Joonas Karhu, chief business officer at Bojoko, says that with impressive early revenues and limited competition, now is the time for operators to get in on the action.
Whenever we talk about legal online gambling in the US, the discussion often immediately shifts to sports betting, and it is easy to see why; statistics suggest that the regulated market could grow to be worth up to $8 billion per year by 2025.
But with so much focus on sports betting, the industry risks missing the huge untapped potential of the casino vertical – in some states where both sports and casino are legal, and the latter is out-performing the former and by some margin.
Given the nascent nature of the market, and the limited competition among casino brands in the states where it is legal, now is the best time for operators to launch casino sites and gain that all-important first-mover advantage.
Online Casino in the US: The Big Picture
While there are now 20+ states that have legalized online and mobile sports betting, less than a quarter have also included provisions for iGaming in their rules and regulations. The states that have include:
- New Jersey;
- West Virginia;
The states that have legalized both are certainly reaping the benefits, with online casino GGR surpassing sports betting GGR.
Pennsylvania, for example, saw online casino and poker revenue reach $80.4 million in January 2021. Comparatively, sports betting operators made $34 million in total taxable revenue. And it is a similar story in New Jersey.
Online casino revenue in the Garden State reached $113.7 million in March 2021, while sports wagering hit $60.8 million. What’s more, casino revenue is far more stable than sports betting revenue which is notoriously volatile.
Why Operators Should Launch Online Casinos Now
The early revenues being generated by online casino gaming in these five states should be enough to pique operator interest and encourage them to launch their own brands into the states where they can secure market access and the required licenses.
Competition remains limited, and more brands entering the market will undoubtedly drive further growth. The fact the competition is limited is another reason why now is the right time for operators to get in on the casino action.
It must also be remembered that states such as Pennsylvania and Michigan have limited the number of online casino licenses that are up for grabs; operators do not want to wait too long and find that all of the available licenses have been taken.
Perhaps the greatest reason for launching now is that operators can lead the education process that needs to take place around legal online gambling in each state and leverage this to engage and inform players while also building trust and loyalty with their brand.
The Biggest Challenges Faced by Online Casino Operators
Of course, the education process is a huge challenge that all operators face in the US. While players are familiar with the land-based play, very few are aware that states are gradually legalizing online gambling, let alone whether their state is one that has and, indeed, what has been legalized.
Then there are difficulties around helping players understand which brands are licensed and which are not. This requires the entire industry to work together, but ultimately operators will shoulder much of the marketing activity required to educate players.
Operators must also consider which states they wish to enter. The US is not really a single market and rather a large market made up of individual jurisdictions, each with its own regulations, rules, cultures, and player expectations.
Then there is the size of the addressable market, the number of licenses available, the cost of licenses, etc. To determine whether a state is worth entering or not requires due diligence, experience, and a clear understanding of whether an operator’s brand works in that market.
What US Online Casinos Can Learn from European Brands
The US market is still finding its feet, and regulators, operators, suppliers, and affiliates are having to get to grips with the challenges it presents. While the US and Europe are wildly different markets, those active in the former can learn from the latter.
European online casinos are very good at driving innovation. Most operators think of themselves as tech companies first and foremost. In the US, we have seen several big brands launch on legacy platforms which ultimately had to help them back.
Cutting-edge technologies are key to offering the experience players are seeking. This includes ID verification, games, payments, and the ability to be accessed easily via smartphones and tablets. Other aspects where European operators set the standard include:
- Responsible gambling tools;
- Speedy transactions;
- Local customer support.
Partnerships have also contributed drastically to the success of regulated online casinos in Europe. The success of an online casino brand is not just about the operator running the site; suppliers and affiliates also come into the mix.
Affiliates, in particular, can play a vital role in helping online casino brands generate the traction they need in each state to succeed. They can also contribute to the education process, providing players with the information they need to learn about legal online gambling.
What’s more, they can help channel players to licensed online casinos – this is a big issue in newly-regulated markets as players can continue to wager at offshore sites for a number of years.
The potential for online casinos in the US is significant, even within the limited number of states that have currently legalized the vertical. Of course, that will likely change as additional states regulate online gambling, having seen the numbers coming out of the likes of New Jersey and Michigan.
The industry will undoubtedly remain focused on sports betting for the foreseeable future, but for those that can see the opportunity the vertical casino presents, that means licenses will still be available and the competition limited.
And that is why there is no better time than now to launch an online casino in the US.