For the latest edition of Breakfast with NEXT, Sonja Lindenberg caught up with Bombay Online managing director Jose’ Micallef in Tallinn, Estonia.
Fifteen years ago, the world bore witness to one of the largest commercial collapses in history.
Lehman Brothers, a financial behemoth and titan of Wall Street, declared bankruptcy on 15 September 2008.
With a staggering debt of $613bn, this cataclysmic event not only left thousands of employees jobless, but also thrust the recession-ridden economy into a devastating downward spiral.
The consequences of Lehman Brothers’ bankruptcy had far-reaching effects on the banking industry, contributing to the broader financial crisis that followed.
In the midst of this turmoil, Jose’ Micallef, then self-employed trading oil futures from his home in Malta, faced a stark reality: he had lost everything overnight.
Micallef took a position at the Malta-based B3W Group, initially as a business development manager in 2009 before rising to the position of general manager in 2015.
His journey eventually led him to roles at NetEnt, Derivco and Pariplay.
In 2021, an introduction to Yolo Group set the stage for Micallef’s current role as the managing director of Bombay Online, which includes live dealer specialist Bombay Live, as well as Bombay RNG Games and content aggregator Hub88.
“I loved working in the industry from day one, and since I came from a fast-paced background, I found a lot of similarities,” he remarks.
Presently, he leads a team of 400 professionals working in various locations. Micallef is based in Tallinn, Estonia, but he’s often on the move. “That suits me perfectly, as I’m someone who thrives on change and can’t remain in a single place for more than eight to 10 weeks.”
The evolution of Bombay Live
Launched in 2020, Bombay Live aspires to be the epitome of the next-generation high-roller live dealer, offering games now accessible in 18 different UI languages.
“We initially embarked on this venture with our first studio right here in Tallinn. Subsequently, we expanded to Kyiv, Ukraine, but unfortunately had to close it down due to the conflict.
“However, last year marked a turning point as we successfully opened two studios, one in Argentina and another in Krakow, Poland.”
He also highlights Bombay’s technological advancements: “Over the past year, we’ve made significant strides in enhancing our technology, resulting in a robust and stable product.
“We are planning to unveil new games and even introduce popular game shows in the near future.”
When asked about the possibility of challenging live casino leader Evolution, Micallef responds with humility: “We wouldn’t even dream of competing with Evolution.”
Nonetheless, he adds, Bombay Live has found its very own niche, catering specifically to VIP players.
The ecosystem advantage
“Differentiation is a pivotal element,” underscores Micallef.
As with all companies in the Yolo Group family, Bombay enjoys the unique advantage of being able to access the thriving ecosystem established by the company.
“The industry continues to change and evolve, which means we need to make sure that our platforms, systems and processes are scalable.
“We carry out rigorous testing, and the advantage lies in the fact that most of our resources are in-house, including our own online casinos. Before introducing a feature to the wider market, we often engage operators in the testing phase.
“Their feedback is invaluable, and we persist with testing until it reaches a stage of readiness for release. This collaborative approach is a fundamental strength,” he explains.
Yolo Group, led by founder Tim Heath and Group CEO Maarja Pärt, has grand ambitions for its Bombay brand.
The company is currently undergoing extensive renovations on an old hotel in Tallinn’s historic old town, transforming it into an exclusive private members’ casino, including a hotel and several restaurants, aimed at high rollers. The opening is scheduled for spring 2024.
One might assume that financial constraints are not a concern for the group.
Micallef clarifies: “We don’t operate under the illusion that money is unlimited. That’s not the case. When we were smaller, there may have been more flexibility. We could act swiftly and had better visibility of our funds. However, as the group has grown, we’ve adopted a more structured approach.
“We generate project ideas, assess their scope, and develop a solid business case. Our focus is always on the value a project will bring to our business and our customers. It’s not a matter of someone coming up with an idea, and us hastily rushing into it.”
Blank cheque scenario
Nonetheless, Micallef acknowledges that within the group, they frequently adopt a concept akin to the “blank cheque scenario”.
When embarking on a new project, they ponder: “How would we approach this if resources were limitless?”
“This mindset serves as a means to eliminate all boundaries and restrictions, especially when striving to create the most impeccable products for future projects,” he says.
However, Micallef clarifies that this approach doesn’t imply a lack of accountability. They meticulously calculate the required man-hours, delivery timelines, and other essential factors.
