New York State mobile sports betting finally got out of the starting gate in January, and from the start, operators attracted the kind of handle that dreams are made of. Since launching on January 8, the nine current mobile apps have exceeded $2 billion in wagers.
But since all sportsbooks offer pretty much the same product, the competitors depended quite a bit on costly promotional deals to attract new customers. And while they attracted customers, they didn’t reap much in the way of profits—or any profits at all.
Truth is, Caesars, FanDuel, DraftKings, BetMGM and other operators lost money, proving that advertising and heavy promotion is not the path to profits. That’s especially true if lawmakers become concerned about the number and frequency of ads and promotions—concerned enough to shut them down, as in some European markets.
“One of the challenges that’s come up in legislative channels is the number of promotions,” said Brendan D. Bussmann (below.), managing partner at B Global. “Whether this be the number of ads or the number of promotions, U.S. operators need to make sure they don’t repeat the mistakes of some other jurisdictions, where legislators and/or regulators take a stark response to these efforts to market, as opposed to a prudent and patient response.”
Long-term efforts should go to the retention of existing customers and the reactivation of one-time clients. It’s a formula for success not only for sportsbooks, but iGaming operators as well.
“There are a host of companies out there that can assist with customer retention,” Bussmann said. “A rewards program is one of the keys that some operators have now implemented across the sports betting spectrum as opposed to just their regular gaming and non-gaming products. For the long-term viability, it is essential to be sustainable.”
Firms like Enteractive specialize in player reactivation. Working with operators, it opens new, two-way conversations with hard-to-reach players with the goal of regenerating dormant revenues. The process starts when the operator shares inactive customer data. That data is entered into what Enteractive terms its “ReActivation Cloud,” which connects agents to former players “for a friendly 1:1 talk in their language.” Reinstated customers are then entered into “a careful CRM contact loop to build long-term loyalty.”
“We’re a part of the customer relationship management mix for operators, filling in the gaps that require a more human approach,” said Andrew Foster (l.), Enteractive’s chief business officer. “Our call agents speak directly with players to cultivate brand trust, loyalty and long-term lifetime player value.”
The customer pool includes registered players who aren’t currently funded, have let their accounts lapse, or don’t respond to more traditional marketing. Contact can occur at any point in the player cycle, from a week after someone registers, to two years after they’ve dropped off.
Such businesses have been around a lot longer in Europe than in the U.S., where widespread legal sports betting is still in its early stages.
“We’ve been operating in Europe since 2008 and have grown and expanded our business globally since then, with fast growth in the last three to four years,” Foster said. “We’ve seen some great results for European clients including Kindred and Betsson.”
Enteractive is now adding U.S. markets to its portfolio, with an office in Miami cementing its domestic position. The company is licensed as a service provider in New Jersey and is looking to enter other states. Foster envisions partnerships with U.S. brands as well as European operators.
Like a law firm that takes no money unless there’s a favorable judgement, Enteractive offers its services on a “no-play, no-pay” basis. Operators pay via revenue-share or a remuneration package for each player who makes a new deposit, Foster said. There’s no financial outlay for operators, and therefore no downside.
‘Tortoise and Hare’
Bussmann views profitability and customer retention as “must-haves” in the present tense or near-term, and not as long-term goals. “While it’s still early on in the race, I’ve always viewed this as the tortoise and the hare, in which slow and steady will likely win in the end,” he said. “Yes, the rabbit may win on occasion, but profitability is becoming more of a focus as we look to enter year four of the post-PASPA era.”
He added that competition “breeds innovation, which breeds a better experience for the consumer. Market limitations on licenses have shown to constrain those efforts. Open markets have proven to be the best method for the consumer and the jurisdiction.” Markets like New York “should not be left to a handful of operators, but (focus on) how the market can best support those suitable operators that choose to operate.”
In that spirit, the New York Senate was expected to vote this week on a budget resolution that could allow up to 16 mobile sportsbooks by 2024, provided the New York Assembly and Governor Kathy Hochul go along.
New York State Senator Joe Addabbo Jr. told Gaming Today the Senate provisions are worth a look. “Everyone sees the potential that we’ve had with mobile sports betting,” he said. “This goes back to our original vision of more competitive skins or operators to compete with other states. So I think it’s a great conversation to have.”