Sportsbook With a Funny Name Prospers -- BoDog CEO Turner Cites eCommerce as Key

The evolution of international gaming continues with the emergence of new companies whose leadership's roots do not extend from local bookmaking. This brave new world of sportsbooks is run by aggressive 20- and 30-something managers whose backgrounds include such disciplines as Technology R&D, eCommerce, and the Internet.

To be sure, the operational side of the sports betting business is not neglected or taken for granted. Strong, confident bookmaking is a cornerstone of these operations, and its expertise is seamlessly integrated into the overall picture.

One such organization, a name nobody had heard of two years ago, today has become one of the dominant brands in the industry, BoDog Sportsbook & Casino ( www.bodog.eu). The Costa Rican and Vancouver-based organization will celebrate its second anniversary at the end of March. On the assumption that this milestone merits some ink, we caught up with BoDog.eu Group founder and CEO Cole Turner, to get his perspective on current issues of interest to players and others who track this industry.

At the time of the interview, Turner was able to truly focus on these critical issues because he was in Asia on a strategic planning retreat.

Turner minced no words in cutting to the chase on several issues and was refreshingly blunt in rebutting conventional wisdom. While many offshore gaming leaders have called for regulation as part of the legalization process, Turner is against it, noting that, "unregulated sports betting has a much higher value proposition for the players than in a regulated market …"

Turner also believes the future of the industry will be determined by the battle to be fought over being able to get funds, not on which laws exist in the jurisdictions where the players live.

From his unique vantage point in both the board room – where his collegial management style has proved productive – to the trenches, where he is a hands-on boss, the BoDog CEO articulated thought-provoking and insightful observations and projections.

Buzz Daly: The terms offshore gaming and online gaming are frequently misused or misunderstood ... please differentiate between the two.

Cole Turner: I like this question because I not only see the confusion you are mentioning, but I actually don't even think the term "offshore" is useful. All gaming is offshore to somebody in the world, including the stuff offered in Nevada, and anti-gaming forces have done a pretty good job of associating the word offshore with something dodgy going on, when in reality the top players in our industry would be top players not only in Vegas if this were legal there, but in most industries. We are a mainstream business that happens to be in the entertainment industry.

I never use the word offshore to describe our industry or us. We are more accurately an "international gaming group" that legally takes wagers from any jurisdictions in the world that has players that want to open and account and send in a deposit.

Online gaming is confused with being the same as international or offshore gaming in countries like the US since opening an account with an international company is the only way players in these markets can even do on-line gaming. All online means is that you are using the Internet to research your plays, deliver the instructions on your account and monitor results. As long as you are dealing with a name brand operation, the jurisdiction is not a major issue. The quality of the management will always be more important than the country it operates in when it comes to the security of your deposit and the quality of your experience.

Buzz: Emerging industries attract many new entrants with varying degrees of a potential for success, which inevitably is followed by a shakeout and/or consolidation. How do you perceive the international sportsbook business to be proceeding?

Cole: What I see happening is exactly what any new industry goes through. A bunch of guys jump in thinking there is easy money to be made, the stronger players gain market share and then there is consolidation down to a fewer number of stronger players. This is not a standards based industry like some and there is a huge range of preferences so there will always be a fairly large number of options and this is good for the industry and players, but the number is going to shrink.

The consolidation started seriously two seasons ago. It is more obviously noticed with the huge decrease in new brands than with the disappearance of existing ones, but both are happening. Two years or more ago I barely paid attention to new brands there were so many popping up, but now I actually follow up and find out who is behind any I see….mainly because I am surprised anyone would launch into today's market given the investment and risk.

This consolidation is driven by the players voting with their deposits for who will stay and prosper and who will have to leave. In the same way as this is happening, the better sites are in turn voting with their advertising dollars with the sites and marketing groups that they feel are more reputable. At the same time as this is happening there is a reverse cycle in effect where the reputable news and monitoring sites are now starting to do more research on the industry pedigree of the gaming companies and not accepting advertising money from ones that they know are going to embarrass them by going out of business and burning their player base. This is further cutting off the life blood of the weaker organizations.

Buzz: Traditionally, sportsbooks looking to do business in the U.S. market have called – even begged for – regulation, similar to what Nevada is known for. But you're not that keen on this approach? Why?

Cole: Not only is the market sorting itself out, you can also clearly see that unregulated sports betting has a much higher value proposition for the players than in a regulated market since regulation kills the whole innovation cycle because it removes competition. With the ease of flow of information on the Internet, the arguments for regulation, per se have disappeared and regulation will in fact decrease the quality and value of the services offered to the players. Regulation of sports gaming stops companies from having to deal with market forces, kills innovation and competition and therefore causes a decrease in Customer Service, a decrease in product offering and technology change and significantly removes the incentive for companies to offer aggressive bonuses. Worse yet it actually removes the efficiencies that would even allow for bonuses to be offered. If you want to see an example of this, compare the quality and volume of sports betting in Las Vegas to what is offered by the international gaming companies.

What I favor for the future, to improve our industry, is not regulation but more and possibly even mandatory transparency. Basically more information on what is happening inside companies so players can make a more informed decision on where to deposit and play.

Buzz: The two years during which BoDog has rushed to the forefront of a crowded sportsbook industry have been difficult for many established shops, as well as newcomers. How did BoDog buck the trend when overall total market growth was slowing?

