Sports Betting

The value of the global online sports betting market has grown at an implied CAGR of over 16% since 2003 to reach $6.7 billion in 2008.  Excluding the US, which despite the legal restrictions is still believed to be the world’s largest online sports betting market, H2GC estimates the global online sports betting market was worth approximately $5.0 billion in 2008 – up 27% on 2007. It predicts this will continue to grow to approximately $7.8 billion by 2012, implying a CAGR of almost 12%. The popularity of different sports varies by territory impacting the mix of wagers and the margins available to betting operators. Horse racing and football are particularly popular in the UK and football and tennis are among the most popular events in other parts of Continental Europe.

Live betting allows punters to place wagers during a sporting event and is becoming increasingly popular.  Margins on live betting tend to be lower than traditional betting, but is highly attractive to bookmakers because it is much more exciting and tends to increase betting volume as customers stay longer on the site.  Again, the sheer number of online sports betting sites means that no market share data is available.

Success in online sports betting
As the operator is taking principal risk by offering odds on a range of sporting events, player liquidity is not as important as it is in online poker. That said, the larger the number of bets placed on a single event, the greater the spread of risk and the greater the prospect that the operator, or bookmakers, will make a profit on the event.

Success requires customers, a broad range of products to bet on and excellent bookmakers that are able to price odds effectively and generate positive gross win on the amount wagered.

Spread betting on sports and financial markets is an increasingly popular variant of conventional sports betting. This involves the bookmaker providing a two-way price, buy or sell, on either the outcome of a sporting event such as the final score or the winning margin. Relative to the price offered, the customer in effect bets that the score will either be higher or lower than that offered by the bookmaker. The same principle holds for financial spread betting. In this case, a customer can bet on upward or downward movement of financial indices like the Dow Jones or FTSE indices, on the movement of currencies or even individual financial instruments, including shares. Operators make their money from the ‘spread’ – the difference between the bid and offer price – multiplied by the total value of bets placed.  Managing an effective spread betting business requires knowledgeable and effective traders and efficient risk management systems in order to manage the operator’s exposure to different outcomes.