Pole position: STS on stepping outside of its home market

Polish bookmaker STS made the bold move of stepping outside of its home market to enter the UK in February 2019 on the BetConstruct platform, looking to tap into the expatriate Polish betting audience while maintaining a grip on its domestic market.

In December, the operator moved  on to its own UK licence, making it the first Polish bookmaking firm to obtain a licence in the regulated UK gambling market. The decision to enter a highly competitive sector like the UK forms part of STS’s long-term foreign expansion strategy plan. “We believe in the UK market, and we want to operate there,” explains Mateusz Juroszek, CEO of STS. And he doesn’t want to stop there. The chief executive wants expansion and consolidation to continue in equal part, a tandem rise in progress.

Plans to enter the Dutch market and the opportunity to enter into more sports sponsorship deals are both on Juroszek’s road map. The Kozminski University alumnus talks about the company’s UK experience so far and how STS continues to dominate the Polish market, as well as discussing the impact of brand ambassadors and the growth of esports as he speaks to EGR Intel.

EGR Intel: How has the move been since STS went live on its own UK licence and what are your expectations for the UK market?

Mateusz Juroszek (MJ): We are not only the largest Polish bookmaking company but the first domestic company in this industry that operates outside the domestic market. Obtaining a licence in the UK is the result of a consistently implemented, international expansion strategy. We are always looking at other prospective foreign markets.

EGR Intel: How do you plan on breaking through with less brand recognition in the UK market?

MJ: In the first stage of our presence abroad, we want to focus on Polish  nationals. Our brand awareness among Poles is high, so our goal is to benefit from this significant competitive advantage.

Polls commissioned by us show that 80% of adult Poles know the STS brand. This indicator among Polish citizens who live in the UK is 52%, which makes it possible for our company to gain an advantage over the largest international betting operators.

EGR Intel: How is STS performing in your home market, and what is the current regulatory regime for online operators?

MJ: STS is the largest bookmaker in Poland, which invests heavily in development and innovation. As the industry leader, we set trends, and nearly half of the Polish market uses our services.

The STS offer is highly competitive in comparison to other entities holding a Polish licence. We are distinguished by a wide range of national league competitions – we offer, among other things, the first futsal league, first ice hockey league, second volleyball or basketball league and speedway competitions at various levels, as well as the table tennis super league.

In Poland, betting is subject to a turnover tax of up to 12% – one of the highest in Europe. Due to this fact, it is estimated that the grey market is responsible for approximately 60% of the domestic betting market.

In fact, a large part of the Polish market is covered by non-licensed operators, which do not pay taxes or comply with the strict Polish bookmaking law. Despite such an adverse competitive environment, we keep expanding our offer and providing new functionalities to our clients.

Our aim is continued organic growth that will allow us to respond even better to our clients’ needs.

EGR Intel: What is your omnichannel strategy at STS?

MJ: 80% of the STS Gaming Group’s turnover is generated by online channels. We strive to take maximum advantage of online traffic.

We are constantly investing in the development and modernisation of stationary outlets. Last year our network of betting shops observed a double-digit growth in revenue year-on-year. The retail channel, which is currently responsible for roughly 20% of revenue generated by STS, has recorded a nominal year-on-year increase in value for eight consecutive years. We still see great potential in the segment of stationary facilities, which is why the current number of more than 440 outlets will continue to grow.

STS has modern betting shops located in every large town in Poland. We are opening new high-standard facilities in the centres of the largest cities. Our high-standard stationary outlets are addressed to customers who prefer to use the traditional sales channel. We offer a number of services, including the possibility of watching sports event broadcasts, checking the selection on tablets or ultimately placing bets via a self-service terminal.

EGR Intel: STS opened its first office outside of Poland last year in Malta; what are your plans for further expansion in Europe?

MJ: Due to the dynamic development of our company and new challenges we will have to face in the future, it was necessary to establish the office in the place that is at the heart of the igaming sector in Europe.

Malta offers access to the well-developed infrastructure of dedicated services for bookmakers and attracts talented and experienced employees. This will certainly contribute to our further expansion.

EGR Intel: In December, STS launched a new proprietary live betting product. Why did you decide to build this in-house, and how are you investing in R&D in terms of your mobile offering?

