Scientific Game

Going for Goal

Gambling software provider Sunplus on how to get the right online sports book products into Asia

Thursday, 14 April 2011 14:30
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The relationship between Western online betting companies and Asian gambling markets is a bit like the relationship between the moon and the tides—one of magnetic attraction. But just like the ebb and flow of the ocean tides, most of the foreign betting brands quickly get pushed back offshore. 

The reason, says online gaming entrepreneur Tom Hall, is that the Western companies generally don’t have the right products for Asia.

“Asian online betting is all about ‘in running’ soccer,” he explains. “Many Western companies have tried and failed in Asia—some of them several times. The reason is that to be successful in Asia you need to have the right product— that means the right number of ‘in running’ soccer events.”

Many Western online betting companies have tried and failed in Asia—some of them several times

As the term suggests, ‘in running’ betting means placing wagers on matches while they’re in progress. That offers all kinds of betting possibilities including event combinations not possible either with simple fixed odds outcomes-based betting or even with the spread betting format popular in Europe. It also means much more complexity in bookmaking and potentially more risk for the bookmaker to manage.

“European sports books are run by managing the customer,” says Tom Hall. “For example, if a punter is successful he might be cut down [by the bookmaker] from being able to bet a thousand, to only being able to bet 500 or even 200. In Asia, it’s run differently. All the bets come in and you just adjust the price. That means in Asia people can bet a lot more. In Asia, the maximum bet on an English Premier League [soccer] game is typically 50,000 euros at any one price. If you go to Ladbrokes you might be lucky to get 2,000 euros on. Asian operators also work onvery fine margins.”

Mr Hall, formerly a CEO of online casino software provider Playtech, is now involved in a company offering a software product that allows Western online betting companies to offer the right ‘in running’ sports gambling products to Asian customers and to expand their offer to gamblers in their core markets in Europe.

“Sunplus is a turnkey sports book software provider,” he explains. “If you’re a casino or poker room [online] and you’re successful at that; these days you need to have sports, because that’s the most ‘sticky’ of all the gambling products. It’s entertainment as well as hard core gambling. People are always going to bet on their soccer team.

“Sunplus is slightly different from a traditional sports book platform provider, where someone like Ladbrokes would come in and take an outside company’s software for an annual fee and use it to run their business.

“If you’re a casino or poker room [online] and you want sports but you don’t want to go to the extent of hiring your own trading team and managing the bookmaking risk, then Sunplus offers that turnkey solution. Those licensing services from Sunplus have all their bets go into a central pool,” states Mr Hall, the company’s Business Development Director.

Critical Mass

Quality and flexibility at the front end and the right expertise at the back end

The key to the Sunplus turnkey software system is that it is backed up by a critical mass of live sports events overseen by a back of house trading team big enough and skilled enough to manage the risk successfully and profitably.

“Sunplus has a relationship with an exclusive service provider which has a team of 700 traders—one of the biggest sports book trading teams in the world. All the bets are managed by the centralised trading team,” says Mr Hall.

“The trading teams operate like huge trading floors in a bank or stockbroker—but they’re trading sports as opposed to stocks.” Sunplus provides more than 5,000 live soccer events per month. Mr Hall says the biggest provider in Europe is bet365 with 1,500 live events.

“If you’re a European operator trying to come to Asia, it’s virtually impossible because the ‘Big Three’—IBCbet, Singbet/188 and SBO and most of the other [Asia-facing] books already offer so many in running games,” he states.

“In terms of the betting volume handled by Sunplus; if you put Ladbrokes, William Hill and Betfair together, it wouldn’t come close. At peak there are 150,000 concurrent bettors. Our record was 160,000 concurrent bettors during the [soccer] World Cup. Sunplus is the biggest platform provider in Asia, and our ONEbook™ platform is used by brands including MANSION88, IBCbet, 12Bet and FUN88,” says Tom Hall.

“So far European online sports books only compete on marketing. Whoever has the greater marketing spend comes out on top,” suggests Carlos Salas, Chief Executive Officer of Sunplus.

“Now we’re saying you don’t have to spend all that money on marketing. You can improve your product and then also compete on the strength of that product.”

Click Versus Brick

The Sunplus business model

Sunplus can offer a range of revenue and licensing models to suit the size of the client’s operation and the nature of the regulations in the market or markets where the client wishes to operate.

White label

“If you’re a small- or medium-sized poker room in Europe, you may not have a sports book at all, so we can provide a white label solution.

“If an operator already has a white label package from one of the other software providers, the quality available in the market generally isn’t that good. We are targeting those operators. They can license the product from us, we give them the software and we also run the whole sports book for them. They then pay us a small initial fee and a share of what we call ‘player losses’ or ‘software royalty’.

“A typical licensee for us is a Western guy who has a good brand and knows how to market, but doesn’t up to that point have the right product. That’s a relatively easy one for us. We give him a very cost competitive sports book, all the tools he needs and all the markets he needs. There is also a big difference between a real turnkey solution and those providers that purport to offer these services but are in fact scraping prices from third party sites with no real trading expertise.

