Editor’s note: This is Part I of a three-part series on prevailing trends regarding sports betting data in the global marketplace.
For bettors who backed the New York Mets in a pitchers duel between Jacob deGrom and Cole Hamels, a wager on the road underdogs seemed worth the risk.
DeGrom, who entered last August’s matchup with a Major League-leading 1.71 ERA, bolstered his Cy Young campaign with a 10-strikeout performance against the Cubs, allowing just one run over eight innings. The game remained tied into the 10th inning when rain stopped play at Wrigley Field. When the contest resumed nearly 14 hours later, a prominent Las Vegas sportsbook spotted a pricing irregularity.
The in-game odds supplied by a third-party data provider failed to account for DeGrom’s departure. Though Mets manager Mickey Callaway turned to Paul Sewald, a young reliever with an ERA above 5.00, the in-play lines did not adjust accordingly. The Cubs prevailed 2-1 in 11 innings.
The scenario represents a conundrum that numerous legal, regulated sportsbooks continue to encounter amid the growth of in-game wagering across the U.S. On the offshore market, similar concerns persist.
While teams of expert traders are trained to spot the slightest intricacy that could tilt the odds, most sportsbook operations do not have the financial wherewithal to physically monitor dozens of contests at once. Alternatively, many books depend on sophisticated platforms from places like Sportradar and Genius Sports to supply in-game odds, pricing, and markets to deploy to the sportsbook’s customers. And even they can make mistakes.
Speaking on a panel at this month’s MIT Sloan Sports Analytics Conference, Sportradar US president Matteo Monteverdi likened his company’s role as a data supplier to one Bloomberg has carved out in the global financial market. At present, he said that Sportradar maintains a 90 percent market share in New Jersey in terms of providing sports betting data.
The service is not cheap.
Current pricing trends in the market
Visiting @SloanSportsConf in Boston today?
Sportradar US President Matteo Monteverdi will be discussing the emergence of sports betting in the U.S. on the #BettingToWin panel.
— Sportradar (@Sportradar) March 2, 2019
Although in-game betting appears to be in vogue in retail and especially mobile environments, it is not a new phenomenon. Placing wagers on continuous action in sports first arose in Las Vegas around 2010, before becoming mainstream several years later. CG Technology Sportsbooks, the operator of eight sportsbooks in the city, including The Venetian Resort Las Vegas, started to manually price in-game action as early as 2011.
At the time, the company’s trading desk used their own methodologies for pricing in-game odds ranging from the historical pencil-behind-the-ear method to employing spreadsheets featuring key statistical metrics. For the most part, football traders would adjust the odds on the fly based upon considerations such as the score, time of game and down and distance.
The manual input strategy worked fine for quiet nights when one game like Monday Night Football dominated the viewing schedule. The method proved less effective on busy afternoons in February, when a multitude of games took place simultaneously.
“Unless your volumes are going to be so, so high, it’s not scalable,” said Jason Simbal, Vice President of Risk Management at CG Technology. “You can only do so many. You may be able to do all the NBA games on a night, but you won’t be able to do college basketball.”
With salaries for risk-management specialists eclipsing $70,000 a year, sportsbook operators could not afford the labor costs to staff a full team. Instead, they turned to live-data feeds that spit out the raw probabilities of a betting result through an automated system. Sportradar’s Betradar platform and Genius Sports’ Betgenius system now represent the industry standard.
The going rate for a data package of approximately 300 in-game lines falls within a range of $4,000 to $6,000 a month, multiple sources told Sports Handle. A more expansive package of 1,000 games per month is a little more costly, said John Murray, director of the Westgate Superbook in Las Vegas. For books that exceed the monthly threshold, many receive the option of purchasing additional games at $20 to $30 per contest.
Tier pricing for data packages can vary dramatically. A small book with one property in Pennsylvania will pay considerably less for a package than a major corporation with operations in multiple states, according to industry sources. Rates also differ based on the popularity of the league: books can expect to pay more for in-game MLB odds than they will for Rugby Sevens. CG Technology pays a flat monthly fee for a data feed into its system, regardless of the number of casinos it partners with throughout the Strip.
On the offshore market, pricing points compare favorably with the rate paid by most legal U.S. sportsbooks, industry sources say. Yet Betradar’s rates appear to have played a significant factor in prompting several foreign books to move to another provider, according to a former sportsbook executive with deep experience in the offshore market.
Different types of packages, pricing
Typically, data providers sell three types of pricing variables within their offering. With the first, an operator receives a basic package with an XML feed, usually at a fixed cost. A second feed with an assortment of opening lines, plus a continuous update of the night’s pre-match fixtures carries an additional price. In recent years, data providers have added a third variable with a live, in-game betting feed.
The first variable costs about 50 percent of the monthly package, while the remaining two each represent approximately 25 percent of the total price, a source said. A smaller operator that lacks experience with risk management may pay more for automated betting lines, but will lose flexibility in customizing their odds.
Though pricey, the expense is one that most books are willing to swallow when weighing the alternative. If a sportsbook opts to develop their own proprietary in-game technology, the costs can add up quickly. To start, a book must first hire a mathematician to build out a high-powered algorithm with the capability of handling a wide range of situational variables that could arise throughout a game. From there, the book needs another member of its trading staff to monitor the algorithm while a third oversees game developments that affect its risk.
