Americans are gaming more than ever before. With legalized gambling expanding across the country, the US gaming industry set a record in 2021 by posting $53 billion in revenue — up from $23 billion in 2020.
Undoubtedly, 2022 will be another record-breaking year as more states legalize various forms of online gambling. As a result, it’s easier than ever for Americans to wager on their favorite sports teams or try their luck at online poker from their computers and mobile devices.
However, with more access to gaming comes some of the same concerns that led to increased regulations in the UK, chief among them being problem gambling and addiction. Statistics show that 1% of the American population faces severe gambling addiction. The greater availability of mobile sports betting contributes to this concern, especially among college students and young adults.
Fortunately, as the US gaming industry grows, we do so with a unique understanding of past mistakes made in the UK, which is why US operators continue to embrace practices and implement policies and procedures to help players wager responsibly. This is how we avoid falling into the same pitfalls that have plagued the UK.
Betting on Sports
Once restricted to only Oregon, Montana, Delaware and Nevada, sports betting in the US became more widespread following the repeal of PASPA by the Supreme Court in 2018 following a challenge by New Jersey. This cemented sports betting as a states’ rights issue and triggered several states to pass legislation in anticipation of the decision.
Fast-forward to the beginning of 2022, when online sportsbooks started operating in New York, players opened 1.2 million accounts within ten days and wagered more than $2 billion in the first 30 days. As of March 27, 2022, New Yorkers had spent more than $4.6 billion on wagers, resulting in $315 million in gross revenue.
Sports teams and leagues now partner with sports betting providers in the US, which was once unthinkable due to historic resistance to sports betting by the leagues. Advertising for sports betting platforms is becoming ubiquitous on TV, social media, and radio. However, while most Americans support legal sports betting, 85% also support policies to curb problem gambling.
Problem gambling experts worry that the increased promotions and advertising surrounding online sports betting could lead to social problems as betting platforms offer huge payoffs, risk-free bets, and thousands of dollars in free credits to draw in more customers.
The UK gaming industry followed a similar trajectory without the benefit of hindsight to prevent these issues from ever becoming problems — which led to unfortunate outcomes. In response to public outcry, the UK government is now pushing stricter regulation of the gaming industry to respond to concerns over player protection and limit the volume of advertising and sports sponsorships.
Unlike in the US, where the states regulate gaming operations, the UK Gambling Commission (UKGC), an independent regulator appointed by the government, manages gaming oversight. Recent UKGC measures include eliminating credit card payments, reducing VIP programs, and implementing affordability checks. In addition, the British government initiated a review of the current gambling laws in 2020 and is expected to announce new legislation aimed at online gaming operators later this year. The proposed laws call for a ban on sports sponsorships and advertising restrictions.
The US can avoid such swift governmental oversight by getting ahead of the problem and staying on the right side of the player experience. In addition to the direct cost to the industry that such governmental intervention has, increased regulations also add unnecessary friction to the customer journey. Players want to be able to log in, create an account, and place bets quickly. Strict regulations resulting in excessive barriers between players and their experiences slow everything down and increase player abandonment driving them to offshore and unregulated websites.
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Responsible Gaming Is Fundamental
Instead of being placed in a silo, successful US operators will need to apply responsible gaming practices as a horizontal and implement robust policies and procedures across multiple business functions such as marketing, onboarding, analytics, and player experience.
Player-friendly operators view responsible gaming as an investment in their brand rather than a cost. Consumers generally like brands that they view as valuing and protecting them. Additionally, sustainable commercial performance can be achieved by increasing player protection. A player who signs up for an account and loses $1,000 in a week before never playing again is worth less than a player who bets $100 a month over a year.
Having responsible gaming as part of your organization shows the public that you care about player protection and demonstrates that you understand the need for consumers to make their own decisions.
In the UK, the government makes many decisions for the consumer, as the increased regulations illustrate. If US operators want to retain a positive public perception and decrease the likelihood of restrictive regulations, they must continue to strengthen their responsible gaming strategies.
While some may dislike the industry, the impact of prohibition prior to the repeal of PASPA led to the US having one of the largest markets for offshore sports betting. Consumers who engage with regulated US-based offerings are contributing to state tax revenue as a result of direct taxation on operators and the tax revenues of their employees. Increasing public support via responsible gaming will also lead to more players choosing regulated platforms over offshore operators, resulting in higher state tax revenue and public infrastructure investment.
Developing Common, Self-Regulating Standards
Unlike the centralized gaming oversight in the UK, each US state is responsible for its own gaming regulations and safe gambling guidelines. However, this state-by-state approach poses an additional risk to operators, as they face different laws in every state with varying degrees of control, enforcement, and consequences. In addition, having different rules in other markets makes compliance time-consuming and tricky.
US operators have an opportunity to take the lead on this issue and avoid what our counterparts in the UK faced by developing common standards and practices that can apply to every state and allow the gaming industry to self-regulate.
A Winning Strategy
If you ask UK gaming operators what they could have done differently, the answer would be that they would have invested in responsible gaming earlier. The US has the benefit of being able to get it right the first time by investing in responsible gaming now to prevent the problems the UK was unable to avoid.
As the US gaming industry continues moving toward common standards while communicating with regulators and stakeholder groups, the brighter our future will grow. The industry has one chance to create a long-term sustainable industry by taking the lead on responsible gaming and providing a safe environment for players.
