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Interview: Joe Saumarez Smith, Chairman, Bede Gaming

| By iGB Editorial Team
We caught up with Bede Gaming chairman Joe Saumarez Smith to find out more about the company’s entry into the B2B space and how it managed to disrupt the dominance of the established platform providers.

You are better known in iGaming for your association with B2C operations. So how did the platform project come about?

Our main client was IPS, which is the B2C business that Crown Bingo became. At the time, we were running 12 different sites on three different platforms, and weren’t particularly happy with the platform suppliers we were using. It also didn’t help that we weren’t their most important client. You would put in a request to change the registration page, and be told was a two-year waiting list to add a simple field.

The reality is that nobody is 100% happy with their technology supplier. That’s an inevitability, you always think your technology supplier is making too much money from you and that you could do better. There were degrees of frustration, and each of the three platforms we were using were frustrating in their own ways, and we thought we could do it better.

It was also clear that most of the platforms had been built by technologists rather than by operators saying: “This is the problem. This is what we need to be solved”, and then using the technology to solve it. Their approach was: “This is what the platform is going to look like”, and very often they hadn’t even talked to the operators about what they actually wanted. Often they would come unprompted and say: “Da, da! Brand new feature!”, to which our response was usually: “That’s not what we wanted. Why did you spend time building that, when we wanted something completely different?” So there was no thought from an operator perspective.

So how did it develop beyond being just a platform for your own B2C businesses?

After we started building the platform for our B2C business, various people in the industry, including some big operators, started saying to us: “We hear you’re building a platform. Can we come and have a look at it?” About nine months into building the platform, one of these did a technology deep dive with us, and they told us that it wasn’t really scalable to take on a Tier 1 company, as we hadn’t built it in the right way.

So we went back to the drawing board, asking them: “If you were to move to us, what would it need to be able to do? What are the peak capacities on Grand National Day, or if you’re running a big bingo promotion, how many concurrent players have you got?” It pretty quickly came clear to us that the main issues were around the speed of the platform and its ability to handle huge amounts of data. So we asked the question, who else is solving that problem outside of gambling?And our answer was that was what high frequency trading platforms, the hedge funds, are doing. So we went to a firm that builds high-frequency trading platforms, and asked: “Can you architect this for us?” So, we worked with them for 18 months, and if I had known how much it was going to cost I wouldn’t have gone anywhere near it! We are about £19m into the project now.

What were the other main considerations that came into play while building the platform?

We pretty soon realised that what you need in a modern platform is for it to be modular. The problems with the old platforms that lots of people are using at the moment is that they were all built as a big black box, so if you fiddle with something in sports betting, it makes bingo fall over, casino fall over, or something like that. You want instead to have it in modular components, so when you are supplying an an operator, you can tell them: “You can have your own RMG sitting in whatever territory you want. You can have this bit in the cloud, depending on what the regulator says, you can mix and match.” A lot of them also have existing loyalty systems or CMS, and they want to continue using those, and you need to be able to say: “Fine, you carry on using it, just plug it in with another module”. That was our theory of how it should look. The other important thing was to ensure it’s completely device-agnostic, so it works on a tablet, on a desktop, on a smartphone, but also with whatever technology comes up in the future, whether that’s a fridge or a car. We don’t know what that’s going to be. But it’s got to be written in a way so that it’s flexible enough to adapt to the future, and built in a genuinely open way, so the core of the platform, which is player management and wallet is there, but if something new nobody has even thought of comes up, you are able to plug it in.

So how did the deal with Rank come about?

The decision had actually already been made before Henry Birch came in as CEO. [Previous CEO] Ian Burke had chosen us, and then just as we were about to sign the contract, Henry was appointed chief executive, at which point he said: “I know we are friends but we are going to have to go through this process again and you are going to have to convince me again.” It put the whole project back six months. Henry obviously had a lot of experience at Playtech from his time at William Hill, so we basically had to win the tender twice.

It was a very big deal for us, because it’s always hard to convince the first Tier 1 to move across, but Rank having that leap of faith in Bede and people seeing the migration being successful has spurred a lot of other people to think: “If Rank can move and migrate from OpenBet to a new platform, maybe we could do that as well.” The main reason that operators don’t move between platforms is because migrations are incredibly technically complex and difficult to do.

