Strategic report Creating premium sports betting experiences across the globe - Kambi
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Annual report and accounts 2018 Kambi Group plc Strategic report Annual report and accounts 2018 Kambi Group plc Strategic report Strategic report Creating premium sports betting experiences across the globe. 4 5
Annual report and accounts 2018 Kambi Group plc Strategic report
Kambi at a glance
Powering the world’s
leading Sportsbooks
Kambi delivers the ultimate We have accelerated the success of some The drive and passion of approximately
of the biggest brands in the industry. By 700 highly skilled people, working across
Sportsbook service to more
working in close partnership with our seven countries fuel Kambi with the
than 20 online and retail customers, Kambi stimulates innovation, strength of resource to push, and stay,
operators across the globe. and guides the co-creation of scalable ahead of the competition. Publicly listed,
From our innovative, in-house and unique tools that empower operators licensed and fully compliant in every
to develop genuine and exciting sports regulated territory in which we operate,
developed software to customer betting experiences – relevant to their Kambi is the first and only choice for
intelligence, risk management, business and market. operators with the ambition to lead in
odds compiling, and front-end Active in six continents, our scalable
their sports betting market.
user interface, Kambi leads model demonstrates the most Kambi Group plc is listed on
from the front over other sports effective means of excelling in today’s First North at Nasdaq Stockholm
international market. As the costs and under the symbol ‘KAMBI’.
betting suppliers. complexity associated with developing
and maintaining a high-quality and
regulatory compliant sportsbook
continue to rise, so too does the demand
for Kambi’s Sportsbook and services.
The results speak for themselves. The
number of visionary operators using
the Kambi Sportsbook are higher than
ever before, having increased more
than 50% in 2018. The success of these
operators provides clear evidence of its
effectiveness and efficiency as a means
of operating a leading sportsbook in
regulated and competitive markets.
700 passionate and highly
skilled people working across
seven countries.
6
Annual report and accounts 2018 Kambi Group plc Strategic report
Active in six continents,
our scalable model is the
most effective means
of competing in today’s
international market.
7
Annual report and accounts 2018 Kambi Group plc Strategic report
Introduction
Reaching new heights
Kambi’s success is predicated The challenge of developing and Entry into the US market naturally
maintaining a highly engaging and resulted in increased revenue for
on the enjoyment players take
exciting sportsbook increases in Kambi. However, the bulk of our growth
from our Sportsbook platform. complexity year-on-year and requires the continued to come from the rest of the
In order for Kambi and its continuous evolution of technology and world, underlining the solid foundations
operators to grow, we realise trading teams. This places rising pressure upon which the Kambi business is built.
on organisations which operate their In particular, the rapid development of
we must deliver exciting sports own proprietary sportsbook, and makes customers signed during the previous
betting experiences to players it extremely difficult for new players to year demonstrates our ability to provide
in a safe and responsible way. enter the market. operators with a springboard to growth.
At Kambi, the player always Kambi successfully anticipated this The respected Power 50 list – an annual
comes first. This has, and always challenge and built a solution which frees ranking of the biggest and most influential
existing operators from the constraints gaming operators in the world – now
will be, our primary driver. of running the core sportsbook function, features nine Kambi-powered operators.
while also significantly reducing the Jumping up from six in 2017, this includes
barriers for new entrants. Launched in three customers in the top 10, and
2010, our scalable and fully customisable illustrates Kambi’s ability to attract
Sportsbook platform has fast become and retain top tier operators, as well
the number one choice for visionary highlighting a trend towards high-quality
operators and players across the globe. third-party sportsbooks. We believe
this trend will continue, with increased
This winning position was reflected in
regulation, rising costs, heightened
2018, with Kambi’s most successful year
competition, evolving technologies,
to date. Our outstanding achievements
and changing consumer habits, making
included: the addition of a record number
Kambi’s services ever more attractive to
of customers, recording our highest ever
ambitious and visionary operators.
revenues, entering multiple new and
regulated jurisdictions, and conducting In 2018, Kambi reached new heights,
a major roll-out of our retail product. bringing sports betting entertainment to
Kambi also played a lead role in a historic millions of players around the world. With
moment for the global sports betting the momentum of this success behind us,
industry – processing New Jersey’s first we move into 2019 with confidence.
legal online bet, following the full repeal
of the United States’ federal sports
betting ban.
historic Kambi processed the first legal online bet
in New Jersey following the full repeal of the
United States’ federal sports betting ban.
8
Annual report and accounts 2018
2017 Kambi Group plc Strategic report
Our visionary
Sportsbook is a
powerful incubator
for innovation and
differentiation.
9
Annual report and accounts 2018 Kambi Group plc Strategic report
Chairman and
CEO statements
Chairman’s
Statement
Lars Stugemo
Digitalisation has been However, potentially the most
transformational event of the year was
changing the way businesses
Kambi’s expansion into the US, where
operate, consumers behave we took the first legal online bet outside
and information is shared. of Nevada following the repeal of the
This evolution is pushing country’s federal sports betting ban.
Since that historic bet, Kambi has built
the boundaries of what we strong positions in the two largest states
thought was possible, from to have regulated so far, New Jersey
both a technology and product and Pennsylvania.
perspective. Moreover, it’s Looking ahead, a combination of
drastically raising the bar digitalisation and regulation will
see the industry become even more
in terms of the end user widespread globally, yet increasingly
experience and expectations. local and fragmented. This will place
an even greater burden on product and
This trend continued in 2018 as digital
compliance organisations to deliver
businesses across a wide spectrum
exciting, localised and regulatory
leveraged newly unearthed information
compliant products to their customers.
to satisfy changing consumer habits
– whether that be through the These industry challenges will only
development of new products, and/or heighten the appeal of suppliers such as
delivering relevant experiences to the Kambi. We are already the number one
end user at the right time. provider to tier one operators, reflected
in the fact we power the sportsbooks of
For Kambi, our end users are the bettors
three of the top 10 operators in the world,
– the players. As industry innovators,
according to the recent Power
our focus, as always, is on consistently
50 ranking.
providing players with new, exciting and
thrilling ways to enhance the viewing of Bearing in mind our proven track record
their favourite sports, teams or players, coupled with the industry’s direction of
through the provision of a high-quality travel, I believe we’ll be required to create
sportsbook to our network of operators. even more entertaining experiences in
2019 and beyond. And if we continue
Clearly our capacity to excite and deliver
to succeed in bringing excitement to
relevant betting opportunities was a
players, we’ll naturally deliver growth
key driver behind Kambi’s record 2018.
to our operators.
