I’m fan of eSports

There have been lots of news and stories about eSports in past few years. There seem to be lots of hype around eSports but not only hype but also serious new business opportunities. I have tried to be active in that area and have visited in many seminars and some events to learn and understand more about that “rising star”. It was great to notice last week in ICE event in London how big part of expo and seminar was about eSports.

I think that it’s fun story how eSports became to my life. I was going to participate in one gambling seminar about 5 years ago. I studied the agenda of that event and noticed that there was one session about eSports. That was totally new item to me and for some reason I decided to find out information about that from internet. I read about Counter Strike, Dota 2 and League of Legends. I also was interested in understanding how big that sport was in Finland and found out the ranking list of Finnish players. There was one very familiar name on that list – the same name than my son has. I told that to my son and mentioned that I didn’t know that there is another person in Finland who has the same name (my family name is not common) than he has. The even stranger thing was exact the same nickname. My son looked at me and said “You can’t be serious! It’s me!” It’s obvious that I’m not so good dad when I didn’t know that my son was among the best players in Finland. I didn’t even know that he was playing at all because he hasn’t been active PlayStation-player as a kid.

After that incident I have learnt a lot about eSports. I have got lots of information from stories, events but also from my son. He is not playing eSports actively anymore, but his good friends Jesse and Lasse are doing that at world-class level. Thanks to good sources I have understood how tough sport it’s at the top level. Those players are real professionals who are practicing hours and hours every day. It’s not at all just geeks with energy drinks!

Is eSports sport or not? That has been the theme of public discussion here in Finland. To me it’s sport for sure but I think that it’s totally irrelevant question. I believe that active eSports players don’t care about that at all. That discussion started in big newspapers more than one year ago when the organizer of the Finnish Sport Gala published the candidates for the best athlete in Finland. One of those candidates was MATUMBAMAN who won with his team The International tournament in Dota 2 (World Championship). Almost at the same time the Finnish Olympic Committee took eSports under their umbrella. Last year the same kind of discussion started again when JERAX and TOPSON won the same The International tournament and got invitation to the President Palace and SERRAL won the World Championship in Star Craft II game. It’s obvious that we have lots of top level eSports players here in Finland!

What is the relationship between eSports and Sports Betting? Some years ago, gambling companies were thinking about to introduce some gambling features inside eSports games, but it didn’t finally happen because that kind of action would change those games and that should be purpose. Instead of that companies decided to offer eSports in Sports Betting as any other sports. It has worked well at least here in Finland. It depends a little bit how you analyze the popularity of different sports in Sports Betting, but I could say that eSports in nowadays among the 4 – 6 most popular sports in Veikkaus offering. It’s at the same level or even higher than for example basketball. I believe that there would be lots of new ideas and options left. We tested one new thing, probably as the first company in the world, this week. We introduced eSports “Football Pools”-game. You know the game where you should select “home win”, “draw” or “away win” from 12 – 14 matches. This time those matches were eSports matches.

What gambling companies could reach by offering eSports and what are the biggest risks? Customers who are making bets in eSports are younger (not too young!) than average Sports Betting customers. They are not using a lot of money but are quite active to do it from weekly basis. That new potential target group is also reason why some gambling companies are nowadays sponsoring eSports events – it will give good reputation among younger customers. I visited in Counter Strike Major tournament in London and were surprised about the structure of audience. There were lots of young people but not so young than I expected them to be. There were quite few who were under 18 years old. I was probably the oldest one at the Wembley Arena but that’s another story… Of course, there is also few quite big risks due to those quite young players. The first on is the risk of match fixing. eSports players don’t understand those risks because they are not aware about that. That’s why gambling companies and eSports organizations should concentrate on education. The other risk is more related to Sports Betting. Companies shouldn’t make any marketing campaigns in the events where are underage audience than that’s very difficult to control.

I believe that the popularity of eSports will increase and there is also huge potential from Sports Betting business point of view too. But we should seriously take care of the integrity of eSports at the same time!

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!

SHARKS – DANGEROUS ANIMALS?

