THE ONLINE

GAMINGNo 12 MAGAZINE MOBILE is Here betsson live score application with over 100,000 downloads 6,889 SEK Million in customer deposits 2012, an increase of 32 PERCENT awarded Sportsbook and casino operator of the year Anniversary Issue Welcome to CONTENTS OUR 50 year anniversary Magazine!

Betsson is turning 50. If you’re wondering how it can be possible for an Internet company that started its online operations in the late nineties to turn 50, I can explain. Betsson was previously called Cherry and worked with land-based gam- ing. Later, the company chose to focus fully on online gaming and divested the old land-based part, which is still called Cherry. Despite this refocus, the heritage is strong and very much present everyday through our main owners, who founded the company back in 1963. This heritage has given us a unique understanding of the business we are in, and we use the experi- ence and knowledge in everything we do. In this edition of Betsson Magazine, we will give you some insights both in how we operate today, as well as how we have done it for the past 50 years, through a historical review of the Group. So put on your best retro glasses and enjoy!

Magnus Silfverberg, President and CEO, Betsson 2012 IN NUMBERS 3 READY TO FREE UP THE GAME 34 THE YEAR IN BRIEF 4 Gustaf Hoffstedt gives his view 50 years of success INVESTING IN STABILITY 36 WORD FROM THE CEO 6 Pays off through an improved Building on 50 years of customer experience embracing change A RESPONSIBLE, 50 YEARS IN BUSINESS 8 SUSTAINABLE COMPANY 38 THE MARKET 21 BUILDING THE DREAM TEAM 42 THE BETSSON MODEL 24 BETS B 46 The wealth builder MANAGING GROWTH 26 BETSSON AND MALTA 52 MOBILE HAS FINALLY SCORED 30 BOARD OF DIRECTORS 54 2012 was really the year SENIOR MANAGEMENT 56 LEGAL TRENDS IN ONLINE GAMING 32 ADDRESSES 60

On the cover: Friendly International. Lisbon. April 21, 1963. Portugal 1—0 Brazil. Brazil's Pele leaps above Portugal's goalkeeper in a mid-air duel. CONTENTS 2012 in numbers

Betsson AB’s core business consists of investing and administering shareholding in companies which – through partners or by themselves – offer games to the end users via Internet. Betsson AB owns Betsson Malta and other companies which operate games through partnerships and own websites. Betsson Malta offers Poker, Casino, Sports betting, Scratch Cards, Bingo and Games. Betsson's own customers mainly originate from the Scandina- vian countries and other parts of Europe. Betsson AB is listed on NASDAQ OMX Nordic Mid Cap List, (BETS B).

% NUMBER OF BRANDS WITHIN 30gross profit INCREASE Nu31mber of nationalities 26 COMPARED TO PREVIOUS YEAR of our employees BETSSON OF WHICH ELEVEN ARE B2C BRANDS . B6ILLION sek IN c9USTOMER 74people working 8 on m23obile solutions generated DEPOSITs, AN INCREASE of 32 three continentS 7 percent of revenues in PERCENT COMPARED TO 2011 the fourth quarter

GROSS PROFIT PER PRODUCT

3% 6% Betsson’s active customers increased by 29 percent last year and the amount of customer deposits has 30% increased by 32 percent. The contribution from Casino Casino, which is Betsson’s largest product, increased Sportsbook 61% by 39 percent. Poker } Other

– 03 – – THE ONLINE GAMING MAGAZINE – THE YEAR IN BRIEF

Betsson is a fast-growing group of companies with close to 50 years experience in the gaming industry. The companies offer a wide range of first-class online gambling products and games in a safe and user-friendly gaming environment.

JANUARY APRIL Betsson Malta Betsson Malta sells launches four its first mobile portal 2012brands on the to partner Realm, who newly regulated launches it UNDER the Danish market under brand Bets10. a Danish license. The portal contains an in-house This is the first re-regulated developed mobile Sportsbook, market that Betsson has start- scratch cards, poker and games ed to operate in. Betsson Malta from different suppliers. also acquires an Italian license. BETSSON IS Betsson was awarded “Online TURNING 50 Sportsbook Operator of the year” by IGA. This is an acknowledgement that the long term efforts broadening the Sportsbook offering pays off. – THE ONLINE GAMING MAGAZINE – THE YEAR IN BRIEF

MAY In addition, Betsson’s brand portfolio is strengthened The technical significantly within the migration of Betsafe betting segment, as NGG +100% is concluded and the receives approximately During the fourth quarter, end users acquired company is now fully integrated 50 percent of its revenues bet SEK 308.5 million via mobile into the Betsson from Sportsbook,” said Sportsbook, comprising 8 percent Group. Magnus Silfverberg, CEO and of the total gross turnover in Sports- The brand Starcasino.it is soft President of Betsson AB. book across all gaming solutions. launched in Italy under the newly acquired Italian license. JULY Revenues from mobile gaming solu- Betsson co-founds the indus- tions comprise 7 percent of total The subsidiary Angler try organisation BOS (Bransch- Gaming is divested to revenues, representing an increase föreningen för OnlineSpel) in Betsson’s shareholders and of over 100 percent compared with Sweden together with Unibet, listed on the stock exchange the previous quarter. Paf, Betfair and Bonnier Aktietorget in Stockholm. Gaming. Magnus Silfverberg is elected Chairman of BOS. AUGUST Betsson Malta appoints a new CEO, Ulrik Bengtsson, whose previous positions include CEO of Viasat Sweden among others. The casino brand Maxino is launched by the NGG subsidiary. NOVEMBER JUNE Betsson Malta is named Casino Betsson AQUIRES Operator of the Year at the NORDIC GAMING GROUP 2012 EGR awards in London. The acquisition of Nordic The judges felt that Betsson was the out- Gaming Group (NGG), with standing winner due to continued growth its main brand Nordicbet in its casino business across Europe as well is closed. NGG adds 185 as its hugely impressive mobile offering 2012 employees to Betsson. that shows no signs of slowing down. “Through this transac- Betsson adds this award to its previous tion, Betsson continues achievements as Socially Responsible to strengthen its Nordic Operator of the Year (2009) and the Sports- operations and its leading book Online Operator of the Year (2011). position amongst the private gaming company alterna- September DECEMBER tives in the Nordic region. Mobile livestream- The Italian brand Starcasino.it ing is added to the is fully launched in connection mobile offering. with the approval of online Betsson subsidi- slots by the Italian gaming aries have now authority, AAMS. integrated mobile solutions into 21 + E185MPLOYEES TO BETSSON of THEIR brands.

