Thomas Holland, product director at Genius Sports, explains how new automation and machine learning are enabling predictive, liability-driven pricing on a transformative scale.

What is the goal of risk management? For traders, it’s all about maximizing long-term profitability. But in today’s world of 24/7 content and often outsourced pricing, many operators and their suppliers rely on simply using risk management to limit losses through setting limits and profiling players.

This is because with prices and liabilities now managed separately, operators do not have the control or agility they need to dynamically adjust prices based on customers’ betting activity.

Considering that the average European sportsbook handles hundreds of fixtures on a weekday and more than double that on a Saturday, manually reviewing activity on every fixture, market and selection to optimize prices would prove very costly. Additionally, it would require an unrealistic amount of resources for most companies.

However, the goal of maximizing profitability remains. So the question arises: How can retailers better align liabilities, pricing and customer management to increase their profits? Thanks to new forms of automation and machine learning, this is entirely possible.

Balanced, efficient trading

The idea that prices and liabilities are linked is nothing new. Before the explosion of 24/7 sports betting content, this was common practice. However, the sheer scale required to do this across thousands of daily events has shifted the focus to customer management.

Thomas Holland, Product Director, Genius Sports

If you are unable to respond to the liabilities in your sports betting offering – which now includes Betbuilder products with complex liabilities – you are missing out on potential margins for each individual game and market type. This means that profits remain unused.

The good news is that automation removes this obstacle. New technologies enable not only liability-driven quota changes, but also predictive, liability-driven decisions. These decisions correlate with all associated market types and outcomes.

What does that mean? By understanding how much money is being wagered on each associated market and taking into account your current and past liabilities and live probabilities, automated solutions can make dynamic margin adjustments on each betting selection at scale. This maximizes profits.

The gains for your entire content and market offering will be significant. Until now, a lack of options has forced many traders to refuse bets and restrict customers rather than engaging them to maximize their revenue.

This leaves huge amounts of money on the table. Good bets are rejected and customers who have a bad experience look elsewhere for higher limits.

By eliminating the gap between prices set by third-party providers, your liabilities, and how you want to manage your customers, automation makes for more profitable sports betting.

Improve your betting experience

As we have rolled out our automated risk management tools to our existing risk management customers, we have seen continued growth in gross profit margins of more than 10% for small and medium-sized operators.

Proactive, correlated, liability-focused risk management also benefits your brand experience and helps drive customer loyalty, sales and differentiation. When pricing and liabilities are connected and automated, traders can reduce bet rejections and suspensions with confidence.

Because they know that their risk is managed highly efficiently, proactively and profitably.

With all betting activity automatically taken into account, operators now allow their customers to place bets on any market type. There is no need to restrict or restrict. Higher margins are applied to selections with a high betting volume and negative liabilities. Meanwhile, less popular outcomes offer more attractive odds and attract more revenue.

The technology required to achieve this is non-trivial and is one of the reasons we believe manual trading to achieve the same goal at scale is not possible. Correctly updating liabilities and prices based on every bet, game status change and trading parameter change in real time can only be successful with automation.

More effective resourcing

New automated tools and features allow you to use your customer data more effectively.

Your betting activity is unique to your sportsbook and tells you exactly what your customers are likely to bet on – and how you can maximize your earnings through odds adjustments.

Additionally, automated, predictive, liability-driven pricing tools reduce manual workload. This avoids human error, saves costs and frees up resources for higher-skilled functions. Automatic, efficient risk management also minimizes the need for time-consuming and often reactive customer management.

The rise of 24/7 sports betting content has been a major step forward in the last decade, increasing operator engagement and revenue. Thanks to automation, risk management is now ready to move forward and keep pace.

Sports betting is an unpredictable business, but new automation and technology are providing more consistency, stability and predictability than ever before. The result is even bigger profits on good days and smaller losses on less good days.