We have written on new greenfield categories of payment spending in the US like cannabis, and today we look into the very popular phenomenon of online betting. Online sports betting in the US has taken off following a 2018 Supreme Court ruling which overturned the Professional and Amateur Sports Protection ACT (PASPA) and allowed states to legalize the activity. Incredibly, only five years later, in 2023, online sports betting is permissible in thirty states supporting an $18 billion market, and is expected to grow at a 10% rate through 2030. Most online sports betting is enabled by mobile apps through well-known companies like DraftKings, FanDuel, BetMGM and Caesars Sportsbook. As an example of a successful sports betting app, DraftKings (NASDAQ:DKNG) is a public company with a $20 billion market capitalization, achieved $2.95 billion in 2023 revenues, is expected to post $4.75 billion topline in 2024 and positive EBITDA for the first time. And, from what we can tell, DraftKings uses a combination of payment processors for card, account management, and withdrawal functions from Paysafe, Paypal and Trustly, respectively.
The variety of betting choices is impressive. DraftKings lists 14 different sports, including the traditional leagues like the NFL, NBA, NHL, PGA and MLB. There is a triple play at work in driving transaction growth in the DraftKings model, stimulated by the ubiquity of the mobile phone, ability to easily introduce new offerings, and the near infinite number of attendant fantasy leagues for those sports. The multiplier effect for payment and transaction advancement may only be limited by the imagination of the online sports service providers.
And there’s more…
ESports (video gaming) is also bettable, allowing the consumer to wager on their favorite gamer in tournaments and other venues. With over 2 billion gamers worldwide, this one payment category could stand on its own. Add to ESports the offshore predictive markets that allow for gambling on political race outcomes, and the online gambling phenomenon seems to have no limitations. In fact, this nascent industry is just getting started.
