Playing the odds

Johannesburg, 15 Aug 2016

Neil Walters and Craig Venter.

Sports betting for me always brings to mind dull smoke-filled rooms crowded with middle-aged men staring intently at a television screen, silently willing their horses to win and then tossing the losing betting slips aside. For my father, it would probably be a memory of a packed racecourse back in

England, his binoculars draped around his neck and bookmakers shouting out the odds. For my children, it's most likely to be a bunch of people standing around at a party furiously prodding at the screens on their smartphones.

Sports betting is an industry estimated to be worth some $3 trillion a year globally, the vast majority of that illegal, the kind of betting that you hear about when some sports star is caught cozying up to a bookmaker, and promptly gets banned for life.

In South Africa, the numbers are considerably smaller, with 2015 revenues from sport-betting totalling around R3.5 billion, a number that is expected to grow to R5.1 billion by 2019, according to PwC. Globally, some 65% of betting happens on football matches, but in SA, the largest proportion of sports betting (R1.9 billion) still happens around horse racing. This is expected to change, with other forms of sports betting apparently ready to overtake horse racing next year.

And that's something that former Altech CEO Craig Venter is banking on.

His new venture, ClickaBet, is an online sports-betting site that steps into a market that is ripe for innovation. Venter says that while the majority of sports betting still happens in physical betting shops, the market is moving online at between five and ten percent a year.

This shift towards online is the key reason that Venter is eschewing the physical realm and making ClickaBet an online-only operation. Not only does he feel that this is the future of the industry, but it is also the area where he feels the competition is weakest.

"While older generations are willing to take the time to go to a physical establishment and place their bets, millennials want to do things here and now," he comments. "It's these customers that the growth is going to come from and who we are targeting."

Venter left Altech in July last year after 27 years with the company, but he says that he had been working on the idea behind Clicka-Bet already. "I am naturally entrepreneurial and was looking for new opportunities and online betting was something that seemed like a natural option given my experience in the technology field and the sports-mad nature of South Africans."

Not having any experience in the field, Venter had to find someone with the right expertise and this person was ClickaBet general manager Neil Walters, then at Sun International's SunBet.

"Luckily we had the luxury of time in getting things up and running and this allowed us to search out the best partners," Venter comments.

"It is amusing that I went over to Europe to investigate betting platforms, only to find out that the best option, BetTech, was actually based in Cape Town," he says. ClickaBet runs on BetTech's platform and, as such, the options for customisation in the platform itself are relatively limited, but Venter says that the real difference that the ClickaBet offers doesn't lie in the technology it uses, but rather in the way it uses technology. None of the technology it is using is unique to ClickaBet; in fact, the secret sauce is all about marketing and customer service.

Machine handover

Sports betting has always been seen as more of an art than a science; punters with the nose for a good bet tended to hit the jackpot while those without were doomed to pad the pockets of the bookies.
But could a computer do a better job of picking winners that a human could? With the rise of big data and machine learning, the answer may be yes.
Isazi Consulting is a small consulting company that specialises in providing companies with access to some of the brightest minds in SA in the area of machine learning and optimisation, employing a diverse mix of pure mathematicians, physicists and engineers, among others.
CEO Ashley Anthony says that by leveraging the right algorithm, it would be possible for a computer to spot patterns with a greater degree of accuracy than a human could.
"One of the projects that we have worked on involved advanced image processing, where we created an algorithm to track the location of football players and the ball on a field. Given enough of that kind of data, it would be possible to map ball possession and when goals are scored and establish what the probability of a goal being scored within a specific period of time would be," he says.
This would shift the betting process from an instinct-driven process to a data-driven one.
"A pure computer model is probably not the best option, as combining human insight and a data-driven model would probably yield the best results."
Machines are much more effective than humans at spotting trends and correlations and, on the whole, the more data you can throw at a problem, the better the insight you will get out, although he says that even with relatively 'dirty' data, it is possible to get good results.
He points out that even though you could leverage machine learning for betting purposes, using it to retain customers in an online betting environment would probably be a more useful application of the technology - something the company has already done in the online casino environment.

Walters says they have tried to identify as many as possible of the snag points in the process of signing up customers and remove as many of them as possible too. "One of the main obstacles is getting FICA documents from customers, so we allow them to use WhatsApp to send us the documents. Almost everyone has a smartphone and a camera nowadays, so this takes some of the legwork out of the signup process."

Because all the software development is being done by third parties, the core of the team in Cape Town is focused on customer care. New clients receive a customised mail from the company and telephonic followups to make sure they don't fall by the wayside.

The company is also betting big on digital marketing. Venter says because the product is online, it's essential that the marketing is there as well. This is also where the millennials he wants to target are most likely to be found.

Venter is confident that once the local market has been conquered, the time will be right for expansion into Africa. "While every country on the continent is different and the regulations vary from place to place, we are confident that the model we are building is replicable."

The rewards are not inconsiderable. Venter expects the company to turn over around R250 million in its second year.

The popularity of sports prediction games like SuperBru indicates that Venter is on to a good thing with sports betting. And if that is the case, then the future of betting is not in some smoky room, or even in your study at home, it's in the stands at Soccer City on the phone during a Chiefs and Pirates Derby. And that would bring it full circle from the days when people went to the racetrack to bet on the horses.

This article was first published in the July 2016 edition of ITWeb Brainstorm magazine. To read more, go to the Brainstorm website.

Playing the odds

After Altech, Craig Venter looks to online sports betting for the next big thing.