– 05 – – THE ONLINE GAMING MAGAZINE – BOARD OF DIRECTORS/senior management

bUILDING ON 50 YEARS OF EMBRACING

CHANGE For 50 years, Betsson has been managing and adapting to change. During its long history, the company has repeatedly faced significant regulatory and technological challenges.

–06 – – THE ONLINE GAMING MAGAZINE – WORD FROM THE CEO

“The acquisition of NGG gives Betsson a stronger brand portfolio, a product mix more geared towards Sportsbook, and a stronger presence in the market-place.”

in the 1970s, slot machines were tion of NGG. This acquisition gives as enabling Betsson to cover more banned in Sweden, forcing the com- Betsson a stronger brand portfolio, segments of the market with its broad pany to change its entire business a product mix more geared towards range of brands. model. In the 1990s, the Internet Sportsbook, and a stronger presence Today, Betsson is the largest non came about and the company decided in the market-place. During the year, state-owned publicly traded online to explore that opportunity, resulting the integration of Betsafe was also gaming operator in the Nordic coun- in the fantastically successful Internet completely finalised. Now the Bet- tries. With that said, we believe that gaming practice that is Betsson (and safe brand runs on the same technol- there is still plenty of room for growth Net Entertainment) today. ogy platform as the majority of the in this market. Just some 20 percent Since starting our Internet opera- other brands in the Group. This will of all gaming occurs online and that tions some 14 years ago, Betsson give many advantages going forward, figure will continue to grow. How- has been working in a fast-growing such as less duplication of technology ever, Betsson is also keen on adding market environment. The market is development, a broader product offer- another major market to our strong- growing due to some fundamental ing for the brand, and synergies in the hold in the Nordic region. There are macroeconomic, technological and Sportsbook operations. currently two major initiatives within demographic factors that are working Betsson has also been active the Group taking that direction. First, to our advantage. First, the Internet is on the mobile development side. Betsson is exploring opportunities for becoming more and more accepted With 22 brands having a mobile site, participating in online gaming in Asia. as a channel for consumption. Sec- Betsson now has 80 percent of all Secondly, in 2012, Betsson launched ondly, Internet payments are becom- the brands covered from a mobile a casino-focused site in Italy under the ing safer and more sophisticated, and perspective. Having built our own new Italian license. With this initiative, third, as the younger generation gets mobile Sportsbook gives us an edge the Group is trying to take advantage older, gaming on the Internet, instead against the competition since it adds a of the recently allowed range of on- of in land-based venues, is becoming lot of flexibility and improves the user line games, such as online slots. The an obvious and preferred choice. experience. Our belief is that mobile site launch was accompanied by a big The speed of change in this envi- solutions will be increasingly more im- marketing campaign, with the aim of ronment, coupled with the growing portant for the e-gaming business and leaving a footprint in the Italian market. market, makes our business a fasci- Betsson is preparing for that future. These growth initiatives, together nating and fun one to work in. Man- Betsson is strengthening and de- with the product and brand expan- aging change is in our DNA and it is veloping its multi-brand and multi sup- sion on Betsson’s core markets, will one of the company´s most significant plier strategy. During 2012, the Group enable the Group to continue growing skills. This ability to manage change added five new B2C brands, launched faster than the market and to continue will continue to be important in a four brands with a Danish specific site building a stronger company for the continuously changing environment. and added one B2B franchisee. The future, drawing on our experience It builds our culture and forces us to Group has continuously added new from 50 years of embracing change. be creative, dynamic and passionate suppliers and now has more than 25 about what we do. suppliers integrated into its platforms. We accomplished a lot in 2012 This expansion will build the broadest MAGNUS SILFVERBERG within the Betsson Group. One of games portfolio in the industry, im- President and CEO the major events was the acquisi- proving the consumer choice as well Betsson

– 07 – YEARS IN BUSINESS

A ni g h t v i e w o f Fr e m o n t S t r e e t, L a s V e g a s. –08 – 1963 – 2013 50YEARS IN BUSINESS

– 09 – – THE– THE ON ONLINEONLINELINE GAMI GAMINGGAMINGN MAGAZIG MAGAZINEMAGAZINENE – – BOARD50 ye a rsOF of DIRECTORS/ success50 senioryears management of success 50 years of success 1963–2013

1960s

Martin Luther King holds his “I have a dream” speech in Washington (1963) John F. Kennedy is shot (1963) The Soviet Union wins the World Cup in hockey played in Stockholm. Sweden gets the silver medal (1963) The Beatles top the charts with “I want to hold your hand” in 1964 The first handheld calculator is invented (1967) Students revolt in Paris (1968) Italy wins European Football Championships (1968) Olof Palme is elected Prime Minister for the first time (1969)

– 10 – 50 years of success– THE ONLINEON LINE GAMINGGAMI N G MAGAZINEMAGAZI NE – XXXXXXXXXXXXX 1963–2013

