The company noted a statutory pretax loss from continuing operations. The CEO understandably adopted a more cautious tone in his trading forecast, telling investors that the outlook was uncertain while conceding that COVID would clearly impact the business. Speaking to SBC shortly. We are a leader - a pioneer in our particular business. Those two businesses have definitely performed very well for us in and we actually. We invested heavily.
Players head to New Jersey in particular and play at Meadowlands. Hopefully that will change. At the beginning of March, state Governor Ned Lamont backed one of two bills that would greenlight sports betting in Connecticut. But it goes directly against the will of the Mohegan and Mashantucket Pequot tribes who back a second bill granting them rights to take sporting wagers, open a casino in Bridgeport and offer virtual casino.
The standoff between the tribes and Lamont is an example of staggering brinksmanship. The bigger issue is that the tribes have stated unequivocally that they will challenge. So they are allowed to continue slots in their casinos which is huge, clearly. They also get. If the Governor does put this bill through and the tribes follow through with their challenge - it is a huge risk. His assessment is not for the faint hearted. How long are we going to be down and to what extent?
Those volumes have been maintained. But the other unknown is are people going to pay what they either owed before or what they continue to owe for the services we provide. How long can we take this through? Where we thought we were geographically reasonably well diversified, that means nothing with this particular situation. Difficult decisions are going to be made. Nobody knows the timetable - none of us at all - but we are tackling rents, licenses and personnel.
Just to set the scene for European operators; what are the key differences to look out for in the US? CC: The US is a completely different market, in pretty much every respect you can imagine. For starters it's not really one market, there is currently a dozen or so, soon to be 25 or 30 markets.
Each one of the states is going to be run in a completely different way. The economics are different, the technology is different, the players are different, the sports are different, the root to market, marketing - everything about it is completely new. The smart European operators are those asking the questions before they jump in and get themselves into trouble.
CC: We're fortunate because we've been in the market for about five years already given our presence in Nevada. We had our platform certified there in so we learned a huge amount. We learned that sports betting is as hard and complicated to do as we thought it would be, if not more than we thought.
For the states and regulators it's something new for them to get up to speed on, and the regulatory environment will evolve very quickly - as it has done already. And we also learned that the casinos, who are essentially the hosts and beneficiaries of most sports betting right now, needed to learn a completely new business.
This involves cutting through a thicket of different types of suppliers,. There's lots of money being thrown around, it's actually quite a surprise how much cash has suddenly materialised and is being thrown at marketing, operators - it's quite extraordinary. SBC: So the key thing for newcomers to the market is that you cannot just. CC: There is no choice. You have to approach each state as a separate market. The Wire Act in itself makes it impossible, illegal even, for you to manage bets across state lines.
You've got to do the licensing, the compliance, the certification, the hosting, the reporting, the accounting, the liquidity - everything within the borders of each state. And actually, more so if you're dealing with tribal operators, so then you've got to do it on sovereign land within the state - it's incredibly complicated.
Americas, you said that would be the year of tribal sports betting; can you just explain what you meant by that? CC: It's just straight forward arithmetic. The majority of the casino business in the US is tribal, much bigger than the commercial sector. If you look at the map where the states are regulating, they are states with tribal gaming.
Where you've got tribal gaming and sports regulating, you're going to see tribal sports betting. These properties are seriously impressive and they are very forward thinking commercially too. They are not afraid to make big investments to capture a new market, and they know that their customers want to bet. CC: It's been quite interesting because if you went to Nevada, the only legal market for sports betting until two years ago - there were almost no SSBTs.
There were some, William Hill had some, but on the strip almost non-existent. The culture was betting at the window - if you were to go to Vegas for March Madness or before the Super Bowl - don't be surprised to stand in line for an hour just to get a bet on. And what was really interesting was that when the market opened up outside, particularly in New Jersey, as soon as SSBTs started to appear on the floor players went straight for them.
They didn't need to be educated or persuaded, or have promotions thrown at them, they just wanted the convenience. Now, some of the data we're seeing from our customers shows that when you add SSBTs you just increase volume. It doesn't take away from the window, it adds to it. And the reason is probably just that it makes the whole experience that much more convenient.
It's also less intimidating to use a kiosk because you don't feel like. CC: No, actually the division seems to be the size of the wager. SSBTs by definition are limited on the size of the wager, because of the physical amount of cash people don't want to have to carry around, but also because of the rules around money laundering in title This makes it very difficult for.
