Regulation requires innovation

August 01, 2016 / Kambi
Regulation requires innovation

Kambi’s chief commercial officer Ian Freeman speaks to Igaming Business on why innovation throughout the value chain is the only way to face modern regulatory challenges

Europe’s regulated sports betting markets present operators with something of a paradox. 

One the one hand, unprecedented consumer demand and new technologies are creating the opportunity of a lifetime for operators across a number of jurisdictions.

But at the same time, complex and variable regulation across these jurisdictions has made servicing customers a greater challenge than ever.

The move from a dot com to a dot country model in Europe has helped legitimise online betting and gaming, but it has also meant that those firms with outdated tech stacks, dating back to a time when European sports betting was still lacking maturity, will now struggle to succeed in the new market reality.

As we have seen over the past couple of years, a classical approach to solving this dilemma has seen a big industry trend towards M&A and consolidation, but is this really the optimal solution?

While this process is bound to continue, I would posit that there is another solution for tier one operators in this situation: partnering with a genuinely innovative sports betting delivery service that has been built specifically to cope with Europe’s regulatory demands and to enable rapid scaling in new markets.

Delivering on promises

Innovation is more than skin deep. For some time now, our sector has bemoaned the lack of real innovation in sportsbook.

But it is demonstrably false to argue that there has been no significant innovation across sportsbook over the past couple of years.

The error many have made is to equate innovation with front-end product features, such as cash out. Certainly cash out has been a huge success across sportsbook, and operators and providers alike dream of developing a product which could have a similar impact.

But innovation throughout the value chain has been creating new opportunities for those who know where to look.

For example, integrations which used to take months are now doable in the matter of weeks; at Kambi we integrated three operators ahead of Euro 2016 in an average of just six weeks each.

This industry is used to big claims, but those with access to the latest and most agile tech stacks are now able to deliver way beyond operators’ expectations.

Regulatory landscape

More tier one operators are now looking at this technology as a way of taking on the challenges posed by the new regulatory landscape.

It is certainly a cost effective and more scalable approach in newly or currently regulating jurisdictions such as the Netherlands, Bulgaria and the Czech Republic.

Previously, multi-jurisdictional operators could waste time and valuable resources looking for solutions with an outdated tech stack in a bid to find a compliant way forward. In the meantime, local competition or more agile competitors raced into a lead which could only be caught via M&A or eye-watering marketing budgets. 

Therefore any operator which wants to compete across a number of markets simply with a .DOMAIN approach   should seek to position with a tech stack which is flexible and adaptable. More often than not, the easy way to achieve this is through a proven third-party which understands the requirements.

Value throughout the chain

Now our industry is finally waking up to the notion that innovation can take many forms. 

It may not be as glamorous as a new front-end feature, but it is important to ask if your platform can rapidly adopt to new market regulations and conditions, i.e. tax, reporting, offering management and so on.

Since the fragmentation of the European sportsbook market, only those firms who have made a strategic decision to have a presence in all regulated jurisdictions, as Kambi has done, can hope to be competitive across the board.

It is not enough to roll out the same turnkey product in multiple markets. Beyond the compliance issues, users are now demanding a localised, personalised product which speaks directly to them.

Getting the ‘boring’ back-end stuff right also allows for some exciting front-end features, like our recent “next occurrence’ instant markets we rolled out during the Euros.

A major operator, even one which has enjoyed considerable success across a number of markets, will not be afforded a second chance in many of these emergent jurisdictions if the offer isn’t tailored. 

New regulation can no longer be viewed as an inconvenience. Instead, this legislation is opening up new markets and opportunities for those operators which can offer innovative and flexible products.

It is an exciting time to be a part of European sports betting – just make sure you have the service delivery proposition which can survive the ride.

About the author

Ian Freeman is chief commercial officer of Kambi. Prior to joining Kambi, Ian spent five years in B2B business service delivery in the sector working with many tier one operators across Europe.

First published by Igaming Business on 29th July 2016