Last week, Merkur Sportwetten GmbH grew its European and Polish presence by announcing that it was acquiring Warsaw-based Totolotek SA.
Merkur Sportwetten operates as a subsidiary of the Espelkamp-based Gauselmann Group, consolidating the group’s national and international operations. SBC spoke to the CEO of Merkur Sportwetten Niko Steinkrauß to discuss the new acquisition and the challenges in navigating a new market.
What are your hopes for the expansion into the Polish market?
The Polish sports betting market definitely has its challenges – the high taxation (12% of stakes), and the difficulties in effectively cutting out non-licensed online operators, to name the top two. Still we believe Poland’s size and dynamic development offer good business opportunities. Especially the retail sector is not as developed as we know it from the other markets we operate (e.g., Germany, Austria, Belgium).
We are confident that with our omnichannel product we can make a big impact in the market and offer Polish punters the best choice across all distribution channels – be it the betting shop, the self-service terminal, or online. In addition, expanding into Poland is a Group project.
Gauselmann’s slot machine division is a partner of Totalizator Sportowy, providing the monopoly operator for gambling with our technology. The arcade operations division is also on stand-by to become active in Poland once opportunities open up. Together, we see the potential to become a major player in the polish gambling and betting sector.
What will be the driving force behind the success of your expansion into the new market?
The key driving force will be how Polish sports betting consumers accept Totolotek’s new proposition. We are investing heavily into our omnichannel approach – converting Totolotek’s legacy mix of different product platforms into our state of the art, integrated platform, refurbishing the shop network, and bringing our unique online offering to customers. The quicker we are with this transition, the better we can turn-around Totolotek and make it a market share winner again.
The gambling industry as a whole has some significant challenges to face this year, especially with more jurisdictions changing their regulatory frameworks. How do you plan to address these obstacles?
In fact, there are two sides to the coin here. On the one hand, we as a provider that is not only willing, but also able to comply with the ever increasing regulatory standards, are actually welcoming their strict enforcement. But the key point is that the enforcement needs to apply to everyone – not only to licensed operators. That unfortunately is not always the case.
Also, if regulation overshoots, it just makes licensed offerings unattractive. That not only harms our business, but also prevents regulators from reaching their actual objectives. You cannot protect players and minors, if the unlicensed and illegal offering is much more attractive. We are in constant dialogue with policy makers on these issues. Only if we listen to each other, we can create an ecosystem in balance.