John O'Reilly on plans to make Rank Group a £1bn revenue business within five years

Few gambling industry chief execs can boast such a rich breadth of knowledge and experience as John O’Reilly. The 59-year-old, who has occupied the hot seat at Rank Group’s HQ in Maidenhead since May 2018, has held senior roles in the industry for almost 30 years, including 19 years at Ladbrokes where he oversaw the growth of the UK-focused operator’s online business. A four-year stint as MD of Coral Interactive in Gibraltar, followed by roles at Grand Parade and William Hill, led to his appointment as CEO for multi-channel and multi-brand operator Rank, succeeding Henry Birch.

Looking back at his long career, O’Reilly recoils at the term veteran, but readily admits that there have been “massive” changes to the industry which he first entered years ago working in his local betting shop. Reflecting on those salad days, he cites the head of marketing position at Ladbrokes, which he held in his early thirties, as a prime example of how the industry has changed. As O’Reilly explains, it was a time of “very archaic” rules and regulations.

“Betting shops were only allowed to sell potato-based cold food snacks, such as crisps, so we ran a campaign around the opportunity to  ‘let them eat cake’. We had to have boarded-up shop windows and there were restrictions on how comfortable the chairs could be. The worry was that customers would spend too long in a betting shop if they felt too comfortable. It was madness.”

Expanding on this, O’Reilly recalls the prevailing sentiment within the UK gambling market. “Our industry was expected to provide nothing more than a basic solution for people to gamble. It was purely transactional. Anything more ambitious or customer-oriented wasn’t really allowed.” All this changed with the 2005 Gambling Act which swept away much of the existing draconian legislation. It was the result, in part, of some  progressive lobbying by the industry. “At the time, we really managed to strike a chord with government and policy-makers. It was a concerted effort to sweep away a lot of obsolete, stifling regulation that had been preventing us from treating our customers like consumers. It brought us more into line with other parts of the leisure industry,” he adds.

Rank CEO John O’Reilly

Indeed, Rank Group’s CEO argues that the changes agreed, firstly in 2005 and latterly in 2014 in the online sector, have resulted in a landscape where it has never been a better time to be a punter. The value, promotions and bonuses offered to customers by an industry operating to tighter margins are good news for the customer. “It’s much easier for the consumer to win today. As a consumer you get far more value for money out of your gambling than you ever used to enjoy. Operators are battling to provide the best value and the best experience which is surely a good thing for the customer. We do that within an environment where safer gambling is front and centre in all our thinking. It can only be a good thing,” he explains.

Striding forward into digital

In the same way that the UK market has evolved, Rank  is a business which has undergone considerable changes over the last decade as it attempts to balance its historic venues business with the need to develop a strong digital offering robust enough to compete in a challenging international market.

The ambition to develop such an offering received a shot in the arm last year with the completion of a £115m deal to acquire Stride Gaming, a multi-brand online bingo-led operator. At the time of the deal,  Rank outlined the key rationale for the acquisition, principally to create a business with “genuine scale and capability in the digital market”.

For O’Reilly, that objective has not changed since the completion of the purchase in November. His drive to generate a scalable digital business is clearly still fresh in the mind. As he explains: “One of our strategic pillars at the Rank Group, before I joined, was to drive scale in digital. That would support another strategic pillar, namely to become the leading multi-channel gaming operator in the UK.”

O’Reilly acknowledges that these aspirations are likely to appear on the strategic plans of most gambling operators but highlighted that Rank did not have the digital revenues necessary to achieve either aim. “When I looked at Rank’s revenues last year, our digital business made up circa 18% of our revenues. Even if we were to grow our digital business at over 20% each year, it still would account for less than 25% of our Group revenues in three or four years time. We needed to do something more significant.”

The issue of driving scale to become the UK’s leading multi-channel operator made the need to grow through M&A more pressing. With this in mind, the Stride Gaming opportunity came at a strategically advantageous time for the business.

O’Reilly cites the deal as having a lot of “immediate synergies”, highlighting those things which will be realised when the integration of Stride into the Rank business is complete. “We will move from having two separate systems to one. Our new system will deliver proprietary technology and, crucially, that will enable us to have much more control over our own destiny,” he explains.

In allowing the company the freedom to develop  at its own pace, the Group’s intended international expansion plans are expected to be facilitated.  O’Reilly stresses that such ambitions are for the future and the current focus is on working through a full integration programme to ensure Stride is incorporated as smoothly as possible.

