Betsson stung by "aggressive" UK strategy
Attempts to build market share with Betsafe and Mr Smith brands hits firm during challenging Q2
An overly aggressive marketing strategy in the UK market played a prominent role in Betsson reporting a slide in profits during Q2, CEO Betsson AB Ulrik Bengtsson told eGaming Review.
Yesterday, the Group posted a 9% year-on-year increase in revenues for Q2 2016, but saw profits dip after a disappointing sportsbook performance, unfavourable currency effects and lower revenue in “certain markets”.
Operating income totalled SEK158.3m (?14m), 26% lower than the SEK213.8m (?18.8m) posted in the same period last year, while operating margin was down 8pp to 17%.
And speaking to EGR, Bengtsson said the UK market, where it has attempted to gain a foothold through its Betsafe and Mr Smith Casino brands, was “clearly a contributing factor” to the firm’s losses.
“We have been quite aggressive to gain volume as we’re a relatively small player in the UK market,” said Bengtsson.
“Looking back, we were too aggressive on bonusing and that cost us some money,” he said. “On the flip side, we also had some great traction when it comes to volume and the UK is now one of our stronger markets when it comes to new customer intake. It’s going to take a few quarters for us to extract the value from those customers.”
Sportsbook revenues amounted to SEK223m (?19.7m), an increase of 8% YoY but 24% lower than the firm posted during the previous quarter.
The CEO said it will be adding new functionalities to its sportsbook as it aims to improve performance, including a new cash out service which will be released in time for the new football season.
“We’re confident the product is being improved and we should be able to see better performances in the upcoming quarters,” he said.
Bengtsson also confirmed Betsson will “definitely” apply for a licence in the soon-to-be regulated online Netherlands market.