Stefan Nelson, Chief Financial Officer of LeoVegas, believes that the sector as a whole will prove innovative and resilient enough to overcome the challenges it faces – but some operators will fall along the way.
As LeoVegas continues to embark on a new era as part of MGM Resorts, Nelson shared insights into how the company plans to navigate the current European economic climate ahead of his appearance at the SBC Summit Barcelona next month.
SBC: Hi Stefan, thanks for this interview ahead of the Barcelona Summit. From a C-level perspective, how are you monitoring the multiple economic headwinds challenging the industry?
Stefan Nelson: Staying on top of economic trends and their potential impact, while ensuring we are capitalising on market opportunities is – as always – part and parcel what I do. We obviously keep a close eye on macro economic trends, we talk to economists, politicians and other experts in order to plan and navigate accordingly. Staying nimble and agile, while diversifying our offering – both in terms of product and geography – means we are hedged against a downturn in a particular market but can also adapt to the rapidly changing economic landscape.
SBC: As such, what changing consumer dynamics or circumstances (inflation, big pinch) are impacting your role as CFO leading an igaming business through tough economic times?
SN: I’m a firm believer that there are always opportunities for growth, even in challenging external economic conditions. In the current environment, cost optimisation and value-driven strategies are even more important, as well as aligning our business model with changing consumer dynamics so we can maintain growth and profitability.
The current environment also provides good opportunities for market share gains for well-invested operators with a strong product offering like ourselves. At the same time, we are constantly evaluating our cost base and our supplier terms to ensure we get fair terms and sufficient returns on our investments.
SBC: Why have so many operators faced a tough financial adjustment post-COVID? What is your take on the lasting impact of 2020 and 2021 on the igaming sector?
SN: The pandemic accelerated the adoption of online gaming but also brought about increased scrutiny and regulations. As we have returned to normality, some players have also returned to land based operators, which was to be expected. However, my take is that the lasting impact of 2020 and 2021 has made the industry more resilient and adaptable, which I believe will benefit the sector in the long run.
SBC: Facing new economic realities and uncertainties, where should the industry focus its investment in?
SN: Placing emphasis on offering the strongest product and a hassle free player experience, enhancing security, and providing personalised user journeys will be key to staying competitive. Player safety is also front and centre of our investment strategy, aligning with regulatory trends and expectations.
SBC: How do you conduct investment and allocate resources effectively across a group active in multiple markets and with broad product scope?
SN: This really needs a strategy that is robust and flexible at the same time. While we set clear global strategies and guidelines, we also allow local teams to adapt and implement them, according to their specific market’s requirements. We also make data-driven decisions and encourage collaboration and communication across different markets and product teams, to ensure alignment with the overall company goals.
SBC: Amid a poor economic outlook and ever-saturated markets in Europe, is the igaming sector looking at a decade of stagnation?
SN: While the economic outlook in Europe may appear challenging, I don’t believe the igaming sector is looking at a decade of stagnation or that the market has reached saturation point: there are still plenty of opportunities for innovation and expansion.
However, the igaming landscape is more complex than ever, and I expect the European markets to consolidate into a fewer number of large operators in each market that can handle all the various local regulatory requirements and varying consumer preferences. So from that perspective, it is a bit of a survival of the fittest situation and, just like in any other industry, not all operators will survive.
SBC: How can an investment strategy be kept adaptable to meet ever-shifting regulatory and market circumstances, particularly in Europe?
SN: I think this is a really interesting question and comes back partly to what I’ve already mentioned – i.e. adopting a diversified approach and really leveraging technology to gain insights so we can make effective data-driven decisions. By being flexible, proactive and nimble with our resources, we can turn challenges into opportunities and continue to grow in various markets.
SBC: What takeaways do you want to present on your panel at the Barcelona Summit on projecting and interpreting the industry’s economic outlook?
In a tougher economic environment, the consumer will be more picky. So the key is to stay consumer-centric, and constantly work on improving the player experience, so that the players will pick us. And at a management level, be sure to take strategic decisions that drive value in the long-term, even if it might be painful in the short-term.
SBC: Any final thoughts?
SN: While there are undoubtedly challenges ahead, particularly in Europe, these challenges present opportunities for those willing to innovate and adapt. By focusing on customer needs, embracing change, and working collaboratively with regulators, I believe we can continue to thrive and shape the future of online gaming.
SBC Summit Barcelona is a leading global betting and iGaming show with a comprehensive high-level conference, a programme of major product launches, and a 300-booth expo. Click HERE to view the conference agenda and tickets.