Rafi Ashkenazi eyed expanding TSG into proprietary payments processing
Ex-Stars Group CEO wanted to cut out payments providers in plan to diversify operator’s online offering
Former The Stars Group (TSG) CEO Rafi Ashkenazi would have diversified the operator into proprietary payments technology had Flutter Entertainment failed to acquire the business.
In an exclusive interview with EGR, Ashkenazi pinpointed proprietary payments processing as one of the “unfinished aims” of his reign at TSG – the other being the conclusion of more media partnerships with broadcasters.
Speaking on the methodology behind expanding into payments, Ashkenazi said: “I believed that being such a big company, processing billions of dollars on an annual basis, we should be able to have our own PSP licence and process our own funds and we should not rely on third-party payments businesses.
“The bigger vision was essentially using the customer base that we managed to build, which was a very loyal customer base, and start diversifying into completely new sectors,” he explained.
“That was a longer-term vision that I had and that’s what we were driving towards, it was about the payments first and the media companies.
“Once we got into a place that we felt comfortable enough executing on those two concepts, I wanted to start moving on to related industries or related sectors and utilise or capitalise on the massive customer base that we built,” he added.
Historically, online gambling operators have outsourced payments processing to external partners, but some have experienced issues when third-party providers encounter technical difficulties or when their software fails to meet compliance standards.
This was highlighted in the 2020 scandal involving now-defunct payments provider Wirecard, which filed for insolvency in June after revelations that €1.9bn (£1.6bn) in funds had gone missing from its accounts.
In addition, the German banking giant was alleged to have engaged in a series of fraudulent accounting activities to inflate its profit, allegations which led to the arrest of CEO Markus Braun and the subsequent disappearance of COO Jan Marsalek, who remains an international fugitive.
Wirecard, which counted several online gambling operators among its client base, allegedly lobbied to become the central payment hub for the German online gambling market in the months before its collapse.
In July, less than one month after Wirecard went under, FTSE 100 operator GVC was forced to deny links between itself and the payments giant over the disposal of its former Turkish-facing payments provider Kailxa to Singapore-based firm Senjo for €29m in 2016.
Newspaper reports at the time linked Senjo with Wirecard Bank AG, with the subsidiary currently under investigation by Singaporean authorities.
GVC issued a denial after the Financial Times linked the ongoing investigation by HMRC to the operator’s historical third-party payments partner used in its former Turkish-facing business.
At the time, speculation caused a 5% drop in GVC’s share price.
Read the full interview with former TSG CEO Rafi Ashkenazi here.