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  1. #1
    GPWA Aaron is offline Former Staff Member
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    Default Affiliate Manager Interview Series | Bernard Marantelli - Colossus Bets

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    NOTE: This interview was originally published in the February, 2013 issue of the GPWA Times Magazine, prior to the launch of Colossus Bets.

    Colossus Bets takes a unique approach to sports betting. Instead of offering straight bets, you offer multiples or parlays (picking exact scores) with guaranteed pool payouts of up to £10 million. How did the concept for a sports betting site that offered huge guaranteed jackpots come about?
    Deciding to offer the world’s biggest bet did not happen overnight. I’ve been exploring the concept of offering huge jackpots on sports betting since acquiring my MBA at London Business School. I have professionally played the various incumbent products for the past decade and realized they had numerous flaws. The most obvious flaws I saw were: content lacking in global appeal; appalling value being provided to players; a cyclical lack of critical mass; and players feeling helpless, locked in for the entire bet. So I set about building a betting product which addressed those flaws and which has produced the £10,000,000 “Colossus” (football Pick 7 correct scores) and a host of supporting products.

    Colossus Bets is providing players with something entirely new – the chance to win eight-figure payouts (£10,000,000) from day one (solving the “value” and “liquidity” flaws) based on the world’s most popular sporting content – top-level European soccer leagues (solving the “interest” flaw). In addition we are allowing players to cash-in tickets (or fractions of tickets) as the games progress (solving the “helpless” flaw). The cash-in option enables players to avoid the “near miss” scenario, one of the perennial frustrations of multi-leg bet players.

    As CEO, you've been building Colossus Bets for almost a year now. How is the team coming together? Are you still looking to fill any positions? And what's the office vibe like so far?
    The team is coming along very well. My software partner i-neda (who are industry leaders) have built an amazing back-end and website. David O’Reilly, former Managing Director of Betfair Gibraltar, has recently joined the team, as have a few young talented professionals who look to have bright futures in the gambling industry. In terms of further recruitment, I am still looking to fill a few roles, including an affiliate manager, and more widely I am always interested in hearing from people who think they have the skills and passion to help us build a great company from the ground floor.

    We have an office in Central London and the buzz of a startup, where people really feel they are on the verge of something big. Most nights I need to chase them out of the office.

    When do you plan to go live with the site? What still needs to be done in order to get the site up and running?
    We are in the process of finalizing our website, so in theory we could be live in a few weeks, but it is now a commercial decision, taking into account the timelines (IT integrations, mainly) and wishes of B2B interests. So I envisage a soft launch in early 2013, and a full launch with several B2B partners for the 2013-14 European soccer season.

    Unfortunately, the online gambling industry has a history of sites failing to make payouts when people have won big, and several sites have gone out of business as a result. How can players and affiliates be sure that you'll have the funds necessary to make large payouts to winners?
    We have working capital and separate risk capital, contributed by myself and investors. We have in place a £20 million “risk pot” that will be used exclusively to underwrite our multi-million-pound guaranteed prizes. That £20 million sum sits in a bank account which is segregated from the company’s own account and we have appointed a top-four U.K. accountancy firm to report on this risk capital.

    We believe that there is a fantastic synergy between the affiliate partnership marketing channel and the unique consumer proposition we are offering. One of the ways that we will demonstrate our trustworthiness to our affiliates is by paying them their share of revenue on a weekly basis.

    Did you consider trying to buy insurance instead of putting the money aside in trust?
    I realize that most betting companies that offer guaranteed prizes buy insurance, and there are some great insurance firms like PIMS-SCA that offer viable solutions for firms that cannot cover (or raise) their own underwriting funds to cover their guarantees.

    However, I decided that a better solution was to establish the underwriting funds directly from investors. Unlike most start-ups, the surprisingly easy part of getting Colossus Bets off the ground has been securing the investment to make it happen. I believe this is because the proposal offered a compelling mathematical case (together with a truly unique product) to them.

    According to your site, 70 percent of all bets made by punters will be allocated to prize pools, and 30 percent will be taken by "the house." Standard sportsbooks generally have 10 percent "juice" and punters are much more likely to win bets when they don't have to pick the exact score. Given that information, why do you think players will bet at Colossus Bets?
    The Colossus Bets product offering is not designed to replace single bets on sports, which do operate with around the 10 percent (or less) “juice” you mention.

