Codere Online Spain growth powered by higher value players as market matures

Despite Codere Online’s uptick in revenue, Sher said increased competition in the Spanish market, buoyed by the Supreme Court’s rollback of advertising rules in April, has driven up cost-per-acquisition (CPA) rates for new customers.  

“When competition is higher, the prices are increasing both in digital and in traditional media, which eventually leads to a higher CPA and then later, maybe to a slower ROI (return on investment) until we are able to cover those CPAs,” Sher told analysts during the operator’s Q3 earnings call on 27 November.  

He said despite the higher CPAs, he is happy to be attracting higher value players to Codere Online that have better retention and loyalty rates.  

A host of restrictions meant to increase player protection were passed in November 2020 under Royal Decree 958/2020. 

But in April, the Supreme Court rolled back a number of the gambling ad rules. This meant operators could offer welcome bonuses and market to players who have held an account for less than 30 days. The ban on celebrity endorsements was also overturned. 

Codere Online CFO Oscar Iglesias said the reintroduction of welcome bonuses had had a slightly negative impact on profit margins in Spain in Q3 due to the costs involved and increased competition from newer operators. 

“When we were operating without a welcome bonus, [it] really favoured the top five, six, seven incumbents. In this new context, you have an additional tool for either new competitors or existing competitors that might be looking to grab share from others to be a little bit more aggressive,” Iglesias told analysts.  

This comes after “a relatively benign competitive landscape” for the three years after restrictions were imposed, Iglesias said.  

Could Spain reinstate gambling ad restrictions? 

But Iglesias was positive overall about the overturning of restrictions. “We have to say that the unit economics in Spain still are very, very good,” he added.  

He reiterated the company’s belief that Spain could reinforce some of these advertising restrictions, as Sher suggested in August. He told iGB at the time the Supreme Court ruling will likely be overridden by a new decree bringing back the original ad ban. 

Iglesias told analysts: “There are initiatives underway where there could be legislation next year by other means to reinstitute some of these restrictions that would basically take us back to where we were by way of what they call a Royal Decree and executive decree and to achieve the same legislative initiatives.

“But we’re not counting on that. We’re operating on the assumption that this will continue and this is the new operating environment in which we have to compete,” he said.  

Codere Online Expansion in LatAm 

Outside of Spain, the operator said it was eyeing up acquisition opportunities in LatAm to either expand their offering there or enter new markets, although this was a more long-term strategy. 

“One of the things that we are considering is some kind of an M&A or entering a new growth market,” Aviv said.  

“Nothing in the short term that we can announce. But I think in the medium term we will see how we are going to use this cash in order to create some inorganic growth or maybe heavily invested in our current markets,” he added.  

Codere Online currently has a presence in Mexico, Colombia, Panama and Buenos Aires in Argentina. Mexico is the company’s biggest market and reported €26.7 million in revenue in Q3, up 27.1% from last year.