Scott Longley – Minority Report: UK sports betting by numbers…

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Scott Longley

Scott Longley breaks down the UK Gambling Commission’s report on UK consumer betting on sport, assessing if there is a clear long-tail of opportunity for bookmakers in markets beyond football and racing.

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The data released in November last year by the UK Gambling Commission for the first time gave an insight into the online betting habits of UK punters by sport. Covering the five months between November 2014, when the Commission first began gathering data under the new Point of Consumption (PoC) regime, and March 2015, the data gives us some headline figures for how much was being wagered and how much gross gaming yield (GGY) was being harvested by the remote sector.

It also gives us a breakdown by sport – the first time that a reliable data set has been put together in any major jurisdiction to give us a snapshot of what the punters actually put their money on. Though hardly eye-opening – it will surprise no one that football is the biggest sport with racing coming a distant second – the data does throw up some interesting insight into sports lower down the list.

Now there are some caveats before we get into the numbers. One is the fact that this is merely a five-month snapshot that will be heavily affected by seasonal factors. Wariness over reading too much into the figures is therefore needed.

A second issue arises out of the way that the Commission reports its fixed-odds sports-betting GGY figures, splitting the total figure of £535m between proprietary GGY of £380m and a revenue share figure of £155m. The revenue share relates to B2B and other arrangements and is designed to avoid any double-counting of figures from operators and suppliers. This revenue share figure is unallocated between the different sports and it has the potential to distort the margin calculations for each sport.

For instance, the margin across the total stakes/total GGY figures as reported is 10%; whereas the margin for stakes/proprietary GGY revenue is 7.1%. the second figure more closely matches the actual margin figures given by the major operators: William Hill’s gross win margin for 2015 was 7.8%; Ladbrokes’ margin was 6.1%; in its last year as a standalone company, Paddy Power achieved a margin for 2015 of 6.6%. Given these numbers, it would appear safe to assume we can trust the margins on each individual sport are a fair indication of the actual margins achieved in the five-month period and that we effectively discount the revenue-share figures.

What stands out from the table below is not that football and racing are quite so far ahead in terms of stakes placed, but what the margins look like for some of the sports further down the list. Our first port of call is cricket.

Sport Stakes (£m) GGY (£m) Margin (%)
Cricket 236.78 4.79 2.02
Dogs 85.87 9.26 10.78
Financials 56.5 3.1 5.48
Football 2,113.48 168.44 7.97
Golf 34.11 3.63 10.66
Horses 1,624.03 127.86 7.87
Tennis 441.74 25.31 5.73
Other 740.73 37.35 5.04
Total 5,333.24 379.74 7.12

A minority sport in UK sports-betting terms (worth 4.4% of total stakes) but the 2% margin is barely enough to sustain the investment in the (clearly-getting-it-wrong) algorithms. In this instance, the period between November 2014 and March 2015 included the Cricket World Cup that took place in Australia and New Zealand between February and March. Clearly there is a tale to be told about shrewd cricket betters ignoring a woeful performance by England (who failed to qualify from the pool stage) and lumping on the form teams in the competition.

Also understandably at the lower range of margin is tennis where we know that it is dominated by in-play (by over 80% ratio according to some sources) and which inherently has lower margins due to the lack of possible multiple opportunities.

Also hovering at around 5% margins is the ‘other’ category of sports. Sizeable enough at total stakes of £741m or 13.9% of the total, the figures include the betting from the long list of 30- or 40-plus minority interest sports the left-hand column of the major sportsbooks. This will include basketball – once again an in-play favourite with UK-based sportsbooks – alongside more European favourites such as handball, the various US sports, novelty bets, darts and snooker.

As with all sportsbooks across Europe, the long list of sports represents the long tail of betting opportunities, there either to provide in-play alternatives or localised offerings. It also includes virtual sports, which in UK terms it might be lower down the revenue table. However, we know from previous comments from providers such as Inspired Gaming and Sportradar that in other territories it can be as high as fourth or fifth in the list of most popular sports. Similarly, eSports will be among the ‘other’ category and though it is likely not worth much in these over-a-year-old figures, it is destined to be more of a factor in the months and years to come.

Finally, at the opposite end of the punter-value spectrum for these UK figures is golf which like the cricket is a good example of the seasonal factors that need to be taken into account these five-month numbers. Clearly, the months between November and March aren’t great for golf fans with some Asia Tour events being pretty much the only fare until early spring when the US and European tours begin winding up the gears.

However, at the Pitch ICE/GamCrowd Studio conference in February this year, Andy Clerkson, the chief executive of Grand Parade, told the audience that anyone with ideas around promoting more golf betting would find willing listeners at the major online sports-betting operators, so there must be something in the sport that the bookies like.

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