Cross sell? Absolutely livid mate.
Why cross-selling is the best and worst thing to happen to online gambling
There are few things more convincing in this world than a lie that sounds like the truth. People love to have their existing biases confirmed. Ah that gentle soothing dopamine hit from finding out you were right. But they’re kind of annoying when they start to take on a life of their own.
One of the ones I hear most regularly in the online gambling world is “these modern sportsbooks just want to funnel players into the casino”. It’s seductive for many reasons, not least that you, the storyteller, are too clever to ever play -EV casino games. It also fits our ideas of good and bad gambling. But it’s largely nonsense.
Roughly 40% of online gambling revenue in the major European markets comes through sports betting. In some countries it’s even higher. Sports betting generates enormous revenues in Asia, in Australia, is growing in Africa and even in the developing economies of Brazil, Mexico and the USA.
Sports betting is absolutely massive. There is plenty enough money to be made from sports betting alone. But casino is going to be even more profitable you say? And yes you are, sort of, correct. The player values are higher, but so are the player acquisition costs and retention is harder as players don’t stick around for as long.
So why wouldn’t sports betting operators want to have a piece of this massive adjacent market? It would seem almost perverse to say no. Not least when the two sectors are way more similar than they are different.
Show me the muggy punters
Sports betting as an industry is all about finding large numbers of consistent losing bettors placing -EV bets. In that sense it’s near identical to casino gaming. The average expected value of most recreational players sports bets is considerably lower than the average EV of a bet on blackjack or a slot spin. They just place a lot less of them as a rule on a day-to-day basis.
Over a player lifetime they might place a not too dissimilar number, however, with sports betting players generally sticking with a site for a much longer time period and playing more frequently and for longer sessions. Over a typical year the casino player will be worth more, over a typical five-year lifetime the sports betting player could exceed him.
A cross-sold player, however, is like some kind of mega-powerful hybrid. A mutant online gambler that is far stronger than either a casino player or sports bettor would be on its own. Higher spending than a sports bettor, more loyal than a casino gambler. A giant among men and women striding ten feet tall and shitting out money.
You hear talk of a multi-product player (one betting sports and casino) is worth 4x or even 6x that of a sports bettor. This feels counterintuitive when casino gamblers are generally only worth double that of a sports bettor, but this is a higher spending player type in general and once you’ve captured that level of loyalty you are getting far more of that player’s total gambling wallet.
So what are the relative values?
The UK monthly data set was one of the best insights into relative player values. While they used “active accounts” rather than players, and casino players will generally have more accounts than sports bettors, it gives a reasonable insight into the gap between the two verticals.
Slots losses per active roughly bounced around the £60 per month mark, casino (other) closer to £30 and betting around the £40 mark. It’s quite probable the slots and casino (other) customers are the same people of course, but you’re looking at a player value somewhere in the 1.5-2x region versus sports betting.
It’s hard to look at that chart, bearing in mind there were roughly 5m sports betting actives compared to 3m slots actives, and say that sports betting is just a way of getting casino customers through the door. But plenty will still try. This is partly because of the way the industry has used cross-selling sports betting in recent years.
Large sports betting operators have looked to bump up revenues by cross-selling casino products while gaming operators have added sports betting as a cheaper acquisition tool. Both have had somewhere between huge and minimal success at these strategies but the default thinking has now been “sports is the entry point not the destination”.
But this is just another group think. It doesn’t have to be this. If it is then someone needs to tell Denise Coates to stop building her massive house and hand back her billions she’s earned from sports betting. “You were supposed to get them into the casino,” the crowd screams at her. How foolish she must feel.
And if you need further proof just look to Australia and player values from the online sports betting industry there. No online gaming, neutered in-play and players spending like they have a money printing machine at home. Sports betting is a very good business in its own right.
Should casino and sports betting be separated?
This is not as simple as it sounds. On the one hand you would have the industry view, which is it’s all just gambling and on the other you would have sports bettors, gambling reformers and regulators who will point to the much higher incidence of problem gambling in casino gaming.
The speed with which you can lose big sums, or more accurately repeat your bets for large sums, in casino gaming is far higher than sports betting. I have little doubt it’s a more dangerous product in terms of problem gambling risks, and separate regulatory treatment feels entirely justified to me. But how far should that go?
Should sports and casino be offered in different ways, on different platforms through different operators? There you start to lose me a little. With regulators increasingly pushing for a single customer view, this feels more like a backwards step and I’d be much keener for operators to simply place higher risk ratings on casino gaming when doing player profiling.
Cross-sold players are likely by their very nature flagging themselves up as potentially higher risk gamblers too so preventing operators or indeed regulators from seeing that data point feels regressive. And let’s not forget cross-selling isn’t new. Sports betting has been used as a hook by Vegas casinos for decades, while FOBTs in betting shops is cross-selling at its purest.
I’ve become much more sympathetic to the view that sports betting should be distinct from casino gaming and the forced overlap that comes mostly from commercial intent has created this strange hybrid of the two. But I think ultimately the realities of completely splitting out the two creates as many problems as it solves. I am open to persuasion on this one though.
Should cross-selling be allowed?
I might not make many friends here but I think again this isn’t a simple answer and I would lean towards yes and no. Should customers be allowed to use a single wallet to gamble across various products? Yes I really don’t see why not. Should there also be barriers when moving between the products? Yes I can buy into that.
So what about cross-selling? Should sports betting operators be encouraging, suggesting or prompting players to head to the casino? That’s where I’m not so sure. Raising awareness of your gaming offering so players go there rather than somewhere else feels fine, but trying to convert sports bettors into casino gamers feels…different. But not inherently bad.
Ultimately I think it comes down to how you treat those customers once they are in your online casino as much as what you do to get them there in the first place. Focusing on the differences rather than the similarities of the products pushes the problem away from where it should lie. This is a broader industry culture point and one that is masked and spoiled by the casino vs sports discourse.
And let’s not forget, the customers will not be living in a world devoid of other casino advertising. Someone will be trying to persuade them to play online casino, it just might be on Facebook, or Twitter or some other trusted platform instead. If you make cross-selling similar effort to signing up to a new online casino then there is almost no argument against it to my mind.
Operators don’t want to do this, of course. They want to make the transition as seamless as possible, and so it comes back to the earlier point. Do we think these products are different? Are they different for the user? Does that even matter? Has anyone ever really sat down and thought about these things when designing an operational strategy?
You’d think the answer to that more often than not would be no. And that, as with so much in this sector, is a problem. The cross-sold fluid multi-product consumer is exactly what the market loves to hear about, but it’s a regulatory nightmare in many respects. And those drivers being in direct conflict frequently creates value destructive tensions.
So it’s a problem. But it’s a problem we can easily solve. It just takes a bit of open minded, creative intelligent thinking. And perhaps some acknowledgement that what makes the products the same is just as important as what makes them different.