Starting a Sports Betting Business
Sports betting in the US is big business.
Really big business.
So big that by 2025, experts project the market to enjoy a compound annual growth rate (CAGR) of 15.41%.
Besides the big-name sportsbooks with an established presence in the market, many more are also coming from further afield. Betting websites already big in Europe are trying their luck across the pond, and various local operators are also looking to impact their communities.
Does that sound exciting to you? Do you want to become a part of this story? Good news—you can.
But before you get started with your online sports betting business, you need to do a bit of research. Some companies have been in the space for decades, and trying to compete with little or no knowledge will not work in your favor.
Before you do anything else, the first place to start is knowing what you should consider when starting a sports betting business. In this article, you’ll learn which states you can expand into, how to get a sports betting license and how to create a successful betting app.
You will also discover how to do market research, plus more.
Find Out Where You Can Offer Your Sports Betting Services
The repeal of the PASPA in 2018 gave every state an equal opportunity to legalize sports betting if they wanted to. However, the vertical is not yet regulated nationwide.
Many states have chosen to permit sports betting both on and offline. Others have only regulated the vertical with significant restrictions, and some have chosen not to legalize it at all.
Below is a list of jurisdictions where online sports betting is legal for commercial operators.
- New Jersey
- Rhode Island
- New Hampshire
- West Virginia
Sports betting is also legal in Washington DC, but only the lottery operator can offer their services here.
Three states have passed legislation to regulate commercial operators’ sports betting and are currently putting together their frameworks. These are:
- South Dakota
Many other states also legalize sports betting, but only for tribal casino operators. Therefore, you would struggle to obtain a license.
Understand Local State Regulations
In states that offer legal sports betting, regulations differ greatly. Some are more liberal towards advertising and operator numbers, whereas others are stricter.
Some states will only allow players aged 21 and above to bet. But for others, the minimum age is 18.
Some states have limits on the number of betting sites they will allow. For example: in Virginia, only 12 online betting sites will receive a sports betting license. Even if the local governing body rejects your application, you will often need to pay a non-refundable fee just to apply.
Advertising is especially important to consider when expanding into new states. When developing your marketing strategy, you must think about the messaging and what isn’t allowed.
Responsible gambling is becoming more of an important talking point across the US. As the vertical grows in popularity, this will only increase.
Even if promoting such messages is not yet mandatory, it probably will be in the near future. Therefore, you should get in the habit of safe gambling advertising now.
It’s also important to look at which legal sports betting markets you can offer. Some states, as an example, allow players to bet on college sports. Others do not. Make sure you’re well-informed on this.
Pick the Right Software for Your Platform
Compared to Europe, the US sports betting industry is still in its early stages. Therefore, the standards of software available to bookmakers aren’t as high of a bar yet.
Couple this with the lack of knowledge many in the industry have on the right software. Then, carrying out prior research becomes even more necessary.
Using the right gaming supplier software is especially critical. But before committing to any, you need to look beyond just the services offered. It’s also important that any company you partner with has a supplier license in your state.
You will also need to look for a technology provider that offers comprehensive payment solutions. Players are demanding more choice in how they deposit and withdraw. Offering only the traditional credit cards will not be enough in the long run.
When looking for technology, you also need to consider your business model. For example, a pay-per-head solution could help you to maximize your earning potential. Think beyond the immediate, and consider how you will continue to grow your profits as you scale.
Apply for a Local Sports Betting License
Before you start offering your services in any market, you must receive a sports betting license. Depending on the state, you might need to apply for two separate permits if you also plan on offering your wagering services offline.
In almost every case, you will need to pay an application fee. The price depends on the state you’re expanding into, plus the type of license you’re applying for.
The local gaming control board usually processes state license applications. There is no federal governing body that decides on licensing for individual states.
To improve your chances of having a sports betting license accepted, you should put together a full business plan before applying. You will also need to prove that your business is genuine, legal, and ethical.
When your license is accepted, you can offer your services in that state until the permit expires. You will get the opportunity to renew as long as you comply with local regulations.
In some states, you will also need to pay an annual renewal fee. Check with the local regulator before applying.
Do Your Research Before Expanding Into Every State
Every state is culturally different, and their attitudes to sports betting also vary. What works for you in Nevada will not necessarily hold in Illinois.
Players in each state will have differing opinions on the best sports betting sites. They will want to see different offerings, depending on where you are.
Often, sports betting brands are successful in the US because they localize their offerings. For example, players in Colorado care more about the local sports teams rather than the big national ones.
Your services should reflect this. If you were to launch in Colorado, focusing on the Denver Broncos and Nuggets is wiser than promoting the New York Yankees or LA Lakers.
Look for Market Gaps
So, you’ve got your sports betting permit. Congratulations! Now you can go and do what everyone else is doing and hope that it works out well for you too.
Well, not quite.
Before launching in a state, you need to realize that much of the market is already filled. Players have their preferred sportsbooks, and if you can’t offer anything different, you’re not getting any business.
But no matter how saturated a market is, there are always extra opportunity gaps. When you’re ready to start preparing for your launch, analyze each market thoroughly.
Understanding what works is essential. But knowing what doesn’t is even more essential. Look at where existing operators could improve, and create your solutions for these. You will then give players a reason to bet with you instead of a competitor.
Create a Mobile App
When you’ve done your background research, it’s time to start creating your sports betting mobile app. You should not do this on your own if you don’t have a team of developers. It will just lead to stress and wasted time.
While developing your mobile app, whoever designs it should consider:
- The content that will feature on the app
- The look and feel, which should reflect your brand’s aesthetic
- How the app’s content will differ depending on the states you launch in
- The gaming software supplier
Many sports betting apps in the US function as more than just a place to bet. They also offer players immense amounts of free value.
You should consider sharing videos and publishing betting previews to help players make their weekend choices. When you offer these extra services, they are more likely to keep engaging with you each week. And the longer they spend on your app, the more probable they are to bet.
Now You Know How to Start a Sports Betting Business in the US in 2021
Sports betting in the US is going to grow significantly over the next decade. Various factors will drive the vertical’s rise in popularity, including high-quality gaming suppliers, more players choosing to bet online, and states opening up further.
Understandably, now is also an exciting time to launch a sports betting business in the US. While the space is competitive, there is still plenty of room for innovators like yourself.
Do your research before launching, understand local state regulations, and apply for a license. Combine these with educating players and providing free value, and you have a recipe for long-term success.
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