From Guts to glory: EGR sits down with GIG CEO Robin Reed

A quick scroll down Gaming Innovation Group’s homepage tells you all you need to know about the raison d’être of the Malta-based firm. Words in bold font such as ‘inspiring’, ‘disruptive’ and ‘lean’ dominate the screen and catch the reader’s eye almost instantly. But with a company motto like ‘just get shit done’, it’s clear these are not just meaningless adjectives but a call to action for a business aiming to live up to its name.

Gaming Innovation Group (GiG), owner of brands such as Guts.com and Rizk.com, describes itself as a “gambling solutions and entertainment provider”, pursuing a business strategy that focuses as much on its B2B services as it does on consumer-facing products. And the company’s three bespoke revenue models – end-user operators, cloud-based platform and B2B performance marketing – all unify behind one vision: to make egaming an open and connected ecosystem.

“Acting as an incubator for egaming businesses, we nurture disruptive ideas from inception to scale, organised through lean and profitable companies under the Gaming Innovation Group umbrella,” Robin Reed, the firm’s CEO and self-described ‘start-up romantic’, explains. “What is different from us and other businesses is that we are actually taking full ownership of these companies – internally we call them seeds – which can create synergies in the egaming value chain.”

Gaming Innovation Group CEO, Robin Reed

It’s a strategy that seems to be paying off handsomely. According to the company’s latest quarterly report, group revenues increased 201% year-on-year to €14.5m in Q3 2016, with growth recorded across all three of the firm’s main business divisions. As a result, GiG
secured 38th place in last year’s EGR Power 50, having only made its debut in the prestigious rankings 12 months earlier. Later this year, the company is also planning to move into a new HQ to support its growth plans.

In line with wider industry trends, M&A – demonstrated by its recent €54m deal for Betit Group – has also played an integral role in the GiG success story. But it is how these assets are integrated into the Oslo-listed firm, the wider role they play in the business, and the use of its in-house B2B services platform that makes GiG such an intriguing egaming proposition.

An ecosystem
At the heart of Reed’s vision for both GiG and the wider egaming sector is the so-called ‘sharing economy’. An idea popularised by the likes of Airbnb and Lyft, involving peer-to-peer lending, borrowing, exchange and collaboration, usually conducted via an online marketplace. “If you look at the internet, it is mainly a democratisation tool with huge potential, and within this you are seeing an expanding sharing economy, whether it’s with taxis or apartment bookings,” Reed says.

“I don’t think such a model has really matured in egaming, possibly because the industry’s so young and it has a complicated regulatory framework,” he continues. “I believe such a model has to come into egaming and I think the first thing you need to do to solve that
– before we even start to work on the product, technological layers, hardware and servers – is to start by looking at the industry’s mentality and changing it.”

According to Reed, the sector is too often tied down by lengthy and tedious discussions over commercial agreements and models, with businesses engaged in a deep trench war of trying to negotiate what is favourable to each party. Other ecommerce companies, he argues, are increasingly conducting business in a far more scalable and clear manner, largely to the benefit of the consumer.

GiG aims to mirror this by offering both its own brands and clients a product that removes the duplicate work every operator encounters when creating their own technological stack and completing subsequent supplier integrations. The idea is that, by providing suppliers and operators with a single integration point, such overheads can then be moved to product innovation to help develop the industry and improve margins.

We nurture disruptive ideas from inception to scale organised through lean and profitable companies

“The way I see it is that if you believe there will become a sharing economy for egaming then, of course, it won’t only be us that is doing it: there will be different approaches and 50 different shades of platform,” Reed continues. “Someone will end up winning but in my opinion I don’t think a winner has fully emerged yet. There have been platforms around for decades but I’m not sure anyone has really grasped what that modern approach to ecommerce actually is.”

The silver lining
In the last two years, GiG has been working flat-out on its mission to build a unique in-house platform. A dozen gaming suppliers, three affiliate systems and just over 30 B2C connected brands have since been integrated or signed up. And it is the Group’s proprietary
gaming platform that is driving much of the growth of its own consumer-facing brands and designed to kick-start the egaming sharing economy revolution.

iGamingCloud – which hosts all the company’s B2C brands – is an open cloud-based platform, offering operators a range of traditional B2B services. It also integrates application developers that can access an ecosystem of operators through a single integration. Operators can then plug their front-end website and CMS into the system through open APIs, while simultaneously gaining access to approximately 2,000 casino games and an extensive odds service.

The product’s mission is to offer all the basic client management functionality, but with a modern twist. As any company can plug into the system and choose the type of software and providers required, they are also getting access to a new application economy via the
open platform. GiG is essentially sharing all the data and KPIs, leading to the emergence of a sub-supplier industry based on the iGaming Cloud with applications built on top of it.

“The way in which we have managed to get this ecosystem up and running is unprecedented. We’ve also created our own cloud with a very large set of hardware, soſtware and virtual machines on top,” Reed says. “And the speed at which we got all this together speaks for the scalability of the technology in itself.

“We are still not there in terms of delivering it to a William Hill or a Ladbrokes but technology is changing and I don’t think all egaming businesses are tech companies. On the front-end side, they have to take care of desktop, mobile, VR and so forth, while on the back-end side, there are things like big data. So I think what will happen is that more and more people will see that they will get the benefit of a sharing economy and a better application that people are crowd funding, enabling them to scale down their own expenses.”

With a proprietary open-sourced platform and digital marketing business to its name, there appears to be very little GiG is unable to do in-house. Reed claims it is also not beyond the realm of possibility that the company could one day also start developing its own games – arguably the final frontier in its quest to be in full control of its own destiny.