During the past year, we signed eight
new customers – a company record,
with the number of players using the
Kambi Sportsbook across our expanding
network rising by approximately 50%.
Kambi now operates across six Lars Stugemo
continents, creating local market leaders Chairman
in each. And in addition to adding new
customers last year, we also continued to
renew contracts with some of our major
clients, with both Kindred and Mr Green
committing to Kambi for the long-term.
10
Annual report and accounts 2018 Kambi Group plc Strategic report
A view from the CEO
Kristian Nylén
When we sat down in 2009 to This was evident in 2018 as Kambi made in Sweden. I’m proud to say we have a
its debut in the US. Kambi’s readiness market-leading retail solution, one which
write the initial business plan
provided the springboard for our partners gives players the same quality they have
for Kambi, we took a view on to succeed in New Jersey. This included come to expect online and operators the
how we saw the sports betting the processing of the first legal online same flexibility to differentiate.
industry playing out. It was our sports bet in the US with DraftKings,
After such a great year there’s always a
post-regulation. We have also taken a
belief back then that regulation leading position in retail, providing our
risk of subconsciously resting on your
would spread from the handful laurels and simply expecting momentum
operators with the most modern and
to continue. However, in my view, one
of markets in Europe to many sophisticated on-property product suite
of the great things about last year is
in the market.
more jurisdictions further that, despite our fantastic performance,
afield, and so we built our While Kambi has long been creating local we have the capacity and motivation
market leaders, regulation in the US to improve further in 2019 and beyond.
business accordingly. has given us a bigger stage on which to We’ve built a great team, a great brand
Ten years on, we now have a sizable display our excellence. Our high-profile and a great product, and I’m very excited
regulated sports betting industry, with success, and that of our operators, has for the year ahead.
many more players having access to generated further interest in Kambi, both
safe and secure environments in which in the US and elsewhere. This is why I
to play. Almost every major European believe that, despite our incredible year
country has some form of regulation in of growth in 2018, many more exciting
place, or is on the road to regulation. opportunities lie ahead.
Last year, the United States entered Kristian Nylén
Reflecting on 2018 reminds me just
the fray, while in South America, Brazil, CEO
how exceptional it was. The financials
among others, is in the process of were strong with revenues up 23%
developing its licensing framework. and operating profit up 65%. We
Having developed our business for signed a record number of customers
regulated markets - building our in a calendar year – eight, and agreed
technology with the scalability and extended deals with two others. We
flexibility to comply with a wide variety established market leadership positions
of local specifications - the opening up of in countries including the US and
new territories is enabling us to provide Colombia, enjoyed a strong World Cup,
exciting sports betting experiences while and won prestigious industry awards.
simultaneously delivering the protections Furthermore, it was a year in which
and safeguards not afforded to players in Kambi truly became a multi-channel
unlicensed markets. The long-term view sports betting supplier. The decision to
we took a decade ago is also helping our continuously develop our retail product
partners enter new markets at speed and really bore fruit in 2018, as we rolled
obtain market-leading positions. out with three customers in the US and
ensured ATG was ready to go live on 1
January 2019 across 2,000 retail stores
11
Annual report and accounts 2018 Kambi Group plc Strategic report
Overview and highlights
€31.1m Net cash
€12.7m Operating
profit
€9.8m Profit
after tax
23% Revenue
growth 20% Operator
turnover growth
20+ A global supplier
with a customer
operators footprint across
six continents
700 employees
across seven locations:
Australia, Malta, Philippines,
Romania, Sweden, UK and US.
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Annual report and accounts 2018 Kambi Group plc Strategic report
Online sports
betting supplier
of the year
69 Sports covered
worldwide
348k Pre-match
events Nine Kambi
customers
recognised
470m Bets placed
in 2018
on the EGR Intel Power
50 list: 888, Casumo,
DraftKings, Global Gaming,
Kindred Group, LeoVegas,
MRG, Paf and Rank Group
203k Live
events
Healthy balance
4.4bn Odd
changes
sheet and steady
cash flow
Eight customers signed
13
Annual report and accounts 2018 Kambi Group plc Strategic report Strategic review Driving growth through scalability and differentiation 14
Annual report and accounts 2018 Kambi Group plc Strategic report
Everything Kambi does is driven by the
enjoyment of the end user. By creating unique
betting opportunities and supplying engaging
products, we strive to provide players with
both an exciting and safe sports betting
experience – that goes above and beyond
any other on the market.
Underpinning the delivery To keep our promise to customers – to In 2018, Kambi’s scalable differentiation
of this experience is our empower them to fulfil their sports betting acted as a catalyst for reaching new
ambitions – the Kambi Sportsbook must heights. Set against the backdrop of an
compliant and increasingly be capable of supporting operators increasingly complex and fragmented
flexible Sportsbook, designed wherever and whenever. Which means that global sports betting market, this
to complement individual we must ensure our Sportsbook platform approach enabled us to execute and
remains as scalable as possible. deliver across various jurisdictions,
operator strategies, and ultimately leading to the business
respond to evolving business Kambi rises to this technical and
outperforming competitors.
operational challenge through ‘scalable
needs. Maintaining this differentiation’ – providing a sportsbook This strategy was a key driver in Kambi
complete service to a high core that meets the needs of all, while being positioned to process the first legal
standard, across Kambi’s empowering operators to innovate, online sports bet in the US, following the
integrate, and individualise through our repeal of the country’s federal sports
ever-growing and diverse
platform. Only by delivering both this betting ban. Not only was our scalable
network of operators, is a scalability and differentiation, can Kambi Sportsbook able to quickly meet the
complex task. and its customers succeed. requirements of the local regulator, but
our flexible platform ensured our customer
The design of a universal sportsbook
could launch a front-end unique to its
core removes the burden of bespoke
brand and customer base ahead of the rest
developments and individual instalments
of the market.
