This is the English translation of my interview published by Agimeg April 20th, 2015. You can see it in the Publications section in this site.
Agimeg: How do you comment Italian betting turnover data just published by the press?
GC: Data show a huge change of the structure of betting sector. In March betting online turnover had been almost equal to betting offline turnover, more than 46%, while it had been 37% in 2014 and 34% in 2013. Bet365 turnover had been almost one third of total online turnover and three times William Hill turnover, which is the second best. Bet365 betting online turnover is now higher than total online and offline turnover of each historical leader of Italian betting, GTech, SNAI, Sisal, Eurobet. But turnover data do not truly tell us the actual change of Italian betting business. By the way there has been a major change, but it is not simply a change of market shares.
Agimeg: What had been the change of betting sector then?
GC: Product and offer changed dramatically. It had been the introduction of complementary program, which enabled the development of in-play offer. The entry of bet365 in the dotit market amplifies the impact of that change. Pay-out of in-play betting is up to 96% and then margin is 3 – 4 times lower than traditional pre-play betting one. Complementary program mostly is in-play bets. 80% of complementary program and, consequently, of in-play bets are collected online. 80% of Bet365 turnover is in-play bets. Product and offer have been deeply changed, but actual role of operators and market structure are changing less than it seems.
Agimeg: Why market structure is changed less than it seems?
GC: Analysis based on turnover leads to misinterpretation. Market shares expressed in terms of margin are much different. Betting online margin had been less than 10% in the first quarter of 2015. In the same quarter betting retail margin had been between 15% and 20% instead. As a matter of fact margin pursued by several retail operators is in this range. Retail betting margin is up to two times margin of betting online operators. Notice that a significant part of them acquire customers in public premises and pursue margin higher than that achieved on bet shops, raising the average margin.
Agimeg: Then bet365 is not the leader of Italian betting market?
GC: Correct, Bet365 is not the market leader in terms of margin. Let us take the month of March as an example. Margin had been high in March because market results had been favourable to bookmakers. Betting online margin had been around 12,5%, while retail betting margin had been 25%, the double. In terms of turnover bet365 share had been 32% on betting online and 15% on total betting market. But share in terms of margin are different. Bet365 leads betting online segment with a 20% share, one fifth only not one third of betting online market, still the double of the main challenger anyway. But Bet365 share on total betting market had been 7% – 8% only, half the share of GTech and, by the way, of Sisal and of SNAI as well. Bet365 didn’t overcome GTech in the betting rank. Bet 365 is one-half of GTEch. It is currently ranked fifth or sixth in Italian betting, not taking into account Goldbet and Planetwin, which both hold higher revenues than bet365. And not mentioning other CTD’s operators.
Agimeg: You seem alarmed by turnover-based analysis based. Why?
GC: Excessive Italian focus on turnover data can bias objectives and strategy of operators. For example it can urge retail licensees to run after bet365 on turnover. It would be a disaster because bet365 provides a different product. In betting business it is imperative to use also turnover data because on short period margin is affected by events unpredictability, which can benefit either bookmakers or bettors. But turnover data used for inconsistent objectives can lead to dangerous misinterpretation. You get what you measure. Thus do not use the wrong measure. ADM should provide to licensees both turnover and margin data. And it should split pre-play and in-play betting data, because those are different products.
