Werner Becher, CEO, Kambi

Thank you for having me.

So first of all, I think Christian in the 40 years before did a great job. We are the global leading sportsbook supplier, premium sportsbook is for sure the best product out there. My focus in the last six months was a lot on our modernization strategy. I think we're well known in this industry as providing the best sportsbook, but Christian set the strategy and I'm executing on that. We also provide now an odds feed, we provide a managed trading service, we offer a bet builder, all these products as standalone products. That's after 14 years of only supplying customers with a turnkey solution. That's a change for the company. And the second area of focus for us at the moment is fully on AI. We started to invest already three years ago. We are an AI-first company and this year is the year of execution for us. So we're rolling out our AI pricing and trading service now, which is a big step for the company. We are very happy about the first results we see. It will really change the whole industry.

Yes. Many areas because first of all, we still have 320 traders at Kambi. So that's a big headcount. That's also a big cost in our P&L. Looking forward, we think we can work with a team size of about 50 supervisors only. So this is a big cost reduction for the company. The best traders we have today, they will stay with us going forward. So that's on the cost side. The more important thing I think is on the revenue side because the margin is so much better. The product and the odds are so much sharper and in real time. So it's getting nearly impossible for sharp punters to take away money from our customers anymore. So we will have more revenues with less costs. And as a public listed company, that's definitely no bad news for investors. That's always the goal, right?

Yeah, I think walking around here at ICE, you can see that every few months, if there is a new conference, more and more new sportsbooks are here with big booths. And I've never heard from these companies before, but it looks like they're all making good business. And I think the reason they're making good business is because of black markets. Kambi was always very focused on regulated markets. We see none of them as our competitor because we see none of them in tenders in pitches. But it looks like with all these very tough regulations, especially in Europe at the moment, but also in Asia, that the big black market is growing and growing, which means there are a lot of opportunities for these companies out there. We are very focused on regulated markets. So regulation is always in our favor. For example, Brazil now. We launched on day one in Brazil with several customers there. Looking to the US with taxes and hopefully to regulate also soon. There are a lot of opportunities for us. But again, there is a big black market and I think a lot of regulators, especially in Europe, do not understand that this is not good for their customers because there's no social responsibility, no responsible gaming, no taxes, nothing, no KYC. Absolutely. It's a difficult market. And when these companies want to get into regulated markets, that should be a black mark against them. Absolutely. So we are licensed in more than 60 jurisdictions, which is a big burden for a company. Our regulatory compliance team today is about 17 employees. It comes with a lot of cost to be compliant in all the jurisdictions all the time. These guys change the regulations and policy every few months. So it comes with a lot of costs and I think only companies of our size and scale really can be compliant and active in so many countries.

Yeah, I think it's definitely a big gray market. It's very tough for two reasons. First of all, it's an ultra competitive market. All the big guys are in there, 75 and more to come. Some are still in wait position but will enter the market soon. So highly competitive. But on the other side, also the very complex KYC process there including face recognition makes it very difficult, made it very difficult in the first few weeks. It's getting better now to really convert the customers from the customer base they had in the gray market before into regulated customers. So we hear feedback from not only our customers but from the whole industry that it was a tough start and it will take some time because customers are jumping around now and try to find operators where they don't have to go through this process. And it takes some time to figure out because there's a lot of blocking in Brazil that more or less there is no other chance now. So it takes some time. A lot of football bets down there, I imagine. Yes. And I heard from a customer yesterday that in the Google search rankings on top at the moment are unregulated casino, unregulated betting because customers are looking for alternatives, do not go through this process. Exactly.

So we are a sportsbook-only company, but of course for all our customers it would be so nice if more countries regulate also iGaming because for all the betting operators, iGaming in Europe is about 60% of the revenue normally coming from gaming and only 40 or 30 even less for betting. So their business model would be much better if gaming would be allowed. I think everyone's a little bit disappointed because we all expected to see more traction, more speed. There are a lot of rumors now out there that Mr. Trump probably could change some things. There are even rumors out there that he's interested to start the process about at least thinking about a federal regulation. But these are all rumors, right? You never know. But there's some optimism now definitely in the market.

Yes. I think we operate about more than 30% of the whole retail business in the US is run on our platform.

Yes. So we work with commercials where there is a lot of tribal operators in the US. And especially the tribal operators, they have sometimes very clear policies about stake limits and things like that. But of course we always have recommendations for our customers because for all these mainly casino-focused companies, sports betting is often a very new area where we are happy to advise and consult them and provide our experiences from a lot of other markets in the US but also outside the US.

Yeah, they're very happy with it and I know Richard Schwartz pretty well and he's very happy with what's happening there.

Yes. So first of all, I think Richard Schwartz is one of the best CFOs I've ever worked with. He's very strategic, a very smart guy. We're very happy to have Rush Street as a customer. We also work with Bally's in the US. We work with Parks Casinos. We worked with Churchill Downs in casinos in the US. And we recently signed a few weeks ago with Hard Rock.

I think it's quite fair if a new incoming CEO is in charge that he also executes some changes in the management team. That what I did. In general, I'm very happy with the team Christian handed over to me. So we have a very experienced senior management team. Yes, I did some changes but the changes are not complete.

Yes. Right-sizing. It's simply because it's 2025. It's too late to simply use AI as a password. We have to execute now. We roll it out. I think it's only Sportradar and us. Only the two of us really started a few years ago already to invest in. And for us in the next few months, it will really pay off a lot.

No, we don't have the license yet. The Nevada Gaming Board paved us in a way. So we still have in two weeks from now with the Gaming Commission the final hearing there, but it looks good that we will.

Yeah, I think it's the gold standard definitely from a license perspective. If you look at the sportsbooks which you have in Nevada, probably they're not all on the top level.

Yes, we have a lot of confidence in our company, but our share price is on a very low level at the moment. I think it was absolutely the right decision to go for a share buyback program. If our share price goes up again, which it will, I think, then of course share buyback probably is not the best option, but getting active more on M&A to use our share price also to pay for or to do dividends probably is then the better way. But for now, it's I think for investors the best thing we can do.

Yeah, I see Kambi going definitely in a direction that with our AI capabilities we will be in such a good position because of margin, because of user experience that we will get even more dominant in the turnkey sector, but we will leverage also our odds now for other customers who have an in-house sportsbook. And our odds are not static odds like you can get from the Sportradars and the others. Our odds are traded on a $17 billion dollar liquidity we have. So we use all our trading and liquidity we have with our AI machine now to constantly sharpen these odds. So life delays, uptime will be nearly 100% because AI can react within milliseconds. So we see a completely different level now with our product and this will be a benefit for our customers because they will take the money from...

Thanks so much. Always a pleasure to talk to you. Hope you can follow up with us next year.