The Future of Virtual Sports


virtual sports
ambling Insider sits down with five key members of the Virtual Sports community to discuss the rapid growth of the industry, evaluating current and past obstacles whilst trying to keep afloat in the increasingly saturated market

THE PANELKevin Reid - Commercial & Marketing Director 1X2 GamingElliot Norris - Director of Virtual Sports, PlaytechNeale Deeley - Managing Director of Gaming, BetradarJimmy Bone - Marketing & Client Executive, Golden RaceSteven Spartinos - CEO, Kiron InteractiveDo you believe virtual sports are the future of sports betting in such a saturated industry?

SS:When introduced more than a decade ago, virtual sports were used as a tool to fill dead time in between racing and other live events. Now, however, they account for between 10 and 20% of over-the-counter and online revenues, making them an important component of the sports betting industry. It’s certainly a saturated market, but virtual offerings are proof that there are still ways to break through with new innovative products. In fact, virtual sports have assisted in bridging the gap between casino and sports betting, thereby assisting in bringing new players to sportsbooks. Audiences are tiring of standard casino offerings and multiple iterations of slot machines, allowing virtuals to provide something new and entertaining. Cross-selling sports betting to a casino player is tough, especially if a love or knowledge for sport isn’t there. Virtual games however, successfully bridge this gap by giving the casino player a soft sell into sports betting.

KR: Virtuals, and most notably high production virtuals that the audience would want to play, are going to be very expensive for an operator to produce and maintain, although it is understandable that every operator will be eager to have their own customisation. With this in mind, the reasons for outsourcing virtuals are similar to that of casino games. To get the feel and reality of a virtual game, which will maximise profits from the user but also allow them to have belief in the game, takes years of development, and without that the product would only facilitate lost potential earnings for the operator when they can easily go to the experts.

JB: I believe they will play a huge part. Virtual sports growth continues, at different rates, all around the world. The Nigerian market, where Golden Race solutions are used in more than 90% of retail locations, is booming. Latin-American punters are warming to virtual sports, although that has taken more time than anticipated, and many companies have fallen short in that market. Golden Race provide something that both operators and players enjoy – engaging sports betting experiences, available 24/7, tailored to their unique location, needs, and tastes. We have created a real sportsbook, exactly the same as the real thing, where the odds, voiceovers, excitement, benefits, and winnings all real. Only the events are virtual.

ND: “The future” is perhaps an overly bullish term, but virtuals will certainly play an important role going forward. In the last few years, virtual has evolved from an interesting niche to a mainstream betting activity. This is clear from just looking at the numbers. Across the world, operators consistently report virtuals as their fifth or sixth best performing sport in the book for turnover. Add to this consistent margins and low cost of operations that you get from an automated fixed odds product, and you can see the very positive impact virtual makes to the bottom line.

EN: Virtual sports is becoming an increasingly important part of the omnichannel sports betting mix across online and retail channels and the relevant devices. Our virtual sport product stands are head and shoulders above the competition in terms of quality, performance, integration, gameplay and uses the latest front and back end technologies that will ensure its longevity for many years to come. Our virtual sports simulated systems, for example, have been developed with future proof technology in mind enabling us to create a unique offering that significantly separates us from our competitors.

How important is outsourcing as an imperative for operators?

JB: It is not absolutely required, but it makes the best business sense. Golden Race offer the lowest investment cost for hardware, and the lowest fees, and still deliver a superior product – because we are passionate about what we do and we think differently. Operators get far more value from our innovative approaches than to try to manage every aspect themselves. We provide winning solutions with total control of everything – they can then use their market knowledge, client base, and infrastructure to get the best returns possible. It’s win-win.

KR: Virtuals, and most notably high production virtuals that the audience would want to play, are going to be very expensive for an operator to produce and maintain, although it is understandable that every operator will be eager to have their own customisation. With this in mind, the reasons for outsourcing virtuals are similar to that of casino games. To get the feel and reality of a virtual game, which will maximise profits from the user but also allow them to have belief in the game, takes years of development, and without that the product would only facilitate lost potential earnings for the operator when they can easily go to the experts.

What is your first priority in improving and expanding your product?

