In this thought-leadership article, Pavlos Sideris, Director of Double Up Media, offers his views on one of the most challenging global topics – climate change – and how it can and will impact the sports betting industry.
Climate change is set to wreak havoc on the world as we know it. Industries of all kinds will deal with the fall out of changing customer behaviour, as well as the challenges of increasingly unpredictable weather in planning, scheduling and reliability. A more unstable world beckons, in which both companies and their customers will need to learn to adapt to the extremes of weather.
Sports betting is no different, and the industry is set to tackle its own challenges around changing weather patterns in the years and decades to come. Both for operators and punters, unreliable weather can and will impact on how markets are priced, how sporting events take place, and even how people choose to gamble.
So what are some of the likely ways in which climate change could impact sports betting, and what can operators, and their customers, do to mitigate these issues?
How climate affects sport
Arguably the clearest way climate change affects sport is by introducing another variable of uncertainty. From dangerous heat to torrential rains, from high winds and extreme cold to snow, severe weather introduces an unpredictability around sporting events, right down to whether the event goes ahead as planned or not.
Cancelled events and postponements, which disrupt betting schedules, odds setting processes and risk management, will likely increase. Player performances can suffer in unpredictable ways, and even changes in the playing surface (think hard/soft ground in horse racing) can all have an impact on the outcome – posing challenges on both sides of the betting market.
Then there are issues like high winds – take golf for an example. High winds during a golf tournament opens the field wide up, making for much less predictability of outcome – a problem for both bookmakers and for punters. Or heavy rain during an outdoor event, which may result in a slicker surface for sports like football, or a heavier surface for the likes of rugby.
The ways weather can impact on sport are manifold, and by extension, this means significant impact on the betting markets and the wider sports betting industry.
How climate change affects gamblers (and their decisions)
It’s not just the sports themselves that are affected – gamblers too are known to make different decisions based on weather conditions. For example, studies show colder weather leads to an increase in online gambling activity. People are likely to be at home more, or in indoor settings, and perhaps more focused on sports and finding ways to keep themselves entertained.
But by contrast, customers at betting sites, casinos and bingo sites are less likely to play when the temperatures rise. People tend to spend more time outdoors, meeting with friends, or alternatively seeking refuge from the heat in the most extreme conditions – they don’t feel much like betting on sports.
Operators can use this knowledge to their advantage to plan promotions and offers to combat periods of hot weather, in a bid to offset the commercial impacts of the slump in activity.
Adapting to climate change
Adapting to climate change is an important focus for risk management in sports betting. Operators need to develop strategies for dealing with the unpredictability of weather, and need to model scenarios for potential disruptions – including odds adjustments – to continue to balance the books through the trickiest of weather spells.
Accepting climate change as an ever-present risk and a growing threat, operators need to up their research and analysis game to effectively get ahead of the problem. Greater collaboration with meteorological data providers can give access to real-time data and forecasts, useful in making decisions around setting odds. Algorithms that incorporate climate data through predictions and reliance on historical data can also be helpful in giving operators a head start.
Relying more heavily on the use of technology in predictive analytics, while incorporating real-time insights and algorithms can better equip operators to make the commercial decisions they need to. At the same time, mobile apps with in-play bet management can allow punters to make their own responses to changing weather patterns, for a more responsive betting experience.
Climate change is happening, and will continue to cause issues for the sports betting industry in the years to come. The future almost certainly looks different from the past, due to rising temperatures, more extreme weather patterns, and greater unpredictability in weather. With so much of sport betting dependent on reliable, programmable and often outdoors events, that risk of cancellation and disruption looks like it will continue to be present for some time to come.
While this poses challenges for sports betting operators, they are not insurmountable. With early adaptations, and a greater reliance on technology and data, these are problems that can be overcome, and can ultimately be factored in as just another variable when setting odds and pricing markets.