The important role that free-to-play games will play in the future success of the online sports betting market

Amid an upward trend of gambling operators' financial results being hit by significant marketing, customer acquisition costs to enter the emerging U.S. sports betting markets, Rob Phythian —Co-Founder and CEO of SharpLink Gaming— outlines in this column four key features that would make free-to-play games an effective resource to address this key issue: reach to all jurisdictions, more user data, engagement with low-frequency bettors, and education.

Right now, companies and sportsbooks are spending an exorbitant amount of marketing money for generic banner ads, bet boosts and free promotions (deposit $100 and we’ll match $100) to acquire new users. This one-and-done effort, formulated to pull in the widest number of new customers while also being as flashy as possible, is not a sustainable way to grow a user base.

Free-to-play games, an often overlooked asset, should be a company’s go-to when trying to encourage steady growth of its user base. Offering something for free when aiming to become profitable seems counterintuitive, but it provides four key points of value to companies and sportsbooks attempting to foster a stronger, stickier customer base.

Free-to-play games engage with 100% of the audience

In the United States, roughly 70 percent of the population cannot make a legal online bet. While generic ads and promotions drive momentum in legal betting states, they disregard those in non-betting states and give those potential customers no direct call to action. Free-to-play games extend to all states, regardless of legal betting laws, and can be applicable to all teams, leagues and media operators. In turn, this builds brand recognition and loyalty. When more states ultimately legalize online sports betting, those operators will have a built-in base of prospective bettors who have already learned through game play and sports betting simulations how to place real bets using real dollars.

Captures user data

User data is an underutilized and underappreciated product in the sports betting industry. Free- to-play games give brands an opportunity to collect valuable data on personal preferences and behavior, which in turn can inform targeted messaging for new users. Additionally, users that sign up for free-to-play games are essentially pre-qualified bettors. Broadening the focus to a wider pool of potential customers will only benefit operators when states flip to legal betting.

Target the low-frequency bettors

High-volume bettors — the ones casinos and sportsbooks focus on — are generally advanced, educated bettors who bet significant amounts of money. To a high-volume bettor, $100 or $500 worth of risk-free bets isn’t enough to engage, but to a low-frequency bettor, it’s a large sum of money, potentially turning them away. Through its obsession with fantasy sports, the American market has already become accustomed and trained to engage a variety of low- and high-frequency bettors. According to the Fantasy Sports & Gaming Association, the number of fantasy players who also place sports bets is as high as 65 percent. Narrowing in on high-volume bettors is a mistake. Free-to-play games widen the potential pool.

Provide touchpoints and education

Sports betting is confusing. It’s riddled with unique and unfamiliar terms, and there are numerous game styles. Before a potential bettor can be successful, they need to be comfortable enough to place their first bet. A generic banner ad or promotion won’t suddenly make someone comfortable and familiar with the unknown. By using free-to-play games, potential customers can learn more about sports betting in a non-threatening, no-risk situation.

Dumping money into general advertising attracts attention, but it lacks KYC – knowing your customer. Knowing your customer by utilizing free-to-play games and understanding their needs, wants and behaviors might lack the cool factor of ads with celebrity spokespeople, but it is grounded in a solid, well established foundation that works. You can bet on that.