How would you evaluate the year 2021 for Playtech in terms of achieving its goals?
2021 has been a quite intense and positive year for us. The complex and challenging global context, that sadly continues to affect all of us, has encouraged Playtech to be even more focused on the safety and the digital wellbeing of players, while achieving a significant commercial expansion. The main commercial goals for the year were the acceleration of our penetration in the United States and in Latin America, which have been both achieved in full. At the end of the year, we announced the launch of two state-of-the-art Live Casino facilities, one in Michigan and one in New Jersey, which represents the next step in our strategic expansion in the United States. We also signed strategic distribution agreements with the likes of IGT, Scientific Games and Novomatic Americas. During the year, we continued to add new clients in both North and Latin America, expand our cooperation with existing customers, and deliver innovation. At the same time, we further improved our ability to provide professional service support to our new customers, especially for those with limited digital experience. At Playtech, our professional services team supports new customers every step of the way throughout the launch process and, particularly, in the early life of a newly live customer. Digitalizing the support services is also important, as we support operators 24/7 around the world. This area of our business has certainly developed over the last 12 months. As a global company, we continued to look at any newly regulated markets. One notable example is The Netherlands, where we were able to help the largest local operator, Holland Casino, launch when the Dutch market opened last October. On the sustainability side, in 2021, we have increased our efforts on player protection and sustainability of the gambling sector in general. This is an ongoing process that will certainly continue in the next years, and that involves all the stakeholders of our industry: gambling operators, academics, researchers, regulatory authorities, and healthcare providers. We have been engaging as early as possible with policy makers, regulatory authorities, and with other local actors that are influential in shaping regulations. In sharing regulatory experiences, best practices, and our own academic research, we aim to create a more responsible and sustainable entertainment industry. In the past 12 months, we also financed and participated into a series of initiative and programs, aimed at increasing the understanding of digital resilience and mental health issues, financial harm and problem gambling in general, which are particularly relevant during the pandemic period. This, again, is part of our longer-term commitment.
The company is extremely active. In recent months, it has signed agreements, launched new products and advanced in important markets, such as the United States and, in the future, in the recently opened iGaming markets of the Province and the City of Buenos Aires (Argentina). Using your knowledge also as a former regulator in Italy, how essential the legalization of iGaming in these and other markets is, and how does that help players to be more secure?
The discussion on the legalization of iGaming has been going on everywhere for a very long time, despite online gambling having been offered, and accessed, on the Internet since 1994; that is 22 years ago! Italy was one of the first countries in the world to introduce a regulatory framework for iGaming back in 2007; even in that case, after a complex and lengthy political debate. The example was soon followed by some other European countries, such as France, Denmark, Estonia, and Spain. Eventually, in the last 15 years, practically all the other European states have legalized this sector. The same started to happen overseas as well. In Latin America, for instance, Mexico, Colombia, and several Argentinian provinces have already adopted their own legislations, with other countries working on the future regulation, such as Chile, Brazil and Peru, for instance. I think this process itself demonstrates that governments see indeed a benefit in regulating the sector. During the path to regulation, there are usually understandable concerns that the legalization of iGaming could lead to an increase of the negative consequences of gambling, but what these last 15 years of history have showed us is that prohibitions are not effective at all in protecting the players. There is a natural demand for this form of entertainment, which can easily be met by a corresponding offer, regardless of the regulatory status, without any possibility to contain it, given the open-border nature of the Internet. Moreover, especially in mature markets, there is no evidence of an upsurge in problem gambling prevalence rates as a consequence of the legalization. Regulation is the only way for a government to gain visibility on a usually significant economic activity, and, most importantly, to control and steer it. More and more new regulatory frameworks now include provisions aimed at improving the protection of vulnerable players, and policymakers have been learning from each other what measures are more effective, and will continue to do so. Another important factor is the opportunity that iGaming offers to use the technology, which constantly advances, to help safeguard the players. Operators have access to very detailed granular behavioral data for every individual player, which can be used to understand, at a very early stage, if any of them is starting to show signs of problematic play. This is a field on which BetBuddy, a specialized Playtech company that uses artificial intelligence to analyze players’ behaviors and predict their risk, has been investing and researching in the last 10 years, and the results are quite promising, with an impressive level of accuracy. The next and significant step, also made possible by the iGaming technology, is to use the individual behavioral profile of each at risk player to engage with them and intervene in a personalized way, through automated tools and customized messages that have a great potential in helping players not to lose control. Finally, the automation allows the operator to effectively engage with a large number of players in a financially sustainable way. In-play intervention is an area in which we are putting a lot of effort, with the objective of sharing our findings with all the other stakeholders and, consequently, help enhance the level of player protection in the whole industry. As a supplier, we are offering our technology, tools and experience, and are also sharing publicly all the results of our research, but it is important to emphasize that, ultimately, it is the responsibility of the operators to raise the bar in the field of player protection.
Speaking of LatAm, how is this region considered in Playtech’s global business plan? Besides Mexico, Colombia, and Argentina, in which other jurisdictions you think your company will try to establish itself in the near future?
