Switch it up: how Sisal has rolled out the welcome mat for customers shifting to online

Who would have known that the 75-year-old Italian gaming company Sisal shares some common ground with EGR after being founded on the dream and intuition of three sports journalists? Massimo Della Pergola, Fabio Jegher and Geo Molo had a vision to give new life to Italian sport and with a total capital of 900,000 lira, Sport Italia srl SISAL came to fruition in Milan in 1946. It was also the first Italian company to operate in the gaming and betting industry as a government licensee.

And it is that wealth of history and experience that has helped Sisal to navigate the challenges of the Covid-19 pandemic in 2020 and beyond. Today, with over 39,000 retail points in Italy alone, the Covid-19 lockdowns last year hit Sisal’s retail business hard. “The dark side of this situation is the fact the retail business suffered last year, with five months of shop closures,” explains Marco Tiso, Sisal’s online managing director. Even at the time of writing, Sisal’s retail venues remain closed, apart from its point-of-sales lottery shops which could stay open during lockdown periods.

The retail shutdown also enabled Sisal to create a new culture within the business by educating its retail personnel who had never dealt with the online business before. “Our retail staff started learning about the digital business and how it works. They helped us a lot in promoting the online business, both with our online customers and through our retail lottery point-of-sale which could stay open,” says Tiso.

In 2019, Sisal’s online division accounted for around 25% of the overall company’s gaming business, while in Italy alone the digital side made up 10% of the overall market. The firm’s online business accounted for about 20% of the overall GGR in Italy during 2020, while for the first time ever the online arm matched the volumes of the retail side.

During the international sports shutdown, like most operators, Sisal saw a shift to other verticals like poker, bingo and casino games. However, Tiso points out online sports betting customers prefer skill-based games rather than casual games, which meant they shifted their play to skill-based games like poker rather than lottery, bingo or casino. Sisal’s sports betting customers also switched to betting on niche sports like table tennis rather than virtual sports.

In a severe blow to the Italian gambling sector during what was already a difficult time, the government approved a new 0.5% emergency tax on sports betting turnover in May 2020 to run until 31 December 2021. Tiso referred to the move as “unbelievable”. “We had the retail business completely closed, that’s 80% of our overall gambling business, but still the government decided to apply a new tax on gambling,” he explains.

Tiso tells EGR Intel that several gambling companies attempted to engage in dialogue with the government but to no avail. One of their suggestions was to plug the revenue gap felt by the country’s sports teams by reopening sponsorship involving gambling companies but the government instead opted for a new tax.

He went on to say: “Even the fact that the tax is on turnover, and not on GGR, is really critical. I’ve read that Betfair decided to stop accepting VIP customers here in Italy because they cannot cover the tax on turnover for this reason, so it’s an unsustainable tax. And even on 1 January 2020, we also had another increase of taxes on retail slot machines, even though the slot machines are closed.”

Shifting sands

Despite the doom and gloom for retail, Sisal’s digital business performed well in 2020 and secured its position as the leader in terms of market share on GGR, according to Tiso. The Italian online betting rankings also saw a shift in power in November 2020 when bet365 was knocked off the top spot for the first time in more than a year by Entain-owned Eurobet as retail operators successfully migrated land-based customers to their online offerings during the pandemic.

In November 2020, Sisal took the second spot with GGR of €14.9m and clung to second spot again with €22m in December, behind Goldbet. Commenting on this disruption to the status quo, Tiso remarks: “It’s true that online operators like bet365 lost market share during 2020 but they grew their revenue while at Sisal we gained market share but lost revenue.

“What happened is that the omni-channel operators like Sisal, SNAI and others had the opportunity to shift part of the retail customer base to online. We still don’t know if these customers who shifted online will stay in the online channel after lockdown or if they will go back to retail,” he replies.

Sisal’s omni-channel strategy has played a fundamental role in this successful migration as its retail workforce is now trained and engaged with managing online customers. Tiso explains: “Our systems are already developed in order to guarantee the same experience for online and retail customers. So, you have exactly the same experience if you play online or if you play retail. And we also developed an omni-channel loyalty programme for customers to gain points on the same programme, whether you play online or via retail.”

