Betsson scopes out UK market with new casino
Mr Smith Casino launched as precursor to potential UK licence application as CEO describes Netherlands' tax rate as "unsustainable"
Betsson AB will use the launch of its new UK-facing casino brand Mr Smith to help it decide whether or not it will apply for a Gambling Commission licence in the coming weeks.
Mr Smith, which is operated by Betsson subsidiary BML Group, replaced the now-defunct Harry Casino at the end of June after its partnership contract with Betsson had come to an end.
Betsson revealed the move during Friday’s Q2 results which saw the group post 30% growth in both revenues and profits with figures of SEK752.3 (£64.5m) and SEK629.7m respectively.
And the Group said all Harry Casino customer accounts and balances had been transferred across to the new casino in a move designed to help Betsson decide its UK future.
“The contract with the partner was ending and secondly we believe we have better opportunities to drive that market in-house rather than with a partner,” Magnus Silfverberg (pictured), Betsson CEO, said.
“We will use Mr Smith to evaluate the UK market, like we had been doing with Harry Casino previously, and this will help us make our decision [to apply for a UK licence or not].
“We will evaluate how well we are doing and the potential we see in the market and also how complicated the new licensing process and requirements will be,” he added.
The Gambling Commission opened the licensing window for its new Point of Consumption regime at the end of June and operators and suppliers have been given until 16 September to submit applications.
Silfverberg told eGaming Review there was “more than a 50% chance” Betsson would submit an application, with it likely to keep its Betsson and CasinoEuro brands active in the UK alongside Mr Smith.
A market firmly on Betsson’s radar is the Netherlands, a country whose government recently decided to progress with a 20% gross profit tax, a rate Silfverberg described as “unsustainable”.
Betsson ramped-up its presence in the Netherlands with a 130m purchase of Oranje and Kroon Casino in March “ last week’s Q2 results revealed the brands had grown their revenues by 13% year-on-year to SEK87.8m (£7.5m).
“In the business case which we made when we acquired Oranje and Kroon we calculated using 20%, which is the current rate, so from that perspective this is not a negative surprise to us,” Silfverberg said.
“But of course 20% in the long run is not a sustainable tax rate for the gaming industry in general. If you look in the European market I think the average profitability of a business is at 20% or lower so if you tax at 20% across the line you will get zero profit and that will not work long-term,” he added.
In the meantime, Betsson continues to push forward in the mobile space and, with its main brands recently equipped with new mobile platforms, mobile penetration continues make up ground on its more advanced rivals.
Q2 saw mobile revenues account for 17% of the Group total, up from 15% in Q1, however this increased to 21%-23% when just taking into account main brands such as Betsson, Betsafe and the brands of partner Realm.
Furthermore, the Betsson brand recorded World Cup mobile sportsbook revenues of 46% and Silfverberg said this performance gives the operator a good platform to obtain further growth during the upcoming football season.
“We really saw customers during the World Cup bet on mobile and that will prompt the new customers to bet with Betsson rather than other brands due to the very good mobile solution we have,” he said.
Overall, Silfverberg said Betsson enjoyed a “fantastic” World Cup with the Group recording revenues of SEK827m at an average of SEK13m per match “ roughly equal to what it recorded for the Champions League final in May “ and all without the participation of core market nations such as Norway and Sweden.