Month: January 2023

‘Distributed Ledge Technology’ will deliver solutions from W2 and Crucial Compliance, as well as specialist blockchain technology from nChain, to support operators in global markets

The three businesses said the collaboration strengthens the suite of compliance solutions currently offered by W2 and Crucial Compliance, helping operators overcome regulatory challenges and future-proofing their compliance tools and processes.

“Protecting players should be easy; combining W2’s tools and expertise with Crucial Compliance and nChain, we’ve created a complete solution that puts players first and makes maintaining compliance simple for operators,” W2 chief executive Warren Russell said.

Crucial Compliance chief executive Paul Foster added: “Distributed Ledger Technology is the future of regulatory compliance and player protection, and this collaboration between W2, Crucial and nChain allows our operator partners to leverage its huge potential today while futureproofing for tomorrow.” 

nChain sales director Nick Hill added that the new offering would help further mitigate the risk of fines and reputational damage for operators within the blockchain market.

“We are passionate about the ways in which blockchain can enhance vital processes for businesses in a wide range of sectors but especially when it comes to gambling operators and regulatory compliance and player protection,” Hill said.

Stats Perform was the first business to be awarded the IBIA’s data standards accreditation and has now seen its status confirmed once more by independent auditor eCogra.

The IBIA launched the initiative in 2021 to audit betting data providers after identifying that high-integrity sports data collection plays a critical role in protecting sports and betting markets against corruption.

“Stats Perform is a long-term advocate for the highest standards of integrity and quality in sports data because we know it is critical for the accuracy and veracity of sports competitions and the betting markets that cover them,” said Andrew Ashenden, chief betting officer at Stats Perform. “We were proud to become the first company to champion and receive the IBIA accreditation.”

“Achieving the standard for an unprecedented third year in a row affirms the reason Stats Perform’s Betting and Opta sports data is chosen by the world’s leading sports federations, sportsbooks and pricing providers: it powers trusted experiences for millions of global sports bettors.”

The IBIA accreditation follows Stats Perform’s recent award of ISO 27001 certification for information security, which it said further underlines its commitment to risk management for its customers.

“Stats Perform’s successful third-year renewal of the data standards accreditation demonstrates the value leading sports data providers see in them. IBIA members also view the Data Standards protocols as an essential initiative, which have a positive impact on the sports betting environment,” said Khalid Ali, chief executive of IBIA.

Stats Perform became the first sports data supplier to receive the accreditation back in January 2021, after committing to the watchdog’s best practice standards in late 2020.

Last year, GRID Esports became the first esports data business to receive the IBIA Data Standards accreditation.

In a trading update for the three months to 31 December 2022, the Australia-based group said turnover was up 6.6% year-on-year to $147.7m (£119.3m/ €135.9m) driven by strong growth in sports and mobile channel.

Almost all of that income was derived from its home market, with Australian turnover of $146.3m, which was up 5.6%. BlueBet said it was aided by seasonal promotional activity, a temporary mix shift towards sport due to the FIFA World Cup in November and December, and short-term negative variance on racing margins impacting net win, which remained robust at 9.4%.

Active customers in Australia was up 32.3% year-on-year to 59,632, which was also up by around 10% on the prior quarter.

BlueBet, which listed on Australia’s ASX in July 2021, launched in Iowa under its ClutchBet brand in August and was ranked No.9 in the state by revenue during the quarter.

BlueBet recorded gross win of $18.3m in the quarter, which was down 0.5% year-on-year. Its costs grew during the period due to investment in marketing, promotions and pricing in response to increased competition in the Australian market.

Normalising marketing spend

Marketing spend and promotional activity is expected to normalise in H2, with product enhancements expected to drive customer retention. BlueBet said it has re-invested the returns from its increased marketing spend in FY22 towards product development, including the enhanced BlueBet Global Platform which is due to launch in mid-2023.

Chief executive Bill Richmond said: “BlueBet had another great quarter in Q2 despite increased market competition, with continued market share gains in Australia driven by strong growth in our sportsbook.

