Game of thrones: How will Kenny Alexander's remarkable reign at GVC be remembered?

So, that’s it then. Kenny Alexander, the wheeling and dealing, no-nonsense boss of FSTE 100 operator GVC Holdings has left the online gambling sector. The 51-year-old Scot announced his surprise retirement during a whirlwind 24 hours for GVC as the firm published its H1 2020 financial results in the aftermath of the coronavirus-enforced lockdowns.

Chief operating officer Shay Segev was confirmed as his immediate successor, giving Alexander just one day to say cheerio and pack up his desk. There was no handing over period, no departure ceremony, and much like the mercurial David Silva playing out his final Premier League minutes for Manchester City in an entirely empty stadium, this also felt like a bit of a damp squib.

An all-time great had gone, only without the goodbye. His legacy was scrutinised in the days following. The nationals called him “buccaneering” and “the roll-up king” as they cast a fine toothcomb over his timeline in the top job. He helped grow GVC from an AIM-listed business with one German-facing casino brand and a market cap of £27m to a global gambling behemoth with annual revenue of £3.6bn and the owner of Ladbrokes Coral.

Mark Blandford is the man responsible for bringing Alexander to GVC, or Sportingbet PLC as it was known back at the turn of the millennium. Blandford, himself a hugely successful gambling industry investor and the current chairman of sportsbook supplier FSB Tech, was executive director at the time and on the hunt for a new financial controller.

“Kenny applied to Sportingbet to be a sports trader, but I needed a financial controller and got him down to Alderney where we operated from and persuaded him to join,” Blandford recalls. “It was quickly apparent that he had a huge knowledge of the industry and that includes understanding the psyche of end users, which is always important. He was much more commercial than a pure financial accountant, and that enabled him to quickly grasp the key KPIs needed to manage the business, other than just financial metrics,” he adds.

The pair – famed for their dry sense of humour – got along so well they ended up sharing a London flat together when GVC moved its head office down to the capital. Blandford worked alongside Alexander for seven years, overseeing his transformation from financial controller to head of the European business, with full responsibility for profit and loss.

Was he shocked by Kenny’s decision to step down? “Yes, it was a real surprise,” says Blandford. “GVC has been doing well and I imagined the company would do whatever they needed to retain him.”

Kenny Alexander

And GVC certainly has been doing well – very well indeed. Online net gaming revenue for Q2 2020 increased by 23% on a constant currency basis to mark a hugely impressive 18 consecutive quarters of double-digit digital growth for the business. Online sports revenue dropped just 4% in the quarter, despite a lack of top-tier markets and competitions due to Covid-19 cancellations.

“Given the extraordinary circumstances in which the group is currently operating, delivering double-digit online net gaming revenue growth in all of our major territories is a very strong performance,” said Alexander. “It is quite a clear testament to the strength and diversification of our business model, the quality of our technology, the enduring appeal of our brands, and the talent, commitment and professionalism of our people.”

Magic wand

One of Alexander’s major strengths is to identify floundering businesses and take them over, transforming each department from the inside out until it begins to reach its full potential. Ladbrokes Coral was grossly underperforming from a digital perspective prior to GVC’s takeover, especially considering its brand power and market share, and the turnaround since has been more than reflected by the numbers pumped out on results days.

Blandford believes Alexander’s ability to deliver consistent bottom-line growth, all the while purchasing, integrating and migrating businesses of huge technological scale, is a rare and priceless ability which has seen him earn the support of a financial fan club among City analysts.

“As CEO, he shaped the strategy alongside former chairman Lee Feldman and executed on it to great effect,” says Blandford. “Along the way, investors were rewarded as the share price rose ten-fold, as well as paying consistently high dividends, particularly in the early years. Kenny earned his spurs as a public company CEO and the City backed him on an ambitious acquisition streak. There is an old City saying that any fool can buy things, but a clever man makes them work as one.”

The market’s immediate reaction to Alexander’s exit saw GVC’s share price fall almost 10%, although it was blurred slightly by the Q2 results being announced at the same time. “That’s recovered a bit now but it’s the City’s way of saying the company had a CEO they believed in,” Blandford tells EGR Intel. “I’m sure if Kenny ever gets involved in a public company again, his City fan club will come out and support him.”

But was Alexander’s City fan club as surprised by his decision to quit as Blandford? Non-stop back trouble and a weekly commute from Scotland to London made it common knowledge that he couldn’t go on forever, while Segev had long been touted as his eventual successor after joining the business in 2016. But the market had regained trust in Alexander following 2019’s impulsive share sale which saw him cash out £13.7m of company stock in cahoots with then-chairman Feldman. The stock plummeted by 16% on that occasion and investors were spooked to say the least.

In the aftermath, the Scot bought back the majority of those shares and insisted he was committed to GVC for at least three more years, because he was eager to see how the operator’s joint venture (JV) with MGM Resorts (Roar Digital) played out in the US. But fast-forward 16 months, and ‘King Kenny’ was out.

