An Optimistic Outlook
While 2019 presented difficulties in Sweden and the Netherlands, Betsson’s Chief Executive, Jesper Svensson, conveyed to Tim Poole that the gaming sector is much healthier than many insiders would lead you to believe.
For those contemplating venturing into the gambling realm, Jesper Svensson might be the ideal person to provide a boost. Amidst a climate of industry pessimism, the Betsson Group head remains steadfastly positive.
Conversing with Gambling Insider about the hurdles confronting operators like Betsson in the current market, the Swedish executive’s straightforward approach is clear. However, it’s a practicality that also prompts Svensson to never overlook the advantages of working in such a “terrific” role.
“It’s crucial to remember that this is a wonderful industry,” he states. “There’s inherent expansion in gaming, and it’s poised for sustained growth over an extended period. Both digital and traditional gambling are on an upward trajectory; online is advancing at a swifter pace, making it a very favorable domain to be a part of. The gambling industry has experienced a healthy growth rate for numerous years. Occasionally, this growth decelerates, necessitating industry adjustments. The key takeaway throughout all of this is that it persists as a robust growth industry, a dynamic industry.”
Naturally, Svensson’s perspective stems from experience, having initially explored the gambling waters back in 2006. The executive has been affiliated with Betsson for the past six years, having previously held high-ranking positions at companies such as Ladbrokes, InterCasino, and Bodog.
The Malta-headquartered gaming firm, Betsson, has experienced its fair share of transformations and obstacles. A few years back, guided by its Chief Executive, the corporation undertook a significant reorganization to tackle internal difficulties. This turned out to be a wise decision, as Betsson rebounded from a tumultuous 2017 to conclude 2018 on a high note. They witnessed a 15% surge in income, reaching a total of 5.8 billion USD. Their earnings also received a lift, with a 35% increase in operating profit.
However, 2019 presented a fresh set of barriers, not solely for Betsson, but for the whole sector. Novel regulations, especially in Sweden and the Netherlands, generated complications for numerous gaming enterprises. These regulatory shifts have evolved into a substantial obstacle in recent times.
In spite of these impediments, Betsson’s Chief Executive maintains a positive outlook. And why wouldn’t he, being at the epicenter of it all? Malta serves as a center for the gaming industry, with providers and vendors practically ubiquitous. It’s a dynamic environment, and the enthusiasm is tangible.
For certain individuals, the isle can give the impression of being somewhat congested, almost asphyxiating. Others perceive the absence of cultural variety as somewhat restrictive. However, Svensson doesn’t share this 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 favorable aspects, particularly when coming from Sweden. Moreover, I consider Malta to be an exceptional location for the iGaming sector. It holds significant importance for Malta, as supporting it is a national priority.”
“This, in itself, fosters a positive environment to be a part of. It stands as one of the most robust industries in Malta.” He further notes that should you require a change of scenery, “Malta might be a small isle, but traveling from it is incredibly convenient, allowing you to easily visit another destination for the weekend. I, myself, travel extensively to our offices worldwide.”
Svensson’s daily routine in Malta centers around the operational facets of Betsson. Now, some readers might experience a touch of bewilderment at this point: if you happen to be among them, you’re likely justified in assuming Pontus Lindwall holds the position of CEO for the Betsson Group. Svensson affirms that indeed, Lindwall is the CEO of Betsson. However, the executive willingly elaborates, acknowledging that *Gaming Insider* isn’t the first to inquire about how his own role functions alongside Lindwall’s.
“It’s a well-defined structure where Pontus serves as the CEO of Betsson AB, the entity listed on Nasdaq Stockholm,” the Swedish national explains.
Betsson AB functions as a parent corporation, primarily investing in gaming enterprises. As the Chief Operating Officer, my role involves supervising the activities of all subsidiary companies under the Betsson AB umbrella. One might say that while one position concentrates on financial markets, mine is more hands-on, managing daily functions, promotion, and technological aspects.”
