After a period of rapid growth in Europe, virtual sports are emerging as a viable product in Asia, with operators drawn to the regulatory flexibility, low-cost turnkey integration and high margins.
Just a decade ago, it was not uncommon to hear virtual sports denigrated as “computer horse racing,” and the vertical was seen as little more than a novelty distraction to be placed in the corners of land-based estates.
But today’s virtuals - which let players bet on the outcome of pre-determined, virtual visualizations of sporting encounters - are now graphically impressive adaptations of the real thing, created with advanced motion-capture technology which make the leading products tough to distinguish from reality.
They also negate many of the downsides of traditional sports betting, including much of the risk, the high cost of dedicated trading teams and the slow turnaround of bets as punters wait two hours or more on a result.
Its growth in recent years has been astounding. AGB understands that virtual sports now account for 10-15 percent of total revenues for most major European sportsbooks. Market leader Inspired said its virtuals products are used in more than 50,000 venues and 300 web and mobile sites across 35 countries, generating a yearly handle in excess of $10 billion.
“Virtual Sports Betting has become a hugely popular product everywhere in the world,” Daniel Grabher, CEO of virtual sports provider Global Bet, told AGB. “It provides new betting opportunities at a high frequency, without having to wait for a real sport event to take place,” he added.
In many Asian markets where sports betting is limited by regulation, virtual sports also have the agility to jump through regulatory hoops and offer players an alternative. Depending on the jurisdiction, virtual sports can qualify as a VLT, RNG, lottery or fixed-odds product.
“The game logic of all the virtual products can be customized to adapt to local regulations as virtual sports have the flexibility to be adaptable in multiple game logics,” said Zoe Mavrofora, head of product marketing at Vermantia. “So in the cases where sports betting is restricted they could be customized and submitted as numerical games (eg. lotto). Of course everything is always upon each jurisdiction’s regulation.”
This regulatory flexibility has seen virtuals grow quickly across Asia, even if some restrictions still remain. As early as 2011, the Ladbrokes and AGTech joint-venture AGT struck a deal with the China Sports Lottery which saw its Lucky Racing fixed-odds virtual sports betting game rolled out in more than 1,000 points of service in Hunan province. Major European online operators are beginning to view virtual sports as a first step towards a sports betting presence in Asia.
A number of offshore, Asia-facing online operators also offer virtual sports, although AGB understands these tend to make up a smaller proportion of revenues than their European equivalents.
Mavrofora highlighted South Korea and the Philippines as markets aside from China with the potential for rapid growth in virtual sports, although did note that some jurisdictions remain reluctant; the Hong Kong Jockey Club does not currently offer a virtuals product.
Betradar’s managing director Neale Deeley agreed Asia was an important region for growth, and that virtual sports are already making a material contribution.
“We currently have over 30 Asian brands using Betradar virtuals across the region with many more in the process of integrating. Take up with the players has been very strong with football and basketball proving to be far and away the most popular sports,” he told AGB.
“Betting on virtuals gives a punter a very similar experience that they get when betting on a real sport. This is appealing to punters in markets where there are no restrictions on sports betting. Where there are restrictions, it only increases the appeal as alternative ways of betting are not available,” he added.
Keeping it real
To fully exploit these opportunities, virtual sports offer the added bonus of being easily customized to local markets.
Mavrofora said Vermantia has been detecting opportunities in Asian markets for three years, and has invested in localized content aimed at China in the form of four games which target Chinese players’ habits and preferences: virtual versions of table tennis, badminton, cycling and archery. The firm is now in the process of the commercialization of this bespoke content in the region.
As well as targeting specific sports to regions, the next generation of products now come equipped with local language commentary, adaptive user interfaces and preferred bet types.
Within Asia there is also an opportunity to target millennials who have grown up playing console games and now consider esports a spectator activity. It is a far cry from the suspicion with which the very first virtual sports products were viewed a decade ago.
“We see Asia as the biggest market for virtual sports in the upcoming years, with a huge margin of growth. We have an ever increasing interest from Asian operators, and for that, we opened a new office in Hong Kong that will serve as hub for all the region,” said Grabher at Global Bet.
“As a reference, in mature markets like Italy we have double digit growth rates for virtual sports betting; we can forecast a solid continuous growth for the Asian markets for the next 8-10 years at least,” he added.
With further advances in the fields of virtual in-play betting, even greater localization, and the prospect of more opportunities as Asian jurisdictions open to fuller regulation, the promise of virtual sports is fast turning into a reality.
Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.
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