Brainstorms Issue #1

Businesses in The Betting Niche

November 02, 2020

Brainstorms Issue #1

What's this newsletter all about?

My name is Keevin and business ideas are my jam. Each week, I scour the web (and use a few secret tactics) to find unmet needs and the business opportunities behind them. Here's what you can expect:

  • ​One well-researched, hand-selected business idea each week - I'm all about quality over quantity. 

  • All of the data I find synthesized so you have context for why I believe it's worth building.

  • A short game plan for how to turn the idea into a company quickly and efficiently.

Pretty straight forward, right? Last thing - as your host, it's my job to make sure your time spent here is valuable. So please, let me know if you have any questions or suggestions! 

Alright, let's dig into it!​

Tracking betting lines is a pain

“I love sports betting but it’s hard to keep track of the betting odds on all the different betting apps. I’ve created a spreadsheet and do it manually, but I still need to search through all the sites to get the information. I’d definitely pay for something that did this automatically.”

- Anonymous sports better 

Market Background/Opportunity Size

Changes in sports betting law have created amazing entrepreneurial opportunities! It's like the gold rush here given how young this market is and how quickly things are changing in the US.

On May 14, 2018, the United States supreme court ruled the federal law prohibiting states from authorizing sports betting, protection act PASPA, unconstitutional. It is now up to individual states to decide if they want to authorize and regulate sports betting in their state. 18 states have fully legalized sports betting with 4 more passing bills just this year to legalize it (they aren’t operational yet).

Even though less than half of the US has legalized sports betting, the market cap was sitting pretty at $104.41 billion and expected to reach $155.49 billion by 2024 (this is an estimate, it was tough to nail down). This market is much larger if you include other global players like the UK, Australia, etc… who have already legalized sports betting. It’s clear that trends for this industry are going in the right direction and there’s still a strong opportunity for the first-mover advantage to take place.

Major Players

  • Draft Kings

    • Founded in 2012

    • 700 employees

    • Publicly traded

  • Fan Duel

    • Founded in 2009

    • 1,000 employees

    • 412.6m raised 

  • Bet 365

    • Founded in 2000

    • 4,500 employees

    • Bootstrapped

Note: There are over 100 sports betting services on the market

The Opportunity

As mentioned above, there is a huge problem with keeping track of all the different betting lines that exist - resulting in many people (unsuccessfully) using a spreadsheet. Here’s an article that explains why tracking betting lines is important.

The TL;DR is this, placing your bet on a site that has the most favorable odds results in you getting the highest return on that investment. Most people are doing one of these two things:

  • ​Nothing. Rather than checking to see where they can get the best returns, they are just using their core betting app and taking the odds they are given. Depending on the bet size, that leaves hundreds of dollars on the table.​

  • Manually tracking the odds each betting site is offering and compiling the odds in a spreadsheet. This results in a lot of time spent switching between sites and transposing numbers - yuck. 

Current Solutions

  • ​Manually tracking betting lines in a spreadsheet or on paper

  • Smart Lines

    • Founded in 2018

    • 2-10 employees

    • Price: Free

    • Notes: They don’t aggregate betting lines from any of the major bookmakers.

  • Action Network

    • Founded in 2017

    • 53 employees

    • Price: Free

    • Notes: At their core, Action Network is a sports analysis and media company. One of their features is line tracking across all the major bookmakers but it’s relatively hidden and poorly advertised.​

How to Execute

  • Define Your Early Adopter: Your TAM is anyone who participates in sports betting, but I’d focus your efforts on finding people who acutely experience this pain. People who are spending a lot of time and money on sports betting have the most to lose. More specifically, hunt for people who’ve already created solutions to this problem themselves - like those using homegrown spreadsheets.

  • Look for CDIs: When looking for channels to find potential users I ask myself “where do my potential customers hang out?”. In this case, I’d look at online communities like Sports Book and Sports Betting subreddits. By simply asking the question, “How do you track betting lines?” you’ll be able to start conversations with potential users about unmet needs.

  • Create an Online Ad: I’d next test an offer to see if you can acquire potential users to sign up for your service. This can be as simple as creating a landing page (using marketing language from the conversations above) and run a paid ad to your target audience to collect emails.

  • Build a Wizard of Oz Test: Now that you have a list from running the ad above, I’d see if you can monetize it. Contact people and charge a small fee to run a small wizard of oz test - you could manually pull lines based on the bets they're watching and send it to them in a daily email. Or, there’s likely a no-code tool you could use to scrape the data from existing sites and organize it for them.

Note: I can see a freemium model working for this as well, so you may not need to monetize immediately. One great option would be to charge the bookmakers a fee for every bet you send to their platform.

Challenges

  • Is there a problem worth solving? Although this idea logically makes sense, there are flags raised because no company has solved the problem yet. Typically, you can validate some form of demand based on market signals or other competitors, but this seems like a blue ocean (both a good and bad thing). Follow the plan above and you should be able to tell quickly if you’re on the right track.

  • Can you build it? The technology to create a product as this exists. That said, it may be difficult to pull data from the major bookmaker’s sites. The fact that Smart Lines doesn’t work with any of the major bookmakers left me scratching my head and wondering why.

  • Legal Challenges? Sports betting is highly regulated like most industries that are birthed from law changes. Even being associated with this space is likely going to create some challenges. I'm not an expert in this space, so it's hard to say exactly what legal challenges may arise, but getting accessing other bookmaker's data and facilitating the betting process are two great places to start your investigation.

Additional Opportunities

There appears to be no shortage of companies trying to become the next big bookmakers. But, there’s plenty of opportunities this burgeoning market has opened up beyond just being a bookie. With this market in its infancy, you can bet (pun 100% intended) that there’s going to be a lot of room to expand your offerings. Whether it be sports betting tips, predictions, tools or even becoming a bookie yourself, there’s money to be made here.

While doing research on this, I found many people are struggling with keeping track of their bets and recording their results. This could be an easy addition to a solution to tracking betting lines. Here’s what some people said- https://imgur.com/a/aPTXuBd

Thanks for reading - now get out there and build it.

Catch ya next week, 

Keevin ✌