In an exclusive interview with Yogonet, Elys Game Technology's Executive Chairman Michele Ciavarella provides an update on new agreements for the US market through subsidiary USBookmaking. He also talks about a recent partnership with Atlantic City's Ocean Casino Resort, plus plans for Canada, initial impressions of New York's first sportsbook in a restaurant launched in October, and the company's U.S. digital roll-out slated for 2022.
Ciavarella also discusses synergies with Elys’ Multigioco subsidiary in Italy, and how the company's US operations can benefit from experience gained in the European market. Moreover, he reflects on the keys to Elys' product and approach to innovative sports betting technology: "Elys is not only developing new features that players are demanding, but also ensuring that we deliver the most technologically advanced risk management and economically feasible betting engine," he says.
Elys' USBookmaking has partnered with Ocean Casino Resort to provide trading management services and future retail solutions. What are the main features of this deal, and why was this partner chosen?
In this regard, there is a significant movement within incumbent U.S. operators that acted early in the period after the repeal of PASPA in May 2018. We had extensive mutual conversations with Ocean management and the tech team, alongside several competitors, and are incredibly pleased to have been selected by Ocean management for their business, not just for our competitive tech stack but also for the talent and experience of USBookmaking.
The New Jersey market is highly competitive, while also the biggest in the US. How does the company plan to secure its presence within it, and what added value can it bring compared to other current offerings present there?
As we have often articulated over the past two years, the market in New Jersey may be crowded, but this is not uncharted territory for Elys because we currently have established a strong brand and are navigating our way to the top ten in the very competitive and crowded Italian market against large operators. As such, we are confident in our capability in this environment. In fact, we were quite strategic in scouting the robust New Jersey market in the early days after PASPA was repealed.
While several competitors chose to repurpose their European products and services for taking early mover advantage, Elys believed that was not the right tactic in our industry. Sports betting is an industry where you truly get only one chance to make a great first impression. It’s a business where the more customers you obtain, the more money you put to risk on the sale of the product, which ultimately is the “odds” on the unknown outcome of a sports event.
Elys can provide value on two key fronts here, the first is through our highly experienced and reputable bookmaking team, as well as our highly scalable and very cost-effective technology for operators such as large casinos and small businesses like restaurants and bars.
The company is currently operational in North America with 6 tribal casino customers. How do you assess market performance so far? How will the company stand out in the highly competitive US market, and which states and regions are a priority there? Which are the main challenges for you there considering your core experience and origins as an Italian operator? Which role has the rebranding to Elys played?
It is still quite early to tell, and to come to conclusions. There is still a lot of work to do but we are very encouraged with two key take-aways from our launch in the small restaurant business which demonstrated not only good performance but also processed about 300% more bet volume than we expected without any glitches or bugs. This is a testament to our talented engineering team. In addition, we were able to find tech and product gaps with the help of feedback from our USBookmaking team that provides feedback from the player demand perspective.
Where Elys stands out is in the fact that we were able to open a full-service sportsbook inside a small business at a very low cost and one that performed extremely well due to the very focused fan base that the venue services. Further, we were selected by Ocean Resort Casino against some tough competition from established providers. This gives Elys bookended clients in the U.S. retail landscape ranging from small businesses to large casino resorts that can prove to establish our brand across the nation for land-based operators, and we are preparing the U.S. digital roll-out in 2022, so we expect to be able to cover all corners of the U.S. and Canadian markets with one of the most advanced technology stacks available in the sports betting market.
Once we deploy our full-stack solution in 2022, we expect to be in all regulated states and provinces in due course, dependent only upon logistics and economics.
The main challenges we face are the same that our competitors face, but they may be taking a different approach to address, and that is the state-by-state or province-by-province regulatory landscape that requires a different set of parameters across the two nations. We also have an overarching challenge with the U.S. Wire Act that guides the digital deployment in the U.S.
But these are challenges faced by all operators. Our specific challenges, however, are self-guided because as mentioned we are taking a methodical and tactical approach in deploying our technology in North American markets rather than repurposing our Euro tech. So, this means more project streams for our tech team, and while market operators may demand faster solutions, Elys is taking a quality-first approach, so it takes longer to prepare and deploy.
