Pro sports betting- could be a jackpot for payment companies

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The Supreme Court decision in May that struck down the 1992 federal law which prohibited states from authorizing sports betting will have an outsized economic impact on sports and gaming industries, creating ample opportunity for payment gateways to process a new stream of transactions.

While the leagues may have initially pushed back against sports gambling, legalized and regulated gaming will benefit the teams, card networks, payments processors.

Worldpay, for example, is expanding its U.S. portfolio and has experience in sports betting to lean on. When the U.K. based Worldpay joined with Vantiv in 2017 (the new entity took the Worldpay name) it brought an extensive portfolio of global casino, sports books, and gaming establishment clients to the merger, so it has been uniquely positioned to help drive quick adoption in the U.S.

“Worldpay is probably the acquirer in the best position given their U.K. roots where legalized sports betting has been effect for years, with the big players being William Hill and Ladbrokes, that already run some of the Nevada casino sports books,” said Raymond Pucci, director of the merchant services practice at Mercator Advisory Group.

An increasing in gaming leads to an increase in fan engagement and ancillary purchases which can benefit payments processing and fintechs that serve the NFL, MLB, NHL, NBA, and other sports leagues, including companies such as Appetize, Infinite Peripherals, NCR, and Fevo.

U.S. adults wager an estimated $150 billion per year on sports games, According to the American Gaming Association. While some of the betting is done legally in authorized establishments such as Las Vegas sports books, most done illegally ranging from the informal office betting pool to offshore gambling houses based in countries such as Latvia, Estonia and Britain.

Legalizing sports betting has had an almost immediate impact. In New Jersey, where the push to allow states to legalize sports betting began, DraftKings, FanDuel, William Hill, and others are already active with sports books open to the public for wagering. In Nevada, the one state exempt from the prior federal bank on sport betting, there’s already a huge volume of payments. In 2017, sports bettors legally wagered $4.9.billion in Nevada, up by $400 million from 2016, an almost nine percent gain in just one year. All of these funds wagered were placed in Nevada, i.e., the consumer was in a casino to place the bet.

Sports betting will have other impacts. Tax revenues, for example, will jump, providing another transaction stream. New Jersey was the first, and was soon followed by Delaware, West Virginia, and Mississippi. Meanwhile, New York, Pennsylvania, and Rhode Island are not too far behind.

There are about two dozen 24 states that have passed laws or submitted bills to authorize sports betting in their states, according to Joseph Pappano, senior vice president and managing director of Worldpay Gaming at Worldpay.

While there is an expected positive economic impact to come from sports betting, not all parties were interested in allowing it at first. Notably, some of the biggest potential winners, the NCAA, NFL and NBA all supported the federal sports betting ban.

But the NFL has existing problems, ranging from the league’s TV ratings decline, a drop in stadium attendance, the concussion settlement and controversy over the national anthem, so any increase in revenue and fan engagement would be welcome.

Based on a recent research study conducted with Nielsen, the potential economic impact on the NFL is a $2.33 billion annual gain. About 75% of the gain is derived from higher fan engagement with the league, driving high ticket sales, merchandise purchases, improved sponsorship and advertising deals. The remaining 25% or $573 million is a direct benefit from the gaming industry to the NFL.

“When consumers have skin in the game, place a sports bet, they are motivated to watch twice as many games and for a longer period of time. Stronger viewership allows teams and the league to pursue bigger sponsorships, better advertising and gain more sales in tickets and merchandise,” said Sara Slane, senior vice president of public affairs at the American Gaming Association.

Following the Supreme Court decision NFL commissioner, Roger Goodell released a statement that accepted the eventuality of legalized sports gambling and called on legislators to enact common sense legislation that would protect players, fans and ultimately the NFL.

“In the long run, once this is all sorted out—acquirers, card processors, issuers, and networks will be winners. Keep in mind, other winners will be current U.S. fantasy sports players FanDuel and DraftKings. Other jackpot winners will be state governments who will welcome new tax revenue with open arms, as will the regulatory agencies that will bulk up because of the required oversight,” Pucci said.


This post was originally published here
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