Hiring top talent has been causing operators headaches in the early days of legal US sports betting. Here is what we have learned in the five months since the market opened
Last month’s G2E Las Vegas was the first time the industry had chance to take stock following the Supreme Court’s decision to repeal PASPA back in May.
In the five months since the decision was made, we have seen all manner of predictions relating to the question of just how big US sports betting can become.
One estimate from Gambling Compliance places the value of legal sports betting in the US at somewhere between $3.1 billion and $5.2 billion in annual revenues by the year 2023.
That would make it the world’s largest sportsbook market, so no wonder everyone at G2E was excited.
Against this backdrop, the show offered an opportunity for sports betting suppliers - both from Europe, the US and further afield - to show off their latest products and pitch for the contracts that will shape the face of the market over the coming years.
Indeed, the Sands Expo was packed with operators keen to learn about the products and technologies that can power success in the US.
Of course, while there is huge potential on the table, there are a number of significant challenges that have emerged and must be overcome in order to unlock the true potential of the market.
Below, we discuss some of the key themes that emerged during G2E, as well as our early observations from the market.
The recruitment challenge
Among the excitement of a brand new industry arriving in the US - legal sports betting is already live in six states at the time of writing, with more on the way in the coming months – operators and suppliers are aware of the hurdles they need to clear.
While these operators have numerous issues to juggle, including regulatory concerns, financing, marketing and, of course, product, there was one factor consistently cited as a key challenge among those in Las Vegas.
Recruiting a world-class team is never easy, but doing so in a market without a strong sportsbook heritage is an eye-watering challenge. Let’s not forget that pre-PASPA, only Nevada operated anything approaching a mature sports betting sector.
It was almost universally conceded among those at the Sands Expo – and other operators that we have spoken to in the early days of legal sports betting – that their number one roadblock for expansion was a lack of talent and eligible candidates.
This is a result of several converging factors. Of course, the fact that sports betting is new to the majority of the country means there simply is not the local expertise available.
Secondly, the way in which sports betting has arrived in the US - with PASPA opening up a large potential market at once and multiple states quickly legislating - has meant competition for the little talent that is present has been intense.
What’s more, the option of bringing in experts from abroad that have previously worked for off-shore betting brands is also limited by the rules on each state – in some states, they would receive the necessary regulatory approval but in others they would stand next to no chance.
This adds up to a serious headache for operators, and perhaps the single biggest challenge to overcome if we are to build a healthy and sustainable sports betting sector in the US.
That is not to say there are not a number of solutions available to operators in the US tackling the issue of recruitment.
While in Las Vegas, the BettingJobs.com team chatted with several operators about the challenges they are facing on this front and the creative ways they are solving team-building issues.
Applying for a work visa is not often a simple process. The traditional Temporary Worker Visa, also known as the H-1B, is becoming increasingly difficult to attain.
In theory, the visa should cover most roles gaming operators would want to hire; H-1Bs are specifically designed for persons working in specialised occupations in possession of a bachelor’s degree or equivalent.
However, the problem is just 85,000 H-1B applications are accepted each year by the US government. Demand is so high that this year, more than 190,000 applications were made in the few days after the application period opened on April 1.
As such, operators are now looking at ways of recruiting talent through avenues separate to the H-1B.
There are several options for US-based operators. Looking at European-based workers who may already hold a Green Card, or have the legal right to work in the US through a spouse, is a good starting point.
Equally, finding US workers who have gained experience in the gaming industry overseas, and are open to returning home, is one way to plug skills gaps.
Another region some operators are finding success in is Australia, whose citizens enjoy an easier path to a US work visa as a result of the Australia – United States Free Trade Agreement (AUSFTA).
Of course, Australia is home to a thriving sports betting industry - the country also bets more per capita than just about anywhere else in the world - and accordingly has a deep talent pool with experience working in a highly regulated environment.
For those operators looking to set up shop in the US, investor visas should also open the door to bringing a handful of employees with you.
While staffing is not a simple process, with enough creative thinking, it is possible to build a strong team of gaming experts within the US.
BettingJobs.com has already seen first-hand the challenges and success stories of staffing US gaming operations.
Since PASPA was repealed and the first states began to go live with legal sports betting, we have placed a large number of executives at key operators across the country.