– enabling Kambi to deliver in a scalable
way. We build once and the benefit is felt And this scalable differentiation isn’t
by all: every tweak, improvement, and limited to online. Last year, Kambi enjoyed
product upgrade to the Sportsbook is great success in the retail channel,
implemented across the entire Kambi primarily due to the quality of its retail
network of operators. solution. Kambi’s retail product has been
continuously developed using the same
Built within this scalable core is a
central Sportsbook core, meaning it
layer of operator empowerment, using
benefits from the same functionality and
sophisticated technology which enables
flexibility as our online Sportsbook.
control over crucial elements of the
Sportsbook. This capability provides Retail has become particularly important
operators with the freedom to develop in the United States, where regulators
tailored products and functionality best have placed an emphasis on the retail
suited to their end users – so no two Kambi channel. Last year, we launched retail in
operators need look or feel the same. three casinos across two US states, New
Jersey and Pennsylvania, and additional
US retail launches have followed in 2019.
15Annual report and accounts 2018 Kambi Group plc Strategic report
In addition, the re-regulation of the Alongside continuing market regulation,
Swedish market on 1 January 2019 saw it has become increasingly apparent
the Kambi Sportsbook launched across that operators and regulators prefer to
a fleet of 2,000 retail stores with ATG, work with those able to demonstrate
establishing Kambi as a multi-channel a long history of respecting local laws.
market leader. Kambi has a proud record of obtaining
each and every licence it has ever
Our scalable Sportsbook core allows
applied for, and in 2018 secured permits
us to be consistently quick to deliver a
in South Africa and the US states of New
high-quality and localised sports betting
Jersey, Pennsylvania, Mississippi and
product, whatever the channel. In total,
West Virginia.
Kambi supported operators with 19 market
launches in 10 different jurisdictions Kambi’s integrity and corporate
throughout the year, including three probity set us apart, and strengthen
separate launches in the space of just our credentials within the industry. We
10 days. are fully committed to creating and
maintaining a sustainable business, and
As regulation continues to unfold across
have developed proprietary algorithms
the US, Europe and the rest of the world,
which can detect the early signs
Kambi believes operators will increasingly
of problem gambling and highlight
require a scalable multi-channel
suspicious betting patterns – protecting
sportsbook such as ours. One that can be
the safety of players, as well as the
rapidly localised and deployed to meet the
integrity of sports.
demands of both regulators and players –
as well as empower operators to innovate Listed on First North at Nasdaq
and differentiate where it matters most. Stockholm, Kambi has a transparent
management and ownership structure.
Acting as a trusted partner Giving regulators and operators a clear
view of who they are doing business with
Kambi has always placed integrity at has had a positive impact on the sales
the heart of its operations, and avoids cycle with operators favouring our clean
markets where gambling is prohibited. business approach. This transparency
We are firmly of the belief that not only is has also improved the speed of the
this the correct way to operate, but that licensing process.
it will provide long-term benefits to both
our business and reputation.
innovate Kambi provides a high-quality Sportsbook
developed with increased capacity
for operators to innovate, integrate and
differentiate upon our platform.
1617
Annual report and accounts 2018 Kambi Group plc Strategic report
Sports betting market
Seeing the opportunity
in regulation
Hundreds of millions of people retail will continue to provide the majority such as Brazil, Argentina and the United
of the gross revenue, with the estimated States. Adopting regulation, as some US
across the globe place bets
€39.9bn generated in 2018 expected states have already, would significantly
on a regular basis, making to rise to €48.6bn in 2023, at a CAGR increase Kambi’s addressable market.
sports betting one of the most of 3.3%.
Kambi has entered a number of regulated
popular pastimes in the world. The bulk of Kambi’s current revenues online markets for the first time over the
Its popularity has created a are generated through regulated online past 18 months, including South Africa,
thriving and ever-growing sports betting, an area projected to Colombia and Bulgaria, as well as a
grow from €5.4bn 2018 to €11.5bn in number of US states. The customers we
industry, boosted by increased 2023 – an annual rate of 16%, and faster launched into these markets experienced
accessibility and connectivity. than any other market segment. In 2018 substantial growth in 2018 – with good
online betting revenues in Europe were prospects for continued growth.
According to market research company
estimated to have overtaken retail for
H2 Gambling Capital, the global betting Kambi’s pre-existing markets are also
the first time (see right, middle).
industry was worth approximately €62bn anticipated to grow at strong rates. Italy,
in 2018, and is expected to grow to A powerful driver of regulated market the Netherlands, Romania, Belgium and
€79.4bn in 2023 (see graph right). Online growth will be the adoption of licensing Colombia are all forecast to be among the
is anticipated to be the fastest growing frameworks in countries where gambling top market performers over the next five
channel over this period, rising from is currently unregulated. Kambi feels years – providing opportunities for Kambi
€22bn to €30.8bn at a compound annual greatly encouraged by the recent operators to increase their turnover.
growth rate (CAGR) of 5.7%. However, regulatory progress made in countries
Global Online Gross Gaming Revenue
by Product Vertical (€Bn)
30 Betting
25
20
15 Casino
10
State Lotteries
5
Poker
Skill/
0 Other gaming
2017 2018 2019 2020 2021 2022 2023 Bingo
Source: H2 Gambling Capital
18Annual report and accounts 2018 Kambi Group plc Strategic report
Global Gross Gaming Revenue*
2018 – 2023 (€Bn) 37.9% 39%
37% 37% Online Online
36% 36.5% Online
Online
Online Online 62.1% 61%
63% 63% Retail Retail
64% 63.5% Retail
Retail
Retail Retail
62.0 64.6 69.5 72.6 77.2 79.4
2018 2019 2020 2021 2022 2023
Source: H2 Gambling Capital
* Please note: this graph contains data relating to both regulated and unregulated online sports betting.
