Itay Pazner, CEO of 888 Holdings, discusses the prospects for the US gambling market following the legalization of sports betting at the federal level.
A year ago, you were optimistic about the prospects of a legalized gambling market in the US. Has your sentiment changed today?
A year ago, all operators were optimistic about the US market, especially after the lifting of the long-standing ban on sports betting. We at 888 were no exception. Overall, the positive sentiment toward the US as a market remains. Previously, there was talk of great potential for legalizing sports betting in the US, but no one really understood the scale of the growth. Today, with the advent of new opportunities, mobile bookmakers, and fantasy sports, the real potential far exceeds even the wildest assumptions.
Firstly, the US has numerous local gambling markets the size of New Jersey, for example, with a population of over 10 million. Secondly, many states with populations over a million are recognizing the commercial benefits of legalizing gambling, particularly sports betting. Over the past three to five years, and certainly in the year since the ban was lifted, more than a dozen US states have announced legalization plans.
Ultimately, we see that America is rapidly moving toward realizing its potential. At least, it’s happening much faster than predicted.
There’s a lot of talk about the financial problems of DraftKings and FanDuel. Do you think they’ll maintain their market share?
In principle, everyone expected DraftKings and FanDuel to take a prominent position in the newly legalized US market. However, no one expected them to become “kings of the hill.” Of course, they have to compete with European and Asian companies with extensive experience in sports betting.
DraftKings CEO Jason Robins’s announcement of revenue growth in 2019 to $190 million is offset by the operator’s net loss of $114 million. Overall, we see the company making virtually no profit. Losses increased by 52%, while revenue increased by 44%.
But I want to point out that this is only the first year of the legalized US market. A balanced analysis can only be made after five to seven years of operation.
More and more operators, as well as industry regulators, see potential in the development of mobile sports betting. What’s your take on this?
Around 20 countries worldwide have already legalized mobile operators’ sports betting activities. Some states are planning to consider similar bills. I know that in Vermont, Senators Dick Sears and Michael Sirotkin have amended the state bill. Starting in July 2020, sports betting will be permitted on mobile devices in Vermont. Mobile gambling is legal in New Jersey, Nevada, and Pennsylvania.
I’m confident that mobile sports betting is the future of the bookmaking industry. It will also pave the way for mobile casinos, poker, and other forms of gambling. However, all of this requires significant investment and smart marketing. At 888, we can’t yet expand our reach to every market in the US.
How do you plan to proceed?
Our plans include selecting a market with the greatest development potential in terms of gaming product offerings and favorable taxation. Currently, the legalized market in the US is experiencing a state of flux, with everyone trying to determine and forecast the financial viability of markets. Currently, there is some understanding of which areas will quickly take off, while others are, one might say, already moribund.
Our current goal is to prioritize markets with significant potential. This is, of course, the online gaming industry, which has already taken Europe and Asia by storm. We believe something similar is expected in the US. For us, this is a familiar area in which we can offer players a wealth of new, technologically advanced, and high-quality products.
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