Plenty to build on: the exponential rise of recreational betting products

The short Bukayo Saka run-up, the little pause, the left-footed drive that was neither placed nor full of venom, the Gianluigi Donnarumma save that was probably just as it easy as it looked on TV. And with that, it was all over. The tournament bookmakers and punters alike had all waited a year for after its Covid-enforced postponement in the summer of 2020, had come to its conclusion. We all know who were the big winners on the pitch, but who had come out on top off it?

“It was a solid nine, just a few penalties away from the perfect 10/10 tournament for us,’” says Myke Foster, head of sportsbook proposition at Ladbrokes, when asked about how good the Euros had been to one of Entain’s flagship brands. “Italy were a very popular pick ahead of the tournament. International teams don’t go three years unbeaten without generating a bit of a following. Ladbrokes are just one component of the wider Entain Group, though, and given our significant presence in both England and Italy, we were able to meet our customers’ expectations in both territories, regardless of the ultimate result.”

In other words, in the days of betting giants like Entain, which owns multiple brands aimed at very different markets, it’s no longer so black and white as regards what is or isn’t a good result for the operator. That Saka miss was a winner for some of Entain’s brands but a loser for others, meaning betting companies are taking the concept of hedging their bets to new levels.

Just off the Fulham Palace Road at Betfair HQ, the picture was considerably clearer as to whether the outcome of that Wembley final was good or bad news. “A bad result,” explains Sam Rosbottom, Betfair UK & Ireland PR manager. “Italy were by far the biggest loser in the book, but it could have been worse – we were actually shorter on them pre-tournament. They were the most-backed team throughout and left plenty of customers happy come the end of the tournament.

“For Betfair, it was a pretty fair tournament in terms of the bookie versus the customer. Plenty of favourites got off to winning starts throughout the group phase but some knock-out round draws helped us claw things back a little. We had plenty of enhanced specials go against us, too. 5/10”

Drawing comparisons

If operators are looking for a like-for-like comparison in terms of assessing the success of the tournament just gone, then Euro 2016 is an obvious place to start. “Massive growth across all metrics – from a sportsbook perspective our offering was bigger and better and gave the customer far more compared to 2016. England going all the way to the final also helped the interest,” says Rosbottom.

So, it was a successful tournament over at Betfair in terms of interest but like just everyone else in the industry, the firm was forced to adapt to changing customer demands. And this is key to the whole thing. If betting companies want things to remain the same – lots of active customers wagering heavily before and during a major tournament until the bitter end – then change is going to be essential. If time waits for no-one, then neither do sports betting customers.

“Punters are always looking for new ways to experience and enjoy their sport and products such as request-a-bets and bet builders have become a mainstay in the offering of any good sportsbook now, and their popularity shows no signs of slowing down,” reflects Foster.

Indeed, a sportsbook in 2021 looks very different to how it did the last time this tournament was staged. The sheer volume and variety of different betting markets ahead of any big game has grown exponentially. Sure, the old classics are all still there. Tournament winner, top goalscorer, match odds, over/under 2.5 goals, both teams to score, and so on. By today’s standards, even betting on how many cards or corners is pretty basic stuff.

These markets are where the value-seeking punter ventures. This is where hours of research and overcrowded spreadsheets come into play. A 2% edge on an over/under 2.5 goals bet or an underrated potential goalscorer are like gold dust to this breed of football bettor.

But not everyone marches to the beat of the same drum. “The industry, as a whole, wants customers to feel in control of their betting – placing their bets, not ours – and in many cases that often means placing smaller stakes on more engaging and personalised markets, which some of these products facilitate,” explains Foster.

If those sorts of products are what a new generation of sports bettors want, then the likes of Ladbrokes is more than happy to accommodate them. Entain CFO Rob Wood specifically flagged up request-a-bets, bet builders and their unique Ladbrokes 5-A-Side product as big contributors in helping to drive margin for Q2 to 13% in his trading update in mid-July. This, he remarked, was a “material step up” on the 11% achieved in 2019 in the pre-Covid era.

