Online Sports Betting

Sports betting is the largest individual segment in the online gaming sector. In Europe it is estimated that the online sports betting segment was worth €4.0 billion of GGR in 2013.

The global online sports betting market is highly fragmented, with a large number of privately owned companies in addition to a few large publicly-listed operators. In Europe, where bwin’s market is focused, the online sports betting market was estimated to be worth €4.0bn in gross gaming revenue (‘GGR’) in 2013, an increase of 5.7% on the prior year. This growth is forecast to continue, with the market worth an estimated €5.8bn by 2018, a CAGR of 8.4%.


Source: H2 Gambling Capital, March 2014

The popularity of different sports varies by territory which impacts the mix of wagers and the margins available to betting operators. Horse racing and football are particularly popular in the UK while football and tennis are among the most popular events in other parts of continental Europe. By including live coverage of sporting events, or integrating sports news and statistics with immediate call to actions onto the gaming site, online sports betting operators are able to increase the appeal of the overall player experience.

How sports betting works

Sports betting exists in most countries and its fundamental characteristics are similar throughout the world: wagers are made in advance of, or during, sporting events in pursuit of an attractive return. The bookmaking process for online sports betting is structured in a similar manner to land based bookmaking. Operators bear the risk of all sports bets placed with them. Ideally, stakes are proportionately distributed on every possible outcome so that, regardless of the result, the book will be balanced and the operator will make a positive margin. The bookmaker’s skill lies in calculating and adjusting the odds as wagers are placed, thereby managing exposure based on achieving a theoretical margin. The gross revenue earned in any period will vary depending on the outcome of the events and the bookmaker’s ability to manage the risk. For example, the largest amount of money staked typically goes on the favourite in an event, and the theoretical margin will assume a certain proportion of favourites winning across all events in a season. If more favourites win than expected, the actual margin realised by a bookmaker on a particular event will typically be lower than the theoretical margin, and a bookmaker on a particular event may even incur losses.

Due to competitive forces and the tendency of players to back favourites, sports betting operators sometimes run unbalanced books, expecting that the bookmaker’s greater insight into the likely outcome of the event will result in a positive margin. In this way, the bookmaker can offer more favourable odds on outcomes that it regards as unlikely to actually occur. The sports betting operator is a genuine trading desk, taking active positions in each market in which it operates.

Advances in technology have meant that live betting – where bettors can place bets during an event – has become increasingly popular and can represent as much as 50% or more of the amount wagered on a particular event.

All market data supplied by H2 Gambling Capital, March 2014