Follow the leader: How important is hands-on gambling experience for CEOs?

So, are you a gambling man?” It’s a familiar topic of small talk for any­one who’s ever trudged the halls of ICE and Betting on Sports, but increasingly it feels that as the industry matures, the answer is becoming more and more “not really”.

In many ways it’s a logical progression. The industry has long struggled to attract the very best graduates and tech talent, and operators are increasingly marketing themselves as tech companies
rather than casinos and bookies. The ongoing consolidation in the sector has also seen the creation of giant public companies with armies of shareholders to answer to. In this context, an MBA and a polished conference call manner are arguably more important than understanding why you should hit a soft 16 against a dealer’s 10, or why punters are piling into an eight-runner handicap.

The obvious follow-up question then is: does it actually matter? Does it matter if the industry’s top execs are businessmen rather than punters? Does having a bit of a gamble ultimately make you a better gaming exec or is it simply superfluous?

One in a million

The first thing to note is the industry is unique enough that it doesn’t lend itself to hire-in execs or career CEOs, while ‘lifers’ have an inherent knowledge advantage.

“It’s a very specific industry and there are best-of-breed corporate CEOs who would struggle in the sector and indeed have struggled in the sector,” notes one leisure industry analyst at an institutional investor. “There is so much industry-specific knowledge needed, from things like historical payment processing issues to the history of grey markets, down to things like bonus abuse and scalping.”

It isn’t necessarily easy to point to one specific example where some deep-seated knowledge has helped a company, with the benefits sometimes accrued through hundreds of tiny decisions or even by not doing something.

One example might be the new Wager app, covered recently in EGR, that aims to bring friend-to-friend betting into the 21st century. The idea of providing a platform for that kind of transaction is evidently appealing for external investors. The founders raised £500k from a venture capital fund to build out and launch the product, but the concept was roundly dismissed by industry veterans who have seen any number of social betting concepts come and go. Sometimes there’s no substitute for experience.

“Does it matter if the industry’s top execs are businessmen rather than punters? Does having a bit of a gamble ultimately make you a better gaming exec?”

“Let’s face it, gambling is a bizarre part of the consumer universe,” says Dan Waugh, a partner at Regulus Partners and former strategy director at Rank Group.

“You get people coming in and saying ‘this doesn’t look like what I’m used to so I’m going to change it,’ which doesn’t always end well.

“My personal preference is for a leader with a love of the industry and interest in the consumer experience. I want my CEO to get up in the morning and be thinking about gambling and wanting to hear different viewpoints about gambling.

“But that’s a personal preference,” Waugh adds. “You can have people who do that who are also lousy at their jobs. It’s too simplistic to say simply ‘gambler or businessman’.”

Hands on experience

Beyond the broader industry knowledge, personal experience with gambling products can be invaluable for executives in helping them understand the consumer and what they want. Mark Blandford, the CEO of Burlywood Capital, points to bet365 and its executives who understood how important in-play betting could be before just about anybody else did.

“You need to understand the consumer to invest in things like in-play trading or cash-out before it was popular,” Blandford says. “That comes from industry CEOs rather than hired-in guys because they don’t understand how innovations could change the industry.

“The gambling industry as a whole is still very young and entrepreneurial, and to me the mindset of hired-in management is less entrepreneurial. It’s more ‘you won’t get sacked for buying IBM’ which isn’t necessarily good for the long-term health of the industry. As a CEO, there’s a whole stream of decisions and you only make the right one more often than not when you have that innate knowledge.”

Blandford also highlights Sky Bet’s decision to build its tech stack with mobile front-of-mind and GVC’s early adoption of cross-sell between sports and poker as an example of smart executives making smart decisions because of a deep understanding of the industry.

Even on a more granular level, using your own products and those of your competitors can only lead to added insight.

As David Williams, director of public affairs at Rank Group, puts it: “When you sit down with [Rank CEO] John [O’Reilly] and swap notes on the industry, he has considered and wide-ranging views, not because of his role at Rank, but because he has many of those apps on his phone and he uses them week in, week out. He goes to the bookies and plays blackjack in rival casinos, not because he is a CEO but because that’s what he has always done.

