As COVID-19 continues to disrupt business around the world, what are sportsbook operators doing to make up the difference in lost business? As we head into an unpredictable fall and winter, how are they positioned to deal with another blackout?
These was among the topics at the SBC Summit Barcelona—Digital last month. In a discussion led by Marc Thomas, a partner with sport betting-focused gambling consultancy Propus Partners, sports betting executives were generally pleased with the response of their organizations, particularly on the technology front. The popularity of filler product such as table tennis and e-sports was a pleasant surprise, with e-sports in particular looking to have carved a niche out for itself. The panelists were Matt Scarrott, director of sportsbook, BetVictor; Jamie McKittrick, group head of commercial, GVC Group; William Woodhams, chief executive officer, Fitzdares; and Martin Dachselt, chief executive officer, Bayes Esports. What follows are some excerpts from the conversation:
What has your organization done to mitigate the effects of COVID?
WOODHAMS: Engagement. We decided very early to engage our audience—we’ve got a much smaller audience than all of the other panelists since GVC focuses on the VIP market. We spoke to about 60 percent of our client base daily about what was going on, with either a personal message or a daily newsletter.
We tried to push people onto new and engaging sports, but we don’t have a big enough book to really make that work. We made a thing about making sure our clients could watch Hong Kong racing on a Wednesday morning, or any sport that was on. We, like the rest of the industry, didn’t push hard to try and flip sportsbook customers onto casino—we felt that would be inappropriate and we felt there would be compliance issues around that.
Really, I thought COVID was about keeping your clients engaged and providing a service to them without taking money off them during that period and hope they would come back to you when sport resumed in June.
MCKITTRICK: There were three main points to our COVID response strategy. First, we are rapidly redesigning all of the digital UX (user experience) to promote all of the non-sportsbook propositions such as poker, gaming, etc., all of which did particularly well. Second, was a massive acquisition of untold volumes of second-tier products—I think it was actually the Tajikistan football second division that had its data rights up for renewal and I’m told it was one of the fiercest bidding wars ever. Finally, from an operational perspective, there was quite a lot of immediate resource redeployment from people who would normally be trading tennis or football, which wasn’t happening, to things like e-sports, with which they were less familiar.
Were all of those things effective? Broadly speaking, yes. Our first half 2020 digital NGR (net gaming revenue) came out in line with the first half of 2019, which, given there were no sports happening for roughly half of that, was quite phenomenal.
What would we have done differently? I think we missed an opportunity for a greater level of testing, which you wouldn’t engage in when there’s a lot of P&L on the line, such as deploying streaming on some products but not others. I think the industry also could have taken the opportunity to leverage some greater transparency out of the racing industry whilst they were knocking on our door for additional support. There’s quite a lot of money going into racing from operators and I think we need to do a better job of making sure it’s going into prize money.
Same question to you Matt—obviously BetVictor is a huge operation, but could you also touch on how things are going in Gibraltar, being one of the centers for gambling?
SCARROTT: Of course, Gibraltar is quite a big thing as you point out. It actually gave us a bit of pre-planning with the whole office working from home. With the Brexit talks not really going anywhere for ages, we were planning for total closure and for staff not being able to get into the office so we were ready for everyone to work from home with 24 hours notice, no problems.
However, for us on the sportsbook, it was all about content. Manual trading is something I hadn’t done probably in 20 years. Trying to keep on the prices on table tennis is impossible—I didn’t do the best job, I have to say. We’re in a position to change around our technology road map with new integration and support from different suppliers, but really I was just about getting everything out as quickly as we can and get the content going.
Probably the most bizarre thing we ever bet on was Kung volleyball, which is probably a bunch of middle-aged, slightly overweight men trying to get the ball over a volleyball net. I’m pleased to say it did okay; it’s not something we’re really looking to continue but it served its purpose for a while. E-sports took a new turn. I never really considered FIFA to be an e-sport myself, but in the absence of any real football, FIFA became the staple of football content.
DACHSELT: Since we are more of a supplier, our aim was helping our customers to mitigate the effects. For example, once e-sports was up and running, the conversation with customers became how can we offer it as soon as possible? We wanted a fast program to replace traditional sports content with e-sports, so we made a special COVID deal, short-term contract, no questions asked with very fast implementation. This was very well received; we had a lot of additional bookies starting to offer e-sports from that point. In general, after two months, the situation stabilized and we were able to increase the business.
Obviously, this has been a challenging time that none of us could have really foreseen. How do you think we’ve coped as an industry?
DACHSELT: I think the industry did the best it could. I saw many creative measures from the traditional operators with e-sports such as FIFA, which has been mentioned. The industry also shined by getting any available content and making it available to the punters. What was doable was tried and done.
WOODHAMS: I think we did unbelievably well. I look at other industries and how slow they were to react and how their UX has been average. Even the airlines, which run numerous bonus schemes, took six months figuring out how to keep everyone at bronze or silver. Within weeks, our industry was on top of this; rewarding loyalty, looking after people. I mean I’m amazed by Jamie’s and Matt’s businesses, their ability to bring in new content to people and keep them engaged and interested in what was quite a boring time for a lot of people.
Therefore, as an industry, I think we did spectacularly well, which, unfortunately, has put us in the headlights of compliance and politicians and people who think we’re taking advantage of the moment; when we were actually being very swift and effective business people. There are people in lockdown pulling their hair out and wondering what they could do with their businesses while, as far as I could see, bookmakers were moving their businesses forward, being agile, adaptive, changing tech, improving UX and planning for the future. So all in all, a slight pat on the back for the industry but, obviously, not too loudly.
