Steve Friess: Betr Shows You How Misunderstood Sports Betting Is

State of Play is a column that focuses on the trending stories in the casino and gambling space with sharp and clever insight from senior staff writer Steve Friess. Over his 25-year career, Friess has contributed to publications such as Newsweek, Time, New York Times and more.

Far be it from me to discourage anyone in the venture capital space from wasting their money, but the repeated decisions over the past year by a variety of firms to keep pumping millions of dollars into the boondoggle that is Betr might be one of gambling industry’s most-baffling developments.

All rational indications, including recent financial disclosures in Ohio and Massachusetts, point to the conclusion that the much-ballyhooed Jake Paul-fronted sports betting app is a huge loser. I mean bigger than losing-a-boxing-match-to-the-Love-Island-guy loser.

And of course it is. Paul and his main partner, Joey Levy, promised nothing less than to reinvent the sports betting app. They claimed they would offer something nobody else does but that legions of users crave. They insisted that the star power and mammoth fanbase of a social media star and mediocre “professional” boxer would be a shortcut to acquiring customers.

I’m a journalist and I cover the gambling industry, so over the decades I’ve seen an endless parade of overhyped newcomers who claim their venture will “re-invent” journalism, casinos or Vegas resorts. Once in a while something genuinely new does come along — The Drudge Report or Politico for journalism, the Bellagio or Wheel of Fortune slot machines for the casino world — but most often it’s just a lot of hype.

So it is with Betr. It all sounded to some people like a good idea. It was never a good idea.

‘TikTok-ifying’ sports betting is not a thing

What’s more, Betr will become an important example of how to misunderstand the sports betting world.

Here’s the gibberish Paul muttered to the press last year when Betr launched its free-to-play software as the company worked toward licensure for real-money wagering:

“I wasn’t into sports betting until I was introduced to micro-betting. Micro-betting is the TikTok-ification of sports betting and I am excited to bring it to the masses through Betr.”

“TikTok-ifying” sports betting is not a thing. It’s like when people say they’ve invented the Uber of fill-in-the-blank. It doesn’t mean anything. TikTok itself isn’t even the revolutionary thing it purports to be; we’ve had apps where you can post videos of up to 10 minutes for years. They just built a great user interface and a critical mass of users.

Betr has a great user interface, granted. But the Betr gambit is that it can attract young people to sports gambling if it speeds it up, provide more immediate results. Betr thinks the problem is the pace of the gambling.

It’s not, though. The problem is pro sports itself. A Morning Consult poll published earlier this year shows one in three Gen Zers don’t watch live sports. This comports with earlier surveys; perhaps the kids are all too busy trying to save the planet from climate change and the nation from creeping authoritarianism to be as consumed by this form of entertainment. Maybe they’re just watching actual TikTok.

We’ve also, as a society, destigmatized gambling and made it so easily available that it’s no longer the transgressive activity it once was. Going to a real-life casino may still be a thrilling right-of-passage for young adults as a forbidden space unlocked by passing a specific birthday, but even in that context the draw is blackjack or roulette or craps or just partying in a social setting. It’s not going to the book to lay a bet on the Padres.

Fundamental idea behind Betr is flawed

So the fundamental idea behind Betr is to attract a generation relatively uninterested in sports into a fast-paced version of mobile betting for which they need a level of knowledge they don’t have.

Let’s set aside for a moment the question of if a large swath of Paul’s fandom is even old enough to legally gamble. The British don’t seem to think so; the Advertising Standards Authority earlier this month dinged Ladbrokes for a promoted tweet in February asking users what Paul would do next now that he lost a boxing match to that Love Island guy. For a variety of reasons — his YouTube and TikTok fame, his past as star of a Disney Channel show — the ASA concluded he “was likely to have a strong appeal to under-18s.”

There’s an ethical question in there, but I’m more interested in the demographic one. Many of Paul’s most-ardent fans are too young for this product. Oops.

But OK, suppose it worked. Anyone who has ever watched a couple episodes of “Shark Tank” knows you can’t get rich on an idea everyone can easily copy. If, for some reason, Betr’s version of micro-betting was actually superior to what exists on other apps and starts making real in-roads on market share, what would possibly stop the bigger, richer apps from just starting to offer it in whatever way was working?

By the way, it’s not working. Just look at the data.

Paul’s popularity not drawing gamblers to Betr

For a tech-first entry into this arena, Betr stumbled out of the gate. They had one job, to be prepared to roll on Jan. 1 when Ohio launched legal sports betting, and they ran into snafus that they dubbed a “soft launch.” In reality, they’d missed half of the super-lucrative NFL playoffs and didn’t start taking real money bets from all comers until mid-January.

That self-inflicted wound was costly. Betr accounted for less than 1% of Ohio’s eye-popping first month. And it didn’t get much better after that.

Through May, Betr handled about $4.2 million in Ohio, holding $313,000. But it spent more than $700,000 on promotional credits, more than double the hold.

In Massachusetts, where it launched in May, the numbers are early but shockingly awful. Through roughly its first six weeks, Betr handled $884,000 and held on to $58,662. Twenty percent of that goes to the tax man. Massachusetts doesn’t force disclosure on promotional spending, but odds are pretty good Betr took a bath.

Remember, this gang claimed they wouldn’t have to do that. That Paul’s popularity would propel people onto Betr.

To paraphrase a great sports film that Paul enthusiasts are probably too young to care about, they built it but they didn’t come.

Social media numbers lacking for Betr

How do I know? Time for some more data!

Paul is an indisputable social media star. Betr is indisputably not.

The Betr feed on Twitter, for example, has just over 90,000 followers, a mere 2% of the 4.5 million folks following Paul. Over on TikTok, the story is similar; Betr has about 542,000 followers, about 3% of Paul’s 17.2 million followers.

Paul is supposed to be the draw here, remember? It’s his personal popularity and immense following that is supposed to make it so Betr can acquire customers more cheaply than competitors like DraftKings or BetMGM. But a year since the initial announcement of Betr’s launch, interest among Paul’s fan base is embarrassingly weak.

The Betr folks might complain that the big boys have existing casino customer databases that give them a tremendous advantage in converting new users. Building a gambling brand from nothing is a much more difficult proposition, it insists.

Well, no duh.

Upstart brands like Betr face uphill battle

And here’s the other thing about Betr: It was never as revolutionary as it claimed to be. It heralded itself as a pure micro-betting site, but two months along it announced it would add a full-fledged, whole-game sportsbook betting as well.

This couldn’t have been a late-inning inspiration. You can’t turn something like that on overnight. We can only assume, then, that it planned to do that all along, which is fine. But now the whole micro-betting hook feels like the gimmick it always was, not the radical departure required to claim it is different than other sportsbook apps.

In other words, the very premise of Betr now feels like a deception. The consumer wouldn’t care if it worked well and they liked it, but evidently they don’t.

The mobile sports gambling space has shown itself to be a tough business full of established brands. None of the upstart brands has made much of a dent, and little changes in the rankings after the first few months of a new state’s launch.

Still, venture capitalists keep giving Paul and Levy their money. Betr, per its most recent $35 million funding round, is supposedly worth $300 million. It is looking to Virginia and Maryland next, as if there’s something in the chemistry of those states that would suggest a different outcome than Ohio and Massachusetts.

The casino owners are not supposed to be the one chasing their losses, but here we are. Maybe it’s time for the venture capitalists to call 1-800-GAMBLER and admit they’ve got a problem.