Thomas Holland explains how automation and machine-learning are helping to transform the way liability is priced.
What is the purpose of risk management for traders? The goal of traders is long-term profit maximisation. In today’s 24/7 world, with commonly outsourced prices and content, operators and suppliers still rely on risk management in order to limit losses by setting limits and profiling players.
Operators lack the agility or control to change pricing dynamically in response to customer bet activity.
Manually reviewing each match, market, and selection in order to optimize pricing is a very expensive task. This would require a lot of resources for many businesses.
The goal to maximise profitability remains. How can traders align pricing, liabilities and customer management to maximize profits? This is possible thanks to machine learning and new automation methods.
Trading that is balanced and efficient
It is not a new idea to link pricing and liability. This was a common practice before the advent of 24/7 sportsbook content. The sheer volume of events required has changed the emphasis from customer service to scale.
You’ll lose out on margins for each market and fixture if you don’t take action on your liabilities. This includes the betbuilder product, which has complex liabilities. Profits are left untapped.
Automation is helping to remove this obstacle. The new technologies allow for not only liability-driven changes in odds but also predictive liability-driven decision-making. The decisions made are related to all market types and outcome.
What does it mean? Automated solutions, which take into consideration your previous and current liabilities as well as live probabilities and understand how much is wagered on each market related to you, can make dynamic adjustments in margins for each selection of bets. Profit is maximised.
Gains across all your content and markets will be substantial. The lack of this ability has led many traders to limit their customers and reject bets rather than take them on in order to maximize revenue.
It is a waste of huge sums of money. Customers who have a negative experience are more likely to seek out higher betting limits.
Automation can help you run a profitable sportsbook by reducing the difference between your liability and third party odds provider prices, as well as how to handle customers.
Improve your gambling experience
We saw a consistent increase in gross profits of up to 10% when we rolled out automated risk management software for our risk management clients.
A proactive, liability-driven approach to risk management can also benefit your brand, boosting retention, turnover, and differentiation. When the pricing and liability are automated and connected, traders will be able to reduce suspensions and rejections of bets.
They know that their risks are managed in an efficient, profitable and predictive way.
Operators will no longer need to limit or restrict their clients’ bets, as all wagering activity is automatically taken into account. Margins will be higher for selections that have a large volume of wagers or negative liabilities. While less popular outcomes have better odds, and will attract more turnover.
This is very difficult to accomplish manually, and we do not believe it is possible to scale up manual trading. Automation is the only way to update liabilities and prices in real-time based on each bet. Match state changes and trading parameters can also be changed.
A more effective way to resource
You can now use your data to its fullest potential with new automated tools.
The betting patterns of your clients are unique and will tell you what they’re likely to wager on. You can then adjust the odds to maximize your revenue.
Automated, liability-driven, pricing tools that are predictive and automated reduce the manual workload. This reduces the risk of human error and saves money, while also releasing resources to perform higher-skilled functions. Automated, efficient risk-management also reduces the time and effort required for customer service.
In the past decade, 24/7 content in sportsbooks has made a big difference to operators’ engagement and revenue. Automation has enabled risk management to keep up with the pace.
The sports betting industry is unpredictable, but the new technologies and automation are bringing greater predictability, consistency and stability than ever. This means that you can make more money on good days, and less on bad ones.
