Blackstone-backed GeoComply dominates US betting market
At the core of the rapidly-expanding online betting industry in the US, a little-known Canadian company named GeoComply has emerged as a game-changer.
Backed by Blackstone, one of the world’s largest private equity groups with $1 trillion of assets under management, GeoComply has carved out a niche for itself in the booming betting market.
Game-changing technology
GeoComply’s technology is simple yet crucial. Before a US gambler can place a single bet online, their location must first be verified to ensure they are complying with the complex patchwork of state-specific laws that govern the market.
GeoComply has a near monopoly on providing this service, processing 1bn geolocation checks every month on average and charging a small fee each time. Its clients include industry giants like FanDuel, DraftKings, BetMGM, Caesars Entertainment, and ESPN Bet, which together account for more than 90 percent of US online sports betting.
Stock market listing for a near-monopoly
Despite its current dominance, GeoComply is not resting on its laurels. The company is drawing scrutiny over litigation and restrictive contracts that have helped maintain its lead. Meanwhile, competitors are lining up to take a shot at the market.
The company’s founders, husband and wife David Briggs and Anna Sainsbury, (in photo above), are now considering a stock market listing.
“Ten years ago, we founded GeoComply with scant resources and amid pervasive scepticism. Many dismissed the potential of our product and target market.”
Anna Sainsbury, CEO – GeoComply
Today the story of GeoComply is a testament to the power of innovation and foresight, a story about betting on the future, and so far, it seems like a winning bet.
Dominance in US betting market
The legalization of online sports gambling in the US has been a game-changer for the industry. Since the 2018 Supreme Court ruling, Americans have bet nearly $300bn online, and this figure is expected to grow by 60 percent over the next four years to US$ 24 billion. Amidst this boom, GeoComply has emerged as a dominant player, processing one billion geolocation checks every month.
GeoComply’s strategy to maintain its market share has raised concerns among some customers, competitors, and antitrust experts. The company has pursued litigation against rivals and drawn up stringent contracts with clients, effectively blocking them from exploring rival services. This has led to accusations of unlawful monopolization and restraints of trade under US antitrust laws. As the online betting industry continues to grow, the stakes are high for GeoComply.
The company’s superior product and business acumen are challenged by new entrants and competitors. Regulatory scrutiny highlights the complexities of operating in this rapidly evolving market. As GeoComply faces these challenges, the future of the online betting industry hangs in the balance.
Business is backed by Blackstone
GeoComply’s success has been boosted by a minority investment from Blackstone in March 2021. The firm was attracted by the rapid growth of the online betting market and the essential role geolocation plays in meeting the industry’s regulatory requirements. However, GeoComply’s dominance has not gone unchallenged. Rival geolocation companies, such as Radar and Xpoint, have also attracted investor attention and are making inroads into the market.
High-stakes game
The company has the advantage of being ‘first to market’ and has therefore emerged as a dominant player in the US online gambling industry. However, GeoComply also faces criticism over its exclusivity clauses, patent litigation, and pricing strategy, which some see as anti-competitive and exploitative. The company defends its practices as fair and necessary, and says that it welcomes competition in the market.
The US online gambling industry is expected to grow rapidly in the coming years, as more states legalise and regulate online sports betting and casino games. This will create more opportunities and challenges for GeoComply and its rivals, as well as for the operators and regulators. The industry will also have to deal with the social and ethical issues that arise from the proliferation of online gambling, such as addiction, fraud, and money laundering.
On the other hand in order to maintain its leadership and success in the online betting industry, GeoComply will have to strike a balance between innovation and compliance, as well as between profitability and responsibility.
