Since the advent of legal sports betting in the U.S., lots of European B2B companies have attempted to bring their technology and know-how to the states. And lots of them have had success because the groundwork they laid in Europe has paid off in the U.S. When operators wanted to find a technology that would power their ideas, the tried-and-true formula that worked in Europe often worked on this side of the pond, as well.
But often, those European companies took time to get accustomed to the U.S. way of doing business. Whether it was confusing regulations, strict AML and KYC requirements or simply the “I need it yesterday” rush of the U.S. businessman, it wasn’t always easy to predict how those business relationships would evolve.
Unless you’ve been there before.
When Dermot Smurfit arrived in the United States more than 10 years ago with his Game Account Network, his goal was simple: Convince enough U.S. casino companies that they needed to establish a social gaming presence to prepare for real-money online gaming that Smurfit knew would arrive on their shores eventually.
But even today, Smurfit says the simulated gaming, play-for-free component is a big piece of what GAN has to offer.
“It’s an incredibly important strategic tool in our armory,” he says. “It is something that generates, renders, and delivers to the typical retail casino patron, an iGaming-esque experience that effectively allows the retail casino operator to move online and start accumulating a database—start building that all-important, incredibly valuable database of your patrons who want to play online.
“So, you’re taking preemptive action, preemptive steps, to protect your retail casino patrons. And if you don’t develop the online community now, and build the online database now, you won’t be ready when iGaming comes, or even when online sports betting comes.”
GAN also is able to merge their social media platform with the loyalty programs of the casino clients.
“We were the first guys to do it back in April of 2012,” he says. “We did it for Maryland Live! and the Cordish Group. We switched on a free-to-play website that was connected with a casino management system and reward card. Because we were the first company to do it publicly, we’ve licensed it a couple of times, for very considerable amounts of money.
“This reflects the worth of players to a U.S. retail casino operator who correctly, logically, wants to connect the retail rewards account and retail rewards card, held by their retail patron, with the online gambling experience and the online gambling account, held within an online gambling system. We connect the rewards cards to the online gambling accounts and everything flows from that relationship. The money gambled online, whether that’s for real money or simulated gaming, drives the issuance of reward points.”
Slot Success
GAN recently announced exclusive arrangements to offer the games from Ainsworth and Incredible Technologies on its platform. The deals add to the content acquisition strategy devised to increase GAN’s fast-growing share of existing iGaming revenues from B2C operators who are not already clients of GAN.
GAN will immediately begin deriving online content licensing fees from Incredible Technologies’ existing online operations in New Jersey. As a result of this long-term deal, GAN’s combined exclusive online slot partners’ content represented approximately 7 percent of all slots sold in the U.S during 2020.
Smurfit says the deals just grow the influence and perception of GAN in the U.S.
“We have the leading distribution here in the U.S., for online casino content,” he says. “We’ve got an incredible number of operator integrations and platform deployments. We are the largest online casino here in the U.S., really, if you think about it in super-simplistic redundant terms. We have an extraordinary amount of activity every single day, across all the states; we launched in West Virginia at the beginning of May—a very exciting launch for us there—as well, getting FanDuel’s online casino up and running.
“And so, what I think has been under-appreciated by EGM slot machine manufacturers is not so much the complexity of turning a physical slot machine into an online game, but actually the distribution, the plumbing, the piping, the integrations that have to be done between something called a remote game server—which is just a black box filled with games—and the integration of that RGS with all the different operator platforms that are out there: GAN, Scientific Games, whoever is using whichever platform.”
Smurfit puts the deals with Ainsworth and Incredible Technologies into the same bucket.
“These deals have allowed GAN and these two pretty significant manufacturers of very well-respected gaming experiences here in the U.S. to focus on what they do best, which is get the games ported, get to scale, concentrate on their tech resources, not on the plumbing, not on the pipes, but on the content,” he explains.
“So you’ve got cost-efficiency, so that the manufacturers are spending their time and energy focusing on the kind of basic blocking and tackling of turning a physical slot machine into an online playable game. Because scale really counts. Ainsworth has done a great job; they’ve got 85 games playable, completed. I think 70-ish are actually out there, operational, in one of the states. But they need to get that portfolio up to 200, which is part of their obligation.
“So the truth is that it lets our manufacturer partners be a lot more efficient, a lot more cost-efficient, time, resource-efficient. And everybody wins. GAN wins because we get to integrate with pretty much every B2C operator platform that’s out there already. And anyone who isn’t a client of our platform, we’ll pick them out as a client for our content. And secondarily, Ainsworth wins and our clients win, because they’re focused on simply getting their 85 games up to 200 games. And the dynamics are very similar for Incredible Technologies.”
Smurfit credits the opening of iGaming and sports betting in Michigan as a milestone for the company.
