1, MSEK BETSSON GOES MOBILE! THE ONLINE. No 13 MAGAZINE EMPLOYEES DURING 2013 BETSSON GOT ITS FIRST NATIVE APP PUBLISHED IN THE APP-STORE

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1 THE ONLINE GAMING MAGAZINE BETSSON GOES MOBILE! DURING 2013 BETSSON GOT ITS FIRST NATIVE APP PUBLISHED IN THE APP-STORE No MSEK TOTAL MOBILE REVENUES DURING THE 4TH QUARTER 1,000 EMPLOYEES ANOTHER MILESTONE REACHED IN THE COMPANY HISTORY

2 NEW YEAR NEW POSSIBILITIES CONTENTS Welcome to the latest edition of The Betsson Magazine! Last year we celebrated 50 years and wrote about the transformation Betsson has gone through the past decades. This year s edition focuses on our new vision "The best customer experience in the industry". Betsson s goal is to offer fun amusement with an amazing experience. Everyone at Betsson can relate to our vision and to live up to this ambitious target it is a fundamental condition to have the customer as a first priority. We always have a lot of exiting stuff in our pipeline and in this year's magazine you will also meet some of the phenomenal staff that make Betsson a great company! Magnus Silfverberg, President and CEO, Betsson AB 2013 IN NUMBERS 3 THE YEAR IN BRIEF 4 WORD FROM THE CEO 6 The year of the mobile BETSSONS ENVIRONMENT 8 It's growth everywhere THE MARKET 10 THE BETSSON MODEL 12 BEST CUSTOMER EXPERIENCE 14 MULTI-BRAND 18 Leads the way to the future REGULATED MARKETS IN DIFFERENT WAYS 18 DIGITAL MARKETING 20 Real-time customer interaction MOBILE FIRST 22 A RESPONSIBLE COMPANY 24 THE UBIQUITOUS PLATFORM 28 BETS B 30 Rock solid success story GROWING, CELEBRATING & TRANSFORMING 36 MEET SOM BETSSONITES 38 GROWTH FROM A DIFFERENT PERSPECTIVE 40 BOARD OF DIRECTORS 42 SENIOR MANAGEMENT 43 On the cover: Exploded view of Betssons native ios app. Betsson reserves for any changes made after the printing of this publication.

3 2013 IN NUMBERS Betsson AB s core business consists of investing and administering shareholding in companies which through partners or by themselves offer games to the end users via the Internet. Betsson AB owns Betsson Malta and other companies which operate games through partnerships and own websites. Betsson Malta offers Poker, Casino, Sports betting, Scratch Cards, Bingo and Games. Betsson's own customers mainly originate from the Scandinavian countries and other parts of Europe. Betsson AB is listed on NASDAQ OMX Nordic Mid Cap List, (BETS B). 21 NUMBER OF BRANDS WITHIN BETSSON OF WHICH 11 ARE B2C BRANDS 12% 34 REVENUE INCREASE COMPARED TO PREVIOUS YEAR NUMBER OF NATIONALITIES OF OUR EMPLOYEES 8.4 BILLION SEK IN CUSTOMER DEPOSITS, AN INCREASE OF 22 PERCENT COMPARED TO PEOPLE WORKING ON THREE CONTINENTS (INCLUDING CONSULTANTS) 21 MOBILE SOLUTIONS GENERATED 80.9 MILLION SEK OF REVENUES IN THE FOURTH QUARTER Betsson s registered customers increased by 17% last year. The contribution from Casino, which is Betsson s largest product, increased by 7%. The sportsbook contribution increased by 34% compared to } GROSS PROFIT PER PRODUCT 5% 3% 28% Casino Sportsbook 64% Poker Other 03

4 THE ONLINE GAMING MAGAZINE THE YEAR IN BRIEF BETSSON IS A FAST-GROWING COMPANY WITH 50 YEARS EXPERIENCE IN THE GAMING INDUSTRY. IT IS AN INDUSTRY THAT MOVES FAST WAS NO EXCEPTION, THESE ARE SOME OF THE HIGHLIGHTS OF THE YEAR! % 2013 was the year when our Sportsbook delivered a new all-time high with an impressive turnover of 14.8 billion a growth of 23%! FEBRUARY BETSSON AB ENTERED AN AGREEMENT AND ACQUIRED THE BRANDS SVERIGEAUTOMATEN.COM, NORGESAUTOMATEN. COM AND DANMARKSAUTOMATEN.COM FROM CHERRY for a price of SEK 286 million. In practice, the deal implied that Betsson AB s subsidiary in Malta, which already was responsible for the operation of the Automaten sites, also took over the brands and the responsibility for the external marketing. This implied that the Automaten brands shifted from being a part of the business area B2B to become B2C brands. The deal is in line with our strategy to focus on B2C in our core markets in the Nordics. Our judgment is that the acquired brands will develop stronger internally because we can use the marketing power and scale advantages of the entire Betsson group. Said Betsson AB:s CEO, Magnus Silfverberg at the time of the acquisition. Simultaneously, Cherry acquired the brand Cherrycasino.com from Betsson AB s Maltese subsidiary, for 1 million SEK. 04

