Paysafe, a payments processing company, is expanding its partnership with FOX Bet, an online sports betting platform, to offer a digital wallet and electronic cash product for online sports betting consumers in Michigan state, according to a June 29 press release.
The London based-company also expanded its partnership with technology giant Microsoft to enable video game players to make online cash transactions via the video game device Xbox at Microsoft's online store in 22 countries like the U.K., Spain, Italy and France, according to a June 30 press release.
The move comes as sports betting and esports spending is hitting record high levels. Nearly $58.7 billion in wagers has been placed in the U.S. online betting industry since a ban was removed in 2018, according to Legal Sports Report. Video game spending in the U.S. hit a record high of $56.9 billion in 2020, a 27% increase as consumers were stuck at home during the pandemic, according to reporting by USA Today.
Paysafe and Flutterwave Entertainment, the parent company of FOX Bet, are expanding their partnership to provide bettors with digital wallet and electronic cash payment options for safe and secure online sports betting.
The company has been working with FOX Bet’s operations in Pennsylvania, New Jersey and Colorado and is now expanding its services to Michigan.
Paysafe's electronic cash system is a digital payment system that helps transfer funds anonymously. The aim of that Paysafecard product was to provide easy and secure micropayments over the internet.
“Customers can purchase paysafecard vouchers for various amounts at participating points of sale and then redeem the value online by entering the 16-digit paysafecard code at the checkout,” Paysafecard CEO Udo Mueller said in an email. “Registered customers can also manage their paysafecard codes and balances through a paysafecard account.”
Some of the retailers where Paysafecard is available include CVS, Krogers and Fred Meyers. More than 13 million customers use the Paysafecard annually across the globe, Meuller said.
Paysafe has been working with Flutterwave’s other betting subsidiaries, including Betfair and Pokerstar.
Since the U.S. Supreme Court struck down the ban on online betting, many online bettors who previously bet on unregulated international platforms have started placing bets in the U.S. This has opened doors for a new industry to develop and grow, said lawyer Jeff Ifrah, a founding member of the law firm Ifrah Law, which specializes in online gaming and sports-betting, among other areas.
State-by-State Regulations/Subjective State regulations
Different states have different regulations regarding where a consumer can place bets, Ifrah said in an interview.
One of the biggest risks associated with online betting is that people don't understand if they are placing a bet on an unregulated site which creates “a risk of payment problems and scams and losing money,” Ifrah said.
Paysafe earns nearly 35% of its revenue through its global online gaming vertical from digital wallet and electronic cash along with “some integrated processing revenue,” a recent Cowen Research equity report said. Paysafe has a stronghold in the online gaming in Europe and its operations in the U.S. online gaming contributes less than 2% of its total revenue, the report stated.
The total market for this gaming in the U.S. is expected to be between $33 billion to $49 billion by 2025, according to Cowen's report.
Diving deeper in the video gaming industry
The company also sees big opportunity in the video game payments industry. The use of Paysafecard through an Xbox console and Microsoft's online store will provide an alternative payment method for gamers. Paysafe integrated its electronic cash product into Microsoft store at Xbox's website in December 2020, Mueller said.
“The issue with video game payments is that at times companies don't know if a person is authorized to make payments,” Ifrah said. “A lot of the gamers are less than 18, might not have their own accounts and can make unauthorized transactions from their parents' cards.”
Some 30% of the the video gamers are less than 18 years old and in the U.S., 60% of the people play video games, according to a June 22 techjury blog.
The offering is targeted towards consumers who might not have traditional bank accounts like younger players. The Paysafecard works as a prepaid digital card where the card holder can add value in it before using it. Paysafe plans on expanding its video gaming payment operations in the U.S., but the company refused to provide any specifics on the timeline.