Another strong quarter for Betsson was not reflected in its share price last week, which saw the stock fall almost 15% since publication of the Q2 earnings on Friday. However, Betsson AB chief Pontus Lindwall, as always, projects a relaxed attitude. Record revenue in Latam and Italy were highlights in Q2 and, while the planned acquisitions in the Netherlands fell through, the M&A war chest is still to hand for the Stockholm-based business.
Third quarter trading is showing strong signs, even with last year’s Euro 2024 and Copa América making 2025 softer by comparison. A new tech hub has opened in Malaga, too, while bosses continue to espouse the benefits of its football sponsorship strategy that includes deals with Boca Juniors and Inter Milan.
For Lindwall, and Betsson group CEO Jesper Svensson, a larger concern away from the share price is the state of regulation in Europe. Svensson joined several other industry CEOs in penning an open letter calling for better regulation across the continent to crush the black market. Here, the duo double down on their stance, insisting local authorities must do more to support the licensed arena.
EGR: Another strong quarter, with Latam reporting record revenue. What is driving the growth, and are there still currency concerns in Argentina?
Pontus Lindwall (PL): The report is solid. We’re in a good space. It’s our second-best quarter ever, so I feel good. The exchange rate in Argentina has impacted negatively again this quarter. On a higher-level Latin America is one of our prioritised regions. We think long term; we don’t really look quarter by quarter in that respect. We do long-term investments, such as the sponsorships, and we build products. But it’s nevertheless very good to see that in the second quarter we have a growth of 35% or so in Latam. We’re very happy about that. It’s a quality seal on what we do in that region.
EGR: Italy also had all-time high revenue. What is working there?
PL: Western Europe is not only Italy, it’s other markets that are doing well, but obviously Italy being the most important and largest one for us. Especially when we have done this large sponsorship with Inter Milan, which is a long-term, large investment and a commitment for the company.
We’re really happy to see we have the traction we expected from it. It’s a combination of everything we do in the market. It’s not enough to just put our name on the shirt of a great team. You need to have the product in place. You need to have the full offering with payments and good customer support and everything. I’m happy we have that and we are investing more in the product all the time so we will become even better.
EGR: You’ve also applied for a licence and got through the first stage of the new regime, so what are the expectations for the newly condensed market?
PL: I don’t have a number in my head [of how many operators will be left], but I’m pretty there will not be as many as there are today. There will be change in the market. It does [mean there is an opportunity to take market share], but there will be other great companies left in the market. We have good ideas, we have a good position. We love Italy and are very optimistic about the future.
EGR: You’ve been deploying the Betsson brand across several markets. Your comments in the report spoke about realising economies of scale – can you touch on strategy some more?
PL: When the company becomes bigger and we have those sponsorships, like Inter and the ones in Latam, it would be a waste not to make use of that exposure. In other countries, we have been operating different brands for certain reasons, maybe acquired brands. Or in some markets, we’ve had separate brands in parallel. Now we are focusing more on the Betsson brand. It’s to use the economies of scale of the marketing investment that we do.
EGR: During Q2, Betsson decided to cancel the planned Dutch acquisitions. You said in the analyst call M&A was still a priority. Will you be trying again in the Netherlands?
PL: We have not closed the door to Netherlands forever, but we are not going to focus on Netherlands for the time being. We will be looking at other markets in Western Europe and in Latam for M&A.
EGR: You’ve opened a new tech hub in Malaga. Can you explain why the city was chosen and what benefits will be derived for the wider group?
PL: It’s in line with our strategy of delivering the best user experience in the industry. A lot of that is in product development; we have a few great hubs, we have a great squad of technicians, but it’s hard to find all those resources in one single place. So, for that reason, we are spread out a bit. When we looked and assessed different places about where we can find a good technical balance, a few cities in Spain popped up, and we decided to go for Malaga, which is an area under strong development and becoming more and more popular. It has a few large tech companies there, so we believe we can be attractive employer there.
EGR: Could you explain how Betsson is deploying AI throughout the business?
PL: There are certain things going on. We use AI in product development and also in how we operate the sportsbook, to some extent. I would say that AI is early days for us still, and I think the customer cannot notice much of it today, except for the chatbots and things like that. It’s going to be implemented more and more as we go by.
We haven’t appointed [a chief AI officer], but we have people that work full time with AI and it is not just one person. There’s a team in place and leadership for that team.
EGR: Do you have confidence in European regulators to deliver for regulated operators and clamp down on the black market?
Jesper Svensson (JS): I think it varies a lot from country to country, and I would say some will succeed better than others. We already see that today. I think it’s very telling about the existing regulations that the black market is so sizeable in many of those markets. That is not the sign of a successful regulation, it’s the opposite. I think many regulators have a responsibility to understand why that is and then work towards helping the regulated side grow in a sustainable manner.
EGR: Do you think there are any regulators that have done a good job in creating a positive environment for legal operators?
JS: I would probably say the most competent regulator today in Europe is still the Maltese regulator. They started earlier than most, they have a lot of experience, and they understand the industry really well because it is in Malta. It’s an important part of the economy, and they have been working very closely with the country in order to develop the frameworks we see we see today.
Naturally, it doesn’t have the same influence or impact anymore because there’s a lot of other local regulators. But I think regardless of that, I would still deem it to most likely be the most successful regulation in Europe.
PL: We have to keep in mind that the Maltese regulator is around 15 years ahead of likes of the Swedish regulator and the Dutch regulator, and it’s a learning curve. But we hope the others will catch up and understand.
None of these regulators we sometimes speak about, where they haven’t reached the aim with the regulation, none of them can be happy with the situation. It’s impossible. So, they will need to do something about it.
JS: To add to that, if the channelisation rate is 50%, as some regulators have admitted, that’s not a good situation from a regulatory point of view because it’s just half the taxes you were intending to get as well. And the answer then is not to regulate harder for the regulated companies.
EGR: Comparisons against Q3 2024 are looking positive in the trading update, especially with Euro 2024 and Copa América taking place last year. Are there any core reasons behind this?
PL: We have a natural underlying growth, and in some other quarters we’ve had an even higher growth in the trading update than we had this time. It’s our general growth that we see there. We’re happy we are growing even though we are in quite a soft period for the time being. But, in less than a month, European leagues will be kicking off. Action will take up. It’s going to be full speed ahead again.
The post Q&A: Betsson chiefs on why some European regulators can’t be happy with current results first appeared on EGR Intel.
Betsson AB CEO Pontus Lindwall and group CEO Jesper Svensson tell EGR they hope regulators in European markets recognise the dangers of the black market as more records tumble in Q2 for the business
The post Q&A: Betsson chiefs on why some European regulators can’t be happy with current results first appeared on EGR Intel.