Insight

Green gaming gathering momentum

Mr Green's holding company has just been granted approval to list its shares on the Nasdaq Stockholm main market in Sweden and was awarded the Online Gaming Operator of the Year by the International Gaming Awards. Mr Green is now revamping its brand with a focus on player retention and responsible gambling.

Mr Green has been 10 years in business. What has changed during this period and how would you assess the recent performance of Mr Green?

Mr Green was set up by three Swedish entrepreneurs in 2007 under the name Lucky Luke. Gladly, the name was later changed to Mr Green, otherwise I doubt that we would be sitting here today. I think Mr Green is a showcase of the importance of a strong brand. Though I am biased, it is beyond doubt that we have a very strong brand. Mr Green is a character, people can connect with his values, behaviour, looks, and most importantly, people tend to remember characters better than names and logos. From the start, we focused on ‘green gaming’. This is what everyone else calls responsible gaming. This, plus a well-defined user experience helped us in quickly becoming the coolest kid on the block. However, even the coolest kid on the block can fall behind, and this is what happened to Mr Green during the last couple of years. Our growth has slowed, and we are seeing peers growing faster, but we have a plan to regain our market position. We are now in the Mr Green 2.0 phase. We want to revamp our brand, and we have quite some cool things in the pipeline, although I cannot yet share many details.

What is green gaming in concrete terms and how does the industry cope with it?

Green gaming is a method to help customers consume the product responsibly. The backside of gambling is well known. Problem gamblers constitute 2% of the population in most countries. As a casino, we must relate to this, and offer help by making their patterns visible through predictive methods. We are constantly working on improving our detection methods, not to police our customers, but to offer those who need some support tools. The industry at large has evolved from ‘Wild West’ into an extremely professional industry. Adventurism was common 10 or 15 years ago. Today, people choose working in iGaming as a career path. I am not intending that professionals have higher moral standards, but to some extent the problem is dealt with a bit differently today.

What level of importance do affiliates have when you have such a strong brand? Does your brand enable direct integration or do you still need affiliates for player retention?

We call our strategy BUD, which is short for brand, user experience and differentiation. If you want to stand out in a crowded marketplace, you need to have a strong brand, a good user experience, and differentiate yourself from other operators. Affiliates in this regard are to some extent benefiting from the fact that we are operating in unregulated markets with strong brands and cannot get PPC traffic from Google in those markets. Google is the largest source of traffic for most operators. Affiliate companies are widening their media buying and are doing a good job on the SEO side to drive traffic. So to answer your question, I think we will continue to see a combination of direct traffic and traffic from affiliates. But we will also see how affiliates will become operators and how operators will become their own affiliates. As a business, we all want to have the customer relation.

 

"One of the problems of this industry is that perhaps it has been too easy to make money. This makes you a bit lazy."

 

Looking across the sector, how profitable are iGaming companies these days?

Some companies are making zero profit or even losses but focus on growth. Other companies are growing more moderately while trying to have stable profits. One of the problems of this industry is that perhaps it has been too easy to make money. This makes you a bit lazy. In the e-commerce industry margins are often much lower, driving these companies to higher efficiency, higher focus on customer retention, better use of data, etcetera. They have realised you cannot afford to constantly acquire new traffic. The iGaming industry is catching up, and some companies are actually really good at this. And with taxes eating more of our margins, our business practices will change from short to long term views on growth and profitability and this will prompt us to focus more on green gaming and retention. Rather than draining our customers in the shortest time possible, it is better to build long-term relationships.

How do you cope with the changing regulatory environment in the EU and how does it affect the value of the MGA licence?

We welcome regulation. It is always easier to play a game when you know the rules. Regulation takes away the uncertainty that the referee would suddenly decide that you are not allowed to play any longer. The reason why all the iGaming companies are in Malta is that it allows us to enter European markets with the protection of EU legislation. The island is beautiful, the weather is fantastic, and taxes are low, but the licence is the top reason. Does this imply that whenever another country offers licences we will move there? No. I don’t think so. That opportunity is already lost for many countries. Malta has built an eco-system. There are hundreds of iGaming companies down here, with at least 10,000 people working in the industry. Having that many people in the same place creates momentum and provides for growth rates unparalleled elsewhere. Malta is a centre of excellence for the industry, and if Malta treats this well, there will be relatively few reasons to move.

Some companies say they like competing for customers, but not for resources. What is your comment on that, and how could Malta attract more people to work in this industry?

We don’t see this as a problem. Competing for talent is part of the game. If you have a problem competing for staff, then you most likely have a problem with your brand. Our philosophy is to pay good, but never pay top. We have chosen to compete with our brand, the family feeling of Mr Green, a good atmosphere and our core values.

What Malta needs to do, is to keep the pearl shining and people will be coming. So just keep the high standard. My advice would also be: do not try to make the last dollar today. Don’t drain your customers, which in Malta’s case are the many foreign professionals working in this sector. Don’t charge them inflated prices. Loyal customers are much more important.

 

"Smart regulation will control gaming, stupid regulation will not."

  

How does VAT and player pool segregation in various countries influence your operations?

We now spend more time on compliance and understanding the different jurisdictions and thus need more local expertise. The right balance is important. If taxes are too high, some operators will not apply for a licence. This will create a black market. If a country wants to create a regulated market, taxes should be somewhere between 15 and 20%. It has been proven in a number of studies: Higher taxes will entice operators to access the market outside of the regulated system. The UK has a tax rate of 15% and 95% of the players within the regulated realm, while the rate in Denmark is 89% at a tax rate of 20%. Smart regulation will control gaming, stupid regulation will not.

Looking to the future, how do you see the gaming industry evolving and what role will regulation play in this regard?

Gaming is such an integrated part of society, but it is also severely stigmatised. It is perhaps the most stigmatised legal industry in the world. If you compare what we are doing to fight compulsive gambling and money laundering to what they are doing in luxury retail stores like Louis Vuitton where someone can just buy a bag for €4,000, you see what I mean. In the stores, they do not ask their customers from where they got the money. We have extensive KYC procedures in place, and we are asking players if they are playing too much. But still we are stigmatised. Since we are stigmatised, and in a politically sensitive industry, regulation is necessary. Ideally, we should have just one EU-licence. It could be based on the model of the MGA or the UKGC. Unfortunately, this is just a dream that will never come true. We must cope with holding different licences in different markets that we operate in, but hopefully new regulators are smart enough to copy elements from the more experienced jurisdictions to harmonise the sector. 

Jesper Kärrbrink has a long career heading companies with a strong focus on long term leadership, change, transformation, management, culture, media, and online presence. Before joining Mr Green, he was CEO of Euroflorist. He has also been CEO of Svenska Spel in 2004-2008, the Swedish gambling monopoly. Additionally, he has co-authored the crime novels Fatal Exit, Elisabeth Gripe: Angel and Demon.

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