Despite the soaring success of the online sports betting market, Tim Poole explores the accusation that, actually, it lacks both innovation and variation
Riveting, exhilarating... boring?
With the excitement sports betting’s US expansion is generating within the gambling industry right now, you’d think the third word of the opening sentence was a misprint.
Yet, despite this being one of the most riveting and exhilarating times in sports betting history, an accusation levelled at the online sports betting market is that it’s exactly that: “Boring.”
With the existence of so many different sports, markets, products, suppliers, affiliates and operators, sports betting is in an undeniably strong place at the moment. Why is it, then, that the general product on offer is being described by many as lacking in variation?
Robbie Morris, CEO of Two-Up Digital, a marketing agency and sportsbook supplier, pulls no punches with his assessment: “A stagnant approach seems to exist that we can’t get away from in the online gaming industry, even though we talk about it a lot,” he told Gambling Insider back in September.
“You go to ICE and everyone’s talking about it – but we never actually move away from it. The first sportsbook went online in 1999 and, barring branding changes, if you looked at it then and look at it now, you’re not going to see a huge amount of difference.
“If you go back to the product, at the moment it looks pretty stagnant and boring. There’s got to be a way, if you’re appealing to the 18-30 year-old generation who are now growing up with disposable media, of moving back towards quick, exciting content.”
Sure, one swallow doesn’t make a summer; the success of gambling companies worldwide might just negate one bit of criticism. But the Two-Up CEO is far from alone. Many gambling executives and analysts we've spoken to have alluded to this very same issue. Like Morris says, everyone’s talking about it – in interviews, meetings and industry events.
Innovation: The supply side
In a court of law, any defendant is found innocent until proven guilty. If we apply that reasoning here, we first need to examine evidence both for and against the claim.
Let’s start with innovation.
Supplier FSB specialises in automated systems and the use of data feeds – an unrecognisable business model going back only a few years. Its use of the latest technology is proof there has at least been some positive change over the last decade or so. But company CEO David McDowell admits the issue of innovation is a “yes and no question.”
He tells Gambling Insider: “If you look back 10 years ago and look at the fixed-odds betting, ignoring exchanges and spread betting, in-play wasn’t even a thing. If you want to take a proper step back, there’s been a phenomenal pace of change in live betting.
“Part of the issue is how you implement live betting in something like 20 or 30 sports with technology that has been designed before live betting was a thing. The whole industry struggles with customer acquisition. It’s a race to the bottom with free bets and price boosts. It’s really difficult to innovate a product that, quite frankly, is a number.”
McDowell’s opening statement raises two crucial points for the defence. Firstly, if there is indeed a lack of variety across different gambling sites, that isn’t to say the product itself hasn’t improved over time. McDowell goes on to give the example of Best Odds Guaranteed – “somebody puts it up then everybody puts it up.”
If a product works, why shouldn’t every operator use it?
The strides made in the in-play betting sector have been considerable, even leading to what McDowell dubs “innovation for innovation’s sake,” such as predicting what will happen in the next instant of a sporting event. Moreover, as the FSB Tech CEO rightly points out, the product on offer is ultimately the price of a bet. If 10 operators offer odds on the same event, how can they genuinely differentiate without losing their margin?
“I think some of the products around bet-builders are fantastic innovation,” he continues. “At the heart of what we’re offering, it’s really difficult to have innovative products in sports betting when inherently it’s what’s going to happen on the field.
“In Africa, a lot of the innovation is around distribution. We’re taking SMS betting and had to dumb down the user experience to put it onto Opera Mini.
“An area where there’s a lot of innovation you can’t see is with algorithmic pricing models. We will trade 100 games simultaneously with just a trader overseeing everything.
“We’re doing a lot with in-memory computing. It was available but in a limited way five or six years ago. We were looking into this in 2011, when the technology didn’t exist. Today, we use off-the-shelf products for in-memory.”
Does online sports betting need to change?
Another factor requiring serious consideration in this context is the popularity of sports betting among consumers in spite of any perceived lack of variety. As McDowell puts it: “It’s a great question. Does it need to change?”
Therein may lay the very crux of the matter. He continues: “The industry is generating some $120bn a year gross win. If you’re doing well, how do you know you could have been doing better?”
If there was ever one single reason likely to account for the lack of development in any industry, it’s that one.
However, among the industry professionals I’ve spoken to, there is universal agreement on one area that needs improvement: UX. It’s on this subject that the FSB Tech CEO is more concessionary: “There is a lot of talk about the user experience and how you can improve that. There’s a lot of talk about recommendation engines and better CRM systems. Quite frankly, it’s a lot of talk. There are some things I wanted to do 10 years ago and still haven’t done.”
The US market: The final piece in the jigsaw?
Whether there has or hasn’t been enough innovation to date, something sure to accelerate any rate of change is the opening up of the US market.
Since the repeal of the Professional and Amateur Sports Protection Act (PASPA) in May, numerous states have joined Nevada in legalising sports betting – and many more are, at the very least, on the path to doing so. As McDowell explains, the differences between the US and Europe, Asia or anywhere else, for that matter, could lead to “real innovation.”
“I think the US market is going to be really interesting, the way it plays out,” the FSB Tech CEO says. “You’ve got an old-school Vegas market taking some bets over the counter. You’ve got a thriving black market, with customers used to pretty up-to-date products with things being run out of Costa Rica or Panama.
“Then you’ve got a lot of creativity and really intelligent, sophisticated digital media companies in the US. I think we’re going to see some real innovation from America because they’re not coming with pre-conceived notions that this is what a sportsbook should look like. They don’t know what a betslip even means. I think there will be some bad interpretations but also a couple of gems.”