Sweden starts gaming

In the early 1960s, Sweden’s gaming industry got a boost thanks in part to legislative chang- es that brought an end to the government’s monopoly on serving alcohol. The changes propelled growth in the restaurant industry and as the competition grew, both state and private restaurant and hotel operators began offering live entertainment as a way to attract customers. They also started organising lot- teries, which included roulette. Mini casinos branched out from this and quickly became an attractive part of the entertainment offering in restaurants.

the stakes weren’t big: Players could purchase a chip for just 50 öre (5 euro cents) and the maximum win was 10 kronor (1 euro), which they had to spend on the restaurant premises, but AB Restaurang Rouletter or “Restaurant Roulette,” saw an oppor- tunity and seized it. Bill Lindwall and Rolf Lundström started AB Res- taurang Rouletter in 1963, opening their very first casino at the elegant Palace Hotel in Gothenburg. Lindwall and Lundström had met through mutual friends, and they engaged family, friends and many students to run their casino games. While AB Restaurang Rouletter was expanding throughout southern and central Sweden, a couple of students were earning money through their new- ly formed company AB Roulette Konsult & Spel- automater, started in 1966.

– 11 – –– THE THE ON ONLINEONLILINENE GAMI GAMINGGAMINNGG MAGAZI MAGAZINEMAGAZINENE – – BOARD BO ARD OF DIRECTORS/D50IRECTORS/ yearsseniorsenior managementmanage mofent success

“Life isn’t just about business deals, it’s about relationships.”

What’s in a name?

By the early 1970s, operations had ex- panded throughout Sweden and slot machines were entering the scene. The four partners were sitting under a cherry tree at Bill Lindwall’s coun- try home when they came up with Bill Lindwall (left) with friends. a name for their company – Cherry. The two students, Lars Kling and Per It wasn’t long before AB Restaurang Cherries, which are the symbol on Hamberg, were childhood friends from Rouletter and AB Roulette Konsult & slot machine winnings, also repre- northern Sweden, who were burst- Spelautomater were competing with sented “winning often, but a little at ing with entrepreneurial ideas, in the each other, but in 1968, a hotel restau- a time,” says Per Hamberg, adding: revolutionary days of 1960s Sweden. rant owner suggested that it might be “Even back then, we were thinking “Most students were communists, better for everyone if the two teams about safe betting.” but we wanted to start a company,” joined forces. “Rolf and Bill were per- says Kling. “We had all kinds of ideas, haps a little threatened by Per and I including starting a taxi company to who were young, successful and hun- drive students home gry. I think they figured after they had been “Most students it would be just as well drinking. The idea nev- were communists, to work with ‘the boys’,” er amounted to any- but we wanted to says Kling. thing though, because start a company.” And work out it did. there was a monopoly The young entrepre- on taxi companies at the time.” neurs soon discovered how well they Student parties were popular and all complemented each other, enter- frequent and the two entrepreneurs ing into what would become a very Strangely enough, the name had only began arranging roulette games at long partnership weathering many been registered by one other person these parties. “We financed the ope- ups and downs. “This is why the busi- – a café owner in Sweden. In 1972, rations with our student loans – enroll- ness has endured so long,” says Rolf the partners bought the rights for ing in more than one university to get Lundström. “Life isn’t just about busi- SEK 1,000 and immediately regis- more money. We paid the loans back a ness deals, it’s about relationships.” tered the name and cherry symbol all long time ago!” adds Kling. over the world.

– 12 – 50 years of success– THE ONLINE GAMING MAGAZINE – XXXXXXXXXXXXX 1963–2013 Let the good times roll

by 1973, Cherry’s business was booming. The gov- ernment had realized that it was better to legislate gambling and collect the taxes from it. Finally, gam- ing could come out from the shadows. People could play for one krona and win as much as 20 kronor – and they got paid in cash rather than credit in restau- rants. The four Cherry partners recognised a fantastic opportunity for expansion and quickly accumulated 55 percent of the Swedish slot machines market.

– 13 – –– – THETHE THE ONONLINE ONLILINENE GAMIGAMING GAMINNGG MAGAZIMAGAZINE MAGAZINENE –– – BOARD BO ARD OF OF DIRECTORS/ D50IRECTORS/ yearsseniorsenior management manage mofent success

“By 1974, the Cherry Group had become Atari's exclusive distributor in the UK and Scandinavia.”

There were also be a part of that game too, and hooked in a Chinese restaurant in Silicon Val- opportunities in America. up with Atari founder Nolan Bushnell. ley and the Atari partners kept getting In the 1970s, Silicon Valley was a Atari was a pioneer in arcade games calls. We Swedes were so impressed green oasis of fragrant orange trees, and video games and it employed a that they were in such demand, being with a pleasant climate and a very smart young technician named Steve called at all times of the day and from young and dynamic spirit. It had Jobs. “The owners wouldn’t let Jobs all over the world.” Only much later also begun to bubble as a hotbed of meet customers because he was so did Nolan Bushnell reveal to them that innovation with the development poorly dressed and smelled awful,” it was in fact the credit card compa- of microprocessors and electronics recounts Per Hamberg with a laugh. nies chasing them for payment. that would eventually turn into the Yet Atari certainly appeared to be By 1974, the Cherry Group had be- likes of companies such as Apple and making its owners wealthy. “At the come Atari’s exclusive distributor in Hewlett-Packard. time, Nolan had not one, but three the UK and Scandinavia. The age of The Cherry partners were eager to Lear jets,” says Hamberg. “We were electronics had begun.

The Cherry delegation at the MOA trade fair in Chicago, November 1975.

