"Friction Points" are Affecting Online Gambling Signups
June 18, 2021
Every new industry has to go through growing pains. That especially true when industry participants are trying to get everything done in record time.
For anyone who hasn't yet noticed, sports and online casino gambling is exploding in America. Confirming what experts had been saying for years, tens of billions of dollars each year are being siphoned away from illegal bookies and offshore betting sites in favor of U.S. sports and casino betting interests that are now legal in 20 states. As a case in point, New Jersey, the leading sports betting state in the nation, is closing in on sports betting handle of billions of dollars a month. Nevada is not far behind.
By the time states like Florida, Ohio, Texas, and California join the fray, the sports betting and online casino industry in the U.S. could be taking in close to $300 billion a year in handle. That translates to about $30 billion a year in gambling tax revenue going into state coffers to shore up budget shortfalls.
As amazing as the numbers are starting to look, there is evidence that the online gambling industry is missing out on perhaps another 35% in gambling handle. For state governments that are paying attention, that's another possible $10 billion in available tax revenue. What's the cause of this issue: friction points.
Friction Points That Are Cooling Off Potential Online Gamblers
If there is one trait that is common among all casual gambling enthusiasts it would be the fact they want to gamble to escape the hassles in life. When they go to an online gambling website (sports betting and casino), the last thing they want to encounter is hassles.
To protect online operators and potential customers, the registration process has been made complicated by the need to verify identities. Unfortunately, the identity verification process can get a little cumbersome. There is evidence that this process could be driving away hundreds of thousands of would-be online gamblers who don't have proper identification or don't have the patience to share it through a cumbersome process. That is becoming friction point number one for the U.S. online gambling industry.
Friction point number two has to do with making deposits. Yes, most online sportsbooks and casinos in the U.S. will allow deposits with credit cards, PayPal, or through online banking facilities. Unfortunately, not everyone has easy access to those deposit/withdrawal options. While depositing and withdrawing through retail betting sites is another possible banking option, it's a restrictive option because a lot of potential online gamblers don't live near retail casinos or betting kiosks.
Finally, the fraudsters are already coming out to play. With hundreds of billions on the line every year, the criminal element will be looking for opportunities to get their piece of the pie. That only serves to make operators put more friction points in place for people who just want to gamble.
In all fairness, this is the same problem that has plagued the online gambling industry in Europe, before anyone will see the full potential of online gambling in America, these issues will need to be addressed.