An Optimistic Outlook
Although 2019 presented difficulties for the gaming sectors in Sweden and the Netherlands, Betsson Chief Executive Jesper Svensson, in a discussion with Tim Poole, maintains that the condition of the gaming industry is much brighter than many insiders perceive.
For those harboring doubts about the future of the gaming industry, Jesper Svensson is an excellent person to consult. In a sector inundated with negativity, the Betsson CEO presents a refreshingly positive perspective.
Conversing with Gambling Insider regarding the obstacles confronting operators like Betsson in the present market, the Swedish native remains practical and realistic. However, Svensson also reminds himself to never overlook the advantages that accompany working in a position he deems “an honor.”
“We must keep in mind that this is a fantastic industry,” he states. “It possesses inherent growth catalysts and will expand for many years to come. Both digital and physical sectors are expanding; online is growing more rapidly, making it a very captivating field to be a part of. The industry has been developing favorably for numerous years. Occasionally, growth decelerates, and the industry needs to innovate. The crucial aspect is remembering that, regardless of circumstances, this is a robust, expanding industry.”
Svensson’s insights are undoubtedly shaped by his extensive background, having initially ventured into the gaming industry back in 2006. The executive has been with Betsson for six years, having previously held high-ranking roles at Ladbrokes, InterCasino, and Bodog.
The Malta-based gaming firm, Betsson, has undergone significant transformations under the guidance of CEO Pontus Lindwall. Assuming the helm in 2017, Lindwall navigated the company through a period of instability characterized by both internal reorganization and widespread industry regulatory adjustments. These endeavors proved fruitful, as Betsson rebounded in 2018. Their earnings surged by 15%, reaching SEK 5.41 billion (approximately $580 million), showcasing a robust upward trend.
However, 2019 presented fresh hurdles. The corporation, alongside the wider sector, encountered obstacles stemming from regulatory modifications, particularly in regions like Sweden and the Netherlands. Svensson acknowledges these complexities but stresses that the influence of regulation is not as pronounced as it was in previous years.
In spite of these impediments, Svensson maintains a positive outlook. He emphasizes the merits of being situated in Malta, a global center for the gaming sector. The island nation is brimming with operators and providers, fostering a dynamic and interconnected gaming environment.
For certain individuals, the feeling of congestion can be nearly stifling. A few discover the absence of cultural variety somewhat unappealing. However, Svensson doesn’t concur.
“I genuinely relish residing on the island,” he remarks. “I believe the way of life here is fantastic, having the Mediterranean Sea and naturally, the sunshine is a major advantage, particularly coming from Sweden. I also think Malta is a superb location for the iGaming sector. It’s incredibly significant for Malta, it’s an element of the nation’s approach.”
“That by itself generates a positive ambiance. It’s among the most robust industries in the country.” If there’s a drawback, Svensson appends, “it’s that although Malta is quite small, it’s very convenient to journey to other destinations, so you can go on vacation to other locales on the weekends. I also travel extensively myself to our branches globally.”
Svensson’s daily routine in Malta involves supervising operations for Betsson. A number of readers might require a touch of elucidation here: if you happen to be one of them, you’d be pardoned for presuming Pontus Lindwall is the Chief Executive Officer of Betsson Group. Lindwall is indeed the Chief Executive Officer of Betsson, Svensson affirms. But the executive, pleased to provide more clarity on the subject, acknowledges *Gambling Insider* isn’t the initial publication to inquire about how his position and Lindwall’s function together.
“It’s a well-defined structure where Pontus serves as the Chief Executive Officer of Betsson AB, the publicly traded company on Nasdaq Stockholm,” the Swedish national states.
Betsson AB functions similarly to a holding company, concentrating mainly on putting capital into various gaming enterprises. As the Chief Operating Officer, I supervise all of Betsson AB’s subsidiary companies. One might argue that my equivalent, the Chief Executive Officer of Betsson AB, is more engaged with the fiscal aspects, while my position is more practical. I am accountable for the daily business activities, promotion, and technological advancements.
