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John Pappas: “I’m Impressed by the sports betting industry during COVID-19”

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How is COVID-19 affecting the sports betting industry and how will the industry recover once this is over?

USBR.com had the chance to ask John Pappas of Corridor Consulting what his thoughts are on the current state of American sports betting and what the future holds sports wagering in the regulated markets.

John Pappas is the founder and CEO of Corridor Consulting. Pappas has more than two decades of government relations, public affairs, and strategic communications experience. His diverse professional background allows him to understand the policy-making process from every angle. For the past dozen years, he has focused his advocacy efforts on the expansion of internet gaming and sports betting in the United States.

What do you think the long term impact Covid 19 will have on the gambling industry, and on sports betting specifically? When it returns, what will have changed (if anything)?

John PappasPappas. I don’t have to tell you that we are swimming in uncharted waters. As much as I pride myself on having the “inside scoop” it is difficult to predict the future landscape of gaming, when the news and information we have to process changes on a daily basis. 

That said, for the short-term there is little doubt that the gaming industry will change and, more importantly, people’s feelings about gaming, particularly at a casino, will be altered.

The question remains: for how long will the virus impact the psyche of Americans about congregating in public settings, like a casino? I am confident the industry will take steps to make their properties a safe and comfortable environment and it will be interesting to see what innovations we see on the casino floor to abide by social distancing standards and new norms.

The current situation has highlighted the need for the land-based casino industry to have a digital offering (iGaming) as well. I am hopeful that the industry and the dozens of states with commercial and tribal casinos will push for iGaming expansion in the coming year. It’s always been a smart business decision to modernize gaming into the digital era, but it has become far more important to serve as a revenue life-line not just for the casinos, but for state governments that rely on gambling tax dollars to fund critical programs.

Sports betting has experienced a precipitous decline with the cancellation of live sports across the world. However, we are starting to see glimmers of optimism that some sports will return by the summer in the U.S. and internationally. This will give sports books some hope, but they also must understand that the economic impact of COVID-19 is likely to alter the betting habits of most Americans. So even if there are sports back on the calendar, the appetite to bet on those events will likely be lower to some degree. 

COVID-19 is likely to alter the betting habits of most Americans

I have been truly impressed by the sports betting industry during this time. They have sought to innovate, adapt and push for new content. eSports and other non-traditional sports, like table-tennis, have taken center stage. It is encouraging to see that state regulators be nimble and responsive to the challenging environment and many have quickly allowed for wagering on these events. Long-term, I think gaming regulators (and state lawmakers) will be more apt to allow for unique event-based wagering, not just betting on traditional sports like baseball, basketball and football.

Offshore online sportsbooks are still occupying significant real estate online and draw away users from regulated local books. What do you think needs to happen for more U.S. bettors to embrace legal, U.S. sports betting? Once more states regulate, what is that transition going to look like?

Pappas. For the sports betting consumer it’s all about convenience and cost, and unless a state creates a competitive framework for sports betting, the off-shore books will continue to have a firm grasp on U.S. customers.

Some states have gone about sports betting the wrong way. One of the biggest flaws is not embracing mobile/internet betting and when you do, removing barriers for people to sign-up, deposit and bet. In-person registration mandates that require a user to go to a casino to sign up for a sports betting account make every illegal bookie smile. 

Policymakers need to understand that more operators in the market doesn’t dilute revenue, it actually increases it. Creating competition and a reasonable tax rate allows legal sports books to compete with their un-regulated counterparts. Competition forces innovation, promotions and marketing to attract and retain consumers. The state will benefit when competitive limits are removed and it makes the off-shore sites a far less attractive alternative. New Jersey has proven that pre-PASPA sports bettors and new customers will migrate to the legal options

The American industry has been relatively slow to react and adapt to a post-PASPA sports betting climate and European businesses own and manage most of the online publication and affiliates. How can local business start grabbing more market share and compete with the well-established European operations?

Pappas. Just like in sports, the experience of having been in the “big game” before is huge advantage. That is why companies with a long-standing European footprint have a leg up in the U.S. market. They have been operating sports betting, marketing the product and adjusting to the nuances of this industry for many, many years. That experience means something. Even some of the biggest U.S. “homegrown” sportsbooks, like a DraftKings, rely on the expertise of European technology companies.

don’t be shy to learn from the European market

This is not to say there is no room for American-born businesses. In fact, I think some American sports betting companies are exactly what sports bettors desire, because they bring a stronger understanding of our nation’s sports culture. My advice to U.S. start-ups is to lean in on what makes your company unique in the market and how your connection with a U.S. sports betting audience can be leveraged. Also, don’t be shy to learn from the European market and hire individuals with talent and experience (from all over the world) to come work with you.

Companies also must have patience (and the capital that goes along with it) to be able to sustain a volatile political and policy making process in the U.S. Unlike other areas of the world that have accepted sports betting and gambling with ease, it is still very much a fight in the U.S. because of two reasons: 1) gambling is considered vice and it makes politicians scared, and 2) every state has existing forms of gambling (lotteries, tribes, casinos, horseracing) and they are all hyper-competitive. That makes slicing the gambling pie very difficult if all the stakeholders don’t believe there are getting the same sized piece.

I think many of the European companies thought it would be much easier post-PASPA, but they too have come to realize the nuance of making laws in the U.S. Even still, when you look at sports betting, I think it is fairly remarkable that more than 20 states have authorized it since May of 2018. By U.S. standards this is lighting fast expansion and I expect it to continue to grow.  

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