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In 2023, chances are your mobile service provider is either AT&T, T-Mobile or Verizon. The maturation of the mobile communications industry in the United States provides a coveted opportunity to break out the “back in my day” phrase and cherish the anticipated eye roll of the recipient of that utterance, waxing eloquent about a time when there was a cornucopia of wireless service providers.
The story of how the mobile communications industry went from that smorgasbord to e pluribus tribum bears several similarities to how the online gambling industry in the US is developing. Whether that means there will be eventually be just three dominant online casino brands in the US is is still uncertain. Legislators, regulators and the operators of those casino apps themselves still have large parts to play in that unfolding narrative.
Common story arcs between mobile comms and online gambling
Like mobile communications in the 1990s, the legal real-money online casino market is still very nascent. Such apps are only legal in six states right now. Two of those states, Connecticut and Delaware, are among the least populated simply due to their size.
In a similar way, mobile communications in the US once started as a patchwork of local, small networks. Over time, those networks came together via two main devices: acquisitions and mergers. In 2005, for example, Sprint acquired Nextel Communications. Cingular Wireless consumed AT&T’s mobile services in 2004 and then in 2007, AT&T bought back those services including the former Cingular.
A long litany of other transactions brought us to the “Big Three” era of mobile communications today, most recently highlighted by T-Mobile’s acquisition of Sprint. Jeff Moore, principal at Wave7 Research, which provides detailed analysis of the US wireless industry, spoke about how these transactions produced the one asset that has made the Big Three what they are today.
“Basically, the big network operators acquired other operators,” Moore said. “It’s been Pac-Man fever for 20 years. That’s how we got where we are today. Operating a nationwide network is a scale game. It favors those who are large and it requires those who are large to get larger. There were many small regional operators 25 years ago but those were generally all acquired.”
In much the same way, the US online gambling industry has seen two operators dominate in one segment: online sports betting. DraftKings and FanDuel have risen to the top because they built on what separated them from the chaff.
“FanDuel and DraftKings have unquestionably won phase one of sports betting in the US and their challenge is now to hold it,” Catena Media consultant Dustin Gouker said. “The assets they had were a great starting database and pretty well-known brands heading into the start of online sports betting. Of course, they also delivered pretty good products versus the competition, but that was most of the advantage.”
That dominance in online sports betting is no guarantee that DraftKings and FanDuel will similarly become the last competitors standing in the evolution of the US online casino industry, though. In fact, the online casino landscape could prize other assets more highly.
Brick-and-mortar presences could be key to online casino market share
The online casino business in the US could mimic the path of mobile communications in another key way; it’s the assets on the ground that grant air superiority.
“I think the land-based casino companies eventually will win online casino as it continues to expand,” Gouker said. “Their existing databases and the ability to tie into a rewards program for either online or in-person is compelling to make them different.”
From that perspective, companies like BetMGM and Caesars would seem to have an advantage. However, there could be room for others to jump into the industry and compete in the way that German company T-Mobile did; buying up the competition.
“Essentially, if you look at the US telecom market, you have two domestic top players, AT&T and Verizon,” Moore said. “T-Mobile, unlike the other carriers, is not a legacy US telecom company. It’s essentially an agglomeration of various startup US cellular operators from the 1990s. That group built out a nationwide footprint and that’s where T-Mobile came from.”
There are both contenders and opportunities in that vein. For example, Fanatics recently acquired PointsBet’s US operations. Along with that comes online casino licenses in four of the six current legal online casino states. There are other rumored acquisition targets like Rush Street Interactive (RSI).
RSI is especially attractive in this instance because it includes the element of ties to Rush Street Gaming’s physical casinos in several states. If Fanatics were to make a play there, it could be well on the way to spending its way to becoming a serious contender for national online casino market share.
As more states potentially legalize online casino play in the future, those brick-and-mortar assets could become more pivotal for building a national online casino brand. To a large degree, though, that will depend on the actions of legislators and regulators.
Would regulators be comfortable with three dominant online casino brands?
The gambling industry in the US could be said to be more tightly regulated than mobile communications companies. That’s especially true on a state level. However, when it comes to potential acquisitions and mergers, federal bodies would have jurisdiction like in any other industry.
The current state and history of mobile communications suggests that three could be a number the feds are comfortable with.
“I think they are comfortable with there being three,” Moore said. “I’m not hearing any outcry on that. The reality that the three are willing to provide their networks on a wholesale basis so the MVNOs (Mobile Virtual Network Operators) can be formed is part of that comfortable situation as well as the fact that the cable companies are providing very solid competition on that MVNO basis. Between Charter and Comcast they have more than 10 million wireless subscribers.”
There are still some regional wireless service providers operating in the US. In the same way, even a future that boasts just three dominant online casino brands could leave space for regional players. That, in turn, could help alleviate any antitrust concerns for the hypothetical Big Three.
History tends to be an indicator of future results. If you doubt that truth, look around you to see the return of clogs and flare jeans. In the same way, the story of how we got from the 90s to AT&T, T-Mobile, and Verizon could play out all over in the online casino biz.
