Ep 563: Unpacking Betsson's 18 Quarters of Growth, with SBC News & Pontus Lindwall

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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?

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?

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?

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?

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?

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?

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?

So you guys are taking a much more steady, measured approach while a lot of other companies are running straight in full steam ahead?

In the rest of Latin America, we mentioned that Peru is quite a big market for you guys, but Peru is also seeing some regulatory changes. Tax changes are looking highly likely. Do you foresee this having any impact on your Latin American margins?

Returning to Europe, obviously a lot of Central and Eastern European markets are quite a big part of your operation, and some of these are seeing regulatory changes as well, like in Croatia and Serbia, and a new tax regime in Lithuania. How has Betsson been navigating these changes, and how do you plan to continue navigating them as they roll out?

Do you think that generally speaking, increases in tax and changes to tax regimes are going to be one of the biggest challenges the industry faces going forward from this year out?

Returning to the topic of sponsorship and marketing we talked about earlier. We've just had the Club World Cup with the enhanced format. Betsson has some partnerships with some of the clubs involved in this tournament. Has this been a successful tournament for you because of that?

As you say, it's still early days in this new format, the Club World Cup. Given that there's a lot less customer familiarity with it, has it still served a decent purpose in providing a fan engagement bridge between the domestic seasons, in the same way that the Euros and the FIFA World Cup do?

With this in mind, we've got the FIFA World Cup taking place next year. It's always one of the biggest events in the betting calendar. How are you preparing for that? Do you have any plans in place, and is there anything you may have learned from your trading during the Club World Cup that might translate over to this bigger tournament?

Okay, thank you, Pontus. That's all I've got time for today. Thank you so much for taking some time out of what I can imagine was a very busy schedule to speak to us on our Gaming Daily. It's been a pleasure as always.

Thank you for listening to today's I Gaming Daily podcast, supported by Optimov, the number one CRM marketing solution for the I gaming market. If you want to find out more about some of the subjects raised today, feel free to explore any of the sites in the SBC News Network or check out the latest edition of the SBC Leaders Magazine. Happy reading.