5 THE ONLINE GAMING MAGAZINE THE YEAR IN BRIEF MARCH An adapted HTML5 mobile solution was implemented for Betsafe. With the new solution Betsafe was in Q2 the best performing brand in terms of mobile penetration within the group. The integration of NGG:s organisation was completed. APRIL BETSSON RECRUITED FREDRIK LJUNGBERG AS AN AMBASSADOR FOR THE BRAND BETSSON.COM Fredrik Ljungberg is a former superstar at Arsenal and the Swedish National team. The Groups first native real money app was launched for Casinoeuro.dk MAY On the AGM Per Hamberg retired from the board and was awarded with the title Honorary Chairman of Betsson. Per co-funded the company 50 years ago and has been one of the key contributors to its development during these years. JUNE BETSSON EXECUTED A TECHNICAL UPGRADE when the brand Betsson.com was migrated to the common technical platform Techsson. The migration was successful and two third of the Betsson brands were by this change on the common platform. JULY BETSSON.COM RANKED NUMBER ONE IN SWEDISH GOOGLE FOR CASINO AUGUST THE BRAND TOBET WAS CONSOLIDATED WITH BETSAFE IN POLAND Live tests were done on the Chinese site kufa88.com. The tests were successful and kufa88 is considered to be one of the most modern lottery sites in China. SEPTEMBER BETSSON S SUBSIDIARIES IMPLEMENTED THEIR NEW VISION, THE BEST CUSTOMER EXPERIENCE IN THE INDUSTRY The new domain Casino.dk was acquired to consolidate some of the group s brands in the Danish market. Casinoeuro.dk became casino. dk in order to increase focus and give the customers a better casino experience. OCTOBER BETSSON LAUNCHED THE NEXT GENERA- TION MOBILE APP! "The new app enables our operating subsidiary to regain the leading position within mobile development. We see that gambling via smartphones is growing rapidly and we are confident that Native apps will be the customers choice in the future. Therefore, our subsidiary puts a lot of effort into this kind of development," Said Magnus Silfverberg at the time of the launch. In October Betsson also launched the new product 1X2 (EttKryssTvå)! Betsson thanks Svenska Spel for 80 years of the pool based game Stryktipset but now it s time for another product, a better product. 1X2 is a more modern and a more fair game where skill is highly rewarded. NOVEMBER BETSSON S SUBSIDIARY MOVED INTO THE BRAND NEW OFFICE BETSSON EXPERIENCE CENTER IN MALTA. DECEMBER ON THE 13TH OF DECEMBER, BETSSON GROUP HAD ITS 50TH ANNIVERSARY. 05

6 THE ONLINE GAMING MAGAZINE BOARD OF DIRECTORS/SENIOR MANAGEMENT THE YEAR OF THE 06

7 THE ONLINE GAMING MAGAZINE WORD FROM THE CEO In total we are now more than 1000 people working full time at Betsson and still counting 2013 was the year Betsson turned middle age, the internet operations turned teenager and the mobile solution moved out of the cradle. For 50 years the company has amused its customers with fun games, and for the last 15 they have been available online. The transformation to online was the first real growth infusion. The company grew from around 300 million SEK per year in the late 90 s to 2.5bn SEK 2013 (3.4bn if you add the divested companies such as Net Entertainment). Mobile is the next big growth driver, we believe. Only since beginning of 2012 the mobile penetration went from below 1% to 12% of total revenues in Q This shows how fast that transition is happening and it will continue to go fast will be the year of the mobile! 2013 was also a year filled with internal change in the Betsson group. A lot of new people joined the company and some left. In total we are now more than 1000 people working full time at Betsson and still counting. The change is a foundation for our operational companies to optimize its operations. The vision is to deliver the best customer experience in the industry and this will be done through leveraging the multi-brand and one platform strategy and become a more data led and digital marketing based operation. This means that the group will be able to deliver more relevant, real time and individual messages and communication to its customers. It also means that the preferred channel for customer acquisition will be online and mobile (instead of TV and print), which will make our marketing even more efficient. All these efforts will make the operations within the Betsson group more optimized and will deliver better customer experiences and eventually higher revenues and growth. Talking about efficiency, Betsson has during the last few years delivered the best margins in the industry. This is due to a very efficient marketing strategy, coupled with good cost control in administration and development. Our aim is to maintain this position, and we believe that we are well positioned to deliver upon that aim. We also believe that margins will be kept high if we choose to continue to operate on internationally regulated markets, where Betsson operates out of its Maltese gaming license. Although many countries in Europe are re-regulating their gaming markets and implementing local licenses, there are many market as well that is preserving the status quo. We believe that the opportunities for growth are strong in both these types of markets, i.e. both on internationally and on locally regulated markets. On the locally regulated markets Betsson will participate and apply for licenses when it makes commercially sense to do so. On the internationally regulated markets, Betsson believes there is an ongoing opportunity to continue to exploit those markets for a foreseeable future. Eventually, these markets will implement local regulations as well, and by then Betsson will hopefully have a strong position on those markets as well as having delivered strong margins and dividends to our shareholders in the meantime. It is also possible to do this responsibly. According to a study performed by researchers from Karolinska Institutet on behalf of the Swedish industry organization, BOS, the EU regulated companies are just as good as the locally licensed operators on responsible gaming. The study compared responsible gaming measures between Betsson, Unibet, Paf, Betfair and Bonnier Gaming on the one hand and Svenska Spel, ATG and Postkodlotteriet on the other hand, and the result was clear there is no major difference. Hence, to regulate the market locally and implement local licenses makes no difference if the regulators aim is to improve responsible gaming. This is good news for all our customers that trust Betsson to deliver secure and responsible games. So what about the future? The transition to mobile will continue, the transformation to a more optimized company will continue and Betsson will, as always, do it in a profitable and responsible manner. It will be a continued intense ride. Are you up for it? MAGNUS SILFVERBERG President and CEO 07