SS: Virtual sports’ ability to recreate the excitement of live sports with top-of-the-range graphics and crisp audio is the reason it has grown so quickly. Players are immersed into the action on desktop, mobile or even at their local betting shop, just like they would be if they were watching a live horse race or football match. The quality of a product is a key factor in the popularity of a game. Players consider realism of the graphics and of the game play as important elements. These together with a variety of attractive betting markets are key ingredients to the success of a virtual game. Localised content is also a priority, in ensuring you are offering a relevant product to operators in different jurisdictions. For example, Kiron’s 17 strong sports portfolio, which is the most extensive in the industry, includes horse racing, dog racing, football,racquet sports, motor-racing, basketball, boxing and cycling.

EN: Entering the virtual sports industry later than some of our competitors has been to our advantage. We have been able to take the best aspects of virtual sports and significantly improve every aspect of the experience. Not only does our offering look best in class, it is also based on solid principles from the services side. Taking football as an example, we have examined huge volumes of player and team data and created unique match simulations. This gives players a far more realistic experience with a representation of real life expectations.Whereas our competitors use simple number generators, we use business intelligence analytics and simulation technology to determine a multitude of game permutations, leaving us above the competition. In addition, the motion capturing work we have created in the last 12 months has added such a level of detail that it has provided us with enough content to last us well into the future.

JB: Leading through innovation. We create the most engaging products which allow full control and customisation in the best way.  Not the way that competitors do things, not the cheapest way – the best way which meets our customers’ needs. We are the only company who live-renders 3D virtual football – everyone else pre-renders, creating huge videos which are fixed, re-used, and costly to update, in time, manpower, data use, and storage. We instead created a live-rendering solution, and then adapted it to work on a low-cost Android platform – again, no one else does that. Last December we won an innovation award for our Real Fighting game.We blended HD video with virtual worlds for an industry first. The realism of professional fighters filmed in HD, combined with the endless possibilities of a full 3D digital background – the level of branding and customisation is endless. Customers can even create their own worlds.

How do you intend to secure guaranteed profits as well as lower costs in an increasingly competitive market?

KR: Our business model has remained the same since 2002 in that we would focus on what we do best, providing a real-life experience for players by way of competition formats and results. We took the strategic decision a few years back to partner with Leap gaming on graphical virtuals, and in combining our expertise we have created a product that competes on all fronts in terms of realism, from results to aesthetics.

ND: The best chance we have to be successful is to never lose sight of what we do. We build virtual sports products that punters want to bet on. If we relentlessly focus on this, then hopefully our customers will benefit so we in turn can continue to invest.

SS: Providing the right content for the right market is an important way of ensuring your product is both popular and profitable. For example, horse racing and football are the stalwarts of the virtuals market in the United Kingdom and Ireland and quite rightly dominate offerings. But it would be less worthwhile targeting the same market with Kiron’s latest ice hockey-themed Hockey Shots, as there is little demand for it. Instead Hockey Shots is likely to prove most popular in markets such as Scandinavia, where ice hockey is a key sport followed by millions of potential players. It’s important to offer operators choice from a range of products, so as to make the offering relevant to their audience. Of course, developing a new virtual sport comes at a high cost, so it is important to resell these products to multiple operators in order to secure your profits.

JB: By continuing to innovate, and by hiring the best people who are passionate, talented, and committed to creating the best products and solutions. Customers can start a shop with our Android-based solution for only €100 – because we take the time to do things differently. We also concentrate on a realistic experience. Instead of only producing absolutely life-like visuals, we work to create virtual products just like real sports betting. We make very aesthetically pleasing products, but they are more than just something pretty to look at.

Some would claim that virtual sports take away the ‘thrill’ associated with sports betting, do you think this is an unfair statement and why?

ND: No prizes for guessing that I think this is unfair but with good reason. The thrill of a bet is in having an opinion on something and putting hard cash on the line in the hope you are right. Every punter has experienced the rush you get when the winning goal crosses the line in the third minute of injury time to prove you were right to back the underdog this time. Virtual delivers that punter experience in the same way real sports do. It may be computer animations and an RNG behind the scenes but where it really matters –it’s a betslip, tension and cash for being right.

