After obsessing about the opening up of the regulated iGaming market in America for five years or more, the time has finally come when we’re seeing real progress in this space. PASPA’s repeal in May has jump-started a process so many of us have been waiting for and counting on, opening up opportunities for American and international companies alike.
Keith McDonnell of KM iGaming is an iGaming industry expert who has been working in his field for over a decade, with a special focus on the European and Asian markets…until now. While McDonnell will retain his interests in Asia and Europe, he has declared a leap into the regulated American market, both professionally and literally, as in one week’s time he’s moving his business, family and dog to the “Land of the Free”.
An established, regulated online gambling industry has been existing in the UK, Europe and parts of Asia for years. McDonnell’s legacy knowledge in these markets has put him in a perfect position to consult with companies who are anxious to open up a US-facing online gambling business.
“[My experience is] only valuable because there are so many pitfalls and I’ve probably jumped headfirst into most of them, but people tell me that’s the best way to learn”, McDonnell joked.
What is no joking matter is the fact that PASPA was finally repealed, thanks to the perseverance of our friends in New Jersey.
“I was in Macau for G2E Asia when the Supreme Court ruling broke that week and there was a real sense in the industry that it was a seismic shift, it wasn’t just more words. To the point where some people were rushing to the airport and saying ‘I need to get on a plane and up to the States’”, McDonnell shared.
“The reality is things aren’t going to be as fast as maybe a lot of people hope or think they will be, there’s still a lot to decide. But there are things happening for sure and I just feel that given my experience in Europe and Asia and what KMI has been doing in the last couple of years in particular, there’s a lot of exciting projects that can happen over there”, he explained.
While PASPA’s repeal is exciting in itself, the question of “how long until the whole country opens up” still remains and the answer is a lot more complex than online gambling operators would like it to be.
“I like to break this down into categories. From an individual state’s perspective, I think there’s three categories here. There’s those that are moving now that are regulated now and are doing business, we’re talking about New Jersey, Nevada, Pennsylvania, Delaware, these guys are moving and I expect there will be another handful of states that will open up and regulate by the end of the year”, McDonnell predicted.
“There’s also going to be a selection that I don’t think will ever regulate in my lifetime – I’m not going to name names there, but there’s various reasons why they probably won’t”, he said.
“But I think the bulk will sit in the middle and adopt a bit of a ‘watch and see’ approach. They’ll look at the states that have regulated, that have opened up and figure out what framework is working. What taxation levels are working. What compliance requirements are working. And try and replicate those”, he added.
From a regulatory perspective, McDonnell likes to compare the situation in America to the EU as the EU has a collection of member states, a somewhat similar structure to that of the United States.
“We all hoped years ago – 12, 15 years ago – that [the EU] would have federal framework where we could have an operator with a license in an offshore jurisdiction, like the Isle of Man or Malta and that would give them the right to promote their services in every single European state”, McDonnell said.
“Well that hasn’t worked out like that at all, in fact its been a lot more complex such that if you want to target anybody in any regulated country you need a license in that country. So, you need a whole set of compliance people to deal with all the requirements there”, he explained.
Rather than repeat the same mistakes iGaming operators have made in the EU, McDonnell urges American operators to look at what’s happened outside the United States to determine how they should tackle challenges and take advantage of opportunities.
“The biggest mistake in my opinion that was made 18 years ago now, in the UK for example, is land based operators trying to run an online business with a land based mindset. If we look back 18 years, Ladbrokes, William Hill, Coral, they’re the market leaders by far in the UK. They tried to set up online businesses and run them with land based experience and suddenly Paddy Power, Betfair, Bet365 have jumped way ahead of them and 18 years later are still ahead of them online. Totally different mindset”, he shared.
“It doesn’t mean the same organization can’t run an online business, it just needs a different way of thinking about how you run it and possibly different people. With some synergies between the two to make sure you get customers at a land based into online”, he added.
American or not, operators who are wishing to launch US-facing online gambling sites in a newly-regulated American market are about to enter unchartered territory, but everyone can learn from the successes or failures from within the established, regulated markets.
“So different mindset, aside from that with a dollop of localization in the US…it ain’t rocket science. Understand what your customers want, assess the market for what really the product options are, compare that with building in-house perhaps, understand your data, segment your customers and come up with some creative marketing”, McDonnell advised.