That‘s an interesting point… do you think COVID has improved, reduced or altered perceptions of the industry?
MCKITTRICK: I agree with Will, the industry has coped well. Many years ago, I was on Ladbrokes risk committee and there was no way you could have realistically foreseen and stress-tested the scenario that we saw. I further agree that, internally, I was blown away by the agility of our technical teams and I think, in fairness, most of our competitors did exceedingly well, too.
I also think the industry did very well to evangelize some if the responsible gambling messages that are becoming the biggest challenge we face. There were several voluntary concessions made around advertising. I think the Virtual Grand National was a great success with several million pounds donated to the National Health Service (NHS). We will continue to get bad press from several notable MPs and journalists, but I think the industry took the opportunity to turn that around by bringing the responsible gaming message forward.
SCARROTT: I agree with everything Jamie said. Probably the biggest thing for me was the collaboration within the industry; the Grand National was the start of it. These aren’t people who normally work together for a common goal, being competitors, and it was great the way everybody came together. There were loads of voluntary stops on advertising.
The virtual Grand National was a bit of an issue to pull together so quickly, but we decided we were going to do it together for the NHS and it was a great result. Horseracing wouldn’t have come back without the operators helping to fund it coming back.
I’m assuming all four of you have been working hard to put in measures should a lockdown or something similar happen again. How do you think you’ll be even more ready should the worst happen?
SCARROTT: Having done it once, it’s going to be far easier to do it again. E-sports, for example, was great for us before the pandemic. It massively accelerated the focus we put on it because people playing games from home are never going to be under that kind of COVID-prevention pressure. The pandemic accelerated things we were doing already but it also made us find some new suppliers very quickly and integrate at speeds we’ve never really done before.
Everybody knows what works this time; we could never imagine that some of the stuff we put up had the kind of traction that it did, but now we’ve got those integrations and we’ll continue to build on that. E-sports is only going to keep growing.
So, yes, we’ve had a practice and hopefully it never happens again—but should it, I think we’ll be in a better position.
DACHSELT: We are more flexible now; we can basically cover a tournament within a day. We have streamlined our communications with the tournament organizers so we get better information faster.
What’s happening in such cases is there are still some business things to sort out. For example, offline tournaments are more valuable than online-only tournaments. Now when offline tournaments are converted to online only, what does it mean for the money we have paid to the tournament organizer?
Nobody anticipated that the pandemic would happen to such an extent, but the same thing happened to us on the customer side in terms of what they paid us. I think we have to adapt contracts in the future to what happens if they deliver less or more than anticipated. But from the pure content side, we are now more flexible and can react much faster if such a crisis situation happens.
WOODHAMS: If I could just jump in… if anyone wants to buy 100 Dell desktop computers, I could give them a good price. Because as of next week, our entire company will be working off laptops that they’ll bring into work.
That sounds small, but the fact that traders can work from home… they should have been doing it five years ago. That they were schlepping an hour-and-a-half into the office trying to be in at seven in the morning and leaving at midnight is frankly ludicrous. Our ability to be more agile with how we work with people means we can work with better people and even better people around the world.
Do you think the lack of fans at stadiums and racetracks and such has a direct correlation into the interest level and betting revenue?
WOODHAMS: Not with racing. It’s great that as a small operator in the UK we get to do a streaming deal with the two main broadcasters for a June start. Broadcast and racing has not been affected.
But every other sport just looks wonky and is a bit rubbish. It will be great to get real fans back instead of dubbed fans as soon as possible. Just the atmosphere, engagement; people love sports, it’s the most popular pastime on the planet. It needs an audience for it to pop, both in broadcast and as an experience.
Matt and Jamie then, as mentioned, you’ve probably changed more from pre-COVID, during COVID and post-COVID. What do you think the “new normal” looks like for BetVictor and GVC respectively?
SCARROTT: Will has summed it up very well. You’re never going to replace the big sports. You can put the extra content on in their absence and some of it will stick around. Kung volleyball and the things that Jamie talked about earlier—they’re not going to be things that we see for a long time. But some of the e-sports—FIFA and League of Legends—it’s all round-the-clock stuff and I think that will hang around.
You’re never going to beat the thrill of a real sport. Racing is probably the one, like Will said, that has survived without the crowd. The others just don’t feel the same, although there’s still plenty of interest. I think it will go up again when you get the fans back.
MCKITTRICK: I concur. We continue to be surprised by the levels of residual demand that we see for “COVID products.” We did more money in table tennis in that one week than we did in the respective week in 2019 on tennis, and that is a phenomenal statistic. E-sports continues to hold up with its popularity. Last month, it was still over two percent of our sportsbook stakes. That doesn’t sound like a huge number, but when you’re talking about tens of billions of pounds across global sportsbook, it soon adds up to quite an impressive absolute number.
As far as the new normal, I agree that we’re unlikely to see a second wave of the same proportion, but as Matt said I think we’re much better prepared for how we do that. Many of the mitigating actions that we took during the main COVID peak we’ll be capable of redeploying quite rapidly.
I think, sadly, the new normal for sportsbooks, the one single, massive focus, is going to continue to be responsible gambling. Certainly, for the two largest regulated jurisdictions that GVC operates in, that is probably the single largest risk to the business. I think it was notable that when Shay Segev recently took over as our chief executive officer, responsible gambling took such a prominent place in the company’s strategy. Quite genuinely, we think it’s in our interest to be a sustainable business, not just to do things right but to do the right thing.