Starting an online sportsbook is much like starting an online casino, but there are a few key differences. Read how and why to start your online sportsbook business below.
Why launch an online sportsbook?
The online sports betting vertical is in better shape than ever.
In Europe, home of the wealthiest gambling markets in the world, sports betting accounts for over 40% of all iGaming income, raking in an astounding €10 billion in gross gaming revenue in 2019. The forecasted year-on-year growth between 2020 and 2025 stands at 10%.
Similarly, sports betting takes the lion's share of profits in developing markets in Africa and Latin America, where the passion for football and spreading mobile connectivity drive the consumption of betting products.
The takeaway? Wherever you are, there’s a vibrant betting market just a stone’s throw away.
Understanding online sportsbooks
There is a huge variety of bets and wagers for punters to choose from. The same kind of bet can be known by different names in different regions, and types of wagering that are popular in one country are sometimes virtually unheard of elsewhere.
Sportsbook operators will need in-depth knowledge of the different kinds of bets that their bettors will want to place, so before we dive into the technical know-how of running a sports betting platform, let’s quickly go over the bets themselves.
Win bet/Moneyline Wager/Straight bet
The most popular and most straightforward type of bet, this is a simple wager on who is going to win a game, race, or other event. The odds depend on the perceived likelihood of victory: the underdog’s success will bring the bettor a bigger payoff than that of the favorite. In sports where a draw is possible, bets can be placed on this outcome as well.
Point Spreads/Spread Betting
Punters participating in a point spread wager are not necessarily trying to predict who will win a game or match. Rather, the bookmaker calculates a “spread,” or a difference in points, that makes both the underdog and the favorite worth betting on.
Punters who bet on the underdog win if their team wins outright or loses by a margin smaller than the spread. Bettors who wager on the favorite win if the team wins by a margin greater than the spread. Bets are refunded in the case of a tie, unless the bookmaker has a stated policy such as “ties win” or “ties lose”.
Totals/Over-Unders
Even less focused on win and loss, this bet is made on the total number of goals or points scored. Quite simply, the bookmaker sets the “line”, and punters bet either that the total will be higher (Over) or lower (Under) than the bookmaker’s estimate.
Proposition bet/Special bet
This is a bet made on something that does not necessarily affect the final outcome of an event, such as predicting which player will score, what team will score first, or the time until the first goal is scored in a match. The variety of proposition bets is practically endless, as even the smallest element of the sport can be analyzed and bet on. These events are typically quite hard to predict, so bettors that prefer this type of wager are experts in their chosen field and challenge themselves for the chance of a higher payout.
Parlay Bets
Parlay bets are when several wagers are grouped together. The payouts are big, but the risks are great. If the bettor puts his money on seven teams to win their next matches, if even a single team loses, the parlay is lost. Parlays can aggregate several different types of bets, such as spreads, win bets, and over-unders.
Parimutuel betting
This form of betting is associated with horse racing and similar events. There are no odds set by the bookmaker. Instead, all bets are joined together in a pool and then divided among the winners. The betting platform typically takes a small part of the total for providing the service of accepting and processing the bets.
Punters usually wager on the winner, but there are many other bet types that call for higher precision, like predicting which horses will finish in first, second and third place, and in which order. Bettors can place bets on several races — similar to parlay betting.
Distinctions can also be made for when the bets are placed. In-play or in-running bets, for example, are bets made after the event has already started. The convenience of devices like mobile phones and laptops makes them perfect for in-play betting, but unfortunately, it is against the law in many countries that otherwise allow sports betting.
Handling exposure: caps, odds, and the vig
When it comes to running a sportsbook effectively, keeping exposure in check is the name of the game.
The first tool operators can use to limit their exposure is capping bet size. By limiting the maximum amount that punters can wager, operators can ensure that potential wins can be covered with available funds.
A positive side effect of limiting bet size is that it keeps "sharps" (professional bettors with the know-how to regularly beat the house edge) at bay; the downside is that some high rollers might be put off. In any case, it is a highly effective practice, particularly for new operators lacking the safety net of large cash reserves.
On top of capping bets size, bookmakers can also limit their exposure by setting odds properly and including a vig.
The vig, shortened form of "vigorish", is also known as the "cut", the "margin", or the "juice". In simple terms, the vig is the commission a bookmaker charges on each bet. The vig isn't a fixed amount either – it can vary from event to event, from pick to pick within an event, and even on the same pick at two different points in time.
Bookmakers modify odds to incentivise players to place bets on the desired pick. The point of modifying odds is not to lower the potential payout: players will constantly scour the web to place their bets on the sportsbook that offers the best return for their wagers, so that would be counterproductive.
