Sports Betting – Researching the Revolution

In the 1980s, professional sports went through a revolution as broadcasting rights and cable sports broadcasting spurred a remarkable growth in revenues, profits and fan engagement. Leagues expanded, players’ salaries skyrocketed, gate receipts multiplied, and cities rushed to build ever grander sports venues.

Today we sit on the verge of another worldwide sports-related transformation: the revolution in sports betting. While media rights will continue to be the largest component of sports revenue, other streams of activity such as digital platforms, merchandising, sponsorship and legalized betting are growing at astonishing rates. Recent PwC research suggests that revenue from sports betting in North America could total 80 billion dollars by 2022. The recent ICE Conference on Gaming in London had as a major focus, the dramatic developments in sports betting.

In September 2018, the NFL relaxed its existing policies on accepting advertising from casinos. The NFL is now accepting sponsorships from casinos that offer sports betting (with certain restrictions). Just a few weeks ago, the US Supreme Court struck down the Professional and Amateur Sports Protection Act that had barred single game gambling on football, basketball, baseball and other sports.  This action gives an important green light for legal single game betting on sports. The floodgates are opening as more and more jurisdictions relax restrictions on sports betting.

As companies in this new world of sports betting begin to capitalize on the opportunities, one of the biggest challenges we will face will be undertaking high quality focused research to fully understand the “sports bettor” and the category overall.  For some time, we have been aware of the appeal of sports betting and the fact that diehard fans have long been finding ways, both legal and illegal, to gamble on sports. We also know that making bets on sports is associated with a higher degree of knowledge, engagement and attachment to particular sports. However, we still lack a deeper understanding of the complexities of the “sports bettor” and the milieu in which he/she operates.

Below, we pose 9 key questions that need to be researched and answered in order to maximize your company’s chances of success in the brave new world of sports betting:

1. What are the deep underlying motivations for engaging in sports betting?

While people can consciously tell us why and how they bet on sports, there is also a subconscious set of forces and needs that are at work below the surface. It is important to uncover this hierarchy to ensure that the customer relationship is resonating on a deeper and more compelling level than just conscious thought. Psychoanalytic exploration can be a powerful approach to uncover these hierarchies. Semiotics can help us better understand the power of signs and symbols associated with the category and those in many cases are cues for subconscious factors.

 2. What are the cognitive biases associated with sports betting and how do they impact behaviour?

A behavioural science lens can be invaluable in uncovering the cognitive biases that influence customer decision making related to sports betting. It can also assist in identifying nudge points that exist in the customer experience that help define this experience. Considering the irrational as well as the rational biases for behaviour in connection with sports betting can provide powerful assistance in guaranteeing positive customer experiences.

3. In what social and cultural context is sports betting situated?

Ethnographic research allows us to immerse ourselves in the world of the sports bettor and understand the context in which the activity occurs. Ethnography uses observation and questioning cued by these observations to understand lifestyle, experiences, environmental, and socio-cultural factors that impact and influence ability and motivations that drive behaviour and decision making. Ethnographic exploration can be done in person or with the aid of digital platforms managed by a trained ethnographer.

4. How can sports betting experiences be optimized against financial, functional and social objectives?

If we don’t understand and quantify the customer journeys that sports bettors embark on, then we have little hope of having any influence over these journeys. CX and UX testing can play a critical role in quantifying the experience and ensuring that platforms used are functioning effectively and delivering a positive customer experience. Successful companies in the category will have to develop powerful experience and usability metrics and KPIs to properly manage the customer experience.

5. To what types and combinations of messaging do sports bettors respond most positively?

The road to business success is littered with companies that develop great products and services but end up communicating and promoting them with the wrong messaging. Message modeling using discrete choice designs allows for the optimization of messaging elements for maximum effect with the target consumer. Messaging campaigns will have to be on target and optimized to break through in this busy new category of sports betting.

6. How do sports bettors choose betting services for the sports with which they engage?

For success in the category, it is essential that marketers have a full and predictive understanding of how customers make choices about what products and services to use. Lack of knowledge in this area can result in poorly designed products with features or combinations of features of little interest to the target consumer. Discrete choice modeling allows for the powerful simulation of actual decision making and helps in predicting future success in the marketplace.

7. Which sports betting offerings have the best probability of success in the marketplace?

Companies in the sector are creating products and services at a dizzying rate. There exists neither the time nor the resources to evaluate these new ideas with traditional test marketing research. Using prediction markets to leverage the “wisdom of the crowd” can be a powerful technique for screening new ideas and evaluating relative probabilities of success in the marketplace. They can provide clearly differentiated results that can easily be validated with in-market performance.

8. What are the parameters of emerging consumer brand equity in the category?

Very often, companies have little understanding of the consumer equity they have in the marketplace, particularly when business is growing. Failure to understand why and how your customers value you relative to other brands is critical to maintaining strong business performance. Creating brand equity segments allows us to clearly identify prospects, loyal and “at risk” customers and understand their differing equity perceptions. This also helps identify and define the magnitude of risk posed to a brand’s customer base by specific competitors.

 9. How do we define and take action related to the key consumer segments in the marketplace?

To succeed in a complex business like sports betting, it is essential to have an accurate and actionable understanding of the consumer groupings in the marketplace. Properly conducted segmentation analyses will yield good estimates of the size, value and composition of the generated consumer segments. It will also yield accurate pictures of the differing product/service usage habits and the demographic and psychoanalytic needs and background of the segments. This allows companies to take properly targeted and grounded action with segments and to have the best chance of enduring business success. 

It is only by working to get answers to questions such as these that companies operating in this new sector can have a reasonable expectation of business success. The category will be chaotic, crowded and volatile as it develops. Companies that do not do their homework risk being left on the side of the “yellow brick road” of sports betting.

Stay tuned for follow up perspectives on topics including the impact of offshore sports betting in Canada and the United States, the role of North American Casinos in the growth of sports betting and the sports betting beachhead already established by Indigenous Groups in North America.

For more information on how we can help with sports betting research challenges please contact Jim Peterson   or Chris Wiggins