CC: Another 10 states. SBC: Is this from a company or regulatory perspective? CC: For us, it's the same thing. If a state regulates, our customers expect us to be there and that's what we're doing. The Golden Race CEO admitted that the primary aim for 3x3 Basketball had been to create a realistic virtual game complete with a wide selection of in-play betting markets, before the opportunity to add pre-game markets and a cashout function became apparent.
We took professional players from the US because it's prerecorded, we brought them on the court and showed them the scoreboard for the. They know what they have to do - the clock is saying one minute to go. So now we offer this too, followed by in-play bets for the first nine minutes of the game.
The in-play markets then resume with the action and the cashout function becomes available throughout the final minute. We are very confident that no-one will follow us because everyone knows Golden Race works with real odds.
We had some tests with clients and they were really into it, so this will be the big game for Supporting its expansion across. It takes a bit of time for people to understand these games. Europe, you have to come with simple games and build the trust of the players. But the US is very new, so we all have to learn how the market works. It's only possible if you're flexible enough like us. However, we were unaware at the time that this official data partnership would produce a new virtual baseball offering for licensed gaming operators in the US and across the world.
Readied for what was meant to be the start of the season in March, this concept of year-round engagement could not be more timely given the impact of the coronavirus on the sporting calendar, which of course included the current postponement of MLB matches. Just like for the in-game betting feed, the virtual game leverages official MLB data. At the time, he explained that Sportradar would be helping MLB.
He said that virtual sports are known to create value in emerging markets, especially around partnerships with a real association or league. Nevertheless, due to changes in technology, perceptions quickly change. So get it up and running in the right way on the right devices, that's the key.
This first-of-its-kind virtual offering does just that, and we are excited to bring fans this new entertainment option. EG: EveryMatrix is not suffering as much as sportsbook providers because we have other products such as virtuals and esports, and our casino is not affected - our large casino clients are not seeing less casino volumes, if anything a bit more.
If we were more like a Kambi or SBTech and had the majority of our volumes on sports then it would be worse for us. Our main product is still CasinoEngine, sports comes in second. The first thing for sports is to make sure that you have as good a coverage as possible - so we are putting a lot of effort into this.
You have to adapt. One of the biggest sports for us at the moment is table tennis. We can very quickly add new sports into our sportsbook. While table tennis, as an example, doesn't replace football, tennis etc. SBC: Can you just explain to our readers why the virtual sports are integrated through the CasinoEngine, and not your OddsMatrix product? EG: This is simply because the CasinoEngine is built to make it very easy for us to integrate vendors.
So as you know, we have more than 80 game vendors across slots, live games and also virtual sports. Last year, we added. CasinoEngine is the platform that best supports this. It allows us to then quite quickly add more vendors. When the coronavirus first started, I think we had five vendors already for virtual sports. So the first thing we do is start identifying and contacting other vendors. And we can quickly increase our offering around virtual sports. The approach we take is that the best thing for the bookmakers is to get as many providers and as much content as possible.
This is similar to say live casino. You could say I'm content to have this from Evolution or Playtech, and tailor the setup to those products, or you can say I will integrate content from as many providers as I can. It's the same with virtual sports. If everything is from Sportradar or Inspired, you can build a lobby to fit with those products.
Or you can say, as we're doing, the better. COVID response approach is to get as many games as possible. For virtual sports, we are doing two things. Add more content as quickly as we can. And the other is to build a front end user experience that goes across vendors so I can navigate between them - for example, I can see virtual horse racing but across four different providers.
And the same way for football, tennis, boxing etc. In this way I can showcase the offering from different providers and group them via sport, which is a bit different to most bookmakers adopting more of a single provider focus. SBC: It seems like every platform provider is rushing to talk up the selection of games that they have to offset a lack of sports; why would the number of games housed by an online casino make any difference to traditional sports punters?
EG: You are sort of right. If you already have 2, casino games then adding another probably won't make a big difference. This is different for virtual sports because the number of. Providers might only have two or three titles, not 50 or They might have football and horse racing, or horse racing and darts that's it. And that's why the benefit of aggregation is much higher when it comes to virtual sports than for casino.
SBC: As virtual sports providers strive to make their solutions as realistic as possible, in some cases incorporating real sports odds, might it be time to integrate the product into OddsMatrix in the same way you do for esports content? EG: Well you could do both.
From the. The key thing is that virtual sports are not put into the casino tab, you will not see them hidden amongst all the slot games. We will make a special main tab so you see it alongside sports, casino or live casino for example.
This makes it as easy as possible for the sports player to see the virtual sports offering without having to visit the casino section. The fact that virtual sports are integrated via the casino doesn't mean that the games will be presented as a casino component - we are just using the CasinoEngine for the quickest integration.
