The key takeaway from this particular case study is that that consumer purchasing decisions are based on comparison rather than absolute price.

Take an example where customers have three purchasing options – call the products A, B, and A-.

A and B have different but equally valuable customer benefits, making a decision between them difficult. How does a customer decide which to proceed with?

The introduction of the third option of A- creates what Ariely called a decoy. The customer benefit with the decoy is positioned similar to A, but is clearly inferior to A, making the comparison between option A and option A- very easy. But in the process, the superiority of A relative to the decoy A- also generally makes A appear to be the most superior option overall. Even if nobody chooses the decoy, A-, the inclusion of it is more likely to make customers choose A as their final selection – even over B.

Our Case Study: Baseball Top Trends
In March 2012 before the start of the MLB regular season, we drew inspiration from this case study in the book as we were deciding how to package and price our iPhone app, Baseball Top Trends.

We initially planned to offer two subscription tiers as available options for customers to upgrade the free-to-download app (in-app purchases unlocked additional content). The lowest option, a weekly pass, was priced at $4.99. On the other end, a $24.99 season pass would make the content available for the duration of the entire 2012 MLB regular season, which runs roughly 25 weeks in total. If a customer was evaluating these two options at the start of the season, they would quickly realize that the season pass would give 25 weeks’ access for the price of 5 weekly passes – five times the value!

With this pricing structure, the season’s pass appears attractive because of the volume discount, while the weekly pass appears attractive because the price and commitment is lower, exposing the customer to less risk. Unfortunately, the extreme difference between the two prices makes comparing the value difficult.

The addition of a third pricing tier, the monthly pass, drove greater purchase of the season’s pass.  A monthly pass was $14.99, but customers rationalized it as “If I spend $10 more, I get 6 months instead of 1”.  This made it much easier for customers to compare discounts, and having two large prices to compare between made the highest tier appear to be have the best value for dollar.

Even though we actually had very few monthly subscribers, its mere existence drove more sales of the season’s pass, increasing our overall app revenue throughout MLB 2012.

Key Takeaway
If you are tasked with devising a tiered pricing strategy for a product or service, try including a clearly inferior option as your decoy price point. Comparison is an inherent part of the purchasing decision for customers, and making the contrast easy for customers is sure to drive sales of the highest price tier for your product and your business.

It worked for us and Baseball Top Trends this MLB season, and chances are it will again next season!

Basically, NFL Team Trends lets you “ask” a question to our database of stats that goes back to the start of the 2006 NFL season.

With this upcoming weekend being the first full weekend of the 2012 season, you might want to know something as simple as how often Miami covers the spread in the month of September? With NFL Team Trends, you could find out in only a few clicks that they have covered the spread in September an abysmal 17% of the time since 2006:

Every time you “ask” a question to NFL Team Trends, we’ll instantly show you the team’s Win/Loss record for similar historical games. And of course since football is a game of point spreads, we’ll also show you the team’s ATS record for similar historical games (yes, using actual historical point spreads!). Finally, using historical odds, we’ll actually calculate how much money you would have won/lost had you bet on each of the historical games, leading to a handy little profitability metrics called “Return on Investment”.

But the coolest part of NFL Team Trends? If you find a highly profitable trend, it might interest you to know the next time your team has an upcoming game where the trend is “live”. NFL Team Trends lets you create your own custom list of trends, and will alert you BEFORE the next game if one of the trends you are following is live. No more spreadsheets, no more notebooks, and no more daily rituals trying to manually determine whether any of your systems are live. NFL Team Trends does it all for you now.

Last season, we launched NFL Team Trends as a subscription-based app. We charged $199 for full-season access (as well as monthly/weekly access), and had people gladly pay the subscription fee. Feedback was that the subscription fee easily paid for itself, and that customers felt like they got value from their subscription. That made us happy!

But this year, we called an audible.

In the spirit of Ronald Reagan, we decided to tear down that wall (paywall, that is). That’s right: NFL Team Trends will be 100% FREE to use for the entire 2012 NFL season!

Sure, we could charge subscription fees and make some money, but this season we’re more interested in getting people using the product and sharing feedback and suggestions. So there you have it: NFL Team Trends is free. Tell your friends, your Grandma, and your mailman.

If you bet on NFL, or are just a stats geek, play around with NFL Team Trends this season on our dime, and let us know what you think. We have some ideas about how we can make it better, but it doesn’t actually matter what we think… it’s what YOU think that matters most!

So go signup at NFL Team Trends now for free before we change our minds ;)

William Hill launches U.S.-facing website hot on the heels of its historic licensing approval by the Nevada Gaming Commission.

