Online Operators Exploring 'Underserved' U.S. Hispanic Market

November 18, 2021
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At least three companies are preparing to target the U.S. Hispanic market for sports betting and online gaming, even as market-access opportunities in key states appear to be limited.

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At least three companies are preparing to target the U.S. Hispanic market for sports betting and online gaming, even as market-access opportunities in key states appear to be limited.

With an Hispanic population of more than 60m, the U.S. would be the second largest Spanish-speaking country in the world, and several operators have identified an opportunity to leverage experiences in Latin America to carve out a niche in the coveted U.S. online gambling industry.

In an updated prospectus released last month, the interactive division of Spain’s Codere confirmed it intends to use some of the proceeds from its public listing on Nasdaq via a Mexico City-based special purpose acquisition company (SPAC) to access the large and “under-penetrated” Hispanic market in the United States.

A Codere Online U.S. offering would leverage its partnership with Real Madrid and other teams to develop a “football-first” or soccer-centric sportsbook offering alongside an “online casino product configuration tailored to Hispanic customers… emphasizing electronic bingo and roulette,” rather than slots.

The U.S. is not the chief priority for the Madrid-based operator that is already active in regulated online markets in Mexico, Colombia and Panama and is preparing to launch in Argentina.

Still, the size of the market and levels of player spend make the U.S. very attractive, said Moshe Edree, Codere Online managing director.

“It’s definitely a market that we would like to be in; we would like to have this angle of being a Latin American operator operating in North America, which means that we will target the Hispanic community,” Edree said last month during a webinar sponsored by IPO Edge.

“Concurring as much as we can in Latin America, North America with the Hispanic community, that will be the next stage definitely.”

Codere is not the only group exploring opportunities in the Hispanic U.S. market.

In announcing its pending acquisition by Aristocrat, Playtech disclosed it has held discussions with Mexican strategic partner Caliente to bring the runaway market-leader for online gambling in Mexico to “selected U.S. states … using the Caliente brand which already enjoys a high-level of recognition in those states.”

Although any agreement is subject to further discussions with various parties, it could see Playtech swap its revenue-share based Caliente partnership for a significant minority interest in a U.S.-listed CaliPlay business, the company said.

Nevada’s Fifth Street Gaming, which operates five casinos including two in Las Vegas that cater to Hispanic players, is another company looking to develop an online gambling brand for the so-called “LatinX” demographic in the U.S.

“It’s a completely underserved, almost ignored market,” Seth Young, chief strategy officer for Fifth Street Gaming Digital, said during last month’s SBC Summit Latinoamerica in Miami.

Will Leading U.S. Operators Make Their Move?

Accessing the U.S. Hispanic or Latin market is far from straightforward, however.

For one thing, the market is not monolithic, with Mexican-American, Puerto Rican or Dominican players potentially favoring different types of sports or casino games.

Spanish-led marketing is another complexity, particularly when it comes to reviewing materials for compliance and potentially obtaining regulatory pre-approvals in certain states.

Perhaps the most fundamental challenge, however, is market access, with licenses or skins in those states boasting the largest Spanish-speaking populations either largely already accounted for or yet to become available.

In New York, for example, regulators are in the process for awarding licenses for just nine mobile sports-betting skins, with Florida’s mobile sports-betting market as things stand subject to monopoly control by the Seminole Tribe.

California will not hold a referendum on sports betting until next year, while Texas could do so in 2023 but only if a measure is approved by the state legislature. In Arizona, most eligible sports teams and tribal casinos have already named their partners for online sports betting, with restricted opportunities for additional skins.

In the meantime, it remains to be seen whether incumbent U.S. operators with broad market access will start to turn their own attentions to Hispanic players.

Emails seeking comment from the three largest U.S. sports-betting operators, FanDuel, DraftKings and BetMGM, were not returned.

But one company that is already addressing the market is PointsBet, which claims to be the only U.S. operator offering a dual English-Spanish language sportsbook platform. The Australia-headquartered operator also has a deal to be the official North American sports-betting partner of Spain’s La Liga.

Interest in the U.S. Hispanic market comes as several U.S.-facing operators are simultaneously targeting growth opportunities south of the Rio Grande in Central and South America.

Chicago-based Rush Street Interactive was among the early entrants into Colombia’s regulated online gambling market, several years before FanDuel-owner Flutter or BetMGM co-owner Entain.

CEO Richard Schwartz last week told investors that the RushBet brand now enjoys close to 20 percent market share by handle despite fierce competition from two local operators, with Colombia “a stepping stone for other markets in the region,” including Brazil.

It’s a completely underserved, almost ignored market.

Although a modest market overall, local regulators are positioning Puerto Rico to play a pivotal role as a bridge between the U.S. and Latin American sports-betting markets.

Culturally Hispanic but a U.S. Territory that was subject to the federal prohibition on sports betting until 2018, Puerto Rico published licensing forms for sports wagering last week and will begin accepting applications on November 22, ahead of a planned launch by Super Bowl.

The three leading U.S. operators have all shown an interest in the Puerto Rican market, said Orlando Rivera, executive director of the Puerto Rico Gaming Commission.

But so too have Latin American operators, for whom Puerto Rico could serve as a “trampoline” to enter other U.S. jurisdictions.

“I am happy to say to the Latin American operators, they can enter the market because they are interested in the U.S. market … and they can use Puerto Rico in order to do that,” Rivera said at the SBC summit.

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