Play the Qatar: gearing up for a winter World Cup amid a cost-of-living crisis

Logs on the fire, gifts on the tree and Harry Kane going round the keeper to score number three. Before 2022, this version of the classic Cliff Richard number one would look out of place, but this year we have the joy of the FIFA World Cup hitting our screens on 20 November and concluding just a week before Christmas on 18 December. When then-FIFA president Sepp Blatter opened that envelope way back in December 2010 and revealed that the tiny Gulf state would host the globe’s biggest footballing competition 12 years later, little did the Swiss truly know what can of worms he would be opening. FIFA’s shock decision generated a barrage of criticism, not least from human rights activists; it was reported last year that 6,500 migrant workers had died since Qatar won the bid, while homosexuality is illegal in the country. What’s more, this gas-rich state, which is home to just 2.9 million people, has practically no footballing heritage. And then, in 2015, FIFA announced the tournament would be shifted to the winter to avoid Qatar’s blistering summer heat, much to the displeasure of the European leagues forced to endure a six-week hiatus mid-season in 2022. Controversy has never been far away from Qatar being chosen to host the quadrennial World Cup. Interest in the World Cup is already growing as it draws nearer, with many operators noting that those who may not even be interested in football are getting involved in the action. Sophie Bichener, head of customer engagement at Curaçao-based low-margin bookmaker Pinnacle, says: “The World Cup is the biggest event on the calendar for most bookmakers out there, and that’s no different for Pinnacle. It’s unique in its truly global appeal, even to those who may not be traditional soccer-loving nations, and this brings benefits to international operators with strong customer bases of both expert and recreational customers on a number of continents.” This tournament may have been 12 years in the making for the people of Qatar, but for gambling operators and suppliers it has been little over a year between major men’s football tournaments following the rescheduled Euro 2020 in the summer of 2021 due to the pandemic. But with the tournament kicking off right in the middle of the regular club season, how will they all adapt to a tournament held in the winter in Europe? At Betfred, Charlie Walker, a football trader for the bookmaker, says: “We had to have most markets up before the football season started as we knew there was very little respite during the season. The recent international break was another opportunity for us to get some further submarkets up as there isn’t another quiet week between then and the World Cup kicking off.” The World Cup – which takes place entirely in Q4 – could make or break some publicly listed bookmakers’ full-year financial results. The last World Cup, held in Russia in 2018, generated an estimated betting turnover of €136bn, according to FIFA, including an estimated €7.2bn on the final alone between France and Croatia. However, this was all probably dwarfed by the sums bet illegally around the world, particularly in Asia.

When looking at which operators see the lion’s share of the action, Oddschecker data shows bet365 had the biggest click share through the affiliate at the last World Cup with 23.9%. This dominance continued into last year’s Euros as the operator’s click share hit 24.3%. This was almost as much as Sky Bet (9.8%), William Hill (8.5%) and Paddy Power (6.6%) combined. Certain operators let their odds do the talking. The Oddschecker data reveals Vbet had the lowest average overround on Euro 2020 1×2 markets at 103%. SBK’s average book was 101.4% but its pricing is derived from the Smarkets exchange. At the other end of the spectrum, recreational brand Paddy Power’s average overround was a standout 107%. Some argue price doesn’t really matter if targeting a low-staking casual userbase. Qatar, which will be the last tournament to have 32 teams in competition before the expanded 2026 tournament to 48 nations, will see 64 matches played (the 2018 World Cup averaged 2.64 goals per game) and two of the UK’s home nations, England and Wales, have qualified. Also, Canada have secured their place at a men’s World Cup for the first time since 1986. With an open online sports betting market now in Ontario, this could help to finally light the blue touch paper for ‘soccer’ in Canada. On the flip side, some major nations are missing, most notably Euro 2020 champions Italy, who won’t be at the World Cup for the second consecutive time, while the likes of Colombia, Egypt, Nigeria and Sweden also failed to qualify. “Unfortunately, Italy isn’t going to attend the World Cup, which is limiting the appeal of the World Cup for this market,” says Alessandro Fiumara, managing director of digital and betting Italy and CEO of GBO Italy at Lottomatica. “But as we do every time there are big tournaments like the World Cup or Euros, we will prepare some promotions for our online and omni-channel customers to keep the interest high.”