I wrote about different customers in my previous blog. I’ll now continue with the same theme and will concentrate on Sports and Horse Betting.

I divide Sports and Horse Betting customers to four groups: “sport fans”, “habit players”, “wannabe experts” and “heavy punters”. The motivations of those different types of customers vary very much and Sports Betting companies should understand that, or they won’t manage well.

“Sport fans” are really interested in different kind of sports. The size of that group is big – in Finland about 50 % of adults are watching when our team is playing in World Championship final in ice hockey. Those “sport fans” are probably playing some money games but they are not so familiar with Sports Betting products. “Habit players” is smaller group but from Sports Betting customers it’s the biggest group. They are gambling every week and know Sports Betting products well but are not using lots of money. “Wannabe experts” is active group who could say that Sports or Horse Betting is their main hobby. They are trying to win money from gambling but won’t manage to do that in long term. “Heavy punters” is real small group of experts who are in practice professional gamblers and Sports or Horse Betting is their job. There are all the time movement from lower group to upper group and sometimes also to another direction.

Let’s assume that there are only three main business goals for betting company. The most common goal is to get profit. The other one is to achieve sale and market share. The third quite common goal is to increase the number of customers. If you are not running giant size company with lots of resources, you can’t do everything and can’t concentrate on all customer groups seriously. Normally we are in the situation where we must select which business goal will be our primary one. Of course that goal could be different in short term and long term – big market share will help you to earn more money in long term etc…

If I should try to get as much profit as possible in next quarter I would target my offering and marketing to “wannabe experts” and partly to “habit players”. Those groups are losing more money than the other two groups. Of course that would be irresponsible way to act but don’t care about that here. If my goal would be to achieve more sale I would concentrate on “heavy punters” and also “wannabe experts”. Heavy gambler could use about 1000 times more money to gambling than an average normal customer. So, it’s the easiest way to increase your sale with them. You should understand that if you are concentrated on that professional group you will potentially face serious problem with your profit because those customers will win in long term. If my goal is to increase the number of customers, I’ll have just option left and it’s “sports fans”.

I think that all sports betting companies are willing to get “wannabe experts”, “habit players” and “sport fans” but not “heavy punters”. Why that is the case? Sports Betting companies seem to be afraid of those professional customers and call them “sharks”. I’m not sure that is the wisest way do business although in short term it might look like that.

When you are willing to make a bet, you should find out another person who is also willing to do that and who is ready to accept odds you are offering. So, we always need two parties to make a bet and both should agree with the conditions of that bet. The interesting question is why I should accept bet from one customer with fixed odds but don’t accept bets from another customer with same odds or even don’t accept any bets from that customer? That’s how most of sports betting companies are doing nowadays. They make their decision based on data of those different customers – bets are ok from customers who are losing in long term and not ok from winning customer = SHARKS. According to rules there is nothing wrong with that but why those companies are so afraid of sharks? The responsible gaming reason is not at all valid when we are talking about those professional punters. They are spending huge amount of money but that won’t cause problem gambling when they are winning in long term. The real reason is of that companies are willing to make money / profit and they won’t do that with those customers or will they?

I agree that those sharks are dangerous “animals”, but would it be possible to act towards them in different way and even utilize them in your business? Yes, I think so! I have three ideas about that. The first one is to make your odds better. When your odds compliers know that there are talent customers against them they will do their work even better than would do against normal customers. When you have better analyzes your fixed odds sports betting will be better business. The other benefit would be better reputation. At least here in Finland those “sharks” are quite famous among “wannabe experts” and when your company accepts bets from them they will speak on behalf of your company and “wannabe experts” would value your company much more. The third thing is the profit which will come from another products. If you are offering pari mutuel sports or horse betting products you will get bets to those games too from “sharks” and that will utilize you in two different ways. You will get higher turnover to your game which will be even more attractive game after that. There is no business risk from company point of view in pari mutuel games, so you will get also profit from those “sharks”. Finally they might be even profitable customers as such or at least via the other customers.

It depends on your business goals how much you should be afraid of sharks. Sometimes they are not dangerous animals at all!