William Hill execs discuss the firm's renewed product and sustainability push

The William Hill Online overhaul is no new tale, and efforts to redevelop the business have been ongoing since before reigning CEO Philip Bowcock joined the business in March 2017. Yet two recent developments mark a new stage in the process, and a seemingly more mature and strategic one at that. In the first half of 2018, two new roles were established in the form of director for sustainability and chief digital officer. And with these new positions, carried out by investor relations and brand director Lyndsay Wright and former Betsson Group CEO Ulrik Bengtsson, the operator considers itself well-positioned to tackle three areas it has up to now been lacking in: sustainability and responsible gambling, product and data, and expansion into other European markets.

Bengtsson’s role is particularly interesting, with the Swede having joined Hills’ senior management team in April from what he describes as a predominantly tech-first operator. “William Hill is not necessarily, instinctively, a tech company as it comes more from the bookmaking side,” Bengtsson admits. “So having a good understanding of product development and agile processes and technology probably helps a bit.”

Speaking on the management reshuffle that brought Bengtsson on board, Bowcock said he was satisfied with the team he had secured, citing Bengtsson’s “different operational expertise”. “Clearly, he’s well versed in other markets outside the UK which are very important. He’s done a lot behind the scenes to make sure we’ve got the best possible product.” Bengtsson’s spell at Betsson was perhaps best characterised by the development and honing of the operator’s in-house Techsson technology stack and its widespread adoption across the group’s brands.

His job at Hills involves building a similar data-driven structure for Hills’ legacy tech stack, with the help of Betsson’s former director of digital and data, Vlad Kaltenieks, who has been poached by Bengtsson to develop in-house data processes. “The plan is to put a data director in place to report directly to me,” Bengtsson explains. “I think that in itself is a new stroke. He will, of course, flesh out his team and bring in a data architect which we haven’t had before and build out our team. Whether it entails moving people around geographically I don’t know – it’s about building the capabilities within his team that he needs to take us to the next level when it comes to having more rich data.”

The chief digital officer also looks to streamline the operator’s CRM efforts through the use of improved data functions. “Data is one of those core capabilities. We need to make it more accessible and have more of it and richer data, so that’s one of the core capabilities we are building to support the rest of the development,” says Bengtsson.

In his first public interview since securing the role, Bengtsson appears at home at William Hill, and like the impressive Bedford Avenue office building in central London that the business now operates from, he brings a refreshed perspective to the traditional retail business. Although his background is not in UK bookmaking, culturally, the UK’s inclination towards betting is not so far detached from his native Sweden. He says the Swedish state monopoly for horseracing (ATG) “really taught the Swedes how to gamble in the last hundred years”, and recalls visiting the local racetrack with his father. However, his knowledge of the UK market now far exceeds what he believed he knew before, as he matter-of-factly points out: “[Betsson] was nowhere near the size of William Hill’s business in the UK so as a consequence of the regulatory landscape, you get a better appreciation by being here and in it.”

Conquering Spain

On growing beyond its core UK market, Bengtsson is looking to Scandinavia and German-speaking countries to balance Hills’ revenue mix, which currently stands at almost 85% from the UK. “Now there are other regions across Europe that are clearly attractive that we haven’t historically been in, Scandinavia being one, German-speaking markets being another and so forth. Our responsibility now is to evaluate all of them and see how, what and when.” Hills’ revenues for Spain and Italy grew an encouraging 16% (13% cc) in H1 2018 compared with H1 2017, and Bengtsson is keen to further boost the company’s presence in these markets, two jurisdictions he knows well from his time at Betsson.

Between 2016 and 2017, Bengtsson played a vital role in Betsson’s European expansion, overseeing 2017 revenues for Western Europe (including Spain) that rose 40.4% on the previous year. Last year, the Swedish operator acquired small Spanish casino site Premier Casino and Bengtsson outlined his plans to EGR to “conquer” Spain’s growing market. Over a year later, he is making similar, albeit slightly more understated promises, at William Hill. “[Spain] strikes me as a little bit under-served compared to a lot of markets that are completely over-served, so I do think it has potential and we have a very good foothold in Spain. We need to do some work with our product for it to be properly competitive and that’s one of the initial things we’re working on.”

Bengtsson emphasises the intrinsic link between moving into new markets and offering users a nuanced version of its product, particularly for an operator likes Hills looking to grow revenues organically. He says: “If you don’t have a properly relevant product for that market you can spend a lot on marketing and really burn yourself, so I think we have to start with the product. In Spain for example, we are working on a single-wallet project which, to be fair, we probably should have done a while ago, but we are catching up on that and that will be a huge enabler for continued casino and gaming growth.”

Doing the Wright thing

The second addition to William Hill’s armoury is its freshly appointed director of sustainability, Lyndsay Wright. Wright has championed the firm’s brand strategy for almost 10 years now, and has eagerly adopted her latest responsibility over the course of a couple of months. “My role naturally morphed from a place where I was doing the work around the strategies that really helped us look at the whole question, and look at where I can also help how we roll that out both internally and externally. There’s a lot of people who are already doing a lot of good work in this space and we want to be able to engage with them,” Wright remarks.

