In our previous article http://aqueriainternational.com/euro-sports-betting-multi-jurisdictional-gaming-proposition/ (June 1, 2013), we discussed the evolving European Lotteries’ industry landscape, underscored the prominence of Sports Betting, and highlighted the associated operational complexities traditional lottery operators face. And concluded, that a Cross-European shared services model with multi-jurisdictional platforms could be a viable solution to the challenges faced.
Reflecting on these observations and considering market changes over the past decade, we find an even more compelling case for the implementation of such a strategy.
Regulatory shifts in most European countries have opened the gates for licensed Commercial Operators in lottery markets, intensifying competition and exerting downward pressure on profitability. Sports betting, once boasting gross gaming margins of up to 20%, now sees lottery operators struggling to secure a mere 3% in a landscape with significant operational costs.
State Lotteries have employed noteworthy strategies to navigate this challenging digital market, including acquiring Commercial Gaming operators to establish a strong foothold in the interactive domain. These moves signify the lengths traditional lottery operators are willing to undertake to maintain competitiveness. However, they also highlight weaknesses within the traditional lottery structure and its response to modern market dynamics.
Looking ahead, some industry professionals favourable to a shared multijurisdictional Sports Betting platform have even suggested the increasing relevance of Betting Exchange platforms, reminiscent of those used by leading Commercial Operators. As this model substantially limits the necessity for multiple technological platforms and reduces the need for specialised teams, focusing on commission from winning bets, thereby negating risk and liability entirely.
However, implementing such a model raises a number of fundamental questions. How do we ensure liquidity for every placed bet? How do we overcome resistance from Players due to the complexity of the exchange platform? How is the Gross Gaming Revenue (GGR) defined and distributed amongst the Lottery Operator and its land-based Agents? What concessions need to be granted by the Gaming Regulatory Authority for this to become a viable operational segment? How can an Operator maintain a Responsible Gaming framework?
These are critical issues that need to be defined. However upon review, we believe that with careful consideration and strategic planning, solutions can be found. The industry has already seen successful implementations of radical ideas, such as the multi-jurisdictional platforms for Euromillions and Eurojackpot.
Admittedly this radical approach was also instigated by another potential threat looming on the horizon and that is, the advancement and use of artificial intelligence (AI) in predicting event outcomes. By all accounts, AI could significantly disrupt traditional Sports Betting operations, with seemingly no practical countermeasures available to operators besides barring punters, a move which is inherently counterproductive.
In the face of such disruptive potential, the case for a cross-European exchange platform may gain an even stronger following. By completely alleviating risk and liability, improving profitability, and providing a robust counter to the AI threat, it may present a transformative opportunity for the European (and not only) lottery industry.
Regulatory complexities and multi-jurisdictional collaboration undoubtedly pose challenges, yet the potential benefits render this pursuit feasible and worth investigating. The feasibility of such an implementation has, in any case, been proven by the implementation of multi jurisdictional Draw Games.
However, the rise of AI presents a significant challenge to the traditional sports betting model. While an exchange platform alleviates some risks for the operator, it doesn’t necessarily solve the problem of AI-assisted betting. If bettors feel they are competing against emotionless, super-efficient AI algorithms rather than other human beings, it could make sports betting feel less like a game and more like a mathematical exercise. Moreover, without dismissing the randomness to any event outcome, if AI becomes prevalent in sports betting, it could lead to a situation where the outcome of bets becomes increasingly predictable, which could reduce the excitement and unpredictability that makes sports betting appealing to many people.
The industry’s evolution has proven the foresight of our past recommendations. As we progress, the embracement of innovative strategies and shared cross-border platforms appears crucial for manoeuvring the emerging challenges and seizing the future opportunities in Sports Betting. The future of sports betting in the face of AI is uncertain, and it will likely require innovative thinking and bold action from industry leaders. The question remains: Can we save sports betting in the age of AI? The answer is not straightforward, but the journey to find it will undoubtedly shape the future of the industry.