#45: What Regulated U.S. Betting Operators Don't Want You to Know

The regulated sports betting narrative in America reads like a polished press release: 

Inevitable market domination, player migration from offshore sites, and the triumph of legitimacy over grey-market operators. Our data tells a dramatically different story.

This week at the NEXT Summit in New York, my team at Blask unveiled a comprehensive report that garnered a lot of attention. If you want to view the full report, you’ll find a link at the end of this email.

Using AI-powered analytics that scan billions of search queries with up to 95% accuracy for major brands, we've mapped the true state of the U.S. iGaming landscape: both regulated and unregulated.

The findings? Let's just say the regulated market isn't winning the war for America's bettors. Not even close.

While regulators celebrate each new state launch and licensed operators tout their growing market share, our data reveals an inconvenient truth: offshore betting interest is approximately twice that of the regulated market. That shadow economy isn't shrinking, it's thriving, despite the billions spent on marketing by legal operators.

The Offshore Advantage

Let's talk numbers because, ultimately, that's what matters. The Blask Index - our proprietary metric measuring user interest and engagement - sits at a jaw-dropping 60.6M for unregulated states, compared to just 28.9M for regulated markets. That is a decisive 2:1 advantage favouring offshore operators.

Who's winning this game? Bovada. By a mile.

With 17.4% of Brand's Accumulated Power (BAP) across the entire U.S. market, Bovada is crushing licensed operators. While DraftKings and FanDuel battle for 8.8% and 8.7%, respectively, Bovada has quietly built an empire that transcends state lines and regulatory frameworks.

Take California, America's golden gambling market. Bovada commands a staggering 38% market share, with an estimated $3.2B in Competitive Earning Baseline (CEB). 

The pattern repeats in Texas, where Bovada captures 39% of the market with a $2B CEB. In Georgia? Another 39%. Alabama? 35%. 

Meanwhile, licensed operators fight tooth and nail for fractional gains in regulated states. FanDuel might celebrate its 19.6% share in Pennsylvania or 21.1% in New Jersey, but those victories seem hollow when compared to the vast untapped market that offshore operators have already claimed.

The data shatters the industry's comforting narratives. What's winning is consistent access, competitive odds, and a product that delivers what players actually want, regardless of which side of the regulatory line it falls on.

The Billion-Dollar Opportunity

While industry titans squabble over regulated markets, they're missing the forest for the trees. The real goldmine sits in states without regulation. And the numbers are staggering.

California tops our leaderboard with an average Competitive Earning Baseline (CEB) of $8.5 billion, with potential to reach $21.3 billion at the high end. That's 1.7x higher than Pennsylvania, which leads the regulated states with a $5.5 billion average CEB. California's Acquisition Power Score (APS) similarly dominates, measuring 1.6x higher than runner-up Texas.

Speaking of Texas, the Lone Star State isn't far behind, with an average CEB of $5.3 billion and the potential to reach $13.3 billion. Florida follows at $4.9 billion, completing a trifecta of unregulated markets that dwarf their regulated counterparts in potential value.

Let's be clear about what these figures represent: billions in player deposits flowing to offshore operators instead of licensed ones. Billions in potential tax revenue evaporating into the digital ether,. And billions in economic activity happening outside regulatory frameworks designed to protect players and state interests.

The competitive landscape in these unregulated states isn't even close to balanced. In California, the top five brands are all offshore, with Bovada, BetOnline, and BetUS claiming 59% of the market between them. Texas shows an identical pattern: offshore dominance, with little incentive for players to look elsewhere.

Even in "mixed" states like Florida, where sports betting is partially regulated, Bovada tops the charts with 24.1% market share and a $1.4 billion CEB. Only Hard Rock Bet breaks the offshore stranglehold, claiming second place with 21.9% share.

The lesson? Regulation alone doesn't guarantee market capture. Pennsylvania might be the poster child for successful regulation with its $5.5 billion CEB, but it's still dwarfed by California's unregulated potential. When players vote with their wallets, they're often choosing platforms that operate beyond state oversight—and they're doing so in overwhelming numbers.

This isn't just lost revenue; it's a fundamental misreading of American betting behaviour by regulators and licensed operators alike.

The Path Forward

So, what's the play here? How should regulators and licensed operators respond to a market where offshore platforms are cleaning their clocks?

First, let's address the reality: players aren't choosing offshore operators because they love risk or lack understanding. They're choosing them because these platforms deliver what players actually value: competitive odds, broader payment methods, more attractive rewards, and frictionless experiences. The offshore advantage isn't regulatory arbitrage; it's customer-centricity.

Regulators face a crossroads. They can continue the failed strategy of prohibition and finger-wagging, or they can study why players prefer offshore options and adapt accordingly. States like Pennsylvania that lead the regulated market have found a formula that works, balancing taxation with market viability and enabling operators to compete on value rather than just legitimacy.

For licensed operators, the message is equally clear: trust and legitimacy aren't enough. When a brand like Bovada captures 38% of California's market without a license, they're doing something fundamentally right that transcends regulatory status.

Perhaps most telling is what happens in mixed states like New York, where DraftKings and FanDuel legitimately thrive alongside offshore operators like BetOnline. The market finds equilibrium based on value, not just legitimacy. Players maintain multiple accounts and smartly shop for the best experience, exactly as consumers do in every other industry.

The path forward isn't fighting the offshore tide but understanding what drives it. Operators that combine the trust advantage of regulation with the customer-centricity of offshore platforms will ultimately prevail in this market. Those who rely solely on their licensed status will continue losing the battle for America's bettors.

The billions at stake demand a strategic pivot, because right now, the house is losing.