SBTech is aggressively entering the government-operated lottery market. They’ve secured three sports betting agreements with members of the World Lottery Association (WLA) between June and September. This makes them a significant new force in the industry. Andrew Cochrane, Chief Development Officer, discusses the difficulties of bringing traditional products into the 2020s.
SBTech has been on a winning streak, signing three agreements with members of the World Lottery Association (WLA) since June. They’ve become a leading provider for state-run lottery operators.
Initially, they secured a contract with the Oregon Lottery in June. This is the largest vertical contract in the US lottery industry to date. They’ll be providing retail and mobile sports betting services.
Subsequently, in July, they signed an agreement with Veikkaus, the Finnish gambling monopoly. They’ll be completely overhauling their existing pre-match and live sports betting products, and developing a new user interface.
As demands for the termination of Svenska Spel’s exclusive rights become more intense, the operator is undergoing a digital transformation to combat competition from international operators.
Earlier this month, SBTech joined forces with Svenska Spel, the Swedish national lottery organization, to aid the lottery operator in adjusting to Sweden’s newly regulated market, which has witnessed numerous newly licensed private operators struggling.
SBTech’s Chief Development Officer, Andrew Cochran, stated that the supplier’s accomplishment is a declaration to the industry.
“The word is progress,” Cochran said. “Ambitious, expanding, forward-thinking enterprises prefer to collaborate with similar companies, and today in the industry, SBTech is recognized as a reliable, inventive, forward-thinking, product-driven business that has achieved success and has been chosen by top-tier operators.
“Companies can perceive that we have momentum.”
Powerful Brand, Subpar Product?
For Cochran, ensuring more lottery activity starts with a straightforward observation: the operators involved can perform better.
In 2018, live betting represented only 16.4% of Svenska Spel’s sports betting revenue, or 2.4% of the monopoly’s total revenue, a figure SBTech believes can be enhanced. However, Cochran said Svenska Spel, along with other partners, is hindered by inadequate real-time products and outdated technology.
“We view it as an opportunity that the industry is providing a very low-quality product to the end user,” Cochran explained.
A significant portion of lottery operators rely on outdated, single-technology systems. Their offerings lack adaptability, and their sports streaming services are subpar.
“Their systems are all intricate, custom-built, sluggish, inflexible, and don’t utilize modern technology,” he added.
Although this might impede their expansion, he stated that they possess robust brand advantages. For instance, Veikkaus is the sole legal gambling brand for Finnish players. Up until this past January, Svenska Spel in Sweden had no rivals. Nevertheless, both of these organizations, along with the Oregon Lottery, are primarily brick-and-mortar businesses.
“They’re all very powerful brands,” Cochran said. “We perceive a vast opportunity to bring these substantial retail presences online, engage players, and drive online revenue growth through a strong multi-channel experience.
“For us, it’s about the multi-channel product, which we believe is a perfect fit for this industry, and we’re thrilled that in the past few months, three lottery operators have agreed.”
However, while these developments have all come to fruition in a brief period of time, they’ve actually been in progress for an extended duration.
Cochran mentioned his experience forging relationships with Veikkaus and Svenska Spel during his tenure at Sporting Solutions. This work continued after he joined SBTech in 2017, and each Scandinavian company’s procurement process extended over a year.
Nevertheless, possibly the most vital step was the firm’s accords with the Sazka Group in 2016 and Danske Spil in 2017.
“There have been a number of significant accomplishments for SBTech in the last three years,” Cochran remarked. “Firstly, Sazka signed a contract with SBTech to operate online sports wagering in the Czech Republic.”
“This gave Danske Spil assurance, they stated, ‘These individuals have WLA member clients, we feel confident in selecting them.’ I believe Danske Spil is a genuine landmark client for SBTech, aiding us with Veikkaus and Svenka, if not all three.”
**Prizing Adaptability**
Cochran proceeded to clarify that the key to securing these agreements was providing adaptable solutions. They required new technology, certainly, but they also desired to retain their internal trading teams and handle risk management independently.
“I believe they were seeking flexibility,” he stated. “If you observe these lottery operators, they typically have their own internal trading teams. They do not wish to dismantle those teams, put people out of work, and hand over control of risk management to someone else overnight.
“Therefore, SBTech provided a blended solution: if they desired to keep their staff, if they desired to keep their trading teams, if they desired to have detailed control over risk management, we provided them the capability to do that, which was absolutely essential.”
Although similarities might exist among the lottery operators, all three find themselves in distinct circumstances. Svenska Spel, having previously held a monopoly in a market that has recently opened to competition, occupies a different position compared to the Finnish lottery, which remains a monopoly but could potentially face a similar situation to its Swedish counterpart in the future. The Oregon Lottery is a newcomer to the sports betting market, a sector that only permitted regulated wagering a year ago. Cochran expresses confidence in the company’s ability to assist its partners in achieving success in each scenario.
“We believe we can assist numerous operators in safeguarding their market share,” Cochran stated. “Examining the figures across Europe, many lottery operators are witnessing pressure on their market share, or in some cases, a decline. Consequently, I believe SBTech’s offerings are well-suited to aid operators in regaining momentum and preserving their market share.”
“We collaborate with our partners; it’s not a client-supplier relationship. Therefore, we continuously analyze the markets where our partners operate and ensure we possess products that are competitive within that specific market. We embrace open market competition because we have robust products capable of rivaling any online sports betting company.”
For SBTech, the current emphasis lies on the launch of each product. Cochran mentioned that the Oregon Lottery product, initially scheduled to debut at the commencement of the NFL season on September 5, is now on the verge of release.
In the meantime, Veikkaus and Svenska Spel are planning to introduce new sports wagering platforms in the initial six months of 2020.
“We’re thrilled to have such a prominent position in the sector, and now we must fulfill these agreements and make them operational,” Cochran stated. “The true examination is the actual product following its launch; we must deliver on the commitments outlined in the contracts.
“Therefore, we’re eagerly anticipating Veikkaus going live early next year, Svenska in the second quarter of next year, and Oregon will be ahead of both – Oregon should be operational shortly.”
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