William Hill launched its “nobody harmed by gambling” initiative across all channels in July in an effort to prove to the industry (and the masses) it is serious about tackling problem gambling. Hills was among a handful of operators fined by the UK Gambling Commission (UKGC) earlier this year for failing to adequately seek information on the source of a number of large deposits. The hefty £6.2m penalty was certainly a wake-up call and resulted in slowed gaming growth in H1 2018, after the firm initiated a process of requesting source-of-funds checks. Bowcock told EGR Intel the stringent checks had seen a reduction in higher value customers.

But Wright shrugs off the financial impact of the sustainability programme, which has already implemented a mandatory loss-limit and established closer ties with problem gambling experts. “The only time you’ll see us specifically quantify [the financial loss incurred by responsible gambling measures] is if we see a very significant change that we want to make, and we then have to update the City and take account of it in the numbers. Beyond that, this is part of how we behave every day and we’re not going to quantify every change as it comes through because this is the right thing for us to be doing,” Wright insists.

The long-term strategy includes wider industry collaboration, clamping down on advertising and engaging the media and political circles that have, up until now, viewed gambling as a largely nefarious industry. It’s a long road ahead but Wright is suitably optimistic. While the industry’s swift move to adopt friendly and inclusive sustainability models across the board appears to have been reactionary following the UKGC’s staunch clampdown on its licensees, Wright admits it has been a long time coming for Hills. “I think what we have really seen from the Gambling Commission is that it’s important for the regulator to see different behaviours where they take those kinds of actions. That’s a symptom of the broader level of mistrust that we’ve seen and it’s important that companies respond to that.”

Armed to the teeth

With Bowcock’s tightly controlled online strategy in full motion, and the final pieces now in place, the operator is in a sound position to aggressively go after new opportunities in the US. Following its H1 results, one analyst described the operator’s US revenues as “ho-hum”, but expressed an optimistic outlook on the future of the US business. From the outside it may appear the operator is treading cautiously and may find itself risk of missing out on major market-share with its strategy of scoring small partnership deals with local casinos. But Bowcock swiftly dispels the notion, insisting the operator is “in a very different place to anybody else”.

“We have good relationships with casino owners and many have got multiple casinos. The US at the moment is all about market access and that comes through casino licences. By our announcement we’re now in six states, both where we are and where we’re planning to be. Those being Nevada, Delaware, New Jersey, Mississippi, West Virginia and Rhode Island. We’ve also announced we’re in talks with a further 14 states,” Bowcock adds.
In his view, major partnerships and joint ventures between US casinos and operators could hinder a company’s ability to talk to independent casino and sportsbook retailers. He emphasises the need for those targeting the US to gain market access via multi-state deals. “If you go and do a big strategic, exclusive partnership with somebody, it’s difficult to talk to independents. This is mobile and retail,” says Bowcock.

Hills has a head-start, having spent six years pushing its sports betting product in Nevada and gaining up to 31% market share. And wagering for its established Nevada and Delaware operations was up 14% in the first half of the year, with net revenue increasing 50% and adjusted profit up 132%. As it looks to the newer, but already somewhat saturated, New Jersey market, Bowcock says the firm’s product will be a slightly nuanced version of what its UK or European players are used to, and rightfully so as the American market is expecting a product unique and specifically catered to its seasoned sports fans.

It seems Bowcock is not the only one bullish about the operator’s chances in North America. One month before the repeal of PASPA and the potential liberation of sports betting, Cenkos analyst Simon French told the KPMG eSummit in Gibraltar: “Today the most success in the US has been achieved by William Hill, with Joe Asher and his team in Nevada creating a genuinely world-class offer with impressive levels of profitability.”

However, in H1 2018 the business incurred losses of £17.2m as a result of new investments and Peel Hunt anticipates a period of “intense and expensive competition as new states regulate and success with regulation will lead to a higher spike in competition and start-up losses”. The analyst firm expects Hills’ US business to break even this year: “We believe the US business plan is very credible; with heavy investment to give the business options for entering multiple states. But the market is going to be fiercely competitive and we need to see success before turning more positive,” a Peel Hunt note added.

The wider industry is expecting at least one major joint venture from the operator, not dissimilar to the likes of MGM and GVC’s $200m deal unveiled last month, with rumours of a tie-up with Penn National and El Dorado floating about. But Bowcock remains shtum on the intricate details of his plan. “If you do a strategic partnership you have to give up some of the economics. Doing the math is quite straightforward,” he says somewhat cryptically. Much like William Hill’s online turnaround and the slow and steady pace it adopted, its US strategy will most likely appear understated in comparison to its industry counterparts. Bowcock’s certainly in it for the long game.