It is no exaggeration to say our lives would not be the same without the advancements in payments technology that have occurred in recent years. Be it the convenience of cashless or contactless payments when purchasing your morning coffee, or splitting the bill with a friend after a good meal, the changes that payment technology companies have brought into everyday life alter the way we live. This fact is no more pertinent than in our industry. Advancements in payments technology allow for quicker, safer and more reliable betting and gaming. Curiously, an industry that has seemingly grown concurrently with the world of payments is the nascent, but undeniably booming, sports betting market in the US. These developments have arguably allowed for online sports betting to dominate the US gaming market in recent years, and at Gaming America we have become increasingly intrigued by the budding relationship between sportsbooks and payment brands, leading us to seek out some of the best-informed voices in the industry to talk us through this connection.
On our minds were some key questions regarding this relationship: Do payments companies take a different approach to sports betting transactions compared to online casino? Are sports bettors involved in more transactions than other users? And perhaps most importantly, is sports betting more profitable for payments companies when compared to other gaming segments? We brought these questions to Mandi Hart, Chief Client Solutions Officer at Sightline Payments and Christopher Justice, President of Global Payments Gaming Solutions and member of the American Gaming Association Board of Directors. What we found out both highlights the growing importance of sports betting to payments companies, while simultaneously reinforcing the key role more traditional forms of gaming play in sustaining our industry.
“Whether sports betting or online casino, the individual customer's expectations are paramount,” Hart noted on the different approaches patrons take to gaming. “Sports bettors may be more cyclical and seasonal in their wagering. Online casino players are usually more consistent with their wagering since they can play an online slot on a regular basis.
“That said, the fundamentals of payments processing are the same for all types of gaming. Consumers are not typically wondering about their payment technology when checking out on Amazon, buying groceries with mobile wallets or paying for their Uber. They simply expect it to work with the tap of a button. It’s all about moving money securely and conveniently.”
In regards to the same question on a company’s approach to sports betting customers, Justice concurred, highlighting the importance of both sets of users: “Online casinos and online sports betting are just a few of the emerging ways the gaming experience is being extended online. Global Payments Gaming Solutions is helping our partners capitalize on these opportunites by offering solutions to help simplify the funding process for both online casinos and online sports betting.”
With the ever-growing influence of sports betting on the US gaming market, we wanted to know just how many transactions sports bettors make compared to their peers.
Hart says: “With the expansion of legal sports betting across the US, fans in over half the country can legally bet on their favorite team, integrating sports betting into the fan experience like never before. Sports bettors typically have less frequency in their transactions, but the transaction values may be higher. The transaction volume follows the seasonality and inflection points of a sports league. For example, the lion’s share of wagers on professional football in the US is in the fall and winter, culminating in the Super Bowl, which is perhaps the most heavily bet-on event in the entire marketplace.
“Online casino customers, on the other hand, can interact with iGaming much like they do within brick-and-mortar environments. Each played game requires a new deposit. Online poker, however, may be the outlier among online casino games since the typical player transaction more closely resembles that of sports betting than online slots or table games.”
Interestingly, Global Payments has found different results, claiming: “Online sports betting and online casinos are both booming market segments. Recently, sports bettors have been involved in more transactions, especially as more states legalize sports betting. According to Forbes, if betting becomes legalized in all 50 states, estimated revenue will exceed $19bn a year.”
What do these contrasting views tell us about the relationship between sports betting and payments companies? Perhaps most importantly that these are two industries growing together, and it is too early to concretely place sports betting at the top of gaming’s payments pedestal. Concurrently, this intriguing difference of opinion could reflect that, as gaming continues growing, payments companies will find their own niches, niches that will be reflected in differing approaches and financial data.
Important for all brands is of course, revenue. So, does sports betting, as we are increasingly seeing for operators, account for higher income than other segments for payments companies? Justice seems to think so.
“While sports betting is more profitable for payments companies at this moment in time, it is vital for operators to pursue both market segments," he says.
Sightline Payments took a different approach to our final question. Revenue is important, Hart argues, but customer retention and omnichannel exposure are king.
“Volume of transactions is a key metric for assessing customer value, and online casino customers are typically processing higher quantities of transactions than sports bettors are. However, the real driver of customer value is the ability to connect an operator’s omnichannel ecosystem together.
“If a patron uses the operator’s mobile sportsbook, that patron can be exposed to an integrated network that includes loyalty and rewards for on-property use. The operator’s online slots app can similarly build this same loyalty into the customer’s experience and incentivize a customer to head to the brick-and-mortar location, to play the same slots in person.
“Capturing more transactions on and off property allows operators the chance to personalize loyalty programs. Seamless omnichannel payments strategies are the key to creating a loyal customer base that will visit the operator’s property and gamble online.”
When beginning research for this piece we felt we would find sports betting’s growing dominance had already imposed itself on the payments world. Yet, it would seem the answer is far more complex than that. Payments companies such as Sightline Payments and Global Payments Solutions are undoubtedly embracing the segment; however, they clearly value more traditional gaming segments and in some cases believe these activities can bring more loyal and long-term customers than the occasional bet on this weekend’s game. Other factors are undoubtedly central, such as betting volume and customer retention, but what stands out is the importance of omnichannel exposure. If a company can expose players to its omnichannel solution, the rest will follow – be it via sports betting, iGaming or land-based payments.
The budding relationship between payments companies and sports betting as a segment is just that then, budding, growing and in its early stages. Sports betting is not yet predominant enough to be these organizations’ biggest revenue maker, and the behavior of sports bettors is, due to its seasonality, too irregular to be the focus all year round. That does not mean sports betting will not play a central role in the success of payment companies in the future, or that it is not important to them now. But it does highlight that, as with much of the US gaming market, there is tremendous room to grow.