– 14 – 50 years of success– THE ONLINE GAMING MAGAZINE – XXXXXXXXXXXXX 1963–2013

An abrupt decision By the late 1970s, Cherry had roulette games, vending machines, pinball games, electronic games and 5,000 slot machines in Sweden. The company was on a roll.

on november 29, 1978, the govern- The Cherry management persisted ment announced new legislation ban- despite the enormous defeat, work- ning all slot machines as of January 1, ing on reduced salaries and pursuing 1970s 1979. Within one month, the entire other opportunities within the indus- Cherry organisation was unravelled. try, such as casinos on board interna- Cherry had to refinance the com- tional ships – one place where slot ma- VCRs introduced (1971) pany and redistribute its centrally held chines were still legal. They also con- Mark Spitz wins seven gold debt to its subsidiaries. It was also tinued to run their successful vending medals at the Munich Olympic forced to sell its operations in England machine business. Games (1972) and other countries to generate cash. There were plenty of times when The US pulls out of Vietnam The consumer games division was Hamberg and the others camped out (1973) sold to a British company that went on at the office, away from their families, US President Nixon resigns in to make GBP 30 mil- working to keep their Watergate scandal (1974) lion in the following “It’s the Cherry spirit. hard-earned company Movie Saturday Night Fever two years. There is no problem alive. “You never won premieres (1977) “Who knows how that we can’t solve.” over the state in those Director Ingmar Bergman leaves successful we might days,” says Hamberg Sweden due to taxation (1976) have been with video games and micro- “There was such hat­­red and distrust First test-tube baby born (1978) processor slot machines if the legis- of companies at that time.” Yet Cher- lation hadn’t come in,” says Per Ham- ry persisted nonetheless. “It’s the Ayatollah Khomeini becomes leader of Iran (1979) berg, who adds that the four partners Cherry spirit,” says Hamberg. “There had many sleepless nights over the is no problem that we can’t solve.” Sony introduces the Walkman (1979) events taking place against their will.

– 15 – –– – THETHE THE ONONLINE ONLILINENE GAMIGAMING GAMINNGG MAGAZIMAGAZINE MAGAZINENE – – BOARD BO ARD OF OF DIRECTORS/ D50IRECTORS/ yearsseniorsenior management manage mofent success

With the crushing blow to the in the early 1980s, Cherry salvaged its Swedish slot machines in Cherry business, the company Denmark and sold kits with renovated parts to Yugoslavia where was forced to look for opportu- they were assembled. nities outside its home country. In 1984, Cherry formed a joint venture with the Croatian state There were plenty of opportuni- lottery organisation, Lutrija Hrvatsa. Gaming operations began in ties in much of Eastern Europe. Croatia in 1985 and quickly spread to the other Yugoslavian states. Expansion took off rapidly with slot machines and in a short peri- od of time, three more casinos were added to the operations. Inge Ask, who was responsible for Cherry’s Eastern expansion, recalls spending a lot of time with his colleagues travelling within Yugo- slavia, waiting for delayed flights in “not-very-charming” airports. Go st, ea young

– 16 – man! – THE ONLINE GAMING MAGAZINE – 50 years of success 50 years of success– THE ONLINE GAMING MAGAZINE – XXXXXXXXXXXXX 1963–2013

“We built up the Eastern European business with enthu- By the early 1990s, the situation in the East took a turn siasm and with a poor man’s solutions,” says Ask. “We for the worse. Cherry had 3,500 slot machines in Yugosla- started very simply, staying at plain hotels and flying econ- via and casinos in every state when the civil war started in omy class, but no one thought of it as hardship. It was a 1991. “It changed everything overnight,” says Kling. “We time of pioneering and a lot of fun. We were creative with were in a bad situation again and made huge losses.” small means — and eventually very lucrative.” In 1992, the Polish Parliament abruptly legislated against Conducting business in Eastern Europe was more po- foreign ownership of casinos. Casinos were making big litical and social than in the West, he adds. “For a deal to profits, yet the money wasn’t remaining in the country. succeed, it was important to eat and drink together with the Cherry had three options: Shut down operations in three people you were doing business with. In Yugoslavia it was months with the option of taking the case to a Vienna important to drink Loza. We drank hectolitres of Loza and court; sell within three months to Polish interests; or con- became very social!” tinue for one year and then close down. In the end, they In 1989, Swedish Cherry won the first ever casino license sold to Polish interests. in Poland, in competition with players from other countries. Other parts of Eastern Europe were also changing the Cherry International Casino division opened its first of four rules and a similar situation occurred in Slovakia, where casinos in a joint venture with Orbis Hotels and the Swedish Cherry had a number of casinos. company Skanska, at the Victoria Hotel in Warsaw. Under Communist rule, Lars Kling remembers a time The casino was run by “highly competent and with “surprisingly no corruption,” when the streets of Bel- well-educated people,” says Ask, grade were free from crime. But with democracy, things adding that working at the casino were different, says Kling. “From one day to the next the paid more than working in the pro- rules could change and there was suddenly so much corrup- fessions in Poland at that time. tion. It became impossible to work in an honest way. The Cherry International Casino “Once again, Cherry was at a crossroads.” division expanded. “Our strategy was to open casinos that were as close , to the border of western cities as possible so “We were creative with small means we could target the people with money,” says Lars Kling. — and eventually very lucrative.” “There wasn’t a lot of money in the East in those days.” A casino was opened in Bratislava, Czechoslovakia, for exam- Go ple, as it was just 50 kilometres away from wealthy Vienna. In 1988 Bill Lindwall and Inge Ask went on an exciting fact-finding mission to the USSR at a time when President st Mikhail Gorbachev was introducing Perestroika (restructur- 1980s ing) and Glasnost (openness). “The old ways were disap- pearing and something new was coming, but nobody knew John Lennon is murdered (1980) what,” says Ask. Björn Borg retires from tennis Ask and Lindwall arrived in Moscow late one evening, a (1983) prior to a meeting about a new casino. After checking into Charity single “We are the Hotel Intourist, Lindwall suggested they walk over to Red World” is recorded by a large Square. “It was dark outside and the streets were empty,” group of American music artists e says Ask. “It was a strange feeling being out with no lights (1985) on anywhere and no people around in a country that you had Space shuttle Challenger been taught was dangerous and with the people who were explodes (1986) your enemy.” Patrik Sjöberg of Sweden sets a oung As they approached Lenin’s mausoleum, lights suddenly new world record in high jump came on, flooding the square. Soldiers appeared from no- (1987) where for the changing of the guard. “After just 10 minutes, Terrorist bomb on Pan Am y the changing of the guard was all over and everything was flight 103 (1988) dark again,” says Ask. “It was one of those magical mo- Wayne Gretsky becomes leading ments that you never forget.” scorer in NHL history (1989) The Berlin Wall falls (1989) man! – 17 – –– THETHE ONONLILINENE GAMIGAMINNGG MAGAZIMAGAZINENE –– BO ARD OF D50IRECTORS/ yearssenior manage mentof success

