The global pandemic may have irrevocably defined sport last year, but it has also been a period in which online sports betting was firmly established as a powerhouse in the US market. This year, 19 states, including New York and Texas, will vote on whether to legalise mobile sports betting, and around 8-10 of those markets are expected to open up before year-end.
Furthermore, 80% of all US states are expected to have some form of legal sports betting product available within the next few years. In one month (December 2020) alone, New Jersey set the national sports betting record for the fifth consecutive month, generating an impressive US$996.3m. These are exciting times for the North American sports betting industry, and it’s little surprise that its most recent industry forecasts estimate it to be worth over $20bn within the next five years.
In terms of revenue, this year has already gotten off to a flying start. In the first two months of 2021, income generated from sports betting in the US contributed $576m on total bets of $7.8bn, according to the American Gaming Association, up from $262m and $4.1bn respectively in the entire first quarter of last year.
The influence of In-Play
Undoubtedly, one of the biggest drivers of online sportsbook growth has been In-Play betting. Across the pond, in more established markets such as the UK, this vertical already accounts for 70-80% of the handle. Many predict that within the next three years this figure will be closely reflected in the US market for a few key reasons.
As a product, In-Play betting is very attractive to operators because it expands revenue and handle above traditional offerings, simply through creating a seemingly infinite amount of betting opportunities for customers. Also, the natural ‘stop and start’ pace of America’s most popular sports including American Football and Basketball means that smaller betting opportunities such as ‘Next player to score a touchdown or a 3-pointer’ are easily created.
A prime example of the rising popularity of this product can be seen with the recent acquisition of Banach Technology by PointsBet. This $43m deal was made for the specific purpose of enhancing their In-Play product capabilities. PointsBet believes that “the In-Play opportunity will be very significant and those with the best depth and breadth of product will win.”
The emergence of Micro-Markets
US Operators such as BettHouse believe that traditional sports betting is too complex for sports fans and lacks the instant gratification needed to engage a new, wider audience. The US population is estimated to have a little over 37 million sports bettors, but the number of estimated sports fans per Nielsen is over 150 million. This strongly suggests that there are over 112 million US sports fans being left on the sports betting table, waiting to be engaged.
According to BettHouse, in order to achieve true sportsbook success, operators need a product offering that exists for both the everyday sports fans as well as traditional sports bettors. Furthermore, they believe this can be achieved through focusing on micro-wagers which allow fans and bettors to easily wager on every play, pitch, basket, shot, punch, and more.
It’s no secret that in today’s society, content is a fast-moving commodity, constantly being produced and consumed on a never-ending conveyor belt of news and entertainment. This societal trend has shaped the market landscape to the point where today, the player now expects instant gratification throughout their playing experience. As suggested by BettHouse above, the emerging trend of Micro-Markets is the perfect solution for this continuous shift towards fast, easy to consume entertainment. Micro-Markets are betting markets that are created and resulted in just minutes or seconds, and for US sports, are often coupled with the core engaging moments that drive consumption (e.g. pitches & at-bats for MLB, plays & drives for NFL).
Especially since the lockdown, this has been a great way to give sports fans a continuous buzz throughout the games when they’re not physically able to be in the bleachers!
This is a sentiment echoed throughout the industry, as we’ve recently seen an increasing number of market leaders heavily promoting these types of products. For example, when FanDuel partnered with B2B product development company SimpleBet on a free-to-play game during the 2020 NFL season, bettors had to predict the outcomes of teams’ drives.
Industry commentators believe that it’s the increased trend of market models such as this that will cause, by the end of the decade, over 80% of US sports betting handles to be In-Play, and over 50% of In-Play betting handles are expected to be micro-betting.
The role of technology
Live sports betting products such as the aforementioned are heavily reliant on the quick turnaround of stats to support the bet-type, which some see as a potential drawback to this product. Data companies optimising the latest technology are the key to the growth and expansion of live betting opportunities.
The subtle, more minute details about players, teams and the games themselves are difficult to gather. Ultimately, it is the quick and unwavering stats from data companies that help sportsbooks set odds, manage profit margins and determine pay-outs on an increasingly wide-ranging variety of betting events.
The core user experience challenge is related to broadcast latency, typically 7-10 seconds for traditional cable and 20 seconds and above for OTT platforms. However, going forward this will be solved through tech solutions incorporating 5G networks pioneered by real-time streaming technologies. In the meantime, “core micros” like at-bats, drives, and player next attempts are less sensitive to broadcast latency and will be the most commercially viable user experiences for operators to offer.
The latest and most attractive technologies are probably as familiar to the average consumer as they are to industry leaders, more specifically; Artificial Intelligence (AI), Blockchain and Internet of Things (IoT). When considering In-play and Micro Markets, Artificial Intelligence (or Machine Learning) probably offers the most value at this point. Its capacity for personalisation, strategic automation and responsible gambling makes it the ideal technology to push this sector forward.
The case for AI
The ever-changing nature of In-Play betting means that things can change unexpectedly. This is almost impossible for a human to assess, but machine learning applications can evaluate the data in real-time and adjust the odds in micro-seconds to reflect the ever-changing nature of sports contests.
AI and machine learning algorithms are designed to scour through all the relevant, contextual data that could impact a particular match,such as the participating players, the weather, injury reports, sport betting stats, and trends, providing users with access to the latest reports within a fraction of a second. The algorithms also analyse records and results to predict the chances of a particular outcome and offer odds that fall in line with its findings. As a result, the odds and fixtures tend to be much more accurate when compared to any past modelling systems.
AI can transform intelligence around customer journeys, enabling it to create the most relevant and engaging betting opportunities, while simultaneously sculpting a digital view of players so they can be better and more efficiently understood. Ultimately, producing instant and tangible impacts on key business metrics.
At its purest, the US online sportsbook landscape is a technological battleground, especially within these live betting verticals, and it’s
those operators that can deploy technology best - or identify superior suppliers or particular disruptive technologies - that will succeed.