Get on board: shining a light on the critical role played by non-executive directors

“I think people recognise . They want to be successful. They want the best people,” says Holly Gagnon. 

A former CEO of Pearl River Resort and the Seneca Gaming Corporation in the US, Gagnon also spent time at a senior level with Caesars Entertainment and MGM Resorts International prior to PASPA’s fall in 2018. She now sits on the board of Bragg Gaming Group.

And it is an extensive industry CV and years of experience, including teaching at the University of Massachusetts Amherst, that she puts her position on the board down to. 

Gagnon is one of hundreds of directors, both executive and non-executive, who make up the boards of private and public gambling companies. While these figures tend to blend into the background, preferring to keep out of the headlines, there are outliers. 

Outspoken Entain activist investor Ricky Sandler railed so much against the group’s M&A strategy that he was handed a board seat at the start of the year.

Not only that, he was also named on the London-listed operator’s Capital Allocation Committee (CAC), with a strategic review conducted by the CAC concluding that Crystalbet should be put up for sale as the Georgia business was deemed “non-core” to the group.

This example, albeit hyper-specific to Entain’s strategy, is a window into how non-execs and board members can be agents for change.

Kelly Kehn, co-founder of the All-in Diversity Project, has just joined FUNNZ, the company behind the Shotz.com and CasinoFriday brands. Founded in 2020, the business is part of the HappyHour VC incubator, of which Kehn had served as its industry relations partner since June 2022, before departing this summer.

The move marks Kehn’s first industry board position, as she completes a non-executive director diploma via a programme with the Financial Times. 

Speaking to EGR about her thinking behind shifting into the role and explaining her experience, Kehn says the transition had been on her mind for some time. 

She explains: “I’ve been thinking about a non-exec career for a long time for a number of reasons. I’ve been independent enough to impart a wider view and some experience I’ve had to companies that are in their growth phase or have specific needs and could use an independent view.”

Kehn says FUNNZ is at a point in its lifecycle where it “doesn’t need the investment strategy”, adding: “They are now operationally focused. It makes sense for them in their growth to add a non-executive board. I wouldn’t have taken it if I didn’t fully understand the company and the direction they’re going in. It’s got a really strong foundation. They’ve got really strong values.”

In the case of Kehn and FUNNZ, it appears to be a more mutual alignment of strategy, with the board and frontline team working in a symbiotic state.

But boards are there to hold management teams to account. The remit of a board member also extends beyond a monthly meeting. There is an abundance of committees and sub-committees, with legal and regulatory expertise a must to be relied upon by the C-suite. 

Though when non-execs add multiple board positions to their in-tray, the workload can mount up. And while compensation packages can be healthy, there remains the fact that the board is the steering hand of a company, and any such business can live or die by the decisions of a select few.

Pontus Lindwall was reinstated as Betsson AB CEO after a major shareholder revolt

Eyes on, hands off

One doctrine that has been pushed when exploring the role of non-executive directors and board members is that of ‘eyes on, hands off’, keeping a watchful eye on proceedings, interjecting with advice or strategy, but maintaining a distance from the day-to-day operations. After all, too many cooks spoil the broth. 

Of course, there are examples of boards taking decisive action when things aren’t running smoothly. 

Looking back to September 2021, the then-Betsson AB chairman Patrick Svensk tried to sack CEO Pontus Lindwall and replace him with a “next generation of international leader”.

Svensk was ultimately foiled by a major shareholder revolt and uproar among staff. Lindwall was reinstated and Svensk had to resign after investors said they no longer had full confidence in him. 

Lindwall has since overseen successive record quarterly performances, helping to push the operator’s market cap towards SEK16bn (£1.2bn). The drama points to a case of letting the team on the ground get on with the job. 

Gagnon says: “Some board members think it’s their job to run the company. It’s not. It’s eyes on, it’s strategy, it’s working with the CEO. Day-to-day operations are not the board’s role, and I think that’s what ‘eyes on, hands off’ means. 

“There’s a lot of responsibility with being a director. It’s a serious role and I think people may have a misunderstanding about it because they may see just slivers of a board. There’s a lot of responsibility and a lot of work. I don’t think it’s a place for someone who doesn’t have something to offer.”

The requirements and responsibilities of boards will also vary depending on the size of each company, especially regarding what stage of growth a business finds itself in. 

Asked how she views the role of a non-executive director at a smaller business, Kehn says: “I think it’s about accountability. It’s making sure you have independent directors who have the best interest of the company at heart.

“It’s also someone who can remain accountable, has an understanding of that particular industry and how you’re navigating it.”

External experts

Boards tend to be incredibly diverse, with firms searching far and wide across multiple sectors to bring in the best possible talent. 

Take Flutter Entertainment, for example, which recently added ex-Walt Disney Company CFO Christine McCarthy and ex-Liberty Media CEO Robert Bennett to its board. The two execs have been chosen as Flutter shifted its primary listing to the US and the company’s core focus turns to FanDuel.

