Online betting in

the United States

Trends, themes, and trajectories
Prepared by Chris Grove, Partner, Narus Advisors, for the Nevada Gaming Policy Committee
May 2016

Skin Betting

The dominant product in the market for eSports wagering

Prepared by Chris Grove for the Nevada Gaming Policy Committee

What are skins?

Skins are virtual items that players can acquire and use in a variety of ways

Acquire

Use

Purchase
Win
Earn
Gift

Prepared by Chris Grove for the Nevada Gaming Policy Committee

In-game
Sell
Trade
Gift

How do people bet skins?

Skin betting is broadly similar to traditional online betting
Deposit

Play

Cash Out

Roulette
Lottery
Sports betting
Rock paper scissors

(Internal currency)

(Internal currency)

Prepared by Chris Grove for the Nevada Gaming Policy Committee

What is the size of the skin betting market?

Sources: Narus Advisors, Nevada Gaming Control, Eilers & Krejcik Gaming

$6bn+

$4.2bn

$2.9bn
DFS handle 2015

NV sports betting handle 2015

Skin betting handle E2016

Prepared by Chris Grove for the Nevada Gaming Policy Committee

Organic search interest in skin betting

PokerStars

(leading online poker site)

FanDuel

(leading DFS site)

CSGO Lounge

(leading skin betting site)

Source: Google Trends

Prepared by Chris Grove for the Nevada Gaming Policy Committee

Landscape for skin betting

No formal oversight

Limited visibility into companies and products

Game design emphasis on simplicity and speed

Prepared by Chris Grove for the Nevada Gaming Policy Committee

Regulated online gambling in the U.S.

Status quo

Prepared by Chris Grove for the Nevada Gaming Policy Committee

States with regulated online gambling in 2016

Poker
Poker + Casino
Sources: Narus Advisors, GamblingCompliance

Lottery

Financial performance to date: U.S. Online Poker

In $000s. New Jersey + estimate for Nevada. Sources: Nevada Gaming, New Jersey DGE, PlayNJ.com
$4,500
$4,000
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0

2014

2015
Prepared by Chris Grove for the Nevada Gaming Policy Committee

2016
10

Financial performance to date: U.S. Online Casino

In $000s. New Jersey. Sources: New Jersey DGE, PlayNJ.com
$14,000
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$0

2014

2015
Prepared by Chris Grove for the Nevada Gaming Policy Committee

2016
11

Factors inhibiting revenue

Payment processing

Persistent lack of consumer awareness

Relatively underdeveloped product set

Prepared by Chris Grove for the Nevada Gaming Policy Committee

12

Regulatory outcomes
No known AML issues

Geolocation technology proven effective

Age and identity controls proven effective

Prepared by Chris Grove for the Nevada Gaming Policy Committee

13

Regulated online gambling in the U.S.

Looking ahead

Prepared by Chris Grove for the Nevada Gaming Policy Committee

14

States considering regulated online gambling in 2016

Active casino /
poker effort
Sources: Narus Advisors, GamblingCompliance

Potential for
online lottery
15

Factors inhibiting legislative progress

Stakeholder fragmentation

Political apathy

Online gambling leapfrogged by other products

Prepared by Chris Grove for the Nevada Gaming Policy Committee

16

Legislative landscape for DFS in 2016

Passed / about
to pass
High potential
for passage
Low-to-moderate
potential

17

Expanding beyond poker

A brief cost-benefit analysis

Prepared by Chris Grove for the Nevada Gaming Policy Committee

18

Costs of expanding beyond poker

Material degree of uncertainty

Industry divisions

Prepared by Chris Grove for the Nevada Gaming Policy Committee

19

Benefits of expanding beyond poker

Technological and regulatory framework already in place

Revenue potential

Expansion of mobile footprint

Prepared by Chris Grove for the Nevada Gaming Policy Committee

20

Casino play one of the few things you cant do on mobile in Vegas
Arrival
Board plane with mobile pass
Play games on plane to earn
comps
Text friends in town on landing
Hail an Uber to hotel
Mobile check-in
Research entertainment options
Explore property options via app
Make restaurant reservations
Buy show tickets
Reserve cabana or table at club

Leisure

Check rewards / comp status

Play poker
Bet on sports events
Check rewards status and
available comps
Navigate within and between
properties
Enter events with mobile ticket
Take photos and videos
Share experience via social
media accounts

Prepared by Chris Grove for the Nevada Gaming Policy Committee

Work & Return

Download convention map
Schedule meetings
Take notes from panels /
meetings
Arrange social events postconference via text or chat
Set alarm for flight home
Check flight status
Review hotel folio
Buy coffee in lobby
Uber to airport

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Questions?
chris@narusadvisors.com