Stream big: DAZN BET's bold vision to disrupt online sports betting

“It’s genuinely a unique opportunity – there aren’t that many around at the moment,” acknowledges Mark Kemp on a Teams call from London. Speaking to EGR Intel a few weeks after getting his feet under the table as CEO of DAZN BET, the 46-year-old industry veteran is understandably bullish about what lies ahead for this challenger sportsbook and the chance to disrupt the status quo in a sector becoming ever-more commoditised. “The industry is full of very ‘me-too’-type brands and products and, while they might have some innovation at the edges, there isn’t really a paradigm shift in the way that sports betting is moving forwards,” he remarks. Instigating a paradigm shift is a bold statement, yet DAZN (pronounced ‘Da Zone’) isn’t short of ambition as an aspiring over-the-top (OTT) subscription streaming service striving to be the “Netflix of sport”. Launched in 2016, the London-founded company is owned by Ukrainian-born tycoon Sir Len Blavatnik. Sitting fourth on the 2022 edition of the Sunday Times Rich List with an estimated personal fortune of £20bn, the father of four and philanthropist accrued much of his wealth through Russian aluminium and oil in the 1980s before the collapse of the Soviet Union. Blavatnik is said to have ploughed $5bn into the lossmaking DAZN business, which has specialised in airing combat sports and has become the “global home of boxing”. As well as the rights to screen British boxer Anthony Joshua’s bouts, DAZN has snagged rights for domestic football on the continent, including Germany’s Bundesliga, Spain’s LaLiga and Italy’s Serie A. More than 27,000 live sports events were streamed in 2021 to users in more than 200 countries and territories.

Make the team

Ever since Shay Segev was headhunted from Entain 18 months ago and later installed as co-CEO alongside acting CEO and co-founder James Rushton, we have been waiting for DAZN to reveal its hand from a sports betting perspective. Poaching highly respected Segev, who was made sole CEO of DAZN Group six months ago as part of a restructure, was quite the coup. What’s more, the Israeli had only been in the hotseat at Entain for six months after succeeding CEO Kenny Alexander when the FTSE 100 operator had to announce in January 2021 that he was heading for the exit. With the deep pockets of DAZN’s billionaire owner bankrolling the operation, rumours circulated that Segev had been offered the earth to jump ship. DAZN’s ambitions to expand into betting were all but confirmed when Ian Turnbull was recruited from Amazon Web Services (AWS) in September 2021 and made EVP of betting and gaming in a newly created role. However, his title has since morphed into EVP of new revenues. This somewhat nebulous job description becomes clearer now that the vision is to transform DAZN into a single digital destination for sports fans. In other words, a one-stop shop for sports content (live, on-demand and documentaries), betting and gaming, free-to-play games, fantasy sports and e-commerce. DAZN has also thrown its hat into the digital collectibles ring with the rollout of a boxing-related non-fungible token (NFT) marketplace at daznboxing.io. “At DAZN, we’re about creating a destination for sports fans – betting is a crucial part of that, but not the only part,” says Turnbull, who was head of B2B at Entain between 2009 and 2019 and was heavily involved in establishing the corporate structure at DAZN BET. “I look after the non-broadcast, non-advertising revenue streams and working out the right mix of products to delight our customers,” he says. DAZN BET, which will use the DAZN brand under licence, is headquartered in Gibraltar, where eventually more than 100 staff encompassing compliance, marketing and customer services will be based. There will also be offices in Malta, the autonomous Spanish city of Ceuta on the north coast of Africa, and potentially near to where DAZN Group already has set up shop in various countries. Kemp describes it as a “very scalable model”. Notable hires include Shane McLaughlin, former director of digital business development and MD of Betdaq at Entain, who has been installed as MD for the UK and Ontario, as well as Simon Gatenby, recruited as CMO, again from Entain. Matt Hartington left Flutter in June to hook up with DAZN BET as director of legal, while Kevin Alvarez, formerly of Ladbrokes, was made head of IT operations in June. Besides this, key staff have been poached from the likes of 888, Casumo and William Hill. Kemp himself arrived at DAZN BET after spells as CEO of BoyleSports and MD of UK Tote Group. Prior to these roles, he worked his way up to MD at Ladbrokes Coral and is credited with overseeing the introduction of the omni-channel Connect Card at Coral when he was the brand’s gaming director. Convincing industry people to buy into the DAZN BET vision hasn’t been a hard sell, says Kemp. “There’s been a lot of consolidation in the industry, and this consolidation and synergies have not necessarily driven innovation. Businesses have been cost-focused and therefore the people within those businesses are looking for something different now; they are looking for innovation.” He continues: “You definitely need a can-do attitude around a startup business, and one that wants to scale very quickly. There are obstacles and things that don’t quite work but you need to be resilient. It’s also more exciting than anything else you will experience. I say to my team, ‘When you are in the position we are in at the moment, there is only one way, and that’s forwards – and it’s forwards quickly’.”