Mind the gap

As previously mentioned, this tournament punctuates the domestic club season, so there isn’t the usual six-week gap between leagues concluding and a summer tournament kicking off. Punters usually have time to decompress and, a few weeks later, begin to plan their tournament outright bets. This time around there is just one week between the Premier League (the last league to pause before the World Cup) and the opening game between hosts Qatar and Ecuador on 20 November in Al Khor, 35km north of the capital, Doha. This may leave punters scrambling to gear themselves up for the tournament as the focus shifts so quickly. Some also won’t have season-long winnings that they would normally recycle on the summer tournament. Furthermore, it could be the case that some players will already be well-entrenched in their chosen bookmaker and stick with them, or they haven’t bet on any domestic football and are hoping to be swung by a juicy welcome offer. There is now a wealth of marketing opportunities available to operators as well. Social media is still booming as ever, and with the advent of platforms such as TikTok there is a new segment of the population advertising could be geared towards. Traditional mediums such as TV are still pertinent, especially during matches when England are playing. For example, an audience of 26.3 million tuned into ITV’s broadcast of England’s semi-final against Croatia, giving operators a wide base to hit. However, bookies need to be careful as some England matches will be shown when children will be watching early in the day, so they’ll have to avoid the tag of aggressive advertising. Although betting advertising is permitted pre-watershed around live sports, it needs to be properly planned and executed. While user acquisition will manifest itself in the usual above-the-line marketing blitz, retaining customers will also be crucial. Anthony Cousins, group head of sportsbook operations for Kindred Group, says: “We will have the acquisition point in the build-up, but because of the shorter window, we’re not expecting that drop-off as we would normally with a summer tournament. “I think, from a sportsbook perspective, it is an easier retention sell compared to the normal windows we usually have. Normally, we get to the end of a long season when we have the Champions League final, and then everything shuts down for five to six weeks before the World Cup comes, but this time the windows are really short so we’re expecting the retention of customers will be a really big focus.” But what about attracting new customers to betting if they haven’t already signed up to a bookmaker for the domestic season? Well, Oliver Rowe, global sector head of leisure and entertainment at YouGov, sees the premise of the enticement offer as vital to bringing in new customers from the data gathered in recent big matches. “We have seen that through the data we have collected, a number of people are considering looking for a new provider for the tournament, so they are looking out for offers and are expecting them for the tournament,” he comments. “We saw this with the Champions League final in May; there was a £5 free bet offer with bet365, and several people used it. So, I am certain there will be a slew of these kinds of offers in time for the tournament kick-off.” He continues: “It will be a very narrow window to get people to make a decision, but regular gamblers will be looking for it. They will be keeping their eyes peeled for it and, in all likelihood, will want to follow that through. It’s not just free bets they will be looking for but better odds and maybe free-to-play competitions that run through the tournament.” The top-performing sign-up offer at the last World Cup, according to Oddschecker, came from Betfred with its promotion of £40 in free bets when customers bet £10. The best-performing offer around England was with Virgin Bet, which gave punters who staked £10 free bets worth £20 plus £5 to place on each England game. Unlike regular World Cups, where there will be a couple of other events occurring at the same time, there is almost a full sporting calendar happening alongside the World Cup, which will mean an almost constant stream of action for people to get stuck into, as Cousins explains: “We will still have a lot of domestic leagues running, the NBA, NHL and NFL all going on, so there is less drop-off. When you have that constant stream of sports material, it’s a bit more like a casino, where there’s always something to play.” Cousins is right in that during the opening couple of weeks of the competition, we will be treated to four group-stage matches a day, with the first two rounds of group fixtures after the opening weekend kicking off at 10am, 1pm, 4pm and 7pm UK time. Naturally, this could lead to betting fatigue, but Betfred’s Walker believes people will pick and choose their matches instead of just going for the all-out blitz. “Look, it’s a bonanza for football fans, but being realistic, every match early on won’t be an absolute must-see. We hope everyone enjoys what’s on offer and dips in and out to suit themselves.” With kick-offs at 10am in the UK, which is the middle of the night for US audiences, this kind of time zone challenge hasn’t been felt since the Japan/South Korea World Cup in 2002, yet operators feel this time difference won’t affect turnover and interest. Cousins comments: “It will be business as usual, as for us and many other operators, we’re not so dependent on one market because it’s always early or late somewhere in the world. People will adapt their betting behaviour depending on the time environment; we have seen it at other World Cups and in the last Rugby World Cup. I think we will see much more pre-match with people placing bets before bed.”

