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Sports betting: What does the future hold?

By - 1 August 2019

Speaking ahead of his CEO panel at SBC’s Betting on Sports held September 17-20, Lahcene Merzoug, CEO of ComeOn! sits down with G3 to talk through his vision for the future of bookmaking.

It is often questioned whether the traditional bookmaking model is a thing of the past. I think to answer that you just have to look around you. Compare e-commerce where it was 10 years ago and where it is today: the expectations from customers on areas like personalisation, user experience, and on-demand services is changing year by year. The bookmaking model is no different, it too will need to keep developing. We see how players are much keener on the interactive experience where you customise the way you bet. The rapid growth in popularity of in-play, in addition to innovations such as request a bet, are prime examples of how operators have had to adapt in line with changing consumer preferences.

With bookmaking being such a content-heavy product, offering players the right content at the right time is, of course, central to an operator’s ability to differentiate their offering in a market that is becoming increasingly saturated. But ultimately, it is the whole experience of the product and how easy you can make things for the player that drives customer retention and engagement. There is also an increased interest in gamification and campaigns where you combine big prizes with thrilling betting experiences. Providing an engaging user journey built on intelligent analytics should not be underestimated.

Developing efficient pricing methods is also currently a major focus in terms of creating new areas for growth. Margins are being squeezed every year and operators must now compete on price to stay competitive. But that is a good thing for the players as it means a better price for the end customer, with lower margin for the operator overcome by higher turnover. Growth can be achieved by improving the offer and providing a better experience to the customer. There is also an unleashed potential in the new generations who are new to the betting world and are excited to get involved. With machine learning now being leveraged within pricing engines, operators no longer need masses of trader headcount to price markets and manage risk.

The development of more advanced pricing models has removed significant barriers to market entry and product growth for new and existing operators.
One strategy that has been employed widely across the industry is discounted customer acquisition. And while this has potential to become a race to the bottom, operators are cautious of applying offers too aggressively. We try not to over compete on being the “cheapest” option short-term. It’s different in each market, but we focus on innovation and giving our players a long-term value, which we believe leads to better player values. In addition to our traditional revenue streams, we also offer live sports coverage, betting and tips to provide value added services that keeps our offering fresh and exciting.

The legalisation of US sports betting is also providing a new avenue of opportunity for bookmakers, with benefits likely to stretch across the industry as investment booms. The American association with sport is unique – and the potential to tap into the great American ‘fan experience’ is one of a kind. Sport has always been at the heart of the American psyche, and with the right sportsbook offering – and the right technology behind it – sports betting has the capability to offer a revolutionary option that until now has only been available on the other side of the Atlantic. I believe we will see more countries following the road to regulation, and with that interest in our industry is likely to reach new highs.
Adding to the momentum is the growth of betting on eSports, which over the past few years has been quite staggering. While I don’t subscribe to the view that it will overtake traditional sports, it is clearly here to stay with no signs of slowing down.

Where eSports is showing very good numbers however, is in attracting a relatively young audience. Operators will need to invest R&D to both understand and pinpoint this new generation’s needs. The best way to adapt is to focus on strategic customer segmentation. For the first time in history, we now have multiple generations of online sports bettors – all with relatively equal proportions of total revenue derived. While recreational bettors are often not price sensitive, no matter what the generation – what is more important is to focus on attraction and retention via a high-quality proposition.
Of course, with each new opportunity comes a new challenge. Operators continue to face compliance burdens that can restrict growth strategies, especially when it comes to global expansion. They need to tread carefully with which markets to enter as it is not feasible to have a pure one-size-fits all approach anymore. Compliance is a central part of any serious betting company today. The companies that have a high local understanding and work with the regulators will be the ones to come out on top.

Responsible gambling in particular is an area where the industry as a whole needs to do more, but the question is what and how. There is a fine balance between player protection and limiting and interfering normal players’ behaviours. We strongly believe in the RG model where you inform and provide great tools for healthy and sustainable gambling. But RG is not an isolated thing to one company, it is an area where the industry needs to come together and work proactively. Regulated markets will help with this as you can introduce successful RG tools across a whole market, such as spel pause in Sweden or Rufus in Denmark.

Looking to the future, I’m excited about the way the industry is evolving. With the right product, the right tech and an efficient flexible offering, bookmaking as we currently know it has the potential to evolve into a multi-segmented omni-channel offering. Not only by delivering the full package for multiple generations rolled into one, but one that can also incorporate the changing face of tech instantly, and as fast as the entertainment industries that surround our sectors. I for one, am looking forward to making that happen.

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