Williams adds: “If you have a passion for this industry and you’re a consumer of the products in your spare time, it brings you closer to your customers. Sure, it’s important to retain objectivity, but there is very little downside to bringing your own experiences into the discussion.”

Jack of all trades

There is of course a case to be made for the generalist CEO. As Waugh notes, the industry can at times resemble an “old boys’ club”, and new blood can bring innovation in its own ways. And as long as a CEO is willing to delegate and appoints well, others in the management team can plug the knowledge gap as the newcomer gets to grips with the industry’s nuances.

“A long time ago, in another industry, I worked for one of the stupidest people I’ve ever met, but he was a good CEO because he recognised his weaknesses and brought in smart people to make up for those shortfalls,” Waugh recalls. “People who are obsessed with their own performance might end up doing badly because it’s about the performance of the business and motivating others to perform. Some of the best leaders just have the ability to unlock things in others.”

Former Gala Coral CEO Carl Leaver was identified by several sources as an excellent gambling exec who “couldn’t tell you if 15/8 was shorter than 9/4”.

“Carl was the best CEO I’ve ever come across,” says the investment analyst. “He just had a forensic knowledge of his brief. I’ve heard they had a saying at Lads Coral of being ‘Leavered’, essentially being dragged over the coals over your brief.

“I spoke to him around the Triennial Review and most people at the time talked about: ‘oh you’ll push people offshore’, in a way that was a bit fluffy, a bit tabloidy.

“But you spoke to Carl and he knew average spin time, average loss per session, incidence of problem gambling. He had the whole brief nailed. If the government were on the receiving end of his speech, it was a defence of undeniable quality. I would say if the industry is looking to evolve, it needs to attract more Carl Leavers.”

The middle ground

There is, of course, a middle ground; a businessman who makes it a priority to use and understand his own products. One well respected CEO tells EGR it is “definitely preferable” for an exec to use betting and gaming products, adding: “It’s not absolutely critical if you are a hands-off leader that has a strong team and a different style to me, but I think it’s definitely preferable.”

He adds: “I was an occasional punter but I became more active due to my job and made a deliberate attempt to use the products and understand the customer experience.”

Former Sky Betting & Gaming CEO Richard Flint was named the number one chief executive in the UK by Glassdoor in 2018

That middle ground also might describe someone like Richard Flint who built Sky Bet from the ground up and was named the number one CEO in the UK in 2018 by employer review site Glassdoor.

“What Richard proves is that [the intricacies of the sector] can be learnt in time but the odds are stacked against people who come in from the outside,” says Blandford. “He’s been here a long time and is a super smart guy who purposefully got under the skin of the industry and the psychology of the end user. A lot of external CEOs don’t last long enough to gain that kind of experience.”

Poker face

The debate is summed up quite neatly by a recent GVC investor call, where Kenny Alexander turned up with less sleep than is perhaps advisable when dealing with people who have millions of pounds invested in you. “I was playing in a poker tournament last night,” he explained, jokingly flashing a wad of cash in a Ritz casino envelope to prove it.

How you view that one instance is perhaps telling of how you answer the question as to the importance of being a gambler when running a gambling business. In an article for EGR at the time, industry analyst Alun Bowden highlighted Kenny’s hands-on experience as a positive for the business.

“The most obvious answer to GVC’s success is its management,” Bowden wrote. “CEO Kenny Alexander is rightly lauded as a focused operator who knows how to drive value and who understands the business inside out. He’s a gambler as well as an executive, as his comment at the analyst call bore out in humorous fashion.”

“Gambling is a bizarre part of the consumer universe. You get people coming in and saying ‘this doesn’t look like what I’m used to so I’m going to change it,’ which doesn’t always end well”

Others were less impressed. The aforementioned financial analyst also brought up that call when asked about leadership, adding: “I’m not sure that’s conduct becoming of a gambling CEO. Or any CEO for that matter. Other people might view that as constructive industry knowledge, and I’ll grant that. But I would ask you this: who would you trust with your piggy bank, Richard Flint or Kenny Alexander?”

Ultimately, the choice between a ‘businessman’ and a ‘gambler’ as your CEO could come down to your tolerance for risk and your desire for big returns at the cost of greater downside. In other words, it could come down to whether you’re a gambler.

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