Back to the future
However, it was not exactly written in the stars that GiG, founded by Reed and his business partner Frode Fagerli in 2008, would be where it is today. Reed was originally a poker player by trade who, like many of his contemporaries, was drawn to the game by the emergence of rakeback deals. And he soon ended up getting his first taste of the egaming industry via affiliate marketing – a common trajectory for online poker players at the time.

Reed quickly found affiliation ceased being a way to earn a bit of extra cash on the side but the start of a full-time career. With the popular social media poker platform Donkr, his team started to get to know the wider industry and gain an appreciation for what worked and what didn’t in the online gambling sector. This stayed with them until they branched out with their debut B2C product. Launched originally as a white label on EveryMatrix, Guts.com remains one of GiG’s most popular B2C brands to date.

“When we expanded with Guts, it was because we wanted to fix what was wrong with the user experience that was being offered to the customer in online casinos and make a larger issue of developing egaming into an open and connected ecosystem for the benefit of all,” Reed says. “And that was very much down to our experience in the wider industry, the dynamics of it, how it all comes together and what we can do to improve it.”

Technology is changing and I don’t think all egaming businesses are tech companies

But did Reed believe the brand would lay the foundations for what GiG is today? “The key driver for launching Guts.com was to improve the offering and the customer experience for the end user. Once we applied for our own licence, we started brokering agreements with all the suppliers and payment providers, and that became the point when the larger vision started materialising and we started to build our own technological layer.”

Today, GiG’s B2C arm has grown to consist of six gaming brands including Guts.com, Rizk.com, Betspin.com, Kaboo.com and Thrills.com. Its consumer-facing products, which have now all been integrated into the iGamingCloud platform, are still by far the company’s largest business segment, with Q3 2016 revenues increasing 200% year-on-year to €11.4m. The firm’s B2B arm – a younger but higher margin segment – also saw revenues rise 160% to €4.3m in the same period.

Step-change deals
GiG may have only owned a few affiliate websites and its Guts.com product during its early stages, but the firm had at the time already begun work on developing its iGamingCloud technology. In the end, it was actually the open cloud-based platform’s first client – Oslo-listed Nio Inc – which would mark a major turning point for the Group and take the business in a new direction.

In February 2015, GiG completed what was effectively a reverse takeover of the Delaware-based gaming company – founder of Nordic-facing online casino brand Betspin. Reed and his colleagues were particularly enthusiastic about the prospect of owning a publicly-listed business, getting their hands on a growing B2C product and the opportunities of combining Nio’s Gridmanager sports betting technology with the iGamingCloud platform.

But this was just the beginning of GiG’s M&A strategy. Last year, the company also acquired fellow Malta-based operator Betit Group, and in turn increased its B2C portfolio to six Nordic-facing brands. The deal completed in September, adding €2.7m in monthly revenues to GiG and nearly doubled the Group’s gaming operations. SuperLenny, Thrills and Kaboo were all successfully integrated into the iGamingCloud platform in less than four months.

“It [the deal] came off the back of what was an incredible growth rate in the B2C space, as we’d previously launched Rizk.com in January 2016 and it had performed very strongly,” Reed reflects. “The reason it grew so much is because of the functionality we started developing. It was just supposed to be a showcase of what we could do in terms of gamification and data, but it took off and we had about 10,000 first-time depositors in the first month without a proper marketing budget.

“Our thoughts on what you should do within online casino and B2C was pivoting around an agile and gamified product, and in Betit we saw people who were like-minded and had a similar take on the industry,” he continues. “They had already signed a contract to get on iGamingCloud and we thought it made sense to unite these people into one company, perform a multi-brand strategy and go for being the best product in the industry.”

Building for the future
Since completing the Betit deal, GiG has unified its portfolio of brands under a single B2C umbrella spearheaded by Tomas Backman, Betit Group’s former CEO. Backman has been tasked with spending the next few months unifying the division with the rest of the organisation, while the individual managers of the six brands will report directly into him.

We are different from other centralised organisations because there is a lot of empowerment within all operators we own

The move is in line with the Group’s basic principle that if all egaming companies compete on price, promotion placement and product, then its main opportunities for differentiation lies largely with the latter. “The best way to be competitive in product is to connect to a centralised tech platform, unleash bespoke gamification features, all the big data we have on the brands and then have a unified organisation behind it,” Reed explains. “Tomas proved at Betit that he can execute such a centralised organisation and be both hands-on and off at the same time to fuel growth.

“We are different from other centralised organisations because there is a lot of empowerment within all operators we own,” he adds. “Each consists of a managing director who is represented in the management group of the company, while the product and commercial people are mostly unique to each brand. They are all complementary to the platform and the technology we already have.”

Artist impression of offices GiG will move into later this year

The company restructure all ties in with Reed’s plan to scale up both the B2C and B2B sides of the business significantly over the coming years. The firm – which now has a total headcount of more than 400 – plans to move into a new modern office building later this year, featuring facilities such as a children’s playroom, café, outdoor workstations and large green spaces. Designed to foster a healthy work-life balance for its staff, it is hoped the HQ will help it attract the best talent in Malta where the competition for egaming expertise is fierce.

However, revenues are currently growing at a higher rate than the company’s personnel-to-revenue ratio. And with its new digs set to be at full capacity as soon as GiG moves in, the company will still need to find more office space in the near future if it is to continue growing at its current rate. Meanwhile, a seventh B2C brand, a new betting cloud platform and expansion into markets such as the UK and Denmark are also part of the Group’s roadmap over the coming year.

This strategy sounds relatively straightforward and it is a common trajectory for a growing egaming business seeking to expand beyond its core markets. But as a US incorporated, Malta-based, Oslo-listed firm, GiG is hardly your average online gambling company. And with a wealth of in-house resources at its disposal, you wouldn’t bet against the company ‘getting shit done’.