PARTNERSHIPS, TRENDS, AND EXPANSION INSIGHTS for B2B Platform Providers

The U.S. market continues to bring exciting prospects and tough decisions for operators and platform providers. It is therefore advantageous to understand the strategic choices behind platform ownership and uncover the perks of partnering with established providers.

Let’s take a closer look at the market landscape, the ever-evolving regulatory framework, and the money-making potential of the sector. Plus, we'll share our key tips for platform providers entering the scene and address some FAQs from industry insiders.

Platform Ownership: A Strategic Choice

There has been an ongoing debate among operators regarding whether they should develop their own platforms or rely on existing ones. While some argue in favor of building proprietary platforms, others have found success by leveraging established solutions. For instance, a certain company acted as the central platform, which was then enhanced by tailor-made developments. This hybrid approach has proven effective for many operators.

Drawing an analogy to the gold rush era, where selling shovels proved more profitable than digging for gold, the current market landscape offers a similar dynamic. Numerous platform providers are thriving due to their ability to deliver quality products and services. Considering the complexities and challenges of entering the United States market, operators, especially those new to the scene, find it advantageous to partner with established platform providers rather than investing heavily in developing their own platforms from scratch.

Capitalizing on the U.S. Market Craze

For operators entering the market, there are a multitude of considerations ranging from obtaining licenses to understanding market trends. By partnering with reputable platform providers, operators can benefit from their expertise, established infrastructure, and compliance capabilities, allowing them to focus on other critical aspects of their business.

Oligopoly or Competition?

An intriguing aspect of the iGaming market is the ongoing discussion surrounding its structure. Will it become an oligopoly dominated by a handful of major players, or will competition flourish, akin to the European market? While the "big five" players are expected to secure a significant portion of the market, there is also room for more agile and niche operators to carve out their own spaces. State-by-state market entry strategies, similar to those adopted in Europe, can be viable options for smaller operators looking to differentiate themselves and cater to specific regional preferences.

The extent and nature of regulations can affect the entry barriers for smaller operators and impact the market landscape. Stringent regulatory measures may favor larger operators with greater resources and compliance capabilities. Conversely, overregulation may lead to market consolidation, diminishing the diversity of operators. Balancing regulatory requirements while fostering competition will be essential to maintain a healthy and vibrant online casino and sports betting ecosystem.

Forecasts for 2024

2024 is expected to witness the introduction of online sports betting legalization in several new states, including Georgia, Hawaii, Minnesota, Missouri, Oklahoma, and South Carolina. This move towards legalizing online sports betting in these states is likely to stimulate a surge in consumer interest and drive substantial revenue growth within the iGaming sector.

Moreover, the forecast indicates that the momentum will extend beyond sports betting, as Indiana, Illinois, New York, and New Hampshire are also anticipated to consider introducing online casino legalization in 2024.

This dual approach of expanding both online sports betting and casino opportunities points to a bright future, offering a wealth of possibilities for operators and investors to capitalize on the burgeoning demand for iGaming in the U.S.

The Money Game

The revenue of the commercial gaming industry experienced a robust growth of nearly 8% compared to the previous year, reaching an impressive $5.41 billion. This remarkable achievement marked the 26th consecutive month of annual growth, showcasing the industry's resilience and enduring appeal. Data from state regulators, compiled by the AGA, revealed that the combined win from traditional casino games, sports betting, and iGaming exceeded $5 billion for the 8th consecutive month.

Revenue Snapshot 2023

During the first 4 months of 2023, the commercial gaming revenue maintained an impressive pace, tracking 13.8% higher than the record-setting year before, reaching a substantial total of $22.06 billion by the end of April.

These impressive growth numbers not only apply to online platforms but also traditional land-based casinos. States are also recognizing the revenue potential and considering its legalization, realizing its popular nature and ability to attract players who are already engaged in unregulated markets. While the current revenue contribution from online casinos and poker may seem small compared to sports betting, it should be noted that it is only operational in a limited number of states. With the potential for expansion, the revenue from online sports betting and casino is expected to significantly increase, making it a substantial portion of the overall market revenue.

Key Points for Platform Providers Entering the Market

1. Slim Footprint

Consider what is truly necessary for each specific state. Assess if you need the entire platform or if certain functions can be consolidated to reduce costs.

2. Budgeting and Planning

Have discussions and make decisions regarding the cost of setting up the entire operation, including licenses and testing labs. Understand the certifications and approvals required for each state, such as working directly with regulatory bodies like the DG in New Jersey.

3. Efficient Licensing

Streamline the licensing process and work with testing labs to obtain the necessary certifications. Stay proactive in understanding and complying with the different regulations and setups in each state.

4. Disaster Recovery

Focus on disaster recovery plans and ensure redundancy within platforms and data centers. As the market grows and more states offer lucrative opportunities, having proper disaster recovery becomes crucial to avoid significant financial losses.

5. Long-Term Planning

While disaster recovery may not be an immediate priority, it should be incorporated into long-term planning. Customers, especially as platform providers, will expect fiscal redundancy and disaster recovery capabilities.

FAQ from B2B Platform Providers

• Which states are the quickest and easiest to set up for iGaming?

  Based on our experience as an iGaming supplier, the following states are considered relatively quick and cost-effective to set up:

  • Illinois: Setting up operations in Illinois is relatively quick and comes with lesser costs compared to some other states.

  • Indiana: Similar to Illinois, Indiana offers a relatively quick setup process and lower costs for operators.

  While the licenses may be more expensive and the process may take longer, it is worth considering the following states due to their significant market potential:

  • New Jersey: Despite a longer setup process and higher license costs, New Jersey is a major player in the industry, and success in this state can have a positive impact on operations in other states.

  • Pennsylvania: Pennsylvania is another state that requires more time and investment to set up, but it offers a large market and considerable revenue potential.

• Are there any changes planned in the approach to data backup policies?

  Currently, there aren't many changes happening in terms of data backup policies. The focus remains on having multiple backups and regularly testing them to ensure their effectiveness. It is important to have a backup in the specific state and recovery backups in most cases. However, in the next few years, we may see an increase in discussions about more redundancy and disaster recovery measures. As the industry faces issues like outages or significant revenue losses, states may start demanding greater data center redundancy and stricter backup protocols. While regulations can be difficult to change, the practical applicability of backup policies may improve as states mature in the market and face potential risks associated with natural disasters and revenue loss.

• What is the best approach to upscaling the initial setup in the U.S.?

  The approach to upscaling an initial setup in the U.S. can involve both technical and business considerations. From a technical perspective, it is recommended to start small and gradually expand. Utilizing a microservices architecture can provide flexibility and scalability as you build your infrastructure. Working with a provider that offers options like dedicated servers or VMware Cloud setup in each state can help accommodate the growing needs of your operation.

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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.