European Betting Market Size
2003 – 2023 (€bn gross gaming revenue)
Retail Online
16
14
12
10
8
6
4
2
0
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Source: H2 Gambling Capital
Online betting growth*
CAGR (2017-2023)
16.6%
15.5% 16.6%
13.3% 12.8% 12.5%
11.3% 10.9% 10.6%
10.2% 9.8%
9.2%
8.4%
7.6% 7.6% 7.5% 7.3%
5.8% 5.7% 5.4% 5.2%
4.3% 4.3% 4.0%
Italy
Netherlands
Lithuania
Estonia
Belgium
Bulgaria
Romania
Ireland
France
Latvia
Croatia
Portugal
Greece
Czech Republic
Cyprus
Sweden
Germany
Spain
UK
Finland
Poland
Denmark
Austria
*Total betting includes horse racing and sports
Source: H2 Gambling Capital 19Annual report and accounts 2018 Kambi Group plc Strategic report
Regulatory developments
South America Europe
2018 saw progress in Brazil, when a On 1 January 2019, Sweden opened its
sports betting bill to regulate activity newly re-regulated market. The new
across both online and retail channels was regulation represents a more open
passed in December. This was particularly and liberalised framework – enabling
noteworthy given the country’s population operators from all around the world to
of more than 200 million. Secondary apply for a licence to enter the market.
legislation is needed before licences The regulation enabled the monopoly
become available which could take up to trotting and horse racing operator ATG
two years. to launch a sports betting product, which
presented Kambi with the opportunity to
A recent study by leading financial
partner with one of the most recognisable
services firm KPMG estimated that
brands in the country.
a regulated Brazilian market could
become the second largest in the world Including ATG, Kambi has seven customers
after the UK – although the US operating in Sweden with a recently
is expected to overtake both in time. obtained licence. It is estimated that the
The study forecasted annual online size of the Swedish online market will grow
gaming revenues in excess of $2bn, around 20% in 2019. All Kambi customers
across all verticals. previously active in Sweden received their
licences and commenced operations in the
Recent reforms in Argentina have
licensed market on 1 January, therefore
enabled each province to act as a
having the opportunity to share in this
gambling licensing authority. The
market growth.
provinces of Buenos Aires City and
Buenos Aires Province have voted to In the Netherlands, regulation moved a
legalise various forms of online step closer in February after the Dutch
gambling – including sports betting parliament voted to legalise egaming,
(retail betting is already regulated). including sports betting, as part of the
Remote Gaming Bill. The next stage
will be secondary legislation, e.g. the
regulations that will govern the market,
which may take up to two years before
being put to the European Commission
for approval.
Sweden Online Betting
Gross Gaming Revenue (€Mn)
1000
800
600
400
200
0
2018 2019 2020 2021 2022 2023
Source: H2 Gambling Capital
20Annual report and accounts 2018 Kambi Group plc Strategic report
Rising opportunities in the US 2018, nine states had adopted regulation
and processed legal sports wagers for
the first time, with others on track for
In May 2018, the US Supreme Court lifted sportsbook. Kambi-powered operators 2019. However, the state-by-state nature
an almost 30-year federal ban on sports have built a strong position in the online of sports betting in the US makes for a
betting – transferring the responsibility for market in New Jersey, generating more complex picture in predicting timelines
law making in this area to state level. This than half of all revenues since launch. and details of regulatory requirements.
historic judgment created an opportunity In neighbouring Pennsylvania, the Kambi
Kambi has taken a proactive approach
for US players to enjoy sports betting in Sportsbook is currently present in five
to communicating with regulators and
a safe and regulated framework, as well properties, giving us a leading position
lawmakers in states throughout the US
as a licensed environment in which Kambi in one of the largest US states.
in an effort to relay how effective
prefers to operate.
A countrywide passion for sports, a regulation has worked in Europe and
Following the decision, the first state to limited history of regulated bookmaking, other jurisdictions throughout the world.
launch online sports betting was New and an absence of sports betting
In all regulating markets, Kambi’s
Jersey. It was here in the Garden State technology mean the new US market
preference is for sensible retail and
that Kambi made history, processing represents a major opportunity for Kambi.
online regulation, with few restrictions
the country’s first legal online wager Operators with an interest in adding a
on market access, which betting markets
outside of Nevada. This was an historic sports betting product to their portfolio
can be offered, and on what channels.
moment which placed our name high on will need to seek outside assistance –
History shows regulation which promotes
the consciousness of gaming executives either in the form of joint-ventures with
competition and innovation – rather
across the US. betting operators, or agreements with
than monopoly frameworks as seen in
third-party suppliers such as Kambi.
Although still in its infancy, the market Delaware and Washington DC – enjoys
has grown faster than predicted and In anticipation of the Supreme Court’s greater success in channelling players
Kambi has made a promising start by decision, some states prepared at- from the unlicensed market into the safer,
launching three customers online in the-ready bills seeking to legalise and regulated environment.
New Jersey – including one with a retail regulate sports betting. By the close of
Lessons learned from New Jersey
New Jersey: Sports Betting Turnover by Channel
Jun – Dec 2018 (US$Mn)
Growth in New Jersey demonstrates the importance of online betting in the US.
72%
400 Online 76%
Online
28%
Retail 24%
350 67% Retail
Online
300 33%
Retail
57%
250 Online
43%
Retail
200
23%
Online
150
77%
Retail
100
100%
100% Retail*
50
Retail*
0
Jun 2018 Jul 2018 Aug 2018* Sep 2018 Oct 2018 Nov 2018 Dec 2018
* Online launched 1 August 2018
Source: New Jersey Division of Gaming Enforcement
21Annual report and accounts 2018 Kambi Group plc Strategic report Annual report and accounts 2018 Kambi Group plc Strategic report
The US opportunity 5 Ohio
At present, licences will be made
available to casinos and racetracks –
6 Michigan
A bill to regulate all forms of igaming,
including sports betting, was vetoed
7 Massachusetts
Four bills to authorise sports betting have
been introduced in January 2019, two of
State sports betting
both land-based and online. by the outgoing governor at the end which would allow online companies to
of 2018. However, a new bill should be licensed without having a partnership
Population: 11.7m
be considered in 2019, with tribal and with a casino.
