Igaming Focus: Doing it all — The rise of the “super provider” By Jake Pollard, CDC Gaming Reports October 12, 2021 at 8:00 am With its acquisition of OpenBet, Endeavor can now offer a complete range of B2B products to sportsbooks, with Genius Sports and Sportradar in near similar positions. So how will this affect their B2C and B2B clients? The buy out of OpenBet by Endeavor Holdings illustrates the many sports betting disciplines the industry’s “super providers” offer and the near-complete range of betting-related products they supply to operators and other providers such as sportsbook platforms. The overlapping of data feeds, odds and prices, marketing services, trading and risk management, video streaming or player account (PAM) services shows how the numerous disciplines interact with one another when it comes to launching, operating or supplying sportsbooks with tech, pricing or marketing services. And while much of the focus, understandably due to their high profile, is on the consumer-facing brands snapping up broadcasters, media publishers or DFS specialists (Penn National Gaming-theScore or DraftKings-VSiN, Caesars-SuperDraft to name just a few), the level of M&A activity in B2B verticals is also at an all time high. This is not surprising. The U.S. continues to regulate sports betting and gaming, operators are spending huge amounts on marketing, and the B2B companies — from established ‘legacy’ brands like OpenBet to the latest in-play betting start up — are all looking for investment and the ability to truly monetise their product offerings, even more so in the official-regulated era the industry now operates in. Everything you need During the investor presentation Endeavor held to talk up its buy out of OpenBet, it produced this useful graph (see below) to illustrate which products the leading providers in the sports betting space supplied. It shows that Endeavor owns the data, odds and streaming specialist IMG Arena, and with its ownership of OpenBet can now boast that it provides a complete set of all the components necessary to launch and run a sportsbook. In other words, any company looking to launch a sportsbook could, if it wanted to, get everything it needs from Endeavor. That is a very simplified reduction of what it entails to launch an online sportsbook, but what it does show is that bar two or three products the likes of Endeavor, Genius Sports and Sportradar now offer and effectively compete with many of their B2B clients that provide trading or risk management services, PAM or betting engine products to their operators. Direct competition I spoke to three contacts who work at medium-sized sportsbook solutions companies for this feature, and all of them echoed this point and how it impacted their relationships with the ‘super providers’. “Commercial relationships, whether in this sector or any other, always have an element of give and take,” one of them said, before adding: What is getting increasingly difficult to deal with, especially if contract negotiations are tense, is when this is done with companies that supply us data but are also competing directly with us on our core products. That can be in relation to trading, risk management, PAM or betting engine services. Sportradar, Endeavor – Genius to a lesser extent, not only sell us data but also compete directly with us, or soon will, for sportsbook clients. None of this is said on the record for obvious reasons, but it’s a point that came up repeatedly during my conversations with those contacts. Issues of competition and pricing are set to intensify in the coming months as the Endeavor/Genius/Sportradar trio look to generate returns on their investments as they renew and renegotiate client contracts. And the key factor in how they pitch their offering is official data. Official inflation Much is made of being able to offer operators and punters official data. For IMG Arena, it is in relation to its official partnerships with the ATP and PGA, while for Genius it’s all about its official NFL data partnership, for which it beat Sportradar in a two-horse race. As part of the OpenBet deal, Endeavor talked about the synergies that will come from its newly-acquired betting platform and IMG Arena data working together. But as Regulus Partners pointed out in a note analysing the deal, if it sets out to use the platform to drive up its prices (a near-certainty), then “a conflict might emerge” with sportsbooks that are already paying top dollar. Added Regulus: “This may remind OpenBet’s clients of the looming threat of content cost pressure which, combined with a growing tendency to seek technology control in any event, is likely to create several flight risks among OB’s clients, in our view.” Meanwhile Genius Sports’ second quarter results showed how much that official data cost. The group recorded net losses of $464.1m compared with net losses of $5.5m during the previous quarter. These were due in part to the cost of its six-year official data deal with the NFL, with the first tranche of over 11 million warrants due to the NFL costing Genius around $200m. The fastest way to recoup this investment is to charge higher prices. According to this report, Genius is asking for around 4% of operators’ pre-match NFL betting revenues and 6% of in-play, which is around four times the 1.5% that Sportradar, the previous official NFL data provider, was charging. In an ideal world, operators will always want an official seal of approval from sports leagues for their data (there isn’t much of a choice in the U.S. anyway), but a premium has to be paid for this kite mark, as Genius Sports has shown; and the cost is then passed on to the sportsbooks. Of course Endeavor, Genius Sports or Sportradar all have different aims and strategies to reach their targets, but whether they can generate the returns from their B2B clients in a way that doesn’t antagonize them too much is what industry observers will be watching out for in the coming months.