ANALYZING THE U.S. iGAMING LANDSCAPE: Perspectives on Regulation, Growth, and Infrastructure Scaling

In this Q&A-style article with Internet Vikings CEO Rickard Vikström, Head of Regulatory Affairs Elena Kvakova, and Chairman of the Board Jesper Kärrbrink, they share their insights on the current state of affairs, regulatory implications, recent developments, growth prospects, and key considerations for scaling hosting infrastructure across different states. Get ready to dive into the world of online gaming, fueled by caffeine and expert knowledge.

Rickard: Elena, let's start with you. Can you tell us more about the current state of iGaming and sports betting in the United States?

Elena: Of course, Rickard, let's get right to it. Online sports betting is currently legal in 33 states, while online casino gaming and online poker is allowed in 6 states. However, from looking at the market it's worth noting that the regulatory landscape differs between online casinos and sportsbooks due to the Wire Act, which applies to sports betting but not online casinos.

Jesper: Now something that really impacts the industry is the Wire Act and its implications. Let's discuss this…

Elena: Ah, the Wire Act! It's a law that keeps organized crime in check and puts a stop to sports betting between different states. In simpler terms, states can make their own rules about sports betting within their borders, but they can't cross state lines to place bets.

Jesper: …and what are the recent developments in terms of state regulation?

Elena: In 2023 so far, the states that passed online sports betting laws are: North Carolina, Vermont, and Kentucky. As for the rest of 2023, there will be no other states that legalize online sports betting or iGaming as the legislative season has ended. California was a great disappointment at the end of 2022; we look forward to seeing what might change in the next few years.

Jesper: How are the regulations different across states in the U.S.?

Elena: Since online gambling is still pretty new in the U.S., states are playing it safe and taking a cautious approach when it comes to laying down the rules. They want to make sure they implement regulations responsibly. So, what usually happens is that sports betting takes the spotlight first. It's kind of like the starting point for many states because it's a bit more familiar and easier to get off the ground. States often keep an eye on their neighbors and learn from their regulations, which leads to groups of states with similar laws. But each state also takes its unique circumstances into account and customizes its regulations accordingly. That's why you might notice some differences between states when it comes to the regulations in place.

Jesper: Now considering all the figures and data, let's look deeper at the growth overview...

Elena: Sure! As per the American Gaming Associations' report, the commercial gaming industry generated over $16 billion in revenue in the Q2 of 2023, marking the 10th consecutive quarter of growth and development. In comparison to the numbers in 2022, iGaming is up 22.5% and sports betting a major 58.5%. Q2 of 2023 was the second-highest grossing quarter in the history of the commercial gaming industry, trailing only Q1 of 2023.

Elena: But how does the current economic climate affect the gaming industry?

Jesper: Well, despite all the ups and downs, the industry has a pretty solid fan base. Even when things like inflation and high gas prices are causing a bit of a headache, people still want to be entertained and both online and offline casino games and sports bets offer great options for that. Historically, the gaming industry has shown itself to be resilient during tough economic times, making the U.S. market desirable for European and global businesses to expand there.

Rickard: Now speaking of regulators, much debate can be held on their level of support, or lack of… Jesper, what do you think, how do regulators support the growth of the gambling industry?

Jesper: Regulators have got the gambling industry's back. They are all about that supportive attitude when it comes to growth. They are not just sitting back and watching. They actively recognize and seize opportunities to help the industry thrive. Let me tell you, their support plays a big role in painting a bright picture for the future.

Elena: Absolutely Jesper! I would like to add from my personal experience with Internet Vikings and trying new things, the regulators are open to hearing innovative ideas and implementing them safely. I have had positive experiences with expansions so far.

Elena: But, moving on to a prominent topic, what security measures should online gambling and sports betting providers prioritize?

Rickard: Ah, security, the name of the game! It's highly recommended to be ISO 27001 certified or have a SOC 2 report. These certifications show that you've got a tight grip on information security. Most gaming regulations in the United States and Europe are all about that ISO standard. So, having those certifications becomes a fundamental requirement for companies of all sizes in the industry. It's like a stamp of approval that says, "Hey, we've got our security game on point." So, if you want to be a player in this game, prioritizing those security measures is key.

Elena: How does scalability impact the iGaming industry?

Rickard: When planning for scalability, iGaming providers must consider factors such as hosting and compute power. Instead of investing significant upfront capital in buying and maintaining servers, many providers now offer flexible hosting solutions that allow clients to provision resources as needed. This shift toward on-demand compute power aligns with modern trends and ensures cost efficiency for both providers and customers.

Jesper: So, on that note, let's talk business. How do iGaming providers juggle resource allocation and cost efficiency?

Rickard: They put a lot of effort into understanding customer demand and aligning their services accordingly. It's like a dance between supply and demand. They keep a close eye on what players want and adjust their infrastructure capacity to match. No point in having excess resources just sitting around, right? By continuously evaluating demand, providers can fine-tune their resource allocation, avoiding any unnecessary wastage. It's all about being smart with planning and efficient with resource management. So, it's a win-win situation for both the providers and their clients.

Jesper: Now if we are talking about market specific Rickard, let's discuss the difference in scaling up…

Rickard: Yes, scaling up hosting infrastructure can vary depending on the state in which you are operating.

For example, New Jersey, Michigan, Pennsylvania, and West Virgina: When working with a cloud provider, scaling up infrastructure within the same state is generally straightforward. However, depending on the extent of the scale-up, you may need to submit a new architecture diagram to regulatory bodies to outline the changes you're making.

Whereas in the states of Connecticut, Indiana, Illinois, and Ohio, scaling hosting infrastructure is faster and requires less paperwork.

____________________________

While online sports betting is legal in a number of states, the path to legalization for online casino gaming and poker is more limited. The industry's growth prospects remain promising, with additional states expected to regulate online sports betting and iGaming in the future. Understanding the nuances of state regulations and compliance requirements is critical for successful operations in different states. With careful planning and efficient resource management, online casino and sports betting providers can achieve a cost-effective and scalable business model while providing an enjoyable and secure experience for their customers.

So, whether you're sipping your coffee at your local cafe or flicking through this article from the comfort of your home, we hope this Q&A has enlightened you on the intricacies of the U.S. iGaming and sports betting market.

____________________

internetvikings.com

Internet Vikings is a leading provider of first-to-market licensed in-state hosting for the sports betting and iGaming sector in the U.S., serving solutions in 23 states. The company, founded in 2008, offers dedicated servers, co-location, and cloud hosting with a premium status proven by its ISO 27001 certification and intensive DDoS protection.