betonliamcasey

Category: Internet Trends

  • Ten betting & gaming industry predictions for the next 3+ years.

    I wrote a post nearly 5 years ago that gave some predictions around some of the areas where there would be growth in the betting & gaming industry.

    The summary from 5 years ago?

    • Operators would need to focus on real-time delivery of a data-based customer experience.
    • That there would be a huge focus on Operators focusing on the addition of more & more markets.
    • That “branded” content would be key to the growth in the egaming space.
    • That there would a struggle to harness Social properly.

    I’ll let you, the reader decide if those predictions were on the money or not…comments welcome.

    So – what does the future hold?

    It’d be too easy to predict further super-mergers, or a loosening up of the regulatory regime in the USA, instead I’m going to focus on some more esoteric and/or short / medium & long term outcomes I predict.

    Short-term (12 months):

    • William Hill & Amaya deal to huff & puff for a relatively short period – but ultimately a deal that doesn’t get done. (Too much grey market exposure for WH. Kentucky lawsuit still hanging over Amaya. Technology integration being a barrier.)
    • PokerStars to announce that they are moving to NYX / OpenBet as their core sportsbetting platform.
    • Fortuna Entertainment Group to gobble up market share on the back of their Playtech deal. (Only if they have the in-house capability & experience to execute though…).

    Medium Term (12 – 36 months):

    • Trading floors (and direct trading of sports volume) to be wound down by many online gambling operators and customer volume to be run through managed trading solutions from 3rd parties. {Trading is a) volatile and material to bottom line results b) expensive & requires highly paid trading floors and c) pricing is getting commoditised as Operators compete with a race to the bottom around “Best Price Guaranteed”.} Offerings like 3ET to disrupt the market. (Ed note: I have done some consultancy work for 3ET.)
    • Skybet to IPO. Their recent results are a clear indication of that. And they are owned by a private equity firm (CVC) that will want to cash out.
    • Matchbook.com to emerge from “mid-tier” Exchange status and start to challenge market leaders via industry leading tech & customer experience (Ed note: I have done some consultancy work for Matchbook).
    • Companies that understand the importance of full vertical integration in the online gambling space will start to dominate across regional markets. (Vertical integration = own the traffic via owning affiliates, own the brands that you send the traffic to, own the software & IP that sits behind the brand, own the payment processing.) Optimizer Invest are probably the best example here.
    • Big national brands that have attempted to build regional profit centres around their core brand – will potentially move to more local facing brands. Paddy Power’s experience with Sportsbet is an excellent example. Betsson Group’s multi-brand strategy will pay off in the long term too.

    Long Term (36 months+):

    • Blockchain to directly contribute to regulation in the online gambling space. (Who needs regulators when you’ve got a globally recognised standard of financial record? There’s a good piece that explains it here.)
    • AI & chatbots to start doing much of the heavy-lifting around basic customer interactions in the betting & gaming space – this reducing pretty large cost-bases (and OPEX) from companies. It’ll take at least this long for current technology to transition to these capabilities.

    What do you think about these predictions? On track? Way off beam? What am I missing?

    If you need to know more about me – you can find out here.

  • Content creation in 2014: what’s next?

    Content creation in 2014: what’s next?

  • Google Correlate: Your own trend data is your friend?

    Quick post this – I just came across this last night, so I thought I’d put down some thoughts.

    Google’s newest lab rat, is Google Correlate and it complements Google Trends in the sense that it allows you to upload your own data series and look for corresponding data trends.

    Google’s mission statement for this is: “Google Correlate finds search patterns which correspond with real-world trends.”

    What’s really interesting is that it works like Google Trends in reverse. With Google Trends, you type in a query and get back a series of its frequency over time. But what Google Correlate allows is to enter a data series (the target) and get back queries whose frequency follows a similar pattern.

    What does this mean in real world terms?

    My understanding of this, is that it allows you to upload a series of data, let’s say for example how may people visited your website (and you know that it’s during say a slower period of the year), and they came to your site looking for “widgets”.

    You could take the search term “widgets” and the data series (of visits), upload the info to Google Correlate – and it would spit out other related data streams that follow the same series. This means that (in search terms) you could possibly target online categories that follow a similar online cycle – and further optimise (or spread) your search budget.

