Instant payments are increasingly what move the needle for sports bettors.
The global sports betting industry is widely projected to deliver outsized growth in the coming years as digital transformation serves as the industry’s primary accelerant and consumers spend more time on their phones and get more comfortable with digital payments and wallets.
A key component of the industry’s shift from brick-and-mortar betting parlors to online platforms is the ability to make real-time payments and instant disbursements to users.
The online sports betting industry continues to concentrate toward a limited number of operators, and the ability of those operators to provide their users with instant payouts of their winnings, rather than delayed disbursements, will prove to be a key differentiating factor and act as a customer retention moat as competition coalesces among the major players, including Barstool Sportsbook, BetMGM, Caesars Sportsbook, DraftKings, FanDuel and WynnBet, among others.
As regulations continue on a state-by-state basis to allow online gambling, sportsbooks find themselves in a customer acquisition race. DraftKings alone stated during its third-quart earnings call that it is live and registered in 18 states that collectively represent over a third of the U.S. population.
The still-emergent industry is being built on a framework that contains all the hallmarks of the connected economy, from digital wallets to stored credentials and more, and its growth and the successes or failures of individual actors will hold valuable lessons for all organizations operating within the digital payments space.
A True Digital Environment
The speed with which customers receive their winnings has always been a sticking point for bookkeepers and casinos, no matter the environment, be it online or offline, that they operate within.
Digitally native bettors, many of whom may be entirely new to the sports betting and gambling world having never visited a casino or engaged with a personal bookkeeper, expect their experience to be seamless and move at the speed of the internet, or as close to real time as possible.
Nothing kills the joy of a big payout more than the wait before it hits a customer’s account, and sportsbooks that make their customers wait the two to five business days it takes for an automated clearing house (ACH) settlement to go through or send paper check in the mail are likely to lose that customer to a competitor who offers a quicker, more seamless payout option.
Making payouts instant, or at least as close to real-time-payments-level as possible, is even more mission-critical due to the fact that the sports betting industry is still primarily in a customer acquisition spree mindset, where enjoying any edge available over one’s peers can be the difference between first and last place.
Companies focused on acquisition don’t see these new customers paying off on a gross profit basis for at least the next two to three years, meaning that acquiring as many as possible will be core to success relative to competition as those profit margins are realized.
It’s My Money, and I Want It Now
As reported by PYMNTS earlier this month, while the power and appeal of instant payouts in a setting like sports betting is obvious, the realities are a little more complicated.
There have been around 2,400 complaints citing delays or glitches in withdrawing winnings filed by consumers against just the top three U.S. sports betting operators in the last three years.
Sports betting is a heavily regulated industry, and withdrawal speed is often caught up in and dragged down by simple compliance checkpoints.
PYMNTS spoke with Caesars Sportsbook’s Trend Striplin, vice president of payments and fraud, who said that for 97% of Caesars users, the payment process takes about an hour to make sure the company is complying with “regulatory, financial and accounting controls and fraud reviews.”
As always across the payments ecosystem, it is important to align consumer and merchant payment preferences as well as to ensure that the expectation gap is not too big.
As sports betting matures post-expansion, the real-time payment and user experience kinks will ideally be worked out. Innovative onlookers would be smart to pay attention, as finding and leveraging ways to make money move faster, as well as successfully enticing users to natively store their payment information, will never not serve as an attractive competitive advantage.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
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