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Flying too close to The Sun - how Tabcorp and News UK snatched defeat from the jaws of success with

Article originally written for for EGR Intel Magazine, August 2018

In sports betting, the tipping point of success versus failure is known as ‘expected value’. It’s the yard stick of what a bettor feels they can win or lose for every bet they place on the same odds if repeated ad infinitum. Positive expected value (known as +EV) ensures a net profit over time while a negative value (-EV) means a long term loss.

The recent closure of Sunbets.co.uk is certainly in the latter’s camp - for one of the partner entities, at least.

The Sunbets joint venture between News UK, the wholly owned subsidiary of American mass-media conglomerate News Corp and Australian publicly traded gaming group Tabcorp cost the Australians a total loss of £51 million. That’s a bad day at the races for anyone, no matter how big your balance sheet is.

So how on earth did this media behemoth and gaming conglomerate cock up the Nuts so badly?

The Chief Executive of Tabcorp, David Attenborough, said at the time:-

"The performance of Sun Bets has been below expectations… while we didn't get it right, we have taken valuable learnings from the Sun Bets start-up process and operations which will inform our approach across our portfolio”.

This is all well and good, but setting up a gaming business, no matter how congested and competitive the environment, should have been shooting fish in a barrel for these guys, so how did they go so very wrong?

To launch a profitable UK operating business in sports betting you need a blend of six ingredients:-

A ‘best in class’ product

Off the shelf platforms from Openbet, FSB or Tel Aviv gaming giants Playtech would have done the job just fine. Tabcorp went with their antipodean proprietary platform, most likely to save the circa 10% share of Net Gaming Revenue (NGR) they’d have to pay a platform provider every month if they’d opted for quality.

A differentiated proposition

This could be great bonuses, leading odds, a blanket of markets, a ‘mobile first’ positioning or rewards for loyal bettors. Sunbets did none of these things and went to market with the beigest of vanilla products indistinguishable from a hundred others found on a Google UK search.

A decent marketing budget

Many chancers have made themselves rich in gaming by injecting huge amounts of brand and acquisition spend into PPC, display, TV advertising, sponsorship and affiliates. It doesn’t work on its own (as proven many, many times) but supporting at least one of the key ingredients makes the wheels turn faster.

A large volume of customers

More customers provide greater liquidity which means you can be more aggressive in how you trade your lines. It also makes your sportsbook more profitable, enabling you to invest more in #1 and #3. Sunbets launched on 6th August 2016 and spent a rumoured £10 million in year 1 across TV, print and billboard advertising, not to mention a significant PPC, digital display and affiliate push. Add to that News UK’s purchase of The Wireless Group and its Talk Sport radio station, ostensibly positioned to promote content and betting services, and you arrive at figure that makes Rebecca Brooks’s pay packet seem reasonable..

Employ the very best people

Whilst it’s easy to explain how to set up a successful betting business in a few hundred words, operating one day to day is a totally different story. Before you even think about accepting customer wagers and taking their money you need to be 100% sure you’re overseeing a licensed, regulated, compliant, functioning, real time, multi-channel betting entity. Sunbets tried their best in this by hiring William Hill’s long standing (and highly regarded) Director of Innovation Jamie Hart to lead as Executive Director, albeit reporting into Tabcorp’s Chief Operating Officer Chris Nugent.

All was apparently not well in Sunbet Towers. After a paltry six month’s and taking learnings from Icarus, Hart flew away from The Sun, ending up in the online gaming mecca of Gibraltar as Group Director of ecommerce at Romanian operator Superbet. Rumours that he couldn’t jump fast enough are as yet unsubstantiated.

A motivating and engaging brand

Bet365 is a betting brand monster, Paddy Power a piss taking joker, Betfair is for experts looking for value, Ladbrokes & Will Hill have been around so long everyone’s granddad bet with them. All of them have a brand identity and, to certain audiences, brand appeal. The Sun is one of the most famous brands in the UK, both on and offline, however Tabcorp and News UK assumed that it’s red banner at the header of an also ran betting product supported by an ill-conceived, multi-million Pound brand advertising campaign would be enough.

This hubris is ultimately what led to the rapid, unfortunate and costly collapse Sunbets although the tab for this rather unappealing dog's dinner appears to have been picked up by Tabcorp. Of the £51 million they lost overall, £39.5 million went to News Corp in withdrawal fees meaning even as clan Murdoch lost the battle, to some extent they won the war.

In gaming, nobody swallows a bad beat like that unless they know they’re avoiding a worse one later on. For Tabcorp’s David Attenborough, like his illustrious namesake, he might feel that he’s found himself lost in the wilderness for now, however this might yet prove to be the best fold of his career.

Harry Lang (@MrHarryLang) is the founder of Brand Architects, a brand-building and integrated marketing consultancy. You can contact him at Harry@BrandArchitects.info or via LinkedIn.

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