The 101-1 promotion that almost sent Betr bankrupt

Sascha: [00:00:02] From Equity Mates media. This is The Dive. I'm your host, Sascha Kelly. Australians are the biggest gamblers in the world. Lots of us love to punt, whether it's at the casino or the horse races or just betting on a game. As a result, we hold the mantle for the highest per capita losses of. On trade. Between 2008 and 2019, Australia lost approximately $25 billion on gambling. So it's not a surprise when a new betting platform Corp. bettor drew the attention of hundreds of thousands of Australians. Boasting an astonishing promotional offer of 100 to 1 odds on major sporting events. But Perez's marketing tactic and the subsequent mass uptake of the platform almost backfired. Had a different horse won the Melbourne Cup last Tuesday at his great debut. Might have seen it scratched. It's Friday, the 4th of November. And tonight I want to know is it better to last the race and what's the business rationale behind such extreme odds? To talk about this today, I'm joined by my colleague here at Equity Mates. It's Darcy Codell. Darcy, welcome to The Dive. 

Darcy: [00:01:13] Thanks so great to be here. 

Sascha: [00:01:14] Did you win at Melbourne Cup? 

Darcy: [00:01:16] I did not win the Melbourne Cup but I do have a few bets riding with better. So I'm qualified to talk about this. 

Sascha: [00:01:23] Commiserations, but also good luck chokers for the future. I am just going to say as a warning in case you haven't got it from the intro, we are going to talk about gambling today if this is something that you think you'd need support with. We have put links in the show notes below, but remember you can always seek help at gamblinghelponline.org.au or by calling one 800 858858. So Darcy. Melbourne Cup was this week? It was a couple of days ago. It's the horse race that stops the nation. The Lexus game and go go trip when it hit a rail, starting from jazz for the ages. Estimates are that about three quarters of $1,000,000,000 are gambled by Australians over the four day Melbourne Cup carnival. But how much of that figure is actually paid out to winning punters by the betting agencies? I want to imagine it's not a lot. 

Darcy: [00:02:14] Yeah, this might be a shock to some, but it's just 1%. 

Sascha: [00:02:17] No. I thought it would be like 10%, 20%, but one 1%. 

Darcy: [00:02:23] Sascha So around $8 million is returned to punters in the form of winning bets out of that $750 million of bets placed and some analysis by Finder last year found that on average Australians bet $88 on the Melbourne Cup per person. Obviously that average is skewed by the huge bets that some played. 

Sascha: [00:02:42] So your chances of winning that $88 back are pretty low? 

Darcy: [00:02:47] Yeah, that's an understatement. But it doesn't stop people from gambling and myself included. 

Sascha: [00:02:52] Unfortunately, I've got to say, I put a cheeky punt on on Tuesday as well. I normally don't gamble at all, but I couldn't resist. 

Darcy: [00:03:00] Yeah. So clearly, Sascha, the real winners here are the bookies. 

Sascha: [00:03:03] Absolutely. 

Darcy: [00:03:04] We said close to three quarters of $1,000,000,000 is bet across the four day Melbourne Cup carnival. But on the actual Melbourne Cup race, which is race seven at Flemington, more than $200 million is bet. 

Audio Clip: [00:03:16] Gates up back and there racing their off in the cup and not. 

Sascha: [00:03:20] Just on the one race. 

Darcy: [00:03:21] Just on the one race and compare that to about the $8 million that's total prise money paid out for the top three horses. So you can say the real prise on Melbourne Cup day actually goes to the bookies, not the owners and the jockeys. Yeah. 

Sascha: [00:03:33] And while movements like NUP to the cop gained traction, the amount of money gambled on the Melbourne Cup is actually rising. It's not going backwards. So let's take a step back and have a look at gambling as a whole. Why are Australians the biggest gamblers in the world? Why do we spend so much money and support those statistics? I open the episode with. 

Darcy: [00:03:55] The main reason it's pokies or slot machines. Unfortunately, they've become so embedded in Australian culture, they're in pubs, entertainment venues, a lot of places that you go out to socialise rather than just in casinos, which we do see in a lot of other jurisdictions around the world. But it's not just the prominence of pokies and casinos that make gambling popular in Australia, it's also a sport. And sport is a massive part of Australian culture. Level high.

Sascha: [00:04:21] Would Sydney get there first? Yeah, we're a sporting nation.

Darcy: [00:04:25] We are. And there's not a lot of regulation around sports betting sites compared to other countries. So the combination of those factors means Australians lose the most on gambling per capita in the world. It's about 1300 dollars per person a year. 

