How Many Customers Do Betting Companies Need?
It isn’t often that we, the general everyday bettor, take much notice of things going on behind the scenes at our chosen sportsbooks or casinos. To us, it is simply enough for us to have a platform taking our wagers on our favourite sporting events. Of course, some online sportsbooks have a massive number of users accessing their markets and placing wagers every day, while others have a considerably lower number registered at their sites. The online world is pretty much flooded with online bookmakers as well, each coming with a different number of users utilising its services. But how many customers do these betting companies need to ensure they are in profit and can continue operating?
Big betting companies will likely generate a larger user base, mainly due to the fact that they are known names. If you take a look at a company like William Hill or Paddy Power for example, these brands have been providing betting options since before the online world came into full flow. Therefore, many of the customers using such services have been wagering through the brands for decades already. But what about the smaller companies and new start-ups? Is it possible that they can generate enough revenue from fewer registered users visiting their sites and placing bets? And how stable is a customer base for a bookmaker? Will it always be able to rely on the registered users to keep returning for betting purposes?
How Much Money Do Betting Companies Make?
The betting industry is, without a doubt, dominated by big brands. We’re talking about companies like the aforementioned William Hill and Paddy Power, as well as 888 Holdings, Bet365, Flutter Entertainment, and so on. Naturally, these companies take the largest share of the profits from the sports betting and gambling industry each year. And because the gambling industry in the United Kingdom is worth about £14 billion annually, even a small portion of that can be considered a fantastic income.
Of course, each company earns a different amount per year. Bet365 earned about £2.981 billion in 2019, while 888 Holdings garnered about £560 million, jus to compare. Yet this can be understood due to the fact that different companies have certain areas that they specialise in, and different business interest brackets, too. Entain PLC, for example, is the parent company of brands like Ladbrokes and Coral, so it makes sense that this would be one of the larger earners, bringing in £3.6 billion in 2019. Many gambling brands actually find themselves in groups under one and the same company umbrella. Competition can be considered as a diminishing thing in the industry.
These kinds of mergers have undoubtedly assisted with bolstering the revenue earned by each sportsbook, and for the parent company alongside. The UK’s top five betting companies in terms of revenue in 2019 were:
- Bet365
- William Hill
- Flutter Entertainment
- Entain PLC
- 888 Holdings
All of those brands are also active online, with Entain and Flutter having multiple merged companies under their umbrellas. And it can be said that they have the market share of customers frequently accessing their websites and placing bets via them.
The Big Brands in Numbers
The big brands operating in the UK scene can consider themselves the domineering companies of the betting scene. Bet365 has certainly grown to rule the roost when it comes to sports betting, expanding from a tiny base of operations in 2000 to today employing around 3,500 people. At the same time, the number of players making up its base stood at 23.1 million by the end of 2016, and the number of active customers had risen by 11% year-on-year.
If, on the other hand, you take a look at the William Hill brand, it reported over 3 million customers had gambled on its online website in 2020. That does not factor in the number of people who visit its land-based stores, so the figure is likely higher overall. 40% of its online net revenue came from the sportsbook, while 60% was attained via the gaming section of the site. In total, 63% of that revenue came from the United Kingdom, with the remainder being from international customers.
For the remaining companies, the number of active users will be determined by the various bookies under their umbrellas. Of course, it is undeniable that to have been labelled as one of the top five betting companies in the UK, they have a large number of users depositing and betting at their websites and in their land-based shops. What about the smaller companies that are only active online? How do they survive against these huge, dominating businesses?
What About the Smaller Betting Brands?
There is little doubt that smaller sportsbooks and casinos have a lot to do in order to keep up with the mammoth companies like those mentioned previously. A start-up would never be able to compete on the same level as a brand like Bet365 or William Hill. Even the companies like Ladbrokes that are part of a larger parent company would prove to be difficult to match. In fact, some of those start-ups and smaller betting companies are highly lucky to amass 10,000 users to their sites, let alone get into the hundred thousands and millions.
Using a white label offering is one of the most popular routes for operators to take upon becoming interested in the online casino and/or sportsbook scene. It doesn’t take much effort to do a swift Google search for details on how to start such a business up in just a few simple steps. Yet these guides don’t inform those potential operators of any pitfalls that could come with entering into such a start-up.
White labels cannot, and should not, be considered as easy options when it comes to sports betting and online gambling businesses, in general. According to Statista, by 2024, the global gambling market for the online world is expected to reach a value of $94 billion (£70.6 billion). It is a rapidly growing area, and it can be quite lucrative under the correct circumstances, as those big-name brands will likely be able to testify to as well. This has led to it becoming a very competitive area over time, too.
