For many European State Lotteries, Fixed Odds Sports Betting has been identified as one of the most significant growth sectors and contributes substantially to their overall performance.
While in Deregulating markets, its development and further enhancement is being leveraged to reclaim segments of the traditional customer base that have been captured by Commercial Operators.
For other Lottery operators, Sports Betting is a relatively “new and foreign” concept, quite removed from the pre-set margins and payouts, which constitute the Draw and Instants Gaming segments.
Sports Betting is a complex and risky business. Complex, since it requires dedicated operating platforms and teams of specialized personnel and Risky, due to the fact that Liability incurred is not predetermined and that its management, relies on individuals making critical decisions under pressure. Furthermore, Sports Betting Lottery operators face the challenge of competition in unregulated markets and a growing number of “educated” punters ready to capitalize on any given opportunity.
Within the Gaming & Lotteries industry at large, F.O. Sports Betting is consistently gaining popularity particularly to a broad male customer base.
The main attributes of Sports Betting (versus traditional lottery products) are: the emotional attachment a player has with a particular sport; the presence of a “gaming rush” associated with the personalized projection and the anticipation of an outcome; the sense of control over the outcome of a wager with the incorporation of a payer’s skill/knowledge base, and the substantial array of betting fields offered and their syndication (Live Betting, system bets, flexbets).
In the overall EU Lotteries market, Sports Betting had been consistently growing and peaked in 2008 with a GGR of €1.448b and Sales of €5.363b, yet this trend experienced an abrupt drop in 2009 (-8% of previous year GGR / -4.6% of previous year Sales) and the gradual decline has continued to this day.
To an extent, this downturn can be attributed to the negative economic climate and the introduction of new Gaming segments. However when taking into consideration that for example, in 2009 the overall E.U. Lotteries GGR increased by 6.4%, this implies that F.O. Sports Betting funds are not reaching the traditional Lottery operations.
This is further substantiated by the fact that, for online Commercial Operators with a full product portfolio, F.O. Sports Betting is by far the single greatest contributor to revenue – 60% greater revenue than casino and around 33% greater revenue than Draw type games. While for Lottery operators in 2011, F.O. Sports Betting accounts for only 4% – €1.34b of total Lottery GGR and 7% – €5.1b of Total Sales. (It must be noted that overall State Lotteries growth has been predominantly attributed to: the introduction of new Gaming Segments accompanied by the relevant marketing and advertising effort, and the substantial ticket price increases).
It is generally true that Commercial Gamming Operators have been able to consolidate their market presence by taking advantage of two distinct Lottery Industry weaknesses. First, State Government delays in establishing a Gaming & Lotteries Regulatory framework (where applicable, in accordance to EU commission guidelines) & second the inability of the Lotteries to quickly utilize Interactive Channel technologies and respond to the evolving player needs.
Furthermore in non-Regulated markets, Commercial Sports Betting operators have been able to leverage the fact that Gaming / Company Taxes are not enforceable by the State and consequently are able to provide a more competitive offering – a substantially greater range of marks & markets at higher odds.
In deregulated markets, the competitive advantage of offering better odds has disappeared and taking into consideration that for a typical Spots Book, less than 20% of events attract more than 80% of sales; Lottery operators have the opportunity to gradually reclaim a large portion of the recreational Sports Betting player base and consolidate their position further in their markets.
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