It allows us to build dedicated lobbies, as we have done for slots, live dealer, table games etc. SBC: Is the virtual sports cross-sell opportunity bigger for sports or casino players? EG: With virtual sports I am looking at a random number generator RNG , something that is put together in the same way as a roulette or a slot game.
The other type of game, which we've touched upon already, that we think will actually work even better in the absence of real sports is esports. These are actual games being played. There are many titles, of course, but some where the experience is very close to the one you have already for sports betting.
For example, you can look at two. There's no RNG involved - it is actual players where the best player wins. The other big title in this regard is the basketball game NBA 2K. SBC: Sports-based games have been seen as low-level games in the world of esports; might this enforced ban on real sports bring about a change to the pecking order?
EG: Yes, I think so. For someone who is not familiar with esports, the first thing you want to bet on is games you understand. So if you're betting on NBA 2K or FIFA, for example, you can see the stream presented in a nice way, you know the rules, it is very straightforward and includes the same betting markets you are used to.
This is where I think it will all start, and we have seen this already. We've been trying to promote the esports sections more for our clients and the take up has been really good. Particularly these sports titles are taking a lot of the volume, even though they are not the ones with the highest number of events. Now as people get used to this, they might spend time in the esports section and get curious as to what else is available.
We're getting into speculation, of course, but for the first few weeks post sports lockdown it is clear that esports has benefited a lot - it has grown almost by a factor of 10 in less than a month. SBC: On your OddsMatrix platform, punters would still see esports as separate to real sports; might there come a time when these are mixed in?
EG: Both options are possible. The main reason to split them out right now is visibility - you want your sports players to notice that there is such a thing as esports. Yet, another thing is that streaming is key for esports. Almost all live events have a video stream, which is very different to real sports where the live stream is rare outside of the richest bookmakers. In esports, these video streams are readily available, they are free and add entertainment value.
That's why you want to have a different look and feel for your esports section. The way we will do it is basically have both options available. Our clients can mix esports into the regular menu, for example placing FIFA next to Football, or keep the two separate. At this stage, when it comes to capturing a new audience, we think it's best to keep the two concepts apart.
We already have a great level of esports coverage but we don't have a separate tab, so this is something we are building now. We are offering it to clients as a new tab, but one you can place next to your existing sports. It's also good for us because if a bookmaker has poor esports coverage, they can frame the esports tab from OddsMatrix and put it there in the same way as if it was a virtual sports tab or a casino tab.
Longer term you might want to do a deeper integration with the sportsbook API, but you. SBC: These are distinct audiences as things stand, but after this extended period of reduced sports coverage might there not be such a split? EG: Yes, this can happen. As with all these situations, there is a silver lining and there are opportunities to evolve.
You can have a sports brand who,. And now they are forced to do it. In a good scenario, what they will discover is that they can reach out to a new audience and when the regular sports are back they will still have their old audience, but they will have also managed to sell a new experience and build a new audience.
In the end, you might have big losses now but a year from now you might. SBC: Final question. How does the betting world look after this crisis is over? EG: It will have quite dramatic effects I think. And of course it depends how long this lasts, but we will no doubt see that some operators will struggle. We have ongoing consolidation in our industry with bigger brands taking in smaller ones. This will keep happening in the coming months. If you don't have a healthy product margin you will be forced to shut down, which provides impetus for further consolidation in the market place.
So the two main things are to focus better on other products. This includes regular casino - there are sportsbook operators out there not doing well enough in order to promote a world class casino offering. But mainly virtual sports and esports, two products which can bring about long-term positive effects for those who do it well. Those who react fastest will be in the best situation. And then, of course, the consolidation part too. However, with a history steeped in land-based real-estate, should, or could, live casino be doing more to embrace new technologies?
And how much of a role does this play with regards to innovation within the sector. From looking at product launches in recent years and at our product development roadmap, we have embraced these new technologies in the sector. Live casino is evolving with virtual reality, scalable options and multipliers not available in land-based casino games. It has now beaten all previous in-house records for a game and attracted huge numbers of new players to live casino, many of whom had never played a live casino game before.
What drives us is creating games that players love. If we can use new technologies to deliver the fun and entertainment in the slickest and most impressive way possible to the widest range of players, then great. Every component of the game has to work hand in hand to deliver a fantastic gaming experience. What challenges exist in meeting the differing needs of users across jurisdictions?
