Following the publication of the Sportradar Q2 results last week, CEO Carsten Koerl spoke with SBC Americas to discuss the company’s recent performance and the growing opportunities within the US market.
Discussing how much of a priority the US market is when compared to Europe, Koerl began: “So at the moment, the US accounts for approximately 15% of total revenue – that’s a yearly figure. It is still a small proportion, but it is rising to more than 60%. The CAGR from 2019 to now is around 59%, which is very strong! If we look at what is powering that growth, it is undoubtedly sports betting and the changing legislation round this. Those changing regulations have of course influenced the availability of sports betting across the US, which has then had an influence on media business and advertising which, in turn, has had an impact on teams and leagues.
“These different segments are all touching our business – so if we continue to see a positive impact from the roll out of sports betting, then that growth will continue. But what is even better for us than just new states coming online is the changing trends of what is consumed and the products that we provide. If I had created a company which solely distributes data, I’d have stopped that 15 years ago. I started out in informatics but I wanted to be creative. I want to do something with that data, and create something that is innovative. So what we do is we are growing our company with both products and services. Based on the data, we’re beginning to predict potential match outcomes.
“Sports betting is not like a casino game where you have strict mathematical rules which may rule in your favour. For example, on the roulette table, mathematically you will have a profit of around 1.7%. But if you take that mathematical expression, there is no chance to win against the casino that has a fixed margin. Lottery is even more extreme. In the lottery, you have a proportion that’s going to play out – that’s what you’re cashing in and it’s very simple to match. Sports betting is a different beast entirely. There are surprises that happen all of the time! I absolutely love sport, sport is my life. But managing the risk for a game, making a prediction and having the knowledge and understanding of the players – to me, that’s exciting.
“If you look now at our business, those three components of risk management, predictions and data insights all require a lot of skills. Whatever you process, live from a data perspective, from audio visual, from predictive models and risk trading requires much more effort and costs much more money to do this. That’s the segment of the business which, besides the growth of state by state, is the fastest growing segment for sports betting. We are seeing that sports fans want to bet during the match on potential outcomes. They’re looking at whether LeBron will score under/over 10 points, whether a certain team is going to win, they enjoy these kinds of markets. From our side, it takes much more time and effort to process these data points. This trend is only going to accelerate in the years to come – and more so now that more states are beginning to legalise sports betting. We have the capabilities to help our partners develop these services for their customers.
“What we’ve learnt is that you need to find a way to understand why your client is interested in risk management services for the NFL. We’re speaking about 256 matches here – it’s not so difficult to have five traders focusing solely on those matches. The NBA is a bit more difficult because you have more matches over the year. When you get into quick sports like table tennis, which can have more than 10,000 matches per month, it’s impossible to do this on an economic scale. But at Sportradar, we can offer a modular scale – we have that capacity. We can offer that service to our clients. That is something which is super exciting for us!
“This is a huge growth market, not just in the US but around the globe. So you can probably understand why I am so passionate about this. It’s more than just data – we’re really having to interpret the strengths of teams and players, and package those insights into products that will help our partners create a better offering for their customers. The future here is, I believe, going to be diving even deeper into player and team activities and using those insights to predict outcomes. The core technology to do this is computer vision. You’re using fast video feeds, which is not so easy with low latency. You’re extracting the data points from players and beginning to integrate this into the machine learning process. This will then flow down into the betting markets.
“But what does the future look like for sports betting? We can look at what’s happening with technologies like the metaverse and other visualisations like virtual reality – both of which are bringing the bettor closer to the sport. Actually, the United States will be the prime candidate for these developments because sports fans consume data in such a different way to the rest of the world. I think in the next two years we will see much more of a tailwind for legislation and with the development of live betting, this becomes even more exciting.”
Talk soon turned towards granular data, and the appetite for more in-depth insights from US bettors. Koerl pointed out that there is an “inherently deep understanding of statistics” across the US – this will likely drive more demand for individual player data.
He continued: “I think the skill here is considering that the US sports fan is very much driven on the data side of things. There is an inherently deep understanding of statistics. It’s the reason why the US is the only relevant fantasy market where you can combine the replays from different teams in your game; there is no other country where you do this. So that very deep passion for data consumption and understanding this on a player level will no doubt drive a demand for more granular data. Looking now into the hardware, where is that then developing? And where is it going? In my mind, over the last 10 years, there are now so many people looking at the big screen. More and more people are watching games via broadcasters. We are living in a digital age so the availability of screens to watch a game is much more prominent.
“The way in which we consume games is completely different. There have been times when I have been hanging out with my friends, we have had three or four games on different screens. It’s no longer the case that people are solely fixated on one individual match at any given time. The next step in this game consumption seems to be virtual reality.
“Virtual reality will somehow give you an avatar that has real parameters. You might be a part of a Formula One team and be able to drive the car. There are already a lot of car simulations on the market. But now, you can get real data from the racetrack based on speed and performance of the cars as well as the race car driver. We get that data from Formula One in real time, with a 20 millisecond delay, so we can accurately simulate you racing this car plus your reactions during a race. Players will then be able to bet on this.
“But I think this is where the market is heading. I’m deeply convinced that the United States is the market where this will be created – the companies are there already, as is the appetite from bettors. On a personal level, I want to fully understand the market and trends – there is much more to understand, especially when it comes to identifying new opportunities.”
Read the full interview on SBC Americas HERE
Carsten Koerl, the CEO and Founder of Sportradar, will keynote at SBC Summit Barcelona 2022 conference and trade show which takes place at Fira de Barcelona Montjuïc on 20 – 22 September. The keynote entitled “Insights from the CEO of Sportradar” is scheduled for Day Two on 22 September. Koerl will be interviewed by his fellow Sports Betting Hall of Fame member Simon Bold, a pioneer of telephone betting, virtual racing and the industry in Gibraltar.