Interwetten chief Werner Becher on the German opportunity

After proving to be something of a regulatory minefield in recent years, there finally seems to be some good news coming out of the German sports betting market. Just last week, the regions informed the European Union of plans to introduce a new State Treaty on gambling which would have unlimited licences available for companies which meet a qualitative criteria.

And firms like Interwetten are well poised to take advantage, with the company expected to break through the ‰âÂ1bn turnover threshold in 2016. The Malta-based operator is also enjoying double digit growth in other key markets around Europe. The firm’s spokesman of the board and de-facto chief executive, Werner Becher, tells EGR about his plans for the company.

eGaming Review (EGR): Which of your key markets are enjoying most growth?

Werner Becher (WB): This year, we will double our revenue in Greece. You have to keep in mind that we had to start from zero after domain and payment blocking two years ago and capital controls last year. It was not easy to reactivate our user database, but we did well. Also in German speaking countries, as well as Spain, we are happy with a revenue growth of more than 20% in 2016.

EGR: What is the new market you are planning on entering, as you noted in your recent earnings report?

WB: We haven’t made a final decision yet as to which country to build up as an additional core market starting from next year. But for sure it will be a country from Northern or Eastern Europe. We are currently evaluating a few countries on our shortlist, regulated as well as pre-regulated markets.

EGR: You have big ad spend planned for 2017 ‰ÛÒ can you give more information on the tone of the ads or the overall strategy?

WB: In general, we invest heavily in brand awareness – mainly in TV – to reach at least a top-five position in brand recognition in core markets. In order to achieve our goal and become one of the top-of-mind brands in a country, we increase performance marketing step by step as conversions perform only efficiently if users trust a brand.

As a private owned business we are not interested in cash-burning-strategies. Therefore we do not spend more than 20% of our revenues in marketing, unless there is a world championship or a Euro soccer tournament when we spent 25%. Although this sounds old-fashioned nowadays, we believe that only healthy growth guarantees long-term success. And as entrepreneurs we are not focused on the next quarter’s results, but dedicated to pursuing our long-term strategy of increasing enterprise value.

EGR: Are you considering any M&A opportunities?

WB: Like in the past we are also fully concentrating on organic growth in future. Therefore we do not plan to acquire any markets or products ourselves. As a completely privately owned company ‰ÛÒ all shares are still held by the founder and the management ‰ÛÒ we do of course receive queries by strategic investors due to our strong market position in Continental Europe. But based on our strong growth rate and high profitability we are absolutely not in need to sell our business, especially not for an evaluation below market benchmarks. But if our strong brand and unique product fits into a specific strategic profile, we are always open for talks.

EGR: What’s the latest update on German regulation?

WB: I know that it’s hard for observers to understand the regulatory situation in powerful German speaking countries. We are at an advantage here as we have been operating in this environment for more than 25 years and know the do’s and don’ts. Recently a decision has been taken to update the legal framework. It still stands to be seen though how and when the latest decisions will be implemented.

EGR: You introduced cash out last year – is it important to have innovations like this in the German market?

WB: We have been offering cash out as well as partial cash out for more than a year now. We are very happy with this product that we’ve developed completely in-house. In pre-match betting the feature is very popular in order to secure winnings. Live betting customers primarily use cash out to minimise their losses. We have learned that all customers, irrespective of their nationality, want to be entertained with exciting new features in order to remain active. In online betting and gaming operators have to provide constant entertainment, usually based on innovations. Therefore product development is a critical success factor.

EGR: Have you considered membership of the new German online casino association? It seems a good fit given your current membership of DSWV and your own growth in the vertical?

WB: We have considered membership, but haven’t taken action as yet for a number of reasons. The most important issue is that, as a traditional sports-betting operator, we feel very well represented by the DSWV for the time being.