Q&A: Global Gaming CEO on whether other operators could lose their licences in Sweden

Sweden-headquartered online gaming operator Global Gaming has, it’s fair to say, faced a challenging year in 2019, with troubles both in its boardroom and in one of its key markets of Sweden. A 35% spike in revenues revealed in its Q4 2018 financial results should have been a positive development for the operator and pointed to good times ahead as it looked to expand its fledgling Swedish business.

However, with revenues not reaching the heady heights of Q3 because of the migration of its Ninja Casino brand, the operator was forced to look at several cost-saving and streamlining measures. In a double blow, the operator was hit with a lawsuit by the Swedish Consumer Ombudsman over so-called aggressive marketing of Ninja Casino in Sweden.

These struggles would not end in April as Global Gaming cancelled a proposed dividend to shareholders and subsequently saw the departure of Joacim Möller as CEO. This uncertainty was further exacerbated by poor Q1 results and culminated in the firm being stripped of its Swedish licence in June for a variety of alleged compliance failings.

Since then, Global Gaming has seemingly been fighting its own private battle with the Swedish Gambling Authority (SGA) in the Swedish courts. But with the launch of its NanoCasino brand in Sweden (via Finnplay’s Viral Interactive licence), is Global Gaming beginning the long road back or is it fighting a losing battle to restore its former glory? EGR Intel spoke to the man charged with leading the fightback, Tobias Fagerlund, to find out where it goes from here.

EGR Intel: It’s a very uncertain time for the business. How do you deal with that as a CEO?

TF: I mean, we’re in a situation that is totally different than any other in the market. No one has experienced this in Sweden before, and we stand alone in many ways. The media focus on what happened between Global Gaming and the SGA in June was massive, and I had to cope with that. I also think that in a situation like this, if you stick to the facts you have and stick to what you think is the right way forward, it helps you a lot. I’m not a negative person, I try to retain a positive outlook wherever possible.

I’m from Sweden, I know the environment, I’ve been involved in many different types of Swedish businesses and my experiences in these environments have helped in the current situation. As an operator, we were very surprised by the SGA’s decision because we thought we had a dialogue with them. It wasn’t a very good one, but we had a dialogue going. We were convinced we had made all the adjustments required by the SGA in their communications and everything was in place. We were very active in changing the procedures that we discussed with the SGA, confident in the belief that we met all the requirements as we did at the time, so that made us very, very surprised when the decision came.

EGR Intel: Global Gaming’s Q2 results showed some very negative performance for the business in the prior period, however the share price of Global Gaming has risen by 24%, suggesting you beat expectations. Are investors buying back into the business?

TF: I think it’s far too early to say what the development in the share price means. I am glad that it seems that at least for the hours that the market has been open today, our message in the financial report seems to be understood. This message is we’re not laying down and accepting our circumstances. We have a plan which we are moving forward with and we will get back to being in the black. It’s still too early to say, but I see we’ve traded almost 400,000 shares in the company today so it’s still doing good trading for a small value share.

My hope, and what I tried to tell the market in the report, is that we are not going to be defensive and we don’t lack ideas or plans. We have had a very, very hard spring and summer but if we can find some working hours to actually execute our plans, we will be a very good company going forward.

EGR Intel: You’ve announced plans to cut the company workforce by 50% by the end of 2019. How confident are you that these cuts will return the company to profitability?

TF: When the revocation happened and a lot of our revenues disappeared overnight, the area we needed to act on was reducing the cost side of the business. As part of our decision to move away from our own technology, that also gives us room to cut costs in our organisation, something which any outsider looking in would have expected to do in my place.

We managed to undertake these changes quite fast and a lot of the changes we’ve talked about in our Q2 financial report have already been executed. I hope this will be the big cut that we need. Obviously, there are a lot of people within the firm that I would have loved to continue to work with that are not going to be working with us going forward, but we, as an organisation, will come out stronger as a result. In my view, we haven’t really deserved the hit that we’ve taken from the SGA, which has affected our employees quite negatively because they have a vested interest in the business. We need to restore positivity and I think these actions will put us on the path to that.

EGR Intel: How has the company remedied the issues identified in the review by the SGA?

TF: We have addressed every single issue that they have pointed out in their review and we have done it in a way that we think is sufficient. We feel in the dialogue we had with the SGA, we managed to explain why the issues occurred and what we have done to correct them, we pointed out that a lot of the stuff the SGA identified was not correct. I think we’ve addressed the issues correctly and I would welcome anyone who wants to come and have a look at the work we’ve done to address this. We now have a robust system in place that is of the highest standards and I’m very confident in our achievements. We have shown, and it’s open to everyone to read in our correspondence with the court, why we think the SGA’s decision was wrong, what we’ve done to deal with it and why.

EGR Intel: Ninja Casino received some very negative coverage in the Swedish press in the months prior to the licence revocation. How much of that fed into the SGA’s decision to revoke the licence in your view?

TF: I mean, this is purely speculation, of course, and they would never say that it had any impact at all, but I think it has. It’s down to a combination of things: our visibility in Sweden and the questioning of our commercial strategy by the Swedish Consumer Ombudsman (KO) in its legal case with us last year. It’s not at all as big as our lawsuit with the SGA, but we were singled out by KO as a test case. There was a lot of public interest and a lot in the news about gaming when the legislation first came into effect. Ninja Casino imagery was very often used by the media, even if the articles and the subject had nothing to do with Global Gaming or Ninja Casino.

