Month: November 2022

Welcome to episode one of our five-part Betting Hero Consumer Insight Series. Using the collective intelligence gathered from the company’s three business units: Hero Activation, Hero Research, and Hero Hotline this series will outline (and quite possibly challenge) the status quo of customer acquisition, retention, and development efforts across the leading sportsbook operators in North America. 

Because we have witnessed firsthand (over 300,000 times) the importance of having a product expert available to help customers complete their registration, funding, and betting journeys, we are also acutely aware of the challenges customers face: the industry average conversion rate from initial app download to bet placed is only around 50%. 

The insights 

In a recently conducted consumer study (highlighted below), our Research division analysed the behavior of more than 150 frequent online sports betting customers across 14 US states and one Canadian province. The purpose of this study was to understand how the leading operators’ current acquisition, retention and development funnels perform across North America and how they impact consumer behavior at each stage.  

Our hypothesis was that even highly educated consumers that bet weekly or even daily would cite frequent issues preventing them from successfully registering, funding and betting with their preferred operators. Knowing that operator loyalty among consumers is somewhere between 10% and 25%, we wanted to understand what correlation, if any, could be found between overall market share and product performance. 

Number of jurisdictions: 14 US States + 1 Canadian Province 
Number of respondents: 151 
Number of total accounts registered for: 590 (AVG 3.9 p/respondent) 
Number of registrations with issues: 154 (26%)
Frequency of bets: 35% place more than 25 bets per month, 75% place more than 5 bets per month 

First, it is important to remember that the respondents we analysed as part of this study are extremely familiar with the apps that they use, and therefore remain less likely to report common registration, funding or betting issues as a result. We specifically chose to focus on a group of frequent bettors to showcase the challenges faced by even the industry’s most valuable customers.  

For example, of the 590 total accounts this cohort registered for, 26% of sign-ups (154 registration attempts) were unsuccessful. It is safe to assume that among a cohort of less frequent bettors, the percentage of failed registration attempts would be significantly higher. 

75% of the respondents claimed to have experienced more than one instance in the last 12 months when they were unable to place a bet. Additionally, 40% of the respondents claimed to have been unable to place a bet on more than three occasions in the same timeframe (3-5 times: 19%, 5-9 times: 13%, 10+ times: 8%). Only 25% of the respondents claimed to have never experienced an issue that prevented them from placing a bet. 

When asked a multiple-choice question of what issues most frequently prevent bets being placed, geolocation issues was the most frequent response, cited by 32% of respondents. Meanwhile, 30% cited connectivity issues, 23% cited app non-responsiveness and 19% cited the inability to find a certain bet type. 

Alarmingly (but also excitingly for the affiliates and operators  in the room), most of the issues likely faced by the respondents could have been avoided or solved through proper customer education or more reliable product performance. 

Knowing that even the industry’s most frequent bettors are significantly impacted by the inability to place their bets of choice, it’s important to understand the next behavior of this cohort to determine the overall possible impact on the industry in aggregate. Keep in mind, these bettors are typically more determined and intent on successfully betting than any other. 

When asked about what next action the respondent would take if they were unable to place a bet; 40% claimed that they would first attempt to use a different app. On the other hand, 14% would decide not to place the bet until their app of choice worked, 13% would attempt to troubleshoot the issue online and only 10% would contact the sportsbook’s customer service department to try and resolve the issue. The remaining respondents did not know what they would do or had never experienced an issue that had prevented them from placing a bet. 

Among the same cohort, 75% of respondents have been unable to place their bet of choice on their preferred app at least once in the last 12 months because of geolocation issues, connectivity issues, app unresponsiveness or the inability to find their bet of choice. When these issues occur, 54% of these high frequency bettors will take an action that results in them not placing a bet with their preferred sportsbook: 40% opting to use a competitor’s app, and 14% not betting at all: all in all, that’s 40% of bettors leaving their preferred app over something that can be avoided. 

In conclusion, we now know that the industry’s ultimate winners could be decided by which operators perform best in terms of consumer education, and product performance.   

