Ahead of the game: An exclusive interview with Entain's Jette Nygaard-Andersen

It is almost one year to the day since Jette Nygaard-Andersen took up the reins at global gambling giant Entain. Prior to her high-profile appointment, there had been much speculation as to who would succeed Shay Segev after the Israeli announced that he was walking away from the company – and the industry – just six months into the role of CEO. One independent bookmaker even chalked up odds on his replacement. Nygaard-Andersen, a non-executive director at Entain since 2019 and with more than 20 years’ media, entertainment and digital business experience under her belt, wasn’t among this layer’s favourites, yet the Dane made a late surge in the running and headed the market at 6/4 before being unveiled as Entain’s new boss on 21 January 2021. “It’s been an incredibly exciting year,” Nygaard-Andersen reflects on a Teams call, with her background set as a digitally generated open-plan office complete with prominent Entain branding. “I think this was the year where we really started to shape our business for the incredible opportunities ahead – and doing this while still in the middle of an unprecedented global pandemic. “Before I joined as CEO, I knew that Entain was a fantastic company with a fantastic team and a great future, but I learned really quickly that not only do we have opportunities to continue to grow in our current markets, but as I look across the globe and into new customer segments, it is extremely exciting. “We have unprecedented opportunity to grow […] we are a global company with a big ambition in an industry that is changing very quickly.” Not that Entain hasn’t been growing of late; the firm’s mightily impressive run of consecutive quarters delivering double-digit online net gaming revenue (NGR) growth was extended to 23 in Q3 2021, fuelled partly by lockdowns and the migration of retail customers to digital channels in the UK, Australia and Italy. This 18-year-old company’s online NGR winning streak stretched all the way back to early 2016, although it came to an inevitable end in Q4. NGR fell 9%, or 6% in constant currency, due to “particularly strong comparatives”.

Target practice

Besides organic growth, M&A has been a key part of Entain’s story. It is how the business, then known as GVC, ballooned from an AIM-listed minnow with one igaming brand targeting German-speaking markets – CasinoClub – into a FTSE 100 powerhouse worth £9bn with 24,000 employees across the globe and brands spanning sports betting, casino, bingo and poker. Along the way there were the headline-grabbing deals orchestrated by Segev’s long-standing predecessor – gambler, racehorse owner and poker player Kenny Alexander – like the purchase of bwin.party in 2015, or the audacious £3.6bn swoop a few years later for Ladbrokes Coral, the latter of which was the group’s most complex to date from a tech integration standpoint. These transactions were supported by a smattering of key bolt-on buys in regulated overseas markets, such as Neds in Australia, Crystalbet in Georgia and Bet.pt in Portugal. “M&A is a core part of our strategy. It’s really been central in how we’ve grown the company to where it is today,” Nygaard-Andersen asserts. The shopping spree continued in 2021, with Entain completing its purchase of Enlabs, a Riga-headquartered operator behind brands including Optibet, Ninja Casino and Laimz, and a few months later leading esports betting platform Unikrn was snapped up. Not all pursuits end in capture, though. Like the all-cash, A$3.5bn offer Down Under last year for Tabcorp’s media and wagering division scuppered by the Australian operator opting instead to spin off its lotteries and keno arm. “The focus for us is always, always about growth and opening up new revenue streams,” Nygaard-Andersen affirms, slowing her speech to emphasise the point. Enlabs is a prime example. “Enlabs takes us into new Baltic markets but, interestingly, it also provides us with a platform to grow in the Nordics as well as into other Russian-speaking Eastern European countries. Because, for example, in Latvia half of the population is Russian speaking, Enlabs has a Russian product. Enlabs fits perfectly with our strategy, and we are so happy with their performance.” While Entain finds itself shopping around in an ever-shrinking pool of standalone operators due to the consolidation frenzy over the past few years, the CEO says this about weighing up the merits of a potential target: “We always look for the best teams. We look for the greatest brands, and then strong businesses, of course. And then we look for teams with a shared DNA and shared values with the Entain family. “Remember, this is also a great way for us to bring in the best teams out there into the family, so it really deepens the skills and the talent pool, helping us also to be a better business.” Very occasionally does Entain choose to dispose of a business. However, this was the case recently when Betdaq was sold back to Irish tycoon Dermot Desmond for what was thought to be a fraction of the €30m paid to acquire the betting exchange back in 2013. “It goes back to the strategy,” Nygaard-Andersen remarks. “If our strategy evolves then we might look at whether there are parts of the business that we are not the best owner of anymore. But we have a very strong portfolio of brands today and every one [of them] has their role in our strategy.” Amid this consolidation frenzy gripping the sector, there is always the danger that the hunter becomes the hunted. This materialised in early January 2021 when MGM Resorts – Entain’s partner in the BetMGM JV across the pond – made a 1,383p per share bid worth £8.1bn for Entain. The London-listed operator rebuffed the offer, insisting at the time that it “significantly undervalues” Entain. Later that month, just days after Segev revealed he was leaving for OTT sports streaming service DAZN, MGM abandoned its bid. Entain’s shares climbed steadily afterwards and spiked at an all-time high of almost £24 in September when US heavyweight DraftKings stunned the sector by tabling a £28-a-share bid worth £16.2bn for Entain. A concrete offer failed to materialise after talks collapsed, though. Entain’s stock has since tumbled to around £17, meaning its market cap of £9.1bn today isn’t much more than 12 months ago when MGM made its move. Industry analysts have speculated that MGM will eventually take another run at Entain, yet if Nygaard-Andersen is concerned about a second bid from the US casino giant she isn’t showing it, calmly insisting that she is fully focused on driving growth for Entain. “I’m here to lead Entain and that’s what I focus on with my fantastic 24,000 colleagues around the world. We are here to create value for our shareholders, so I don’t speculate on what is going on outside my world,” she stresses. An attempt to press her on why DraftKings’ interest evaporated is also calmly batted away. “I don’t have any more comments to that […] in terms of what happened on the other side of the table, I think that’s more a question for DraftKings.”

