Bridge to Europe
SBObet and 188Bet are two Asian operators that have recently been granted European licences. What are the reasons for their move to Europe? And what competition do they offer European operators?
BET AND 188Bet are two Asian operators that have recently been granted European licences. What are the reasons for their move to Europe? And what competition do they offer European operators ?
Tales of Asian sports-betting operators working off huge volumes and tiny margins are legion and up to not too long ago, much of the talk from the European operators centred on how they might be able to tap into that customer base.
However, some of those Asian operators of late have been making their presence felt in Europe by getting licensed in UK white-list jurisdictions and most recently becoming shirt sponsors of football clubs in the English Premier League.
While it is easy to hypothesise about why those operators are getting licensed in Europe, it is also easy to forget that those businesses are highly efficient and operate on a different business model to most Europe-focused operators.
That is not to say that there isn’t any truth in the theory doing the rounds that they are looking to gain legitimacy by obtaining a UK white-list jurisdiction licence, as the possibility of an exit strategy or a float is left open. One source, who did not wish to be named, told eGaming Review that there was some truth to those theories.
“Clearly, the driver for some of them, especially those that have grown into mature businesses, is that they want to work in jurisdictions that they feel are more regulated and expose their companies to as little risk as possible,” the source said.
“The other obvious point is that if market conditions change, the founders or major shareholders want to have the option of going to the markets. No matter how good the company is, the London market is more likely to have an appetite for a company licensed in one of the white list jurisdictions.”
There is also a simple, more operations-based reason for this recent influx of Asian operators into Europe. Western companies in both betting and gaming verticals have been making inroads into Asia as they seek to tap into the player base there. Asian operators have therefore been thinking about how they can address this situation, and one of the ways of doing this has been to enter the European market. Allied to this are the well-known, much lower margins those Asian operators work to, typically under 2% of gross win.
No legal uncertainty
The other reason often mentioned for this influx is that due to the legal uncertainty under which they operate in Asia, their costs and overheads are thought to be much lower when compared to those of European operators.
However, Andy Scott, chief executive of Cube Corporation, the parent company of 188Bet, rejects that theory. The company has recently agreed a sponsorship deal with English Premier League clubs Wigan Athletic and Bolton Wanderers and Scott is keen to set the record straight on the reasons why 188Bet got licensed in the Isle of Man.
Our operational efficiency is something we pride ourselves on, it’s got absolutely nothing to do with legal issues or uncertainty in Asia at all. I want to make that point very clear. We have a very professional, well-run and objective operations team across a number of offices around the world and they are consistent across all markets,” he says.
Scott adds that the methods and processes 188Bet has in place in all the markets in which it operates is beholden on any company to work that way. He says: “Yes we do see it as a competitive advantage that we work to lower margins because it enables us to bring products to market at much better prices than other bookies. But I want to make it absolutely clear that it has nothing to do with any legal greyness (sic) at all. The Isle of Man government has looked at our business very closely and we know the value of running a business in a responsible way and that is what we intend to do.”
SBOBet is the other Asian operator which has made its presence felt in the UK in the past year. The company is also licensed in the Isle of Man and has been the shirt sponsor of Premier League club West Ham United since December.
For Bill Mummery, executive director of SBO parent company Celton Manx, the focus is on the value his company can provide to punters and the educational work it can do to raise the awareness levels of the value to be had in Asian Handicap (AH) betting. Mummery starts off by placing his company’s activities into context.
“Where the Asian mindset is I believe stronger than the European one is that instead of just putting up a translation of a site up and try to attract Western players, they are willing to put in the time and effort to get their offer right: learn their lessons, build their brands and then go for it so that they enter the market properly, such as in the West Ham sponsorship.”
There is little doubt those companies have done their homework on how to address the market. But when it comes to the products on offer, how will they compete with the established European operators such as Ladbrokes, Bwin or Sportingbet? Surely there is an awful lot of educational work to be done to teach average punters the benefits of AH betting in the UK alone; while in continental Europe, the concept must seem even more alien.
Spreading the AH message
Scott concedes the point and adds: “More education needs to happen. I suspect European customers are put off by the term Asian Handicap, out of lack of understanding or fear of not knowing what they are doing. It’s not a product we would look to lead with [in Europe] but it will add richness to our customers. Just as importantly though, it’s about delivering products that customers want, not that we think they should have.”
Bill Mummery says his company has an educational task to undertake with European customers vis-Ã -vis AH, which should be about showing them where the value is. “It’s a literal value because the margin retained by the bookmaker is so much smaller than fixed-odds or tote and we have to educate punters about why it’s better, demonstrate the strength and breadth of our content such as our in- running markets and establish trust with them.”
Mummery also points out that the Isle of Man licence provides SBO with key payment options. “If you think about Asia, the business-to-consumer model has not been the prevalent way of doing business. What our Isle of Man presence does is enhance the payment options which previously weren’t available to customers in Asia. So the licence is not just relevant to European customers, it acts as a much broader money solution that is attractive to Asian punters, diversifies away from the wholesale market and balances our portfolio,” he says.
However, one source based in Asia told eGaming Review that the main reasons behind the likes of SBOBet and 188Bet obtaining licences in Europe were to look into listing on the London Stock Exchange and because they are fully aware that there is going to be a crackdown on the business they are taking from China.
“They are trying to legitimise themselves and are keen to do an IPO. The Philippines licence [in First Cagayan] takes the agency business and in the Isle of Man it takes cash deposit customers. They then look for suitable “Western’ partners/investors to give them credibility and to facilitate an IPO,” the source said.
The source added that the “golden goose’ period in China was coming to an end as the government in Beijing was preparing to crack down on agents and illegal betting rings. They added: “The Beijing government will block the underground money routes and stop the master agents from working. The operators know they have a limited life-span operating in China because the government will crack down.”
Although both SBOBet and 188Bet were not willing to comment on this particular point, another source, surprisingly, said the People’s Republic of China didn’t actually represent that big a segment of those companies’ business.
“There is a big difference between the perception and the reality of working in China. Some activity definitely takes place there, but how much it represents of SBO’s or 188’s turnover is questionable,” the source said. “The sophistication levels of Chinese punters isn’t that high and the lack of broadband access also makes online betting difficult. In addition, if a bookmaker is going to work off just 1.5% margins, does it really want to take that level of risk in a market like China?”
Here to stay
Scott says the “beautiful thing” about 188Bet’s sponsorship of Wigan and Bolton is that “the Premier League is a global product and the partnership allows us to get increased visibility across our home markets at the same time as really launching into the UK and Europe.
“We have a detailed plan for future action and want to make sure we deliver a sportsbook that is fit for purpose for European customers. The concept of betting can be fairly consistent across markets but specific products, engagement, interaction and the reasons people bet can vary quite a lot. We are working hard to have products that appeal to specific markets and not have a one size fits no-one solution.”
Mummery meanwhile argues that rather than looking for conspiracy theories, SBOBet’s management has a duty to assess the risk levels of operating in certain jurisdictions and the company’s licensing in the Isle of Man is simply reflective of that fact. With regards to the company’s business in the UK and Europe, he says it has “been very successful in the time we’ve launched [December]”.
“The West Ham deal is about getting our brand out there and is also doing a great job for West Ham when footage is shown in Asia. We’re constantly learning lessons from it on how we can refine our offer and products before we embark on a broader and more aggressive strategy.”
Speculation and gossip is natural in any industry but seems to act as a second skin in the online gaming and betting sector. For all the conjecture in this article, what clearly transpires from talking to operators and industry sources is that Asian operators are here to stay in Europe.
This article first appeared in the June edition of eGaming Review.