Hervé Schlosser has been working in the sports betting industry over the last 15 years. He founded and launched Sportnco and was its CEO and main shareholder from 2008 to 2022.
The Company started as a B2C business in sports betting in the newly regulated French market as it got one of the first sports betting license in 2010. He has since launched a B2B business under Sportnco, in France, Europe and South America.
Schlosser negotiated the sale of Sportnco to Gaming Innovation Group (GiG), which was signed in December 2021 and closed on the 1st of April 2022. He now works as Managing Director of Sportnco.
Gaming Innovation Group (GiG) closed the acquisition of highly-regarded sportsbook and platform provider Sportnco for €51.3m in April this year.
However, Hervé Schlosser, CEO at Sportnco, says it wasn’t a natural step in their evolution to join forces with GiG – in fact, Sportnco was not originally for sale.
It quickly became apparent that the combination of geographical areas, product portfolio and PAM product made for a very strong united force, Schlosser says, meaning the combination made strategic sense.
Meanwhile, each company brought a strong presence in a different group of regulated markets, with only one overlap: Argentina. Sportnco was very prominent in France, Spain, Greece, Belgium, Portugal and South America while GiG had a significant presence across Northern Europe, Eastern Europe and North America.
Schlosser says this is what made the companies “a perfect match – with almost no overlaps.”
From 2010, Sportnco launched its B2B offering for regulated markets across Europe first and then South America. After combining with GiG, the pair now delivers sportsbook and PAM solutions to 36 different jurisdictions, operating with more than 610 employees out of headquarters in Malta, Denmark, Latvia, France, and other offices in Barcelona and Madrid, Spain.
Jumping in the deep end
Everything started 13 years ago for Schlosser, when the French gaming market opened to competition. Schlosser credits his business’s current success to starting in such a complex and highly taxed jurisdiction.
High taxes necessitated high margins in the country, with a turnover tax of 9.3% meaning operators had to work to a margin of between 15% and 20% to remain profitable.
“We started as a B2C company and were among the first eight to get their sports betting licence in 2010, when the French market became regulated. Very quickly, we had opportunities to do B2B business, because we had been building our software for the sportsbook platform in France.”
Having started as an operator under the France Pari brand, the success of its B2B operation ultimately saw the supply side generate similar levels of revenue, then surpass the customer-facing business.
“Two or three years after the start of our B2C activity, we made a clear decision in terms of strategy,” Schlosser explains. “My feeling was that the world was getting regulated, and so we focused on our B2B operations”
Going forward, starting in such a heavily taxed market has helped make Sportnco adept at entering similar highly regulated territories, such as Portugal, where it already has three clients signed, including migrating Betway’s local operations in the second half of this year.
While creating strong foundations across Europe, Sportnco and GiG’s expansion efforts in North America further reflect the company’s focus on taking strategic positions in high-potential markets. The lessons learnt early on have set them up to succeed going forward.
“Our understanding of regulated territories is where we are able to bring value to North America – we have a strong competitive advantage in our ability to offer attractive odds and good margins – which seems to be impossible to mix the two, but this is part of our know-how.”
Common ground
GiG and Sportnco both started out in Europe, and at the time of the acquisition had grown to B2B businesses of similar types: software in SaaS mode for regulated markets, something Schlosser believes has aided the integration in its early stages. “In terms of culture, our ability to mix internally has made for a very strong team – it is all going very well.”
This undertaking, he says, is focused around combining the solutions of the two entities, and developing unified processes for the enlarged company.
“As a business, we have had our first deal with [Full Games in] Angola, where we were able to put together Sportnco’s books and platform and combine that with GiG’s managed services,” he explains.
“GiG can offer clients that have their own license but no operational experience the ability to launch into the market and quickly find success, supplying them with the marketing, CRM and Business Operations to do so seamlessly. We can support this through our KYC processes and pavement management.”
Sportnco and GiG followed this by striking a head of terms agreement with Crab Sports in early June. The deal – which will focus on the state of Maryland – marked the first US-facing deal struck since GiG acquired Sportnco in April. Under the agreement, Sportnco and GiG are able to provide their full solution, which includes their technical platform, CMS and sportsbook.
“It’s been amazing to see how quickly we have been able to finalise this deal in the US – it’s been really impressive.”
When it comes to processes, Schlosser sees this as a combination of learning and teaching. “Being with GiG we have been able to strengthen our processes in terms of dealing quickly with new regulations” he says. “[This enables] us to move quickly when expanding into new markets. Both companies are learning a lot from one another.”
Company dynamics
Moving ahead, Schlosser picks out three priority areas for a successful integration, and to ensure the enlarged business can thrive. The people, the clients, and the financials.
“In terms of people, we are getting along well. We had a seminar in Madrid two weeks ago which was a tremendous success. There are so many rationales behind the merger of the companies that everyone feels comfortable in its success.”
Schlosser credited GiG’s team for preparing for the merger in advance, with preparatory work carried out ahead of the deal closing ensuring everything was scheduled and prepared before the deal was completed.
When it comes to clients, the expansive new network and addition of products have only increased and got stronger – as evidenced by the Full Games and Crab Sports deals being struck in quick succession since the acquisition closed. “We now benefit from a sportsbook that has the tools to accelerate the acquisition of players, and our clients benefit from better products, developed tools and more access to different regulations.”
And in terms of financial performance, he adds, there has been signs that growth has accelerated “I think our new deals are a testimony that we are already performing well”
“So far, the integration is a success, and we really want to continue to have this good dynamic between Sportnco and GiG.”
And that sets up the business for a strong push into North America. “We expect to continue to grow our existing client base with the help of GiG, enabling our clients to recruit more and more players and compete in multiple markets,” Schlosser says. “We also want to bring in existing clients to new countries.
“We have Europe, we have added LatAm, and now we’ll add North America and Africa”
With the Fifa World Cup coming up, the success of this year is only set to continue for GiG and Sportnco, with an extensive roadmap set out in the leadup to November.
“Our sports calendar drives our business – we’re incredibly excited about all the upcoming opportunities of 2022.”
Original article: https://igamingbusiness.com/acquiring-the-perfect-partner/