And how key is it to achieve a tailored product to meet the needs of players in a variety of regions? So there, roulette is the main game but lottery is also in high demand. Finally, as a responsible operator, we always put that at the forefront of our concerns,. Launching a New Jersey studio in Atlantic City during , the process to build a similar entity in the neighbouring state of Pennsylvania has begun and agreements with new operators for that state have already been struck.
In all markets where we operate, we pride ourselves on having a strong understanding of player needs and local gaming customs. Sometimes that involves creating a very specific game, such as our American Double Zero Roulette. In other cases, it might involve just some small tweaks to the rules of an existing game. The dice game craps, for example, is an important strategic release and another global first for us. SBC: For our readers who are unaware of the current landscape, can you just explain the current state of play for regulated igaming in the US?
DS: The US has been really interesting. NJ is doing fantastically well I think for everyone in igaming. SBC: What are the likeliest states to join the regulated scene in the next year or so? DS: If I had a crystal ball it would be great. SBC: Picking up on sports betting, do you think the successful spread of this vertical has lowered the barriers for more states to regulate on the online casino side? DraftKings has got a very different type of player to.
DS: Super excited. And we see it as a core mechanic of the platform, allowing players to use their free rounds on a wide variety of compatible games. SBC: In terms of how it works as a bonus mechanic, is it just for your library of titles, or can it be applied.
Most free round products that exist in the industry only work on a set amount of content. As Free Rounds is a platform feature that lives on our Open Gaming System OGS , it not only takes care of products that we build through our own studios, but also studios and partners that are integrated in the right way can also take advantage of our Free Rounds product.
Now in the UK and Europe we have something like games that are already Free Rounds enabled across a plethora of different content - so not only our own content but people like Big Time Gaming are using Free Rounds as well. DS: Jackpot Wars is a new innovation. It fuses the world of random number generator RNG casino gaming with the social gaming world.
Essentially, it allows players to interact with the game like they normally would but then actually opting to win a jackpot in a very new and innovative way. Kind of like a fusion of social gaming with RNG, players can then create their own robot, they can create their own features around the robot and essentially enter that robot into a tournament and into a jackpot system that allows them to potentially win a number of different jackpot prizes.
Whether this trend continues or there is a move away from such third-party platforms to operator and. SBC: Are we going to see more suppliers franchise their product? It is more a case of offering different tools or leveraging experiences and technology. So the wording should be considered with this in mind. What does come across is the need to present and offer faster routes to market while making it easier for new suppliers to offer services, and operators to take on new content.
SBC: Is there a case to be made for gaming suppliers to acquire their own platforms? It requires heavy initial and ongoing investment in the technology itself, the integration team to support it, compliance and legal teams that are geared up for various markets of interest and all that comes with it, plus a strong contacts book ready and willing to prioritise your content for integration without delays that cost you money.
I can see that a lot of suppliers will choose to streamline expenditure rather than invest in a fully-fledged RGS and the choice for innovative suppliers is for a partner that provides a simpler integration with faster timeframes. However, large suppliers with a bank of hot content will usually end up at least playing with the idea of their own RGS and this is another reason that Relax supports server builds as well.
As an aggregator, Relax Gaming supports both, as not all suppliers are in a position to invest in their own platform. It was originally argued that having your own platform affords you the potential of direct integrations to an operator, independence and the ability to define your own tool suite.
Although this still holds true today, consideration also needs to be given to the market landscape. The explosion of content providers in the last two years has drastically expanded operator choice and reduced the appeal of direct integrations that are expensive and time consuming. The efficiency for studios of owning their own platform is a reduction in the cost of rebuilding on several different server APIs if they choose multiple distribution routes. However, if a Remote Gaming Server RGS provider needs to use a middleware to reach the operator and its tools, then it dampens those benefits.
SBC: Is the idea of operator-built platforms now gone? Is outsourcing the only solution? SH: If the ideal is for operators to centralise their platforms for uniformity, then the idea of operatorbuilt platforms is almost more important today than ever, given the influx of content and regulation. Naturally, however, an operator needs to consider the more stringent landscape that regulation and general market conditions are shaping.
Current conditions pile pressure on hiring, building and maintaining a large tech workforce to service their needs, which makes the idea more difficult to put into practice. Outsourcing, meanwhile, can provide pockets of innovation especially in relation to key areas such as business intelligence, analytics, promotional engines, AML and the like.
It can harness expertise or indeed fast-track development in areas whilst letting the operator focus on what they do best. I think there will always be the desire for a centralised operator platform, but with the changing landscape also comes a changing mindset to plug in additions from outsourced specialists. SBC: How can we improve the operator and player experience at a platform level? SH: There are numerous ways through which the platform can provide a unique and improved partner experience.
