Q&A: Henrik Tjärnström on Kindred’s strategy to eliminate revenue from high-risk gambling

Kindred Group hit the headlines on Monday when it reported that 4.3% of Q4 revenue was generated from so-called high-risk gamblers, becoming the first major operator to open its books to the public. At the same time, the Stockholm-listed operator acknowledged that 75.7% of high-risk gamblers showed improvements in their gambling behaviour after being identified by Kindred’s proprietary PSED system (Player Safety Early Detection), which aims to combat problem gambling among the operator’s player base.

With ambitions to take its high-risk player revenue to 0% by 2023 and a 100% of high-risk gamblers successfully identified, the firm faces an interesting next two years. Below, EGR chats to Kindred Group CEO Henrik Tjärnström about the need for transparency as Kindred strives to deliver on this pledge, as well as market challenges in Sweden and the UK.

EGR Intel: Why is it important for Kindred Group to publish these figures?

Henrik Tjärnström (HT): We know that gambling is one of the most popular pastimes across the world and has been so for hundreds, if not thousands, of years. But we also know that there’s a small number of players or a group of players that are ending up involved in harmful gambling. We’re revealing these numbers now to increase the knowledge and transparency about sustainability and how we’re also going to use this to serve as a catalyst towards achieving our ambition of 0% of Kindred revenues from harmful gambling by 2023. This is an important step in contributing to better dialogue with decision-makers and other stakeholders about harmful gambling and what’s needed to protect those who suffer.

EGR Intel: Would you encourage other operators to follow suit and publish their figures?

HT: Yes, absolutely. We are the first to do this, but I’d encourage others to follow and open the discussion around problem gambling to transparency, particularly from the operator side. Currently, there’s a lot of numbers floating around in the media or being brought up in the discussion that are not correct in a sense or certainly not describing the problem as it looks from our side. So, we want to provide our real numbers based on our system with our data team, extracting real numbers rather than self-assessments and other processes. These are the real numbers that we see with Kindred and we’re more than happy to see these numbers open to discussion and challenge from other firms.

EGR Intel: What could it add to the ongoing debate surrounding problem gambling and operator standards?

HT: I hope it can lead to a constructive discussion and encourage efforts to see how we can come together as stakeholders in our industry to improve on this. We must remember that behind all these numbers, there are individuals that are suffering, and of course, we have the ambition to take that number down to zero in 2023. Gambling should be a joyful activity for 100% of players and this is what we are aiming for.

EGR Intel: Is 0% of your revenue coming from problem gambling by 2023 a realistic target?

HT: It’s a very ambitious target, but we are confident that we will do whatever we can to get to that number. At the same time, the intention behind releasing these numbers now is that we need to open this up for transparent and fact-based discussion, also with government and other stakeholders. We want to make sure that all the regulated systems are improved, to allow for as high channelisation as much as possible so that we can make sure that we have all the fundamentals in place to enable all operators to develop in this direction.

To get these numbers down, we need to be much faster, and to detect and to be able to act with the customers. At our sustainable gambling conference, we demonstrated the use of AI in this process, and how we could deploy the most recent emerging technologies and data processing powers available to work in this direction. If we can get all these things working in that direction, we are confident that we can take the 4% down to 0%.

EGR Intel: According to what scale is the improvement effect post-interventions measured?

HT: Our Player Safety Detection System (PSED) measures the customer’s behaviour in our platform and if we see behaviour that could be a sign of a problematic behaviour, then we contact the customer. In 2020, we carried out around 57,000 of these sorts of interventions, things like on-site messages, direct emails and phone calls to maintain contact with our customers.

Of those 57,000 contacts, we’ve seen that around 75% developed a healthier gambling pattern post-contact than they did in the period prior. So clearly that’s very positive, but we’re also going to work hard to increase that number even further to 100%. Those are the two numbers we’ve published and will continue to publish every quarter until this ambition is realised.