Svensson and Lindwall, the Chief Executive Officer of Betsson AB, maintain an excellent professional rapport with well-defined limits. Contrary to the amusing competition between Michael Scott and Jim Halpert from “The Office,” their interaction revolves entirely around cooperation. Nevertheless, Svensson’s workdays are far from dull. He flourishes on the varied obstacles that accompany managing a corporation like Betsson, which possesses licenses in twelve distinct territories. He explicitly mentions that maneuvering the intricacies of each marketplace presents a continuous assessment.
This leads us to the primary hurdle that Svensson, along with numerous others in the sector, is confronting: escalating regulations. A prominent illustration is the Swedish market, which experienced a significant restructuring in 2019. When non-governmental entities were granted entry into the market, Betsson’s Chief Executive Officer was hopeful, anticipating they would evolve into a dominant force.
The actuality, however, has been more intricate. It hasn’t been an utter disappointment, but neither has it been the resounding triumph they had envisioned.
The Swedish gaming landscape presents a somewhat complex picture currently. This is evident in the difficulties encountered by Betsson, a prominent Nordic operator. Their mid-year financial statement revealed a mere 2% increase in earnings year-on-year, reaching 26 billion Swedish Krona (approximately 2.8 billion US dollars). The situation appears even less favorable in the April-June period, where earnings actually contracted by 5%, falling to 12.7 billion Swedish Krona.
Profitability also suffered. Operational income for the first six months decreased by 12% to 45.21 billion Swedish Krona. The second quarter proved particularly challenging, with operational income plunging from 30.07 billion to 19.69 billion Swedish Krona. This can largely be attributed to their wagering and gaming division, which experienced a sharp 10% downturn in the second quarter.
However, Sweden’s issues extend beyond Betsson’s financial performance. 2019 witnessed a surge in penalties imposed on various gaming entities for violating new regulatory guidelines. Betsson itself was implicated, with one of its subsidiaries facing sanctions.
Nevertheless, a degree of hope persists. Industry specialists anticipate that, with time, the dynamic between regulators and gaming firms will improve. They recognize that initial obstacles are unavoidable in a newly regulated sector. As one expert noted, “Undoubtedly, these regulations have had a near-term effect on operations. However, it’s crucial to remember that these regulatory adjustments were long overdue and enjoy widespread backing. Ultimately, this will foster a more robust and ultimately more prosperous market. We simply need to adjust.”
This perspective reflects a broader sentiment that regulators are still striving to strike a balance between fostering a business-conducive atmosphere and guaranteeing that licensed operators adhere to the established rules. After all, a regulatory structure is only effective if all parties operate within its boundaries.
An ideal equilibrium hasn’t been achieved in any legal system currently, as I believe it’s crucial from a governance perspective that overseers are present to support and cultivate enterprises within established boundaries, and not automatically create pathways for prospects beyond those limits.”
The Betsson Group Chief Executive commended the Malta Gaming Authority highly. “In my view, the Maltese regulatory body is among the most proficient, if not the most proficient, considering its background and the expertise it has accumulated,” he elaborated. “They possess a wealth of knowledge to share with other regulatory entities. Undoubtedly, they are a stringent regulator; becoming progressively more so, and they’ve implemented robust actions throughout the years.”
When questioned by iGaming Business publication about how the Maltese regulatory body would manage a comparable re-regulation, Svensson remarked that Sweden was in its “early stages.” “The discourse between businesses and the regulator isn’t as developed as in other jurisdictions, so I anticipate that will progress over time,” he stated. “It also involves receiving appropriate direction. If there’s a requirement for guidance within updated regulations, it’s vital that the regulator furnishes that to the operators and doesn’t merely direct them to the legal language. I believe the Swedish regulator has some tasks to address in that area.”
Tobias Fagerlund from Global Gaming would likely concur with Svensson.