Entain wasn’t the only firm acknowledging the value of recreational products. Kambi’s Q2 update said: “The combinability of Kambi’s Multi Builder product, which enables players to create their own unique combination bets, continues to perform well. Multi Builder was available for the first time during a major summer soccer championship and delivered a high single-digit percentage of all Euro 2020 turnover, at a considerably higher margin than the tournament average.”

Also wise to the role those recreational products have to play on proceedings, and particularly margin, was Flutter Entertainment CEO Peter Jackson in the Q1 results. “Net margin declined by 210 basis points versus Q1 2020, reflecting favourable sports results last year, partially offset by the benefit of a shift in mix to higher margin products, such as same game multis.”

Building blocks

The big secret to the success of these products and the high margins they allow for lies in the attitude of customers towards them. Whereas the more serious punter would turn their nose up at a 11/10 quote when they were after 5/4, it’s a different story when it comes to how discerning the more recreational punter is. Or isn’t, as the case may be. Just as an example, Ladbrokes’ bet builder doesn’t display the odds on the different selections as you go about building your bet, just the final odds on your selection as an acca. So, you can see how bookmakers get away with such high margins.

To some that may seem like shopping in a store where nothing has prices on it, but it doesn’t stop customers wading in and coming back for more, particularly when there is one match on that day and they want a create their own longshot.

In this regard, the Ladbrokes 5-A-Side product, has been a huge success. It allows you to choose five players from either side to feature for you in a match and you then select which stat you want to bet on, and at what level. Each level will have a different price. Put the five together and not only do you have yourself a team, but you also have a bet.

“We’ve been absolutely overawed by the reaction to our 5-A-Side product this summer, from across the whole industry,” says Foster. “5-A-Side was always intended to be a way for our customers to place the most personalised, engaging and unique bet possible. Our punters know football inside and out, and 5-A-Side is the only product which allows them to really showcase that, on a single game.”

Myke Foster, Ladbrokes

During the Euros, customers were allowed to place their first 5-A-Side bet of the day for free, on all 22 match days. And at Ladbrokes there are already elements of the likes of bet builder and 5-A-Side being rolled out to other sports, with US sports in particular tailor-made for stats-based wagers.

Kambi has already vowed to extend its Multi Builder product, or a variation of it, to American football for the upcoming season, starting early September.

Betfair may not currently have a unique product of that nature to match Ladbrokes’ big hit, but they do a pretty good job of promoting what they have, including well-argued tips on potential bet builders for customers to place bets on.

A competition run over social media invited customers to try to land the biggest-priced bet builder of the whole Euros, with cash prizes available to those featuring on the leaderboard. The reward for Betfair was greater awareness of these types of products and increased customer engagement.

The reward for the winning customer was a cash prize. To go with his payout from the 222/1 bet builder that won him the tournament.

World Cup ambitions

The Euros may be over, but the new football season is just around the corner, and this is after all a World Cup year, although it doesn’t kick off until November 2022.

The appeal of improving existing recreational products, further promoting the existing ones or trying to come up with the next 5-A-Side, are obvious. But at the same time, always taking into account the foundations that a successful sportsbook is built on.

Foster says: “We have a list of great product developments and innovations across the entire Entain Group which we’d love to bring to the fore, not least with the ongoing evolution of our 5-A-Side proposition at Ladbrokes during this upcoming season and beyond. But a significant amount of our focus will always remain on some of our key principles: delivering the best, most stable, and responsible product that we can. So, understandably, we’re just as keen to innovate in those areas as we are with our flagship products.”

It was just about honours even at Euro 2020 between bookmakers and punters, and it will be interesting to see who comes out on top when the action moves to Qatar. The smart money is on a couple of the leading operators having some exciting new user-generated products that make a splash in the desert.