Join me for next week’s episode as I explore the common consumer frustrations caused by their (sometimes not-so-) preferred sportsbooks. 

*Insights referenced collected by Betting Hero Research between September – November 2022 

About Betting Hero 

We are widely known as the No. 1 live activation company in sports betting and iGaming having delivered more than 300,000 new depositing customers to our strategic partners since inception. Uniquely as an affiliate; we engage, educate and activate customers via in-person interactions. We help sportsbook operators achieve their most critical goals across customer acquisition (Hero Activation), customer retention (Hero Research) and customer development (Hero Hotline). 

Unlike online affiliates that largely convert customers using digital content and promotional comparisons, our in-person teams educate hard-to-reach, high-value consumers on the unique benefits of respective sports betting products before guiding them through their registration, funding and betting journeys. As a result of our expert activation teams and concierge approach to customer education and acquisition, we are proud to boast an app-download-to-bet-placed conversion rate of over 80%, which happens to outperform the industry average (~50%) by more than half. Here is an example of one of our How To tutorials.

According to a recent online survey by Opinium of 2,000 British football fans, 61% said there are too many gambling ads during the World Cup and other international tournaments. 

A further 28% said they were anxious about how much they might lose while betting during the World Cup, while 56% said it is easy to lose more money than expected.

GambleAware said this anticipated betting activity, coupled with the rising cost of living in the Great Britain, and the fact the tournament is taking place near the high-cost Christmas period rather than its traditional summer slot, could lead to financial problems for fans. 

As such, the charity has linked up with the Football Supporters Association (FSA) and a number of former footballers to run a new campaign and raise awareness of the early warning signs of gambling harms.

The charity will also offeri fans advice on how to enjoy the tournament without experiencing ‘Bet Regret’, a ‘sinking feeling’ that GambleAware said people may experience after making an impulsive bet, often when drunk, bored or chasing losses.

“This should be an enjoyable time for all football fans, but with the sheer volume of football and the amount of betting ads, it can be easy to get carried away with betting – and we can see that many fans are already feeling anxious about this,” GambleAware chief executive Zoë Osmond said. 

“As the cost of living-crisis bites and people feel the pinch in the run-up to Christmas, this could create a ‘perfect storm’ where fans resort to gambling as a way to cope. This can have the opposite effect, both financially and in terms of mental health. 

“There are lots of ways to avoid ‘Bet Regret’ – the sinking feeling you get after making a bet you wish you hadn’t – from deleting apps, to setting a limit. These steps can help fans enjoy the football this winter without feeling stress or anxiety around gambling.”

Gambling Minister Paul Scully also backed the campaign. He said: “I welcome this campaign from GambleAware to help raise awareness of practical actions people can take to avoid gambling-related harms. 

“We are undertaking the most comprehensive review of gambling laws in 15 years to ensure they are fit for the digital age, including considering the evidence on gambling advertising and marketing.”

The detail comes as part of Peru’s efforts to regulate online betting and igaming. The country’s Congress unanimously voted for a bill to regulate the sectors in July, which was then signed into law in August, coming into effect 60 days later.

The law names the Ministry of Foreign Trade and Tourism of Peru (Mincetur) as the country’s official gambling regulator.

As regulator, the body established a number of rules that will apply to operators in the market, including a ban on free bets and supplier registration requirements.

These rules are subject to a consultation, with stakeholders able to submit their opinions until 2 December.

Free bet ban

The regulations state that operators may not offer any type of remote betting or gaming for free, whether this is for promotional purposes or for education such as through a demo of a game.

If an operator is found to offer a free bet, it could face a fine of anywhere between one and 50 Peruvian tax units (Unidad Impositiva Tributaria/UIT).

Currently, one UIT is equal to PEN4600 (£1,010/€1,149/$1,197) but the units are intended to be flexible with changes to the value of the country’s currency.

In addition, advertising should not be “directly or indirectly” directed at minors, nor should ads include minors. Ads may also not be deemed in violation of “people’s morals”.