Live and direct

DAZN BET may well have the agility of a startup but it won’t send shockwaves through the industry with a transformative product from the get-go. Kemp and Turnbull are tempering expectations and instead underlining how the offering will undergo a gradual progression rather than a ‘Big Bang’ moment. The plan is to soft launch with a minimal viable product (MVP) and iterate from there, with DAZN building the front-end. In April, DAZN announced a multi-year deal had been struck with Pragmatic Play to supply DAZN BET with a platform and a player account management (PAM) solution, as well as slots, live casino and virtual sports. Pragmatic Play being gaming-focused with a recently launched sports betting solution means that the supplier probably wouldn’t have been among most people’s favourites to land the gig. However, DAZN management spent more than three months speaking to a host of sports betting providers before settling on Pragmatic Play. “They have some great technology assets that they can bring to the table, a great management team and, crucially, a very entrepreneurial and agile way of working,” says Turnbull. DAZN originally weighed up the options of purchasing an operator with its own tech, or a B2B supplier. The other potential route was to create it in-house. A self-build was soon ruled out, though. “We discarded that pretty quickly,” Turnbull stresses. “There are lots of examples in the industry of people who tried to build things from scratch [but] it takes much longer than you think, and you often have a painful first few years where you are optimising it. As for other options, we looked at pretty much everything, including M&A. We had conversations with large and small operators, B2B [suppliers], but I think we ended up with the right size of partner and the right assets. We are very pleased where we ended up [but] in the future we may look at acquisitions to accelerate growth.” Longer term, the vision is to fuse live sport with betting opportunities – all without annoying the hell out of those subscribers who just want to enjoy the action, of course. It is why making sure audiences have to opt in into betting or odds overlaid on the action is vital. Yet the obvious problem with gambling through your main TV in the house – besides the fiddly and laboured rigmarole of inputting selections and stakes with a remote control – is that betting is a solitary, even secretive, pastime. People don’t want their spouse or kids witnessing that in-play punt on the next goal scorer. Put bluntly, it ruins the experience for others and is why gambling on smart TVs or platforms like Apple TV has never taken off. This didn’t stop Paddy Power from debuting a sports betting app for Samsung smart TVs in 2012, or Betsson-owned Betsafe launching a gambling app for Apple’s TV streaming device four years later. One of the pioneers was Sky Bet with the ability in the early 2000s to have a flutter through your Sky box using the Sky TV remote control. The novelty soon wore off, though. Where DAZN BET could disrupt the market is with more of a second-screen proposition. Picture a scenario where DAZN BET on your smartphone knows you – a DAZN subscriber – are watching a boxing match streamed on the lounge TV and the app seamlessly opens and presents live odds on both fighters between rounds. US streaming service FuboTV has attempted something similar after acquiring sportsbook startup Vigtory in 2021, although the firm recently put Fubo Sportsbook, which is live just in Iowa and Arizona, under strategic review after achieving just a sliver of market share in both states. “I think it will be a second-screen experience,” Turnbull says regarding DAZN BET’s future. “You’ll probably execute [bets] with your mobile phone while watching on TV.” For those watching DAZN on a handheld device, in-play prices could pop up on the stream in a similar fashion to the Watch&Bet live odds overlay Unibet released for its livestreaming player last year. The next step could be so-called ‘micro-betting’ markets (in-game prop wagers that resolve quickly) which some US operators and suppliers are hailing as a massive growth opportunity. Indeed, Joey Levy, co-founder of B2B micro-betting firm Simplebet, recently unveiled a consumer-facing micro-betting product Betr in conjunction with social media personality Jake Paul following a $50m (£41.4m) Series A funding round. So, as Robert Lewandowski is lining up to take a penalty for Barcelona, DAZN BET could offer odds on him scoring or, more interestingly, display odds on which part of the goal the shot is aimed at. All priced up using AI and historical data from his previous spot kicks. Of course, the start-stop nature of American football and the leisurely pace of baseball makes these sports much more conducive to micro-betting than football but popular European sports like cricket and golf seem quite suited. “The in-play, micro-betting market is going to be a super-exciting area for us to look at,” says Turnbull. “There will be different types of audiences that want to place wagers in different ways, but I think that’s going to be one of the exciting areas where you have the opportunity to do a true watching and betting-integrated experience.” Keeping latency – the lag between live and when the action is shown on a subscriber’s device – will be crucial, much in the same way bookmaker streams are a few seconds behind. Otherwise in-play betting on all these quick-fire markets becomes almost impossible. DAZN’s website references a delay of 10 to 15 seconds regarding streams but it hopes to reduce this as tech develops. “It’s work that is underway,” Turnbull states with a smile while being careful not to reveal how this will be achieved. The pair are also cognizant of having robust RG systems in place, particularly as in-play micro-betting is potentially more harmful than pre-match wagering. Serving up a steady array of in-running betting opportunities, such as the outcomes of every pitch in a baseball game, has already raised concerns in the US. “It’s a priority in terms of setting up the business from scratch,” Kemp emphasises. “We are investing in all of the tools to support responsible gambling.” Spearheading this effort is the firm’s head of safer gambling, Gemma Burge, previously head of UK safer gambling policy, strategy and risk at William Hill.

