Betsson: Norway, Turkey and keeping the faith
Betsson's exposure in the Turkish and Norwegian markets is huge, says Dawid Myslinski of Swedish invstment analysts Redeye, who assesses the threats...
ANY investor with any knowledge of Swedish operator Betsson knows about their exposure in the Turkish and Norwegian markets.
The markets are potential threats, since they are not part of the EC and hence legislation prohibiting online gambling is rather clear.
Judging by CEO Pontus Lindwall’s statement that Norway is one of Betsson’s three biggest markets and by figures in Betsson’s latest quarterly statement, my estimate is that the markets combined account for more than one third of the company’s turnover. So how likely is a crackdown in those markets, and what would the damage of them to Betsson be?
These questions are difficult to answer without full inside insight in the company. Lindwall told investors at the latest report presentation that the company has technical “work arounds” (for instance alternative payment methods) to handle a Norwegian blocking of payments, and does not anticipate a big impact of the Norwegian legislation.
He also stressed that not all payments will be affected and that customers who want to play will find ways to place their bets with Betsson.
And when Turkey legislated against online gambling in the second quarter of 2007, Betsson initially lost a lot of active clients, only to bounce back to new highs around the end of 2007. This may be due to Betsson becoming embroiled in the guerilla war that other operators are fighting, constantly seeking to stay one step-ahead of the authorities in the blocking battles.
Since we cannot ourselves properly asses the risks involved with Norway and Turkey, we have to rely on somebody else. Betsson’s historical top line growth from 2005 through 2009 amounts to more than 700% and probably outperforms the industry as a whole during any quarter in that period.
All that growth has been achieved organically. And the management has, to my knowledge, a flawless track record of keeping things going according to plan. And all that is what I base my final conclusion on: put your trust in Pontus.
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