THE INNOVATION GROUP
SPORTS BETTING: THE MAIN COURSE? With more states now legalizing sports wagering, the buzz around it has never been stronger since PASPA was overturned. But The Innovation Group president Michael Soll helps us explore whether sports betting itself is the entrée, or just the appetizer for players cross-sold into other verticals. Indeed, while sports betting is an activity many can partake in, that can be marketed across multiple platforms and be combined with numerous other activities, its margins are undeniably lower than other verticals. In January, New Jersey saw $958.7m in sports betting handle. This translated to $82.6m in revenue – less than 10% win. If a casino, or online sportsbook, has to give back on average over $90 for every $100 it receives in sports bets, is every dollar it receives from other revenues arguably worth more? Online slots and physical table games provide far higher margins, while every $100 spent on food, drinks or attending a show, for example, is money a land-based casino doesn’t have to give back.
HOW IMPORTANT IS CROSS-SELL?
MICHAEL SOLL
Earlier in this issue, our columnists from Dickinson Wright wrote: “Due to the thin margins associated with sports wagering, sportsbooks are offered almost as an amenity to casinos, to draw customers in to play their much more profitable slots and table games.” They provided the context of Nevada casinos offering sports wagering as part of their “resort experience,” while pointing out smaller operators might not survive on sports betting’s thinner margins. Referencing payouts ranging from 4% to 6% annually, the Dickinson Wright lawyers also factored in various other taxes and expenses. It begs the question: With all the excitement surrounding US sports betting right now, is its main benefit simply getting new customers through the door to spend on other things? 58 GAMINGAMERICA
With this in mind, how does sports betting actually fit into a casino’s strategy? The Innovation Group president Michael Soll tells Gaming America that sports betting has become an important amenity within the bricks-and-mortar environment, where it is implemented ahead of online sports wagering in many jurisdictions. He explains: “Outside of Nevada, sports betting came to the market late, just behind online casino wagering, which has emerged over the last decade. When offered online or via mobile devices, sports betting behaves a lot like other forms of online gaming, in the sense that player relationships are less personal and more intertwined in the digital marketing environment. The value of new marketing channels for online gaming had been so compelling that social sites arrived ahead of ‘for money’ play to establish player relationships and build databases. With sports betting, the marketing channels are blown wide open incorporating media companies and – now less controversially in the US – sports leagues, teams and even players themselves. Much of the value of the offering exists outside of the wagering itself. “But live sports betting in casinos differentiates itself from online wagering as it becomes more active and more social.
