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Pretender to contender: Part One

| By iGB Editorial Team | Reading Time: 3 minutes
Kambi CEO Kristian Nylén and CCO Max Meltzer reflect on a stellar 2018 which saw the supplier establish itself in the nascent US sports betting market.

In 2017, Scientific Games’ acquisition of NYX Gaming Group and its OpenBet sportsbook platform was the clearest sign of the industry’s confidence that the Professional and Amateur Sports Protection Act (PASPA) was to be consigned to history.

Few doubted that the solutions giant was set to carve out a major share of the regulated US sports-betting market.

William Hill, active in Nevada since 2012, was also expected to thrive. The likes of International Game Technology, SBTech and Amelco were also hotly tipped. Kambi, the former B2B subsidiary of Kindred Group, was mentioned as an afterthought, if at all.

What a difference a year makes. As 2018 draws to a close, Kambi has exploded onto the US scene. Its partners in New Jersey have established a market share of around 60%, including the current market leader, fantasy sports giant turned sports betting frontrunner DraftKings.

Its partnership with Rush Street Interactive has launched two of the three legal sportsbooks in Pennsylvania. The fourth – Parx Casino – will also be a Kambi client. The Rush Street partnership also provides a route into Illinois and New York State.

This has seen Kambi evolve from being an afterthought to one of the most significant suppliers in the sports betting vertical. In the company’s most recent financial results, for the third quarter of 2018, revenue was up 39% year-on-year, with client turnover up 31%.

Investors have also bought into the US story, Kambi having been the strongest performer in iGB’s RP iGaming Index (see page 45) since it was rebased in May 2018 following PASPA’s repeal, up 138% by November.

Chief executive Kristian Nylén (pictured left) explains that, while the business had not been expecting such a quick turnaround in the wake of PASPA’s repeal, the US launch had been in the management team’s thoughts for years.

“There’s always been debate over whether the US would ever allow sports betting outside of Nevada,” he says. “We were positive it would and we wanted to ensure we’d be ready whenever it occurred.”

Nylén argues that Kambi was in an especially strong position as a result of its dedication to regulated markets – even if that forced it to forego opportunities for short-term revenue growth. “It’s easy to go into those markets if you are seeking the quickest route to money but it’s not a long-term strategy for a reputable business such as ours,” he says.

Chief commercial officer Max Meltzer (pictured right) adds that, in the US, where the progress of gambling regulations has been slow, a whiter-than-white approach is crucial. Where legislators treat gambling with a degree of caution, he explains, it is vital to be as credible and regulated as possible.

He says this has resonated with regulators and casino groups post-PASPA, pointing out that the sports betting supply deal with Parx Casino operator Greenwood Gaming and Entertainment was won partly because of Kambi’s regulated market focus.

“Companies spend a lot of time and money to build a brand and reputable business, they don’t want to jeopardise that,” he adds.

PASPA was repealed on 14 May last year. Kambi sprang into action and three days later announced its partnership with Rush Street Interactive. The deal highlights how its regulated market focus has positively impacted its US performance, with the two companies first collaborating on the launch of a sportsbook in Colombia’s regulated igaming market.

This, Nylén explains, allowed the operator to familiarise itself with the Kambi system, testing its capabilities and strategies for sports betting.

“This gave them a great base to work from when going into New Jersey, which I think has been proven by the success they have had,” he says. “If you look at the [New Jersey revenue] figures posted by the DGE, SugarHouse is third in terms of sports betting revenue, way ahead of the major casino brands in the market.”

While the Rush Street partnership served as a statement of intent, it was Kambi’s deal with DraftKings, struck in June 2018, that made rivals sit up and take notice.

Part two, in which Meltzer and Nylén discuss how Kambi sealed the DraftKings partnership, the importance of retail and its plans for further US growth, will go live tomorrow (January 11).

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