Rather, the idea is to make all bets equally attractive to avoid imbalances. Lowering the return on a likely outcome while raising it on an unlikely one lures players into spreading their wagers equally between the two.
The biggest risk for bookmakers is to have a sizable imbalance between the total amounts staked on the possible outcomes, with most of the money pouring in into a single pick. When this is the case, the bookmaker stands to lose a substantial amount of money if the pick is correct.
The vig ensures operators’ profits, as losing bets are meant to cover for the winning bets. However, in the short term, fluctuations can be wild and ring the death knell for sportsbooks lacking the cash reserves to cover wins.
Setting odds correctly requires extensive expertise and knowledge of math, statistics, and of the sport in question. It also requires constant access to up-to-date information, as any event can dramatically change the likelihood of an outcome: say that a star player gets injured in training just before the match – the chances of his team winning are bound to diminish. Without direct access to this kind of data and the skills required to analyze it, the best option is to rely on third-party odds.
In the modern, AI-driven era, API solutions can provide sportsbooks with everything they need to properly set odds.
Where to launch an online betting platform
Once you’ve done proper research and gotten familiar with the possible risks and ways to deal with them, it’s time to consider the market of operation.
“Gray” markets don’t have dedicated legislation, but they don’t prosecute betting operators either. On the other hand, regulated “white” markets offer stability in return to meeting requirements, including technical specifications, player protection measures, and marketing guidelines. Regulated markets also differ in the types of bets allowed and on what events operators can list.
For example, horse racing is frequently subject to national monopolies, even when sports betting is otherwise legal. If the operator has a specific interest in offering non-traditional types of betting, for example on esports or virtual sports, that should also be kept in mind in this phase, as some jurisdictions may limit their ability to do so.
We recommend considering a license issued by a respected jurisdiction such as Malta, Gibraltar, Alderney, or the Isle of Man. This creates an incentive for operators to abide by high-quality standards rather than exploiting the lack of control. Slotegrator offers consulting and licensing services to help operators go through this process quickly and easily.
Choosing a regulated market requires extensive research. Before getting started, investors need to understand which market best fits their needs and possibilities regarding licensing costs and requirements, market size, level of competition, and growth potential.
If you are not sure where to start our interactive map with gambling regulations of the world will be a great tool. We discuss the news in the iGaming industry in this section of our website, read them to stay updated about the gambling markets.
Small and emerging markets can, in some cases, represent a better opportunity than large, wealthy markets. With lower licensing fees and less competition, new operators lacking the marketing budget to compete with the industry's giants can find their footing and start making a name for themselves in a less cutthroat environment.
Attractive emerging markets are scattered across the world. We already mentioned Africa and Latin America, but there are also opportunities throughout Asia, and in eastern and southern Europe.
What it takes to launch a sportsbook
Much like starting an online casino, launching an online betting platform requires plenty of planning and extensive market research. Here’s a rundown of the steps you’ll take.
Gather capital
As in any other type of venture, prospective sportsbook owners will need a detailed business plan and access to funds. The amount required will significantly vary depending on the chosen market, as this will define the licensing costs and the monetary guarantees that must be provided to authorities. Similarly, the market's size impacts the expected bet volume, and so do the sportsbook's marketing efforts. The more bettors play on a platform, the higher the operator's baseline exposure will be.
Operators need to make sure they have enough funds to cover their exposure to all the bets coming in. In some jurisdictions, this amount is defined by law. The initial capital must also cover all the below mentioned aspects, including licensing fees, platform development, and marketing.
Online sportsbook license
The international online sportsbook business is very lucrative, but it requires operators to comply with various rules and regulations. In some countries, online betting is still relatively new, so there is no special legislation or taxation yet. But to operate in the world’s biggest markets, sportsbook operators have to obtain licenses.
Operating in various legal frameworks is a delicate and challenging topic. We covered it in more detail in a separate article.
The online sportsbook platform
High-quality platform software is essential. This can be developed in-house from scratch, but it's also possible to get a head start by purchasing a third-party solution.
A platform should have appealing and navigable UX design, a variety of reliable payment methods, a CRM system, and data feeds, among other features.
Flawless design
A sportsbook that is easy and intuitive to navigate, with a clear brand image and modern design, instantly appears reliable, which in turn helps retain users. A good website should forgo pop-ups and loud noises in favor of an appealing color scheme and well-placed promotional offers.
Sign-up buttons should be highly visible, and it should never take bettors more than a click or two to find the sport they prefer to bet on. Remember, if bettors don’t like to look at your website, they won’t want to bet on it, either.
Functionality and payment processing
The technical side is extremely important. Make sure you offer 24/7 customer service and prevent glitches, outages, or delays caused by heavy traffic — you don’t want your site crashing during the World Cup.
