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IN-DEPTH 30 October 2018
Dealing with emotional offerings
Everyone who has ever seen a gambling advert has potentially been enticed by an offer involving their favourite team or event. But just how do emotional offerings work on a psychological level? Industry experts have their say.
By Gambling Insider

The crossed wires between marketing and trading departments - Jeevan Jeyaratnam, Head of Compilation, Abelson Odds

What are the risks to operators when they offer special deals for specific teams or players?

There’s always been a battle between marketing departments and trading desks. The traders are judged on their figures, while the marketers are judged on sign-ups, retention and brand exposure.

This mix is often incendiary, with marketing wanting to offer promotions that the traders know will be loss-incurring. Getting the mix right is a tricky business and so, of course, there are inherent risks in offering what I called “biased specials.” Firms are used to overseeing unbalanced books, but creating an artificial imbalance certainly affects the potential profitability of a sportsbook.

Operators still haven’t fully embraced the personalisation opportunities available, and so specials of this nature are usually generic. For example, boosting Harry Kane to score for England appeals to many, but a UK operator is likely to see lopsided money for England and Harry Kane anyway, so why erode the margin further? The answer lies with the marketing department and their need to be noticed, offering best price on a multitude of selections every day. They are all trying to encourage brand loyalty, which is somewhat of an oxymoron in a nomadic online battleground.

Are the odds offered by bookmakers affected by what region their customers are based in?

I speak only for football, but invariably this comes down to margin application. The true odds are the true odds, no matter the territory. The style and size of the margin application is the changeable attribute. Most firms will add or remove margin dependant on the legislation of a particular territory. For example, in France, tax on gross revenue is anathema to a tight margin offer. French punters are generally worse off, because their government demands a bigger chunk. Operators taking a competitive UK-based sportsbook and planting it directly within the French market are going to make substantial losses when the tax bill arrives.

How do operators calculate what bonus offers they can afford to make?

I’m sure all operators have models which advise how daring they can be with their bonuses, and these are probably incorporated within a marketing budget. The industry has fallen into this chicken and egg situation, where in order to attract and keep custom, they need to offer increasingly ridiculous bonuses. The whole system is flawed and it is one of the reasons we have seen recent sportsbooks consolidate or fail.

The trend towards automation and single supplier feeds, instead of a fully capable trading team, has led to increased client account closures. Firms work very hard to attract users, but they simply don’t spend enough resource to offer an accurate enough product to keep them.

Anyone with a single ounce of nous is generally restricted or closed down, most after spending their bonus bet.

Some of the opening market prices are simply way off the mark, and anyone paying even a smidgen of notice can try and take advantage. By way of example, with the Fifa World Cup having ended just a week ago, Manchester City, Manchester United and others are setting off on lucrative pre-season tours. The Manchester clubs have gone to the US. Managers of both clubs have said the players need a three-week break before coming back to training.

Given the number of World Cup players involved with both squads, it doesn’t take a skilled odds compiler to assume these touring parties are going to be made up of a majority of youth players. Borussia Dortmund, Manchester City’s opponents in the first game, had far less concerns and their squad was relatively strong. You’d think the bookmakers would be on top of all these factors and so an opening show that had Man City as 1.91 favourites was shocking in its laziness. They ended up going off around 3.00. Those taking the early gift are likely to have accounts scrutinised, restricted or closed, while the bookmaker continues to churn through punters.

Have you seen an increased interest in bonus offers over the past few years?

The Gambling Act of 2005, which set terms for betting operators allowing them to advertise on TV from September 2007, plus vast improvements in technology, have led to erosion in brand loyalty and a more competitive market place. Bonus offers have increased with velocity in the interim, to the level we are now at.

Are there any risks to sports integrity from raised stakes on individuals or specific encounters?

I think failed operator Sun Bets proved that raising stakes on individuals, whether or not they are actually involved with the game, can be damaging.

Piegate caught the beleaguered firm offering odds on Sutton United’s goalkeeper eating a pie during a televised FA Cup tie with Arsenal. The stunt resulted in the company receiving an £84,000 fine from the Gambling Commission.

On a wider level, I don’t think this is such an issue. Raised stakes are only going to be applicable to high level sports and athletes. The risk simply wouldn’t be worth taking.

Why do operators accept the risk involved with sign-up bonus betting?

Many UK-focused sportsbooks are no longer interested in risk. This may seem a strange thing to say given the nature of the industry, but shareholders want guaranteed returns with minimal risk.

This is the entertainment business now. Liability books are carefully monitored and bet acceptance protocols are set remarkably low. This is standard practice for UK and European-facing sportsbooks. Odds offered are tightly controlled, and though swings like we detailed earlier in the Dortmund v Man City International Champions Cup match occur on an all-too-frequent basis, they are largely non-toxic to profit margins.