Sascha: [00:04:39] That's a huge number. When you say the $88 figure earlier, that was kind of where I was heading, but 1300 is a lot, so that's the average in Australia. But let's provide some global context. Which other countries are big gamblers? 

Darcy: [00:04:52] In the spirit of this episode, Sascha, let's make a bet, if you can guess one of the other top five highest gambling nations per capita. Oh, by lunch. 

Sascha: [00:05:01] Hour guy, I doubt I'm going to win, but I do love the idea of free lunch. So I want to say bring it on. Are you going to give me a clue? 

Darcy: [00:05:10] No. 

Sascha: [00:05:10] But I will say Italy is very close. 

Darcy: [00:05:14] Their sixth, sixth on the list. 

Sascha: [00:05:17] Spain? 

Darcy: [00:05:17] No, Spain is down to ten. 

Sascha: [00:05:20] What about. 

Darcy: [00:05:21] One more. 

Sascha: [00:05:21] Guess? Brazil. 

Darcy: [00:05:23] No, not in the top ten. [

Sascha: [00:05:24] I'm sorry. I just went with Football Nation. There was no ulterior motive with my guess. 

Darcy: [00:05:29] It was solid guessing, so I'll round out the top five. Singapore is the second highest losing country of course. 

Sascha: [00:05:35] Okay. 

Darcy: [00:05:35] They're close to 1200 dollars per person. Then it drops off a fair way. So Ireland's in third at $588, Canada in fourth, about 570, and then Finland in fifth at $550 per capita a year. 

Sascha: [00:05:50] So while Australia and Singapore are so close, we're almost double the third highest on that list. 

Darcy: [00:05:56] Yeah, that's right. So two massive standouts and it just really shows the prominence of gambling in Australia. 

Sascha: [00:06:02] So I think we've more than proved our point that Australia is a massive gambling nation. That's the fast pace of important context for this story. The second is that the industry is incredibly consolidated. 

Darcy: [00:06:13] That's right. There's only a few big players in the Australian sports betting and racing scene. There are four big gambling companies. They're Sportsbet, Tab Bet365 and Ladbrokes. And combined they take up the vast majority of the market share in online gambling in Australia. So here's a stat. These big four companies, they take up 94% of all online traffic to gambling sites during the Melbourne Cup.

Sascha: [00:06:38] Wow, that's massive. Okay, so Darcy, Australia is a nation of gamblers and most Australians are only betting with a few of those big players and into this large, powerful and consolidated industry steps a new player and that's better. So let's take it. Take a break and then we want to focus on this new company better and the bet that they made. That almost cleaned them out less than one month after launch. We'll be right back. 

Sascha: [00:07:22] Welcome back to the Dive. I'm your host, Sascha Kelley. I'm joined today by Darcy Cordell. If you're loving the dive, then please give us a five star review and thank you for your support. As a result, we've actually been nominated as the best business podcast at the Australian Podcast Awards in 2022. So a huge thank you for getting us there. We couldn't have done it if you weren't listening. So today we're talking about gambling and the launch of Betr. If you're an Australian, you've probably been hit by advertising or word of mouth about this new platform. It's certainly been a hot topic of discussion here in our office. Darcy, let's start at the beginning. Who is behind this new app?

Audio Clip: [00:08:01] Sports fans get ready for something better. Because the betting brand you've been waiting for kicks off soon. 

Darcy: [00:08:07] There's a consortium behind Betr, and it includes some big betting industry executives, one of which is Matthew Tripp. And he's the former owner of Sportsbet, which is Australia's largest betting site and he's now the CEO of Betr. 

Sascha: [00:08:20] But there must be some money involved as well, like some deep pockets to kind of come out with this. Who else is there? 

Darcy: [00:08:26] Yes, Rupert Murdoch's news. 

Sascha: [00:08:28] Okay.

Darcy: [00:08:29] So News Corp has a 33% stake in the business and it's where they're looking to expand. Then there's also Betmakers, which is a wagering technology group which is behind a lot of other Australian gambling sites, and it's also listed on the ASX. 

Sascha: [00:08:43] I've definitely seen that name through Equity Mates before. 

Darcy: [00:08:46] Yeah. And then rounding it out is Tech Corp, which is a US based digital gaming, consulting and investment firm. So that's where the money's coming from, along with the News Corp to line up with a lot of experience in betting and also a vast reach in online and in broadcasting. 

