Can GeoComply Maintain its US Geolocation Market Dominance?

GeoComply has dominated geolocation services for the US online gambling market with a near-monopoly for the last decade but now faces newcomers trying to break into its space. To date, GeoComply has processed nearly every location check in the regulated US market—a mandatory step for every legal online bet, ensuring that the gambler is playing from a permitted location.

Ten years on, bolstered by GeoComply’s success, competition has emerged as challengers seek out their piece of the lucrative gambling geolocation market.

Can GeoComply maintain its ubiquity, or will a growing and maturing industry welcome the emerging choice?

Building a Better Mousetrap

GeoComply’s story officially began in 2011, when husband-and-wife team (and possible clairvoyants) Anna Sainsbury and David Briggs founded the company to develop geolocation technology tailored for the gambling space.

Early on, the company tested its product in New Jersey, which legalized online casino gambling in 2013. Despite early competition, GeoComply soon emerged as seemingly the only provider with tech sophisticated enough to meet stringent regulatory needs.

That technical superiority laid the foundation to become today’s market leader, John Pappas, a longtime senior advisor to GeoComply, told Bonus in January.

GeoComply just had a better product. They built a better mousetrap.

Pin-Drop Possibilities

Significantly, during its early years, GeoComply invested significant time talking legislators through the ins and outs of its technology. At the time, federal lawmakers had considered banning online gambling outright—they failed to see how states could keep play contained within borders.

Working with Poker Players Alliance at the time, Pappas recalled requesting GeoComply’s help getting through to Washington’s decision-makers. In one instance, he said, they met with Rep. Lindsay Graham, one of the era’s biggest online gambling opponents, and explained the technology.

After some conversation and a demonstration of GeoComply’s iconic pin-drop maps, Pappas said Graham could see state-level regulation was possible.

By 2018, when the Supreme Court ruled the Professional and Amateur Sports Protection Act (PASPA) unconstitutional, GeoComply was ready for the online gambling expansion that soon followed.

In an earlier interview with Bonus, Pappas noted the importance of GeoComply’s advocacy:

Had there been federal action in those early years, we wouldn’t be talking about the industry today.

Chad Kornett, GeoComply’s SVP of gaming operations, recalled the fear at the time was palpable.

Kornett, who worked for Gaming Labs International (GLI) when New Jersey legalized, told Bonus the potential legal consequences inspired a lot of fear.

The regulators, everyone, were so scared. There were federal laws they might violate if they accepted a wager from across the state line. It was really nerve-wracking.

I think Lindsay, Anna, and the others who helped explain it could work are the only reason we got to this point.

Lindsay Slader, named above, is GeoComply’s compliance SVP. In addition to being a co-founder with Briggs, Sainsbury serves as CEO.

First-to-Market Advantage

In the years since PASPA fell and as legal online betting spread across the US, GeoComply has testified before lawmakers from over two dozen states.

Today, the company boasts a client roster with household names like DraftKings, BetMGM, Caesars, and FanDuel, alongside lesser-known boutique brands.

Impressively, the geolocation Goliath checks nearly every legal bet made in the US, processing over a billion location checks each month. Globally, over 400 million devices have downloaded its tech. Most recently, the company reported a 22.3% rise in location checks throughout Super Bowl weekend.

Thanks at least partly to that success, GeoComply faces new competition as challengers queue for a piece of a US online gambling market worth billions of dollars. According to Eilers & Krejcik Gaming, US gambling should grow 60% to reach $24 billion in annual gross gaming revenues over the next four years.

A recent Financial Times (FT) piece suggested GeoComply’s business may violate anti-trust laws. In particular, it points to terms allegedly contained in the company’s contracts that would make it costly for clients to switch to another provider.

However, Pappas says that GeoComply welcomes the arrival of competitors.

GeoComply’s success has led others to look at this market… Competition is only going to make the market stronger overall. It’s certainly driving GeoComply to do even more and innovate even harder for its customers.

Challengers Assemble

With eight years of experience providing geolocation services to retail clients, New York-based tech firm Radar is the latest to turn attention to online gambling.

Neither Radar nor CEO Nick Patrick is shy about the intention to shake up GeoComply’s near-complete online gambling monopoly. Radar has licenses in Arizona, Colorado, West Virginia, and Puerto Rico, with plans to gain approval in “all other states” over the next year.

“GeoComply has long been the only game in town for geolocation compliance,” Patrick wrote Bonus in an emailed statement.