The pair have joined an existing board featuring execs drafted in from other sectors, including telecoms and private equity. 

It is a bag of mixed experience which, for Gagnon, is a benefit to any firm’s potential success. She points out: “Everything is about complementary skillsets. You could become very myopic if you’re just all gaming and only seeing things done one way. I think it’s great to invite new eyes, new voices, to the composition of a board.”

Another more recent example of non-frontline gaming experience being brought in was the addition of former Barclays head Michael Hartmeier to the Boyd Gaming board in June.

Coverage of his appointment was littered with his core experience around M&A, with reports suggesting Boyd could be looking at acquiring PENN Entertainment’s land-based casino assets via a dual approach, with Flutter purchasing the digital arm, including ESPN Bet.

While Hartmeier boasts extensive involvement with the gaming sector, albeit in adjunction, the lack of B2C experience was also of note. 

There is a point to be made regarding the dilution of igaming boards away from their core competencies, leading to potential strategic shifts into other business avenues. However, Gagnon stresses that balance is key. 

“If you have everyone on the board who doesn’t understand the business, is that good? No. I do think with the amount of M&A work that’s involved in these companies, there probably is value in having someone who’s seen things done in other companies,” she explains. 

“Maybe the commonality is, have you been involved with other companies at this stage of growth? Gaming might not be the only commonality you might be looking for to complement the rest of the board. You’re learning from each other, but you’re also focused on the value of the company and driving that shareholder value.”

For Kehn, who is in the early stages of her board career, the chance to lend her expertise to a company outside of the sector is an appealing one.

While she draws the line at holding several board positions at any one time, the former HappyHour head suggests the multifaceted nature of igaming makes it a perfect bedfellow for other industries. 

“Gaming has a lot to offer other industries, particularly with the heavy regulation and compliance. In gaming, we know a lot more than we give ourselves credit for,” she says. 

“There’s a real opportunity to go outside of gaming. I don’t think I’d even pitch my experience as gaming. It’s more about being part of a tech industry as an early adopter and understanding the issues and risks that come along with it.”

Kelly Kehn suggests igaming experience could translate well to boards in other industries

Handle the noise

Eminence Capital CEO Sandler was given an Entain board seat in January after he penned an open letter the previous summer slamming the company’s M&A approach – namely its move for STS, Poland’s market leader, in a deal worth £750m. It was a case of a major shareholder making his grievances known, and Entain then bringing him into the fold. 

For one Entain shareholder, who made clear their displeasure with a lack of progress in the US with the BetMGM JV, Sandler’s arrival was a key moment.

They say: “If you’re working on anything, isn’t the point to make it better? First, do no harm; two, make it better. And I feel like sometimes, the ‘do no harm’ becomes the entire focus of the board. That’s where I think somebody like Ricky Sandler stepping in is a really good change agent. It’s an indication we want to have a change of voice on the board.”

The shareholder also makes the opposite case that Gagnon and Kehn note: that the board must also be held accountable for actions taken. Ultimately, the source argues, the shareholders are the ones that have the most to lose from misdirection.

With Entain now under new leadership in the form of Gavin Isaacs as CEO and Stella David replacing Barry Gibson as chair from October, there is new optimism. A return to growth has come in Brazil ahead of the market’s regulation while product development and Angstrom Sports-powered markets in the US are being praised. 

However, on Entain’s board of 10, sans Gibson, Sandler has been the most active advocate for change. The numbers are, evidently, not in his favour. But the hope is a culture shift from inside the company can drag it forwards. 

The Entain shareholder continues: “I’m sure there are plenty of very good people on board. But I do think what these boards need, like every business, is someone advocating, who’s got a perspective on the industry, who’s got a mindset of ‘how do we create value?’ And the boards need to be open to that. It’s not just adding another person who used to in compliance to the board.”

Reflecting on her time on the frontline as a CEO, Gagnon lifts the lid on the reality of dealing with a board. She notes that the combination of having amassed a wealth of experience at the top level of the US casino sector meant she developed an understanding of how to manage the relationship, as well as better shaping the director role she holds today.

Gagnon claims it wasn’t a case of coming to blows in the boardroom in the past, and that the best option can be letting bygones be bygones. 

She explains: “It makes me better in this role because I understand what it’s like to be a CEO. Sometimes there are inexperienced board members who want to micromanage, but I’m the CEO – you give me the objectives and I deliver. 

“There’s always the agree to disagree option. I do think people leave companies if they feel they’re not aligned with their board, so they choose other options. That’s probably the right thing to do when that happens.”

While walking away is a choice, vested interests also require appropriate action. Benevolence and altruism may come second when the prospect of shareholder value is on a slippery slope.

Activism will continue abound; one only has to look at PENN Entertainment as a recent example, with two open shareholder letters this year slamming the operational direction of the company. 

The question then is how the business looks to quell the noise – by inviting a dissident in from the outside or ploughing ahead on a determined course? Those on boards across the sector will be hoping they have the answer.