Convenient, reliable payment systems are absolutely essential to win over long-term sportsbook customers, so cooperating with certified payment service providers is a necessity. Make sure your players can place their bets no matter what by offering a variety of payment methods, including not just credit cards and bank transfers but e-wallets, and accepting payments in a range of different currencies (including cryptocurrencies).
Transparency and convenience
To make a good bet, punters need information – statistics, historical data, news, and insights. To put it simply, if your service offers no convenient access to the data they need, punters will inevitably find another source. And after that, why not place their bets elsewhere too?
Live feeds and real-time sports data (scores, schedules and statistics) have become an industry standard. By giving bettors the information they need to evaluate the odds and decide what outcome to wager on, you can build player trust, which in turn helps to retain your audience. The fewer reasons your players have to leave your online sportsbook for another resource, the better.
Slotegrator’s turnkey platform solution for online casinos and sportsbooks allows operators to spend a minimum amount of time and money and get to the next steps of launching an online betting project. The new platform’s Casino Builder module offers many pre-made UX templates created by designers and based on users’ preferences; the BI module helps collect and analyze all the important information from the platform’s back-end; the platform’s bonus module allows operators to set and adjust bonuses, deal with security, and process user verification quickly and efficiently.
Coverage
The world of sports betting is a big one. Every discipline has local and international matches, races, and tournaments, all of which attract a sizable audience. While bettors that are devoted to a single sport make up a large portion of the traffic of a typical online sportsbook, there is also a category of people that view betting as a business, making a number of large bets on a variety of sports – volume bettors.
This approach often involves betting on different disciplines because most sports are played seasonally, not year-round. Some sports, like American football, have short seasons (the NFL season lasts just five months) and don’t have a large volume of games, so punters that don’t want to take an extended break from betting will have to look for something else until the next season comes around.
Whoever your target audience is, you’ll want to offer plenty of options so punters always have something to bet on — not just traditional sports, but virtual sports and esports as well.
There are many more varieties of betting specific to particular sports or countries. When expanding into new markets, it’s a good idea to perform extensive research on betting practices in the region.
The odds are also a big factor. Many punters have in-depth knowledge of their sport of choice and keep a close eye on the odds offered by different providers. As a result, if the odds you offer are not competitive, your sportsbook will lose a lot of traffic.
Aside from offering an array of choices, it’s critical to give your punters plenty of reasons to lay their money down. A good strategy is to promote events in the run-up to the match and offer good odds and special offers to attract new bettors. For many people, the main barrier to betting on multiple sports is perceived difficulty and lack of knowledge, so you can make it simpler for them and take steps to tell your audience more about other types of events.
Our Sportegrator solution offers a wide choice of live sports data feeds, risk-management tools, personalized frontend design and navigation, customizable bonuses, content and performance management, and a choice of payment methods.
Marketing strategy
When launching any online project, it’s very important to stand out from the noise. The quality of your digital advertising, SEO marketing, and affiliate marketing will be a huge factor in the success of your online sportsbook. To keep up with your audience, you should constantly evaluate the performance of different channels, test new strategies, and make sure all of your efforts are tailored to the preferences of the market segments you are targeting.
It’s also important to closely follow the law, so make sure that advertising is legal in your target market. Governments of some countries, such as the UK, impose limitations on how online sportsbooks can advertise and what forms of marketing are permitted.
Customer support
Finally, the sportsbook will need experienced personnel. From customer service hosts assisting customers with any technical issues to legal experts ensuring the product's compliance with local regulations, from marketers tasked with providing a steady flux of new players to localisation specialists making the platform accessible to a broader customer base, no business can run without the right people behind it.
Due to the level of competition on the market, the thrill of winning alone is not enough to keep your audience coming back. To build a base of returning customers, operators should regularly offer special incentives. Free bets and sign-up bonuses will encourage potential customers to make deposits and place wagers, while loyalty and VIP programs will keep your long-term users happy even when they are on a losing streak.
How can Slotegrator help?
Our Sportegrator solution, a comprehensive bundle designed to get your project going without headaches. Sportegrator includes both a state-of-the-art backend system and a fully customisable frontend, an advanced content management system, CRM tools to drive user retention effectively, and payment providers integration. What is more, Sportegrator gives you access to real-time sports data feeds and to the most vital part of any successful sportsbook: high-quality, profitable live odds compiled by industry experts using cutting-edge mathematical models.
To learn more about Sportegrator and all the other services we provide, feel free to get in touch with our sales team – we'll gladly answer all of your questions on how our tailored business solutions can add value to your enterprise.
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