Gambling Insider Sports Betting Focus H2 2020

SPORTS BETTING FOCUS

INSIDE: • Esports focus • Virtuals in retail • No crowd? No problem • US market update

November 2020

Patience & discipline Elys Game Technology chairman & CEO Michele Ciavarella talks us through the company’s long journey

EDITOR’S LETTER

COO, EDITOR IN CHIEF Julian Perry EDITOR Carl Friedmann Carl.Friedmann@gamblinginsider.com Tel: +44 (0) 207 739 9908 SENIOR STAFF WRITER Tim Poole Tim.Poole@gamblinginsider.com STAFF WRITERS Owain Flanders Owain.Flanders@gamblinginsider.com Iqbal Johal Iqbal.Johal@gamblinginsider.com Ezra Amacher Ezra.Amacher@gamingamerica.com Peter Lynch Peter.Lynch@gamblinginsider.com

Julian Perry, COO, Editor in Chief

Carl Friedmann, Editor

Once sport and sports betting were all but smothered in the spring due to the pandemic, we all scrambled to fill the void somehow. Revisiting particularly glorious matches, with stands filled to capacity, satisfied some sense of nostalgia; but the itch for some action went unscratched. Sure, some sports betting companies saw opportunities and diversified with virtuals and esport offerings, and niche sports served as a form of betting life support, but it was never going to measure up or sustain against the variation and need to immerse in the top-flight leagues. Then the Bundesliga resumed matches in June and the rest of the majors followed suit in the following months. And now we’re getting accustomed to shifts in betting trends that reflect our current circumstances: the effect of abbreviated seasons, is home advantage moot without fan support, and so on. But the bigger picture is that sports betting, especially in the US, is trending upward: especially online.

In fact, with the return of major league sports, New Jersey set a national record for the highest-ever monthly sports betting handle, with data from the New Jersey Division of Gaming Enforcement showing $748.5m in sports betting wagers for September, and that’s without college sports in the picture. There’s no guarantee that 2021 will deliver sport to normal, but despite the setbacks of this year, the industry has been able to rigourously adapt to its steady return. And although we’re still aching for more, we certainly wouldn’t expect anything less.

CONTRIBUTING THIS ISSUE

LEAD DESIGNER Laura Fogar DESIGNERS Olesya Adamska DESIGN ASSISTANTS Radostina Mihaylova, Aimee Matthews, Aleksandra Cakikj, Veronika Fukita MARKETING & EVENTS MANAGER Mariya Savova FINANCE & ADMINISTRATION ASSISTANT Dalia Ambrazaite IT MANAGER Tom Powling COMMERCIAL DIRECTOR Deepak Malkani Deepak.Malkani@gamblinginsider.com Tel: +44 (0)20 7729 6279 EVENTS SALES MANAGER Ryan Horwood Ryan@globalgamingawards.com +44 (0) 208 638 7610 SENIOR ACCOUNT MANAGER William Aderele William.Aderele@gamblinginsider.com Tel: +44 (0)20 7739 2062 ACCOUNT MANAGERS Michael Juqula Michael.Juqula@gamblinginsider.com Tel: +44 (0)20 3487 0498 Clive Waite Clive.Waite@gamblinginsider.com Tel: +44 (0)20 7729 0643 Richard Carr Richard.Carr@gamblinginsider.com Tel: +44 (0) 203 435 5624 Nitesh Patel Nitesh.Patel@gamblinginsider.com Tel: +44 (0) 207 739 5768 Martin Dilleigh Martin.Dilleigh@gamblinginsider.com Tel: +44 (0) 203 435 5628 US BUSINESS DEVELOPMENT MANAGER Aaron Harvey Aaron.Harvey@playerspublishing.com Tel: +1 702 425 7818 US ACCOUNT MANAGER Erica Clark Erica.Clark@playerspublishing.com Tel: +1 702 430 1912 CREDIT MANAGER Rachel Voit WITH THANKS TO: Benjamin Cronin, Quentin Martin, Araksi Sargsyan, Steve Rogers, Mike Ciavarella, David Sargeant, Dominik Beier, Lee Richardson, Aubrey Levy

DAVID SARGEANT

iGaming Ideas

DOMINIK BEIER

Former Interwetten speaker of the board

Gambling Insider magazine ISSN 2043-9466 Produced and published

by Players Publishing Ltd All material is strictly copyrighted and all rights reserved. Reproduction without permission is forbidden. Every care is taken in compiling the contents of Gambling Insider but we assume no responsibility for the effects arising therefrom. The views expressed are not necessarily those of the publisher.

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CONTENTS 08 COMMENT

Tim Poole reflects on the continued ingenuity behind Paddy Power’s sports betting marketing

10 ESPORTS: PINNACLE

Operator Pinnacle assesses the upward trajectory of esports betting and how this has been accelerated by the pandemic

12 ESPORTS: LUCKBOX

Luckbox CEO Quentin Martin speaks about his journey from gamer to CEO

14 VIRTUAL SPORTS IN RETAIL Iqbal Johal explores the importance of the vertical to betting shops and how virtual gaming can help the land-based sector

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16 NO CROWDS

Owain Flanders assesses how sports betting firms have been faring, as major leagues return without crowds in attendance

18 US SPORTS BETTING

Gambling Insider reviews this year’s developments in the US sports betting market, of which there were plenty, with contributions from David Sargeant of iGaming Ideas

20 COVER FEATURE

Elys Game Technology chairman and CEO Michele Ciavarella talks Tim Poole through his journey from ice hockey coach to the sports wagering industry, with the sports betting firm now publicly listed

26 SPORTS BETTING SPONSORSHIP

Iqbal Johal looks into sports betting sponsorships within the UK market, with the help of former Interwetten speaker of the board Dominik Beier

30 LEE RICHARDSON

We recap our GI Huddle podcast with Gaming Economics CEO Lee Richardson, who reflects on the state of the US sports betting scene following the Caesars-William Hill merger

34 FINAL WORD: THESCORE Aubrey Levy, VP of content & marketing at theScore Bet, discusses all things promotions and bonuses

COMMENT

TIM POOLE

The power of PR Tim Poole explains why Paddy Power is still a cut above its competitors in the marketing department

It was classic Paddy Power, much to the despair of Fulham fans, as the operator paid out on the football club being relegated just three matches into the Premier League season. So much so that the phrase ‘classic Paddy Power’ has now become a cliché. It’s not the first time the brand has stood out with its purposely mischievous marketing methods, nor will it be the last. And for Fulham supporters, it was simply another nail in the coffin.

The newly promoted side had just lost its third match on the bounce, a 3-0 reverse at home to Aston Villa, and everyone from Gambling Insider staff to Sky Sports pundits were declaring the team already relegated. Turning that into a betting opportunity is a tough sell for any sportsbook. So why not turn it into a marketing opportunity, Lee Price, the head of PR & mischief (a genuine job title for those unfamiliar with how seriously Paddy Power takes its troublemaking tactics), presumably thought to himself. Et voila, the Flutter Entertainment-owned company paid out on all bets for Fulham to be relegated with a full 35 Fulham games to spare. Approximately 350 Premier League matches to spare overall.

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It was the second-earliest stage at which Paddy Power has paid out on relegation, showing this is no fluke and that the operator has history here. Nor is it Paddy Power’s only recent example of grabbing the headlines in football, with the brand championing its ‘unsponsorship’ campaign in 2019. Here, Paddy Power was praised for its anti-sponsorship message in football, partnering with a number of lower-profile clubs and keeping their football shirts bereft of any gambling logos. Of course, this was in my eyes a disingenuous move as the unsponsorship was a sponsorship in all but name. I wrote as such at the time and raised the issue at a sports betting conference to find I was far from alone in holding that opinion.

But the genius of the idea did not fly over my head. There, Paddy Power created the opportunity to generate the kind of headlines a bog-standard agreement with a top Premier League club simply could not rival. Crucially, it achieved this without the huge cost associated with a bog-standard agreement with a top Premier League club. Fast forward and the brand’s Fulham payout has been equally effective in generating headlines

TIM POOLE

and creating a buzz. As has its promise to plant 6,000 trees every time Arsenal fails to win – and many similar examples.

