The USA European Alliance
Steven Valentine, Director of Interactive at Comtrade Gaming talks about his views on how the US market is shaping up four months after the repeal of PASPA in G3 Newswire.
The relationship between the USA and European has always been a close one, even before NATO was formed in 1949. At any world leader event, there is the usual customary public appreciation from both sides and in the case of the UK the relationship is even considered as “special”. Nevertheless, out of the public eye, most people will grudgingly admit that Europe needs the US a lot more than it needs them.
However where online gaming is concerned the situation is currently a little different.
The repealing of PASPA was the single biggest change in the online gambling market since UEGA back in 2006. Back then the US online market gambling was heavily dominated by European players before it became illegal and it seems that 12 years on as the market now really does start to open up US land-based operators will still heavily rely on European ones to provide service to their homegrown player base.
The gold rush is most definitely on with new deals being struck on a daily basis as everybody tries to stake their claim. The unreadiness of most land-based operators for the repealing of PASPA is quite apparent, with many three-way deals being done whereby a US operator needs a vendor for sports betting software and but also need an established operator to run operations and marketing for them.
There are a lot of deals to choose from but take the 10 year deal between GVC/Ladbrokes Coral and MGM for instance. Whilst on paper this looks like a smart move and definitely a bold one for both companies but with the US market being in its infancy it will be interesting to see if the deal is working well for both sides in three years’ time let alone ten. The last time GVC signed a ten year deal was with Betfred and that fell apart before the ink was dry.
There is a tried and tested formula in Europe whereby mid to large sized operator’s partner with a vendor for their tech or perhaps the largest build the tech themselves, but the operational side of the business is always kept in-house and is seen as one of biggest ways how to differentiate from competitors. In the past some of having tried outsourcing operations, normally in times of crises, and although these started well and provided a much need to kick to the share price at first over time most ended with fairly spectacular and expensive separations.
For the mature European competitive markets, the player experience is absolutely key, state of the art player account management software is critical and the push for a true omni-channel strategy continues for those with a land-based and online presence. In this very early stage of the US market no doubt many of these elements are being overlooked due to the rush just to get a deal done and be online as fast as possible.
Nobody can blame the operators for their haste to get into the market and they simply don’t have the operational experience to do it themselves, only time will tell how successful each partnership is. However, as the major US players gain more experience and the market starts to mature it is likely to expect that they will want to take more control of their own operations and a bigger piece of what is after all their own pie.
The rhetoric from the current US administration represents a change from the norm where Europe is concerned and they have now been very vocal about their unhappiness with NATO and the fact they feel Europe is not pulling its weight. It will be interesting to see in a few years’ time if US operators feel the same way about their online operating partnerships.