Online gaming – a dramatic journey

in the early 1990s, the Cherry board Nonetheless, the two companies in- was taking place that would change decided to leave Eastern Europe be- vested SEK 75 million in the develop- people’s lives.” Still, many companies hind and focus mainly on its Scandi- ment of Net Entertainment. failed in the beginning, “not because navian maritime casino business and The public was also uncertain of poor ideas,” says Lindwall, but due video lottery terminal operations. about gaming for money on the Inter- to a lack of financing. In 1996, Bill Lindwall’s son Pontus, net, he adds. “It was hard to gain trust Even the parent company Cherry who had previously been active in and get the traction to grow. People called Net Entertainment the “kin- Cherry, was boating in the Swedish were sceptical in the beginning and re- dergarten” in the beginning, he says. archipelago with a friend. It suddenly luctant to use their credit cards on line, “We liked what we were doing and dawned on him that the only way to get especially in Europe.” we liked working with this new tech- around frustrating land-based legis- nology, but we were pioneers. There lation would be to start gaming on “We liked what we were no books to buy about the sys- the Internet. His boating buddy was were doing and we tem and we really had to do it all by not terribly impressed. “At that time,” liked working with this ourselves.” says Lindwall, “people were not used new technology, but In 2000, Net Entertainment launched to the Internet and they didn’t under- we were pioneers.” its Internet casino software on the stand what it was capable of doing.” Casinodomain.com site and Cherry- Convincing not just his friend, but The Internet was a brave new world Casino.com opened at the end of the investors and others, took determina- in the late 90s and early 2000s and year. By 2002, CasinoEuro.com was tion. Lindwall started Net Entertain- Sweden was leading in many of the launched in multiple languages. The ment in 1996 and convinced Cherry developments. “There was a bunch dotcom collapse didn’t help with the and Kinnevik to invest in the company. of us working to start up Internet ven- process, but by 2002, the company fi- “The people at Kinnevik were into tures that would get together in bars nally achieved profitability for the first new media and they understood the and chat about our ideas,” says Lind- time. As Lindwall says, “We could fi- potential, but they were still unsure wall. “People thought we were crazy, nally afford to buy lunch! It was a great about payment methods, safety and but we understood that something moment when the figures went into so on with the Internet,” says Lindwall. great was going on. A technology shift the black.”

1990s

Stefan Edberg wins Wimbledon tennis (1990) The Who’s Tommy opens on Broadway (1993) Playstation introduced (1994) Sweden joins the European Union (1995) Princess Diana dies in a car crash (1997) France wins FIFA World Cup The summer of 1996, over Brazil (1998) Pontus Lindwall boating with friends.

– 18 – 50 years of success– THE ON LI NE GAMI N G MAGAZI NE – XXXXXXXXXXXXX 1963–2013 2000s The Oresund Bridge, connecting Sweden and Denmark, opens for traffic (2000) Brazil wins World Cup in Football (2002) Sweden rejects adopting the Place euro (2003) Fredrik Reinfeldt and the alliance coalition are elected in Sweden (2006) your Swedish ice hockey team Tre Kronor takes gold in the World Championships (2006) Apple launches its App Store bets: (2008) Betsson enters the picture that the big clients in Africa were actually fraudsters. “After that incident, we got better at protecting the system from fraud,” he says. On-line fraud is an on going battle, he adds. “They get smarter and we get smarter.” “We gave the general public an oppor- Betsson added casino games to its offering and was one tunity to be the bookmaker as well as of the first to launch poker, which became an immediate suc- the player, giving or taking odds. This cess in Sweden and elsewhere. By 2003, things started going well for the company with is what made our product unique.” revenues of 100 euros a day. “It was a memorable moment,” says Holmgren, who spent much of those days with a suit- case always packed and ready to go to one of the company’s while cherry’s Net Entertainment was putting traditional many operations across Europe. roulette, blackjack and slot machines online, three Swed- Cherry had bought into and co-developed Betsson and ish partners, Henrik Bergquist, Fredrik Sidfalk and Anders by 2005 it owned the entire company, the same year that it Holmgren, were developing their online betting company, opened in Malta. By 2005, the company had 100,000 regis- Betsson. Formed in 2000, they operated the company tered poker users. Online sports betting had also become from the UK, where they had been granted a license, but one of the company’s fastest growing activities. This was a their target market was primarily Scandinavia and coun- good reason to change the company’s name from Cherry to tries in Northern Europe. the current Betsson. “When we started in 2000, I think people had the per- By 2008, Betsson had passed SEK 1 billion in revenues. ception of gaming as something people did in dark, smoky In 2009, it was awarded the prize as the most responsible rooms,” says Anders Holmgren. “It had a bit of a nega- gaming operator. tive image, especially in Sweden. But with Internet gam- In 2011, it acquired Betsafe, one of its fiercest competi- ing and younger people playing online, it’s become much tors. Today, Betsson is the biggest Internet gaming company more acceptable today.” in the Nordics. Betsson began with a betting exchange where custom- In 2012 Betsson was awarded both Sportsbook online ers could bet on the outcome of various games, mainly to and casino operator of the year. do with football. “We gave the general public an opportu- The games and betting have also been going increasingly nity to be the bookmaker as well as the player, giving or mobile. “Today the technological infrastructure is good and taking odds. This is what made our product unique.” it is easy for clients to play games on their mobile phones,” Holmgren remembers how happy the three partners says Pontus Lindwall. “The younger generation is changing were when they managed to get a few very big clients in the way people bet. For them, going to the tobacco store to the early days of the company. Shortly after they realized place a bet is unheard of. A new era is beginning.”