If you build it, they will come

The biggest innovation in sports betting in recent years has been the advent of the accumulator bet on the same match known as the bet builder. It was an evolution of Sky Bet’s wildly popular Request A Bet from a few years back. So, for example, for the Tottenham versus Arsenal match earlier this season, a punter could have created their own accumulator by selecting a 3-1 Arsenal win, Granit Xhaka to be shown a yellow card and Son Heung-min to score from outside the box. The combined odds of all outcomes occurring were 66/1. And these higher-margin bets – known as same game parlays in the US – tend to rise in popularity as the tournament progresses and the matches per day decreases, thus reducing multi-leg betting opportunities. Sportsbook supplier Kambi is pouring investment and resources into improving this element of its product. Bet builders accounted for up to 30% of Kambi’s clients’ total bets at the previous World Cup, while 40% of customers placed four or more bet builders throughout the competition. The firm’s clients also reported that 15% of pre-match bets on Euro 2020 were bet builders, while a quarter of these operators’ trading margin came from these bets in Q1 2022. Jonathon Hurst, head of soccer at the Stockholm-listed provider, only sees this element of sports betting increasing for the World Cup. “It’s the independence bookmakers give bettors which makes them so popular,” he says. “I think the feeling of empowerment for the end user to add or not add to the bet builder is another thing that drives its popularity.” Konstantinos Diorelis, director of trading at Kaizen Gaming, the parent company of Stoiximan and Betano, agrees with Hurst that this independence is key. He remarks: “Both cash-out and bet builders have proven to be one of the most revolutionary additions or features for both companies and punters in recent years. From the punters’ side, it seems to be really popular to the fact that everyone can combine many outcomes, ‘hunt’ bigger odds and bet on many popular markets simultaneously.” Due to the constant stream of action and hundreds of markets per match, which Cousins likens to that of a casino, what opportunities are there for operators to cross-sell igaming to consumers, and do that responsibly? Diorelis says: “Our approach always revolves around customer relevance; we feel it is important to target these customers with a higher propensity to engage with an additional product. So, these customers will be more susceptible to cross-selling. We have taken this approach in comparison to a spray-and-pray approach as we have seen the latter can have an adverse effect on customer satisfaction.” Cousins insists Kindred’s flagship, multi-vertical brand, Unibet, won’t be ramming casino games down football bettors’ throats, though. He comments: “We’re mainly attracting the recreational player at the moment. We are looking at multi-product players as well as the whole ecosystem, but we won’t actively push players into products which they don’t want to play, but we are finding that players are organically moving across without any push from us. This also flows into making sure people spend within their means, especially given the current financial constraints gripping most of the world.”