“After making additional seasonal and tactical marketing investments in H1, quarterly cash outflows are expected to normalise in the second half, with our Australian business expected to return to generating positive operating cash flow as we continue to gain market share with our differentiated brand and product.

“In the US, ClutchBet is now live in Iowa having taken first bets in late August, and the early response from our customers has been very positive,” he said. “We are now focused on enhancing our product to fit the US market, as we progress towards an expected go-live in Colorado in mid-March. 

“We have commenced discussions with potential B2B partners for our white-labelled sportsbook-as-a-solution B2B offer in the US and expect to make further progress in the second half.”

Last year, BlueBet made a strategic investment worth $500,000 in free-to-play sports gamification platform provider Low6. In the trading update, it said the first free-to-play game will be released in the US for the Super Bowl

ICC will take place on Monday 6 February in the Capital Suite at the ExCel London.

The conference will feature 150 key industry leaders discussing a range of issues associated with the land-based casino sector, including emerging markets, regulation, and politics as well as the latest news in ongoing casino development.

This will include exclusive insight into the acquisition of the Palms Casino Resort by the San Manuel Band of Mission Indians. The resort opened just 132 days after receiving its licence to operate, in April 2022.

Laurens Vosloo, CEO of the San Manuel Band of Mission Indians and management committee member at the San Manuel Gaming & Hospitality Authority and Cynthia Kiser Murphey, general manager at Palms Casino Resort Las Vegas will be making keynote presentations on the acquisition at ICC.

The casino saw interest from tribes that sought to open the first casino resort in Las Vegas entirely owned and operated by a Native American tribe.

Tribal-owned

“Owning a casino resort in the entertainment and gaming mecca of Las Vegas was a long-term vision realised as part of the Tribe’s investment and diversification strategy,” said Vosloo.

“At the International Casino Conference, we will be sharing the story of the San Manuel Band of Mission Indians and how they made history by becoming the first Native American tribe to wholly own and operate a casino resort in Las Vegas.”

Reflecting on the logistical challenges involved on the project, Murphey said: “Our team opened Palms in less than four months —a period which included sourcing, hiring, and training 1,200 exceptional team members; overcoming strategic sourcing and supply chain issues and dealing with unknowns that we encountered as the first tribal entity to own and operate a casino resort in Las Vegas.”

“We are grateful that so many original Palms team members re-joined our team at opening. Team members expressed their desire to return because of the magic they feel when working here together. Their energy and enthusiasm are the reasons Palms continues to thrive.”

ICE London 2023 will take place from 7-9 February. Click here to register.

Over the week starting 30 January, iGB will release H2 Gambling Capital’s latest in-depth analysis of the US sports betting market. Read part one here.

H2 Gambling Capital have assessed the major trends and developments of the past year of US sports betting which has seen over $85bn legal bets made across 33 states – 90% of which has taken place online.

The gross win generated over the same period totals over $6.3bn but H2 estimates that free-bets make up around 39% of this, indicating that net win came in at $3.8bn.

Commercially regulated sports betting is now available to 43% of the US adult population across 26 states which have a combined GDP of over $10tn. With this considered, H2 estimates that the average gross win per adult over the past 12 months is around $60 with actual net win around $37.

While the growth of US sports betting has been very strong since 2018, the market still remains relatively small in the global context, with substantial runway for future growth.

US betting in its infancy

H2 forecasts the US sports betting market to grow by 50% year on year in 2022, and then more than double between 2022 and 2027.

However, this would still equate to only 17% of the global sports betting market, whereas it currently accounts for 50% of the land based global gaming market gross win and over 30% of the land based global lottery market gross win. 

US vs non-US sports betting gross win ($bn)

Looking ahead, H2 forecasts US sports betting gross win to reach $23.2bn by 2030. In terms of confidence in future forecasts, H2 has not had to alter its forecasts on the US sports betting market by more than 5% in any of the past 4 years, when excluding the impact of the Covid-19 pandemic in 2020, a significant uptick in free bet activity in 2021 and the pushing back of a handful of new state launches in 2022. 

