A guide for iGaming Operators
In this article, Dan highlights the key items that should be on every product manager’s shopping list when it comes to selecting the right esports betting product for their business. A must read for product decision makers who are responsible for identifying product opportunities.
Ease of integration & technical feasibility.
Yes, the pipeline is always full – jam packed. That is healthy. You wouldn’t want an empty pipeline or you would be out of business! Since your IT team is always busy and since there are always so many projects fighting for priority, budget and resources, nothing is better than going for the “quick win”. Indeed quick win’s are the key to short-cutting priority queues in the roadmap or backlog. Any good project management office should be rating quick wins highly in a decision matrix and marking down priorities for large complex integrations which will jam up the pipeline and introduce too much risk.
In short – shop around for a solution that not only promises to be easy and fast to integrate but a solution who can prove it by exchanging technical documentation and doing a joint feasibility study with your IT team. The session should take a day or two at most including the analysis of the documentation by each party. It’s time well invested and ideally your IT team keeps resources available especially for these kind of evaluation tasks so no one should be getting pulled away from a project to help you check the ease of integration.
Naturally the key factor in deciding on an esports betting provider must be the quality and features of the product itself. There are a several things you are going to need:
- The product’s general user interface and betting features such as the betslip;
- A compatible API integration with your wallet solution;
- Either a trading & risk management solution or an integration with your own risk and trading solution;
- Either a comprehensive and officially licensed data supply of esports market events & odds feed or an integration with your own or existing esports data feeds if you have them;
- A supplementary data source(s) for esports facts and statistics surrounding players, teams and tournaments;
- Localizations to suit your target markets;
- Live streaming;
Make sure to check the product basics, such as support for your required localizations (language and currency) and odds display format (decimal or fractional for example). Your target market may have specific requirements such as support for system bets or Asian handicap betting. I’d also check the products hosting locations and make sure they are localized and also that the supplier uses CDN and other performance enhancing techniques to ensure the product is available at lightning speed in the geographic regions where you operate.
Once you have covered the basics, look deeper into the actual products features. You need the best coverage of markets, events and bet types. Especially for the sports games which are popular in your target markets. It’s no use having great coverage for Counter Strike if that is the least popular game in your target region. Whilst looking into the odds and data, ensure the supplier has competitive odds. Will the supplier provide a fully managed solution or will you require traders or people to operate the product?
Importantly – is the data source the supplier is using legitimate and licensed or is the supplier sourcing it’s data feeds from the “black market”? It’s common to find suppliers who are not actually paying for licensed use of data but in fact scrape their odds and data from other websites. Depending on your own legal, licensing and regulation standpoint, this may be acceptable but in many cases it’s not the best way to go if you want to carry minimal risk. Also consider that scraping data from elsewhere will inevitably lead to delays in data transmission to your own product which could bring penalties against margin.
Some esports data suppliers are doing their own trading and creating their own odds by viewing live streams of the games without leveraging official data rights. Again, this can add a delay since live streams can run a minute or two behind the actual event. You don’t want a scout tipping off his friends (or gang members) from inside the esports arena minutes ahead of you – they can see the future, and you know the inevitable will happen to your P&L if you are vulnerable to wise guys.
A final consideration to add on data supply is vendor lock in. Although there are many data sources in the market for esports, you would be wise to avoid being locked in with a single supplier. Some suppliers cover specific games and regions better than others and if you want the widest offering you will ideally look for a data agnostic supplier or a supplier which can be freely taken on non-exclusive terms.
Risk management – is this in-house and controlled at your side or does the product supplier provide this? Without it you will be open to abuse and not have any defendable product margins.
How about the user interface and usability? Is the product well designed and is it cross platform/cross browser? Mobile friendly? And is it appealing and can it be fully integrated within your brand guidelines or will it look like it’s alien and struggle to fit in with your site and app designs?
If you choose this supplier, what will the future look like? You will need regular product updates and you will need a supplier who is invested in improving the product, optimizing revenue and margins, improving risk management and of course expanding the available games and betting opportunities regularly.
EsportsConstruct’s Esportsbook can be licensed as a fully turn-key solution which includes everything you need to start taking bets on esports. Optionally the esportsbook can be taken modularly in various combinations. For the greatest flexibility, Esportsbook is data agnostic and we have done deals with a selection of data suppliers to suit various budgets and requirements so if you go with our solution you have the freedom of choice and won’t be locked in.
The most common fee models are revenue share based. The standard practice in iGaming applies well here, as expected, because increases in volume of business directly result in an increase in supplier costs. Revenue share deals for esports betting also benefit product improvements and the good working relationship between supplier and operators since they will be in it together. I would avoid models which come at a fixed fee, because it removes incentive from the supplier to share in your success in the market. In some cases however, for some start ups for example who can’t expect to reach required GGR volumes to cover the cost of the provision of the product it is common to agree on fixed minimum fees or minimum guarantees. This means the product suppliers costs of provision are covered and your esports product supply is secured while you focus on building up the GGR. Without this, it’s unlikely the product supplier will run at a loss while awaiting your business to pick up.