It doesn’t matter that Paddy Power has potentially lost money it needn’t have if Fulham stays up. The last time the operator used this tactic, it actually did lose money as its erstwhile victim, Stoke City, did survive relegation. Instead, the long-term effects are the KPIs here. How many times was Paddy Power mentioned on Twitter, WhatsApp and sports blogs globally? How many times will Paddy Power be mentioned in conversation when Fulham comes up as a topic? How many mentions will Paddy Power receive from Fulham fans as the relegation battle intensifies, whether the club stays up or not? It’s a win-win.

Ultimately, this all helps entice a potential sports bettor to wager with the brand. In a sports betting market where there are limited avenues in which to truly stand out, Paddy Power continues to find simple yet effective ways of doing just that. Just as a player might see the short odds offered on Fulham to be relegated and not give the selection another thought, a sportsbook would be expected to look elsewhere to attract media attention and new customers. Paddy Power, however, preferred to muscle in on a trending topic and add its own headlines to the mix. Bravo.

Over the years, this kind of different thinking has helped keep Paddy Power relevant and given it a strong degree of independence against UK stalwarts such as Bet365, William Hill, Ladbrokes Coral and more. Since its merger with Betfair, though, and subsequent M&A that has brought Sky Betting & Gaming under the Flutter umbrella, this strategy is no less vital to the strength of its brand.

True, there’s one less competitor in Sky Bet, but Bet365 and GVC Holdings (owner of Ladbrokes Coral and several other brands) show no signs of abating, while 888 Holdings has been touted as a potential acquirer of William Hill’s European-facing assets. So Paddy Power’s rich history of gasp, laugh or rage-inducing marketing ploys is just as important to the heart of the organisation now as it ever was.

COMMENT

It’s true the operator is hardly the inventor of such techniques, nor does it monopolise the ability to produce early payouts. Betfred co-founder Fred Done is another prolific user of this particular method, famously paying out on Manchester United to win the Premier League before Arsenal won the title in 1998, and then doing the same as Manchester City clinched the title on the last day in 2012.

He did so again (correctly) last season, this time paying out on Liverpool to become champion in December.

Yet with Paddy Power and its department of mischief, you simply get the whole package. If there was an award for best sports betting operator marketing and PR (a real one without the trophy going to the highest bidder), Paddy Power would win every time. From its empty open-top bus parade to celebrate the number of Premier League footballers to have come out as gay (zero), to its Rhodri Giggs advert about loyalty being dead – still I believe the finest advert of any kind I’ve ever seen – Paddy Power remains in a class of its own.

Fulham fans such as BBC presenter Richard Osman may be far from enamoured with the firm’s confidence in their club’s failure, but every sports bettor who backed the team for relegation will undoubtedly be delighted they bet with Paddy Power. It’s not always ethical; it’s not always politically correct. But it does usually work and, as we come full circle, it’s always classic Paddy Power.

Richard Osman GAMBLINGINSIDER.COM

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FEATURES

PINNACLE

Onwards and upwards Benjamin Cronin, head of content marketing at Pinnacle Sports, assesses the upward trajectory of esports betting and how this has been accelerated by the COVID-19 pandemic

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Thinking back to the start of this year, it’s hard to imagine anyone out there could have predicted the situation we currently find ourselves in. Depending on where you live in the world, you will have experienced the impact of COVID-19 in varying degrees. Additionally, different industries have had to try and find their own solutions to the wide-ranging problems caused by a global pandemic. Companies such as Zoom, Netflix and Amazon were destined to succeed during these tough times, while other companies, particularly those in the hospitality or arts sectors, have faced a massive challenge.

The online betting industry finds itself somewhere in the middle. The postponement of all sporting events meant there was very little to offer in terms of betting; but the majority of operators had their online casino offering to fall back on to fill the void left by no sport and to provide their customers with a source of entertainment. Some operators were also fortunate enough to have another tool in their arsenal to help engage with their customers: esports.

Esports, previously known as ‘competitive gaming’ and confined to a very small community of enthusiasts, has actually

PINNACLE been around since the 1980s and the days of Space Invaders. However, it is only really over the last decade that esports has made its way into the mainstream. Now almost every major operator will post odds for the biggest esports events as a minimum. While esports betting has been on a solid upward trajectory for many years, 2020 has been its biggest yet and a lot of that is down to COVID-19.

The vertical as a whole is now a billion-dollar industry, with a global audience of over 500 million people.

The revenue generated by the industry increased over 45% between 2017 and 2019, with the fan base more than doubling (208%) over the same period.

It’s clear more people are interested in esports, more companies want to invest in it and, most importantly for operators, more people are betting on it. One operator has seen a 28% increase in esports bets placed and a 70% increase in esports customers over the last 12 months alone.

Esports betting has certainly had its doubters, but as the years go by and the figures become even more impressive, it’s obvious to everyone it’s here to stay. The fact it now sits comfortably in Pinnacle’s top five sports by betting volume (pushing the top three) should be evidence enough for just how popular it has become. The global pandemic caused by COVID-19 has

“As for the teams and players, they will of course want to play in front of their fans in packed stadiums, but playing and competing for multi-million dollar prize pools from the comfort of their bedroom is nothing out of the ordinary”

undoubtedly thrust esports betting even further into the spotlight; but how has it managed to go from strength to strength over the past eight months where several other forms of entertainment have tried, and failed, to fill the void?

Many will argue sports fans and bettors turned to esports because there were no other sports on between March and August. Although this would have helped esports events garner more attention, it’s the foundations on which esports is built that have really helped it thrive. Esports is perfectly suited to the online environment and its compatibility with technology allows it to be accessed in one form or another through any of a user’s preferred devices. It has a relatively low barrier of entry because you don’t need to buy any expensive equipment to play esports and you don’t need to pay for a costly TV subscription package to watch events.

The amount of titles that fall under the term esports means it doesn’t matter whether you’re interested in strategy, shooting, fighting, racing, sports, or fantasy: there really is something for everyone. Additionally, the esports calendar is like no other. Instead of waiting until the weekend for soccer games and having a three-month break during the season, esports events run pretty much 24/7 for nigh-on 365 days a year.

While the reasons stated above clearly show why esports appeals to such a wide demographic, the way in which the industry has managed to handle the logistical nightmare presented by COVID-19 is also one of the key reasons it has been able to thrive. Planned esports events have continued with minimal interruptions or cancellations. This isn’t to say there weren’t a few casualties along the way – such as Dota 2’s The International and the ESL One CS:GO Major in Rio. But when you consider it’s only a handful of examples compared to a complete halt to any form of elite-level soccer, tennis, basketball, American football and pretty much any other sport, it isn’t bad going.

In truth, given that the industry plays the bulk of its events in an online environment with only selected events played at a physical location known as “LAN” (local area network), the transition to hosting all events online would have been fairly easy for the esports sector to make. As for the teams and players, they will of course want to play in front of their fans in packed stadiums, but playing and competing for multi-million dollar prize pools from the comfort of their bedroom is nothing out of the ordinary.

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Benjamin Cronin The real success for esports betting in recent months isn’t that it’s become a viable alternative to sports betting. It’s now on that level and will continue to be for some time, perhaps even surpassing it at some point. Esports has been able to leverage its new audience and engage with all different types of fans on so many different levels.

It’s easier than ever before to place a bet on esports, but it’s also more fun than ever before to watch the events and become a part of the experience.

It’s the experience of esports fans that should get the most attention from operators. Success on an operator level is determined by the quality of the product on offer and the connection with your customers. Those trying to simply take advantage of an opportunity as it presents itself will continue to struggle to find any value in the rise of esports betting. Overall, however, the uplift in esports betting activity during COVID-19 has been quite incredible.

GI Verdict: It goes without saying that esports has grown exponentially in recent years, with this growth aided significantly by the pandemic in 2020.

As an early esports proponent and now one of the market leaders among mainstream operators, Pinnacle is an authority on the subject and it is noteworthy that even the company itself has been blown away by this recent growth. An interesting question is whether esports betting will ever overtake traditional sports wagering in the long run, which our interviewee overleaf certainly has an opinion on.