Supplier registration

Suppliers, meanwhile, will have to register with Mincetur in order to offer their services to licensed operators.

These suppliers will have to list other authorisations they have received as part of the application process. However, other details about the criteria to have an application for registration accepted or to have an existing registration revoked were not provided.

Use of an unregistered supplier again carries a fine of between one UIT and 50 UIT.

For operators, remote betting and gaming will require two separate licences. All licensed operators must either be registered in Peru or have an office set up in the country.

Dermot Smurfit, CEO of GAN, noted developments in its B2B arm throughout the quarter – including the launch of B2B products in the US and the next version of GAN’s Gamestack technology – as reasons for the uptick in B2B revenue.

“Our third quarter was highlighted by our launch of B2B sports betting technology and managed trading services in the US along with continued progress toward the domestic launch of Gamestack 2.0,” he said.

B2C revenue made up the majority of the total, coming to $19.4m. This was a decline of 7.8%. During the quarter, GAN appointed Endre Nesset as president of B2C.

In contrast, B2B revenue grew slightly, by 13.5% to $12.6m.

Smurfit projected that GAN’s sportsbook platform, GAN Sports, would have a strong launch and added that GAN the FIFA World Cup and entries into other markets also represented good opportunities.

“We are looking forward to what we expect to be a strong launch cadence of GAN Sports, the upcoming FIFA World Cup, as well as our entrance into the Mexico market.”

Difficult environment

However, GAN CFO Karen Flores said that these opportunities may be offset by “difficult” macroeconomic environments and headwinds that were present during the third quarter, which also led the company to suspend its full year guidance.

“While we are excited about the launch of GAN Sports and progress around other initiatives, as expected, a continued difficult foreign exchange environment and European headwinds impacted our third quarter performance, and we expect those factors to impact our fourth quarter as well,” she said.

“Although we are expecting a significant increase in activity for the World Cup, the unique nature of the event and the wide range of potential outcomes for the quarter have led us to elect to suspend our guidance for the full year.”

After its lower-than-expected results in Q2, GAN lowered its headcount and reduced its full-year revenue guidance to between $142.5m and $152.5m.

Reduced loss

The total operating costs for the quarter came to $37.2m – down by 5.4% year-on-year. General and administrative expenses also fell, by 20.9% to $10.1m, but were the highest contributor to operating costs throughout the quarter.

The overall cost of revenue was $9.4m, down by 12.6%. Sales and marketing costs amounted to $6.7m, while product and technology costs came to $4.9m.

After these operating costs, the operating loss stood at $5.1m. This was $1.9m less than in Q3 2021.

Interest expenses were $1.4m. Following this, the pre-tax loss was $6.5m.

After income tax, which came to $356,000, the net loss for the third quarter was $6.9m, down by 20.0%.

Eric J. Green joins GAN board

Alongside its third quarter results, GAN announced the appointment of Eric J. Green to its board of directors.

“We are constantly evaluating our board structure to ensure that we have the right leadership to support our strategic initiatives,” said Seamus McGill, chairman of the board. “Consistent with that mission, we are thrilled to announce Eric’s appointment to our board of directors, along with his deep knowledge of the capital markets and the US gaming sector.”

Green has over 25 years of investment experience. He has worked for Penn Capital, and still serves as Penn’s chief investment officer of equity as well as the senior portfolio manager for Penn’s small cap and small to micro cap equity strategies.

“It is an honor to be joining GAN’s board and I am incredibly excited to begin working with the team,” said Green. “I look forward to offering my expertise to leverage the best of GAN and accelerate the company’s growth and profitability.”

Organised by Uefa in collaboration with the University of Lausanne’s (UNIL) School of Criminal Justice, Fight the Fix (FTF) will support national associations’ integrity officers and representatives of institutions involved in fighting match-fixing.

The new programme will provide participants with intelligence-gathering and investigation skills required to identify, investigate and prosecute match-fixing cases.

