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NEWS 19 July 2019

Size matters: The case of Paddy Power, GVC and UK shirt sponsorships

By Tim Poole

Congratulations, Paddy Power; not for the first time, you fooled us all.

It’s been an eventful few days for the Flutter Entertainment-owned brand, during which it both sponsored and unsponsored the shirt of English Championship football team Huddersfield Town.

For those who missed it – and some may well have done at the iGB Live conference in Amsterdam – Paddy Power initially announced it would sponsor Huddersfield’s shirt last week. It was a rare move from the operator and now we know why.

Earlier this week, the football club revealed a kit with a huge Paddy Power sash across its front, prompting a backlash of scathing criticism. Huddersfield then unveiled the real kit – with no sponsor – and Paddy Power released its "Save Our Shirt" campaign, rallying against gambling shirt sponsorship in football.

Talk about a u-turn. This was another classic marketing ploy from Paddy Power and it didn't fail to draw attention. Everyone you could think of, including Gambling Insider, reported its initial deal and we now know we were all victims of the same PR move.

For effectiveness, it’s a great little trick. It may have even earned Huddersfield and Paddy Power more exposure than a traditional shirt sponsorship in the Championship ever could.

Its deeper connotations however, are not as clear-cut. While Paddy Power likely won’t care, the rest of the industry has the right to roll its eyes at what is essentially a satirical reflection of the sector's marketing methods.

Recently, Gambling Insider analysed how some gambling myths are being proved wrong. When the EFL surveyed over 27,000 supporters, 71% said they felt gambling sponsorship was acceptable. Operator 1xBet also agreed major new partnerships with Liverpool and Chelsea, while several brands signed lengthy shirt sponsorship deals across the Premier League and Championship.

Unfortunately for those operators, Paddy Power’s new campaign merely enforces the baseless myth gambling sponsorship is some kind of plague on society.

But that is because size ultimately matters in this industry. Paddy Power is not the first company this summer to call for an end to shirt sponsorship in UK football. GVC Holdings did the same earlier this year, with one notable example being its donation of Sunderland’s shirt logo to a charity.

When GVC made its call to arms though, industry insiders suggested it was a PR stunt. GVC owns some of the biggest brands in the sector and can’t make too many further gains from mainstream UK sponsorship. Enforcing this theory, GVC-owned Bwin recently extended its partnership with Spanish La Liga team Valencia to include shirt sponsorship. Playing by different rules in a jurisdiction where GVC owns less market share? Form your own conclusions.

With Paddy Power, that idea of a PR stunt has now grown to a literal level with Huddersfield. The bookmaker, too, does not need to be on a football shirt to increase brand awareness in the UK. Paddy Power’s brand is synonymous with the UK market, while Flutter’s US brand FanDuel is now synonymous with US sports.

The bottom line is Paddy Power doesn’t need Premier League or Championship sponsorships and nor does GVC. That’s why, when Paddy Power MD Victor Corcoran claimed "shirt sponsorship in football has gone too far," it was in the company’s interests to promote exactly this message but for very different reasons. Removing UK sponsorship will simply reduce competition and give bookie bashers more to boast about.

For operators like 32Red, it is a very different story. Speaking to Gambling Insider in May, General Manager Neil Banbury urged the gambling sector to focus on education and genuinely combating problem gambling, rather than simply papering over the cracks.

But whatever your take on gambling sponsorship, it’s clear there is a divide within the industry on how to approach the issue. The well-known brands of GVC are gaining less and less from the practice and Flutter has never ventured too far into the field, anyway. They both also face increasing competition from Asian-facing operators and others to secure key slots (Paddy Power couldn't have dreamed of using its recent tactics at a club like Manchester United, for instance).

On the other side of the debate, up-and-coming or smaller brands know how important sponsorship is to them. That's why you won't be seeing any Paddy Poweresque stunts from them.

RELATED TAGS: Marketing | Industry | Feature
IN-DEPTH 16 August 2019
Roundtable: David vs Goliath – Can startups really disrupt the industry?

(AL) Alexander Levchenko – CEO, Evoplay Entertainment

Alexander Levchenko is CEO of innovative game development studio Evoplay Entertainment. He has overseen the rapid expansion of the company since it was founded in early 2017 with the vision of revolutionising the player experience.

(RL) Ruben Loeches – CMO, R Franco

Rubén Loeches is CMO at R. Franco Group, Spain’s most established multinational gaming supplier and solutions provider. With over 10 years working in the gambling, betting and online gaming industries, he is skilled in operations management and marketing strategy.

(JB) Julian Buhagiar – Co-Founder, RB Capital:

Julian Buhagiar is an investor, CEO & board director to multiple ventures in gaming, fintech & media markets. He has lead investments, M & As and exits to date in excess of $370m.

(DM) Dominic Mansour – CEO, Bragg Gaming Group:

Dominic Mansour has an extensive background of nearly 20 years in the gaming and lottery industry. He has a deep understanding of the lottery secto,r having been CEO at the UK-based Health Lottery, as well as building bingos.com from scratch, which he sold to NetPlay TV plc.