“I think it did come as a surprise,” says Bixteth Partners’ Simon French. “He has given some very upbeat conference calls on upping investment into the US, and first-quarter trading and the tone in those calls was very positive. There was no indication there and nothing to suggest that he was considering stepping down any time soon.”

French’s reaction was echoed by another analyst, speaking to EGR Intel on the condition of anonymity. “It was a big surprise given all the announcements he’s made over the last 12 months, ever since he bought back the shares and said he was in it for the long term. It was a shock. My expectation was that he wanted to stay to make a success of the US as that was one of his big things, but obviously something happened over the lockdown period which made him change his mind.”

A family affair

According to Alexander, what happened was the coronavirus lockdown. He abandoned the capital and GVC’s head office in the shadow of St Paul’s Cathedral as the company switched to homeworking, which allowed him to spend more time in his native Scotland without a horror commute.

“This is something I’ve been thinking about for quite some time,” Alexander told investors. “My family is in Scotland and I come down to London every week between Monday and Friday, which I have been doing now for a long, long time. I am going to go back to Scotland to spend time with them, rather than doing this crazy commute which I’ve been doing for 20 years.”

Alexander finally traded his place in the rat race for a simpler life. His daughter is off to university in September, which may have been a contributing factor, although those who know Alexander best might suggest family is in fact code for stud farm. The horses, along with poker, are the gregarious Scot’s biggest passions in gambling and one of his horses, Honeysuckle, landed the Mares Hurdle at this year’s Cheltenham Festival after an accomplished ride from Rachael Blackmore.

Has the City taken Alexander at his word, or should his family-man image be swallowed with a pinch of salt?

“Anyone who has spent the last four months outside of London in pleasant surroundings can understand the attraction of not having to work day in, day out in the capital, let alone doing a weekly commute from Scotland,” says Bixteth Partners’ French. “I think the benefits of stepping away from that kind of commitment both physically and mentally would be apparent to anybody.”

French singles out the migration of the Ladbrokes Coral brands onto GVC’s proprietary platform (completed in May) as another potential factor. “From a to-do list, maybe that felt like an appropriate time to step aside. Shay has been there a number of years waiting in the wings to take over, Rob Wood has bedded in as CFO and Barry Gibson has bedded in as chairman, so it’s easy to see why it might have seemed like a natural time to step aside.”

Others, though, aren’t as convinced, including our off-the-record analyst: “It is difficult, taking on face value, that he needs to spend more time with family, and I am not overly sure whether to believe that. Leaving on the very next day also seems strange. If you’ve built up a company for 13 years and want to leave then fine, but don’t just throw it all away, especially if you think the share price may go down. If you built up a business for that long, you must have some emotional attachment to it.”

With phenomenal foresight, he adds: “I don’t know if it is something to do with old skeletons in the closet resurfacing – maybe he just wanted to get out ahead of time.”

Analysts are paid to predict the future, and this one had more than earned his stripes. Just two working days after Alexander’s departure, a bombshell of an RNS feed alert ricocheted into the inbox of investors: Turkey was back on the menu. The news filtered through on Monday morning that HMRC had widened the scope of its ongoing investigation into GVC’s former Turkish-facing online gambling business. The operator was now being asked to assist with HMRC’s case and was being investigated for “potential corporate offending” by an entity or entities within GVC itself. Previously, the investigation had only focused on former third-party payments suppliers in the grey market.

According to the London-listed operator, HMRC did not provide details of the nature of the historic conduct being investigated, except for a reference to Section 7 of the Bribery Act 2010. The non-ministerial government tax department also failed to clarify which part of the GVC group was under investigation. GVC disposed of its Turkish-facing business in December 2017, but the firm’s share price still fell by more than 8% in wake of the update.

The plot thickened in July when The Times speculated that GVC’s disposal of its former Turkish-facing payments processer, Kalixa, was facilitated by Wirecard, the now-disgraced German banking giant at the centre of a €1.9bn fraud scandal. GVC’s share price slid a further 5% as Alexander’s stocks-led retirement kitty took one hell of a battering. GVC addressed the speculation by insisting there was no evidence to support the story. Very few concrete facts have emerged surrounding HMRC’s Turkey investigation. All we have is confirmation that Alexander’s reign is no more.

Tough at the top

Alexander’s exit was met with equal parts dismay and surprise from the City, but what about those who worked under him at GVC? “I think it’s a good thing because it gives GVC a chance to clear the cobwebs of the past away,” says one former GVC staffer, now working elsewhere in the industry.

“The old guard was very much Kenny’s way or the highway. He made all the big decisions and he was the driving force along with Feldman. They made the big calls and everybody else was responsible for implementing them. They surrounded themselves with implementers instead of doers, except for Shay who was brought in to be able to do both.”

