The right fit: Why Glitnor Group has chosen to branch out into the affiliate sector

Founded just four years ago by former executives from igaming and casino operator Vera&John, Glitnor Group has carved out a niche as a B2C business operator with brands including Lucky Casino and Gambola. In tandem the group operates a casino content business, Swintt, with both being deployed in a number of key markets across Europe.

Glitnor hit the headlines earlier this week with the acquisition of challenger affiliate KaFe Rocks, a deal which springboards the start-up into the affiliate sector for the first time in its short history. Below, EGR delves deeper into the rationale behind the deal in conversation with Glitnor Group CEO David Flynn.

Glitnor Group CEO David Flynn

EGR Intel: Can you elaborate on the structure of the arrangement?

David Flynn (DF): It was a win win for both teams, that’s really important. The founders and management team at KaFe Rocks really believe in what we’re doing here at Glitnor Group. Suffice to say, it was certainly a cash and shares-led deal because they really believe in our growth and our strategy moving forward and they want to participate in continued growth as well.

EGR Intel: In the statement confirming the deal you’ve mentioned targets relating to the KaFe Rocks acquisition. How you measure those targets and do you have anything long term in mind?

DF: KaFeRocks has their four-year forecast ahead, just like any normal business and like ourselves. For me it’s important that they can focus 100% on those targets and goals so that they can continue to deliver to the shareholders.

EGR Intel: Can you provide more detail on the background talks that took place in the run up to the deal?

DF: We’ve been in discussions for a while. As a part of our strategy, we’ve assessed a number of different targets. Many of them are extremely well-run businesses, with great management teams, etc. But the one thing with KaFe Rocks was that from day one, we seemed to just click and that says so much in this industry. Not only did we click as a management team and founders team, but the businesses just clicked together as well. They are entirely complementary businesses and it just fitted our strategy to a tee in terms of the direction that we’re taking the business. We’ve been talking for many, many months but in effect the deal was pretty much done commercially within a matter of weeks. But the small print takes some time to sort out.

EGR Intel: Why was it important to you to keep some of the KaFe Rocks existing management structure in place as part of the deal?

DF: Just to clarify, we’re keeping 100% of the KaFe Rocks management with the firm and it’s important because they’re an extremely talented team. Many of the C-level team of KaFe Rocks have only joined the team quite recently and they’ve built this team up over the course of the last four years. Let’s not forget that both Glitnor Group and KaFe Rocks are approximately four years old. KaFe just turned four last week and we’ll turn four in the next couple of months so we’re both very young and entrepreneurial businesses with a lot ahead of us going forward. The management team, as I’ve said, we just seemed to click from day one. We’ve had very open and very good discussions in terms of how we can make the businesses chime together and we’re super happy to have them along on the journey together with Glitnor.

EGR Intel: What does being the most entrepreneurial company mean to you?

DF: I’ve been in the industry since 2003, a long time, longer than I care to recall to be honest. But no two days have ever been the same, I always say that. The industry in a way keeps one entrepreneurial. By that I mean always looking for the possibilities no matter what the challenges that are thrown ahead of you. It could be changes in regulation, changes in product, Covid-19, whatever it might be. It’s about trying to work with entrepreneurial, fast-paced people who can make very, very quick but yet sound decisions in order to be able to grow the business, and really empowering those people to be able to make those decisions. That’s what it’s all about because the last thing you want is for decisions to go all the way up a chain to me, for example. Those decisions should be made right at the coalface so they’re made a lot quicker and grow the business a lot quicker as well.

EGR Intel: How much of the acquisition is about diversification into the lucrative US market?

DF: It’s no secret, Glitnor’s strategy is very much focused towards the US. We’ve built up a very strong business in Europe with Lucky Casino in the Swedish market. We went from brand 90 to casino brand number three in a case of 3.5 years. And this is something we believe we can replicate with the B2C business across in the US. However, when you look at the US at the moment, there’s a heck of a lot of money being spent but not necessarily the most wisely money being spent. And I think there’s a much more profitable way to be able to make money in the American market. KaFe Rocks is also very focused on the US market with a number of their brands. And making sure that we drive our revenues initially through our affiliation business as we continue to enter into the US through our B2C business. And, of course, our B2B business Swintt, which has already got deals in the US, just subject to licensing.

EGR Intel: What’s the reason for the move into affiliate marketing?

DF: Look at what has been happening in the gaming industry over the last 18 years, look at what’s been happening most recently. And look at the opportunities that one has not only from a country-by-country perspective, but also if you look at the US on a state-by-state perspective. Let’s take Germany, or even the Netherlands. A number of operators had to pull out of those markets and then go back in, if that remained suitable, under a local licence as provided by the local authority. Many companies have decided that they wouldn’t go into those particular markets on the local licence or indeed it may take a long time. And that’s just as a B2C operator.

Now, if you have three legs to the value chain so affiliation, B2C and B2B, then you can still continue to make money in a market, subject to the regulations being followed, of course, in that market, via any of those three parts of the value chain or indeed all three. We’re always going to see these changes in regulation across different markets. There’s always going to be challenges thrown at the gaming industry in that respect. And it’s really important that any company out there in the marketplace can continue to generate revenues from each market by one of the three parts of the value chain, if not more. And by doing so, you make for a much more solid business going forward. You have a very solid footing from which you can grow and invest in future markets going forward.

EGR Intel: Coming from the Jackpotjoy Group and your experience with the Vera&John brand, which is very successful in Sweden, how much of those lessons learned from that time translated into what you did with Lucky Casino?

DF: I think it’s actually more about the lessons that we learnt of how the market has changed from those days. Within Glitnor you’ll find a lot of the management team and founders are from Vera&John. Our founding two partners are the founders of Vera&John. Our head of B2C was managing B2C within Vera&John. So, we have a lot of history there. We really do know that market extremely well, as indeed many other markets across Europe and into Japan. By understanding what’s happened in terms of the way that players make decisions and what they’re looking for when they want to play on a particular casino site, we just change our marketing profile to a different way of attracting a player. I’m not going to give you all the secret sauce, but that’s really what we approach our players with. It’s a different offering in a different way.

EGR Intel: What’s next for Glitnor?

DF: Watch this space! When looking at the igaming industry, it’s very clear that M&A has been rife, it will continue to be rife. We’re obviously a company that’s continuing to grow our business geographically and across the value chain in a number of different markets globally. The US is a focus. Today, we are a private company. Who’s to say what the future may hold in that respect. But the US is an interesting market so you can put two and two together.

The most important thing for me is that through this acquisition, I call it a combination, we’ve had a number of different discussions, presentations and Q&As across both the Glitnor and KaFe Rocks teams. It just really reinforces such a great team up of the two businesses because the cultures are so aligned. Our goals are so aligned as well in terms of our future focus towards the US and continuing growth across the value chain.