Igaming Focus: 2021 review — Sports betting and startups to continue on their paths, crypto to make its entry By Jake Pollard, CDC Gaming Reports December 21, 2021 at 10:00 am Sports betting is set to continue on its upward trajectory next year, as are igaming startups. And look out for crypto’s grand entrance on the OSB scene in 2022. The wave of regulation that saw sports betting bills adopted across many states in 2020 has provided the regulatory impetus that has enabled U.S. operators to push on in 2021. In the process, the industry has achieved a level of exposure that would have been unimaginable when PASPA was repealed just three years ago. It’s a line that is made repeatedly, because it is as accurate as the transformation has been quick and unexpected. The fact that all the major sports leagues and gambling brands such as MGM, Caesars, Las Vegas Sands and tribal interests have accepted online betting and gaming and have already launched substantive online operations, or are preparing to, is a major change from the stance they (or some of them at least) held just a few years ago. When it comes to igaming investment, financing, startups and the public markets, the amount of activity has also been huge. To a large extent that is what prompted Scott Longley and myself to launch the Wagers.com Earnings +More newsletter, and we feel the decision has been vindicated by the events, newsflow and interest the content has generated during the past nine months. The level of activity and scale of the groups already involved — think FanDuel, Penn National Gaming or DraftKings — was already substantial. To those names can now be added companies like Disney, Fanatics or the crypto exchange giant FTX as they look for opportunities to enter the space. Sports betting high Of the two key online gambling verticals, online sports betting (OSB) has taken the limelight and this is not surprising. Sports betting generates huge amounts of content that is entertaining and full of drama. The vertical is more acceptable socially, and, with the exception of major tribal interests in Florida or California, its regulation has not been opposed too vehemently by the different industry stakeholders across U.S. jurisdictions. It has also been performing very strongly. Witness New Jersey’s November figures showing gross gaming revenues up more than 127% year-on-year and up 36.4% on a monthly basis to $114.8m, the first state to break the $100m GGR barrier, while handle of $1.28bn meant that it broke the $1bn handle barrier for the second month running. Those results came thanks to very strong margins of 9.1% compared with 5.4% in October. And for the first time sports betting GGR nearly matched that of online casino ($118m). Of the other major states that have regulated sports betting: Illinois recorded $840m in handle and GGR of $48.3m, Michigan hit record handle and GGR of $500m and $58.8m, and Ohio, the seventh most populated state in the country, also brought more festive cheer as it legalized online and retail sport betting and joined New York as one of the top 10 states to regulate the vertical. As ever, some caveats apply to these positive developments, notably: the path to profitability for all sports betting operators, from the largest to the smallest, is far from certain, online casino is much more profitable, but regulated in just five states, and there is no guarantee that it will be regulated in a large number of U.S. jurisdictions in the next few years. Startups line up The startup scene has also been a hive of activity in 2021 and, as the Vivid Seats-Betcha acquisition has shown, more startup M&A is highly likely. Among those firms are AI content creator Narrativa, betting gamification specialist Rush Sports and ratings agency SharpRank. Narrativa president Jennifer Bittinger says competition for players is so fierce currently that “the need to attract and engage new players is acute” and, in a line that might send a few shivers down some journalists’ spines, Narrativa’s AI-powered sports betting content enables operators to benefit from content “at a fraction of the time and cost it would take a human to produce”. To be fair, Narrativa’s content applies to specific types of operator content and its mission, says Bittinger, is to lower “acquisition costs, increase retention, and foster reactivation to improve lifetime values”. In my previous column, I (somewhat) bemoaned the fact that U.S. sports betting was heading towards an oversimplified, binary form of live micro-bets and mentioned Rush Sports CEO Tomash Devenishek’s comments on the ‘Tik-Tok-ification of sports betting’. However, Devenishek says that in order to attract casual players, the stated aim of all the major brands, betting should be enjoyed and not be about problem-solving. “Having hundreds of lines and things to bet on isn’t actually good for a casual audience,” he says. He also pointed out that those simple bets are the ones many U.S. sports fans want, “because they have grown up using Instagram and Tik-Tok as their sources of entertainment and the only skill required there is to scroll up”. SharpRank describes itself as the ratings agency for sports personalities and algorithms, and CEO Chris Adams says he wants his company to be “the standard for transparency and eventually enable sports betting to become an asset class”. In the U.S., the convergence of “media and sports betting is a major differentiator” when compared to more mature markets in Europe. Adams says SharpRank is “a critical tool in bringing transparency to the huge amount of content and media that covers U.S. sports betting”. Crypto entry into OSB And finally, cryptocurrency exchange giant FTX may not have succeeded in acquiring New Jersey-licensed sportsbook PlayUp, but as those firms splash the cash with sports sponsorships and crypto partnerships, it’s only a matter of time before either FTX, Crypto.com or Coinbase make their entry onto the B2C betting scene with a sportsbook buyout in the next 12 months. Wishing all CDC Igaming Focus readers happy holidays — see you in 2022!