The Sync: Alexei Miller & Russell Karp Discuss What People Are Betting on When Sports Are in Near Standstill

The pandemic hit the sports betting sector hard, leaving almost all stadiums empty for months. Russell Karp, VP of Media & Entertainment Practice at DataArt, discusses alternative options for betting, such as Virtual Sports and eSports, and forecast after-pandemic trends in sports tech.
5/06/20
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By Alexei Miller
Finance Practice
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By Russell Karp
Vice President, Media & Entertainment
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The Sync: Alexei Miller & Russell Karp Discuss What People Are Betting on When Sports Are in Near Standstill

Alexei Miller: We're on with Russell Karp, Vice President with DataArt Media and Entertainment practice, who is focused on the betting and entertainment sector and sports in particular, and I know Russell in the last few years that sector has gone through a tremendous change and our work at DataArt with clients from that sector has gotten bigger. But now the pandemic changed everything. So first of all, thank you for sharing your insights with us. The first question is obvious: there are no sports, what are sports betting people betting on when there are no sports?

Russel Karp: That's an excellent point, and it's been pretty slim pickings these days. We have seen an uptick in some secondary and tertiary betting markets such as eSports, Orson greyhound racing, even some soccer matches in remote parts of Europe and Asia. One that's been pretty interesting is Ukrainian table tennis. So when things were initially shut down, betters found one very active league which was Ukrainian table tennis, and to this day, there are multiple daily matches, and there is a pretty high demand from the better side for Ukrainian table tennis.

A.M.: So was someone betting on it before the crisis, or they all discovered that this is something you could bet on now?

R.K.: The bets were available. They weren't the most desirable, because I'm sure 99,9% of the public do not know any of the players or anything about them. But again, as soon as betting options dwindled down, they started looking at this area and doing research of these players and their records, and it evolved into a pretty active area.

A.M.: Virtual sports or eSports, which is very hard for me to fathom, what's that all about?

R.K.: So that's an excellent question, it comes up often. So those are two completely different things. eSports are specifically video games that are played between teams, and they have tournaments, individual competitions, and you can bet on that. So these are people playing games like Fortnite, and it's been semi-popular, but it has gained popularity in the sports betting market recently.

Virtual sports is a very interesting area, it's only legal in New Jersey in the United States, but it's very popular in other parts of the world, specifically Asia. Virtual sports is a collection of historical data that an algorithm is applied to, which produces game results. So, for example, you can take the last 25 years in basketball in the NBA, put it through an AI/ML application and it will spit out results based on how the league is formed today because the style of play has changed in the last 25 years, so all that is taken into account when the results are produced.

A.M.: So it's basically a simulation of what could be happening today with historical participants and the modern rules of the game, and you can bet on the outcome of that simulation?

R.K.: Exactly. You can watch it too. So there are a couple of different variations of virtual sports where you can just bet on something, and then the result is displayed immediately, or you can sit through and watch the results as they occur, which allows for even more betting because it can then introduce live betting or in-play betting during virtual sports events.

A.M.: I am a big fan of one particular sport, which is tennis, in real life at least. And tennis has been hit hard like every other sport. There are no live events, no physical events of any kind, however, tennis I think, has tried to move into the virtual space and right now as we speak a pretty big virtual tournament is going on, and you can watch it, you can comment on it, and you can bet on it. I find it fascinating. And so because we're a technology services company and our role in all of this is helping these companies to develop these tools and these technologies, I guess it's a safe bet that life hasn't stopped, that people are still developing stuff, still doing stuff. Fair?

R.K.: Yes, they're looking for creative ways to engage fans and to continue to engage fans. I'm a very big tennis fan myself, and when Wimbledon was canceled a few weeks ago, I think that's when this whole pandemic really hit me. But similar to what you described with tennis players playing these virtual matches using their avatars and their computer-simulated strengths and weaknesses, the same thing is happening for Formula One and NASCAR racing as well, and it's gathering a fair amount of fan engagement on social media platforms like Twitch. They're seeing big gains during this time; folks will want to stay engaged with the sports, so they follow.

A.M.: I'm sure you're in touch with many of the contexts in the sports tech and betting sectors. Speculating the recovery, the timeline, and what shape it will take, what are people saying, specifically in this sector, what does recovery look like, and when is it likely to happen?

R.K.: Things are pretty bleak currently. There are some companies that are almost 95% down on the revenue. The good news is that when things start picking back up, which hopefully will be within the next several months around the late June-July timeframe, there will be a lot of demand, and there will be a lot of active sports at that time. So if you take the sports and in the U.S., for example, we have three major sports that are sidelined: baseball, basketball, and hockey.

They're all going to start playing pretty much at the same time, and especially in basketball and hockey, the games will be extremely meaningful, and baseball, they rumor to redesign how teams are aligned by divisions which will bring a fresh aspect to this sport which will draw even more interest. So when things start moving along a lot of lost revenue will be recouped, not all of it, of course, because we spend a few months here with pretty much nothing.

But some of these companies that I have spoken to who just focused on sports betting, they're starting to look into overall IGaming so they're thinking about how do we get into online casino games such as roulette, blackjack, slots because that can be an additional source of revenue. So they don't want to pigeonhole themselves into just sports betting in case something like this might happen again. Other iGaming options like your typical floor games can be played online, and that will not stop during a pandemic; it might even increase.

A.M.: Thanks very much for sharing your insights. I really appreciated it. Russell Karp, Vice President with DataArt Media & Entertainment Practice. Thanks again!

R.K.: Pleasure, thank you!

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