    It effectively cuts out all the complicated data analysis required to try and find similar search patterns, but based on your own data. This is where it differs from Google Trends in that all the data is coming from Google in Google Trends – but with Google Correlate you can upload your own data to be queried against what’s already stored by Google. (It’s pretty chunky in that it goes back to 2003, too).

    The maths behind the algorithm etc is pretty complicated – the number wizards out there can check it out here.

    There’s a whitepaper on it here – and the Google FAQ’s are here.

    I haven’t played around with it enough to see of it’s much more than a number-crunching exercise in terms of Google showcasing their ability to generate relevant results, based on your data – but I’m guessing that if it proves to work that it’ll (no surprise) get online marketers spending more online dollars as they try and exploit other data (search) trends that mimic their own.

    In other news, the www.igamingsupershow.com was busy, and it was good to meet so many old faces that had made it to Dublin. I’ll wrap up some thoughts on that, and #bluemonday – when I get time to draw breath.

  • Online Betting: Could Financials get the Moneymaker effect?

    When Chris Moneymaker won the 2003 WSOP Main Event, from a $39 buy in at PokerStars – he ended up creating what was known as “The Moneymaker Effect” – which was summed up saying “staying at home in front of a computer screen could be more profitable than going to work…” (a quote that came from an interview he did with Howard Swains in The Times).

    However, since 2003, online betting & gaming  has become more and more commoditised, as technology and access to content becomes cheaper and more widely available.

    There are now many online betting operators that solely rely on 3rd party software to provide product experience and infrastructure – and solely concentrate their efforts on marketing by brand differentiation. You could compare (for example) the Titan brand that solely uses Playtech for all its products and infrastructure (Titan Poker, Casino, Sportsbook) VS Bet365 that has developed a proprietary platform for its sports-betting and then uses 3rd party partners for its egaming products. (Which has become standard operating procedure for the most successful operators).

    And simply hoping for a “Moneymaker Effect Mk.2″ to drive their business may be a little optimistic.

    What’s this got to do with financial betting?

    The standard online betting operator (that’s either a market leader in a local terrritory, or has a global presence) tends to have at least 4 verticals. Sportsbetting, Casino, Poker, Games. In certain local territories, Bingo is also a staple and Live Casino is where there’s been massive adoption over the last 18 months. But why hasn’t there been more widespread adoption of some relatively simple, high margin financial type offerings, that can be easily integrated using virtually the same technology and infastructure as other online gaming offerings?

    I’m discounting spread-betting because the “hold” requirements are too high for the average man in the street. In the the UK, the average account requires at least £1,000 for any market activity, and that was the average amount attributed to a new account deposit by IG Index in 2010.

    The regulatory requirements in terms of KYC (Know Your Customer) and the documentation is a roadblock too.

    Paddy Power’s experience with offering a spread-betting & CFD product at a more casual customer base, seems to back up the assertion that it’s not a good fit for the classic online betting operator. For definitions of CFD’s see here – but it’s glorified spread-betting. (BTW – I’m actually a big fan of both product types, but I think that they either need to be re-packaged in terms of the “sell”, and targeted at a market segment that could be educated and walked through the process better.) There are opportunities available to potentially be disruptive in this market, as in many countries in Europe, the level of trust that was inherent in the financial advisor / banker / broker relationship – has been badly damaged by much of the economic fallout from recession.

    There’s another financial offering that I think is really interesting – and is yet to be exploited in the B2C market. That’s fixed odds binary options – which are simply a fixed odds bet where the customer decides where a thing (share price, price of a commodity eg: oil, gold, or index (Nikkei, NASDAQ) is going to end up higher or lower than whatever the thing’s price is at, when the bet is placed. (I love that I had to get technical and describe financial instruments as “things”). It can get more complicated than that, but that’s a fairly simple explanation. Wikipedia does variants in-depth.

    If you could tell a customer, that you can bet now on the fact that the price of (for example) oil, will be higher or lower in 5 minutes, 10 minutes, an hour or 24 hours – for as low as €10. It’s a fairly simple proposition. Binary options will allow people to bet on multiple indices, in low amounts, with a margin that’s set by the underlying market provider.

    Basically that means that the market maker (in this case an operator, or to be even more exact, the 3rd party that’s providing the operator with the binary product) can choose what price that they want to pay out on the particular index/commodity etc.