Back in July 2019, the country’s gambling industry was shaken up by the approval of a legislative Dignity Decree, which entailed a broad gambling ban, outlawing all forms of advertising of gambling products and services across all media outlets. The ban covers TV, radio and the internet, as well as during sporting, cultural and entertainment events, while gambling sponsorships in football are also prohibited.

Sisal’s online MD feels that the ad ban has been “half-half” a success and failure. He acknowledges that at the beginning the ad ban was able to reduce the excess of gambling advertising that was present. However, on the flip side, it has meant regulated operators haven’t been able to secure visibility and it is hard for customers to distinguish between legal or illegal brands. “The only way to look for gambling is on Google, and Google lists the operators according to SEO, but the SEO doesn’t distinguish between legal or illegal operators,” adds Tiso.

Luck of the draw

Meanwhile, Sisal has been making significant strides in the lottery side of the business. But one way in which Tiso believes the operator can make a real impact in the vertical is through the use of digital technologies. “I think that virtual reality, social media and augmented reality, all these types of new technology, can really rejuvenate the traditional lottery experience.”

One of the ways Sisal is looking at reinvigorating the online lottery product is by creating an emotional and warm experience for its customers. “Our ambition is to evolve the online business from a lonely experience to a social one, and especially for lottery this is very, very important. So, you can create a syndicate with friends. If you are able to create the social experience in the online experience, then you can also try to fight against problem gambling,” he remarks.

Sisal’s lottery footprint includes its running of lottery concessions in Morocco and Turkey. Its first foray outside of Italy was its 10-year concession to operate Morocco’s national lottery in 2018. Tiso says: “We decided to take our first steps outside Italy with Morocco and it was the right balance between a big challenge and a relatively limited market.”

For Sisal, which jumped up the EGR Power 50 rankings from 34th place in 2019 to 26th last year, Africa is a region it wants to analyse and Tiso believes there will be great opportunities on the continent in the coming years.

Following the Morocco deal, in August 2019 Sisal-Sans, a joint venture between Turkish Demirören Holding’s Şans and Sisal, signed a deal for the operating rights to Turkey’s national lottery for a 10-year period. Just a year later, despite both Italy and Turkey being in full Covid-19 lockdowns, the new lottery licence was officially launched. “We have a lot of experience and we are really creating a new way of playing lotteries in Turkey. Demirören has a deep knowledge of the Turkish market and culture and this is absolutely fundamental for us. We discussed a lot with Demirören if the way we were going to implement the lotteries is in line or not with Turkish culture, because we have to respect their culture and their way of seeing the lotteries market,” comments Tiso.

With a wealth of lottery experience behind it, would Sisal consider bidding for the UK National Lottery licence which is currently up for tender? “As our CEO said, we are looking with interest at all lottery tenders coming in the next year like the UK and Germany,” Tiso replies.

One of Sisal’s key ambitions is to expand its business into international regulated markets. Tiso tells EGR that “the UK and Germany represent today the biggest opportunity”. Prior to the pandemic, the company had made plans to open a new office in Ceuta, an autonomous Spanish city on the north coast of Africa, to aid its expansion in Spain. While the plans have been delayed, a new Ceuta office remains on the cards. “We still plan to open an office in Ceuta but the Covid situation has slowed the process. We’ve selected our country manager and started creating the team. As soon as we are able to travel, we will physically open the office. We plan to do that in the first half of this year,” says Tiso.

On Sisal’s corporate website, one of the sections that clearly holds a great deal of importance for the firm is sustainability and responsible gambling. For Tiso, it is crucial for Sisal to “create a sustainable and acceptable business for the society where we act”. The Milan-headquartered operator wants to move from a compliance to a commitment approach.

“We started a strong commitment to developing an effective responsible gaming programme and we want to set the standard for the future of the industry. We are deeply investing in terms of the organisation, people and process and in tech solutions like artificial intelligence to prevent problem gambling. This year will represent a step-change in terms of developing our responsible gaming programme,” he reveals.

Looking ahead, Sisal sees significant growth opportunities in developing its international and digital business. While the firm will eventually evaluate M&A opportunities, it is not in the current plans. However, with the Italian market expected to consolidate in the next few years, you never can say never.