After Monday's Supreme Court ruling, the sports betting industry, which has been stuck in the black market in the U.S. for decades, will be legal. It will clearly be a boon for casinos, media companies, sports leagues, foreign online gambling outfits, and fantasy sports companies like FanDuel and DraftKings. But for every gaming platform, there are at least three software platforms doing the thankless and invisible work of processing payments, verifying player age, and blocking IP addresses from out of state.
These wonky enterprise cloud software companies might sound boring, but they will form the bedrock of America's emerging sports betting industry, which is estimated to be worth tens of billions of dollars, according to the American Gaming Association.
Four states already allow online gambling, and 12 states have legislation in the works. With all those different markets, and the Wire Act of 1961, which prohibits interstate betting, geolocation, age verification, and fraud prevention software platforms will be in high demand.
Worldpay, one of the world's largest payment processors, already services 20 state lottery programs, casinos with online poker games, daily fantasy sports platforms like FanDuel and DraftKings, and other "real money" mobile games.
Joe Pappano, the senior vice president of Worldpay's gaming division, says the Supreme Court decision marks the gaming industry's largest expansion in the modern era. And companies like Worldpay, First Data, Playsafe, and others will be the ones managing the billions of dollars flowing in from gamblers to the house and eventually to banks.
"It's a funnel: All the money from the different operators and business models will inevitably have to go through payment processors," says Pappano. "The games will be different, but all those gaming companies will have to work with software platforms and service providers to do anti-money laundering checks, know your customer, and other regulations. All the business eventually cascades down to companies like us."
Braintree, which is owned by PayPal, also handles mobile gambling and real-money gaming apps. A PayPal spokesperson said that while the company only offers payment processing to a "limited number" of online gambling companies, it is watching the sports betting space closely.
In order to keep a payment processor, every gaming site or app will need to prove its compliance with all laws and regulations, which include age limits and geofencing.
Companies like IDology, a subscription cloud software platform that verifies age and identity and prevents fraud for gaming, retail, health care, and other industries, are also poised to take advantage of the sports betting market.
John Dancu, the company's founder and CEO, said every company will be required by the states in which it operates to make sure it doesn't allow underage users or identity thieves to gamble online. IDology already works across dozens of states for online lottery programs and online horseracing.
"We've been doing this for 14 years," says Dancu. "Gaming is a part of our business, and sports betting is an area that we're actively trying to grow."
For GeoComply, a geolocation software company focused on the gambling industry, sports betting represents a gold rush. GeoComply has licenses to act as a geolocation services provider in Nevada, New Jersey, Delaware, and Georgia for state lottery programs, along with MGM Resorts, Caesars, payment platforms, and other clients. Lindsay Slader, the company's operations manager, says GeoComply is now focused on expanding its services to sports betting platforms in states it already operates in and expanding into new ones as they come online.
Slader says that when states start legalizing sports betting, other states like Utah will uphold the ban. This means that companies like GeoComply will have added responsibility to make sure Utahns cannot access the betting platforms. One thing is clear: The successful expansion of legalized sports wagering will be heavily reliant on these underlying tech companies.
"Sports betting could be larger than the casino and poker market," she says. "For GeoComply, that's 100 percent of our business, which means this is a huge opportunity to grow our business."