In focus: Kambi Harnessing the power of third-generation sports trading

Successfully launched for the 2022 FIFA World Cup, Simon Noy, SVP Trading at Kambi, explores how fully automated algorithmic trading is revolutionising the sportsbook, alongside its implications for front-end delivery

The buzz and enthusiasm for artificial intelligence and algorithm-driven products throughout the entire spectrum of the technology sector has been unmissable over recent months. Conversations around the potential of AI and machine learning were common through the halls of recent conferences such as G2E and ICE London, and as the scale of the sportsbook offering expands, the potential such solutions carry to evolve the landscape of the sports betting industry is beyond question.

At Kambi’s Capital Markets Day in January, the Group expanded on the concept of the ‘limitless sportsbook.’ End-user behaviour is increasingly focusing on products that essentially only complex algorithms and AI are capable of delivering, and as the scope of the offering grows, presenting this content in more engaging, entertaining and seamless ways to the bettor will be crucial to ensure a satisfying consumer experience.

Core to delivering the limitless sportsbook is the company’s third-generation algorithmic trading capability.

What is third-generation trading?

In simple terms, algorithmic trading means the pricing and changing of odds without human intervention. Having been in development for several years, the growth in computing power, the richness and depth of available data and the strength of Kambi’s algorithms and modelling have enabled us to bring to the market the next generation of trading capability – a shift from machine-assisted human trading (second-generation/industry standard) to human-assisted machine trading (third-generation/Kambi standard).

To this point, a great deal of sportsbook product creation has been guided by a trading department’s ability to price and risk manage certain bet offers. Algorithmic trading removes these limitations, while also enabling human expertise to be leveraged more effectively, deployed to those decisions where it can have the greatest impact.

Trading with algorithms – true automation – enables us to greatly expand the number of available bet offers, fuel the creation of new products and expand the breadth of the combinability we are able to offer through the Kambi sportsbook. Now available across all top football leagues and set to be rolled out across other data-rich leagues and sports, the technology was successfully launched ahead of the 2022 FIFA World Cup, stress-tested at scale in powering Kambi’s entire pre-match offering.

Underlining its effectiveness, we were able to have a full pre-event offering for the knockout rounds – something which would normally take a sportsbook several hours – ready within 90 seconds of the final whistle being blown in the group stages. Furthermore, the proportion of Bet Builders placed as a percentage of total bets was up 50% compared to UEFA Euro 2020, highlighting the importance of the enhanced combinability that Kambi’s third-generation trading unlocks.

Algorithmic trading is now driving around two-thirds of pre-match soccer turnover, and this figure is only increasing.

The importance of front-end expertise

As previously alluded to, the capabilities that algorithmic trading affords the sportsbook in terms of creating new products and enhancing combinability, so that the right bet can be presented to the end user at the right time, heralds a unique set of challenges from the perspective of sportsbook packaging; and how we present the offering to the end user. As the offering expands, the traditional, spreadsheetstyle sportsbook UX will increasingly struggle to present the offering to end users in a digestible way.

As such, expertise in front-end delivery has never been more crucial. The product needs more focus on personalisation and engagement features than ever before, to both attract players and see them retained in the long-term. This was a crucial factor in bringing the industry’s leading providers of front-end technology, Shape

Games, into the Kambi Group in 2022. The fully native nature of Shape’s technology means it can cater effectively to operators’ intensifying demands across areas such as differentiation, personalisation and empowerment, and as regulation expands across the globe, a front-end which can offer the highest levels of flexibility and customisation will be increasingly critical. Third-generation trading, and its implications for product creation and front-end delivery are vast and here to stay. This progression in trading automation through AI and powerful algorithms will be the standard in years to come, and as the richness of data grows alongside this, second-generation trading will struggle to keep pace with the products third-generation trading can unlock. Operators cannot afford to risk playing catch up as player expectations and behaviours continue to evolve.