Analysis: Sports betting is revolting

Hidden deep in the presentation for William Hill’s first half results was a small note on the popularity of its YourOdds product over the World Cup. The request-a-bet style offering apparently generated 25% of tournament gross win. This from a product Hills only launched in a fairly rudimentary state back in January 2017 is quite extraordinary, and really it’s only the tip of the iceberg when it comes to the changes in sports betting that have been underway in 2018.

It’s fair to say this wasn’t an entirely passive change at the old lady of the UK betting market. YourOdds was heavily advertised in the UK both prior to and during the World Cup, and the product was significantly enhanced in time for the tournament, extended into in-play as well as being offered on multiple matches. It was a clear attempt to take a bigger share of the mass market Sky Bet had to some extent made its own during the biggest acquisition event in the calendar.

And it wasn’t alone. BetVictor’s £1m bet campaign saw it plunging headlong into the world of user requested bets and bet builders with several winning bets of 10,000/1 and above as punters, some of a fairly serious nature, scrambled to outdo each other. Paddy Power and Betfair was a little more low-key and somewhat unimaginatively named “same game multis” but it was present nonetheless and bet365, arguably the originator of the bet builder, had its product front and centre in all World Cup markets.

But interestingly despite the success of these products they are not leading to huge leaps in incremental revenues. While the 25% number at Hills tallies with anecdotal numbers from other operators, and is even at the lower end of some figures, there isn’t a similarly large rise in betting revenues. What we’re seeing instead is the reinvention of the multiple and the repositioning of sports betting as a product with customers increasingly being sold into gaming-style jackpot betting with a side dish of personalisation.

A bit of light relief

For the operators faced with declining margins and a price pressure squeeze in the main markets it must seem like a godsend. In an era where football and racing pricing is cut to the bone on the main markets it’s a product where margin offers a bit more breathing room. With 1X2 markets in football often facing very slim overrounds and enhanced odds cutting these down to loss leaders at times a higher margin product that consumers love is a welcome relief.

The fact they are multiple bets naturally makes them higher margin, while the individual and complex nature of the user generated bets means direct comparisons with the competition are less frequent. There will be less pressure, for example, to ensure your bet on Aguero to score 2+ goals, both teams to have +4.5 corners and Fernandinho to be booked in the second half is a better price than across the street than there would be on the BTTS market. And its extension to in-play could even help massage up what has always been a low margin product, but there is no question it raises some other issues.

The big question nobody is really asking is what happens when you turn sports betting into a gaming product? What is the end game here? The short-term looks very attractive with the potential for higher margins and a fun, entertainment-based product that appeals equally to younger audiences and the old-school acca punter. But the longer term is creating a more transient style of user experience with jackpot chasing and gaming-style interaction as opposed to the more deeper emotionally invested relationship we traditionally see with betting on sports.

This can only be exacerbated by the sheer volume of new launches continuing to enter the UK market, partly as an end goal and partly as a conduit to Asia. A seemingly never ending onslaught of bonus offers, enhanced odds and bet boosts continues to put pressure on the incumbents as much as the newer entrants to the market who are all fighting for market share. And the last thing anyone in sports betting wants is a market that begins to resemble online casino where players are as loyal as Georgia from Love Island and move from bonus offer to enhanced bet to bonus offer.

The big sponsorship gamble

The latest big launch pending is the long-awaited marketing onslaught from the Addison Global brand MoPlay, who recently revealed it was the new betting partner of Man United, but they are far from the only one battling for share. Kindred and LeoVegas are also in high visibility this new football season with the two responsible for 9 shirt sponsorships in England’s second tier football league, the Sky Bet Championship. There are also several other brands on the front of the rest of that league with 18 of the 24 clubs having gambling sponsors.

A similar situation exists in the top tier Premier League with nine clubs sponsored by gambling firms, although most of these are as conduits to other markets, predominantly Asia, with any UK business only of moderate interest. But it’s not escaped the attention of the media. In an article in The Guardian Marc Etches of GambleAware said he felt the issue was at a tipping point. “We have a generation of fans who believe you have to bet on football to enjoy it and that is disturbing and concerning,” he said. When linked to a culture of gaming-style bets and cross-sell into casino it becomes even more problematic in terms of its public image.

This may sounds hysterical were it not for the recent changes in Italy where a populist government brought in a sweeping ad ban on the back of public discontent with a surge in gambling promotions including football sponsorships. And the ever increasing number of sponsorship deals sits a little awkwardly in a market that is still finding its feet in terms of public and legislative comfort with gambling as mainstream entertainment. Both in the UK and elsewhere in Europe this feels like an industry unwittingly asking for things to be brought to a head.

It feels unlikely the sports betting industry can avoid some kind of reckoning with the regulators over its deep links with sports clubs, but this is only one part of the ongoing revolution the sector needs to deal with. The mass market nature of the product brings with it a number of new demands around responsible gambling and marketing but it also potentially changes the nature of the consumer itself. Lower spend, lower loyalty and bonus and boost fixated. Operators may need to spend more to earn less in an advertising environment where opportunities have become more limited and acquisition more expensive as a result. This is in some ways a problem of the industry’s own making and it’s one where it’s not entirely clear yet what the solution is.