Value Proposition
Clearly the market for on-line sports wagering is in its infancy and there exists the opportunity for any player to develop a strategy to become the dominant player in the industry. Many have attempted to become this dominant player by offering their services over the Internet. However, none of these sights offers any unique value-added benefits that differentiates themselves from their competitors. This analysis focuses on how competitors at each level in this industry can position themselves in a more competitive position vis-a-vis the other players.
Obviously, the first and second level of companies could improve their competitive position by developing web sites that enable end users to place wagers on-line. This can be done with minimal capital investment or technological know-how. All these companies need to do is develop a web site that allows web users with an active account number and password to place wagers. (Click here for an example of how I would envision such a page looking).
By making these technological advancements, first and second tier competitors can elevate themselves up to the third tier. It is at this stage that competitors have seemingly ceased to seek value added services for their clients. I contend that a competitor in this field could gain a first mover advantage and capture a disproportionate share of the market by leveraging existing databases and sharing historical information with its customers.
Most of these companies process and monitor the bets being placed on particular games by using internally maintained databases that contain client personal information, information on wagers placed by each client, and information on spreads and final scores. The client database has a one-to-many relationship with the wagers database which also has a many-to-one relationship with the games database. Thus, when a wager is placed in the wager database, it is linked to both the games database and the client database. At the conclusion of any given sporting event, the book inputs the final score into the games database, which then dynamically determines the outcome of each bet in the wager database. The results are then reflected in the client database, showing each client’s current balance as a result of previously placed wagers.
Each firm that maintains such a database owns a significant amount of historical data regarding closing point spreads and final scores to every sporting event in which the firm makes a book. This is information that gamblers would find valuable, and could be used as an added value feature to attract new customers. These firms could maintain pages dedicated to individual teams showing their historical performances both straight-up and against the spread as well as analysis on each team’s performance against upcoming opponents. (Click here for a sample of how I envision such a report looking). Despite the fact that the spread on each game attempts to make each game's likely outcome a 50-50 occurrence, many gamblers consider themselves sophisticated risk takers, and would prefer to place a bet based on more, rather than less, information. By sharing this information, a firm would fulfill this demand without effecting the probability that the book would be able to adequately balance the wagers on each game. This "balancing of the book" can still be achieved by altering the spread each game to shift demand.
More than likely this would be information for which gamblers would be willing to pay. However, I believe the best strategy would be to offer user friendly team reports free of charge to customers who maintain an account with the firm. In order to entice new customers, the firm could offer a free 30 trial whereby new users would have full access to the historical reports. By not charging clients for the data, the first mover would not fear losing customers to competitors who react by offering similar reports at a lower price. The on-line gambling companies will make substantially more by increasing their gambling client base than could be made by charging for reports. Additionally, these companies already own the data. Therefore, the only cost incurred by the company would be to convert the data into a user friendly mode.