Monday, August 21, 2023

Companies Making Sports Betting More Complicated is a Problem for Customers, But It's Life

I noticed a tweet today from the CEO of a new betting exchange. He was illustrating that even making a bet on a "square" side - in this case the Ravens - can get you limited.

Sports betting through Fanduel or whomever, I think we all agree, should be pretty basic. They have millions on account, they take bets and if you want to bet the Ravens, you bet the Ravens. But it's not the case. 

Exchanges were created about 25 years ago, and the simplicity of them were apparent from the off. As long as there was someone on the other side, you'd get filled, and with a worldwide market, it wasn't hard to get filled. The exchange took their 4% or 5% and off we went. 

This was true for virtually any event of any size. 

Back in 2004 I remember playing the US election markets on Betfair. Because of the curious nature of Florida's results in 2000, the networks were loathe to call the state quickly and the markets were vibrant. Eventhough George W. Bush was in the driver's seat from the data if you dug even a little, I sat across from my playing partner as he bet $75,000 on Bush, in-running. 

That bet didn't need an approval from a CEO. It didn't need a board of directors to manage the risk. It needed a market and a click of a mouse. And this was 2004

Betting markets today have been bastardized, likely in my view, because of corporatization. The pure exchange model, a shake hands event, doesn't deliver lifetime value needed to sustain revenues. The corporates need you betting parlays, the online casino or blackjack, or online poker. Getting 5% of winning bets? It's just not enough to feed the complex, bloated beast that is <insert ticker symbol here>.  Hey, they aren't a charity. 

We lament a great deal about betting in horse racing and we should. 20% win juice on a five horse field is like flushing money down the toilet; massive rebates for a few tilts the takeout rates not our way. Corporates who want to curtail signals, raise fees etc, are not on our side, they're just trying to squeeze lemons. But it's all we have. 

It appears, at the present time at least, it's all sports bettors have, too. They've shuffled out a pure, almost perfect handshake medium in the quest of ever more customer lifetime value. Maybe the market will shift once again, and this model can return en masse at places like Sporttrade, but it seems pretty doubtful. 

Have a great Monday everyone. 

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