Why football bets are far more profitable to bookmakers than gambling machines

When the government completes its review of the gambling sector in the coming weeks, a clampdown on fixed odds betting terminals (FOBTs) looks to be on the cards. Dubbed the “crack cocaine of gambling” for allowing punters to bet stakes of up to £100 in games like roulette and poker, even former UK culture secretary Tessa Jowell has joined the chorus demanding curbs – despite overseeing their expansion in the 2000s.

With proposals to reduce maximum stakes to £2 and restrict the number of terminals, the industry is on tenterhooks. One of its defences is that FOBTs have a gross margin of between 2% and 3%, meaning between 97% and 98% of stakes end up being returned to punters in winnings. Which sounds reasonable until you reflect that the high maximum stakes and the speed at which people can bet means they can still run up large debts in a short space of time.

Nonetheless, FOBTs are serving as something of a lightning rod for other types of gambling that are also unfair to punters but poorly understood. I’m referring to bets where people bet not just on the outcome but on other aspects such as the scoreline, who scores first and combinations of outcomes. Supposing it were an Arsenal vs Burnley game, the bookmaker might be offering say 50-1 on Arsenal’s Alexis Sánchez to score first, any Burnley player to score second and Arsenal to win 4-1.

All these betting offers have exploded in recent years. You’ll see them all over the windows of high street bookmakers. It may not be quite as easy as with FOBTs to place lots of bets quickly, but online betting certainly makes it quick and there’s no maximum stake. There’s also no defence of a low gross margin. Do the maths and you find it can be as much as ten times higher.

How it works

Suppose in an upcoming international football match between England and Germany, a bookmaker offered odds of 3-1 on Germany to win. That bookmaker is implying that if the game were played four times, Germany would win once. The probability of Germany winning is 1/(3+1), or 0.25, or 25%. In theory the bookmaker is also implying a 0.75 (or 75%) chance of Germany either drawing or losing, since the probabilities of the various possible outcomes has to add up to 1.

I say “in theory” because the above imagines a situation where a benevolent bookmaker told you what they really thought was probable. In reality, bookmakers build in a profit margin by quoting odds that imply a sum of probabilities greater than 1. In other words, they say every outcome will happen slightly more than is possible – hence offering lower potential wins than they “should”. This allows them to make a risk-free profit from their customers’ wagers that is the same no matter which event actually happens. The higher the sum of probabilities, the higher a bookmaker’s profit margin.

For example one bookmaker offered odds on the Germany vs Argentina 2014 World Cup final that gave Germany a 0.44 probability of winning in 90 minutes, Argentina an 0.29 probability of winning and a 0.31 probability of a draw. These add up to 1.04, implying a gross profit margin of 0.04/(1+0.04) = 3.8% (see here for an explanation of how this maths works).

When I studied bookmakers’ odds across that tournament, I found the profit margins on different bets varied remarkably. The size of the profit margin was related to the number of possible outcomes in a given bet. Bets on which a team would win a match had the lowest profit margins – 4.5% on average. (Note this means even these plain vanilla bets have a higher profit margin than FOBTs.)

When it comes to betting on the scoreline of a game, Netherlands to win 2-0, say, there are many more possibilities than for the match outcome. The average gross margin on these bets was 21.9%. As for bets on which player would score the first goal, these have even more permutations – there are 20 outfield players, after all, or no one might score. The average margin on these bets was 32.3%. Meanwhile, aggregated bets that combine different outcomes like first scorer and who wins can also have much higher profit margins than bets on a single match’s outcome.

No surprise that when I looked at the bookmakers’ advertising, both on TV and in their shop windows, I found it almost entirely dominated by scoreline, first goalscorer and aggregated bets. These trends have continued; in work I will be publishing soon, I find that Premier League TV gambling advertising in January and February of last year was similarly geared toward bets with high bookmaker profit margins.

When Saturday comes RIP

There are also endless opportunities to get in on this action. Football betting was a low frequency affair when the majority of matches were on Saturday afternoons. Now high-profile matches take place almost every night of the week. To make it easier still, “in play” betting lets punters place bets during a match, with the option to “cash out” for a sure money amount before the result. Combine this with the high profit margins and modern football betting has become a high-risk gamble for the average customer.

There is therefore a strong argument that the UK government should do something about these bets as part of its reforms of betting. Gambling losses are running at record highs – £286 per adult per year in the UK and up by a third between 2010 and 2015. Your chance of beating the bookies really depends on whether you can restrict yourself to bets with a low average profit margin.

Capping the maximum margin is one option for the government – though FOBTs are proof you need to do more than that. The govermnment could also aim to educate and disclose, similar to what is done with alcohol. Or it could restrict or ban this type of advertising or even these types of bets altogether. At any rate, it is time for a debate. “The house always wins” is an old saying in gambling. These days, bookmakers are increasingly taking it to extremes.

Mr Green leads sportsbook launches ahead of Euro 2016

Mr Green has launched its new sportsbook just in time for the UEFA Euro 2016 national team football tournament.

The Kambi-powered betting site has been unveiled ahead of schedule as Mr Green was keen that its sportsbook should be operational before the start of the European Championships, which begin in France on Friday. Mr Green said that the integration project “has been managed with the highest priority”.

