UK and EU Operators' Ambitions in the United States Gambling Market

Author: Matthew Haynes

It stands to reason. As the quote goes, “Build it, and they will come.” this could not be truer for the US online gambling market.

Over three years after the US' legalization of online gambling and sports betting in earnest, following significant financial losses in numerous states caused by the global pandemic, it has proved to be somewhat of a masterstroke.

One which has been reflected in many state’s coffers. The considerable amount of revenue that has been generated from the taxation of gambling companies, in addition to license fees, US online gambling revenue has led to the gradual economic recovery of many of the affected states. At the very least, it has contributed towards this.

European Gambling Firms Eyeing the Lucrative US Market

While US-based online gambling firms more or less have a commodity on the market, the sheer potential and capability started to lead to envious glances from across the Atlantic as UK and European online gambling companies began to draw up plans to gain access.

Indeed, according to data, the US online sports betting market is projected to be worth $13 billion by 2025, which does not account for the live online casino sector either.

Any external gambling company looking for a way into the US market has faced stiff competition from native companies. Indeed, being able to differentiate from the likes of FanDuel, DraftKings, BetMGM, and Caesars is a tall task, and that is before you have even started a marketing campaign.

Obviously, the US market is well aware of these firms, with these having been around for years, especially either as fantasy sports operators or land-based casinos. Furthermore, any external firm that wants a US license to operate in any state is required to partner with a local physical gambling venue to be able to offer its online services.

As such, any UK or European gambling companies wanting to make its mark in the US ideally understands the challenges that are posed surrounding this. One of the more interesting challenges is the crazy amounts of money that American companies invest in marketing. That being said, US customers have demonstrated over the last three years is that they like choice - especially when it comes to online sports betting.

Many are avid enthusiasts who enjoy poring over statistics, so getting the best odds is a priority; something that the more experienced European operators can (and do look to) capitalise on.

UK Firms with a Foothold in the US Gambling Market

One operator from across the pond which has been gradually expanding in the US is the UK-based behemoth, bet365 - the largest, single-entity online gambling company in the world, which is still privately-held.

Over the last year, the Stoke-on-Trent based company has been growing its US presence and recently launched in Iowa - its fifth US market in the space of less than 12 months. Having launched in Colorado in September 2022, it has since expanded into New Jersey, Virginia and Ohio, in addition to its most recent.

Despite its operating profits reducing to 94.5 percent year-over-year from March 2021 to March 2022, this was due to an increase in administrative costs, which rose to $380.5 million, caused by the gambling firm’s expansion into the US.

However, this is seen as an investment worth making, following a reported 48 percent increase in active customers, which, it is anticipated, will begin to have a positive impact on overall revenues in the next few years.

Another UK firm that has essentially gone under the radar in the dynamic market of the States is Betfred, which made this a key priority in its growth strategy from as early as 2019.

The northern England-based company is now live in 10 US states, having launched in Nevada, Virginia and Ohio in the last eight months alone. Its partnership with US Integrity has helped the brand to grow significantly.

Bennet also expanded on the importance of being able to effectively acquire market share in the US, aware that this is absolutely key to having success in a market that has significant potential.

Unibet's Rapid Rise in the States' Market

One of the European companies making a mark on the US though, was the Kindred Group-owned brand, Unibet.

Having launched operations in June 2019 in the mature market of New Jersey, it quickly expanded into Pennsylvania and has since gained a foothold in Arizona, Indiana and Virginia. Its partnership in New Jersey with the prominent Hard Rock Casino & Hotel has proved pivotal to its growth; being associated with such a well-known name helped it to establish credibility quickly.

One of the biggest contributory factors to Unibet’s popularity in the US is how easy it is to use its app. It arguably has one of the most attractive user interfaces in the industry, which makes it really easy to navigate, as well as having visually attractive aesthetics. In addition to this, its vast library of slots, plus an extensive number of quality live dealer games, has also helped to raise the brand’s profile.

Meanwhile, UK conglomerate Entain’s decision to link up with MGM Resorts International to launch the brand BetMGM has proven to be a crucial one in recent years. It is now viewed as one of the ‘big three’ operators in the US and even has taken the number one spot in some states. It won ‘Online Casino of the Year’ for 2022 in Michigan at the American Gaming Awards, and Entain can be thankful that its strategic decision in 2018 is paying off.

Challenges Faced by External Operators

Despite non-US gambling operators beginning to establish a foothold in a number of states, there are still a number of challenges that many of them face.

Arguably the biggest and most important from an internal perspective is being able to justify the cost of their expansion, which means that they expect a substantial return on investment. No doubt, the potential is there.

The increased legislation in some states may also have an effect as the US across the board looks to tighten laws around responsible gambling. One of the advantages of UK-based firms is that they are already aware of what needs to be done, with the country having put a significant emphasis on this over the last decade. Essentially, this gives UK firms an edge over US operators.

Another challenge for external operators will be gaining access to more markets, especially the most lucrative ones in the US, with the state of New York having exceeded all expectations to take the top spot over the last year.

Access to this market has proven to be considerably hard, even for US operators, with the state only allowing 10 initial operators for its mobile sports betting launch in January 2022. Currently, there has been no further dialogue as to whether New York will increase the limit for more operators, however, this is something that UK and European gambling firms are sure to be monitoring over the next year.

Indeed, this is one market where Entain holds an advantage over its European competitors in the US, despite having to share 50 percent of BetMGM, however, 50 percent of something is better than 100 percent of nothing. It continues to be one of the best-performing sportsbooks in New York.

What Does the Future Hold for Non US Operators?

The next few years could certainly be interesting in the US market and not just for external US operators.

Certainly, native brands have faced numerous challenges over the last few years and, as a result, have only really now started to establish themselves - particularly those who are not seen as the ‘big three’.

Australian firm PointsBet sold its US arm to Fanatics having found it hard to get a stranglehold in the country. This was seen as a significant coup for the Jay Z-backed brand.

Any foreign operator looking to capitalise in the US should be aware that, despite the size of the US market and projected growth rates, it will not be an easy task to gain a substantial share, as PointsBet found out.

That being said, Betfred represents an interesting prospect, due to already being in 10 states, while it no doubt has ambitions to expand into further US territories over the next couple of years. The rest could well be playing catch-up unless they grow smart and apply creative strategies in order to meet their objectives.