Under the radar: How the Betfair Casino became the biggest brand nobody talks about

At some point in late 2016, something seemed to click for the Golden Nugget and its online casino licencees Betfair and SugarHouse. The group shot to the top of the market and started setting new revenue records month after month. In December, they posted a new record of $4.8m, which they promptly shattered in February, becoming the first license to go over $5.2m. That benchmark lasted just one month before revenues topped $6m in March. The Golden Nugget in particular was lauded for its accomplishments, walking away with five trophies at this year’s EGR North America Awards and earning gushing headlines across the trade press.

But of course, the ever-increasing numbers being reported alongside the Golden Nuggets’ name come from the casino’s licencees, as well as the operator itself. And perhaps the best kept secret within those numbers is the Betfair Casino, which according to some estimates was a bigger money spinner than the Nugget itself in April, albeit with some positive variance on the hold rate.

Eilers & Krejcik give a slightly more conservative view, estimating the Betfair Casino and the Golden Nugget each accounted for 42.5% of April’s $5.4m revenues, with SugarHouse Casino delivering the last 10%. That would put Betfair monthly revenues at around $2.35m in March, with total revenues up 68% in the first three months of 2017. The site is also operating at breakeven EBITDA, roughly three and a half years after launch, according to the Paddy Power Betfair full year results call in March.

Controlled aggression

So how has the firm reached breakeven in such a relatively short space of time, despite the absence of a land-based presence? Off the top, the decision to forgo a poker product to focus resources on casino has proven a shrewd one, with almost all of the New Jersey market growth coming from the casino vertical.

Beyond that, Eilers & Krejcik attribute the site’s success to its GAN-powered platform and approach to bonusing and CRM while also spending aggressively on marketing and acquisition. As Chris Grove, Eilers & Krejcik’s US analyst puts it: “While initial success in New Jersey was heavily correlated to land-based brand awareness, extended success in the market has largely been a function of a few components: Content, payments, and marketing. The consensus is that Betfair is punching above its weight on all three fronts.

“Of course, we’re still talking about relatively small sample sizes when discussing revenue trends in New Jersey, and Betfair’s success may not prove persistent. But if I’m a New Jersey online casino operator, I’m definitely looking to Betfair’s platform and processes for ideas regarding how to refine my approach.”

Top talent

So what should rivlas be looking out for? If you ask the Betfair team how they’ve managed to be successful without a land-based presence to boost their brand and build relationships with players, one answer comes up time and again; talent.

“One of the great benefits for us [Betfair US] from the Paddy Power merger was the amount of talent we were able to bring to the US,” says Kip Levin, CEO of Betfair US. “We brought in people with years of operational experience in very competitive markets, and that really helped us”.

One of those people was Lorcan Kelly, now the director of the Betfair Casino, who joined the US division in September after 10 years of operational experience with Paddy Power in Europe.

Kelly too points to “the people” as the number one reason behind the Betfair Casino’s success. “From our side it’s all about team,” he says. “We have great people with lots of experience across product, marketing, CRM and payments.”

When asked how this has led to tangible results, Kelly points to the site’s conversion rate i.e. the rate of players who sign up who ultimately go on to place a wager. Kelly believes Betfair’ conversion rate is likely the best in the New Jersey market.

“The big thing for me was how to get customers over the line once they register, because something like 50% of banks block online gambling transactions [thanks to the fallout from UIGEA],” says Kelly.

“So we redesigned the payment and registration pages and made them more intuitive and easier to flow though. And then when customers got declined we made it as simple as possible for those customers to use an alternative option.”

For instance, a big focus was pushing punters to deposit onto prepaid credit cards which weren’t blocked by banks, and then that cash could be quickly transferred into the Betfair wallet.

“We put those all options onto one page, so it was a seamless flow and very intuitive,” Kelly adds.

Another of Kelly’s other priorities after his hire last year was the mobile product, with the mobile site and apps completely redesigned in November.

“A strong mobile product is particularly important in New Jersey,” Kelly explains “Features and content need to be released cross-platform with the same customer experience.”

Lorcan Kelly, director of Betfair Casino US

Deep pockets

Of course plentiful human resources aren’t the only benefit of being a part of an international gambling giant. There’s also the small matter of the sheer financial firepower that can support marketing and bonusing campaigns.

Betfair is considered to be one of “noisiest” brands in New Jersey when it comes to advertising, and Kelly has the capability to ramp up spend as he deems fit –  whether that’s to take advantage of seasonality in winter months or to shout about the site’s new live casino.

“We’re still in investment mode, and we’re still seeing a return on investment in terms of acquisition and the number of customers through the door, so from our side we continue to spend when the opportunity presents itself,” Kelly says.

