The sports betting industry in the USA has experienced rapid growth since the Supreme Court decided to overturn the Amateur Sports Protection Act in 2018. This landmark ruling has opened new opportunities for entrepreneurs and businesspeople to enter the world of sports wagering. As the market expands, the need for cutting-edge sports betting software and innovative betting platform solutions is increasing.

Table of Contents –

Introduction:

Setting up a sports betting business in the USA requires careful planning and execution. In this blog, we will look at the essential steps, including researching the market, establishing a business entity, and developing a robust technology stack. It will also cover creating a comprehensive product offering, implementing effective risk management strategies, and building a solid brand identity. By following this roadmap, aspiring operators can position themselves to succeed in this competitive and fast-paced industry.

Researching the US Sports Betting Market

Industry Trends

The US sports betting industry has experienced remarkable growth after the Amateur Sports Protection Act in 2018. This ruling has allowed individual states to legalize sports betting software within their borders, leading to a rapid market expansion. In 2023, Americans wagered an astounding $119.84 billion on sports, representing a 27.8% increase from the previous year. This surge in betting activity translated to $10.92 billion in revenue for the industry, marking a significant 44.5% jump from the prior year. One latest trend is the rise of mobile sports betting, which has become the dominant channel for placing bets due to its convenience and accessibility. Operators are investing in user-friendly mobile applications to attract and retain customers, recognizing the importance of this platform in the industry’s future growth. Another latest is the increasing popularity of parlay bets, which combine multiple wagers into a single bet. These bets are attractive to players due to their potential for high payouts and are valued by operators for their high margins.

Regional Preferences

The sports betting landscape in the United States varies significantly across regions. New Jersey, Pennsylvania, New Orlando, and Michigan are recognized as the states with the highest betting activity in a year. The addition of five new states – Kentucky, Maine, Massachusetts, Nebraska, and Ohio – in 2023 further fueled the industry’s growth, collectively contributing $1.49 billion in sports betting revenue. Ohio emerged as the fourth-highest revenue generator at $936.6 million, while Massachusetts ranked ninth with $483.2 million.

Growth Projections

The US online sports betting market is projected to continue its upward trajectory. Analysts forecast that Americans will legally spend $45 billion on sports betting annually when the market matures. The industry is expected to grow at a CAGR of approx 12% between 2022 and 2028.

Several factors contribute to this projected growth:

Ongoing legalization efforts in states that have not yet approved sports betting
Increasing consumer spending on sports betting over time
Improvements in betting products and offerings
The convergence of media, sports, and betting platforms

The future of sports betting software will likely involve more personalised experiences, improved in-game betting products, and greater integration with media content.

Establishing Your Business Entity

Legal Structure

Selecting the legal business structure is crucial in establishing a sports betting business. Various companies or corporations, weigh factors like liability protection, taxation, and operational needs. Each structure has nuances regarding personal liability protection, tax rates, and administrative complexity. It is advisable to consult with a corporate advisor to determine which structure best suits with the business goals and financial expectations.

Registration Process

The registration process for a sports betting business involves several key steps:

Jurisdiction Selection: Choose a jurisdiction known for its reputable regulatory environment in the online gambling industry. Consider licensing requirements, taxation, and the legal gambling framework.
Business Registration: Register the business entity in the chosen jurisdiction following local laws. This typically involves filing necessary documents with the appropriate governmental department and paying the required registration fees, which can vary significantly depending on the jurisdiction.
Tax Registration: Obtain an EIN or its equivalent, even if the business does not have employees. This is used for tax administration. It is crucial to understand tax obligations in the registration jurisdiction and other target markets.
Banking Setup: Open a separate bank account for the business to maintain clear financial records and demonstrate transparency. Choosing a bank familiar with the iGaming industry is advisable, as some financial institutions may be hesitant to associate with gambling-related activities.
Licensing: Secure a gambling license, which may vary by location. Standard requirements for an online betting license include:

Fees: Pay licensing fees and other taxes. For example, Colorado requires a license fee of $1,200 for new applicants.
Background Checks: Prepare necessary documents on business procedures, financial stability, and ownership hierarchy. Licensing authorities require applicants to have a proven track record.
Security Measures: Implement protocols like encrypted data and user authentication to safeguard user data and ensure a secure, fraud-free environment.

