Live betting is already a dominant force within European sports wagering. In the US, it’s a growing force, though it has significant room for manoeuvre. Chris Bevilacqua, co-founder and CEO of Simplebet, is aiming to capitalize on the potential of in-play markets, and after signing partnerships with FanDuel, PointsBet and Intralot, has made early progress towards doing so. Gaming America caught up with the executive to hear more about Simplebet and ‘micro-markets.’
Tell us about Simplebet. What does the company do and what is it that’s different about you from the rest of the market?
Simplebet is a digital products company that is leading the way with machine learning and automation, building products that enable in-play micro-betting opportunities. We’ve spent almost the last two and a half to three years building it out. We’re a B2B company, it’s enterprise software solutions that we sell to commercial customers like FanDuel, DraftKings, MGM Resorts and all the consumer-facing operators.
That then enables their users to have micro in-play betting experiences. So for example in a sport like baseball, you can bet using our products on every pitch, every at-bat, and in a sport like American football, you can bet on every play and every drive; in a sport like NBA, every possession, every shot. And our automated platform, our enterprise solution, allows for that to happen at scale.
Off the back of that, two questions come to mind; does that mean you are exclusively about in-play betting and don’t focus on pre-match markets?
At the moment, that is correct. We see the big opportunity in the first-mover advantage, and you know having in our view cracked the code around automation and machine learning, our value and competitive advantage in the marketplace is that we have been able to do that, and no one else has. So we are totally focused on in-play and micro-markets. However, we have built a platform that we could very easily move into the more traditional markets, and use our technology platform to do that. But we think that’s a pretty crowded market, so we haven’t allocated any resource at this time to do that; we’re just going to stay focused on the in-play and the micro-markets for now.
Obviously in-play betting is quite strong in Europe, but in the US do you see live betting as quite a gap in the market?
That’s exactly right and probably even more so. I mean, in Europe, about 70% of the sports betting handle is already in-play – in-play meaning money lines, and overs and unders, and the outcome-based bets where a line is setand then it moves throughout the game. It’s still a bet that doesn’t get resulted until the game is over, so that’s much different than what we’re looking at here in the US, which is a different market. Obviously we’re at a much earlier stage than the international markets and the European markets where this has been legal for a long time. And we think because of the cadence of US-based sports like football, baseball and basketball – which make up about 90% of the sports betting handle here in the US – we’ve seen in the early going almost 80%, for example in New Jersey, of all betting has been in-play and mobile. So New Jersey has been the state that has sort of led the way over here: much like it has been in the European markets, in-play is probably even a higher percentage of handle at the moment. In our case with in-play, we’re taking it to the next level and that’s what we’re referring to as micro-markets.
So what’s different about our micro-markets products is that they’re not really built and positioned for the punter or the serious sports fan, it’s really more built for a casual fan; someone that really wants to watch the sport that they love and interact, and be entertained with it. It’s a much different experience and therefore it’s a different kind of product and one we argue to our commercial customers, it sort of grows the whole pie, because we’re bringing in casual fans to the sports betting market that wouldn’t otherwise be in the ecosystem. We think we are helping them grow the pie, we think it reduces their customer acquisition costs, increasing the long-term value of a customer. This type of product is just a different product than what you would see in a traditional in-play product like you’ve seen in Europe over the years.
Could you explain exactly what micro-markets are in a bit more detail?
Micro-markets are all user versus the house; this isn’t a daily peer-to-peer fantasy type offering. When we talk about micro-markets, we’re talking about betting opportunities that result in minutes or seconds, unlike the traditional markets which result over the course of a two or three hour game. It really is taking two and three-hour basketball games, baseball games and football games and turning them into millions of little games. So if you look at our first three products, NBA, NFL and MLB, in 2020 alone, we’re able to bring to the market between those three sports across every single game in those three sports, about 2.5 million new markets. Baseball is almost a million and a half of those; football is about 600,000, NBA is about 750,000, and those are just the early markets.
