Analysis: We need to talk about data (sorry but we do)

We need to talk about data. Sorry, but we do. Mark Locke, the founder of Genius Sports, laid out what looked a declaration of war in EGR a couple of weeks back, warning “many more” legal proceedings would come in the future as rights-holders and their partners looked to combat the “theft” of live sports data. And he’s not the only voice warning of what might be on the horizon. A detailed discussion on the sourcing and distribution of sports data might not necessarily set the pulse racing, but it’s a topic that is going to dominate discussions in sports betting as the new football and NFL seasons arrive.

This is not a new topic, but it’s recently got new impetus. While some markets have taken a more protective approach to the rights of their leagues, notably France and Australia, it’s the arrival of the US onto the sports betting scene that has acted as an accelerant to what has long been a slow burning issue. Some states have looked to bake-in official data into new legislation and the major sports leagues are pushing hard for recognition. The US leagues seeing the emerging betting market have been keen to claim a stake for themselves and after a brief flirtation with integrity fees they now seem to have settled on data as the ticket into the party.

Putting cynicism to one side, that is not in itself a negative move for the industry. Sports leagues working for rather than against the betting sector is a clear advantage and the perfect model of data sharing and collaboration to produce high-quality consumer facing products that are rich in content and engagement should be a goal welcomed by all sides. But that is not quite how things are playing out. Operators, not least in the less in-play-driven US market, are reluctant to pay out relatively large costs for data and the approach to persuading them to use official data has been somewhat combative so far.

Genius Sports’ deal with NASCAR is one example of the official data partnerships being signed in the US

Function over form

It has to-date been all stick and no carrot, which is somewhat problematic as you can see a logical objection for operators to paying additional costs for a service that provides no clear net revenue gains for the business. While the likes of Genius Sport and Sportradar have built themselves businesses through the provision of pricing, in-play trading, streaming and data, it’s fair to say the latter is much more functional component of the betting ecosystem. While adding more in-play markets or streaming events can generate more revenue, adding better or faster data doesn’t really have the same impact.

That functional issue is an important one to focus on, because this is what has helped create the current environment. Operators need fast data, and more importantly accurate data, but it’s a little like the petrol you put in a car. Unless you have a supercar then the extra money you spend on the super high-quality fuel is probably not going to make much difference to your final performance. Data that is good enough, when combined with the protections that have built up over the past two decades can give a product that’s suitable for 99% of customers in 99% of situations.

How data becomes a more valuable part of the ecosystem seems a more important question. In-play is still a product in its infancy compared to pre-match betting, and most of the innovation around bet product and presentation has come on the pre-match side to-date. There feels like there is a lot of room for innovation with in-play and this could be led by the type and speed of data given to operators. The likes of Genius Sports and Sportradar can also clearly utilise their depth of pricing and trading expertise to generate these products as well as simply enable them on the operator side. But you sense this is not, yet, where the market is headed. Instead it feels like we’re heading into something of a head-on collision between the suppliers and the sector.

A head-on collision

It seems the idea is if you can’t join them, beat them. There are threats of enforcement of data rights, of the removal of unauthorised scouts from stadiums and a wider move to shut down unofficial data sources in a variety of forms. While the development of new products reliant on fast, accurate data might feel like an end-game, the threat of legal action is perhaps a more compelling near-term picture. The biggest threat is the possibility of disrupting unofficial data feeds, which would cause significant knock-on impacts to operators relying on them for a busy trading weekend. A combination of business continuity, legal and reputational risks probably doesn’t sit well with the board of a major PLC.

But it feels an oddly aggressive line to take from suppliers who also want to sell in a number of additional higher value services to the operators. What seems more likely, and something we hear some positive indicators of, is the development of a bit of compromise and an acceptance that for the larger operators’ cooperation is by far the best model. Ultimately this will come down to a value calculation and if the official data suppliers can provide enough of it in a variety of tangible and intangible ways then it would seem perverse for the mega-merged giants of egaming to not play along.

The question there is, however, what happens to the very long tail of operators not fitting at that top-table discussions. How can small or mid-tier operators justify large data costs when the unofficial solutions persist and provide that good enough service, scouting from TV pictures or scraping from other sources. That feels like a problem the data suppliers need to solve for themselves. Because the industry will be in no rush to do it for them. For the data firms and the leagues then it’s perhaps time to move fast and break things.