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ONLINE BETTING INDUSTRY - THE GOOD YEARS (Blog 2019)

The five listed below have all taken advantage of the internets reach and positive .

 

It’s a fact, many billion dollar betting companies where actually founded with very little money. Putting just 100K on the table was usually enough to get licensed and structured in countries such has Costa Rica, Malta, Gibraltar and Curacao.

 

One thing all these companies had in common was being in the right place at the right time. Most countries didn’t have a legal framework to stop   citizens placing bets across borders, and when challenged these betting companies could win in the courts.

 

Being able to work in the grey zone meant low taxation/costs, so cash-flow was available to develop systems and fuel growth. Furthermore, most of these companies gained traction by using Affiliate, Franchise and Betting Agent models to supply customers. In short, they paid sales   commission on customer losses, meaning they had few direct costs. 

 

UNIBET (Founded 1997) 

 

Maths graduate Anders Ström was the founder of Unibet, he’s still on board. In a little known story, Ström won the start-up capital from his share of landing Swedish trotting races V75 (jackpot bet). Unibet have around 1500 employee’s, and they are now part of the Kindred group. Revenue in 2017 was reported at £751 million. 

 

Unibet originally operated from the founders Earls Court (London) apartment. They secured a UK license in 1998 and took telephone bets from mainly Scandinavian clients. In 1999 Unibet released their first ever online betting platform, and during the same year acquired a Maltese remote gaming license. By 2004, the Unibet Website was in twelve different languages, and they boasted over 300,000 registered customers from 100 different countries. 

 

Unibet won the race because they:

 

* Identified an opportunity in the untapped Scandinavian betting market.

* Found a way to advertise to Scandinavians through TV

* Localised business by adding languages

* Integrated payment channels.

* Created brand of trust with better odds and higher limits. 

* Acquired betting companies for a foot in to other markets.

 

At the time of writing, the Kindred group has a market value of 21,585,831,557, about €2.06 Billion!

 

 

BET365 (Founded 2000)

 

The Coates family (Denise, John and Peter) own what is considered to be the biggest online betting company in the world. 

 

Bet365 was  found in a Portakabin by Denise Coates, the business first went online in 2001. Because the Coates family owned betting shops, they where able to borrow £15 million from the Royal Bank of Scotland. In 2005, the Coates family sold it’s retail chain to Coral for £40 million, and they paid off the loan. In 2018, the company reported revenue of £2.86 Billion, and a operating profit of £660 million.

 

We consider Bet365 where successful for a number of reasons, they include. 

 

* Building the best proprietary ‘’in-house’’ bet taking Software

* Fantastic and trusted affiliate network

* Understood Digital marketing and long term benefits of SEO

* Bonus incentives which made customer acquisition easier.

* Fabulous content with something for everyone.

* Adding verticals to cover all aspects of gaming.

 

Bet365 suffered several controversies, and to name but a few.  Bet365 (Australia) was fined a massive sum by the Australian advertising authority. They refused to pay winnings of £1M to a Northern Ireland bettor, and their was  bribery scandal (lobbying controversies) bought against the company!

 

As of today, Bet365 are said to employ around 4500 people. To be fair, the company have maintained roots and created thousands of jobs in Stoke on Trent. In 2018, they where ranked second on the list of UK’s biggest tax payers, with Denise Coates also paying a personal income tax of £99 million!

 

 

TIPICO (Founded 2004

 

Tipico was found by three students and the father-in-law of one. They consisted of a business manager (Oliver Voigt), Software developer (Mladen Pavlovic), Lawyer (Dieter Pawlik), and Papa bear Wolfgang Kuentzle (Lawyer). Tipico took a Malta betting license, and the original  plan was to simply take bets from residents of Germany. The idea began in Karlsruhe (Germany), and the story goes…

 

Tipico faced three hefty challenges, which where Software/Franchise/Legal:

 

Tipico started building an ‘’in-house’’ bet taking software. This was continuously developed during the years, and we believe it gave them a massive advantage over competition. In fact, it was this that endeared them to local bettors and Franchise partners alike.

 

Since sports-betting was not legally allowed in Germany, bets where transferred to Malta. Franchise partners where signed up has Internetdienstleistung (Internet services), and bets taken in a shop environment where then transferred in live-time to Tipico. By using this system, Tipico had no costs to open shops. Deals where typically 70/30% of the ‘’hold’’ going to the Franchise partner. 