EGR Intel: In what ways does Kindred plan to become more precise in its identification of problem gamblers?

HT: The increased precision is also about time, and what we can do to automate the processes to make them faster to make sure that the problem is detected as soon as possible. So rather than having to wait, for example, 30 days to identify a problem gambler, if we can shorten that period it will inevitably be more precise and more accurate. A big step is what we’ve done over the last couple of years in developing the next generation of Player Safety Detection System, where it’s based now on behavioural science, and that’s a big step forward. Rather than looking at financial measures, we actually look at behaviour now. This can help us to also detect a problematic pattern much earlier.

EGR Intel: How does having that sort of transparency add to your offering?

HT: It improves the ecology that we have in our business and allows us to make sure customers enjoy gambling to its fullest potential. Ninety-eight percent of the customers already gambled for entertainment, leaving the 2% clearly in the danger zone. As I said, behind every number there’s a person and we don’t want to have any revenues from harmful gambling – it’s not good for us and it’s not good for our business. We don’t want to have that on our platforms. We want to interact and intervene with the players before a problem can arise. We want to ensure that the customer comes back to a healthier behaviour and we as the operator can have a more lifelong relationship with the customer based on entertainment, but with the proviso that it should be monitored and should stay within what the player can afford.

EGR Intel: What enhancements does Kindred plan to undertake to the PSED system in 2021?

HT: AI and more machine-learning automation is hooked on the top of the agenda to really make sure that we have a faster detection process. When we have customers coming in, we want to be able to tell very, very quickly what kind of customer they could be, what kind of behaviour they’re showing and what actions we should take and what kind of tools we should propose to them. Those are the important things that we’re working on right now.

EGR Intel: Kindred has been very vocal in its criticism of the Swedish government’s temporary Covid-19 gambling restrictions, citing channelisation concerns. Are you seeing an impact from these measures in your identification of problem gamblers?

HT: Yeah, it does because it incentivises the customers to spread out their activities with more operators and higher probability that the customers would go outside the system. Then they’re beyond control and again, that’s why channelisation is so important. It’s not just about directing players to us but if customers play within the system, they are covered under the duty of care and consumer protection. Those important things that are mandatory within the system, within the regulations, can help customers. If customers are playing outside the system, they’re outside control and that’s the counterproductive effect of this. We’ve seen it in our own numbers that our casino activity has come down. I don’t think these new rules are for the betterment of customers because we know that there’s a lot of aggressive operators who are targeting the Swedish market and can do it with a dotcom offering. Any customer who uses these brands is outside the systems of control of the licensed market.

EGR Intel: The Swedish government has a high-profile gambling market review, proposing swinging cuts to things like advertising. Does that just play into the hands of the Swedish black market?

HT: The big risk that these kinds of extra restrictions and measures that are put on the regulated operators is to the benefit of the black market. This levels the playing field for them in a sense when it comes to attracting customers and if their offering can be more appealing to the customers and it’s easier to find them, there is a bigger risk that it has a negative impact on channelisation. So, again, the locally regulated operators need to be given all the tools and an advantage over the dotcom market to be able to attract the customers, and that’s what these kinds of restrictions are going against.

EGR Intel: There is a debate in the UK on the impact of the black market on the licensed market. Based on your observations and experience, what impact do unlicensed operators have on Kindred’s operations?

HT: It’s the same across all markets: the higher the channelisation, the better it is for everyone in the system. One needs to be very mindful that it’s a slippery slope; you can make some changes but all of a sudden it comes to a point where the offering of the black market is more appealing to customers and potentially the more vulnerable ones. Then there’s a leakage out of the system and once that process starts, it’s hard to reverse it. One needs to be very cautious and mindful about the effects of changes, so that it becomes a more longer-term process. It’s often a case of a further restriction can go one step further and then, all of a sudden, there’s too much restriction which lets in the black market and then it’s hard to get the customers back.