GAMBLINGINSIDER.COM

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FEATURES

LUCKBOX

From gamer to CEO

Luckbox CEO Quentin Martin speaks with Gambling Insider about his journey to CEO and the upwards trajectory of the esports vertical

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Can you explain a bit about your background and what it was that attracted you to the esports betting market?

I started life as a pro gamer. I spent the better part of 10 years playing Magic the Gathering professionally. I was UK number one and Canadian number one. I also played poker professionally for about eight years.

Later in life when I got into the gambling industry I spent almost 10 years at the Stars Group and worked my way up. In the last four or so years of that I was running the free-to-play gaming studio there. While I was there I was blessed to report to former Stars Group CEO Rafi Ashkenazi for a while and we were always keen to explore esports.

One of the projects I was working on was looking at what we could do with esports betting. When the opportunity at Luckbox came up it was the perfect combination of almost all my life. It was combining a decade-plus of gambling industry experience with a lifetime of being a gamer.

You joined Luckbox in 2018. Have you noticed an increased popularity in esports betting since then?

Absolutely – in two ways. One, it’s always been growing. If you look at the reports it is supposed to be growing at around 24% year-on-year. We also saw a second jump with the pandemic with everyone moving into lockdown. With everyone’s hobbies or ability to socialise diminished, they turned to something they really loved that they could do from home, which was playing games and watching games. As a result we saw a massive spike in esports betting. At Luckbox we saw bets increase by around 500% during the initial stage of lockdown.

Like any industry, it is maturing and getting older. Its audience is getting older and it’s here to stay.

Although the audience may be getting older, esports betting is predominantly associated with a younger demographic. What do

LUCKBOX you think is needed to get the older bettors interested in esports?

I’m not going to go to Canada and convince people to start watching cricket and I’m not going to go to India and convince people to start watching ice hockey. Likewise, I’m not going to go to 60-year-olds and tell them they need to get into their League of Legends. People in general bet on something because they are passionate about it. They either played the sport or they follow the teams. It’s the same with esports and computer games.

Our demographic of esports enthusiasts is generally an 18 to 40-year-old demographic.

Our average bettor is 32. That zeitgeist that it’s for kids is really incorrect. You can see in the computer gaming industry itself that some of the biggest hits, whether it’s God of War or Last of Us, they involve a 30 or something year-old protagonist taking a kid through the game. The gaming industry is recognising that its standard customer is over the age of 30 now.

Everyone always says “well kids play computer games.” Yes, but kids play football too. My favourite stat is that 18-25-year-olds watch more computer games than they do traditional sports. We’re already seeing a seismic shift and that’s only going to get larger each year that goes by.

As the conditions of the pandemic ease off around the world, do you expect esports will continue on its accelerated path; or do you expect some downturn in popularity?

The lockdown definitely accelerated esports a couple of years into the future for sure.

Most countries left lockdown months ago, and don’t get me wrong we’re still in and out of various stages of non-normality, and we saw a drop-off to a degree but nothing substantial. We have retained 75% of the players we gained during lockdown. Our turnover is pretty much in the same place as it was in peak lockdown. I really think it is sustained because people have remembered those games are out there and have engaged with them.

During lockdown we saw a number of celebrities and sports stars turn to esports. Do you think this has had some influence on the increased popularity of esports betting?

I think it helped but I don’t think it drove it.

Almost all of those initiatives were driven by the traditional sports world. They had lots of sports stars sitting there on endorsement contracts and burning money. Don’t get me wrong, it definitely benefitted esports but it didn’t drive that growth.

I think it’s more the fact everyone was in lockdown and everyone who is 18 to 40 has

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Quentin Martin been a gamer in their life at some stage. For example, 75% of Europeans self-identify as gamers. During lockdown you couldn’t turn on the TV and watch the Premier League but you could tune into Twitch, watch some games and get that engagement.

As we look towards the future of the vertical, what are your expectations for esports betting? Do you think it can ever overtake traditional sports betting in its popularity?

I’ll bet substantial amounts of money with anyone who will take it that esports betting will become bigger than traditional sports betting in my lifetime. It already is for 18-25 year olds. Grow them 50 years into the future and they are 75 in retirement homes playing each other at computer games. It’s going to take a while, however, because if you look at the wealth distribution of the world it doesn’t lay in the hands of people under 40.

I believe companies that are only paying esports lip service are damaging their brand and longevity going forward. There’s a lot of zeitgeist, different languages and memes.

I am 37 and I am already on the fringe of it despite having been a pro gamer in my youth. You need an authenticity. It requires the use of different marketing channels. It takes a dedicated focus to build an esports betting community and to acquire traffic.

Those traditional sportsbooks that are focusing on that are really seeing great benefits.

What’s next for Luckbox?

We’ll be listed on the Toronto venture stock exchange in a few weeks’ time. We’re looking to really accelerate our growth, help us get better access to capital and double down on

marketing. I really can see some of the larger gambling companies that aren’t growing organically in esports right now choosing acquisition as a way to get into the space.

That’s what we’re trying to build in Luckbox – the platform and community that meets those needs. 

“I’m not going to go to Canada and convince people to start watching cricket and I’m not going to go to India and convince people to start watching ice hockey.

Likewise, I’m not going to go to 60-year-olds and tell them hey need to get into their League of Legends” GAMBLINGINSIDER.COM

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FEATURES

VIRTUALS IN RETAIL

Virtually back to normal

While virtual sports boomed online during the pandemic, Iqbal Johal explores the importance of the vertical to retail betting shops; and how virtual gaming can get the land-based sector thriving once more Virtual betting was one of several online verticals that thrived during the height of the coronavirus pandemic. The outbreak caused all major live sport to be suspended in midMarch until at least May, and the closures of retail betting shops and casinos for several months. That meant operators and suppliers had to adapt quickly to offer an alternative product, which is where virtual sports and games came in.

Often seen as a niche offering pre-lockdown, the vertical boomed as a result of a halt in live sport. As Golden Race CEO Martin Wachter told Gambling Insider earlier this year, the supplier observed a 74% monthon-month growth in online ticket sales for March; with April’s numbers showing a 110% increase. While overall, Wachter explained

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that online virtual ticket sales grew 220% from January to April.

The vertical helped the industry generate much-needed revenue after incurring huge losses during the pandemic, arguably helping the sports betting sector survive. Aside from the cancellation of live sport, retail betting shops were closed from late March, until June, in most countries across Europe. In England, shops started a phased and restricted opening on 15 June, causing the big industry players to finance heavy losses. For example, operator William Hill claimed in August 119 of its high street betting shops won’t re-open, not expecting customers to return in similar numbers seen before the pandemic.

Although gross gaming yield for online virtual betting among major operators in

the UK fell from £12.8m ($16.7m) in April to £6.7m in August, the figure was still higher than the £6.6m brought in for March 2019, suggesting a rise in overall activity in the past year, even if figures have tailed off as live sport returned. Online virtual betting activity has boomed throughout the year, but that doesn’t reduce the reliance on the vertical in retail ouetlets; especially at a time when the sporting calendar remains volatile and operations at such venues haven’t yet resumed to 100%.

Before the pandemic, most of the business from those specialising in virtual sports took place in the retail sector. That was no different for DS Virtual Gaming. The Austrian-based supplier, which specialises in virtual gaming software development, saw

VIRTUALS IN RETAIL around 80% of all income coming from its retail operations pre-lockdown. The closures of such shops meant a transition from offline to online, as players were still able to get their virtual sports fix.

As DS Virtual Gaming head of business development Araksi Sargsyan tells Gambling Insider, the popularity of virtual sports is still as strong as ever at betting shops. “Based on our experience, we had a very popular vertical in the form of virtual games at bеtting shops, which due to the pandemic brought the offline players to the online sphere.

Naturally, the preferences of the players in the game remained the same as they continued to play their favourite games on the site. It is worth noting that online and offline players are different audiences themselves, which strive for different ways of getting pleasure from entertainment. Playing at betting shops is a huge layer of the gambling culture.”

The closure of retail shops did, of course, lead to losses for much of the industry that rely on the land-based sector, despite the transition from offline to online. For DS Virtual Gaming, April and May were the most testing months with total profit taking a hit, but Sargsyan says June saw the supplier gradually return to its usual turnover; by October, financial figures were on par with those seen before the pandemic.