JB: You only have to walk into any retail location using our products – there are more than 30,000 of them around the world – and you will see the genuine emotion, excitement, and all the thrill of the real thing. Those who love to game, love virtual sports just as much. The sheer variety, constant availability, and the possibility to wager on things which are simply unreal is unbeatable.

KR: It could be argued that virtuals takes away the thrill associated with sports betting in the same way an RNG casino game takes away the thrill of playing in an actual casino. Technically all the mechanics are the same, and like that of an RNG casino game, Virtuals tap into emotions that the sports fans have for the event, game or tournament. The fact that this is not played in a live environment to them is not relevant so long as the results are fair. Therefore, although a virtual isn’t a physical event, for virtual players that still does not take away the passion the user has for that virtual event.

SS: With life-like graphics and realistic game play, virtual sports offer players the "thrill" of their favourite sport, any time of the day when it suits them. Modern-living has time constraints making it difficult to always make yourself available at the time of a live sporting event. Virtuals offer players the convenience of betting on a virtual event at their leisure, thereby enjoying the next best thing to a live event. Millennials in particular, with their affinity for gaming and love of mobile devices, are a key target market. But virtuals were never designed to replace live sports betting or take away the thrill of a live event, and they never will. Instead the real-time, high-frequency nature of virtual games provide an exciting option for those looking for a quick ‘spin and win’ alternative.

What has been the biggest obstacle you have had to overcome in the industry in 2016?

ND: Every operator I have ever spoken to wants to do more things than they can ever complete and new ideas come along almost daily. This demand crunch on technology and operational resource means our virtual sports products are constantly fighting the prioritisation battle to secure initial integration or upgrade resources. We do what we can on our side to minimise the effort required, and the Betradar universal feed will make this even easier, but ultimately we have to prove we can deliver meaningful revenues for our clients. Thankfully, we managed to get just under 60 new clients live in 2016 so it looks like we can present a compelling case and bottom line.

SS: Regulatory processes and full project pipelines were the two largest obstacles we faced in 2016. The bedding down of recent corporate mergers was also a major factor. Delays and changes in regulation can be a tedious and time consuming processes, but when you finally get the relevant approvals, it makes all the hard work worthwhile, with many opportunities opening up.

EN: The biggest obstacle was arguably upgrading our offering; however we overcame this by significantly investing in the product and level of quality that has never been seen and is unable to be matched by any of our competitors. The introduction of 3D Graphics in the last decade has seen competition increase within the virtual sports industry. In response, we have been able to look at the content provided by our competitors and push the boundaries to create a significantly more advanced offering.

Where do you see the virtual sports vertical this time next year?

KR: Virtual games from various providers are all so different, and all bringing something that users may find enjoyable. I believe operators are beginning to come to the realisation that Virtual Sports should be treated in a similar way to having different slot and casino providers… this is because by just having one it is not going to satisfy all tastes of their customer base therefore by not having choice for the user, an operator could have lost potential revenues that they may not even be aware of. With this in mind, I see potential for both providers and operators to try and make more of a collaborative effort in the future.

ND: I see the next year bringing a continued strengthening of virtual as a mainstream betting product. The number of medium to large operators who don’t offer virtual is shrinking rapidly while we and our market companions continue to innovate and improve the product.

SS: Continuous enhancements in technology means the quality of virtual sports is only going to keep improving with games becoming more lifelike. Kiron will continue to push the boundaries in terms of product quality and hopefully the opening of new territories in the year to come will help us get our diverse catalogue of games to a wider audience. New territories will of course mean demand for new games. We’ll be continuing to innovate with fresh ideas to meet the needs of the operators in these new jurisdictions. But it’s not just product quality and product variety where we at Kiron and the virtuals industry as a whole will be looking to improve. Innovation in game play and the range of betting markets on offer are also likely to see important advancements.

EN: We have taken Virtual Sports to an entirely new level of quality so it will be interesting to see how other companies react.

JB: We have some major plans for 2017, but we don’t like to give our competitors too much information to try to replicate our products, like we have seen in 2016. Generally speaking, I see a continuation with online and mobile platforms, continued improvements in realism for both visuals and user experience, and some very exciting new products. At least, for Golden Race and its customers, it will be a winning year.
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