Greg Ponesse, Chief Revenue Officer at Compliable

The year is coming to an end, and we can look back at an interesting 12 months that have seen the US betting and gaming landscape further expand into three new states, Vermont, North Carolina and Kentucky.

The American Gaming Association (AGA) recently released numbers that showed commercial gaming revenue was boosted in Q2 of 2023, hitting a record of $16.07bn. The impressive results marked the 10th consecutive quarter of growth for the industry.

Yet, some operators have had to navigate through choppy waters, with news stories from the last 18 months including Churchill Downs, MaximBet, PlayUp, Fubo, FOX Bet and WynnBet closing or pulling out of states as they struggle with profitability.

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Sports betting, the main legalized vertical in the US, is such a low margin business that the ability to save money anywhere in operations is so important. Competition is extremely high, and the sports betting markets in the majority of legalized states have been dominated by a handful of behemoths such as DraftKings and FanDuel.

While these operators have large compliance teams to cope with the fragmented regulatory landscape that exists across states in the US, smaller to medium-sized companies have fewer resources to handle ever-changing regulations while also preparing for new states opening up.

Historically, if not handled by an internal team of compliance staff, regulatory issues were simply given to outside counsel with their associated high legal fees. Furthermore, overstressed smaller compliance teams leave room for mistakes as a result of human error which can lead to large regulatory fines.

The number of reg tech solutions now available in the gambling space can be hugely beneficial and can drive down costs in a number of ways, with one of the major advantages being that companies can benefit from compliance work that is being done in one market across similar jurisdictions.

Despite a lack of common regulatory approaches in legalized US states, there are still many similar obligations, and with technology, the process to complete these tasks can be automated. Licensing of employees and reporting of revenues or other data are common compliance duties that most regulators require. This type of requirement can easily be handled by technology rather than employees, significantly increasing efficiency, and freeing the team to focus on higher level problems which can be critically important when launching in new jurisdictions.

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Simply put, reg tech allows a smaller team to operate with the same skills and efficiency as a much larger team and can help cut costs while still maintaining operational compliance.

Even if fewer US markets are currently opening up compared with a few years ago, successful gambling operators and suppliers are targeting multiple states at a minimum. We have passed the point where any one person can be an expert on every gambling jurisdiction’s requirements and tech is a necessary component to help manage the processes.

As 2024 is approaching, we will see further regulatory developments in the US betting and gaming space and more consolidation cannot be ruled out as operators grapple with being profitable in a hyper competitive sector.

Reg tech can play an important part, cutting costs while streamlining and simplifying processes and procedures, helping operators to succeed in the exciting US market.