Straight Up – The virtues of scale in a game of little fish and big fish
In this edition:
- Fee reprieve – SA regulator backflips on bookie admin charge
- Azzopardi launches BearBet
- Betr goes again with PointsBet play
- ‘Take no action’ – PointsBet urges shareholders to wait and see on latest offer
- Betr in the black as positive promise is delivered upon
There is a very good reason that wagering company betr is fighting so hard to stay in the fight for PointsBet.
It is called scale.
We have covered the rival takeover bids from MIXI and betr and the corresponding drama and acrimony extensively on The Straight, with further developments this week after betr confirmed its latest offer and PointsBet offered a cautious response.
The experience of betr chairman Matt Tripp and his executive team in acquiring, scaling and selling off major wagering brands is front and centre in the pitch to PointsBet investors. Tripp and CEO Andrew Menz know the secret to unlocking serious value of Australian wagering businesses is getting to that magical 10 per cent market share mark.
But the journey of betr to profitability, something it confirmed this week, has been far from straight forward, certainly less so than Tripp’s previous success stories involving Sportsbet, BetEasy and CrownBet.
In a mature market, with an established trio on big bookies on top, two of them backed by global powerhouses, it is hard to shift punter sentiment. Betr first tried through a blitzkrieg of headline grabbing promotions and now ‘inorganically’ through acquring various players, adding BlueBet and TopSport, and now in pursuit of PointsBet.
While the market for the punting dollar is hyper competitive, it is the cost of doing business which prevents most bookies from growing. Cost savings are front and centre of the betr pitch to PointsBet shareholders. It is a privilege often only open to those who operate at scale.
Australia has around 100 smaller bookies – less than one percenters – the latest of which was launched this week when noted greyhound and racing professional punter Darren Azzopardi “jumped the fence” with his new brand BearBet.
Most of these small bookies have emerged via the various ‘white label’ platforms, which have lowered the cost of entry and provide solutions like trading, transactions and compliance.
Being small and nimble has its advantages, but it also means they are especially vulnerable to major changes on taxation from government, as recently happened in the Northern Territory, as well as policies and fee structures from racing bodies.
A $2000 additional fee for fielding on South Australian harness racing is unlikely to cause a ripple in the accounts department at one of the major corporates, but for lower volume players like James Filgate of JimmyBet, it meant it was no longer worth his while to field on the trots in that state.
After a string of complaints from small bookies, the new CEO at Harness Racing South Australia saw the light and changed course.
While there are significant rivalries between many of these smaller bookies, there is also a sense of common purpose when it comes to issues which acutely affect those in the shallow end of the pool.
Earlier this year, they banded together to lobby Racing Australia to change course on a 600 per cent data fees spike which threatened the viability of many of the smaller players.
They won the argument as RA changed tack, opening up its data provision to more suppliers in a bid to ensure prices remained competitive.
Australia’s wagering landscape is becoming increasingly divided as scale incentivises consolidation. The big fish may do the heavy lifting, but the concerns of the smaller fish should not be ignored.
Regards,
Bren O’Brien
Managing Editor and Founder
The Straight
Author
