Kambi CEO exclusive: Local heroes will be a key part of US strategy

Kambi CEO Kristian Nylén speaks to Gaming America about the supplier’s future plans in the US. Nylén believes that despite its partner DraftKings planning to merge with Kambi’s rival SBTech, its US business will still grow faster than its European business and the strategy for future success in the market will involve partnering with locally-known brands within individual states.

In the US, Mohegan Gaming, Penn National Gaming, Jack Entertainment and Seneca Gaming Corporation have all partnered with Kambi in the last year, while Unibet has launched in the US too. How would you assess the last year of performance in the US?

It has been very positive from almost every angle. I think regulation has moved forward at about the pace we would have hoped for. We have been very successful in signing a big multi-state operator in Penn National Gaming, but we have also signed big, local heroes, including Jack Entertainment and Seneca Gaming Corporation, in markets that have either opened or will open up soon.

Taking into account the announcement of DraftKings’ planned merger with SBTech, how do you think you are positioned in the US for the next few years?

It will obviously have a large impact on our US revenue and it’s a big disappointment, but our overall position is still very strong. If I look at the business now compared to where we were before PASPA was overturned in May 2018, we have done amazingly well.

You first announced the partnership with DraftKings in June 2018. At that point, what suggestion was there, if any, that DraftKings might be looking to bring sportsbook technology in-house?

They were very clear about the message they did want to bring technology in-house, even before we partnered with them. I hoped we could convince them otherwise, but that wasn’t possible.

You mention you tried to convince them not to bring technology in-house, but why did they press ahead with doing that anyway?

We are not the easiest acquisition target, and outside of us, there is a limited amount of sportsbook technology to buy. SBTech was one of the few targets they could have looked at.

Did DraftKings ever try to have discussions about buying Kambi?

There is some complexity when it comes to M & A with us, and that was something that never really came up.

Why did you still agree an extended deal with DraftKings after rumours about a deal with SBTech were reported?

We only had an agreement with DraftKings for New Jersey. The new agreement was a necessity we had to agree to expand the partnership to more states. As long as they are partners with us, it is a very strong revenue stream for us. It gave us some additional security, but more importantly, we were able to enter more states early on.

How likely is it we will see other operators come in and challenge DraftKings and FanDuel in the states in which they operate?

It’s very early to say where the market will go, but having about 20 years’ experience in online sports betting, I remember William Hill and Ladbrokes were very dominant in the beginning. But then Bwin took over the number one position for Europe, then Betfair, and eventually Bet365 became king, which it still is in Europe.

DraftKings and FanDuel have a great position. They have an amazing customer base from their daily fantasy sports business, but it’s early days. I think there will be big opportunities for other operators.

What do you think is the best strategy you can take to keep moving forward in the US?

It’s very simple. We want to give a fantastic experience to players and to operators. Focusing on those big, local heroes in the strong markets will be important for us too.

You said in our interview here last year that the US part of your business could be larger than the European business in a few years’ time. How would you see the US business now comparing with the European business for the next few years?

We haven’t disclosed any numbers, but looking at the public numbers, you can see it’s starting to become an important part of our business already, and it’s only the beginning.

I’m sure that part of the business will continue to grow faster than the European part of our business as a greater number of states open up, although Europe will naturally remain a core area of focus for Kambi.

What will be the big challenges in the US moving forward?

I’m not sure about challenges, but the important thing for us is that the pace of regulation keeps moving at the pace it has done so far. Of course, it’s highly important that online gaming moves forward in states like New York, but the opportunity is currently limited to a few upstate brick-and-mortar casinos. If we can have mobile sports betting in New York, the potential for growth there is very strong.

How many states would you forecast to be live with sports betting this time next year?

I think it could be the same number of new states this year as there were last year. I would say maybe five to 10 states are likely to open up this year.

David Cook

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