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IN-DEPTH 27 April 2018
Seeking the lion's share of the market
LeoVegas has been one of the most exciting operators to watch in the online gaming space, taking just six years to go from concept to a billion-dollar market valuation. Co-Founder and CEO, Gustaf Hagman shares his thoughts on the journey so far, and offers an insight into the group’s ambitious plans for 2018
By Caroline Watson

 As a co-founder, you have seen the business develop into the multinational it is now. Can you share some insight on what it was like at the beginning of your journey?

When you’re an entrepreneur, you do pretty much everything yourself in the beginning, including the media buying, building the organisation and all of the conceptual and technology side of things. However, the most important thing is to actually understand what you are not that good at, and to complement your team with really good people. So what we originally did was to hire the best tech guys we knew of, and this small group formed the first core team at LeoVegas. Although the talent market for tech people is quite competitive in Sweden, we managed to get a great group of individuals together, and this was instrumental for us in getting the right kind of product to market in the early days. It has been a great journey, and we are now celebrating our sixth anniversary.

Given LeoVegas’ ‘mobile first’ strategy, was it difficult to find games that met your expectations when you first launched?

Absolutely, but I think it was a case of great timing when we launched. Luckily enough, NetEnt had just launched their first three mobile games, so in the beginning we had something to start with, and then NetEnt and the other studios started to launch titles; the volume of mobile content increased dramatically. In just six months we had about 20 mobile games but we were lucky in a way as we were in the right place at the right time. So essentially, when we started, the industry grew with us, which in turn made it slightly easier as opposed to starting now with all the existing industry giants having an increased focus on mobile. In the beginning we worked very closely with our suppliers to shape the games, just as we do with Kambi today in terms of helping to make our sportsbook a more mobile-friendly user experience when it comes to betting.

2017 in particular has been a special year for LeoVegas, which has now reached a $1bn market valuation. What has been the secret of this incredible growth?

It’s been a huge milestone for our company and for all the people that work within it. We call our staff our Leo Lions and Lionesses, and we are extremely proud of the work that our teams and individuals have put in to support the success of LeoVegas. It’s 100% a team effort and I really have to emphasise that. Fundamental to this is our dedication and focus on mobile first, user experience and our success within data-driven marketing.

What’s the reasoning behind your positioning LeoVegas as a ‘GameTech’ company, that sounds like an interesting new angle?

Ever since LeoVegas was founded, we have been extremely product- and technology-focused. Our innovative and data-driven marketing has been instrumental to our success. Everything emanates from technology, and we therefore see ourselves not only as a gaming company, but as a tech company in the gaming industry.

Explaining LeoVegas for investors and others with respect to identity, culture and work approach is expressed best with the term GameTech. I am proud of our passion – “Leading the way into the mobile future” – and ability to say that we are leading development in this part of the industry.

How have you maintained the corporate culture at LeoVegas during this time of rapid growth? Or has it changed significantly?

It is really good to have hard workers and entrepreneurs for the foundation of the organisational culture, but then you have to work to maintain that culture all the time. Last year in particular we’ve worked especially hard to do that, as we’ve grown from around 350 people to 600, just in the space of 12 months. We have almost doubled in size in that time which obviously means you have put in a lot of effort to keep the original ethos. Our core value is around our passion in leading the way into the mobile future, known in the business as our ‘Leo Passion’. We talk to all new employees and explain to them what it actually means to be a leader and a role model in this industry. We all know that the future is mobile; whether it’s smartphones or VR or even AR, it’s mobile, so that’s extremely important.

Now that we have six or seven offices around Europe, I need everything to work with a similar sort of synergy, and I need the people who work at LeoVegas to work together, be accountable, and depend on each other.

What’s the Italian market like at the moment? Have you seen growth?

We think the Italian market is a really strong prospect; if you look at the latest gambling numbers, the UK and Italy markets are about the same size. However, in Italy the move towards internet and mobile gambling hasn’t really happened as of yet.

There have been some fundamental changes in Italy that make it very attractive for mobile gaming operators. For example, for the last two years they have been switching over to 4G, and are also changing mobile subscriptions to align with the UK model of inclusive data, which they had to pay for separately before. The government is also closing down a lot of the what they call the ‘pizzeria casinos’ in restaurants and so on, and when that happens we think people will jump directly to mobile because they now have the infrastructure.

The new LeoVentures business unit has already led to some exciting new brands. Can you share progress with any of the latest projects?

