Poachers turned gamekeepers: Can Bethard bring the Pinnacle model to Europe?

Most in the gambling industry have heard of the legendary bet made on France in the 1998 World Cup Final. The story goes that Tony Bloom – then a trader at Victor Chandler – convinced the firm to put its winnings from the entire tournament on France to cover the Asian handicap in the game. France won 3-0, Tony Bloom went on to become perhaps the most famous football bettor in the world, and Victor Chandler evolved into a successful online bookmaker. It was a legendary gamble, probably without parallel, but at least one recent event could perhaps be mentioned in the same breath.

As Conor McGregor’s circus-act-cum-superfight with Floyd Mayweather approached last year, most firms were dealing around 1.3 on the favourite, Mayweather, and around 4.0 on McGregor. However, one bookmaker was well out of line with the market, with Mayweather a 1.1 shot. That was Bethard, founded by professional gamblers who, staying true to their background, were laying the underdog and building up potentially ruinous liabilities on the Irish MMA superstar.

The rest, as they say, is history. The fight went exactly as Bethard predicted in an event some described as the greatest redistribution of cash from squares to sharps in history. Four months later, Bethard announced Swedish footballer Zlatan Ibrahimovic as a co-owner and face of the brand. Eighteen months on, Bethard is making inroads in the UK and around Europe, with sign-ups and volumes reportedly soaring.

Here, Bethard CEO Erik Skarp tells EGR Intel about the thinking behind the McGregor decision, and the firm’s plans to bring Asian bookmaking, with high limits and low margins, to Europe.

EGR Intel: Bethard has been described as a ‘proper bookmaker’ with pricing and low margin at its core. Is that how you would describe yourselves?

Erik Skarp (ES): Yeah, that’s where we’re coming from. We have a background in the sports betting world, so pricing is definitely one of our USPs. We took that position shortly after launching with Zlatan because we consider the pricing aspect great for conversion in combination with Zlatan. It’s nothing necessarily new in the industry. We wouldn’t say we are that special.

EGR Intel: It’s relatively unique for a smaller operation to take that approach. Pricing has become pretty commoditised thanks to the low barriers to entry for off-the-shelf sportsbooks.

ES: You do have the likes of Betfair and others that are quite competitive. Again, with the background we have, we feel comfortable taking more risks than our competitors, meaning we can afford to offer higher pricing to our customers without losing too much margin. That’s the key.

EGR Intel: Sky Bet recently said its margin expectation was around 9%, while someone like Kambi expects something closer to 6.5%. Presumably you’re on the lower end of that spectrum?

ES: Over the past 12 months we have been trading about 8%, so in the middle of that range. However, there are some strategic insights on the breakdown of that we don’t like to share. It’s all connected to the conversion to live betting. We operate on very low margins pre-match but we see the live betting as more of a casino product, so there’s room for improvement on a margin point of view. That’s how we get to 8%.

EGR Intel: When you say live betting is more like a casino product, do you mean in the vein of fellow Scandinavia operators Mr Green and LeoVegas, who push their micro-markets on things like ‘a corner to occur in the next five minutes’?

ES: We do have these features which make the sportsbook very similar to the casino. However, from a strategic standpoint, it’s about converting pre-match volume into live volume rather than cross-selling to casino. We prefer to keep sports betting players in the sports betting product. That might be quite different to how our peers are operating, where everyone is super focused on converting to casino. We believe that players who are into sports should continue to play sports, but the live betting product is a better option for us, margin-wise.

EGR Intel: Are you doing anything specifically to get pre-match punters betting in-game?

ES: It happens naturally these days, but you need to be mobile-first obviously. All the technology trends are super tilted towards live betting. I wouldn’t say we are doing anything particular to push that trend.

EGR Intel: And what’s this background that allows you to be so confident in your pricing?

ES: We’re professional gamblers. Maybe fifteen years back, we came from poker and went into sports betting about 10 years ago. Our main shareholder is very much into sports betting today. He’s the brain behind the pricing in our books.

EGR Intel: I assume you’re not going to be sharing his identity?

ES: He prefers to stay anonymous.

EGR Intel: If you’re working on these thin margins, are you using other parts of the Asia/Pinnacle model, such as using information from your sharp bettors and betting it yourself?

ES: Definitely. That’s how things will develop in the coming years. I see the trend where operators are only taking losing players and they are over-selective in flagging them up and shutting them down. It’s not good for the brand to be shutting people down. It’s quite obvious from a player point of view what you’re doing and it shouldn’t be the way a gambling company operates in 2018. Either you take the bets and adjust your pricing as they do in Asia, or you can play the bet yourself. It shouldn’t be a problem. It’s all about what you do with the information.