Cole: Buzz, you are right about the market growth slowing, but this is mostly caused by credit card companies, not demand. However, I still think our industry, though it is still relatively young, is now entering midlife. The days of being able to start up a sportsbook with a few thousand and a lot of work are gone for good. I would not recommend starting with less than $5 million. Even then, if you do not have a few guys working on the project who have done it all before, you still might not make it.

We started out as a technology company, specializing in eCommerce, and got into gaming when we realized that eCommerce is what gaming is. There is no physical product to be delivered.

The last factor is that we already had a powerful marketing machine in place with very strong industry contacts, so it was all just fired down the same pipe and happened quickly and easily for us. This combination of things allowed us to ramp the BoDog.eu brand and become an industry leader in a relatively short amount of time.

Buzz: During the last year in particular, BoDog became a seemingly inescapable fact of life. Everywhere sports bettors went, BoDog was there. What do you think was the strongest contributing factor in the company's enviable track record?

Cole: The big one last season was definitely our proprietary direct bank transfer deposit and withdrawal system. We have been using this method since the early '90s. Last year, it really took off. You can send money to us or get it sent back right from your bank account, and since it's our own system it's very inexpensive to us and we pass the savings along to our players through the most aggressive deposit and reload bonuses in our industry.

I think the biggest competitive advantage we enjoy is that we are the most vertically integrated organization in our industry. We do everything in house, from technology development and eCommerce to customer service and bookmaking. Now that we have all the pieces in place, we respond faster to market changes, are not accountable to any other organizations and we can implement the changes our players want faster than ever.

Our business model has given us two consecutive years of more than 100% growth per year in a market that is expanding at less than 20%. This shows us that our model is very much endorsed by the guys that really matter – the players.

Buzz: Is your proprietary funds transfer system a service that could be used by other books? If so, do you have plans to market it to others?

Cole: At the moment we are not offering it to others, but our director of eCommerce development has it on her list to open this up to the rest of the industry. She already has a file full of inquires from some of the best of our competitors, so we know the demand is there.

We do not have a time line on this yet, however, since our first priority is always our existing players.

Buzz: Profitability and expansion of online gaming seemingly are compromised by anti-gaming zealots who support and enact crippling legislation, targeting either gaming operators, or financial services vendors. How is this being dealt with, near term and long term?

Cole: I believe this question is accurate for some of the companies that saw early success in the industry, since it was relatively stable for a few years, but this is not accurate across the board. The evolution of an industry follows the same mysterious Darwinian forces of natural selection as the animal kingdom. The companies that were optimized for the initial years are not necessarily the ones that are optimized for today, or for the changes that are coming. That said, there will be some out there that will actually profit from any changes that are caused by new legislation.

Groups like ours, designed to change quickly, are the ones that will gobble up market share from groups that have locked in one form of business model. Our business was designed for change and that is why we have everything in house and do not contract out. We can change on a dime without needing to get another organization to change.

So to answer your question simply, I think you will see rule changes cause fortune changes, but the totality of the industry will not slow down at all. Companies that adapt fast and easily will expand, and those that can not will not even survive the change.

Buzz: What are some positive signs given off by successful, reliable companies that players or investors can use to separate them from the herd?

Cole: If you want to know who is good among the gaming companies, look for companies that are rising in profile like the BoDog.eu Group. If a company is profiled on all the major sites that cover the industry and this profiling has grown noticeably year on year like we have, then that is the type of company you should be depositing your money with. If a gaming company's advertising profile is shrinking you should use extreme caution. What other industry do you know of where the successful companies stop advertising?

So though we have a few more years to go through, the market is already sorting out who is good and who is not on its own. Unlike casino gaming, sports players know who is straight with them and who is not, the entire act of gaming is independently verifiable.

What we need is more transparency. I envision a system of disclosure similar to what public companies go through, thereby allowing players to really make an informed decision.

Buzz: What else are you predicting for the industry that I have not specifically asked you about?

Cole: First, more globalization. As the winners start being obvious to everyone without needing them to be pointed out, these groups are then going to go after more markets.

Second, the battle will be fought based on being able to get the money, not on which laws exist in the jurisdictions where the players live. The companies are all based out of legal jurisdictions, so the business is legal and there is no way to stop people communicating. It's going to be all about trying to control the flow of money. I think if the UK allows cross-border wagering, like they say they are going to, it will force everyone else to, which will kill forever the notion that your own government is somehow smarter than you are as to where you should spend your money (which is what they are saying when they say, "You have to gamble with companies in your own back yard, those we say you can play with, and no others").

Controlling the flow of funds is also a doomed strategy and will prove to be impossibly costly compared to what they are actually trying to stop. It will fail. I think we are already at the bottom of this cycle since passing a law to stop something that is not going on anymore is going to be a huge waste of everyone's time and energy. The credit card companies' involuntarily stopping the transfer of funds has already forced evolution away from existing systems to new ones that are not as easy for local governments to influence. That is how evolution works -- change the system and everything else adapts.

Money transfer is going to improve from here on forward and we are going to be one of the companies moving ahead.

For more information on BoDog Sportsbook & Casino, call 1-888-263-0000 or go to www.bodog.eu