The initiative will focus on hands-on practice, with participants solving a fictitious match-fixing case, following the full intelligence and investigation process from identification to prosecution before a final moot court simulating sports arbitration proceeding.

The first FTF session took place earlier this month at UEFA HQ in Switzerland and focused on the detection phase. The second event will take place online and look at intelligence, and the final session at the Italian Football Association in Rome to emphasise prosecution.

“Match-fixing is one of the biggest threats to the integrity of the beautiful game and it is Uefa’s duty to remain at the vanguard in the fight,” Uefa president Aleksander Čeferin said. “Maintaining trust in the sport means increasing expertise and support for those involved in the fight at national and international levels

UNIL associate professor Stefano Caneppele and Uefa’s managing director of integrity and regulatory Angelo Rigopoulos added: “The first week of the FTF was extremely successful. The session aimed at bringing together the knowledge from academics, international sport federations and practitioners to stimulate active participation and exchange of views on the mechanisms and on the challenges in detecting match-fixing. 

“We would like to thank all the speakers for the quality of their presentations and the participants for their enthusiasm and strong commitment. We are looking forward to meeting them for the next session in February 2023.”

Last month, global integrity body IBIA revealed it recorded 76 instances of suspicious betting in the third quarter of the year. Of these, 13 came from football of which four were in Uefa member countries.

Galaxy said the business experienced growth within its online gaming operations during the three months to the end of September, helped by the launch of a new igaming division in July.

However, with revenue in both its Galaxy Core land-based business and Galaxy Digital online casino arm having been impacted by the strengthening of the US Dollar against both the Euro and UK Pound, this, coupled with higher costs, impacted its overall performance.

“Exchange rates, interest rates and inflation rates worsened in Q3,” Galaxy’s chief financial officer Harry Hagerty said. “The dollar continued to appreciate versus the Euro and the British Pound, and the floating rate upon which our interest expense is calculated increased by 138 basis points in the quarter.   

“Inflation continues to affect us as most of our expenses are denominated in US dollars, and the current quarter reflects a higher-than-normal level of professional services expenses as we strengthen our financial systems and our intellectual property protection. 

“But despite the challenges, the company is performing well. Our balance sheet improved in the quarter with increased cash balances and modestly reduced debt balances, and we were comfortably in compliance with the financial covenant in our Fortress credit agreement.”

Revenue up for Galaxy Gaming

Looking at the Q3 results, revenue for the three-month period reached $5.9m, up 11.3% from $5.3m in the same period last year. Galaxy said this, alongside online growth, this was helped by the continued recovery for its land-based customers in the wake of the pandemic, especially in the UK.

Revenue in Europe, the Middle East and Africa was 17.9% higher year-on-year at $3.3m, while North America and Caribbean revenue also climbed 4.0% to $2.6m.

However, this revenue increase was accompanied by a rise in operating expenses, which were 12.2% higher at $4.6m. This was primarily due to a 22.2% jump in selling, general and administrative costs.

Galaxy also noted $2.2m in finance-related costs, a 545.6% jump from $333,293 last year. The provider said this was mainly the result of $1.9m in interest expenses, though foreign currency exchange loss was also higher than in Q3 of 2021.

Swing to a loss

As a result, pre-tax loss amounted to $853,634, in contrast to an $853,050 profit at the same point last year. Galaxy did receive $154,944 in income tax benefit, but after also including a further $77,871 negative foreign currency translation, this left a net loss of $776,561, compared to a $792,520 profit in 2021.

In addition, adjusted earnings before interest, tax, depreciation and amortization (EBITDA) slipped 4.0% year-on-year to $2.4m.

However, like Hagerty, Galaxy chief executive and president Todd Cravens was upbeat about the quarter, also noting details of a cost-saving initiative that would result in lower annual spend.

“Despite the continued strengthening of the US dollar, we had an excellent quarter,” Cravens said. “On a constant currency basis, revenue increased by 19% in the quarter and 27% in the first nine months vs. the same periods in 2021. As compared to Q2 2022, sequential revenue growth was 6% on a constant currency basis. 

