Left to itself, the gambling industry can have devastating side effects. That’s why the US started regulating it to steer players towards safer platforms and perhaps collect more revenues. Maybe that is what many people expected when online casinos and sportsbooks began rolling out across US states in waves.
But things don’t seem to have turned out as anticipated. Just recently, SCCG Management published a report claiming that the American economy is losing up to 74% of its iGaming revenue to offshore websites. That’s nearly three-quarters of all online gambling dollars escaping US regulators and heading to operators existing far outside the reach of the country’s laws.
This number should not stun you, as offshore sites are pretty fast, bold and aggressive. Data in a report from Zamsino show they quickly adjust to modern preferences like easy mobile access, allowing more players to remain connected. Offshore platforms also offer more freedom and bigger bonuses than licensed competitors; features which can be appealing for players who just want to click and experience the fun.
Why are offshore websites appealing?
Their attention to customer engagement
Generally, most people love bonuses. According to Access Development, more than half of consumers (55%) will likely sign up for a loyalty program if given an opportunity. Good enough, online casinos know how well to take advantage of such statistics, explaining why they usually have numerous bonus perks.
But, remember, tight regulations and licensing fees can limit how far legitimate platforms can go with bonuses. And this is where these offshore sites have the edge. For instance, where a local operator offers a 50% deposit bonus, an unregulated one could offer 100% or even more. Of course, an average player who doesn’t care about their safety would want to enroll for the website with the higher offer because it means more engagement.
Still, in customer engagement, unregulated platforms have a way of throwing in everything. Whether sweepstakes, prop bets or slot titles, you will find everything under one roof. And who does not want such an experience?
Such one-stop experiences can actually be a differentiating factor. According to CSP Daily News, providing them can help you improve your appeal to 75% of customers who love the convenience of finding everything under one roof. This way, offshore websites are able to get ahead of licensed competitors.
Aligning with modern preferences
As technology evolves, so do customer preferences. Take payment technology, for instance. In the past, everyone was okay waiting ages before receiving their money. But things have changed today as several technologies allow real-time and cheap transactions. And because of the convenience and flexibility of these technologies, many people now prefer using them.
A study by Thunes values the real-time payment market at $25.92 billion and expects it to grow by a 35% CAGR. This growth rate is no joke, highlighting how modern consumers, including gamblers, love instant payments. Interestingly, offshore platforms tend to recognize and align with such preferences more quickly than licensed operators. This makes them feel more customer-focused, which encourages return visits and conversions.
Even when it comes to seamless logins, offshore platforms carry the day. Cumbersome and tedious signing-in processes don’t work well with many modern players. Can you believe that, according to SC Media, more than half (56%) of customers abandon an online service when logging in is frustrating? Declined card payments and forced KYC checks, common in regulated casinos, can also be frustrating and cause players to turn to unlicensed alternatives.
What’s stopping the fight?
Not every American has to log in to an offshore site to access gambling experiences. There are some states where online gambling is legal. However, regulations do not automatically equate to no illegal gambling; there must be a well-coordinated national strategy to avoid losing more revenues to unregulated markets.
Key stakeholders are calling upon other sectors to come together and formulate structures to help overcome this dynamic challenge. According to Derek Webb, founder of the Campaign for Fairer Gambling, combining efforts can help because regions like New Jersey, where online gambling is legal, are losing more per capita compared to those like California, where the practice is illegal.
Ismail Valie, founder and CEO of Yield Sec, also weighed in, emphasizing that stopping illegal gambling was everyone’s responsibility. But will the gamblers listen, given the benefits of these platforms? A good number of them are also ignorant, being unable to distinguish between unregulated and regulated platforms. What’s even more intriguing is that these customers don’t fully understand the risks associated with offshore gambling, such as weak consumer protections.
Also, don’t forget that unregulated operators are heavy on affiliates. Statistics show over 668 affiliates actively promoting illegal gambling sites in the region, compared to just a few of them marketing regulated alternatives. If there are no stricter controls on affiliates, illegal platforms will likely stay front and center.
However, to avoid losing more revenues to these websites, the US needs proper enforcement and collaboration between key stakeholders. A good place to start would be to create an environment that allows innovation in the regulated market.
Licensed operators must be able to quickly adjust to changing customer preferences, like cheap gaming, to outperform offshore platforms. Proper consumer education and federal support will also come in handy. Without this cocktail, illegal websites will keep thriving while legal ones and players pay the price.
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