In terms of the effect the pandemic has had on the popularity of virtual games in retail outlets, Sargsyan is adamant it has been minimal. “I don't think the pandemic has had a big impact on the popularity of virtual sports in betting shops,” she states.“Virtual games have long been a mass

Steve Rogers

product for offline operations; this did not happen during the coronavirus period.

“Although many are sceptical about our vertical, the fact remains that for every bet on sports, there are five to 10 bets on virtual games. Some of our partners' betting shops do not offer sports betting at all but operate exclusively with our products. So operators who have their activity both in the online industry and offline have long known how profitable it is to have virtual games at their betting shops.”

It’s easy to see why virtual games and sports have become so integral to retail outlets. Firstly, the vertical is arguably the closest in nature to live sport, with the added advantage games only last between 90 seconds and several minutes, adding to the immediacy of players winning or losing. Yet, unlike live sport, you can play virtual sports 24/7 – at any given day or time depending on the player’s preference.

“I think virtual games in betting shops are classics of the genre,” Sargsyan explains. “In most countries, it is impossible to imagine operating offline without the same virtual races. According to our statistics, one cashier per shift accepts from 500 to 1500 bets only on our product.

“At the moment, there are a lot of interesting verticals available for ground operations and many of them are popular to one degree or another. I believe no one will dispute the fact that sports betting and virtual games currently account for about 90% of betting shops’ income. Moreover, of these 90%, 50% – 55% are virtual games.”

For fellow virtual sports supplier Inspired Entertainment, retail and online business is more split compared to DS Virtual Gaming, although its retail business has gained stronger traction since shops reopened in Europe in the late summer. Inspired’s chief commercial officer for virtual sports, Steve Rogers, also points to stronger activity postpandemic, both retail and online wise. He equally stresses the importance of virtual sports to retail shops.

Rogers tells Gambling Insider: “Before COVID-19, our virtual sports business was split around 50/50 between retail and online. When retail closed down for a period of time, we saw a big uptick in our online virtual sports business. As we’ve returned to some level of normality, online activity has remained strong and retail business in Greece is even stronger than it was before the shutdown; due to the introduction of new content.”

In key markets such as Italy and the UK, Rogers says Inspired saw a return to around 95% of its pre-COVID retail activity levels.

Now, with the “continuing strength” of its online options, Inspired’s virtual business activity levels are “slightly higher” than pre-pandemic.

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Araksi Sargsyan Rogers adds: “It’s extremely important and profitable. The sheer amount of betting options, its availability as filler content during live games, and the idea that ‘the season never ends’ all make virtual sports a versatile offering for retail betting shops and online.”

Rogers believes the increased popularity and activity of virtual sports online during the pandemic has resulted in an uptick in retail play, especially as players became familiar with the product. This was helped by April’s Virtual Grand National, which gained around 4.8 million viewers in the UK and raised £2.6m for NHS Charities Together.

“Virtual sports are definitely more widely known and valued, especially since the national TV broadcasts of Inspired’s Virtual Grand National and Virtual Kentucky Derby races,” Rogers explains. “Media coverage of these events generated a number of new opportunities for virtual products. With the shutdown of live sports, we had players trying virtual sports for the first time, creating online profiles and discovering that they really liked the experience. As players are cautiously returning to retail settings, we’re seeing some of those players seek out virtual sports there, as well.”

So while retail betting shops across Europe were severely hit due to months of closures in March, it appears virtual sports have been a huge help in the recovery. With virtuals so profitable yet entertaining for the customer, the vertical has arguably gained greater importance than ever. Indeed, as betting shops look to recoup some of the losses from earlier this year, virtual sports might be their best way back to normality.

GAMBLINGINSIDER.COM

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NO CROWDS

No crowds? No problem

Owain Flanders takes a look at the absence of crowds in sports leagues across the world, evaluating how this has impacted bookmakers Our favourite sporting moments are inextricably connected with the roar of live crowds – from Usain Bolt’s 100 metre world record in London’s Olympic stadium, to David Beckham’s last-gasp free-kick against Greece in 2001. While these moments will always live in the memories of sports fans for their undeniable brilliance, would they really be the same without the accompanying cheers of thousands of adoring supporters?

This year, sports fans have experienced a whirlwind of emotions. In January, the English Premier League was well underway, the NFL play-offs were soon to begin and the Tokyo Olympics and European Football Championships looked set to keep fans entertained all summer.

Just three months later and that schedule was lying in tatters.

With the first wave of COVID-19 under greater control around June, the path was relatively clear for sports to return. However, this was sport with a twist. Removing fans from sporting arenas was accepted as a necessary and temporary solution to an unsolvable problem.

For the world’s sports betting operators, the return of major sport will have been met with great relief; yet there must also have been some trepidation about the prospect of sport behind closed doors. After all, in the entire history of bookmaking, it is unlikely there have been many instances in which fans have been banned from a stadium for a single event, never mind for whole seasons. That said, as we look at the actual impact of the

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lack of crowds, it is evident that operators had very little to worry about.

There are a few ways in which this lack of crowds can impact bookmakers; one of which is increased TV coverage. This seems to have resulted from a desire to increase both fan engagement and sport revenue in the absence of ticketed events. The fact players can now watch more of their favourite sports than ever will only lead to increased bettor engagement as sports fans look to wager on games to increase excitement.

One example of this is the Premier League.

Since its return, all Premier League games have been allowed to broadcast on TV. This is the first time this has occurred since the 1960s, when it was decreed that Saturday afternoon games would not be broadcast to increase stadium attendance. A combination of this increased coverage and the closure of stadiums has seen the league generate its highest TV viewing figures to date, with Southampton’s victory over Manchester City in July viewed by a record-setting 5.7 million people on the BBC. The second significant effect of crowdless sport is its impact on home-game advantage.

Commenting earlier this year, industry expert and director of Gaming Monitor, Kevin Dale, explained the importance of this for bettors.

He said: “The lack of a vociferous home crowd should make a difference to player confidence.

As a punter, if you don’t feel this reflected by the oddsmaker, then start betting on away teams.”

As Dale alludes to, this is something that not

only influences bettor behaviour, but also the way traders price up games and events. Now less able to rely on home-game advantage to swing results, pricing is even more reliant on current form.

The effect of this has been most prominent in football – and has been clear to see in the Premier League this year. The highest figure for away wins in the league currently stands at 34% of all games in the full 2018/19 season. So far this season, the total currently stands at almost half of all games, at 46% – well above the 35% for home wins. The German Bundesliga has seen similar results.

Home teams won just 22% of matches when games returned in front of empty stands, down from 43% before the shutdown in March.

Despite the issues this causes for traders, there is definitely more positives to be taken from the lack of home advantage than negatives. While this might affect the type of wagers customers place, turnover certainly shouldn’t suffer as a result. In fact, punters may even consider themselves to be in with a greater chance of beating the bookies, subsequently increasing betting volumes.

Although a lack of crowds has caused much heartache to fans unable to attend events, it is difficult to see the situation as anything other than beneficial for sports betting operators looking to mitigate losses imposed during the early part of 2020. As long as they are able to capitalise on increased fan engagement with efficient marketing and pricing, this crowdless period could well be a profitable one. 

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US SPORTS BETTING

Making up for lost time

Iqbal Johal talks to US sports betting consultant and investor David Sargeant, reflecting on a rollercoaster year for the market, what lessons can be learnt from the pandemic and what 2021 holds There’s no doubting how popular sports betting has become in the US since PASPA was repealed in May 2018. Since then, sports betting is now legal in a number of states, as well as the District of Columbia, with many others in the process of adopting sports betting legislation. American Gaming Association (AGA) statistics estimate that Americans have legally wagered more than $25bn on sports betting since legalisation up to August this year. The vertical has generated hundreds of millions in tax dollars to state and local governments.

The AGA also predicted around 13% of American adults plan to bet on National Football League (NFL) games for the 2020 season, which equates to 33.2 million.

