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Wednesday, February 3, 2021

GS interviews Paysafe's Scot McClintic on Super Bowl 55, iGaming

Kudos to the Kansas City Chiefs and Tampa Bay Buccaneers, who will face off on Sun., Feb. 7, 2021. Despite the pandemic, the big game will go on. Indeed, payments analysts expect Super Bowl 55 to set a new record in U.S. sports betting, with millions of bets placed well ahead of kickoff time.

This week, Scot McClintic, senior vice president of iGaming Product & Strategy at Paysafe Group, discussed online betting trends in an interview with The Green Sheet, highlighting how payments industry stakeholders can further support this sector's growth. The Q&A follows.

What new trends have you seen in online sports betting and how are they attributable to COVID-19?

Through the course of 2020, the COVID-19 pandemic led American states and cities to impose lockdowns and shelter-in-place orders. This resulted in temporary land-based casino and retail sportsbook closures, with sports bettors needing to consider alternatives to in-person wagering.

Unsurprisingly, in states where online and mobile sports betting is permitted, the digital gaming space has seen strong growth. Our December 2020 research reveals that U.S. sports bettors have been wagering online more frequently, and over two thirds (68 percent) agreed that the pandemic has made them more comfortable with iGaming.

The online shift looks set to endure even as the pandemic stabilizes this year, as we've seen with many other eCommerce verticals. Close to two thirds (61 percent) of sports bettors we surveyed plan to bet online even more frequently in 2021.

What specific regulatory changes have helped to accelerate online sports betting?

For the U.S. space, the Supreme Court's May 2018 repeal of the federal ban on single-event sports betting in all states excluding Nevada was a game changer. This gave individual states beyond Nevada the green light to regulate this gaming vertical, with jurisdictions like New Jersey and Pennsylvania regulating and launching a sports betting market the same year.

Since then, over 20 states have regulated sports betting. That said, not all states' regulation covers online and mobile sports betting, with some restricted to wagering at brick-and-mortar, or retail, sportsbooks. Certain states like Mississippi allow online or mobile betting when sports bettors are on-premise at a casino or retail sportsbook but restrict wagering beyond the property. Other states like New Jersey and Colorado allow online and mobile wagering everywhere within state lines to complement on-property wagering.

Given that COVID-19 and brick-and-mortar casino and sportsbook lockdowns have galvanized an online shift in sports wagering, the big question is if state regulation will become broader—digital as well as in-person wagering—to acknowledge and respond to this trend.

What changes have you observed in consumer online betting behavior?

From a payments perspective, one of the ongoing issues for U.S. iGaming consumers is card declines due to a certain lag between recent gaming regulation and acquiring banks flagging sports betting transactions because of merchant category codes that have not kept pace with legislation. Players attempt a deposit with a regulated sportsbook in a state where gaming is now legal, and have the transaction rejected because it is considered illegitimate.

As gaming industry stakeholders and payment service providers like Paysafe work with acquirers, the card networks, and regulators, to resolve this issue, the immediate challenge to consumers remains. Indeed, our research reveals the issue has actually been getting slightly worse: with the 10 percent of U.S. players experiencing a decline regularly in our January 2019 research increasing to 14 percent in our recent December 2020 survey.

Nonetheless, our research shows that consumers are relatively flexible when faced with a card decline—if payment alternatives exist with the sportsbook in question. Our December 2020 research reveals that only 19 percent would leave a sports-betting brand when faced with a card decline, with close to three quarters (73 percent) attempting a deposit with another payment method.

The value of alternative payment methods (APMs) is immediately obvious in this respect, with over a third of players (35 percent) using a digital wallet to deposit after a decline. More niche APMs like online cash, or eCash, products are also gaining interest, with roughly one out of 10 players (8 percent) using this to deposit after a decline.

Overall, the big payments takeaway is that iGaming brands need to provide consumers with a broad payment offering – incorporating not only card payments but APMs like digital wallets, eCash and other solutions. By fielding a comprehensive payment offering, a sportsbook will not only serve every payment preference in the already diverse U.S. financial landscape but also negotiate the card decline issue in the near term.

To turn from deposits to payouts, or the withdrawal of winnings by a player, an important trend is how much consumers are prioritizing this over essentially every other aspect of a sportsbook. When selecting and trialing an online sports-betting brand, fast and streamlined payouts are paramount, with over a third (37 percent) of consumers we surveyed in December saying this was their most important consideration. Frictionless payouts came top in our research, beating the brand's reputation (32 percent), promotions (28 percent), competitive odds (27 percent), and even the different sports markets offered (11 percent).

How is Paysafe capitalizing on these trends?

It's essential for U.S. sportsbooks to offer a wide range of payment methods, including alternative payment methods. A comprehensive payment offering helps players and the brand overcome the challenge of card declines, and it also responds to the diversity of payment preferences in the U.S., where cash can still be king yet lives alongside card payments and rising interest in digital and mobile wallets.

Our response has been to develop a unified payments platform. This plugs iGaming brands into the full range of Paysafe's payment solutions – from card processing via our best-in-breed payment gateway, to our digital wallet Skrill, and eCash paysafecard and Paysafecash products as well as third-party APMs. The platform is accessed through one single, streamlined integration, simplifying the process for the operator and avoiding multiple separate integrations with different payment service providers. It's an unprecedented solution in the U.S. iGaming market.

Sports bettors' prioritization of quick and streamlined payouts of winnings guides our product development for our range of payment solutions. We also collaborate closely with partners and the operators themselves to ensure this is top of mind so that they can maximize customer acquisition and retention.

What advice do you have for third-party service providers entering the online betting space?

As mentioned, our payments advice to new iGaming operators entering the space is to cover all their bases in terms of payment methods. It's not sufficient for operators to just offer card payments or even a single digital wallet. A brand needs to provide multiple payment methods – traditional and alternative payment methods catering to every customer's individual preferences. In short, as we label it here at Paysafe, an iGaming brand needs to provide all the ways players pay when they want to play to succeed in the space. end of article

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