Going logo

Today, the Entain group consists of more than two-dozen online-only and multi-channel brands, a few of which could be classed as household names (Ladbrokes and Coral aided by their combined retail estate of 2,750 shops fall into this category in the UK). Along with the likes of bwin, Eurobet, PartyCasino, Sportingbet, BetMGM and Gala products, to name a few, it is an unparalleled portfolio in the sphere of digital gambling. “I hope you aren’t going to ask me to name them all,” Nygaard-Andersen laughs before addressing the benefits of a diverse stable of brands. “We operate as a multi-brand organisation, that is how we are set up. Some of our brands are local, some of them are regional, and we have a couple of brands that are global.” She adds: “In Australia we acquired a local brand, Neds, but we also have Ladbrokes. “And the guy we brought on board from Neds [Dean Shannon] is now running the portfolio of brands we have in Australia and in that region. In the US, we talk about BetMGM but we also have the Borgata brand and we’ll have the Party brand there, so a multi-brand strategy plays out really well for us.” With one eye on current and future trends impacted by changing consumer behaviours, Entain made a statement of intent to expand outside its “core” (as the chief exec describes its traditional betting and gaming businesses) with the aforementioned Unikrn purchase unveiled ahead of Entain’s Investor Day in August. Entain initially pledged to plough £50m into its esports betting offering, a sum which includes the financial outlay to acquire Unikrn and its 50-strong international team. Meanwhile, Justin Dellario is spearheading the push into interactive entertainment after being recruited from video game streaming platform Twitch, where he was global VP for esports for almost six years. It transpires the tyres were kicked on a few dedicated esports betting operators before plumping for Seattle-based Unikrn as Entain looks to tap into an esports market thought to be worth $2bn. Two of Unikrn’s unique features that may have had a bearing on Entain’s decision include UMode, whereby gamers can bet on their own ranked matches, and Streamer Betting, an AI-powered feature that updates odds in real-time for betting on Twitch streams. The combination of skill-based wagering and growth opportunity of betting on competitive video gaming excites Nygaard-Andersen, who herself was no stranger to esports in her previous roles. She has also chaired international esports organisation Astralis Group A/S and been a board member for leading esports organiser ESL. “In short, esports is the millennial sport of the future,” Nygaard-Andersen enthuses. “Today, almost 500 million people are esports fans, and they watch esports tournaments. That’s close to the number of fans watching the NFL and NBA combined. It’s important to mention that 70% are adults. They are passionate and often they play games themselves. And fans are much closer to their heroes than the stars we see in traditional sports. We also know that fans of esports are even more likely to enjoy having a bet.” She adds: “We believe that esports betting and wagering could be worth $12bn in the mid-term.” Entain revealed during its Investor Day that adult video gamers are 4.3 times more likely to participate in betting and 4.5 times more likely to take part in igaming than non-gamers. Meanwhile, sports bettors are 2.7 times more likely to play free-to-play games than sport fans who don’t bet. “There’s a clear crossover,” she asserts.

