Q&A: Sports IQ Analytics on long-term perspective and staying afloat as a start-up

Start-ups are often forced into a challenging position despite the gambling industry’s welcoming nature and largely painless supplier regulation process.

But, in such a fiercely competitive space largely dominated by legacy companies, some fall by the wayside early on in their journey.

However, three-year-old US oddsmaker Sports IQ Analytics is one firm that is taking major precautions to maintain a long-term operational vision. The Vancouver-based firm was co-founded by former Don Best CTO Matthew Belzberg who brings 25-plus years of oddsmaking knowledge to the table.

CEO Omer Dor outlines the firm’s initial priority to ensure the product was best-in-class, before growing the business operationally.

Dor also touches on Sports IQ’s largely automated set-up and why it beats out manual trading in fast-paced player props markets.

EGR North America (NA): Can you tell me about Sports IQ and your background?

Omer Dor (OD): We’re oddsmakers which focus exclusively on building pre-match and live models for US sports.

Our backstory is that we started the company two years ago, just before the repeal of PASPA. My partners, who are our CTO and head of modeling, have been in the sports betting industry for a very long time. They had the pedigree and experience of building some of the most successful US sports models in the business.

Before PASPA was repealed, we had a very clear view of how the market would soon change. First, we knew that there would be a proliferation of sports betting across the US and because US sports would begin to represent a higher degree of turnover for operators, they would expect high quality pricing products. Second, we could foresee that there would be a host of new entries into the sports betting industry, and the backgrounds of these operators would be diverse; for example, media organizations. Finally, we anticipated that eventually US consumers would engage with betting in a different way than they had historically. It’s a point that has been made many times: the average US sports fan doesn’t have the same ‘muscle memory’ for sports betting that a consumer within Europe does. But they do understand their sports and sports entertainment, so it only follows that they would have a different way of engaging with betting.

In considering all of these, we felt that the odds, which are essentially the building blocks to any betting product, had to evolve in order to support these changes.

From an oddsmaking standpoint, we knew it wasn’t possible at the time so we asked ourselves how could we invest heavily in technology like machine learning and automation in such a way that would provide the quality operators would demand and the sort of engaging products consumers will want?

EGR NA: Where do you sit in the sports betting supply chain?

OD: We sit between the data providers and the bookmakers, providing an essential service in calculating the odds that power their products. We operate in a symbiotic way and are constantly looking for new ways to create engaging and innovative products, with ideas coming not only from us but also being shaped by the marketplace.

EGR NA: What have you learned from similar oddsmaking start-ups, some of whom stormed into the US market but had to scale back operations within a year?

OD: I think every start-up is a disruptor that tries to bring innovation to their industry. That doesn’t happen without experiencing failure along the way. And I speak from personal experience. So, we have nothing but the utmost respect and admiration for all those who have taken risks by launching new products and services.

Every company’s make-up, strategy and aspirations will also differ. I wouldn’t say that we’ve learned from the failures of others, as much as we have from our own experiences.

We took the view that we didn’t want to go out and hire a tremendous amount of people right off the bat. We also did not ramp up our sales efforts until we had a full solution in place – by which I mean covering all four US sports, not just one. We knew from experience that our clients wouldn’t want to buy a single sport from one supplier and have other suppliers for the other sports.

We also recognized that one of the main hurdles for commercial success was going to be the many challenges of technical integrations. Fortunately, our CTO has been in the industry for the last 15 years. He has worked with almost every possible type of bookmaking platform, so he knew what the blueprint needed to be in order to facilitate seamless integrations for our clients.

Finally, we’re also in an industry where, if I can paraphrase, you can’t fake it till you make it. When your odds get tested, they’re either right or they’re wrong. And operators, rightfully so, expect the highest quality product for their end users. So, we made sure that we invested heavily on testing and ensuring the quality of the product before it went out.

EGR NA: What sets Sports IQ apart from the other oddsmakers?

OD: It comes down to three important pillars: US-focus, customization and cutting-edge technology.

