GiG on why its price-led sportsbook strategy will pay dividends

Gaming Innovation Group (GiG) has long prided itself on having its fingers in every part of the egaming value chain, but it’s no secret that sportsbook has historically been overshadowed by casino at the Malta-headquartered firm. Sportsbook revenues are projected at €1.7m for FY 2019, according to analysts at SEB, with an expected EBITDA loss of €4.9m. That compares to €81.7m projected revenues from gaming. However, the firm predicts its sports vertical will hit break-even by the middle of next year, with Stuart Weston the man in charge of the effort, having joined from Scientific Games in July. EGR Intel caught up with Weston after four months in the role, with the former Hills man hailing the chance to lead a division with an almost start-up culture.

“There’s a freshness about the company,” Weston says. “It’s a young company with young leadership and young technology. There aren’t many opportunities in the industry where it’s almost a start-up within an established company.”

Weston of course spent 19 years at Hills before briefer stints with Superbet and then SG Digital. When GiG initially approached him about a B2B role, it was the opportunity to combine that with running the two B2C brands, Rizk and Guts, that really convinced Weston to make the switch. As he sees it, the best way to improve the platform and convince potential partners of its worth is to successfully run a business off it.

“I’m essentially a customer of the platform myself, so it helps to put me in my customer’s shoes and set up a good product roadmap,” he explains.

Perhaps unsurprisingly, given Weston’s history, his initial focus will be on building the B2C side. “That’s my quickest route to break even, which means that we can afford to have strategic [B2B] partners like Hard Rock, but that will probably take a bit longer to bear revenue fruit,” he adds. “It means that we’re not forced to rush out and pitch for all the business that we can, and we’re hoping that’s going to generate revenues for us.”

Hidden gems

Despite GiG’s relatively small sports revenues, the company has an eclectic mix of assets which have not necessarily been used to best effect yet. That includes a 24/7 trading team in Malta, sportsbook ops in Marbella, where Weston is based, and an algorithmic trading team in Norway. Weston himself has added to that with several key hires, including James McKay from SG Digital as sportsbook ops manager and Claire Alexander from GVC as head of sports product, both of whom worked with Weston at Hills. The firm also hired an experienced sportsbook architect from SG Digital.

“My observation is that we really needed a bit more quality and experience on sports because GiG wasn’t a business with a natural sports DNA,” Weston says. “What we’ve looked to do is not hire lots of people but hire people with tier-one experience to fast track it.

GiG has been busy building its sportsbook team under Stuart Weston

“As we drive revenues on the B2C side, we will be increasing that team,” he adds. “People will see something really quite interesting happening in Marbella and an alternative sports operation to what’s going on in Gibraltar. And because my network is all Gib, it gives me access to good people as and when we need them.”

Local hero

The first port of call for GiG will be the Nordics, where the operator will look to leverage its local expertise and specifically the trading knowledge of Odds Model, the Norway-based algorithmic trading group acquired by GiG in 2016. GiG is also working on a “big branding exercise” for Guts and Rizk with a Copenhagen ad agency, and will “throw the kitchen sink” at the two markets in Q1 2020, according to Weston.

“My best chance is Norway at the moment because I’m lucky to have a 20-man team out there and people who have run sportsbooks previously in the Nordics,” Weston says. “Inheriting local knowledge is a real USP for me. It’s not every firm that is going to have 20 Norwegian experts in it.”

That Odds Model expertise has not yet been fully harnessed by GiG, despite being acquired back in 2016, with their prices still not automatically integrated into the GiG platform. However, Weston is aiming to change that, starting with manually incorporating their prices, so GiG brands will be standout top price on “three or four” Premier League games a week, based on the teams that Odds Model wants to take on.

“Even before I started, I went over to take a look and meet them,” Weston explains. “They are a young team of super smart sports people. We’re just testing that [the manual price changes] at the moment but the early signs are really promising.”