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But what was due to be another booming year for sports wagering in 2020 came to a shuddering halt in March of this year, as the coronavirus pandemic suddenly paused the vertical’s rapid growth. As a result, US commercial gaming revenue figures from the AGA showed sports betting gross gaming revenue (GGR) for the second quarter dropped 46% year-on-year to $64.2m. The suspension of all live sport in Mid-March until July had a huge impact on the vertical’s revenue; although from January to August, GGR was up 10% to $324.9m, demonstrating its strong performance before the pandemic caused a worldwide lockdown.

However, major sport finally returned to the US calendar on 23 July, with the

2019/20 Major League Baseball (MLB) season resuming. Then what was four months with no sport suddenly led to an unprecedented occurrence. The National Basketball Association (NBA) season was back in action on 30 July, followed by the National Hockey League (NHL) in early August and the NFL in September. That meant all four leagues took place at the same time for the first time ever on 10 September, along with Major League Soccer (MLS).

Throw into the mix the fact both the US open tennis and golf took place in the same month and it’s safe to say September was a “proverbial feast” of sports betting action, as William Hill US CEO Joe Asher so eloquently put it.

US SPORTS BETTING That certainly helped New Jersey set the record for the highest-ever legal monthly sports betting handle total in the US. Data from the New Jersey Division of Gaming Enforcement showed the state collected $748.5m in sports betting wagers for September, with more than 90% coming via mobile.

But there is still cause for caution.

Despite pent-up demand and the sector being on the road to recovery being, industry analysts are still uncertain about when sports betting will return to full throttle. That’s certainly the view of sports betting consultant and investor David Sargeant of iGaming Ideas, an advisory and investment company specialising in online gaming. Sargeant, who has almost 20 years of experience in the sector, believes there’s still some way to go before sports betting can return to normality, especially in the retail sector.

“The glut of sport in the summer definitely helped betting numbers globally get back on track,” he tells Gambling Insider. “However, the brakes were still on the US bookmaking industry with the lack of a full roster of college sports. This will be especially apparent as we face a period now with only one major league running.

Having said that, the content schedule should be enough to keep the number of engaged bettors at mobile books.

Retail-only, and tethered, states have and will continue to suffer more than those with omni-channel offerings - you can see that in the suppressed Nevada numbers as visitors stay away.”

David Sargeant

In the long term, Sargeant is convinced the market will continue to grow, as freshly legalised states come online and others begin to regulate; and that the popularity of sports betting goes hand in hand with the return of sport. One thing the legal market has certainly done is legitimise the sports betting industry.

“I have seen, in the market access deals I have worked on, the demand for access from both new and existing operators isn't going away soon,” Sargeant explains.

“We know this is having an impact on the wider market as we see offshore operators (5Dimes for example) effectively give up, and try and legitimise their businesses as a means of keeping relevant.”

At times of crisis like this, there are always lessons to be learnt. Being adaptable and diverse has been key for operators outperforming the competition during the pandemic, now that it’s clear even major sport is not invincible. That means having plenty of content, which has been a crucial driver to player acquisition and activity, particularly during the height of lockdown.

But what this period has shown the US industry is that the future is certainly online. There’s been a clear digital acceleration, as the gaming sector begins to move away from an over-reliance on the land-based sector. With an online boom arguably saving the industry from catastrophe, it’s shown the many states reluctant to implement online gaming that’s it’s certainly nothing to be afraid of from a revenue perspective. Legalising sports and online betting will therefore help generate fundamental tax funds.

Sargeant points out: “The obvious lesson is the reliance on retail can't remain. The ping pong of tethering in Illinois shows that, for sports betting to work, operators all benefit from fully untethered sign-up. The next lesson learnt is that content is key. The race to add more betting markets has shown globally to add little value and it is the number of events that engage bettors.

The pandemic proved this as consumers looked to all kinds of content at all times of day. Having more events on your betting schedule increases the window of engagement and drives greater revenue.

The importance of college sports, minor leagues and secondary sports (and esports) to fill the content schedule will be a key driver for increasing revenues going forward.”

The hunt for tax dollars as a result of the COVID-19 pandemic is “definitely pushing” the drive to legalise sports betting quicker than expected, according to Sargeant, as well as online gaming.

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“The obvious lesson is the reliance on retail can't remain.

The ping pong of tethering in Illinois shows that, for sports betting to work, operators all benefit from fully untethered sign-up. The next lesson learnt is that content is key” A raft of new legislation is expected in the new year, with estimates of eight to 10 new states legalising sports wagering in 2021.

Additionally, mobile may well be a given in any new legislation – something many politicians still seemingly couldn’t get their heads around even in 2019.

Overall, it’s clear 2020 has been a rollercoaster and unique year for sports betting, but what can we expect moving forward? For Sargeant, next year will be another 12 months of growth for a vertical that moves into its fourth legal year, which includes utilising new technology. He concludes: “2021 is going to be the year of a maturing industry coming out of its infancy. Companies are beginning to realise what they are good at, how they can compete and crucially how they can use resources effectively to scale.

Awareness of the sector will continue to grow and revenue in all states should follow. Mainstream visualisation of the industry will be driven both by bookmakers tying up large-scale media and team deals, but also by digitally savvy operators finding cost-effective clicks across the board.”

Technology deals will become more important, as will innovation, the use of data and automation, and the strength of a company’s product. So, while there was progression in the US during 2020, unforeseen circumstances meant the sector couldn’t push on as it would’ve envisaged at the start of the year. Here’s hoping 2021 can make up for lost time.

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PATIENCE AND DISCIPLINE Elys Game Technology chairman and CEO Mike Ciavarella speaks to Tim Poole about his journey since joining in 2011, with the company going public in late 2019

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“I never thought I’d be in the sports betting business – but here we are,” reflects Mike Ciavarella, Elys Game Technology chairman and CEO, as he sits down to discuss the company’s progress with Gambling Insider.

Looking back, a past version of Ciavarella may well have been surprised to hear he’d become CEO of a sports betting technology company, given he once wrote a textbook on ice hockey coaching.

“My career was on a completely different path altogether,” he elaborates. “I was a portfolio and account manager in finance, so I was brought into the company with my business-building experience.

My exposure to sports was my ice hockey coaching background, and that’s why the two dovetailed together and it was quite a remarkable transition.”

The transition Ciavarella refers to began in 2011, when he became CEO of Newgioco Group, an Italian sports betting firm. Now, that company is a stock-listed firm going by the name of Elys Game Technology, following its recent strategic name change. It has been quite a journey. As he explains, it wasn’t a case of him saying, “Hey, why don’t I get into the sports betting business?” Instead, the appointment was the result of a referral to Ciavarella, based on his aforementioned business-building background.

Since its beginnings as a company started by two families, Elys Game Technology still strives to remain a very family-driven business, he says. One developed the retail, customer-facing side of the business and was licensed when the Italian Government regulated its betting market. Starting with four locations, the family built what Ciavarella calls a “phenomenal business” that possesses a distinct brand in the Italian market.

The second family primarily worked on the technology side, though it was initially with another operator.

This side of the company conceived Elys, a new platform Ciavarella discusses at length during our interview and, in his own words, has talked about “ad nauseam” in recent years.

GAMBLING GAMBLINGINSIDER.COM

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“Essentially what the two of them saw was the opportunity to take this brand new platform and expand it all around the world,” he says. “But they knew for them to do that they needed some good corporate structure, possibly to raise capital in an environment other than the Italian banking space, which is quite challenging in itself. When they first contacted me, my approach was, ‘We have to prove the platform; I’m not going to promote the stock of a company without knowing your product is what you say it’s going to be.’ So it was a two-pronged approach: them finding me and putting corporate ideas together, and then me throwing it back to them and saying, ‘You guys prove it and I’ll take the company where we need to take it.’”

Considering it’s almost been a decade at Elys/Newgioco for Ciavarella, it’s safe to say the company did prove itself in his eyes. Over that period of time, it’s been the old adage of “a marathon not a sprint” for the chairman and CEO. He started off setting up a global plan for the organisation, with a main plan and a second part of the plan: “Stick to the main plan.” In essence, as Ciavarella describes, this emphasised two key words for Elys in its early years: patience and discipline.

“That comes from my financial planning background,” he states. “A lot of guys invent something and want to get it out right away, and they get very emotionally attached to that process. The hardest thing to do is keep the horses tight.” The next step to keep this journey going, Ciavarella says, is to export Elys’ platform and software elsewhere, having proven the brand in the Italian market.

