Micro machines: How Betr plans to break into the US sportsbook market through micro betting

When it comes to flash and pizzazz in the sportsbook industry, nothing beats a celebrity endorsement. Whether in the form of a brand ambassador or content creation-based media partnership, it brings a boost of popularist kudos to the sportsbook operator in the eyes of the public as well as a profound effect on the operators themselves (as typified by DraftKings’ partnerships with NBA legend Michael Jordan which caused a 16% spike in its share price).

But, what is the ultimate expression of the celebrity/sportsbook operator relationship and what effect can it have on the latter’s chance of sportsbook dominance? One possible answer came in August with the launch of micro-betting site Betr, along with its high-profile co-founder and president – social media mogul, professional boxer, and content creator Jake Paul.

Paul, who has over 20 million followers on Instagram, made an immediate impact that was plain for all to see. His mere association saw the startup’s social media following grow to almost 100,000 in less than 72 hours (exceeding that of both BetMGM and DraftKings) as well as helping Betr accrue more than $50m in funding from enthusiastically willing investors. And the other side of this thriving partnership? That’s being worked by Simplebet co-founder and Betr CEO Joey Levy – the sportsbook brains behind the brand. EGR North America managed to corner the man leading this micro-betting revolution and ask him about his vision to make sports betting “betr”.

EGR North America: Simple question, why micro-betting over regular betting and why will it become the “predominant” way bettors bet on sports?

Joey Levy (JL): There are two primary reasons. First, the cadence of US sports lends itself perfectly to micro-betting (eg. baseball is driven by pitches and at-bats, American football is driven by plays and drives). US sports generally feature a stop and start cadence, a lot of scoring, and a lot of speculation over players and what they will do next. While micro-betting has technically existed in Europe and other regulated mature markets globally, the experience is typically a contrived one for the consumer, given soccer drives most of the global regulated betting market. The primary micro-market for soccer is a Next Occurrence market, which enables folks to bet on whether the next occurrence in a soccer match will be a yellow card, red card, throw-in, corner kick, goal, etc. Do folks actually care whether or not a yellow card will happen before a throw-in while watching a soccer match? Probably not. But do folks care about whether the next pitch of a baseball game is a ball, strike, or in-play, or whether the next play of an NFL game will be a pass or a run? Yes – these moments are core to the viewing experience. US sports are driven by moments, whereas soccer, which previously drove the global regulated marketplace, is not.

The second reason is that we live in a society where consumers have increasingly lower attention spans and are constantly seeking more instant gratification. Micro-betting features the ultimate level of instant gratification with respect to the sports betting user experience. Similar to how daily fantasy sports introduced instant gratification to season-long fantasy, micro-betting introduces instant gratification to match outcome-based legacy sports betting.

Betr CEO and co-founder Joey Levy

EGR North America:  In the PR on the app’s launch, you suggested conventional sports betting was “uninterpretable” by the casual sports fan. Can you explain this stance and how micro-betting is different?

JL: Focusing on micro-betting is one of two core product pillars for Betr, with the second one being a focus on making the sports betting user experience simpler and intuitive. I actually started Simplebet, initially, to be a direct-to-consumer operator (that was open to going to market as a B2B company), to solve this front-end focused user experience problem. I remember the first time I used a sportsbook, I had no idea what ‘minus 175 money line’ or ‘five-and-a-half-point spread’ meant. Sportsbooks are presented in tables, lists, grids, and are generally overwhelming and cluttered interfaces, so it almost feels like you’re interacting with a spreadsheet rather than an entertainment product. It’s not an intuitive experience to somebody who’s never used a sportsbook before, meaning it’s basically uninterpretable to the vast majority of the US public.

After the repeal of PASPA we were trying to design simple user experiences that would allow betting on US sports to be more intuitive. After trying to integrate a collection of API feeds to enable us to design simple user experiences around the moments that drive US sports – like pitches, at-bats and plays and drives – we discovered that the back-end technology to enable micro-betting did not exist. We realized that historically product, technology, and operations in the global sports betting industry had been rooted in accommodating match outcome-based experiences because that’s what made the most sense for soccer which was driving the global regulated market. But it seemed obvious to us that people would want to bet on specific events within live games for US sports, so we began focusing on building the technology to enable this to exist.

EGR North America: Why couldn’t you achieve an uncomplicated betting product at Simplebet?

JL: When we discovered there was no technical infrastructure to enable micro-betting on US sports, we decided to focus exclusively on building the bespoke machine learning and automation infrastructure to enable it to exist. Over time, we realised an exclusive focus on the product and technology, and then ultimately distributing that as a B2B supplier made the most sense for Simplebet. But I continued to believe that the biggest limitation to the mainstream adoption of micro-betting and sports betting in general was user experience, and that couldn’t be solved as a B2B company because you don’t have enough control over the user experience.

EGR North America: Your funding round was oversubscribed, are there any plans to hold subsequent funding rounds to meet investor demand?

JL: We’re contemplating it. As a Series A-stage company, we are laser focused on revenue growth and getting the business to profitability, which will enable us to control our own destiny with respect to when we go out for additional rounds of financing. In addition to the oversubscribed demand we had before, we have been fielding many inbound requests from people who want to invest in us, so we’re evaluating those requests and considering the best way to accommodate them.

EGR North America: In your opinion, what difference does it make having someone like Jake Paul attached to the Betr offering, especially in your target market of the US?

