Trader's View: What's the best way to manage liabilities on betbuilders and SGPs?

At this summer’s UEFA Euro 2024 and Copa America, betbuilders and same-game parlays are set to be crucial for sportsbooks. In the latest edition of Trader’s View, Thomas Holland, Product Director at Genius Sports outlines how automation will help traders increase margins by using liabilities to optimise pricing on each leg.?

Over the past 12 months, same-game parlay and betbuilder betting has reinforced its importance as one of the largest revenue drivers for sportsbooks. FanDuel stated that over 90% of active users have placed a SGP bet, while Flutter partly attributed a 6% uptick in Q3 sports betting revenues in the UK & Ireland last year to increased betbuilder usage.?

With major international football tournaments like UEFA Euro 2024 and Copa America dominating this summer’s sporting calendar, betbuilders are set to be vital again.?

But this huge opportunity comes with its own challenge. Managing liabilities by making price adjustments on complex betbuilder outcomes is extremely tricky.?How do you forecast and manage risk across same-game-multi betslips, each with different legs and prices, across a full set of daily football fixtures??

Increase betbuilder margins?

Since the emergence of betbuilder products around five years ago, trading teams have utilised raw probabilities for individual betting markets, without factoring in multi-leg liabilities. While betbuilders are highly profitable and high margin in nature, this approach leaves even greater returns on the table.?

Without visibility over exactly how much each selection will win or cost your sportsbook across betbuilders, exposure can be hidden in individual legs, leaving traders unable to optimise pricing based on betting activity to balance risk and increase profits. Instead, traders revert to a combination of stake limits and accepting almost all betbuilders on the basis that the high margins baked into their pricing will outweigh the payouts.?

However, thanks to new automated technology, this is finally changing. For the first time ever,? automated liability-driven pricing can automatically streamline exposure by adjusting betbuilder pricing based on real-time bet and liability data, including how liabilities correlate across related betting markets (for example, Match Result, Double Chance and Correct Score).?

Solutions like our new Edge technology are a welcomed innovation because they dynamically optimise pricing on each outcome and fixture to reduce exposure and drive extra margins on every fixture and betting market across your sportsbook. This approach helps operators to maximise long-term profitability rather than rely on limiting. I like to refer to it as correlated liability-driven pricing.??

Now imagine the revenue impact across an entire major tournament like UEFA Euro 2024.

When I first entered the industry over a decade ago, traders used liabilities and customer betting activity to move pricing. But the volume of 24/7 betting content and market-types required today has resulted in operators outsourcing pricing, while keeping liability management and customer management in-house.?

This disconnect has led traders to turn to setting limits and profiling customers to limit risk, instead of using liabilities to grow profits. But Edge puts the power back into their hands.?

Automation is the answer?

Recently, I spoke to a number of Trading Directors who say they are unaware of their SGP liabilities until all bets are settled.??

As an example, player markets involving Harry Kane will attract major turnover for operators in Europe and Africa at UEFA Euro 2024. The same goes for Lionel Messi at this summer’s Copa America.?

With smart automation, operators can automatically and efficiently optimise pricing on individual legs based on betting activity and how liabilities relate across market-types. By ingesting real-time bet and liability data, new forms of automation are a real gamechanger.?

Beginning by mapping total liabilities on Kane’s selections in First Goalscorer, Anytime Goalscorer and Match Result & Anytime Goalscorer markets, as singles and in betbuilders, our Edge solution then applies overround changes unique to your sportsbook to set the optimal price to drive extra margin growth on every leg and betslip. This approach reduces volatility on high turnover tournament fixtures.??

Take the 2022 FIFA World Cup Final. Across 120 minutes there were six goals, eight cards, Kylian Mbappe scored a hat-trick – including two penalties, Messi scored twice - including a penalty, with Argentina eventually coming out on top after a penalty shootout. The game had everything, and with zero visibility of their liabilities, many operators would have to pay out thousands if not millions on multi-leg betbuilders. By using Edge, sportsbooks would be insulated from these significant losses by adjusting pricing in a correlated way across single and multi-leg bets.??

Moreover, Edge connects your liability management across pre-match and in-play rather than treating pre-match liabilities and then the live game as separate events.?

In a recent webinar run by Genius Sports experts from Superbet, Tipico and StakeMate also acknowledged the challenge of identifying trends and liabilities hidden in accumulator bets.??

In a major tournament year, betbuilders and SGPs will play an important role in driving bottom-line sportsbook revenues. With a new approach to managing risk on these growingly popular multiple bets, traders can be excited about maximising profitability on this year’s crucial football content.??

Learn more about Edge, our new first-of-kind solution to maximise your sportsbook profitability.?