Sports Betting – bulk product?

I’m on my way from the biggest gambling event in the world, ICE, back to home. I had there lots of interesting meetings and would have so many ideas for my blog. This time I chose the item which stimulated me most: the future of Sports Betting. I would like to thank three of my good friends Jens Nielsen, Stein Onsrud and Sami Kauhanen about fruitful discussions about that!

As you know I love Sports Betting! It has somehow been my ”baby” and I would like to see it to have bright future. Unfortunately, I don’t have so positive view about that, but we haven’t lost the game yet. In the ”old days” when we started fixed odds Sports Betting in Finland it was battle between odds compilers and punters. It was a little bit unfair competition due 20% margin which the company had. Anyhow the core of Sports Betting was to make as good statistical estimation as possible and that was enough to run successful Sports Betting business.

The other important feature was marketing. There could be some other companies who could make as good analyzes than your company and you should be more attractive from customers point of view than those other ones were. Marketing was the key tool for that competition. It was quite simple to run successful Sports Betting business in 1990’s. You just needed excellent odds compilers and marketing people.

Everything seemed to change when Betfair and some other betting exchanges appeared to the market. Their business model was totally different – margins where about 5% or even less. I believed that it was all over from traditional Sports Betting companies’ point of view. But I was wrong! Companies raised payout percent up to 92-93 % and that was enough for the customers. Of course, betting exchanges have taken quite big part of the business but not so much than I expected.

The next and probably even more crucial change in Sports Betting business has been and will be the raise of companies like Betradar, Betgenius, Kambi etc… Those suppliers are selling their statistical analyzes to Sports Betting companies. Odds suppliers have hundreds of odds compilers and analytics and they are using IT-experts too to make perfect analyzes. They can also utilize scalability more than Sports Betting companies can. Due to those reasons nowadays almost all Sports Betting companies have outsourced odds making to those suppliers. Companies are buying services from same few big suppliers and that’s why there are not differences in odds anymore between Sports Betting companies. That has made Sports Betting quite boring!

Sports Betting is not anymore bookmaking like it still was 15-25 years ago. I could even say that there are not anymore real fixed odds! They are rather running fixed odds because companies are changing odds all the time based on money coming in. Computers could take care of that and there is no need for skillful odds compilers anymore or isn’t it?

It seems that Sports Betting has become as a bulk product. All companies have the same product with the same odds. Marketing has still big role but something else is needed if you want to make business in that gambling area. I think that there are at least two possibilities left. The first one is understanding of your customers. You should be able to sell Sports Betting in separate ways to different customer groups. I already wrote about that in one of my previous blogs. There are customers who are not so interested in odds but are still ready to make a bet. You should offer Sports Betting to them in totally another way than to active punters.

As an old Head of Sports Betting business, I’m probably too much married with old times but I would say that the second possibility is to make better odds than the other ones. Would that be possible? I’m sure that it is but just in limited areas. You could concentrate on one or two sports and be there better than those odds suppliers are. Pinnacle is good example of that. They are now the leading company in eSports and very good in some other sports too. You could also concentrate on one country and try to be the best analytic of sports there. The Nordic lottery-based companies are good example of that strategy. I believe that my company Veikkaus is the best Sports Betting company in Finnish ice hockey and football and some other local sports like ”pesäpallo” (our own baseball style sport) too.

There is big risk that Sports Betting will be bulk product which all companies just have but no one really concentrate on it. But I believe that at least some companies will try to fight back and try to do some part of Sports Betting in different way than the other ones. As a Sports Betting enthusiastic I really hope that there will be need of bookmaking also in the future!

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