Editor’s note: The following is a guest article submitted by payments processor Paysafe. It has been edited for style and the content does not necessarily represent the views of Legal Sports Report.

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For sports betting firms operating in crowded markets, finding an edge over the competition is critical. Particularly in mature markets such as the U.K., product differentiation is typically marginal. Similarities in user experience can outweigh differences, and the scope and breadth of sports markets offered are fairly similar from operator to operator.

This is not to say that there is not product and user experience (UX) innovation across the industry – as there undoubtedly is. However, with such a homogeneous offering to work with, acquisition and retention can default to a race to the bottom.

As we see in the U.S., operators are fiercely competing on sign-up offers, ongoing promotions, odds boosts, and competitive vigorish. This tactic has proven to be effective in the U.S. thus far, but it is also expensive as cost per acquisition continues to spiral.

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Winning players in the US

With the U.S. online sports betting market scaling at pace – both in states where regulation has already been passed and in states on the cusp of passing legislation – there will be millions of new customers for sportsbooks to win. And sportsbooks are already investing heavily in the battle to win these new players.

DraftKings and FanDuel alone reportedly spent over $154 million in media advertising (excluding social media spend) between January and September 2020, according to data from market researcher Kantar.

More expensive promotional offers and lower odds seem like the unavoidable and foreseeable conclusion to acquiring new players as the U.S. market becomes more saturated. Make no mistake: a combination of pent-up demand for sports wagering and a growing addressable market can support this strategy in the near term.

But what about the long term? This is the high-risk game at play – spend significantly upfront and bet on long-term player monetization. To maximize the economics of this strategy, operators must consider more ways to differentiate.

A change of approach

Ever-increasing costs for player acquisition is neither a healthy state for operators nor the industry as a whole, so if sportsbooks can differentiate themselves another way, then they should.

To find out whether there are other tactics operators could employ to differentiate themselves favorably with players, we commissioned a survey of 2,000 players in December 2020 across eight states with a regulated online sports betting market.

When we asked U.S. players to give us their top three criteria when evaluating different sportsbooks that they do not currently have an account with, over a quarter of players (28%) named good promotional offers as a differentiator that is important to them. A similar percentage (27%) said good odds were in their top three criteria when assessing one sportsbook over another. So, there is clearly some value in both, as would be expected.

But surprisingly, promotions and attractive odds were not the biggest differentiating factors for players. Instead “being able to trust the brand” (32%) and “quick and easy payouts” (37%) were both selected by a higher percentage of sports bettors as being the most important factors when choosing a sportsbook.

How payments factor into acquisition

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And the same pattern is true when we asked players with multiple online sports betting accounts open how they choose which account to bet with at any given moment.

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Both the odds (36%) of the specific wager they want to make, and the inclusion of a promotional offer (44%) are important to much fewer players than how quickly they can receive their potential winnings (51%.)

Moreover, three-quarters of players, when directly asked, say that being able to receive payouts quickly is the most important factor when deciding whether to open an account with an online sportsbook or not.

Looking ahead

As the U.S. online sports betting industry grows and goes from strength to strength in 2021, and new markets open, solving the issue of standing out from the competition is going to be critical for operators. Treating account deposits and withdrawals as a point of differentiation, rather than just a necessary function, will be key.

Specifically, this means increasing speed of payouts to bank accounts, as two thirds of players (66%) expect to receive their funds within 24 hours.

A second strategy is to offer more payment methods for players to deposit and withdraw. Three quarters (75%) of players would change their payment method if it meant faster payout and over half (52%) would even pay a premium, so it is easy to understand why payment methods that offer immediate payouts such a digital wallet will be critical to sportsbooks’ success.