“The third type of licence we have is the big sports betting group that may want a niche product from us. They have their own [trading] teams and their own sports books, but they may want just ‘in play’ soccer because we have so many live events available,” he states.

“The typical revenue share terms we can offer a licensee are a lot more attractive than a typical Western operator. That’s because we already have a very profitable business in Asia. For us to add additional licensees adds only marginal costs. It’s just a question of the time it takes for our software guys to launch a new skin. That’s very different from the smaller software companies based in Europe.”

The Front End

Off the peg or tailor made customer interfaces to suit different needs and different budgets

Ask some gambling software providers to set up a new website and you could be waiting a year, claims Carlos Salas. Sunplus has turnarounds that can be measured in a few months, he says.

“Our record for licensees to set up their platform is two months. Once they got the hardware and ISP out of the way they integrated the turnkey solutions within two months.

Some competitors can take a year.” Website platforms from Sunplus come with a pre-designed template, though larger companies with bigger budgets and brand identity to support will generally choose bespoke solutions, says Tom Hall. But with all the ‘skins’—the front of the website that the customer sees and uses—the idea is that after handover to the client, the site should be as user-friendly as possible at the back end as well as the front end.

“Our Chief Technical Officer Bill Koh redeveloped the software product so that effectively a licensee can change the look and feel of the skins used on a licensee’s site much more and much more easily than other platform providers can,” explains Mr Hall.

“It means we don’t have to get involved so much. Licensees can move things around, add new banners, that sort of thing, to define what the customer sees. Licensees don’t want to have to send us requests to move a banner—it drives them insane.”

Flexibility

That ability to minimise the amount of after-sales input is critical to building a successful software business—especially as your client list grows, says Tom Hall.

“We learned lessons from earlier experience in the gaming software market. When you start having multiple licensees, you need to have software that is user friendly—otherwise your time gets tied up in helping with standard customisation inquiries and that hits your ability to develop new products and features,” he explains.

“No software company can ever do instantly everything that a customer wants—even though that’s the customer’s expectation. But we’ve tried to structure the business so that the development queue is as organised as possible. That’s a really important thing, because as you grow you want to minimise the amount of support time you spend on each one—that’s for everyone’s benefit.”

Regulatory Landscape

How Sunplus ensures ‘turnkey solution’ means what it says

“There are some regulatory constraints about how we license people in Europe,” says Tom Hall. “We’re working our way through that and having meetings with relevant government representatives.

Regulated markets can be very stringent,” adds Carlos Salas. Some require you to make a certain amount of profit, or offer a certain number of games, or not to surpass a certain amount of profitability, so we have to look at markets on a case by case basis.”

“Our job is to make our licensees’ lives as smooth as possible,” says Mr Hall. “So if we can say to licensees: ‘We’ve set up this system with X, Y, Z jurisdiction. We’ve got a lot of servers we’ve linked together so the system all works and you as our licensee don’t have to invest in any of that,’ then we’ve got it right. We ensure that wherever the gaming operator is already licensed, by taking on a sports book they have minimal additional regulatory headaches.

“We’re getting a lot of enquiries from regulated markets such as Italy as our product and commercial terms make us very competitive in Italy and enable us to access that market and possibly neighbouring markets.

“In some regulated markets revenue sharing is hard—an extreme case is Nevada where no profit sharing is allowed with the casino operators. We built the business model so that we offer a range of licensing models” says Mr Hall. 

The Latency Issue

Some technical challenges faced by global online betting businesses

There are technical as well as regulatory challenges when it comes to enabling global online sports betting businesses, says Carlos Salas.

“We’ve had to deal with the latency issue between Asia and Europe. That means the speed of Internet data traffic flowing between Europe and Asia. FFor sports betting the optimal number is about 180 milliseconds, and the best that can currently be achieved is about 280 milliseconds, though customers don’t really notice any difference so long as it’s under 300ms. That’s about a thirtieth of a percent of a second. It’s way better than live TV, which has about a three second gap between the live action in a soccer ground in Europe and the pictures that appear on TV in Asia. Still, betting traffic is not as fast as we would like it, but that’s because the bandwidth is not there on the Internet.”

All online betting platforms are beholden to the inherent architectural strengths and weaknesses of the Internet. But Sunplus says that by licensing out of established online gaming jurisdictions with the best available technical infrastructure, it can offer the most stable system to be found anywhere in the world.

“In the most developed online jurisdictions such as CEZA [Cagayan Economic Zone Authority] in the Philippines, Kahnawake in Canada or the Isle of Man, they have so much bandwidth and pipe and so many tools that they can deal with all contingencies, including things such as a DDOS [distributed denial-of-service] attacks,” states Tom Hall.

“And by coming to Europe we are creating a shared hosting environment so that we don’t have the latency issue,” adds Carlos Salas.

“For Europe this is a new kind of service. There’s never been a licensing regime for it or any regulatory structure for it. We are talking to jurisdictions that are open to the idea of this product and are interested in having us in their jurisdiction.”

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