The rivalry between prediction markets and sportsbooks is fierce, with signs indicating that prediction markets are starting to impact the customer base of traditional sportsbooks.
According to a survey by Fullstory, a behavioral data analytics company, 60% of bettors believe that prediction markets are influencing how they use sportsbooks, with 35% acknowledging a decrease in their use of traditional sports betting platforms as they gain access to event contracts.
“Consumers are being presented with more options for how they can participate in online gaming, creating a more competitive landscape where a seamless digital experience is increasingly becoming part of the value proposition,” said Jason Wolf, president of Fullstory, in a statement. “The brands that understand how consumers are navigating, comparing, and engaging with their platforms in real-time can identify where friction is getting in the way of trust and retention.”
One-quarter of respondents stated that they use both prediction markets and sportsbooks based on the event they are considering betting on. Despite the decrease in usage of traditional sportsbooks, studies show that bettors often choose sportsbooks over prediction markets when given the choice.
Prediction Markets Making Other Inroads
While sports event contracts are currently popular in prediction markets, data reveals that bettors and traders are also engaging with other categories.
Fullstory reports that 62% of consumers have participated in sports event contracts, 42% have traded economic or financial derivatives, and a similar percentage have engaged in election or political event contracts. Additionally, more than a quarter have traded entertainment or pop culture derivatives.
This diversification is crucial for the industry as projections suggest that the volume in prediction markets could reach $10 trillion by 2035, with other categories surpassing sports in popularity.
Nearly 1/3 of respondents expressed that a wider range of event contracts could lead them to favor prediction markets over sportsbooks consistently.
Customization Is the Key
While sportsbooks offer larger bonuses than prediction markets, the latter can attract customers by emphasizing personalized experiences.
Promotional spending is beneficial for customer acquisition, but both sportsbooks and prediction markets should focus on customization as customers seek tailored experiences.
“Twelve percent of respondents have switched platforms because another offered personalization aligned with their interests, while 9% said recommendations based on their interests would make them more likely to try a prediction market,” concludes Fullstory.