Wednesday, November 30, 2022

Changing Betting Behavior is Tough. In North America, Maybe Even Impossible

The Premier of my province came on the tee vee the other day asking the Feds to suspend their carbon tax increases which have driven up the price of home heating and gasoline to super-high levels. For a province as poor as this (Maritime provinces are poorer than the poorest US state), it does have some appeal. 

The most interesting part of the speech for me, was when he talked microeconomics. He noted, correctly, that this province being very rural can not change its behavior. People can't bike to work, take the subway, install solar panels or buy electric cars. It's the land of trucks for winter, hauling in summer; chainsaws and driving; tractors for snow removal. This place just ain't built for it. 

Over in wagering land, Crunk has spoken a little about the new exchanges trying to break into sports betting (and before them, racing) land. They simply can't get any volume. This despite, just like the carbon taxes, there's an incentive (on price) to play them. How can this be?

In my view, there are some obvious explanations. 

Regular consumers are not as price sensitive as they think, and companies take full advantage of it. I can get cable, cell phone coverage and internet for $200 per month, but the person across the street - even if he or she knows they can get this value - gets swayed by "bundles" from the big guys, and pays $350. This, in subscription models, is known as stickiness. 

I see bettors "cashing out" a bet at their sportsbook at incredibly bad prices. They know they shouldn't, and an exchange could yield them hundreds or even thousands more at the end of the year, but they go on doing it. It's just too much trouble, and the stickiness is too favorable. We see similar with rebated ADW's versus the big dogs. 

I think it's immutable truth at this point - lots and lots of casual bettors don't care a whole about price. 

I see there's a difference, however, between my province moving hell and earth to change chainsaw behavior and your average bettor who can change by line, website or ADW shopping : The infrastructure to enable those who may want to change is not mainstream or available enough. 

The rebated ADW doesn't have Churchill (they know all too well what they're doing when they withhold signals... they're like a big telco); the exchange is tied up in red tape in state after state. You or I can not click a button to cash out at $180 proceeds instead of $155 with any ease whatsoever. 

To be clear, there are people who do this regularly - the high volume, professional or semi-professional player. ITP does this. Many others do, including people in Australia who have many accounts for horse racing, and shop for best prices on exchanges and bookmakers. These mediums have grown from a paltry amount of volume to many billions. This fact is exacerbated, likely, because of the love of win betting downunder, compared to here. 

I believe the infrastructure will not change appreciably, certainly for horse racing, but likely for sports betting, too. And with that, I doubt the casual fan changes either. For the future of betting games in North America I think that portends less innovation, and in the end less overall growth, if any. 

Unlike my snow removal tractor and chainsaw neighbors, casual bettors can pivot on price and medium if they really wanted to, but they haven't and likely won't very much at all. And this industry, whether it be sports betting or racing, isn't going to do anything that gives them a push. 

Have a really nice Wednesday everyone. 

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