Betsson’s Jesper Svensson: Industry faces challenge to win back institutional investors
Global equity markets have plunged significantly over the last few months, but for many tech and digital companies, this is a sign of “market normalisation” rather than a prolonged downward trend.
Those are the thoughts of Jesper Svensson, CEO of Betsson Operations, who sat down with iGamingNEXT for an exclusive interview in July.In H1 2022, many growth stocks on global markets were hit hard after international institutions gave a bleak economic outlook, including high inflation and the prospect of a recession.
While Betsson’s share price fell from a high of SEK88.29 in mid-September 2021 to SEK57.50 in mid-July 2022, Svensson believes the downward trend of growth sector stocks should also be considered as a market correction after a pandemic-fuelled boom.
“I am not worried about the long-term outlook by any means,” said Svensson. “To be frank, there are still so many opportunities for the iGaming industry to explore, which will provide growth for many years to come.”
“I do think however it will be a challenge for the industry to get back some of the institutional investors that left the gaming vertical. But all in all, it’s a growth industry that has a very solid outlook.”
“Online gaming has proven to be very resilient as an industry, even in difficult times, hence we are standing stronger than most industries.”
Betsson’s financial Q2 financial results, published days after the interview, prove that growth is still possible after the operator reported all-time high quarterly revenue of €186.3m.
This caused a 10% uptick in Betsson’s share price. However, institutional investors are increasingly including environmental, social and governance (ESG) considerations when making investment decisions.
Svensson noted that sustainability has risen up the agenda of the iGaming industry and “a lot of work is being done in the field of responsible gaming” where taking data-driven decisions to protect customers from harm has become the norm in regulated markets.
However, he admits that not all ESG efforts are visible or being noticed by those holding the cheque books, which shows the sector can do more to improve communication of ESG measures in a transparent and informative way.Svensson further pointed out that online gambling accounts for only about 15% of the global gambling market, although this figure is significantly higher in digitally advanced economies like Sweden, where online gaming’s market share has surpassed 50%.
He also stressed that Betsson will continue to pursue its strategy of geographical expansion, across regulating markets like Latam and Africa, to keep growing and to mitigate some of the challenges seen in more mature Western European markets.
“We are growing in Latin America and are presently building our regional headquarters in Bogotá, Colombia,” said Svensson.
“We now have a licence in Argentina, and are present in Brazil, Peru and Chile. Later this year, we will go live in Mexico. So, Latin America will remain an important focal point for us going forward,” he said.
“I am not worried about the long-term outlook. To be frank, there are still so many opportunities for the iGaming industry to explore.”
Indeed, Latam has become one of Betsson’s biggest operating markets by revenue, accounting for 25% of overall revenue in Q2 2022 after generating €45.7m during the reporting period.
“That was really tough as the Dutch market accounted for a significant part of our revenues. We now expect to receive our Dutch licence within the next months,” said Svensson.
Looking again at the global picture over the next few months and commenting on the worsening economic conditions, he said it could well be that consumers will gamble less often as even relatively wealthy countries are experiencing mounting cost of living pressures.
“When times are hard, it always has an impact on how much consumers can spend on entertainment, so this will affect any company that is in the entertainment industry, including gaming companies. That said; online gaming has proven to be very resilient as an industry even in difficult times, hence we are standing stronger than most industries.”