Why operators need to acquire sports betting customers now

In New Jersey, the average cost of acquiring an online casino player is now well over $500 per new depositing customer, according to operators in the state. That’s a substantial price to pay for a customer in a ring-fenced market that is a little over four years old and with a small number of competing brands.

Indeed, it’s a figure that should make casino and racetrack operators in the state – and elsewhere – sit up and pay attention. Why? Because when regulated sports betting arrives, those costs could go even higher.

New Jersey is going to be the catalyst for legal sports betting across the US. Most observers believe the Supreme Court will repeal PASPA, effectively allowing operators in New Jersey to run legal sports books for the first time. Other states will follow suit, with West Virginia having just passed its own sports betting legislation.

Once New Jersey gets the green light, there will be a rush as operators hurry to get to market ahead of their rivals and acquire players. Like in the early days of legal online casino in the state, expect large welcome bonuses, overly-generous promotions, and multi-million-dollar market spend.

But this may not be the most effective – or cost-efficient – way to acquire sport bettors.

Building blocks

Operators across the US cannot monetize new customers today, but that doesn’t change the fact that player acquisition costs are as low as they will ever be. Between the NBA Playoffs and the World Cup, there’s a variety of high-profile events ideal for brands to harness sporting passion and drive customer acquisition.

Today, acquisition costs could be less than 5% of LTV. So, the price is right, but how exactly can operators tap into the psyche and, perhaps more importantly, the mobile devices of sports bettors?

First of all, it is important to understand who sports bettors are and where they are spending their time pre-PASPA. The most obvious engaged sports bettors currently jump through digital hoops to place wagers in the gray market. These customers are digitally savvy, passionate enough to find a way to wager and, if the product and pricing strategy is right, will take advantage of the opportunity to transact locally.

However, the operators who succeed in acquiring market leading volumes of profitable customers will source from multiple areas. Daily fantasy databases hold many sports bettors in waiting, and provide better odds than their current game. Furthermore, if the rise of European casino and sportsbook power plays has taught us anything, it’s that online casino databases are a rich source of LTV extending cross-sell into online sportsbooks.

Let’s not forget: the American Gaming Association estimates that 25 million Americans currently bet on sports, and that post-PASPA, we’ll see nearly double that number wagering. Even if you cut those numbers in half: there is a large pool of future recreational bettors out there today.

Brands that have invested in real-money gaming and social casinos are already engaged with some future sports bettors. Once both online casino and sportsbook are live, internal cross-sell opportunities can be managed cost-effectively using existing marketing and bonusing capabilities.

For example, when we merged an online sports book with a casino in South Africa, we found that 65% of the casino loyalty program bet on sports. Many casino patrons immediately became sports betting customers to take advantage of the earn-and-burn that only we could offer.

Data (as always) is king

However, the most powerful thing all operators can do today is to leverage the power of their brand’s social network to collect the most crucial of currencies pre-PASPA, data.

Brands can leverage the interactive power of free-to-play games across existing social network assets to connect with the sports bettors of tomorrow. Customer and FTP games behavioural data will supply you with the data required to powerfully market to your sportsbook customers post go live. Indeed, drawing on a powerful example, Sky’s Super 6 has delivered as an effective acquisition tool for Sky Betting and Gaming.

Once players have been engaged with free-to-play sports betting products, it’s critical to deliver best practice digital marketing to ensure high marketing ROI.

Operators who strike the right marketing cadence and focus on fan passion around big events will build the most valuable databases and will drive more upsells to products that pay their bills today – online casinos, hotel rooms, food and beverage, and so on. For New Jersey operators, there is still time to launch F2P sports betting products.

In reality, the first real customer acquisition crunch (when the price will most certainly be wrong) will commence towards the end of the year when multiple sportsbook operators are live.

Operators with foresight can take advantage of the low acquisition costs and be ahead of the game for when legal sports betting touches down in their state.

Daniel Kustelski