888 CEO on the success of its casino platform, US growth and the challenges of poker

The financial results season is nearly upon us. And first up with a full-year trading update was 888– although no official figures were released.

Earlier this week, CEO Itai Pazner confirmed to shareholders that he and the board remained confident the company would achieve an adjusted EBITDA outcome for the period in line with expectations. Pazner highlighted the “continued success” of the group’s Orbit platform as well as good revenue growth in sports betting.

Reflecting on the figures for 2019, Pazner spoke to EGR Intel.

EGR Intel: What would you attribute 888’s record December revenues to?

Itai Pazner (IP): There was good momentum in December due to the factors we mentioned in the trading update. However, we will disclose much more information at our annual results. The big things that worked for us in 2019 were casino, sports, the UK and other European regulated markets. We saw quite a big increase in first-time depositors reaching a record of one million. This is

a significant increase on the previous year and first-time depositors drive revenue cycle starts. So, the more we recruit during the year, the greater impact on deposits and revenue. This led to the positive results in December. In addition, December and January are [usually] pretty good months for us.

EGR Intel: How is development of the new Poker 8 platform progressing?

IP:  We have only launched the first part of Poker 8, which is the layout of the poker table. The full Poker 8 product is planned to be launched later this year and hopefully we’ll see a greater impact on the numbers. A lot of the product experiences we have implemented in Orbit will be rolled out on Poker 8.

EGR Intel: Are there any transferrable lessons learned from the success of the Orbit casino platform that you can apply to Poker 8?

IP: The Orbit platform is what I call a living organism; something which is developing and evolving all the time. Alongside the in-house developed games, which are some of the highest ranked games on our platform, we had the biggest influx of the best third-party providers and games on the platform. We’re reaching just over 1,000 games on the casino platform in the UK and we’re quite selective when it comes to choosing the best providers.

We have the best third-party games and all our in-house developed games on our platform which allows us to offer customers a huge range and choice supported by our AI algorithms . In Q4, we added daily jackpots and are planning to add more gamification and engagement tools to the platform over the coming year. Orbit is evolving and developing all the time through product enhancements and innovations. This reflects our ultimate goal of becoming the best online casino site in the world.

EGR Intel: Can you provide any more information on the “exciting new product features” slated for Poker 8 and when these will launch?

IP: The features which will be launched during the second phase of the Poker 8 development will include a [new] lobby, variations on the game [of poker], AI recommendations of tables, in addition to a smooth consumer flow. Poker 8 is a very big update for us.

EGR Intel: In terms of sports betting, has the BetBright platform 888 acquired last year now been fully integrated into 888sport?

IP: Having bought BetBright at the beginning of last year, we’re working on the final stages of product development and integration into our backend systems to launch our sports betting platform. The process has gone better than expected and we plan to launch in Q1 or early Q2 at the very latest.

888 CEO Itai Pazner

EGR Intel: How are you planning to build on the encouraging performance of the group’s shared liquidity network in Southern Europe, which launched in July?

IP: In poker, liquidity is king. Apart from the product enhancements that we’re undertaking, we are continuously looking to add more liquidity pools into the different poker networks. At the moment we have the dot.com network, the European shared liquidity network and the US network. Italy may join the European shared liquid network and France is a market that we may enter. We will launch in Pennsylvania this year on the US network with Caesars and the World Series of Poker brand, before the famous WSOP event this year.

In poker, you can have the best product in the world but without liquidity you will not be successful, so you ideally need to do both side by side and I think we have a great product

EGR Intel: You previously mentioned good momentum within European markets, so what strategies are you deploying to maintain this going forward?

IP: We are seeing good results in almost every regulated European market in which we are operating. Managing player safety, working closely with regulators and delivering product excellence to create a smooth customer experience ultimately creates more value. Having initiated this strategy and focus in the UK first, it is now being introduced to other markets. We are focusing on casino and sports as our premier growth engines, in addition to poker. Poker is a product which needs help with returning to growth and we are addressing this with the Poker 8 rollout.

EGR Intel: What are your impressions of the US sports betting market? Are you looking to expand your operations to further states?

IP: The US is evolving quickly with more and more markets opening up with sports betting and  igaming. We are planning to launch into more markets in the US, where we can enter with sports betting and then potentially incorporate igaming as the regulatory situation develops. We will launch in Pennsylvania during the early part of this year, but we’re also looking at other markets. Sports betting is going to be a very important theme in the US market and was one of the reasons we acquired a sports betting platform in BetBright. We are planning on taking our proprietary platform into other US markets with the aim of building up our market share. However, we think igaming will also be a very important theme and will follow the trend of sports betting.

EGR Intel: How would you assess the performance of the group’s operations in New Jersey?

IP: We have casino, sports and poker in New Jersey and sport is working well through Kambi’s platform.

EGR Intel: How important to 888’s ongoing US strategy is it to employ local experts and what do these recruits bring to the table?

IP: We are recruiting a Global Head of Sport but we are also bringing on more local people to support on local market and product experience, and help our US expansion. The acquisition of BetBright brought us a very strong pool of talent and sports betting DNA. We are shifting from a gaming-first business, as a result of our heritage, to a more balanced gaming provider with sport. With BetBright,  we have depth of knowledge in sports betting, trading, risk management which are all extremely important to anyone who wants to run a big-scale sportsbook.

EGR Intel: How concerned are you about the impact of potential advertising restrictions in Spain on your operations in the country?

IP: We’re always concerned about limitations in any market in whcih we operate in. Although we don’t support the move, we’re still managing to be relatively successful in Italy despite the ban. Italy is still a growth market for us. When competition and restrictions are even between operators, we have the advantage of being a solely digital operator. We have online and SEO assets that have helped us compared to some of the other operators who have used more above-the-line assets such as TV ads and sports sponsorships as the basis of their marketing. We’re leaning more on the digital marketing side and we believe that in the short to medium term we have an advantage. We don’t support advertising restrictions in Spain but we do know how to operate under those conditions.