MJ: Our strategy is to lead the way in development in terms of technology that constantly pushes to do things better. We implement modern solutions and develop our functionalities to ensure that our customers have access to a unique offer. That’s why we decided to launch new proprietary live betting software aimed at mobile bettors in the Polish market.
We spent almost two years developing the product in-house, which will allow punters to bet in-play via the STS app or on the mobile version of the website.

EGR Intel: Following your investment in Better Collective last year, what are your plans or hopes for the US market?

MJ: Better Collective is such a large and well-known entity, especially in the Americas where the igaming industry is growing rapidly. We really believe in affiliate businesses and the potential for growth. That is why we see this investment as a long-term asset. We have been looking to diversify our family investment portfolio and we saw Better Collective as a perfect chance to do so.

EGR Intel: Esports betting is a key focus area for STS. How do you aim to stand out in this area?

MJ: Esports is one of the most promising industries for bookmakers. Revenues from esports are rapidly growing every year. There is currently no other discipline that could consistently boast of such results. Of course, because it is a new category, it is not of the same significance as football or tennis. But every day there are a lot of events around the world that make the choices in betting very extensive. This applies to pre-match and live betting. After all, esports is already in the top 10 of the most popular sports that our bettors place their bets on. Hence, our goal is to make us more recognisable among fans.

EGR Intel: STS has numerous well-known brand ambassadors, such as Peter Schmeichel and Martin Schmitt, so how do you select the most appropriate ambassadors for your brand, and how does it help to promote your brand? How do you measure the effectiveness of these deals?

MJ: Peter Schmeichel is a footballer with Polish roots and is a perfect example of the fact that fortune favours the brave. He took up the challenge of playing abroad, which turned out to be a path to numerous successes in the sports world. This is incredibly close to our philosophy regarding the international expansion of STS.

Martin Schmitt perfectly reflects the values of the STS brand, namely modernity, sports character and dynamism. For many years, Martin has led an exciting battle for leadership in the world of ski jumping. He is an excellent example of how determination and courage can lead to success. These are the features that characterise STS, such as in terms of foreign expansion, which is why the cooperation with the three-time Olympic medallist perfectly fits our global communication strategy.

Mateusz Juroszek with three-time Olympic medalist Martin Schmitt (left) and former Manchester United goalkeeper Peter Schmeichel (right)

EGR Intel: STS has also signed a lot of betting partnerships with sports teams in Poland. Why have you decided to do this and are you expanding this to sponsorships in other markets?

MJ: STS is the most significant private player in the Polish sponsorship arena. For years, the company has worked with fans, clubs and sports associations from across the country. We actively participate in supporting Polish sport and set trends for other companies in the industry. STS is an official sponsor of the Polish national football team, which allows it to reach football fans all over Poland at a level beyond club games. The commitment to supporting teams from Ekstraklasa – Poland’s top football league – is an integral part of our sponsorship activities. In the current season, STS is cooperating with seven teams.

Even though football is a key discipline – the presence of STS is the easiest to notice on football stadiums across the country – we are also committed to supporting other disciplines and sports associations. In the future, we do not exclude cooperation with international teams and clubs.

STS’s participation in sponsorship activities goes far beyond showcasing a logo. We are focused on activities directed at all fans, as they are an essential element in the world of sport. Our main goal is to support them in actions that create an unforgettable atmosphere around sports.

EGR Intel: Can you tell us more about the STS Foundation and what you hope to achieve with this?

MJ: The foundation assists talented athletes by providing them with material aid and substantive support. It helps them to organise suitable training facilities and continue their career or participate in competitions at a national or international level. For instance, swimmer Paweł Juraszek won bronze in the European Championships and Magdalena Stefanowicz is a gold and silver medallist in the Polish Junior Championships in sprinting. There has also been success for the Polish wheelchair rugby team and individual Paralympians.

EGR Intel: What is your strategy for STS over the next 12 months in terms of targeting new markets, growth and investment?

MJ: STS is now the biggest bookmaker in Poland, and our offer is available in several European countries. We are thinking about breaking into other markets in Europe, for example, in the Netherlands. We are waiting to see what regulatory changes will be implemented there. We are also sure that our growth will continue due to investments in technology and customer functionalities.