SBC Media. Welcome to the I Gaming Daily podcast, analyzing the news from the betting and gaming industry all over the globe. Supported by Optimov, the number one CRM marketing solution for the I gaming market.
Hello, thank you for joining us today on this episode of I Gaming Daily, sponsored by Optimov, the number one CRM marketing solution for the I gaming market. I'm Tedm Clay, editor of SBC News, and I'm joined in the studio by Ted Meier, SBC Media's editor at large, where we're going to discuss Betsson's financial results, which were published just last Friday. The company has had a pretty solid quarter and first start to the year, all things considered. With some, obviously, the same challenges that the industry is facing overall with changes in regulation across a lot of core markets, a lot of governments looking to hike up gambling tax to fill some gaps in their economies and help drive growth. So amid this challenging sector, Betsson has stood out as doing pretty well. We're going to be speaking to Pontus Lindwall, Betsson AB CEO, later as well to hear his perspective on it and quiz him about some of the different market dynamics they're facing and some of their plans. So Ted, you broke the news on SBC today of Betsson's H1 result, just to start things off. What stood out to you from the financial report? What stood out? Normally, Betsson is always kind of first to go and back. If we rewind back to five years ago, I always viewed Betsson as the bellwether for European gaming, the first ship out of the docks that tells you what the weather is like. However, I can't view that now because they keep on outperforming market expectations and they keep on beating their forecasts against these very turbulent conditions we're seeing in the market. So again, this has been their 18th quarter of growth since 2021, which is remarkable. The financial metrics look solid. Revenues are going above 500 million, and they're putting a good 20% of that back into the BET at 160. This is a company that is outperforming even its own expectations. That would be my main view of where Betsson is going. The other factor is that, and I think Pontus will outline it, it is going to be a turbulent H2 coming up for them. A lot of tax changes coming into markets in Eastern Europe and Western Europe too, and also the launch of Italy's new online gaming marketplace with 36 licenses. So I think that's going to drive up costs. The Italian aspect is quite interesting. It's going to be a very competitive market, and it's also one in which, as some commentators from the market have said, it's going to be one for the big budget firms – for your flutters, your Entains, and so on – but also of course Betsson is in there, and they are outperforming a lot of people, so it'll be interesting to see how they take that market on. Sorry, Ted, I interrupted you there, please.
The other thing that jumped out, and I should have said this in the intro, is that I think Betsson needed a new market to lighten up its Western or European activities, especially in light of the Nordics being stagnant, them moving out of the UK about three years ago. Italy is becoming a more and more important market for them where they are taking market share. They have a very solid casino product, and I think they're now trying to advance their sportsbook properties and doing high-profile sponsorships out there. There's still in the background the reputation of the dignity decree that we've reported on. Italy is going to become more and more important for them. They are looking at a Western market where, if they can take a top polling position in the online market, that will impact the valuation of Betsson as a corporation.
Then Latin America stood out as well in this report. It was quite a big growth driver for them, wasn't it? In contrast to a lot of other people, they're taking a bit more of a steady approach to Brazil, aren't they? They've not fully launched out there yet. They are there, but they're not fully there. Instead, they're going for a lot of the Spanish language markets. Do you think this approach will pay off in Latin America, and that they might start outperforming some of the international competitors there in the same way they have done in Europe?
I think you have to separate the Latin American market. You're quite right to say they've gone more down the route of the Spanish-speaking markets – Peru, Argentina, Colombia. It's a real shootout in Brazil at the moment. Another important factor of the H2s will tell us how much the international operators are spending there, how much they are feeding back in terms of a BET from the Brazil market. The market has changed significantly from its January launch to July, and it's going to change even more in H2 with potential tax rises and the implementation of quite severe advertising restrictions. We'll find out in the long term whether Betsson was a bit too late to the market or played the right card and waited for the market to cool down.
Fair enough. There's a lot of it – the usual saying we don't have a crystal ball, we can't really tell what's going to happen. But I do find their approach to Latin America very interesting, and that is something we're going to ask Pontus when we get him on. Right, I think we're going to run out of time if we carry on talking amongst ourselves. So you've heard our opinions, and now it's time to hear some insights from the man himself, Betsson CEO Pontus Lindwall. Pontus, thank you very much for speaking to our Gaming Daily today, just after Betsson has released its H1 and Q2 financials. So Betsson has really stood out because you've recorded 18 quarters of successive growth since 2021. This has been during a period in which a lot of your competitors have faced significant struggles. How exactly do you explain this?
I think that's the result of decisions we made and actions that we took five years ago. We made a lot of changes – even five to seven years ago. We did some organizational changes. We took some decisions, and it took a couple of years until it took off. But now we are harvesting on that, and we are in a much better shape as a company than we were back then.
You've noted some of the organizational changes you've made. Something notable that Betsson has done was your exit from the Netherlands. What impact has this had, if any, on your Western European market growth profile?
Not much at all, because we never entered the Netherlands. We never fulfilled that acquisition. We never had any Dutch revenues in the P&L, so it doesn't have any impact at all.
The Netherlands has obviously become a very competitive market, but it's also quite a high value one for a lot of companies. Is this a market that you're quite happy not being involved in?
We had this acquisition going. It took a lot of time, and the market changed during that time as we waited. It consumed money, energy, and resources for us. So we decided to back out. That means we will not go into the Netherlands in the short term, but we have not closed the door on the long term because we are a global company. We are open for any market that looks decent in terms of conditions for a gaming company like us.
So it's more a case of a short-term refocusing on some of your more immediate targets, like Latin America and Italy. Is this an accurate statement?
Yeah. Yeah. So on this topic of Italy, we've seen that you've doubled down on your Italian investment, but there's also a new regime in Italy that is pointing towards a period of hyper competition. How confident are you of standing out among all the other companies looking for a bigger footprint in Italy? I think the competition in Italy is high already now, and there will be a new regulatory regime that will have an impact on the market structure. We will see how that plays out, but I don't believe that the competition will be so much higher after the new regulatory regime is in place. As you know, we have done several investments in sponsorship deals and others, and we have a good setup for Italy. So we are very optimistic for the future there.
You mentioned sponsorship there. This is quite a core part of your marketing approach, isn't it? Are there a lot of lessons you've taken from some of your more established markets to apply to your new targets in Italy and Latin America?
It's been a natural development for us. In some geographical markets, there have been restrictions on advertising in certain kinds of media, and sponsorships have worked fine. As we become a global company, it's important for us to be seen globally. A sponsorship like in the Junior team – these are global teams – it puts a certain label of quality to the company as well. So it's a very important part of our marketing and branding strategy.
Turning to Latin America, this obviously stood out quite a lot in the report. You've had a lot of growth there, but interestingly, a lot of companies at the moment are very fixated on Brazil, whilst Betsson is targeting more Peru, Colombia, and Argentina. What's the rationale behind this?
We have a license in Brazil as well. We have experience from newly regulated markets. Sometimes initially there is a marketing war because everybody wants to grab their market share. We have also seen some regulatory instability because when the regime is new, it may have to be tweaked and changed. So you don't really know what you invest in, and you also need to have the product fit for the market before you can really go for it. We believe we have a good product there now, but we have decided to be a little bit on the sidelines initially. When we feel comfortable, we are going to start gearing up also in Brazil. But we have a good position in other Latin American markets, and that's where we put the bulk of our money right now.
If I can just quiz you a bit more on your Brazilian ambitions. You've noted that you've got a license there, and there's been a marketing war going on in Brazil between a lot of the newcomers. How would you summarize Betsson's progress in Brazil so far?