EGR Intel: So you’re seeing plenty of sharp players sign up?

ES: Definitely. That strategy will pay dividends in the end, accepting bigger players who want to challenge an operator. I think it’s hard for them to find homes in Europe. The home for them has been Asia but it’s not optimal to be gambling in Asia, for obvious reasons, and I hope Bethard can take that position as an EU and locally licensed operator going forward. Taking big bets and offering competitive pricing is something that’s missing and indeed something that I have missed personally.

EGR Intel: Can you share some more details on the Mayweather/McGregor fight which helped launch the brand?

ES: We basically made our own investigation into that fight because it was a one-off event we will never see again. We interviewed many boxers and UFC fighters to understand the fundamental differences between the sports and we concluded there was only one way for the UFC fighter to win, which was a knockout. A boxer like Floyd Mayweather would know that and wouldn’t let it happen, so we felt the right odds were less than 1.1.

We also thought Brexit had an impact. We felt there was some momentum on the side of the underdog and the upset for the betting public. So we felt the right thing to do was take a lot of risk on McGregor. We were a long way off market, something like 1/10 compared to 1/3 in places. We got a lot of input on the way, people telling us ‘you guys don’t know what you are doing’ and it was a risk. It’s easy to be fooled by randomness in one fight, but watch it back and it’s quite obvious McGregor won’t win that fight too often. It was maybe the best bet ever.

EGR Intel: You’re on the SBTech platform, so do you take control of all pricing or just certain sports?

ES: We have 100% of pricing. We’re the only operator on SBTech that has full trading control. We don’t do too much in sports other than football – and mainly the big leagues –since football is 80% of our volume. That’s where we spend most of our time. In other sports, we are happy to use traditional or standard pricing.

EGR Intel: Does that mean getting on Oddschecker and other price comparison sites is going to be vital to get your odds in front of price-sensitive customers?

ES: Yeah, of course. That’s the main objective for us: to increase our exposure on the price comparison and affiliate sites, and Oddschecker is number one on that list. They have six or seven markets where they’re big.

EGR Intel: What was the thinking behind bringing on board Magnus Rydeving – a known gambling critic – to help with responsible gambling processes?

ES: It’s pretty simple. We wanted to do something special in this area. I know the problems that can come from gambling; it’s serious stuff. So I heard Magnus talking and was interested by him. He’s got tons of knowledge and has been in the press a lot, being very negative and outspoken about the industry, so I thought it made sense to hear him out, give him a shot and keep the conversation on the right level.

Often when someone comes in with an aggressive approach the gaming industry has a tendency to be quite defensive, which is easy to understand, but Magnus and I had a very good conversation about gambling and addiction, and he shared my vision, which is to do something different and be genuine when it comes to social responsibility. It’s something very important for the industry, not just to do cool PR stuff, but to implement things to protect people. It was quite straightforward when we sat down. We liked each other and I’m very glad he joined our team.

EGR Intel: Has he had a chance to sit down and get his hands on your systems yet?

ES: He spent last week in Malta, meeting the operations team. He’s starting to understand our systems. We have been very truthful about our business, how we operate, what areas we see problems, and where we want protections. He responded very well. He’s not there to point fingers; he’s there to guide us and create a balance in the discussion because it’s hard to have a balanced discussion in our industry. There are maybe one or two responsible gaming guys at each company and that obviously isn’t balanced enough.

EGR Intel: Is this a particularly important strategy given Sweden and the UK are your two main markets?

ES: Definitely. But it’s also important because it’s the right thing to do. That’s how we create long-term sustainable growth and sustainable results. Money from people who shouldn’t be gambling is short term and will come to an end.

EGR Intel: Is Sweden or the UK more important for you at this point?

ES: The UK is growing much better than Sweden. Obviously, we’re coming from zero in the UK, but we see better player value, better conversion. Sweden is a little special given Zlatan’s status there. Sometimes he’s the king, sometimes he’s hated, and people are not really sure which one. We saw some negative impact when he appeared a lot on TV for other companies during the World Cup. The UK is the focus from our side if we had to pick one of them.

EGR Intel: How do you deal with the level of competition there?

ES: We’re coming in with a sports betting brand, which is where it has to start in the UK. We see so many casino brands; some will do well, but most will fail. My take is you need sports betting at your core in the UK, and so far we’ve seen that our brand works.