We’ve spoken to dozens of operators over the past year, and virtually all of them agree: viable, cost-effective geolocation alternatives are needed. Radar is here to meet that need.

Unlike other “upstarts,” said Patrick, Radar already works with brands including DICK’S Sporting Goods, Panera, and T-Mobile, annually processing over 100 billion API calls from 100 million devices.

Beyond geocompliance, Radar’s solution supports location-based messaging, on-property app experiences, address validation and mapping,  and “more.”

However, the cost seems to be the main selling point for Radar’s new gambling-focused fraud detection and geo-compliance solution.

Patrick told Bonus Radar is “generally at least” 50% less expensive. For major operators, he said, that could amount to millions in annual cost savings.

Radar’s pricing, he explained, is based on monthly tracked users, not location pings. The pricing, he added, allows operators to easily forecast costs, check a player’s location whenever required, or enable new use cases.

Xpoint’s Gaming-Only Expertise

Seeing online gaming geolocation opportunities, Radar expanded its retail-focused services to address the needs of the betting industry.

Meanwhile, GeoComply is on a mission to “instill confidence in every online transaction” while remaining a market leader in the gaming industry. So far, that includes targeting cryptocurrency and financial services, media and entertainment, and child protection geolocation needs.

On the flipside, Xpoint is a newer geolocation provider dedicated to perfecting its solutions solely for the gaming industry.

Unlike other players in the space, Xpoint’s focus is solely gaming, CEO Manu Gambhir told Bonus in an interview.

We are 100% focused on the gaming industry. Sure, other industries have some geolocation needs; digital media, banking, retail—Radar offers a great product to the retail community. But there are just so many unique requirements in gaming. Why divide our efforts?

As a businessperson, Gambhir said he sees the validity of a multiple-vertical strategy, but not when it comes to gambling.

The problem is that the gambling space has so many idiosyncrasies and nuances to it that if you get a competitor like us, who is dedicated, solves all the nuances, and goes into every nook and cranny, how are you going to compete?

Second-Mover Benefits

According to its website, the new kid on the block came into being in 2019 with a singular purpose: breaking up the monopoly in US geocompliance.

Nearly five years on, Xpoint has secured licensing in 19 states and the District of Columbia. On Jan. 22, it announced a partnership to provide services to leading fantasy sports operator PrizePicks. And last year, Xpoint signed on to provide services to UK-based operator Bet365 in at least one US state.

Notably, despite being “more competitive on pricing” than the incumbent, cost is not a main selling point, said Gambhir. Instead, Xpoint differentiates through accuracy, speed, and its ability to leverage operator data to offer in-depth insights.

Accuracy, specifically, is Xpoint’s number one focus, and Gambhir explained why it’s so important.

When it comes to geolocation, it’s pretty easy to hit 97-98% accuracy, he said. Unfortunately, nailing that last 2-3% presents an extra challenge, which Gambhir called the “last mile problem.” Plus, he noted solving for that additional certainty can consume substantial engineering time and budget.

But, if you’re a company like Fan Duel, with over $3 billion in revenue, losing even 2% to geolocation inaccuracies is a $60 million problem. So, if Xpoint can solve for that last 2%, it’s a huge advantage for its clients.

While Gambhir acknowledges GeoComply has enjoyed a first-mover boost, he believes second movers have an “incredible advantage” if they capitalize on it.

Xpoint is that second mover, and they’re starting to grab market share. The roster is expanding quickly, he added.

The amount of inbound interest and conversation is phenomenal. I’m sure we’ll get our fair share of the market as time goes on.

Anti-Trust Allegations

Although Gambhir has never seen GeoComply’s contracts first-hand, he told Bonus that Xpoint was not surprised to hear about the anti-trust accusations leveled in the FT coverage.

However, he also believes increased competition will bring natural change as GeoComply loses the advantage of being the sole gaming geolocation provider.

“Xpoints’ goal is to level the playing field and compete on its services, not restrictive covenants in contracts,” Gambhir said.

Operators now know that there are multiple providers. They’re not accepting these terms anymore. As the renewals happen, it’s, ‘Hey, we’re going to renegotiate pricing and no more restrictive covenants.’

Still, GeoComply previously launched a patent infringement claim against Xpoint. However, a judge granted Xpoint’s motion to dismiss in 2022. While GeoComply is appealing, Gambhir said Xpoint is confident the court will uphold the initial finding.

GeoComply expects the process to unwind more like a marathon than a sprint, whichever way the court decides.

