The lucrative business of sports betting in South Africa

SuperSport’s new betting platform, SuperSportBet, is an interesting move by MultiChoice – and one that could result in huge revenue.

The platform is being built on KingMakers, which is also owned by MultiChoice, reducing the work and costs of getting SuperSportBet running.

MultiChoice is doubling down on the sports betting industry despite the rocky performance of KingMakers.

Over the past three years, MultiChoice was forced to write down its investment in KingMakers by a significant amount.

Its R6 billion investment in KingMakers is recorded to be worth only R4.73 billion in MultiChoice’s books.

Furthermore, KingMakers has been running at a loss for years – although it managed to decrease its losses from $16 million to $8.6 million for the first half of the 2024 financial year.

Despite these continued losses, MultiChoice has bet big on SuperSportBet as it seeks to gain a significant chunk of the ever-growing South African sports betting market.

While in the 2020/21 financial year, sports betting revenue in South Africa was R8.1 billion, this number had grown to R20.6 billion by the end of the 2022/23 financial year.

Betway

An example of an online betting company experiencing incredible growth is Betway.

Super Group, which owns Betway as well as SpinBet, generated over €1 billion in global revenue in the first nine months of 2023.

To continue its growth trajectory in South Africa, Betway has thrown lots of money into marketing.

It is currently the title sponsor of the SA20 cricket tournament and an official sponsor of the Springboks.

Furthermore, it has run marketing campaigns with a who’s who of local sports legends, including Lucas Radebe, Jean de Villiers, and Victor Matfield.

This aggressive marketing strategy is echoed globally, as it is a sponsor for three Premier League teams, too – Arsenal, West Ham, and Brighton & Hove Albion.

How sportsbooks generate huge profits

SuperSportBet’s launch stems from the fact that sports betting is a tremendously lucrative industry.

While betting is hugely risky from the bettor’s perspective and usually ends in overall losses, it can be a reliable cash cow for a company like SuperSportBet.

The easiest way to explain how sportsbooks guarantee themselves excellent profits is by using the popular betting form known as point spreads.

Point spreads entail the sportsbook asking bettors to make bets on a margin of victory rather than on a winner.

Examples of this include:

• The Los Angeles Lakers will win by 10 or more points.
• Liverpool will beat Everton by more than one goal.
• The Proteas will beat England by more than 20 runs.

This number will be chosen by the sportsbook’s analysts based on extensive data.

Let us say, for this example, that the bet is structured as follows:

The Los Angeles Lakers will win by 10 or more points.

• -110 – Above
• -110 – Below

“Above” would refer to the Los Angeles Lakers winning by 10 or more points, and “Below” would refer to the Lakers winning by fewer than 10 points or losing.

In both cases, the odds mean the bettor must bet R110 to win R100, R220 to win R200, etc.

It is important to note that odds are always constructed to ensure that a bettor cannot bet on both sides equally and make a guaranteed profit.

In this example, if you bet R110 on the “Above” and R110 on the “Below”, you would bet a total of R220 and would receive R210 back either way – meaning you would lose R10.

A basic example

In our scenario, we will presume that 50 bets of R110 were made for the “Above” choice, and another 50 bets of R110 were made for “Below” – meaning bettors were split down the middle.

The total betted amount will then equal R11,000, and the payout will be as follows:

• “Above” wins: The 50 “Above” bettors are each paid out their original R110 and an additional R100 for winning. R210 multiplied by 50 bettors equals a R10,500 payout. “Below” bettors get nothing.
• “Below” wins: The 50 “Below” bettors are each paid out their original R110 and an additional R100 for winning. R210 multiplied by 50 bettors equals a R10,500 payout. “Above” bettors get nothing.

In both scenarios, the sportsbook took in R11,000 and paid out R10,500 – resulting in an R500 profit and a profit margin of 4.5%.

Human nature

The above hypothetical assumes that bettors will be split 50/50 – but in reality, it is almost impossible to balance bettors along a 50/50 betting split.

Therefore, another tool that sportsbooks leverage is human nature – which is surprisingly predictable.

Extensive data shows that bettors prefer betting on favourites, as it makes them feel like their bet is “safer.”

Bettors often show biases towards teams and players that have great historical records or large fanbases.

Sportsbooks leverage these biases through “shaded lines” – which involve tweaking the odds to maximise their profits.

Shaded lines

For example, if a sportsbook’s data shows that the Los Angeles Lakers basketball team are likely to win by approximately 10 points, the general expectation would be that the sportsbook would design its point-spread odds around a 10-point victory.

However, because the Lakers are an extremely popular team, and because they are the favourite, the sportsbook may adjust the “middle ground” of the bet from 10 points to 12 points.

Empirically, in this scenario, betting on the Lakers achieving a 12-point win or better would be a bad choice, and betting on the inverse would deliver good value.

However, the Lakers’ massive popularity will likely skew the number of bettors who choose the “overpriced” bet.

Therefore, let us assume the sportsbook offers the following odds:

• Lakers win by 12+ points: – 110
• Lakers win by under 12 points or lose: -110

Let us presume that 100 bets of R110 are made (totalling R11,000), and because of the Lakers’ popularity, 60 of the 100 bets are made on the Lakers winning by 12+ points.

The two payout scenarios are as follows:

• Lakers win by 12+ points: 60 bets of an original R110 and an additional R100 in winnings are paid back. 60 multiplied by R210 payout = R12,600 payout, or a R1,600 loss for the sportsbook.
• Lakers win by under 12 points or lose: 40 bets of an original R110 and an additional R100 in winnings are paid back. 40 multiplied by R210 payout = R8,400 payout, or a R2,600 profit for the sportsbook.

While the sportsbook has now taken on risk in the form of a R1,600 loss, the potential profit is also much greater than before.

If a sportsbook ran odds like this 50 times, and the Lakers won by 12+ points half of the time, the Sportsbook would average a profit of R500 – the same as in our first example.

However, we already know that the data predicts the Lakers will win by 10 points – so the “Lakers win by under 12 points or lose” option will happen more than 50% of the time.

Therefore, we can expect the average profit to exceed R500 – proving that sportsbooks can easily tweak their odds to increase their margins.

Sportsbooks employ mathematical experts and use complex computer algorithms to work out the risk and reward of running strategies like shaded lines when setting their odds.

Other forms of sports betting

Point-spread bets are one of many sports betting formats – each of which has its own mathematical strategies like shaded lines that allow sportsbooks to turn big profits.

Other popular betting types include:

Moneyline – Pick which competitor or team you believe will win.

Eg: the Dricus Du Plessis vs Sean Strickland UFC odds were 2.32 : 1.61

• Dricus Du Plessis wins: a R100 bet would yield a profit of R132.
• Sean Strickland wins: a R100 bet would yield a return of R61.

Over/Under – Pick the combined points scored between two teams.

Eg: For the next Springboks vs All Blacks Test Match, bet on if the teams will score more/less than 40.5 points.

Parlay bets – Make several bets, and only get paid out (handsomely) if you get them all correct.

Eg: you bet R100 on the following basketball odds:

• Los Angeles Lakers beat New York Knicks
• LeBron James scores over 30.5 points
• New York Knicks score under 105.5 points
• Milwaukee Bucks beat Charlotte Hornets
• Brooks Lopez gets the first block of the match

If you get any of these wrong, you get nothing, but if you get them all right, you get a much higher return – such as R3,000.