After deciding to pull out of the US online sports betting race and focus on online casino in two states, Super Group’s global focus came into sharper clarity as part of its Q3 earnings report last week.
The parent company behind Betway and multi-brand online casino Spin reported record Q3 revenue of €402.9m, driven by success across Africa and Canada as bosses talked up further expansion opportunities.
Podium positions in five out of its seven live Africa markets were championed in the investor deck, with around 1,000 Super Group staff dedicated to operations on the continent.
There were also gains in Canada and the UK, while there were positives as the estimated costs for exiting the US online sports betting market came in lower than expected.
The operator has also decided to pull out of Brazil ahead of the market’s regulation in January, as CEO Neal Menashe and CFO Alinda Van Wyk explain while speaking to EGR.
EGR: Africa is really coming to the fore for the group. When you’re looking at expansion there, are you only targeting markets where a podium position is attainable?
Neal Menashe (NM): It’s also actually about if the other operators pay tax? It’s a big problem, like in Germany, the black market operators don’t pay tax [and] can do what they want. In Africa, it’s a bit different. In some cases, we’ll only go when there are regulations, and when we know that the tax bill is the right tax bill.
What we don’t want to find is that one lawyer says, ‘This is how you pay tax’, then five years later, [the government] want back taxes. We won’t do that. Wherever it is ambiguous, we won’t do it. We’d rather lobby to get it correct. We’re not competing with anyone bar the local operators.
EGR: Could you give some more colour on your Canadian performance and any lessons to take from Ontario launching when the regulated Alberta market goes live?
NM: The key lesson is how easily you move customers over from the dotcom platform to the regulated platform. And I think there were too many steps with Ontario and the timing [with our IPO], that made it a bit too complicated. Did we do a good job? Not initially because we were listing at the same time. Have we learned how to do it properly? Absolutely yes.
EGR: In the US, online sports betting finally shuttered with lower-than-expected costs at €36m. Where were you able to save the €9m from previous €45m expectation?
NM: It was saved from some of the onerous contracts that we had with some of the land-based [companies]. You have these long ‘leases’, and you say that we’re getting out and we negotiated and got them a bit cheaper.
EGR: Super Group is staying in the US with an igaming-only approach in New Jersey and Pennsylvania, what are the expectations there?
NM: October was better, and the revenue is increasing. We don’t want to spend $5m to make $5m in revenue. We’re not going to go and spend more than what we’ve lost already. If it is showing a path to profitability, then maybe a little bit, but we won’t be spending for the sake of spending. Casino is different, you can compete on casino as it’s a totally different proposition.
The market is so big. Remember, it’s about service and if customers feel lucky. They are not the same customers who play at the casino in a sports book. It’s different customers, it’s not sports betting customers.
EGR: You mentioned in the Q3 analyst call that you’re not planning to make a big push in Brazil and will exit the market. Why is that and do you think that market could end up being like the US?
Alinda Van Wyk (AVW): It’s even more complicated with the regulations but also trying to get money out. The banking infrastructure in South America is challenging to say the least. There is also a massive risk on currency. Trying to get money out if you make a profit is quite complicated
NM: Betano said they were spending significant sums on marketing, BetMGM are going to spend in a similar fashion, Flutter has bought a business and put more money into it. Let them go and do their thing. We learned our lesson from America.
EGR: Looking at the black market, Neal spoke on the topic at SBC Lisbon. Do you think there is a ‘silver bullet’ solution to the issue?
NM: There’s not one silver bullet, but if they would regulate the black market like they regulated us [it would help]. But they need a process. If they send a letter once, then send a second letter, believe me, you send a few harsher ones and they can find them [the people behind the illegal platforms].
As the lobby group, the Betting and Gaming Council [in the UK], which we are all members of, should have a task force that does this, we fund it, and it literally reports on a set basis, and it gives the intelligence to the government and helps them do their job.
Believe me, if the regulators start a proper process of writing and writing again, to all these companies, service providers, banks and corporate service providers that are illegally providing services, I promise you, they will start to take notice. Couple this with legal action on some of them. Then the game changes.
AVW: The legal operators and the regulated bodies are the industry. We have to work together. They have to see that we pay the tax, and we want to regulate. But if you have all these other operators around you, it makes it very hard, and then they think gaming is something that is not good.
It’s actually surprising that it’s in Europe, you would expect it maybe in a more developing country, but it’s actually in Europe. That said, we need to protect the customers everywhere. Small wins will make a massive difference and people start taking note.
The post Q&A: Super Group C-suite on global growth and learning lessons from the US first appeared on EGR Intel.