There’s some turmoil in the U.S. betting market right now, particularly in states that are charging high tax rates to sportsbooks. Operators have been forced to pass on the cost to players, leading to anger and discussion among industry stakeholders. With the landscape still shifting, Pay Per Head bookies can seek to onboard new players — but in a legal manner.
How High Tax Rates Hurt the Bettor
Operators are being squeezed on their margins in high-tax states. Some, including DraftKings, have responded by imposing a 3.2% surcharge on winning bets in Illinois. Put another way, bettors now get less on their payouts. A common $11 bet to win $10 now returns just $9.68 if successful.
This reduction has a very strong effect. Bettors now need to win 53.3 percent of the time to break even, up from 52.4 percent. The gap may seem small, but over time it adds up, and can cut significantly into profits for experienced pros.
Offshore Betting Is a Growing Temptation
With a limit to how much is wagered, and frustration over increasingly paltry returns, it’s a safer bet many American bettors will resort to offshore sportsbooks. And beneficial as these platforms are (overseas exchanges are not subject to US taxes or regulatory fees), they commonly offer the better odds and looser terms.
But betting offshore is not without risks. These sites are not regulated by American authorities, so players do not have the same protection as they would in the case of a dispute or fraudulent activity. But, value can be a powerful motivator, and the potential for better payouts could entice some to use foreign sportsbooks.
This could be good news for PPH bookies. If they offer competitive odds and cheap-ish betting experiences, they might win over some unhappy gamblers. However, PPH bookies want to make sure that they remain legal with local gambling laws to prevent legal issues altogether.
TACTICAL OPENINGS FOR PPH BOOKIES
The current tax infested climate of the US wagering market provides an opportunity for the astute, law abiding PPH bookie to expand. One of PPH’S main features is flexibility in service. They allow bookies to:
- Provide the best rates and a 2-point spread
- Modify player features, markets, and betting limits
- Run with less overhead than a traditional sportsbook
This flexibility allows you to react faster to market trends and player needs. Yet these benefits need to be managed judiciously, especially amid regulatory changes.
Regulatory Compliance Is Significant
Compliance is not optional. For PPH bookies that are in US or take bets from the US, it is thus important to understand and obey the state laws. Fines, shutdowns and lasting harm to reputation can follow violations.
Operators should:
- Do not take bets from restricted territories
- Keep current on local tax and compliance requirements
Limit your risks and liability by partnering with counsel or PPH who provide you with compliance support
The market for betting in the US is growing, but it’s also facing greater scrutiny. For PPH bookies, they can only last long in the business if they are able to equally seize an opportunity and assume the responsibility.
The US betting market is working in a tough climate, with high taxes and surcharges affecting both the sportsbooks and the bettors. These are both risks and opportunities for adaptative, well-prepared PPH bookies. With competitive lines and regulation compliance – PPH operators can still flourish in this climate.
It’s time for bookies to evolve. With the right game plan, tools and legal footing, they can turn the headaches of the industry into an edge.
