A new era for the gaming industry

This is a year of celebrations for Malta, and one comes to celebrate not only what the country has achieved in the last 50, 40, 35 & 10 years, but more importantly, the firm direction where the country is going. How do you see the development of the country in the last 5-10 years and what are the key factors for success that you can identify?

First of all I haven’t been here for 10 years, but I can see what has happened in the last few years and I think it has been an incredible growth in the quality of life and the supply for the citizens here, whether for expats or locals. Schools and restaurants, but also infrastructure has boomed. It’s been an incredible growth and this is a prerequisite to keep attracting investment in Malta, by developing the quality of life. When it comes to the economy, Malta has been able to show growth in the last few years, which is remarkable. One can speculate that it has been a smart move to open up licenses in the iGaming sector. The industry currently employs 8,000 people directly, and another 5,000 indirectly, which is massive for a small country like Malta.

Apart from the fiscal incentives that you have been mentioning, which attract all these European companies, what other factors would you identify for the success of the gaming industry here?

I actually think that it wasn’t fiscal incentives that attracted companies here, but it was the legal incentives – the legal framework that makes it possible for us to operate here, within the European law and the license regime compliant to this law. On top, it’s the fiscal incentives that sped this process up, but primarily it’s the legal incentives, which are very up-to-date. Europe has not yet found any other cross-country regulations that have worked. Malta is still the most powerful pan-European license that you can obtain. That is the key reason which has led to a lot of spin-off effects, bringing a lot of talent and senior people here. A lot of iGaming competences are centered in Malta, so it has become a vehicle, as it moves by itself after a while and it becomes easier for companies to relocate to Malta, as there are a lot of skills here for the industry.

When we met Mr. Joe Cuschieri, he told us that one of the problems that the industry is facing right now is that in many European countries you need special licenses in order to operate in these particular countries. With your company, which has operated in many countries in Europe, how are you dealing with this?

We apply for licensees in those countries that we think are financially viable to do so. We currently have licensees in Malta, Estonia, Italy, Denmark and we have just received our provisional license to operate in the UK. We apply for licenses where we think the license regime is compliant with EU law and/or they are financial viable. You have license regimes like France for example, where it doesn’t make sense to apply, because the point of consumption tax is very high. In Italy, on the other hand, the tax of consumption is lower, so we have a local operation there. In that sense we do not need a Maltese license for the Italian operations, but we use the Maltese license for other operations. A lot of countries create their license regime that is compliant with EU law, but there are a lot of commercial challenges that come with that. I think that eventually, France will realize that you cannot run this in a way that is commercially not viable. Eventually the barriers will break down so they will have to reestablish or relicense that license regime. The UK is a mature gaming market and they know these things. The UK license regime is very well constructed in that sense.

The UK as a gaming market is very mature, and as Betsson got a license there, why aren’t you focusing on that market, which is one of the biggest?

You need to make a business decision if you think you have the ability to compete there. We have never been a big player in the UK and we never had a big presence there. We have always been a big player in Scandinavia though. To get a big presence in the UK, given that it is a mature market, is a tough task. The UK market has never been a core market for us. It doesn’t mean that we will not invest there a bit as we are operating there.

Betsson is today the largest iGaming company in Malta. It has seen rapid growth since opening its first Malta office in 2005. Can you tell us a bit more about the evolution of the company into a leader of the industry in Malta?

We moved to Malta after hovering around in a lot of places. We had our first offices in South America. Then the opportunity arose when Malta launched their license regime, so we were quick to move here. We have never really looked back after this. We have invested in Malta, in the people, in facilities and this regime here has been very good for us for the simple reason that it is commercially viable and it is robust and predictable. In our industry, what we do not like is unpredictability. We don’t want any surprises when it comes to the license and so forth. In that way Malta has been fantastic to us; it has been very predictable and that is very important if you want to invest a lot of money here. A lot of other companies have looked at Malta differently and they have operational hubs somewhere else, but we have our business here. We have 650 people working for us in Malta. This is not just a customer service office or a legal representative office – this is our business. This is making Betsson slightly unique as we have the core, the heart and the soul of our entire business here in Malta.

About this uniqueness of Betsson, you mentioned you have your operational structure here in Malta. What would you say the difference is between your company and the competition?