8 THE ONLINE GAMING MAGAZINE BOARD OF DIRECTORS/SENIOR MANAGEMENT 8

9 THE ONLINE GAMING MAGAZINE XXXXXXXXXXXXX BETSSONS ENVIRONMENT IT'S GROWTH EVERYWHERE! BY PHILIP DOFTVIK CEO ASSISTANT, JOINED BETSSON 2013 Gaming on the internet is still an under penetrated industry with many years of strong growth to come. The positive trend of re-regulating online gaming in Europe is continuing and governments in countries such as Denmark and Italy have reregulated their online gaming markets with promising outcomes both for governments and operators. Several other European countries are discussing similar re-regulation. The Netherlands is for example just about to re-regulate its market in a hopefully commercially and viable way. Trading towards other markets from Malta, under a license with the protection of Malta - EU and international law, also continues to develop. As markets become more and more available Betsson forecast that the underlying growth will continue. Re-regulation trends are also seen in the US, for example in the states of New Jersey and Nevada, even though they still have some way to go before reaching the level of some of the European markets. The US and Asian countries like China and India will probably be the largest online gaming markets in the future and these are still relatively unexploited. In China there are no official numbers on the online lottery sales volume, but the estimated online lottery sales in 2012 increased by 30% compared to 2011 and is about 10% of the total lottery sales volume. The growth outlook is still very good, it is expected that online lottery sale will increase 10-15% each year and grow to 40% of the total lottery revenue in the next few years. Analysts predict that online lottery sales will become the future lottery industry trend in China. On top of this, large portions of the world s population have limited access to the Internet, which is a clear indicator that the industry is still in an early phase. In addition to this, the countries with good internet coverage are now taking the next step by moving gambling from the web to mobile solutions in smartphones and tablets which enables increased presence of Betsson s products. The biggest operators in the industry claim that 50% of the revenues will come from the mobile in a couple of years so the mobile revolution has only started and will be a significant growth driver going forward. 9

10 THE ONLINE GAMING MAGAZINE THE MARKET EUROPE according to h2 gambling capital, in 2014 the European online gaming market will increase by 13 percent from last year, reaching an estimated market size of EUR 14 billion in In 2015, the market is estimated to be worth EUR 15.3 billion, an additional market growth of 9 percent. The online gaming market has increased more than nine times since 2003 and the yield per active account has almost doubled since Due to market- and political pressure from the European Commission, many European countries are following the examples of Denmark and Italy and are preparing for a controlled opening of their markets. Italy is for example estimated to grow with a compounded annual growth rate of 9 percent going from a market size of EUR 749 million in 2013 to EUR 1 billion in The Danish market, regulated since January 2012, is expected to have a compounded annual growth rate of 5% from 2013 to 2016 with a market size of 470 million in Z 25% of gambling in Sweden is interactive. The Global average is 8.2 percent. 1 INTERACTIVE GLOBAL TOTAL GROSS GAMBLING YIELD % of all interactions are screen based and we spend an average of 4.4 hours of our leisure time in front of screens each day. Source: Google The new multi-screen world BILLIONS EUR E 8.4 INTERACTIVE GROSS GAMBLING YIELD BY PLAYER LOCATION % THE NORDICS in the nordic online market the number of players who prefer gaming online instead of offline is still growing. Growth in the Nordics has been strong for many years and the market is quite fragmented with each government managing its own gaming regulation. In 2012, Denmark liberalised its gaming laws and became a locally regulated market. If the Danish model proves successful, it might become the model for its neighbors as well. However, the current model in UK might be a better example to use as a benchmark when implementing new regulations, since it currently enables the operator to make use of existing EU licenses whilst adding a tax element for local point of consumption. For Betsson, the Nordic market is very important, especially the B2C segment where Betsson has a strong position. However, Betsson only has a small part of the total market, due to the strong monopolies, which leaves potential for market share increase going forward. H2 Gambling Capital estimates the Nordics to grow with 7-8% in Betsson has grown faster than the market in recent years and we believe this trend will continue. Betsson s position is very favorable in terms of both the underlying market growth and the ability to take market share from competitors, mainly form the state-owned monopolies. We believe that Betsson and the market in the Nordics will continue to perform strongly. 15% A47% 29% Europe Asia and Middle East INTERACTIVE GROSS GAMBLING YIELD BY PRODUCT % 12% A 6% 21% Sportsbook Casino 8% North America Other Poker Bingo 47% Other State Lotteries 10