As mentioned, Playtech has a strategic focus on Latin America. The reason is simple. The region seems to be, in terms of regulation of iGaming, in the same position as Europe around 10 years ago, with just a few countries having already legalized the sector, and others on the verge of doing it. We expect that, in the next years, just like it happened in Europe, most territories in the region will be regulated, and we are ready to play our part in all of them. Launching in any newly regulated market is not straightforward, and the primary reason for this is the bespoke requirements of each regulatory body. Each regulated market, due to legitimate cultural, social or political reasons, adds their own local flavor to regulations, and even when taking the lead from existing best practice, there should be an appreciation of each country’s own specificities. Every country, and even every province, like in the case of Argentina, is different, and gambling can be an emotive subject with various considerations at play. It should not be expected that one set of regulations can be lifted to fit squarely into another’s. For us, having the necessary market information and clear timelines to be able to comply with local rules is a key, and we put a lot of effort in this process. When possible, we aim at establishing strategic partnerships or even joint ventures with reputable, market-leading operators. Mexico (with Caliente) and Colombia (Wplay) are two remarkable examples and extraordinary success stories. At the same time, thanks to the flexibility and the breadth of our offering, which includes our player management platform, sportsbook, casino, live casino, poker, and bingo, we can cater for the needs of local and international licensees of any size. For instance, in the City of Buenos Aires, we promptly got a supplier license that allows us to provide our games and services to every operator which is going to launch there. Last but not least, like the entire industry, we look forward of the start of regulated iGaming in Brazil, that now finally appears at the horizon. Brazil has the potential to become one of the largest regulated markets in the world, and we are definitely ready to have an important role in it.
Technological innovation, original and fun content, responsible entertainment. How these three concepts are part of Playtech’s working ethics?
These are indeed the pillars which have characterized the entire history of Playtech, since it was founded in 1999, in Tartu, Estonia, one of the European technological hubs. Online gambling, as mentioned, is definitely technology-intensive. Innovation is a key: while the mechanics of slot machines -essentially based on spinning wheels- have remained the same since 1894, when the first one, “Liberty Bell”, was invented, technological innovation around the games has been incorporated by the operators to cope with the growth of the sector and the increase of competition. We’ve been embracing this innovation by introducing games that could meet the evolving tastes of the players. Every year, we launch over 80 new games and variants, and continuously evolve and improve our live casino offering. Thanks again to technology, we can gauge the reaction of the players, which varies greatly from one territory to another, and even from one operator to another in the same country, and rapidly adapt our products to offer those that can provide the most fun to them. While technology helps gambling to be an immersive, entertaining multimedia experience, it also allows us to significantly improve the security features, aimed at preventing tampering, frauds, money laundering, at the same time, protecting the players, especially those who are more vulnerable. This is very relevant, because fun and responsible entertainment must necessarily go hand-in-hand. If this does not happen, and operators are not genuinely committed to promote a responsible way to gamble, with every possible technological help, the whole industry puts itself at risk of not being sustainable in the long term. Finally, to achieve this, I think that we, as an industry, should take action collectively. If we look back, and I’d say both on the regulators and the industry sides, all safer gambling initiatives have been carried out individually, without much sharing of experiences and best practices among regulators, and even less among operators. As a supplier, which is a more neutral role, we have been trying to play our part by promoting a more joined-up approach across all the stakeholders. There is an indeed ethical component. Gambling can be harmful, and we should do whatever we can to prevent that. The abundance of data and insight on each and every player that online gambling can provide represents a spectacular opportunity to do that.
Looking into the future, how do you envision the post-pandemic type of gambler, and what challenges will your company have to face to continue captivating both operators and players alike?
First of all, let’s really hope that there will indeed be a ‘post’-pandemic soon. The main challenge for us and for the entire industry, in my opinion, is around sustainability. As I’ve said, we have a sort of more neutral role. We work with hundreds of B2C operators, who often compete fiercely against each other, but this competition doesn’t affect our ability to invest time and energies in safer gambling research and development. We also benefit from a privileged observation point. Our responsibility is essentially two-fold. On one hand, we want to develop safer gambling solutions that actually work, supported by evidence and extensively trialed, which are focused on the individual player’s wellbeing and not generically on the entire players’ base, since we are all different. I mentioned above that online gambling gives us access to a myriad of individual data that wasn’t available in the past. It’s not just the gambling data, which is already very granular. There are possibly many other sources, given how ‘connected’ we are. I know that VIP managers check a player’s activity on social networks, for instance, if they suspect that something is going on. There are affordability data: companies like Experian or Equifax know everything about our spending habits. The pandemic has probably made us even more ‘connected’, being stuck at home for a long time further increasing the amount of available individual digital data. Now, it depends on our ability to use all this information for good. On the other hand, we need to educate both policymakers and industry peers on the potential of this approach. In the last three years we have been having conversation with many European regulators, and, finally, several of them are introducing regulatory requirements on behavioral analysis and personalized intervention. These are the likes of the Netherlands, France, Spain, Germany, Sweden, for instance. In conclusion, while continuing to innovate and respond promptly to any change in the players’ demand, our primary challenge is to try to promote a sustainable, long-term growth that can benefit equally the consumers, the governments, and the industry.