The trends of gambling in 2020. An interview with Dmitry Belianin, CMO of Parimatch International.
Let’s begin with the betting markets. Are they equivalent to one another?
Markets are either grey and white. To operate on white markets, you need to get a license, often a local one. In a nutshell, this means high approval rates, trust payments.
In contrast, grey markets usually imply difficulties associated with the law and the system as a whole. Some licensing exists (e.g., the Curaçao license) or none at all, which is typical for so-called “closed” markets widely present in Asia, India being one example. There, betting is neither banned nor allowed.
Betting-related businesses experience a variety of problems that payment partners can easily solve.
Are there any issues that betting companies continuously face? What do they expect from a suitable payment provider?
Trust is the first problem. Potential customers have trouble believing in bookmakers' trustworthiness — obligation to deposit money raises questions regarding the likelihood of their successful withdrawal.
This is where payment providers can step in. If a partner is seeking to develop and establish a brand’s B2B reputation, this will be the one we are confident to rely on. It has potential. Thus, We will be happy to work around their brand to increase trustworthiness and display and implement the brand on our webpage.
The approval rate is the second problem, the percentage of successful funds transfers. On the grey market, it is usually around 50%, sometimes 20%. But those numbers are quite alarming; they say that the cost of attracting bettors is much higher than the potential profit.
To succeed, a reliable system should provide a high upfront rate. Thus, payment providers must work hard on internal gateways, cascading, and MCC codes. At the same time, betting companies are looking for a particular solution: they expect the payment provider to take full control over operations and management. Otherwise, they are forced to invent something out of the blue, twist things around.
Stability is the third problem. When a payment system is unstable on the grey markets, it can suddenly shut down with blocked domains. Thus, we have to build something unbreakable. Otherwise, we lose money and, most importantly, customers.
UX of the payment system is the fourth problem: user-friendly interface, simple and straightforward registration process, or the speed of SMS confirmation delivery. A great payment partner will work on activating and optimising conversions and improving UX. Many providers are reluctant to dive deep into this: they have an unfriendly, complicated interface, lots of forms to fill out. Consequently, that leads to a lower conversion rate and financial losses—game over if you can’t accept the transfer.
Withdrawal speed is just as important as everything mentioned above. Since players have trouble trusting betting companies, they tend to deposit small amounts and take it all out as soon as they can. Thus, the longer they wait, the smaller the chance of their return to the platform. However, If the client’s money arrives within 10 minutes, a bookmaker can establish trust — players get a feeling they won’t be cheated and are happy to come back for another betting round or deposit more.
Companies see payment service as a contractor. But it’s not the same for the user. Any sudden problem or issue — gateway shutdown or withdrawal time increase — will fall on the betting company’s shoulders. Players will go straight to the bookmaker’s support service, not the provider’s. Thus, It is a bookmaker’s responsibility and trustworthiness on the line.
Was there any shift in the industry during the pandemic?
- The first thing that comes to mind is the workflow, the transition to entirely remote operation. Cancellation of sporting events was a massive blow for the sports industry. We had to develop new products: cross-sells with no offline sports dependence, mini-games, casinos, virtual sports.
- While sports was away, people got used to a new type of entertainment. However, when it returned, the results were astonishing — people were much more engaged than before the pandemic, sports betting was on the steep rise. Yes, broadcasts are now only available at home, we get it. However, despite this, the flow of players has not changed.
Restrictions have affected some types of alternative payment systems, especially offline ones, like the popular in Brazil Boletto system — they lost a significant chunk of their market share. Nevertheless, If we look at the market as a whole, it has returned to the pre-crisis level.
Many experts keep mentioning black swan. While some believe it’s an apocalypse precursor, others see an opportunity and expect significant changes to arrive very soon. When it comes to bookmakers, how shall they perceive it?
I don’t think that even one little black swan is present here. After all, we see the emergence of virtual sports, e.g. simulations and so on. Everything remains where it was, but with one exception: users became pickier.
