Interview

Q&A: Adam Greenblatt on his grand plans for MGM GVC Interactive

MGM GVC Interactive CEO Adam Greenblatt explains to EGR North America how the landmark joint venture plans to conquer the US betting market

No company’s rise to the very top table of egaming has been as spectacular as that of GVC Holdings. The firm was ranked as the second most powerful online gaming company in the world in this year’s EGR Power 50, just a few short years after being off the list entirely.

So when the multi-brand group announced earlier this year that it had partnered with the second largest offline gaming company in the world to take on the US sports betting market, it was always going to make waves. The two companies have formed a joint venture called MGM GVC Interactive, with both committing $100m initially to get the project off the ground.

In his first interview since being announced as the CEO of the JV, GVC’s former strategy chief, Adam Greenblatt, tells us about his plans for the product and why being first-mover is overrated.

adam-greenblatt

Ada Greenblatt

EGR North America (EGR NA): How is the team building going?

Adam Greenblatt (AG): It’s going well actually. I’ve just sorted out my chief marketing officer, which is a fundamental role as you’ll appreciate, so I’m delighted. I’m building up the product team and the marketing team with a mix of people in the US and UK.

EGR NA: So you’re hiring from external companies as well as cherry picking from both parent businesses?

AG: That’s right. What I think is best for the business is bringing a mix of people. People that I trust, people that the business knows and are experts in their areas. I want people who understand GVC technology. That’s important. Then you have the US cultural aspect to be sensitive to. So it’s best for the business to have the pick of the bunch from the GVC group, but also American experts as well.

EGR NA: What size team are you looking to assemble?

AG: We are probably looking at 150 to 200 people in the next 12 to 18 months. Obviously, it’s driven by the pace of state rollout. When you put in place every aspect of a digital and multi-channel business, including marketing, social, BI, trading, CS, it adds up quite quickly to 150 to 200.

EGR NA: Have you picked your headquarters yet?

AG: Head office will be in New Jersey initially. We haven’t announced a specific location yet.

EGR NA: How are you thinking about the adapting the GVC product for the US?

AG: Our approach to product development will be scientific; a test and learn approach. The fact our tech is proprietary lets us listen to customers and develop where the market leads us. This is uncharted territory. We could just give customers what is popular in Europe, which is fine. Or we do a combination; start somewhere then listen, improve and invest in what customers like.

EGR NA: It’s often said a current mobile sportsbook only looks the way it does because of how a soccer coupon used to look in British betting parlors in the 1980s. Do you think you have the chance to build something completely new?

AG: We absolutely do. The product we have in New Jersey at the moment is an extension of the product that’s been live in Nevada for some time, powered by Stadium Technology. It’s fairly simple and certainly not as feature-rich and developed as the European product, and definitely not the bwin product. Stadium has really come into its own. The technology is rock solid and gives us a platform to develop in any direction we chose to take. Do we have an opportunity to develop something entirely new? Sure, we do. I’m not sure that’s the right answer yet.

That’s the luxury of having the technology and development capability. If it turns out US bettors are the same and a mature European product is the right solution, we have that. If it turns out some customers are new to the market and prefer a cleaner and less cluttered UI, we have that too. We will start with Stadium and develop out that product as we learn. The more mature bwin product is available should we choose to deploy it.

EGR NA: Do you have any idea yet what the typical US bettor looks like?

AG: I haven’t done enough research yet. I haven’t put any meaningful money into New Jersey yet because we haven’t had in-play [betting] yet. I will say we have some big players who like what we are offering, and we are building a good relationship with them. Whether they are promiscuous, I’m not sure yet.

LAS VEGAS, USA - December 22, 2016: Las Vegas Strip, MGM Grand Lion and New York New York Hotel and Casino

LAS VEGAS, USA – December 22, 2016: Las Vegas Strip, MGM Grand Lion and New York New York Hotel and Casino

EGR NA: Many companies are spending a lot of money to establish themselves in the US. Is the $100m each company initially pledged to invest going to be enough?

AG: I’ve spent that already! We built that number with bottom-up, state-by-state business plans, which had a whole lot of assumptions about CPAs by channel, by product. Then based on our expectations of rollouts and sequencing of states, we got to a cash figure that could cover near-term expectations. In short, the $200m was designed to get us to a position where the JV can survive on its own power. The reality is the business plan was pseudo-scientific and based on lots of assumptions, so it’s inevitably wrong.