By the end of the year, Weston is hoping to be covering the top five European leagues with Odds Model pricing, as well as the top-two tiers of Norwegian football, before fully integrating their prices into the platform next year. Once football is up and running, GiG will start a similar switchover to Odds Model pricing on tennis and ice hockey.

“We’ll definitely have something to say on price, particularly in Norway,” Weston notes. “And we’ll also be in a position where we can take sizeable bets because we’re confident in the prices we’re laying. We want to have some quality bespoke prices rather than a generic feed, which is what we have at the moment.”

High risk, high reward

There is, of course, no shortage of risk in this kind of price-led approach. There’s a reason the recreational soft-book model predominates in Europe and price-led challengers like MustardBet have shut up shop. That said, the player economics are currently more favourable in markets like Norway compared to the UK. And of course, it’s easier to beat the market on Norwegian football than the Premier League.

So, does GiG have what it takes to zig when others are zagging and make the price-led approach work? “It’s going to come out in the quality of the pricing, which we’re obviously testing,” Weston says. “[Odds Model] has been testing it internally since the company was acquired and it’s been positive. The prices that we go to early tend to be where the price ends up by kick-off. Being price-led is obviously risky in the type of clients that you can acquire but also gives you an opportunity, particularly in specific territories if you want to be more of a VIP-led brand.”

Weston says customers ultimately appreciate “care and attention” from the bookmaking perspective that show the company “knows what it’s doing and actually cares enough to offer some prices that are competitive”.

As noted, it’s perhaps a more effective strategy on an individual market basis and suits the type of ‘local hero’ plan that Weston is pursuing. After the Nordics in Q1, Latin America and Central Europe could be next on the docket for H2, although nothing is yet set in stone.

“I’m hoping our small size will allow us to fairly nimbly get in and out of territories as appropriate without it being an enormous overhead, dragging the whole company with it”

“What we want to prove is that this is a model we can replicate in different territories, rather than necessarily competing in all the big territories,” Weston says. “If we wanted to go into a specific South American territory, we could build a model for their leagues and be quite aggressive there as well.

“We’re not trying to compete with the tier-one European operators, we’re just trying to find our base within specific territories.”

GiG of course has an inherent advantage in being able to go after specific markets thanks to its modern tech stack. “I’m hoping our small size will allow us to fairly nimbly get in and out of territories as appropriate without it being an enormous overhead, dragging the whole company with it,” Weston explains.

“Having been at William Hill, launching into new territories is a big operation and you always get dragged back to the UK, which is why some of the bigger firms end up outsourcing their international stuff. We’re hoping to be more of a speedboat nipping in and out.”

Dual approach

The proprietary pricing from Odds Model could prove to be a major boon on the B2B side of the business as well, with GiG itself then given the freedom to focus more on the tech/product side of the platform. Is that an attractive proposition for partners? “I guess it depends how the operator wants to run their business,” says Weston.

“We will be generating bespoke pricing that isn’t scraped or isn’t taken from anywhere else and that gives people potential other routes into any particular markets.”

In an era where more and more of the large bookmakers and even suppliers see pricing as a commodity to be bought, a different approach could pay handsome dividends.

The one market conspicuous by its absence from Weston’s grand plans is Sweden, where GiG’s proprietary B2C sportsbooks remain down as the company seeks clarification on certain aspects of Swedish regulation. The impact on revenues is immaterial, according to GiG, and there’s no immediate prospect of change on the horizon.

“That’s an internal GiG conversation at the moment,” Weston remarks. “Whether we go back into Sweden is above my pay grade. It’s my job to make sure that we’re ready if that’s the direction people want to take so we’ll have a piece of work ready on the roadmap.”

Sweden, with its hefty compliance costs and fierce competition, is hardly the ideal target for the GiG strategy anyway, and the other Nordics markets will likely prove more fruitful in the short term. Regardless, after more than 20 years with the slower-moving heavyweights of the industry, Weston is relishing the chance to build something completely new at GiG.

“A lot of things are going to come together in the next month or so as people join, and the outlook for next year is really quite exciting.” He adds. “We’re going to have a proper run at it.”