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Pretender to contender: Part Two

| By iGB Editorial Team | Reading Time: 4 minutes
In the second part of our feature on Kambi's rapid growth, CEO Kristian Nylén and CCO Max Meltzer discuss DraftKings, retail and the future, including its expansion plans for Pennsylvania.

In the second part of our feature on Kambi’s rapid growth, CEO Kristian Nylén and CCO Max Meltzer discuss DraftKings, retail and the future. Read part one here.

“I think part of the reason for that perception is the great success we’ve had online,” Meltzer says. “Although when I was appointed chief commercial officer I looked at the different markets, the various dynamics and our approach to them and found that we needed to make a lot more of our retail product.”

He says this was simply a case of showing ambition and communicating what Kambi could do in the retail channel. It had a product, one that had proved itself in heavily regulated markets, and it was simply a case of making potential US clients aware of it. 

Meltzer says translating their online technology into the retail sphere had enabled them to offer the same depth of markets, in-play quality, speed and presentation. While retail as a channel had slipped under the radar to some extent, it is firmly in the spotlight because the majority of US markets are currently adopting a land-based first approach.

“Executing on-property was probably the one doubt we had about ourselves going into the US,” Nylén says. “But after what we’ve achieved in recent months, it shouldn’t have been a concern to us at all. I’m confident we now offer the leading online and on-property sportsbook in the US.”

This confidence is born less of bravado than of having had the retail solution stress-tested within an inch of its life. In short order Kambi has worked with DraftKings to launch a retail sportsbook for its licensing partner Resorts, and simultaneously tested, then launched, sports betting for the Rivers (pictured below left) and SugarHouse (pictured right) casinos in Pennsylvania.

 “I believe the initial Resorts sportsbook hadn’t been performing well and they had seen the quality of product DraftKings offered online and decided to take the on-property equivalent,” Nylén explains. “Resorts set a pretty short timeframe to make the switch, which meant DraftKings and Kambi had to spring into action. We allocated top talent to ensure we could deliver on time. 

This helped the Pennsylvania roll-out, says Nylén.

“We gained our license from the PGCB on 28 November and were up and running on 13 December, launching in two casinos simultaneously. Introducing two on-property sportsbooks on the same day was a challenge but it was one we met and the sportsbooks so far have been a great success.” 

Looking ahead, Nylén dismisses concerns that Kambi could be locked out of certain states following a rise in long-term partnerships between land-based and online operators. In recent months a trend of market access deals has emerged, such as Bet365’s 25-year partnership with Empire Resorts for New York State, and William Hill and The Stars Group pairing up with Eldorado Resorts. 

Kambi’s CEO argues that this requires the market entrants to pay prohibitively high revenue share agreements or give their new partners equity.

“It also seems premature,” he adds. “You’ve got to consider it is still early days in the regulation process in the US; most states aren’t close to regulating or deciding how many skins they will allow establishments to have. 

“Take New Jersey: they have three online skins offering ample chance for market access. While that isn’t and won’t be the case everywhere, we’re taking steps to ensure that in markets such as single-skin Pennsylvania, and New York with its four commercial casinos, we are well‑positioned.”

He points out that Kambi’s partners will provide it with routes into multiple states: “Combined with that, there will be states where numerous skins will be made available and where some have already paid a price for market access when they perhaps needn’t have done so.”

Nylén also warns the US casinos against rushing into deals.

“From our perspective, what we are increasingly seeing from US operators is the desire to protect and grow their brand in their respective markets,” he says. “Unfortunately for some, they’ve come to this realization too late and are starting to regret their earlier decisions perhaps blinded by short-term share-price gains – particularly as they begin to see how the Kambi sportsbook stacks up against the rest of the market.”

Kambi ends 2018 having shot ahead of many of the operators and suppliers that industry observers had tipped to make a bigger splash in the US. While some will view 2019 with a degree of trepidation, Nylén has the luxury of looking at the year ahead with a degree of excitement. The supplier is already preparing for the next 12 months with plans to open its first US office, staffed by trading, risk-management and commercial staff. 

“It’s thrilling to take part in such an environment with all the different combinations, the number of skins changing per state, the joint ventures we’ve seen, the focus on retail and the creation of some partnerships you may not have expected,” he says of the US market.

Since May 2018, Kambi has evolved from a pretender to a serious contender. Few would bet against further success in the coming year.

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