Bettor together: Is social betting finally ready to take off?

“If Sky Bet is doing something, I just assume it’s the right thing to do. I don’t even question it anymore.” That was how one industry executive described the Leeds-headquartered firm earlier this year. Specifically, he was talking about its attitude to social responsibility, but he may as well have been referring to innovation, because the creator of the request-a-bet service has some track record here too.

So when Sky Bet unveiled its new Group Bets in July, it got plenty of people across the industry talking. Social and group betting is arguably the Holy Grail for the betting industry. WhatsApp alone connects more than 1.5 billion people, who send 65 billion messages per day. The chance to tap into that closed network is a tantalising prospect, and one of the key drivers of the Group Bets project. For the uninitiated, the feature lets customers create betting groups, with each member adding one leg to an accumulator they can then all bet on.

According to Andy Evans, principal product manager at Sky Bet, customer testing found that a large number was already creating bets manually with friends, either in-person or via messaging apps. “We identified a number of pain points in what they were currently doing and established that we could address a large number of those with Group Bets,” Evans said. “Essentially, we’ve taken a behaviour that already exists and created an experience that satisfies users’ needs and simplifies that activity for them.”

Sky Bet, headquartered in Leeds, unveiled its new Group Bets function in July

The initiative is still early-stage – Sky Bet declined to provide an update a month or so since it was beta-launched – and is one of a number of initiatives popping up around the industry. The best known is perhaps Colossus Bets Syndicates, where punters club together to crowdfund a bet into the operator’s jackpot pools. Since the product was launched in early 2017, it has seen 415,000 unique contributions, with 45% of Colossus pool betting handle now coming via the feature.

It has also proven to be a powerful acquisition tool, with 25% of new Colossus players having their first interaction via Syndicates. According to group COO David O’Reilly, that translates into a CPA that hovers just below £10, as compared to industry benchmarks of often well over £100 for channels like PPC and affiliate marketing.

That’s one of the key appeals of social betting; the unique acquisition tool it can provide. As industry veteran Matthew Trenhaile puts it: “It basically turns all your clients into unpaid affiliates.” Anyone wanting to join a Group Bet needs a Sky Bet account, anyone wanting to join their mate’s Syndicate needs a Colossus account or one at a relevant B2B partner, and so on.

Down the chain

All of which means the concept is not just being left to operators. Several affiliates are alive to the benefits of social betting and have it as a key part of their business model. BetBull is a kind of affiliate/operator hybrid that aims to build communities of punters, creating chat rooms where only people on a particular bet can join. “We are focused on the experience, on the chat room, on building a community around betting,” says founder Sadok Kohen. “So we are creating an environment where people will want to spend more time and enjoy betting.”

Better Collective is another affiliate heading down the social route with its BetBehind product which has been in development for three years and went live earlier this year. The feature aims to leverage Betting Expert’s fleet of tipsters by letting customers automatically follow those tipsters in when they put up a bet. Punters can create filters so they only bet on certain sports, certain odds and certain books.

“The betting market is changing,” says Henrik Lykkesteen, SVP of product and global operations at Better Collective. “The big affiliates need to not just send depositors to operators – we need to take more control over the value chain and keep motivating people to place well-educated bets.” In other words, as the UK betting market has matured, punters’ loyalties have become more ephemeral, and any product that cannot just acquire, but keep players, will go a long way.

Lykkesteen says Better Collective customers have been slow to embrace BetBehind, but those that do immediately become evangelists. “This is a very disruptive product for the industry,” he says. “The barrier to entry is high because it’s so new, but once customers get on board, it keeps rolling, people keep adding tips and filters to their profiles and keep placing bets that way.

“It’s not the type of product that an immense number of people really flock to, but it’s the ketchup effect – everything will happen at once. When people start sharing with friends and forums, it catches on very quickly and that’s the effect we’re starting to see now.”

