Exclusive Interview: Bet365 One Year On (Part 2)

eGaming Review (eGR): How has this year been since we last spoke, what specific challenges have the last 12 months brought with it and how have you overcome these? Has this been one of the toughest years in Bet365’s history?

Denise Coates (DC): I think we have had a decent year financially so it’s certainly not been anywhere near the toughest from that perspective. Don’t get me wrong, it’s been challenging, but so is every year. Business is just like that, but I would have to say it’s not quite like the pressure of the early days when added to those normal challenges, we had the enormous added issue of losing money and being beholden to the banks for continuing support.

eGR: What have been the highlights and the toughest points during the year?

DC: The highlight of the year business wise for me was the launch of the new sports site including all the new in-play features. Our sports product is so critical to us and it is imperative that we keep driving forward with it all the time and hopefully constantly improving the user experience. In terms of the toughest, I would have to go back to that recurring theme of regulation. It’s a huge task we all face and realise it’s going to have long terms effects on the business, however, it’s a challenge that hopefully will end up being worthwhile.

eGR: As things change are you considering taking a step back from your hands-on role within the company?

DC: I continue to love what I do. The business has evolved enormously from when it was a start up and now with over 1,700 employees I don’t know everyone anymore. That said, I think I will always run the business in an approachable way so that all my senior staff know that they can discuss anything with me and get quick decisions.

eGR: How has each vertical performed in comparison to a year ago?

DC: If you look at our year to March 2011, overall numbers were pretty good. We saw gross gaming revenue (GGR) rise to £438.5m, with EBITDA up to £117.9m. There was a slight dip at the profits before tax level to just under £100m as a result of heavy IT investment, but I was pleased with our performance. If I look at current run rates during the first six months of 2011, I feel that our continuing investment in the business is paying off. Overall GGR was up 37.6% at £269.9m for the half year. Sports was the strongest performer up 47.5% at £195.1m, with gaming also performing very credibly up 17.1% at £74.8m for the six months.

eGR: With a number of supplier changes and the CEO of a rival bookmaker looking for better terms with his suppliers, how has your relationship with suppliers changed this year and how do you see this changing over the coming years?

DC: We have, of course, always developed our own software sports product which is very much our lifeblood, and which represents more than 70% of our revenues. I have never regretted the decision to go down that route although I would also never pretend it was easy. It has given us a point of differentiation and I think it has been an important part of our success. Playtech provides the products on our casino, poker and bingo tabs, but, our games tab is open with us having a large range of suppliers including Finsoft/GTech, Electracade, Realistic, Ash Gaming and MGS. As such, I think we have a pretty good balance.

eGR: Do the issues William Hill Online has recently faced and is facing with Playtech mean you could reconsider your relationship with them? Are suppliers as valuable to operators as they used to be?

DC: Our relationship with Playtech remains good, for us they are a pure software provider and they remain a valuable partner.

eGR: In general, is relying on partners and suppliers to provide customer management, affiliation and of course products, the right way to do business? Would you ever consider designing your own casino and games software, or is this simply too large an investment?

DC: I don’t think there is a right or a wrong way to do it. The circumstances for each individual company will be different. For us we have kept the vast majority of things in-house, but, that does not mean it can’t be done successfully another way. In terms of developing our own casino and games software, I would never rule anything out, but, I think it’s unlikely. I have a huge development team and my view has always been that our best strategy is to focus on our core product and backend/support systems. My fear was always that if we tried to do all our ancillary products as well, we would end up compromising our core sports product.

eGR: To counter this, is an acquisition likely and if so in what area and territory? Have you looked at acquisitions recently, and if so what takes your interest and why?

DC: We have done pretty much everything organically so far and I suspect that we will continue with this strategy. That’s not to say that acquisition can’t be good, you only have to look at what Paddy Power have done in Australia to see if executed well what value can be created. However, I go back to the comment that every company is different and I am not sure acquisitions are right for bet365 and the way we are set up.

This article features in the latest issue of eGaming Review. Part three will follow tomorrow.