The expansion of the Internet to everyday life resulted in the digitalization of online betting services and moved the Internet. Online betting services have existed for a while, with a start in the late ’90s (Miranda, 2015; Betsson, 2016). In the beginning, the main goal for them was to introduce this new online opportunity to the world and gain new customers. More than a decade has passed and the market has changed. Nowadays online betting services can not only concentrate on attracting entry-level customers but need to appeal to existing customers, as well as they, need to retain current customers. The online betting market is very competitive where competitors are “just a click away”.
The World of the Online Betting Industry
The world of online betting is undergoing tremendous change, setting it up to flourish in the years to come. The market is worth $67 billion and is estimated to reach about $93 billion by 2023—growing at roughly 11.5% per annum.
There are two trends that are bringing about this growth. First, more of our activities are taking place online, a trend that extends to betting as well.
The second is loosening regulation. The U.S. Supreme Court uplifted the Professional and Amateur Sports Protection Act in May of 2018 to legalize sports betting on a federal level. Since then, over two dozen (plus Nevada) have followed through, taking the state tally to 25.
The Most Popular Online Betting Activities
Online betting activity breaks up into a few unique categories. Casino is a big one, making up 32% of all online betting activity. It appears traditional casino games like blackjack carry the same thrill online. Bingo’s popularity is a lot more modest at 4.5%.
But the most popular activity by far is sports betting, which makes up over 40% of the total online betting market—and the $66 billion in value it encapsulates.
Online Betting Activity Type Share of Total
Sports Betting 40.3%
Other / Skill Gaming 3.5%
Betting On Betting
The numbers behind sports betting are truly staggering. Since the Supreme Court’s decision, $57 billion in legal sports bets have been made, $4.1 billion in revenues have been generated, and $571 million has been collected in tax or jurisdiction revenues.
And these numbers reflect activity in some 20 states. The total count is expected to reach some 40 states in the years to come, brewing optimism toward the industry.
The surge in betting has trickled into the world of investing. The BETZ ETF, one of only two bettings ETFs, has over doubled the performance of the S&P 500 since its inception.
It appears investors are now betting on betting.
Is Online Betting profitable?
Online betting is not always profitable because it is against your favor due to the vig. For betting to exist, companies have to make money off it, which is why PASPA was struck down in 2018. While Nevada has been raking in millions of dollars through betting, new legislation will allow every other state to benefit from sports gambling.
It can be profitable…
To be a successful sports betting, you have to put time into studying and researching various aspects of the business.
While turning positive in sports betting is possible, it’s not easy if you want to do it on a consistent basis. Before starting, a bettor should know the majority of terms used within the sports betting world. From there, research begins which could involve studying team trends, looking at odds or shopping around for the best lines.
To be a successful bettor, one doesn’t simply win a few bets from a guess and continue to win. There’s a reason sports betting is a big business and states turn a profit of millions.
Top Factors to consider when starting an online sport betting business
Thinking of starting an online sport betting business?
Here are the Top 7 factors you need to get right.
1. Generate an overall Business Strategy
The importance of a realistic strategy cannot be underestimated?
How are you going to compete?
How are you going to leverage your existing capabilities?
Is speed to market important to you
What will be your positioning?
What is your total budget?
What margin do you expect to deliver?
The answers to the questions above (and more) should then inform your marketing, product, technology, supplier, financial and trading strategy, and more.
A realistic business plan is also a must-have requirement – with budgets, costs, customer acquisition targets, margins, and unit economics all essential.
2. Research and choose the betting Software platform you actually need
Online betting platforms can be about more than the sportsbook. You will need to consider such requirements as regulations, customer registration, payments, KYC, responsible gaming, bonus, and trading tools.
Maybe you have a platform already and you want to swap out the sportsbook. At Digitain we offer a number of options, including a sportsbook API – a data feed that can be quickly integrated into an existing platform.
Also, consider the type of platform supplier you want to partner with. Do you want to be a small fish in a big pond or would you prefer to work with a supplier where you can influence development priorities?
Cost of future development is something to consider – you will want or need to add further developments to your sportsbook platform, as you compete in new markets or new opportunities arise – how much do you need to budget for this?
Build your own online betting platform
Pros: Owning your own technology can be a competitive advantage in terms of the ability to innovate, differentiate, the flexibility of product development.
Against: Time consuming, expensive, and carries a great deal of risk.
Also read: Small Business Ideas, With Big Dreams
Getting to market quickly maybe your priority and marketing your business may be your strength – so a build strategy may not suit your priorities.
Buy / License a betting platform from a trusted software supplier?
Pros: Speed to market, proven technology, and less risk. Flexibility, scalability, and cost are benefits. Experience and technical capability underwritten
Against: Not all platform suppliers are equal. Costs of the platform, minimum monthly guarantees, and localization potential, are just some of the issues to be considered.
Choose a software provider that is flexible, fast, and economic in terms of delivering your future product development roadmap. Look at the range of products and associated content and customer tools available. Is the combination fit for purpose for the markets you are targeting? Are all the sports and markets covered? Is the live betting coverage comprehensive?
3. Agree on your Product Portfolio
When European company Ikea expanded into the US in 1985 they were very keen not to adapt their product/service mix. Why change a winning combination developed over many years, right?
However, their strict strategy of not localizing any of their products wasn’t universally successful. A significant issue for the Philly customers (used to a big gulp) was the relative “tiny” sizes of the drinking glasses available in the shop – so they started buying the Ikea glass vases as drinking vessels…
Inevitably Ikea had to adapt to the market – change their “standardized” approach and localize.
You will need to have a product that can be localized and is responsive across all channels.
Be “Mobile First” – consider native app development if not for launch, then later. This approach will give you opportunities to engage directly with your customers. At a minimum ensure that the mobile web version contains all the main functionality available to players on the web version.
Consider the other key products you want to add to your platform – online casinos including specific slots, live dealer / live casino, virtual sports, and eSports have all become staples of an online betting and gaming business, so make sure your platform supplier can meet your requirements.
4. Assess your Marketing capabilities
The most successful online betting and gaming businesses are masters of digital marketing.
Unfamiliar with digital marketing? Then you’ll need to build this capability – perhaps supplementing them with an experienced digital agency.
Depending on your location, will you develop an affiliate network? Consider building your own network, or out-source to an existing experienced provider.
SEO, PPC, programmatic advertising, Google regulations, Facebook advertising – knowing how these work and how the regulations apply or don’t apply to your operation – is key. Work with your platform supplier – at Digitain we are experienced in giving new operators a helping hand, guiding them from initial concept to market entry.
5. Optimising your data – make business-led decisions
A benefit of an online sports betting platform is the amount of business data available. Invest in a Business Intelligence capability in order to optimize this opportunity – and make data-influenced decisions.
Your product development roadmap should be informed by the data you have gathered. You may be tempted to just copy what your customers do – but be careful of a “me too” strategy, copying from your competitors without knowing their “secret sauce”.
6. The customer experience you deliver
Your customers have a choice – your competitors are one click away. So, build a long-term relationship with your customers.
Develop a customer experience strategy to drive continual improvements. Surveys, focus groups or customer feedback – listen and act on the information. Customer Services are your ears – every member of the overall team needs to spend time each quarter in Customer Services, listening to the feedback about your products and services.
7. Your people, your most important asset
The most important element – take time and recruit the best people and build a team.
Train and develop. Share data on performance, customer views, new product priorities with them – and be prepared to act on their feedback.
If you’re not talking regularly to customers – you should listen to those in your team who are.
By the way – talk to customers! Regularly talk to a few customers about their views to sense check what people around you are telling you!