How To Make Online Sports Gaming A Sure Bet For Payments, State Governments

Damon Runyon — the American author who created characters like Sky Masterson, immortalized in “Guys and Dolls,” and enamored with rolling the dice — once wrote: “The race is not always to the swift, nor the battle to the strong, but that’s the way to bet.” Against that backdrop, considering the speed at which states are accepting online sports betting (and the strength of the dollars flowing into the space), legalized gambling via mobile seems a sure wager.

To that end, George Connors, senior vice president of gaming solutions at Fiserv, told Karen Webster in a podcast that it’s just a matter of time before more state governments and payments industry stakeholders see the positives from legalized online gaming and sports betting.



Part of the impetus comes from the fact that sports betting is legal in 19 states, though mobile betting is only allowed in 13 of them. Several other states have online gambling legislation in the works. The challenge for wider acceptance of online wagering, however, comes as $150 billion in illegal bets are made through online bookies and offshore sites.

As Connors noted, the change is inexorable, moving from in-person wagering (there will always be a place for land-based casinos) to betting done across cyberspace. As detailed in a recent edition of the Commerce Connected Playbook, 90 percent of sports bets will be placed via online or mobile devices through the next decade.

The Current State

The current state of the gambling industry shows just how much the landscape has changed in terms of accepting a range of bet placements (and payments), Connors noted. There has been a continuing evolution that — viewed through the prism of his own experience — has spanned decades, and moved well beyond the confines of coins in buckets and croupiers’ cages.

“In the past,” said Connors, “when I first started in the industry 25 years ago, the payment products that are so widely used today were few and far between. Cash was king — until credit, debit and check-cashing became a significant part of the equation.”

Connors added that, through the years, ATMs took root in brick-and-mortar casinos, as sponsoring banks and issuers embraced debit transactions. Check-cashing also found a place, and ticket-redemption machines proliferated as well.

One overarching theme still remains, said Connors: “The battles that we had in the early days, to make it very clear how the transactions would be utilized, and to ensure that they comply with and fit all regulations — well, that has not changed.”

The Technology Component

For the states where betting is legal at retail locations and online, Connors said, the battle cry has been to get more dollars to both casinos and virtual floors. He added that Fiserv and others have had to take what would normally be a brick-and-mortar transaction, and facilitate a card-not-present (CNP) transaction in an eCommerce world.

Indeed, the regulatory environment has progressed on a state-by-state basis. As online gambling has gained traction, the onus is on technology providers to make sure players over mobile means are geographically located where they are supposed to be transacting.

Speed is important when placing bets, but so is ensuring that good transactions get through. Thus, said Connors, it is important to utilize sophisticated tools to know your customer (KYC), and identify geolocation to make sure transactions originate and settle in the states where they are allowed. Connors likened the tech-driven approach to building “high walls” that keep fraudsters from transacting illegally in states where gambling is still not legal.

When asked how pervasive legal sports betting may become in the United States, Connors said it’s realistic to assume that several more states could authorize and regulate such wagering — perhaps sooner rather than later.

He recounted a personal anecdote: Having grown up in Tennessee, a relatively conservative state, it seemed to be an unlikely candidate for legal gambling. However, though brick-and-mortar gambling is still not permitted, the state legislature passed a law earlier this year that allows for mobile sports betting.

Regulation plays a key role in the orderly spread of legal wagering, Connors noted.

“We’re going to be able to know our customers, and all stakeholders are going to benefit — and it’s absolutely going to have a negative effect on the illegal activity,” he said.

To get a sense of just how quickly mobile means can lure betting activity (swelling revenues of gaming operators and state coffers, too), consider the fact that mobile wagering accounts for about 80 percent of gambling in the state, equivalent to about $241 million of bets in December.

As sports betting moves increasingly online, Connors said it is important to observe the nuances of transactions as they are presented for processing and approval. It’s been a stumbling block in recent years to get the issuing banks on board to make sure the standard debit and credit transactions happen.

Going back to 2013, when the legalized U.S. gambling industry first started online, payments were primarily centered around ACH transactions because of the heavy decline in credit and debit transactions, as stated above. However, with other core competencies, Fiserv has helped increase the options on payment offerings when it comes time to wager.

Looking ahead, it’s important for the issuing banks and sponsor banks to understand that sports betting is here to stay. Across the next three to five years, Connors predicted, the banks will get comfortable with allowing these transactions.

“We need to have the online experience be as accepted as the brick-and-mortar gambling experience,” he told Webster.

It seems the stage is set, as the author Runyon might reflect, for a sure bet.