Partnerships and Agreements

Forming partnerships and agreements is an essential aspect of establishing a sports betting business:

Software Providers: Negotiate contracts with software providers to ensure a robust technology stack for the betting platform.
Professional Services: Establish agreements with legal and accounting professionals to ensure compliance and proper financial management.
Third-Party Platforms: If applicable, negotiate contracts with third-party platform providers to enhance the betting offerings.
Regulatory Compliance: Ensure all partnerships and agreements comply with local laws and protect the business’s interests.
Mutually Beneficial Partnerships: Seek partnerships that align with a shared vision and provide complementary components.
Engagement Focus: Partnerships can spark engagement and promote growth. They can be influential in promoting players, offering prop bets, and getting more people involved in sports betting.
Diverse Offerings: Consider partnerships that allow for various engaging content and interactive features.
Marketing & Affiliate Partnership: Partnership with Marketing agencies will help to bring value to your brand whereas affiliate marketing will help to get a direct audience to your business.

By carefully navigating the legal structure, registration process, and strategic partnerships, entrepreneurs can lay a solid foundation for their sports betting business in the USA.

Developing a Robust Technology Stack

Software Selection

In the rapidly evolving sports betting industry, selecting the right software is crucial for business success. A robust technology stack ensures high player engagement, stable platform operation, and the ability to meet growing demands. When choosing a sports betting software provider, operators should consider factors such as customization options, market research capabilities, and the provider’s track record in the industry.

Several reputable sports betting software providers offer comprehensive solutions:

API Integrations: Application Programming Interfaces (APIs) are crucial in modern sports betting platform development. They provide developers with standardized methods to access and display current data regarding odds, sports events, and other relevant information. Key features of sports betting APIs include:
Real-time Data: APIs offer immediate updates on odds, scores, statistics, and player performance for various sports and leagues.
Odds Comparison: Developers can quickly evaluate odds from multiple sportsbooks, allowing users to find the best value for their wagers.
Automated Betting: APIs enable the setup of computerized triggers to place bets based on pre-established parameters, such as changes in odds or specific game events.
Statistical Analysis: Developers can leverage APIs’ statistical and historical data to identify patterns, analyze trends, and create more profitable betting strategies.

Account Management: Some APIs allow programmatic management of betting accounts, including functions like checking account balances and retrieving transaction histories.

Scalability Considerations

Scalability is a critical factor in developing a robust sports betting platform. As the industry grows, operators must ensure their technology stack can handle increasing demands without compromising performance or user experience. Key considerations for scalability include:

Distributed Architecture: Many platforms opt for a distributed system or microservices. This approach divides the system into smaller components, facilitating independent maintenance, scalability, and updates.
Cloud Services: Utilizing cloud providers like AWS, Google Cloud, or Microsoft Azure offers flexible computing, storage, and networking resources. This allows platforms to adjust quickly to accommodate more users without slowing down.
Load Balancing and Caching: Implementing load balancers to distribute traffic among servers and caching data like odds and event information can significantly improve platform performance and reduce strain on backend systems.
Automation: As access to a website increases, automation plays a vital role in maintaining performance. Automated systems help scale microservices to meet growing customer needs, ensuring the system continues to run smoothly.
Gradual Growth: A well-designed, scalable platform allows for gradual growth without wasting resources, ensuring profitability for the development company and operator accessibility.

By carefully considering software selection, API integrations, and scalability, operators can develop a robust technology stack that meets the demands of the sports betting market and provides a smooth, reliable experience for users.

Creating a Comprehensive Product Offering

Sports Coverage

To create a successful sports betting platform, offering a vast range of sports or events is crucial. This diversity caters to various user preferences and enhances the overall betting experience. A comprehensive sports betting application should include popular sports such as basketball, football, soccer, and emerging and niche sports.

For instance, operators can expand their offerings to include unique sports during major events like the Olympics. ESPN Bet, for example, has introduced markets for field hockey, handball, badminton, and water polo for the Paris Olympics. This approach allows operators to capitalize on increased betting activity during typically slow periods.