Betting as an investment

Indeed, the BetBehind product has helped seed a similar idea at one of Better Collective’s operator partners, Matchbook, which has been developing its own Syndicate product over a series of hackathons. The Matchbook offering is seen as a combination of BetBehind, a hedge fund and Colossus Syndicates, with people putting a certain amount of cash into a betting fund controlled by a single captain.

“I think this is the biggest untapped idea that exists right now in sports betting,” says Matchbook’s head of strategic insights, Jesse May. “For me, it’s the evolution in sophistication of our betting society. People still want action, but the challenge is how difficult it is to win. This helps that and it’s also more fun than working on your own. It’s the same thing that brings people to sports teams. Everyone wants to be part of a team.”

May envisions a separate hub built around the syndicate idea, with a news scroll featuring updates on picks, results and team news, as well as a chat box for syndicate members to communicate. “You’re essentially managing your portfolio on this hub,” he says. “What I like most is it forces you into correct betting habits. This is a truism maybe, but what defeats almost everybody in gambling is bankroll management. The great thing about syndicates is that an expert with a model or system is staking sensibly on your behalf.

“For a guy like me who isn’t a pro, it’s the most attractive thing I could ever find. And how many guys like me are there? It’s a huge percentage. With syndicates you can have the entire experience of trying to be a profitable investor. It’s a sports betting apprenticeship in a way.”

In fact, May compares the concept to Wall Street in the 1960s, when the quantity of stocks traded more than doubled in three years thanks to the spread of hedge funds and the creation of easily trackable indexes like the S&P 500. “I really don’t see any difference between this and a traditional hedge fund, except the sports betting market is more transparent and people are more passionate about it.”

Again, the key benefits of the idea would be in acquisition and retention. The Racing Post, for example, could be offered the chance to lead a syndicate, with members paying 1% commission to the leader and 1% commission to the exchange itself. Once money is locked up in the fund, punters are encouraged to come back each day to cheer on bets and find out what they’ve invested that day.
For a more modern example of just how effective this type of mechanism can be, look no further than eToro – the social investing platform that pledges to “democratise trading”. eToro allows customers to copy traders or funds at the click of a button and now has nine million users worldwide. It raised $100m in funding earlier this year, bringing its total funding to $162m. It’s not hard to see a betting operator enjoying similar success with a similar model.

New kids of the block(s)

The opportunity is so potentially vast that it’s not just established operators and affiliates having a crack. BetBlocks – the so-called WhatsApp for betting – is perhaps the only firm directly trying to answer the question posed by Sky Bet and many other firms: how do we tap into people talking about betting in private WhatsApp groups?

BetBlocks is a messenger app that turns text like “I fancy Aguero to score and Man City to win 3-0” into a clickable link that takes punters through to an operator’s betslip. The app is set to go live in the coming weeks with initial partners William Hill, Ladbrokes and BetVictor, according to co-founder Jonny Robb.

Robb and co-founder Nilesh Mistry first came up with the concept back at the 2014 World Cup (“that’s depressing,” says Robb), but they were initially laughed out of several meetings. “People said we were crazy and it had no legs,” Robb recalls. “But now everything has moved in that direction and other people in the industry are trying to tap into the space.”

He says the Sky Bet product is a plus for them rather than a competitive concern, with the operator helping to popularise the entire concept of group betting. “If you truly invent something new, don’t be worried about someone stealing your idea because you’re going to have to ram it down people’s throats for them to get it,” says Robb. “When we first came up with BetBlocks it was so alien. Now with Sky and Colossus, there’s a buzz about the concept. We’ll be looking to capitalise on that increased awareness. Yeah, you can do that with Sky Bet, but we’ve got our own flavour.”

Trenhaile, who has a background in odds compilation and spread betting, also sees an opportunity for something completely new to come to the table and take market share in true start-up style. “I envisage something along the lines of syndicate captain like in Colossus but with more scope to build personality – blogger style, maybe even Twitch – and the ability for people to cash out when they want, unlike Colossus.” He continues: “It needs no trading desk or risk management – just a third-party odds feed, slick app and good Twitter and YouTube integration so people can build followers to take on a journey.”

