An Optimistic Outlook
While 2019 presented difficulties in regions like Sweden and the Netherlands, Betsson Chief Executive Jesper Svensson, in a discussion with Tim Poole, maintains that the condition of the iGaming sector is much brighter than many perceive it to be.
For those uncertain about the iGaming industry, Svensson might be the voice to heed. In a field often overshadowed by negativity, the Betsson CEO emerges as a symbol of hope.
Conversing with Gaming Insider regarding the obstacles confronting operators like Betsson in the present market, the Swedish leader exhibits a distinct practicality. However, it’s a practicality that never allows Svensson to overlook the advantages of working in a role he “feels very honored” to occupy.
“We must keep in mind that this is a remarkable industry,” he states. “It possesses inherent expansion and will persist in expanding for a considerable period. Both digital and physical realms are developing; online is advancing more rapidly, making it a highly favorable domain to inhabit. The industry has been progressing steadily for numerous years. Occasionally, the expansion decelerates, and the industry needs to adapt. The crucial point to recall amidst all of this is that it remains a robust industry that is flourishing.”
Naturally, Svensson’s insights stem from a wealth of experience, having been engaged in the sector since 2006. The executive has been affiliated with Betsson for six years, having formerly held prominent positions at Ladbrokes, InterCasino, and Bodog.
Betsson, with its base in the sun-drenched Mediterranean archipelago of Malta, has a long history, observing significant transformations within the company and the broader gaming sector. Consider the two-year period when Pontus Lindgren held the helm as CEO. Under his leadership, Betsson underwent a substantial reorganization, directly addressing internal difficulties. These actions proved fruitful, enabling the company to rebound from a turbulent 2017 and conclude 2018 on a “highly optimistic note.” Revenue surged by 15% to SEK 5.41 billion (equivalent to approximately $5.8 billion!), while operating income soared by 35% to SEK 1.19 billion. And the icing on the cake? Net earnings experienced a robust 37% rise, reaching SEK 1.07 billion.
However, 2019 presented more formidable obstacles, and Betsson was not alone in confronting a more demanding environment. As Lindgren himself acknowledged, “It hasn’t been a walk in the park.” This time, the hurdles were primarily external, with regulatory shifts disrupting operations. These alterations created ripples across the industry, affecting Betsson and numerous others. Sweden and the Netherlands, in particular, posed their unique sets of difficulties. Collectively, these factors cast a slight shadow over the year. Lindgren even conceded that the regulatory headwinds constituted one of the most significant challenges they had encountered in the preceding six years.
Despite these impediments, Lindgren maintained his focus on the positive aspects, and it’s understandable why. Malta, a central hub for the gaming industry, is practically teeming with activity. One can hardly stroll down the street without encountering someone connected to the business! It’s this dynamic environment, with its concentration of operators and providers, that sustains the industry’s vitality.
For certain individuals, the throngs can be somewhat overwhelming. Others perceive the absence of variety as suffocating. However, Jesper Svensson holds a different perspective.
“I genuinely relish residing on this isle,” he remarks. “I believe it offers a fantastic way of life; you have the Mediterranean Sea, and naturally, abundant sunshine, which are incredibly positive aspects, particularly for someone hailing from Sweden. Moreover, I perceive Malta as a remarkable center for the online gaming sector.” He elaborates, “It holds immense significance for Malta, occupying a prominent position on the national agenda.”
“This very factor cultivates a favorable environment. It stands as one of the most robust industries nationwide.” He further notes that should you require a change of surroundings, “Malta may be a small island, but it boasts excellent connectivity, allowing for easy weekend getaways.” He adds, “I, myself, travel extensively to our various offices across the globe.”
Svensson’s daily routine in Malta revolves around the operational facets of Betsson. Now, some perusing this might experience a touch of bewilderment; if you happen to be among them, you’d be excused for presuming Pontus Lindwall is the Chief Executive Officer of Betsson Group. Lindwall is indeed the CEO of Betsson, Svensson affirms. However, the executive – who is more than willing to expound, acknowledging *Gambling Insider* isn’t the first publication to inquire about the synergy between his role and Lindwall’s – elucidates the organizational structure in greater depth.