11 THE ONLINE GAMING MAGAZINE THE MARKET 34+Z 34% Expected CAGR for global mobile gambling gross win for the period Z 38% of our daily media interactions occur on a smartphone. 2 GROWTH DRIVERS BILLIONS EUR GLOBAL MOBILE GAMBLING GROSS WIN E GLOBAL MOBILE GAMBLING GROSS WIN AS A PERCENTAGE OF INTERACTIVE % 80% 70% 60% 50% 40% 30% 20% 10% E 1. Source: H2 Gambling Capital 2. Source: Google The new multiscreen world. 7% 8% 2 11% 6 23% 14 39% in regions with high internet penetration there is an ongoing conversion towards online and an increased trust in e-commerce. We use the web for shopping, banking, stock trading, insurance, bookings and other activities and this is a change in behavior since only 10 years back. This behavior will also increase even further with new generations growing up that are basically doing everything online. This coupled with increased trust, are important driving forces for the development of the online gaming market. Developments driving the growth of global online gaming include: broadband capacity Improved bandwidth enables increasingly advanced gaming functions, which attracts more potential players. mobile product development The recent technological development, with increased usage of smartphone and tablets, improves availability to the games which drives activity. We expect this trend to explode in the coming years. increased confidence in e-commerce Confidence in online gaming operators and payment services is on the rise, which contributes to an increase in the number of potential players. In combination with Betsson s 50+ years experience we believe trust will be one part of our success going forward. market share shift from offline to online A steadily increasing number of people are playing online, instead of in traditional offline gaming. For younger players who have grown up with the Internet, online gaming is a natural choice. strong demand There has always been a strong demand for gambling products. In recent years betting has been popular, mainly in sports events. Through its Sportsbook and the ability to implement new products, Betsson is well positioned to capitalize on this trend. 11

12 THE ONLINE GAMING MAGAZINE THE BETSSON MODEL Betsson consists of Betsson AB, a holding company that invests in gaming companies throughout the world, and its subsidiaries, the operational online gaming companies. The business model of Betsson AB and its subsidiaries are described below. BUSINESS MODEL through its subsidiaries Betsson runs a number of gaming sites, both mobile and web. We call it a multi-brand strategy. The reason for having a multi-brand strategy is that the Betsson Group can target different customer segments with different niche sites and thereby reach out to a wide customer audience. Furthermore, it is known that players like to play on several sites simultaneously, and we figure it is better if they spend their entire wallet on Betsson sites rather than share it with competitors. We have also experienced a drop in customers in the case when we have terminated smaller brands since customers are conservative to be transferred to another brand. This gives further support for our multi-brand strategy it is also a strength when doing acquisitions since we are able to keep and develop the acquired brand. The multibrand strategy is manifested in our B2C and B2B segments. The delivery of multiple brands is done primarily through the proprietary and inhouse developed gaming software platform called Techsson. Techsson contains all the functionality needed to run multiple gaming sites, such as functionality for account management, payments, bonus management, CRM, business intelligence, site management, mobile solution and so forth. The platform is the core of the offering, and is highly scalable. Integrated into the platform are Betsson s different games. These are developed either in-house or sourced from the market. It is our belief that Betsson can t be the best at developing all types of games itself and therefore Betsson applies a multiple supplier strategy when sourcing games. With this strategy, the customers are always offered the best and most attractive product mix. A first-class offering is essential for success in the industry and Betsson is working hard to maintain its prominent position through innovation, technology and keeping the customer experience in focus. The company continuously adds new products and suppliers as opportunities and needs arise. BETSSON AB business concept Betsson AB s business concept is to invest in fast-growing companies operating in the online gaming industry. objective Betsson AB s objective is to generate longterm growth and responsible profitability in order to provide shareholders with the best possible returns in the long term. strategy Betsson AB and its subsidiaries will grow organically and/or via acquisitions. BETSSON SUBSIDIARIES vision Deliver the best customer experience in the industry. strategy Betsson subsidiaries have the strategy to become the most customer centric company in the industry. To transform their business by becoming a data-led best in class digital marketing company that leverages a multi-brand model and a single technological platform. B2C AND B2B Currently, Betsson runs 23 different brands, 13 within B2C and 10 within B2B. Betsson s B2C segment is defined as games for customers acquired by Betsson, as well as games for customers originating in Betsson s network of affiliated websites (affiliatelounge.com). Anything that is not included in this definition classed as B2B. In our direct business (B2C) we currently focus on our core markets and products in order to consolidate our resources towards creating higher growth in those areas. The Dutch and Nordic markets are important and a solid foundation for Betsson s global ambitions. In our indirect business (B2B), we target new markets as well as niche segments in established markets with a partner strategy. The strategy is to break into these markets together with strong local partners, since we know from experience that local knowledge is an important success factor. Betsson s B2B section is a dedicated department within the Betsson Group and operates gaming sites jointly together with the partner. In addition to our 50 years of gaming experience, companies choose to partner with Betsson since they get access to the best gaming solutions available on the market. Betsson has a world class solution in both web and mobile. In our operations, we build on our strong capabilities within technology, know-how of gaming operations, innovation and the customer experience in focus. When combining Betsson s capability and experience with strong local partners who have considerable presence on the market, we create huge opportunities for Betsson and our partners. 12