While it is impossible to forecast a ‘black swan’ event such as the pandemic, H2 believes that promotional activity has now become more rational. And although the timing of new state launches is inherently subjective and potentially subject to change, 57% of our projected future growth is from states where sports betting is already legal. Only 43% of the market growth will come from states where sports betting is expected to legalise in the coming years.

Live betting to drive future growth?

One of the key drivers of growth going forward is expected to be the higher adoption of in-play wagering in the US. The focus of US sports betting operators over the past year has been on parlay wagering, which accounted for 15% of handle but, due to its stronger hold margin of c20%, made up 37% of gross win. 

However, H2’s analysis suggests the driver of gross win is repetitive wagering opportunities rather than hold margin. This is evidenced by the higher average spend of igaming over sports betting.

iGaming is a high turnover, low margin product, and the average annualised gross win per adult in states where igaming is legal in the US is currently at c$160, compared to c$60 for sports betting.

In-play betting accounts for well over 50% of betting activity in Europe. Data reported in Oregon suggests it is similarly popular in the US market, accounting for 49% of handle – although in-play betting on US sports is currently lower than this, with the overall market number inflated by tennis and soccer. Given the stop-start nature of US sports H2 expect that over 80% of US Sports betting handle could come from in-play bets going forward. 

A new variation on live betting?

Micro betting could be a key driver to increase in-play wagering of US sports to levels of that seen in Europe for basketball and tennis, with the majority of wagering activity being incremental to existing spend. H2 estimates that micro betting could generate up to $3.3bn of gross win by 2025, with the base case being $2.5bn of gross win.

The battle for market share in the US has been fierce but a clear winner has emerged in the online arena over the past 12 months. H2 Gambling Capital produces state by state, monthly online, retail and total US sports betting market share data by operator, utilising state reported data and estimates for states where data isn’t reported, as well as incorporating company reported data. 

FanDuel has gained a substantial lead in online gross win market share thanks to its superior parlay product and arguably best in class risk management which deliver a structurally higher margin than its competitors. When looking at net win, its lead is even greater. 

The factors that shape US sports betting’s future

However, market share can change over time, and H2 believes that there are three events that could drive material change in the market:

a change in market dynamics as operators look to shift from top line growth to profitability, leading to a reduction in promotional spend and potentially lower investment in product by some operators in an attempt to balance the booksthe increasing sophistication of customers, meaning that product becomes even more important than promotions or brand – this could be driven by the growing significance of a strong and diverse in-play product offering / micro-bettingM&A activity to generate scale through inorganic means

Sports betting is now legal in some form in 33 states, and $85bn of legal wagers have been made with licensed US sportsbooks in the past 12 months.

Jump to:

Sports betting gross win per adult

Free bets

By sport analysis

Bet type analysis

Despite a handful of states only allowing retail sports betting, over 90% of handle is generated through online / mobile sports betting.

In terms of gross win / customer losses, US licensed sportsbooks have generated over $6.3bn in gross win (handle less prizes paid out) over the past 12 months, with just under 90% of this generated through online / mobile channels.

However, we note that gross win figures include free bets, so the actual net win (the actual customer losses) is much lower than this.

The hold margin can vary substantially on a month-by-month basis, due to sporting results (predominantly driven by the number of favourites winning, although other factors such as odds promotions can also have a significant impact).

Generally, retail has a higher hold margin than online, due to the type of bets placed (more parlays / less in-play in retail) and the relative lack of competition (retail has a more captive audience). 

However, the differential between the two channels has narrowed, with the average retail hold margin over the past 12 months of 8.7% only 130 basis points higher than the average online hold margin of 7.4% over the same period.

Speed of roll-out

33 states have some form of sports betting – including states where there is only retail sports betting on tribal reservations.

In terms of the commercially regulated market, legal sports betting has launched in 26 states. Combined, these states have an adult population of over 100 million, or c.43% of the total US adult population.

In terms of the wealth of these states, commercially regulated sports betting states have a combined GDP of over $10tn, or c.42% of total US GDP

Sports betting gross win per adult 

Monthly sports betting gross win can vary substantially, based on seasonality and the hold margin (primarily driven by sports results).