What were the most difficult aspects of the migration?

Getting all the existing features that they have in place, as well as 25 different game suppliers, financial processors, content management systems. We probably did 35-40 migrations, all with very different associated supplier relationships. You are dealing with tonnes of different companies, all with different priorities. Some of these are suffering a financial disadvantage from things moving across. So, it’s managing to coordinate many different people. However, the upside is that you end up with a more flexible platform and the ability to increase lifetime value of players, your responsiveness to them and to increase your share of their spend.

The platform space is undergoing significant change at the moment, with consolidation among established players and a host of smaller suppliers flooding into the market. What do you see as driving this?

The main driver is that the senior management team of any operator realises that a large part of what they are doing is a technology play. Five years ago, if you talked to the chief executives of most of the major gaming companies, they would probably have ranked the importance of technology a lot lower than the current batch do. It affects your ability to react to your customer, differentiate, segment, treat them in different ways, distribute bonuses in a much more sophisticated way – at a player level or a game level – rather than saying: “20% of our customers sit in this segment, they will all get the same bonus.” You need to be far more like Tesco which sends out 13 million of pieces of mail per week, and 12.9 million of those are completely different. It’s a customised offering. It has taken the industry a long time to get to the same place as where other sectors are at.

So, the failure of existing marketing strategies and tactics is what’s driving the sector’s uptake of these new platforms and technologies, in your view?

In the past, everybody was making so much money, with the rising tide disguising a lot of structural failings. As it’s become more difficult to make money and the market has become more competitive, you need to extract more money from your existing customers, to retain and look after them better. Without a decent platform, you can’t do that. I know some marketing departments that are still doing manual bonuses for sign-ups, manually uploading a bonus every four hours. People are still doing that in 2016, let alone being able to say, “This person has lost ten blackjack hands in a row, so let’s send them a popup messaging saying: ‘You’ve lost 10 in a row, here’s your 11th for free’”. That sort of responsiveness to the customer, to be able to build rules engines that allow you to target players in that way, that’s kind of the holy grail of the casino marketing department, but there’s not many people who can do that.

Your success in convincing a big operator to move away from an established provider has not yet been mirrored on the sports betting side, where those Tier 1s without their own proprietary technology still run on OpenBet. Why is this?

It’s really difficult to build a good sportsbook. We are integrating Kambi for Rank, and it’s one of only a couple of viable turnkey solutions out there, in my view. Rank is a bingo business, so sports is a tertiary offering. If you take OpenBet, you basically have to have your own trading team and development team on top of that. We have talked to people about whether we should be building our own sportsbook but we would need a client to sponsor that project.

How much of the reticence among Tier 1 operators to go with an emerging platform for sports betting is down to scale, or is this less of a concern these days?

If you architect it properly, scale isn’t nearly as much of an issue as it used to be. If you can do stuff in the cloud, you can add infinite numbers of servers. If you technically architect things properly, you should be able to deal with those big loads. It’s a lot easier than it used to be, when you needed to have a physical box and a warehouse full of servers ready for Grand National day. Now you can just spin up a new box on the cloud to allow you to scale. I think some of the improvements in technology means there are opportunities for the new providers to come in. As an operator, I think you could probably have more comfort now than you did five years about people being able to build a new technology capable of handling that kind of scale. But you have to have the architecture from Day 1 to be able to deliver that. You can’t just have built it and then say “We need to scale from here.”

Developers talk a lot these days about open-source software and APIs and greater collaboration between providers due to the changing demands of operators. Is this borne out by the reality?

Everybody who is building new systems is building them so they can all talk to each other, with open APIs, and I think it’s now accepted that the walled-garden approach of: “If you take this platform, you have to have these games, and you can’t integrate other third party suppliers”, is over. I think everybody has moved away from that, as it didn’t work.

What’s up next for Bede?

We’ve got two big projects this year, both Tier 1 operators. One of the European lotteries is going to be using our platform, and we are doing some interesting stuff in North America as well. We could honestly take on ten times more work than we have, but there’s no point taking on work that we can’t deliver.

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