13 THE ONLINE GAMING MAGAZINE THE BETSSON MODEL A tática é sua. B2C BRANDS B2B BRANDS Betsson, Betsafe, Nordicbet, Triobet, Casinoeuro, CasinoDk, Sverigeautomaten, Bets10, Casinomaxi, Casino Metropol, Dhoze, EuroCasino, HarryCasino, Danmarksautomaten, Norgesautomaten, StarCasino, Maxino, Oranje and Kroon Casino. Svenskalotter, Norskelodd, Soumiarvat and Kufa88. PRODUCTS has grown substantially in recent years and has become a prioritized product for continued growth. It lets players wager on various events throughout the world, both live and pre-match. In addition to being a first-class product, this game constitutes a good introduction for our customers, who often also try other products. Betsson s Sportsbook offering is among the widest in the industry, and one of the fastest and most attractive sports betting experiences available. The Sportsbook product works very well in the mobile environment were Betsson have a market leading offering. Betsson Sportsbook is built and managed in-house which gives full control of the product and its flow of information. sportsbook offers a great variety of world class casino games that are accessible to our players anytime. Customers can play on their mobile or from the comfort of their home: the experience will always be best in class. The Casino portfolio features industry leading games from several well-known game providers. Games include videoslots, table games like roulette and black jack, as well as dice games and video poker. Betsson is the home of jackpots: multi-million cash prizes that can change anyone s life in just a split second. casino live casino Betsson is determined to bring the best casino experience to the customers. Our portfolio could not be complete without offering a classic casino environment that is available no matter where you are: in the Live Casino, customers interact with live dealers and other players around a physical game table. The gaming experience combines the best of real life and the online experiences. Through its industry-leading partners, Betsson offers classic table games from the most luxurious Live Studios. High-quality video stream, immersive visuals, local-language tables, sidebets and simultaneous multi-table gaming puts Betsson in front of the Live Casino competition. at Betsson Group represents the largest liquidity pool of any portfolio poker product in Europe. Poker at Betsson Group is all about customer engagement and experience! What separates our Poker Product out from the crowd is it has a distinct advantage versus its competitors, as we can pool our plethora of brands together to create a real together we are stronger approach. This joined up approach also means that we can secure cost savings on headline grabbing promotions, which is reflected in some of the strongest margins poker has ever delivered. poker This can be seen through the joint initiatives run every month on Microgaming Poker to the upcoming inaugural Betsson Group SuperWeekend live event series planned in Whilst Poker is often seen as the third wheel within the Group, it is absolutely fundamental to the overall success of Betsson Group. scratch Betsson s scratch card of- lottery tickets are available to our customers both on desktop and mobile. All of these scratch tickets provide considerably better opportunities to win than traditional scratch tickets. Betsson s selection of scratch cards has a high pay-out rate and every third card is a winner. As one of the most famous gaming products in the world, Bingo obviously has a spot in Betsson s portfolio. Draws have been ongoing 24/7 online at Betsson for almost a decade now. It s a classic games of chance played with randomly drawn numbers which players match against numbers that they picked beforehand. Since bingo cards can cost as little as EUR 0.05, this thrill is certainly accessible for everyone. To enhance the experience, the company has bingo hosts who chat and socialize with the players. bingo games cover many types of amusement, from dice games to creative variations of table games. Players can try their luck at virtual horse and dog racing or creative combinations of gambling and gaming products like Pinball Roulette. Betsson offers its players real money bets on classic video game titles. Games attract players who are looking for new and innovative gambling products. By offering over 100 different games in Betsson s Games lobby, all players can find easily accessible excitement. fering is among the most extensive in the industry. Betsson offers a range of scratch cards with a jackpot win of EUR 1 million to be paid out over a multiyear period. In total, more than 80 types of 13

14 THE ONLINE GAMING MAGAZINE BEST CUSTOMER EXPERIENCE BEST CUSTOMER EXPERIENCE BY ULRIK BENGTSSON CEO BML GROUP LTD, JOINED BETSSON 2012 When the famous American sales consultant Grant Cardone travelled around the US and visited Sears retail outlets, he got incredibly annoyed with the poor in-store customer experience. There is an example on Youtube, where he has to wait over 10 minutes to be attended to, despite the fact that he is actively looking at various things to buy. Quote: How are you going to buy a 125 psi 1 hpr compressor without help? Needless to say Sears is not doing very well, sales are down and value are being destroyed. More recognized customer experience leaders such as Apple, Amazon and Waitrose however are doing quite well. Not only because they are based on great ideas, but also because they consistently deliver what the customers want which means they consistently record some of the highest customer experience scores around. Measured through Net Promoter Score (NPS) they deliver scores in +60 to +80 range, on a scale of -100 to In fact looking at NPS and S&P 500 below, the evidence is overwhelming: Companies with positive customer experiences outperform companies with negative experiences; Sounds obvious, doesn t it? However, you only have to go to your own everyday life to realize that you daily come across poor customer experiences, such as the Sears example. Too many companies fail to recognize what customers really need. Anyone within Betsson would testify that we are in a massive transition phase to become a truly customer centric company and we have come a long way, so long in fact that we have set out a new vision: To provide the best customer experience in the industry. 14

15 THE ONLINE GAMING MAGAZINE BEST CUSTOMER EXPERIENCE 69+Z AMAZON.COM NET PROMOTER SCORE 50+Z NETFLIX INC. NET PROMOTER SCORE 20+Z THE COCA-COLA CO. NET PROMOTER SCORE Amazon.com remained at the top of the online services sector for the fourth consecutive year. Source: Satmetrix Netflix topped the online entertainment sector. During 2013 the stock rallied 312%. Source: Satmetrix Correlates quite well with the performance on NYSE during 2013 of +14,85%. Source: wordofmouthindex.com CUMULATIVE TOTAL RETURN 40% 30% 20% 10% 0-10% -20% -30% Customer Experience Leaders 43% S&P 500 Index 14.5% Customer Experience Laggards -33.9% -40% 6-YEAR STOCK PERFORMANCE OF CUSTOMER EXPERIENCE LEADERS VS. LAGGARDS VS. S&P 500 ( ) Source: 2013 Watermark Consulting From , through the best and worst of times, Customer Experience Leaders outperformed the broader stock market, generating a total return that was three times higher on average than the S&P 500 Index. It is a path with many obstacles, but the following are the pillars on which we are building our exceptional Customer Experience; customer centric culture We want to live and breathe customer experience. We are trying to get an understanding of everything, from the customers intent when searching google (or our sites), to the needs that drive preference amongst our brands. data-led We want to predict what our customers want to do before they know it themselves. We want to make the gaming experience as intuitive as flicking on a light. With our available data and our relations with our customers, this is within reach. digital marketing We want our communication to the customer to become more relevant, the world of digital marketing is opening up enormous opportunities for us to meet customers expectations in a completely different way than before. multi-brand model and single technological platform Our multi-brand strategy enables us to cater for more detailed customer needs and allow customers to choose what experience they prefer. We can be very effective in delivering this, and enable a full range of functionality across our portfolio by using a single technological platform. last but not least: mobile first We aim to live like our customers do, the Mobile is in the center of their lives. The same will have to go for us. A superior mobile offering, means a superior customer experience. Consequently the way Betsson will deliver the best experience in the industry the next few years will be by: Becoming the most customer centric company in the industry. Transform our business by becoming a data-led best in class digital marketing company that leverages a multi-brand model and a single technological platform. 15