    Looking at like-for-like products, a 30 percent takeout is pretty typical for multi-leg pool bets globally, yet unlike Colossus Bets, other such pool bets provide limited or no guarantees about the size of the prize pool. We offer £20,000,000 of guarantees (after deductions) weekly.

    In comparison with fixed-odds multiples bets, our products have far greater appeal. If you consider a “correct score” soccer betting market offered by a typical sportsbook, the effective takeout will be in excess of 20-30 percent and of course this is for a bet with just one leg. Multiply even a conservative 20 percent by seven legs and the effective takeout is 80 percent (i.e., only 20 percent is returned to the player on average).

    Even worse, if your multiple should win, virtually every European sportsbook will cap your winnings at £1 million. Colossus’s minimum is 10 times the maximum payable by all other sportsbooks, and this is just our day-one minimum starting point for this bet. In other words, our pool can ONLY get bigger.

    The only other place where an eight-figure win is available for gamblers, certainly in the U.K., is the National Lottery, which operates with an effective takeout rate of 50 percent. In short, we think our 30 percent takeout rate from bets is fair to players and is extremely competitive in relation to lottery and sportsbook multiples, and that is before you take into account the amazing, user-friendly cash-in option.

    If your model succeeds, are you worried that other bookies with more established brands will copy your business plan and offer large jackpots for picking several correct scores in soccer matches?
    They say that imitation is the sincerest form of flattery, so I very much hope that some of the established brands, who have not already joined us in a B2B capacity, witness the success of the Colossus and Colossus Bets and consider trying to replicate that success with an equivalent offering. However, there are at least a couple of obvious hurdles for anyone attempting to follow our lead. First, the mathematics behind Colossus Bets is complex and precise and offering £20,000,000 in risk is intimidating or unviable for many firms; and second, Colossus Bets has a patent application pending on several elements of our offering that include the cash-in process. Besides offering the world’s biggest guarantees, our unique cash-in is perhaps the most compelling product feature we are offering.

    The gaming industry traditionally makes a lot of money on high-stakes gamblers. Your model, however, appears to rely a great deal on volume. What does your market research tell you about the demand for this type of product?
    We believe that the lure of lottery-sized prizes will appeal both to small players and to high-staking players who will take multiple “perms” in an effort to increase their chances of capturing one of our big prizes. In other words we think Colossus Bets products will appeal to gamblers from across the spectrum. We also think we can recruit sports fans who may be new to betting or who may be infrequent bettors, as well as lottery-only players.

    Currently the only avenue open to players who want to chase multi-million-pound prizes is to try to correctly choose randomly drawn balls from a lottery drum, or playing some other game of chance. We want to offer sports fans (and lottery-type players) the chance to win these kinds of truly life-changing sums, in a game which is interesting and engaging and in which they can seek to pitch their skills against other players.

    What is your marketing plan for Colossus Bets? And where do affiliates fit into that plan?
    Our marketing plan covers several different channels, from social to traditional avenues that we will develop in conjunction with B2B and media partners. Word of mouth could prove quite viral, too.

    Separately, the affiliate marketing channel is a particular focus for us. Because what we are offering has never before been available to players, we think it will work very well for affiliates and will complement what they’re already offering to players in terms of existing betting and gaming opportunities. We think we can grow the overall pie, rather than taking a slice of the existing pie.

    Similarly, we remove one of the perennial issues for affiliates – i.e., players quickly switching to other very similar offerings. Players will not be able to switch from the Colossus and our other products because there is no similar product available. Therefore, affiliates who send us one of their valuable clients will benefit greatly from the structure of our product and hence the continuous revenue streams that a unique product such as ours will generate.

    What kinds of payments are you planning on offering affiliates? Should affiliates expect a CPA or a revenue-share model?
    We believe the unique nature of the product will ensure affiliates largely pursue a revenue-share arrangement with us. We will offer affiliate partners a revenue stream on bets placed plus a revenue stream on the volume of bets cashed-in – i.e., dual revenue streams based on turnover (not on net wins, as is the case with many other operators). In simple terms this means that affiliates are guaranteed a risk-free “clip of the ticket” for every bet placed. Affiliates are also guaranteed an additional percentage of tickets which are cashed-in by their players. A ticket which is still “live” with one or two legs to go in our £10,000,000 Colossus pool is likely to have a cash-in value of around £700,000. This means that the affiliate will get a few percentage points of this, banking tens of thousands of pounds, regardless of the outcome of the final leg(s). As players cash-in, so do affiliates. We will also offer a CPA option for any affiliates with a preference for that model.

