Catena Media CEO voices fears over German market amid regulatory turmoil
Michael Daly confirms spend to be focused on UK and Italy as low conversion rates continue to hamper the business
Catena Media CEO Michael Daly has said the affiliate doesn’t hold the “greatest of expectations” for the German market as stringent regulations continue to shackle Europe’s largest economy.
Speaking following the group’s Q3 results, in which Catena confirmed cost savings of €5.5m (£4.8m) following a 25% reduction in European headcount, Daly expanded on the difficulties the firm had faced in the market.
The group noted regulation and low conversion rates continued to “hamper progress” but did not disclose a wider financial breakdown.
Catena did state its organic growth was down by 4%, which was adjusted to a decrease of 3% when excluding the German sports betting and casino market.
Touching on Germany, Daly praised the team on the ground for their efforts, but was frank when it came to the issues facing the firm.
Daly said: “I think our teams in Germany have been doing a good job with our products and I’m happy with the growth in our traffic. The challenge we have seen to date is the number of operators and the marketing spend, and also the conversions.
“We are sending traffic to a number of operators and the conversion rates are not very healthy from our perspective. They are having trouble with some of the new rules and regulations and so the market still hasn’t stabilised into a churning engine,” he added.
Current regulations in Germany include a €1 stake limit for online slots, along with a 5.3% turnover tax on slots and poker, as well as a €1,000 monthly loss limit across all operators.
Several operators have pulled operations in the market, including Kindred Group, although Germany was a tiny part of its revenue.
Fellow Swedish operator Betsson has chosen not to utilise its sports betting licence and recently decided to apply for one slots licence (Rizk brand) when it originally hoped to secure three.
Daly confirmed his intentions to focus on the UK and Italy in Europe but did not rule out future growth for Germany.
He continued: “We are focussing on the UK and Italy, but we are by no means saying that Germany won’t grow into a very significant market for us some day.
“It is just over the next 12 months we don’t see that [growth happening], particularly with the other things going on in Europe outside of the gambling industry.
“We are being cautious on Germany, we are keeping our teams in place and working on our products, but we don’t have the greatest of expectations that it blossoms as a market over the next six to 12 months,” Daly concluded.