VICTORIA, British Columbia, Canada, July 26 – Launched at WilliamHill.us, William Hill’s new website presents a unified presence and rebrand for the three American companies acquired by William Hill PLC as part of last month’s licensing approval process: American Wagering Inc., Brandywine Bookmaking LLC (Brandywine) and the Club Cal Neva Satellite Race and Sportsbook Division (Cal Neva). Bet Smart Media Inc. was selected by William Hill PLC’s newly formed US subsidiary to provide a US-facing website.

Bob came to Bet Smart last September professing how good of an iOS developer he was. We didn’t believe him, so we hired him to call him on his bluff. Turns out we were wrong… horribly, horribly wrong.

In all seriousness, Bob joined Bet Smart with the full intention of one day leaving to start his own company. And while we would have loved for him to wait longer before doing so, we can’t begrudge the man for wanting to flex his own entrepreneurial muscle. After a bit of well-deserved time off, Bob will be starting his own consulting company (name TBD), where he will be offering his iOS services to the world at-large.

To honour Bob and his time with Bet Smart, I’ve written a haiku (related: if I haven’t responded to an email from you, sorry – I’ve spent the entire week perfecting this poem):

Developer Bob,
Don’t call him a rockstar dev;
He prefers “ninja”.

From the gang here at Bet Smart, thanks for being with us, Bob. It’s been a pleasure. Just don’t forget us little guys when you make it big!

- Jesse

As we work towards the site relaunch – which will also coincide with some announcements – we’re going to start using this blog to talk more about something near and dear to our hearts: sports betting on mobile devices.

The iGaming industry is undergoing a tectonic shift, and the mobile channel is a driving force behind that. We have some pretty strong feelings and opinions on the topic, so we’ll be standing on our little soapbox here to shout about it!

Stick around. This is going to be fun :).

Continuing along this line of thinking, I also wrote an article that was featured in the same issue of the magazine, which has a printed circulation of 16,000, and an additional 75,000 online readers.

Bookmakers – companies licensed to take sports bets – are experiencing a surge in business right now. The idea that you can now bet on discrete events within a game has injected rocket fuel into the “P” side of P&L’s for UK & Europe’s top bookmakers.

Naturally, the bookmakers are all keen to increase adoption of in-play bets by their customers to help further drive this growth. In my article, I offer some practical strategies that bookmakers should consider if they are serious about capturing and retaining market share in this growing and lucrative category of iGaming.

As for us here at Bet Smart: let these articles be a glimpse into what we’re working on. We’re placing a big bet on the future in-play betting on mobile devices, and can’t wait to debut our first in-play sports betting apps soon.

Enjoy the article, and let me know in the comments what parts you agree/disagree with!

Jesse

View the PDF

Conversely, in-play sports betting occurs once a match has started. Sportsbook operators create markets (key events people can bet on) out of any aspect of the game. They have teams of mathematicians sitting in their offices coming up with complicated algorithms to analyze the probability of various events actually occurring in the match. Low probability events get better odds, high probability events get worse. For hockey, it may be a bet on which team or individual player will score the next goal, for baseball it could be the result of the next at-bat.

It’s been quite a ride to see the emergence of in-play over the last few years. In reading the annual reports for the top sports book operators in Europe, some have seen triple digit growth YoY with in-play now accounting for over half of their revenue. The numbers are getting so staggering, it would be foolish to ignore. Here at Bet Smart, we have some pretty fancy ideas on how to take the in-play betting experience to the next level, particularly on mobile devices. Stay tuned throughout the summer as we start to share parts of our most ambitious technology undertaking to date. In the meantime, check out the article below:

Devising a Standout In-Play Betting System –

Baseball Top Trends is a self-sustaining analytics engine that produces daily updates and provides valuable content to users.  It does this by leveraging a powerful trend-mining engine that analyzes the profitability of each day’s games.  Baseball Top Trends then takes the games which pass the standard of profitability, and assembles them in a Top Trends list.

Rather than limit users to one standard of top trend, Baseball Top Trends finds opportunity in three separate criteria: the first being situations in which teams win often, a traditional method of looking for opportunity in baseball.  On top of that, Baseball Top Trends analyzes the amount of times that a game’s total number of runs has gone ‘Over’ or ‘Under’ the expected amount, and presents a top trends of those games.

The final criterion is possibly the most innovative.  The Return On Investment top trends list takes the past winnings of situations, using real historical lines, and arranges a top trends list based on profitability, a stat more valuable then totals or wins and losses.  This new metric lets users find opportunities that they couldn’t before without hours of research and calculations.

