Change for the better: Kaizen Gaming on new markets and regulatory challenges closer to home

Kaizen Gaming, the former Stoiximan business, is a company that is proud of its long history and links with its native Greece. The firm has carved out a significant share of the market through a combination of technical development, high-profile sponsorship deals and strategic agreements with fellow operators, most notably retail operator OPAP, with which Kaizen enjoys a productive investment-led relationship. With OPAP acting as a strategic investor through a 36.75% stake in Kaizen’s global operations, the partnership has enabled it to aggressively invest in its expansion plans.

However, in today’s competitive online gambling market, a diversified market portfolio is a must for any operator, and Kaizen is no exception. As the group prepares to emerge from the shadow of Covid-19 and into the challenges that lie ahead in Greece, EGR Intel chats to Kaizen Gaming founder and CEO George Daskalakis about the operator’s future.

EGR Intel: How did Kaizen Gaming navigate the pandemic in 2020 and what impact did it have on the group?

George Daskalakis (GD): The truth is the pandemic outbreak caught us completely by surprise and we had no contingency plan in place for it. Our top priority was to secure the safety of our people, so we kicked off a massive internal project that made it possible for 80% of our 700 (back then) colleagues to switch to remote working within a few days in all of our five offices across Europe, with the rest following a couple of weeks later. We have been operating on a fully optional mode ever since, with Kaizeners being able to decide on a monthly basis whether they want to work from the office, where we apply all safety guidelines (including PCR tests twice a week) or remotely.

Shortly after the Covid outbreak, we launched a series of online initiatives and events aiming to reinforce team spirit during this testing period. We focused on supporting our people who are working from home, informing them of what is happening at Kaizen, identifying creative ways to boost team bonding, including participation in internal CSR initiatives like our #oneteamrace where people had to walk, run, cycle or swim to trigger donations, and trying to put a smile on their faces. The ‘Christmas in a Box’ presents sent home to all Kaizeners’ children being a highlight.

Finally, we also contacted the authorities of the countries where we operate to find out how we could better help healthcare systems through our CSR programme. We focused on finding ways of supporting the real heroes of the pandemic, the healthcare professionals, by either supporting their need for protective equipment or by joining forces with other organisations to cover their daily dietary needs. We managed not only to keep our people safe but also to bring in about 200 new colleagues during the pandemic and not only keep the business going but also grow it by over 50% during the past 12 months. We are all proud about the way we responded to this crisis as a team.

EGR Intel: You took the decision to unveil the new corporate branding last July, what was the thinking behind the branding?

GD: After several years as Stoiximan, we felt we needed a new identity to represent and unite our teams. This led us to the choice of Kaizen, which in Japanese stands for ‘continuous improvement’, another value which has been inherent in our organisation from day one. It was a very natural transition for our people as most of them were familiar with it as we had been using this name for our Greek services company for a few years. Somehow it felt like the obvious choice as it represented pretty much everything we wanted it to. Kaizen describes our mentality and is the bridge between what we have accomplished so far and where we want to go in the future.

EGR Intel: How has the relationship with OPAP developed and what does the investment they bring allow Kaizen to do?

GD: From OPAP’s initial investment in 2018 to the conclusion of their investment earlier this year, very little has changed in the way we go about business. OPAP is well known in Greek retail gaming and wanted to strengthen their online presence by investing in the leading digital operator in the country. I am glad to say they have trusted our team to continue doing what it has been doing for the last nine years and the team has consistently delivered. The backing of such a powerful investor allows us to be more ambitious and aggressive when it comes to investing in our expansion plans going forward.

EGR Intel: Kaizen has made senior international hires of late, but what made those candidates Kaizen material and what are they bringing to the company?

GD: During the last few years, we have managed to establish our position in Greece and Cyprus, and are also present in Romania, Portugal, Germany and Brazil. We are preparing to launch in two more markets later this year, and by the end of 2021 we will be active in eight markets with our team which is now almost 900-strong and expected to surpass the 1,000 Kaizeners milestone.

We have undergone a major transition from a third-party dependent local start-up to an international operator powered by its own technology, with the launch of our proprietary sports betting platform Ariadne earlier this year being a major milestone for us.

Bringing in guys like Julio Iglesias Hernando (chief commercial officer), Steve Grech (director of product) and Claus Jansson (head of affiliates marketing and media buying) who are experienced as well as great fits to our culture creates a nice blend in the team. In parallel, we are continuing to promote people from within the organisation in key positions like in the recent cases of Dimitris Thanasopoulos (director of technology), George Skarlatos (CRM director) and Christos Tzalavras (commercial director). Assembling a team that will both build on what brought us here while driving change where needed is a very challenging but also very rewarding process, and I feel very optimistic about the outcomes.