We simply provide a better customer experience any given day compared to our competitors.

Commercially speaking, are you focusing on the mobile platform?

Absolutely, we had an initiative which is ‘Mobile First’. A lot of our game services are mobile only, and the mobile penetration of the company has grown dramatically from less than 10% a few years ago (July 2013), to 24% of our total revenues.

You mentioned in a recent interview that this year was a turning point for your company, that it will be an execution phase from now on. What other factors would you identify in that sense?

We had a quarter in 2012 which was a tough time for Betsson. It was in conjunction with a lot of big acquisitions. The company back then was not ready to take on big acquisitions. Since then we spent a lot of time rebuilding our structure and the capabilities of the company, in order to handle acquisitions, and at the same time to run the operational business as usual. We also focused irritatingly on the customer. We have put an incredible focus on customers to make sure that we keep on innovating and supporting customers. And if you do that consistently, month in month out, you will create an experience that has less friction points to it, and eventually this will create the better customer experience. We are nowhere near to be done with this but this is the journey we are on.

How would you explain to someone that does not know much about the gaming sector, what responsible gaming means?

Responsible gaming means giving the player the choice and the tools to be able to control his playing behavior and playing pattern. We are operating in an online environment, so to get an online player to go down to the social welfare office to ask for help is a long journey. So we need to give the player the tools in the environment that he plays, which is online, to be able to either stop himself from hurting himself, or set limits and frameworks so he feels comfortable to operate, whether that’s budgetary or deposit limits, or self-help, self-diagnostic tools. That is our way of reaching out to the customer and to make sure that we have enough tools so the customer can help himself. We do not think that we can get that customer physically to go and ask someone for help.

I would like to ask you about the Summit tomorrow, SiGMA, which is trying to position Malta as the Silicon Valley of Europe in the gaming sector.

Actually, this was my idea. My point with that is instead of focusing on taxes and regulations; we need to focus on the people, who are building this business. That should be the reason to relocate to Malta – because you have the skills here. And that is completely different from having a regulation here, because regulations change. All of a sudden, Italy, the UK, etc, all do their own regulations. But what I mean with the Silicon Valley of gaming is that if you can understand what is the skills-set that will be unique for the industry and if you can make sure that the people have this skills-set will stay in Malta, then you have a very sustainable position.

Regarding the skills that you have just mentioned, I would like to know what kind of partnership do you have with MCAST or with the University of Malta for training young people?

I don’t think it’s my responsibility to start a computer science education in the University of Malta. I am happy to help and make commitments on internships along the way. MCAST is a college, but Malta needs world class programmers. We need brains and well educated engineers, and in order to supply that you need an education system that prepares such people. There is a big misunderstanding in Malta in terms of what are the skills that are really required and how do we make sure to supply this skills-set. We employ engineers from around the world that are top notch computer science engineers.

How many Maltese people do you have working here?

About 1/3 of our staff here are Maltese, 1/3 Scandinavian and 1/3 from the rest of the world.

With the restructuring process going on at Betsson, how do you foresee the following 2-3 years?

We have set very aggressive targets to outgrow the markets for the next few years. We have companies that grow much more, and ones that grow less, but Betsson is about long term value creation and we want to make sure that we deliver a stable long-term growth.

As CEO of the key player in the gaming industry in Malta, and as an ambassador of Malta to the outside world, do you feel a responsibility to the Maltese people?

The Maltese are very suspicious to the gaming industry because they think the industry can easily leave Malta. They ask themselves what sort of persistent values this industry really creates for Malta. They are possibly afraid that for a gaming company it is simply a fiscal matter, but they miss the point a little bit, as it is not that easy to relocate. Companies do not just pack up their bags and leave. It’s minimum a 5 year cycle to plan to relocate the whole office. But it’s not about us, it’s about the people we employ, the services we buy and the general wealth generation to Malta. The whole new construction works that are here would not be here if it would not be for the gaming industry. If you think that growth in Malta is important, and if you believe in Malta long-term, then this is what the gaming industry is providing to Malta. I think we are showing a lot of respect to the Maltese by providing jobs here, residual effects in terms of growth and by paying taxes.