Sportsbook's blurred lines

Coral’s launch of customisable player bets, which brings elements of fantasy football into sports betting, raises some interesting questions for the online sports betting sector. And the biggest one of all is at a time of huge market disruption, are operators ready for what comes next?

On the face of it the new Coral launch doesn’t look like a game-changer. It combines elements of user generated content (UGC) with daily fantasy sports (DFS) metrics to allow players to create their own bets on major sports. What it speaks to isn’t a huge interest in DFS, but a need for operators to continue to invest in product to keep ahead of a hard chasing pack.

Standing out in the sportsbook vertical is suddenly of real importance. The emergence of off-the-shelf trading software means the sector is more crowded than ever, and the rise of the mega-merger firms has only increased the advertising spend within core regulated markets. Even the established names are having to shout just to be heard.

And with the looming spectre of advertising restrictions in the UK, operators are going to need to find more ways of keeping themselves front of mind among a user base with four or more betting accounts. Product innovation is set to become the new battleground, but will DFS provide operators with some ammunition?

Is this just fantasy?

More than three million people play the Fantasy Premier League season-long game and it forms the basis of most work conversations in many offices. It’s tightly integrated into people’s lives and creates huge levels of engagement in the Premier League from the player base. But does that mean people want to bet on it?

Evidence from the US suggests that perhaps DFS isn’t quite as sexy a sector as it appeared 12 months ago. Leading DFS analyst Adam Krejcik of Eilers & Krejcik Gaming told delegates at the recent EGR US Power Summit that while it was premature to say the industry was in decline, the landscape has changed drastically over the past year, and not in favour of the operators.

The anticipated merger of market leaders FanDuel and DraftKings is a defensive move aimed at shoring up some very wobbly looking businesses that are yet to turn huge player bases into huge profits. It’s mostly a problem of their own creation with an unsustainable media spend placing enormous bottom-line pressure on both firms.

But as Krejcik noted, a “very dedicated & sticky user base eventually leads to profitability” and it is this aspect of the business that should be capturing the attention of a European sports betting sector where player retention is now hugely important.

UGC – easy as 1, 2, 3

While previously sports bettors had what could more accurately be described as the illusion of choice (a red one, some blue ones and a green one) when it came to sports betting, there are now emerging brand and product distinctions. There is now real choice and real differences in the product and user experience as consumers are increasingly looking for more bang for their hard-earned bucks.

Krejcik noted that the DFS surge highlighted the popularity of “skill-based games and value proposition (willingness to pay for a truly engaging entertainment experiences)” among millennials. And this is a key concern for the betting industry too. How can it continue to engage an audience raised on the internet with high expectations of what it should get for its entertainment spend?

One tool we’ve seen used recently is user generated content. UGC has been the next big thing for around four years now, but in sports betting it’s finally gaining some traction. Sky Bet’s Request A Bet feature, where users request specific combination bets to be priced up by traders, has been hugely successful and is front and centre for most Premier League games.

While we understand Request A Bet isn’t hugely revenue enhancing, its a core retention tool for a certain segment of the user base and its success is clear in that Paddy Power has slowly began testing out its own version via social media. Nothing says success in egaming quite like a me-too product. So will we see the same for more DFS-lite products?

The future is blurry

While in the US we have the slightly implausible scenario of operators insisting DFS isn’t just another form of gambling, in Europe it’s generally viewed as a sub-vertical of sports betting. It’s arguable neither side is correct, but what it means over on this side of the pond is operators are able to blur the lines more.

If Coral’s product is a success you can guarantee a number of the major operators will jump on board with the technology, but it is unlikely to be the last innovation around the edges of sports betting we see. Operators will be looking to make a number of changes to the user experience over the next year and while any big successes will quickly be copied some greater points of differentiation should also emerge.

The big question of course is which ones will work in terms of bringing in more revenue and increasing retention? On that the answer is far from clear.