GDPC: $47,567
commercial casinos in line to offer
Population: 6.9m
sports betting.
GDPC: $65,646
Population: 10m
GDPC: $43,372 All GDPC figures as per Bureau of
*
Economic Analysis, 2017
1 New York
Current legislation, which could be
actioned in 2019, permits sports
betting within the state’s four
commercial casinos. Meanwhile,
a new bill has the potential to add
online betting and the participation
of the state’s tribal casinos.
Population: 19.5m
Gross Domestic Product per Capita
(GDPC)*: $64,579 6
2 Connecticut 7
Sports betting is currently limited to 2
the state’s two tribal casinos. However,
pending legislation could open this up 3 4 5 1
to off-track outlets and the lottery –
both land-based and online.
Population: 3.6m
GDPC: $65,511
3 Illinois
Pending legislation seeks to
permit sports betting in casinos,
off-track outlets, and the lottery –
both land-based and online.
Population: 13m
GDPC: $54,091
4 Indiana
Pending legislation seeks to
permit sports betting for casinos –
both land-based and online.
Population: 6.7m
GDPC: $45,317
Key
Live Passed Active Reports No active
legal single game sports betting 2019 sports of upcoming sports betting
sports betting bill or ballot betting bills 2019 sports bills (10 states)
(8 states) question, but not (22 states) betting bills
yet operational (7 states)
(3 states + DC)
22 Source: American Gaming Association as of March 2019 23Annual report and accounts 2018 Kambi Group plc Strategic report
Kambi customers
Partnering with Kambi is also actively monitoring In 2018, Kambi expanded its Partner
regulatory movement in South America. Success team to meet the demand of our
visionary sportsbooks
Having already delivered growth for our ever-growing customer base. More new
partners Corredor Empresarial and Rush team members joined us in early 2019,
Kambi’s commercial team signed eight
Street Interactive in Colombia, we are well some of whom will be based at Kambi’s
operators across Europe and the US in
positioned to capitalise on further market new office in Philadelphia – open in Q2
2018 – beating the previous record of
opportunities in the region as they arise. of 2019.
five. These new additions to the Kambi
network were driven by the continued
expansion of regulated markets and the Unlocking our
ability to demonstrate the capabilities of customers’ potential
our Sportsbook.
Over the next 12 months, and into Kambi partners with its customers
2020, Kambi will continue to pursue with the aim to enhance the businesses
opportunities in the US – starting with of both – evidenced by our revenue share
the states set to regulate in 2019. In business model. Each customer comes
addition to casinos and major gaming with its own unique requirements and
brands, our targets will include state regulatory demands, but there is one
lotteries – having signed two Europe- common prerequisite for becoming a
based World Lotteries Association Kambi partner – the ambition to become
member partners in the past two years. a market leader.
We also have our sights on market Kambi operates a Partner Success
leaders within Europe, a region where department, a variation of the Customer
we continue to set a high standard. Our Success methodology used by many
preparations at the end of 2018 enabled major corporations around the world.
us to successfully launch seven of our Our adaptation of the Customer
customers simultaneously into the re- Success methodology began structurally
regulated Swedish market – as it went live in 2017, through the creation of the
on 1 January 2019. Among these seven technical partner role – used to educate
customers was ATG, which we launched partners on how to realise the full
online as well as across its 2,000 shops, potential of Kambi’s scalable technology,
demonstrating our ability to deliver and feedback into future product
retail at scale. development.
24Annual report and accounts 2018 Kambi Group plc Strategic report
New customers
in 2018
ATG: Greenwood Gaming & Entertainment:
Kambi signed the Swedish trotting The owner of Pennsylvania’s highest
monopoly in July. On the opening of grossing gaming property – Parx Casino
the re-regulated Swedish market in – signed with Kambi in November and
January 2019, ATG launched the Kambi launched an on-property sportsbook
Sportsbook both online and across the following month. An additional
its 2,000 retail outlets, boosting its sportsbook was launched at Greenwood’s
existing trotting and horse racing offer. South Philadelphia Turf Club just one
week later.
Casumo:
One of the most innovative casino
operators in Europe, Casumo signed
Latvijas Loto:
with Kambi in March. They are currently
preparing to launch a Kambi Sportsbook The government-owned operator of
in the coming months, and will also Latvia’s national lottery selected Kambi
leverage our open platform and APIs. to power its expansion into the online
Casumo is ranked 34th in the EGR sports betting vertical, in July. The
Power 50 rankings. sportsbook – under the brand name
Beteo – is due to launch later this year.
DraftKings: Rush Street Interactive:
The Daily Fantasy Sports giant turned Signed in May, Rush Street owns four
its attention to sports betting, following US retail casinos across three states,
the repeal of the US sports betting ban as well as an online casino in New
in May. In August, Kambi and DraftKings Jersey. In June, Rush Street launched
worked together to process the first RushBet in the regulated Colombian
legal online sports wager in New Jersey. market, and a sportsbook via its online
In November, DraftKings launched SugarHouse brand in New Jersey.
an on-property sportsbook in New This was followed by the launch of
Jersey, using the Kambi Sportsbook. on-property sportsbooks in two
DraftKings is ranked 29th in the EGR Pennsylvania casinos in December.
Power 50 rankings.
Stanleybet Romania:
Global Gaming:
After signing in April, the leading
The power behind the successful Ninja
Romanian operator went live with
Casino brand joined forces with Kambi in
its Kambi-powered sportsbook in
August. Global Gaming will soon launch
June – ahead of the FIFA World Cup
the Kambi Sportsbook in Sweden, with
– maintaining our exceptional track
additional regulated markets to follow.
record of fast deployment.