“The goal,” Micallef notes, “is always to create great customer service.
“What matters most in the gaming industry is how the money flows from the player to the operator and to the suppliers. So there are all these transactions ongoing every second, and it’s also high volume.
“Therefore, you need to create swift systems for fast deposits, fast withdrawals, and provide good customer service.”
He points to banking services through Yolo Group’s HubWallet. It facilitates B2B transactions between operators and aggregator Hub88.
“With the HubWallet, transactions are cost-effective as we leverage cryptocurrencies. Additionally, we have plans to introduce fiat currencies in the future,” Micallef highlights.
Unique insight
He possesses a distinctive industry perspective, having the ability to speak from the vantage points of an operator, aggregator, and game developer.
“Players are seeking something special. There’s a plethora of content in this highly competitive, saturated market. Game studios are emerging from every corner, and operators and players are becoming more selective.
“Some studios release a game or two every week,” he remarks, highlighting the impact on the shelf life of games, which has dwindled from around 40 to 50 days to approximately 14 to 15 days before peaking.
“I believe that someone will soon crack the code and create more personalised games, where players may even have some ownership,” he predicts.
Life in Tallinn
His greatest challenge, Micallef points out, is managing a team with diverse backgrounds and nationalities.
Bombay prides itself on its diverse workforce, with individuals hailing from a multitude of countries and encompassing various professional and cultural backgrounds.
The challenges, therefore, are predominantly centred around people-related issues and bridging the gaps between cultural perspectives.
Micallef himself eagerly accepted the opportunity to relocate from Malta to Estonia, emphasising the allure of the city and its natural surroundings.
Nonetheless, there’s one element from Malta he longs for: “I do miss the Mediterranean Sea,” he says.
Sea creature
The sea has always held a special place in Micallef’s heart. In 2018, he engaged in ocean conservation through “My Ocean Road.”
“I’ve always had a deep passion for diving,” he explains. “So, I travelled to Mexico and participated in coral reef restoration. I joined a group of volunteers.
“We literally lived on a beach for several months. We embarked on two daily dives and operated a coral clinic for their rehabilitation.”
Micallef said they were isolated from the modern world, devoid of electricity or familiar conveniences.
“We ate what the land provided. It was tough at times, but it was a great experience, and if the ocean dies, we die,” he says.
Ecosystems in all forms
In every endeavor, Micallef’s journey reflects the interconnectedness of ecosystems, both in the natural world he cherishes and the corporate landscape he operates in.
Though he misses the sea from his homeland, he is keen to ensure that Bombay makes waves in the iGaming industry.
Betsson is facing a lawsuit from a player who claims to have been manipulated by the operator’s VIP programme and is seeking to recover millions in losses.
As first reported by Swedish newspaper Dagens industri, Betsson AB CEO Pontus Lindwall has appeared in court in Uppsala, Sweden, as a witness. However, he provided little detail on the case, claiming he “does not work with those issues.”
The player alleged that Betsson used trips, bonuses, and incentives to entice him into gambling away large sums on various sports games between 2016 and 2018, despite him showing obvious signs of problem gambling.
He is seeking almost SEK5m (€443,113) in damages, which is his net loss after placing bets totalling almost SEK60m.
The lawsuit alleges that Betsson’s behaviour violated the Swedish Contracts Act and centres on the operator’s responsibility for problem gambling and whether it had appropriate procedures in place to both detect and prevent it.
According to Dagens industri, the player’s lawyer argued that Betsson should have been aware of the customer’s gambling addiction and that the company’s “combination of technical systems and manual processes” should have detected it.
Betsson, meanwhile, argued that the customer’s losses were due to his own actions and that he had the financial means to gamble the amounts in question.
Reference was made, among other things, to the player’s LinkedIn profile and declarations, which showed that during the relevant period he held a managerial position in a large company, with an annual salary of up to SEK1.5m.
Lindwall testimony
During the trial, Lindwall confirmed that Betsson had responsible gambling procedures in place but said that he “doesn’t know in detail” on how these procedures work.
When asked how to identify if a player has a severe gambling problem, Lindwall replied: “I can’t answer that exactly. I don’t work directly with those issues.”
He revealed that Betsson has income from more than 30 countries with different legislation.
The court is expected to make a ruling in the coming weeks.