In the month of June, the Swedish gaming regulator rescinded the Swedish permit of SafeEnt, a branch of Global Gaming. Fagerlund vehemently contested the ruling, labeling it “unlawful” and asserting that the regulatory body had misapplied an already ambiguous regulation. The Chief Executive further disclosed that he was only informed a mere eight minutes prior to the public announcement of the decision, at 8:00 am on the first day of the workweek.
The head of the Betsson Group also remarked on the regulatory environment, implying that conditions often ameliorate as regulations evolve and businesses adjust. He cited the numerous penalties imposed on operators in Sweden that year, contending that these were not necessarily born from malicious intentions, but rather a lack of transparency in the regulations. He opined that clearer directives from regulators would substantially diminish such incidents.
The Netherlands presents another regulatory obstacle for Betsson, as hinted at by Svensson in our prior discussion. 2019 represented a critical year for Dutch internet gambling, with the eagerly anticipated Remote Gambling Act finally securing approval. Industry expert Willem van Oort characterized it as an “unbelievable event” to observe the act become legislation after two and a half years of traversing the lower house of Parliament. This sets the stage for license requests to commence in the middle of 2020, with the market formally opening on the first day of 2021. Importantly, the legislation encompasses a two-year “waiting period,” signifying that entities that functioned in the market illicitly within the preceding two years are disqualified from applying for a license.
We felt very certain that we would ultimately penetrate the Netherlands market,” Svendsen remarked. “It’s a sector that is progressively becoming more accessible. To satisfy the Netherlands’ criteria, we needed to implement some modifications to our offering, which we have now completed, placing us in a favorable position to seek a permit. Thus, we had to make those alterations to be a part of the Dutch regulatory framework.”
At this point, the final jurisdiction on readers’ thoughts might be the United Kingdom market. It, similarly, is a heavily regulated and fiercely contested market, one that both ComeOn and EveryMatrix have departed in recent months (for a piece on Maltese businesses leaving the UK, refer to page 32). Betsson declared the shutdown of its UK office in December 2018 and that its Netplay label would not be extending its agreement with the BBC. Many perceived this as an indication that the operator was downsizing its UK activities and might be contemplating a complete exit. However, Svendsen informed
_Gaming Insider_
that the firm has not abandoned the UK market, nor does it intend to.
“We maintain a presence in the UK, so we haven’t departed,” stated the Swedish national. “However, we are not as engaged as we were a couple of years prior. We are presently transitioning a business we procured a few years back onto our proprietary platform, the Netplay brand, which will be concluded by the year’s end. We remain in the UK, but we are not allocating resources in the same manner as we did previously.”
We are of the opinion that the labels within the NetPlay portfolio require product enhancement prior to any additional investment on our part, and that is our primary objective at this time.”
Looking beyond current markets, Svensson identifies a surge of new prospects emerging for gaming companies. He emphasizes Betsson’s command over the user journey, having constructed its proprietary sports betting platform, gaming software, and payment gateway. As Betsson pursues expansion and market dominance, it’s unsurprising that Svensson, as our conversation concludes, circles back to a subject clearly close to his heart – Betsson’s nearly six decades of industry expertise.
He imparts a message of cooperation to his counterparts in the gaming sector: “It’s crucial for the industry at large that we convene more frequently, advance a more unified set of objectives, and exert influence in a constructive manner. This hasn’t always been a forte of this sector. However, I am hopeful that certain transformations will encourage the industry to unite around shared goals and a common purpose.
“Occasionally, when one reflects upon the mainstream and trade media coverage over the past half-year to nine months, I believe a significant portion of the attention has been directed towards unfavorable news, while the industry itself is undergoing a process of maturation, becoming more robust and professional. Furthermore, there are exceedingly positive advancements transpiring, and I am of the view that we should accentuate these more prominently than we have in the preceding year.”
A genuine feeling of hope surrounds the 2020 interactive entertainment industry if other organizations can reflect Svensson’s upbeat perspective. The head of Betsson Group states, “Each year presents its own set of hurdles and prospects.” He believes the outlook for gaming is promising.