Offsidegaming trading director Dinos Stranomitis discusses how trading styles have evolved and advises how the industry can successfully move with the times

It was just after the new Millennium that my trading manager gave me a call doubling up my salary as a bookmaker. It was a day to remember. I had to provide odds in sports and leagues that the online industry had never seen before, such as European basketball, volleyball and water polo.

Also not forgetting the unique project of developing Greek markets by offering lower football divisions, and at the same time having proper odds for the big leagues to ensure we had the expected profitability. That was pretty much the set up for every online company at that time. Simply to get the best bookmaker and penetrate the market. Marketing only had to shout “we offer Spanish basketball and Italian volleyball. Subscribe with us and you may bet on your favourite sport”.

It was probably around 2005 that having just another league was nothing special in reality. A number of operators could easily get an employee with limited knowledge on betting, with the single mission of copying everything from others. The simple way was “follow the leader”. However, if you were to follow this route, no matter what, you would naturally end up in the same place as the leader and if not exactly same place, you end up around the same place. Information technology is improving so fast that any breaking news, that historically only leaders could find, is now immediately available over the internet. This has also meant that those employees with limited experience are now able to react quickly to information received via the internet which has become yet another challenge for the leader. Not to mention that some leaders are now more expensive and not necessarily more productive.

There is now the third part of the story that has happened in recent years with a new trend called “automatic feeds”. Simply put, you get a huge number of leagues and events, pre-match and in-running, at a standard cost that is definitely lower than employing traders (even with limited knowledge) to do the same job. Some of the providers of such feeds can even guarantee a part of the profit. What a massive change. In a few years, an industry of “specialists” and “leaders” became the industry of “get it for a penny”. Some steady mathematic formulas describing a model and comparing it with the market gives some confidence. At the end of the day, no matter what, we get the same offer and end up at approximately the same profitability as any reputable operator in the world. Again, important to mention the lowered operational cost such a solution provides.

There is no doubt this is happening nowadays and if any operator is trying to keep the “good old style” it is just a question of inertia and adaptation because all operators must put automation in their trading production. Maybe they do not need to buy a feed, but at least they must create a feed themselves to compete with information technology. Today, if you are a small operator, you need at least 1,000 live games per month and larger operators must offer at least an average of 3,000 games within a minimum of 10 markets for each game. Without automation, you need a small army to do it.

Looking back on the history of humanity, such questions have been answered in a very clear and diplomatic way. Regardless of whether you drive a horse, trolley, car, aeroplane or a spacecraft, you still need a human to do it. Even if some day this is done by robots, you still need a human to make the robots. Humanity is evolving and the Homo Erectus becomes Homo Sapiens, so the good old bookmaker has to evolve to 4M that is simply a modern model math mind. You just need to describe the model in detail, give it to developers, follow it up and make sure your drive your modern vehicle in between the obstacles of real life.

Being a CEO of a company you may get an off-the-shelf product that is cheap and tested with a satisfaction guarantee promise, however within a few months you realise that your clients are not betting the same as before, so you have to pay more for marketing. But surely you solved the trading issue that used to give you a headache in the past with all those traders causing you overheads. The bottom line is still not answered, especially if the company had not made more profit. The funny thing is that in 12-13 years of online betting the companies with financial problems are the ones investing in marketing, and yet those companies that invested in trading never had a breakdown.

I do not say that as a CEO you must retain your old trading style, but you probably have two choices to decide from: 

  1. Invest on a production department that is something in between trading and IT and make the automation part of your production. This way you will have 100 per cent control including its overall efficiency, profitability and you give your experienced traders a gun to fight plus you also then create a big asset for the company. Tough way to go, but your reputation is paramount and considered the best within the first five years. This is the destiny of the big companies.
  2. Be a partner with someone who provides trading automation. This is something you control to a certain extent, it is surely efficient, profitable and the partnership itself gives a value. It is a cost effective and wise solution. All you need to do is build synergies that will ensure that your reputation doesn’t go down the drain. Just make sure you have the right partner.

Any other solution simply cannot answer the following question: “Would you accept a £50,000 stake from your VIP client on a Brazilian game on odds provided by a tool copying the market that all in all has £3,000 liquidity in that league?” You may answer “yes” just because the client is one of your VIPs. The answer will be 100 per cent no if the client is just registered, even if the stake is 10 times less.