“We’re working through what we call the ‘discovery phase’.  The businesses are getting to know each other and we are beginning to flesh out the key initiatives that will drive the most effective integration of both business units. There’s a lot to do but  we’re making good progress,” O’Reilly adds.

“Underpinning every element of the integration is our commitment to safer gambling. It’s part of the fabric of Rank – how we operate and how we interact with our customers.”

Transformation planning

The acquisition of Stride Gaming is a lynchpin in Rank’s three-year digital transformation programme which O’Reilly inaugurated shortly after he arrived to take up the CEO reins. Explaining the need to make significant changes, O’Reilly accepts that Rank, historically, had its shortcomings when it came to project delivery. “Too many projects were falling by the wayside. We had a strategy that was good, but we just weren’t delivering on it. That was my sense before I joined and, soon after I arrived and started to look under a few stones, I realised that my preconceptions were largely justified. I knew we had to change the way we went about delivering on our promises.”

Delving deeper into his immediate efforts to address this in the weeks following his appointment, the chief exec refers to experiences in his career where process-led transformation projects resolved similar issues as necessitating the need for a similar one at Rank.

Referencing the early days of his tenure as CEO, O’Reilly remembers a meeting which articulated the clear need for a transformation programme to be ushered in. “The Group had 148 in-pipeline technology development projects on the go. They were all  written up on post-it notes. I thought we were probably equipped to deliver maybe 40 of them, at the most. I hosted a follow-up session and we started to whittle it down to something more sensible. I asked who was responsible for each of the projects and if there were no-takers, we’d rip it up and we’d move on. Ultimately, we ended up with about 25 projects which we agreed we would deliver on. We brought them into the transformation programme and that’s the vehicle through which we will be delivering them, on time and on budget.”

Making it happen

Under the digital transformation programme, Rank has 13 different workstreams. Five are focused on growing revenue, four are focused on cost control, and four are categorised as “key enablers”, all of which Rank must successfully execute if O’Reilly’s ambitions are to be realised. Within each workstream, a series of flexible initiatives are clearly defined. As initiatives are delivered, new ones are introduced.

“The pipeline is fairly simple: new ideas come in and we evaluate them forensically. If, after a series of checks and tests, we decide that they will deliver meaningful value to the business while satisfying our safer gambling criteria, we feed them into the pipeline and ensure they get the right levels of resource and focus.”

The benefits of the transformation programme are two-fold. Firstly, it provides clarity on what the project is, what it will deliver, and who in the organisation is responsible for the delivery. Secondly, it allows Rank’s management team to monitor the progress of the workstreams within the transformation programme on a weekly basis.

To oversee the process, the company has formed a transformation team, incorporating colleagues from within the Rank Group along with some external hires. “They support the workstream owners and they support the initiative owners. They also provide my executive team with a clear line of sight into how we’re performing against each of those initiatives. It creates a real clarity which is crucial” says O’Reilly.

Rank’s Mecca bingo brand

Reflecting on his first few months in the role, O’Reilly reveals that much of his focus was on getting a tighter grip on cost. “We had too much unnecessary cost in the business but I’m very conscious that you can only take cost out of a business once. After that we’ve got to grow revenues to deliver on our wider ambitions.”

Those ambitions extend to Rank becoming a £1bn international revenue gaming company by 2023. As the key architect of this vision, O’Reilly believes these targets are not impossible. The Rank Group was valued at £1.05bn at the end of 2019, the share price having doubled in the calendar year. He does not rule out further acquisitions down the line.

Much of this depends on the speed and effectiveness of the Stride acquisition, but O’Reilly claims that Rank is “not short of options” to potentially acquire another business before the end of the 2023 deadline. “There are plenty of opportunities for this company to grow, whether through acquisition or organically. We’re in a strong position,” he explains.

Bringing in the old guard

While the concerted drive to become a top-performing international digital gambling business continues, could an argument be levelled at Rank that its traditional bread-and-butter venues business is in danger of neglect? While O’Reilly emphasises the need to move further towards digital operations in today’s competitive gambling industry, he believes there is a vital place for the land-based venues within the strategic business aim of becoming a multi-channel operator. O’Reilly bristles at the notion that Rank’s casino business (Grosvenor Casinos) is a retail business. “In many respects, we are anything but a retailer. We’re in the business of providing a great experience for our casino and bingo customers rather than actively selling them something. We’re not really on the high street and our focus is much more about delivering excitement and entertainment for our customers rather than simply transacting with them.”