“We had three operator clients go live in our platform on day one in Michigan,” he says. “That was a huge technology deliverable by our team, and I was incredibly proud of everybody for making that happen for all of our clients. In no other state have we had three operators at the starting line, every one of them with the same online casino portfolio, and we were able to spend a lot of time looking at the relative performance of all the individual games in these online casinos. And for the first time, it gave a very fair evaluation opportunity, where we could say, ‘Hey, do retail slot machines in America really out-perform slot games that were designed in Europe and transported across the Atlantic, and popped up on a website?’ And the answer was yes, comprehensively.
“Then we started offering some very clear financial performance metrics, that were balanced, fair, and calculated with reference to all the actual data as Michigan ramped up very, very quickly. Not only do retail slots perform financially, on a per-unit basis, but they’re also extremely important in lowering the cost of acquisition for our clients.”
When GAN extended simulated gaming to sports betting a few years ago, he says the response was amazing.
“We were amazed at the activity during that NFL season on fake money sports gambling,” says Smurfit. “The average bet was 53,000 fake dollars. We wondered what was happening, but they were behaving that way because we’re the only company that can show you what’s happening with real money sports betting, by comparing what’s happening with fake money sports betting. And we saw the same number of bets versus a typical average bet of real money—$50, $60, $70 per unique individual sports bet, depending on which operator brand you’re talking about. But we saw the same level of engagement and utilization during the NFL season and all the key matches and events that took place during that season.”
Industry veteran Rob Lekites, who was brought in from Twin Spires to run GAN Sports, says simulated sports betting will help GAN’s clients prepare for the real thing.
“When we go into a market where gaming is not legal, for example, in California—we have a lot of social gaming customers—we’re continuing to grow up that customer base there,” he says. “Our customers are building a digital customer base. There’s a lot of crossover from social gaming to sports and especially from social gaming to casino. When you build that social gaming site, you get the digital brand out there, and then when sports comes and we flip that switch, there’s a lot of crossover. That’s why our social gaming customers are very important to us—because there is an opportunity for us to leverage those relationships, to continue to build on them.”
Cool Acquisition
As sports betting became a larger part of the online gaming market in the U.S., Smurfit went on a global quest to find the best sports betting technology, which led to the acquisition of the European-based Coolbet after an exhaustive search that started when GAN went public.
“This system allows the marketing team to properly segment and target those customers and retain those customers. That is a huge differentiator for us—the flexibility of the system for an operator to have a full suite of tools at their fingertips, but they don’t have to keep bouncing between multiple platforms. It’s all on unified platform.”
—Rob Lekites, Vice President, GAN Sports
“From the onset of our IPO we have continued to enhance and perfect our internet gaming software-as-a-service solutions for the U.S. market,” he says. “As a part of that growth strategy, we have been clear that we needed to add a best-in-class sportsbook engine to round out our real-money iGaming platform, and we believe Coolbet is the perfect fit for both GAN and our customers. Coolbet launched in early 2016 in a hypercompetitive online market in Northern Europe and subsequently expanded into Latin America and Canada over the last two years. Since its launch, Coolbet has proven that its sportsbook offering is one of the best in the market today.
“Coolbet’s award-winning user interface and proprietary technical platform will enable us to quickly introduce the sportsbook offering to our land-based casino customers across the U.S., who need a flexible and customizable solution to online gaming. Coolbet brings one of the most experienced teams of engineers in the industry, and their technology is built on a similar architectural design as our own, which is anticipated to make the integration process fairly seamless.
“Additionally, Coolbet is more than just the best sportsbook platform we vetted during our process. Coolbet has a well-established global business, a strong and loyal B2C customer base, and a diversified revenue stream. They are expert marketers and have grown their top-line over 46 percent in highly competitive and established markets in Northern Europe, Latin American and Canada. We will not only achieve scale and diversity across our revenue streams through this combination, but we also see a strong opportunity to leverage Coolbet’s expertise and relationships in other markets where our industry-leading B2B SaaS platform can be deployed.”
The technology of Coolbet is what convinced Smurfit it was the right choice.
“If you’re going to buy just a pure-play B2B tech company in Europe and then bring it into the U.S.,” he says, “it’s only one part of the jigsaw puzzle. And it’s a complicated jigsaw puzzle, which I always feel is under-appreciated. It’s complex on the platform side, it’s complex on the sports product side, it’s complex on the front-end, end-user interface side. And that is all important because that’s what the end-user consumer sees, even though it’s a relatively small proportion of the totality of the tech that’s required to drive that consumer experience.”
Lekites says it’s cutting-edge technology that will differentiate the product.
“The technology powering GAN Sports is a young technology,” he says, “and we have the flexibility to adapt much more so than our competitors in the space, which are really working off a much older technology. It’s been around forever. So we’re in a strong position there to take advantage of that.”
Richard Veltri came to GAN with Coolbet and is now the COO of that division. He says the ability to customize the platform is what makes it so attractive to clients.