Svensson and Lindwall maintain consistent dialogue, with a “distinct separation” between their roles. Anyone familiar with the American version of The Office can be certain this differs from the frequent boundary blurring that transpired when Michael Scott and Jim Halpert shared managerial duties. Beyond this working dynamic, Svensson naturally encounters regular hurdles, stating that “each day presents novel situations.” He particularly emphasizes the “geographic dispersion” of Betsson’s twelve distinct licenses, as this “implies constant diverse concerns across various markets.”
This leads to the primary obstacle—one that has occupied Svensson’s thoughts—as he readily highlights. Heightened regulation is undoubtedly a focal point for him, with perhaps the most relevant illustration from the past year found within the Swedish market. On the first of January, 2019, Sweden restructured its gaming sector to accommodate private entities. Lindwall conveyed to Gambling Insider at the time that Betsson “should constitute a cornerstone of the Swedish gambling market.”
The subsequent events cannot be categorized as either a resounding triumph or an utter disappointment.
The current state of the Swedish gambling industry presents a somewhat complex picture, with Betsson’s recent results serving as a prime illustration. The company experienced a marginal revenue increase of just 2%, reaching approximately 26 billion Swedish Kronor (equivalent to roughly 2.8 billion US dollars). More concerning is the 5% contraction observed in their second-quarter earnings, which fell to 12.7 billion Kronor. Profitability also suffered a setback, declining by 12% to 4.5 billion Kronor during the first six months of the year. The second quarter proved particularly challenging, with operating profit plunging from 3 billion Kronor the previous year to 1.9 billion Kronor this year.
However, the difficulties extend beyond mere financial figures. Throughout 2019, numerous companies, including one of Betsson’s own subsidiaries, faced penalties for non-compliance with newly implemented, more stringent regulations. Industry analysts generally believe that a harmonious relationship between regulators and gaming entities will eventually be established, a sentiment echoed by Pontus Lindwall, Betsson’s CEO. Nonetheless, he acknowledges that certain obstacles were unavoidable given the significant regulatory overhaul. In his words, “In the short term, it has had some effect on our operations. However, we must not overlook the fact that we have been strong advocates for this regulation, which has been long overdue. We firmly believe that this will prove to be a highly favorable market for us in the long run. Therefore, it is a matter of adjusting to the new landscape.”
Lindwall raises a valid point regarding the importance of striking a balance between satisfying regulatory requirements and avoiding excessive constraints on businesses. He states, “I believe that for any regulatory body, the key lies in finding the right equilibrium between fostering a business-friendly environment and simultaneously ensuring the integrity of the licensed market. If a substantial portion of the market operates outside the purview of the licensing framework, the system has ultimately failed.”
“This equilibrium isn’t a common sight in the present day. Governing bodies should collaborate with corporations within well-defined boundaries, rather than leaving loopholes for actions to transpire beyond established regulations.”
The head of Betsson commended the Malta Gaming Authority. “They stand among the most capable regulatory bodies, perhaps even surpassing all others,” he proclaimed. “Their expertise could significantly aid other regulatory entities. They are undoubtedly stringent, and their stance has only grown firmer, implementing decisive measures over time.”
When questioned about Malta’s potential approach to regulatory adjustments, similar to the developments in Sweden, Svensson highlighted that Sweden remains “in its nascent phases.” He elaborated, “The dialogue between operators and the regulatory body lacks the fluidity observed elsewhere. I anticipate improvement, contingent upon receiving appropriate guidance. Should any aspect of the revised regulations require elucidation, the regulatory body should adopt a proactive stance, refraining from simply instructing operators to decipher it independently. Sweden still has potential for advancement in this domain.”
Tobias Fagerlund, the leader of Global Gaming, would likely concur with Svensson’s evaluation.
In the month of June, the Swedish Gaming Commission rescinded the Swedish permit of SafeEnt, a branch of Global Gaming. Chief Executive Tobias Fagerlund vehemently opposed this ruling, labeling it “unlawful” and contending that the regulatory body had misconstrued an ambiguous statute. He disclosed that he was only notified of the determination a mere eight minutes prior to its public announcement, at 8 a.m. on a Monday.