We have derivative markets we will make out of all those markets, which will increase the amount of micro-betting opportunities by a factor of ten, so three years from now, just from those three sports, we will have 25 million betting opportunities. And when I say derivative markets, right now in our NFL, we have a product on FanDuel called PlayAction, it’s been up for about five weeks right now, and they are drive-level bets; so you can come and bet on a particular drive in an NFL game; it’s going to result in a score, or it’s going to result in a change of possession: yes or no? Then we have a four or five-sided market that says; is it going to be a touchdown, a field goal, a punt, a turnover, or other. When you look at even a few weeks from now when we start rolling out play-level markets; what’s going to happen on the next play, is Patrick Mahomes going to throw for ten yards or more, is Le’Veon Bell going to run for five yards or less?
The permutations are endless, and we can do that, because we’ve invested in automation and we’ve invested in machine learning. It’s all automatic and algorithmic, and there’s no human intervention, there are no traders necessary to create the odds. We do all that with our machines and our automation, so we create markets, we suspend markets, we re-price markets and we result markets, all in minutes or seconds; it’s a very fast feedback loop. You could place your bet and then you will know whether you have won or lost in a matter of 90 seconds, and our platform does that for you. That’s the difference between micro-markets and the traditional markets that move in-play with that market, because you could continue to bet on a particular thing but it results after the game is over.
Is the platform you are describing the stand out factor that helped secured partnerships with FanDuel, PointsBet, Intralot?
Yeah, we only launched the FanDuel partnership five weeks ago. It was our first live product and we did not have a pre-season that we typically would have had to test or work out all the kinks, because it’s a very complicated product we had to build. It’s taken two and a half/ three years to build this and it’s been spectacular, but we had to work it out and get it integrated properly and get it rolled out. To give you a couple of numbers, FanDuel so far hasn’t even marketed it yet; in the first five weeks as we’ve worked out all the kinks, the average user that is betting on these micro-markets, these drive-level markets, is betting somewhere between 25 and 35 times per user per game. About 25% of the users are spending an hour or more on the app and about 10% of the users are spending two hours or more on the app.
We have around 30% retention rate, meaning about 30% of the users that came in, those customers came back and played it again, which is very high retention. The result of all this, over the last five weeks, is now that this is starting to come out, we’re now getting a lot of incoming from other operators that say, ‘hey wait a second, are those numbers real? Because if they are real, that type of engagement, you just don’t see anywhere.’
We’re now getting into lots of different interesting follow-on discussions and it feels a little bit like we’re drinking from a fire hose here over the last three weeks. Our challenge as a young company – we have 40 people, we have heavy investment in machine learning and product people – to get our products rolled out, we have to do technical integrations that don’t happen in 24 hours, you have to devote a little bit of engineering resource. So it’s a little bit of a juggling act, you can only do one or two at a time before you go to the next one, which are all good problems to have, because there is demand for the product.
Bearing all that in mind, what are your goals going forward, have you got a growth plan mapped out?
The growth plan is to get more customers on the platform and get these unique products out into the marketplace. We just feel like the market will take over, and we’ll have some real demand for our products, which may allow us to have some more leverage with our pricing. If these products are driving engagement like we’ve seen in the early going, it’s only going to make it more valuable as a commercial product. We need more customers, and we want higher rates – our business model is net gaming revenue, percentage of net gaming revenue – so obviously we want to show to our consumer-facing customers that
we want to help them get more revenue, get new players and lower customer acquisition costs.
If we’re able to do that, that’s what our business plan relies on; if we can prove all that, note we’re just talking about the commercial customers. Where we are really
seeing some outsized early interest, not surprisingly, I come out of the sports media world – I’ve been in the sports media business for 35 years – what now seems to
be the more immediate opportunity is coming from media companies. Because what’s their currency? Their currency is people watching their programming, so if we have a product that incentivizes people to watch longer, that’s obviously hugely valuable to a media company; as well as the rights holders, the leagues and the teams, because if more people watch their games longer, that makes their media rights way more valuable, and makes advertising sales more valuable.
So we’re seeing a lot of interest on let’s just call it the media equation, the media side and the rights holders’ side. Because we’re at the early stages of rolling out micro-markets, which we think are going to be a big percentage of the overall sports betting handle two or three years from now. But in the immediate interim, if we can show people that are using our products or watching games for 20/30 minutes or an hour longer than they would normally watch it, that’s a huge deal.