A small misstep can be damaging. In the waning moments of the Broncos’ 20-19 win over the Raiders last September, a technical glitch in FanDuel’s in-game platform — provided via a third party — incorrectly listed Denver as 750/1 underdogs for a period of 18 seconds. After initially citing the house rules which would exculpate such an error, a wave of public backlash came crashing against FanDuel. The company eventually honored several wagers at the erroneous price, including a $110 in-game bet that paid out $82,600.
All told, a 12-member trading team could cost a sportsbook a seven-figure sum annually, said Matthew Holt, president of U.S. Integrity LLC, a Las Vegas based company.
“It’s just not financially feasible,” Holt said. “If you do it on your own it’s a hard business to run and make money on which is why no one is doing it on their own.”
Founded in 2018, U.S. Integrity provides integrity monitoring and fraud prevention services to pro sports leagues, college conferences and sportsbook operators.
Distinctions between non-official and official league data
Several weeks into its regular season, the NBA announced an unprecedented partnership that gave both Sportradar and Genius Sports the non-exclusive right to distribute the league’s official sports betting data to licensed sportsbooks in the U.S. Under the deal, the data providers received authorization to distribute the league’s data and sports betting products for NBA and WNBA contests in real-time.
The designation provides the league’s imprimatur or stamp of approval that the information being used to grade a bet is reasonably accurate. Meanwhile, a sportsbook that uses unofficial data from a third-party unofficial provider might decline to accept a 3-pointer attempted after the buzzer, even when a controversial shot is recorded as a made basket, according to the NCAA box score. Theoretically, sportsbooks that accept unofficial data may also have the discretion to rule on certain plays, such as whether a turnover is a block or a steal. The decision could affect props, on say, the total steals recorded by Draymond Green in a given contest.
The NBA and Major League Baseball have argued that the potential for different results at different sportsbooks would damage the integrity of their games. Whether fans would hold such an outcome against the sportsbook or the league, and take their sports wagering patronage elsewhere, is debatable.
“As the sports betting landscape continues to evolve at a rapid pace, these new partnerships will provide robust and reliable data to ensure the best possible gaming experience for our fans in the U.S.,” NBA Commissioner Adam Silver said in a statement.
Detractors, however, argue that there is little distinction between the official league data being used to create in-game probabilities and statistical information provided from outside sources. The disparity, they say, has become less pronounced as the latency from when a play occurs and a line is posted improves across the industry. Sportradar can deliver in-game odds with a latency of less than one second.
Sportradar also announced a partnership with MLB on Feb. 27 that enables the Switzerland-headquartered company to deliver the league’s real-time betting data to regulated U.S. sports betting operators on a non-exclusive basis. Days later, MLB issued a directive requiring clubs to present their starting lineups to the commissioner’s officer 15 minutes before the teams may release lineups to the public. The lineups, along with umpire assignments, will first appear on the league’s official data feed, and thus paying subscribers will be among the first to gain in the intelligence, separate from the teams submitting them to MLB headquarters.
The league, under the new policy, will instruct teams to submit the lineups in a “uniform fashion to reduce the risk of confidential information being ‘tipped,” Major League Baseball said in a statement.
As books scurry to attract new customers, some operators may use the partnerships with the pro leagues as a marketing tool when competing against peers without such access. Over the last year, MGM has signed non-exclusive sports betting partnerships with the NBA, MLB and NHL, in which MGM will obtain the leagues’ official data feeds. In January, Caesars Entertainment reached a multiyear sports gambling partnership with the NFL.
“It can be better, but most of the times it’s just a label,” a high-level industry source said. “There is kind of a stigma if you’re not using official data as a bookmaker.”
“The bookmaker has to take it or leave it: take official data and pay more or stay with unofficial data and suffer on the reputational side.”
A spokesperson from MGM Resorts International declined to comment on terms of the company’s current partnerships.
The controversy surrounding official data mandates
Weeks before his retirement from the U.S. Senate, former Utah Senator Orrin Hatch filed a 37-page proposal in December that outlined the federal government’s role in providing oversight of the legalized U.S. sports gambling market. The proposed legislation, co-authored by Democratic Senator Chuck Schumer of New York, could require sportsbooks to use professional sports league data for determining sports wagering outcomes through at least Dec. 31, 2022. Since then, a handful of states, most notably New York, have introduced legislation with mandates for books on official data — in accordance with the “Model Legislation” the NBA and MLB provided lawmakers last year. Kansas and Indiana are among a bevy of states this year to include such a requirement in pending legislation.
Over the last two years, pricing trends for sports betting data have remained relatively constant, Simbal said. He has also seen little movement in prices since the NBA’s deal with Sportradar and Genius Sports. But if the leagues are successful in lobbying a number of states to require sportsbooks to use official league data, the third-party providers will likely spot a tipping point in the market, Simbal emphasized. “That is probably when you would see the price increase,” he said.
Besides Sportradar and Genius Sports, Scientific Games’ Don Best Sports and the U.K.-based Perform Group are the other major players in the market, according to industry sources. When asked specifically on the company’s pricing model for its sports betting data, Sportradar declined to comment through a company spokesman.
Holt, who formerly served as vice president of business development at CG Technology, is urging states to avoid passing legislation mandating the use of official sports league betting data when the packages are distributed by a select few. Not only could it represent the worst-case scenario for the industry, it is irresponsible from a regulatory standpoint, he argues.
“If you want to mandate to league data, it just doesn’t seem fair to create any monopolies,” Holt said.
Coming Tuesday: Part II — Data distribution to illegal, offshore operators