WGES in Barcelona – deals, delights and disco9th July 2015 7:12 am GMT
The superstar CEOs might have stayed away but the World Gaming Executive Summit in Barcelona still has plenty to offer.
Amaya chief executive David Baazov, Intertain CEO John FitzGerald and 888 chief operating officer Itai Frieberger were all scheduled to appear at various stages during the planning of this event. In recent years, bwin.party chief Norbert Teufelberger has been a regular attendee. With this morning’s announcement on the bwin.party sale, it seems all were too busy to come to Barcelona.
Against that backdrop, it was not surprising that M&A dominated proceedings with almost every panellist being asked how consolidation affected their particular part of the market.
It was perhaps appropriate then, that one of the kings of online gaming M&A was first on the stage to deliver his take on the current state of play. Playtech’s Mor Weizer predicted a future where five or ten operators will dominate each and every market.
“Based on conversations I have had with bankers in London, as soon as Ladbrokes and Gala Coral happens, the other bookmakers will appoint their own bankers and lawyers,” said Weizer. “It will be a domino effect.”
Intertain finance director Keith Laslop might have been standing in for CEO FitzGerald but the two are very much a team and his canny insight was apparent on stage.
Following an acquisition spree that has seen Intertain acquire Intercasino, Costa Bingo, Vera&John and Jackpot Joy in quick succession, it is easy to assume the Canadian company is one of the industry’s giants. But Laslop noted that with 70 per cent of revenues originating in the UK, Intertain is still a minnow in global terms.
“No-one is big enough – Amaya maybe excluded. Everyone else is a potential target,” said Laslop.
He went on to note Steve Wynn’s pre-Black Friday agreement with PokerStars and the Vegas mogul’s interest in Gamesys before Intertain acquired it as evidence that the industry’s real giants might yet join the wave of consolidation.
“If Adelson dies or gets off his hypocritical high horse then LVS might enter the action. Everything is possible at this point.”
Laslop admitted some bias (Amaya is an Intertain shareholder) but he believes Amaya and GVC would be a stronger partner for bwin.party than 888. This belief is partly driven by Intertain’s strategic approach. Laslop shares Weizer’s (admittedly self-serving) belief that operators should stick to brand-building, marketing and CRM and allow technology suppliers to deal with technology.
“888 has shown that if you try and own the entire technology chain it limits your ability to grow. We also saw that with bwin.party.”
NYX chief executive Matt Davey agreed that Amaya’s deep pockets make them strong favourites but noted 888’s potential to extract synergies as a possible deal clincher.
Davey and Laslop were on stage to support event sponsor Canaccord Genuity. The Canadian financial adviser has played a key role in both companies’ recent growth bursts and its clients presented a compelling advertisement for the wisdom of exploiting Canada’s capital markets.
Davey said NYX looked at Swedish, UK and Australian exchanges before settling on the Toronto Stock Exchange for the company’s December listing.
“In our view, the Canadian market best supports an M&A-driven approach,” noted Davey. “We have not seen that in the other jurisdictions.”
Of course, success through M&A is not a given. Davey said integration is not talked about enough. He talked about the importance of communicating your strategy clearly to employees, who could be extremely frightened for their job security following a transaction. Laslop was even more strident.
“Personally, I am terrified of integrations,” admitted the Intertain FD. “I don’t ever want to integrate two 400-employee dev teams. What’s key for our companies is to collaborate, not integrate.”
If M&A was not far from most conversations, it was not the overwhelming concern of all panellists. BetConstruct chief executive Vahe Baloulian admitted to being an excited watcher of the M&A action but his aim is to grow his company organically.
Many other speakers, from Weizer to Kristian Nylen of Kambi and David O’Reilly of Colossus Bets were more concerned with data than with consolidation.
“My main challenge is educating operators that they can do better and leverage their current position rather than innovating and worrying about the next big thing,” said the Playtech boss.
He pointed out that 40 per cent of Gala Coral’s online net gaming revenue is from customers it has had for many years. Most operators have been online for a number of years now and have amassed a wealth of data that they are not exploiting.
“The cost of acquisition is minimal to non-existent. You are just implementing potential that is already in the business,” concluded Weizer. It is his current sales pitch but that should not lessen the value of his words. No doubt he will elucidate further on this theme in a forthcoming interview with Gaming Intelligence, which will be published imminently.
Weizer’s panel was intended to focus on business disruptors. The Playtech chief returned to the topic of consolidation when asked what would be the industry’s biggest disruptor.
“Consolidation will disrupt the activities of other operators, who are not consolidating,” predicted Weizer.
Non-consolidating Baloulian was a quiet but thoughtful presence throughout. He said he used to work for the largest online casino in the world (888), which had a very successful affiliate, which went on to become Playtech.
“Another small company went to Playtech and asked them to supply them with technology but Playtech said you are too small. The CEO of that company went on to form his own company to supply online gaming technology. That CEO was me,” said Baloulian. “The disruptors are in this room.”
Baloulian went on to cite one of Ronald Reagan’s famous quotes regarding government’s ability to mess everything up. From land-based operators such as Hippodrome Casino CEO Simon Thomas and BACTA president Jason Frost’s concerns about fixed odds betting machines in the UK, to Sean Ryan of Facebook’s flippant disregard for the threat of it, regulation, of course, was also never far from the conversation.
Davey revealed that the Toronto Stock Exchange regulator probed NYX about every single jurisdiction the supplier was present in and the existing regulations. It is, he noted, difficult to give a definitive response when your answer depends completely on the view of your law firm in a particular jurisdiction.
Baloulian noted: “There is opportunity in grey markets because in the future they will be black or white.”
He said it was best not to dive into any market – particularly one that looks like turning black – but avoiding grey markets is not smart. It was an honest and perceptive point. Indeed, while there were no serious disagreements between speakers on stage, across the day a diverse range of strategies were revealed by a diverse range of successful companies.
Tipico for example, whose director of customer operations Troy Cox claimed to be Germany’s biggest operator. It is now looking to expand internationally but will only do so in regulated markets. Tipico is untypical in many ways it turns out. Its website looks crudely simplistic with no live streaming or other bells and whistles.
“The German customer likes to bet effectively and efficiently,” explained Cox.
Tipico aims to minimise the number of clicks it takes to get from registration and deposit to placing a bet. It doesn’t have live streaming because it believes customers attracted by live streaming are lower-spenders, which drags down margins. The operator does not go in for casino games much either. It reaps 90 per cent of its revenue from football, 8 per cent from tennis and just 2 per cent from the remaining odds and sods, which just goes to prove that there are many different ways to skin a cat.
The day closed with the ever-enthusiastic Sean Ryan of Facebook holding forth on all things social. It was a superb way to end the day although it was a shame the auditorium was nearly empty. For those who missed it, Gaming Intelligence will publish the edited highlights in the coming days.
If some of the large operator CEOs stayed away, it did not affect the enthusiasm of the lesser mortals, who were buzzing around the evening’s Gala Dinner. This has been revamped into a more relaxed buffet affair than in previous years, allowing delegates to get busy discussing deals and strategies before the nightclub and its worldly delights beckoned.