Covid-19 and the effects on the Betting world.

Daniel Bernard explores the real problems highlighted by these unique times.

Our editor called me yesterday and asked me to write about Covid-19 and the effects on the betting industry. “I think it’s really topical and your view will make interesting reading” he tells me. Ok. So, I sat down and did what any “expert” would do under the circumstances. I googled Covid effect on Sports Betting to see what others had published on the subject. I wasn’t surprised at the content I found, but I didn’t expect the enormous number of articles I came across online.

I have resisted the temptation to simply synopsize other people’s work and pass it off as my own by adding some nice bridges and anecdotal supplements. This is mainly because the task has got me thinking about some of the related issues at hand, and I have subsequently decided to change the focus of this piece. I’ll apologize to the editor later.

I shall explain, but first I will provide the basis in just a couple of sentences. For an initial period of about two months, from mid-March, Sports Betting operators were hit with an unprecedented and totally impossible to predict emptiness to the fixture list, leading to a flatlining of revenues similar to everyone else in the sports industry. Those were scary times. But then, things started to return. And while others involved at the higher echelons of the sporting world are still nursing their financial wounds, large sections of the betting industry are actually thriving, reporting increases in year-on-year numbers since June.

How is it possible that no matter what happens, the betting industry manages to cash in? Part of the answer to that question led me to think about a very real issue facing the betting world today.

So, why is it that despite Covid, betting platforms quickly returned from the red and into the black? Perhaps this shouldn’t be so surprising given the fact that the whole industry is built on a model of financial gain from others’ losses. Ok, that was a bit crass of me. I retract. Betting certainly does provide a source of entertainment and not just a way for punters to empty their wallets. However, it did make me think about just how much of the upside for the betting operators was due to people being stuck at home. Even before sports returned, punters were turning their attention to e-sports in a big way, with turnover numbers in that sector rocketing. Furthermore, they were diversifying their betting habits to other less mainstream sports that were still in play. Add to that the fact that all the top betting companies offer casino products as well as sports betting. With the absence of your sport of choice to bet on, it is extremely simple to hit the casino tab on the same online platform and have a few spins of the roulette wheel or be dealt some hands at the live-dealer blackjack table. And then I wondered; if people are betting more because they are at home and have more time on their hands, how much of this “upside” is the result of problem gambling?

Aha! Problem gambling. A sensitive subject indeed and one of the buzzwords of recent times featured in many a push for anti-gambling legislation. There have been so many publications highlighting the addictive nature of betting and how it can draw people into uncontrollable debt or even worse. Problem gambling is indeed a serious issue. However, not ALL gambling is problem gambling and, as is so often the case, the subject needs to be understood so that a correct balance can be struck. On the one hand, you have tons of campaigners doing whatever they can to put a very tight lid on the whole betting industry as it is a cause for great social evils. On the other, you have a multi-billion dollar business sector trying to push as hard as it can to proliferate the entertainment of having a bet.

I feel it is necessary to note just how instrumental the gambling industry has been in the advances in the sporting world over the last fifteen years. Arguably the betting sector drives the biggest revenues in the wider field and finances filtering back through commercial deals and sponsorships have led to improved professionalism, better production, better sport. It’s all related. However, no amount of zeroes on betting related contracts can sweep the problematic side under the carpet and out of sight. At least it mustn’t be allowed to.

So, what do we do about the problem? The campaigners trying to stamp it out could be paralleled to UK quarantine laws for Covid which unfortunately, and through an impossible to manage quandary, can end up restricting the lives of 99% of the population while trying to protect 1%. (Like many interesting stats, that’s totally made-up but you get the point). If we stamp out all gambling, what have we achieved? Will we pat ourselves on the back at having eradicated problem gambling whilst, in the background, the hugely beneficial revenues to the sports business take an unrecoverable blow? Hmm… Well done everybody!

No. Just like for Covid management, there must be a more balanced approach to best identify those at risk. The problem gamblers, just to remind you…

Hang on a second, I’ve just had a lightbulb moment. No, I haven’t stumbled upon a solution to the problem. I’m not nearly clever enough for that, but perhaps someone else is.

Here’s the challenge to all you smarties out there. Who can find a way of successfully identifying problem gamblers from the plethora of non-problem gamblers using data, betting patterns and technology? (GDPR limitations, needle in a haystack, scalable product, blah blah blah… all the usual caveats apply). It’s not like people aren’t looking into this already, but perhaps any effort on the part of the betting operators isn’t really incentivized enough. And similarly, any effort from the regulators to tackle this issue isn’t based on enough knowhow of the inner workings of the individual platforms. And what we really need is to bring the relevant capabilities in line with the requirements, all wrapped up snugly in a nice incentive blanket. If we can do a much better job of identifying problem gambling, we can support the efforts of a healthy, regulated and positive betting industry to continue to thrive and support the sporting world, while protecting those that don’t have the ability to do it themselves. Sounds like a win-win to me.

So, there you go. The gauntlet has been thrown down. Who can deliver a way to solve this issue? Please send your answers into Daniel@mindspring.capital and the best idea wins an all-expense paid trip to the betting mecca of Las Vegas. Well, not really… But you may get the chance of receiving seed investment from one of the most sought-after investment firms in sports business! Best of luck to us all.