“It’s a highly transparent arrangement where Pontus serves as the CEO of Betsson AB, the entity listed on Nasdaq Stockholm,” the Swedish national states.
Betsson AB, a parent organization, primarily invests in gaming enterprises. As the Chief Executive Officer of operations, I oversee the activities of all subsidiary companies within the Betsson AB portfolio. One could argue that my counterpart concentrates on financial markets, while my focus lies in the practical aspects, such as daily business management, promotion, and technological advancements.”
Svensson and Lindwall remain in constant contact, with “distinct boundaries” established between them. Enthusiasts of the American sitcom *The Office* can be certain that this dynamic differs from the frequent blurring of responsibilities witnessed between co-managers Michael Scott and Jim Halpert. Beyond this working partnership, Svensson inevitably faces daily hurdles, emphasizing that “each day brings fresh obstacles.” He pinpoints Betsson’s “geographic reach” across twelve distinct licenses as one such hurdle, as it “implies a constant stream of varied challenges across diverse markets.”
This leads us to the primary obstacle Svensson is eager to emphasize—one he ponders independently. Heightened regulation is a central concern for him, with the Swedish market offering perhaps the most relevant illustration from the past year or so. On January 1, 2019, Sweden restructured its gambling industry regulations to accommodate private entities. At the time, Lindwall informed *Gambling Insider* that Betsson “ought to be a cornerstone of the regulated Swedish gambling market.”
The subsequent events cannot be categorized as either a resounding triumph or an utter catastrophe.
The Swedish gaming scene presents a somewhat complicated picture for Betsson. Although their earnings for the initial six months showed a slight increase, the second quarter experienced a decline, causing some concern. Their operational profits took a noticeable downturn, especially in the second quarter, with the internet casino segment bearing the brunt of it.
However, it’s not solely about the figures. Sweden has been tightening its regulatory grip, and Betsson faced a penalty in 2019. While there’s optimism for improved relations between operators and authorities, Betsson’s chief executive acknowledges some challenges. He maintains a positive outlook for the Swedish market over time but recognizes the need to adjust to the evolving landscape.
He raises a valid point about striking a balance between regulation and fostering a thriving environment for licensed businesses. Ultimately, what’s the benefit of a regulated market if everyone seeks entertainment elsewhere?
“An ideal equilibrium hasn’t been achieved anywhere globally yet, as I believe it’s vital, from a governance perspective, that overseers bolster and aid firms within the established structure, instead of providing avenues to prospects beyond it.”
The head of Betsson Group commended the Malta Gaming Authority. “Given the background and past of the MGA, I believe it’s among the most, if not the absolute most, proficient regulators available,” he elaborated. “They possess much to offer other regulatory bodies. Naturally, they are a strict regulator; that has grown even more apparent, and they’ve implemented decisive measures throughout the years.”
When questioned by Gaming Insider about how the MGA might have addressed a comparable regulatory overhaul, Svensson noted that Sweden is “still in the initial stages of the procedure.” “The discourse between businesses and the regulatory body isn’t as developed as in other areas, so I anticipate that will progress moving forward,” he stated. “It’s also about obtaining the correct direction. If there’s a requirement for some guidance within the new regulation, the regulatory body needs to furnish that to the businesses, not simply direct them to legal clauses. I believe the Swedish regulatory body still has some tasks to complete in that domain.”
Tobias Fagerlund, from Global Gaming, would probably concur with Svensson’s evaluation.
In the month of June, the Swedish gaming regulator rescinded the Swedish permit of SafeEnt, a branch of Global Gaming. Global Gaming’s chief executive, Tobias Fagerlund, heavily condemned the ruling, labeling it as “unlawful” and alleging the regulatory body had incorrectly enforced an unclear regulation. He further disclosed that he was only notified of the judgment a mere eight minutes prior to its public announcement, at 8:00 am on Monday.