16 MULTI-BRAND LEADS THE WAY TO THE FUTURE PURCHASING DECISIONS AND NEEDS VARY DRAMATICALLY FROM ONE CUSTOMER TO THE NEXT. BETSSON S MULTI-BRAND STRATEGY ALLOWS US TO ADDRESS THE NEEDS OF SPECIFIC CUSTOMER GROUPS IN A WAY THAT A SINGLE BRAND STRATEGY CANNOT. 16

17 THE ONLINE GAMING MAGAZINE MULTI-BRAND LEADS THE WAY TO THE FUTURE BY HUW THOMAS CHIEF COMMERCIAL OFFICER, JOINED BETSSON 2010 If we can arrange things in such a way that our interests are aligned with our customers, then in the long term that will work out really well for customers and it will work out really well for us. It would be impossible for one brand to position itself to match the needs of multiple customer groups and still maintain a strong brand identity and relevance. We also know that customers actively maintain relationships with multiple gaming brands at any given time. So, by designing a multi-brand strategy, Betsson can fill multiple market positions to maximise relevance to the customer. At the heart of the strategy lies detailed segmentation insight to fully understand and explore the drivers and needs of distinctive customers groups. The future of our business depends heavily on our ability to understand and execute on customer insight that drives preference and loyalty in increasingly competitive markets. At a product level from a customer perspective, they see a high level of commoditization on the sites they visit. Richness of casino content is supplied by a handful of large providers and spread across hundreds of operators. Sportsbook offerings vary by market depth and volume but prices remain relatively synchronised. Features and functionality differ slightly but it is the brand and customer experience across multiple touch points where a multi-brand strategy springs to life. Across our Group, the business teams for each of our main consumer brands sit at the intersection of customer insight and the execution of world class customer experiences. The customer experience is the relationship between our brands and their customers. It is a blend of our rational performance, the senses stimulated and the triggered emotions. And it is on these moments of contact that our business teams strive to deliver. Those moments of contact and their level of relevancy lie at the centre of our experience offering. Aside from the distinctive nature of a multi-brand strategy, there are core functions that span across the multi-brand environment. One such function is Customer Relationship Marketing (CRM). The group wide CRM strategy, system and tools are catalysts within a multi-brand operation. This includes developing a Single Customer View (SCV) across the group to maintain an immediate understanding of hundreds of thousands of individual customers split across the brands. Understanding patterns of behaviours across customer groups and taking pre-emptive action to drive loyalty. As well as utilising data insight from multiple brands to finetune value group segmentation. But most importantly, it allows us to bring multiple brands in to one CRM Framework to leverage the full power of the multi-brand environment. The stewardship of a complex multi-brand organisation relies heavily on the delivery of differentiation. The cloning of experiences or functionality may offer short-term gain, but a long-term vision based on customer insight and heavily linked back to the segmentation, is where the real customer benefits lie for individual brands. It is this conscious decision making process that needs to ripple through every business team for each of our brands. Where is our customer in our daily operational decisions? Where is our customer in our testing and monitoring? Where is our customer in our design and development? Jeff Bezos quotes abound the world of e-commerce and this one neatly sums up the future of aligning the interest of our multiple brands with the interests of customers: If we can arrange things in such a way that our interests are aligned with our customers, then in the long term that will work out really well for customers and it will work out really well for us. 17

18 THE ONLINE GAMING MAGAZINE REGULATED MARKETS IN DIFFERENT WAYS The Netherlands have set out to regulate online gaming in an open and transparent way, including all games and hopefully deciding on a commercial viable taxrate. BY MARTIN THORVALDSSON GROUP GENERAL COUNSEL, JOINED BETSSON 2010 REGULATED MARKETS IN DIFFERENT WAYS 18

