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ICE 2015 Comment – Peter Bertilsson Metric Gaming – New Technology & Innovation in iGaming – 2014 Review

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Peter Bertilsson Metric Gaming

Ahead of ICE 2015 Peter Bertilsson  CEO & President of Metric Gaming reviews igaming 2014 innovations and industry technology/market conditions.

The gambling industry – despite (or perhaps because of) its size and success – has been notoriously resistant to new technology. Indeed, because many gambling operators still rely heavily on outdated technology, any upgrade would likely require a complete system overhaul, demanding substantial time and cost – not to mention potentially burdensome regulatory testing – all while jeopardizing an already working and highly profitable product.

But the one company that did just that – Bet365 – has reaped extraordinary benefits, realizing year over year gains in mobile sports betting revenue in excess of 100%. Surprisingly, no other major operator has been willing to invest that kind of time and money in the latest wagering technology, with most companies instead attempting to improve their live and mobile offerings by pushing existing desktop solutions through mobile channels – an inevitably losing strategy.

As a result, in 2014 the iGaming industry saw sports betting “innovation” primarily in the form of a larger selection of in-game sports betting markets. Such increased variety was not a function of improved technology, but more reminiscent of financial derivatives, representing variations on the same underlying commodity (i.e., the conventional total and point spread markets). Of course, a larger selection of bets – particularly ones that are merely derivative – is especially counter productive on mobile channels, where real estate is limited.

With technological innovation largely at a standstill, competitive differentiation has become tricky. Indeed, marketing messages across operators are looking more and more alike, as the same betting markets and online casino games are available virtually everywhere. Such uniformity has resulted in inflated customer acquisition costs, forcing operators to compete on price alone (e.g., bigger bonuses) and/or breadth of game selection, as operators race to integrate the latest slot machine iterations. The big winners in this environment are naturally the B2B casino suppliers, who can continue to churn out new slot games with relatively simple variations on themes and graphics, rather than any substantive innovation.

To stand out among competitors in the sports betting market, however, technology is likely to be a more critical factor in the near term. In 2014, we saw the appearance of the first truly “real time” betting markets, allowing wagers on discrete, in-game events as they unfold (such as an upcoming free kick, birdie putt or field goal attempt). These markets indeed capitalized on the latest in live data feeds, mobile technology and in-game betting algorithms, and are likely indications of where the mobile sports betting market is headed in 2015 and beyond.

The ever-increasing popularity of in-game betting also indicates an important shift in how the world consumes sports wagering products, with the success of lottery-style pools and alternative markets (i.e., individual player performances and discrete in-game events, rather than end-of-game totals and spreads) also signaling an appetite for new live sports betting options and formats. Given the very nature of sports betting – where outcomes are dictated by real world actors rather than random number generators – satisfying this burgeoning demand for innovative wagering products necessarily requires enhanced technology. To be able to place a wager via a smartphone on what will happen in real-time in a sporting match requires tremendous bandwidth and computing power, such that the events on the field are tracked and processed, handicapping algorithms applied, markets generated, wagers transacted and results graded, all in the span of a few seconds. Any latency or hiccups along the way, and the user experience is compromised. To achieve this functionality requires new technology with modern architecture.

Along with more bookmakers embracing the technological advances necessary to offer such next generation sports wagering, in the new year we are also likely to start seeing the “app-ification” of sports betting consumption. That is, rather than cramming the full sports wagering platform (i.e., all sports, leagues, bet types, etc.) into a single mobile portal, offering individual apps for each sport (or even each league) instead. Consider having to go to the app store to run a search every time you wanted to play Candy Crush – that is effectively how mobile sportsbooks are offered today. These products should instead be compartmentalized to mimic today’s widely popular and intuitive app-driven culture, where the consumer enjoys an experience that is already fully tailored to his or her preferences.

The surge in popularity of fantasy sports in the U.S. has also begun to carry over into Europe, where fantasy sports betting products are starting to gain traction as well. This trend will likely continue, as fantasy sports betting offers a level of enhanced consumer interactivity driven by the inevitable sense of ownership one develops when hand-selecting a fantasy team. This personalized aspect of the wagering process improves end user engagement levels, creating an additional source of entertainment separate from the wager itself (i.e., the mere chance to win money). Accordingly, fantasy sports wagering offers exceptional entertainment value without requiring a large monetary commitment – an especially attractive proposition for younger generations.

This undeniable appeal of high value entertainment is also prevalent in the social gaming sector, where inexpensive in-app purchases can translate into many hours of playing time, leaderboard recognition and other accolades that are readily shareable with friends. But the success of social, virtual casino products has surprisingly not yet translated into social sports wagering, suggesting that the market’s existing offers are not sufficiently engaging.

Metric Gaming has accordingly partnered with a U.S. company to launch a social sports wagering mobile application based on its SuperLive™ markets, offering propositions and odds that have already been tested and proven for real money betting, but as a social game for competitions among friends and other users worldwide. The iGaming market will likely continue to see innovation in the mobile fantasy, virtual and social gaming markets, in keeping with the massive market potential and perpetual advances in mobile technology.

Despite a lack of significant technological innovation for the sports wagering market in 2014, revenues nevertheless continue to rise, and will almost certainly maintain their trajectory into 2015. Competition will stiffen, however, as operators increasingly recognize the need for innovation to maintain a competitive edge, which will in turn raise demand for technology suppliers, particularly those with turnkey solutions that allow operators to quickly and efficiently implement the most advanced sports wagering systems.

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Peter Bertilsson – CEO & President Metric Gaming

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