Taking control

Have you seen a rise in popularity in the betting exchange model in recent years?
I think we’ve definitely seen a rise. We’re aiming for more, though. Smarkets has existed for more than 10 years now and we’ve been growing heavily since 2014, mainly by bringing a better alternative than the existing betting exchange offering.

A betting exchange has a higher learning curve than a classic sportsbook so users want information that’s easy to digest, easy to use and looks appealing, and once you’ve got that, you want to gather more users.

Smarkets was added to the Oddschecker grid in 2018 on the wave of a great FIFA World Cup for us, and a lot of great work has got us to where we are now. There are still barriers,though. Some people might not bother to dig into the betting exchange model and try to understand it because of the learning curve, and then they might just sign up to a classic sportsbook, which means they miss out on the extra value of exchanges.

Education is really key and educating customers definitely helps. This can be from posting blog content to a wider marketing campaign. Our affiliate partners help explain the benefits of a betting exchange to users.

What would you say were the main benefits to this model?
The main differentiator from an exchange to a sportsbook is the fact that users can layselections. On sportsbooks you can obviously only back so laying means you can bet against an outcome happening, which is something you can’t do with a bookmaker, and it opens up a lot of opportunities for making money.

Another big benefit for exchanges over sportsbooks is price, which means much better odds for the customers. When a player bets against a bookmaker, the bookmaker’s profit margin is factored into the prices they offer, while an exchange is a peer-to-peer model. You’re able to bet a higher amount with us, we don’t block users because they are winning and we even welcome high-value traders.

Another benefit from a user perspective is a higher amount of control, again because you’re not playing against the bookie. If you don’t like the odds, you can request higher odds, similar to a real stock exchange, and leave them unmatched until another user matches them.

A final thing would be higher transparency, as the exchange model is a product that is fairer, and because you are trading against other users, you just pay commission.

With higher transparency in mind, how can affiliates use the exchange model to maximise revenue?
There are not many betting exchanges out there, hence why education is really key and the need to inform their users on what sets an exchange apart. Affiliates can do this with pages explaining what laying a bet is, really targeting key words such as matched betting and hedging, but lots of blog content also helps. I see lower conversion if you just show a welcome bonus on a bonus page and do not add anything, just an overview of bonuses. A welcome bonus is aggressive in terms of being an exchange but if you compare it to other casinos and bookmakers, it’s obviously much lower. We don’t do minimum odds or wagering requirements and it’s key that you explain that to the users.

Another thing you could do is cross-sell to users, whether it’s getting new people into betting. For example, a lot of my colleagues have never bet before, they have a finance background or tech background and they’re very fascinated with the concept of a betting exchange. You can target people who actually trade with stocks who are used to trading and you can maybe cross-sell them in using us instead of an exchange broker.

In which markets do you see the exchange model being most popular and what are the next markets on Smarkets’ agenda for expansion in 2021?
We’re only active in regulated countries. There are some big ones that could be appealing in terms of liquidity but we steer away from them. UK and Ireland is our core market; we also have a Malta licence but the UK is definitely our biggest one. Our users are a very high mix of high-value traders to matched betters, recreational punters and also everyone who wants to check and trade on our political markets. In terms of new markets going forward, we first want to grow in the UK and then grow in the markets we recently launched in this year.

Even during the pandemic we launched in Sweden, meaning the Smarkets exchange is live there despite the recent changes in regulation. We also launched our SBK sportsbook in the US market, which is obviously a massive milestone for us. The US market is booming right now and there are plenty of articles you could write about it alone. We’ve been live in Colorado since July and are making some very exciting product improvements there that we think will set us apart from the big players.

Our focus is really pricing and product there with SBK. Indiana is another market we’re targeting, we're planning to go live there in Q1 2021, so there’s a lot of regulation we need to go through but we’re confident we will be live there as well.

There’s also Denmark, which is a market we want to launch our exchange in. At the moment our focus has been on Smarkets but the growth of SBK will be one of our biggest priorities looking forward into next year. I mentioned those countries but if you look beyond 2021, every country that makes financial and regulatory sense is obviously appealing; for example there’s interesting movements in the likes of the Netherlands and Canada.

With SBK going live on Oddschecker, how big of a boost is it to your sportsbook brand? This was a project we’ve been working on for a while and it’s definitely a big boost. Next to social features, the main string of SBK is its pricing and the pricing of the exchange. We also show this in-app by showing our odds to competitors. We have this feature called Price +, which has a green triangle when we’re the best price. What’s a better place to highlight the power of our pricing than on Oddschecker, which is the UK’s biggest odds comparison site?

It’s a long-term strategy so we really want to show that we’re in it for the long haul. Oddschecker is a big commitment so we definitely take it seriously and are not like a sportsbook that’s not going to be here in a year.

What can we expect to see from Smarkets in 2021 in terms of product enhancement and aims?
Our aims for next year are twofold. A lot of what I’ve previously mentioned was about SBK but we still have the Smarkets exchange. In terms of features, we launched multiples on the exchange, which is quite advanced on an exchange as most of the bets on the platform are single-focused. We’re the first betting exchange where users can put their own selections together to back and lay multiplies.

We’re also going to try to push our politics offering next year and beyond. We just had the US elections but we’re now thinking about our 2021 strategy as at the moment, a lot of it is focused around Brexit, which is still ongoing for now. In terms of politics, we want tocontinue to be seen as a source of information, for example we send political pricing emails where journalists come and check Smarkets to see the latest trends.

In terms of SBK, we are the best price in terms of the markets we offer but we need to offer more markets. That means covering more events and pricing, better in-play and more in-play. The other aspect is social. Every user on SBK has a social account where they can place comments on the tips of their friends and brag about them too. We don’t want it to be a gimmick, we want to expand it so there will be improvements coming in the next six months to a year. A few sportsbooks have tried to be a social sportsbook; sometimes they get frowned upon but we believe if we get it right, combined with the best price, it will definitely take off.