Global Gaming is ranked 40th in the EGR
Power 50 rankings.
25Annual report and accounts 2018 Kambi Group plc Strategic report
A customer base of
sports betting leaders
Customers signed
prior to 2018
888sport: Mr Green:
888sport is part of London Stock Mr Green extended its agreement
Exchange-listed 888 Holdings. with Kambi in July 2018, adding its
Following the repeal of the US federal recently acquired Redbet brand to the
sports betting ban, 888 chose the contract, replacing another third-party
Kambi Sportsbook for the launch of supplier with the Kambi Sportsbook.
888sport in New Jersey – where it Nasdaq Stockholm-listed Mr Green,
debuted in September. 888 is ranked was recently acquired by William Hill,
8th in the EGR Power 50 rankings. and is ranked 22nd in the EGR Power
50 rankings.
Corredor Empresarial:
BetPlay is a sports betting brand owned NagaCorp:
by Corredor Empresarial, Colombia’s Kambi has supplied the Cambodia-based
largest game-of-chance network NagaWorld casino with its retail solution
operator. In 2018, BetPlay enjoyed since 2014. In 2017, this extended
rapid growth, becoming one of the most to include the new Naga 2 premises.
popular sports betting brands in the NagaCorp is listed on the Hong Kong
regulated Colombian market. Corredor Stock Exchange.
Empresarial was considered ‘One to
Watch’ in the EGR Power 50 rankings.
Napoleon:
Napoleon continued to explore Kambi’s
Kindred Group: empowerment features in 2018,
Nasdaq Stockholm-listed Kindred group, including the use of a third-party to
owns Kambi-powered brands Unibet and make the most of our flexible front-end
32Red. In 2018, Kindred extended its client. The operator continues to be one
long-term deal. Kindred is ranked 5th in of the top sportsbooks in the regulated
the EGR Power 50 rankings. Belgian market.
LeoVegas: National Lottery AD:
Ahead of the 2018 FIFA World Cup, This World Lottery Association member
LeoVegas launched its new sportsbook signed with Kambi in Q3 2017, going live
client – a combination of Kambi and with the Kambi Sportsbook in its local
LeoVegas components, resulting in a Bulgarian market in early 2018, using its
unique product. LeoVegas is publicly 7777 brand – and has already gained a
listed on Nasdaq Stockholm, and ranked top three position.
10th in the EGR Power 50 rankings.
26Annual report and accounts 2018 Kambi Group plc Strategic report
Novomatic: Sun International:
A successful 2017 saw Kambi launch Sun International was signed by Kambi
Novomatic’s Greentube interactive in Q4 of 2017. Through its existing
brands in Romania, Italy, and Spain. Sunbet brand, it went live online in
In 2018, we strengthened our its home market of South Africa in
partnership, with a launch in Latvia Q2 of 2018. Sun International, one of
via the operator’s Fenikss brand. the country’s largest tourism, leisure
and gaming groups, is listed on the
Johannesburg Stock Exchange.
Paf:
As Paf continues to take a lead in the
protection of players, Kambi supported Televisa:
the operator with its responsible Listed on the New York Stock Exchange,
gambling initiatives in 2018. We also Mexican media company Televisa is the
helped Paf to make its debut in the largest in Latin America – as well as
regulated Latvian market before the the first of the Spanish-speaking world.
World Cup. Paf is ranked 32nd in the Televisa operates 18 land-based casinos
EGR Power 50 rankings. in Mexico through its PlayCity brand,
each using Kambi’s retail product suite.
Customers signed
R Franco: so far in 2019:
Kambi powers the R Franco sportsbook
Wanabet, in the regulated Spanish
market. In 2018 the home page was
redesigned using Kambi’s open platform
and APIs, while the live offer was
expanded to increase competitiveness. Mybet:
Previously one of the most prominent
sports betting brands in Germany,
mybet was recently relaunched with an
online Kambi Sportsbook, after Kambi
signed a deal with new mybet owner
Rank Group: Rhinoceros Operations.
Kambi powers Rank Group’s Grosvenor
Sport brand. In 2018, Grosvenor
launched Kambi’s new and improved
horse racing product. Rank Group is
listed on the London Stock Exchange
and is ranked 20th in the EGR Power Mohegan Sun:
50 rankings. The highest grossing Native American
casino in North America, Connecticut-
based Mohegan Sun recently selected
Kambi to launch an online and
on-property sportsbook as soon as
regulation permits.
27Annual report and accounts 2018 Kambi Group plc Strategic report
Business model
Creating value for The fully scalable Sportsbook
our customers Kambi has an impressive record of
providing a superior Sportsbook service,
effective in generating significant growth
Kambi offers a fully managed sports in revenue and market share for both us
betting service that works with real and our operators. The scalability of our
time sports data providers, on a robust business model is key to this success –
technical platform. Our expert traders with little need to add extra resources for
utilise proprietary tools to compile odds, new operators, as the number of users is
working alongside our risk management independent of our service.
department to provide a highly
competitive sports betting offer, whilst Creating and sustaining our state-of-
mitigating risk. Kambi provides operators the-art Sportsbook requires continual
with the freedom to customise their investment in people and technology.
user interface, enabling them to deliver Through our investment programme we
against specific marketing campaigns and enable operators to offer end users a
provide a unique experience to end users. premium Sportsbook that delivers a first-
rate experience across mobile, online
Kambi’s goal is to provide sports betting and retail in a cost-efficient manner.
experiences that go beyond any other.
We power market leading brands across Our business model provides strong
the world, using cutting edge technology operating leverage in a revenue-sharing
supported by highly skilled expertise. model, driving Kambi’s earnings growth
Our user interface has been designed and margin expansion.
to deliver a seamless omni-channel This model incentivises Kambi to provide
experience, which drives acquisition odds that maximise our operators’
and boosts retention. gross gaming revenue creating a natural
alignment of interests. We also allow our
operators the flexibility to adjust pre-
match odds, up to a set level, for certain
events, enabling them to differentiate and
optimise their marketing campaigns.
