firm, we have months of in depth US gambling research under our belt, and a lot of it comes from our conversations with partners and good friends in the industry.

Because the industry is new, a lot of this information and insight has had to be collected from hundreds of sources. And to be honest, where we are now is very different from where we imagined we would be six months ago.

What we want to do now is help others and share this expertise. It will be really helpful for the individual companies but also market as a whole in terms of competition and quality of the product.

 

You mentioned that the company is looking to provide license hosting in the near future. What was behind this decision?

Hosting has always being our strong suit and main product, and when we started looking into the US, it's what we wanted to do. As we were learning the ins and outs of gambling hosting regulation and market, we noticed a few things that could be done better. And to us, a Swedish company, nimbleness and customer focus is in the forefront of everything we do. And it is what we are trying to do to the key states right now: set up a secure, reliable, cost effective, fully-formed hosting solution so that the new providers that are coming to the US market could focus on other things. It will greatly benefit the market and we can’t wait to go live.

 

Do you think the US market will match or overtake Europe? Is it purely to do with population, or is there a particular urge
from players for it?

Honestly, I think yes it will. It's just a matter of time. We are seeing such a huge appetite, and that’s why it is the hottest market right now, everyone wants to be an early bird here. It may take three to five years, but I certainly believe it'll surpass the European market.

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