So firstly, at Sports IQ we focus exclusively on modeling US sports. What that means is that we leverage our extensive background and expertise to ensure we build the highest quality product. This lends itself not just in terms of pricing accuracy, but also the comprehensiveness of our market offering.

Second, rather than provide a ‘cookie cutter’ service, we allow for a high degree of customization to be made for each of our clients. For example, we take the time to understand how each client will look to utilise our products, where their customers are and what they want. We then tailor the products accordingly to their needs. We appreciate that a ‘one size fits all’ approach may work in single European jurisdictions, but the complexities of the US state-by-state model needs a more nuanced approach.

Finally, we have invested heavily in automation and the latest technology in cloud computing. This means that our solutions provide the kind of scalability that an operator would expect from their supplier when they deploy in a multi-jurisdiction environment like the US. Whereas legacy technology is just not well positioned to handle that sort of challenge.

EGR NA: From a tech standpoint, how much of the platform is automated and how much is manually done?

OD: A significant amount of what we produce is automated. Our models produce odds for a potentially huge range of different betting markets, so having this automated approach is essential in order to achieve consistency. That said, we appreciate that some manual intervention is required in any business like ours where odds are originated, and not copied.

We do have some manual touch points in a few different areas such as when dealing with player injuries and market suspensions. The technology we have built flags possible issues and allows our trading team to react quickly to these events.

This goes back to our culture of finding solutions to problems – as we develop over the coming years, we aim to find more and more innovative techniques to reduce the need for manual intervention from approximately 10% downwards.

EGR NA: Are you hiring both inside and outside the betting industry? How has the operation grown in the last two years?

OD: Definitely. We try to balance our team by making sure we have people with battle-proven experience in sports betting as well as hiring people from outside the industry. And that mix has really worked for us in that we always have multiple ideas on how to solve complex problems.

Over the last six months we’ve doubled our headcount and will expand further over the coming year.

We try to hire the smartest people we can find, and I take tremendous pride in the calibre of the people that join our company. For example, on our team we have a brilliant data scientist with a PhD in particle physics, as well as people from diverse backgrounds such as epidemiology and financial markets. Regardless of their experience everyone on the team has the same appetite and enthusiasm in building the best possible products.

We are also fortunate in that Canada has a fairly large talent pool to choose from, especially in recent years as it began to be recognized for being a powerhouse for AI and machine learning.

EGR NA: What are the kinds of the conversations you’re having with operators?

OD: Whereas two years ago the focus was really on just going live, today we are clearly noticing a shift in operators’ interests towards product differentiation and improved quality. Specifically, they are seeking flexibility and customization. Especially as this relates to creating personalized betting content for their customers across different jurisdictions.

In part, this trend has to do with the increased maturity and competitive landscape we are seeing in the US. And I believe a lot of credit is due, not only to those operators which have expanded quickly across multiple states, but also to the relatively new entrants such as PointsBet, DraftKings and theScore for instance. They have been hugely successful at disrupting the sector and are motivating other operators to innovate alongside them.

What is interesting is that we have noticed the same trends with non-US facing brands that need to compete in their domestic markets. Aside from the shape of the products on offer, there is an increased focus on the accuracy and efficiency of the output in order to protect their margins and provide increased interest to their clients.

I would also say that the other influencers to this trend are the “managed-service” suppliers which have committed to the US market with their modern products. Metric Gaming, which we are proud to have as a client, is a perfect example of this.

EGR NA: What are you expecting to see in the next wave of betting in the US?

OD: It’s very difficult to predict the future with everything that is going on in the world right now. Coronavirus has had an unprecedented impact on people’s lives and our industry has not been spared. Assuming things get back to some sort of normalcy, we would expect more states to come online, and their respective legislation may change the landscape somewhat. I anticipate that mobile betting may play a more important role in a post-coronavirus world.

Specifically concerning products, we think that there will be a move towards regional content which will allow consumers to engage with betting products that are clearly focused on, for example, their local NFL team, or NCAA school. Of course, we are set up to support that need.

We also expect to see a new wave of traditionally non-betting brands hit the US market, which may lead to a very different looking marketplace in five years’ time, not only from an operator standpoint, but also from a product standpoint.