In our previous article https://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. In that post we 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 18.5%, now sees lottery operators struggling to secure a mere 3% with significant operational costs.
State Lotteries have employed noteworthy strategies to navigate this challenging digital market, reaching the point, of acquiring Commercial Gaming Operators to establish a stronger 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 favouring the concept of a shared multijurisdictional Sports Betting platform have even suggested the increasing relevance of Betting Exchange platforms. This model focuses on a set commission from winning bets, thereby eliminating operational risk and liability. It also substantially limits the need for multiple operator technological platforms and specialised trading teams.
However, implementing such a model naturally raises a number of fundamental questions. How do we ensure liquidity for a substantial in size, Sports Book? How do we overcome engagement resistance from players due to the perceived complexity of exchange platforms? 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 informed investigation and review, we believe that with careful strategic planning, solutions can be found. The industry has already seen successful implementations of such radical ideas, as has been the case with multi-jurisdictional Lottery Draw platforms e.g. EuroMillions and EuroJackpot.
Admittedly, this approach was also instigated by another potential threat — 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.
AI challenges the bookmaker model because algorithms can exploit odds inefficiencies faster than human traders. However, in an exchange platform model, AI usage by participants does not affect the operator’s profitability. The platform remains agnostic as long as liquidity and trading volume are sustained.
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 both feasible and worth investigating (- Italy has implemented a licensing model). The practicality of such an implementation has, in any case, been already proven by the success of multi-jurisdictional Draw Games.
The rise of AI event outcome predictions also brings about another issue related to players’ engagement triggers. While an exchange platform alleviates risk for the operator, it doesn’t necessarily solve the problem of AI-assisted betting within the market itself. If bettors feel they are competing against 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 of event outcomes, if AI becomes prevalent in sports betting, it could lead to a situation where bet pricing becomes increasingly efficient and margins narrow further. This factor 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 maneuvering the emerging challenges and seizing future opportunities. The future of sports betting will likely require innovative thinking and bold action from industry leaders. Operators must decide whether to compete with AI or adapt their business models to coexist with it — favouring exchange-based, volume-driven structures over risk-based ones.
In essence, addressing the challenges of sports betting in the age of AI may not be about preserving the old model, but about redefining what sustainability and excitement mean in a data-driven world.
A recent analysis by iGaming Business highlights that while AI-assisted sports betting offers improved risk management and pricing accuracy, it can also flatten margin volatility — ultimately reducing profit potential for operators grammerheist.com+1anteupmagazine.com+1grammerheist.com+7igamingbusiness.com+7symphony-solutions.com+7.