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Interactive


BETTING ON SPORTS AMERICA - DIGITAL - DECEMBER 1-2, 2020 SHARP ALPHA ADVISORS


efficiently improving competitive advantages, expanding reach, and ultimately driving long term profitability.


Tere is also a growing push for sports betting operators to be as vertically integrated as possible. Tis is accomplished by building core functionalities in-house as well as by integrating them via M&A, with the goal being something close to complete ownership and control over the entirety of the sports betting stack.


Looking forward, there is a pervasive expectation of consolidation within the industry, both in terms of corporate structures and user interfaces. A market dominated by a small number of participants, all of whom attempt to compete by offering “one-stop shop” sports betting experiences, will likely come to fruition largely due to the mergers and acquisitions that enable profit-maximising business combinations and integrations.


How significant is the social element of sports betting?


It is difficult to overstate the importance of the social element of sports betting, particularly in the US. One simply needs to compare a William Hill betting parlour in even the nicest part of London with a randomly selected Las Vegas sportsbook to quickly notice the unique sociocultural role that betting plays in the United States. A majority of lifelong sports bettors and fantasy sports players will report that bragging rights, social engagement, and friendly rivalry are the most valuable components of their experience. While only a very small percentage will actually be profitable over the long run, a majority prioritise the entertainment that sports betting provides, especially in a social context.


Tere is ample evidence to support this point. Last year, US$8.5bn was wagered on March Madness with over half, US$4.6bn, being wagered through bracket pools. 76 per cent of NFL bettors continue to place wagers with friends and family or in office pools and fantasy contests. 63 per cent of bettors report being more likely to gather with friends or family to watch a game if they have wagered on it. One


third of sports fans say they would be more likely to place a bet on a game if a friend, family member, or co-worker was doing the same. Te list goes on.


And yet, current product offerings are relatively devoid of social functionality. It is not as if the decision makers at DraftKings and FanDuel are unaware of this factor, it’s just that market forces currently make it cost prohibitive to develop disruptive innovation in house. A large contributor to the US$4.5bn valuation placed on the Barstool Sportsbook before its launch was the expectation that they would leverage their social influence to acquire and retain customers at a vastly cheaper rate than the competition.


With Barstool representing the exception rather than the rule, there is a ton of activity in the start-up arena focused on filling this exact void. For example, Betcha is a real money player prop platform that offers users an odds boost when they place a bet on the same game as a friend, regardless of whether it is the same bet. Especially as Barstool continues to succeed in leveraging their personalities and community to drive handle, this topic will gain mainstream awareness.


Right now, a prospective user considers a number of factors when selecting a sportsbook, such as pricing, promotions, and user interface. However, the sportsbooks that their friends use are not likely to materially influence decision making. Tis differs greatly from most adjacent industries such as video gaming, social media, and connected fitness, where network effects are brand-specific within peer groups. While this has been the status quo in virtually every international sports betting market for over a decade, a tectonic shift is emerging whereby betting platforms of the future may feature social functionality even more prominently than odds.


Is enough being done to educate American sports bettors?


I suppose that what constitutes “enough” will vary based on whose perspective you are talking about, but right now I don’t think there is anyone who would say the answer to this question is “yes” in relation to the US market.


A majority of lifelong sports bettors and fantasy sports players will report that bragging rights, social engagement, and friendly rivalry are the most valuable components of their experience. While only a very small percentage will actually be profitable over the long run, a majority prioritise the entertainment that sports betting provides, especially in a social context.


P114 NEWSWIRE / INTERACTIVE / MARKET DATA


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