KEIRETSU, BETTOR FATIGUE AND LTV

BestOdds Co-Founder Will Armitage joins Tim Poole on the Huddle to discuss the US affiliate market at large, from M&A to microbetting and more.

Will, it’s been about two years since we first met over Zoom, so it’s great to finally meet in person! How are things going, first of all for BestOdds, in terms of markets, finances and that kind of thing?

Exciting times ahead for BestOdds. Our website has been live for about 16 months now and we’ve finally hit that threshold of profitability. We want to scale and keep growing to become a dominant player for our global ambitions.

Obviously there will be some kind of organic growth there, but I know you have an update for us in the M&A department as well.

Correct. We’ve made an acquisition stateside for BetPrep, which was a platform created probably about 2.5 years ago by a whiz in the financial space. It was a trader, and a bit like Victor Kiam with Remington, he loved it so much he bought it. But he actually built his own research hub, selecting products and tools, and back-testing all manner of features.

This is all part of a big rollout and we’re very much integrating it and then repurposing it slightly, towards the BestOdds brand and image. We are then building out a subscription model targeting the US audience; with tools, research, props, picks, parties and all manner of exciting things for the US bettor, no matter where they are in terms of knowledge.

Congratulations on that deal. Obviously M&A is very frequent within iGaming. But I think more recently, there has been more and more of it in the affiliate world. I’m very keen to ask you about the news that Better Collective acquired a >5% position in traditional rival Catena Media. I wanted to ask your thoughts as an objective viewer within the sector.

As a sort of comparative newbie in this space, as an independent brand you admire and look up to brands such as those and the term is ‘super affiliate.’ The idea of potentially having a ‘super super affiliate’ is a bit perturbing, I have to say. I think one has to forge his own path and try not to be distracted by that. But, as somebody who dibbles and dabbles with investing on the side, as well? I’m intrigued by the rationale behind it and whether it’s a keiretsu-type investment… is it both sides investing in the other?

I’ve heard nothing about the idea of Catena investing in the other side. What is the ulterior motive and purpose of that? I saw momentarily the CEO of Better Collective walking past and I couldn’t quite grab him in time, but I’d be intrigued as to what is the mindset of that. Are they thinking, okay the share price is down, but it’s a value trade? Could this be a mega dance partner that would leave the rest of the industry quaking in their shoes? If it transpires, have we got to up our game? Yeah, absolutely.

I want to talk about the US next, because those two super affiliates are big in North America – and I know you guys are targeting a lot of traffic here, as well as being operational in New York. When we last spoke, we discussed microbetting. I love the fact that you’re of the opposite opinion to many on this topic. Could you briefly just remind us of your thoughts on it?

So it’s an interesting space. My career prior to moving to the affiliate space was in the online trading world, with a company called IG. Back then, we were at the very forefront of something called binary betting; it became a major global product when we first started with the idea. The idea was not what would the FTSE do within two years, it was what would it do in the course of the next minute? And I think in terms of one’s concentration span, we struggle and this is just too intense.

I think the user will look at that and think, oh, novelty, that’s great: let’s do this, put some money down, have a crack and see what happens. And you just get fatigued. This is my hypothesis. I could be proved wrong. And who knows? I love being proved wrong normally. But sometimes you can analyze other industries and how you can draw parallels to it. I’d hazard that you look at this and think: 'Do I really need to see what the next pitch is going to be for three hours or four hours of a game?' It’s too much.

It will be interesting to see how the numbers play out, because I very much take that point on board. It’s something I’ve put to microbetting proponents – but they’re still excited. It may well be that there will be this huge early profit maximization and then things slow down as companies feel they’ve already made their money. I know there’s the concept of ‘TikTokification,’ with sports betting names like Jake Paul getting involved...

I wonder what the LTV (lifetime value) will be like, as one spends a lot attracting a customer. The more valuable a customer, the better for everybody. You want them to last a long time. They come in, explode, implode, gone. And yes, some businesses have been very, very good in the digital space. But I think there’s been more demand for actual longer-standing relationships.

Could that be the key to where the US iGaming and sports betting markets are heading? There is, of course, this massive focus on acquisition – and you’ve got crazy bonus offers, betting nothing and getting $200 free. Is too much of a focus on acquisition and not necessarily retention the key hurdle to overcome in the US? Correct. Though I would hazard in terms of the whole bonus piece, it has somewhat been tempered. You’re not seeing quite the lunatic ones we saw last year or 15, 16 months ago. However, they are still spending a huge amount to acquire their customers. They don’t know the lands and there can be conundrums for all those in the finance department thinking: 'Are we overspending for our customer at the moment?'

I’ll give you a final word from BestOdds on US gaming and open the floor up to you on 2023. What are you aiming for and what do you expect to see change in the industry? Will we, in fact, see much more of the same this year?

I think 2023 will be much more of the same, as I think what we’ll have in 2024 onwards is the excitement and buzz around will it be California, Florida, Texas? Because that will be revolutionary. But, for the time being, for us as a business, it’s integrating BetPrep, becoming much more of a destination and giving people that reason to keep returning to BestOdds.

… And hopefully lowering the tax rate in New York – obviously, you can’t do that yourself!

I know the lobbyists are trying to make it happen, but it’s a tough gig. That’s a tough game. It’s hard to get a regulator to recognize they’ve made a mistake and reverse their decision.

Will, fascinating as always to speak to you. Thanks verymuch for coming down.