Opportunity or cautionary tale? The value of ‘local champions’ in Eastern Europe

Opportunity or cautionary tale? The value of ‘local champions’ in Eastern Europe

Is Eastern Europe the next big opportunity for the continent’s igaming sector? Entain and Flutter certainly think so if their acquisition strategies of late are anything to go by, but the region is tricky to traverse.

If the views of an SBC Summit Barcelona panel are to be believed, big-name operators will have a more difficult time in Eastern Europe than in other regional markets if they don’t properly consider certain local conditions.

“I don’t believe that it represents an opportunity for any of the big operators and the major players around the world,” said George Athanasopoulos, CEO of Novibet.

“It actually should act as a cautionary tale that unless you have a very local approach and the platform and technology to go with it, you probably should just stick to your big new countries.”

But some large, global operators are already in the market, most notably the aforementioned Entain, one of the world’s largest international operators. Athanasopoulos clarified that he meant ‘no offence’ to the firm and any of its partners, outlining his view that the FTSE100 group was taking the right steps for the region.

Entain has brought in local people with an understanding of the market which is shaping a good business for the region, but on a wider scale Athanasopoulos asserted that for many an eastward expansion is ‘a huge risk’.

The real opportunity is for companies that have built themselves up within the parameters of the Central and Eastern Europe (CEE) region, he asserted, and ‘trained inside’ its unique market conditions.

Perhaps, then, this is why Entain has pursued a strategy of acquisition rather in Eastern and southeastern Europe. The group’s Entain CEE holding kickstarted this strategy via a takeover of Croatia’s SuperSport, and most recently Poland’s STS Holdings.

No one is more familiar with this strategy than Radim Haluza, CEO of Entain CEE, who – from his background as CEO of Croatian market leader Supersport – has built up a detailed understanding of the Eastern European landscape.

In Haluza’s view, Eastern Europe as a betting market faced some neglect from the industry for some time. This is partly due to many larger operators being active in the grey market in the region, he said.

“From the perspective of how much money those markets can generate, they were all well aware that these markets are very promising and very lucrative,” he outlined.

The region therefore does represent a big opportunity – although as both Athanasopoulos and Haluza alluded to, operators should be wary of the various hurdles of the various markets.

For starters, Entain’s regional chief emphasised that the markets of Eastern Europe are anything but homogeneous, with different markets understandably requiring different approaches across the map.

“There are of course differences. The markets are at different levels of maturity. For example, if you compare Serbia to Greece, it’s incomparable. But, the Serbian market will inevitably get that at some point in time. 

“However, the players do share some similar patterns, how they bet, even how they think about betting. For most punters the habit is to put multiple bets on one ticket, to have a higher chance to win or a higher amount of money, they all put things on one ticket.”

Entain is not the only major market player to secure a new foothold in eastern Europe recently though, as just this morning Flutter Entertainment announced its acquisition of Serbian ‘local hero’ MaxBet.

Just six days prior to the takeover, MaxBet CEO Darko Živanov debated Eastern Europe market conditions with fellow panellists at Barcelona, agreeing with Athanasopoulos and Haluza’s sentiment around the importance of ‘local champions’.

“Maybe the message for potentially interested companies is that local champions are massive, but they can be very expensive. They must be very smart with their decisions and what they do.”

Being a local champion does not just equate to market share, though, as Athanasopoulos explained, with the CEO outlining Novibet’s social responsibility efforts in Greece as an example. 

“We try as much as we can to contribute to people who need it, like in the wildfires in the summer and the floods that have happened in Greece. We do not advertise this, we prefer to make meaningful contributions to communities that are in need.”

Providing some further clarity on Serb market conditions, Živanov emphasised that the omnichannel offering – and demand for it – is strong in the country. Interestingly, Serbian customers will often play on their mobiles whilst sitting in a retail shop.

As a consequence of this, the retail customer experience is vital for success in Serbia. The shops are often used as a place to watch sports as well as bet, and in Živanov’s view the retail and online customers are viewed as one single bettor, as opposed to opposing verticals in other countries.

He did acknowledge, however, that this might not be the same across the wider Eastern Europe region, and this was somewhat confirmed by Athanasopoulos, who commented on cross-selling.

“I don’t believe what we offer in the online crosses over to the land base. Yes, you can have cash points and this is a valid point. Yes, there are things that online hasn’t achieved yet like the community effect that you have inside the shop. 

“But on the other hand 24/7 availability, the lower cost of operating and servicing these customers. This is always going to give the online experience a different end product.”

So, did the panel answer the ultimate question? Is Eastern Europe an opportunity, and can outside companies seize it? The answer seems to be a resounding yes, but only by partnering with or acquiring a well-established local hero operator. 

Given the moves made by Entain and more recently Flutter, it seems that this conclusion has already been reached by the biggest names in European betting…

To  find out more about SBC’s upcoming events schedule, including the SBC Summit Latinoamérica, next month, click HERE

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