A unified UX   

Right now, Nygaard-Andersen feels betting on esports tournaments, your favourite esports team or your own gameplay streamed on Twitch is a “quite disjointed experience”. The aim therefore is to amalgamate the different aspects of esports wagering, but not forgetting responsible gambling (RG) best practices. “There is not one global platform with all the compliance and protection of players that we offer today for our products. That doesn’t exist currently. That is really what we set out to do – take all the experiences and knowledge around how you have the best player protection and compliance and then build a new platform.” The acquisition of Unikrn, completed in October, jumpstarts this vision. “Unikrn will now form the backbone of our esports betting and wagering strategy going forward, which will then take us into a new market with a new audience. And while this is all very nascent, it’s something that will develop over time into what we believe will be a huge opportunity.” Another opportunity, potentially, is the much-hyped metaverse. Proponents of the metaverse envision an interactive, three-dimensional internet where we collaborate for work and hang out with friends and strangers in our downtime – or even buy land to build properties and businesses – will become the norm. Sceptics, on the other hand, dismiss the concept of a metaverse as some Black Mirror-esque dystopia. Last year, though, Entain trialled what it hailed a “first-of-its-kind virtual reality multi-sports entertainment experience”. Accessed through Facebook’s Oculus Quest 2 VR headset, the product allowed customers to “explore multiple VR sports games” and play games individually and with friends. “My background is from media and entertainment and the video gaming industry where there is increasing overlap with our sector. So, we see this gathering pace, especially as technology advances,” Nygaard-Andersen tells EGR Intel. “We are already looking at developing some of these first immersive, VR multi-sports experiences for customers – metaverse products if you like. But the metaverse already exists today within games. And the way we approach this is we put a lot of effort into understanding gamified experiences in general. “Namely, how we can extend our existing games within the immersive experience, whether it’s within a metaverse or whether it’s a more gamified experience. A lot of the things that we are doing today will happen within a metaverse – it’s our task to figure out the most exciting games and products we can offer within that environment.”

TAM to act

Entain believes ‘interactive entertainment’ accounts for $20bn of the company’s $162bn of identified TAM. The rest, the firm projects, is made up of its core international gaming business, new markets (potentially 50+ in the medium term), market growth in core markets, and becoming North America’s market leader. On North America specifically, which Entain pegs as a $32bn opportunity, Entain has made impressive progress in the past couple of years with the BetMGM brand, which is now live in 19 US jurisdictions and is America’s number two operator behind FanDuel. From its HQ in New Jersey, and led by boss Adam Greenblatt who manages a workforce of 900, BetMGM has grown its market share nationally to the point where it was 24% for sports betting and igaming in the three months to November 2021. In fact, it is the clear market leader for igaming with a 30% slice of the online casino and poker pie (BetMGM also recently rolled out 75-ball bingo built by Entain for Borgata in New Jersey). This rock-solid position stateside is all a far cry from when Alexander nonchalantly talked up the US JV’s potential in trading updates and suggested it would be a failure if the alliance wasn’t eventually the market leader. Analysts on those calls didn’t seem to quite share his optimism after what was a sluggish start following the formation of the JV in June 2018, one month after PASPA was struck down. It now seems that the forthright Scot could be proved right. “I’m extremely proud of our achievements there and the achievements of the wider team,” Entain’s boss comments. “Since PAPSA’s repeal two-and-a-half years ago, we, together with the team and MGM, have built the business from scratch […] we are on course for revenue of more than one billion [dollars for full-year 2022].” In fact, Entain and MGM announced in a business update on 19 January that BetMGM is projected to deliver net revenue of more than $1.3bn in 2022 and to reach positive EBITDA in 2023. Full-year 2021 EBITDA losses are forecast at $420m-$440m, in line with expectations. Online sports betting launches in Illinois and Louisiana are earmarked for the first quarter of this year, along with the rollout of the bingo product and BetMGM’s racing app in additional states. Entain and MGM will also inject $450m into BetMGM this year, taking the total investment to $1.1bn since 2018. The MGM brand and the ability to acquire online customers through its land-based casinos, combined with Entain’s platform supported by more than 3,000 technologists and general online gambling know-how, is a powerful proposition. Enlisting Hollywood star Jamie Foxx to front BetMGM’s marketing was a shrewd move. All this goes a long way to explain how BetMGM torpedoed the FanDuel and DraftKings sports betting duopoly and expects full-year 2021 NGR of $850m, which would be nearly five times more than the prior year. “BetMGM is fully integrated and running on Entain’s platform, and therefore benefits from the powerful platform and also the products, the CRM, the business intelligence, the trading and all the experience within Entain,” Nygaard-Andersen explains. “I think that has been really valuable because when you go into a new state in the US, you almost need to start from scratch; you don’t have any customers there. However, MGM can run on our platform, and they benefit from our knowledge.” That knowledge includes 250 terabytes of data on the behaviours of more than 160 million players globally, more than 100 content recommendation engines and in excess of 50 AI-prediction models. “We are also creating, through our own games studios, exclusive games for BetMGM that are only available in the US market,” Nygaard-Andersen points out. The result is around seven in 10 BetMGM customers play in-house or exclusive games, and they consistently rank as the top-five most popular titles. “From my side, the focus is really to do everything we can to make BetMGM in the US the most successful it can be by using the Entain platform, our products, knowledge and experience to help them go into more and more states.”

