Pinnacle has been successfully operating a unique high volume, low margin, winners welcome model since 1998. We are often asked why this approach hasn't been successfully copied. The fascinating answer I got back from our Trading Director is both an interesting commentary on modern bookmaking and a metaphor involving a shark tank.
Pinnacle does things differently to other bookmakers. While our competitors are falling over themselves to invent ever-more outlandish promotions, we are unashamedly no-gimmicks. Our unique no-nonsense approach is built on three fundamental principles.
Offering the most competitive odds online
Offering limits that can accommodate pretty much any bet
Not restricting winners
So what has stopped other bookmakers emulating this approach? I asked our Trading Director - Marco Blume - who, in his eight years at the company, has cemented our trading philosophy.
Marco, we make no secret of our approach to bookmaking, so why has our model not been successfully copied?
Running one of the world’s biggest sportsbooks means that Marco’s time is very precious and he is economical with communication, but on this subject his eyes light up and he becomes noticeably animated.
"To really answer this question it is important to understand our position in the market and modern concepts of bookmaking. What most bettors out there consider to be big-name bookmakers are in reality more like marketing machines promoting betting odds.
Most of the risk is handled by 3rd parties and the main focus is bonus-led player acquisition, with the majority of profit generation from the cross-sell of high margin casino products. There is nothing wrong in this, they are very good at what they do, but it is a different vertical to where Pinnacle sits, so for the purposes of comparing approaches, we are talking apples and oranges.
There is increasing competition among these marketing style bookmakers; because the risk management is off-the-shelf, the barrier to entry is relatively low. The only real differentiators are the brands themselves and their equity, which is why we have seen several challenger brands emerge with very aggressive spends for example - think EPL shirt sponsorship.
Changes to the legal landscape are making it harder for more established brands to grow internationally, so you are seeing a lot of mergers, but Pinnacle really sits outside that activity."
Marco searches for a useful analogy. “I mean, if you take a Venn diagram type approach there is some overlap between Pinnacle and that type of bookmaking but it is shrinking.
We share much more in common with the big Asian books, though it isn’t a complete overlap. We are really a hybrid because they aren’t focused on the European cash market.
I generally attend ICE in London and often hear rumours that a new book mimicking our model is looking for investment. The thing is that they would need really deep pockets” Marco reinforces the point with his hands looking for imaginary pockets “I mean really deep pockets. You know, we have been around since 1998 so we know what we are doing, we have huge volume and our models for the major sports are really tight.
Anyone looking to take us on would have to endure a long period of really expensive losses, it would be like being thrown in a shark tank.” His eyebrows raised, he seems to enjoy this analogy. “They are gonna bleed a lot you know, making expensive mistakes, trying to gain traction and volume, so the question is how long could any wanna-be rival survive in the shark-tank learning what we have built over 18 years before they get eaten up?”
“The fact that no one recently has worked out how to survive in the tank underlines the strength of our model, but we are in no way complacent. We are constantly looking to improve and know the difficulty of breaking into new markets like eSports where we bled a little ourselves in the early years.
eSports is a great example of Pinnacle blazing a trail and other books copying our odds but not our model. I take that as a compliment. And if any book wants to test the water, and wholly emulate our model, I wish them luck in the shark tank”