STS on how it plans to take on the UK market

It’s coming to the end of ICE London as EGR sits down in the lobby of the Four Seasons Hotel to interview the chief executive of STS. The industry exhibition had no doubt been an exhaustive week of back-to-back meetings for Mateusz Juroszek, but it was just the warm-up as he prepared to fly home to make one of the biggest announcements in the Polish bookmaker’s history.

On Friday 8 February, accompanied by football legend Michael Ballack, the young CEO took to the stage in Warsaw to reveal STS had secured licences in both the UK and Malta and was planning to expand outside its home market. The Polish operator has since gone live in the world’s largest regulated online gambling market with a multi-vertical offering while, under its licence from the Malta Gaming Authority, STS will now operate in markets such as Germany, Norway and Iceland.

STS CEO Mateusz Juroszek believes the Polish bookmaker will find success in the UK market

It seems a bold move for a brand that is synonymous with Poland and little known outside of the company’s home market. However, STS, which claims to have a 50% share of the Polish sportsbook market, is aiming to use this brand recognition to its advantage. Juroszek points to the nearly one million Poles living in the UK today as a way for STS to build the brand initially in such a competitive market, while there are also plenty of other large Polish communities living across Europe.

According to Juroszek, Poles living in these countries still have a strong affinity for the STS brand. “There are hundreds of different brands in the UK, so the competition is massive, but we have this advantage because Polish people in the UK know who we are,” he says during his first ever interview with EGR.

As a result of its strong growth in Poland, Juroszek also claims big operators have come knocking many times and that he gets “emails nearly every day” from prospective buyers. And if STS can pull off this international expansion, then there is little doubt such offers will continue to flood in.

EGR Intel: What convinced you that this was the best way for STS to go internationally?

Mateusz Juroszek (MJ): I’ve worked closely with people in international markets, as we cooperate with some different companies across the globe, and I was always aware of what our place was. We are doing good business in Poland but we know we aren’t going to build another bet365, so we were looking for some kind of idea as to what could be an interesting niche for us.
A couple of years ago, I realised just how many Polish people there are in the UK; statistics show there are perhaps up to two million Polish people in the UK, one million in Germany, 200,000 in Norway and 100,000 in Iceland. They just recently left too, it’s not like they emigrated in the 1990s. Then I saw a statistic that a Polish website was fifth or sixth in the top 10 websites in the UK, which shows how big the population is.

When they were in high school, all these people were betting in STS and they still have a close relationship with Poland, while our research showed 90% of male adults knew who STS was. We got a similar number when we did the same research with Polish people in the UK. If you ask a Polish guy on the street to name a bookmaker they would probably say STS or William Hill, which is pretty well known in Poland because people think it’s an old guy with a hat who likes a bet.

EGR Intel: What are your immediate plans?

MJ: Our main business will remain in Poland and this is where we want to grow and make the most money. However, we decided we would go after these Polish customers in other countries. We are launching under two new licences from the UK and Malta, and we will be operating in the UK, Germany, Norway, Iceland and anywhere else we can do it. We have a marketing campaign ready to go and have opened an office in Malta. It’s a big deal for us and is one of the most important events in the company’s history.

We are a market leader in Poland and I need to always think how to motivate my staff so they don’t get bored or always think they are just the best, and now they have to compete with other operators across Europe. We are working on different ideas for online casino and live casino – in Poland we only have sports betting because of the monopoly.

EGR Intel: Will you be looking to only appeal to Polish customers in these specific markets?

MJ: Yes, at the beginning. The idea was that we have to concentrate on something that is going to give us a big warm-up at the beginning and provide us with a niche. If we are successful with the Polish players, then we can see where we go from there. Our clients are very demanding in Poland when it comes to sports betting as they want to bet on everything. For example, we need to have a very good ski jumping offer because it’s super popular in Poland, but it’s also really popular in places like Germany, Finland and Norway. We have lots of traders based in Poland, so we offer pre-match and live betting for sports which are incredibly popular in specific markets.

EGR Intel: You have a big retail presence in Poland. Will you only be online in these other markets?

MJ: Online is much easier to start with but if the project is successful, then we could think about opening a few shops in the UK, particularly where there is a big Polish community. I had an interview with Polish radio in London and it was very interesting because they have websites, radio and newspapers and 300,000 people on their Facebook group, and all these people like buying Polish products. We will obviously start doing some promotions for these people as well, for example, putting STS branding in the Polish airports where everyone travels to the UK. It’s also very good for our partners in Poland as they will see that we now do international markets and will look at us as being in a different league to our competitors in Poland.

EGR Intel: Why was now the right time to expand outside of Poland?

MJ: We have 50% of the market in Poland but we don’t just want to stay in one market. There is also the threat of legislation as well because when you operate in a few markets and something changes, you can always operate somewhere else. We are doing a lot of business in Poland but there is also a risk from the legislation, particularly with elections coming in the next couple of years.

EGR Intel: Have you heard anything with regards to legislative changes in Poland?

MJ: There was recently the issue of there being a lot of offshore companies in Poland, but for a long time none of the parties could regulate that for some reason and didn’t touch the legislation. One party came in and changed it, did IP blocking and notified the European Union about the legislation which forced a lot of the big operators to leave.

Although the legislation left a very high tax rate, the market has grown a lot and our turnover has tripled in the last few years; last year we were growing 50% and this year we are already growing at approximately 30%. So I think the parties are pretty happy with the legislation as they can see a big increase in taxes; STS alone paid €65m in taxes just from betting but it would be almost 0% if we had a Maltese licence, so they will be reluctant to change it.

EGR Intel: Would you personally like to see changes to the legislation?

MJ: It would be a dream for us if the Ministry of Finance opened the market, had a 20% tax on GGR and online casino. However, they just gave the state monopoly the online casino, so I don’t believe they will change the legislation and give it to private operators any time soon. In Poland they are trying to get as many taxes as possible because they give a lot out in areas like social security. You can make the case that it would be better in the long term, but in the short term the inflow of tax would almost certainly decrease and they don’t want to touch that.

EGR Intel: A few companies looked at buying STS but you didn’t sell. Why?

MJ: These operators have a lot of cash and the possibility to get all kinds of funding. They can come to countries and just buy the market-leader because it’s easier than doing it themselves. We didn’t really talk about the money part of this as it’s a family company and I don’t need more money because I have enough already. It’s the same with my father in his work, so we don’t want to sell just for the sake of having more money. We want to develop the business because it’s fun and interesting and when Stanleybet was the majority shareholder, people didn’t want to work with them and we showed them that we could do it better. I’m still young and I want to keep developing the business, although anything is possible.

EGR Intel: Who remain your biggest competitors in Poland?

MJ: We have 50% of the market and Fortuna has approximately 30%, but that’s part of a bigger holding company. The rest are all small companies that can’t compete. Superbet, for example, is a strange one because they started opening shops up in Poland a year ago at a time when it wasn’t profitable because the costs of operating were so high. They didn’t go online when we recorded 80% of our income from online of which 70% is from applications. Some operators don’t even have applications in the Polish market although Superbet did recently obtain an online licence.