Fortuitously, in Ciavarella’s eyes, the US market is now opening up for the company. With potentially up to 50 different regional state markets available across the Atlantic (once legalised in each respective state), markets like New Jersey and Pennsylvania have already gained a strong footing both online and offline. Indeed, hundreds if not thousands of pages across Gambling Insider’s publications have been dedicated to the topic of the US since the overturning of PASPA legalised sports betting in May 2018. For Elys, preparations for the US venture began in 2013, and Ciavarella is keen to stress the company is “not a late mover” in North America.

Naturally, much of Elys’ focus is now diverted towards the US. “The guys understood their part: they really know sports betting,” Ciavarella says. “But they also understood that US sports betting lines are completely different lines from European lines. To jump into the US market, the guys decided we have to prove Elys in its own environment for the US. You can’t take a European platform and put it in the US – it just will not work. And we’re seeing that in some of the gaffes at some of the events that are being posted and they’re going ‘Oops, that was a mistake.’”

Just as US acceleration approached, however, and just as Elys’ (then Newgioco’s) IPO in December 2019 took its growth to a new level, the COVID-19 pandemic sent shockwaves through the gaming industry. It’s led Ciavarella to describe his first few months as a CEO of a publicly traded company as “painful – in a word.” Having developed the firm in the over-the-counter market, the business is yet to undertake the steps it planned out as necessary after going public, which is mainly a function of COVID-19. He says Elys is now continuing with its initial plan but admits it was

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“We didn’t really suffer significant damages. We normally go through a summer period in Italy where we don’t have sports, so all COVID did for us was shift the summer season” sidelined, as there is “no utility in marketing when people aren’t sure what’s happening” – and especially where there are no sports.

The lack of sport was the pandemic’s main impact on Elys, with all major leagues across the world coming to a halt thanks to the spread of coronavirus. As was well documented by Gambling Insider throughout the period, sports betting companies either had to diversify into online casino and poker, pivot more towards virtuals and esports, or simply rely on Russian table tennis, Nicaraguan football and the like until major sport returned.

“We made manoeuvres to balance the book, if you will,” Ciavarella explains. “We had a very good balance between sports betting – which is not like a gaming product – and the online gaming side, which is poker, casino and all the rest of it. Ultimately when the pandemic occurred, it affected all companies across the board; the reason it affected us like everybody else is because sports betting vanished, essentially.”

Elys’ sports betting revenue dropped significantly but so too did its expenses. And, on the other side of the equation, Ciavarella says the company was carried through the worst of the pandemic through its online gaming side – as online gaming numbers absolutely boomed during national lockdowns across the globe.

“That shows our disciplined, diversified approach really worked,” he reflects. “We didn’t really suffer significant damages. We normally go through a summer period in Italy where we don’t have sports, so all COVID did for us was shift the summer season. We’ve seen the rebound now that sports are back, so it was a surprise but it didn’t adversely affect our business overall.”

With that in mind, Ciavarella labels his last few months since Elys went public (initially as Newgioco)

an “exciting ride”. The challenges he’s already alluded to lead him to hold a lot of respect for those who have been pioneers as public gaming CEOs. “We have to take a family culture-driven company into the public market,” he says.

“Now it’s a question of getting our product and corporate governance up to speed. The biggest challenges, aside from all those little nuances, have been trying to get the message out to our current investors and, number two, the investors we’d like to see come into the company. So we have to keep putting that message out that this is a genuine company here to be invested in.”

It’s the topic of Elys’ platform that really inspires Ciavarella as he outlines where Elys goes next. And it’s the planning process involved in exporting Elys that the chairman and CEO believes differentiates the company from the competition in its attempts to move into the US market. “Of course I’ll keep some trade secrets to myself!” Ciavarella quips. “But our team first recognised that there is a main difference.

There is a huge similarity between the passion and emotion around sports between Europe – particularly in Italy – and the US. But what we understood is that things operate differently in terms of the business side of sports betting.

One thing our guys were sharp on was saying ‘at the end of the day, we’re a small operator, so what drives our business is profitability and being a sustainable business.’ That’s when we developed Elys and the risk management side of the platform which was critical, because that was always missing in legacy platforms.”

As stated, the Elys team began planning its US move well before PASPA was overturned, back in 2013, anticipating a day of reckoning where the law would either be repealed or adjusted. When that day came, the firm wanted to ensure Elys was ready for the US before entering the market, rather than entering multiple states post-haste.

Instead of taking the European version of Elys into the US, the organisation prioritised taking data: “You have to feed data into the engine for it to react properly to what’s going on in the market. Over the last couple of years, we’ve looked at the market, judging how baseball lines move compared to football

“To jump into the US market, the guys decided we have to prove Elys in its own environment for the US. You can’t take a European platform and put it in the US – it just will not work” 24

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lines. Then we also sought to understand how the US sports bettor behaves, compared to the European sports bettor.”

Here, Ciavarella places great emphasis on the overall plan not being to enter New Jersey as quickly as possible to “bang heads with everybody that’s already there”. Elys is adamant it will first prepare a full offering and certify its products on every level.

The first step toward that aim was securing GLI-33 certification on its core engine; the second component will be kiosk/retail, with mobile to follow. Ciavarella affirms Elys has an omni-channel platform, so it has all those necessary components to begin with.

“Our first target is the Washington DC market. But our first step was to make sure the product is completely certified,” he explains. “So if someone likes the platform in DC and says, ‘It’s exactly what we’re looking for but we’re way over here in Colorado,’ we’ll have mobile certification ready for entry to Colorado. No matter where an operator is situated, we’ll be ready for it and don’t want to ask anyone to wait a few months.” Once again, this means a key difference in Ciavarella’s eyes of Elys being a “disciplined mover” rather than a late one.

Looking forward, he says Elys remains very aspirational, with a very ambitious plan. Speaking as honestly as he can, but again without giving away any trade secrets, Ciavarella is betting big on the company’s software. “Elys really is a remarkable platform which has got great feedback.

I’m not blowing a horn but simply stating what the reaction has been,” he says. “When you compare what we have versus what’s around the globe, legacy-wise, we feel very confident that if we establish a solid foundation, our plan is still ambitious enough to become a major global player.”

Ciavarella believes Elys is going to be the one to watch, becoming a major deal in the next 15 to 20 years. And there’s no shortage of ambition in his declaration that Elys will become one of the major global operators. For a former hockey coach who never thought he’d end up in the sports betting business, Ciavarella is now a man determined to leave his mark on the sector.

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SPONSORSHIP BANS

More harm than good

Following calls from parliamentary groups in the UK to ban gambling sponsorship in sport, Iqbal Johal examines why such measures would cause more damage than actually help deal with problem gambling

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Gambling sponsorship in sport is a complex and moot topic, which has led to many heated debates and parliamentary reports in the UK in recent years. The link between sports betting and sport itself is an obvious one; so it’s no surprise we’ve reached a point where sports leagues and teams across Europe, in particular the UK, have become so reliant on gambling sponsorship to provide important funds.

For the 2020/21 season, eight English Premier League clubs have gambling operators as their main shirt sponsor, accounting for 40% of the entire league and a further 11 in the Championship (second tier). That total of 19 clubs being sponsored by gambling companies is down from 27 in 2019/20, but the industry is still the biggest in terms of shirt sponsorships in the top two tiers of English football.

When you consider the fact betting partnerships are prominent in Germany (and formerly Spain), too, you can see this is a relationship of importance and need

for both sides. Football clubs generate a significant amount of revenue from such sponsorships, from an industry willing to pay the most for them – demand and supply.

During a time when clubs, especially those in the English Football League (EFL) are cash-strapped due to games being played without fans, those funds come as a great relief. Operators, meanwhile, are promoting themselves to their biggest target market: football fans. Millions of fans up and down the country are partial to a flutter on their favourite teams each weekend, with an intrinsic link between the vertical and the sport.

One vehement supporter of sponsorships in sport is Dominik Beier. The former Interwetten speaker of the board is no stranger to overseeing gambling deals.

