Having been in full operations for just under a year, sports betting mega jackpots start-up Colossus Bets has become one of the leading start-ups in igaming. 2014 has seen Colossus Bets integrate its pool betting services with sports betting operators Betfair, BETDAQ and Boylesports, as this fast moving new comer to igaming has processed more than £5 million in pool wagers.
SBC caught with Colossus Bets Chief Operations Officer David O’Reilly to gain further insight on launching new products and services for the sports betting industry. A founding team member O’Reilly details Colossus Bets journey from idea stage, to researching market propositions, developing initial product, refining product/services and fully launching Colossus Bets.
SBC: David, Colossus Bets has been in full operations for just over a year, can you summarise for our readers your company’s 2014 as a start-up enterprise in the sports betting sector?
David: Some of the obvious betting metrics for 2014 to date are extremely encouraging: we’ve processed almost 2 million bets; received over £5m of stakes into our pools; and players have made Cash-Ins of nearly £1m.
The World Cup, by which time Betfair and Betdaq were live offering our pools to their own customers, gave us really good impetus through the Summer and we launched a £1,000,000 HDA15 (i.e. 15 legs in a 1X2 format) at the start of the new season, which has proven a big hit.
In the last few weeks alone we have seen the following:
- a player live into the last leg of the HDA15 turning down a £320,000 Cash-In offer and falling at the last fence as Man City could only draw at home to Roma;
- 16 tickets, of differing unit stakes, going one better the following week and landing the HDA15, with payouts from £20,000 to £200,000. A number of these winners went on to scoop an additional £250,000 collectively in the HDA15 bonus leg, including one player who netted a total of £70,000 from a ticket which cost just 40p; and
- an £8 spend which nailed the first 5 scores in the £2,000,000 Pick 6 last week but missed the final leg by a solitary goal (he needed Scotland to beat Poland 2-1, which was the score with just 15 mins to go). The player did however Cash-In 60% of the ticket along the way, banking £27,000 on what turned out to be a losing bet.
SBC: Colossus Bets has tied up a number of top tier betting partnerships. How did your team undertake partnership as a growth strategy for its product and services?
David: The best advertising and biggest selling point of lottery products, despite the odds of winning generally being astronomical, is the steady trickle of winners who have landed life-changing prizes. In simple terms, lots of people play the National Lottery and EuroMillions etc, because people sometimes win, and sometimes people win only because lots of people play.
The chances of winning our headline pools, with jackpot prizes from £1m to £10m, are much better than winning the Lottery, but the same broad principle holds – we want winners so that players believe these prizes are attainable and to get winners we need lots of players.
It was logical therefore that getting volumes and players into our pools via B2B partnerships would form a part of our business plan from the outset. We have focused a lot of effort in this area and have signed 16 contracts to date with a variety of B2B partners, five of which are now live offering our pools to their own players.
Because we are offering prizes which are unprecedented in sports betting, with a unique Fractional Cash-In feature which gives a real ‘stickiness’ to the product, we have had a really strong B2B reception. Selling the Colossus proposition has not proven to be a big challenge.
SBC: Colossus Bets has developed a sports betting product/innovation from scratch, what key principles guided the development of Colossus Bets product for the sports betting market?
David: I think new sports betting operators fall into three categories:-
- Those trying to build a traditional brand from scratch, which is a huge challenge against the established operators. Those incumbents are generally slick and well-run operations who are expert in recruiting and retaining players and who can invariably outspend a new challenger to maintain their market share.
- Those trying to find the magic formula between social and gambling. Hardly a week goes by that I don’t come across something, whether live or intending to be live shortly, which is seeking to layer a social element on top of a gambling proposition or vice versa. I am bearish on this category based on what I have seen – it could be a fallacy that someone is going to crack this space, simply because social and gambling may be broadly incompatible.
- Those trying to come up with a pure gambling proposition with at least one clear USP. The last operator to breakthrough in this category was arguably Betfair, but that was almost 15 years ago.
The third category above is the one which Colossus is trying to attack. We think offering a lottery-sized prize on something far more interesting than balls randomly falling from a drum, whilst enabling players to take control of their destiny via Fractional Cash-In, is a winning formula. There is no reason why Cash-In functionality, which dominates the current TV advertising campaigns of a number of the biggest betting brands, needs to be a binary ‘will you? won’t you?’ decision. Punters should be allowed to Cash-In their positions in increments as the event/pool progresses and I believe Fractional Cash-In will become industry standard.
In terms of the principles that have guided our journey thus far, I would say that hard work and determination are essential to have any chance of succeeding. After that you need some luck and most obviously of all the core proposition needs to be compelling. The hard work and determination are the easy parts – the luck is out of my control and whether the proposition is compelling will be for punters to judge!
SBC: Prior to the launch of Colossus Bets how much customer and market research had your team undertaken in order to ensure appropriate consumer reach and engagement?
David: In terms of what is already in the market and coming to market, we did a lot of research before launch and have continued that since going live. The Colossus management team comprises people who are lifelong punters so we have a natural interest in what is going on and who is doing what in the sector.
We did a ‘friends and family’ soft launch which was very useful before going live in August 2013, but there was not a formalised programme of customer research. Since going live however we have been tuned in to what our customers are telling us. For example, we launched with a minimum bet size of £2 in all pools, but based on player feedback we introduced ‘fractional’ staking in late 2013, which means players can buy ‘fractions’ of a full unit stake and can play all our pools from as little as 20p.
SBC: As part of the founding management team of a sports betting orientated start-up, what can igaming and sports betting operators do to help new services such as Colossus Bets flourish in the market?
David: The reality is that in an ultra-competitive industry with product and technology roadmaps bursting at the seams and new fiscal and regulatory challenges coming thick and fast, incumbent operators are like hamsters on a treadmill. They don’t have the capacity to concern themselves with paving the way for new entrants/new service providers – and nor should they.
There is no way to sugar coat the fact that it’s a tough environment for newcomers and the failure of a number of smaller operators (social concepts and traditional ones) over the past 6 months will make it harder still.
SBC: Looking ahead to 2015, how do you see Colossus bets growing as a business, as a sports betting start-up what are your upcoming goals and growth values?
David: Our focus from now and into 2015 will be continuing to focus on our B2B rollout, making enhancements to our B2C offering and bringing new sports on stream. Although we launched with a football-only offering, Colossus is about providing life-changing jackpots on sports generally.
We are also keen to utilise our intellectual property portfolio. Colossus has been granted 5 patents in relation to Fractional Cash-In across pretty much all forms of betting and gaming and currently we are in dialogue with a number of gaming technology providers to develop slots which will give players the chance to Cash-In their position in full or part, before the game has been resolved.
In a similar vein we are looking at extending the mathematical and risk management expertise that underpins our guaranteed prize pools. We are currently providing the risk backing for a series of multi-million dollar pools which Ladbrokes Australia is offering throughout the Australian ‘Spring Carnival’ of horseracing.
So in short we want to grow the core betting product but also take advantage of certain components in other areas of the wider gambling sector.
David O’Reilly- COO – Colossus Bets