High margins are not the solution to esports profitability

High margin odds in betting
Published on
March 14, 2024
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The lure of high margin odds is apparent when the goal is to reach profitability as a betting operator. A partner should be able to deliver a margin of a minimum 4% and up to 10% across its portfolio if other factors are taken into consideration that make the betting products appealing. The myth is that high margin odds automatically lead to higher profits, however this is simply not always the case. There are nuances involved in risk management, customer satisfaction, and overall revenue generation. To really see the bottom line skyrocket, bookmakers must strike a balance between profitability and fan engagement, so neither one is disrupted.

Find the balance to risk management

A central conversation around the success of a bookmaker is its profit margins and of course the vigorish (vig) that will lead to this. Margins or vig is the built in commission or ‘the cut’ a bookmaker receives on each bet. However, the pursuit of driving higher margin odds doesn’t take into consideration the risk management strategies required to protect a sportsbook's earnings. This includes setting betting limits for individual bettors and suspending markets when necessary. Ignoring such risks could expose a company to significant financial losses. 

The combination of high margins for higher profits, and strict risk management to protect those profits may look appealing. Long-term, however, it will alienate the customer base and reduce future betting activity. Finding the right odds solution will ensure a high quality betting experience, and will be vital for growing and retaining a loyal audience.

With a single integration and unified data format, Bayes Live Odds deliver a variety of odds feeds with optimal margins and uptime. Avoid using early market suspension as a risk mitigation tactic and instead focus on sustainable long-term growth that a balanced strategy can deliver.

Consider your target audience

There isn't a one-size fits all strategy for all sportsbooks. The personality and nuances of each customer base will affect the markets, game titles, and margins offered. High margin odds are not universally appealing and do not cater to the expectations and behaviors of all audience segments. What might appeal to casual bettors, who may not closely compare odds from multiple sportsbooks, could fail with professional bettors who seek the best possible value. 

The same goes for selecting what game titles and markets a betting operator offers on their portfolio. Regional differences play a key role. Game titles like Mobile Legends, Call of Duty, and Crossfire may not be perceived as financially lucrative as the big 3, but in specific regions they may be more commercially successful. A blanket strategy may leave unused potential.

Successful sportsbooks tailor their offerings to meet the needs of their diverse customer base. Knowing the type of bettor they should target for each title will distinguish how they balance their odds margins. Tools like Bayes Live Odds cover an expansive range of tournaments, titles, and markets, giving an unprecedented amount of options to build your esports product. The marketplace allows betting operators to mix and match what provider they pull their odds from. If you are not happy with the odds being delivered for one tournament or market, change your selection with a single click, without any further integration work needed. No matter your audience, budget, or strategy, Bayes Live Odds allows you to create the perfect product.

Focus on building high quality products

If you were the only sportsbook on the market, there would be more freedom to the margins that could be set. Instead of focusing on maximizing your vig, figure out how your odds can be the most attractive in the esports space. Broaden your strategy to encompass competitive pricing, exemplary customer service, and compelling betting experiences. Do not neglect the complexity of the betting market or behavior of the consumers.

High quality products will keep your audience coming back time and time again. So while your profits may be on a more gradual incline, you may avoid the instability high margin odds brings with it. Sportsbooks should prioritize building high quality, reliable solutions  based on fair practices and transparency, generating trust and loyalty amongst their audience. 

When working with Bayes Esports, betting operators can add on tools designed specifically to boost engagement and build visually exciting products. Not only will the Live Odds provide optimal margins, they come bundled with widgets offering a comprehensive match overview, high quality and low delay video streams, historical stats, and more.

Esports has brought huge profits to many betting operators but others have struggled to turn a profit in recent years as we saw most prominently with companies like Betway or Luckbox. An essential factor distinguishing the success of the betting operators is the data upon which their products are built. Companies utilizing unofficial data from the gray market cannot rival the user experience provided by products built on official live data. With official live data at the core of Bayes Esports’ products and services, we enabled over 1 billion EUR in annual betting turnover for our clients in 2023. 

The big picture

The belief in "highest margin odds" as a direct route to betting profitability simplifies the complexity of the industry and the nuances within esports. Instead shift your focus to the bigger picture which prioritizes long-term growth and customer satisfaction. By attracting and retaining a diverse customer base, effectively managing risks, and offering attractive odds, you will be able to cement your position within the industry and boost the overall integrity of the esports ecosystem - ultimately leading to a more profitable future.

Martin Dachselt
Martin Dachselt

Martin has over 20 years of top level management experience in tech startups. He served as CTO of Dojo Madness, Smartfrog and Delivery Hero, and as VP Operations for Click&Buy. At Bayes Esports, he is looking to professionalize the industry and create a sustainable future for everyone involved in esports.


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