Total recall: Apuesta Total CEO Gonzalo Perez is ready for the fight for Latam

Taking refuge from the sweltering Buenos Aires heat on the fifth floor of the Hilton on the edge of the Argentine capital’s Río Dique, Apuesta Total CEO Gonzalo Perez cuts a relaxed figure despite his hectic schedule. The Peruvian has jetted into Buenos Aires for the EGR Latam Power Summit as he rubs shoulders with some of the market’s leading figures. Perez is among this coterie since stepping up to become CEO in 2018 and overseeing a rapid period of growth for the multi-channel operator.

Perez steered Apuesta Total through the Covid-19 pandemic, which was an especially difficult time for the traditionally retail-focused group, but it turned out to be a blessing in disguise. A huge drive to the online side of the business has seen the revenue makeup flip on its head, and Perez and Apuesta Total are not looking back. With Latam increasingly viewed as the next big thing in the industry, the CEO is seemingly in a strong position to capitalise on this growth.

His calm persona reflects in his attitude to that growth too, as foreign firms set their sights on the riches on offer across the region. Here, Perez details the Latam market from the perspective of a person who lives and breathes it, as well as offering insight into Apuesta Total’s role in the region and how he views the influx of brands from Europe and beyond.

EGR Intel: How would you describe the Peruvian market and Apuesta Total’s position within it?

Gonzalo Perez (GP): Peruvians have a long history of gambling. We were one of the first countries to pass legislation for the land-based casinos, so from that perspective, it’s quite a mature market. Then, with the arrival of sports betting and online gambling, it’s now evolving and growing very fast. Land-based casinos are stabilising in terms of growth but sports gambling and online are having an amazing boost. I think the market is very good and will continue growing.    

EGR Intel: Online legislation, put forward last August, has finally been approved? How has that process played out and how have you viewed the market in the interim?

GP: For me, it’s a completely white market. Some people will disagree and say it’s grey because it doesn’t have regulation. But it’s important to differentiate Peru from other countries where gambling is illegal. In Peru, gambling is legal, but it’s not regulated. As a business we can open bank accounts, have a payroll, work with payment methods, and so on, but what is missing is real specific regulation. We do have different regulations for the industry in terms of advertising on TV, money laundering, customer protection, to name but a few, but we don’t have it written in law.

Last August saw it signed into law by the President, but we have to wait for secondary, technical legislation. This was due to be released four months from 1 August, but sometimes these things can take longer. A draft of the technical legislation was published for the creators of law and for review. I think they are working on parts of it that are currently against the law. For example, the law states that international companies will not pay a special gaming tax, just Peruvian companies and subsidiaries. So, this will hopefully be worked on in the draft to change the technical legislation so it will no longer be against the law to charge international companies gaming tax. It’s a big issue for our market.     

EGR Intel: Do the authorities want a complete ban on advertising given some of the rhetoric in the draft legislation?

GP: No, not completely, but it’s tricky. If they approve this draft, they’re changing a lot. They have received more than 700 comments in response to the draft and my perception is that they are open to receiving these comments to improve the draft legislation. I don’t think the regulator wants to harm our business, but while they need to set some rules, they don’t want to change things drastically.

The main objective of this new law is to collect taxes. For that to happen, they need to offer a good scenario for operators so they can do that. 

EGR Intel: Apuesta Total was officially established in Peru in 2016. How has the journey been so far?

GP: It’s a good story. I joined the company in 2018 and at that point we had 36 shops. Our aim was to have as many shops as possible and, so, we set a goal of 1,000 shops by the 2022 World Cup. Apuesta Total is part of a group of land-based casinos and land-based bingo venues that have been running since 1983, so we have really good experience with retail, and our plan was to have the strongest retail network in Peru. By the end of 2018, we had 420 shops.

Then the Covid-19 lockdowns started in March 2020, which was crazy for us because our revenue from retail was 85% and online was only 10%-15%. But the lockdown helped us as we suddenly had the opportunity to focus on our website. Every day, with my team, we sat down and worked to better our website and now it represents 60% of the company’s income. Retail is still growing but our online business is growing much faster. Casino represents 50% of our income.

Nowadays, we have over 500 shops and our plan is to open 120 more. Of course, the market has become more aggressive in terms of competition but we’re confident that from the technology, marketing and customer care perspectives we know how to deal with real customers. We’re confident we will keep our position as one of the top three leaders of the market, and we are very happy with that.  

EGR Intel: In terms of the retail/digital split, are people using both to enable you to leverage omnichannel gains?

GP: It’s hard to know if someone is using both channels because retail is completely anonymous, but there are different characteristics between a retail customer and an online customer. For example, in retail, the average stake is way lower than the rate online. The average bet in retail is around $2.50 but online it’s $25. In retail, you also see more multiple bets, more pre-match bets; people trying to get rich or win money from little money. For online, data shows more singles and in-play bets. Yes, we have lower margins in the online business, but the volume is around three times bigger than the retail business. 

EGR Intel: Payments have traditionally been quite problematic across Latin America. Is this the case for Peru and Apuesta Total?