Innovation: The demand side
So far, our chief witness has been a supplier. While it’s evident there have been notable efforts from the supply side to move the industry forward, we have yet to scrutinise the operators’ neck of the woods.
With customer acquisition, user experience, promotions and often the odds themselves falling under the umbrella of an operator, should they be doing far more to vary the sports betting experience?
At this point, it’s worth noting a number of operators did not respond to Gambling Insider’s requests for contribution and analysis.
One did, however: DraftKings.
Having made its name in daily fantasy sports, DraftKings ventured into sports betting earlier this year following the repeal of PASPA. It has since become one of the early market leaders in the competitive state of New Jersey.
As a new entrant to the industry, the operator has already implemented innovative features within its sportsbook, including useful statistics to aid bettors before they place a wager. Within the scope of this debate, something as simple as that can make a huge difference.
But, tellingly, DraftKings Senior Director of Digital Sportsbook Operations, Jamie Shea, is crystal clear about her take on innovation – or lack of it – on DraftKings’ side of the Atlantic.
She tells Gambling Insider: “In America, absolutely. Prior to the Supreme Court ruling overturning PASPA, there was no real opportunity for innovation in mobile and online sports betting.
“With sports betting previously confined essentially to Nevada, there was no compelling reason for potential licensed operators like DraftKings or media and tech companies to invest capital into innovating a product with no legal marketplace.
“What passed for innovation to American bettors was unfortunately largely driven by illegal, offshore sportsbooks. That is changing – rapidly. Sports betting is a high-tech industry with limitless possibilities for innovation.
“As a technology-native company that has excelled in the mobile arena, DraftKings is in a unique position to re-energise the innovation of online sports. We absolutely intend to be at forefront of the innovation of mobile and online sports betting in America.”
For the fledgling sports betting operator, it could be argued there is more pressure on DraftKings to get it right – and add more to its product – than a traditional competitor, backed by years of success behind its brand.
DraftKings doesn’t see it that way. Shea says: “DraftKings is, first and foremost, a technology company. Innovation is part of our DNA. We don’t feel any added pressure to innovate as we entered this new industry because we’ve always embraced our role as disruptor, whether it be fantasy sports or sports betting.
“In fact, new entrants into the mobile betting space that are rooted in technology might have certain advantages. It was DraftKings who made history as the first legal mobile and online sportsbook operator in New Jersey, beating to market established competitors who had been operating online gaming products in the state for years. “
Fresh blood having more to offer in the way of innovation is another key point – and chief on the prosecutor’s list in our trial. Traditional operators may well have become set in their ways and what’s noteworthy is Shea’s use of the word “reenergising.”
On whether online sports betting is “boring,” Shea’s answer is a resounding yes for the US market pre-PASPA. Admittedly, though, that has plenty do with the lack of regulation or competition outside the illegal market.
Regulation is an interesting topic in this discussion, as it’s easy to separate policy from how an operator sets their sportsbook up. Inevitably, it has a strong bearing on just how stagnant a market can be.
Shea explains: “When there’s not a competitive, legal marketplace, ‘boring’ is what you get. That will change as more states legalise sports betting. What will be important is ensuring state regulations don’t force operators to be ‘boring’ which will allow illegal, offshore sportsbooks to continue to flourish and prey on American bettors.
“Unreasonable restrictions around bet types, live betting and other features will put legal operators at a competitive disadvantage to illegal sites. No one – other than the illegal operator – wins in that scenario.
“Competition is good for consumers and, ultimately, they’ll seek out and be loyal to the best product and the best experience. Legalised sports betting in America is a dynamic new industry. It would be a mistake for anyone to expect what held true for the industry pre-PASPA will continue as more states legalise sports betting.”
So, is it worth it for a company to stand out from the market, considering the marketing and technological costs that would involve?
Again, it goes back to McDowell’s point – whether sports betting truly needs to change if it already generates so much revenue. Part of the rhythm bookmakers will have fallen into over the years will no doubt originate from the feeling they can bring customers in ten a penny, regardless of how similar their rival offerings are.
In other words, is it better not to fix what isn’t broken?
“We simply reject the lazy ‘don’t fix what isn’t broken’ way of doing business,” Shea explains. “That is not who we are as a company and that sort of thinking is antithetical to the DraftKings culture. By no means are we dismissive of legacy operators.
“In developing DraftKings Sportsbook, we closely studied competitive offerings and conducted customer focus groups to understand the strengths and shortcomings within the industry and applied those learnings to our platform. At DraftKings, there is always something that can be fixed, improved, innovated or invented. And we’ll never be afraid to stand out. ”
It may be no coincidence DraftKings holds this view, with genuine evidence of its first sportsbook being that little bit different to what consumers in the UK, European or Asian markets would come to expect. Seasoned operators with big names, however, can rely on bettors visiting their sites regardless of how much their product differs from five to 10 years ago. Their motivation, therefore, may be far lower.
Reviewing the evidence presented, it’s fair to say a strong defence of the online sports betting industry has been put forward. For any suggestion of a lack of innovation, the examples of live betting and algorithmic pricing models prove strides have most definitely been made. The great US expansion we are currently witnessing, meanwhile, may well be the final piece in the puzzle for sports betting’s technological revolution.
The supply side certainly seems to have provided its end of the bargain.
There are still unanswered questions, though. Crucially, no one has come forward with an outright rebuttal of the initial claim; on the sites of major UK, European and Asian operators, there is often very little to no differentiation. Bet-building products and unique new promotions are innovative at first – but a slow replication across the industry usually results in the same lack of variety.
So, ladies and gentlemen of the jury, how do you find the defendant: boring or not boring?