Betting, boredom and bouncebackability in the time of coronavirus

Alun Bowden is backing the survival instincts of a sports betting sector with no product left to sell

What a decade it has been. Wait. What? It’s only March? These are certainly strange, strange times. While the end of January ushered in the year of the rat, it’s arguable that from last summer the online gambling industry entered into the year of the black swan and there are some big lessons being learned about long tail probability distributions. Disruption is rapidly becoming the new normal, although nobody could have prepared for the last few weeks.

The Frankie Dettori multiples incident last summer gave an insight as to the new risks of scale, and regulation showed some of the underlying fragility in these seemingly bulletproof businesses and the gradual decline of growth expectations. But the recent days and weeks have been far more of a test. A situation nobody could have seen coming and an outlook that looks very bleak will be very challenging for some operators that have taken on large amounts of cheap debt and look, suddenly, quite precariously levered.

The big impacts

Share price graphs that look like a route map of the end of Thelma & Louise, company valuations at unprecedented lows, sports betting revenues vanishing and a deep abiding sense of uncertainty about the future all just arrived uninvited and unwelcomed in the space of a couple of days. The world at large faces far bigger problems than what happens to the online gambling industry over the next few months, but that doesn’t mean there aren’t some huge issues to be addressed for those whose future resides within it.

Sports betting is clearly facing a short-term crisis. There is something bathetic about the sports betting sector barely two days into this. While Betgenius and Betradar try and keep the lights on with Myanmar U21 football and Russian table tennis, and bet365 takes the fairly extraordinary step of moving FIFA games into its soccer in-play section, the reality is this has become an industry with almost no product to sell. It’s a pub selling empty pint glasses and hoping customers will find a way to fill them.

And there are big knock-on impacts from this too. While there will be accounts with money to be spent now and players looking for something to do, the big drivers of acquisition and retention are the sporting events themselves. It’s a much harder sell to try and get your customers to come back and redeposit because there is a Tanzanian Premier League match on that evening. The dip in activity also might impact brand affinity, break habits and lose share of wallet to other sectors such as casual gaming.

The big questions

But nobody should underestimate the adaptability and ingenuity of the sector. These are businesses that can and will look to find a way through and hopefully will look to shelter and protect those who have worked so hard to help build them in the short term. Because while this is a massive test of stability for some, there is no existential threat to the online gambling industry here. Sport won’t stop. People won’t stop betting. And opportunities will return in the future. It’s just very hard to gauge exactly when that will be at the moment.

For an industry that exists on long-term value propositions, one that knows about variance and expected value, this shouldn’t be hard to understand. This is not about making a success of the next few months, it’s about not messing up the next few years both for you and for the remainder of the industry. Now more than ever is a time to take a long-term view, to sit back and not rush into decisions and to try and take the time to think strategically about where you can position yourselves when this all shakes out. And there are, even, opportunities in the short term.

One of the big conceits is this will be good for the online casino and poker industries. Hundreds of millions of Europeans trapped at home with limited entertainment options and no land-based gambling available will flock to the online sites and apps for some much-needed distraction. Poker should thrive in this context and, to an extent, it is up to poker operators not to mess this up rather than anything more grandiose. Don’t try and be too clever, too cynical or too greedy. Just give the players what they want and need right now. Some fun and some value for money.

The big issue

There is also more cynical talk of an end of days mentality driving more reckless gambling, and this is something operators with more than a six-month view would be very wise to be cautious of encouraging. The responsible gambling approach to this unique situation will be absolutely vital to the long-term health of this industry and its customers. Customers betting at higher volumes, for longer and on new game types need to be carefully managed and looked after. And often they will need to be told, no.

This will be hugely challenging with reduced staff numbers and remote working, but caution has to be the watchword here even as revenues are falling off a cliff elsewhere. Now is the time to increase interventions, decrease limits and really push hard at the responsible, entertainment angle. To err here would be a devilishly huge mistake and one some companies may not come back from in terms of a licence review.

But more importantly, now is the time to prove to the wider public that gambling can be fun, safe and all the things you are telling regulators you want it to be. Actions, as always, will speak louder than words ever could and online casino operators need to think very carefully before they act for the next few months. This is a testing time for the online gambling sector in many ways, but those who find the landing softest perhaps need to take the most care of all.

Coronavirus | Sports betting | Strategy