This circumstance underscores the occasionally strained dynamic between gaming providers and regulatory bodies in Sweden. Pontus Lindwall, the head of Betsson Group, remarked that “As time passes, these matters tend to resolve and improve; considering the number of businesses penalized in Sweden this year for various reasons, I don’t believe it’s due to companies intentionally acting improperly. I suspect we would witness fewer of these incidents if there were more transparent guidelines.”
As hinted at by Gustaf Svensson in our earlier conversation, another market presenting regulatory obstacles for Betsson is the Netherlands. The year 2019 marked a pivotal moment for the Dutch online gaming sector as its much-anticipated Remote Gambling Act finally received approval. Following two and a half years of the legislation navigating the House of Representatives, industry expert Willem van Oort characterized finally witnessing the bill’s enactment as a “surreal experience.” In practical terms, this signifies that the licensing procedure will commence in mid-2020, with a projected launch date of January 1, 2021. It also encompasses a 24-month waiting period, during which an organization cannot pursue a license if it has been functioning illicitly within the market for the preceding two years.
We possess assurance that we will ultimately penetrate the Netherlands’ market, a sector currently undergoing liberalization,” Svendsen stated. “To satisfy the stipulations they’ve established, product modifications were necessary. This undertaking, now accomplished, positions us advantageously in the permit procurement process. These alterations were essential to ensure conformity within the Netherlands’ framework.”
The concluding jurisdiction might captivate readers’ attention: the UK. This constitutes another intensely regulated and fiercely contested market that both ComeOn and EveryMatrix have recently relinquished (refer to page 32 for an article concerning Maltese enterprises departing the UK). Betsson proclaimed the shuttering of its office there in December 2018, adding that its Netplay label wouldn’t renew its broadcasting agreement. Numerous observers interpreted this as a signal of the operator curtailing its UK-oriented endeavors, potentially aiming for complete withdrawal. However, Svendsen conveyed to _Gaming Insider_ that the entity is not abandoning the UK market, nor are there any intentions to do so.
“Our presence persists in the UK; we haven’t departed,” the Swedish national affirmed. “Nevertheless, our current activity level is reduced compared to a few years prior. Presently, we are transitioning a business acquired a couple of years ago (the Netplay brand) onto our proprietary platform, a project slated for completion within the current year. Operations continue within the UK, but our investment has diminished compared to the scale of a few years ago.”
Following the purchase of several brands under the NetPlay umbrella, we recognized the importance of optimizing our product portfolio before committing additional resources, and that remains our primary objective at this time.”
Svensson further noted that in addition to current markets, a surge of new prospects is emerging for gaming companies. He stressed Betsson’s capability in managing the user journey, attributed to their in-house sports betting, gaming, and transaction processing systems. Nevertheless, as Betsson marks its 57th year and continues its quest for expansion and market dominance, it’s understandable that Svensson returned towards the interview’s conclusion to a subject evidently close to his heart.
He reaffirmed his optimistic perspective on the gaming sector, concluding, “It’s vital for the industry at large that we cooperate more frequently, advance a more cohesive strategy, and proactively influence the industry’s trajectory. This hasn’t always been the industry’s forte, but I’m optimistic that some of the shifts we’re observing will compel the industry to unite with common objectives and a shared path forward.
“In the preceding six to nine months, if you’ve been attentive to general and industry publications, much of the discourse has centered on unfavorable news, but I maintain that the gaming sector is developing, gaining resilience, and becoming more proficient. Simultaneously, there are very encouraging advancements occurring, and I think we should accentuate those more than we did in the previous year.”
Its undeniable: if other organizations adopted Svensson’s methodology, the interactive entertainment sector would be in a far superior position in 2020 and beyond. The Betsson Group CEO stated, “Each year presents its own set of hurdles and prospects.” However, he believes the prospects within gaming consistently eclipse the hurdles.
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