Evolution Gaming, Kambi, & US Gaming Regulation

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

Could you start by telling me your background in the space; what you have done and are doing?

I went to school in Las Vegas to study this industry. The University of Nevada had a gaming program, so that was where I set sail. Since then, I worked in the brick and mortar side of the business, so the actual casinos, which is where I started off. Then six years ago, I joined a startup online casino game, similar to Candy Crush where you run out of lives; you run out of slot coins and purchase more. That was acquired by Penn National Gaming who is a big operator in the US. At that time, they had a database of social gamers and wanted to convert them to real money when the time was right. I helped them with the online side of the casino, then joined FanDuel 2.5 years ago, where I launch all their products such as online casino and sports and daily fantasy into new states.

Are you also involved in the regulatory stuff?

Yes; my team oversees everything from once the deal is signed with a market access partner through to understanding the rules and regulations and presenting the regulators with our ideas and what we want to do to enter the market. I also do all the vendor licensing.

Is this all US domestic?

Yes. We are currently live in 10 states with our online sports book, four with online casino and we have 17 retail venues.

Are you in live casino, as well?

No, casino we are live in four states for online.

Do you use Evolution for that?

Yes, in two of the four; New Jersey and Pennsylvania and soon also in Michigan. Because it is focused on the live dealer element, a lot goes into licensing and setting up the studio. We went live in Michigan in January but no Evolution yet because the lead time is so long.

What are the lead times to putting it on?

They are the only player in town who do what they do, so you would imagine they are working with all the various operators to integrate them into their product, so there’s a lot that goes on there. Depending on the state requirements, they may need studios in the state or different servers; there are many complexities but it has taken longer than usual in Michigan. We would have liked to have it sooner than we have done.

Are online casino and sportsbook the two main verticals?

Yes, but they complement each other. In a state which has both, it is easier to cross-sell and monetize customers, but the more valuable vertical is casino. With sports betting, the margin is so small compared to online casino. The four states which have casino are more valuable.

If sportsbook is not as profitable, why do you do it? Is it mostly to bring on people because everybody bets on sports?

Yes, that is part of the strategy. The sports betting industry is still massive and if every state legalizes it – which we hope it does – there is a huge opportunity there. When they bring the casino element on board, that is when money starts to go haywire.

Slots and roulette is way more profitable from the casino point of view than sportsbook, just like poker is not that profitable on casino relative to slots?

Yes.

Do FanDuel create their own sportsbook or does Kambi help you run that?