We are constantly updating our model with our latest estimates of state rollouts. Do I still think $200m will cover us? I’m not sure. Will the 20 states considering betting land in 12 months? I don’t know. There is no expectation we will run out of money in the short term. To the extent we need more money from the parents, this is a big deal for MGM and GVC. Apart from Japan, this is the single biggest value-creating opportunity for MGM on the slate. Likewise, for GVC. This has the potential to be a multibillion-dollar business. If we need another 10, another 50 from both parents, I have no doubt it will be available.

EGR NA: It sounds like huge project

AG: From a professional perspective, I couldn’t be more excited. But there is a personal toll. I have two young kids – a whole family in London. There is a real personal cost of making a commitment to this project. Picking the whole family up and moving them to other side of the Atlantic. I wouldn’t do that unless the business opportunity was so massive, and I thought it was worth it. I was head of corporate strategy for GVC, the most successfully acquisitive group in the sector. Why would I give that up unless I thought this could be even better?

EGR NA: Have you been very involved with all those commercial deals MGM has been signing with the pro sports leagues?

AG: We have been a little bit involved. They have benefits to MGM independent of the JV. Is there some value for the JV? Sure. Would we have done the deals for ourselves alone? Possibly not. Taken together with MGM’s objective and the JV’s objective, there will be value. Apart from access to digital assets, these deals reinforce MGM as a trusted partner and highlight the integrity of the brand. These are positive features for the playMGM brand, which is obviously the hero brand for the JV.

EGR NA: So the focus is on playMGM over partypoker?

AG: PlayMGM will certainly be the focus because the poker market opportunity is relatively small. We’ll put money into where the biggest opportunity is and, as you know, the poker liquidity pool is limited. When there are big pools of players available and pooling is a feature of the market, our investment will reflect that. In the short term, we will prioritize playMGM and building our sports business.

EGR NA: Do you have an idea how you might use the exclusive data you will receive from Major League Baseball?

AG: I’ve got a product team here at GVC who are very excited about all these things. We are in early-phase ideation and are in contact with the leagues about all of these things. You’ll have seen play-for-fun games and how this will all come together is under discussion, but it’s still too early.

MGM Grand exterior hero shot

MGM Grand exterior hero shot

EGR NA: How would you respond to the criticism that the JV structure potentially makes you less agile, and fast-moving than some competitors?

AG: That seems like a two-part question to me. One is about our appetite for innovation. My high-level observation is that the market opportunity is too big for me, for GVC and the JV not to do whatever it takes to win. Online betting and gaming is GVC’s core business. We will persevere until we are successful. We have enough resources, enough focus. I have absolutely the commitment from [GVC CEO] Kenny [Alexander] and the board of the JV. There is absolute focus.

In terms of pace, you know the pace that we at GVC work at. So I think you’re asking me, ‘does MGM work too slowly?’ We have specifically set up an entity that is independent, fast-moving and responsive. My team and I will have our own offices on the East Coast, close to the leagues. What I hope to bring is a performance culture and a pace that is the nature of the business – digital sports betting and online gaming. This is a different business to building huge casinos with long lead times, and I give MGM a lot of credit for recognizing this is a different world and partnering with the best.

EGR NA: We hear a lot about the media companies that appear to be talking to anyone and everyone. Would you ever do a deal with one of those guys?

AG: I don’t think we need a brand but I’m talking to all of them. They will participate in some way in the broader ecosystem, as Sky does, as Google does, as Facebook and Instagram do. They’re trying to figure out how to participate. There seems to be limited or no appetite to go through the licensing process in every state. So their ability to operate or participate in revenues is not available. Initially, do I expect there to be big JV deals which would require them to become licensed? No, I don’t see it. I would be surprised but I’m often surprised.

EGR NA: We’ve seen DraftKings get out to an early lead in New Jersey. Do you think there’s anything you can learn from them or is their success a by-product of being first to market?

AG: There are a few factors to consider. To make the running you need to have an existing organization and people doing things, which they did, with a marketing and product team. So they were in the market immediately thanks to Kambi’s product and they could communicate that fact. And then they had the existing database of DFS customers they could cross-sell to. Does that mean they will continue to lead? Well, if that was the case, you wouldn’t have seen the likes of Sky Bet succeed so spectacularly in the UK market.

It takes time to build a business. This obsession with the monthly numbers coming out of New Jersey creates noise and pressure, which is unrelated to my project. My project is building the right team, listening to customers, seeing what the right product is, then redeploying. Success or failure in New Jersey is not the final answerer. Anyone seeking to extrapolate these numbers to long-term winner…. well, I’m looking forward to demonstrating that the JV we put in place is the right structure, and the right answer.

Gvc | GVC Holdings | Interview | MGM

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