New GVC CEO sets out blueprint for future growth
New GVC Holdings chief executive Shay Segev has set out four key priorities that he believes can drive “significant growth” for the business, add value for stakeholders and entrench responsibility in everything it does.
Segev said the operator’s first half results, in which its online performance helped partially mitigate significant retail declines, showed that the business has a “strong foundation”.
“As a technologist, I have huge admiration for what Kenny and the rest of my colleagues have achieved but I am also determined to pursue a programme of continuous improvement as we focus on our four technology-enabled priorities,” Segev said.
“These are leading the US market, organic growth, expanding into new markets, and being the most responsible operator in our industry.
“That is how we will deliver greater and more sustainable value for all our stakeholders.”
The US represented the “single biggest growth opportunity” for the operator, he explained. GVC believes the US betting and igaming market will be worth approximately $20.3bn (£15.5bn/€17.1bn) by 2025, of which legal betting will account for $13.5bn and online gaming $6.8bn. GVC, which is active in the market through its BetMGM joint venture with MGM Resorts, committed to a second tranche of investment in the business, taking the total committed to the business to $450m. This, Segev said, meant BetMGM “has all the key elements” to achieve a leading position across the US.
It has access to 21 states in which regulations have been, or are being, enacted that represent 51% of the eligible population, and is live in seven, with a further four expected to go live by the end of 2020. GVC expects igaming revenue for New Jersey alone to reach $130m for the year.
The operator’s reach has been extended by multiple partnerships, as well as integration with MGM’s M Life Rewards programme, that gives it access to 34m loyalty members. Deals with media portal Yahoo Sports, as well as teams, leagues and sports such as the National Basketball Association, Nascar and the Denver Broncos further strengthen its presence in multiple states, Segev noted.
Through these partnerships, customer acquisition costs will be reduced to anything from zero to $150, compared to a range of $200 to $550 for customers acquired directly or through affiliate partnerships.
“Combined with the appeal of our products, the strength of our offer, and our outstanding digital marketing and customer retention tools, we expect these to result in highly desirable payback metrics and strong customer retention as BetMGM works towards market leadership across the US sports and online gaming market,” Segev said.
This will be supported by organic growth in existing markets, driven by GVC’s online business, which has reported 18 successive quarters of double-digit growth. This, Segev said, would be underpinned by the operator’s technology.
“Our platform is a key driver in our ability to grow ahead of the markets and win market share time and again,” he said. “Our technology is at the heart of what we do and gives us unique capabilities in delivering a superior customer experience. We can provide moments of joy and great entertainment experiences.”
Despite this existing footprint, Segev said there was significant scope for further expansion. He pointed out there were a further 50 regulated or regulating markets around the world. These markets have an aggregate population of some 1.3bn people, he said, and potential gross gaming revenue of $45bn.
“We can enter many of these markets with internationally recognised such as bwin and PartyPoker, which can be operated from our existing regional businesses using our unique proprietary technology platform, enabling relatively low cost entry,” Segev explained. This could be aided by M&A activity, should GVC identify suitable targets, he added.
Finally, he said, GVC would look to become the most responsible operator in the industry.
“Our industry-leading technology will enable us to grow responsibly and sustainably, using our data-driven customer insights to ensure all of our customers have an enjoyable and safe experience while gaming with us,” he explained.
This has seen GVC focus its efforts on regulated or regulating markets, which accounted for 96% of revenue in 2019. This is expected to increase further as it expands into new territories.
The focus on player safety saw the operator enhance its safeguarding measures to limit the potential for risks such as isolation, long periods spent at home and boredom during the Covid-19 lockdown. Among the measures implemented were new metrics to track customer behaviour, and reducing TV advertising, including replacing ads that did run with responsible gambling communications.
Segev claimed this had helped avoid any increase in problem gambling under lockdown in the market. Quarterly data suggested the country’s problem gambling rate had in fact declined, from 0.7% to 0.5%.
“However, there is absolutely no place for complacency,” he warned.
To protect a “small minority” that suffered gambling harm, a dedicated team was monitoring customers’ play, ready to intervene when there were signs that their gambling was getting out of control. The tools it offers to players are being developed and enhanced through consultation with customers, which led to the introduction of voluntary stake limit setting functionality.
This is supplemented by contributing 1% of British revenue to research, education and treatment around problem gambling by 2022, as well as a $5.5m research partnership with Harvard University.
“It is clear there is no one single silver bullet for tackling the issue, but behaving responsibly is a fundamental part of our DNA,” Segev said. “We cannot be a sustainable business without being a responsible one.”
Image: GVC Holdings