eGaming Review January 2014 - Page 34

P R O F I L E B E T 365 "WE HAVE NEVER CONCERNED OURSELVES WITH WHAT TAX OTHER COMPANIES DO OR DON’T PAY" - DENISE COATES, BET365 so we’re very committed to the Australian market and believe we’ll have a successful business there in years to come. For us to gain significant market share against extremely strong competition will take time.” Some of the Australian press has questioned whether the influx of British bookmakers in the country will result in punters gravitating towards familiar, local brands such as Tatts Group and TAB rather than latecomers from Europe. Yet Coates stresses that, as in the UK, it will be the quality of product and customer service that wins out. “What customers want is exceptionally good product, odds and service,” she says. “If you can give that to them I don’t think they mind where you’re from. Clearly you’re competing against strong local brands like TAB and so on and they have a resonance, but I don’t think it’s an Australian versus non-Australian issue. They may gravitate towards a local brand because that brand has a strong product but in general, historically online users have chosen the best product.” Rumours have circulated that bet365 may look to obtain a licence to operate in Italy, a move which would hold massive potential for a company with bet365’s proven track record in sportsbook. Italy also permits online slots, a lack of which in Spain has stunted growth. Even despite the lack of slots regulation, Spain has been a success story for bet365. The brand has been strong there for some time – it is among the most recognisable alongside bwin – and heavy investment in product and marketing has led to it securing around 40% sports betting market share. 32 Challenges, however, still remain in Spain. “Clearly [our success is] allied to the fact that not everyone came into the market as a result of the high tax rate, which has meant on sports we have managed to capture a significant portion of the market,” says Coates. “The challenge for all of us is to build a profitable business there with a 25% tax rate. This will be a challenge despite the otherwise reasonably sensible regulations. It’s okay, but, the absence of slots and the Spanish only liquidity in poker have, as you would expect, had a hugely negative effect.” Closer to home, while the UK’s point of consumption (PoC) tax next year has forced other operators into finding ways to compensate for the 15% hit on gross profits, the change could actually be beneficial to bet365. The operator currently pays 15% gross profits tax on all sports betting revenue whereas under PoC it may only have to pay that on its UK revenues, which are estimated to be around 35% of its business compared to Paddy Power at 60%, Hills at around 70% and Betfair at nearer 80%. The hit is expected to see these operators plough more money into geographic expansion to balance the books and marketing on home soil to put smaller competitors under pressure. Coates, however, is as pragmatic and focused as ever, claiming bet365 “doesn’t really think about it in those terms”. “The PoC tax makes our business workable in terms of our non-UK business and the lack of double taxation. We have never concerned ourselves with what tax other companies do or don’t pay,” she says. Race to the top All change: 3D model showing plans for bet365’s new office Unsurprisingly, the rest of the industry has attempted to mirror bet365’s model, with the likes of William Hill and Paddy Power matching it blow for blow in terms of in-play markets, competitive pricing and broad mobile and gaming offering. But the task of catching up will test the patience and budgets of all major egaming operators, as bet365 looks set to continue to be a tough competitor in every market it enters. One of the biggest reasons for this is its relentless above the line marketing. UK readers will be extremely familiar with the operator’s TV ads for in-play featuring actor Ray Winstone, without