Robin Reed, CEO of Gaming Innovation Group, speaks exclusively to Gambling Insider about the group's financial results for the second quarter of 2018 and future growth opportunities. GiG's revenue grew 39% year-on-year to €36.9m ($42.1m), while organic revenue went up 30%.
With your revenues increasing so rapidly, why has your EBITDA fallen slightly from €1.9m to €1.7m in your latest Q2 report?
We are in a state where we are heavily investing. In order to ensure that we are competitive, we have had to expand across multiple verticals, having now expanded to the point where we have a surface offering on every major vertical. Of course this expansion period has impacted our EBITDA negatively in the short-term, but we are now ready to grow as we are firing on all cylinders. As a result we will see our EBITDA improving in the future.
GiG Comply is set to sign two new external customers. What effect can you see the website having on your future performance?
Compliance is arguably the most important aspect right now facing all of the major operators in the online gaming industry, so many of them, including ourselves, are putting compliance at the heart of their business operations. We have started to tour the GiG Comply product now, already securing two upcoming agreements and large amounts of interest. It could definitely be beneficial to our business and revenues in the future, due to the strong interest we have already seen.
Marketing costs are down compared to total revenue. Why is that?
We upped the marketing spend ahead of the FIFA World Cup in Russia, and as a result, our proportion of spend on marketing increased in the period prior to the tournament. However, we are now focusing on performance marketing. Following the end of the World Cup, we expect that marketing portion to become even leaner.
Could you tell me of any new jurisdictions where GiG are currently looking to expand into in the near future?
We are currently very happy with the product portfolio which we currently have and are developing. It is therefore about expanding our geographical system. It is also about improving our existing products even more, making them top class, and generally optimising where we can.
What is the thinking behind your partnership with Hard Rock International?
We are very happy that we were selected by Hard Rock for this partnership, as well as helping them to go live in New Jersey with their casino offering in July. Another thing which we were pleased with regarding the partnership was the fact that Hard Rock has ambitions to be the largest online operator in the state, which could also stand to benefit us financially.
Can you see many more regulatory opportunities, such as the repeal of the Professional and Amateur Sports Protection Act (PASPA) in the US, opening up new opportunities for GiG in the near future?
Yes. We are obviously incredibly excited about the US Supreme Court’s decision to repeal PASPA. We are already one of only a few companies to be fully certified in New Jersey, which of course has and will allow us to make many new connections. We are also very well positioned in the US to enter into other states as more markets begin to open up.
Sweden is now beginning to undergo its re-regulation so we are submitting our application there. We are also looking into entering the Danish market, along with several other places in Europe where we are looking to gain new licenses next year. The advantage that we have is that we usually enter into a new market with one of our B2C operators in order to justify the investment into new regulation. It is our own unique approach.
Can you see the gap between your B2C and B2B businesses shortening in the future?
GiG has an aim to be the largest full service company in the online gaming industry. We are focusing on our B2B business and it is growing incredibly fast at a rate of 80% year-over-year. The operators play a role in achieving that goal, supplying affiliates that are in our affiliate program. This helps drive up our volumes and helps us secure a better supply width. The B2B business could potentially grow even faster than the B2C business moving forward as a result.
What are the main strategic initiatives for GiG moving forward?
We are focusing on our operator business as we want to build powerhouse brands in a few selected markets, so we are consolidating our focus and marketing expenses. We are turning away from traditional online gaming marketing and instead moving towards digital performance marketing. Sustainability, along with compliance, is being put at the heart of our business. Ultimately of course we are a technology company by default and everything that we do originates out of our own technology and our products. It is all about focusing on ensuring that our technology and our product are enhanced so that we can become the most scalable company on Earth.