Read the full interview HERE
We recently interviewed a Former VP at Parx and Former Head of Business Development on the future of the US online sports and casino landscape.
We explore:
- Historical CAC and retention of DFS players
- How online is additive to casinos' land business
- Why US sports bettors are potentially more valuable than Europeans
- Core differences between online casino and sports betting
- How and why Parx built a stack of GAN and Kambi to offer online sports and gaming products
- Kambi versus SBTech full turnkey solution
- Potential advantages for GAN versus competing software platforms
Did the decision to choose GAN, largely result from the fact that they had social gaming and they had the account and player management details? As you said, there are a million online gaming casino studios or offerings out there?
It’s actually more complicated than that. Yes, there are a million studios, but when you think about some large studios – well, they’re not studios; these are large companies that do stuff, including the lottery and scientific games or NetEnt for IGT or for a whole variety of places – a lot of those guys just make games. That’s their primary business. You decide to put games on your site and they get anywhere from 8% to 14% revenue cut of it. There aren’t as many of those, what I would call, platforms. GAN, itself, doesn’t necessarily have a ton of games, but that’s not why you’re working with GAN. You’re working with GAN because they are a platform that has, for years, worked with all of these other operators. If I want to plug in a ton of scientific games or NetEnt games or this or that, they have them and you can start to stick them on. I almost think of it as like a Velcro board. They are the Velcro and you have all of these individual ornaments or pieces that you then stick on there. They’re the base. There aren’t, necessarily, a ton of those guys.
There are other versions. There are ones across Europe and Israel, as well, like Playtech and various others. Part of the issue is, GAN was the first mover in the United States. This is a big thing that we haven’t even talked about, which is the licensing process. I don’t know when it happened, but years ago, GAN got licensed in the United States, so it takes a lot of the burden off, if you’re working with them. If I’m an operator, not only do I have to build it, I have to make sure it gets licensed and all sorts of other things. It’s a very lengthy process, in order to get your platform ready. If somebody like GAN has already done that, it’s great. I already have that Velcro board; I can start sticking stuff up on it. Whereas there are a bunch of other companies that are over in Europe, who decided, because New Jersey was just a single state and they didn’t know how wide the opportunity could, ultimately, get, in the United States, they did not do that.
So GAN is reaping the rewards right now and they also relisted on the Nasdaq, here in the United States. By making that decision, years ago, to be here, at this point in time at least, they have a little bit of a mini monopoly in the United States, that they are taking advantage of and more power to them. There will be increased competition. Everybody abroad sees the opportunity in the United States and they see it, not just as sports betting, but online casino, too.
Let’s say competition does come in for GAN, for example. Maybe Playtech comes in rapidly and other competitors from Europe. What is the decision-making process, from the operator? Is it around how quickly you can get to market or how good are the games or how cheap it is? What is the plane of competition that you see GAN competing on, with other operators?
In the United States, I think speed to market will be really important. It depends on the operator. If you feel one product is vastly superior to the other and you think, if I’m going to be in this for the next 20, 30 years, six months may not make that much of a difference. If this one is much better, I want to go with that one. I do feel that, at least from a sports betting standpoint, it’s definitely speed to market, because so many states are rolling out. Online casino seems as if it’s going to be slower. Michigan is the next state coming. If I were in Michigan, I would be, speed to market, who do I need to work with? I need to make a decision fast.
If you ultimately wind up getting to the point where a lot more states are starting to open, from an online casino perspective, then I think it’s really going to become a combination of products and price. Let’s say you’re Penn National; I have the ability to be operational in 15 states and I know it’s going to happen in a lot of them, I’m going to be, absolutely, looking at price. I know I’m going to be in this game, long term. I can be making hundreds of millions of dollars off this. The difference between some platform that I might be working with, that’s going to charge me 5% versus 7%, for something, that’s a lot of money, over those years. I don’t have to worry, as much, about competition, if I have all these existing player bases that I can hit.
Again, it depends on the operator, sports, it’s speed to market. If you’re in Michigan, for online casino, I think it’s speed to market too. Otherwise, it’s dependent on how these states open up.
But it does seem as if GAN is one of the first decisions to make, on software, as part of the stack, in terms of getting to market quickest and the central repository of the stack. Then you bolt on Kambi, like you said.
You can do wallets in other ways. I don’t know the exact system that DraftKings has. I know that this stuff is all online and publicly available. GAN is not necessarily the only solution, at this point in time. It’s more like, what is the software that you need. Also, one of the big question marks is, usually, for a given state, who is licensed? If I’m GAN, or any of these guys that want to come in, such as a Playtech, or Gbet is another company from Europe, I would want to be getting licensed in these states. If you’re a brick and mortar, or anybody who is thinking that they want to come into this state, for the first time, I can work with you, I can’t do anything, if you’re not licensed. That’s always going to be one of the big burdens or lifts, in the United States; who is licensed?
I’ll use the analogy of, say California opens up tomorrow and, literally, the only platform that’s licensed is GAN, then yes, I’m almost forced to use GAN. That won’t be the case, necessarily. But it’s why, particularly if you are a software provider, rather than an operator, speed to market is actually very critical, because then you can immediately start pitching guys and saying, hey, you X casinos, that want to go live in this state, I’m ready to work with you; I’m ready to go. Companies like GAN and Kambi have really been at the forefront of that; especially Kambi. For Kambi, you are constantly seeing, we’re licensed in another state, we’re licensed here. They’re doing that because it means that they’re hopeful of getting a lot of business, based on the fact that they are an early licensed platform, in many states.
Can you walk through how land casinos look at choosing a sportsbook, like Kambi? Why choose Kambi over SBTech?
Again, I did not make the decision on my end. I can talk about some of my thoughts, which are, basically, the way anybody should do it is, you’re probably going to bring all these guys in and have them pitch you, on what makes them unique and/or special. I think what Kambi has been really good at, in the United States is, that they are a flexible platform. If you are somebody who wants to get more creative with your sportsbook, they allow that capability. Just from my experience, word of mouth, things like that, there are pros and cons.
Some of the bigger ones that are very well-known to people are Kambi and there’s SBTech. SBTech has the advantage of the fact that they can give you end to end solutions. You don’t have to worry about finding a payment provider or a wallet; they do that all in one. The issue, though, is that a criticism has been, but it’s more of a cookie cutter sports betting platform. You don’t have as much variety of what you can do with it.
For Kambi, the pro is that you have a lot more flexibility, in terms of what you can do with the product. The con is, they don’t give you an end to end solution, so you still need to find a wallet, you still need to find a way to deal with payments.
Read the full interview HERE