Q&A: Inside the launch of the Bethard and Metric Gaming JV

Just last month Metric Gaming and Bethard Group entered into a joint venture (JV), Hard Metrics, to pursue the US market. The aim of the JV is to offer a one-stop shop for operators that are already present in other territories as well as those hoping to enter the US for the first time.

While Metric Gaming offers a full sports betting solution with a focus on American sports, it also has its own proprietary golf, racing and soccer product. Meanwhile, Bethard Group, through its B2B sister company Together Gaming, will provide its igaming platform along with its operational services such as customer support and payments. It also allows Hard Metrics’ partners to offer casino content to their players where they are permitted to do so.

Being a US company and with an office in Las Vegas, Metric Gaming is already well placed with the local know-how on how to cater for the US market as well as how to navigate the regulatory landscape. Last year the firm completed a $10m funding round, led by investment firm RDA Ventures, to help the sportsbook provider push ahead with its US ambitions.

Metric Gaming’s Martin de Knijff tells EGR North America why product is key in the US and where he sees the most opportunities opening up for Hard Metrics Stateside.

EGR North America (EGR NA): How did the partnership first come about?

Martin de Knijff (MK): We had some discussions with Bethard. Obviously I’m Swedish so I’ve known those guys in the past. The genesis of these discussions was more brainstorming about how the US market would play out. And understanding that a lot of the US operators would be unsophisticated, not because they’re not smart but just because they’ve never run online gaming to begin with. They are configured in a completely different way.

What we thought was going to be a very good value proposition was to offer a one-stop shop, one contract, one tech stack solution where the only thing the operator needed to do was to be licensed in the state they wanted to operate in and we’ll handle the rest. We can navigate them through the whole thing, helping them not to have to go through this onerous, tedious process of certification and licensing when it comes to the tech. Also not having to go through the jungle of synthesizing a sportsbook offering. There isn’t really that know-how in the US. That was the genesis of the discussion. We can be extremely relevant and can solve a lot of the problems that the US operators would face.

We were also thinking there will be a fair few European operators that want to get into the US and the different components of the solution, being the player account management system and sportsbook platform, with that speed to market might be something that is coveted. So for operators they could have a solution where it’s easy to go to Hard Metrics. We have everything they need, then all they need to do is push their brand, get regulated and they are in. It wasn’t just to service the US operators or potential new operators but also existing European ones.

EGR NA: How does the JV build on the existing relationship between Metric and Bethard?

MK: This is a joint venture for North America primarily, however as the default, since we are doing all these integrations between our systems, it opens up doors for Bethard’s B2B business in Europe and the rest of the world too. With their white-label offering, we will offer then a Metric sportsbook to Bethard in the rest of the world as well. That would be something to come later. We are focusing on the US first but this will be part of their portfolio to offer casino operators that want to get into sportsbook to have Metric as an option. But that is not a joint venture, it’s more traditional with us being integrated into their system.

EGR NA: What kind of knowledge, skills and expertise can both sides bring to the JV?

MK: Everything is extremely complementary here. We come with a full sportsbook and plumbing underneath, like a New York Stock Exchange kind of system where you have transactions, risk management, trading and operations and the clearing house of all the transactions for the sportsbook. Bethard comes with the business intelligence, the player account management system and they come with a B2C way of thinking which is very important. They run a B2C brand as well.

Together we have a great understanding of the problems operators need to solve and the support they need.

EGR NA: Are there any plans to boost your staff numbers as a result of the JV?

MK: The joint venture will focus on two areas so the reason for the existence of the JV is essentially to interface with the gaming commissions of the different states so it’s a compliance and regulatory play. The other part of the division is sales with research and development (R&D) which will come from the parent companies. The chief focus of the JV is compliance and sales. Of course there will be a fair amount of people hired into the JV first. With regards to the parent companies, there’s probably not going to be any significant recruitment, at least not in the short-term.

Metric Gaming CEO Martin de Knijff

EGR NA: How is the process of obtaining licenses going?

MK: The first two states that we will go into to do full regulatory licensing is going to be New Jersey and Mississippi. We’ve just commenced that part.

EGR NA: Will you need to adapt your platform/offering to meet the needs of US customers and how do their needs differ from European customers?

