As consumers’ comfort level with online sports betting grows, a quick and frictionless payout of winnings will play a key role in their choice of an online gaming vendor, says a study released Thursday by payment-platform provider Paysafe Group.
Of the more than 2,000 online-sports bettors surveyed by Paysafe across eight states where sports betting is legal, 37% cited quick and easy receipt of their winnings as the leading factor when selecting an online sportsbook. Other criteria include brand reputation (32%), promotions (28%), competitive odds (27%), and sports markets offered (11%). The survey was conducted among bettors in Colorado, Illinois, Indiana, Iowa, Nevada, New Jersey, Pennsylvania, and West Virginia, all of which have legalized online sports betting.
Prompt payouts also influence customer retention, with 79% of respondents saying they have a negative impression of an online sportsbook if they wait longer than expected to receive their winnings.
Online sports betting has received a boost from consumers sheltering at home during the Covid-19 pandemic, with 68% of respondents saying the pandemic has made them more comfortable wagering online. Additionally, 61% say they plan to bet online more frequently in 2021.
Online sports betting has been a booming business since its legalization in 2018. For example, in New Jersey, currently the largest online sports betting market, revenues from January to October in 2020 were up 35% compared to the same period a year earlier, the report says. In October of 2020 alone, revenue topped $50 million, a 43% increase from October 2019.
“Since the 2018 U.S. Supreme Court repeal of the federal ban on sports betting, the market has shown incredible growth, most recently in the online and mobile space during the Covid-19 pandemic,” Philip McHugh, Paysafe’s chief executive, says in a prepared statement. “Against the backdrop of additional states regulating iGaming, our research indicates that the online market will continue to expand in 2021 and beyond—and payments will play a critical role in helping operators drive that growth.”
The rapid growth of online sports betting is attracting more processors. Shift4 Payments Inc. earlier this month announced it will process transactions for online gambling and fantasy leagues through a partnership with Sightline Payments, a provider of cashless gaming and betting solutions.
Despite the strong growth in revenues, one challenge facing the online gaming industry is that 14% of sports bettors consistently have their credit or debit card declined when attempting to fund their account, compared to 10% in 2019. Declined cards negatively impact a sportsbook’s brand and customer retention. Indeed, 47% of respondents said they would directly blame the online sportsbook for the decline, 45% said would leave the brand due to persistent card declines, and 65% would not recommend the sportsbook to peers.
Offering alternative payment methods such as digital wallets or e-cash is one way that online sports betting operations can overcome the negative impressions resulting from a declined transaction. Some 35% of respondents said they would continue to attempt a transaction after an initial decline if they could do so using a digital wallet and 8% said they would do so if they could use e-cash.
“Card declines remain a significant issue, and as industry stakeholders work to address this, operators can leverage digital wallets and eCash to provide players with alternatives that complete their payment offerings,” McHugh says. In December, London-based Paysafe Group Holdings Ltd. announced it was being acquired for $9 billion by a group put together by Las Vegas-based Foley Trasimene Acquisition Corp., a special purpose acquisition company headed by veteran businessman William Foley.