– 19 – – THE ONLINE GAMING MAGAZINE – BOARD OF DIRECTORS/senior management

– 20 – C a e s a r's P a l a c e, L a s V e g a s – THE ONLINE GAMING MAGAZINE – XXXXXXXXXXXXX

MAARKET WITH STRONG GROWTH PROSPECTS

gaming on the Internet is still an underpenetrated industry with many years of prospective strong growth to come. The positive trend of freeing up online gaming in Europe is continuing and gov- ernments such as Denmark, Italy and Estonia have been taking steps to legislate with consequences that are favourable to both the governments and operators. Several other European markets are discussing opening up to regulation and taxation. Re-regulation trends are also seen in the US and in a number of Asian countries, even if they still have some way to go before reaching the level of some of the free European markets. The US and Asian countries like China and India will probably be the largest online gaming mar- kets in the near future – and these markets are still untouched by serious operators. As markets become more extensively available and opportunities for marketing and other activities enable opera- tors to compete with state-owned monopolies on equal terms, growth will accelerate. At the same time, large portions of the world’s population have limited access to the Internet, which is a clear indicator that the industry is still in an early phase.

– 21 – – THE ONLINE GAMING MAGAZINE – THE MARKET

Interactive global total gross gambling yield EUROPE BILLIONS EUR according to H2 Gambling Capital, are preparing for a controlled opening 35 in 2013 the European online gaming of their markets. Denmark, Estonia 30

market will increase by 10 percent and Spain have been re-regulating 25 34.3 from last year, reaching an estimated their online gaming regulations and 20 market size of EUR 13 billion in 2013. other markets such as Holland are 15 26.2 21.5 In 2015, the market is estimated to expected to open up soon. As an 10 15.9 be worth EUR 14.2 billion, an addi- example, Italy, with favourable regu- 5

tional market growth of 12 percent lations, is estimated to grow with a 0 7.2 or a compounded annual growth rate compounded annual growth rate of 2003 2006 2009 2012 2015E of 7.5 percent from 2011. The online 11.2 percent going from a market size gaming market has actually increased of EUR 1.23 billion in 2011 to EUR Interactive Gross Gambling Yield by more than nine times since 2001 and 1.87 billion in 2015. The Danish mar- Player Location 2012 the yield per active account has more ket, regulated since January 2012, is 10,5% than doubled since 2003. Due to pres- expected to almost double in terms sure from the European Commission of market size by 2015, going from an 13,5% and following the examples of the UK estimated market of EUR 285 million

and Italy, many European countries in 2011 to EUR 550 million in 2015. 44,4%

31,6%

Europe North America Females account for 42 percent of online gamers and Asia and Other 62 percent of all gamers report playing games online. Middle East

Source: NPD.com Interactive Gross Gambling Yield by NORDIC Product 2012 in the nordic online market the num- has a small part of the total market 9% ber of Internet users who prefer gam- which leaves potential for a much 5% ing online instead of offline is growing greater share of the market. Betsson 6% rapidly. Growth in the Nordic market has grown faster than the Nordic mar- 46% has been strong for many years. The ket in recent years and we believe market is quite fragmented with each this trend will continue in the years 22% government managing its own gam- to come. Betsson’s market position ing regulations. In 2012, Denmark lib- is very favourable in view of both the 12%

eralised and deregulated its gaming underlying market growth and the abil- Betting Bingo regulations while the other countries ity to take market share from competi- Poker Other Casino State Lotteries still have some way to go. If the Danish tors, mainly state-owned monopolies.

model proves successful, it might The large increase in number of online Source: H2 Gambling Capital, Dec 2012 very well become the model for its gamers is a significant driving force in neighbours. the industry and we believe that the For Betsson, the Nordic market is company and the market for Internet 25 percent of gambling in very important, especially the B2C gaming in the Nordics will continue to Sweden is interactive. The segment where Betsson has a strong perform strongly. EU average is 12.5 percent. position. Overall though, Betsson only Source: H2 Gambling Capital, Nov 2012

– 22 – – THE ONLINE GAMING MAGAZINE – THE MARKET

% 59Expected total growth rate for mobile/ tablet Internet for the period 2012–2015.

Source: H2 Gambling Capital

Online gross gambling yield by sub-channel 2012

Computer Internet Mobile phone/tablet Itv 2% 13%

85% DRIVING FORCES FOR

Source: H2 Gambling Capital ONLINE GAMing In regions with high Internet penetration there is a conversion towards online living and an increased trust in e-commerce. We use the web for banking, stock trading, insurance, bookings and other activities and this change in behaviour, coupled with increased trust, are important driving forces for the development of the online gaming market. Developments driving the growth of global online gaming include: Internet penetration: Increased ac- traditional offline gaming. For younger cess to the Internet in households, players who have grown up with the In- leading to additional potential players. ternet, online gaming is a natural choice. Broadband capacity: Improved band- Strong Demand: There has always width enables increasingly advanced been a strong demand for gambling gaming functions, which attracts more products. In recent years betting has potential players. been popular, mainly in sports events. Product development: The recent Through its Sportsbook, Betsson is well technological development, with dif- positioned to capitalize on this trend. ferent smartphone devices, improves availability to the games which drives In recent years, Betsson has delivered activity. We expect this trend to con- strong profitable growth, which we tinue in the coming years. see as proof that we are on the right Increased confidence in e-commerce: track with our strategy. Since 2006, Confidence in online gaming operators Betsson has increased turnover by and payment services is on the rise, 651 percent while keeping the operat- which contributes to an increase in the ing margin between 20–33 percent. number of potential players. During the same period, Betsson has Bill Lindwall and Minister of Market share shift from offline to on- invested continuously in IT infrastruc- Trade Kjell-Olof Feldt 1975. line: A steadily increasing number of ture and partnerships, while managing people are playing online, instead of in day-to-day operations.

