Considering, prioritising, practising and implementing sports betting risk management is very important. There are lots of reasons for this which we will be uncovering in this blog post.
Meanwhile, statistics show that the sports betting market is experiencing wide and fast growth around the world. In 2022, the market reached a value of about 83 billion dollars and has increased by at least 10% in 2024. Experts in the field are speculating that the market value for sports betting may be worth about $95 by 2030.
Such a massive growth is mouth-watering to say and yes, sportsbook makers and betting app development companies are eating big. However, as the market grows and more money pours in, the risks, weaknesses, vulnerabilities and security challenges become concerning.
This makes the implementation of risk management processes very crucial. According to the OddsMatrix, it is a “proven strategy for achieving success as bookmakers and betting operators”.
What is Risk Management in Sports Betting?
Risk management in sports betting involves different processes of creating and implementing plans for a stable and profitable sports betting business. It is a very important aspect of sports betting app solution and should be balanced with user experience.
While implementing risk management is an important tool, it may pose some challenges or come with downsides.
For example, when sports betting platforms set betting, deposit and withdrawal limits as a risk management strategy, they may be perceived as unpleasing restrictions which users may find inappropriate.
Another example of a challenge is that restrictions in the name of risk management may reduce available data. When this happens, it will negatively impact the insights being generated for informed decision-making.
No matter the challenges that you come across or have to deal with, do not let your guard down. Implement risk management strategies to minimise losses and rake in some profits.
Making your risk management processes to be loosed or less strict than they should be will expose your betting platform to huge winnings. Many of such winnings will hurt your business and even lead to a shutdown.
So, going further, what should you do?
Fundamentals of Sports Betting Risk Assessment
There are some important things to know in other to have an effective sports betting risk management plan. In this section, we will be sharing some of them with you. Our focus is to help you uncover the best for the best outcome when implementing your risk management strategies in the future.
Assessing Probabilities and Odds for Risk Management
Betting companies pay attention to the odds and always assess their winning probabilities. They must always do this because it can lead to huge financial losses. Therefore, setting odds based on their outcome possibilities is an effective strategy for managing risks,
The important factors to consider here include; the player stats, the team winning/loss history, and current team form. Others are the injuries and team composition, venue and weather conditions and then expert analysis. It is from these statistics that probabilities are built and then converted to odds.
After converting this to an odd, there is a need for balancing the book. This is to enable it to attract user action. with this, the betting app company gets profits in most outcomes.
Odds adjustments may happen and should be an ongoing process until the end of the game.
This should however be introduced or implemented by in-play betting features. It is also an excellent risk management strategy.
Handling Sharp Bettors – Sports Betting Risk Management
Some gamblers are far above average standards. They are very sharp, always looking out for loopholes to take advantage of in the betting app.
If these people happen to be gambling influencers with hundreds of thousands or millions of followers whom they share their betting codes with, that will be much higher risk exposure for the betting company.
So, what do you do? Stay vigilant by first, identifying those users with higher winning ratios. You can also monitor their social media posts to see when they share their bet codes with their followers and reduce the odds or limit how many other users can place the same bet or use the same betting codes.
Identify Industry-Inherent Risks
There is a couple of industry-inherent risks in sports betting. These include; financial risks, technology risks, fraud risks, reputational risks and others. Let’s break it down some more;
Financial risks in sports betting platforms
This is related to risks in currency fluctuations, cash flows and credit risks. The most common of financial risks happens when there are large numbers of gamblers win, leading to huge volumes of playouts. This event may end up affecting the economic stability of bookmakers.
Financial Betting Risks Management Solutions
- Invest in implementing real-time data feeds from different sources and sports betting markets. This enhances your sports betting platform to offer betting odds with lower financial risks.
- Prioritise risk management strategies, including utilising AI and Machine learning. This enables you to employ advanced algorithms to automatically make adjustments on odds and betting markets. These tools can help in studying betting patterns, user behaviours, market trends, etc, providing relevant insight to help make decisions to mitigate financial risks.