EGR Intel: Your Betano brand was recently granted an online sports betting licence in Germany. What are your plans and hopes for the German market given the regulatory headwinds?

GD: We had been operating in the German market since 2018 via our regulated subsidiary Betkick. This year we participated in the new licensing process and recently acquired a sports betting licence from the Darmstadt Regional Council. The licence required a migration to betano.de as well as an integration to the OASIS responsible gaming system, as per the regulator’s guidelines. It has been quite a slow and complex procedure to be honest but hopefully now that the first major step has been made the rest will follow in a more efficient manner, though I do expect the second of half of 2021 to bring new challenges to be honest.

As our strategy entails presence in licensed jurisdictions, we believe that every well-structured step towards regulation is beneficial for the states, the players and serious operators respectively. We now have a clearer set of rules, one that further ensures player protection and public revenue for the state and we are looking forward to further promoting the brand in the country and offering quality services and entertainment in a responsible manner to German players. Germany is a big market with great potential and we are committed to further grow our footprint there in the coming years.

EGR Intel: Are there any difficulties in managing Betano’s wide spread of markets it operates in given its standing in both Europe and Latam?

GD: Expanding outside of Europe was a symbolic milestone for Kaizen, which made it clear that we do not see Europe as our frontier. Now regardless of the location, I would be lying if I said that adding markets to our portfolio in general has not been challenging.

We are also still learning as an organisation how to bring different cultures together and are constantly trying to optimise our processes and remote operations. Interestingly, Covid-19 had a positive side-effect when it came to remote operations as suddenly everyone had to share the exact same experience. It did not matter anymore if you worked at the HQ or at a smaller office abroad.

Every market is different, each has different levels of maturity, different terms and different competition. It must also be said that the experience we have gained from the first few markets we entered is now proving invaluable as it is helping us be more efficient when it comes to new launches. Overall, international expansion is definitely challenging but it is also a really exciting process as well.

EGR Intel: Sponsorship is one of the key pillars of Betano’s strategy. Why has the group embarked on such a wide-reaching football sponsorship portfolio?

GD: During the past seven years, we have accumulated significant experience on how to create value for both our brand and the teams we sponsor. I am proud to say that we have built long-term relationships in Greece with the teams we sponsor, and this is because of the value that is created for all parties involved.

A lot of the credit for the success of our sponsorships goes to our marketing teams which do not simply sit on a sponsorship contract. They continuously seek new ways to create exciting experiences for the fans, to implement joint social responsibility activities with the club; they generally act as friends, not as a distant professional sponsor. They always respect the history of clubs and try to promote it in the best possible way. This ultimately creates a sense of loyalty to our brand, which is obviously quite important, especially in new markets.

EGR Intel: How has the Stoiximan brand been impacted by changes to the Greek gambling bill, if at all?

GD: The regulation of the Greek market via the implementation of the relative law which has been voted and the licensing of online operators is a major reform that has been delayed for years. Recently, the process for the ratification of the law has started and it seems like the Hellenic Gaming Commission is targeting a 1 August go-live date.

Unfortunately, although we were hoping for some rational changes versus the interim regime which is currently in effect, the new legislation will not only retain the extremely high 35% taxation on gaming revenue but also introduce stricter limits – the €2 max stake in RNG being the stricter of them all and coincides with the implementation of a new tax on player winnings above €100. We fear this unfriendly approach to the industry will lead part of the market which has successfully moved to the regulated side during the past few years back to the black market. We will obviously comply with all the requirements, and as market leaders do our best to keep players on the right side of online gaming in our home country.

I can confirm that we, along with bet365 and Entain, have undertaken to form an association that will safeguard industry standards and represent the sector in the best possible way by promoting safe and responsible gaming in this new regulated era. We’re hoping to add more members to the association over the next few months. The interest is already high and I am confident that together we will be in a better position to push for regulatory improvements that will benefit both the state, the players and the industry in the future.

EGR Intel: What are your ambitions for Kaizen in the next 12 to 24 months?

GD: I think that if there is one thing we learned during the past 12 months, it is that it’s very risky to make predictions. Especially in a fast-paced industry like ours with the lightning speed of events which we are witnessing, mostly due to the developments in the US, it is difficult to predict what will happen in the next two years. Our ambition at Kaizen is to establish ourselves as an international player in the coming years by focusing on technology and customer experience.

This is why we are continuously bolstering our capabilities, especially when it comes to the tech side of things, in order to build best-in-class sportsbook applications and expand successfully to more international markets while always executing on our customers’ voice. We want to eventually be among the market leaders in every country where we operate, so clearly a lot of effort will be required. Moving to our new Athens headquarters, which is expected to be ready in Q2 2022, will be another major milestone for Kaizen. We are all looking forward to it.