In comparison to the US, Canada has just recently legalized single event betting. What perspectives does Elys find in this nascent market, and what will the strategy there be like?
I think there will be more similarities than differences in nascent markets such as Canada and U.S.
Because we took the course of action we did, we feel extremely confident that our solution will be selected by experienced operators that recognize the quality and performance of our platform for their operations in Canada.
Elys has recently partnered for the opening of the first sportsbook in a restaurant/bar in the US. What have been the initial results of this business so far and how would you assess its first weeks of operation? What has customer reception to this sportsbook been like so far and what should we expect of this venture, and this new D.C. market in the near future?
As mentioned, we are quite encouraged by two key take-aways from this first deployment.
The first is the seamless launch without any crashes, or bugs, particularly because this was very new to everyone. We have our tech team isolated in Europe, with our trading team in the USA, and this was all being launched in a virtual environment because of COVID restrictions. Our engineers never really had the chance to even test the system on-site before hitting the on-switch.
The second is made up of two parts: first is the cost-effectiveness of launching a physical, small business location for a very low cost; and the second is a surprising volume of sports bets that exceeded our expectations. This gives us a cookie-cutter model that we can now exponentially grow for a negligible cost for each additional restaurant and bar in the state. In addition to the published results of sports betting, the ancillary benefit is that the restaurant is driving benefit to their F&B business. As a combined result, I am confident that we will see a number of additional clients signing on to have our system installed.
The early results from DC are truly a solid testament to the power and capability Elys brings to the market in all of North America.
The company has also committed to this new business market by partnering with New York's Restaurant Association to promote sports betting. What opportunities does this model open for both small businesses and operators in the US? Should we expect sports wagering at restaurants to become a growing trend going forward? How will Elys leverage its experience with this business model in Italy for its US operations?
We are very bullish on this segment of the market. We believe that small business venues such as restaurants, bars, coffee shops and convenience stores are places where people congregate to experience sporting events and share their competitive enthusiasm. So, this bodes well for our business and for the restaurant industry that has been affected by the pandemic. Currently, many U.S. markets have either monopolized their legislation or have favored the online channel that sends revenue and profits out of state. I believe that as more states adopt this small business model, more legislators will realize that this is a better economic driver for their own states.
The restaurant vibe is a key industry in the state of New York, with thousands of available establishments that can partner with Elys to adopt this opportunity. As such, Elys can share its experience in the Italian market where this business model thrives. We can be a key corporate citizen in aiding the adoption of sports betting in these businesses to help them drive their core business and generate ancillary revenue for their operations, and benefit the local economy with job creation, both within and outside of the location.
Elys’ Multigioco subsidiary in Italy has recently ranked among the top sports betting businesses in the country, while USBookmaking has announced its first partnerships under Elys’ management since purchase completion in July. What does the company expect from these milestones in terms of long-term growth and what synergies does it open? Does Elys plan to diversify its business operations into other international markets and verticals? And how does the company plan to approach product innovation in a context in which users expect new customizations and features?
The growth of Multigioco in our core market is a result of two key strengths: one is our customer-facing product, management and customer service operations in a very challenging market; and it is also a validation of our technology developed by our talented engineering team. Again, when you look at a highly competitive market like Italy, where almost all of the large global players are competing, moving up in the market is a proud development.
The synergies with Multigioco and USBookmaking are extensive and were a key part of the formula that brought our two enterprises together.
We are currently focused only on regulated markets with U.S. and Canada on the immediate radar screen. However, there are many newly regulated or developing regulatory environments where Elys can have a presence, so we are not shutting anything out if it makes both economic and pragmatic sense.
As for innovation, one of Ely’s greatest strengths is in the feedback ecosystem we created with Multigioco's customer-facing operations on the one hand, and USBookmaking market data and trading experience on the other hand. Both feed this knowledge and experience to the engineering team so that Elys is not only developing new features that players are demanding, but also ensuring that we deliver the most technologically advanced risk management and economically feasible betting engine for operators around the world.