He was in charge of the operator when it extended its sponsorship of German Bundesliga clubs TSG Hoffenheim and VfL Wolfsburg in June, and became the title sponsor of the Greek Super League in August.

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SPONSORSHIP BANS

Beier firmly believes gambling sponsorships are just as important for operators and sports teams alike.

“They are equally important. Receiving sponsorship revenues for rights holders is not an easy job,” Beier explains to Gambling Insider. “Therefore, partnerships with industries which come along with sports consumption are very important for them. On the other side, they are of course important for operators to gain reliability, build up your brand and get the right message across.”

However, the sheer amount of gambling sponsorship currently in sport is undoubtedly escalating the debate about overexposure to vulnerable people and children. It’s a relevant point, considering that according to statistics from the Gambling Commission’s 2018/19 annual report, 340,000 UK adults are identified as problem gamblers. Only this past summer, two parliamentary reports were published calling for restrictions to gambling sponsorships in sport.

In July, a House of Lords Select Committee report, Time for Action, which suggested a number of sweeping changes to the gambling industry in the UK, recommended “gambling operators should no longer be allowed to advertise on the shirts of sports teams or any other visible part of their kit.” It also called for a ban of such advertising in or near sports grounds or venues, although the ban wouldn’t take place for clubs below the Premier League before 2023.

It pointed out that such removal of sponsorship wouldn’t have a significant impact on Premier League clubs, but admitted it would have a serious effect on clubs in the EFL – tiers two to four – which “might go out of business without this sponsorship.” To emphasise the need clubs have for such sponsorship, Championship club Coventry City’s sponsorship deal with Irish bookmaker BoyleSports in August was its highest value front-of-shirt deal for eight years.

In September, GVC Holdings launched a multi-million pound investment programme to support grassroots football in the UK. The deal sees Pitching In help support the Isthmian, Northern Premier and Southern Leagues, with the programme becoming the title sponsor of each lower-level division. This is a great example of the support operators provides lower-league and non-league clubs; what would happen to such clubs and competitions without this help?

For Beier, the importance of such sponsorship deals for football teams means they are fully justified. “Gaming is an important revenue source for all sport

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leagues and teams in many countries worldwide,” he stresses. “This does not only include sponsorships but also data or streaming rights. Additionally media rights are sold by leagues and federations for a lot of money, which partly are refinanced by gambling advertising. So I do think gambling companies are very important for the value chain within sports. I do believe the market regulates itself at a certain point.

“Sports fans are obviously the main target group for sports betting operators.

Therefore advertising within the sports environment is absolutely justified. With proper regulation in place and the necessary responsible gaming messages, all involved stakeholders benefit from it. With regards to sponsorships, I totally agree the money received from the betting industry is crucial for many sports and leagues.”

Another group to call for an advertising ban was, unsurprisingly, the GamblingRelated All Party Parliamentary Group (APPG). This summer, it called for a ban on all gambling advertisement, with APPG chair Carolyn Harris saying that while the Government should do more to support football clubs financially, she believes gambling sponsorship in sport should be outlawed, saying “it’s one of the most obvious things to do.”

If such a move was indeed sanctioned, it would follow in the footsteps of Spain, which outlawed betting companies from sponsoring football shirts from the start of the 2020/21 season. Naturally, Beier is very much opposed, believing all stakeholders would lose out.

“I am totally against these bans,” he states adamantly. “There is no logical reason for me to do so. The only thing it does is to harm sports – it will create less revenue and the channelisation rates will automatically go down.

“It is crucial to communicate responsible gaming to customers, which can perfectly be done through sponsorships. By banning all ads, you only create a lot of questions for customers; which operator can I still trust, which brands promote responsible gaming etc?

So in the end there are only losers on that: the rights holders, the operators and the customers. Additionally, cases have shown the total overall demand doesn’t decrease.”

A blanket ban on both sports betting advertisement and sponsorship seems like political pandering, trying to appease a general public with dim views of gambling.

If a ban was enforced, where would we draw the line; would bookmakers have to close in fear of children walking past them in the street? What about fast-food chains, should we ban access to these too?

Dominik Beier Problem gambling is, of course, a serious issue but it goes further than sponsorship in sport. It’s too easy to call for a blanket ban without suggesting an alternative solution. Let’s not forget that sports betting sponsorships help promote responsible gambling. For example, Sportsbet.io signed partnerships with Southampton and Arsenal respectively this past summer, making clear it would work with both clubs to promote safe gambling. The work operators and clubs do to promote this message seems to be lost among critics who call for blanket bans.

Concluding, Beier sees gambling sponsorship as playing an important part in promoting responsible gambling in sport, providing it’s done correctly. He says: “I strongly believe in sponsorships as an important communication channel within the marketing mix of an operator.

If you do that right, the upside of sponsorships are much bigger than from traditional ads. As it also is with marketing channels, responsible gaming should be part of the message you want to get across.”

It’s clear the important role gambling sponsorship plays in sport. Operators get to promote their product to its main target audience, and teams and leagues take in much-needed funds to help keep them afloat. But most importantly, it gives all stakeholders the perfect opportunity to promote safe gambling within each local community. Perhaps there’s an element of overexposure, which might need addressing. But draconian blanket bans are not the answer – they would do more harm than good.

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THE HUDDLE

Mining the gold rush Lee Richardson, CEO of Gaming Economics, talks with Gambling Insider’s Tim Poole and Carl Friedmann about the implications of Caesars’ looming takeover of William Hill US, as well as which operators are best-placed to dominate the big untapped markets in America

CARL FRIEDMANN: Can you run down how the William Hill-Caesars deal has been received and how it came about?

Has this been a big surprise or did the industry see this coming?

LEE RICHARDSON: I think to some degree there was evidence of this being an ongoing deal. Remember, there were two competing deals. There was Caesars who already owned 20% of William Hill USA, but you also had Apollo Management.

I think the thing that probably got Caesars over the line is they made it very clear in their offer of about $2.9bn that they were pretty much going to rip up the access agreement they had with William Hill. That was effectively a poison pill because they appeared to have obviously won that particular deal. But if you

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go back a little bit, remember that Caesars are only coming off their own merger with Eldorado and that alone was making them probably the biggest listed entity in the US, and certainly with access on both the land-based gaming and online of about 20 states. Obviously Caesars were bringing that existing share of William Hill to the party anyway.

Now William Hill probably had around a 30% market share of the US sports betting market. They’ve been there the longest. Certainly they acquired their businesses in Vegas seven or eight years ago and clearly had leverage. They’ve leveraged that very hard in the intervening periods since PASPA was repealed two and a half years ago. Caesars has also made it pretty clear that they don’t want anything other than the US element of William Hill. We already know that the European and UK retail and online businesses are going to be up for grabs. So effectively this is the break-up of William Hill.

Not the brand but the company and we’ve already seen speculation as you would inevitably expect about what happens to that non-US element of the business. We’ve already heard 888 would be interested in the online part

THE HUDDLE

of the business, with at least two failed attempts of William Hill and 888 getting together in the past. This might be the final third time lucky for 888 to get that.

But I’m pretty certain they won’t be interested in the retail side, a major retailer in the UK with a thousand shops even though they’ve closed a couple hundred on the back of COVID. We’ve already seen speculation that somebody like Fred Done might want to pick those assets up. Fred is a very smart operator.

He stepped in back in March and bought a strategic shareholding when he realised just how cheap that 90-year-old William Hill brand was.

I actually went back and re-read a post I made on 17 March a few days after the Gold Cup, and I noticed that William Hill had lost 90% of its value over the previous five years. Their market cap had never been as small and Fred bought a strategic shareholding at that time. Well the deal that was announced the other day, that’s gone up around eight-fold so he has made about an 800% return on that strategic acquisition.

You can see what Caesars are getting out of this, which is clearly going to be market share leadership on the online and retail sports betting business in the US. But the other components of the business are clearly going to be attractive. While we’ll see the end of the company as we know it, I can’t see any other potential acquirers doing anything with the William Hill brand.

It’s the most well-known sports betting brand in the US. Despite lots of other people entering the market like DraftKings and FanDuel, there’s no question that William Hill has real brand equity in the US, as it does in all the other markets in which it operates. So I don’t think this is the end of that 90-year-old betting brand, but it’s certainly the break-up of the company.

