Since the ban on sports betting was lifted in the US, the market has witnessed an incredible rush of activity in the last 12 month, such as New Jersey which wagered a record total of $445 million in September alone.
Neil Erlick (EVP of Business Development, Paysafe Group) breaks down some of the key issues his company has faced post-PASPA.
Once the sports betting market became legal, how much did you lean on experiences from other markets?
NE: We have over 20 years’ of experience in supporting global gaming operators. It’s one of our biggest assets.
Our expertise spans mature European gaming markets and the Canadian provincial lottery space to online casino brands in New Jersey, and now US sports betting.
When supporting US sportsbooks, our experience globally – and particularly in the New Jersey online casino market – has proven invaluable.
It’s certainly true that the US market poses unique payments challenges and given the fragmented regulatory landscape, card declines by card issuers remain a significant problem.
Operators need to tailor their payment offerings according to the market, and that’s where our experience can really help.
What have been some of the major challenges in setting up a payment system in the US for sports betting?
NE: Card acceptance rates are arguably the major challenge. Close to a fifth (19 per cent) of US sports bettors we surveyed in Q1 2019 had experienced a card decline when wagering online.
We and our acquiring partners, such as Worldpay, are working closely with the card brands to educate them on the post-PASPA market and help raise approval rates.
In tandem, operators are also diversifying their payment offerings to include digital wallets like Skrill and prepaid e-cash solutions like our paysafecard product as well as ACH.
It’s important for operators to give players choice, so that a card decline is never an excuse for not wagering.
Where do customers appear to be heading towards in terms of alternative payment methods (APMs)?
NE: While credit and debit cards – favored by 32 per cent and 31 per cent of players we surveyed, respectively – are two of the most popular payment methods for online wagering, APMs are also seeing significant uptake. They are commonly used by players when faced with a card decline.
Over a third (35 per cent) of such players will turn to a digital wallet like Skrill, according to our research.
Online cash vouchers like paysafecard are also popular, with our research revealing that more than a fifth of bettors (22 per cent) have used this method after a card decline.
ACH, online bank transfers, and operators’ branded prepaid cards are also popular alternatives to traditional cards.
Overall, a diverse payment offering, with a mix of cards and alternative payments, supports operators’ player acquisition. Around a quarter (23 per cent) of sports bettors we surveyed cited payments as key differentiator when choosing a brand.
How vital is open communication between operators, payment firms and regulators as the market continues to develop?
NE: Relationships are everything. Given the issue of card declines, there needs to be very open lines of communication between operators, payments providers, card issuers and regulators.
At Paysafe, we believe in transparency and open communication. Given our expertise, operators rely on our advice, and really value it to optimise their payments offerings.