New era

At this point, it’s worth considering what exactly has changed to make the industry so receptive to this type of concept after a string of failures in the past. Arguably, the biggest factor is the increasing influence of Generation Z and Millennials who are more apt than ever before to share almost every aspect of their lives on social platforms.

“You see that willingness across all industries, but a lot of people have been in denial about the impact of that on betting,” Robb says. There’s also an increasing sense the betting industry is failing to make the most of social media and platforms like Twitch or YouTube. There’s only room for so many Paddy Power-style banter accounts on Twitter before it becomes white noise to consumers.

Matthew Trenhaile says social betting could be “the Candy Crush of betting”

Social betting can help here, with Colossus achieving significant cut-through with stories of its biggest Syndicates wins. “Marketing needs to be more viral/YouTube and less Ray Winstone and Ladbrokes Life’,” adds Trenhaile. It’s also becoming apparent that different group concepts can help reinforce a brand message and appeal to exactly the demographic that a firm wants. Group Bets is perfect for the £5 acca customers that Sky craves, while Matchbook’s idea will appeal to the shrewder investor types.

“The whole group betting concept definitely has legs,” says one veteran sportsbook executive at a major European operator. “I’m usually negative on this kind of thing – I didn’t think cash-out would work, but this could be the future. Punters are inherently lazy – they love being told what to do, and it’s perfect for the recreational market.” The exec adds: “Execution is going to be key on this. It will need to be seamless. If you have to go away and put the bet on somewhere else, it’s not going to work, but if it’s slick and you can message and bet in one app, it could be huge.”

Trials and tribulations

So far so good then, but there are reasons why no social betting concept has yet taken off. The elephant in the room is losing. It’s accepted wisdom that well over 90% sportsbook and exchange accounts are long-term net losers. While Betting Expert can boast a multitude of winning tipsters, several studies have suggested there is some survivorship bias at play here, with all the losing tipsters having given up. Automatically following tipsters becomes a lot less fun if they’re losing money. There are similar concerns for Matchbook’s idea, while even a long-term winning syndicate could soon find itself moving the market and reducing its own edge. There’s also the case to be made that long-term winning bettors have no need to run a fund with other people’s money when their own bankroll is easily scalable.

Losing is a concern for the more recreational products too. How many accas need to go down on Sky Bet before a group of mates realise they’re not the second coming of Star Lizard? “Social betting has been the next big thing as long as online gambling has existed and has never worked so far, so I’m not overly enthusiastic about its chances in this incarnation,” says Eilers and Krejcik Gaming analyst Alun Bowden. “Social media has changed the very nature of online interaction and of betting but it’s also fair to say many of the popular social media betting phenomena have been somewhat disingenuous at times.”

Indeed, the legion of ‘acca-booming’ Twitter tipsters caused many operators to radically rethink their affiliate policies, and it’s conceivable that more group betting could encourage irresponsible gambling and bring transparency concerns. “Betting is not, despite appearances, an inherently social activity,” Bowden continues. “And while the millennial generation views it very differently to those who came before, you only need to check social media to see how toxic that can go when wins are replaced by losses, as will happen to the vast majority long term. The key skill of gambling has always been making losers feel happy and, where social betting can do this, it clearly has its place but it’s equally realistic to suggest it could do much the opposite.”

The future of social betting looks somewhat precarious. The upside is enormous, with the potential to create an army of highly engaged customers who double as unpaid guerrilla affiliates in their own social circles. There are opportunities at both ends of the customer spectrum too, for serious bettors and acca-backers alike. The rise of eToro in the financial industry is a great example of what could be achieved. But by the same token, it’s clearly a tough row to hoe, and any operators looking to get ahead of the game had better move fast, with established giants and nimble start-ups already hard at work on solving the issues. Trenhaile sums it up neatly when he says: “Badly executed, it’s a car crash but when one catches fire it could be the Candy Crush of betting.” Game on.