– 23 – – THE ONLINE GAMING MAGAZINE –THE BETSSON MODEL THE BETSSON MODEL Betsson consists of Betsson AB, a holding company THAT invests in gaming companies throughout the world, and its subsidiaries, the operational online gaming companies. The business MODELS of Betsson AB and its subsidiaries are described below.

Betsson AB Betsson Business Model Subsidiaries Business concept Through its subsidiaries, Betsson runs a number of gaming sites, Betsson AB’s business Vision both web and mobile. We call it a multibrand strategy. The reason concept is to invest in Betsson Group shall have fast-growing companies a stake in every online bet. for having a multibrand strategy is that the Betsson Group can operating in the online target different customer segments with different niche sites and gaming industry. Mission thereby reach out to a wide customer audience. Furthermore, it • We deliver fun, fair and is known that players like to play on several sites simultaneously, Objective creative online gaming and we figure it is better if they spend their entire wallet on Bets- Betsson AB’s objective experiences to people is to generate long-term son sites rather than share it with competitors. Our multibrand growth and responsible • We strive to be the best strategy is manifested in our B2C and B2B segments. profitability in order to where we choose to play The delivery of multiple brands is done primarily through the provide shareholders proprietary gaming software platform that Betsson has developed. with the best possible • We are a creative and This platform contains all the functionality needed to run multiple returns in the long term. dynamic company built gaming sites, such as functionality for account management, pay- by passionate employees Strategy ments, bonus management, CRM, business intelligence, site Betsson AB and its sub- management and so forth. The platform is the core of the offering, sidiaries will grow organi- and is highly scalable. Integrated into the platform are Betsson’s cally, or via acquisitions, different games. These are developed either in-house or sourced inside and outside the EU. from the market. It is our belief that Betsson can’t be the best at developing all types of games itself and therefore Betsson ap- plies a multiple supplier strategy when sourcing games. With this strategy, the customers are always offered the best and most at- tractive product mix. A first-class offering is essential for success in the industry and Betsson is working hard to maintain its promi- nent position through innovation and technology. The company continuously adds new products and suppliers as opportunities and needs arise.

– 24 – – THE ONLINE GAMING MAGAZINE – THE BETSSON MODEL

B2C and B2B

Currently, Betsson runs 26 differ- those areas. The Nordic region is an together with partners, operate gam- ent brands, 11 within B2C and 15 important market and a platform for ing sites jointly. In addition to our 50 within B2B. Five of these brands are Betsson’s global ambitions. years of gaming experience, compa- Danish.dk versions of other brands. In our indirect business (B2B), we nies choosing to partner with Betsson Betsson’s B2C segment is defined target markets as well as niche seg- Business Solutions gain access to the as games from users acquired by ments in established markets with a best gaming solutions available on the Betsson, as well as games from us- partner strategy, trying to break into market. In our operations, we build on ers originating in Betsson’s network these markets together with strong our strong capabilities within technol- of affiliated websites (affiliatelounge. local partners, since we know from ogy, know-how of gaming operations, com). Anything that is not included in experience that local knowledge is an innovation and quality. When combin- this definition is classed as B2B. In our important success factor. Betsson´s ing Betsson’s capability and experi- direct business (B2C) we currently fo- B2B segment, Betsson Business ence with strong local partners who cus on our core markets and products Solutions, is a dedicated department have considerable presence on the in order to consolidate our resources within the Betsson Group. Betsson market, we create huge opportunities towards creating higher growth in Business Solutions is a unit which, for Betsson and our partners.

Products

Sportsbook LIVE CASINO Sportsbook has grown substan- Launched in 2010, Live Casino has proven period. In addition, more than 50 types of tially in recent years and has be- very popular. Customers interact with live lottery tickets are available. All of these come a prioritized product for dealers and other players around a physi- scratch tickets provide considerably better continued growth. It lets players wager on cal game table and the gaming experience opportunities to win than traditional scratch various events throughout the world. In addi- combines the best of “real life” and on-line tickets. Betsson’s selection of scratch cards tion to being a first-class product, this game experiences. has a high pay-out rate and every third card constitutes a good introduction for our cus- is a winner. tomers, who often also try other products. POKER Betsson’s Sportsbook offering is among the As for many products, localised BINGO widest in the industry, and one of the fastest offers are a key to success and Betsson offers more than 50 and most attractive sports betting experi- poker is no exception. There- bingo games where bingo cards ences available. During 2012, Betsson ex- fore, Betsson offers poker from multiple can cost as little as EUR 0.05. In panded its Sportsbook offering to include a suppliers in order to cater to specific local order for people to enjoy themselves, the state-of-the-art mobile Sportsbook solution. demand, thus offering unrivalled variety in company has bingo hosts who chat and so- This solution has been launched under three a key product. Ongame Networks, one of cialize with the players. brands during the year. the world’s largest networks with approxi- mately 18 million registered poker players, GAMES Casino is our main poker destination. In addition to Games cover many types of Casino is Betsson’s largest prod- Ongame, Betsson offers Microgaming poker amusement, from lotteries to uct. Casino games include table and fast poker from Relax gaming. A much dice games. Players try their games like roulette and black appreciated addition to gaming is our poker luck at virtual horse and dog racing or play jack, as well as video slots and video poker. school, which has helped many new users the Slotbox, Betsson’s variation on the Betsson’s casino offers a large variety of become better players. classic game of Tetris. Games attract play- world-class casino games that do not re- ers who have limited time but want a little quire downloads. Games with an oppor- SCRATCH excitement. Today Betsson offers over 60 tunity to win large jackpots are the most Betsson’s scratch card offering is different types of games. popular ones. During 2012, Betsson added among the most extensive in the a number of suppliers to its casino product, industry. Betsson offers a range and now has casino games from more than of scratch cards with a jackpot win of EUR 10 different suppliers. 1 million to be paid out over a multi-year

