Old-School Bookmakers Question The Business Strategy Of Industry’s Post-PASPA Newcomers

Industry long-timers say the giveaways and spending to attract customers is bound to fail for some
Las Vegas betting board

Some longtime Las Vegas bookmakers raised concerns last week about the unprofitable marketing competition taking place in the online sports betting industry ever since PASPA’s repeal.

Art Manteris and Vic Salerno, American Gaming Association Hall of Famers who have some eight decades combined in the Nevada sportsbook industry, were skeptical about some companies’ approach in spending so much money to gain customers that they ignore their bottom line.

They did not name names during the online seminar, “Sportsbook as an Amenity to Drive Patrons Back to the Casino,” presented by iGaming Business. Various high-profile operators such as DraftKings and FanDuel, however, are known to have a business strategy focused on building their customer base with the idea that profits will come down the road rather than today.

Manteris and Salerno noted that sportsbooks from their inception were low-margin revenue producers for Nevada casinos, but still, they were always expected to hold their own and make money in addition to helping drive overall patronage.

“The business is completely different than what I expected,” said Salerno, now president of USBookmaking, which focuses on providing sportsbook services to tribal casinos.

“None of these larger companies are making money — it’s very difficult when you’re giving away from 30 to 40 to 120 percent of your winnings as promotions. That’s going to have to change. There will be a lot of flushing out of a lot of people in the business.”

Manteris, the vice president of race and sports operations for Stations Casinos, echoed the point, saying, “I’ve been shocked at the growth of a few of the big players, but there has to be a day of reckoning at some point. At some point, profitability has to come back into the business model.”

The need to build loyalty among customers is stressed

Manteris and Salerno were joined on the webinar by Luisa Woods, vice president of marketing for gaming and entertainment for Delaware North, which has casinos in multiple states, and moderator Melissa Blau, a consultant who founded iGaming Capital.

Woods said there’s been such an emphasis in the industry on gaining customers through giveaway promotions that some operators lose track of what they need to do to hold the customers long-term.

“You need to understand the math behind your promotion very, very well,” she said. “I think a lot of operators have gone out and spent mass quantities of dollars building a database and realize all they have is names on a file somewhere, and none of those players have any loyalty to them. They haven’t done the work building relationships and trust to be able to hold onto them.”

The speakers all agreed that even with the proliferation of mobile sports betting, which is the vehicle for 90% or more of the total handle in some states, there will always be a place for the retail component as a casino attraction. And it’s far more important today than in the past, they said, when Las Vegas sportsbooks might have originally just been a few betting windows tucked away in a corner.

Giant sports screen can be compelling feature

Woods noted that in entering the sports betting field since PASPA’s fall, Delaware North has wanted its sportsbooks to be a prominent feature “front and center.”

“We wanted the first thing people to see to be that giant screen — there’s something very compelling about that,” she said, adding the sportsbook customers should have ready access to food, drink, and other amenities as part of the communal experience that that type of gambling provides.

“To me, it’s a gathering place, it’s a community,” Woods said. “Human beings are social creatures, right? And so much of the technical revolution creates isolation. … There are times I just want to whip out my phone for a transaction and times I want to get away with friends and create an experience. That’s what the retail environment can deliver that my mobile phone simply cannot.”

Manteris knows about that as well as everyone, having previously headed one of the world’s largest sportsbooks for many years at the Las Vegas Hilton, which is now the Westgate Superbook.

“When I was part of the opening of the Superbook in 1986, that was an example of a property going from no sportsbook one day to the next day a major sportsbook, and the property saw a major increase in restaurant and hotel revenue,” Manteris said.

“I always looked at the sportsbooks in Las Vegas as an excitement center for the property,” he explained. “Certainly, we are a draw to the property, but properly run we should also be revenue-drawing … not just a loss leader drawing bodies to the properties.”

“I believe the sportsbook is no more an amenity, but a necessity,” Salerno added. “If you want to draw people, you have to have a sportsbook. It brings people cheering, it brings people to the casino, it makes them feel good, and that leads to them participating in the table games and slot machines.”

Computerization is great, but only to a point

Salerno and Manteris have had their eyebrows raised by some of the newcomers to the U.S. sports betting world from the European industry, which was much more advanced with mobile betting and ready to pounce in multiple states outside Nevada after PASPA’s repeal.

Again, without naming names, they said some companies have had oddsmaking strategies and betting lines different from traditional Nevada practices that leaves them cold. There is also an emphasis now on computer algorithms and artificial intelligence that is helpful in many ways, they said, but shouldn’t be relied on 100%.

“I don’t know that A.I. is going to be able to anticipate everything,” Salerno said. “Humans still have to come into it and make the starting odds on everything.”

“There is still a need for human intervention and human oversight at this time — at least for the foreseeable future, I hope,” Manteris said.

Woods, who is no oddsmaker herself, said computers are great when everything in the world is moving along as it should, but unexpected events enable savvy bettors to take advantage if no adept person running things is able to adjust odds quickly.

“We need to understand the players and markets and personalities,” she said.

Manteris, who started in his 20s as a ticket-writer when writing actually meant with paper and pencil in calculating payouts and such, observed: “The best education you could have gotten in this industry was when you had to do everything manually.”

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