Challenges Persist Converting U.S. Players To Home Markets

October 12, 2021
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When the time comes for another U.S. state to pass sports-betting legislation, the starting point of debate will likely be converting players from offshore sportsbooks to regulated markets, even if post-legalization challenges remain.

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When the time comes for another U.S. state to pass sports-betting legislation, the starting point of debate will likely be converting players from offshore sportsbooks to regulated local markets, even if post-legalization challenges remain.

In addition to offering customers a legal option, operators and industry advocates are challenged with breaking existing players' habits and educating potential new players on the differences between regulated and unregulated sports-betting sites.

"As the U.S. was shut down for so long those were the brands that most Americans had been interacting with, so they gained a lot of trust with those brands," GeoComply chair and co-founder Anna Sainsbury said of offshore sportsbook operators, which remain prevalent in the U.S. today.

"This is one of the complications that we have with all of these states opening up: how do we educate these players to know and decipher between a licensed, taxpaying, compliant operator; what those benefits are to them and to our communities; and what are the things they should look in deciphering those things."

One improvement Sainsbury suggests is better education to guide customers through the know your customer (KYC) process that they may not face on an unregulated sportsbook.

"That's pretty cumbersome for someone to go through, and they might want to know ‘why do you want to know all this stuff about me?,’” Sainsbury said.

"I think that educating the customer through that and helping them know we're asking these questions for their own safety and compliance reasons, and I think keeping that communication throughout, even as players want to withdraw," she said.

One issue that arises in educating customers, however, is that in a U.S. market currently flooded with marketing bonuses, customers are encouraged to shop around for the best deal, said Jonathan Fishner, director of federal regulatory compliance for FanDuel.

"That's a positive thing,” he said. “Customers should go and get their deposit bonuses and over time I think the best products will be the winning products.

“But I do think we are to some degree conditioning the customer to go from place to place to find the best deal they can, and we are not engaging in the type of messaging Anna is talking about across the industry."

Another step, Sainsbury suggests, would be working with search engines such as Google to prevent unregulated sports-betting options from ranking high in results for common searches.

"When you're searching for pharmaceuticals or to buy Advil, you'd hope that the Advil site would get to the top of the page and not some other type of narcotic," she said. "That's how we expect the internet to work, so in gaming it should work the same."

Although the entire gaming ecosystem bears some responsibility for educating consumers, consumers also own some of that responsibility, said C. Darren Lian, special agent in charge of criminal investigations with the Internal Revenue Service.

"If I was going to go out and invest in the market, I'll do my own research, and it's the same thing as spending your money on the online [offshore] platforms; you have to do your own research," he said.

Fishner also said the industry could promote itself more in terms of its positives, particularly compared with some of the darker aspects of illegal bookmaking operations in the United States.

"I'd like to see a little more pride in the industry," he said.

"I think a lot of the things that hold this industry back are very American; it's new here, it's sort of a puritanical approach to certain things, and that prevents us from really talking about things like how much money we're raising, and that a lot of customers are coming over from bookies."

Fishner said he started his career working in investigations in the Manhattan District Attorney's office in New York.

"Some of those low-level bookies were guys that got in too deep wagering and went to work," he said. "There is some risk of course [in the regulated market]; it is gambling, it is risky, but it's nothing compared to any of that.

"Those are good points for us all to be making, and it would be nice to see that kind of a message with the top ten platforms behind it."

Lian said that although government agencies are frequently playing catch-up to new schemes and new uses of technology, such as using cryptocurrency and changing merchant codes to process payments on offshore wagering sites, many traditional investigative methods remain effective.

"Yes, there are new ways to perpetrate crime, but at the end of the day, the traditional law enforcement techniques are still sound and still effective, and really, the focus is the on ramps and off ramps," Lian said.

"You can conceal your origins all you want, or use cryptocurrencies to hide behind that, but at the end of the day, you still have to spend your ill-gotten gains somewhere, you still have to purchase that Lamborghini you've always wanted, that $10m mansion you've always wanted."

The three spoke last week during a panel discussion at the Global Gaming Expo (G2E) in Las Vegas.

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