Market diversification was the key talking point for a diverse group of betting CEOs at the SBC Summit Barcelona this year, with the assembled industry leaders also noting the ever-present challenges of regulation.
Regulated markets have become the main focus for the industry, the CEOs observed, and this is only going to increase. In the words of Jesper Svensson of Betsson Group, it is important for operators ‘to have many legs to stand on’.
He said: “There has been so many regulatory changes in the past five years, so if you only operate in one, two or three markets you are at risk of regulatory changes affecting the growth of the business in some ways.
“For us the focus has been to go into new markets, build up and get some sort of scale and then have the ratio of markets to de-risk a bit. At the same time, with regulation, and working towards regulation in some markets, on a global scale there’s more non-regulated and locally regulated revenues in the market, but in five years it will probably be 50/50.”
The key challenge for operators here is to achieve a degree of balance with regards to the ratio of regulated and unregulated markets, Svenson continued, and building up a good geographic spread is paramount to this.
Regarding geographic diversity, there is perhaps no better example than Flutter Entertainment, which is active in a range of mature markets via its Paddy Power, Betfair, FanDuel, Betfair and Sisal holdings.
Dan Taylor, CEO of Flutter International, also aired his opinions on this matter, whilst also referring back to his keynote speech which kicked off the 2023 edition of this conference.
At Flutter, the primary objective has been to achieve a leadership position, Taylor explained, via the launch and/or acquisition of ‘gold medal’ brands in prominent sectors, such as Sisal in Italy and FanDuel in the US.
“Fundamentally we believe that it is important to have leadership positions in the markets we care about,” the CEO of the FTSE100 group asserted.
“We think you get disproportionate benefits and scale in these markets if you’ve got what we call the ‘gold medal’, but of course we are always looking to add new markets to the portfolio, we’re not going to stand still.”
In his keynote speech prior to joining the Leaders panel, Taylor went into further detail on how Flutter has achieved ‘gold medal’ positions in several key markets, such as the UK, the US, Australia and Italy.
He remarked: “We really believe in scale in terms of building that competitive advantage in the market. We are believers that driving or scale allows investment and high revenue growth, drives greater operational leverage back into the business, drives more scale – and that repeats.”
The diversity of the global betting sector is only continuing to expand. LeoVegas CEO Gustav Hagman was the first to bring up Brazil, where the looming regulation of a federal wagering market has caught much attention, as well as the forthcoming liberalisation of Finland’s licensing system.
“I think for us it’s going to be more on regulated markets, not too much into grey markets,” he said. “Things are happening around the world, in Brazil and also in Africa. There are some exciting countries coming up, and a lot of land grab to do.”
What was clear from the statements of the assembled industry leaders is that ‘standing still’ is not an option for igaming – as more markets open up, companies need to keep their feet on the pedal on business activity.
As Taylor explained, Flutter has not certainly ‘stood still’ and is continuing to pursue opportunities in markets such as Georgia and Armenia, as well as developing and emerging ones such as India.
Central to this has been a policy of sharing products, technology and information across its business. For example, the group’s experience of daily fantasy sports (DFS) in North America via FanDuel has been ‘exported’ to the Indian sector.
Whilst the opportunities are numerous, there is one ever constant challenge for the industry, that of the ‘regulatory burden’ as Kindred’s Nils Anden observed. Managing this task is a key skill for operators.
Being able to rely on multiple markets and having a highly scalable business is of course ideal, he observed, but regulatory challenges can counter this progress, and could also impact the ‘risk appetite’ of investors.
Summarising the mood of the panel with her opening statement, Maarja Part, CEO of Yolo Group, affirmed: “Our industry is so fast moving, we cannot afford to stand still. It will always be about creating new opportunities in that sense.”