Pontus Lindwall’s unfinished business

In September 2021, a brief press release announced the departure of one of the industry’s most well-known figures.

Officially, Betsson announced Pontus Lindwall would resign as CEO, but he doesn’t look to downplay what happened. “I was more or less sacked by the board,” he says bluntly.

It might be easier for Lindwall to be frank, because of what happened next. The announcement sparked uproar from shareholders, prompting a vote of no confidence in chairman Patrick Svensk, and the election of a new board that kept Lindwall in his post.

“I didn’t even leave the office, it was a quite fast turnaround,” he notes.

What kept him in the role was likely closely linked to the reasons the board provided for his departure.

Lindwall was brought back into the top job at Betsson in 2017 – six years after leaving for the first time – to implement a recovery programme after a series of challenging quarterly results.

In Q2 of 2021, the business reported record earnings before interest and tax. Svensk said this meant the business was “back on track” and Lindwall had thus completed his task, but to shareholders, deviating from a successful formula may have seemed unwise.

“Obviously they have been shareholders for a very long time and, I think, they have over time been quite happy shareholders,” Lindwall says. “And it seems they just had a different view than the majority of the board.”

So are there major goals for Betsson and Lindwall now he’s been given fresh life as CEO?

“There’s so much business to be done in these industries. So yes, there is unfinished business.”

Lands of opportunity

That business may include a number of new markets, with Latin America having been a particular focus lately.

Betsson has made a number of strategic acquisitions focusing in the region, including Colombia-facing Colbet and Peru’s Inkabet. At the same time, it has launched its core brand in the city of Buenos Aires in Argentina.

“It’s a big opportunity,” Lindwall says of Latin America. “It’s a huge market. It’s some years behind European markets in terms of development, both on a technical and legal side, but there’s a huge interest in sports.

The ultimate prize in Latin America, though, must surely be Brazil and its football-mad population of more than 200 million. Betsson readied itself for the launch of fixed-odds sports betting in Brazil back in 2018, acquiring a 75% stake in local operator Suaposta. At that time, legal fixed-odds betting seemed imminent.

Four years later, a number of delays have meant the market has not yet launched. Major progress came in May, when the government published its draft regulations for the sector. With the 2022 World Cup presenting an obvious target date for a launch, Lindwall says Betsson will do what it takes to deliver a product ready for Brazilians by that date.

“If the regulations are approved in time, then it will be up to us to prioritise and see if we can manage to get our systems up and running for the World Cup,” he says.

While the operator’s focus in Latin America has been clear, its strategy in another new market exciting the industry may seem more muted. The business has been expanding in the US, but primarily as a B2B proposition. Its B2C product only launched in Colorado in March.

This launch is not, Lindwall says, a move towards a B2C-first approach to the US. Instead, the consumer-facing brand exists to complement the tech offering.

“It’s not a shift in strategy,” he explains. “The US is a huge market and it’s very expensive to go full-blown B2C there. And we have a very competitive sportsbook product, which we think makes a good fit into that market.

“But we also realise that in order to be able to kind of present our B2B offering to the US market, we need to be in the market and have the product validated. So we started our own B2C operation in Colorado, where we’re going to keep gaining market knowledge for our product and at the same time use this as a showcase for our sportsbook and our technology.”

As a business with its own sportsbook technology that it’s currently showcasing in the US, Betsson has been involved in its share of M&A rumours. However, when it comes to potential deals, Lindwall sees his business as a buyer, not a seller.

“We are in an acquirer position and we did some acquisitions last year,” he says. “So we are going to continue to be on the buyer side. It’s part of our growth strategy to do M&A.”

European challenges

While these new markets present new opportunities, European operating conditions are growing trickier.

In the Netherlands, Betsson was part of the wave of international operators that blocked all Dutch customers as the market opened, having passively accepted Dutch bets before the Remote Gambling Act was implemented.

Lindwall notes that whatever the intent of these rules, it’s clear that state entities such as Nederlandse Loterij and Holland Casino have been beneficiaries.

“We had some good revenue from the Netherlands before 2021 as we made an acquisition of a company that was accepting Dutch customers a long time ago, when Dutch authorities said that they were going to regulate the market,” Lindwall says, referencing a 2014 deal to acquire Oranje and Kroon. “Obviously the process was much longer and then this cooling-off period took place.

“We were not very happy about that because we had to sit on the sidelines, watching the state-owned companies grabbing market share. But now we have filed our application and we are looking forward to being in the licensed market as soon as we can.”

He notes that when Betsson is permitted to launch, gaining market share from the incumbents may be tough, as the industry is now set to face new advertising restrictions.

“Of course it will be a challenge for us to do that,” he says. “We would have been better off if we could start at the same time as the state businesses, but we will have to cope with the situation, run a very good operation and see where that can take us.”

Germany hasn’t been much better. The country’s new online gambling regime – permitting online slots and table games nationwide – came into effect last July. Only one operator is licensed under the new system, but Betsson is part of a larger group playing by the new rules as part of a transitional regime.

Those new rules, though, are some of the strictest in any fully regulated market, with slot stakes capped at just €1 and deposit limits applied across all operators, with only limited exceptions.

Betsson has noted in recent results that these rules have hit its bottom line. Much of the revenue lost, Lindwall notes, has gone to the black market.

“I think the regulators will have to reassess the whole situation because no regulator can be satisfied with a situation where the majority of revenue ends up outside of the regulated market,” he says.

Lindwall is certain something needs to change – not just with black market enforcement, but regarding these rules – to make the market viable.

“I think only targeting the black market wouldn’t solve the problem,” he says. “They need to allow operators to have a competitive product.

“It doesn’t mean that you have to go all the way back in everything, but you definitely need to have a product which is attractive enough for customers.”

Start of a change?

Events in Betsson’s home market of Sweden have hardly been friendly to the industry, but an optimist may be able to find some green shoots in 2022.

In January, the country’s government decided not to make the SEK5,000 online casino deposit cap a permanent feature. In May, it opted not to pursue a ban on gambling ads between the hours of 6am and 9pm, instead focusing on licensing B2B suppliers.

Lindwall recognises that while there have been challenges, regulator Spelinspektionen now has an opportunity to focus on tackling the country’s channelisation issue with somewhat reduced levels of political interference.

“The thing about these measures [such as the deposit cap] that was a little bit problematic was it was done in a very fast way without much investigation or work behind the proposals,” he says. “But now I think we can keep on moving ahead on the existing regulation for some time.

“Obviously the aim from the regulator is to address the rather low channelisation. People are playing outside of the regulation and that’s something which is a problem for all regulated markets. And the regulator will have to come to the conclusion that we need to be able to have a proper offering which is competitive.”

But even if the regulatory challenges across Europe die down and the most anticipated new markets launch without hiccups, Lindwall says he’ll never truly have completed all his goals in the role.

“There’s always business to be done and business to be finished.”