The ex-employee describes Segev as “absolutely brilliant” and reveals he has been running up to 80% of the business behind the scenes for almost a year now, a claim backed up by the Israeli himself on a recent conference call. Segev’s remit rapidly expanded to include the US JV and the UK retail team, and as he rose through the ranks, speculation mounted that Segev had been appointed as part of Alexander’s succession plan all along.

But the erstwhile GVC exec disagrees, insisting Segev’s hiring was purely for technological reasons – at the time, at least. When he came aboard, Sportingbet had a very small system run on a shoestring budget, but the acquisition of bwin.party meant GVC was taking on a huge piece of technology that needed expertise and experience in droves. GVC’s recent track record of integrating acquired businesses proves Segev’s hire was a masterstroke.

The source says: “It is such a big company now that you need a more credible and more encompassing senior management team and I think they were always going to struggle while Kenny was there to bring people in or promote quality from within who weren’t necessarily just ‘yes men’.”

And Segev has wasted no time in implementing his own senior management team. On 24 July, CTO Sandeep Tiku stepped up to fill the COO position vacated by Segev. Tiku joined the operator as IT director in 2014 before becoming CTO in 2016, having previously spent 14 years at global digital agency Valtech.

During his time at GVC, Tiku took the lead on key technology and platform programmes across the operator’s proprietary gaming platform, doing a great deal of heavy lifting. His role in the migration of the acquired Ladbrokes Coral business was described as “pivotal”, while the search for a new CTO is already underway. Segev said he was “delighted” to be backing GVC talent after integration director Marc Lange was promoted to chief of staff to the CEO, while retail MD Andy Hicks was bumped up to the senior leadership team.

Shay Segev

The former employee is still in touch with GVC staff in Gibraltar, who are reportedly “really excited” by Segev’s leadership style. GVC would be a shadow of the business it is today without the guidance and tutelage of Alexander. His one-track mind was absolutely determined to make GVC a set-and-forget FTSE 100 company. When GVC fell out of the financial index in March 2019 after the share price dropped on news of FOBT stake cuts, Alexander, ever the punter, bet The Times business reporter Dominic Walsh £10,000 the company would return within a year. Walsh should have taken the bet but swerved a wager on account of Alexander’s dogged demeanour. But sure enough, GVC did return to the FTSE 100, in June 2020, after a 15-month absence.

But did Alexander’s drive and determination ever rub people up the wrong way? “The problem with Kenny was that you were either on the right side of him or the wrong side,” says the source with a grin that masks a grimace. “You might be on the right side, but say something he didn’t like, and you would never find out that you were on the wrong side until you were out the door.” He adds: “He was pretty cutthroat, but he was also a very straight guy who said, ‘this is the way it’s going to be’ and wouldn’t often listen to others. He always believed in the quicker decision and if it was wrong, then change it.”

In business terms, the source concedes that was absolutely the right approach as stalling over a decision costs both time and money, while the bottom line is a constant reminder that Alexander’s ruthless, relentless strategy was vindicated. “He was always right,” said the source. “You are much better off making a fast decision and then correcting it if need be than deliberating for a long time and never even making one.”

New blood

Plenty has been written about Alexander’s departure signalling the end of gamblers as gambling company chief executives. Eilers & Krejcik Gaming’s Alun Bowden described him as “the last of the old school”, while former Sky Betting & Gaming (SBG) CEO Richard Flint called Kenny “the last of the old bookie types” – bosses who were as much punters as they were egaming professionals.

“One of the characters has gone, definitely,” says our off-the-record City source. “In fact, there aren’t many characters left. The industry is going to be less exciting and one of the biggest players within it will also be a less exciting business,” repeats French of Bixteth Partners.

But will Segev’s rule be so vastly different to Alexander’s? The 44-year-old has spent nearly five years under his wing, after all. “I don’t know him very well, other than he is obviously a very good operator,” says the anonymous financial analyst. “He is very shrewd. I don’t want to say he’s the opposite, but he is certainly not like Kenny. He is cut from the same Playtech cloth as Rafi Ashkenazi and Mor Weizer, so very technically focused and very data-driven.”

The data-driven description probably is the polar opposite of Alexander, if our former GVC employee is to be believed. He suggests Alexander never wanted more than a one-page briefing, even on the biggest of projects.

“Even on the budget, he only ever wanted a one-page summary. He wanted to know what went up, what went down and what went across. He worked in a very simplistic way. He knew the detail inside out, but he didn’t want you to tell him the detail. He said, ‘I already know the detail, otherwise I’ll ask for it’.”

We have heard all about cutthroat Kenny, but Segev is no pushover and he will be eager to leave a similarly substantial legacy. He has already made it abundantly clear that the US is his number one priority.

“Non-emotional is maybe a bit harsh, but Segev is certainly a safe pair of hands,” says our off-the-record analyst. “Everyone knew, quite frankly, that in time he was the obvious choice. Even if no one expected Kenny to go quite so soon, I absolutely agree that Segev was a natural successor.”

The king is dead, long live the king.