Sports Betting for Lotteries: a look into the future, Bill Demakakos, WLA Magazine Summer 2018

Sports Betting for Lotteries: a look into the future

Faced with slowing growth and, to some extent, lack of innovation, operators, including State Lotteries urgently need new ideas and preparation for the player-first world.

In this article, we will check the environment we are operating in, the trends and what to expect in SB Product and Operations, so for the Lotteries to be better prepared for the future by selecting a technology and services partner that can lead them in this new world that gets formed.

US Lotteries, the quiet giants

Not all lotteries, of course, are in the same stage of maturity as far as Sports Betting is concerned, with the most recent example of US getting prepared for the post-PASPA world. In this case, first step would be around the regulatory burden into how States may approach legalized betting going forward. It is anticipated that many States will follow course with their own unique regulations until such time as, and if, federal intervention occurs.

Most pressing policy issues that we believe will influence the development of what could easily become world’s largest regulated Sports Betting market are tax, including any federal wagering excise or other tax, the “Royalty” fee potentially sought by the US sports leagues, the facilities and channels where SB will be offered, the brands/skins allowed, and the treatment of the Wire Act, a 1961 federal law which bans the transmission of sports bets across state lines.

No matter of the stage you are in, though, as a WLA State Lottery or a SB Operator, the following environment is actually shaping your future. Let’s have a look at it.

The age of the customer

We are in an operating environment, where the player is king, being better informed, better connected and, thus, more demanding in all areas of the engagement. Players expect instant access to options and personalized offerings. They push for speed, simplicity and ease of use in all touchpoints, thus creating an Omni-business mandate.

But how to move towards a such a “player-first” omni-business? Being not as straightforward as it looks, it is much more than channel harmonization; it’s all about building an architecture of fundamental capabilities across the entire enterprise value chain, spanning the product base, the supply chain, the partnerships and the core technology enablement, namely tech architecture, innovation and data analytics.

Get personal and listen to the crowd

Lotteries’ Product teams must create and boost an engaging player experience, powered by speed, simplicity and ease-of-use. One area where change must come sooner rather than later is personalization where, largely speaking, sportsbooks have fallen behind the rest of the ecommerce world. Technology can certainly help and, as an example, Intralot’s new Sports Betting platform already incorporates a number of personalization options and capabilities in its product and player –facing modules as well as in risk management.

Other trends include retail-online convergence, digitalization of the retail environment, player interactivity boost powered by the bring-your-own-device concept, and the overall need for modernization of a rather traditional sales’ network currently used by Lotteries. Younger demographics will bring along their needs for fast-settling bet types and the socialization of their activity; they share everything, and so they are already sharing their bets in private conversations or even post them online. Lastly, crowd wisdom has already been used by operators, to a certain extent, so that every participant can potentially get the benefit. All the above are expected to be rather mainstream in the years to come.

Get ready for the robots

Operationally, automations, potentially powered by machine learning (ML) and artificial intelligence (AI), are expected to greatly affect trading. Nowadays, trading rooms are already much different than they were 15 years ago; the gut instinct of an odds compiler has been replaced by algorithms and 3rd party feeds. In the short-term, automation and flexibility will continue to be critical, while the need for everything in real-time will prevail. In the longer term, we can expect robotics and cognitive automation to be able to shape our operational future.

A bit of a background first: the continuum of automation classes, collectively dubbed as robotics, consists of (a) what I call the “Piano Player”, i.e. a basic process automation where routine tasks get powered by the machine and volume counts, (b) Machine Learning (ML), where technology enables use of structured and some unstructured data to support elements of self-learning and (c) “Intelligence Augmentation”, where we have decision support and advanced algorithms to allow automation of processes that are more cognitive in nature. The benefits of robotics, as they have started to show in other industries, largely include quality boost, accuracy, error-free routine tasks’ execution and speed.

Privacy and compliance, including aspects of responsible gaming, can also be better automated and powered using robotics, as the machine can follow regulatory-devised rules better and without errors compared to a more manual approach.

Trading operations throughout the life-cycle of a pre-match or an in-play event include some or all, of the task types that are better suited to be empowered by robotics: manual, transactional, repeatable, error prone, high-volume, pattern behavior, complex, massive intelligence. If we think of the above list of task types as a line, as we move towards the right end then we are much more closer to the “Intelligence Augmentation” type of robotics, whereas if we stay to the left then we are closer to the simple basic process automation.

My view on how far we will go on the robotics continuum for the Trading Operations is that we will be seeing more process automations within the next 18 months and machine learning (ML) empowered applications in our business within the next 2-4 years.

In fact, in Intralot, our Sports Betting product and technology development teams have already empowered our new Sports Betting Platform with automations in its trading tools, including algorithmic pricing models, customer profiling, real-time alerts and safety nets around risk management and further advance our robotics journey by enhancing our Platform’s capability for personalization boost.