Executive summary
Overview
Sports betting exists in most countries and its fundamental characteristics are similar throughout the
world: wagers are made in advance of, or during, sporting events in pursuit of an attractive return.
The bookmaking process for digital sports betting is structured in a similar manner to land-based
bookmaking. Operators bear the risk of all sports bets placed with them.
Ideally, stakes are proportionately distributed on every possible outcome so that, regardless of the
result, the book will be balanced and the operator will make a positive margin. The bookmaker’s skill
lies in calculating and adjusting the odds as wagers are placed, thereby managing exposure based
on achieving a theoretical margin. The gross revenue earned in any period will vary depending on
the outcome of the events and the bookmaker’s ability to manage the risk. For example, the largest
amount of money staked typically goes on the favourite in an event, and the theoretical margin will
assume a certain proportion of favourites winning across all events in a season. If more favourites win
than expected, the actual margin realised by a bookmaker on a particular event will typically be lower
than the theoretical margin, and a bookmaker on a particular event may even incur losses.
Due to competitive forces and the tendency of players to back favourites, sports betting operators
sometimes run unbalanced books, expecting that the bookmaker’s greater insight into the likely
outcome of the event will result in a positive margin. In this way, the bookmaker can offer more
favourable odds on outcomes that it regards as unlikely to actually occur. The sports betting operator
is a genuine trading desk, taking active positions in each market in which it operates.
The global market for digital gaming has accelerated in recent years and is forecasted to maintain
one-digit growth rates over the next four years and expected to reach a medium-high, double-digit
number in billion Euros revenue.
Global digital gaming gross win by product genre (%)
Poker
10%
Bingo
6%
Skill/Other/Community Lotteries
6%
State Lotteries
9%
Betting
47%
Casino
22%
Source: H2 Gambling Capital
Digital Sports Betting 5