 

During the early years, the German authorities tried to stop Franchise partners from conducting this type of business. Many where forced to close business at short notice, while others where arrested and ended up in court. Legal challenges went back and fourth, and in most cases business was allowed to reopen.  The high court and European courts of justice delivered verdicts, and in short the highly paid lawyers beat the German State and authorities!

 

As of today, Tipico is said to have a franchise network of over 6000. Most of the shares have been acquired by CVC partners, with the valuation being €1.2 Billion. 

 

Tipico made it because they:

 

* Where willing to challenge the legal system.

* Found low cost ways to force growth through Franchise partners

* Had the perfect balance with founders.

* Incentivised customers to bet direct.

* Branded company at others cost!

 

The worlds worst kept secret is Tipico operate a parallel website Rivalo (Curacao license) for many of the black markets (Turkey/Switzerland etc).

 

With regards to controversy, the company have used their presence on the high street to partly circumvent Franchise partners. In fact, Germany introduced a 5% betting tax on all bets from German residents. That means someone betting in a shop pays 5% on their stake, Tipico waive this fee if playing online. Suffice to say, shop owners have lost numbers and feel cheated by Tipico

 

 

 

PINNACLE SPORT (Founded 1998

 

We know a couple of the Pinnacle owners, but it’s all very secret and we better not get into that.  The fact is this company has changed ownership since Stanley Tomchin, George Molsbarger and Brandt England kicked it off in 1998. One thing we can confirm, Magnus Hedman acquired the majority of shares in 2015. 

 

Pinnacle was originally found to offer US Sports betting to Americans, but in 2007 they withdrew from that market. That followed the indictment of CEO Jessica Davies, who has since then changed her name to Paris Smith. The granddaughter of former Governor John E Davis was given probationary sentence for her part in taking bets from US customers.

 

The difference between Pinnacle and other bookmakers is they are a low margin (reduced juice) sports book. They operate a one rule for all, meaning professional gamblers can stake the same amount has losing punters.

 

Punters can bet with Pinnacle directly, or through an agent account. The sports book itself operates using dynamic odds, which works similar to the stock exchange. By that we mean odds move up and down according to weight of money being bet on each proposition.

 

Pinnacle have endeared themselves to professional punters and Whales alike. They have high limits, and turnover exceeds $800 billion per year. However, margins are just one percent, so some traditional bookmakers have bigger hold!

 

What’s made Pinnacle successful:

 

* Low juice appeals to everyone.

* Using bet collecting agents allows for Asian street players

* Great reputation for paying

* High stakes + same limits for all.

* Professional punter paradise!

 

 

 

 

5DIMES (Founded 1996)

 

Highly regarded US facing sports-book 5dimes found their way around the prohibitive wire act. Most of the users are from North American, albeit some countries in South America are also accommodated.

 

Low juice on many US sports, and reasonable limits until you start winning too much. Yes they do restrict, albeit they have a reputation for never missing a payment.

 

You might not have heard it, but 5dimes owner/founder William Sean Creighton was recently murdered. He was first kidnapped with a ransom note of $1M following. His family paid, but he was never released and his body was found. Police arrested 12 people including 9 in Spain!

 

Although we have no figures to confirm this, 5dimes are probably the biggest US facing sports book. What we can tell you, this Costa Rican registered company have the biggest US facing affiliate networks in the world. On that note,  5dimes pay affiliates a flat 30% of hold, and they offer many incentives to keep and acquire new customers. Unlike many European bookmakers, this Sports book have never reneged on paying partners.

 

What helped 5dimes succeed.

 

* Best marketing department, they call clients with incentives!

* Honour - they always pay on time.

* Low juice - beating Vegas odds.

* Big offer on US sports.

* Payment options exceed what others have!

 

We will be following on this blog with two more blogs about BETTING INDUSTRY STRUGGLER, and WHAT A NEW SPORTSBOOK WILL NEED TO SUCCEED! Check back shortly, and in the meantime

 

Check out our Blog on 10BET & PREMIUMTRADINGS BEWARE WARNING (BLACK-LISTING)