On Tuesday, 888 and Sports Illustrated saw their partnership manifest with the launch of SI Sportsbook in Colorado. Ahead of the launch, 888 SVP and Head of US Yaniv Sherman spoke with Bookies.com senior producer Bill Speros about a broad range of issues, challenges and opportunities facing the sports betting industry in North America.

With Week 1 of the NFL season starting Thursday, sports betting is now legal and operating in 18 states, and operators are expecting big action on betting apps when the Cowboys and Buccaneers get us under way. Sports betting in Canada is also live in the province of Ontario.

Barring intervention from a federal court, sports betting is set to launch in Florida on Oct. 15 after the Department of Interior approved a gaming compact between the state and Seminole Tribe. Florida would be the most populous U.S. state with legal sports betting.

Here is the recap of the Q&A featuring Sherman and Bookies, with parts edited for brevity and clarity.

Branding & Partnerships

Bookies: Considering your partnership with SI, is the path forward in the legal gambling space in the United States for providers like yourself to have these partnerships with large media outlets?

Sherman: Yes, (but) not necessarily media outlets. The larger operators now understand the puzzle that is the US market that has all sorts of components to it. Market access, technology, product, distribution. Brand and distribution are two inherent parts if you want to reach a bigger market. Traditionally, offshore bookies, Vegas, was all around the avid gamblers, but that's a smaller group of people that generate a lot of activity. You now have publicly traded companies, companies already registering billions of dollars of revenues in the US, and you need to keep feeding that beast and that growth trend, you have to appeal to a broader base.

Sherman: That broader base is consumed as products and media differently. These are not people who are looking to bet. One of the main reasons why we wanted to partner with Sports Illustrated is it brings us to an audience that bets with someone else, which is great because we tap into a ready-made market, and the people who have never placed a bet. They read the articles and they want to place their first bet with someone they trust. That's the main reason why I think others are going down that route. They're trying to also broaden that base in a commercially reasonable way...Now you're starting to see people talking about CPAs and profitability. I think that's the natural evolution of the market investors, shareholders. The market won't continue to accept money bonfires simply burning through cash in order to get players on board. It has to be more sophisticated than that.

The Evolutionary Curve

Bookies: Where do you see us on the evolutionary curve in terms of the eventual full maturity of the sports betting market in the United States? Where are we on the arc right now?

Sherman: Some people refer to the US market as a bulk. It's not. It's a state-by-state analysis. New Jersey, for instance, is reaching maturity and just continues to grow, but I think it's nearing that point around the $2 billion mark. I think that its growth trend has subsided. Two segments that you need to take into consideration are one, media distribution. The vast majority of Americans do not bet. They consume sports content, but they don't (combine it) with betting. Second, some of the components of the ecosystem haven't adopted sports betting. Banks, for instance. Bank of America, Chase, some of the other institutions, still do not accept or do not authorize gambling transactions. That is a fair chunk of the market right now that has us offering all sorts of ways and means to fund your account. I think there's still a lot more runway on the product and onboarding side to fuel that growth. Some of the states like New Jersey are maybe a year or two off of what we call maturity stage. Some of them are a few years away, and taking into consideration that some of the states that just legalized sports betting may also legalize online casino betting, which is a game-changer.

Arizona

Bookies: Is sports betting in Arizona the pot of gold out West many seem to think it is?

Sherman: It's a sizeable state. I think this is the first time we see sports organizations become operators, which is amazing. Three years into it. Three years ago, sports organizations were the plaintiffs in (the PASPA) case, and now they're actual operators. They're actually in charge of the players and their funds. We'll see how that plays out. Arizona has a big metro area, good sports teams. No reason why it shouldn't become another healthy economy and a healthy marketplace.

Florida

Bookies: How do you assess the future of sports betting in Florida?

Sherman: It's much easier to intercept the bill than to push it through. I think that's what the major operators are trying to do right now. I think that the legal challenge and the (2022 ballot) referendum, some of the bigger operators are throwing their lobbying dollars behind this initiative because they've got nothing to lose. I would look to see what happens towards October, whether a deal is struck between the larger operators and the Seminoles, or this actually is taken forward and there's some federal challenges. I thought the federal challenge was a long shot. Right now, it looks like a legitimate course of action. We'll just have to wait and see, but this could easily turn into another California, where it's embroiled in legal challenges. I would hope that there is some sort of compromise that will open it up for a more competitive landscape, and then allow the Seminoles to still be the dominant factor in the state.