Just as Rank’s casinos are in the business of delivering experiences to consumers, O’Reilly identifies the parallels with their online offering. “We are in the fortunate position of being a genuine multi-channel operator, and the overlap for the consumer is significant, both for Grosvenor and Mecca customers” he adds.

This belief in what is effectively the cross-pollination of the Rank brands is typified in the group’s Grosvenor One digital offering, which gives Rank customers one single account and wallet that can be used in either environment. Although this has taken longer than anticipated to deliver, O’Reilly asserts that this has been a “big step” in driving both the growth of the business over the last year and driving a closer working relationship between the digital and venues businesses.

O’Reilly points to the value of customers having the ability to resolve potential account issues from the Grosvenor digital arm in Grosvenor’s land-based casinos. He highlights the benefits to marketing investments, where Grosvenor One budgeting and campaign costs can be simplified, rather than living across two parts of the business.

Discussing the development of Grosvenor One, O’Reilly points to the introduction of a similar offering launched during his time at Coral, namely the Coral Connect wallet in 2014. It is something Rank is keen to replicate. “We’ve delivered the technology which, in many ways, was the most important first step. We’ve now got to nail the customer proposition. There’s plenty of work yet to be done but if we get it right the rewards are considerable” he explains.

Further afield

The drive towards becoming a £1bn international revenue business has seen the Group expand into many different arenas including through international acquisitions. The 2018 deal to secure  the Yo brand, a well-known Spanish business which operates primarily in the bingo sector, has been significant. At the time of the deal, Rank pointed to Yo’s ‘strong digital bingo and casino presence’ as being a key business driver, something which also served to enhance its existing Enracha brand.

Just under two years on from that acquisition, the business has been well received by customers, something which Rank Group’s CEO believes is the most important metric for the business going forward. “We’re obviously pleased with how customers have responded to what we are doing with Yo, but we are still on a steep learning curve and have a long way to go before we optimise the customer experience.  It’s one of the reasons why we’ve chosen to restrict it to our Spanish customers, and not provide links to the site on the YoBingo brand elsewhere,” he adds.

The Yo brand enjoys a strong brand resonance, something that Rank is clearly looking to capitalise on with its offshoot, YoCasino. Although currently only live in Spain, O’Reilly confirms that Rank is planning to expand this business into the Portuguese market during 2020. “We’re starting to think about expansion into other markets, particularly in the context of the Stride acquisition. Where we take the Yo business and Stride proprietary technology next is an exciting discussion that we are working through,” O’Reilly adds.

Evidently, much of Rank’s immediate future will be taken up by successfully migrating existing Rank Digital assets onto the Stride platform, one of the biggest technological changes to affect the digital business since its inception. “In terms of ongoing development, it’s business as usual. We’ve got a pipeline of activities which are underpinned by a number of initiatives and a set of resources within the digital transformation process,” he adds.

Rank enjoys a “superb” relationship with Gibraltar

One potential issue on the horizon is the UK’s now-imminent exit from the European Union. Last year, Rank Group was one of several businesses which reaffirmed its commitment to the Gibraltarian market following bet365’s decision to relocate a significant portion of its operations to Malta. Addressing this issue, O’Reilly points to a clear industry need to continue to service European players, something which he believes follows the same rationale used by fellow operator, William Hill, in its decision to acquire Mr Green. “Our business in Gibraltar is entirely UK-facing so there would be no logic in moving what is a very strong operation and a very strong management team away from Gibraltar. It wouldn’t make sense. Gibraltar is a vital part of our business” he explains.

O’Reilly details the positive nature of the Gibraltarian market as another motivation to keep faith with this jurisdiction. “I’ve lived in Gibraltar on three separate occasions, over a number of years, so I know Gibraltar well. The Gibraltar government have a terrific grasp of the digital gambling business. We enjoy a superb relationship with them,” he adds.

Rank Group is a business which was founded in 1937 and has subsequently undergone many changes over the next 83 years. Whether or not Brexit has a negative or positive effect on Rank’s core markets in the immediate future or as it works towards its 2023 targets is a matter left for speculation. The business itself, however, is doing all it can to secure a prosperous future.