2/1
Real-time Technical Odds
sports data platform
28Annual report and accounts 2018 Kambi Group plc Strategic report
The Kambi Turnover Index
Kambi aims to achieve optimal margin, to maximise turnover growth and boost the
financial performance of our customers – both in the short and long term. We manage
this by leveraging our sophisticated risk management tools.
The turnover and margins of our operators vary from quarter to quarter, and are
impacted by the outcome of sporting events. The Kambi Turnover Index (see below)
illustrates our operators’ quarterly turnover and betting margin. The operator turnover
of the first quarter of 2014, shown on the left-hand axis, is indexed at 100. The operator
trading margin is shown on the right-hand axis.
Operator turnover index and trading margin
375 369 12.0%
350 334 11.0%
325 307 10.0%
300 9.0%
281 277 273
275 8.0%
254 259
250 239 242 7.0%
225 221 219 6.0%
203
200 5.0%
175 163 160 4.0%
150 147 3.0%
119 124
125 109 2.0%
100
100 1.0%
75 0.0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2014 2015 2016 2017 2018
Source: Turnover
Kambi network data
Index Turnover index
Margin (%) Margin
Kambi charges its operators a commission based on their result, which is calculated as the margin on their turnover. The level of
operator turnover is a stronger indicator of performance than margin, which can fluctuate in the short-term due to the outcome
of certain events.
Risk User Operators End-users
management interfaces
and API’s 29Annual report and accounts 2018 Kambi Group plc Strategic report
The Kambi revenue model the turnover generates the operators’ Kambi’s commission is based on a
gross gaming revenue (GGR). The 2018 percentage of the operators’ net gaming
Kambi charges its operators a fee based operator trading margin stood at 8.2%, revenue. To promote and support growth,
on a number of variables, including: fixed up from 7.4% in 2017. As a result of this some customer contracts include tiers
fees, the number of live events offered, higher margin, operator GGR increased with lower commission rates applied to
and commission - based on a share of the by 34% year-on-year. As part of Kambi’s higher levels of sports betting revenues.
operator’s net gaming revenue. The most revenue model, we share certain costs The tiered commission levels run on
significant portion of Kambi’s revenue with our operators. These include: a yearly basis. The development in
comes from the revenue-share element. the business of many of our operator
i) for some operators, costs for player partners resulted in a lower effective
The graph below shows how the growth incentives linked to sports betting
in operator turnover ultimately drives our commission rate in 2018 than in 2017. In
– such as free bets. addition, contract renewals with updated
own revenue growth.
ii) gaming tax; 52% (2017: 50%) commission rates due to the significant
While Kambi’s reporting currency is the of our operators’ GGR was subject growth of Kambi’s customers had an
Euro, our operators’ turnover originates to betting duties incurred in impact on revenue growth. Additionally,
in the currency of their end users. re-regulated markets. some parts of Kambi’s revenues are fixed
Excluding the impact of FX movements and not linked to the growth in operators’
on the translation of these amounts, During the year, the addition (or full year businesses. The net impact of these
operator turnover grew by 20% in 2018. effect) of certain gaming taxes, added to factors was that Kambi’s revenues grew
When the impact of FX movements is additional deductions for player incentives, by 23% year-on-year, resulting in a 70%
included, operator turnover grew by resulted in the growth of operators’ conversion from Operator NGR growth to
22%. As illustrated in the Kambi Turnover net gaming revenue (that is GGR less Kambi revenue growth.
Index, the operator trading margin can deductible costs) being 33% in 2018.
fluctuate. Multiplying the margin by
Operator turnover & Kambi revenue growth
2018 vs 2017
40%
35%
30%
25%
20%
15%
10%
5%
0%
Operator Operator Taxes/ Other* Kambi
turnover margin marketing revenue
growth impact deductibles growth
impact
* ‘Other’ includes the impact of contract renewals, volume-related commission tiers and fixed revenues
Source: Kambi network data
30Annual report and accounts 2018 Kambi Group plc Strategic report
Sustainable and
responsible business
Driving growth through Commission Sports Betting Intelligence Leading the way
Forum in the UK – helping to formulate
responsible actions in responsible gaming
standardised actions for detecting and
reporting suspicious betting events.
Since day one, Kambi has focused on Although Kambi does not have access to
creating a sustainable business. Not only Kambi also joined the American Gaming player information, we are fully committed
does this serve our commitment to social Association’s Sports Betting Task Force, to responsible gaming and the protection
and corporate responsibility, but has helping to advance the creation of the of end users. We understand that sports
significantly contributed to our success Sports Wagering Integrity Monitoring betting is at its most exciting when users
– and will continue to do so far in to Association, after a senior Kambi are able to play in a safe and enjoyable
the future. representative participated in its meeting environment – betting only with funds
at the major gaming conference G2E in they can afford to lose. We realise that
Operating in a sustainable and
Las Vegas. it is healthier to have players gambling
responsible way combines a range of
responsibly over the long-term, than
actions and tests, which can be applied Kambi is able to take this leadership
betting irresponsibly for a short period.
to businesses of all types – such as position thanks to the extensive work
creating jobs, acting in the best interests carried out both in-house and in Kambi’s commitment to responsible
of the environment, and supporting good collaboration with sports organisations. gaming is one of the key reasons why it
causes. Kambi is committed to all of these The first step is prevention – and Kambi is pro-regulated markets. In unlicensed
areas, as well as actions specific to the continues to take steps to ensure our markets and/or those in the process
sports betting industry and the regulated platform is as hostile to manipulators as of regulation, Kambi encourages the
territories in which we operate. possible. Crucial to this is the extensive adoption of a regulatory framework that
database of teams, players, and officials enables licensees to compete effectively
Protecting the integrity Kambi has built over the years. This with incumbent unlicensed operators. Only
database informs our categorisation of in this situation, where licensed operators
of sport events, so that we can decide whether aren’t overly limited in their operations
to: take no action, reduce the size of and offering to the player, can the
The sports betting industry is built upon
maximum stakes, or remove markets regulated market transition the maximum
a foundation of trust – bettors must
altogether – depending on the level of risk number of players from the unregulated to
have full faith in the integrity of sporting
of manipulation. a safe and secure environment.
