Thomas Holland, the product director at Genius Sports, has outlined how new forms of automation and machine learning are transforming the sports betting industry. The main goal of risk management for traders is to maximize long-term profitability. However, with the advent of 24/7 sportsbook content and commonly outsourced pricing, operators and their suppliers often rely on risk management solely to limit losses through setting limits and player profiling.
Pricing and liabilities are now being managed separately, which leaves operators with limited control and agility to dynamically adjust pricing based on customer betting activity. According to the average European sportsbook, trading hundreds of fixtures on a weekday and even more on a Saturday, manually reviewing activity on each fixture, market, and selection to optimize pricing would be highly expensive and unrealistic in terms of resources for most businesses.
Traders still aim to maximize profitability, but the question arises: how can they better align liabilities, pricing, and customer management to increase profits? The answer lies in new forms of automation and machine learning.
The new technologies enable not just liability-driven odds changes, but also predictive, liability-driven decisions that are correlated across all related market types and outcomes. Automation allows for dynamic margin adjustments on each bet selection at scale, maximizing profits across the entire content and market offering. This eliminates the need for traders to reject bets and limit customers, ultimately leaving significant profits untapped.
By removing the gap between third-party odds providers, liabilities, and customer management, automation delivers a more profitable sportsbook. The automated risk management tools rolled out by Genius Sports consistently increased gross profit margins upwards of 10% for small-to-medium sized operators. Proactive, correlated liability-driven risk management also benefits brand experience, retention, turnover, and differentiation.
These automated tools also enable the more effective utilization of customer data, offering unique insights into customer betting activity and how to maximize revenues through odds adjustments. Furthermore, they reduce manual workload, avoid human error, save costs, and free up resources for higher skilled functions.
Overall, the rise of 24/7 sportsbook content has been a huge step forward for the industry. Thanks to automation, risk management is now ready to step forward and keep pace, driving greater consistency, stability, and predictability than ever before. The result is bigger profits on good days and lower losses on the not-so-good ones.