On June 22, the National Hockey League will vote on expansion and, according to many sources, Las Vegas should be awarded the newest franchise. For edgier financial companies, though, it may be the holy grail of combining fintech and gambling technology.
There's a darker side to fintech, one that was better understood in March, when an article was published about gambling companies masquerading as financial firms. When you enter the shady underbelly of forex and binary options
companies, it's eerily similar just how the behavior of "investors" on these platforms is to gamblers. Worse, lack of regulation and pricing standards has led to potentially significant fraud.
The thinking goes, however, that if a pro sports team were to come to Las Vegas, a safe-haven for financial gambling migrants could be provided. It's legitimization for these types of quasi-financial/gambling technologies. In short, it could set off a bull market for financial technology players.
In anticipation of the NHL’s decision, here’s what could change for fintech and gambling technology with a major sports franchise in Las Vegas.
Two Types of Gambling
On the gambling side of things, the market is already developing. In April alone, the Nevada Gaming Control Board reported $292 million dollars in total bets placed on sportsbooks, so there's some captured sizable demand.
Specifically, fintech companies have an opportunity to influence two types of gambling: real-time gambling and Daily Fantasy Sports (DFS).
Real time gambling is as simple as it sounds. Players gamble on individual plays as the game progresses. Through a mobile app, users receive prompts and place bets on games in real time, and earn points for successful bets. Players with the highest daily scores win cash prizes.
DFS has had a bumpy road lately. DFS sites, like FanDuel and DraftKings, allow participants to assemble virtual all star teams of top players and award cash prizes to the teams that perform best. In recent months, DFS sites have been thrown through a legal gauntlet and actually banned in a number of states. Our state of interest, Nevada, outlawed DFS sites due to the lack of a gambling license. Even with legal issues, Eilers & Krejcik Gaming reports that entry fees alone for DFS are expected hit between $8 and $14 billion by 2020. That's a lot of money up for grabs for companies that can find a way to support the financial side of this market.
A new form of participatory gambling
If the NHL opened a franchise in Las Vegas, it would be stupid for the team not
to develop an in-house gambling app. Gambling is an untouched revenue stream for sports franchises, and with the magic of Vegas, a sports arena could become a sportsbook. Even more intriguing, fintech companies can create a new category of participatory gambling
for their fans at the games, placing a plethora of prop-bets in real time, using real money, or creating a licensed DFS league for live event attendees.
Fintech companies could provide either in-seat or mobile gambling apps for the NHL and essentially build a mashup of financial services. These legal gambling apps could be built upon the API infrastructure of payment firms like Visa and MasterCard. Currency conversion platforms like Transferwise can allow foreign visitors to gamble in-seat using their home currencies. Online lending companies can provide lines of credit to gamblers who need a little more cash, profiting off a short term vig.
For regulation, companies handling AML and KYC can play the role of hall monitor, making sure the money comes from and goes to the right places. Finally, by extending current software, former financial gambling companies can find a legal safe space in Las Vegas.
If the NHL is successful in Las Vegas, Vegas could become the new market to expand for other leagues. All major sports would want a piece of the action. Participatory gambling could be an easy and unique sell, and fintech companies would be there to facilitate and profit from services.
As the saying goes, “Vegas wasn’t built on people winning money", and someone ‘s gonna make a lot of money from a pro sports franchise in Las Vegas. Only time will tell how big the pot is at the end of the rainbow.