Depending on the part of the world, the sports betting industry is perceived differently. Western societies see it as a time-honored tradition (a good example being horse racing in the United Kingdom) or as a way to show support and admiration for an individual, group or even a whole nation, by endorsing a sports team. On the other hand, Eastern Europe societies usually associate this industry with gambling, not in a recreational sense of the word, but more in a pejorative way. This article aims to clarify and explain some of the particularities of sports betting as an industry, culture and business, and will try to remove some of the stigma from this captivating and complex field, which is full of vast opportunities.
Differences between sports betting and gambling
First, let’s examine the similarities and differences of the terms sports betting and gambling. Sports betting is defined as the activity of predicting sports results and placing a wager on the outcome, whereas gambling is the wagering of something of value (“the stakes“) on a random event with the intent of winning something else of value, where instances of strategy are not taken into account. Upon studying the two definitions it is evident that there are clear similarities, but there is also a very big difference – the prediction factor.
If we consider the probability theory, gambling involves two scenarios; win or lose and relies on a 50% probability. The same applies to sports betting, but from two possibilities, multiple situations can be extrapolated with analysis and prediction of the odds.
Sports betting applies the simple principle of taking calculated risks both for the bookmaker and the person placing the wager (punter). Odds come into play here, and the lower they are, the higher the chance of winning for the punter.
This is, essentially, the beauty of this industry. Just by looking at the history, we can see the change from the gambling concept that in the past was done by a bookie (the person who has a ledger with all the information about punters and the wagers placed) and allowed for illegalities and rigging of results, to the modern concept of sports betting that is highly studied and, in some countries, heavily regulated. As mentioned before, the United Kingdom, one of the countries with a tradition in this domain, currently can be regarded as an example of extracting a business idea from an illegal practice and converting it into a highly complex, highly regulated and financially rewarding one.
The market size of the sports betting sector in the UK reached a value of $5.4 billion in 2021, accounting for 5% of the global market size, making it the market leader, according to GlobalData. The UK accounts for 23% of the European market size. The remaining segments of the market include casinos, lotteries, sports betting and other activities, out of which sports betting and related accounts for 24% of the market size at $101 billion. The sports betting and lottery market size worldwide amounted to 194.63 billion U.S. dollars in 2021, an increase over the previous year’s total of almost 173 billion U.S. dollars. A surge of interest in sports betting, and the enormous revenue it generates, helps explain why companies are looking for cross-functional software development teams to design solutions that tap into this booming market.
An increasingly regulated market
Other countries in Europe and outside the continent are reacting to such examples and taking steps to change according to the opportunities presented by this financially attractive sector. In certain countries, sports betting falls into a legal grey area. However, efforts are consistently underway to establish and enhance laws and regulations, as well as safety measures for the public. Even if it is still illegal in other regions, it does exist, hence governments are losing money and customers are unprotected due to a lack of regulations.
One of the major arguments against the industry is the risk of addiction that can occur for end users. Let’s refer to the United Kingdom and the Gambling Commission, which successfully implemented safety measures to address this risk. Now, online bookmakers are required to protect their customers by having a responsible gambling section on their websites. It remains crucial for betting companies to prioritize proper licensing and compliance. Not only does this ensure that a company operates within legal boundaries, but it also provides a level of trust and transparency for its customers. Companies can demonstrate their commitment to responsible gambling practices by obtaining the necessary licenses and complying with regulations.
This term refers to a general set of rules that betting operators must comply with, such as the risks associated with this entertaining activity. Encouraging users to bet within reasonable limits (which can be enforced by online betting websites with certain daily limits per user – either for deposited amounts or spent amounts) and providing clear information about the events used to place wagers, such that informed decisions can be made, are just some of the measures which are proving effective.
In addition to these general rules, one of the most effective ways is to establish mechanisms for restricting participation and ensuring player self-exclusion from the sports betting platform for a certain amount of time, or even permanently, depending on the exhibited behaviour.
Behind the scenes, supporting and creating a legal domain requires a lot of work. Different departments and specialists (traders, mathematicians, data analysts, data scientists, legal advisors, software developers, quality analysts, subject matter experts and many more) work closely to create and provide a modern online experience that complies with all relevant regulations, depending on where the activity takes place. Additionally, such teams of specialists are constantly trying to find the “holy grail” of the sports betting business – unlocking the algorithms needed to predict the outcomes of events and by staying ahead with new and attractive functionalities for their customers.
By briefly looking at the traders and different kinds of analysts involved in the business, the domain and type of work done is not very different from the daily work that stock exchange traders do. The same mathematical theories apply to both, and the goal is to make informed decisions and have winnings from investments made on outcomes. A certain level of risk is involved in both activities, from both traders and investors, as losses are possible in both the stock market and sports betting. The difference between them is usually the amount of risk, which is higher on the former than the latter. Reducing risks and navigating a complex legal framework can be tricky, but a skilled sports betting software partner can create solutions that comply with state or territory regulations and enable success in a changing market.
Erasing the stigma and focusing on growth
The article aimed to provide readers some context on the controversial industry of sports betting and pique further interest in the subject. In summary, the area is complex and has aspects that have not been thoroughly examined or understood. Negative labels have been applied to it based solely on its past, without considering its potential for growth and development, which has been further facilitated by technological advancements.
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About the authorSorina Costache
Business Analyst and Product Owner
An IT industry veteran for over 10 years, Sorina started in the sports betting industry as a Quality Analyst, where she worked closely with developers to understand how systems in the background work. Subsequently, she moved to a Business Analyst position and also used her talents as a Product Owner, working with international clients on retail and online betting systems, lotteries and casino projects. Sorina tackles every challenge with a combination of curiosity, openness, enthusiasm and determination for the benefit of the team, project, client and their respective end users.