Part 1: Introduction – piecing together the Nordic jigsaw
A fair number of currently Curacao-licensed
Part of the logic of M&A is cost synergies,
sites currently target the Nordic space, if not which inevitably means job cuts. Soon after the
specifically Sweden, and with Norway and completion of the Paddy Power Betfair merger,
Finland remaining unregulated, it is unlikely for instance, the company announced around
operations into these territories will cease just 650 job losses across both headquarters in
because Sweden has regulated. The potential Dublin and London. Although we didn’t see
for some leakage back to unregulated sites by the headline numbers for Ladbrokes Coral, the
Swedish players is, therefore, reasonably high. nature of what was termed a “blue takeover”
Gustaf Hoffstedt, secretary general of the
and the shift to a single UK HQ in east London
Swedish Trade Association for Online Gambling, is known to have led to a substantial number
is less than optimistic that the authorities will of mainly Ladbrokes personnel leaving after
achieve their aim of all but wiping out the the deal completed.
black market and says that the channelisation
Rationalisation has a cost in terms of morale
percentage will likely be between 80-90% – at least in the short term – and the recent
“which is far too low”. “With a better regulation performance of Paddy Power Betfair and
we should be able to reach at least 95%,” the Ladbrokes brand would appear to bear
he added. testimony to that notion.
David Flynn, chief executive for operations
Operationally, it also has an effect. Time spent
at JackpotJoy, which operates a number of across all levels on integration efforts means
brands in the Swedish market, including its focus can be lost on getting the basics right.
eponymous bingo site and the Vera & John Platform issues take up valuable development
offering, is more sanguine. time and budget. M&A is not known as being
“There will always be those that do not follow
the regulation,” he says. “However, given the
reasonable tax rates, and the aim to protect
a driver of innovation — good ideas get swamped
out as organisations gain scale.
Scale, of course, is one of the main drivers of
players in ways which most reputable operators consolidation and its value has been cited by
do already, I think it should capture at least 85- various figures across the industry. In the Paddy
90% of the grey market. My wish of course would Power Betfair 2016 annual report, chairman Gary
be that it would capture 100%.” McCann began his introduction by stating that
More optimistic still is Kristoffer Lindström,
the merger had brought together “two very
part of the equity research and ratings team successful businesses creating a world-class
at Redeye. “I believe that the tax rate of 18% is operator with substantial scale and capabilities
low enough for the operators to have a viable that leave us well-placed to serve our customers
business,” he says. and attract and retain top-quality employees.”
“I talk to most of the public and some
In the prospectus for Ladbrokes Coral,
private operators in Sweden, and none has ever meanwhile, the company stated that the
stated that they would not apply for a licence. increases in scale that had occurred recently
I do believe that the government is relatively were expected to make investments in
confident that they will capture most of the technology and marketing “more affordable”.
grey market, as the proposed re-regulation is
well balanced.”
process to date. This is not a coincidence.
“In addition, larger betting and gaming
operators are expected to be better equipped
to understand the increasingly extensive and
One of the obvious points about M&A – and complex regulatory and licensing requirements
certainly a factor in why M&A is often seen that they face and to absorb the impact of any
after the fact to have been value destructive – adverse changes in regulation, taxation and/or
is the disruption caused. levies,” the company said.
iGaming Business Market Monitor • The Nordics • May 2018
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