Ep 505: Betsson Bets On Tech, While Entain Bets On Stella - With Pontus Lindwall

Hello everyone. Welcome back to iGaming Daily. I'm Ted Clay. I'm joined here with Ted Meir yet again. Second day in a row. We're back in the studio. Of course, the podcast is sponsored by Optimov, number one CRM marketing solution for the iGaming market. We're going to hand over to our colleague Victor later on who did an interview with Pontus Lindwall, the CEO of Betsson AB earlier today about their Q1 financial results which were just published this morning. But before we get into Victor's interview, Ted and I are just going to have a bit of a chat about these results and the wider market and circumstances for some of Europe's biggest gambling PLCs, I guess. So yeah, Ted, you're ever the expert, ever the analyst on these sort of things. What do you think so far from these results? What are some of the big talking points you reckon for Betsson and other big gaming PLCs at the moment?

Okay, should we start with... I think Entain kind of overshadowed this morning. I mean, Entain are obviously what, second biggest gambling group in the world after Flutter, usually by revenue. So they are the big one. So they announced the appointment of Stella David as permanent CEO, transitioning from interim. Were we surprised? Not really. I think that this kind of points towards a more strategically stable Entain in terms of what has to be done and what has to be done to kind of confound the relations with investors and project kind of a clearer strategic view of where the company's going to. But it has a long road ahead and it definitely has kind of headwinds incoming with the FCA's challenge in the UK and the Austria settlement yet to be decided in Australia. So as ever, you know, Entain, they're a moving vehicle and it's hard to project where they'll be at the end of the year, but things are developing there.

Yeah, Entain's an interesting one, isn't it? I mean firstly I think a good point you made there was relations with stakeholders and investors, wasn't it? Because I think there's been some reports in UK media lately, I think on Sky News, I believe it was, that apparently some investors have been calling for her to be instated on a permanent basis lately. It seems there's been some demand there perhaps for a bit more stable leadership. Like you said, a confirmation of strategic direction with a permanent CEO at the helm. I think obviously it's an interesting one, isn't it? Kind of again for the same reasons you mentioned of like they consistently perform well on a revenue basis and it's easy to see why with such a strong portfolio of brands that they've got, you know, Ladbrokes, Coral, Bwin, so on. You mentioned Australia, obviously they're one of the biggest ones there, Ladbrokes Australia and Neds. But then kind of from like a regulatory and governance standpoint as you mentioned, that's where they come up with the hurdles, isn't it? In terms of like trading and brands, they do really well, but they're just coming up against a lot of these regulatory challenges and headwinds like with the Opticourt investigation, with the situation with the FCA in the UK and the old HMRC settlement from a year or so ago. So like it's a very interesting company to follow in that regard. A lot of drama.

Yeah, a lot of drama. Okay, what great insight. But look, I think look, we got to step back a bit. We're still kind of very early into the Q1 calls across the PLCs, but I think kind of updates from Entain and Betsson, I think one thing that it's telling us is that there needs across the board there needs to be kind of stability and there's a lot of pressure on leadership to get things right in what's going to be a difficult H2 for all PLCs. And you know, we live in uncertain times. So the macroeconomic picture is looking very blurred out there, especially in North America and Europe. And also there's a heck of a lot of regulatory headwinds coming in in Latin America, you know, markets where they've invested kind of multi-millions, not only in Brazil but Colombia, we're going to see kind of that VAT increase to 19%. So how that plays out, I think this is going to be a year that really tests leadership and I think from an investor view, you know, if you're not sorted at the top table, it's going to be quite frantic for them. And I think that a lot of the players that you're going to see now are just to settle kind of your corporations for kind of messy affairs or messy headwinds coming in from H2 onwards.

Betsson kind of noted this in their Q1 report as well, didn't they? I mean, the statement in that from Pontus Lindwall, which will be discussed I think later on by Victor. Anyway, he mentioned like the macroeconomic headwinds that are going on, the really difficult trading circumstances that companies, not just gambling companies, but businesses in general, like you said, in Europe and America are facing with tariffs and trade wars and sluggish economic growth. Things are difficult. Obviously they've recorded revenue gains against that, but the economic circumstances these companies and all of us as consumers find ourselves working in are difficult. And then like you said as well, the Latin America side of things. I mean, I think Betsson are quite an interesting company in Latin America. From what I've read, when I spoke with Jesper Svensson at ICE earlier this year, kind of their approach to Latin America of it being very diversified is interesting. Kind of spreading their bets, I guess you could say if you want to forgive me for that pun, in Latin America, like not just focusing on Brazil which has obviously got a lot of hype around it at the moment. They're active in Argentina, like you say. I think they've just been building up in Paraguay as well. But a lot of these markets have got some tough regulatory changes incoming, particularly around tax. So there's a lot of prospects but also a lot of challenges. They're just coming hand in hand with each other. Is that something you'd agree?

Yeah, look, I mean, I'd rather be in Betsson's position where they signed a resilient kind of Q1 than heading into the kind of headwinds that everyone's going to have to tackle with. And then remember, this is gaming and a lot of results, regardless of what's going on in the world, come down to whether conditions are favorable to your business. I think we have to like, this is one of the few times where gaming has to kind of look outside of its remit and it is an uncertain time across all industries. But I think the bigger picture is like, how does kind of gaming recapitalize or kind of recalibrate to new conditions, right? And whether by kind of Q3 it still carries its appeal to kind of wider investors and wider institutional investors willing to back the sector. There's everything to play for here and actually I think that in kind of these rupturous times you might see one or two kind of clever moves from companies that benefit from that.

Yeah, absolutely. Right. I think you've hit the nail on the head there with that one, Ted, of yeah, of looking ahead to what the rest of the year will be like. It'll certainly be an interesting one to keep an eye on. There's a huge amount of factors at play, different regulatory changes and challenges, changes to tax regimes, just the general squeeze that consumers and businesses are finding themselves in in these quite challenging economic times. Who knows where it could go. It's going to be very interesting to see how it plays out. Anyway, I think on that note, it's probably about time for us to hand over to Victor and his interview with Pontus Lindwall, Betsson AB CEO, where he'll be discussing a lot of these factors we've just discussed. I think as well as something that Betsson mentioned quite a lot in their Q1 was like a focus on technological investment and things like that. So I think we'll hopefully hear a few insights into that as well when Victor speaks with the CEO. So yeah, thank you very much for joining me, Ted, to have a quick breakdown of these PLC results and to our listeners, please enjoy the interview with Pontus Lindwall. See you next time.

I'm Victor Kay, senior journalist for SPC News. And today I'm joined by Pontus Lindwall, CEO and President of Betsson, to discuss the company's latest results. Pontus, once again, thank you for joining me today. As always, I'm not going to waste your time anymore. I'm going to head straight into the questions. The first thing I want to ask is that we've seen Betsson achieve a strong sportsbook margin in this quarter. Given this fact, do you think are there any plans to introduce more niche sports betting options such as esports, local sports, etc.?

All right. And you also have a strong cash position. How does Betsson plan to use this, further acquisitions or tech investments or business diversification?

Yeah, definitely. And focusing more on the product side of the company, are there any plans to leverage AI further for dynamic personalization of gaming content for individual customers?