Here is a quick rehash of an experience a bettor had with one of the new private Ontario sportsbooks. The individual signed up, downloaded the app and wanted to move $100 into their betting account to try it out.
After having their Visa card rejected, they tried a debit transaction from a major Canadian bank. They found $100 had been deposited into their new betting account, but the withdrawal was not showing in their bank checking account. Days went by, with still no indication from their bank that the withdrawal came out. After four days, the withdrawal finally showed up. Not having overdraft protection, and balancing other obligations, the uncertainty of when the withdrawal would come out eroded that person’s trust in how the sportsbook processes payments.
In fact, Alcohol and Gaming Commission of Ontario CEO Tom Mungham said if he had one regret about the rollout of the regulated Ontario online betting market, it was that they didn’t fully comprehend the level of risk tolerance in the banking community to bring them more on board with operators.
And that, according to industry experts at last week’s Canadian Gaming Summit in Toronto, is where the rubber is going to hit the road for Ontario betting apps operators in the hyper-competitive market.
If trust is eroded in any way, that operator will lose that client, probably forever. The whole area of payments has changed dramatically over the past few years.
Industry Players Offer Advice For Operators
Taking part in the panel: Andrew Darley, senior director, iCasino & iLottery at OLG; Greg Kirstein, VP of business development at Paysafe; and Noah Levy, SVP of product at theScore Bet Sportsbook.
Darley’s advice for operators was in line with the experience the bettor in question had. The process of signing up a new customer needs to be seamless, money needs to get in and out quickly. What kind of a role do payments play in product offerings and how important has it been in customer acquisition and retention?
“Payments are a core part of the funnel,” Darley said. “We talk a lot about deposits, and the importance of getting in your money quickly, but it’s just as important for us to look at what we can do from a withdrawal standpoint as well.”
Levy talked about the differences between Canada and the U.S. market regarding player payment preferences. “There’s a lot of similarities,” he said. “Cards are king in both jurisdictions. In 2018 and 2019, some of the largest financial institutions were not processing (in the U.S.), and we were seeing massive decline rates. From a product perspective, that sucks.”
Financial institutions in Canada, though, have moved a lot faster compared to their U.S. counterparts when the market went legal there, he added. But they’re still seeing some of the same issues pop up.
Customers are looking for different ways to fund their wallet for how to bet on sports in Ontario specifically.
“Operators often focus on product, making sure we have the right place for customers to engage with us online, but the only way any of that works is if they can deposit in the way that works for them,” Darley said. “We have to go where they want us, not where we want them.”
Kirstein said clients will always try a credit or debit card first, since that’s the way they are used to transacting. “But the way issuing banks view transactions (in the iGaming business), it forces operators to really provide optionality as it relates to deposit options.”
Customer Conversion Remains the Key
Payment methods include Interac e-transfer, digital wallets (some customers want the flexibility to move money in and out of a wallet, and they don’t want to involve their checking account or credit card, keeping the transactions off their statements), e-cash, and reloadable cards.
Some consumers want to remain anonymous. Not every customer is the same.
“Operators pay a lot of money to acquire a customer,” Kirstein added. “They need to get them through that funnel, convert that customer. You have to have a 100% conversion on your cashier through one or more payment methods, with a positive experience for them, so they will come back.”
As Levy said, it wasn’t too long ago when you would get a call on a Monday and you would pay cash to a bookie in person, the original payment method for gambling over a weekend.
That transitioned into the grey market online space, where bettors put money into a payment operator who they were probably less familiar with, leading to some uncertainty about whether they could get those funds out when desired. Now the new legal environment, with active brand names like PayPal and all the card and bank providers, has been an incredible transition.
End User Looks For Trust
Challenges remain in smoothening out the processes, making operational improvements, and tweaking the journey, Levy added.
“The core of all this is trustworthiness,” he said. “The end user needs to know that the money in their funding account is available to them when they want it, how they want it. And if you don’t have that level of trust, you’ve lost your customer. You need to make payments instant, and as seamless as possible. The operator can’t hold it for some undue reason.”
Overall, Kirstein added, the Canadian market has been “pretty good,” just two months in, with strong credit card and debit card penetration, compared to other jurisdictions. Cards were unusable in markets like New Jersey, Delaware and Nevada, for example, for a solid two or three years after regulation.
It takes time to educate the banks that this is safe, regulated gambling.
“The deposit experience needs to be as good as the withdrawal experience,” Kirstein said. “I think things are good here. They are going to get better."
Darley: “As entrants come in (to the market), the only ones that will be successful will be the ones that people feel like they have the right payment methods available to them and the operators are doing right by them.”
The 1,000-pound gorilla in the room, for everyone, is cryptocurrency, and how that will translate into the online gaming space, since the whole beauty of it is the anonymity, (not having to tie it back to a financial institution).