Home > VIXIO GamblingCompliance’s James Kilsby: “Overall, states are regulating to a pretty high standard”
Interviews News

VIXIO GamblingCompliance’s James Kilsby: “Overall, states are regulating to a pretty high standard”

vixio

Since the repeal of PASPA three years ago, a lot has happened in the U.S. sports betting industry, to say the least. Each month we have seen stories about new market developments and the list of states with legal sports of betting hasn’t stopped growing.

2021 is no exception. This year, there have been many interesting developments, with record-high betting numbers, in-person account registration making a comeback, progress in New York, and new betting markets being created.

As we approach the 3-year anniversary of the PASPA repeal, we thought it would be a good idea to chat with someone who has a good understanding of sports betting regulation to learn more about where the industry is headed.

James Kilsby is VP of the Americas at VIXIO GamblingCompliance, a regulatory intelligence firm out of Washington D.C. James took time to answer a few questions about the industry and the work that VIXIO is doing.

First and foremost, what is VIXIO and what is your role as it pertains to the sports betting industry?

Kilsby. Since 2007, VIXIO GamblingCompliance (originally just known as GamblingCompliance) has been the leading provider of regulatory intelligence to the global online gambling industry. Our subscription services help operators, suppliers, advisors, regulators and investors to anticipate, understand and evaluate changes in laws, regulations or policies so that they can prepare to enter new markets or ensure they are remaining compliant with legal requirements in jurisdictions where they or their partners do business.

Obviously, the pace of change in the U.S. since the Supreme Court ruling of May 2018 has been extraordinary, and we offer a range of tools that save a ton of time and energy reviewing and comparing different regulatory requirements, spotting policy trends, gathering and analyzing market data, identifying partnership opportunities, and forecasting market growth based on different legislative scenarios.

Your recently conducted a survey in partnership with SBC. What has been the most surprising insights from responders and which particular challenges have been brought up regarding the regulatory landscape in the U.S.?

Kilsby. Prior to last year’s Betting on Sports America conference, we collaborated with our friends at SBC to survey our subscribers and their event attendees on the key regulatory and compliance challenges of entering the U.S. market. (You can download a copy of the survey here.)

The primary regulatory obstacle to growth identified by survey participants was the Wire Act, which prohibits transmissions of sports bets across state lines. That was followed by the lack of consistent enforcement against offshore operators, specific legal restrictions that arise from federal laws related to tribal gaming, then high tax rates and license fees.

The survey also found that despite those challenges that arise from the Wire Act, enforcement and Indian Gaming Regulatory Act – i.e. all matters that pertain to federal law in some way or other – 60 percent either agreed or strongly agreed that the status quo of strictly state-led regulation was still preferable to any kind of federal intervention in sports-betting policy.

I was somewhat surprised the Wire Act featured quite so prominently in our survey, although it most certainly is a very influential component of the regulatory landscape overall. I would imagine that the legal uncertainty arising from the U.S. Department of Justice’s recent attempted reinterpretation of the Wire Act, to apply the statute beyond sports betting to other forms of gaming, only to see that overturned in federal courts, was a major factor here.

We are starting to see the influence of IGRA restrictions be more prominent in 2021, as the Florida legislature considers a new compact with the Seminole Tribe perhaps most notably, and offshore competition remains a key issue where the federal government has much more tools at its disposal than the state regulatory bodies.

What did you make of the recent Bally’s MKF acquisition? The evaluation and final acquisition figures raised some eyebrows in the industry and I am curious to know what type of deals you think we are likely going to see this year.

Kilsby. Speaking a bit more generally, many of the partnership deals or acquisitions we are seeing seem to point to at least one of two things, in my mind. First, there are the high costs of customer acquisition for mobile sports betting – strategic partnerships or acquisitions that provide operators with access to a ready-made database of keen sports fans make sense in that regard. Not just with Bally’s-MKF, we’ve seen this in other alliances such as between BetMGM and Yahoo! Sports, among others. DFS businesses, being able to operate in more states than online sports betting, make sense as an early customer acquisition tool for new markets.

A second type of partnership we’ve seen a lot of is brand-building – sportsbook operators acquiring a brand or aligning their own with other brands that resonate with large numbers of sports fans. Again, DFS businesses – most notably FanDuel and DraftKings, of course – have brand equity in this regard. But so, too, do CBS, NBC, ESPN, The Athletic, etc., plus major sports franchises across the country. So it’s no surprise we’ve seen sportsbook operators leverage those relationships as they build their own brands in the U.S. market.