California

Bookies: Where do things stand in California from your perspective?

Sherman: They've taken a step forward, and I think including a referendum for retail sportsbooks in tribal casinos, but I think there are competing bids right now. I think that there's a mounting coalition from the card rooms not to allow the tribes to have that unanimous or unilaterally go through. The only challenge is that it's much like Texas. It's moving in two-year increments. You miss this window; you're thrown two years into the future. Also, in California with all due respect to sports betting, they have much bigger fish to fry. Nobody's going to push up contentious bills when they've got forest fires and deficits and drought. Again, I'm very conscious of our state of affairs. If anything, I think there was some consensus around retails. I'd rather see just retail sports betting go through than nothing at all.

The Future

Bookies: It’s been three-and-a-half years since PASPA was overturned, where do you see legal sports betting three-and-a-half years from now?

Sherman: I've come to learn that I cannot handicap this market. So if I told you three-and-a-half years ago that the plaintiffs in the NCAA vs. Murphy case will now be collecting revenues based on data rights and be licensed operators, you would've thrown me off the step. In three-and-a half years, I would say, 40-46 states would be legal. More than 80% of Americans will have access to legal sports betting. I see some major players or non-gaming companies venturing into the field, more aggressively buying their way in. You’ll see more blue-chip companies heavily involved. You will see a North American experience (including Canada and Mexico) as opposed to just the US. We spoke about $15 to $20 billion worth of total addressable market by 2025, add four or five billion dollars on top of that just in Canada, and then you're looking at one very interesting market. I see North America by far much bigger than Europe with some very interesting product combinations. I think we have yet to see the American product. All we're seeing right now is European products adapted with some degree of success, but I'm looking forward to bringing a new product into the market.”

Bookies: Is Amazon the Death Star if they venture into sports betting?

Sherman: The major (FANG) companies are way too dominant, way too lucrative to venture into it. If Amazon ventures in, they're going to give so much credibility to this sector. Remember, everybody stays in their lane. The fact that someone buys a package with Amazon, doesn't mean that they can place a legal sports bet with it. You still have to cross that bridge. If Amazon wants to come in, we're happy to have that conversation with them. I think Mr. Bezos has a few other things in mind in three-and-a-half years. Maybe we'll take the first bet on Mars.

The 2021 NFL Season

Bookies: How important is this NFL season to both your company and the industry as a whole?

Sherman: Every NFL season we've seen so far has more state-legalized NFL betting. The size of the prize is only increasing. Operators have their legs under them now. They know what to expect. You're better equipped. You're deploying new technology. Operators understand their scale. People are putting more emphasis on product and technology. They're much more savvy. For us, it's an important milestone. This is your window, coupled with March Madness, when you want to really put your pedal to the metal on marketing and acquisition and activity. Regulators, policy makers, legislators. Their decision cycles are also established based on football season. You see legislation accelerate toward football season, and they're trying to get many people across the line to go live by two milestones: NFL kickoff and Super Bowl. If it doesn’t happen by these two, you can assume that they'll be punted down the line.

Educating Sports Bettors

Bookies: What is the biggest impediment when it comes to educating sports betters in the United States? What should and can be done about it?

Sherman: The biggest impediment is the fact that it has a shady reputation, and that people don't know it's legal and they can't distinguish between offshore bookies and legal, regulated bookies. I think that's the first step. Even in New Jersey. People ask, ‘Is that legal?’ I say, ‘Yeah, it's legal.’ Landing in Newark, the INS officers say, ‘What do you do?’ ‘I work for a gambling company.’ ‘Is that legal?’ I said, ‘Yeah. It's legal.’ That’s the number one impediment. The other area where we need to be mindful, is safe, responsible gaming. This is something that we should continue improving. We've put enormous amounts of resources globally on that, not just because we are required to do so. We feel it produces a better customer experience and a better ecosystem. It's a healthier customer base in the long-term. That's another area that should be receiving more attention, not just from compliance officers, but also from the delivery, the tech development, product development around these areas because the faster the market grows, more and more you will see that you need to make sure that people are playing within their means as we translate this or transform this into a digital experience.