That said, firms can occasionally underestimate the popularity of an offer, being forced to withdraw promotions early due to worryingly large liability books. Of course, by offering prices that are way above true prices, there is little hedging opportunity, so this can become a worrying aberration on the balance sheet.

Star Sports seemingly found this out to their cost in June, offering a wildly generous World Cup offer on their new sportsbook. The offer, which involved what was basically a £50 free bet on Germany, for spending just £20 on an outright bet, was pulled well before kick-off, before being swiftly amended.

The only firms really embracing risk are the huge Asian-facing enterprises, led by the likes of Pinnacle. In stark contrast to the UK-facing bookmakers, they don’t limit winners. Indeed, they require the sharp punters to help them understand the true price. It is a constant learning experience, but their skill and confidence in understanding the correct price at all times is sadly lacking elsewhere. Relying on huge liquidity and small margins, these operations set the tone for the rest of the world’s base prices.

The Asian market is critical to every sportsbook you can possibly think of, but it certainly doesn’t mean that they share the same attitudes to customers or business strategies.

The psychology of betting attachments - GamCare (Fay Kepidou,Training and Development Officer & Gambling Treatment Practitioner and, Andrew Bowring, Responsible Gambling Co-ordinator)

Why do we do what we do? The psychology of choice can be an odd one.

What is important to us, what we give meaning to and how something makes us feel are usually good indications of why we decide to go through with a particular action or not. For example, supporting our local or regional team has more meaning for most than supporting a faraway team which we can’t relate to. If the win happens locally or nationally, it will be all around us, in our community, defining our environment and interactions. We are naturally biased beings, meaning we are inclined towards personal, unreasoned judgement. What is more personal than betting in favour of your own home country?

Sometimes people like an added thrill or a bit more excitement. The recent World Cup saw revellers spend record amounts on betting, with The Times quoting an unprecedented £2.5bn wagered over the tournament – almost 50% more than the last World Cup. There were wagers on whether Luis Suárez would bite another player on the field, the number of own goals (of which the record doubled from 1998) and a whole host of other bizarre bets to raise eyebrows.

Could this be because the sport is losing its appeal?

Almost one billion viewers tuned in, so you would think not. This was a truly digital World Cup, taking in myriad platforms, with the contentious addition of a video assistant referee. It promised to be a clinical and precise occasion – chance was eliminated as best as could be, which seemed to make viewers want to bet on those chances even more.

Why do traditions and superstitions emerge, like guessing what colour hat the queen will wear to an event? Why do people enjoy throwing caution to the wind on a punt they cannot possibly know the outcome of? Well, why do we take risks in general?

We are living in a viral age. The idea of 15 minutes of fame has been ground down to seconds, and the digital community has an even more rapacious appetite for the next big thing. Perhaps the speed with which we are living our online lives means we take a little light relief from hilarious bets placed just as quickly.

But what about when this play on our emotions has even higher stakes? What about the political domain where individuals have such passionate views? Is it responsible to fan the flames of an already volatile situation?

The reality is people have more varied emotional attachments than there are countries on the map, so some ask whether we should encourage fanatical opinions through wagers; should there be a limit to what people should be able to gamble on?

Alongside the social responsibility codes that all UK licensed operators should adhere to, enhanced guidance has recently been produced on how companies should advertise gambling activities (via the Advertising Standards Authority, Committee of Advertising Practice and Broadcast Committee of Advertising Practice). It must not be misleading, should not urge gamblers to bet with offers that are supposed to expire but never do, and should not suggest that gambling enhances personal qualities or capabilities.

Advertising should not encourage gamblers to recklessly spend more and more. The more individual, player-focused bonuses should be addressed independently, with regards to how much each operator values social responsibility, purpose and profit. Since we know that problem gambling arises and is maintained by irrational and erroneous beliefs such as lucky objects, lucky rituals, underestimating chance, overestimating skill and a false sense of control despite the house advantage – gamblers will often believe they can win more money from gambling than they will lose.

Irresponsible advertising, promotion and marketing is likely to further entrench these beliefs and appeal to the urgency and compulsive nature of problematic gambling. This can be hard to regulate when the odds offered (i.e. during the World Cup) are tailored to the tournament, seem likely to happen but are always biased, and are advertised in such a way as to influence an already subjective view to bet on an unlikely outcome.

Individuals affected by problem gambling are also likely to be more vulnerable on social media, where advertising is currently less well monitored or regulated, and may also come in the disguise of endorsements from some celebrities. In the mind of someone experiencing problems with gambling, who thinks they are due a win or their luck is about to change, a long-shot can seem very appealing if for nothing else than to prove everybody else wrong.

Gambling is a legal activity in Britain; for many, it is a fun activity, but for some it can become a serious problem. We must all ensure the correct protections are in place, including socially responsible promotions, and the right systems are in place to identify and address problematic behaviour appropriately if it arises. There is a consensus across the gambling industry that these measures must be robust and reasonable.
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