Looking ahead, I think we’ll see more of both these types of deals, in addition to the market-access partnerships between operators and casinos or sports teams that will vary in shape and form based on the regulatory requirements of each state.

Based on what we’ve seen from state legislatures early in 2021, we can expect to see more direct partnerships between operators and sports teams going forward, as states grant local teams their own licenses similar to how New Jersey and others have favored casinos or racetracks. Also, large operators partnering with minority- or women-owned businesses in specific states could become a trend. We’ve seen that to some extent in land-based casino licensing in past years but it is now also becoming a feature of licensing regimes for sports betting in certain states, such as Maryland and Virginia.

From a compliance and regulatory standpoint, what state has the safest and most customer-focused betting landscape in 2021? What can other states learn from it?

Kilsby. Generally speaking, most of the states with legal sports betting have been diligent in applying pretty stringent regulations that should give customers confidence that their funds are secure, that offerings are fair, etc., and overall I’d say that states are regulating to a pretty high standard compared with most international jurisdictions, especially those that are legalizing sports wagering for the first time.

There are absolutely challenges and we’ve seen a handful of regulatory hiccups – but that should be absolutely no surprise at all given the rapid pace of market expansion since May 2018. As we start to see states open up opportunities for smaller or local operators in sports betting, there could well be additional challenges because more opportunities are being offered to companies that have less experience in regulated sports wagering than the multi-state or international operators. So I think we’re going to have to see regulations continue to adapt because the kind of laws that are being passed state-to-state are evolving as well.

It terms of consumers, clearly there are benefits to bettors of markets with strong levels of competition. We can see that more competitive markets are generally performing better revenue-wise than those with a single provider, but even then there are different approaches taken.

Overall, I think it’s important for states to ask what policy goal they want to meet through the legislation. Is it purely raising as much tax revenue as they can? Bolstering their local casino industries or sports franchises? Creating opportunities for local businesses? There are different policy options available based on these choices, but at the end of the day state legislatures and regulatory agencies do need to make sure that the sportsbook product they are authorizing is going to be able to meet consumer expectations, otherwise many can travel to other states or go offshore.

How can we reduce the media footprint of offshore books and bring more people to bet on U.S. licensed books (aside from regulations in more states)?

Kilsby. I think education and patience are the keywords here. As you say, more regulation should reduce the media prominence of offshore sportsbooks but even more so will be the expanding networks of alliances between media companies and legal operators. Those weren’t in place when the Supreme Court ruling had just come down so we still saw offshore operators promote themselves through the media, capitalizing on the popular myth that the Supreme Court ruling had made sports betting legal (when it just gave states the authority to make it legal).

Today, so many more national and local media groups are affiliated in some fashion with legitimate, regulated sportsbook operators. The industry, regulators, and sports teams, among others, also have a role to play in crying foul when they see it, but I do think this is something that is going to keep improving with time.

One policy area that is a factor, however, are novelty bets which aren’t always available in specific states. With offshore operators, you can bet on politics, TV talent shows, pro wrestling or so many more non-traditional events that you can’t always do in the legal market one way or another and this remains fertile ground for offshore books to promote their odds in the absence of lawful competition. You’re probably going to see some loosening on the part of states when it comes to bet types that reduce this area of friction, and in the absence of that we’ll see more of lawful operators providing odds on politics or other events strictly for free-to-play contests – i.e. to gain the same brand exposure.

Finally, what is your top 3 wish list for the industry overall today?

Kilsby. I should stress that at VIXIO GamblingCompliance we are a completely independent and impartial service and we don’t advocate for any one approach to sports betting or any other form of gambling, so I can’t say I have much of a wishlist per se!

However, I do think it is absolutely imperative that the industry places a high priority on responsible gambling and responsible advertising over the next couple of years. As we recently explored through a series of articles on VIXIO GamblingCompliance, we have seen from across Europe that there are risks of a policy backlash if advertising becomes too aggressive, and I think it’s going to be imperative that the industry is proactive in applying self-regulation and restraint to marketing, and in seeking to constantly raise standards on responsible gambling so that it can be seen by policymakers to be a mature and socially responsible industry that does not warrant a more intrusive level of regulation.

Subscribe for sports betting offers, promos and news

Related stories

PointsBet Promotions Continue To Deliver

Ryan Knuppel

Barstool Launches Mobile App in Pennsylvania

Ryan Knuppel

New York’s Mobile Status and What It May Mean For Neighboring States

Ryan Knuppel

Update of Recent States and Legal Sports Betting

Tyler Vaysman

SBTech Signs Pala Interactive Partnership

Joan Mantini

Indiana Sees Large Dip in Sports Betting Handle for April 2021

Ryan Knuppel