What does it take for a startup to make waves in gaming?

DM: On the one hand, it’s a bit like brand marketing; you build an identity, a reputation and a strategy. When you know what you stand for, you then do your best to get heard. That doesn’t necessarily require a TV commercial but ensuring whatever you do stands out from the crowd. Then you have to get out there and talk to people about it. 

AL: Being better than the competition is no longer enough; if you’re small, new and want to make a difference – you have to turn the industry on its head. Those looking to make waves need to come up with a new concept or a ground-breaking solution. Take Elon Musk, he didn’t found Tesla to improve the existing electric cars on the market, he founded it to create the industry’s first mass-market electric sports car. It’s the same for online gaming; if you want to make waves as a startup, you have to bring something revolutionary to the table.

JB: Unique IP is key, particularly in emerging (non-EU) markets. As does the ability to release products on time, with minimal downtime and/or turnaround time when issues inevitably occur. A good salesforce capable of rapidly striking partnerships with the right players is vital, as is not getting bogged down too early on in legal, operational and admin red tape.

How easy it for startups to bring their ideas to life? How do they attract capital?

AL: It depends on the people and ideas behind the startup. Of course – the wave of ‘unicorns’ is not what it used to be. Some time ago the hype was a lot greater in terms of investing in startups, but that’s changed now. Investors now want more detail – and even more importantly, to evaluate whether the startup has the capacity (as well as the vision) to solve the problem it set out to address. That’s not to say investors are no longer interested in startups – they certainly are – but now more than ever, it’s important for startups to understand their audience as well as dreaming big.

JB: To get to market quickly, you need a great but small, team. If slots or sportsbook, the mathematical engine and UX/UI are crucial. Having a lean, agile dev team that can rapidly turn wire framing and mathematical logic into product is essential. Paying more for the right team is sometimes necessary, especially when good resources are scarce (here’s looking at you, Malta and Gibraltar).

Building capital is a different beast altogether. You won’t be able to secure any funding until you have a working proof of concept and, even then, capital is likely to be drip fed. Be prepared to get a family and friends round early on to deliver a ‘kick-ass’ demo, then start looking at early-stage VCs that specialise in growth-stage assets.

How do you react when you see startups coming in with their plan for disruption?

RL: We welcome the innovation and fresh thinking startups bring. This is particularly the case in Latin America, with a market still in its infancy. One area we’d especially like to see startups making waves is in the slot development sector. Latin America is a young market that needs local innovation suited to its unique conditions – especially in regard to mobile gaming.

Operators eyeing the market have Europe‐focused core products, which creates a struggle to work to the requirements of players and regulators. To succeed there, it has become more important than ever to work with those with a knowhow of the local area to adapt products and games to besuitable from the off; we welcome the chance for local talent to develop and grow.

Do you think it’s easier for established companies to innovate and establish new ideas? 

AL: From a financial perspective, yes. It is without a doubt easier for incumbent companies to establish a pipeline of innovation via their R & D departments, as well as having the tools to hand for data gathering and analysis.

But it stops there. Startups hold court in every other way. Not only are they flexible, they can easily switch from one idea to another, change strategy instantly as the market demands and easily move team members around. Established companies know this – and this is why we’re seeing an emerging trend for established companies to acquire small, innovative online gaming start-ups. They have the right resources and unique ideas, as well as the ability to bring a fresh approach to businesses’ thinking.

RL: For me, it’s always going to be established companies. Only with the resources, industry experience and know‐how can a company apply technology and services that truly make a difference. Of course there are exceptions. But when it comes to providing a platform that can be approved by regulators across multiple markets – as well as suiting an operators’ multiple jurisdictions – it is simply impossible for a couple of young bright minds with a few million behind them to get this done.

DM: I actually think it’s harder for established companies. It’s key to differentiate between having a good idea and executing one. That’s where the big corporates struggle most. They’re full of amazing people with all sorts of great ideas but getting them through systems and processes is nearly impossible.

Is it essential to patent-protect innovative products?

AL: It’s a very interesting subject. If we take IT for example – patents can actually become a block to the evolutionary process within the industry. Of course, getting a patent future proofs yourself from the competition copying your concept but, having said that, if you’re looking to protect yourself from someone more creative, smarter and agile, you’ve probably lost the battle already!

In our industry everything is moving faster and research takes less time than the development itself. No matter how good you are at copy pasting, you can’t copy Google or Netflix. The most important thing is not the tech itself but rather its ‘use-case’ – or in other words, does it solve what it’s meant to solve? Competition is healthy and the key to innovation. If you spend your whole time looking behind you, you’ll never be able move forwards.

JB: Tricky question, and one that depends on what and where you launch this IP. It can be difficult to patent mathematical engines and logic, mostly because they’re re-treading prior art. Branding, artwork and UX is more important and can easily be copied, but the territories you launch will determine how protectable your IP will be once patented. US/EU/Japan is easy but expensive to protect in. But China/South East Asia is a nightmare to cover adequately. Specialised patent lawyers with experience in software, and ideally gaming, can help you better.