Why is In-Play Sports Betting on the Wane

Posted by Harry Kane on Friday, March 6, 2020

The iGaming market in the UK remains a myriad of contradictions, as it continues to return contrasting results that highlight the impact on frequent regulatory and legislative shifts.

This has been borne out again recently, as while the value of the iGaming market declined in the year ending March 2019, the rate of online gambling participation actually increased during the same period.

At the same time, in-play sports betting online has also experienced a marked and extended decline, with this trend expected to continue in the near-term. But why is this the case, and what does it tell us about the future of the marketplace?

A Look at the Figures – What Do You Need to Know?

In terms of numbers, the total GGY for online gambling fell to £5.3 billion in March 2019, and while iGaming still claimed a 37% share of the overall industry its value declined by 0.6% in comparison with the previous year’s figures.

This occurred despite a slight increase in online gambling participation in 2019, with 21% of respondents in the UKGC’s latest survey having engaged in some form of iGaming activities during this time.

This was three points higher than the figure recorded in 2018, although it should be noted that the total number falls to 16.6% when you exclude those who participate regularly in National Lottery draws.

Overall, however, iGaming participation still increased by 2.2 points throughout 2019, which will leave some scratching their heads as to why the total GGY for the market declined so unexpectedly (we’ll have a little more on this later in the piece).

In the field of virtual sports betting, online participation showcased even more pronounced growth overall, rising by nine percentage points to a whopping 81%. Of course, this market is maturing at a rapid rate in the UK, which is also borne out by the fact that corporeal and retail betting declined by 13% to 27% in 2019.

The behaviour of these bettors changed slightly in 2019, however, with in-play participation declining by two points to 21% overall.

Interestingly, this trend was most pronounced amongst the 25 to 34 demographic, with participation in this age range down by 8% in comparison with 2018.

This contributed to an overall decline of 11% in the online sports betting GGY for 2019, despite the noticeable increase in participation and a reported 2.7% in total turnover.

What Are the Key Takeaways from These Numbers?

In both the online sports betting vertical and the iGaming market as a whole, we’ve seen similar financial trends emerge over the course of the last 12 months.

More specifically, the respective yields for sports betting and the total iGaming market declined despite an overall increase in participation. In both instances, these niches also recorded slight hikes in revenue, contributing to a mixed performance that seems to embody an increasingly volatile online gambling space.

Before we begin to unravel these numbers and understand what they mean, it’s important to comprehend the precise definition of the so-called GGY.

In simple terms, this refers to the total profits generated by all iGaming activity, and is calculated by deducting the total value of payouts from the cumulative amount wagered by players.

The industry figure is usually aggregated from the figures generated by individual operators, as this offers an accurate insight into the true value and performance of the marketplace.

These figures definitely make for confusing reading, but one possible explanation is that while the number of active online gamblers and accounts has continued to increase, punters are wagering slightly less and more responsibly against a background of increasingly stringent regulations.

This could easily create contradictory numbers and contribute a slightly increased level of turnover, while the more responsible and informed approach adopted by punters may be delivering a higher proportion of payouts in relation to the amount staked.

However, the marked decline in in-play sports betting is slightly harder to explain or even comprehend, particularly when you look at the statistics pertaining to live wagering during real-time sporting events.

More specifically, a high percentage of most sports audiences are thought to wager on the action as it unfolds, particularly in the case of horse racing, boxing, tennis, golf and football.

For example, an estimated 97.4% of horse racing fans regularly wager in-play, with the corresponding figure for boxing estimated at 86.4%.

Even in the case of football (which ranks fifth overall in terms of live audience participation), an impressive total of 76.8% of fans regularly wager in-play. These figures have underpinned a huge growth market in recent years, which is why the recent decline in participation has come as something of a surprise to industry stakeholders.

The fact that this decline occurred across all demographics apart from the 35-44 age range also came as a significant shock, while the biggest declines also occurred in sports that have previously bolstered the in-play betting market.

In analysing this, one of the most telling factors may well have been the blanket television advertising ban agreed by market-leading operators in the UK gambling industry.

This ban, which pre-empted more stringent regulation following the revelation that viewers were bombarded by almost 90 minutes worth of betting adverts during the 2018 World Cup (often during pre-watershed broadcasts), has effectively prohibited operators from promoting in-play markets at a time when punters were most engaged with their favourite sport.

This voluntary ban has impacted on other live broadcasts of sports such as horse racing and tennis, creating less opportunity for in-play sports betting and declining awareness of the live markets available to players.

So, although participation in online sports betting may have increased across the board, it’s easy to see how the rate of in-play wagering has simultaneously declined and looks set to fall further in the near-term.

This could also account for a declining sports betting yield, as people tend to wager more in-play due to its impulsive nature and their emotional relationship with the event in question. In contrast, other forms of sports betting are more staid and considered, creating more measured wagers and potentially a higher frequency of winning bets.