CF: You said this would be the third time that they go into talks with 888.

What have been the sticking points so far?

LR: I think it was always the price. It was always William Hill doing the enquiring and it was always too high a price. There was one or two occasions when William Hill were going to float and then they pulled it at the last minute, so I can't actually recall whether the first exchanges were before they were a listed company; but certainly one of them was when they were listed, and the price then just wasn't

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right. So this, in a sense, is a reverse of that and it was William Hill this time that didn’t get the price out of it; that was always the sticking point in the past.

TIM POOLE: We talked about how this deal benefits Caesars and how in effect the William Hill brand will continue. How do you think it shakes up the US market in terms of the brands you mentioned, like DraftKings and FanDuel? Also, how does Caesars compare now against MGM Resorts with this additional brand?

LR: One of the interesting things is I have been spending quite a bit of time these past couple of months examining what kind of market shares people already have and what they aspire to. And you still have got new people coming into this market as listed entities. So for example, Rush Street Interactive is going through a special purpose acquisition company route. And you can see that they’re hoping to get a share of the US sports betting market. If you look at all of their aspirations, it comes to well over 100%, so clearly there are going to be some winners and losers. I think MGM Resorts have probably been through Roar Digital, which is the joint venture of GVC and MGM Resorts. They have probably been the most aggressive, saying they are really going to spend as much as it takes to get a dominant 20%-plus market share. DraftKings has pretty much a similar strategy, as does FanDuel, and you have many other smaller providers in there.

So there are clearly going to be winners and losers and I suppose at this stage, Caesars as the market leader is probably going to come under the most pressure. One of the differentiators is going to be who has got which platform.

Which platform is going to be the most agile and the best-placed to take advantage of what is a fast developing and fast-moving marketplace? Because I think it is fair to say that if you look at the mobile apps currently available for sports betting in the US, they are not particularly leading edge. They are pretty clunky, in many cases, and while mobile is still getting the lion's share as you would expect, I think there’s still an opportunity for somebody to bring in an absolutely first-generation sports betting mobile app. I don't think it exists yet in the marketplace. So you can clearly see that whether it’s Roar Digital, DraftKings, William Hill or

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some of the others, there is definitely an opportunity to get real market share, scale and scope by improving that offer to the US consumer. Rush Street Interactive for example is very clear that’s where it sees an opportunity and that’s why it thinks it’s going to get a 6% to 10% market share once it attacks out beyond Pennsylvania and New Jersey. But it can't get all the market share. It's already stated it won't because it just doesn’t exist.

CF: Is this kind of a gold rush in the US right now?

LR: Gold rush in the sense of getting players and getting revenues, I would say it probably is. Again you have to remember that 80% of all the bets on sports betting in the US right now are still with the offshore illegal market.

The legal market is still getting the vast minority but you are seeing very good year-on-year growth, even taking out the pandemic effect, which clearly interfered with sports earlier in the year. You're seeing growth now at every single level, whether it's small markets like Rhode Island, which is probably the smallest live sports legal betting market, right through to the larger, more established ones like Pennsylvania and New Jersey. But the other aspect to remember is the really big markets, the likes of New York, California and Texas. These are huge markets where at the moment, there is nothing available.

And I think for the real gold rush, we have to see one of those mega states come on board and adopt much in the way that we see success in states like Pennsylvania and New Jersey. We have to see that before we see a real breakthrough in sheer volume terms; and to get a chance of the legal market even getting to 50% of the total market right now.

CF: With the US presidential election, do you think that will be pivotal in terms of which direction it will go?

LR: I’ve read various people’s views about what impact this current election will have on that. I’m not entirely convinced it makes that much difference.

I think what’s more important is the dramatic effect on state budgets through the pandemic, and we have already seen examples of people bringing forward legislation and expanding into iGaming.

I think the state of states’ finances and political requirements of their individual budgets is going to have a much more significant effect. I see that being much

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more of a reason why California would adopt this. We know, for example, they missed out on the opportunity of having their referendum at least until 2021 and we’re months away before we even get close to that. I can see other states bringing those things forward and I think that will have much more effect than on the political side.

Many states have gaping gaps and clearly some of these things can help plug them to some degree.

TP: If a big market like California opens up, who is in the best position to go in there and dominate it? Is it Caesars with William Hill now, or is it still going to be tribal-based in California?

LR: You’re right to raise the tribal influence. There are a couple of key states: California is one of them and Oklahoma another. Because of the number of tribal outlets, they would be a very powerful lobby to whatever would be allowed in California. You would have to say that some of the land-based firms, like Caesars and William Hill, would be very well positioned to capture the multiple deals, to cover the multiple outlets and facilities that the tribes would have there. We would absolutely expect to see the likes of Penn Gaming, too, who has just entered the market but has a very clear goal of entering every single state that it can have operations in. DraftKings has a similar operation and so does FanDuel. You have multiple operators who have the similar strategy of wherever they will be available, they will go for licenses.

FINAL The marketing WORD playbook Aubrey Levy, VP marketing and content at theScore Bet, speaks with Tim Poole about the operator’s opening-day NFL offer and overall marketing strategy

With so many brands for players to choose from in the bustling New Jersey market, as well as burgeoning markets in Colorado and Indiana, it’s not about “outshouting the competition” for theScore Bet. Instead, the operator is using specifically targeted offers, including one that caught many eyes during the first week of the NFL season.

For customers who place a futures bet of $50 or more on who will win the Super Bowl, theScore Bet is offering a free $5 wager for each week of the 2020 NFL regular season. The offer generated plenty of traction for the brand during the opening week of proceedings – and Gambling Insider caught up with Aubrey Levy, VP marketing and content for the organisation, to find out more: Tell us about the offer. I’ve got to say it would look appealing if I was a New Jersey bettor.

The intent was to try to give players something that built off the excitement of the NFL starting and give users a way

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of being engaged all season long, keeping them rewarded and playing along as their teams progress throughout the season. So the idea was bet $50 or more on a future of who’s going to win the Super Bowl and we’ll give you a $5 free bet each week, all season long. That’s regardless of whether that team wins or loses, even on the bye week. So it’s up to 17 weeks of free bets.

One of the best things in my mind about the promo is a lot of times these futures offers end prior to the season starting.

Ours is running all season long; if you want to start later in the calendar, you can still start at any point and get free bets for the rest of the season.

season in New Jersey and have launched in Colorado and Indiana, too. Oh, wow, it was exciting – and there were a ton of learnings.

We basically got a sportsbook stood up in under a year and got live in time for the NFL season, which was a huge undertaking for our team. The fall was about learning what’s working, validating our thesis that Score media users wanted to be Score bettors.

And we saw a good amount of that, which has since prompted us to double down on the integrations between our two products.

But to summarise, it was an exciting and instructive football season.

Can we expect more of the same from you in terms of marketing and offers Taking this offer into account, what going forward? kind of general betting volumes have To a certain degree. The name of the game you had for the NFL, also considering for us is not to outshout the competition. pent-up demand?

Even for our marketing strategy, you’re not On the opening weekend, which was an going to see us spend hundreds of millions incomplete first game week as there were still of dollars in above-the-line marketing. games to go, we saw almost the same number Now, we will do value-add strategic targeted of futures placed on the Super Bowl in just promotions like this, that we think are good that first period as our entire last season. for our users and good for us building our It’s very strong and very exciting. Most ecosystem; we will continue to do these. seasons you have this phased in lead-in to They will be strategically executed, so it’s the NFL. This year it’s a standing start, with all not just going to be a perpetual blasting that pent-up demand hitting at once. It’s very of shotgun promotion. encouraging what we’ve seen so far. When we Largely, what we’ve done and what we’ll first saw baseball roll back online, we saw almost continue to do is lean into our own user the same betting handle around baseball in that base to serve these. Part of the value in our first week as we did Super Bowl week. ability to do these is that we don’t have to go to the open market as aggressively as the How has theScore Bet found its first competition to acquire users, because we year in New Jersey generally, as well have a built-in user base and we can give as in other markets? them more value. That’s going to be part We launched for the beginning of the 2019-20 of the playbook. 