Denys Parkhomenko, Chief Product Officer of GR8 Tech, unpacks some of the challenges facing trading departments in 2023.
He discusses the role that automation can play in deploying an effective risk management strategy before explaining how GR8 Tech is supporting its clients in integrating best-in-class trading solutions.
While the spotlight often shines elsewhere in bookmaking, trading remains the backbone. Its primary mission is to ensure a steady foundation by balancing attractive odds for the players and sustainable profits for the business. Trading’s success depends on the swift reaction to live events, the precision of mathematical models, and thorough risk evaluation.
Choosing between sustaining a vast trading operations team or outsourcing trading to feed providers poses challenges. Different feed providers have exclusive rights for tournaments, necessitating partnerships with multiple feed providers to get comprehensive coverage. For instance, exclusive rights mean lower latencies and quicker updates using official data.
We at GR8 Tech experienced the importance of this when we observed a 10-15 second delay in odds updates from a prominent football tournament due to the absence of official data. In niche sports like cricket such latency could be very risky and may significantly increase margin volatility. This environment resembles streaming services: managing multiple subscriptions becomes necessary for comprehensive, high-quality coverage.
- As a result, if the operator wants to have a high-quality feed to fuel a sportsbook, they’d have to face such challenges:
Implementing integrations with multiple feed providers. Not only does this approach give you access to the fullest high-quality coverage, but it also gives you alternatives for trading each event. Also, it makes you less dependent on a single provider, which lowers the strategic risks of losing the feed.
- Managing content from different feeds. Aside from the technical capability of getting data from different sources, it is important to know how to cherry-pick their content to maximise the quality of your odds. It requires particular expertise to know which provider is good at which sport or tournament, to analyse their odds and when to decide to switch to an alternative.
- Managing margins, limits and other trading settings with high precision. It is important to understand that different markets within one event have different dynamics and, therefore, can inflict different risks. For example, the market “Next point winner” in tennis is much more dynamic than “Match winner”; therefore, it is more sensitive to any delays in updating the odds and is riskier. It is a good practice to mitigate this risk by setting different limits for different markets. For example, you can win 5000$ from a bet on “Match winner” but only 500$ from “Next point winner” for a top-tier event.
Automation as one of the key aspects of trading support
Automation, powered by AI and ML, is the cornerstone of modern trading support. GR8 Tech leverages AI and ML algorithms to analyse vast amounts of market data, back trading decisions with data-driven insights and accurate predictions, automate repetitive tasks and reduce human errors, significantly increasing operational efficiency and cost savings.
Additionally, the ability to continuously learn and adapt through machine learning algorithms enhances the risk management capabilities and leads to higher performance, adding 1-2% to the client’s margin.
But, just like anything else, AI and ML have their challenges. Quality data is the backbone of practical machine learning. GR8 Tech prioritises high-quality data collection and remains committed to the ethical use of these technologies. We continuously refine our models, making our predictions sharper and decisions more adaptive.
One of the emergent challenges in this digital era is the sheer volume of bets. With thousands bets placed every second, the manual adjustment of odds in real-time is no longer feasible, leading to the necessity of automation. With calculated strategies like real-time bet scoring and automated risk management reactions, we aim to further optimise our operations.
The robust and stable automation allows us to maintain and continuously improve the width and flexibility of our feed. We currently have 6 active integrations with feed providers and continue adding new ones. During the past few years, we tried more than 10 feed providers. We also have over 200+ traders managing the content we get from feeds.
GR8 Tech has its own odds engines for 20 sports with more than 80 traders that generate the content using our own trading tools. The traders primarily work on top-tier events to create tailor-made trading, as well as do custom trading of local tournaments if a client is not happy with the coverage provided by other feeds.
Our own trading team tends to keep longer uptime during a live event, especially in dynamic sports such as basketball. For example, GR8 Tech provides open markets for ~97% of live events, while other feed providers make it around ~90%. With multiple feed integrations and our own trading, we always have at least 2-3 alternatives for each major event and are flexible in creating custom trading content by request.
Additionally, we have an elaborate system of feed customisation. Such parameters as margins, limits, and latencies for in-play bets can be customised for each market within any event. Also, the same customisation can be done per brand, per user segment, or for a single player. Such an meticulous customisation system alone allows GR8 Tech to increase its clients’ GGR by around 1-1.5%.
Such extensive variability and real-time adjustment of settings would be unimaginable without automation. But there’s another piece to the puzzle – risk management.
Risk Management and Automation
Without the capacity to mitigate risks as early as possible, all automated systems would overflow with errors, stopping any trading dead in its tracks.
GR8 Tech recognises the critical importance of effective risk management. AI and ML are pivotal in our risk management strategies, enabling us to identify and assess potential risks in real time. Through advanced anomaly detection algorithms and risk modelling techniques, we can proactively monitor market conditions and adjust our risk exposure accordingly. This ensures that our operations are resilient and adaptive to changing market dynamics.
GR8 Tech’s risk management approach includes:
- Accurate risk segmentation uses ML models for client segmentation based on behaviour and other characteristics;
- Potential risk detection for forecasting future risks for proactive mitigation;
- Fraud detection helps identify activities like arbitrage betting and bonus hunting;
- Real-time monitoring, which is essentially live data analysis for swift decision-making;
- Adjusting parameters and models as per specific business needs;
- New operator accessibility, ensured with user-friendly interfaces and intuitive workflows.
We calculated that applying some reactions, such as temporarily closing the markets and adjusting limits or delays, when automatically triggered by risk factors, can add up to 0.5% to GGR of our clients. So our next priority is to automate risk action on overpriced odds detection, frequent bets players of negative segments, and suspicious load on specific selections.
Trading and Risk Management, working together
An integrated approach is more potent than isolated actions. The best risk management strategies become futile without supporting trading systems. They must operate in tandem to identify and address the root causes rather than merely treat the symptoms. For instance, a top-notch feed customisation system may fail to deliver its max effectiveness without appropriate player segmentation.
Understanding the importance of this much-needed synergy allowed us to show the stable growth of our clients’ margin from 6% to 7.5% over the last 3 years while working in different regions: Eastern Europe, India, Africa, and LATAM. And we are happy to extend this success further – to our operator clients, ensuring their development and growth with top-notch solutions and products, as well as to other providers to avoid reinventing the ‘wheel’, generate player and business value by outsourcing trading operations to GR8 Tech.
GR8 Tech will be exhibiting at the upcoming SBC Summit Barcelona, which takes place from 19-21 September at Fira Montjuïc. Pop by to Stand CG414 to speak to Denys Parkhomenko and the team about your risk management and trading needs.