Posted on September 9, 2019
How are you doing? I’m fine and at full speed. You operate within the online gambling business, which includes casino, poker and various games. How do you distinguish yourselves in that market? What we have done is change the registration process Instead of going to an online casino or another online gambling service, as one has always done, submitting all of your personal information (e-mail address, where you live, your name), you come to our platform, use your own usual bank log-in and make a deposit. Who is the average online gambling gambler?
With this concept it is generally somewhat younger if you compare to the other trademarks, and it has a lot to do with the log in procedure. The technical maturity is different for younger gamblers in comparison to the older ones. The typical user of bank-id is in the age group of 30 to 40.
That is one of the unique selling points for this concept. Another one is that the quality of the data we gather in to the system is very high. We know that the identity of the gambler is correct because we receive it from a registered payment intermediary, in this case Trustly. Trustly have the accurate information from the banks. Since we trust the KYC (know your customer) from a registered payment intermediary, we are able to trust it fully up to a certain amount before we ourselves have to receive a new set of KYC-information.
What this means for the average gambler (who doesn’t exceed the limit of perhaps 2000EUR), is that the experience becomes very smooth. You log in, make a deposit ie: 500SEK, play for a while, win/lose and if you have funds to withdraw, press the withdraw button. If we can then see that this is under the limit we can then push it back to your bank account as fast as the bank can act on it. So you have lowered the threshold for people to bet which is a positive.
But there is a drawback of this. What is your moral stance with it being easier and faster to gamble without these thresholds existing? So called problem gamblers generally bet with rather big amounts. As a whole we are focusing on another target group for this brand and for the platform as a whole.
We follow the same regulations as all other operators and have the possibility to set amount limits for deposits, withdrawals, maximum losses over time and so forth in order to follow authority regulations. A big advantage with this concept is that we know the identity of the gambler right away and can make sure minors cannot access the service. Global Gaming is about to be listed at First North in the middle of October. Congratulations! Thank you. That means you will have a lot of eyes on you and that you will fight giants such as Kindred, Mr Green, Leo Vegas and so on.
What stops these competitors to copy your technique? The technique itself they can copy, but we feel that we are ahead in the process of taking care of the customer, because we offer a complete different customer experience. You don’t have the traditional methods to communicate with customers, you don’t have e-mail addresses and so on. We also need to work on legal issues since this is a new concept.
We have existed for a year and have put in a lot of time and resources on finding how we can take this further, and spread it beyond the borders of Sweden and Finland. My view is that there is a current marketing race in this business, until the alleged gaming regulation in mid 2019. Could it be that companies are now building brands as much as possible, and that the weakest will cease to exist when the new taxes emerge? That is absolutely the case.
There is a disproportionate number of brands that don’t have anything unique about them. I would say there will be a natural clean-up, and those who have a unique offering or have built a very strong brand will succeed. Despite the fact that Global Gaming is rather small still, do you think your unique solution will be the factor that makes you stand tall, while others fall?
If you read the gaming investigation, you will find that it aligns with the path we are on, in that there shall be some sort of strong identification of the customer. You shall have the technical ability to ensure locking out of a customer if needed, a central locking register is proposed as in many other local licensing regulations. It sounds like companies will be forced into your solution? That might absolutely be the case, and with this we have the advantage as the timing for our services is right. What also speaks to our favour is that we are first and will have existed for a considerable time going forward, both on the Swedish as well as the Finnish market. And in time for new regulations, we will have entered a number of other markets too.
Finally, why should one buy shares of Global Gaming? We know we have a unique offering with pay and play. We have a fantastic opportunity to keep growing, both on current and new markets.
A lot of time and funds have been put in to figure out what our next step will be and of course we keep this to ourselves at this point. But we have an exciting 2018 ahead of us, absolutely. We’re in the studio in Stockholm and with us is Redeye tech analytic Kristoffer Lindström. Welcome.
Thank you. You cover many companies in the online casino business and on the 19:th of October Nasdaq First North will see an addition in this sector; Global Gaming. How will they be able to stand up against the established sector players?
Today Global Gaming primarily has one brand, Ninja Casino, that distinguishes themselves from what other business players offers. There is different paths to take for an operator. Ninja Casino and Global Gaming have a concept called pay and play, which means you don’t have to register and you don’t have to deposit money to an account in the casino. Instead you deposit money via an e-id and then you get paid when you are finished betting. Today this is a unique concept. So no other gaming site does this today?
None of the big ones have embraced this yet Today, Global Gaming is the one that offers this and market it distinctly. Speaking of marketing. That has exploded in this business lately, and it feels like every other ad you see on TV is for an online casino.
How are Global Gaming standing up in that area? In the latest quarterly report, Q2, they spent 17 percent of revenue on marketing and still they grew revenue year-on-year by 381 percent. From moderately low levels of about 20MSEK but to 97MSEK. Within this business, is 97MSEK big or small? Global Gaming is not a very small player and they have a big space to grow their market share. The Swedish market in general is commonly said to grow by about 10-12 percent per year.
This shows that Global Gaming is doing something else more than that with these growing numbers. And Global Gaming is mainly active in Sweden? Yes, and also partially in Finland. This has to do with that the pay and play concept requires e-id. Is e-id coming to other countries, is it something that is being worked on?
That is a bit of a different business, but regulations in the financial markets are taking place. For instance banks must open up to third party info, through open API’s etc. People with knowledge of the business say they think e-id will be introduced all across Europe at some time. I think it’s practical, and I think most people would subscribe to e-id, if this kind of solution existed in a lot of countries.
Speaking of regulations. A big gaming regulation comes to action in 2019. What is this about? This has to do with taxation of the betting revenues.
So when these regulations comes in play, there will be a bunch of fixed costs that betting companies will have to handle? You could say that. If you look at the Baltic countries, which are partly regulated companies there can spend a lesser part of their budget on marketing, in order to grow their business.
An interpretation is that with fewer competitors establishing, you can make marketing more efficient. Do you think it will be more expensive for the customers? No, I don’t think so.
This business is still competitive long term and I don’t think that will be the case. Which is the biggest risk for Global Gaming? The fact that their concept seem so profitable might attract other business players, and this the company has also communicated. If you bet at Ninja Casino and are happy with the experience, it is likely that you will go on Google later and search for “no registration casino”, for instance.
Today Ninja Casino would appear as basically the only option. If you search just for “online casino”, you will get a whole lot of hits. And you think this may change in the coming years?
Strictly economically speaking it is likely, because this is so profitable at the moment. It is crucial for Global Gaming and Ninja Casino to establish the brand further and really step on the accelerator, now that they have a certain advantage and have delivered a smart solution. I think that is important.
So you think Global Gaming should increase their marketing budget? They have said they will. People often have somewhat of a hard time understanding this business, and argues that the profits are low. The reason for this is that companies invest in customers, to establish the brand. For more traditional businesses, a big part of marketing costs would go through the balance sheet, for instance. So, I don’t think one should worry too much about profits oscillating in the near term in this business.
What’s important is that they are able to attract new customers and grow the top line, and once they reached a steady overall level, the profitability will be able to be very good. So revenue is what’s important? Yes, growth is.
And then I think it is important to keep track of efficiency and marketing efforts; the proportion of how much they need to spend. Global Gaming have said they will accelerate marketing in Q3 and also in Q4, although there has been some delay in the efforts. What you need to pay attention to going forward is top line; that you see a steady growth. Then we will look forward to Global Gaming.