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Emerging Technologies

What are the odds on that? How technology has transformed the betting industry

Today bookies can take bets on minor sporting events more or less anywhere... Vietnamese Third Division, anyone

9 July 2016

9:00 AM

9 July 2016

9:00 AM

Sixteen years ago last month, the organisers of a party at the Sports Cafe on Haymarket heralded a sports betting revolution. What they launched — known that evening as ‘open market’ but soon renamed ‘exchange’ betting by the media — predicted that technological innovation facilitated by the internet would herald the death of the bookmaker and offer punters the opportunity to take control. But in January this year the business they created merged with a traditional bookie that was very much alive and kicking. The revolution, it seems, was aborted.

Or perhaps the revolution still continues. The betting industry has certainly changed beyond all recognition since June 2000. In fact it has changed to a remarkable degree since June 2012, and in both cases, technology has been the driver. Back then it threatened the existing industry. Today it looks just as likely to be its saviour.

During early changes, what had been an exclusively cash environment switched to electronic exchange, and the chance this gave to monitor transactions was welcomed by marketers, regulators — and the taxman. Meanwhile, the devices punters use to place bets have developed at breakneck speed. In 2000, online gambling was in its infancy and telephone betting still big enough to warrant the entire industry moving offshore. Today 70 per cent of UK remote (that is, not shop-based) betting takes place on mobile devices. Betting call centres are under greater threat than the snow leopard.

The days of a ‘take it or leave it’ price are long gone because punters can now ‘cash out’ their bets if the market has moved their way. And lurking behind the ability of bookies to offer that facility is the factor that has changed the industry most of all: the depth of data, and the ability, thanks to technology, to exploit it.

The fact that every tackle made, yard run, shot struck or goal scored is meticulously recorded — along with every other possible variable — will come as no surprise to anyone who watches TV sport. But few non-punters will be aware how much that data, processed by mind-boggling algorithms, now governs the sports betting market.

The explosion in betting is largely predicated upon this development. Even five years ago, the only way to provide ‘continuous content’ was to fill the gaps between horse races with gaming ‘products’ such as the controversial fixed-odds betting terminals, which at one point were accounting for half the profits of the big retail chains. Today, however, it is possible for bookies to accept bets on minor sporting events more or less anywhere. No longer is it too risky to make markets on anything more obscure than Italy’s Serie A. By taking data from companies that scout matches all over the world and pumping it into computers that churn out probabilities, the big players now offer prices on more than 700 leagues in more than 100 nations. Vietnamese Third Division, anyone?

The result of live information, often straight from the umpire’s chair, is visible wherever you look — and not just because of deals such as the $70 million paid to the International Tennis Federation for five years of data rights. Punters have become much more sophisticated; some even create algorithms of their own to arbitrage worldwide markets like hedge-fund managers. Operators are now risk managers rather than odds compilers, with individual traders looking after four or five matches at a time. The biggest names online, whose customers can stream live video, did not even exist at the turn of the century. And offline, the pendulum that had swung so far towards casino-style products is starting to swing back.

Forget FOBTs; today’s high-street action increasingly revolves around SSBTs — self-service betting terminals. These, ironically, are much more deserving of the ‘fixed odds’ name, since that is what they provide, but on sports betting. Three years ago there were only 700 in Britain. Today a single operator provides 13,000 to almost all the retail market. Only William Hill has developed its own, rushing out 540 machines just in time for the Euros.

Where FOBTs are limited by legislation to four per shop, terminals offering betting on sport return the bookies to what it always was. Preferred bets are changing too: with teams outside the top 25 leagues often unknown to the punter, the outcome of the match is being usurped by data-driven bets like ‘total goals’. But with no restrictions on the number of the new machines, content available from wherever it is daytime, and 98 per cent of machine bets now taking place in-play, retail sports betting is making a comeback.

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