We currently have four companies within LeoVentures right now, including Authentic Gaming, which recently signed a deal with the largest casino in the US, Foxwoods Casino. They stream roulette from Foxwoods to mobile players in Europe, so customers will be able to play at an American casino for the first time ever. It’s a unique deal, and we actually believe it will be a real breakthrough moment for Authentic Gaming. We also have a company called CasinoGrounds which is our latest acquisition, it’s a streaming network which we believe is really interesting for the market. It’s the first time we’ve seen people actually watching other people playing online, and I think it’s almost a new affiliate model; it’s interesting to see how much that company has grown this year because they are fairly new in the market. We also have livecasino.com, which is a premium domain within LeoVentures and operates as an affiliate site as of today. We will try and grow it into a big affiliate site or potentially turn it into a live casino sort of operator, but we will have to see what happens, it’s a great premium domain nonetheless. Finally, we have 21 Heads Up which is a game that we invented ourselves, it’s a combination between poker and blackjack which will hopefully be released fairly soon.

The move into casino streaming with CasinoGrounds sounds like an interesting new venture, how does this fit into your wider strategy?

What we’re going to do with CasinoGrounds is we are going to build the largest network or chat forum for other casino streamers. Right now there are maybe six or eight different streamers but there will be more connected to CasinoGrounds later on. To a certain degree you can say this is an affiliate business, but it’s also very interesting that people are watching other people playing slots online.

In terms of this fitting into our wider strategy, we will have to focus on what happens in the UK and what the regulators are doing. But it’s tough because we need affiliates in some markets when you can’t do that much marketing yourself. But we’ll keep a close eye on the UK in terms of what’s happening there.

The regulatory environment has become more restrictive in many places across Europe for online gaming. How has LeoVegas reacted to this? Can you envisage a return to Australia following your recent exit?

Our strategy is to enter markets that are either regulated or soon-to-be regulated, and we believe Sweden and the Netherlands have healthier regulations coming up later this year or even in 2019. Then we have the UK, Spain and Italy, so you have a couple of major markets in Europe that are regulated and in a good position. We are doing extremely well in Denmark but then again we’re probably going to continue with a small portion of “unregulated” countries as well, like Canada for instance.

With regard to Australia, it’s really sad that they chose to regulate the way they did. Until the end we actually believed they were going to regulate in a similar way to the UK’s tax-based approach. Being part of the Commonwealth we really thought they would take that path but unfortunately they did not. They will probably change their mind after some time as they’re currently creating a black market; people will still continue to play online and once they find this to be the case they probably will re-regulate. And of course, then once it opens up and regulates in a healthy way we will enter
back into that market at some point.

You oversaw the company’s first acquisition of the Italian business Winga back in February 2017 but also the recent acquisition of Royal Panda, is this your preferred route to expansion?

I think we would prefer to grow organically but we made that first acquisition because we needed a licence and a great team in Italy, and we believed in the Italian market. It was kind of difficult to get a licence in Italy and when we found this opportunity it was a no-brainer in order to expand into Italy. Now Winga have been rebranded to LeoVegas and our team in Italy is called Leo Italy.

And with regard to Royal Panda, it has in a short time built up an exciting and strong brand in one of our most important regulated markets – the UK. This is a major acquisition we are carrying out following a carefully executed process. 

Backed by the strong symbolic value of the panda, the company has built a premium brand among players that will serve as a good complement to LeoVegas. With the acquisition we now have two great brands that are both global, which makes the scalability in our continued growth enormous.

Royal Panda is run by people with a long record of experience in the gaming industry, and what they have achieved is impressive. The team is strong and very effective, which can be seen in the company’s highly effective marketing.

Royal Panda is currently where LeoVegas was a few years ago, experiencing the same kind of questions and challenges, so in a way we can help them a lot. It’s really great to see how fast they have integrated with our teams in terms of knowledge, information and trust.

What plans do you have for growing LeoVegas beyond the core markets of the UK and Scandinavia?

Spain could definitely be of interest; we are looking at getting a licence in the first quarter of 2018, so it will be interesting to see how that goes. Maybe the United States will finally happen next year, and let’s not forget the potential in South America and Japan. The Netherlands are moving into a regulated market fairly soon which of course is of interest together with Germany. At the moment, there are several opportunities that we would be looking to capitalise on, but we will just have to wait and see. 

What drove the decision to launch the LeoSafePlay brand, and what do you hope to achieve with it?

We’ve actually been talking about responsible gaming for several years, and if you look back, (CFO) Viktor Fritzen and I made it a central part of our presentation when we listed the company. What we’ve done with LeoSafePlay is created a dedicated web domain where players can find tools, tests and information that can help them identify if they have a problem. It’s both an external and an internal tool for everyone to use, and if we discover players that we think might have a gambling problem we actually send them to LeoSafePlay to check out self-assessment tests that we have available there. It’s been working really well, and we combine this with new algorithms that we use to detect players that might fall into that problem gambling category much earlier. It’s our duty of care so it’s very important for the company and for the industry to take responsibility for these things.

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