    So, for example – let’s say gold is trading at $100 an ounce, and I place a $10 fixed odds binary bet, that in 5 minutes that price will be more than $100 (doesn’t matter how much more), and in 5 mins, gold is trading at $101. I win my bet. But the payout is fixed at (for example) 70% – so I get paid out $17. If gold is trading at less than $100, I lose my $10. Looks like bad value for the customer (and at those margins it is), but it’s very profitable for the operator. The lack of value, can be more than made up for by the fact that it can be seen as a very low cost to entry to a “sophisticated” market – for a customer who thinks that they’d need to go through broker / equity / other to be able to do that.

    There’s some pretty complicated risk management involved for the market maker, but there are some great 3rd party companies out there who’ve got a solid handle on this already. I’ve talked to a few, and some of the up and coming ones have amazing technology. I think that they need to further simplfy their offerings, get some good B2C marketers involved, link up with established brands, and maybe they’ll start making further inroads with some of the larger multi-product betting operators.

    There may even be some left-field opportunities to develop relationships & binary white labels for companies that have customers who trade or who trade on their behalf – and are looking to be more active in their investment decision-making. The 24/7/365 mobile device enabled environment that we’re surrounded by today would allow consumer investors to react as quickly to newsflow and trade oil / commodities (in reaction to world events) using very simple up/down options – under this model. To make it competitive, the market makers would probably need to adjust their margins to give better value – but it’d sure be interesting to see it happen. You can see a “Play for Fun” example at ladbrokes, if you want to try it out. (Not a massive fan of their interface, but the brand postioning is ok).

    Could fixed odds binary options get the Moneymaker effect? Only time will tell.

  • My take on the Full Tilt / PokerStars / Absolute Poker ban for US players.

    If Pokerstars and Full Tilt Poker (in particular) weren’t so focused on world domination, and trying to one-up each other in terms of player volumes, I think that the events of Friday the 15th of April may not have happened.

    Why?

    In the race to keep maintaining player deposits from US customers, and given that credit cards are not an option, (particuarly for new customers), ACH transactions became much more important. ACH transactions are bank transfers where the player gives their bank details to the gaming company, and a transfer is inititiated through a payment processor, from the bank, to the player’s gaming account.

    Why was this important and how did it impact on Full Tilt, Pokerstars and Ultimate Bet?

    It became important because it allowed these companies to bypass credit card blocks, as the system that’s set up to monitor bank transfer payment types (in the ACH system) isn’t as robust as what the credit card companies have available. It’s also a system that requires a lot more monitoring, but is much more fragmented as (in the US) it is populated by the diaspora of small, local US banks.

    The banking system in itself in the US is a lot more fragmented than in other parts of the world. This means that  you’d need to have checks & balances in place, at a local level at every single bank that has the ability to send or receive funds from/to any 3rd party. Currently, the US banking system (and individual banks) conduct due diligence into the business of any merchant when the account is opened, but if the nature of that business changes (ie: from buying & selling coffee and having 1000’s of individual transactions from individuals buying coffee > overnight 10,000+ transactions which may or may not be related to online gaming) , the bank don’t necessarily have the resources (or the interest) to look deeper into it. Also, let’s face it, fees are now being generated on the 10,000+ transactions. Money talks.

    Now, if you are a big enough online gambling business, and have:

    a) enough cash at your disposal to buy a bank

    b) difficulty in getting payments from US players

    …why not buy a bank, where you can set up as many merchant accounts as you like – to process as many transactions as possible? Or, at least buy the companies/people that can do that for you?

    That’s what these guys did – and it came back to bite them on the ass. When one of their payment processors (a middle man) got caught, it looks like that in exchange for doing a deal with the DoJ in the New York – he reverse engineered a lot of the transactions and the money trail – thus allowing the DoJ to work out who was getting money from where, and where was it ending up.

    Read about Daniel Tzvetkoff’s story here.

    How does it impact on the companies indicted?

    If you combine that fact that it’s relatively easy to take a guess about the player volumes (and therefore revenues) that are being generated at these sites, because of poker aggregating sites like Poker Scout – and the feds could now reverse engineer the money trail due to Tzvetkoff. A perfect opportunity was presented to allow the DoJ to indict the owners of the largest online gambling companies out there. The Full Tilt owners (in particular) probably didn’t need to flaunt their market position so openly – three words. Red rag, bull.