On the global stage

Entain currently holds 100 licences in 27 countries around the world. What’s more, 99% of revenue is derived from regulated or regulating markets as part of efforts to exit grey jurisdictions. The aim is 100% by the end of 2023. One of the markets that falls under ‘regulating’ is Brazil, a country where Entain insists it is the leader with its Sportingbet and Betboo brands. The introduction of regulated online sports betting has been frustratingly slow in this part of South America with a football-obsessed population of more than 200 million. Nevertheless, Martin Lycka, senior VP for American regulatory affairs and responsible gambling at Entain, says that the group will apply for licences “as soon as they become available”. “Once regulated, we expect Brazil to become by far the biggest sports betting and, prospectively, also online casino market in Latin America,” he tells EGR Intel. “Elsewhere in Latin America, we intend to continue looking for new regulatory opportunities, such as Chile or Peru, with a view to building up on our existing licensed presence in Colombia.” Closer to home, however, its gaming offerings in particular face headwinds in Germany due to the country’s tough regulatory regime, whereby online table games are verboten and there is a prohibitive 5.3% turnover tax on slots and poker. Indeed, Germany is consistently highlighted in Entain’s results as being a drag on performance. Furthermore, Entain, like a number of international remote gambling operators, has been forced to endure a ‘cooling-off’ period in the recently regulated Netherlands for previously serving Dutch players when the market was unregulated. A return to the country is earmarked for Q2 2022, although the hit to group EBITDA is around £5m per month in the meantime. And in the UK – Entain’s largest market – the industry is eagerly awaiting the outcome of the review into the Gambling Act 2005, which does seem likely to result in some form of curbs on gambling marketing at the very least. Entain’s chief governance officer, Robert Hoskin, says he supports “good regulation”, but on the UK specifically he adds: “Regulation must be proportionate to allow businesses to thrive whilst protecting the small number of customers who may be at risk of harm. What we have seen from other markets where draconian regulatory restrictions have been introduced is the size of the black market increases and so does the levels of problem gambling.” While on the subject of problem gambling, tackling this is an area where Entain takes the lead within the industry, aided by ARC (Advanced Responsibility & Care), the company’s intelligent approach to risk reduction that uses AI to spot markers of harm. It is said to pinpoint customers at potential risk in 80% of cases. Moreover, RG forms part of the company’s sustainability charter that includes Entrain, a multi-million-pound scheme to improve access to technology and improve diversity, as well as donating £100m over five years to the Entain Foundation for good causes. In addition, one million trees will be planted as part of Entain’s goal to be carbon net zero by 2035. Nygaard-Andersen says: “My ambition is that in turn we will lead on many of these areas of sustainability in our industry, but also beyond the industry. We understand our role in society, but I also truly believe the most sustainable companies in our industry – really in any industry – will be the most successful and will be leaders today and in the future. So, that is really why we made ESG and sustainability an integrated part of our strategy.” Entain, like other leading igaming firms, is pivoting away from VIP customers towards offering a more mass-market proposition as part of its sustainability push. It is very much striving to become an all-encompassing digital entertainment business, which could be jarring for dyed-in-the-wool sports bettors. Perhaps also for an ‘old school’ bookie like ex-boss Alexander. Yet Entain, which scooped operator of the year, the headline prize at the EGR Operator Awards, and finished second in the latest EGR Power 50 rankings, is putting a decent portion of its chips on interactive entertainment to help drive future growth and capitalise on that TAM of $162bn. Esports and gaming are part of this bet. As it turns out, Nygaard-Andersen is au fait with the first-person shooter and esports betting staple Counter Strike: Global Offensive, or CS:GO for short. “I really like the game,” she reveals. “But I’m so bad at it; because if there is one thing I don’t like, it is not to win.”