The head of the Betsson Group, Pontus Lindwall, offered his perspective on the matter, stating: “As time passes, these situations tend to become more transparent and improved; considering the number of corporations that have faced penalties in Sweden this year for various infractions, I don’t believe it’s due to a lack of desire on the companies’ part to operate in accordance with what they perceive as correct. I suspect we would witness fewer of these occurrences if there were more explicit directives.”
Another marketplace presenting regulatory obstacles, as emphasized by Gustaf Svennson in our prior discussion, is the Netherlands. The year 2019 marked a pivotal moment for the Dutch internet gaming sector, as its eagerly anticipated Remote Gaming Act finally received approval. Industry expert Willem van Oort characterized it as an “unbelievable event” to finally witness the Act’s enactment after two and a half years since its passage in the House of Representatives. In essence, this signifies that the licensing procedure will commence in mid-2020, with a projected launch date of January 1, 2021. This framework also encompasses a 24-month waiting period, during which an organization is ineligible to apply for a license if it has engaged in unauthorized operations within the market during the preceding two years.
“Svensson stated, “We are confident that we will ultimately penetrate the Netherlands’ market, a sector currently experiencing liberalization. To satisfy their established criteria, certain product alterations were required. Having completed these modifications, we are now well-positioned to pursue licensing. These adjustments were essential for aligning with Dutch regulations.”
Another area potentially captivating readers is the UK, a similarly tightly controlled and fiercely competitive market that both ComeOn and EveryMatrix have recently departed (for an article on Malta-based firms leaving the UK, refer to page 32). Betsson declared the closure of its UK office in December 2018 and indicated that its Netplay brand would not renew its agreement with the BBC. This was widely interpreted as a signal of the operator downsizing its UK operations, possibly with an eye towards complete withdrawal. However, Svensson informed *Gambling Insider* that they are not abandoning the UK market and have no intentions of doing so.
“Our presence in the UK market remains active; we have not exited,” the Swedish executive clarified. “However, our level of activity is not as pronounced as it was a couple of years ago. We are currently transitioning a business acquired a few years back – the NetPlay brand – onto our proprietary platform, a process slated for completion by year-end. While we continue to operate in the UK, our investment strategy has shifted from previous years.”
Consolidating these trademarks beneath the NetPlay banner is truly about solidifying our base. Our emphasis is on enhancing our product portfolio to position ourselves for grander and more favorable outcomes in the future.”
Svensson proceeded to underscore the promising prospects that await operators, extending beyond established markets. He stressed how Betsson’s dedication to crafting their proprietary sports betting platform, gaming framework, and payment mechanisms grants them unparalleled command over the user journey.
As Betsson embarks on its 57th year, the pursuit of expansion and market dominance persists as a paramount objective. Svensson, evidently enthusiastic about this, concluded our dialogue by revisiting a subject close to his core.
He reiterated his plea for heightened cooperation within the gaming sector: “It’s imperative that we, as a collective, engage in more transparent communication and collaborate effectively. We must concur on shared aims and project a united front, particularly when it comes to effecting positive transformation. This hasn’t consistently been our forte, but I’m optimistic that recent shifts will foster greater cohesion and a unified vision.”
He finished by stating, “Reflecting on the preceding year, I perceive that both conventional and industry-specific media have frequently concentrated on the downsides. Indeed, obstacles have arisen, but the truth is that this sector is undergoing a maturation process. We’re becoming increasingly resilient and professional. Remarkably positive advancements are transpiring, and I hold the belief that it’s time we commemorate those triumphs even more extensively than we did in the previous year.”
The future of gaming appears quite promising, particularly if other organizations adopt Svensson’s approach. His assertion that each year presents both obstacles and prospects holds merit. However, for industry insiders, such as the head of Betsson Group, the potential rewards in this sector consistently surpass the hurdles encountered.