Smart casual

Keeping players safe will be helped by the fact DAZN BET is targeting a recreational player base. Whereas most of the publicly listed bookmakers in the UK have pivoted towards this cohort and shelved generous VIP programmes to foster sustainability, DAZN BET will be very much chasing these customers from the outset. Sharps probably need not apply. “The sweet spot for DAZN is that mass-market, casual end,” Turnbull confirms. Kemp adds: “We are seeking to create an entertainment experience and for DAZN BET to be part of that. Therefore, it is likely to be more of a recreational customer.” And when traditional UK bookmakers are paying hundreds of pounds to acquire a player, the ability to tap into the DAZN subscriber base will suppress user acquisition costs. Being an OTT service means DAZN’s audience tends to skew younger, too, and are more likely to be into gaming and other online entertainment. This is where free-to-play products, including competitive predictor games with leader boards and fantasy sports, will help to engage this audience. DAZN BET also isn’t ruling out building social products either, despite there being enough startups that have crashed and burned attempting to crack social betting down the years to fill a graveyard. “A lot of the traditional bookmakers have built their businesses on a significant percentage of their revenue coming from high-value players,” says Turnbull. “We’re actually starting from fresh and have an opportunity with a more casual betting product. A casual betting product lends itself much more towards that social betting format. I don’t think it is a slam dunk, but it is an area that may grow over time – if you are watching with friends there may be a way of casual betting at the same time.” DAZN BET will first roll out in a handful of markets, although bosses are tight-lipped as to where other than the beta launch on 22 August in the UK. Launches in Ontario, Spain and “other European markets” are planned for “later in the year”, the company said. Each market entry will typically involve a soft launch lasting four to six weeks. “We are very ambitious in terms of the number of markets that we want to go into as quickly as we can – this is a very scalable opportunity,” Kemp states. The aim is to test and learn from these launches before ramping up the product innovation roadmap in 2023. Until then, the work goes on behind the scenes. Turnbull says: “There’s a heavy lift of getting it to the start line, so getting the product built, getting the team built, getting the licences – there’s a huge amount of work that goes into that – then there’s the phases of iteration afterwards where we build the product out.”

Go compare

What DAZN as a sports broadcaster is trying to accomplish with DAZN BET has been compared to how Sky Bet with its links to satellite sports giant Sky became a formidable force in UK betting and the leading brand among recreational punters. Kemp and Turnbull disagree with this comparison, however. “Sky Bet is obviously a big business and they’ve built a great business,” Turnbull says. “I think the key differentiator for us is that we have a digital platform. There are other things we can do from an integration and technology perspective that they can’t do because they’re a linear channel. We have a different opportunity to build something which doesn’t exist elsewhere. What that model shows is there is a significant crossover between sports broadcasting and betting, but if we get it right, we can take that product differentiation into a whole new area.” To drive greater awareness of the DAZN brand – and paying subscribers – DAZN will be seeking to grab more of the sports broadcasting pie amid an increasingly fragmented space with the entrance of the likes of Apple and Amazon. DAZN almost pulled off a £600m takeover of BT Sport, which broadcasts the UEFA Champions League and the Premier League, but the deal collapsed earlier this year and BT Sport subsequently inked a joint venture with Eurosport parent company Discovery. Reports recently suggested that DAZN is now looking to acquire sports streaming company Eleven Sports founded by Leeds United owner Andrea Radrizzani. The battle to screen elite sport doesn’t come cheap; DAZN lost $3.7bn between 2019 and 2021, partly due to the sporting calendar being ravaged by the pandemic, but it hopes to turn a profit in the next 12 to 18 months, Segev told the FT recently. How all this live sport is integrated with DAZN BET will largely rest on nailing the UI and overall UX. Especially so on a smartphone with restricted screen real estate. Personalisation – an area the industry has struggled to properly execute in a way leading e-commerce sites have – will also be important to prevent users being turned off by irrelevant suggested in-play bets. As for the long-term aims, Eilers & Krejcik Gaming senior consultant Alun Bowden penned a blog post recently on DAZN BET where he said “something a bit bigger, braver and bolder” is what we all want at this stage in the industry’s lifecycle. “I’m just not sure that is what we are going to get,” he conceded. Kemp admits DAZN BET will initially look like a “me-too product” but stresses the challenger operator is on a journey. “We will very quickly follow a path that we believe will make us more innovative, disruptive and bigger and bolder than anybody has previously done because we’ve got the ability to do that. Nobody else has the assets and the capabilities of the two businesses we have.” He also comments: “When you bring two verticals together in the way we’re doing, it takes you to another place and unlocks opportunities. We don’t even fully understand how far we can go with some of those opportunities and what they will be as technology evolves. But what we do know is there is a crossover of sports content-watching on an OTT platform and betting can offer a much greater integrated experience than it has ever been able to do before.” Turnbull chimes in: “It’s really got the potential to be a game changer, the combination of broadcast sports and betting […] it became clear to me from my discussions with Shay just how big the ambition was to create this unique destination for sports fans. Those opportunities don’t come along that often, so I leapt at the chance.” If DAZN BET does manage to disrupt the sector with a ground-breaking and innovative product, and it’s a big ‘if’, a few more execs could also be leaping at the chance to join the business. Only time will tell.