Simon Trim explores the ways in which optimising data for sportsbooks can increase business.
Clive Humby, a mathematician from the UK, coined “data is new oil” in 1998. Data was going to be the next wealth-creator for industry and the economy in the same manner that oil enabled new products and technologies since mid-19th Century.
This comment, for the industry of sportsbooks, was way ahead of its times. The in-play betting that we see today, driven by game-state data and real-time statistics, was not available back then. Even on football, most operators offered very little after an event started. In-play betting was not available for some operators.
You could easily believe that by 2024, sports betting operators and their supply chains are fully utilizing the available data.
It is widely believed that data and internet technology have enabled the growth of sports betting, which was impossible 20 years ago.
This isn’t completely true. When the substitute effect between pre-match and in-play turnover, along with the shift from online to retail is taken into account, the growth of sports betting in those markets that had been regulated by 2006 is not as great.
Data has not driven the growth of the betting industry.
What will the industry’s next winners be?
This hasn’t been a concern for today’s top operators. Flutter and Bet365, which have always been on the cutting edge of new trends, have become the biggest sportsbooks in the world today, displacing the former leaders of horse racing betting and betting shops, Ladbrokes, and William Hill.
While sports data might not have been the driving force behind industry growth as it’s often portrayed, how operators use different types of data will likely determine the industry’s next winners.
The future value of sportsbooks will be based on a more accurate use and interpretation the data that they have.
Let’s return to our oil analogy. This black gold, while it has been a driving force for growth and innovation in the past, is worthless when unrefined. Here is the interesting data parallel.
Base prices on exposure in real time
90% of all data in the world has been generated over the past two years. Operators now have a wealth of information that they can use to their advantage, thanks to the bet activity of customers.
The tools available for sportsbooks today to refine, analyze, and use this data to increase profits, are at best rudimentary, which means that the majority of its potential is not tapped.
Current industry models are in-play, which cannot adapt to or incorporate the rapid evolution of data. These same models allowed operators in the past to achieve great success when it came to supplying more content.
The way they’re built, however, means that they can’t automatically manage risk based on factors such as customer skills or book liability.
Operators can move forward by incorporating how prices are affected by their exposure in real time. Data-driven decision making that is objective will improve the bottom line. The sports betting industry can learn from the financial sector.
How to put the Algorithm into Action
The information that is extracted from real-time bets and other data sources can help powerful algorithms make decisions.
Operators can optimize their pricing in real-time by overcoming limitations imposed by their existing models. This is based on the objective assessment of data and their own proprietary risk profiles. If operators improve their risk management approach in this manner, the result is obvious.
The equation is based on increased margins, greater profits, reduced volatility, better brand differentiation, and sustainable market share growth.
Data proprietary can be the key to a new era of economic growth for operators in sports betting. It’s not the data itself that makes a difference, but how you use it.
