Delayed innovation, grey market appeals and macroeconomic impacts to the M&A environment were all key topics touched upon at SBC Summit Barcelona’s opening panel session on day one. 

Following a rousing opening keynote, which was delivered by DAZN’s Shay Segev, five industry heavyweights were guided by Anton Kaszubowski, Founder and managing Director at SBC Advisory Partner, in navigating issues of obstacles, challenges and opportunities.

After hearing of the evolving role of a CEO, or Chief Everything Officer as per Glitnor Group’s David Flynn, guests were treated to the touching insights of Parimatch Tech’s Maksym Liashko who offered close insights into the months following February’s Ukrainian invasion.

With an increasingly eye-opening understanding of the many difficulties that confronted those across the country and further afield, Liashko spoke of a priority of providing stability for employees and the subsequent close relationships formalised despite a “dramatically” changing time.

This saw the near 50 minute session travel onto matters of regulation, and the subsequent impact this could, or in certain viewpoints will undoubtedly, have on innovation.

Paris Smith, Pinnacle CEO, touched upon the headwinds that see goalposts constantly changing, as well as looking at how regulatory developments could cause a slight pause across the industry.

“So, I think the innovation is going to be a little bit delayed”

Paris Smith, Pinnacle CEO

“We all have to look at the regulated markets, because that’s where the future is,” she said. “So I think the innovation is going to be a little bit delayed, because everybody does have to react to all the different regulatory requirements and everybody has a different requirement in every market.

“But it also gives an opportunity from the economic impact, the responsible gaming. It actually comes at quite a nice time where we want to manage and protect people, and all the different regulations that require responsible gaming, the limitations, etc it really goes hand in hand with what’s happening right now. 

“But the biggest challenge is definitely trying to push your innovation, it really comes to resourcing, because you want to push through innovation, but you still have to keep up with the regulations.”

This saw Jesper Svensson, Betsson CEO, forward a belief that “innovation today is focused on how can you do KYC flows in the best way possible,” with the real winners, and future industry leaders, being those that allow a customer to find a specific game in the quickest way.

However, Flynn ventured down a different path and instead chose to illustrate a disappointing lack of progression when it comes to innovation that, he said, is evidenced by a pandemic that brought the world to a standstill.

“I was actually thinking about this question a little bit about a third party innovation that we’ve probably used [and] must have had the biggest impact on the business over the course of the last few years. And I was struggling at first,” he noted.

“I think unfortunately, these days, if a player wants a really innovative experience, they’re going to go a grey market”

David Flynn, CEO Glitnor Group

“And then of course, it just dawned on me. We’ve just gone through an absolutely huge and devastating pandemic. And actually, within our business, the best innovation was Zoom, which is really disappointing. 

“But it’s actually the case, because without that particular product, we would not have been able to continue our business in the way that we have and just like many other businesses around the world, and like yourselves, yes, absolutely. It’s very much around regulation and focusing on regulated markets. And making sure that you meet the requirements there.” 

Before issuing a stark grey market warning: “I think unfortunately, these days, if a player wants a really innovative experience, they’re going to go a grey market, because, you know, those are the operators who are actually able to spend more time on developing software that’s really interesting and nice player experience, as opposed to focused on regulatory requirements, which is really not where we need to go as a business.”

This saw panellists move on to another huge point of discussion that is rarely far away from any industry conversation, that being mergers and acquisitions.

Svensson kicked things off by stating that “valuations are not at their peak in our industry,” pointing to the “structural growth” across both the online and offline segments.

“So I think today, you will see more and more mergers and acquisitions, because in regulated markets and locally regulated related markets, you need scale in order to be profitable,” he said. 

“…valuations are not at their peak in our industry”

Jesper Svensson, CEO of Betsson.

“And that is what is the driving element for M&A In many ways, but it’s hard to agree on a price today. It is because a year ago or two years ago, it would have been doubled. In many ways. So, it’s a tough conversation.”

On this, Flynn first addressed an increasing influx of firms that are becoming available for purchase, as well as noting a significant development that could see European companies enter the crosshairs of their US counterparts.

“I would just like to add, there’s a lot of small to medium sized companies in the marketplace at the moment that are available, shall we say?,” he commented. 

“There seems to be coming more and more, especially those that are in single regulated markets. I think that is a sign of the size is a challenge. 

“A lot of these companies, whilst may be profitable, they see that it’s going to be a real challenge for them to grow at the pace that they want, they may need more capital, there isn’t more capital available in the market these days, not at the price that you’d want anyway. 

“So, I think there is going to be continued M&A for sure. But I’d also love to be in a position right now whereby I sit on a pile of US dollars, actually.

“You know, the markets dropped, absolutely, but the US dollar, we forget that it’s 20 per cent stronger against the Euro than it was twelve months ago. So, US companies buying European companies, I think, is definitely something to keep an eye out for.”