The sports gaming market has not seen a self-sustaining and dynamic program such as Baseball Top Trends.  This release is extremely exciting and will help bettors find a new edge this MLB season, as well as further Bet Smart’s vision of innovating the way users interact with sports betting.

See Baseball Top Trends in the App Store or check out the Best Betting Apps feature of the app and give it a try with the live widget.

Using Facebook’s Restriction API has a couple advantages.  It uses Facebook data to determine if a user can access an app, even if the user hasn’t made their age and location public.  The app doesn’t show up in Facebook’s search if the user can’t access it.  And let’s not forget that it’s one less piece of code you have to write.

Existing docs can be found at https://developers.facebook.com/docs/reference/rest/admin.setRestrictionInfo/

We wrote a script to set the restrictions in PHP. Don’t forget to replace your App ID and App Secret with the correct values for your app. You can find those at https://developers.facebook.com/apps

We hope this will save you some time on your project!

We spent the week catching up with existing partners and customers, while also meeting many interesting folks for the first time.

And after a week of talking with hundreds of people, seeing hundreds of exhibitors, and being generally immersed in industry chatter, we came away with a few top themes to characterize where we feel the industry is at, where it’s headed, and what’s on peoples’ minds. Bear in mind that this is limited to online and sports, so it ignores the many other categories represented at ICE.

Our Top 5 Themes at ICE 2012:

1. Mobile Betting is Huge. The last couple years, industry headlines have proclaimed that mobile betting will become huge. Well that forward-looking statement can now be adjusted to the present tense, because those oracles were right: mobile betting IS huge. Ladbrokes saw its net revenue from mobile device betting grow 174% for 2011, Betfair’s mobile channel revenue grew 88% for the first half of its current fiscal year, and 44% of Paddy Power’s customers bet using a mobile device as of October 2011. Expect operators to continue investing in the development of new mobile betting products in 2012.
2. In-Play Market Race. Instead of betting on a sporting event’s outcome before it starts, you can now bet on an event while it’s in-progress — or in-play. Who will score next? When will the next score occur? How many total points will be scored?  These are all examples of in-play bet options, and operators are ramping up the number of choices they offer. In an effort to gain share in this fast-growing market, the prevailing mentality seems to be more is better. The truth though, at least anecdotally through conversations we had, is that this is a fallacy — so far. The majority of in-play bets being placed are on a disproportionally small number of available options. Yet operators are jockeying for position to offer the greatest number of in-play betting options, with no end in sight over the coming year; the race for in-play market supremacy is still early.
3. US Market Buzz. On December 23, 2011, the Department of Justice announced major changes to The Wire Act, opening up the possibility of legalized Internet casino gaming in the US. The recency of this announcement made conversations at ICE particularly speculative. Coupled with recent headlines about large British bookmakers taking positions in the US, ICE was abuzz with hypotheses and conjecture about the US market. If you’re curious, the British bookmakers include William Hill who entered Nevada last May, Paddy Power who announced last September that it was applying for a license in Nevada, and the Ladbrokes acquisition of a technology company in Nevada just last month.
4. Social Media & Betting. Facebook announced that it’s considering allowing real-money gambling on it in the UK. Zynga has confirmed that it is seeking partners for online gambling initiatives. And of course, the thing on everybody’s mind at ICE was IGT’s acquisition of the Double Down virtual casino on Facebook — for $500 million. With the prospect of real-money betting coming to social platforms – and insane valuations given to companies involved in virtual-currency betting – cracking the nut that is social betting was especially topical at ICE 2012.
5. Product Differentiation. Walking the floors of ICE for a second year reinforced the suggestion that sports betting is becoming a commodity. Exhibitor after exhibitor showed off turnkey sportsbook software, automating every part of the bookmaker function: trading, risk management, e-wallet integration, etc. Barriers to entry have never been so low, and as a result, there are online sportsbooks popping up everywhere. The  market is inevitably becoming saturated, and punters (aka sports bettors) have more choice than ever. Top sportsbook operators are quickly realizing that product differentiation is one of the keys to standing out in the sea of noise, and that offering a compelling betting experience is a critical tactic for capturing the attention of punters. Luckily, people like ourselves exist to help with that using our sports gaming apps!

Leprechaun at the Ice Ice Baby party

Grant Posing in front of Big Ben

Fire & Ice Party

Jesse & Judd sampling a pint

Judd Overlooking the ICE 2012 Exhibition Floor (that's only 25% of it!)