Our picture was often used both in TV and in the press to illustrate negative press articles on things like sports betting, which we don’t even offer, but the picture used was always Ninja Casino. This widespread use helped to increase the visibility of the brand, but it also increased awareness among people who have a negative perception of gambling.

EGR Intel: Why have you taken the decision to first challenge the SGA’s ruling through the courts and then effectively circumvent it by launching under the Finnplay licence?

TF: Fundamentally, we’ve challenged the SGA’s decision because we think that it’s wrong. We want to have a Swedish licence, we want to be able to operate on our own licence with our own brands in Sweden and we want to own our entire business. What we’ve done with Finnplay is of course perceived as a reaction to the fact that we’ve lost the licence, but it’s not part of a strategy that arose out of this loss. We partnered with Finnplay because we think they are simply a very good partner. They have a good brand and we have the marketing capacity and knowledge to make it a success. In this way, we will be part of the Swedish market without operating in it and not being a passive bystander during the legal case with the SGA. For me, it’s very important for us in order to re-establish our own licence, to re-establish our own business and our own honour.

This is not something that I or anyone else involved in this business wanted. We don’t want to be known as the company that lost its licence, because we don’t deserve it. We have a very good, solid and compliant business. When we win, and I expect that we will at some time in this process, even if it takes one or three years, then I hope that we can get back in business on our own.

At this point, it’s very important for me to say that we have never had any intentions whatsoever to circumvent any laws or to act in contradiction to the laws. We want and we should be compliant, we want to pay our taxes and we want to be a player in the Swedish market under the premise of the Swedish law. That is our intention.

EGR Intel: What future do you see for the Ninja Casino brand if your appeal against your Swedish licence revocation is unsuccessful?

TF: I think the Ninja Casino brand will continue to be operational in Sweden and I think it can do so in a lawful and compliant way. It is my hope that it will be on our own Swedish licence but, if not, we do of course have to look at the other options available for the brand. We operate Ninja in other jurisdictions and on other licences very successfully, so Ninja is not at all gone from the market, just absent in Sweden and hopefully we will be back. I think we have a good chance of coming back. I can’t give you a time estimate or tell you under what conditions Ninja will return to Sweden, but our goal is for this brand to be active in all markets we want to be active in.

EGR Intel: What are your plans for the Swedish market if your appeal against the Swedish licence revocation is successful?

TF: If we are successful, we will come back with our own licence, but it will be on Finnplay’s platform and it will be under our new organisation. The damage that this has cost us is tremendous obviously, and if we win, which we think we will, I think we are looking at a very, very sad situation where a decision made by the authorities, in order to try out the new legislation and make an example, cost a lot of people their jobs. It has also seen the loss of a legitimate and good business, a lot of revenues, shareholder disappointment and lost tax revenues for the government. So, no one wins in a situation like this. But let’s hope that the courts deal with this in a very fast and professional way.

I have a lot of trust in the Swedish legal system in the end, but of course you also feel a little ashamed of it. This is not the way that it should have been. The law, the directions, the communications with the stakeholders, the regulatory approach, everything could have been done in a different way, in a much better way that would have been even better for taxpayers.

EGR Intel: What action will Global Gaming take if the Swedish Gambling Authority does not allow Global Gaming to operate egaming under the Finnplay licence?

TF: I would be very surprised if they do say that we cannot operate, because this is well within the law. Viral Interactive is a licensee, they operate in a legitimate and compliant way and we assist them in marketing. We have knowledge that they can benefit from, but there is nothing in these Swedish regulations that stops them from doing business with us. Indeed, if the SGA does decide to block Finnplay from working with us, we’re more than prepared to assist them in that legal battle as well. However, we just don’t see that as happening in the future.

EGR Intel: Do you believe that more operators will have their licences revoked by the SGA?

TF: I think that is a very, very good question. In following the standard they set with us, I would expect many operators to lose their licences. Based on the issues identified by the SGA and their desire to create a level playing field within the industry, a lot of other operators could be expected to lose their licences. However, that may not be the case. They have made their example and stated very clearly to watch out, that they mean business and are serious enough to revoke licences. I expect that more companies will be fined rather than lose their licences, but honestly, I don’t know.

EGR Intel: What learning will Global Gaming apply to other markets based on your experiences in Sweden over the past year?

TF: Never take anything for granted, anything can happen. The biggest learning is not really a learning at all, it’s something that we need to continue to do and that we think we did also in Sweden, and that is make sure you stay compliant and stick to the rules. If you don’t know what the rules are, you will ultimately learn what they are the hard way. Compliance in the markets that we are operating in is super important and something not to be gambled with, it’s either be compliant or be gone.

EGR Intel: Aside from the Swedish market, which of Global Gaming’s core markets is the most integral to its future success in your opinion?

TF: I think Finland is the most important of our current markets. Estonia is also very good, but Finland is a market that is very interesting in many ways. Just in the past few months, we’ve had very public statements from the Finnish authorities saying that they might end the monopoly of Veikkaus. If they do choose to go down that route, I think Finland could prove to be a very interesting market for many operators, Global Gaming included. We’ve been in the Finnish market in one capacity or another now for quite some time and we’d like to continue to be.

EGR Intel: What are Global Gaming’s priorities for the rest of 2019?

TF: Sweden has been and is our number one market. It was where we started and the market where we have generated the most revenue. But it’s very important for us to understand that in order to be successful in the future and to come back to profitability, we must also broaden our approach through new markets and brands. In terms of our future, I’d expect that in the coming three to six months, we will present a clear and executable plan on how to enter new places, but also how to act in the markets in which we’re already present.