Many casinos and sportsbooks are launched on a frequent basis, and many of them fail on a frequent basis due to one reason or another. Obviously, a player base is something that these sites need to be able to stay in business. Preparation, followed by official launch and exceptional marketing are all key elements of making something like this work properly and effectively. It takes a lot of time and attention to detail to ensure that this is the outcome. And because various operators have tried following “simple” guides and utilising the white label route, they have no idea of the likely challenges they face ahead. While it can be said that white labels are a good start-up for beginners, this can only work if the pitfalls are known in advance, too.
Unfortunately, because most white labels are unable to draw in the necessary player base to continue running, they will frequently turn towards a cloning strategy instead. This essentially sees the operator take everything included in its online casino or sportsbook, clone it and simply layer over it with a different casino name and website design. The games, promotions, general layout and odds etc. will all remain the same. The betting sites are churned out as being something “new”, people register and build the user base up, maybe place various bets, and then realise that it’s not quite all it’s cracked up to be. This leads to them never returning, the active user number dwindling, and the operator burning that site to simply create another clone and start the process all over again.
That sort of process doesn’t cost a lot for the operator to proceed with, but it does flood the market with a huge number of cloned brands. It cannot be said that in this instance, the customer base is stable or sustainable. You may end up seeing the same customer registering at all the clones available, but in the end, they will likely end up consistently leaving in search of something else.
Key Data to Take Notice Of
The United Kingdom Gambling Commission is the body responsible for regulating the gambling industry in the UK. Yet it is also there to take notice of figures, and report on these, too. A more in-depth look at gambling was published in June of 2021, which looked back at 2019 and 2020, in general. Within that report, the Commission focused on the popular ways to gamble, where the majority of gambling in the UK takes place, and more.
At the same time, it was found that online gamblers actually hold an average of three accounts at gambling sites. A significant portion of younger gamblers have more than this average, though. That doesn’t mean to say that they are active at all of them and will most likely use one account more so than any others that they have. And the figure is on the rise with regard to the number of gambling accounts held by players. A mean of 3.2 accounts was recorded in 2020, which is quite the increased when compared with the figure of 2.7 in 2018.
Of course, it is difficult to say exactly how many customers an online betting site needs in order to be profitable from any kind of figures. Why? Because different customers spend different amounts when engaging in online gambling. To put it bluntly, if one site has 10,000 customers who all bet a maximum of £20 each per month, another could have an equal amount who all bet about £60 each per month. Doubtless, the latter is going to be the one more in the profit because 10,000 x 60 = £600,000, while 10,000 x 20 = £200,000. That is a very specific set of figures though, and different players have different betting limits catering to their bankrolls.
The point is that it truly depends upon the funds being spent on bets by the players themselves. Plus, what happens when a website has more people winning than losing? After all, part of the funds taken from a losing player must be put to use to pay winning customers, as well as to sustain the sportsbook or casino itself. Many factors come into play when trying to determine the number of customers that a platform requires to stay afloat.
It could be for this reason that such sites try to reach out to what have been defined as VIP players. These customers tend to deposit and spend a lot more at gambling sites, and much of the time, this is because they can obtain exceptional rewards from the VIP programs that are available at the casinos and sportsbooks. Yet it is also these schemes that have been targeted by the upcoming overhaul of the Gambling Act 2005. Therefore, gambling companies are likely not going to be able to turn to these programs in the future so as to maintain a high level of profit from high rollers. Primarily due to the fact that they have also been linked with the growing number of gambling addiction cases in the UK. Of course, this is not likely to have too much of a huge impact on the bigger sportsbooks and casinos, but it does take away another route for the smaller companies to benefit from.
Things will always be difficult for any new business start-up, as they need to ensure they are providing a niche enough service to draw people in and then maintain them as regular users. That is precisely the same with the online gambling scene, and it is even truer in today’s age of merging companies. This process crafts even bigger companies which take over the scene and make it even harder for start-ups to gain much recognition.
How many customers do betting companies need to ensure they are profitable? A lot, it would seem. Especially with the dominant brands now being a constant within the scene and controlling everything. But perhaps to achieve this, they need to introduce a new way of betting, or something that is much more unique than their competition, big or small. This can be the difference maker in what builds a company from a small fish to a big shark. Customers like to benefit from something new and innovative, which is true in all walks of life.