    You are fairly new to working in the iGaming industry but have a background in private gambling and banking. How does the industry compare to finance? What has been your biggest surprise so far?
    Yes, I have been involved in the racing and gambling industries since I was a teenager. My father, Gavin, and his two brothers were bookmakers, and I grew up learning (everything I know) from my dad - I wish that I knew half of the things he has forgotten.

    When betting exchanges (Betfair) arrived, I instantly realized there was an opportunity to apply my knowledge in my spare time, and my love of betting and markets re-emerged and proved profitable.

    I think what would surprise people the most is that I think the exchange betting markets are even more efficient than the stock markets. I believe that the participants of betting exchanges in particular could make a killing in financial markets, but the financial barriers to entry largely keep them out.

    What do your former colleagues in the banking industry think of your new venture?
    I think every second day they wish they were me, and every other day they are glad to have a well-paid (semi)secure job. But they think I am using my expertise and following my true passion, and as such they think I have a very good chance to succeed.

    What's your favorite thing to do outside of work? Any hobbies?
    Travel, and photography, but I wish I had more time to do them properly. Betting is a hobby also . . . but I guess it is really my passion and business rather than a hobby.

    Are you originally from London? Have you ever lived anywhere else?
    I grew up in Melbourne, Australia, and I went to university in Western Australia. After that I lived in Brussels for three years, before moving to London, which has been home to me and my wife (and now my four-year-old son) for over a decade. Hopefully it will be home to the company for another decade.

    If someone from out of town were to visit you, where is the one place you would have to take them?
    Borough Market – a real foodies market – or the London Eye for a good view of historical London, or a day out horseracing, perhaps at the Cheltenham Festival, which is unique to the U.K.

    What’s the best movie food?
    A hotdog, followed by ice cream.

    What is the last book you read? Did you enjoy it? And did you read it on an e-reader?
    I don’t enjoy novels, so maybe a Bill Bryson book a decade ago. When I read technical books I prefer having a hard copy to make notes.

    What is your favorite movie?
    Triple dead-heat between Man on Fire, Once Were Warriors and Casablanca.

    If you had a theme song, what would it be?
    “Cat’s in the Cradle,” but I guess it is an anti-theme song, as I try to be the exact opposite.

    If you could go anywhere on vacation, where would you go?
    The Maldives for relaxing or the Galapagos Islands, which remain on my must-explore list.

    If you could have dinner with three other people, living or dead, who would they be?
    Charles Darwin, Susie O’Neill, Albert Einstein.

    What would you do if you just inherited a pizzeria from your uncle?
    Install someone who was passionate about pizza – success is so much easier when you have true passion for what you are doing.

    What are three things that no one knows about you?
    Well, they will know if I tell you! So take your pick from these four:
    I bred and showed fancy poultry as a teenager, specializing in Dorking Bantams and Frizzles.
    I have done a few stand-up comedy shows.
    My first degree is in genetics and biochemistry.
    I want to explore one of the true untouched jungles of the world with my brothers one day.

  2. #2
    LukeC is offline Non-sponsor Affiliate Program
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    Birmingham, UK
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    It's refreshing to see a new operator come in with a different business model to the traditional bookmakers and it'll be interesting to see whether The Colossus takes off both with punters (both football fans and lottery players) and affiliates.
    Head of Affiliates at Digital Fuel

  3. #3
    Aussie is offline New Member
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    East Grinstead
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    I think that fact that his main headline bet has been exposed as having true odds of a trillion to one is not good.

    The firm claims seven correct match results on a £2 accumulator could see
    punters land £10million.

    But a sequence of unlikely scores at the astronomical odds — equal to a
    thousand billion — would have to happen to land the jackpot.

  4. #4
    Miles_FTA's Avatar
    Miles_FTA is offline No longer with Fast Track
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    Very Interesting Interview im curious as to how Charles Darwin, Susie O’Neill, Albert Einstein. Susie gets your Nod ?

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