“Finally, at the end of the quarter, in consideration of a $2.0m cash payment, we eliminated the obligation to make contingent consideration payments to the original seller of the intellectual property supporting our Bonus Craps side bet. 

“Based on the run rate in Q3, this should save us around $315,000 on an annual basis and potentially more as Bonus Craps deployments increase.”

The structure includes a Commercial Committee and Integrity Advisory Committee, while a new Industry Programme Group was also created to help drive forward the sport’s main areas of strategic focus.

The Commercial Committee will meet monthly and oversee the work of the existing Fixtures and Funding Group, Racing Group and Gambling Strategy Group, as well as develop areas of the industry strategy with commercial focus. This will include the racing product, promotion of the sport and initiatives regarding key stakeholders such as owners and bettors.

Chaired by BHA regulatory independent non-executive director David Jones, the committee will include BHA chief executive Julie Harrington and BHA chief operating officer Richard Wayman, as well as Racecourse Association (RCA) CEO David Armstrong, Arena Racing Company CEO Martin Cruddace, and Jockey Club CEO Nevin Truesdale.

The Integrity Advisory Committee will provide strategic advice and make recommendations to the BHA Board on matters relating to the integrity of the sport and will meet four times a year.

Committee members include the BHA’s Jones, independent disciplinary officer Patrick Russell, BHA chief regulatory officer Brant Dunshea, and BHA director of integrity and regulation Tim Naylor. BHA regulatory independent non-executive director Raj Parker will chair the committee. 

BHA Industry Programme Group

In addition, the Industry Programme Group will contribute to strategy on horse welfare, industry people, equality, diversity and inclusion, corporate social responsibility, social licence and environmental sustainability. 

The group will be chaired by Harrington and comprise three members appointed by each of the RCA and the Thoroughbred Group members of the BHA. Also sitting on the group will be BHA director of strategy and change Alison Enticknap, and representatives of the Horserace Betting Levy Board and Racing Foundation.

“The agreement of a new governance structure is an important step along the road to developing an industry strategy to secure the future prosperity of racing in Britain,” Harrington said.

“This new structure not only provide a platform upon which progress can be established, but also clarifies the BHA’s role as the sport’s governing body and regulator. Acting on behalf of our members at the RCA and The Thoroughbred Group, I am confident that this structure will lead to better informed decisions on commercial and strategic matters.”

In his new role, Thomas will oversee BlueBet’s marketing strategy and efforts in Australia.

Thomas joins BlueBet after spending the last three years consulting to Australian businesses through Wiseguy Communications, while he also co-founded Fans.Inc in October 2021.

Prior to this, he spent more than nine years as chief marketing and digital officer at Nova, while he also had a spell as head of media and advertising at Coles Group and marketing director for ninmsn.

In addition, he was marketing director at PepsiCo for almost six years, marketing manager for vodka at Diageo and also brand manager at Uncle Tobys.

“It’s such an exciting time for BlueBet, as it experiences strong growth in the market, and I’m looking forward to helping it accelerate its growth agenda, disrupt the market, and continue to take market share,” Thomas said.

“There is a real challenger brand mentality at BlueBet, filled with smart and passionate people, and this is exactly the sort of business I love being part of. As a challenger brand, we need to work faster and smarter and create big, impactful ideas that cut through in a competitive market.

“Australians have lots of choice when it comes to punting so creating an Australian brand that Aussie punters love is important. The BlueBet team has done an outstanding job and have a ton of industry knowledge and I’m excited to be joining such a high performing and passionate team.”

Challenger brand

BlueBet chief executive Bill Richmond added: “Tony has developed and executed some of the most recognisable campaigns in this market over the past 20 years and importantly built teams and cultures that align with BlueBet’s values and disruptor mentality. 

“Tony is bringing a strong strategic mind to the company and has some exciting ideas about how we can take our brand and proposition to the next level.

“Tony understands that BlueBet is a challenger brand with a unique proposition and appeal to Australian punters and we think his expertise and vision will make a real impact to our business.”