Therefore, to smooth out these monthly changes, we show the legal sports betting gross win using a 3-month average gross win, and then multiply this by 12 to get an annualised figure. When dividing by the total number of adults in states where sports betting is legal, this equates to annual gross win of c.$60 per adult.

Free bets

Reported gross win data includes free bets, which are substantially higher in the US than elsewhere, given the high levels of competition in newly regulated states and the importance of market share / scale in terms of long-term profitability.

In European markets, one may expect free bets to equate to c.10-15% of gross win, or c.1% of handle. However, H2’s analysis shows that the US we have seen free bets substantially higher than this, artificially inflating the market size.

Over the past 12 months, sports betting free bets (in states where this is reported) have averaged 39% of gross win and 3.2% of handle. That is to say that actual customer losses in the past year are c.39% lower than the reported market gross win.

Free bets in decline?

However, investor pressure on operators to show a path to profitability has led to a reduction in promotional activity. Therefore, we have seen a reduction in free bet percentage in 2022 compared to 2021.

We caution that when looking at free bets as a % of gross win, individual monthly data can be influenced by the hold margin. In that sense, the June 2022 free bets data looks higher than it actually is, and the September free bets look a lot lower, due to the higher-than-normal gross win on the back of very favourable sports results.

By sport analysis

The US sports betting market is dominated by three sports – Football, Basketball and Baseball – although the timings of each of the seasons means that the split of betting between these sports varies significantly throughout the year.

On average, these sports represent c.80% of total handle throughout the year – although during Q2 / Q3 2020, this was significantly lower as major sporting events were cancelled.

While the basketball season starts in October, there is strong competition with the NFL during calendar Q4, and therefore it is not until the first calendar quarter of the year when basketball becomes the dominant product for sports betting, culminating in the ‘March Madness’ college basketball finals.

This changes towards the middle of the year when baseball takes over as the dominant product, filling the gap between the end of the basketball season and the start of the football season. However, as we get to the end of calendar Q3, football becomes the focal point, with the NFL / college football generating the majority of operator gross win from October to January.

The seasonality of the sporting calendar means that inevitably some parts of the year have a greater impact on sports betting operators than other parts – however there are also arguably three key events in the sporting calendar when competition intensifies. These are the start of the NFL season in September, the Super Bowl in February and the College Basketball Championship (March Madness) in March.

Super Bowl dominates

The Super Bowl generates the highest wagering on a single game in the United States, generating just over $1bn in legal wagering in the U.S. in 2022. This equates to c.7% of total NFL wagering, despite accounting for less than 0.4% of total games – or c.5% of total football wagering (including college football) despite accounting for just 0.1% of all games.

March Madness is the single largest wagering event in the United States, generating c.$3bn of legal wagering in the U.S. in 2022. This equates to c.10% of total basketball wagering (including all NBA wagering) despite accounting for only 67 games out of over 7,000 a year – the equivalent of 10% of wagering from c.1% of games. 

The start of the NFL season also sees operators increase promotional activity, as it is viewed as a key opportunity for new sign-ups.

Outside of these three main periods, there are other one-off events that can be used as acquisition tools. One of which is the FIFA 2022 World Cup, for which the US soccer team qualified. While soccer is a minor sport in terms of wagering, it is the largest event globally in terms of wagering, and H2 estimated that it could generate c.$0.5bn of handle – depending on how far the US team progress in the tournament. Flutter, for example, have stated that the US winning the World Cup represents their greatest liability for the tournament, although this is in a large part due to the long odds of 125/1.

Bet type analysis

Betting can be broadly split between two different bet types – single bets and parlays.

Single bets are a based on a single outcome – for example the winner of a match. Parlay bets (also known in Europe as accumulators or multiple bets) are based on the results of multiple outcomes – such as the winner of 3 separate matches

Parlay bets can lead to significantly higher winnings for customers, as the winnings from the first bet is effectively used as the handle amount for the second bet and so on – and are therefore attractive in terms of potential winnings versus initial stake. However, they are also more profitable for operators, having a higher hold margin.

