Neogames is best known for its iLottery solutions but it is a cornerstone of William Hill’s stateside maneuvers and is well placed to become a key supplier for lotteries, casinos and sportsbooks in the US and beyond. New CEO Moti Malul reveals all.
Since the repeal of the Professional and Amateur Sports Protection Act (PASPA), we have published a series of features looking at some of the smaller companies that might benefit. Few are as well placed or as well established as Neogames. Neogames is no longer such a small company. It has grown employee numbers by 85 per cent during the past three years to around 250 staff and revenue has shot up 397 per cent.
Moti Malul was promoted to the chief executive’s office in October after 10 years in charge of sales and business development. He calls in from the World Lottery Summit in Buenos Aires, his second conference as CEO following the company’s debut G2E appearance in Las Vegas. The two conferences give a good indication of the two worlds that Neogames is straddling.
The company’s NeoPollard joint venture, mutually owned with with Pollard Banknote, has made it one of North America’s leading iLottery suppliers through deals with Michigan, New Hampshire, Virginia and, most recently, North Carolina. Indeed, Malul argues it is the North-American number one iLottery supplier based on number of player accounts and the iLottery revenue of its clients.
In addition to this, recent statements from William Hill chief executive officer Philip Bowcock have begun to make it clear how Neogames will also have an influence on the nascent US sports betting market.
Surprisingly for some, William Hill has emerged from the ashes of PASPA with more partners than any other sports betting operator in the US. It has opened 18 new sports books in just four months. Hills’ US operation has benefited from its ability to get sports betting booths in casinos quickly, but it is Neogames that will shape William Hill’s online and omnichannel efforts in the US.
Neogames’ solution is more feature-rich than any sports betting platform currently live in the US
Malul says that process, the evolution of the product, will depend on prioritisation. Thus far, the priority has been rolling out the minimum viable product in order to go live. The online and omn-ichannel frills will come a little later in the process.
At a recent capital markets day Bowcock spoke about investing $70m in “a bespoke Player Account Management system from Neogames, whose solution is more feature-rich than any sports betting platform currently live in the US”. It will be ready during H1 2019. Can Malul tell us more?
“We are just a part of it. We are a central part of it but we don’t do everything by ourselves,” he begins modestly.
He explains that William Hill has developed the backend technology – with the betting engine and trading services – and frontend functionality. That will connect to the Neogames player account management system, which has been proven to work in the US market and has been integrated with online casinos and retail systems in Europe.
“William Hill’s vision, which we fully support, is having an omnichannel approach,” says Malul.
He says that an omnichannel approach needs to allow players to deposit into their digital wallet when they’re inside the casino and to cash out internet wins when they are at the premises, among many other things. Moving into the future it will connect to the loyalty club and other such features.
“This is not new to us. This is what we do every day,” states Malul.
For example, Neogames provides the online gaming and lottery platform of the Czech national lottery operator Sazka. This connects to the IGT retail lottery system and the SBTech sports book.
This has also been done with IGT’s retail lottery systems in Michigan and will be soon in New Hampshire. The player account system is, says Malul, “at the heart of everything”.
An M&A Master Stroke?
James Henderson’s short stint as chief executive officer of William Hill will not be mourned by many but the 29.4 per cent stake Hills took in Neogames in mid-2015 could yet prove to be one the canniest M&A moves the bookmaker has completed in recent years.
No doubt Henderson was guided by then business development chief Robin Chhabra, who has since taken up the same role at The Stars Group. When they made the investment in Neogames it was predicated on three things: access to the US market (they only had retail systems in Nevada back then); diversifying into another gaming sector where they were not present (lottery); and lastly access to technology. Hills’ desire to have more control over its core technology and rely less on third parties has common thread running through its M&A strategy.
“Up until now they have not made much use of our technology because in Europe they are so embedded with other vendors and it is difficult. When the opportunity came to start something fresh, we had a role to play,” continues Malul.
Those three factors – US, lottery and technology – added to the retail presence of Joe Asher’s William Hill US operation in so many US casinos make for a compelling proposition that is perhaps only matched by GVC MGM Interactive and SG Digital. The products of all three companies are in various stages of evolution but this trio of companies are probably best placed with existing assets capable of making the omnichannel dream a reality in the US.
Malul believes there is nothing to stop Neogames delivering sports betting and iGaming solutions to US casinos in the same manner that it already has to US lotteries through the NeoPollard joint venture.
“These are way more than platform deals,” he explains. “They are fully managed deals – a full turnkey solution for the lottery.”
This comprises the player account management system, as well as the company’s own instant games technology server and its draw games system to sell Powerball, MegaMillions and other draw-based games to online players. It also provides a wide range of operational services. It provides 24/7 customer service, compliance, KYC and marketing services. In some states NeoPollard is even the merchant on record for payment.
Neogames’ European business operates independently, supplying digital solutions to lotteries in the Czech Republic, Croatia, Portugal, Lithuania, Italy and elsewhere.
The Independent Route
Neogames has one more route to market in the US, which is independent of William Hill and NeoPollard.
William Hill wants to keep its solution proprietary, meaning it does not want to provide its betting engine and trading services to any casino that it did not sign a deal with directly. It has stated that its primary interest is launching the ‘William Hill US’ brand and in places where that doesn’t work to launch a ‘powered by William Hill’ brand.
Of course, some casinos want to retain their brand rather than selling their licence to a European bookmaker for a share of the revenue generated by the European brand.
“This opens up the door for us,” says Malul. “We are in the process of seeking a parallel sports betting pure B2B partner, so that we can offer our gaming solution to those US casinos that do not want to work with European B2Cs.”
The remaining US sports betting opportunity is the few states where the lottery will govern sports betting. Malul says neither Hills nor Neogames have decided how best to approach these clients. He points out Hills’ partnership with IGT to provide sports betting to the Rhode Island Lottery. Importantly, Hills will not provide its betting engine technology, only trading services allied to the IGT solution. The pair have announced this model could be replicated in other states.
“Side by side with supporting William Hill to be a great success story, our strategy is to initiate a business to get other customers in the US market which isn’t purely state lotteries,” summarizes Malul Molul.
Back in Europe, it has another route in the shape of additional close relationship, AspireGlobal. Neogames, which is a so-called spin off from Aspire Global a publicly traded iGaming platform company operating B2C brands as well as serving B2B operators.
Neogames provides Aspire with certain development, maintenance and support services that are important to the Aspire operations and technology strategy.
“That has given us a lot of experience that is also relevant for the US market, because our player account management system is already integrated with market’s leading content and other providers ,” says Malul.
It is based on the same source code that can be used by William Hill in the US.
In 2021, the UK bookmaker will have to decide whether it will take up the option of acquiring the remaining 70.6 per cent of Neogames. If both sides deliver on the strategy Malul has laid out then the purchase would seem like a certainty.
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