The outcome could have significant implications for the gambling industry, and the case is being closely watched by industry analysts and regulators as it could set an important precedent.
Alongside this case, Unibet owner Kindred Group is facing a similar lawsuit in Stockholm, where fashion designer and media entrepreneur Per Holknekt claims he was “seduced into a viciously dependent position towards the gambling companies.”
He is suing the firm for SEK10.3m.
888’s share price has plummeted more than 20% after the operator revealed that CEO and executive director Itai Pazner has left office with immediate effect.
While the reason for Pazner’s departure from 888 has not been officially stated, iGaming NEXT understands it is related to an internal compliance investigation that found the company failed to adhere to KYC and AML protocols for VIP customers in the Middle East.
The non-executive chair of the group, Lord Mendelsohn, will be stepping in as the executive chair on an interim basis while the board searches for a permanent CEO.
Lord Mendelsohn thanked Pazner for his contributions to the company over the past 20 years, including the last four as CEO.
“Itai has played a very important role in building a business with powerful proprietary technology, and has overseen successful early stages to the William Hill integration process. We wish him well in his future endeavours,” he said in a brief statement.
Under Pazner’s leadership, 888 acquired William Hill’s European operations for a sum of approximately £1.9bn.
However, the company incurred a substantial debt of £1.76bn to finance the acquisition.
Pazner joined 888 Holdings in 2001 as marketing manager and held various senior positions before being appointed COO in 2017 and CEO in 2019.
On LinkedIn, Pazner described working for 888 for more than two decades as a “great honour”.
In a social media post, he said: “The main achievement that stands out for me is my role in creating the 888casino into a leading online casino brand globally.
“Working with a great team of colleagues, we built 888 into a top-tier player in sportsbook and 888poker to be one of the leading poker networks globally,” he added.
Compliance investigation
In a separate statement, 888 revealed that it has suspended VIP activities in some of its .com markets due to an internal compliance investigation.
The review has revealed that best practices regarding Know Your Client (KYC) and Anti-Money Laundering (AML) processes have not been followed for VIP customers in the Middle East region.
To rectify the situation, the board has decided to suspend the VIP customer accounts in the region, which is estimated to impact less than 3% of the operator’s revenues.
Lord Mendelsohn commented: “The board and I take the group’s compliance responsibilities incredibly seriously. When we were alerted to issues with some of 888’s VIP customers, the board took decisive actions.
“We will be uncompromising in our approach to compliance as we build a strong and sustainable business,” he added.
iGaming NEXT has reached out to 888 for comment.
The trouble with .com
Advisory firm Regulus Partners linked Panzer’s departure to the “dangerous” nature of “grey-market operating practices”.
The firm also pointed out that 888 made redundancies at its Israel office a few days ago.
“The Middle East contains a full house of ample VIPs, complex gambling law, extreme AML risk, and ‘creative’ payment processing, to the extent where the act of doing business is potentially as a big a problem as the amount from a legal risk standpoint,” said Regulus Partners analyst Paul Leyland.
“As regulatory scrutiny increases, it is likely to become increasingly difficult to hide systemic AML failings in plain sight, in our view; indeed we are surprised that it has taken this long for a blow-up of this nature to happen,” the firm added.
Regulus predicts that Pazner won’t be the last senior executive to face consequences for questionable .com practices of publicly listed and domestically regulated operators.
The question remains, Leyland concluded, whether a senior scalp will be enough to appease inquisitive regulators.
CFO stays on
Meanwhile, 888 said CFO Yariv Dafna has now agreed to stay on until end of 2023.
Earlier in January, it was announced that Dafna would leave 888 after publication of the firm’s full-year 2022 financial results in March.
According to a recently issued trading update, overall revenue for Q4 2022 slipped by 2.6% year-on-year to £458m.
Moreover, 888 ended the year with £1.8bn in equivalent debt, it said, with some 70% of its interest costs fixed for at least three years.
Headquartered in Gibraltar, and listed in London, 888 operates from 15 offices around the world and employs over 12,000 people globally.
London-based brokerage Peel Hunt admitted its Buy rating for the stock was less credible following today’s news. It lowered its target price to 150p per share, down from 210p.
“The share price decline implies investor concern that we are not being told what is really going on,” said Peel Hunt analyst Ivor Jones.
“The board has a lot to do to reassure that there are no more problems to be revealed,” he added.