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Kambi

Sports betting’s new challenge

04 Jul 2017 / Author: Erik Logdberg

What are the challenges that lie ahead for the sports betting industry in 2017? Erik Lögdberg, the chief business development officer of Kambi Group, offers his perspective.

The sports betting sector, like many strands of the global gambling market, has undergone considerable change in recent years, with more formats, products and competition from different providers.

This significant expansion has been fuelled by multiple factors, including a broad acknowledgement by sports organisations worldwide that responsible, regulated gambling has a crucial role to play in not only generating interest and funds for their activities, but also for identifying wrongdoers and fraudsters.

However, whilst mobile and in-play betting have offered new dimensions to punters, the appetite for more flexible, relevant and above all engaging products is greater than ever from a demanding pool of potential customers who have more choice at their fingertips than ever before.

Erik Lögdberg, the chief business development officer of Kambi Group, a sportsbook supplier and B2B risk management service provider, is well aware of the challenge that lies ahead for sportsbetting companies in 2017 and beyond.

“There has of course been big growth in the whole sports betting industry and lots of companies enjoying success,” Lögdberg said. “Growth has historically been achieved by doing the fundamentals, however, partly because of democratisation of sportsbook, this is no longer up to just a few companies that could afford it at the time. Now, you can more or less buy a sportsbook off the shelf, and this is enabling more companies to try to attract players in new ways.”

New demands

According to Lögdberg, one of the greatest challenges facing companies that operate in the sector is the inevitable shift towards catering for a new type of player with fresh demands and expectations. When and what these demands will be remains to be seen.

“The end use of product is still similar to what it has always been, but we have seen changes and movement in strategies in many places where sports betting hasn’t been before,” Lögdberg said. “Everyone believes it is going to change, but it is just the question of which direction or directions it is going to go.

There is a new type of player coming in the form of the Millennial and they will have a different view of what good looks like. They will likely have a shorter attention span, demand transparency and be more social, but we will face more competition from other forms of entertainment to gain their attention. 

The approach is going to have to shift to customer centricity and this is going to define the whole of the gaming sector moving forward. Previously, we were looking at product aspects such as bet offers, limits, live events and paybacks  but I can see that shifting and become far more complex and interesting. How to with data and packaging put all this together to create relevance is what’s going to be absolutely key.

Pivoting a business on the whims of an unpredictable market will prove a major obstacle for established operators'', Lögdberg acknowledges.

“The major challenge in this shifting landscape is to protecting your existing revenue, while at the same time making yourself prepared and attractive to a new type of player, and with threats coming from left, right and centre, this is challenging” Lögdberg said. 

“The gaming management system and the core sportsbook platform need to be very agile, because we don’t know exactly what direction, or directions, the market could go. Getting the business models, tech-stacks and data in order that will allow you to respond is the key challenge right now.”

Grasping opportunities

Sport is preparing for a big year in 2018 – with the Winter Olympic Games in Pyeongchang followed by football’s Fifa World Cup in Russia. However, Lögdberg is convinced that traditional and established events now represent only part of the sportsbetting story as the sector edges closer to the third decade of the new millennium.

Referring to the example of the rise in popularity of esports worldwide, Lögdberg added: “I think sports betting can reach more demographics that have never really been wagering on sports. Around the world, interest in sports is huge, but the interest in sports betting is only a fraction of this.

“Esports is one example that really can work for some of the new players. It is definitely a product that can speak to people who have never seen themselves placing a sports bet.”

The Daily Fantasy Sports market, which is straddling the regulatory sportsbetting line in North America remains in a tumultuous state as a result, is another area in which traditional operators can flourish with the right approach.

Although significant question marks remain over DFS, Lögdberg does believe that the appeal of the sector amongst a younger demographic shows that there is untapped potential.

“DFS is a tricky one as if the US had real sports betting, how big would DFS be? We are yet to see DFS fly in Europe from a revenue perspective. Regulation in the US is something that everyone keeps an eye on as this would be a major change for the whole sports betting industry” he said.

“I do believe in DFS in that it for many players is a more accessible way to bet on sports rather than the more traditional product and is more attractive to a younger audience. The younger generation are not necessarily fans of a team, but more a player, and they will follow that player wherever he goes.”

Just as media companies have evolved their coverage of sports to accommodate a more tech-savvy and data-hungry audience in recent years, sports betting providers also need to reflect on how they are perceived by the next generation.

“For Millennials, you are probably looking at a repackaging of sports betting and it is likely that new channels will be important as well” Lögdberg said. 

“With mobile, the player always has your product in their pocket, but at the same time you face more competition from various other forms of entertainment. You really need to make yourself relevant as a sportsbook.”

Reinvention

Despite the emergence of mobile betting technology and a clear preference for many punters to place wagers ‘on the go’, Lögdberg pointed out that retail and the opportunities with omni-channel must absolutely not be forgotten. 

Suggesting that retail still represents around 75 per cent of the global betting market, Lögdberg added that there is still a lot to be gained from the humble betting shop experience.

“It is important to pay attention to retail as while this market clearly isn’t growing like online, it is certainly not shrinking either” Lögdberg said. “Retail is definitely reinventing itself by becoming more digital, where players can get the in-play experience at a retail venue, and it will definitely have a place in this industry for a long time to come.”

With that in mind, innovation is key and it is inevitable that some of the larger sharks in the sea will swallow up some smaller fish. Lögdberg said that despite advancements in recent years – in particular the growth of in-play and mobile betting – the desire to improve mass-used sportsbetting services remains as acute as ever.

“The market is maturing and becoming increasingly crowded,” Lögdberg said. “Everyone needs to find their place in the value chain and identify where they can deliver more value than their competition. 

“This will inevitably lead to M&As, outsourcing and, in some cases, insourcing. Companies need to use all of these measures, while at the same time identifying where they need to be in the value chain.

“Better use of data is going to become important for all companies in the sports betting industry over the coming years. Once we begin to use data properly, we are going to see the end user experiences being different for different users and see more niche propositions. 

“But right now, it is a big risk to be one of the first to go and do this sort of thing as the traditional product has been working quite well. It’s about making that transition and companies need to be able to do both, so I think it’s time for some companies to start trying things out.”

First published by IGaming Business in the June 2017 Sportsbetting Report