hen Kambi presented its Q1 2021 results, it highlighted its US expansion across 14 states, with the company closely watching New York’s recent regulation. Could you share an update, further details on your plans in New York, two months after online sports betting was signed into law? What are your performance, feedback, and business strategies in the main US markets, and which other states would be appealing for Kambi’s entry this year?
The regulated United States market is an increasingly important one for Kambi, and revenue derived from the US has been growing every year as a proportion of our overall gross gaming revenue. We were able to facilitate an online or retail launch every nine days in 2020, and Kambi has achieved market firsts in ten US states – processing the first legal wagers in states including New York and Pennsylvania. It is this ability to pivot our technology to meet any local requirements while providing a premium sports betting offer capable of driving consistent engagement that has underpinned our growth to become the sports betting partner to major multi-state operators like Penn National Gaming, Rush Street Interactive, and Churchill Downs, as well as tribal operators such as Seneca Gaming Corporation.
Kambi partner Rush Street Interactive took the first legal wager in New York on-site at Rivers Casino & Resort Schenectady in 2019, and we are closely monitoring forthcoming online regulations in the state with our partners as the framework takes shape. Additionally, we took the first legal online wager in Michigan in January 2021, launching with four of our partners on day one of online regulation. As the US continues to regulate sports betting on a state-by-state basis, Kambi has an ambitious group of partners who are eager and ready to capitalize.
What are the current demands from operators in that fast-growing market? What are the keys to stay competitive and comply with the different regulatory frameworks and bettors' profiles?
Kambi had developed a deep offering for all the major US sports prior to entering the market in 2018, ensuring that we were fully prepared for when US states regulated sports betting. One of the most appealing aspects for operators is that Kambi can quickly tailor our sportsbook technology to adjust to different regulations in different states, meaning that we are able to launch new partners quickly, and in full compliance with all local requirements.
Furthermore, the extensive differentiation capabilities offered through a partnership with Kambi have been crucial in establishing the business as the market’s leading provider of sports betting technology. For example, our open APIs enable operators to build entirely bespoke front-ends - as Penn National Gaming has done with their Barstool Sportsbook – while our sophisticated price differentiation tool provides our partners with the opportunity to adjust both in-play and pre-match odds on specific outcomes, giving them all the scope they need to pursue their individual strategies.
How do you assess Kambi’s progress in Latin America, and what are your ambitions in the region?
Kambi is already well established in Latin America’s regulated markets. Colombia has led the way in establishing a regulatory framework in the region, and Kambi is partnered with two of the market leaders in BetPlay and RushBet. In Argentina, we established a multi-year partnership with one of the leading operators in the country, Casino Magic, launching an online sportsbook in the province of Neuquén shortly after the ink was dry on our agreement and we look forward to more provinces regulating sports betting.
Most recently, Kambi put pen to paper on a partnership with NG Gaming to power the launch of its Olimpo.bet brand. The Olimpo.bet brand will initially target the Peruvian market and has ambitions for future expansion across regulated markets in South America. We have a great product fit for the region and are excited by the opportunities across the continent.
Which short-term trends could you mention in this business amid the massive global shift from offline to online? ahead, what are your outlooks both for the retail and online sportsbooks in this new landscape?
One trend that is increasingly making itself felt is the importance of Kambi’s partner network. As the Kambi network grows, so too does the value it offers our partners. The success Kambi delivers is anchored in our ability to leverage network data from a global player base, creating network advantages that increase as each new partner is added and existing partners grow. Every player interaction or bet benefits each of Kambi’s partners. For example, a greater volume of data will lead to a more accurate understanding of player behavioral habits, aiding Kambi in providing a more frictionless and intuitive user experience.
In simple terms, when our partners launch sports betting with Kambi, they do not do so from a standing start. They are not competing alone, but with the benefit of our 20 years of trading experience and actionable analytics from our deep network data behind them – a partnership with Kambi provides a platform on which they can thrive.
Which specific changes have you seen in the sports betting industry since the pandemic began, with current and possible long-term effects, even after major sporting events returned?
The pandemic brought about significant challenges for all kinds of industries, including sports betting, since most sports around the world initially came to a halt. As the leading global sports betting technology provider Kambi has long maintained a strong offering in a variety of sports around the world, so the pandemic resulted in a reallocation of our existing resources more than being caught on the hop.
The pandemic created an opportunity for more niche sports to enter the limelight. For instance, table tennis and South Korean baseball were two of our top performers in the US in 2020, and the pandemic situation certainly introduced more players to the full breadth of the Kambi offer, both pre-match and live. When sports such as basketball, soccer, and football did return, we saw high levels of enthusiasm for them and we were able to respond efficiently to ensure the resources were in place as those sports returned.
Further to this, it’s worth emphasizing that the pandemic has prompted a rethink by operators with regard to their fixed costs. Having the sportsbook function in-house risks having an inferior product at a higher cost base, with high fixed costs leaving operators at risk of exposure to external uncertainties. Kambi works with our partners on a revenue share basis, and that variable cost base offers a layer of protection to events such as the pandemic.