Attorney Jeff Ifrah explains why a Second Skin Model could benefit Sportsbook Operators in various States.
August 14, 2019
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Jeff Ifrah is the founder of iDevelopment and Economic Association (iDEA) Growth, a leading industry trade association. Ifrah outlined a scenario which explains why a second skin model could be beneficial for sportsbook operators in various states. Take New York, for instance, where regulators have authorized four Upstate casinos to accept legal sports bets. By adding an additional skin, participating casinos have expressed concern that they could lose a considerable amount of business as the pie for sports betting revenue is divided into eight slices.
The argument, according to Ifrah, fails to take into account a key consideration. By introducing new entrants into the market, the size of the pie could grow exponentially. While a state with few operators may struggle with its marketing endeavors when it comes to online sports betting, the addition of several new companies could help a new product get off the ground.
Using the same pie example, instead of dividing a 12-inch pizza by four slices, operators could share the revenues from an extra-large, 50-inch pie if the market expands accordingly. In such a case, the operators have the opportunity to potentially double their revenues.
“It’s not that the same pie is now cut into eight slices, it’s that the pie is bigger,” Ifrah said. “It’s a much bigger pie because you now have four more people contributing to that marketing spend.”