That firepower extends to bonusing, where Betfair offers the largest acquisition offer in the marketplace, with deposits matched up to $1,500. Interestingly the other operator to receive plaudits for its bonusing – SugarHouse Casino – has gone the exact opposite route, offering relatively small bonuses but with minimal play through requirements in an effort to recreate the land-based experience. Both approaches appear to be working in the short-term.

Share the knowledge

In the same way that Betfair New Jersey has benefited directly from talent from other corners of PPB, the business still has access to ideas and lessons from those business groups. Levin says he regularly liaises with the parent company about what’s working overseas, but the most valuable lessons come from the other arms of PPB’s US businesses.

“In a market like the US where there’s a lot of restrictions, we’ve seen real benefit from sharing best practices across different commercial groups,” Levin says. “TVG has been offering online betting for years and has optimized things like Paypal as another way round the payment issue.”

“We can also share things like which digital acquisition channels are working. When there isn’t a lot of the affiliate digital infrastructure that there is in Europe, knowing what works without having to do the trial and error for each brand is really useful,” Levin adds.

There is also more potential in this area, with the US businesses not really cross-selling yet, in part because they sit on different technology stacks. “There is still some upside there,” admits Levin.

Live and kicking

Part of the reason that kind of technology project has yet to be undertaken is because the short term focus has been on the launch of Betfair live casino product, which has now been integrated into the site, with the action itself taking place inside the Golden Nugget’s studio.

Levin says the firm has long planned to launch its own live dealer, but the cost synergies from sharing the studio with the Nugget, and the results already being generated there, made the launch an easy decision. The Golden Nugget for isntance says its live dealer product is helping it generate “unprecedented levels of customer acquisition”, with the platform eventually expected to account for up to 15% of revenues.

And it’s been a similar story so far for Betfair, with a successful integration in the bag, and the firm now looking to make live dealer a central plank of its marketing strategy.

“Everything’s been great from a product point of view and we’re looking forward to ramping up the marketing because we think that will bring a new demographic to the site,” says Kelly. “In particular we’re after traditional casino-goers, because trust is such a huge factor. Those players aren’t familiar with online casino, and this is a nice stepping stone for them to learn more about it without worrying about trust. It also helps to drive revenues with little cannibalisation of current online customers and reinforce our image as a trusted brand in the marketplace.”

Green pastures

Of course, like most operators active in the North American online casino market, Betfair sees New Jersey as something of a launching pad, as well as a profitable market in its own right. Rivals like Sugarhouse have openly admitted its New Jersey site is a chance to test a product and build a brand for the eventual regulation of real money gaming in other states, with Pennsylvania top of the list.

Kelly confirms Betfair has designs on a Pennsylvania site should the state regulate, even if the current 54% tax rate isn’t lowered by the House.

“It isn’t ideal, but it’s still appealing to us,” says Kelly. “We’d like there to be multiple brands allowed per casino because obviously that would make it cheaper for us to get in there.” And indeed PPB CEO Breon Corcoran has been vocal about his willingness to invest in the US in pursuit of long-term profits.

“I think that market has yet to open up properly” Corcoran said recently. “I would hope we could do more there, but it’s a question of legislation and opportunity. There is a lot of appetite to do more if the right thing comes up at the right price.”

Optimists also argue that Pennsylvania needn’t be a profit sink in the short-term either, with Dermot Smurfit, CEO of Betfair’s platform provider GAN, arguing that operators could feasibly turn a profit in the market by eliminating bonusing for players and turning to cut-price content suppliers.

On that note, some analysts have suggested Betfair could cut its own costs by moving from GAN onto the proprietary technology that powers the parent company’s gaming brands. However, as Kelly points out, PPB’s tech teams have enough on their plate in the near future, with the company currently integrating legacy technology form both brands into a combined group platform.

“We’re very happy with GAN and we aren’t going anywhere in the near future” Kelly says.

Blue sky

Instead the near term strategy will continue to be acquisition first, profitability later. In particular, there will be a focus on product, with continual additions to the site in the vein of live dealer, to help stand out from an increasingly busy crowd.

Kelly said he is also eying virtual sports and the Colossus Fracpot title which will be the first slot in New Jersey to offer cash-out functionality and brings an element of sports betting to gaming

“While the Cashout term is more synonymous with sports betting in Europe, we feel the Colossus Fracpot title will really appeal to our current customer base, in particular Jackpot players,” says Kelly.

What must be concerning for rivals is that Betfair has arguably done the hard bit in New Jersey. It’s already built one of the largest online casinos in the market from a standing start, and has tangible upside going forward in the form of live dealer, cross-selling and continual product improvements. With its operational expertise and financial firepower, it would be a brave man to bet against Betfair establishing itself as a market leader both sides of the pond.