In these early days, a majority of these placements have focused on senior positions. The approach most operators take is to install a couple of leaders and then entrust them to build out their teams.
The primary complaint these executives make is the lack of talent available to them, with trading, risk, marketing and operations being the areas where there is a particular dearth.
This is, to a degree, to be expected in the early days of the market.
With six states already live with legal sports betting, a vast amount of experience is being accrued on a daily basis. Those states which join the sportsbook party in a few years will likely have a far deeper pool of talent from which to draw.
In the meantime, operators will continue to fight ferociously for top talent.
One workaround we are seeing many operators turn to is hiring locally in related sectors. While sportsbook is a new game in town, industries such as social gaming and daily fantasy sports offer talent which shares many of the key attributes sports betting operators are looking for.
Bringing in this local talent and ensuring it is retooled for the sportsbook challenge is proving a successful alternative for many.
It is no secret that staffing a sportsbook operation from the ground up is a costly exercise.
According to the BettingJobs.com Salary Survey, building such a team could cost in the region of $1 million to $2 million per year – depending on the size of the operation.
This might include a VP of sportsbook, which will set you back in the region of $210,000 per year, a head of marketing ($165,000) and a head of finance ($115,000).
Other roles, such as junior developers ($70,000), an affiliate manager ($55,000) and a content manager ($45,000) quickly add up, too.
The bad news is that the BettingJobs.com salary survey focused on the European gaming sector, and we have found that such is the competition for talent in the US, these figures are likely on the low side.
The reality is that hiring the best will cost, although given the scale of the potential rewards in the US, such hires are likely to be the best money you will ever spend.
To save costs, some operators are opting to hireto help train local staff. This can be a cost-effective solution to both the struggles of recruiting from overseas and the lack of nearby talent.
Where to call home?
Aside from the challenges of building a sportsbook team, one of the first questions operators must ask themselves is where to base it.
Currently, New Jersey offers the largest talent pool to potential operators. The state has been live with iGaming for a couple of years now, and was among the first states to go live with legal sports betting post-PASPA.
Geographically its proximity to New York makes it a popular choice for operators looking to expand across the east coast.
However, there may be room to take another path. With the US regulating sports betting on a state-by-state basis, there are opportunities to grab large market shares in states which may not be attracting as much competition as somewhere like New Jersey.
Indeed, setting up shop elsewhere, as long as you can place key department heads beforehand, offers the chance to staff up locally, attracting top talent from outside of the industry and training them.
There are many ifs and buts to this approach. The legislation and taxation rates of each state must be closely considered; some states may well end up regulating sports betting in a manner that essentially prohibits viable entry.
Similarly, watch your competition closely. Do not necessarily expect national brands to dominate the US sportsbook sector; there could be room for locally-focused operations to succeed in a handful of states, both in terms of grabbing market share and recruiting the best talent.
Becoming a big player locally may be the best way to establish a foothold before expanding nationwide.
The European example
In many respects, these early days in the US are reminiscent of the nascent UK online sportsbook sector some twenty years ago.
It is understandable that mistakes will be made, and we are already seeing a number of operators hiccup on trading and risk.
While this is never a pleasant experience, given the lack of maturity of the sector and its talent pool, it is absolutely to be expected, and should be nothing to be overly concerned about.
The key, as with most things in life, is to learn lessons and apply a better model going forward. Sure, some of these errors will be costly - a couple of operators have already been stung by hefty palps - but they are also an important part of the process.
For an industry that essentially was only given the green light a few months ago, a huge amount of activity is already underway.
Teams are being built, new brands are launching and products are being delivered to millions of players, just months after the Supreme Court ruling.
The reason for this is the clear potential of the market. Sports betting in the US is a once-in-a-lifetime opportunity for the gaming industry to establish itself in the world’s richest country.
To do so, operators must not take shortcuts when it comes to recruitment.
Sportsbook operators must remember they are not only competing with each other in the US; they are building out an entire new sector, and they must do so in a way that makes it competitive and appealing to an American populace bombarded daily by all manner of entertainment options.
Putting together teams packed full of top talent - both local and international - is the only way for sports betting to fulfil its potential in the US.
With the race already under way, it will be fascinating to watch these teams - and the sector as a whole - mature over the coming months and years.