Over the past year, parlays have accounted for c.15% of US sports betting handle, but given the higher hold margin, they have accounted for c.37% of operator gross win.

The average hold margin of a parlay bet over the past year is 20% – meaning that an operator will on average keep 20% of all parlay wagers – compared to just 5.7% for single bets. Given the relative proportion of single vs parlay wagers, this has led to an overall merged hold margin of c.7.7% over this period.

Oregon has split out data between pre-match bets and in-play bets (wagers made after an event has started).

Low hold margin for live betting

In Europe, in-play is an incredibly popular product, accounting for well over 50% of all betting activity. In the US, according to data from Oregon, in-play accounted for just under 50% of total handle in 2021, and c.44% of gross win.

The lower gross win percentage is due to the generally lower hold margin for in-play betting – which itself is partly due to the fact that the majority of in-play bets are singles, compared to pre-match bets which are often parlays.

In Oregon, the average in-play hold margin in 2021 was 7.9% compared to an average pre-match margin of 10.6%, and overall hold margin of 9.3%. This is higher than the 7.7% referenced when comparing parlays vs single bets as the hold margin in Oregon is generally higher than elsewhere as there is a monopoly online operator in the State, and therefore it does not need to use pricing as a competition mechanism.

Entain’s announcement did not come as a surprise. The company warned that it would withdraw from grey markets in November 2020, when it announced that it would only operate in regulated markets by the end of 2023.

Since then, Entain has withdrawn from a number of unregulated areas, placing pressure on those same markets to regulate or lose potential business from heavy-hitters like Entain.

This new effort would see Entain exit markets such as Brazil sooner rather than later. While support for sports betting there has been rife, there have been no successful attempts at legalising online gaming in the country. 

Whether purposefully or not, this decision to withdraw from markets that are steeped in the often arduous process of regulating could see other operators be persuaded to cut their losses. 

Under the influence 

Operating in grey markets is a calculated risk. From this viewpoint, Entain’s decision to withdraw is a logical one. 

For one, authorities in many grey markets are cracking down on unregulated and unlicensed operations, with dire financial and reputational consequences for operators. In November 2022, the Dutch government announced that eight operators were under tax investigation pertaining to activities in the country before the regulated market opened. 

Also last year, in Norway, Kindred and the country’s regulator were trapped in a bitter back-and-forth as Kindred was issued fines for allegedly operating there, even though it doesn’t have a licence. 

It is important to note that Entain said it would exit unregulated markets “where it no longer sees a path to domestic regulation”. When taking into account the perilousness of grey market, this is reasonable.  

But whether Entain means to become an outlier, or wishes to be the leaders of a movement, remains to be seen. What is undeniable is the influence this will have on the rest of the industry – for better or for worse. 

Moneymaker 

Whether the industry chooses to address it or not, operators can make a considerable profit in grey markets, even considering the potential sanctions. Many find it fruitless to exit them for this very reason.

Often, the amount of profit and exposure grey markets can offer operators – whether morally or legally right – outweighs any potential punishments like fines.

The recent example of the Netherlands provides a look into the potential outcome of exiting a grey market. Operators were forced to withdraw from the market for a time in late 2021, as the country regulated and mandated that all operators must have a licence to conduct business in its market.  

The forced exit delivered a blow to some of the biggest companies in igaming. Flutter estimated that the withdrawal would cost £50m, while the exit contributed largely to Kindred’s 30% revenue drop in Q1 2022.  

Trendsetters 

Meanwhile, in the markets Entain will remain in, it has been making an increasing effort to solidify its presence. 

In November 2022, in Croatia, it acquired sportsbook operator SuperSport Group. Meanwhile, in December, it relaunched its esports betting brand Unikrn with the aim of focusing on fully regulated markets. 

These moves ring true to Entain’s success in regulated countries, and why it is aiming to slim down its reach. After all, in 2021, Entain reported that 99% of its revenue came from regulated markets. 

But for a company as large as Entain, it is possible that this move could encourage others to follow in their footsteps. Whether this could speed up the regulation process in some markets, or discourage them from continuing down that path, remains to be seen. 