When it comes to revenue share deals, I’d recommend a tiered model. As GGR volume increases, the percentage you will pay for the product supply will decrease incrementally. This is ideal for both parties as it encourages you to perform better in the market to gain the increased financial rewards and it of course translates in more revenue for the supplier too, who is often happy to offer discounts on the tiers as volume increases. For the same reasons, I’d avoid any supplier who wants to only offer a fixed percentage for the revenue share, and I’d avoid that as it shows they don’t have confidence in growth or interest in driving growth with you.
When negotiating a tiered revenue share model, make sure to be confident of the various levels and that they are realistic goals. It’s no use telling your board that you secured a 8% deal if it requires a monthly GGR of $8 million. Unless of course you can hit that level and you have a solid plan to make it happen. Similarly check the entry level tier and make sure it’s not too large, you don’t want to be trapped in the most expensive bracket for too long. A fair entry level tier will be ideally a level of GGR you are confident you can break through in 3 to 6 months time after launching.
Aside from product licensing fees, pay attention to the commercial terms for how losses will be handled and who is responsible for any losses. Another key commercial factor in the contracts should be marketing rebates. In the casino sector this is getting to be common place, and marketing rebates are also ideally suited for esports. Consider a decent rebate against your marketing costs up to a cap you are happy with. You can then claim a discount on invoices within this cap provided you show evidence of spending your marketing budget on promoting the suppliers esports product in the market. If your supplier is unwilling to offer rebates then see this as a warning sign that they may not have confidence in your operation or may not be ideal partners to help you grow the business. It would be unfair to carry all of the risks and costs alone for example if esports is a new vertical for your business, but if you are well established it may not be so unreasonable to leave rebates off the contract.
If you choose EsportsConstruct, to start with we will always work through a business case with you and come up with realistic projections. You can then expect a fair and competitive software license agreement, complete with our industry leading commercial terms and customized revenue share tiers based on monthly GGR projections.
Operational support and service level agreement.
Who will provide customer support for the product and what will the flow be? For the best long term and serious commitment from your supplier you should be getting a comprehensive SLA. Check that it is up to your expectations and that the supplier is offering 24/7/365 support and what the response times will be. What will happen if they break the SLA terms? Aside from support for issues, how will the supplier support you with product training and esports general training and marketing?
If you partner with EsportsConstruct, we provide a complete SLA with rapid response times and since we have a turn-key solution and provide all of the components that go into our Esportsbook solution we also offer a full service for support – meaning any issues related to the product can be escalated by your customer services or tech support / NOC to our team for resolution. Your support team doesn’t have to handle the details directly but just act as a redirector and interface with the customer. We never communicate with or know who your customers are as it’s confidential.
With casino products, typically you get a new game release and then that game is not going to change much after launching. Instead, you get frequent new game releases from your suppliers to keep adding interest. Esports however is a bit more similar to sportsbook, bingo and poker products in the sense that the main product itself requires updating to introduce bug fixes and feature enhancements.
When choosing an esports betting supplier I would recommend taking a look at their product roadmap and finding out how frequently the product is going to be updated. You need an evolving product and you need a product that doesn’t need to wait for a release every quarter to address issues or add improvements. From a customer's perspective there is an expectation that you will be covering more games over time as new games become popular for esports. Customers also expect the product to offer more features over time otherwise you will lose market share to competition.
EsportsConstruct provides it’s Kaizen programme and we invite all partnered operators to take part in regular discussions and give input and priorities for features and changes in our product roadmap. We value each operator as a partner in success and you can be as involved as you want through the programme to get your desired enhancements or changes implemented. Through the programme we also collect anonymous feedback from your customer services (“Voice of Customer” / VOC data) so that we can incorporate that valuable information in ensuring our product remains customer focussed at all times.
Licensing, compliance and regulation.
Be upfront at the start about your licensing requirements and don’t waste any time in processing the regulatory requirements. Any supplier you contract with may come under scrutiny from your regulator and any unaddressed issues can be expensive to the tune of multi-million dollar fines. It’s also easy to underestimate the time it can take for regulatory approvals for your new product release, especially so if you are also taking out a new license or license variation to allow you to take bets on esports.
At EsportsConstrct we have real-world working experience of satisfying the strict UK Gambling Commission (UKGC) , Isle of Man Gaming Commission and PAGCOR / POGO (Philippines) requirements. Currently we are offering our solution for both unregulated and regulated markets globally. For regulated markets we have partnered up to provide our product inline with Malta Gaming Association (MGA) requirements. If you have any other requirements for licensing we can discuss these.
About the Author
Dan is passionate about the potential of esports in the betting industry and is the CCO at EsportsConstruct – a B2B gaming product supplier that specializes in turn-key esports betting solutions and their flagship product – Esportsbook. Dan has been involved in the iGaming industry for more than a decade and has worked with top names in the industry such as William Hill, Dafabet, Betfred, Betvictor and 188BET. Dan has previously directed and managed the implementation of EsportsConstruct’s Esportsbook product inside operators product ecosystems and achieved great success in East Asia. You can reach Dan with questions, feedback or comments using our contact form.