events, and those competing, if they are
to place a wager on them. A breakdown The next step is detection. Kambi’s Kambi supports and strengthens
in trust, would have a severe negative network business model ensures we operators’ responsible gambling
impact on the long-term sustainability remain one step ahead of the competition initiatives, through the collection and
of the sports betting industry. As such, in the detection of match-fixing and sharing of data we call ‘green values’.
one of Kambi’s primary objectives is to corruption. Our ability to see player Just as we use an in-house developed
protect sports from manipulation. activity across the entire network, algorithm to detect suspicious bets, by
monitored by a dedicated Sportsbook changing data inputs, we are also able to
Kambi plays a prominent role in the
Control team and a real-time alerts pinpoint instances of potential problem
detection of sports manipulation
system, means we are quick to notify our behaviours – often before they become
worldwide, building close working
customers – and often first to alert sports harmful to the player.
relationships with sports governing
governing bodies and regulators – of
bodies to proactively prevent and report The issue of responsible gambling has
any suspicious activity. This often leads
instances of fixing and collusion. During risen high on the agenda of regulators in
to interception before any manipulation
2018, we demonstrated once again we a large number of territories, with some
takes place.
are an industry thought leader on the handing out significant fines to operators
subject – sharing our experiences with Kambi’s efforts in this area not only who fail to meet increased compliance
jurisdictions in the process of introducing preserve public trust in sports, but help demands. Kambi’s ability to detect
sports betting frameworks. For example, operators to understand the importance instances of irresponsible and harmful
Kambi representatives presented to US of integrity and the need to protect their gambling not only protects operators
legislators and regulators on effective brand and players – leading to additional from potential fines, but also enables
regulation and protecting sports integrity business opportunities. We provide our them to take early and appropriate
at conferences in both Ohio and Texas. services to state-controlled entities, actions to steer players away from
as well as an increasing number of US harmful behaviour.
We participated in the ESSA Working
businesses understandably sensitive to
Group meeting held at the International
issues of sports integrity. It was concerns
Olympic Committee HQ in Lausanne,
over these which first led to the now
and the United Kingdom’s Gambling
repealed federal sports betting ban.
32Annual report and accounts 2018 Kambi Group plc Strategic report
In 2018, regulators’ increased focus on Protecting our people and our Supporting local communities
responsible gambling led to thorough business: anti-corruption and and charities
reviews of a number of Kambi operator
partners’ responsible gambling procedures anti-bribery
Kambi and our employees support
and protocols. Following these reviews,
Kambi takes anti-bribery measures charities, on both a company and an
Kambi’s responsible gambling measures,
seriously. We have established systems individual level – mainly focusing on the
as employed by our operators, were not
and controls, from the executive team communities in which we operate. Our
found to be of any concern.
down, to facilitate timely production of people play a hands-on role in supporting
As US states began to regulate, or risk assessments and the implementation local charities and community projects
consider the regulation of gambling, of proactive measures to avoid bribery. on a voluntary basis, giving their time,
Kambi presented to delegates at the raising funds and making other donations.
National Council of Legislators from We ensure these processes are regularly
reviewed by our legal and compliance
Gaming States’ biannual conference.
teams, and also produce regular company-
Working towards a more
Here we discussed problem gambling
initiatives and made recommendations wide updates to ensure our people are sustainable environment
based on learnings from our years of always familiar with these policies.
The industry in which Kambi operates
experience in addressing this issue. Kambi is committed to ensuring that no requires minimal consumer resource,
employee suffers injustice as a result with the end product produced by
Ensuring compliance and of reporting a suspicion that bribery or Kambi in virtual online form rather than
another corruption offence has occurred,
transparency through physical. From that base, we also look to
or may take place in the future. Our reduce our carbon footprint in as many
corporate probity processes and internal teams enable ways as possible. As a digital company,
confidential reporting, supporting our environmental impact is primarily
Kambi holds itself up to the highest an environment that prioritises an
standards, at all times, in everything it does. in energy usage, and business-related
employee’s protection when he or she travel. Sometimes it is the simplest of
This manifests in a number of ways, and reports a potential offence.
results in a fully transparent and compliant actions that make the biggest difference.
business that is trusted by operators and Kambi has also updated its anti-money All of our offices practice an organised
regulators the world over. laundering (AML) processes and and efficient recycling system, with
procedures, making them available to all recycling bins used to ensure maximum
Key to this is Kambi’s public status. Listed employees via an internal platform. efficiency in the disposal of waste food,
on First North at Nasdaq Stockholm, plastics, glass, paper and cardboard,
Kambi offers clarity on its performance, We do not make any contributions to and tins. The use of electronic document
financial position, management team and political parties, and we only make signing enables us to dramatically reduce
ownership at all times. Combined with a charitable donations that are legal and our need for paper, and we have recruited
rigorous approach to markets – avoiding ethical under local laws and practices. a confidential waste disposal company to
those where sports betting is prohibited securely recycle over 90% of the waste
– we have built a record and reputation to it removes from our offices. We have also
be proud of. invested in virtual meeting equipment to
The end result is an unblemished record reduce business travel.
in obtaining licences. Kambi is licensed
and / or accredited in every jurisdiction
in which it is required to be. Furthermore,
we have invested in the development of
flexible technology which enables quick
compliance with varying jurisdictional
requirements. This approach has enabled
Kambi to launch customers quickly into
new markets – as demonstrated in 2018,
when we created history processing the
first legal online sports bet in the US
outside of Nevada.
Our highly compliant and transparent
approach to business is attractive to
operators that simply cannot afford to
put their position or brand at risk by using
less reputable suppliers. In recent years,
Kambi has begun to work with World
Lottery Association members, as well as
state controlled businesses, who apply
the strictest of vetting procedures to
selecting a partner.
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