Upcoming Iddaa tender for Turkish licensed betting monopoly

In 2008, Inteltek won the Iddaa tender to run the Turkish licensed betting monopoly for a period of 10 years.  Inteltek is a joint venture between Turkcell and Greek lottery operator Intralot.  2018 will be the year for the new tender.   I wanted to summarize my thoughts on the process. The biggest change for the new period would be that the payout rate will be increased to 70% from the current 50%.  The higher payout rate will allow the Operator to offer more single bets as well as live betting.  Legally single bets and in:play betting has been legal in Turkey for many years.   But Inteltek has been offering them rarely for risk management concerns. Turkey is a very big market for any operator.  With a population of 80 million, the annual turnover of Iddaa was about 11 billion TL in 2017.  That figure corresponds to around 3 billion Euros with 2017’s exchange rate.  Additional 40-50 billion TL turnover is fleeing to the offshore black market operators.  The black market operators attracted great interest from Turkish punters mainly due to their ability to offer in live betting, single bets, higher odds and alternative payment methods.

What will change with the new Iddaa tender?

The new law allowing a payout rate of 70% is the right step to minimize the share of illegal betting in Turkey.  Even there was no increase in the NGR, the turnover of Iddaa would still rise about 66,5%.  With additional NGR coming from the illegal betting operators, we can easily say that the turnover of Iddaa will at least double during the new period. Clearly, a licensed monopoly opportunity in such a big market is very interesting for any operator.  Inteltek is interested in the Iddaa tender and has an advantage as the incumbent.  But we also know that its partner and technology provider Intralot is having technical problems in some markets.  Also it may face difficulties in the new era with a more challenging risk management and much higher volume. Surely with the new payout rate, Turkish punters will start enjoying a world class product.  Also it will maximize the share of legal and licensed betting’s share in the country, hence the tax revenues for the country as well.  We expect that Spor Toto will issue the RFP documents in September 2018 with actual tender date in November.  The tender would be definitely an interesting event to watch !

White Paper – How to choose the right betting platform provider?

How to choose the right betting technology and provider for a leading operator.

This article aims to summarize my experience in selecting the right betting technology and betting platform provider for a leading national betting operator in the CES.  Please see the notes on the end of the article as well.

1. Background

The Operator has been acting as a licensed monopoly for over 5 years but facing several challenges like:

  • Limited growth
  • Unreliable technology
  • Market share loss to international operators
  • Very poor online and mobile offering
  • Low customer satisfaction

Product-wise, the Operator was offering very limited number of single bets. Besides major leagues, a punter needed at least an accumulator of 3 games to place a bet in a minor league. Also, the number of live events were very limited. Further, the odds offered by the Operator were around 15-20% lower than international competitors. There were two main reasons for these challenges. Firstly, as set by the authorities, the operator could only offer a 69% payout rate to the punters. Secondly, the risk management was not robust and risk averse. The risk managers were reacting aggressively even to short term fluctuations.

The Operator’s existing betting platform provider was having a downtime much higher than the industry average. As a result customer satisfaction was extremely low. Also online and mobile offering were significantly inferior compared to world standards. As a result, a lot of punters were shifting to international operators.

2. Challenges

Once a decision for a betting platform replacement was made, several key factors for selecting the new betting platform provider have been identified:

  • Needs to offer an omni channel platform.
  • Needs to be very strong on mobile and online.
  • High reliability
  • Strong and creative risk management
  • Fast response, agile partner

The challenge was to select a betting platform provider who would provide focused and high level service to the Operator. It should also solve the current problems of the Operator as well as have a vision to stay as a trusted and selected provider for the next 5-10 years at least.

How to choose the right mobile betting provider and technology?
Mobile betting technology

3. The process

Phase 1 – Exploration (2 weeks)

The initial step was to collect basic info on major betting platform providers in the market. The initial list was compiled through past experience, colleague referrals and internet search. At this point, we identified red flags of about 10 points. These red flags included items like country of origin, current customers, company size, etc. The list was decreased from 20 to 15 companies after the red flagged companies were eliminated.

Phase 2 – Clarification (6 weeks)

The short listed betting platform companies have been contacted. We shared initial scope of the project and signed NDA’s with each of them. We talked to each of them, received their basic info. Some of them made online presentations explaining the strengths of their products. During this process, we eliminated some companies according their ability, capacity and eagerness.

Phase 3 – Face to face meetings (3 days)

EIG Berlin was selected as the event where we can meet all the potential names face to face. The number of potential providers were 8 at this point. We actually did not attend the conference, rather rented a meeting room in a hotel for back to back meetings. We also had some shop visits with the betting platform providers who had existing operations in Berlin.

Phase 4 – Deep dive (4 weeks)

The number of potential providers were dropped to 5 after face to face meetings. At this time, we shared a detailed questionnaire consisting of more than 100 items with potential providers. This factsheet allowed us to compare all the potential providers objectively on the same page. We used a weighted average scoring system to come up with a final score for each provider.

Also, a pricing guidance was asked for the first time, to see if the potential providers were within the range of our expectations.

References were checked in detail for the remaining providers from their current and former clients, industry contacts, etc.

Phase 5 – Office visits (1 week)

The number of potential providers were dropped to 2 at this point to avoid distraction. We visited each company at their HQ to better understand their ability, corporate culture, product. A detailed presentation and demonstration were made by each company.

Also, we shared more guidance for our pricing expectation with each company at this point.

Phase 6 – Final negotiations (2 days)

Both potential providers were invited to our offices for clarification and final offers. We asked for binding offers at this point subject to contract negotiations.

Phase 7 – Decision (1 week)

Actually, this was the most difficult part of the entire process. Both providers were strong, willing and competitive. Their pricing offers were very close, but in the vicinity of the low end of our expectation. Both companies offered outstanding solutions. At the end, the decision was made considering both hard and soft factors. The product, price, references were surely important factors, but soft factors like top management engagement, team quality, eagerness to win this project also played a significant role in the final decision.

Phase 8 – Final negotiations and contract signing (6 weeks)

After the decision was made, actually final pricing negotiations were concluded very rapidly. The signing of the contract took about 5 weeks with the lawyers on both sides. Since both parties were willing to close the deal, contract negotiations were concluded in good faith. At the end, a fair contract has beed finalized between the parties.

4. Final thoughts

The entire process took about 6 months. At the end, the Operator was able to secure a new provider with a much better solution. Also, the platform costs were reduced more than 50% compared to the existing provider.

The new Provider was happy to sign a new client in a regulated market for a long period.

Certainly, this article is not enough to cover of all the details of such a complex project.

Also, confidentiality concerns prohibits me to share more details. The transition from the old to the new provider was in progress at the time of this article was written (July 2018). Once the transition phase is completed, I will share another article summarizing that phase as well.

If you have any further questions, feel free to contact me at ziya@proad.com.tr. I will try to help as soon as it is not covered under my current NDA.

Finally some notes on this White Paper:

I was assigned with the task of finding a replacement for the platform provider of the licensed betting monopoly (“Operator”) in a CES country. This was a challenging assignment considering that the Operator was already operating with 500 retail shops and a single online dealer. Also, the vast number of quality platform providers made the choice not easy. The goal of this White Paper is to share my experience and shed light to anybody who will go through such a challenge.

Although this White Paper shares the experience in a specific sector for a specific service, the same principles can be applied in any sector for any product in a systematic way.

All the brands, company names are omitted from this article. I am aware most of them will be apparent to any industry player, but the goal of this article is not (dis)credit any company or player, instead share my experience in a systematic way.