Betting Types

A robust sports betting platform should offer various options that cater to various user preferences and skill levels. Some essential betting types include:

Traditional sports betting
Live betting (in-play)
Daily fantasy sports
Express bets
Combo bets

Offering diverse betting options ensures something for everyone, and enhances the overall user experience, it’s important to incorporate robust betting features:

Real-time Data: Provide users with live scores, player stats, team lineups, and other relevant information to help them make informed decisions.
Live Streaming: Integrate live streaming of games and competitions, allowing users to place bets while following the action. Consider utilizing cloud technologies to manage the streaming infrastructure efficiently.
Quick Updates: Ensure that the platform can handle fast-paced events and update odds quickly to reflect the changing dynamics of live sports.
User-friendly Interface: Design an intuitive interface that allows users to place bets easily and quickly during live events.
Cash-out Options: Implement a cash-out feature that lets users settle their bets before the event concludes, adding flexibility to their betting strategy.

To enhance the betting experience, consider incorporating predictive analytics and deep player and team performance data. This information can help users plan their bets, see win probabilities, and make more informed decisions. Additionally, implementing features like match schedules and alerts for when streams start can improve user engagement and satisfaction.

By offering a comprehensive product that includes a wide range of sports, diverse betting types, and robust betting features, operators can create a compelling sports betting platform that attracts and retains users in this competitive market.

Implementing Risk Management Strategies

Odds Compilation

Odds compilation is a crucial aspect of risk management in sports betting. It involves setting odds that are competitive while ensuring profitability for the bookmaker. Odds compilers, typically employees of bookmakers or betting exchanges, aim to reflect the percentage chances of various outcomes in sporting events.

The process of odds compilation has evolved with technological advancements. In the past, compilers relied heavily on their understanding of form and the ability to identify “smart money” from random bets. Today, while form analysis remains important, statistical data plays a significant role, especially for markets like corners or throw-ins in football, which are less dependent on team form.

Liability Management

Effective liability management is essential for maintaining a balanced book and minimizing potential losses. One key aspect is understanding and managing exposure across different betting markets, particularly in complex bet types like bet builders.

Traditionally, trading teams have utilized raw probabilities for individual betting markets without considering multi-leg liabilities. This approach, while profitable due to the high-margin nature of betbuilders, leaves room for optimization.

To enhance liability management, sportsbooks can implement automated, liability-driven pricing systems. These systems adjust bet builder pricing based on real-time bet and liability data, including how liabilities correlate across related betting markets. This approach, known as correlated liability-driven pricing, helps maximize long-term profitability.

Fraud Prevention

As the iGaming and online gambling industry grows, so does the threat of fraud. Between 2019 and 2021, the digital fraud rate increased by 68.6% in iGaming and 29.4% in gambling globally. To combat this, operators must implement robust fraud prevention strategies. Typical fraud schemes in iGaming include:

Multiple account fraud
Bonus abuse
Affiliate fraud
Gaming
Chip Dumping
Account takeovers
Phone top-up abuse
Chargebacks and first-party fraud

To protect against these threats, iGaming companies should adopt multilayered prevention strategies that:

Verify identities
Analyze behavior
Secure payments
Assess regularly
Train staff

Implementing practical fraud prevention tools is crucial for avoiding legal penalties, preventing financial losses, safeguarding player accounts, retaining players, and protecting the company’s reputation. For instance, solutions like EVS offer comprehensive fraud prevention tools designed to meet the unique security challenges of the sports betting industry. These solutions can verify consumers’ age, location, and identity, preventing fraud. Sports betting operators can create a more secure and profitable business environment by implementing these risk management strategies across odds compilation, liability management, and fraud prevention.

Building a Strong Brand Identity

Brand Positioning

Establishing your business as a brand is crucial for success in the competitive sports betting industry. A well-crafted brand identity helps companies stand out and connect with their target audience. One practical approach to brand positioning is to focus on the audience’s primary interests and emotions associated with sports betting. For instance, some companies have created dynamic brand identities that resonate with the adrenaline rush of sports victories. When developing a brand identity, it’s essential to consider each market’s unique characteristics. Every state presents its marketing challenges, market leaders, and sports celebrities. Visual Design The visual elements like a great logo shows the world what a company stands for and makes people remember the brand. When designing a logo for a sports betting company, it’s essential to consider the following elements:

Color: Choosing the right logo colors can highlight a business’s strengths and help attract the right customers.
Shape: The shape of a logo can tell customers if a company is friendly or severe, scientific or artistic, traditional or cutting edge.