19 THE ONLINE GAMING MAGAZINE REGULATED MARKETS IN DIFFERENT WAYS During the last few years the online gaming industry has had a focus on locally regulated markets like Italy, France and Spain, and the hopes of an opening up of the US market, while the cross-border operations has come almost second hand. The initial difficulties for many operators in locally regulated markets, not to mention the US, has however started to shift the focus back to the trading that is continuing from for example Malta, Gibraltar, Isle of Man and Alderney. Legal certainty has been one of the arguments for the focus on locally regulated markets, but while trading under a local license adds legal certainty (and more market access), the operations in well regulated countries that allow operators to trade also towards other countries is maybe not something that the operators should downplay in the way that has been done during the last years. There is protection for this model not only from EU Law principles but also under International Law and the perception of it is constantly changing to the better as cross-border operators and regulators are becoming more and more mature. For example, the level of player protection features available to a Betsson customer is today superior to the tools available at many monopoly operators. Players simply cannot spot the difference and are also rightly asking why monopoly or local regulation is necessary. Also on the regulatory side there have been massive improvements. Betsson today have around 600 people in its operational hub in Malta tending the needs of the players under strict regulation and supervision from the Malta Lotteries and Gambling Authority. One can certainly question whether the player, at least initially, actually will get more focus from the regulator in a locally regulated market than in Malta where the regulator have over ten years experience from managing players issues. That this advantage over local regulators isn't easily mitigated is evident from the current problems in many locally regulated countries. For these reasons we believe it is likely that the focus will continue to shift back from locally regulated markets to cross-border markets during 2014 as locally regulated countries continues to struggle in creating well-functioning regulation and markets. The trend to regulate locally is positive for the industry in the long run but the slow progress in many countries, and the increased maturity of cross-border operators and regulators, will probably make the process slower than what was anticipated just a few years ago. While the locally regulated market expansion has been halted a bit due to the negative experiences in for example France, Germany and the US, there are also promising signs from a new wave of more mature regulations. For example, the Netherlands have set out to regulate online gaming in an open and transparent way, including all games and hopefully deciding on a commercially viable tax rate (the tax rate was not known at the print of this article). This new wave of more mature regulations is also supported by the European Commission who recently opened six new infringements proceedings, and reopened several existing ones, because of the non-compliance of the local gaming regulation with basic European Union Law principles. Sweden has received especially severe criticism due to its long-standing lack of action in reforming its gaming regulation. There is no sign of that these proceedings will slow down and this will put further pressure on governments not only to give up the out-dated monopoly regulations, but also make sure new regulation is compliant with European Union Law principles. Betsson have a long history of supporting such positive trends by being in direct dialogue with legislators and regulators, sharing our knowledge and expertise, and working together towards responsible and commercially viable regulations. We hope that our work, and the trends set out above, ultimately will lead to more mature and commercially viable local regulations in for example in countries like Sweden and Norway. It s promising for the future that we now for the first time can see signs of local regulations that aim to strike a genuine balance between responsible gaming, the fiscal needs of the society and the entertainment value for the players. 19

20 THE ONLINE GAMING MAGAZINE DIGITAL MARKETING & REAL TIME CUSTOMER INTERACTION DIGITAL MARKETING & BY PATRIK ÖQVIST CHIEF MARKETING OFFICER, JOINED BETSSON 2013 It is an exciting time to be in e-commerce as we are in the third age of digital marketing and customer engagement. New tools and ways of connecting systems and piping data around are opening up completely new possibilities. Also, open architecture thinking means it is easier now than in the past to make marketing and customer systems play nicely with each other. These systems include CRM Systems, Ad Servers, Affiliate Systems, Web Analytics, Tag Solutions and even Content Management Systems. The biggest difference of the third age is our ability to analyse and act towards both potential and existing customers across our sites and the internet at large. Digital marketing sounds like it is an activity for the marketing department, but it is much wider than that. In a business like ours, most of our people are engaged in bringing our services to market one way or another. So we are all in marketing. By implication we all carry the responsibility of serving our customers. In that light it makes sense, even unavoidable, that we are setting out to become truly customer centric. The first age of digital marketing wasn t really digital since it mainly focused on getting visitors to your site through TV ads. This is what powered the first internet bubble that burst so spectacularly in I helped set up the UK s first personal finance site MoneyExtra at that time. Despite being good at delivering traffic to credit card issuers and banks, the affiliate systems now so prevalent just didn t exist. So we didn t really get paid for the traffic, just for selling banner space. Even the search engines mainly sold banner ads. MoneyExtra was sold, just before the money from our stock exchange float ran out. Surprisingly, it is still around as a personal finance website 15 years later. The second age was ushered in by Google switching from selling ads on a cost per impression basis (CPM) to cost per click (CPC). This was significant as it meant companies 20

21 THE ONLINE GAMING MAGAZINE DIGITAL MARKETING & REAL TIME CUSTOMER INTERACTION REAL-TIME CUSTOMER INTERACTION were able to optimise their spending much more precisely. Google s Adwords programme was launched in 2000 in the US and later in Europe. Initially advertisers would deposit money with Google and Google would manage their campaigns on their behalf. The Adwords programme sold contextual text-based ads around the search results, much as it does today. Also in the second age, the big e-commerce players figured out how to turn customer intent, e.g. I want to buy a digital camera, into a site experience that matched that intent. Sites would start to tailor content depending on where you came from and what you did previously. Amazon continues to be the best example of this; Customers also looked at is a well-known feature. We are now in the third age of digital marketing, where convergence and integration are the leitmotifs, all centred around the customer. It is now possible to change our site and CRM activities depending the customers behaviour on the wider internet. We can also tailor our online advertising based on what the customer does on-site. It also gives us a unique capability of using our multi-brand strategy to great effect; great for us but very hard for our competitors to copy. The proliferation of tablets and smartphones is also key to understanding the third age. Smart phones are actually making TV viewing more digital as the first response is often via the phone. Most of the time people are watching TV with a second screen within arm s reach. This means we need to respond in real time to customers as they show their intent to us. It also means we should stop thinking about TV and mobile as separate channels and more as different ways of talking to and interacting with both existing and new customers. Now it s up to us to embrace the change the third age opportunities bring and turn them into communication that our customers value. 21