Sascha: [00:09:01] I know it's a cheap joke, but if you were going to place a bet on a team that was going to enter this space and come out winners, they've put together a pretty good brains trust there and the money to back it up. And Murdoch's News Corp in particular is really interesting. For years they've enjoyed the advertising revenue from Australia's big bookmakers. So it feels like with this move they moved from partner to competitor. 

Darcy: [00:09:25] Yeah. So News Corp wants to go from advertising gambling to taking some of the profits from it. They own the broadcast rights to a majority of the sports in Australia and they own a lot of the print, TV and radio media. So they're in a prime position to have their betting agency front of mind for the average Australian sport viewer. 

Sascha: [00:09:42] And when you hear those stats, like hundreds of millions of dollars being put on these four day events, like there's only so much advertising you need for this, the race that stops the nation. We literally have a public holiday for it in Melbourne.

Darcy: [00:09:53] It's everywhere. So reports are that Lachlan Murdoch, he's particularly interested in sports betting. Maybe he wants to follow in the footsteps of fellow billionaire James Packer, who bet his family's fortune on casino gambling. The Murdochs first got a taste of running a sports book rather than just advertising one with sky betting and gaming in the UK. But they sold out of that in 2017 and then in the US they're also doing something similar with Fox Bet. So we shouldn't really be surprised that they're now looking at doing this in Australia. 

Sascha: [00:10:24] And we've said this before, but it's literally only a month ago that Betr launched in Australia.

Darcy: [00:10:28] That's right. On the 10th of October, Betr launched. And with such a consolidated gaming industry, they needed a massive promotion to make a splash and cut through to customers. 

Sascha: [00:10:38] And this is where it gets interesting today, doesn't it? 

Darcy: [00:10:41] 101 to $1 odds for some of the biggest sporting events like song anticipation when they host punters in with a mass marketing campaign that offered these incredible odds on the Melbourne Cup, FIFA World Cup, Aussie Rules Premiership, NBA Championship and the NRL premiership. So put simply, they allowed people to bet a maximum of ten points on who they thought would win this tournament. So all races and if you pick the winner, right, you get $1,010 back. 

Sascha: [00:11:10] Okay. So can you put that in context for the non gamblers or the non mathematicians amongst us? Because it sounds attractive, but what does that mean in practise? 

Darcy: [00:11:20] Okay. So if you went on to Sportsbet right now, you could say that the Boston Celtics are the favourite to win the NBA championship at $6. So if you put $10 on that bet and they ended up winning, you'd win $60 back. 

Sascha: [00:11:33] All right. So 100 to 1 means how much are my pocketing? 

Darcy: [00:11:36] It means if you put that $10 on the Boston Celtics with BET, you're winning $1,010 rather than. 

Audio Clip: [00:11:43] Signature with that crossover Garland, another three. Welcome back.

Sascha: [00:11:48] I mean, that makes me excited right now so I can understand why punters fell for it. 

Darcy: [00:11:53] It got me. And I've actually outlaid about $60 in total on each of these bets, $10 each. And if a couple of them win, Sascha, I could have thousands of dollars in my account from 60. 

Sascha: [00:12:03] Okay, so you've got me hooked right now selling that to me. But did it work nationwide? Did it get a lot of Australians excited? 

Darcy: [00:12:10] We're yet to receive official. From Betr. But the CEO, Matthew Tripp, said this week that over 300,000 people have signed up to the platform in the first month. For some context, though, Sportsbet, the biggest sports betting site in Australia, has 1.25 million total customers. But Sportsbet has been around since the nineties, so 300,000, it's almost a quarter of the customers in one month of the biggest player in Australia. Basically this promotion was so effective that the New South Wales Government has announced an investigation into better to see whether they broke inducement laws. 

Sascha: [00:12:44] You can totally understand why they're doing that. So from a marketing angle it worked. I hope that person's asking for a pay rise, but it works so well that the company started to get worried. Which brings us to the major horse races of the last couple of weeks. 

Darcy: [00:12:59] Yes. Along with their 100 to 1 promotions, better also offered $21 to one odds on all horses in the Cox Plate, which is another major Australian horse race. That race was held on the 22nd of October, so within two weeks of better launching and the favourite for the race, Animaux was valued at about $2 to one to win on other sites. So if you put $10 on that with Sportsbet, you would win $20 back. But better. If you put the $10 on and it won, you win $210 and animo one Sascha there racing. 

Audio Clip: [00:13:33] Animal y only. 