The appointment comes after BluBet last month made a strategic investment worth $500,000 in free-to-play sports gamification platform provider Low6.

BlueBet said the investment will allow it to expand its own product offering into free-to-play games, as well as assist in onboarding and to engage with its customer base.

In the three-months ending on 30 September, Playmaker made an operating loss of $364,000, compared to operating income of $1.0m in the same period the previous year.

The company highlighted that part of this was due to $1.7m in special costs, such as stock-based compensation, depreciation and amortisation. The amortisation is a consequence of the company’s acquisition spree, and will continue to affect the company’s statements in the short to medium term.

However, other costs still almost doubled to $6.6m.

In total, when also factoring in other non-operating costs that affected Playmaker’s finances, such as transaction costs, interest expenses and foreign exchange transactions, the business made a net loss of $2.8m in Q3 2022, compared to the $440,000 loss the business made in the same period the previous year.

M&A activity

In 2022, Playmaker acquired a number of media and affiliate businesses, including US soccer media business World Soccer Talk, Mexico-facing sports media publisher JuanFutbol, as well as igaming affiliate Wedge Traffic – Playmaker’s first foray into the online casino affiliation space.

While Wedge Traffic acquisition in October means that the numbers did not add meaningfully to the Q3 totals, the business’s acquisitions have radically altered the shape of the company – with total salaries more than doubling year on year.

If Playmaker and these companies were considered a combined entity for all of Q3 of 2021, then the business would have enjoyed organic growth of 20% from $8.4m in pro-forma revenue to $10.1m in the three-month period.

Bullseye

“We are very proud to announce another strong quarter of revenue growth and profitability,” said Jordan Gnat, Playmaker CEO. “Our vertical focus on sports, continued momentum of direct sales, organic audience growth, differentiated content, and diversified revenue streams, is serving us very well. Our acquisition of Wedge Traffic in October was a bullseye.

“We identified the need to add meaningful affiliate revenue and now we have the team and the business that can deliver that at scale. We remain on track, continue to deliver strong results, and we are looking forward to Q4 and the FIFA World Cup.”

The company’s non-financial metrics also showed strong growth. Playmaker’s portfolio of projects enjoyed 95m users in 715m unique sessions in Q3 2022, representing pro-forma growth of 30% and 55% respectively.

Focused on profitability

“We remained sharply focused on profitability during Q3,” said Mike Cooke, Playmaker CFO. “Our operating segments produced $2.3 million of Adjusted EBITDA in the quarter on an IFRS basis and $2.7 million on a pro forma basis. Our organic growth remains strong, as shown by the 20% growth in pro forma revenue compared to Q3 2021.

“Meanwhile, the $20.0 million convertible debt facility that we closed during Q3 provides significant additional capital to continue pursuing acquisitive growth opportunities as they arise. As we look ahead to Q4 and beyond, we are excited to continue building on the momentum we have generated in the first nine months of 2022.”

Financial terms of the deal were not disclosed, but Novomatic said the acquisition will make the business one of the largest operators in Italy.

HBG Gaming is active in Italy as a concessionaire of both video lottery terminals (VLTs) and amusement with prizes (AWP) machines, as well as in the igaming, sports betting and bingo segments.

The acquisition was able to complete following approval from the Italian Autonomous Administration of State Monopolies.

“With this acquisition, Novomatic is sending a clear signal of further international expansion and can double its market share as a concessionaire in one of the key European gaming markets,” Novomatic executive board member Ryszard Presch said.

The deal comes after Novomatic in February also acquired Admiral Sport in Italy, just months after its Greentube interactive division purchased Italian developer Capecod Solutions for an undisclosed amount.

With this transaction, the number of employees across the Novomatic group will increase to more than 3,000 in Italy and to over 21,900 around the world.

Novomatic Italia chief executive Markus Büchele added: “In the year of our 15th anniversary in Italy, we can continue on a very successful path thanks to a great partnership with HBG and grow further together.”