International edition
October 21, 2020

BMM CEO Martin Storm, interviewed by Non-Executive Director Frank Fahrenkopf

"BMM will grow its leadership amongst gaming labs in the U.S. and worldwide"

Martin Storm, BMM's CEO (left) and Frank Fahrenkopf, former Founder & President of AGA, and current Non-Executive Director at BMM (right).
United States | 10/14/2019

Frank Fahrenkopf, former Founder & President of AGA and Non-Executive Director at BMM has asked a series of questions to CEO Martin Storm. They discussed the record growth experienced by the company in 2018, the current state of the gaming testlab market, and the firm’s plans for the future.

F

rank Fahrenkopf, former Founder & President of American Gaming Association, and current Non-Executive Director, BMM Testlabs has interviewed Martin Storm, BMM's CEO on the industry state of play.

BMM's 2019 business performance has been strong after an impressive 2018. What do you attribute continued growth to?

Frank, BMM continues to outperform. We maintain our emphasis on test and certification, everywhere around the world for gambling products. We remain focused on organic growth - Revenue up 29% and EBITDA up 46% in 2018, and 2019 looks very good too. For the longest-serving gaming lab that's operated successfully for nearly 40 years, we repeatedly outperform our segment CAGR of 5-6%.

We continue to rate first among global labs for quality of testing, time-to-market and customer service. We rate first because of our people, our talented leadership, management, and staff. It's truly a privilege to work with them all, as their professionalism, commitment and care make growth happen for BMM. What a differentiating factor they are.

The gaming testlab market around the world is dominated by BMM and GLI, who certify more than 80% of all gaming products. Even with GLI's acquisition of NMi in Europe, it seems that BMM is growing appreciably in the online test segment. How did that happen?

In the early years, I did not want to invest in the online test segment due to our focus on U.S. licensing and U.S. legislative restrictions, even though we wrote the first comprehensive set of gaming standards for Online Gaming in 2001. We had a look at TST some 10 years ago as a possible acquisition but the culture and numbers didn't work for us. Then GLI's acquisition of NMi in 2017 made available some very talented staff who chose BMM as their new home. We committed to them and their results have been remarkable.

Our European online business is growing at some 40% CAGR and can continue to do so into foreseeable future. Large online customers wanting to go everywhere can only choose BMM or GLI in online, so we are both competing actively for that business, and we win our fair share.

Speaking of GLI, while BMM has been very strong in international land-based testing markets for many years, it still remains the challenger brand in the U.S. Now that the jurisdictional gap between the companies has closed materially in the U.S., what should we expect next?

Any major supplier in the U.S. that wants its slot machines and gaming systems certified, understandably wants a certification process that covers all the jurisdictions in a market to maximize product sales opportunities, without having to spend additional funds to test a second time for a handful of jurisdictions not initially covered. Because only GLI has complete jurisdictional coverage, it has essentially guaranteed itself of the vast majority of business within North America. While BMM is working on the last handful of tribal jurisdictions (from more than 300), GLI continues to offer free tools and services for jurisdictional exclusivity, effectively depriving major suppliers of competition among gaming labs, costing those same suppliers millions of dollars per annum. The time for real competition amongst labs in the U.S. is now, and its nearly here.

Has this exclusivity enjoyed by GLI served the U.S. gaming industry?

It has certainly served GLI very well. James Maida, CEO and Owner, and Kevin Mullally, VP of Government Affairs, have worked very closely together in many jurisdictions over many years now developing regulatory relationships that have maintained those exclusive positions. When combined with their government lobbyists and tribal representatives, James and Kevin have been a very formidable and intimidating team.

But to answer the question directly, no, I don't believe GLI's continuing, effective monopoly for Class III games certification has served the gaming industry well. Having only one lab that can test for all jurisdictions in the U.S. has been inordinately expensive for gaming suppliers and operators, as a material inefficiency in the gaming industry. Industry experts have told us that testing costs have been too high for too long. With competition limited, testing performance has been slow - it seems to have taken GLI more than 10 years to make process and quality improvements in pursuit of BMM's performance. And we know that testing quality is lower in markets serviced by only one gaming lab, as evidenced by the high number of product revocations. In my opinion, and others, GLI exclusivity in just a few gaming markets is the premium paid for by the gaming suppliers and their operator customers, and also regulators through administration and management overheads.

What happened in Illinois - that was huge news?

The wonderful news is that BMM is now licensed in Illinois through the new Illinois Gaming Board. This major U.S. commercial gaming jurisdiction will now allow multiple qualified labs to service gaming suppliers and compete for business with the state itself, and the many suppliers who have reached out to me are thrilled. Thanks to all those that supported us all these years.

So what's next for BMM?

Frank, we are keeping it simple. We continue our focus on land-based gaming testing and certification, and have advanced our position in aligned segments that we can command over time - online and sports betting, machine inspections and cybersecurity. That combined with market access completion with tribes, enhanced operational coverage, staff development, and productivity evolution will see BMM grow its leadership amongst gaming labs in the U.S. and worldwide.

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