On the other hand, Entain could simply be viewing a gap in the market. It is exceedingly rare that other operators would announce their departure from unregulated markets, let alone set a three-year long timer into motion to make it happen. 

Whether this slimdown of its market presence is a practical move on Entain’s part, or an attempt to be ahead of the posse, the decision is set to push grey markets to the forefront of the industry’s mind.  

Under the agreement, Stake will serve as Alfa Romeo’s new title sponsor, with the team to be known as Alfa Romeo F1 Team Stake for at least the 2023 Formula One season.

Stake will work with the team to develop focused activations for races in countries around the world, with the 2023 season to feature 24 races across 22 countries.

The operator said these activities could include special car livery in the brand’s key markets and street-demos.

“Formula One has seen a huge increase in interest over the last few years and the arrival of brands such as Stake are representative of the massive exposure our sport can offer,” Sauber Group chief executive Andreas Seidl said.

“We are excited to join such a portfolio of sports and entertainment brands and we’re looking forward to the activation programme that Stake will unveil for our fans.”

Stake co-founder Bijan Tehrani added: “Alfa Romeo F1 Team Stake will expand our opportunities for fan engagement through brand integration and activation. We are fully committed to enhancing race weekends by creating unique experiences for all Alfa Romeo F1 Team Stake fans, growing audience engagement in the digital arena.”

The new partnership represents Stake’s latest commercial deal in the sports industry, with the brand also having deals in place with other properties such as English Premier League football club Everton and mixed martial arts organisation the Ultimate Fighting Championship.  

Earlier this month, Stake also expanded its live streaming capabilities for the English FA Cup and agreed partnerships with three lower-league clubs competing in the competition.

Stake partnered with three lower-league sides that played top-tier Premier League clubs in the third round, including Cardiff City of the Championship, League One’s Sheffield Wednesday and Gillingham from League Two.

Under the agreement, which will run for an initial five years, GiG will supply Playr.bet with its platform account management (PAM) to support the brand and Joy with expansion plans in the online casino market.

GiG’s PAM, which can also be used in the land-based sector, allows operators to personalise the customer’s experience in each regulated market where the operator is active.

“This is a new venture into an unknown vertical for us and it was clear from the start that GiG’s technology would enable us to access the opportunities inherent within our existing customer base,” Joy director Luis Fernando said.

“What was also clear throughout the process was GiG’s capacity to help us understand the challenges ahead of us, and moreover, to help us overcome them.”

GiG chief executive Richard Brown added: “Delivering new revenue streams for organisations with established online customers is at the core of what we can offer. Whilst remaining committed to the principles of not resting on our successes, we can take pride in the continued strength of our technology and on the strength of the relationships we’ve built with our partners.”

The deal comes after GiG this week also struck a head of terms agreement with an unnamed European land-based operator to support its online expansion plans.

GiG will provide the operator with its player account management platform (PAM), front-end delivery and content management system (CMS).

GiG said the deal with the operator, which has been active in the live casino sector for more than 25 years, will run for an initial five-year period. 

In his new role, Foster will support Enteractive with its plans to expand into more regulated markets around the world, reporting to chief business officer Andrew Foster.

Foster joined Enteractive after two-and-a-half years with iGaming Group, where he served as commercial manager and head of games for aggregation and white label sales.

Prior to this, Foster was the business development manager at Golden Innovations, while he also had spells as sales manager for Azure Malta, head of sales for socialite B2B at Clear Channel and sales manager at Absolute World.

“Enteractive has built a superb offering to help operators both large and small around the world to generate increased revenues through the activation and retention of more active players,” Foster said.

“2023 looks set to be a busy year for the industry, and that means more opportunity for Enteractive to deliver our unique services to new clients across multiple markets. I’m excited to join the leading player in this field.”

CBO Foster added: “In the last year Enteractive has experienced phenomenal growth in new markets around the world, and our B2B team will benefit from an extra pair of hands at the helm to service this increased demand for our services.   

“With the combination of John’s sales and igaming industry experience, we’re excited for him to join our B2B team and drive our ongoing growth in Europe and Asia in 2023.”