SBTech hits Las Vegas market

May 15, 2019 3:02 AM

Five men sit in a row inside a spartan office, each staring at computer screens. Seven big-screen televisions hang on a wall in front of them.

This office, a couple blocks from the Strip, isn’t home to a new start-up. It’s the initial foray into the Las Vegas market for United Kingdom-based SBTech.

In a small, adjacent office sits Ian Bradley, the company’s chief strategy officer. Bradley, who’s based in Bulgaria, is here to try to build partnerships and bring Nevada sports betting into the 21st century.

The United States became fertile ground for companies like SBTech when the Supreme Court last May cleared the way for states outside Nevada to allow sports wagering.

In New Jersey, where the lawsuit that paved the way for legal sports betting originated, quarterly handle has surpassed $1 billion. Investment bank Morgan Stanley predicted in November that U.S. sports betting could reach $215 billion annually by 2025.

“We wouldn’t be here otherwise,” Bradley said. “It’s why we’ve come to Nevada.”

SBTech, which has partnerships with Golden Nugget and Churchill Downs, made news recently when it was selected to provide the underlying technology for the Oregon Lottery, that state’s sports betting system. Oregon moved quickly, wanting to have its sports betting games up and running by the start of the NFL season.

Long established in Europe and Asia, SBTech operates in the United States under the regulation of the Mississippi Gaming Commission and has made deals in New Jersey and Pennsylvania, as well. But company officials have found the complex U.S. regulatory system daunting and the technological infrastructure limited.

“In Europe, more governments have embraced the internet, and that internet has allowed sports betting to become a lot more entertainment-driven,” SBTech CEO Richard Carter said. “It’s seen as more fun. People are watching a match and betting in-play, which is a big part of the European market.”

In-play — or in-game — betting is large portion of what SBTech is looking to sell in America. But Carter and Bradley believe Nevada sports betting needs some modernization.

“The regulatory backdrop in Nevada doesn’t lend itself to innovation, necessarily,” Carter said, “and I know that’s something that the gaming authorities in Nevada are currently having a look at. In New Jersey, the product offering seems to be a lot more advanced than what you’re seeing in Nevada.”

DraftKings and FanDuel account for 83 percent of the New Jersey market, according to CNBC. The two companies took in a combined $20 million in online bets in March. The CNBC report also said that gamblers have made more than 34 million wagers in New Jersey, a state of around 9 million people, since sports betting was legalized.

While he said that Europe has been quicker to adapt and innovate in the sports betting landscape, Carter predicted that the United States would take more of a leadership role in the near future. In Mississippi, SBTech has partnered with Churchill Downs’ BetAmerica online sportsbook. The BetAmerica website and mobile app offer a smorgasbord of wagering options. Mississippi casino customers also place bets at kiosks that are, in Carter’s words, just large mobile phones.

Large menus of proposition bets are no longer limited to just the biggest events. Tuesday’s Boston-Carolina NHL playoff game had dozens of different bets — “markets,” in SBTech parlance — on offer. Betting on the game to end in a shutout was +540. Like the Bruins to win by exactly three goals? That’s +625. And the Bruins’ David Pastmak was +950 to score the first goal, +950 to score the last one and +165 just to score. All three were the lowest odds of any player in the game.

Regular-season Major League Baseball games, Euroleague basketball and Australian Rules football contests have similar offerings.

The odds or point spreads on many of the betting markets — the in-game wagers — are fluid as the contest progresses.

“And that’s where the traders come in,” Bradley said. “They’re always monitoring what everyone is doing.”

Traders sometimes need to make adjustments to real-time odds on games. Algorithms are good at providing live win probabilities. But they don’t anticipate injury to a star player like Kevin Durant. Traders need to compensate for such occurrences. Often that means seeing how competitors react.

Bradley likened it to the stock market: Consensus is key. 

“An algorithmic model — as of today, we don’t have any algorithmic models that can make those judgments (about player injury),” Carter said. “You need the traders to stay on top of it, as well, to make those adjustments. It’s like a share price. You’re also looking at the other pricing out there, as well, so you’re making sure you’re not in arbitrage with the other prices.”

In an interview with CNBC in April, Carter talked about working with various leagues to insert microchips into balls, uniforms and gear in an effort to increase the number of betting options on the menu. Companies require instant data as the odds are ever-changing.

NBA commissioner Adam Silver has been a key figure in the debate over legalized sports betting in the United States. Where Silver’s predecessor, David Stern, barely acknowledged legal wagering, Silver has been a leading proponent.

“(Fans) want to bet throughout the game, so they’re betting on quarter scores, on particular players, on free throws and everything else, and independent of whatever revenue stream comes from licensing our intellectual property to those gaming companies, it results in enormous additional engagement in fans,” Silver said at a 2017 panel that included the commissioners of all four major-league sports.

Netflix customers are greeted on the home screen with a list of options based on their viewing history. Bradley talked about approaching sports betting apps with similar customization directed at patrons. Bradley talked about doing a better job of catering to bettors, “putting the customers in control.” 

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