MK: It’s a two-step way of thinking. One is on the taxation and regulatory divergence part because every single state is going to have a different regime. There are different rules and how you do compliance varies. That’s what is very unique about the Metric platform. We can clone and configure up operators differently in different territories. So it’s not like if you have one offering in New Jersey, you don’t have to have the same in Pennsylvania or Massachusetts. You can actually have different offerings within your own brands. There might be a high tax in Pennsylvania and a lower tax in Massachusetts or New Jersey and your offering might be completely different depending on where you operate.

So that’s the luck of the draw for us. The more complex the rules are for every single territory, the better off we are.

On the product side, that’s where a lot of the European operators of B2B platforms will struggle because football in the UK is not going to be 50% of the turnover in the US. It’s a whole new set of sports now. You have the four big sports, the colleges and you have a different way of betting too with spreads and other types of products that the American audience is used to. With our pedigree in Metric, we have a better understanding than most but not to say we are the best by any means. But we understand it better than most of our competitors, at least in terms of the product and what the requirements will be in the US.

The bar is going to be a lot higher. You’re not going to get away with an inferior product in the US as everything is very product driven. That’s going to be a massive challenge to stay ahead of the game when it comes to product. There’s plans for us to invest a lot of money into R&D there.

EGR NA: Do you have enough expertise in pricing US sports?

MK: We do. If you look at Metric’s journey, we started off doing SuperLive which was the proprietary product we built and that has support for all the US sports. We’ve done a lot of models around US sports and we’ve been working really hard on the in-play aspect. It still has a lot to grow in the US. It’s not as far gone as it is in the UK or Asia where in-play can be 75-80% of all transactions. I think in-play on US sports is really where the market is going to take-off when it breaks through with product. That’s what we are focusing on and that’s our strength. That’s our expertise in modeling of US sports but also risk management and operations around that.

Metric products

EGR NA: Will you be using Bethard’s pricing expertise/model of low margins in certain sports?

MK: That might be the case when we’re looking at the European and rest of the world offering. For the US where football isn’t such a big sport from a betting standpoint at least, I think that’s less of a priority. There’s more about how you package the product around the offering that’s going to be more important than being really competitive with price. I would say no for the US but it is definitely possible for the rest of the world that we would use Bethard for football.

EGR NA: What sort of conversations have you had with operators?

MK: We have had half a dozen really deep discussions with existing operators in the US that are not in the space right now but they have strong brands. We understand that this is going to take time and decisions aren’t made quickly. Sports betting still has a stigma to some extent in the US and there’s a rigorous process to make decisions to go in to this vertical. We are still very nascent here and still in the warm up stage. You only have seven states that have approved it. I think when we start seeing some more states, those customers will mature and get into the market. We have a few European operators that find this solution very compelling and that want to fast-track into the US market. This JV would be that vehicle for them.

We have two signed contracts. One operator will not start off in the US immediately but will start in Mexico but is very likely to spread to the US once the market starts to grow. We anticipate the Mexican customer to be live in September.

We think we have a very unique value proposition here and we have the right partner. We’ve been very impressed by Bethard and the more we are dealing with them the more impressed we are. It’s really exciting.

EGR NA: Where in the US do you see the most opportunities opening up for Hard Metrics?

MK: We are big believers in Massachusetts. We think the whole New England area has a huge sports fan base. We are also big believers in New York where mobile and online has opened up now. New York is a massive opportunity. We believe the East Coast is where the big money is going to be. There might be some places like Arkansas that could be interesting too. They have some casinos there in the Memphis metropolitan area.

EGR NA: What impact will the DOJ’s Wire Act ruling have on the egaming sector?

MK: I think this is a very positive thing for sports betting. Perhaps counterintuitive but it’s very positive. The Wire Act has been applicable for sports betting up to this point so the change in the opinion of the DOJ doesn’t mean it’s been hashed out in any courts.

I think what’s going to happen here is all gaming verticals are now subjected to this Wire Act. With online casino and other verticals, there’s too much investment with the lobbyists behind these kinds of activities. So I think it’s really good for sports betting because sports betting wanted an amendment, a rewriting of the law so to speak and I think that actually could happen now. I wasn’t very optimistic that would happen without these other verticals or businesses behind it but it will happen. The issue is going to be forced now that they have to make an amendment. I think everyone is going to benefit from that.

It doesn’t change anything for sports betting, apart from obviously some short-term uncertainty. Of course, it never helps when news like this comes out because it scares people. They don’t understand the intricacies of it.

Bottom line, for sports betting this is a positive because all other verticals are coming behind it and want to make a change.