by Tim Maloney / August 27th, 2020
Roundhill recently did a Q&A with Jesper Søgaard, Co-founder & CEO of Better Collective. We discussed the impact of COVID-19 on their current operations and the opportunities they are tackling moving forward.
A: I founded Better Collective in 2004 with Christian Kirk Rasmussen, now COO, and the company originated from lead generation/affiliation. This means that no bets are placed directly through our platforms. Instead we help players to make the most knowledge-supported betting decisions, when they bet through our partners (bookmakers/operators). We are on quite a growth journey, since 2017 fueled by M&A. In 2018 we decided to IPO and we are now listed on Nasdaq Stockholm (BETCO). In recent years we have ventured into more traditional media through partnerships with NJ.com and The Daily Telegraph, delivering our technology to provide betting content on their online platforms. We have extended our focus on communities such as our flagship brands bettingexpert.com and hltv.org and introduced revenue models we know from traditional media such as subscriptions. Our vision is to empower iGamers through innovative products and technologies and by creating transparency in the online betting market.
A: We established a position within the esports betting market through the acquisition of HLTV.org ApS, which included the assets HLTV.org and dust2.dk. The esports platform HLTV.org is the leading CS:GO (Counter Strike: Global Offensive) site in the world (source), providing news from the esport industry, CS:GO match information and player and team rankings to the global esports audience. For years, the site has been the most popular site for CS:GO enthusiasts across the world (source). It is the brand behind the official CS:GO World Ranking as well as the CS:GO Player of the Year Award. On average, the website has more than 26.5 million visits per month.
We very much consider esports a sport in terms of sports betting. Esports betting is offered by the same operators and we see an overlap of bettors. In general, esports are already established with professional teams and opposite to many other sports they have true global reach. Esports in general is growing and COVID-19 has most likely accelerated this growth as it has offered an alternative while traditional sports events have been closed down. Whereas esports in general tend to attract younger people, CS:GO has a more adult audience, partly due to the fact that the Counter Strike games series have been around for 20 years.
A: It has been a challenging time for online sports betting as the COVID-19 pandemic affected almost all major sports events. Since mid-March, major sports events have been postponed or even cancelled, leading to reduced sports betting activity to approximately half of normal levels. However, our digital business model has proven strong under these circumstances and we have, as a company, demonstrated the flexibility to withstand a period with low sports activity. All employees have switched to working from home which has proven to be an almost seamless transition. The situation calls for flexibility and we have redistributed resources internally to focus on business areas that have remained active such as esports and casino. Along with temporary cost reductions, we have been able to keep our financial targets for the full year. Over the summer, sports have picked back up so while things are not yet back to normal, the second half of 2020 and not least 2021 look promising in terms of sports activities.
A: Even during the pandemic there seems to always be some sports active. With major events and leagues halted, we have seen niche or local sports gaining a larger betting audience - like, tennis and less exposed soccer leagues. Also notably, some have shifted to esports and casino. We are interested to see to which extent these behaviours stick as regular sports pick back up.
A: The iGaming market is a highly attractive market. The developing technology and growing use of mobile devices has made iGaming accessible to a wider audience and has also resulted in increasing demand from users with regards to their iGaming experience. These trends have also entailed growth in market participants, both among operators as well as their affiliate partners. As iGaming becomes increasingly more widespread, many countries are amending or implementing new iGaming laws and regulations, often referred to as re-regulation. The ongoing process in the US is a prime example and what we believe to be a key driver for us for years to come. We welcome regulation as it creates visibility, a level playing field, and stability in the market. Adapting regulations to allow online betting also limits black economies, provides national tax revenue, and offers the best possible environment for sound betting behaviour. Last but not least, sports turnover is increasing as are the sports and games to bet on - esports being a good example.
A: Two strategically important US acquisitions in 2019 have secured a strong foothold with brands like vegasinsider.com and RotoGrinders.com. We build our strengths in this industry on almost 20 years in a European setting with a time-tested acquisition model. Along with the US brands, we onboarded two dedicated teams with market insight and local content experience. Regulated sports betting is expected to surpass 6 billion USD in 2024 in a market characterized by high player values. However, we need a different and dedicated approach to unlock this significant potential rather than just copy what we have done in Europe so far. We view each state as an individual country, with different regulation, different operators and often diverse views on individual sports. Some products can work for the entire US market, whereas others need to be tailored to a particular state. While we are excited about the opportunities, we are also realistic about the incremental nature of growth based on state regulation as well as the competitive landscape.
A: At Better Collective, we want to make sure that our users’ betting experiences remain as a form of fun and entertainment and we strongly endorse responsible gambling. Last year, we invested in Mindway AI, which specialises in innovative and advanced software solutions for the identification of at-risk gambling and problem gambling behaviour. We see their technology as a perfect addition to Better Collective and our aspirations to help protect online sports bettors, while at the same time engaging in a business where we foresee a sound future for growth and profitability. We have partnered with Racing Post and Oddschecker to co-found the trade association, Responsible Affiliates in Gambling (RAiG) in the UK, which is established to promote the socially responsible marketing of gambling products and a safer gambling environment for consumers. Generally, we aim to raise the standards in the sector as, in our view, it is the only way for online gambling to be sustainable.
Better Collective is an Index holding in the Roundhill BITKRAFT Esports Index and the Roundhill Sports Betting & iGaming Index. This post is not investment advice, nor is it a recommendation to buy or sell a security.