Surfing through the recession
Fruitful for the bookmakers of course but there is more to having a bet than making money, believe it or not. That sounds insane but if it was just about winning, most of us wouldn’t be doing it. There is a rush, a bungee-like enjoyment, an endorphin-overload brought on by the combination of risk, the fear of losing and the actual anticipation of pocketing a few euro, that is a significant part of the experience.
This explains why punters are looking for more types of bets, and responding to easier ways to make those wagers. It also explains why the big firms continue to make massive money and why the likes of William Hill have decided to make a big play for a slice of the estimated €1 billion Irish online betting and gaming market.
Just a couple of weeks ago WilliamHill.com was launched in Dublin, promising to offer Irish punters “an unrivalled number of betting opportunities on a wide variety of global and local sporting events”. Throw in the bingo, casino games and poker and the discerning punter is being provided with what he expects nowadays. There is even a new financial site called ‘Day Trader’.
This is where gambling is now. No longer is it just about picking the winner of the Tramore bumper. William Hill Online (WHO) promise to offer Irish punters in excess of 500,000 betting opportunities every week on GAA, soccer, horse racing, rugby, golf, motorsport, US sport and the novelty markets.
WHO is an amalgam of William Hill and Playtech, an Israeli software provider listed on the UK stockmarket. Established in 2009, it is now one of Europe’s market leaders in online gaming and sports betting. Most recent figures saw them generate revenue of €285m (up 24%) and a profit of €105m.
“A few years ago we had a poor online platform,” concedes Cathal McCarthy, chief financial officer of Gibraltar-based WilliamHill.com. “We alleviated that and then set up as William Hill Online using the computer savvy of our Israeli partners and we are now more innovative.
“A few years ago, there were two traders covering each football match for every potential eventuality. Now it’s automated and it only takes one person to cover all the matches. In terms of automation, we’re right at the forefront. Once we were followers, now we are leaders.
“We’re still talking growth in the industry. Alright, we might have lost a lot of the high-roller activity. There is definitely less business in the casino market. But the modest-stake punters who are looking to spend their leisure pound online... there is no recession there. It’s showing growth and enough growth for us to increase our revenue.”
It’s as if playing on some market or other provides a short, temporary release from the harsh realities going on around us. The downturn might actually be ensuring that there is “no recession” for the bookies.
The big issue between bookmakers and Ireland’s horse racing authorities right now relates to Government requesting a cut of the bookmakers’ revenue in the form of tax to enable the sport to be self-sufficient.
There has been much debate about this, and in particular, how legislation can be established to regulate online gambling. The new Minister for Agriculture, Simon Coveney is in the process of extending the 1% tax to all online betting outlets and is on the record as being in favour of increasing the tax to 2% in time.
“We’d be interested to hear what the Government has to say,” McCarthy responds. “They have said that they recognise that offshore operators are taking money off Irish punters and want some way to get some of that back. I think they understand that if they overtax this sector, it will push the likes of Paddy Power and us out of the market and there will still be other operators taking that money.
“If it’s relatively benign, William Hill will remain in the market. At the moment though, there is no mechanism in law for taxing an offshore company. There is talk, we’re looking forward to seeing what comes of it.”
But as mentioned earlier, while horse racing remains a significant gambling attraction, it has many rivals now. Basketball has been added by WHO recently and McCarthy reports that it’s doing well for them, while soccer and tennis have most in-play activity.
“In the old days, you bet on the winner of a race or a tennis match. Now you can bet on a game, on a point, on a set. Because of that, you get people watching a game, having a bet on a set and if they win, then moving on the next set. It’s part of the experience. You’ll find that in-play activity usually involves relatively small stakes too so it’s a fun/leisure experience market.”
The development of in-play betting has changed the dynamics of the business.
“We have a team of mathematicians that create algorithms based on history, statistics, previous results. Because everything is automated, those algorithms can account for 100 markets on 50 games. The key is that if Man U got 1-0 up, that the odds will change immediately.
“We have had a significant R&D investment and are constantly tweaking as punters change behaviour. You have to keep on top of things because if you make a mistake on the internet, you’ll pay.”
So not just does every sport have a different algorithm, every competition within that sport does. Having qualified as an accountant in the 80s, Wexford native McCarthy is relishing the constant fluidity of internet betting business.
“People are saying that 2011 is going to be the year of the mobile. The industry as a whole is moving into that space and there’s huge growth which is likely to continue for a while yet.”
WHO’s mobile business increased by an incredible 800% last year and WilliamHill.com is offering four different mobile apps to Irish customers: Mobile Sportsbook, Racing App (Racing Post/William Hill), Shake-A-Bet and Match Predictor. McCarthy expects there to be plenty of interest.
“Irish punters are amongst the more knowledgeable in the world so you don’t have to do the education that might be needed elsewhere. They appreciate the breadth of opportunities on offer.”
Recession, what recession?
