Running up that hill: part 4

This is the fourth article of my series about the frank experiences, travails, and ups and downs of being a smaller, independent affiliate in the US sports betting and igaming affiliate market. For anyone not familiar with our industry, the vast majority of them would underestimate it quite how competitive it is.

So this will be the theme of article number four. How can a company like BestOdds forge its path to profitability and beyond when pitfalls and predators abound?! I will focus on notably increased competition, both from a revenue and fundraising perspective.

Bit too crowded

Anecdote time. I have a cousin called Beryn who brews Double Dragon, the national ale of Wales, from his Felinfoel brewery. As you can imagine from a man so deeply entrenched in the wine, beer and spirits industry, he keeps very much up to date with trends and competition. Some time ago I told Beryn that I had met the founder of Fever-Tree drinks who told me he’d embarked on producing tonic water because he felt the gin vertical a decade ago was overcrowded.

At that time in the early 2010s, there were five to eight celebrated major brands and that was it. Several years later in 2019, Beryn informed me there were 85 new independent gin brands launched in the industry magazine, Drinks Business! Now that is what I call competitive, if not hugely over-saturated! The fact that there were another 74 in 2020 is by the by; the point is, it suddenly seemed that every Tom, Dick and Harry was launching their own special gin brand in all manner of guises.

Well, you don’t have to be a rocket scientist to gather where this thought process is going!

Yes, back in May 2018 when PASPA came into being, there were a handful of primarily European super-slick and experienced affiliates that leapt out of the blocks to the forefront of the nascent industry. At that stage there really was just the forefront! The pack had not yet figured out what was going on, nor got their act together to participate.

Fast forward five years, and the US affiliate landscape is a very different kettle of fish to having just the old guard of Catena, Better Collective and XL Media dominating proceedings. Yes, this trio and the likes of Gambling.com Group sit atop the industry with their label of super affiliates, but below them now is a kaleidoscope of affiliates of different shapes and sizes, all plying their trade to steal market share from both the behemoths and their fellow challengers. Much like there was an explosion of boutique gin brands at the end of the 2010s, there now seems to be a plethora of affiliates appearing on the scene at the start of this decade.

Competing against everyone

Whereas one gin frankly tastes very similar to another, there is no such thing as a typical US affiliate. At BestOdds.com, we would categorise ourselves as a betting odds comparison, education, subscription and data business. That’s quite a mouthful but covers much of what we currently do. However, we occupy just one niche of the overall market. We find ourselves competing not just against the big European players and similar players to BestOdds, but also media companies, sports leagues, bloggers, vloggers, tipsters, personalities, newspapers, newsletters, etc. The list goes on! Yes, the sportsbooks are spending a vast amount of money to attract their US audiences, despite the tempering that we have seen in the past 12 months, but they must be rather appreciative of the appetite from such a wide range of businesses seeking to generate leads on their behalf!

At times it really does seem that everyone is now a competitor to BestOdds. With the US sports betting affiliate scene becoming this crowded, one doesn’t need a crystal ball to know that many will go to the wall. Meanwhile, the M&A bankers for this industry are some of the few to be kept busy in the current global climate. We have a fascinating few years ahead of us, and top of intrigue pile must surely be the move by Better Collective to pick up a small stake in Catena!

It’s not just competitive to send a FTD to a sportsbook, it’s also becoming increasingly tougher to raise the funds to scale such a startup US affiliate operation. In recent months, those tapping up existing shareholders or trying to onboard new ones have been hit by a double whammy: the global inflationary macro environment and the fact that investors are aware that it is now an increasingly crowded space. Some companies have managed to raise in the past 12 months, but those that did were likely to fulfil some specific fund criteria and at reduced valuations to what the founders would have been demanding 18-24 months ago.

Cash will be king for many in our industry this year and next. If your bank balance is running low, the fundraising journey will be a precarious one. That is why the M&A lawyers will be busy this year! Opportunities will keep on presenting themselves and foresighted founders will seek out new dance partners.

BestOdds made its first acquisition in 2023. I’m sure that many of our more direct competitors will being doing likewise in the months and years ahead. After all, we all want to leave the crowded dance floor and eat up at the top table!

“If you can’t beat ’em, join ’em!” will likely be a theme for the US sports betting and igaming affiliate industry this year…

Photo by Stephen Leonardi on Unsplash

You can read previous editions of Running up that hill here: Part 1, Part 2 and Part 3