Technology Raises Stakes for Sports Betting

Q: What opportunities in the entertainment sector led to the establishment of Grupo Caliente?

A: Online sports betting has a long history in Europe. England implemented online betting in late 1999s and early 2000s, which spurred the creation of many betting companies. Mexico, however, was not ready at that time for the introduction of online betting, as e-commerce had little penetration due to the low bandwidth in the country. As e-commerce evolved and the bandwidth infrastructure improved, the conditions to introduce online betting consolidated. Companies launched online betting products in Mexico as early as 2009 but these still performed poorly. It was not until 2014 that we deemed it appropriate to launch Caliente Interactive, which was quickly adopted thanks to Mexicans’ love for sports.

Q: How could regulatory conditions improve to foster the legal development of this business niche?

A: We estimate that about 50 percent of the online betting market in Mexico is illegal. Some companies do not pay taxes and might be taking advantage of minors. The sector needs a new law that regulates online casinos and it is necessary for authorities to work together with certified companies to develop it. There are many strategies to tackle illegal gambling, but I believe the most effective will be for the Ministry of Communications to block access to online pages that promote or take part in illegal gambling.

Q: How big is the Caliente Interactive business within Grupo Caliente and what are your strategies to keep growing its importance?

A: Caliente Interactive represents between 35 and 40 percent of Grupo Caliente’s revenue. We expect this rate and our number of users to increase by 40-50 percent in 2019. Caliente Interactive has a 10-year plan to consolidate the company as the leader of the Mexican online betting industry in terms of market share. We want to grow our brand’s presence and become the Telcel of online betting.

Q: What strategies is Caliente Interactive implementing to increase its presence in the online betting market?

A: At this point, the most popular sports for online betting are soccer, baseball and boxing, with tennis, basketball and American football fighting for fourth place. The first step to grow this market niche was to familiarize Mexicans with soccer bets. In 2014, most sports betting done in Mexico focused on sports played in the US. Now, betting on Mexican soccer games is part of the mainstream so we are focusing on other sports like baseball by allying with Liga Mexicana del Pacífico (LMP). We will focus on baseball in 2019 and gradually incorporate other sports, including basketball and boxing.

We invest in advertising to generate traffic to the webpage. Once clients are there, our strategy is to keep a good relationship with them through a good customer relationship-management platform. We invest in providing our clients with a personalized experience and offer them the products they like. It is all about knowing our users and for them to see online betting as entertainment, not an addiction. We are working with regulators to ensure this is a healthy industry that promotes the development of Mexico’s sports industry and does not generate social problems. Caliente Interactive has even incorporated a system to protect users, blocking or regulating their account when we feel they might be overusing the systems. We also channel users who fear their gambling is becoming a problem toward professional care institutions, so they can receive treatment.

Q: How can Caliente Interactive create value for its partners, such as LMP?

A: Betting goes hand in hand with the sport itself. For that reason, we work together with sports associations and teams to create more entertainment options for fans. Through bets, it is possible for fans of a specific team to show interest in other teams, even if their favorite is not playing. Our strongest allies are our sports partners, without whom we would not be able to provide these services.