Tightening the purse strings

Financial constraints will be particularly pertinent for this World Cup. The change of season not only means people will more than likely be having viewing parties at home, but it also means that it will start just under six weeks away from Christmas and finish just a week before the festive period. We are also embroiled in a devastating cost-of-living crisis in the UK and Europe due to the after-effects of the pandemic and the ongoing war in Ukraine having an impact on commodity prices, which will lead people to have less disposable income than they normally would have done during the tournament. Inflation at the last recorded measure by the UK Office of National Statistics was 8.6% at the time of writing, which, when compared to what it was for August 2021, sat at 3%. So, inflation has almost tripled in the space of a year, while the UK’s energy price cap – the limit households can be charged per unit of gas or electricity – has almost doubled from £1,277 last winter to £2,500 this year. Thanks to the former Chancellor’s mini-budget at the end of September, we have even seen mortgage rates fly through the roof and the pound crash after the markets were spooked by £45bn of tax cuts. The UK is also teetering on the brink of recession. While gambling is said to be recession-proof, will it be true this time with disposable incomes squeezed by soaring bills and inflation with Christmas just around the corner? Diorelis envisions both increased spending and a reining in of expenditure due to the mitigating factors. He says: “Consumers tend to spend more around Christmas time, so I don’t think Christmas will be a barrier to turnover. On the other hand, the tournament is in the wintertime in Europe, and the macroeconomic conditions instil pressure on the household, with power and gas going up definitely playing a role. Overall, I expect that punters will have to pull back due to these circumstances.” Cousins predicts that Kindred will see record-breaking turnover for a major men’s tournament, yet there is always a chance some people get increasingly desperate to chase their losses as we get closer to Christmas and bills mount up. Cousins insists Kindred, which generated 3.3% of revenue from harmful gambling in Q2 2022 (the goal is 0% by 2023), will place a particular focus on responsible gambling checks. “This is the focus we have had with our responsible gambling affordability checks and making sure people have the funds to bet. “We have deposit and loss limits which we actively apply to customers to make sure they are not in a harmful situation. This goes hand in hand with our company strategy that we want to achieve zero revenue from harmful gambling.” Sports betting is a battle-worn vertical, having faced almost constant disruption to the sporting calendar due to Covid-19 and other mitigating factors, but this resilience has resulted in there always being a market to bet on. Cousins points to this resilience: “I think what we’ve seen with the betting industry over the last three years is that we’re very resilient, whether it’s Covid or the war in Ukraine and now the cost-of-living crisis, we are living in a time where there’s always going to be disruption and a new threat on the horizon. “There are things we can’t control but we’re always doing things in the right way to make sure we’re steadying the ship in the storm.” Bichener of Pinnacle reaffirms this kind of grit that the industry has when faced with economic instability. She says: “Gambling is a global pastime that will always be popular, no matter the economic climate. From the operator viewpoint, we just have to ensure that we keep our customers’ interests as a priority, giving them a safe betting environment in which they can bet responsibly within the context of their day-to-day lives.” When looking into the actual hard data on whether people will tighten their spending, Rowe from YouGov has already seen people changing their gambling habits but says there are some caveats to reducing gambling spend. “If you ask people, they will say ‘Yes, I’m going to cut back on gambling’, and we have seen that in some of the data we have collected so far. People have said they will cut back regardless of the World Cup. “However, with offers out there and if England do well, it could spark activity, but if they go out, and likewise with Wales, that will have a big impact, as well as the wider recessionary situation and the energy cap coming in.” As we enter the final furlong in the lead-up to one of the biggest sporting spectacles on the planet, we could see several scenarios for stakeholders. As the economic situation worsens across Europe, and especially in the UK, we could see World Cup parties lit up by candlelight and people hugging not just in celebration but to keep warm. On the flip side, we will have possibly the biggest revenue-generator for bookmakers since the last World Cup. It is extremely difficult to predict what kind of world will greet the winners of the 22nd FIFA World Cup, but what we can say is let’s make sure we make the most of this festival of football and, hopefully, we will see Harry Kane bring some joy this Christmas.