Success is never guaranteed in any business, but sportsbooks have always been considered a safe bet; sports betting has a huge, worldwide audience, including many who are uninterested in other forms of gambling. But when an unprecedented crisis left punters with nothing to bet on, the solution that stepped up to the plate may spell the future of the industry. Keep reading to learn everything you need to know about virtual sports.
While the gambling industry is associated with a certain level of risk — not only for players, but for investors and operators as well — offering sports betting has always been seen as a nearly surefire way to build a profitable business. Wagering on football matches and horse races never seems to go out of style, attracting massive audiences in markets around the globe.
But the crisis of 2020 showed that nothing is certain. As sporting events were cancelled and postponed, betting volume dropped drastically, forcing operators to scramble for other options.
Thankfully, even when your team is not playing (either because it’s the offseason or due to a pandemic) you can still make a bet. Simulated by software, available at any time of the year, with hundreds or even thousands of opportunities to bet every day — enter virtual sports betting.
What are virtual sports?
Virtual sports are similar to real competitions and races, but instead of featuring live players or horses, events are simulated by software. Players can bet on virtual horse racing, tennis, and football matches, and are offered the same types of bets that would be available if they were betting on a real event: outright winner, total score, over/under, finishing positions, or parlays of any kind.
Practically any sport can have a virtual counterpart, and many providers even offer simulations of matches, fights, or races with 3D graphics. From the perspective of the bettor, the experience looks very similar to betting on real sports, but the actual outcome is determined by an RNG.
What is an RNG?
A Random Number Generator is an algorithm that, as the name suggests, generates numbers without any predictable pattern.
Applied to virtual sports, an RNG determines the winner of an event based on predetermined odds. This way, favorites and underdogs have different chances of success, but actually predicting the outcome is absolutely impossible — for both players and operators. Technically, this makes virtual sports betting very similar to slots and roulette.
True randomness is very hard to produce: computer algorithms are predictable by nature. So a typical RNG either simulates randomness or uses some physical source as a base like atmospheric noise or the unpredictable fluctuations of hardware temperature.
There are many ways to set up an RNG for iGaming, with varying degrees of randomness, complexity, and transparency. Operators’ chief concern is that the RNG is sufficiently random, so players can’t discern a pattern and start predicting outcomes of virtual events. Players, on the other hand, need to be sure the operator is not manipulating the outcome in any way.
To guarantee that an RNG is operating in accordance with industry standards, online casinos and sportsbooks obtain Random Number Generator Certifications from independent labs. Also, certification is often required to legally operate in many regulated markets.
Virtual, fantasy and live
Despite being very different from a technical standpoint, virtual and live sports betting attract a similar audience. Bettors pick a sport that they find interesting and easy to understand, and then either analyze the odds or just bet on their gut feeling. At the end of the day, the experience is not that different.
The main place where virtual sports diverge from live events is speed and frequency. Live betting is associated with long waiting times between matches or races. Virtual sports, on the other hand, are available around the clock, with no holidays, offseasons, or other interruptions. The process is much quicker too, so the bettors can place more wagers on virtual sports than they would when betting on live sports.
Virtual Events can happen as often as every 3-4 minutes.
From the point of view of the operator, it is also a great deal. Despite the fact that the odds and handicaps can be based on real stats, the overall result is still utterly random. The operator doesn’t risk losing money due to miscalculated odds or bettors that use insider knowledge or expert analysis. The event itself also can’t be affected by things like player substitution, weather, or human error, giving operators the control to set the odds exactly as they see fit without worrying about unforeseeable circumstances.
Of course, therein lies the main problem of virtual sports betting — despite its appearance, it’s essentially a slot machine. Players can’t make an informed decision to improve the odds of winning and form a long-term strategy. Some operators take care to offer realistic odds and make the experience more in line with real sports betting, but so far the idea of a complex, realistic simulation of a football match or horse race is not a market standard.
If this were to happen, it would bring the discipline closer to another form of gambling — fantasy sports.
