When looking at adding sports betting, there are many factors to take into consideration. For those of you who may be familiar with Simon Sinek, let us start with “Why.” It is critical that you select a partner that can offer all the verticals that you need to fully capitalize.
If you are doing it solely with the objective of making a lot of money, that is probably not the right reason to begin with. Most businesses that start with the objective of “I want to make a lot of money,” more than likely will end up failing. They fail because they have not determined whether the product, or service, they offer is something that somebody wants or needs. Proper planning, execution and service determine the success of the business and if that’s all done correctly, the money will follow.
It’s About the Entertainment Value
The next part of the equation is truly understanding the industry that you are competing in. The quick and obvious answer is gambling. Betting on football, basketball, soccer, or anything that has some kind of a ball or a competition that has a winner and a loser.
The real product that sports betting offers is maybe less obvious, but it’s the most important. It is entertainment.
The legalization of sports betting in many states has opened the door for many more people to participate. Before that, there were fewer legal alternatives to participate in, outside of some offshore account or the local guy operating out of the back of a building.
With the one exception of a group of friends, business associates or family members who had their fantasy football league every fall. It was for bragging rights more than anything, but there were certainly plenty of leagues that played for serious money. Most of the fun centered around the planning of the draft and then the draft day itself. With the criticizing of the other participants’ draft picks and comparing who ended up with the best team when it was done, usually everyone had drafted the best team in their opinion. All of these things should be viewed the same way when you talk about sports betting.
People are starved to find an alternative that can capture their attention for a few hours, that not only provides enjoyment, but also engages them and allows them to be a part of an activity that doesn’t cost them a fortune. As an example, for those of you who have participated in a fantasy football league and at the end of the Sunday games you find yourself trailing your opponent by 10 points, but you still have players left. Even though the Monday night game is between teams with one and 10 records, but you have a kicker, a wide receiver and your defense playing, so you are watching the game until the very end.
This is what sports betting now brings to the table. You have skin in the game, which is entertainment.
Reaching Critical Mass
Although sports betting has been legal in the US for about three years now, it is still in its infancy. If you look at the changes just in that time, the whole mentality has changed. Professional sports leagues before that would not even mention the phrase, let alone promote it. Now they are not only promoting it but also partnering with these groups and developing whole new programming to be a part of it. If you look just in the last year, the reshuffling of broadcasters who have switched networks and are making more money than when they played has been turned upside down. Let alone the different networks lined up to provide new content that we have never seen before. No pun intended, but it is a whole new ball game that will provide all kinds of new opportunities, which include casinos.
That same engagement you have seen with fantasy leagues brings that same opportunity with sports betting. A game that may have had no interest before now will keep your guests engaged until the last snap of the ball, which could be the difference between a winning or losing wager. Your ability to provide that viewing opportunity becomes critical. How you attract that audience depends on the same things that you provide for a guest service expectation.
Reaching critical mass now becomes the goal. What I refer to as critical mass is having enough recurring players who make the products sustainable. For example, Amazon Prime has 200 million subscribers in the United States, and Netflix has 73 million subscribers in the United States. Now using a monthly subscription fee of $10 to $15, they are able to support their business model. For sports betting you have multiple fees taking place in the same day or even the same game.
Surprisingly, when you look at the average wager for sports betting, it is much less than what you would think. Five, 10 and 20 dollars are the most common. That certainly does not mean that there are many players who will wager much more than that, which is great, but volume of players is just as important.
Maximizing Guest Acquisition
The next critical step in the process is guest acquisition. It does not matter what kind of industry you are in (offers for new bank accounts, music subscriptions, food delivery programs), everyone is willing to give you something to get your contact information.
But that is only the first step:
- Reactivation, Reactivation, Reactivation
A lot of this has to do with the partner that you choose for your sports betting platform and what their capabilities are. You cannot give away things for free forever, at some point you must become profitable.
In Part II we will talk about how that can be done. Three important factors to remember will be:
- Average wager
- Profit margin
Until then, good luck and have some fun.