- UK Based betting exchange/sportsbook operator Smarkets has announced that they’ll ‘temporarily pause’ their US expansion plans.
- Smarkets operates their SBK sportsbook brand in Indiana and Colorado.
- They’re the latest operator to leave the US market or alter expansion plans due to anti-competitive regulatory situation.
UK based betting exchange/sportsbook operator Smarkets has announced a ‘temporary pause’ to their US expansion plans. They’re the latest sportsbook operator to run headlong into the country’s dysfunctional and anti-competitive regulatory framework. Americans–and particularly American politicians–love to give lip service to ‘open markets’ and ‘free enterprise’ but the reality is quite different. Nowhere is this more true than in the gaming industry and especially sports betting.
The extent to which the various US states have completely bungled sports betting regulation is borderline unfathomable. With very few exceptions (Colorado is one), states have taken what should be a multi-billion dollar industry full of ancillary economic benefits like job growth and tourism and flushed it down the toilet. Instead of creating a competitive, open market state regulation has been designed to minimize competition, reward legacy gaming interests and enrich political cronies while creating monumental barriers to entry for anyone else. It’s an ecosystem with no real winners and plenty of losers. In some cases, state tax revenues have seen a bump but nowhere near what would have been possible had sports betting been done right. The toughest hand has been dealt to companies trying to challenge the status quo and anyone that isn’t politically juiced in. No surprise that the biggest loser of all is the American betting public.
Smarkets cited a 10% loss in revenue as the imputus for the ‘pause’ in US expansion. They’ve been able to launch their SBK sports betting platform in only two states and I bet you can guess which ones they are (Colorado and Indiana). A statement from the company (possibly from Smarkets CEO Jason Trost) suggested that the US ‘pause’ was collateral damage from a more challenging international macroeconomic environment:
“While we acknowledge the challenges present in our international expansion during 2022, we have made the decision to temporarily pause our US expansion. However, this is not a goodbye to the American market. We are committed to re-engaging with better and stronger product, and we remain optimistic about the opportunities it holds. Our focus for 2023 will be narrower and centered on product development.”
The company cited the usual laundry list of extenuating factors–the Russian invasion of Ukraine, inflation, supply chain issues, higher interest rates and even COVID-19–as complicating factors for international growth. The company’s betting volume dropped 33% which they attributed to ‘churn of users acquired during the COVID-19 pandemic’.
CEO Trost sounded a more upbeat note about the companies efforts to cut costs and increase revenues elsewhere:
“Our efforts in cost reduction, coupled with revenue increases, have transformed us into a leaner organization and put us on a clearer path towards profitability.”
“Although the past year was filled with obstacles, I am immensely proud of the company’s continued productivity and the efficiencies we have achieved.”
“Our commitment to fixing the betting industry remains steadfast, and while the journey has been challenging, it has also been a remarkable turnaround to reach the point where we stand today.”
I’m a big fan of Smarkets and CEO Jason Trost but I’m far less optimistic about the US market than he is. I see few signs that the US sports betting regulatory framework is improving. The fact that the best, most competitive and most player friendly jurisdiction in North America is north of the border in Canada is telling.