Mobile Sports Betting Start-Ups Would Be Wise To Pump The Brakes

Posted By Juan Carlos Blanco on June 1, 2018

No sooner did SCOTUS strike down the federal sports betting ban than potential stakeholders start envisioning the inevitably massive windfalls they figure are coming down the pike.

Many of these are lawmakers, some who continue to spout potential sports betting revenue figures steeped in either willful embellishment or blissful ignorance.

But they’re far from the only ones with a cart-before-horse approach. Plenty of would-be, sports betting-focused startups no doubt have visions of cash-stuffed sugarplums dancing in their collective heads, as well.

Sports betting faces different start-up climate than DFS did

A recent Bloomberg piece highlighted how multiple companies are looking to get an early jump on what is expected to be a considerable expansion of mobile wagering over the next few years.

Granted, the article takes a generally measured tone with respect to how quickly fully digital sports betting platforms — such as apps allowing for in-game prop betting — might be able to take off. However, it does, at one point, attempt to draw a comparison to the daily fantasy sports industry that could prove misguided.

It’s easy to see how the long-anticipated but nevertheless sudden arrival of legalized sports betting creates a temptation to draw certain parallels to DFS:

  • The existence of both naturally depends on the same underlying games being played.
  • Both have fought battles of public perception and legality.
  • The meteoric rise from startups to industry heavyweights that FanDuel and DraftKings experienced in what was then a new industry is likely to inspire many nascent sports betting hopefuls.

But the harsh reality is that the road could prove much rockier this time around. After all, at the time of their respective ascensions, FanDuel and DraftKings enjoyed a few advantages with respect to the product they were peddling:

  • Fantasy sports was already an established, legal form of entertainment for millions for decades prior.
  • Playing fantasy sports for money carried no appreciable social stigma; it was widely accepted that friends and family got together each year to draft their squads and put a little skin in the game in the process.
  • Multiple season-long fantasy operators had long been running contests with significant cash prizes — particularly for fantasy football — with no legal conflicts of consequence.
  • There were no “black market” fantasy companies to contend with.
  • That’s because, with the exception of a handful of states, playing fantasy sports for money wasn’t expressly illegal. Moreover, as a new offshoot of what was widely considered an innocuous form of entertainment, DFS wasn’t likely to be on legislators’ radars for quite some time.

Sports betting can’t afford legal blindspots

Clearly, none of those factors apply to sports betting.

DFS snuck into the party uninvited and didn’t draw too much attention to itself. That is, until one of its crew inadvertently put a turd in the punch bowl.

In contrast, all eyes – some of them still disapproving and suspicious — are on sports betting as it makes its grand entrance.

Freedom to legalize and regulate is great, of course. However, that guarantees nothing in terms of expansion, especially on the digital front.

Sure, the potential and convenience of mobile wagering is a beautiful sight to sports betting app developers looking to capitalize. But having an approach of walking “right up to the line of what lawmakers will tolerate” that one such company, Readyfire, reportedly plans to deploy, could have unfortunate repercussions.

Lawmakers around the country will be contending with multiple contingents whose positions run the gamut from mildly concerned to extremely dissatisfied with respect to widespread legalized sports betting. Now that they perceive the overall war as lost, the focal point for many will be to win the battle of making wagering as restrictive as possible.

Taking this into account — as well as the incredibly arduous road sports betting already had to take to legalization — the ask-for-forgiveness-instead-of-permission strategy doesn’t exactly shape up as the most prudent.

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Juan Carlos Blanco

Juan Carlos Blanco has served as a freelance writer for a wide variety of online publications and websites, with an intensive focus on fantasy sports. Juan has provided analysis and comprehensive coverage of the MLB, NBA, NFL, CFL, AAF and AFL while also reporting on news and developments in the daily fantasy sports and online gaming industries.

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