JL: FanDuel, DraftKings, BetMGM, and Caesars have collectively spent billions on customer acquisition. People know these brands and they’ve become synonymous with sports betting. But, with the exception of Barstool Sports, no one has done a really good job of capturing true brand affinity.

I think Betr, under Jake’s leadership on the content creation side, is uniquely positioned to build not just a betting business – but a media one, that will serve as a hack for brand awareness and brand affinity for our betting business – all while independently generating incremental revenue and enterprise value for Betr. Despite launching only seven weeks ago, we are already one of the top sports betting media brands in the US, and I think we will be the number one sports betting focused media brand in the US by this time next year.

EGR North America: In what ways will you utilize social media and Jake Paul’s profile across the vertical in your marketing strategy? Do you operate your own social media?

JL: While Jake is going to be heavily involved in our content and marketing strategy, I do not think we will be successful if we are just the “Jake Paul sports betting company.” We plan on diversifying our talent slate and giving content creators infrastructure to amplify their brands. There are many talented content creators out there already achieving incredible engagement, but don’t have the right production, content development, and perhaps most importantly monetization funnel in place to enable them to reach their full potential. We ultimately see Betr as a primary destination for this emerging talent, with Jake being the godfather of this emerging talent network.

For example, we recently signed Marco Piemonte and Anthony Damato, who launched the 100x Club show just prior to the beginning of NFL season. In just four weeks, 100x Club is already a top five sports show in the US on Spotify – and this is just the beginning for both 100x and other franchises we plan on developing at Betr.

EGR North America: The US sportsbook market is already a very crowded place and brands like FanDuel, DraftKings, and BetMGM have carved out significant, some would say unassailable, market shares. How do you plan to break their dominance?

JL: From a product standpoint, I don’t think anybody in the industry is doing anything differently. There are around 55 direct-to-consumer brands right now in this industry in the US and I challenge you to load up their apps and see what’s different besides the brands and color schemes featured in the product. It’s all effectively the same. While we are nowhere near where we want to or need to be from a product standpoint, I do think if you download and use Betr, you’ll realize that what we have launched is far different than anything any of the incumbent operators are building. We do not think of ourselves as a “sportsbook”, but rather, a micro-betting app today, that will ultimately feature additional game types that we think will resonate with the mass market of US sports fans. Through a combination of real product differentiation and establishing brand awareness, brand affinity, and community (on a minimal-to-zero cost basis), I think we will be successful, and have the opportunity to create the category defining company in a manner that is far more capital efficient than the incumbent direct-to-consumer operators.

EGR North America: Can you explain more about how Betr will utilize Simplebet’s platform technology?

JL: The most important thing are the feeds that enable micro-betting to exist. There are two components to this – the bespoke machine learning and the automation infrastructure.

From a machine learning standpoint, pricing micro-betting markets is a very different endeavor to a traditional match outcome-based market. Most sportsbooks are in the business of balancing the books so they may not necessarily even care about the probability of those markets. Their predominant job is to balance liquidity across a binary market. For example, if you have a plate appearance market,  which is one of the most popular micro-markets for MLB, and you want to give consumers the opportunity to predict not just a yes or no on the batter reaching base but whether it’ll be a single, double, triple, home run, strikeout, walk, etc., you have a seven selection market open for 90 seconds. On average, and even at scale, you’re unlikely to have sufficient liquidity to properly balance that book and will need more of a probability-based approach to the market making. That’s where Simplebet’s technology really shines from a pricing and a machine learning standpoint.

From an automation standpoint, you will need a different approach to automating market mechanics to ensure you can do things like live bet a plate appearance – it’s a very different user experience to just predicting the first batter in the upcoming half inning. Simplebet enables you to actually live bet a plate appearance as it’s happening. The odds will change from a 0-0 count to an 0-1 count to a 1-1 count. It’s rather like a game within a game, and it’s an incredibly big deal to the user experience. That can only be done if you’re fully automating the mechanics that enable market creation, suspension, repricing, and resulting in real time. That’s what Simplebet’s technology does.

Simplebet has also built a betting engine bespoke to the micro-betting experience, which we are leveraging.

EGR North America: Betr is obviously still in its startup phase but what sort of development timeline are you working towards and how will you measure progress?

JL: We have a vision for where we think this business should be a decade from now and we think we have an opportunity to be the category-defining company in two verticals. We’re disrupting legacy gambling and legacy media but, for now, we’re laser focused on the next two quarters of execution, which includes getting our licensed real-money micro-betting product live in our first state and continuing to optimize and expand our content creation engine.

EGR North America:  How important is it to use a new business to recruit the right people in the right positions?

JL: It means everything. Jake and I are just two people and we’re most effective when we’re able to leverage our time and energy into the things that we’re good at. We’re going to be very deliberate and methodical with our hiring process and are very focused on building an all-star team around us to help accomplish our goals and vision. Having Alex [ex-FanDuel product director Alex Ursa] as the head of product gives us a lot of confidence in what we’ll be executing from a product standpoint. Likewise, Mike Denevi, [head of media], built BR Betting, which has quickly become the number one most-followed sports brand in sports betting media. I can’t think of anybody better than him to help run the media business.

EGR North America:  What’s your plans for the rest of 2022?

JL:  We’ve launched our free-to-play product and now are focused on getting our real-money micro-betting product licensed and ready for day one in Ohio, which is January 1, 2023. In parallel, the media company is going to continue focusing on optimizing its existing platform, bringing on more talent on the content creation side, and building out the rest of the team.