A Redundancy Problem

In any case, Gambhir told Bonus he thinks the standard for geolocation will soon change drastically.

If you look at the technology stack for online gaming sportsbook operators, in every area—KYC, payment, PAM—there is redundancy, he said.

If I am an online sportsbook and my primary payments provider goes down, my software’s built so I have a backup payment provider and route my payment traffic there. Same for KYC. The single point of failure in the whole industry has been geolocation. If GeoComply goes down, the whole industry goes down. There’s no backup, no redundancy possible.

Initially, there was no choice with only one provider. Now, there are other solutions, but redundancy is still lacking.

Eventually, Gambhir believes geolocation backup will become standard.

As we look a year or two out, operators will have a primary provider, and if there’s a problem, they’ll just run the geolocation data through the secondary option.

A geolocation monopoly by any company is unlikely to hold in the US. Instead, Gambhir predicts two operators will share a two-thirds to one-third split by late 2025, with possibly a third picking up the leftovers.

Anna and David had the foresight many years ago to see this opportunity. By being first to market, they were able to develop a huge advantage. But it’s unlikely this industry would be a monopoly forever.

There’s also opportunity globally, but less than in the US. And the standards for geolocation outside North America are typically much lower, he said.

However, Gambhir added that he’s aware of early-stage conversations happening in some overseas jurisdictions around tightening geolocation requirements to meet the bar set by the US, particularly for tax reasons.

If that happens, it could open up further opportunities for US geolocation providers.

Compliance Pays Off

For its part, GeoComply declined to comment on the anti-trust allegations in the FT piece.

Bonus also has no first-hand knowledge of GeoComply’s customer contracts or willingness to negotiate. In that light, it feels prudent to note that exclusivity clauses are not uncommon in the tech sector, particularly when a company lays out a significant investment upfront.

However, regarding cost comparisons, Pappas said GeoComply considers its product cost-neutral.

Reducing user friction, he explained, allows the operator to optimize location calls and better avoid false positives and negatives. Further, said Pappas, with GeoComply’s full tool suite, operators can identify fraud risks and defend against credit chargebacks, saving even more.

In 2023, during the Super Bowl, GeoComply helped one client save nearly $10 million in potential bonus abuse fraud, Pappas added.

Ultimately, yes, there is a cost, but those are somewhat neutralized when they look at the efficiencies they’re getting with our superior technology and the cost savings from the fraud we’re able to stop.

According to Pappas, GeoComply has separated itself thanks to technology that works better for the operator and end user and its “unrelenting commitment” to solve customers’ problems.

As a company, we started as geolocation compliance, and now we’re helping companies onboard customers via a more seamless ID verification process. We’re helping them solve fraud issues. I think that unrelenting desire to ensure our customers’ problems are solved is something that the industry values.

Natural Evolution

As Kornett pointed out, the tech is consistently evolving.

We’re always improving ourselves. And we’re fortunate to have this position where basically the entire industry’s traffic is channeling through our systems… We’re constantly learning from the data coming in.

As a result, he said, the technology is ever-evolving, incrementally, and through more extreme shifts.

It’s always getting better. Will there be a material shift in the core tech? Yeah, we’re always releasing new products.

In June 2023, GeoComply released its No Download Browser Solution (NDBS) in Ontario, Canada’s highly regulated commercial market. The tool streamlines the player’s online gambling experience while ensuring location spoofing detection and regulatory compliance. And, for the first time, there’s nothing for the player to download.

The change, explained Kornett, is a considerable shift from the past.

Additionally, said Pappas, Carbon, GeoComply’s single point of failure backup now has regulator approval in nearly ten states. The new product ensures client operations are unaffected if GeoComply ever suffers a catastrophic failure, potentially addressing the redundancy issues noted by Gambhir.

Two weeks ago, GeoComply also joined the call for online gambling regulation with the release of a video spotlighting the repercussions of illegal online gambling in the US.

Ultimately, Pappas reiterated, GeoComply welcomes a challenge:

As a company, we don’t sit up at night worrying about competition. We sit up at night worrying about how we solve problems for our customers, and if competition helps drive us to do that even better, then we welcome it.

About the Author

Robyn McNeil

Robyn McNeil

Robyn McNeil (she/they) is a Nova Scotia-based writer and editor, and a lead writer at Bonus. Here she focuses on news relevant to online casinos, while specializing in responsible gambling coverage, legislative developments, gambling regulations, and industry-related legal fights.
To Top

Get connected with us on Social Media