- Consider mixing detailed reporting with the use of sophisticated financial tools. While this sports betting risk management strategy helps in detailing all your betting activities, it can track and analyse financial performance. All of these can be done in real-time for swift decisions.
- Also, you may want to consider what we call player profiling. This is more like identifying a player by his/her patterns and behaviours or winnings. You can then introduce some restrictions on the player. However, ensure to do this within the law, and code of conduct of betting apps.
Fraud Betting Risks
The betting industry is witnessing a flood of fraudsters on its platform, especially since the pandemic. However, with the implementation of modern fraud risk management tools, the situation is reasonably under control. However, there is no room to be caught off guard. Fraud risks should be a work in progress. Fraud risks can be internal and external. Internal is with the employee while external comes with customers, data mining, credit cards, etc.
At Prometteur, we identify this as a serious issue and implement sophisticated fraud detection and prevention tools. These tools not only utilise advanced technologies but also come with powerful automation and keep 24/7 surveillance on potential frauds.
They are powerful and intelligent enough to identify and take crucial action just right on time to block malicious and suspecting activities in the betting app.
TechnologyBetting Risks
You can’t rule out the role of technology in leading innovation and expanding markets in the betting industry. However, this comes with some challenges and risks. For example, the rise in cybersecurity issues, scalability and integration challenges.
Technology Betting Risks Management Solutions
There are four reliable ways to manage the technology risks of sports betting.
- Implement strong cybersecurity measure using advanced cybersecurity systems. here at Prometteur, we consider using encryption protocol tools, secure servers and stringent access controls. These help in protecting sensitive data, ensuring safe and secure data storage and preventing unauthorised access.
- Use scalable infrastructure that can carry the weight of your sports betting business growth. We encourage the use of cloud-based infrastructure and tools to solve this challenge. They are known for high-level scalability and can accommodate expanding growths in terms of storage, expanding clients and other developments of the business.
- System integration is yet another way to properly manage technology risks in sports betting. Use reliable tools that can integrate with both internal and external systems. these are tools that can offer sports bookmakers the type of flexibility that they require for success.
- Use reliable infrastructure in general. This should be considered at the point of the mobile app development design. Consider online using technologies that can handle the required loads and high-volume transactions.
Reputational Betting Risks
Reputational sports betting risks can come in different forms, including regulatory risks, changes in laws, legal risks, and credibility risks. The way to handle this is by partnering with an expert sports betting app development company to help you navigate the complex landscape.
Reputational Betting Risks Management Solutions
- Getting the needed sports betting and casino gaming licence from a regulatory authority
- Ensure the protection and security of customer data and information, from internal and external threats.
- Collaborate with experts in the sports betting app development industry for the best solution and advise.
Use Advanced Analytics Tools Like Artificial Intelligence and Machine Learning
Deploy these tools for the main purpose of automation, advanced analytics of historical data and trends in the betting industry. This can bring about a turnaround in terms of winning probability and odds setting. Betting platforms with the best sports betting risk management strategies record only about 5% winning users and 95% losing users.
Sports Betting Risk Management Vs Bankroll Management Sports Betting
While sports betting risk management is implemented by sportsbook companies and betting apps, bankroll management strategies are by bettors.
In risk management, the sportsbook may focus on implementing trends that keep things balanced up. They may also decide to profile a gambler who is known for recording too many wins on the platform, thereby, posing high financial risks to the betting app. For example, some of these gamblers with a higher winning streak are active users on social media, with millions of followers.
The former focuses on maintaining profitability across all bets and minimizing exposure to potential losses. Sportsbooks implement risks management processes, including using advanced tools to monitor betting activities on the platform and ensuring the company is not on the losing side.
Such bettors are known as gambling influencers who have gained some influence and command respect in the betting world. They may place bets on a betting app and share their codes with their followers.
Now imagine when a punter places a bet of 1k odds and shares it with millions of followers online. If this ticket bangs, as in turns into a win, and has been played by almost a million people, it can pose a financial risk to the betting company.
