GPWA Times Magaine - Issue 23 - February 2013

panies that offer guaranteed prizes buy insurance, and there are some great in- surance firms like PIMS-SCA that offer viable solutions for firms that cannot cover (or raise) their own underwriting funds to cover their guarantees. However, I decided that a better solution was to establish the underwriting funds directly from investors. Unlike most start- ups, the surprisingly easy part of getting Colossus Bets off the ground has been se- curing the investment to make it happen. I believe this is because the proposal offered a compelling mathematical case (together with a truly unique product) to them. According to your site, 70 percent of all bets made by punters will be allo- cated to prize pools, and 30 percent will be taken by “the house.” Standard sportsbooks generally have 10 percent “juice” and punters are much more likely to win bets when they don’t have to pick the exact score. Given that in- formation, why do you think players will bet at Colossus Bets? The Colos- sus Bets product offering is not designed to replace single bets on sports, which do operate with around the 10 percent (or less) “juice” you mention. Looking at like-for-like products, a 30 percent takeout is pretty typical for multi- leg pool bets globally, yet unlike Colossus Bets, other such pool bets provide limited or no guarantees about the size of the prize pool. We offer £20,000,000 of guarantees (after deductions) weekly. In comparison with fixed-odds multiples bets, our products have far greater appeal. If you consider a “correct score” soccer betting market offered by a typical sports- book, the effective takeout will be in ex- cess of 20-30 percent and of course this is for a bet with just one leg. Multiply even a conservative 20 percent by seven legs and the effective takeout is 80 percent (i.e., only 20 percent is returned to the player on average). Even worse, if your multiple should win, virtually every European sportsbook will cap your winnings at £1 million. Colos- sus’s minimum is 10 times the maximum payable by all other sportsbooks, and this is just our day-one minimum starting point for this bet. In other words, our pool can ONLY get bigger. The only other place where an eight-figure win is available for gamblers, certainly in the U.K., is the National Lottery, which operates with an effective takeout rate of 50 percent. In short, we think our 30 per- cent takeout rate from bets is fair to play- ers and is extremely competitive in rela- tion to lottery and sportsbook multiples, and that is before you take into account the amazing, user-friendly cash-in option. If your model succeeds, are you wor- ried that other bookies with more estab- lished brands will copy your business plan and offer large jackpots for picking several correct scores in soccer match- es? They say that imitation is the sincer- est form of flattery, so I very much hope that some of the established brands, who have not already joined us in a B2B capac- ity, witness the success of the Colossus and Colossus Bets and consider trying to repli- cate that success with an equivalent offer- ing. However, there are at least a couple of obvious hurdles for anyone attempting to follow our lead. First, the mathematics be- hind Colossus Bets is complex and precise and offering £20,000,000 in risk is intimi- dating or unviable for many firms; and sec- ond, Colossus Bets has a patent application pending on several elements of our offering that include the cash-in process. Besides offering the world’s biggest guarantees, our unique cash-in is perhaps the most compelling product feature we are offering. The gaming industry traditionally makes a lot of money on high-stakes gamblers. Your model, however, ap- pears to rely a great deal on volume. What does your market research tell you about the demand for this type of product? We believe that the lure of lot- tery-sized prizes will appeal both to small players and to high-staking players who will take multiple “perms” in an effort to increase their chances of capturing one of our big prizes. In other words we think Colossus Bets products will appeal to gam- blers from across the spectrum. We also think we can recruit sports fans who may be new to betting or who may be infrequent bettors, as well as lottery-only players. Currently the only avenue open to players who want to chase multi-million-pound prizes is to try to correctly choose ran- domly drawn balls from a lottery drum, or playing some other game of chance. We want to offer sports fans (and lottery-type players) the chance to win these kinds of truly life-changing sums, in a game which is interesting and engaging and in which they can seek to pitch their skills against other players. What is your marketing plan for Colos- sus Bets? And where do affiliates fit into that plan? Our marketing plan cov- ers several different channels, from social to traditional avenues that we will develop in conjunction with B2B and media part- ners. Word of mouth could prove quite viral, too. Separately, the affiliate marketing chan- nel is a particular focus for us. Because what we are offering has never before been available to players, we think it will work very well for affiliates and will com- plement what they’re already offering to players in terms of existing betting and gaming opportunities. We think we can grow the overall pie, rather than taking a slice of the existing pie. Similarly, we remove one of the peren- nial issues for affiliates – i.e., players quickly switching to other very similar offerings. Players will not be able to switch from the Colossus and our other products because there is no similar product available. Therefore, affiliates who send us one of their valuable clients will benefit greatly from the structure of our product and hence the continuous revenue streams that a unique product such as ours will generate. “Colossus Bets is providing players with something entirely new – the chance to win eight- figure payouts (£10,000,000) from day one . . . based on the world’s most popular sporting content – top-level European soccer leagues.” 61 Affiliate Manager Interview Series