“GAN Sports has been really built on the proven success of a platform that delivered market-leading results in highly competitive B2C markets,” he says. “Operators are able to launch a market-leading sportsbook product while also taking advantage of customization. When we speak of customization, then we’re not only speaking about the front end or the design, but we’re really talking about the customization of the odds to differentiate yourself and really have control of the events that you’re offering as well as the bonuses and retention, and everything that goes with the sportsbook.”
Smurfit says the Coolbet product allows clients the ability to differentiate themselves from their competitors.
“We have a simple view,” he says, “and our view is informed by our clients, the retail casino operators. Most B2B product experiences available here in America are fairly pedestrian. They’re not particularly exciting; nobody will download a B2B sports app and go, ‘Wow! This is better than anything I’ve seen provided in the marketplace here in the U.S. today.’ So, what we believe is that Coolbet has a highly socially engaging offering. We’ve got end-user features that are surfaced to the consumer, the sports gambler, which I think Jason Robins, the CEO of DraftKings, is today talking about maybe developing in the future. Coolbet has it today. It’s been deployed. It results in market-leading industry statistics for player retention month-to-month for the sports gambler.
“Coolbet is the Tesla of sports gambling apps. I’ll leave it at that.”
Veltri says that the Coolbet platform has lots of different features that other online casinos can’t match.
“One of the elements that we’re bringing to the market is something that we call incoming bets, where you actually see all the bets coming in from all your customers,” he explains, “and you see details of your potential win. Then you can just simply also segment between parlay or single round robin, let’s say, and you can just simply copy that bet and make the same bet whenever you want.”
Lekites says that the adaptability of Coolbet is what will make it a success.
“This system allows the marketing team to properly segment and target those customers and retain those customers,” he says. “That is a huge differentiator for us—the flexibility of the system for an operator to have a full suite of tools at their fingertips, but they don’t have to keep bouncing between multiple platforms. It’s all on unified platform. We’re a white label solution giving the brands the tools to go out and offer their customers the best sportsbook possible.”
In addition to its B2B capabilities, Coolbet had some B2C operations in other European, Canadian and Latin American markets, something that will not happen in North America. Veltri says that experience only deepened the company’s understanding of what the players want.
“It’s been a huge benefit to us having that B2C experience outside of the U.S.,” he says. “It’s given us the ability to tweak the product and see how the customers react and how it grows the market share. Three years ago, we wouldn’t have been ready for this, but as the market grows in the U.S., the timing is really perfect because we can now bring a superior product to the market.”
Station To Station
“Operators are able to launch a market-leading sportsbook product while also taking advantage of customization.” —Richard Veltri, COO, GAN Coolbet Division
GAN was just one of many platforms bidding for the contract of Red Rock Resorts’ Station Casinos to replace their antiquated app for mobile sports betting. Smurfit describes the bidding process as long and arduous but at the end, GAN was awarded the contract for all Station retail sportsbooks and the STN betting app utilizing GAN’s GAMEStack platform and Coolbet. He believes this is another milestone for his company.
“After a comprehensive and competitive process, we are greatly pleased to secure our first major U.S. retail casino operator client of our omnichannel sports betting technology and managed trading services solution acquired at the outset of the year and demonstrated at G2E,” says Smurfit. “The GAN team worldwide is excited to enter the U.S. sports market next year with a market leader in Nevada.”
Thomas Mikulich, senior vice president, innovation and slots for Station Casinos, says the idea of giving the contract to GAN was logical.
“The choice of GAN reflects their proven technology platform, specialist experience with integrating reward programs, reputation for integrity and their exciting sports betting user experience across online and retail devices, and their overall commitment,” he says. “We look forward to collaborating closely with GAN to roll out their innovative sports experience here in Nevada.”
G2E brought lots of attention to Coolbet, and many companies are interested in signing up. But Lekites says the company will proceed slowly, getting the Station app perfect, before making many more commitments.
“We don’t want to be in a position where we’re over-promising and under-delivering,” he says. “We’re prioritizing our existing customers. We want to make them happy first. We want to make sure we do it right the first time. And we’ll obviously ramp that up in late ’22 and ’23.”
It’s Complicated
For Smurfit, the last 10 years of developing GAN products was just the run-up to the success the company is having today. His passion for the process is indicative in his reasons why an operator should choose GAN rather than chase their own proprietary technology.
“Battle-tested technology is very, very scarce,” he points out. “My view is there’s only really two battle-tested platforms available here in the U.S. today that are low-risk and proven. And the marginal cost of renting our technology and our services is vanishingly small in the context of the overall opportunity.
“The iGaming and online sports technology is incredibly complicated. It is capital-intensive just to get to where we’re at today, never mind where we’re going to be in a few years’ time. One of the key reasons operators choose GAN is we are a battle-tested, well-thought-of, successful, significant developer, owner, operator of technology, which is contributed to by so many different real-money gambling clients here in the U.S., and our experience is unique. Our capability is very, very strong.”
Smurfit’s commitment to his clients is beginning to be legendary.
“Life is all about conferring a competitive advantage on our B2B clients, to let them succeed in the marketplace,” he says.
