Q&A: LeoVegas on live casino and why Sweden must avoid moving the regulatory goalposts

In today’s lockdown world, a diversified online gambling offering has never been more important to the immediate future of an operator. With its mix of online casino, live casino and sports betting, Stockholm-listed LeoVegas has been well placed to cater to both sports-starved bettors and traditional land-based casino patrons stuck at home.

The challenge will be to keep those players coming back to casino once the lockdown ends, something which LeoVegas is directing all its operational might towards. LeoVegas CEO Gustaf Hagman discusses the accelerated shift online, as well as the operators’ decision to publicly oppose Swedish regulatory changes.

EGR Intel: First quarter revenue is up 4%, is there any one specific factor to which you attribute this revenue growth during the period?

Gustaf Hagman (GH): During Q1, we’ve made a lot of product enhancements, particularly within the area of online payments, which have made a good contribution to increasing customer ease and accessibility to the site, something which has been reflected in the revenue rises. In addition, the migration of our UK brands to our own proprietary technology platform is already starting to deliver good growth during Q1, earlier than we had anticipated. Those are the main factors which have enhanced growth.

EGR Intel: Where does the launch of LiveCasino.com leave your existing business relationship with Evolution Gaming?

GH: This is one area I’d very much like to address. To clarify, LiveCasino.com is an operating brand of the business and will feature live casino gaming supplied by Evolution Gaming among several other live casino suppliers. We have a very good relationship with Evolution Gaming, and this is something I’m very keen to continue with the LiveCasino.com brand. With the LiveCasino.com site, we’re attempting to use SEO to capitalise on Google searches by players for live casino games, blackjack and roulette, something which we’ve not done previously. We do not have a live studio of our own, all games are provided by suppliers.

EGR Intel: In what ways is LeoVegas exercising extra restraint in its advertising practices during the Covid-19 crisis?

GH: We are running several responsible gambling-themed advertising campaigns in the UK, showcasing safer gambling messaging to our customers. We’re trying to be more modest in our marketing, specifically in the messaging we use within our advertising. We’ve launched a large responsible gambling advertising campaign in Sweden this month, geared around safe play and encouraging players to gamble in a responsible way through the use of both print and external adverts. We want to help both consumers and regulators gain a greater understanding of the online gambling market.

EGR Intel: LeoVegas has added its name to a BOS letter criticising new Swedish parliamentary proposals, adding that it may lead to an exodus of licensed operators. Would LeoVegas ever consider leaving the market?

GH: It is a good question. To explain, I’d like to use a footballing analogy. If two teams were playing a football match and one team changed the rules of the game at half time, no team would want to continue in the second half. This is something that is currently happening in Sweden in respect of the regulatory change. Among operators it is something that is being discussed, but first and foremost we will try to talk to the authorities and see if there is a way forward. Hopefully, they will understand this is not a good way forward in terms of driving customers towards the black market, which is something that will undoubtedly occur if you put a deposit restriction of SEK5,000 in place. Online casino channelisation is already down to less than 75%, according to the latest report by Copenhagen Economics, and is continuing to fall, something which is not good at all for the market. One way authorities could mitigate this would be to introduce B2B licensing for payment providers and game suppliers so at least the black-market operators would not have access to either without going through some regulatory involvement. In addition, authorities could start IP blocking black-market sites on a widespread basis, at least during the six-month suggested period, something which would reduce the market as well.

EGR Intel: Do you think Swedish authorities have made a rod for their own back in over-regulating the Swedish market?

I think the biggest thing that Swedish authorities can do is to leave the markets to adjust to the new reality and stop changing things too often. It’s been one year since the regulated market launched and it’s still a relatively new regulation. There’s also a lot more things that we can do on the licensed operators’ side of the debate. Operators are working together a lot more and we would also like to reach out to the government and the SGA more. It’s about making them aware of the situation, because it’s not good that the channelisation figures are so low and are continuing to fall. However, they are not interested in having these sorts of discussions, such as the operator-regulator dialogue which we have in the UK market. Neil McArthur [UKGC CEO] invites us to participate in roundtable discussions twice a year which are always extremely productive, and I think that’s something that the Swedish authorities should look to mirror.

EGR Intel: The impact of Covid-19 has led to the business adding market share from land-based casino operators. Do you believe this trend will reverse when the lockdown ends and how will you work to maintain the business you’ve gained?

GH: As with other online industries such as food and ecommerce, everything’s booming. New consumer behaviours and new consumer groups are entering the online space. In the past, people would have seen transitioning to online as an insurmountable hurdle, but Covid-19 has forced consumers in all groups to jump that hurdle and I think that trend towards online gambling will continue after the lockdown ends. For example, Italy has a market of €18.5bn in total, but just €1.8bn of that market is online, so about 10% in all. When the Italian offline market closed, there was still that big chunk of regular players who wanted to gamble and the only way they can do that is to go online. These players will learn to play online, and I think will continue to do so.

EGR Intel: Are you seeing any other trends in respect of gambling during Covid-19, for example in players switching verticals?

GH: We operate both a sportsbook and online casino brand and we have gained customers from those operators who only feature sports betting as well as customers switching from sportsbook to online casino. I think to some extent players may stay on the online casino sites, while others may go back to sportsbook once everything starts back up again, but some may stay as both online casino players and sports bettors.

EGR Intel: Q2 revenue looks to be on the rise with 23% growth in April, do you believe this trend will continue for the remaining period?

GH: There are internal factors which have benefited the business. The migration of our UK brands to the proprietary platform has put us in a good situation there, contributing to good growth and then there are the payment improvements I mentioned earlier. Overall, the machinery of the business is doing well when it comes to customer acquisition and retention. Externally, you have the land-based casino shutdown across Europe which is accelerating the switch from retail to online gambling, something as I’ve said will continue over the next year.