Sascha: [00:13:34] Family. Okay. How did that go? 

Darcy: [00:13:37] So as you can imagine, a massive amount of punters bet on Animo to win and better lose as much as $12 million on that single race. 

Sascha: [00:13:46] Wow. I mean, it's kind of ironic that a gambling company, the ones that usually come out on top, clocking up these huge losses just to get customers. 

Darcy: [00:13:55] Yeah. Reports surfaced that this was about four or five times higher than Bettor had budgeted for, so it really got out of control. 

Sascha: [00:14:03] Okay. And that was the Cox Plate. And that's small numbers compared to the race. That's, you know, the highlight, the jewel in the crown of the racing season, which is the Melbourne Cup. 

Darcy: [00:14:11] Yes. So Bettor had their $101 two won promotion for the Melbourne Cup and Deauville Legend was the heavy pre-race favourite furlongs. 

Audio Clip: [00:14:20] Deauville Leger is out after it on the outside. His secret state. 

Sascha: [00:14:24] You know, that's always a favourite. There's always one that's like standing that all the newspapers are talking about, all the commentators are talking about. 

Darcy: [00:14:30] It's odds on. Now the books were about 3.5 to 1. So if you bet $10 with another bookie, you'd receive $35 back. But $10 with better, you win 1010 again. So as you can imagine, tens of thousands of customers signed up and bet on the favourite Deauville legend. Better may have been liable for up to $60 million if Deauville Legend won the Melbourne Cup. 

Sascha: [00:14:52] And apparently it got so bad that Bettor was frantically calling around to other bookmakers and trying to hedge their exposure to Deauville Legend. [

Darcy: [00:15:00] They were calling other bookmakers and basically placing bets on Deauville Legend to win, which would have sort of covered their losses. They would have had to pay out this potential $60 million, but they also would have won from their bets placed on Deauville Legend, and that would have helped them pay the punters. 

Sascha: [00:15:16] And it does feel like a little bit of a domino like it could quickly cycle into chasing your losses. Got it. Yeah. 

Darcy: [00:15:23] Yes, it could. They even offered customers a cash out option from the bet before the race in exchange for a $150 bonus bet, effectively a voucher. And that would cancel the customer's bet on Deauville Legend. 

Sascha: [00:15:36] But luckily for better, Deauville Legend didn't win an outsider gold. Gold Trip did. And while better still had to pay out this massive check for $1,010 to a lot of people who'd picked Gold Trip as the winner, it was far less than the people who picked the favourite, and it also seems like they were overwhelmed by the number of people who joined the platform. But the big question remains Darcy has bet as tactic work. Is this model sustainable? Remember, we've still got like what, four or five bets that are on these 100 to 1 odds still to play off? 

Darcy: [00:16:11] We do. But 300,000 customers in a month, that adds a lot of value. And they've also been pulling back on these promotional offers. So new customers that sign up now they actually can't access stays 101 to $1 odds. The aim for better is to turn those 300,000 plus sign ups into repeat customers and hope that they stay on the platform long term. I guess I'll give a personal anecdote here. The only bets I'd place with BET on the promotional offers and at this stage, I probably don't plan on making any other bets with them, but honestly, it's going to take some time to know the true success of BET is big promotional BET. The big question is how many are still punting with better in 2023 or 2024 on a random Wednesday afternoon? 

Sascha: [00:16:55] Yeah. Well, a quick reminder, if this has brought up any issues for you, then do go and visit gambling helpline a year to reach out for help. But Darcy, I suspect from those statistics that you've outlined, people still will be betting with BET. In the coming years. Part of me is hoping for a bit of schadenfreude that they get that it's a bit more of a difficult journey for them in the months ahead. Look, if you've enjoyed this episode, then please tell a friend about it. It really is just the best way for our podcast to grow, and so we really need your help. If you've just joined us for the first time, then welcome. Go and check out our full back catalogue. We've got lots of episodes there that you can explore. Remember, you can always follow us on Instagram. We're at the Dive Dot Business News. You can contact us by email, the diver Equity Mates dot com and you can subscribe wherever you're listening right now. See, you never miss an episode. I'm going to say one more huge thanks for your support in helping us get to the Australian Podcast Awards. We're really excited. I'm personally just starting that out. The Small but Mighty Team has managed to get on this massive shortlist amongst some really big players. So thank you from the bottom of my heart. Thank you so much for joining me today. Darcy. 

Darcy: [00:18:07] Thanks, Sascha. 

Sascha: [00:18:08] Until next time.