“By launching a sportsbook, we are meeting our customers’ demand for betting and odds”, said Per Norman, chief executive of Mr Green & Co AB. “Together, we have managed to build the sportsbook in record time thanks to our new, efficient product platform.

“We have built a sportsbook of the same high quality as our online casino and I’m happy that we can launch the sportsbook ahead of the European Championships.”

Mr Green follows Gamesys, LeoVegas, and Cherry as casino firms to launch an add-on sportsbook in recent months.

“I’m proud that Kambi together with Mr Green, have successfully empowered Mr Green to launch its Sportsbook ahead of schedule”, said Kambi’s chief executive Kristian Nylén. “Our agile integration capability will allow Mr Green to benefit from the upcoming European Championships, and offer its customers a personalised sports betting experience.

PokerStars confirms Beta launch of sportsbook

PokerStars, the online gambling brand owned by Amaya Gaming, has confirmed the launch of its new sports betting platform in Beta mode.

PokerStars announced in January that its online sportsbook would launch ahead of schedule during the first quarter of this year.

The service went live on Tuesday and is currently only available in Beta mode.

A PokerStars source told the Pokernews.com website that the sportsbook would soon be available from internet browsers and mobile, as well as being fully integrated into the new PokerStars 7 client.

The beta launch is the last step before the sportsbook is officially launch in some selected markets – a move that is expected to take place within the next few months.

The launch comes after parent company Amaya Gaming posted heavy growth across its key financials for 2014.

In a statement accompanying the results, the firm said: “The corporation anticipates PokerStars will launch its beta version of its sports-betting product, available both on the web and in the PS7 client, in certain jurisdictions in the near future, with rollout to other markets across the dot-com network through the next two quarters of 2015.

“The company anticipates launching sports betting on mobile in 2015 as well.”

Amaya ahead of schedule for PokerStars sportsbook launch

In its consumer business update Amaya Gaming, parent company of PokerStars stated that it was ahead of schedule in the upcoming launch of its sports betting product. The operator expects to launch the product by Q1 2014

The sports betting product will initially launch within the PokerStars poker client within certain markets. PokerStars will gradually add more markets as well as web and mobile versions throughout the year.

The operator has chosen to build its sports betting product in-house, in November 2014 Amaya revealed that it had begun to construct its sports betting trading team.

Its planned expansion into the sports betting market, comes just months after the operator launched its casino product.

In December 2014 PokerStars completed the rollout of casino table games to players in eligible markets on PokerStars.com and certain domains sharing liquidity on the global network. The table games are available through the new PokerStars 7 platform, which is currently an optional download to players but which will become the sole poker client in the future.

PokerStars will also launch web and mobile versions of its casino in 2015, supported by an aggressive consumer marketing campaign. PokerStars announced the planned rollout of table games on its .com network in November, following a successful launch on PokerStars.es, the brand’s website in Spain.

The operator claims that it has witnessed a 30% cross sell for its casino table games to its its active player base in Spain.

Sportsbook.com reopens to US traffic, courting danger using a .com?

There is some good news for American sports bettors as the industry ramps up for another football season. With longtime sports betting operator Sportsbook.com reopening to American gamblers, their affiliate program CommissionAccount.com has sent emails to their former affiliates, encouraging them to reengage their marketing campaigns targeting the US market. US owned Sportsbook.com has historically always had its primary market in the US and in fact, has never stopped having its primary market in the US. However, for the last year they have stopped taking any new business in their US back yard. But all that changes this week.

The following is an email sent by CommissionAccount.com

“Good news, CommissionAccount and Sportsbook.com are open to accept US traffic again. Please reactivate your campaigns where possible. Football creative will be updated for the new season within the next 2 weeks. If there are any specific creative requirements please let me know. Looking forward to a successful football season
Thanks
XXXX”

In two weeks we’ll see what the group has planned for marketing their sports betting operation to the US market.

As we’ve seen far too often in the past couple of years, Americans are having their sports betting options limited; if it isn’t the DOJ chasing away reputable operators, it’s shady operators who steal the players’ deposits and then hide away in Halifax. With Sportsbook.com’s American market resurrection however, American sports bettors will now have another very large and credible option to bet on football for the upcoming NFL season.

Still, we have to wonder why Sportsbook.com is continuing to use their .com domain name. Sure, the URL redirects to ‘sportsbook.ag,’ but by keeping its use of the .com, it’s tempting the US Government to confiscate the domain.

Having the most generic and most searched gambling name no doubt helps them immensely in their Google traffic, but it’s a bit like walking around with the Sword of Damocles hanging over one’s head.

Though there is a distinct SEO advantage of using ‘Sportsbook.com’ in their marketing, this leg-up may be short lived. Sportsbook operators can use a .com domain extension so long as they refuse to take bets from American players like WilliamHill.com or Ladbrokes.com. After all the domain seizures and the fact that US prosecutors cite the use of a .com as part of the legal justification for jurisdiction over the actions of international gambling companies and other internet businesses the US government deems unworthy of the American public (see Richard O’Dwyer), Sportsbook.com may be taking unnecessary risks by insisting on keeping the .com and accepting US resident bets who get there from Sportsbook.com.