    Personally, I think that it’s a perfect storm for these companies only. They’ve backed themselves into a corner with payment processing, market share and profile.

    My take?

    US players that have money on PS / FTP / UB are probably trying to get their EU based buddies to log into their accounts and chip dump to other EU accounts so that they can get their money out. Alternatively, if they want to get their cash, they’ll ned to relocate outside of the US. Otherwise, they are in for a long wait for their cash.

    Interesting times for the industry. I’d bet they’ll get more interesting.

    NB: it might slow up (in some cases) some recruitment – as people wait to see if there’s fallout (ie: good people) from the biggest companies in the space. It may actually accelerate it in other companies – as those at certain companies jump ship (wrongly) as a knee jerk reaction to this. My take? Wait and see. The sky’s not falling in, and in a month’s time, it’ll be business as usual for most people.

  • My crystal ball for Facebook advertising is working well.

    World domination is ongoing, law suits are pending and one of my Facebook predictions for marketers is coming true.

    I predicted that the cost of advertising on Facebook would rise (it’s up 40% in the last year) but that click through rates would drop. Ergo, it’s not a great destination for seriously bottom line focused marketers, companies and brands. See a few of my social media predictions – here.

    The anecdotal evidence that we’ve heard and seen from partners and competitors is that the return on investment for companies looking to use it as an aquisition tool for paying customers, is one word, crap.

    We do a lot of deals with portals, ad networks and other online destinations. Conversion rates can be anything from .5% to 5% depending on whether the site that our ad is appearing on is targeted (to our segment) or untargetd (maybe just sports, but no gambling). We’ve heard of 5 figure campaigns run with response and ultimate conversion rates of less than .001%. Ouch.

    Twitter’s growth is unabated, and it seems to have beaten Facebook to the punch on click through rate – but part of that is due to the nature of the medium (of the tweet). To have any engagement, you HAVE to click through a tweet to see more in-depth content – this is primarily due to the URL shorteners out there.

    Some of the feedback that we’ve had from customers is that when they are on Facebook, they are in friend-browsing mode and even less likely than usual to engage with random marketing, however targeted. It’s a little different when they are surfing outside of a social network. They are more open to suggestion.

    There’s a good piece on it here from last year, and that was before Facebook’s prices went up. Read it here.

  • Back in the saddle of blogging. Some online gambling thoughts first.

    It’s been too long.

    Blogging about the business of internet gaming / marketing /  gambling has just felt like extra work – and god knows, I’ve got enough real work to be going on with.

    What’s happening on the day-to-day business of online gaming front for me?

    I’m overseeing 2 x casinos, 2 x poker rooms, 3 sets of fixed odds games, our overall Partner function as well as heading up our Business Development function. It means that my time gets split between current egaming partnerships, what may be future ones, general business development – and managing a team of people.

    I’m going to have to get my sh*t together and get down some thoughts on the business of online gaming and in particular, what are the industry trends and my thoughts on them.

    Social Media – Macro Trends:

    * Social media will still not be monetised properly this year by brands.

    * Advertising on Facebook will get more expensive but click through rates will drop, and marketers will still spend shed-loads of money there, for little or no return

    * Overall email engagement will continue to drop for brands looking to engage customers through that channel. There’s too much email clutter, and social networks are cutting out the commercials by allowing P2P communication.

    * Twitter will block a bunch of aggregators that are currently piggy-backing their content, put them out of business, and try to work out their own business model (it’s got to be sponsored tweets + brand pages at a premium).

    Gaming Industry – Macro Trends:
    * B2B infrastructure deals between operators (who are now taking on the role of platform partners) – what’s going to be successful?
    * Growth in regulated markets – what markets are going to open and how tough will they be to enter?
    * Poker revenues falling off a cliff (for multi-platform operators) – why? Is it terminal?
    * Super affiliates becoming Operators (particularly Poker & Bingo) – do they have a future?
    * Live Betting is THE growth area for Sportsbooks – what sports and where’s the incremental revenue?
    * The growth of financial betting platforms – do they have a future with multi-platform operators?

    One final thing. I’d be amazed if online poker doesn’t get legalised on a state by state basis within the next two years. That’s a bonanza for online marketers in the US. Gird your loins…