As the size of the online sports-betting opportunity has grown in the last three years, so has the wellspring of trading talent in the US. So why is PointsBet making claims otherwise?
In comments during a company presentation to the Jefferies Digital Sports Betting and iGaming Summit in New York at the start of the month, PointsBet’s US CEO Johnny Aitken made some interesting comments about what he views as his company’s advantage when it comes to in-play.
“We do our own internal trading, we’re not ceding that to a third-party such as Kambi. Our trading team is based in the US on US hours. That is also unique versus how most of our competitors are set up.”
The uniqueness claim is interesting given that it is, how shall we put this, provably false.
PointsBet is far from unique in having a US-based trading team. Indeed, even a brief scan of the landscape shows that it is rare for a US-facing operation not to have some sort of in-country trading operation.
The United States of Traders
A run through what we know of some PointsBet’s competitors quickly shows how much Aitken was talking through his hat.
- DraftKings, for instance, has trading personnel based both in Las Vegas and in its hometown of Boston.
- FanDuel has offices in New York and an operational including trading team in New Jersey.
- BetMGM’s trading is based both out of Las Vegas and in its headquarters in New Jersey.
- Caesars Sportsbook is based out of Las Vegas.
Of the platform suppliers, SciGames has the old Don Best operation again based in Las Vegas while Kambi – which still serves Barstool Sportsbook along with Bet Rivers and Twin Spires – has a trading team based in Philadelphia.
That probably covers all of the top ten – if there are ten – in any given market. So, the question has to be asked, why is Aitken making these comments?
A point about capability
“I bet every tier one operator will say they have traders in the US,” says one source. “Besides, it’s a bit of an anachronism to talk about where a trading team is based anyway.”
The assumption is that Aitken is trying to make a wider point about PointsBet’s capability. Certainly, the company does have some advantages.
Among these is the work that comes from the Banach business it bought in March this year for $43m.
Banach provides the technology behind same-game parlays and other BetBuilder-type products. The team previously worked with Flutter and as an independent provider is thought to have had a close relationship with Entain.
It is a business that, not incidentally, is based in Dublin, Ireland.
Global complexity
One point Aitken was evidently attempting to get across – and we should remember his audience was a bunch of potential investors, not industry types – was the complexity of providing an in-play offering.
Supply chain issues might not seem like a relevant question for an online operation. Betting operators, after all, have no need to ship goods and parts around the world. Container loads of odds and markets aren’t getting held up off the coast of Los Angeles and Long Beach.
But they do have a globally connected chain of suppliers and remote offices that will feed into their global offerings. Important elements of this chain of supply will be provided by third-parties.
Back to the point
Aitken also claimed at the Jefferies Summit that at present one in every two attempted in-play bets “fails” to be completed due to the limitations of many of PointsBet’s competitors’ sites in terms of uptime.
This, he argued, was due to the reliance elsewhere on third parties.
“The data they compile is at times ineffective or inefficient and because they are not doing the trading themselves they don’t have the confidence to keep the markets up longer,” he argued.
“Our aim is to be up the longest, in terms of uptime, and be the quickest to accept the bet.”
The argument about failure rates and uptime are unverifiable, of course.
We do know that DraftKings had issues during the past few weeks with site outages that occurred over two consecutive football Sundays.
Industry-wide issues
Speculation on social media suggests this might be related to the platform switch from third-party provider Kambi to its own SBTech technology that DraftKings completed around the start of the NFL season.
But it could be related to other factors including DraftKings’ other third-party dependencies around odds provision and same-game parlays, for instance.
The point here isn’t to single DraftKings out. Rather, this is about the technology and third-party dependencies that exist with all the top operators. It’s why third-party providers exist, after all.
PointsBet chooses its battle
In trying to seek differentiation, PointsBet has clearly decided that product will be its chosen battleground.
But this is a risky strategy, and not just because claims about uniqueness in trading capability are somewhat flimsy.
The product has to retain leadership in what is a hugely competitive race. Holding onto a product advantage is an expensive business with rivals and third-parties snapping at your heels.
And that assumes your product is recognized as being market-leading by the only audience that really counts – the consumer. Given the market share reverses being suffered by PointsBet in the third quarter in each state in which it has launched, that is by no means a given right now.
