Q&A: Gavin Hamilton, CEO of Red Tiger Gaming

EGR Intel: From a standing start three years ago, Red Tiger Gaming seems to have mushroomed. What’s the secret to your market disruption?  

Gavin Hamilton (GH): The success is invariably the sum of many parts, but I think that the primary factor is simply product. The entire senior management team comes from the sector and we all have many years of hands-on experience running online casinos. We are also all keen slots players, some of us literally take our holidays in Vegas and we all play online a lot. When you are the casino and the player you’ve a great advantage in becoming the software and games supplier as that’s effectively the middle layer.

For as much as we focus on developing great games, we put similar resources behind our games management platform. This enables the casinos to get far more powerful bonus tools from than those available from any other supplier in the market today. The industry has recognised this both with awards and market share as we’ve come to dominate the prime online real-estate on many of the major brands such as William Hill, Paddy Power, Betfair, Unibet, Betsson and many more.

EGR Intel: Do you see big regional differences in the types of games that players enjoy? 

GH: Absolutely. We have expert teams dedicated to the production of engaging games for each of our core markets. As recently as nine months ago we had very little play from Sweden, for example. We hired the right talent, conducted some research and launched our first games designed specifically for that market. It’s fuelled considerable growth and is now our third biggest market globally.

Sensitivity to local tastes is critical to success. We distribute all of our games in 31 languages, but that’s not localisation. Localisation is giving each cohort of players in each market the experience that their custom deserves. This is often quite subtle, but with a material effect on gaming revenue. All elements of each game combine to please players of different backgrounds.

EGR Intel: You mentioned the Red Tiger platform. Are there any big upcoming feature releases there? 

GH: Yes, we are about to launch a new tournament management system that will enable casinos to offer the most expansive range of tournament options of any supplier in the industry. They will be functional across both our own games and Cayetano’s. It’s been developed with the help of a social gaming team that we acquired to really help ‘power up’ the slots play experience.

Tournaments are a great way to acquire, retain and reengage lapsed players. They also offer the lower-budget player an opportunity to get far more play time for their money when buy-in tournaments are offered. The application will first be seen on one major operator’s site in September. We’ve given them a head start launching tournaments and we’ve got a great new exclusive tab there to showcase them. Most of our other clients have already signed up for them and the rest will get demonstrations in the next few weeks.

Red Tiger Gaming CEO, Gavin Hamilton

EGR Intel: Red Tiger is now a truly global casino games supplier. Do you generally see positive government engagement with the sector? 

GH: We stand at a strange junction in the history of this industry. It is clear that we are moving both forwards and backwards at the same time, which will result in both stronger black and white markets, on a country by country basis. Broadly we see a positive trend, but with some peculiar exceptions. As an industry that clearly needs regulation to protect the vulnerable and taxes to benefit society, the health of the industry is far more government dependent than many. How governments choose to engage ranges from the admirably pragmatic to the shockingly half-witted, with much in between.

Some governments seem to be aware that black market internet gambling is a vast and effectively unstoppable industry; one that deprives society of tax revenue and fails to protect players. The illegal operators always find ways to process payments and to circumvent any technical barriers. They are determined and very well resourced. If the US and China can’t slow the growth of such operators, having invested billions in trying to do so, it seems impossible. Boston Consulting conducted a fascinating and detailed study which showed that the size of the illegal market share is approximately equal to the percentage of the tax rate. So a country that taxes at 25%, may well collect less tax than one that taxes at 15%.

EGR Intel: Are there any movements in certain markets that you believe could benefit the industry?

GH: We are pleased to see Spain about to reduce the market share of illegal operators by reducing taxes to promote legal business. The research clearly shows that more tax will be collected and the responsible, legal, operators will take market share from the illegal sites. Conversely, we see that the regulatory and tax burden in certain Western European markets now risks doing more harm than good. It isn’t there yet, but we see clear potential.

The UK reduction in FOBT stakes to £2 will naturally cause tens of thousands of job losses and a huge reduction in tax revenue. While I would agree that FOBTs where an imperfect gaming product, this sledge hammer approach was clearly sub-optimal. There were many more powerful options to address social harm without this draconian measure. We also expect some tax increase, which at most should bring it in line with the new 20% rate proposed in Spain, perhaps a bit less. It’s the risk of killing the legal industry through stake capping that concerns us more there. Good intentions often lead to considerable unintended consequences.

EGR Intel: What about outside of Western Europe?

GH: The most serious example of government mismanagement that we’ve seen is in the current proposed online gaming tax increase in the Bahamas. The market there has seven licensed operators and a very solid domestic market regulator. The tax rate until now has been 13% of GGR when we include all compulsory tariffs. The new proposals will raise it to an eye-watering average of 44%, with a marginal rate of up to 68% for the larger operators. When you deduct this from gross revenue, you immediately kill the industry as there is insufficient residual revenue to cover marketing and operational costs. Particularly as such a tiny country where it’s not possible to generate economies of scale. The most profitable solution is simply to close down immediately. Those laws are not due until 1 July, so there is a little time left for common sense to prevail.

There are plenty of other examples of governments turning left or right on our sector. We are excited about progress in Slovakia opening up, disappointed in Norway and so on. Online gaming is a polarised intersection on the Venn diagram of politics and economics, so we expect the current global dichotomies to persist.