School of hard knocks: Are there lessons to be learned from the demise of BetBright and 188BET?

The closure of BetBright and 188BET made plenty of headlines in the mainstream UK media, thanks broadly to the treatment of their punters’ ante-post bets. A Guardian article at the end of March began: “More bad news arrives for ante-post punters, as we are told that 188BET is to cease trading in Britain and Ireland and will honour ante-post bets only for events to be completed in the next three months. It appears that BetBright set a precedent when it decided to void ante-post bets in closing down, a decision which the Gambling Commission then legitimised by failing to do anything about it.”

The bigger story for industry executives however were the signs that significant, second-tier bookmakers were finding the ongoing competitive and regulatory crunch simply too much to bear. The manner of withdrawal was also instructive. BetBright was rumoured to have invested approximately £72m in the platform since being founded in 2012, and while it obviously generated significant revenues during that period – including a reported £16m in 2017 – the final selling price of £15m can only have represented a significant loss. The fact the brand and customer base were also mothballed by 888 is telling.

“There must have been significant liabilities in the ante-post book or they couldn’t simply show scope for any profitability whatsoever after eight years of operating,” says Paul Fitchford, a betting and gaming consultant. In short, there was a significant investment on building a tech stack, product and brand, with major sponsorships in racing, that yielded very little indeed

It’s a similar story with 188BET. The firm generates the majority of its revenues in Asia but could never be accused of not giving the UK a fair crack. The operator was a regular feature on EGR Marketing thanks to multiple deals with Premier League football teams, major horseracing meetings, snooker tournaments and rugby league teams, to name but a few. Last year it redesigned its site to appeal to UK punters, and started offering extra places on major UK horse races, albeit to little avail with the firm closing its UK site at the end of March for “commercial reasons” in a “very competitive market”.

“The UK is such a tough market that unless you have a proper, high-quality machine behind your operation you will fail,” one 188BET staffer tells EGR. “Product was something that let down 188BET and unlike the vast majority of UK operators the heartbeat of the firm was in Asia, meaning the UK was never the true priority of the organisation. That made things difficult.”

However, as one UK gaming exec, speaking off the record, predicts: “They won’t be the last ones to go this year.” But just where did the two firms go wrong and is there anything to be learned from their mistakes? Can smaller firms still make an impact in the UK, or is scale really as important as egaming executives tell their investors?

No entry without ID

The biggest issue shared by the two firms was a lack of identity, according to sportsbook consultant Matthew Howard. “It all comes back to a lack of differentiation,” says Howard. “You can throw money at customers and promotions, but after that, there’s nothing to keep them there. There’s no reason for a customer to say: ‘I’m a 188 customer and I like playing with 188.’ You’ve got to be unique and stick to a true brand identity.”

That identity could come through pricing, but for key sports like horseracing both firms were reliant on third-party compilers and feeds rather than investing in their own compiling and quant teams.

“BetBright was the best group of firefighters I’ve ever seen and their trading was the only positive on the balance sheet, but the output price was just a sourced 100% line,” says one sportsbook analyst, speaking off the record.

If you aren’t really going to compete on price, then perhaps product is the way to go, but BetBright never really took advantage of having invested so much in its platform. Ultimately the firm spent years developing a product that looked indistinguishable from every other sportsbook on the market. The firm spoke about a culture of innovation, but perhaps the most unique thing on the platform was a social betting feed that told other customers what other punters were currently betting on.

Eilers & Krejick Gaming analyst Alun Bowden suggests product is still the best way for smaller firms to compete, pointing to BetVictor as an example, adding: “Even from the big boys there is still a sense of a commoditised product with some bells and whistles and a user experience that isn’t radically different beyond colour palette.”

Unfortunately, examples of genuine product differentiation are still few and far between, with 188BET and BetBright failing to really stand out.

“I don’t think any of these brands coming in have necessarily done anything wrong,” adds Bowden. “They are just coming into a battle that very few will be able to compete in and where it’s going to be a long expensive grind just to get into single digit market share.

“And to do even that you’re going to have be totally on point with everything you do and ideally offer something different or exceptional to the market. It’s certainly not impossible, but it’s really really hard.”

It also required at least a seven-figure backing, according to Fitchford, and a willingness to lose money for several years as you build a decent userbase. MoPlay, for instance, has made headlines recently with some of its acquisition efforts – refunding all win bets on the Masters after Tiger Woods won and offering some very chunky free bets around the Cheltenham Festival.  As noted earlier, you need some reason for those acquired customers to stick around however, as at some point the free-money hose has to be turned off.

All white on the night

For those who perhaps don’t have deep-pocketed foreign investors, Fitchford says the best way to enter the sportsbook market now is via a pure white-label partnership, with the entirety of the gambling operations left to a partner.

“I personally think that’s the way new entrants are going to have to go now,” Fitchford says. “The white label system right now is massively underrated. The beauty of the white label is you own the IP and the brand, so at the end of a three-year deal, if you’re making money, then you can go get your licence and get your platform because then you have the player base to pay for it.”

It’s something of a bold suggestion, given the most high-profile recent example of a sportsbook white label partnership is Sun Bets, but Fitchford points to PlayOJO as a success story on the casino side of things.

“I get three or four enquiries a month – how do I enter this space and I think that’s the way you have to go now,” he adds.

Bowden also offers some advice, with a nod to the likes of Redzone.bet, adding: “We’re starting to see more niche operators emerge with a focus on specific sports, and that lends itself to further experimentation, with the hyper-local model presenting options if attacked intelligently.”

The key message that seems to emerge then is just to be different. There’s simply no point building anything that looks and feels like bet365 or Sky Bet because they already execute that model brilliantly and can throw eight figures at marketing promotions if they feel like it or run an entire sport at a loss just to acquire customers.

The counter to scale then appears to be doing the exact opposite; finding a niche and owning it and generating loyal customers that way. It might not propel you into the Sunday Times Rich List but it sure beats the alternative.