Operator after operator are seeking their fortunes westward as the US gold rush gets well underway with over 30 states now open to some form of regulated online gambling, and European eyes are understandably glued to stateside developments.
In a call with SBC from the group’s US headquarters in New Jersey, Tipico US CEO Adrian Vella explained the group’s approach to the rapidly expanding stateside betting space and highlighted key transatlantic lessons to SBC’s New World Opportunity series.
Preparing for the marathon
As an outsider to the market, one of the main takeaways Germany-founded Tipico has picked up in the US is that launching and running in the country is a ‘marathon not a sprint’.
“It is big enough for everyone and there is a space for a great sportsbook product where we can take a good piece of the market,” Vella explained.
“Our focus is on efficiency, driving a good product, providing the best experience, and efficient P&L. We’re seeing less bonus spend as the market is maturing. The competition is more P&L conscious than they were two years ago, which benefits the market overall.”
Starting out as a betting shop in Karlsruhe before expanding to acquire a Malta Gaming Commission (MGA) licence in 2004, Tipico has cultivated a strong basis in Europe during its 15 years of activity.
As a result, the group’s approach to the shores of the New World has been shaped by its experience in the Old, particularly regarding leveraging expertise and knowledge and investing in greenfield technology.
Vella emphasised that at the centre of Tpico’s operations – both in Europe and in the US – is a ‘very talented management team’, and the company holds its in-house control of technology and trading in high regard, all rooted in experience.
“Sportsbook is at the core of our group’s DNA and when you have expertise you can build a great operation and sportsbook,” he said. “You get things right by building it one, two, three or four times, then you get efficient trading, betting, marketing, and everything in between.”
Trading in particular is an area where US players can look to the veteran brands of the mature European market for inspiration, in Vella’s view.
“There are also lessons from retention, bonus allocation and driving an efficient P&L,” he continued. “European business has been optimising that for years, but in the US there has been a cycle of mass acquisition. In these areas in particular we can learn a lot from Europe.”
The starting pistol
Launching in New Jersey back in 2020, two years after the repeal of PASPA opened the doors to regulated betting in the US, Tipico joined a competitive market, one already home to local casino operators, nationwide firms and European prospectors.
Based on its technological backing – as well as a hyperlocal marketing approach, which will be explored later – Tipico US adopted a state-by-state approach, making a landing in New Jersey before moving on to Colorado, Ohio and Iowa.
Vella explained this strategy, saying: “The US is a marathon not a sprint and there is a lot of potential with the size of the market. We decided to build a US-based business three years ago, with its own operations and management on the ground as well as its own IP and proprietary technology.
“Most of our competition are using a B2B supplier or are sourcing technology from Europe, but if you want to compete you need to invest in greenfield tech built for the US customer, run by a US team – this is what we invested in.
“We now have a competitive product on the market that is multi-state, running a sportsbook and casino with its own trading, modelling, retention and customer activation activities.”
New Jersey itself was the ideal launching pad, he noted, posting to the fact that the market is long-regulated, therefore perfect for Tipico to test a multi-product offering before heading west to Colorado to try its hand at multi-state operations.
Vella continued: “New Jersey was regulated for a long time and we knew it would be competitive. When you want to build a really effective operation you want to go into the most aggressive market – New Jersey is the beachhead.
“We have now scaled into four states and Ohio is now the centrefold, as this is our debut first-mover state where we have opened with the market. This is what our investment has been leading to.”
However, marathons are not known for being easy, and rolling out as a betting brand with European origins in the US is no different, but Vella asserted that Tipico has found its pace.
“When we started in the early months the US was booming, so we had to go into bidding wars to get market access, which was challenging at the time but the status quo has changed.”
The serious business of sport
Central to securing and expanding upon state access as a non-US brand of course requires mastery of a very important discipline – marketing. Sponsorship has of course played a strong role in this for Tipico, but with a noticeable twist, especially in the case of Ohio.
There are two central pillars to the bookmaker’s – a focus on hyperlocality, presenting itself as the ‘local sportsbook for Ohio fans’ in the case of one state; whilst adopting a general approach of ‘amplifying emotions’.
“We already have a perception as being a brand of German heritage and German quality, as well as one of trust,” the group’s US CEO explained.
“Through our heritage we amplify the emotions of millions of fans and that adds weight. On top of that we love to take sport seriously and be a brand where we amplify emotions around this.
“Sports are a serious thing, and so you won’t hear lowest common denominator advertisements from us, it’s all about the emotion of sports, as shown by our ‘let’s make this interesting’ tagline.”
In Ohio, the group’s latest state and the first one where it is first mover, having opened on the regulated market’s day one, the group has added another piece to the puzzle, the aforementioned hyperlocal tactic.
This has seen the firm partner with local newspapers, prominent outlets such as USA Today, the Columbus Crew soccer team, the Rhinegeist Brewery and AEG, hosting events in bars and venues with the latter.
Vella reaffirmed Tipico’s emphasis on hyperlocal engagement: “We are trying to be the local sportsbook for Ohio fans, and that is a very different position than a lot of other nationwide bookmakers.
“There are a number of things that make a strategy – being a first mover, having creative assets, faces to your brand, communication that entices the customer and shows they are being heard – but you want to have trust.
“When you partner with the community with brands that people know, it adds weight to what you’re doing, especially when competing with local long-term casino brands and firms with big marketing budgets.”
In with the new
Preparing for a marathon is difficult, but running one is even harder, and Vella reflected that there are some differences that Tipico, as a firm rooted in Europe, had to adjust to in the US.
Specifically, there are ‘black and white’ changes in consumer preferences between the two continents, perhaps best exemplified by the US sporting calendar, which is far more diverse than that of many European countries.
“In Europe you have the majority of your revenue coming from soccer, followed by tennis and other sports, but then its tail down for everything else,” Vella continued.
“In the US on a calendar basis, you have January and February, when you move from football into basketball with the Super Bowl followed by March Madness. Then in April to July, you have MLB and hockey, and in September the NFL starts again.
“The spread of the calendar is huge and the content pool is much larger, especially when you factor in college sports. This is not even considering the depths of the products – player props, bet builders and everything else.
On the other hand, regulation has not been particularly challenging for Tipico is regulation, with simple hurdles in the form of cross-state differences relatively easy to cross, with Vella remaring that regulation only has positive impacts.
“They have a process that is different per state – some have their own labs, whilst with others you go through GLI, and some have their own process for management.” he said.
“Regulation means that everyone is playing on the same battlefield with the same rules, and so even if it is sometimes ‘cumbersome’ it is important and it adds value to the market, to the customer and is good for business.”
Of course, as a new, fertile testing ground for new products and an expansive, wealthy market flooded with new technologies, the US does have some tricks that the old dog of Europe could benefit from learning.
Vella emphasised that American businesses tend to be ‘more bullish’ and open to ‘test and learn’ with new ideas, products and niches than their European counterparts, pointing to the now popular phenomenon of micro-betting as an example.
“There are lots of companies trying different things. The size of the market and the investment in it, and how vast the offer is from a product perspective, firms are really trying to push the status quo of betting on a more accelerated pace.”
However, European and American consumers and companies do have one major thing in common, that being that ‘as a community everyone is using an app, whether that be for dating, cabs, groceries or betting’.
People on both sides of the Atlantic are now used to a certain level of commodity, experience, usability, and of service, and Tipico is keen to address this demand in both continents.
Taking note of consumer demands in the Old and New Worlds, and leveraging its experience in technology and marketing, Tipico is targeting a certain space in the US, Vella concluded, one where there is strong potential ‘for a really good product on the market that is doing something different’.