Sportsbook 2022: How to Stay Ahead of the Curve
As the Sportsbook sector continues to flourish and recover from the economic downturn of 2020, the industry is now looking ahead to what’s next and how to maintain the healthy levels of growth we’ve seen in the market recently.
We spoke with Paris Smith, CEO of leading sportsbook operator, Pinnacle, to hear her thoughts on future growth opportunities in the market and how operators can best embrace new verticals and regional markets to stay ahead of the curve to ensure growth well into the future.
The traditional sports betting market has recovered relatively well over the last 18 months. As we enter into the ‘new normal’, do you expect our sector’s growth to continue and what will be the key drivers for this?
“Fortunately, the ‘new normal’ isn’t far off the previous status quo, but as an industry, we are now better equipped and more agile to deal with these external shocks. In terms of continued sports betting growth, regulatory and cost pressures are always in mind, but on the whole, we’re very confident about what’s to come, with results already surpassing pre-pandemic levels and bettors seemingly keen to get back to where they were.
“The US market is justifying its hype and that’s likely to give other markets the confidence to follow suit from a licensing point-of-view, while the sporting shutdown also gave both operators and suppliers time to reassess their product and partnership offerings, which is set to put us in good stead for the years to come. Elsewhere, the esports betting vertical continues to outpace the traditional sector, and appealing to its younger, affluent audience is set to be a key battleground industry-wide in the near future.”
With esports betting rising to become a priority sportsbook product in recent years, what makes an esports supplier stand out and what is it they’re offering to operators that deliver them esports success?
“To be the go-to esports betting supplier, you have to be able to deliver operators two things: acquisition potential and profit on the back of it. Too often, esports products don’t appeal to the unique community they’re marketed to, and even then, the underlying trading and risk management offering isn’t equipped to deliver sustained bottom-line performance.
“We’ve shaped our products to service this unique audience. They want more and being esports fans ourselves, we believe we know what these higher demands are. These betting experiences have to look like the digital environment they engage with, and the final product has to be at the same high level they find elsewhere within the esports ecosystem.
“Beneath the product is where the best esports suppliers stand out though. Being able to manage frantic live action, low margin demand, and so many titles simultaneously is extremely challenging. Only with the best trading and modelling teams, that can work around the lack of data and overcome arguably sharper bettors, can you deliver long-term results to operator partners, who increasingly want to see a better return on their esports investments.”
Customer acquisition and retention is a continual challenge for operators. Do you think our industry relies too heavily upon bonuses to engage players? What else can sportsbooks offer that will attract and retain players?
“There’s no doubt that sportsbooks are being squeezed in the current climate. Bonuses and sign-up offers are cutting into already thin margins. Conversely, the Pinnacle way has always been to avoid marketing-led strategies and focus on standout pricing and higher limits instead, and this is leveraged for our B2B partners too.
“With odds comparisons sites increasingly utilised and prices running to the middle of the market, bettors are right to be disillusioned by a lack of choice. If operators are able to look more authentic with prices that fit their liabilities, not the market average, this can be a significant acquisition tool. Once bettors are in the door, that’s when you can start thinking about retaining them through product quality.
“The ageing betting demographic is also shifting, with new customer types coming on board, and in particular, the esports audience. Having treated betting with some cynicism in recent years, we’re now winning them over with the quality esports betting content and experiences they deserve. There’s a huge opportunity to get a foothold in this rapidly-growing market right now, and working with partners that can deliver a trusted esports offering is a surefire way of bringing this new demographic through your door.”
Operating in such a competitive and continually evolving landscape as sports betting means effective risk management is a key part of staying ahead of the curve. What can operators do to ensure they have the most robust strategy in place?
“Operating your own fully-serviced trading team is an expensive business, and that’s why most have either cut risk management corners or outsourced their trading functions to specialist providers, such as Pinnacle Solution. Cutting corners is a dangerous game; it inevitably means line copying, which in turn means inefficient hold performance.
“We advocate for a higher level of trading standard, focusing on risk management as a key element of the sportsbook operation. Maximising hold on more revenue is a promise we make to our partners, and we can back it up, having proven ourselves in challenging markets for over two decades.
“For those sportsbooks who don’t have the resources in-house, it’s a straightforward process to work with those who can better manage some or all of their risk, leaving them to focus on other functions where they hold the comparative advantage. For those that are content towing the middle-of-the-market line, with low limits and high margins, then we’d be more than happy to show them the results we’re seeing.”
Emerging markets such as LatAm and Africa are showing encouraging signs of growth, in the sportsbook sector especially. How can partnering with a company such as Pinnacle Solution help to make market entry into these relatively new regions as seamless as possible?
“Local operators know their audience best; we’re not there to tell them how to market to them. Our expertise allows them to maximise the potential of these new, growing audiences by underpinning their brand with the best sports betting content and the sharpest risk management processes.
“The Latin American market is hugely exciting for us with its esports following. The grassroots esports community across the continent is booming, and we’re seeing significant pick up across our B2C arm and sportsbook partners. We’ve tailored our product and content output to suit this demand; local tournaments and local teams are always offered to regional partners so they can engage with the local esports communities.
“We’ll continue to tailor our betting content to these regions, while also adapting our products to suit the needs of the local betting audiences. We’ve proven we can succeed in the challenging East Asian markets, and with over 50 live partners worldwide right now, we’ve shown we can work with all operator types and regional betting profiles.”
According to Paris, the “New Normal’ isn’t far off the previous status quo and it’s still business as usual. The only difference being now operators are far more agile and equipped to deal with external shocks.
Paris also believes that new regions like the US and relatively new verticals such as esports are justifying their hype, providing excellent growth opportunities in the market.
One thing that does need attention is the continued focus on bonuses and promotional offers as a means of acquisition. Operators’ margins are already squeezed and these acquisition techniques will only make matters worse. Paris believes the key is to improve the product itself, through features such as more competitive odds for players. Paris believes this is the most authentic acquisition tool and once you get customers through the door you can retain them through giving excellent service.
Putting the customer journey at the forefront seems to be the best way forward and we look forward to seeing more operators in the industry take this approach.