Research: In-Person Registration A Barrier To Successful Online Sports Betting

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A group in Washington, D.C. released research Thursday showing in-person registration is a barrier to successful online sports betting when it comes to potential revenue streams, competitiveness in legal markets, and raising tax revenues in states where sports betting is legal.

The research commissioned by iDEA Growth analyzed in-person registration requirements for online sports betting accounts and included a proprietary survey of sports bettors in Iowa, which has the largest active market that requires in-person registration.

“We do everything on our cell phones. Legalized, regulated betting and gaming should be no different,” said Jeff Ifrah, founder of iDEA Growth, in a statement. “We don’t have to register in person for rideshare, dating, or food delivery apps, so why should mobile betting and gaming be any different?”

Sports betting began in the Hawkeye State on Aug. 15, and the in-person registration provision in its state law does not sunset until Jan. 1, 2021.

Some key findings

New Jersey, which allows online registration and funding of accounts anywhere within its state borders, continues to be the gold standard when it comes to online sports betting. The study found that since sports betting became legal in the Garden State in August 2018, online betting accounted for 78% of the overall sports betting handle and 76% of the tax revenue. New Jersey also enjoys a 2.1 multiplier in terms of performance when compared to states that do not offer online sports betting.

That has helped New Jersey claim $40.68 of sports betting revenue per adult over a 12-month span, more than double any of the other five states — Mississippi, Delaware, Pennsylvania, West Virginia, and Rhode Island — the study also considered “first-wave sports betting markets.”

The preference of online registration was made apparent through both a case study in Rhode Island and survey of 400 potential bettors in Iowa. In Rhode Island, potential bettors have to go through a three-step process in which they register through the Sportsbook Rhode Island app, confirm a valid email address and activate the account with a government-issued ID at either of the two casinos in the state.

Research showed that just 45% of the 12,000 bettors who downloaded the app between September and October of 2019 actually completed the registration process by showing up at one of the casinos. That success rate pales in comparison to New Jersey, which had 75% of potential bettors complete their online registration through the Know Your Customer checks required for activation.

In the Iowa survey, 35% of the respondents found the in-person registration process somewhat or very inconvenient and 13% — which would amount to 94,000 potential bettors in the state — would not drive to register their online sports betting account. Unsurprisingly, more than 75% of the respondents agreed with the statement “consumers should be able to create online sports betting accounts from their homes instead of having to visit a casino to register for an online account.”

Online registration also provides deterrence to illegal markets

The survey of Iowa bettors revealed that in-person registration could pose as an obstacle in lessening the influence of illegal sports betting markets. If active bettors are unwilling and unlikely to register in-person and move their accounts from illegal to legal sites, it preserves the demand for illegal sports betting sites to exist. The study also noted that since most marketing campaigns target “consumers who are not active bettors,” there may not be a full understanding of what differentiates legal and illegal sites, and the inconvenience factor of in-person registration may drive some consumers to illegal sportsbooks.

“Convenience and security are key to any form of online entertainment,” said Jeremy P. Kleiman, co-founder of iDEA Growth. “Today’s technology can provide both a secure and reliable online registration process, as well as an efficient and convenient user experience. There is no compelling reason to require in-person registration.”

The survey also noted how online registration would also create competition in the way of bettors having multiple accounts. Slightly more than two-thirds of the respondents said they would have at least three online accounts if they did not have to visit a casino to open one, which falls in line with 76% saying bettors should be able to open their accounts online without in-person registration.

Nine casinos offer online sports betting in Iowa, and the $33.66 mm mobile handle in November accounted for 56.7% of the overall $59.34 mm handle.

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Chris Altruda

Chris Altruda has been a sportswriter with ESPN, The Associated Press, and STATS over more than two decades. He recently expanded into covering sports betting and gambling around the Midwest.

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