GP: We have local processors that accept credit cards as well as a payment method where customers can pay with coupons in the retail networks. Within our own network of shops, we have a system where customers can top up their accounts and then withdraw the money. Those payment processes differentiate us from our competitors. We also started a telesales channel in lockdown to make it possible to top up an account by transferring money from a mobile phone.

I believe 30% of the deposits in our company are made in shops or through the telesales channel. The second preferred payment method is through coupons, where customers choose a quantity to top up their account. We send them a coupon which can be taken to different locations to be paid. Once it’s paid, the money goes into the customer’s account. The third payment method is by credit or debit card for retail. Around 30% of all transactions are made with credit cards, but, of course, cash is king in retail.

EGR Intel: As more of Latam becomes regulated, are there plans to expand or are you content being a top-three operator in the Peruvian market only?

GP: We want to compete in other countries. Latam is very hot right now and a lot of operators are looking to move in. We need a very good strategy to defend our position. Apuesta Total has grown very fast in the last two years and there are around 2,500 people working with us. It’s a good challenge to prepare ourselves for an even more aggressive market. It’s already aggressive but once regulation is in place, it will be even more so.

But, as I said, we’re pretty comfortable. One of the things that’s mature in the sports betting business in Peru is the marketing assets. Every shirt in the Peruvian league is already taken. The sponsorship of the national football team is already taken for four years. The name of the league is taken for the next four years. Apuesta Total has sponsorship for Peru’s two main teams, Universitario and Alianza Lima, which have around 80% of the total supporters. So, even though it will be an open market, it will be hard for new competitors to establish their operations because these channels of marketing are already taken. 

EGR Intel: What other markets in Latam are you eyeing up?

GP: Buenos Aires and Argentina are tricky because there are restrictions on taking the money out abroad, so that makes operations very hard. At the beginning it’s fine because you reinvest but at some point, you will have to take the profit out of the country, which is challenging. Brazil is another market, with a population many times greater than the Peruvian population. We would also like to explore Colombia, but it’s already quite crowded with 17 brands.

So, we are looking at these countries but in those markets we’ll need a different strategy because we don’t necessarily want to be the leader. We can be one big competitor, and that’s fine for us. We want to then expand our business into different countries but without the pressure of being the leader.

EGR Intel: Is there a timeline for that?

GP: Right now, we have a second website with a different brand for Ecuador and Chile. We are learning how to deal with payment methods there, how to acquire customers, etc. In Ecuador, with a third brand, we are starting retail. So, again, our strategy is not to use a particular brand as we don’t want to burn it in terms of reputation. I think we will take this year to understand these markets better and then next year, probably, you will see our appointed brand working in Chile and Ecuador.

EGR Intel: In terms of Peru making the market more attractive for foreign operators, who will ultimately win the fight – the local brands or the publicly listed companies that can come in and spend vast sums of money?

GP: The winners will be the ones with the knowledge of the customer. In Peru, for example, there is one competitor [Betsson] that is huge in the world. They have a lot of money, so they can do almost whatever they want. We, of course, don’t have their size but we do have knowledge of our customers. We know how to communicate with them and are completely different from any other competitors. We’re investing a lot in product creativity because it’s important to differentiate and find your niche.

We’re looking to reach customers from maybe level B, C, D spenders, whereas competitors are trying to reach level A. So, our spending level group is less but the size of the group is bigger, so it compensates. The most important thing is knowledge, and I think that if some big competitors want to come to Peru, it will be tricky for them because we already have many years’ experience of understanding the country’s customers. Every market is different, so what works in one won’t necessarily work in Peru.

It’s likely that a huge brand with a bunch of money thinks it can do whatever it wants. But Latam doesn’t necessarily work that way. There’s a lot you need to have in terms of customer relationships, and you can only get that understanding by being from that country.

EGR Intel: Is M&A on Apuesta Total’s radar or is it more about organic growth?

GP: Naturally we look for the easiest way to grow, and because there is so much interest in Peru’s market, we have been approached by many people trying to understand our business and our brand. What I think is more probable is that we’ll get some investment from a bigger company rather than us investing in a smaller one.

EGR Intel: What do you think about the industry’s perception of Latam?

GP: Latam is very exciting because it’s like Europe in its early years. There are almost no restrictions in terms of gambling, and I’ve talked to a lot of people who cannot believe certain things are allowed – and for many, it’s just like Heaven. European operators have a lot of experience and that will help us with things like how to deal with risk management, which is tricky in the region.

For example, we don’t have markets on second division football because of concerns over match-fixing. European operators have the experience to understand and identify potential risks. I think it will be a good mix: we have the knowledge of local customers and know how to deal with communication and promotions, and they have the experience of mature markets for various operations.

EGR Intel: What are your expectations for the firm over the next 12-24 months?

GP: Our brand is performing well, and I think we will keep up the leadership [position] in Peru; if not the leader then one of the leading operators in the market. Then, in two to three years’ time, we hope to be operating in other countries in Latam. That’s our goal.