On the other hand, sports betting bankroll management strategies focus on maximizing returns while avoiding ruins.
A typical example here is setting a percentage of total finances in the betting app for daily, or weekly bet placements. Gamblers who practice bankroll management do so because sports betting activities have no guarantees. And what has no guarantee of winning already poses serious financial risks to the bettor?
read more on money management betting strategies in this blog post.
Key Differences Between Sports Betting Risk Management and Sports Betting Bankroll Management
| Aspects | Sports Betting Risk Management | Sports Betting Bankroll Management |
| Scale | Managers of sports betting risks across thousands and millions of bets and gamblers | Individual gamblers implement their own strategies to manage their stakes |
| Management Complexity | Sports betting companies implement the use of more sophisticated tools. They also have access to more data. | Individual gamblers typically use simpler sports betting bankrolling methods |
| Flexibility | Sportsbooks can always adjust their odds and limits to manage risk and potential losses. | Gamblers can only work with the given odds on the betting app platform |
| Goals | Sportsbook companies focus on achieving consistent profits with minimal losses at all times. | Staking for higher returns at all times. |
| Resources and Information | Sports betting platforms tend to have more information and resources | Gamblers have very information and resources to do the most. |
| Regulatory Laws | Sports betting apps platforms must comply with regulatory standards and laws in the besting industry | Must not comply with set laws or regulations. |
Implementing Effective Sports Betting Risk Management Strategies
There are many ways to develop risk management in sports betting but the ideal ones conform to best practices.
Let us take a deep look into the effective implementation of risk management processes.
Implement Regular Reviews and Updates of All Risk Management Strategies
All risk management strategies should be carefully monitored, updated and reviewed occasionally. The practice should be an ongoing event.
Get your teams to gather relevant data on sports betting trends, changes, user behaviours and developments, then review your risk management to suit them all.
Always Leverage Technology and Data for Sports Betting Risk Management
The combination of (advanced) technology and data helps in proffering sustainable solutions to many challenges in the betting industry.
For example, you can use technology to gather enough data, analyse them and make informed decisions on security, user behaviours, trends, and improved customer satisfaction.
You may use insights for data to detect and prevent potential fraud or block malicious activities that expose your sports betting app to high financial and regulatory risks.
One of the most powerful benefits of implementing the use of technology is automation. The whole fraud risk management and financial risk management can be fully automated.
Implement Responsible Gambling Practices
Responsible gambling is a core aspect of sports betting risk management. It is very broad though and includes the implementation of various policies to standardise betting activities for all users.
But very importantly, responsible gambling practices ensure the safety, and security of users, as well as the betting app. It can mitigate the risks of hosting criminals on the betting app as well as the use of malicious software and hacking operations.
It is also an essential risk management strategy because it helps to protect both the betting company and users against harmful financial losses from sports betting.
Implement the Sports Betting Risks Management Strategy for Odds Management
Remember we mentioned how important it is to balance the book? With the use of technology and data, this is quite easy and can be automated.
Sportsbooks can gather relevant data on what experts are saying, match histories, general opinions, player fitness, wins, losses, and draws to create odds and betting options. These odds and betting markets will be like a summary of the sportsbook’s estimation of the possible outcomes.
For the most effective sports betting risk management measure, implement technology to automate the balancing of odds.
Financial Control Sports Betting Risks Management
This includes both cash flow management, internal audits and separation of duties. We recommend that you do not solely depend on internal teams for your auditing services, but rather outsource for objectivity.
This helps in setting higher standards and meeting user demands and requirements.
Conclusion
The betting industry will continue to witness immense growth and in 2030, will hit a much higher value. Also, the threats and risks will keep coming around to pose serious challenges. Only sports betting apps with the ideal sports betting risk management tools and strong implementation plans will take good advantage of it presents.
Do you want to learn more risk management in sports betting? Or you want to implement the best sports betting tools for risk management in your betting app? Let us help you with the best now. Talk to us.