So, when soccer was put on hold in all countries apart, Nicaragua and Belarus and users switched to esports. Wasn’t there a difference in the number of players after Bundesliga’s re-launch?
Those who were betting on traditional sports continued to bet when it came back. However, the players got to know and enjoy the new type of entertainment, and they are continuing their new betting routine. If we talk about the upcoming changes, the popularity of esports and virtual sports will grow. For example, Parimatch, one of the most advanced CIS companies in that field, sponsors Vertus Pro and regularly organises championships. For us, especially during the pandemic, it was another round of development, not something brand new.
Esports are a real deal with professional competitions, while virtual sport is a simulation using actual statistics in 3D.
Does the African market differ from all the other countries?
a) In terms of payment systems, it is not the same. Majority of transfers are done through cell phones, through the so-called “mobile money”. People use their cards for withdrawing wages and transferring them to MPC wallets. They do not trust traditional European payment systems and prefer local, specific methods.
Cash is widespread, and the market is overwhelmingly mobile — it has passed the PC stage, laptops and desktops are used rarely. Many countries have excellent 4G coverage. Players love mobile entertainment, love it in general.
b) Behavioural patterns are dramatically different — in Europe, people can spend as much as they want on the bookmarker, but they spend as much as they can in Africa. LTV in Africa is much lower, but what really matters here is a volume of LTVs — hundreds of thousands of small LTVs bring excellent profits.
c) If betting is about fun in Europe, then in Africa it is about making money. They see betting and gambling as a way to make ends meet and try to convert their knowledge of sports into earnings. The share of users does betting for fun is meagre.
Many professional players make money, and we even uncovered the emergence of “tipsters” — professionals paid for giving betting advice. Furthermore, Africa has many influencers, sites, groups where people exchange tricks and tips.
d) There are two types of bets — single and express. Express or press bets are complex, with a large number of events within one single bet. In Africa, they are prevalent. Players have a lot of faith in themselves, their knowledge and luck. They bet at insane odds of 1,000 to 2,000 and sometimes win.
What are the differences between the markets in Europe, Latin America, Asia and Africa?
Latin America is a vast market where gambling is the norm. People go crazy about sports, especially soccer. LatinAm’s fintech is in the early stages of development, with offline deposits still being widespread. If you made a deposit on Friday and it didn’t go through, it won’t come into your account until Monday. That is a constant struggle for bookmakers.
There are lots of issues with funds transfers in Asia because markets are mostly grey. While you can get a Philippines license covering a good number of countries, local regulations still apply.
As for the user behaviour, every local market has its favourite sports — it is cricket, kabaddi, field hockey, tennis or chess in India or horse racing, curling, rugby and football in the UK.
Historical events most likely influenced the player behavioural patterns, colonisation being one example — all in all, it left a strong imprint.
Products aimed at Asia are very different in terms of design and UX. The UX/UI often has screaming colours, flashy interface, and wicked fonts. The similar story is in Africa. I believe this has to do with the evolutionary specifics, years of particular colour preferences.
All in all, European approach doesn’t appeal to them. Once we did a research and offered users a flat, more modern and clean design. It wasn’t well understood due to its simplicity. Ironically, we were one out of many companies that faced the same problem, even eBay complained. They published a book about launching a product in Asia that didn’t take off because the market wasn’t very well studied. The company used an already established model and didn’t bother with the proper localisation.
Do you think this applies to payment system design? To what extent is it necessary to localise?
I would advise doing a proper localisation and run tests, launching the standard version of payments, and hypothesising that the Asian counterpart will do better. Don’t forget that Asian countries are very different: South Asia and Japan are more Western, with demand for cutting edge interface, beautiful colours, and combinations. Basically, chic and shiny. However, when it comes to Vietnam or Taiwan, the standard Asian localisation route works much better.
In Africa, localisation varies from country to country. Take South Africa, for example. I like the expression that the Dutch have made it for themselves to come and live. It is heavily Europeanized.
In a nutshell, the one-size-fits-all approach won’t work; each country has its specifics. Do not hope for a magic formula — use the key brand values and adapt them according to the situation.