Billy Gowing, co-founder and managing director of social betting exchange Fairplay Exchange, outlines how introducing this product could be the key for operators trying to attract casual bettors, either in-house or via acquisition
In sports betting, the dilemma of whether to develop the technology in-house, outsource to a third party or perhaps acquire a supplier is one which frequently comes up.
That particular discussion traditionally focuses on the regular sportsbook offering, with operators working out whether it is more cost-effective to employ their own trading and development teams or pay external partners for different parts of the operation. This can also apply to things like artificial intelligence and marketing technology.
When it comes to product, however, most of the offerings you will see in a traditional sportsbook, whether developed in-house or externally, will focus on the same types of offering that have been served up for players since the birth of the online sports betting industry around the turn of the century.
Step forward social betting
One particular area operators should be focusing on for variation is something they are currently missing. Social betting exchanges can solve a familiar problem bettors have when making a wager against their friends.
With 21.6 million people in the UK using cash only once a month or not at all, according to a 2022 study by UK Finance, it can be very difficult for players to collect their winnings and make sure the pot isn’t short.
Apps such as Fairplay Exchange, Betmate and Lebom have addressed this by offering players the opportunity to sign up and make wagers with their friends, guaranteeing the winnings are paid in full and on time
Operators could use this technology as both an acquisition and a retention tool within their own platform, keeping players engaged via peer-to-peer (P2P) betting. P2P betting has previously been associated with regular betting exchanges like the one Betfair operates, or other games like poker, but this is something that could work particularly well for players who could dip their toes into the water before being converted to sportsbook and casino products.
A different environment
Based on the activity we have seen at Fairplay Exchange, this is the type of offering that can attract players who would not normally spend their disposable income on betting.
That could be because they feel slightly safer betting at low stakes in a casual setting, and also because they find the interface and technology slightly easier to understand than the plethora of information they are greeted with when visiting a regular sportsbook.
The type of bettor who may not be relentlessly studying the formbook at the Cheltenham Festival might still like to bet £10 on the Gold Cup, and social betting can be the ideal route to doing that.
An important thing to note is there is no reason for operators to limit themselves when it comes to the number of markets available, as it is possible for groups of bettors to place a bet on whatever they like (within reason of course).
The operator doesn’t have to necessarily be tied to offerings on fantasy football leagues or sweepstakes for events like the US Masters and FIFA World Cup, even if those events tend to be among the most popular. This is something which is being offered by Fairplay Exchange and is a natural development as the product continues to evolve.
This product could also offer valuable information about the players and what they may be likely to bet on when wagering against the house. If a player regularly uses the exchange to bet on games of snooker with their friends, then they could be notified by the operator that they may be interested in betting on the World Snooker Championship when the tournament comes around.
M&A opportunity
Going back to the issue of in-house versus outsourcing, there is a strong argument about whether this is the type of technology operators should look to bring in-house via acquisition.
Data-led businesses are often ripe for acquisition in sports betting, and social betting exchanges are no different. There is some history in this regard, with Yahoo purchasing P2P sports betting app Wagr in April 2023.
There are other similar examples, like Bally’s buying free-to-play sports prediction games operator SportCaller for £50m in 2022. This was a case of an alternative betting product being integrated into an operator’s offering, allowing them to diversify the service for the end user, as well as bringing the opportunity to attract new customers.
In a slightly separate but comparable deal, Betcha Sports, a real-money sports app with social and gaming features, sold to online ticket marketplace Vivid Sports for £65m in 2021. This is another example of how providing an innovative gaming experience can generate value, building a user base which can be utilised by the purchasing company.
Risk and reward
Cost is always likely to be a factor in deciding how to go about implementing social betting, and with this still being a fledgling product at this point, this could be the ideal time to look towards acquiring the data and userbase this technology can provide.
It could be a matter of weighing this up against the time and research and development funds it could take to build the product from scratch, and we have not yet reached a point where the total valuations of these exchanges would likely outweigh those costs.
The relentless fight for market share in sports betting is not likely to ease in the coming years, and any slight edge in the search for new customers will make a significant difference. As that battle continues, the arguments to use social betting as an upselling tool, either in-house or by purchasing technology externally, will only become stronger.
