World Cup 2002 - A Preview

In terms of gold-nugget events for companies looking to market their brand, soccer's World Cup is the biggest of them all.

Consider the simple fact that 32 nations will take part in the month-long event and more than a billion people in 196 countries will tune in to watch matches on TV; the event easily surpasses any other as a true global happening.

Bookmakers project handle for the World Cup to reach £200 million.

The 2002 tournament, which kicks off on Friday, is expected to be a huge moneymaker for business involved directly and indirectly with it, and interactive gaming companies are right in the middle of the mix.

For the first time in the 60-plus-year history of the tournament, action will take place in Asia, with South Korea and Japan co-hosting the event. Mix in the fact that the tournament has expanded to 32 teams and the host countries have a betting-friendly society and bookmakers, both land-based and Internet-based, are licking their chops at the possibilities.

Most online bookmakers agree the World Cup hold enormous potential, both for current business and future growth.

Ladbrokes, England's biggest bookmaker, predicts handle associated with World Cup bets from British punters alone will reach £200 million, or almost US$300 million. That will more than double what was bet on the last World Cup, which was held in 1998 in France. Company officials hope that 5 to 10 percent of that action will come from its Internet business. They also predict that industry-wide turnover from the tournament will increase 50 percent from the 1998 tournament.

William Hill, which is in the middle of stock market floatation, which also projects the betting action for the World Cup to be near the £200 million mark, is hoping that online business will increase dramatically over the month of June.

BetFair.com, a popular P2P betting site based in London, is using the World Cup as a platform for strengthening its stronghold among British bettors and as an opportunity to gain an increased market share in the Asian sector.

Asian punters already dominate horse betting on the Internet and bookmakers are hoping their higher-spending habits compared to bettors in other countries, along with the frenzy surrounding the World Cup, will translate into booming business for them.

Increased TV coverage in Japan and other parts of Asia of European soccer leagues, mainly England's Premier League, have raised the awareness of international soccer among punters.

One of the few factors that could put a damper on the betting action is the time difference between the Far East and soccer-crazy countries like England.

To take advantage of this new market segment, BetFair has launched a Chinese-language version of its site in partnership with Dr.Ho.com, the online casino caring the brand of Macau casino mogul Stanley Ho.

One of the few factors that could put a damper on the betting action is the time difference between the Far East and soccer-crazy countries like England. William Hill made a profit of £2 million off the Euro 2000 tournament compared to £12 million off the 1998 World Cup. Officials expect the profit from the 2002 World Cup to be somewhere in the middle of those two figures, simply because of the unfavorable time difference.

Mark Davies, BetFair.com's communication director, said it's difficult to predict his site's handle for the tournament, but they do have a rough equation to determine a ballpark figure. He said the previous high for an individual horse race, prior to this year's Chelltenhum Festival, was £160,000. In the first race of the 2002 event, BetFair handled £500,000. Considering they did five times the amount on that race, due in large part to key marketing and promotional partnerships, officials can apply the same principal to the World Cup, and that could mean huge business.

To date the site's biggest football match the site has ever done generated £880,000; the average game brings in about £350,000. If the "five-times more" rate comes to fruition, BetFair could be looking at £3 million to £4 million a game. He said it is more reasonable though to expect more like £500,000 a match during the course of the tournament .

While Davies would be thrilled with that outcome, he too acknowledged that the time difference and the success of underdog teams will have a bearing on how much P2P betting is conducted.

He said the nature of P2P punters is to get more involved with punts when a heavily favored team falls behind. If teams like France, Argentina and Italy have no trouble in their matches, little action will take place. But if they fall behind, he said, they will see an increase in volume.

"There are some obvious favorites and some obvious underdogs," he said. "It will depend on how well the underdogs do as to whether we really balloon.

Bookmakers agree that any time-zone difference could be offset if a team like England makes a deep run through the tournament. Davies said BetFair's success won't depend on the success of the Red Shirts, but any positive results from the English side will add to what is brought in from other games.

Davies said the partnership with Dr. Ho will not only open BetFair up to a player base of 250,000 gamblers, but it will also introduce P2P betting to the Asian market.

While William Hill and others are predicting a drop in revenue from the World Cup due to the time difference, Sportingbet.com, a leader among independent online-only bookmakers, is hoping to cash in on the time difference. Officials with the company feel that the odd start times for matches (often early in the morning London time) will force punters to the Internet to place their wagers because betting shops will be closed.

They also say gamblers in many Asian states will be betting on reputable U.K. sites because independent high-street bookmakers are illegal in Japan and Korea.

"For the first time, the Internet will be their most accessible route to placing a bet," Chief Executive Nigel Payne explained.

Payne added that reaching Asian gamblers remains a problem because advertising for gambling services is forbidden in many Far East countries.

Sportsbetting.com, an offshore Internet sports book based in Antigua, is using the World Cup to conduct a special promotion with its punters.

The $500,000 Quest for the Cup is a free prediction contest on the 2002 World Cup. The $500,000 Quest for the Cup gives members and visitors a chance to win cash prizes from $5,000 to $500,000. Any punter who correctly guesses the outcome of 64 games will win the $500,000 grand prize. Anyone who correctly predicts 60 to 63 games will win $50,000, and $5,000 for nailing 55 to 59 matches.

The site will also award prizes to top scorers. Prizes include a Toshiba 50-inch HDTV Projection TV, a Sharp Digital Viewcam, a Yamaha Computer Audio System and $6-$100 betting accounts.

With the global reach of football meeting the betting-mad culture of Asia, the region could benefit from a wagering windfall worth billions of dollars.

Chinese soccer fans, for example, are expected to indulge in the popular national passion for gambling, riding the wave of the national team's success after reaching the World Cup finals for the first time.

But much of the betting in Asia is expected to take place through illegal sources, and so the total amount of wagering in the region is difficult to quantify.

Some local governments are taking steps to draw betting funds away from illegal bookmakers. Others are cracking down on illegal betting syndicates that were taking hundreds of thousands of dollars in World Cup-related bets.

In Hong Kong, the local legislature has made it illegal to place bets through offshore bookmakers and Internet gambling sites. And in an effort to stem the flow of funds to illegal bookies, the Chinese government has taken its first steps toward legal gambling by launching a soccer lottery.

France heads to Asia as the defending World Champ. Argentina, Italy, Brazil, Portugal, England, Spain and a host of other countries will try to dethrone the French.

In the gambling arena, the true winners will be the bookmakers who can effectively grow their businesses, both in existing markets and new emerging ones.