The concept has been around since the mid-20th century, and is based on the following principle: participants create teams of proxies, based on real athletes, and then compare their performance based on statistical data from real competitions. The first sport to be played this way was baseball, but now there is a huge variety of fantasy sports available: football, golf, hockey and even wrestling and racing.
Unlike virtual sports, these are not random. Statistics are taken from the actual performance of a player or fighter in a particular year. Knowledge of the sport would allow bettors to predict which athletes would likely perform better, and make sure their team would tally the most points in the league. They are also completely dependent on competitions actually happening. If no games are played, the lack of statistics means there is nothing to bet on.
While virtual sports were definitely inspired by fantasy sports, the latter is hardly an alternative, but rather a continuation of the traditional sport betting industry.
From the bench to the forefront
Before 2020, virtual sports were widely considered a niche gambling discipline — a bridge between online casinos and sportsbooks that appealed to a very limited audience.
But as live events took a hit due to the crisis, the traditional sports betting industry was completely disrupted. UEFA, NBA, NHL, MLS, and troves of other sports leagues and competitions were canceled or postponed. The International Tennis Federation (ITF) let go of half its staff and had to move the dates of 900 tournaments. The Formula One Grand Prix in Azerbaijan, Singapore, Japan, Monaco, and many other countries didn’t happen. The list goes on: boxing, cycling, marathons, golf — everything was affected, wrecking bookmaker revenues across the board.
Not only did companies have to deal with the financial fallout of canceled games and interrupted seasons, but they also had to be ready for the possibility of similar circumstances happening again — and uncertainty is bad for business.
Sportsbooks all over the world started shifting to virtual sports to supplement their reduced income. In Sweden, for example, government regulators allowed sportsbooks to offer virtual sports betting with the same license to help operators survive the crisis. In the USA, prominent horse and greyhound racing enterprises like Hawthorne Race Course and Palm Beach Kennel Club started partnering up with virtual racing software providers.
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In the UK, the Virtual Grand National was shown on national TV in place of a real race. Inspired, the company that provides the product, has reported a surge of revenue in virtual sports.
Some companies were ahead of the curve. In 2019, Betradar launched a virtual Asian Cup, which proved very popular in the region. By the time the crisis hit, they already had a strong offering of virtual football, basketball, tennis, and cricket.
The reality of the future
This past year has shown that there is no such thing as 100% certainty. The global sports betting industry had been steadily growing year over year, and no one expected that giant bookmaker companies would face times as difficult as these.
The question on everyone’s minds is: When everything goes back to normal, what share of the market will virtual sports occupy, and how will they evolve in the future?
You can certainly count on sports and racing fans to enjoy virtual versions of their favorite events. One example to consider is the F1 Virtual Grand Prix series. Millions of TV and internet viewers followed live virtual races where professional racers engaged in a virtual competition.
Some сompanies, like Golden Race, try to operate their virtual sports business as close as possible to traditional bookmaking by investing in realistic graphics so that players used to sports betting will have “zero learning curve”. This way, the principle will be closer to fantasy sports, where the performance of players and teams is based on statistical data from real competitions.
Converting live sports bettors into virtual sports bettors is certainly a viable option, but it would discount such advantages as speed, stability, and a low entry barrier. Right now, virtual sports bettors can enjoy the activity without extensive knowledge of the sport, and the games are resolved in a couple of seconds. People can make dozens of bets on their favorite team in a day, bringing operators a steady cash flow.
The likely answer is to listen to your customers. What do all these people flocking to virtual sports betting sites expect? Will they be relieved or disappointed when they see the differences? After all, the mission of every online casino and sportsbook is to cater to the needs of players, give them thrills and entertainment, and offer them a fair chance to win.
The betting market is a profitable one, but navigating the changing currents of the business requires patience and experience. Slotegrator works with providers, sportsbook operators, lawyers, and industry experts to anticipate market changes. If you’re unsure how to get started on your new business venture, or need expert help to revitalize your existing operation, contact us for free consultation.