Opinion: Cashing-in on cash-out
Former Boylesports CEO Lee Richardson gives his thoughts on the growth of 'cash-out' products within in-play betting and asks what it means for the upcoming World Cup
With UK bookmakers under pressure over recent unfavourable sports-result patterns, the arrival of new point of consumption taxes and other costly duty-rises, many will be looking towards the FIFA 2014 World Cup in Brazil this summer to help turn things around.
Football remains the single-most popular sports-betting activity across the globe, and the World Cup the most popular football-betting event of all. In-running betting (IRB) flourished at the last World Cup in 2010, becoming the first tournament dominated in revenue-terms by this form of wagering, with an estimated 55%-60% of all stakes on the event being struck while the games were in play.
But since South Africa four years ago, a new, and fast-growing, sub-segment has emerged. ‘Cash-out’ “ designed to retain customers and stimulate bet re-cycling “ involves offering the online player the option of cashing-out their original bet, to either protect their initial stake, lock-in a profit or mitigate a pending loss, through a simple ‘one-click transaction.’
Whilst this trading mechanic had been open to more-experienced users of betting exchanges since their launch over a decade ago, this automated ‘cash-out’ option targeted at the more recreational player has proved both a very popular and fast-growing element of the football betting landscape.
Results from early-adopter Tier 1 operators such as Betfair (launched in 2011), Unibet (2011) and William Hill (2012) clearly highlight how popular this has proved with players. Following a heavyweight TV ad campaign, 38% of Betfair’s substantial customer base of football punters now regularly use cash-out, with 10% of them having only ever placed ‘back’ bets before. William Hill were reporting 10,000 unique account holders cashing out on a daily basis within 12 months of launch.
Just as importantly, cash-out has also proved highly-advantageous to operators, all of whom have reported their customers’ reduced propensity to churn, a subsequent increase in betting frequency and an uplift in average stakes. Improved customer retention and increased customer ‘dwell-time’ are all vital to bookmakers, with the upturn in average stake alone (some report up to 19% improvement) making the initiative hugely worthwhile in revenue terms.
With such attractive characteristics on both sides of the betting relationship, it’s been no surprise to see other Tier 1 operators, including bwin.party, bet365, Ladbrokes and Paddy Power, all since adding a cash-out option in the past 12 months.
New sports-betting providers are now building in this functionality from the outset. One recent example is Colossus Bets, which offers the player the option of cashing-in early in order to ‘bank’ profits across its range of progressive, multi-leg jackpot football games. However, not all fixed-odds bookmakers are able to easily overcome the technical, trading or operational hurdles to be able to offer this increasingly vital customer benefit, although third-party solutions are available.
Whatever the size or scale of the bookmaker operator chosen by the customer, it’s clear that cash-out is now regarded as a vital part of many football punter’s betting repertoire. With some concerns over the anti-social nature of the kick-off times in Brazil 2014 “ and the resultant effect that might have on IRB volumes “ offering a cash-out option on their World Cup bets is clearly now an essential for bookmakers to attract and retain customers, plus protect margins, during the biggest sports-betting event in the world.
Richardson is currently the CEO of Gaming Economics, an e-gaming consultancy, and non-executive director of Btwiice, a UK gambling Commission-licensed sports betting software provider