Data centres: odds-on favourite for online gambling

Written by Sacha Kavanagh, Freelance Analyst Published 2020-06-10 10:12:31

Gambling in the UK goes back centuries. The Unlawful Games Act 1541 made virtually all gambling illegal – although it was never enforced and didn’t stop Queen Elizabeth I from introducing England’s first national public lottery (to raise money to repair harbours) in the 1560s.

Horse racing and football are the nation’s favourite sports for betting. The former has enjoyed popularity for centuries, while football betting is a more recent phenomenon. The first Football Pools began in the 1920s and, by the time the National Lottery launched in 1994, was attracting 10 million players a week. Turnover is negligible compared to other forms of gambling and player numbers have dropped off significantly, but it still has a loyal fan base.

Just as the Football Pools are now played online rather than putting umpteen tiny crosses on a form for the Pools Man to collect in person, other forms of gambling have also shifted from in-person to remote (defined by the Gambling Act 2005 to include internet, phone and any other technology used to communicate the bet). The date of the legislation is a good indicator of when remote gambling started to become mainstream, even though it wasn’t until 2015 that the Gambling Commission began publishing data on the market, when strong growth was driven by the availability of now commonplace smartphones.

Casino gambling accounts for three quarters of all remote betting and has been growing fast. Between April 2015-March 2016 (the first full year for which the Gambling Commission has released data) and April 2018-March 2019, remote casino turnover in Great Britain is estimated to have grown 44% to hit £89.7 billion. Over the same period, remote betting turnover rose 21% to £27.6 billion. Football (£11 billion) and horses (£9.6 billion) account for the majority and have been growing at a similar pace.

Gambling companies were prepared for the growth in remote betting: they had already developed online operations and put in place the infrastructure to support them. But while casino play may have peak traffic times that can be easy to predict, it is unlikely to have the same spikes as sports betting. The operators will have been used to surges in betting around major sporting events, but must now have the ability to scale to cope with online betting around those events and a rise in in-play gambling demanding near real-time odds and bets.

With nearly all major sporting events postponed or cancelled in the current climate, gambling companies are naturally pushing casino betting given that it already accounts for a large proportion of their business, while sporting organisers are turning to alternatives. Virtual sports are not new, nor is betting on them, but they have been thrust into the limelight given the dearth of live events.

The Grand National is the world’s most famous steeplechase and the UK’s biggest betting horse race of the year. The decision to cancel was a blow to the industry and fans alike – as well as a horse called Tiger Roll (well, his owners and jockey at least!). The favourite was tipped to go for a third consecutive win and, if he’d succeeded, he’d have overtaken Red Rum in the history books to become the only horse to achieve that landmark in the event’s 181 year history.

ITV had already been set to run the race virtually the day before, as it had done for the previous three years. The virtual events haven’t come up with the exact outcomes – which would have been remarkable given the unpredictability of the race – but they have been pretty accurate.

The 40 horses (or at least those that last the course) jump Aintree’s 30 fences, running against a backdrop of the racetrack which was filmed in detail using drones and special cameras. Horses are handcrafted digitally, and the simulation uses algorithms to weigh factors like age, weight, form, weather and ground to predict the likely finishers and their positions. The race is then animated using ultra-HD CGI technology.

ITV chose to broadcast the virtual event at the same time the real race would have been run, and gambling companies collaborated to come up with a betting format. All profits were donated to NHS Charities Together.

Some 4.8 million people tuned in to watch, less than half the number who had been expected to watch the real thing. But it still generated significant interest. As a comparison, only 737,000 people had watched the virtual race in 2019, while at one point the 2020 virtual race was trending second worldwide on Twitter.

Tiger Roll came in a disappointing fourth but we’ll never know how the race would have played out on the track. AI can model known factors, but can it take into account luck or jockey determination?

It’s unlikely that the Grand National will be the only event to be held virtually this year. The company behind the Virtual Grand National, Imagined Entertainment, had a deal with Uefa 16, which could lead to some form of virtual competition given that the Euro 2020 championships have been postponed for a year. And the ATP (Association of Tennis Professionals) Tour is suspended until early June at least, but a virtual ATP Masters 1000 product has launched as the world’s first officially branded virtual tennis product.

Up to now, virtual events have been used to provide more betting content for punters during quiet periods in the sporting calendar or – as in the case of the Virtual Grand National – in the run-up to major events. With AI and a treasure trove of historical data to tap into, virtual betting products have become increasingly sophisticated at a time when gambling operators are looking for alternative revenue streams to offset new regulations designed to curb problem gambling. Virtual events will never replace the real thing, but their popularity is likely to build even when live events are held again.

Data centres are fundamental to the online gambling industry, ensuring odds are calculated, bets are placed and events are streamed without a hitch. They will have a greater role to play as the sporting world adapts to the current environment and looks ahead to the future. Data analytics, modelling and AI, not to mention the animation required to make virtual events as realistic as possible, all need significant computing power. And that power resides in data centres.