At an operator level, ease of use lies at the heart of working with a platform and follows four basic principles: ease. When we take the player experience into account, there are countless ways of making improvements that could have positive effects on the gameplay. How the mechanics are extrapolated from the backend to the final gamescreen can have major effects on the. A reduction of fragmentation, for example, is a key area that benefits both the operator and player and is directly linked to the platform.
Players are not interested in where the inspiration for a game comes from, or how, but they do care about. The reduction of fragmentation in the industry, which is centrally routed in common platform functionality or standards, will help drive the market forward. NT: The UK is traditionally a card focused market, so increasingly. SBC: And in terms of the European market, how important do you believe cashless payments will be?
We are able to help them around responsible gaming, we are able to cater to newer audiences that are comfortable making deposits on mobile and we are able to provide KYC information alongside payments that really tighten the regime from a money laundering perspective. In order to keep up with an ever-. And it also helps them reduce costs, as there are a lot of costs associated with handling cash.
SBC: From your perspective, what do you believe are some of the key differences between the US and European consumer when it comes to payments? NT: Payments across Europe vary from country to country. Some places like Denmark and the UK are card dominated, whereas other countries like to use e-wallets, prepaid cards or different local methods.
We have 50 states in the US, the first few states will set the standard and then everybody will adopt and there will be fast followers. That's why we are poised. NT: With the business being very mature in Europe, we are working with most of the large operators in European online betting and casino and we are now looking to work with them in the retail landscape.
We can leverage the experience in the European market with the US, where it is a much newer scene, but we can also learn from what we have done over here in Europe and extrapolate that for the US market. SBC: Speed and efficiency have been key to ensuring customer engagement in Europe, do you believe this approach will be replicated in the US?
And we do that very effectively. That's why we have the success that we have. But, to answer your question, speed and efficiency will be extremely important. SBC: In Europe, payments within sports betting have innovated faster than payments in other sectors.
Do you think that this speed of innovation will be mirrored at a. KM: In the US, the e-commerce market is much more mature when it comes to traditional methods than it is with sports betting in payment methods. This is because sports betting is very new and the law has only just changed within the past couple of years to allow betting online.
As a result of that, we are looking at infrastructure that was in place for e-commerce and seeing if we can apply it to sports betting. The challenge is that the number one way people pay online in the US is with their Visa or Mastercard, but neither of these are supportive for sports betting.
It also may have some interesting implications for e-wallets. If I load my e-wallet with a credit card is that going to be allowed or not? That could knock some e-wallets out of the blend. With the way. This is a key difference in the US; so you have to look for alternatives and that is very much where we play a key role. The responsible angle here is very important and bank transfer as a payment method very much plays into that. Merchants will try and do a lot of different things for fraud mitigation, but here Trustly is relying on the bank to know their customer with multi-factor authentication and so we can reduce, if not eliminate fraud.
Do you see this as a regulation that needs to evolve? And is it a step in the right direction? The new rules state that gambling website owners must complete age verification checks before consumers commence play. This means that no funds can be deposited, and no form.
Discussion of the new policy only officially began in January before being executed in May that same year. The Gambling commision had a consultation, decided to do it and then brought it in. Whereas in other industries the build up to new policies has been a bit slower. To be able to do that you need a smooth onboarding process and as I've looked across the industry, both internally and externally through different operators there are many different ways that they do it.
Russell implied that the best way is to not make rash decisions regarding re-structuring a betting operator's current age verification process. Whilst the regulations came in quite quickly, most if not all of the operators had age verification in their workflows as part of the KYC Know Your Customer process.
So the knee jerk reaction to meet the requirements was to push the KYC right to the front of the process because it would tick the box from the. GC but it isn't a sustainable process. If we have a client who wants to come on to our site and play with us. This has been heavily implemented in the betting industry to solve underage betting and problem gambling. There was an immediate impact on the conversion funnel. Despite the age verification policies only coming into place quite recently, multiple other sectors are currently dealing with the issue of trying to verify its customers in order to eradicate underage consumerism.
Currently, the knife industry is. Whilst e-cigarettes are also being implemented with age verification protocols in order to prevent young people purchasing the product, especially through online outlets. Russell believes that while gambling companies can learn from these sectors, the key issue is separating age and identity. But for betting companies, they need to know who you are for money laundering purposes.
Can different markets collaborate? Yes they can. Will they? Gambling industries are being held in the same regard as finance and foreign exchange companies when identity requirements are mentioned. So, in theory, a working relationship with these companies on how the firms verify its customers could benefit the betting industry as a whole.
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