Typography: A bold, modern typeface can convey energy and excitement, which aligns well with the sports betting industry.

Content Planning

A robust content planning is essential for engaging customers and driving traffic to a sports betting platform. Quality content can help educate bettors, boost fan engagement, and encourage more betting activity. According to a recent survey, 35% of sports bettors aged 18-34 and 39% of those aged 35-54 consider expert content when choosing a betting provider. By implementing these strategies across brand positioning, visual design, and content creation, sports betting companies can build a strong, recognizable brand identity with their target audience and stand in the competitive market.

Conclusion

The sports betting industry in the USA is experiencing rapid growth, presenting exciting opportunities for entrepreneurs. This guide has explored the key steps to setting up a successful sports betting business, from researching market trends to building a solid brand identity. By following these strategies, operators can thrive in this dynamic and competitive landscape.

To get success in the sports betting industry, a business must stay ahead of the curve and adapt to changing consumer preferences. This means investing in cutting-edge technology, implementing robust risk management strategies, and creating engaging content to attract and retain customers. With the right approach, sports betting operators can build a profitable, sustainable business for the long term.

How can Tecpinion help you build outstanding sports betting software for your business?

Tecpinion is a leading sports betting software development company that offers comprehensive solutions to help you build a successful sports betting platform. Here’s how they can assist you:

Core Offerings:

Turnkey Sports Betting Applications: Pre-built, customizable platforms ready for deployment, saving you time and resources.
Custom Sportsbook Software: Tailored solutions to match your business requirements and branding.
White-Label Sportsbook Solutions: A branded platform without the development hassle.

Key Features and Benefits:

Comprehensive Sports Coverage: Supports a wide range of sports, including popular options and niche markets.
Advanced Betting Options: Offer various bet types (single, accumulator, system, etc.) to cater to diverse player preferences.
Live Betting and Streaming: Engage users with real-time betting and live event broadcasts.
User-Friendly Interface: Create an intuitive platform for seamless navigation and betting.
Robust Security: Protect user data and financial transactions with advanced security measures.
Mobile Optimization: Ensure a seamless betting experience across different devices.
Data Analytics: Data Analytics helps you to gain valuable insights into user behavior and market trends to optimize your offerings.
Payment Integration: Support multiple payment methods for convenient deposits and withdrawals.
Customer Support: Provide excellent customer service to enhance user satisfaction.

Additional Advantages:

Experienced Team: Benefit from Tecpinion’s expertise in the sports betting industry.
Scalability: Build a platform that can help you to grow your business.
Customization: Get customized software to match your brand identity and target audience.
Compliance: Ensure adherence to industry regulations and licensing requirements.

By partnering with Tecpinion, you can:

Accelerate Time to Market: Launch your sports betting platform quickly and efficiently.
Enhance User Experience: Create a platform that engages and retains customers.
Maximize Revenue: Offer a wide range of betting options and promotions to increase profitability.
Gain a Competitive Edge: Leverage Tecpinion’s innovative solutions to stand out.

FAQs

What are the steps to launching a sports betting business?
To initiate a sports betting business, you should begin by understanding the legal requirements of the location where you intend to operate. Develop a comprehensive business plan and apply for the necessary sports betting license. Additionally, seek guidance from industry experts, familiarize yourself with the specific terminology used in sports betting, plan your budget and financing, and establish a website to reach your audience.

What is the minimum investment required to start a sports betting business?
Starting a sports betting business typically requires a capital investment. The amount of money you invest can significantly influence your business’s ability to secure a strong position in the market. Amateur bettors generally place smaller bets, whereas professional bettors tend to wager more significant amounts.

How do I start a legal gambling business?
To start a legal gambling business, you must first choose a jurisdiction and prepare a detailed business plan. You will need to gather the necessary documents and pay any associated fees. After applying for a gaming license, your application will be in the review process, and if it fulfils all the criteria, you will be granted a license to begin operations.

How profitable is the sports betting industry?
The sports betting industry in the United States has shown significant growth. This growth indicates the industry’s profitability as it continues to expand across the country, according to the American Gaming Association’s annual report.

References

https://www.trafficguard.ai/blog/the-state-of-us-sports-betting
https://www.kenresearch.com/industry-reports/usa-online-sports-betting-market
https://gr8.tech/blog/beginners-guide-how-to-start-an-online-sports-betting-business/