22 THE ONLINE GAMING MAGAZINE MOBILE FIRST Mitsubishi Roamer Released: 1986 Size: 21x8x4.5cm Weight: 960g System: 1G (TACS) Battery life: 60min Price: 2600 Apple iphone 5s Released: 2013 Size: cm Weight: 112g System: 4G (LTE) Battery life: 250h Price:

23 THE ONLINE GAMING MAGAZINE MOBILE FIRST MOBILE FIRST BY CEM MIRALAY CHIEF EXPERIENCE OFFICER, JOINED BETSSON 2013 While living in London in 1986 as a young software developer just out of university, I remember saving hard to buy my first mobile phone, a Mitsubishi Roamer that I purchased for the princely sum of 2,200. When I was at the right location and facing the right way, I could even make some phone calls with it. But I didn t care. It was amazing and I loved it because it gave me the freedom to stay connected on the move. It was this new found freedom that made us fall in love with our mobiles, pay huge amounts to get them and fuel an industry that delivered innovation at an unequalled pace. In 2013, one billion touch screen smartphones and quarter of a billion tablets were sold. That s more than one touch screen device for every seven people on the planet. By 2016, the total number of touch screen device shipments is expected to exceed two billion. Today s smartphones and tablets are not just fancy mobile phones or miniature PC s. In built features like cameras, location services, Near Field Communications, security and most importantly, persistent connectivity makes these touch devices the perfect platform on which our Betsson customers can enjoy their favourite casino games, have a flutter or even a game of cards, whenever and wherever they like. With Betsson and Betsafe Apps in the Apple AppStore and mobile web for all our brands, we have seen exceptional increase in mobile revenue and quickly reached 12% of revenue from mobile in a short period of time. Our strategy, however, isn t to have total coverage of all our brands and all operating systems on touch devices. It is to become the market leader in gaming on touch devices. That is Mobile 1st! This is a bold statement considering we have both the well-known big guys and start-ups to compete with. It will take total focus, investment and alignment across Betsson for us to achieve this. We have an advantage. We are Betsson and we know that when we put our minds to something, we can get it done! As we define the design principles for our touch device Apps and web presence, we are focussing on seven key areas:» The simplest, most intuitive customer journeys regardless of what the customers are trying to do on their device.» Exclusive content designed for touch devices.» Natural, seamless integration with devices and events around you and enabling multi-screen experiences.» Effortless sign up, deposit and withdrawal as easy as flicking a light switch.» Mind blowing performance.» Delivering relevant and personal messages to our customers at exactly the right time.» Software architecture enabling personalised and segregated experiences. Our teams are diverse and global. We have designers in Malta and App developers in Stockholm, payments in Kiev and Sportsbook in Manila, country marketing teams and brand teams and more. Our toughest challenge will be to keep communicating and operating as one extended global team with a common objective and unwavering focus on a single outcome. We have put up Mobile First stickers around our offices, which are more than just nice designs in Betsson colours. They are a constant reminder for everyone working at Betsson to think about how what we are doing impacts our vision to deliver the best customer experience in the industry on touch devices. Our roadmap today is changing and evolving rapidly. We have some fundamental deliverables like creating applications for Android and Windows Phone, in addition to ios. However, it is the new architecture, fundamentals of our future UX and the innovative experiences like scanning rather than typing in the data from a credit card when depositing, that reduces the deposit journey from an error prone and tedious minute all the way down to under 10 seconds that will make a difference. Easy as flicking a light switch. That is what is important to the customer! 23

24 THE ONLINE GAMING MAGAZINE A RESPONSIBLE COMPANY KEEPING A PRO-ACTIVE APPROACH TO RESPONSIBLE GAMING BY HILLEVI STUHRENBERG RESPONSIBLE GAMING MANAGER, JOINED BETSSON 2007 Betsson has been consistent in promoting and investing in Social responsibility in general and responsible gaming in particular since RESPONSIBLE GAMING NATURALLY MAKES OUT THE MAJOR PART OF THE BETSSON GROUP S SOCIAL RESPONSIBILITY COMMITMENT. IN ADDITION, BETSSON SUPPORTS A VARIETY OF HUMANITARIAN, ENVIRONMENTAL AND POSITIVE LIFESTYLE PROMOTING CHARITIES IN SWEDEN, MALTA AND INTERNATIONALLY. Responsible gaming is everybody s business at Betsson, regardless of which department one belongs to. The Betsson Group takes an integrated approach whereby Responsible Gaming is part of every business area and the general value foundation of Betsson, which promotes fairness, fun and innovation. This is not just in the view of our customers but also in order to protect and maintain the long term sustainability of online gambling. The Manager for CSR & Responsible Gaming is based within the Customer Service Department and reports to the Chief Experience Officer of Betsson Group. Consistent investment in Social Responsibility Betsson has been consistent in promoting and investing in Social responsibility and responsible gaming in particular since Betsson was one of the first online operators to become certified in respect to their responsible gaming tools and procedures by an independent international accreditation and certification company; the Global Gambling Guidance Group (G4). Betsson invests heavily in responsible gaming training because we firmly believe this enhances our customers experiences long term. In 2013, 130 customer-facing employees received an in depth responsible gaming training by the company s Responsible Gaming Manager. Additionally, 220 employees company wide regardless of role and position underwent a 4 hour training session on responsible gaming facilitated by our external training provider the Global Gambling Guidance Group. Another aspect of responsible 24