– 25 – – THE ONLINE GAMING MAGAZINE – BOARD OF DIRECTORS/senior management

– 26 – – 26 – – THE ONLINE GAMING MAGAZINE – MANAGING GROWTH

BY ULRIK BENGTSSON MANAGING GROWTH Entrepreneurship, passion, hard work and a bit of chaos all go hand in hand in the first few years of a business. Within chaos, creativity and innovation are born and, if nurtured properly, THEY build a company. Betsson can vouch for that.

here are many stories in our Group of the tant. We want the Betsson experience to be superior to times “back then” in 1963. I am sure that that of our competitors at all times. That is how we will those who were there can testify that there build loyalty and revenues. was a certain element of chaos at the com- Managing growth is also about continuously striving for pany. With 50 action packed years operational excellence and not losing the edge. behind us, we can sit back for a mo- Fun The environments we are operating in are becom- Tment to savour the success and reflect on a proud Chaos ing increasingly competitive and in order to keep entrepreneurial history and a deeply rooted affinity Hard work outgrowing the markets, the need to be highly for innovation. Commitment optimised in our commercial activities is increas- Closeness to ing. As Betsson grows up, it is clear that Betsson New brands and faces customers of 2012 is less chaotic and more optimised than Nowadays, Malta is the heart of our operations with Betsson of 1963, but the passion, hard work and { over 500 “Betssonites” working out of our three Execution entrepreneurial spirit is still here. Although we are offices on the island. In Malta, we value our entre- Innovation becoming sharper each day, we want to keep a preneurial heritage as we continue to fine-tune a certain element of chaos and remember our roots

well-oiled machine. Our revenue growth the last { as an innovator. These days, our customers are few years highlights the importance of managing a Growth providing us with the insights for future innovation. fast-growing organisation. This year alone, over 300 Our values of being passionate, fun, fair, cre- new faces joined our teams in Malta, Manila, Kiev ative and dynamic are combined with very com- and Tallinn. Six new brands have been added to our portfo- mitted and competitive employees that have the desire to lio: Starcasino, Svenskalotter, Nordicbet, Triobet, Maxino always perform at the highest level. Maintaining our unique and Tobet. This on top of the four brands that were added in culture is an integral part of managing growth. December 2011: Betsafe.dk, Casinoeuro.dk, Betsson.dk, and Danmarksautomaten.dk Putting plans into action Managing the growth of our company means improv- A wise man once said that the winning team isn’t the team ing and building our operational capabilities within our core with the best plan. It’s the team with the best execution. functions of marketing, customer relationship manage- Nothing can be more true. We have some really exciting ment, product management, technology, and customer plans for the next chapter in Betsson’s history and I am experience. As some of our core products are being com- confident we have the capabilities to execute them. This moditised, the customer experience is particularly impor- will be fun!

Betsson currently has employees and consultants in Malta, Stockholm, Talinn, Kiev, Manila, Krakow and Gibraltar. At year-end 2012, we were 932 persons providing gaming experiences for 5.8 million registered customers in 20 different countries.

– 26 – – 27 – – THE1977 ONLINE GAMING MAGAZINE – BOARD OF DIRECTORS/senior management – The Cherry-service Dan Gurney, car, never more than British Grand Prix an hour away. on11 July 1964.

The Betsson owners with Sweden's Minister of Trade, 1975.

– 28 – – THE ONLINE GAMING MAGAZINE – XXXXXXXXXXXXX

When it all began

Stanley Matthews and Stoke City team on his 50th birthday on 1 Feb 1965

Billie Jean King at Wimbeldon in London

The Cherry golf The president 1977 meets with The King, Dec 1970.

Betsson signs deal with Betsafe, May 2012.

– 29 – – THE ONLINE GAMING MAGAZINE – BOARD OF DIRECTORS/senior management

MOBILE HAS FINALLY SCORED There is no doubt that the introduction of smartphones and tablets has revolutionised the web in recent years. And while companies and industry experts have been claiming “this is the year of mobile” pretty much every year since the first m-Commerce (mobile commerce) transaction was made back in 1997, this statement applies to the Betsson Group in 2012. It really was the year when mobile arrived.

– 30 – – THE ONLINE GAMING MAGAZINE – MOBILE HAS FINALLY SCORED

BY JONAS MÅRTENSSON

“What really makes it the year of mobile is of course that our customers have embraced our products and our reports are showing hockey-stick looking graphs. Instead of the usual optimistic forecasts, these nice graphs are based on real numbers.”

uring 2012, we rolled out mobile TV no longer commands our full attention as it has become solutions for more than 20 of our one of the most common devices that is used simultane- brands with a completely new ously with other screens. This relatively new consumer mobile site including Sportsbook behaviour of using multiple screens make us feel more ef- with live streaming, casino, scratch ficient because we can act spontaneously and get a sense cards, poker and more. But what of accomplishment. This results in a feeling of “found time” really makes it the year of mobile because we can do things simultaneously. On your way to is of course that our customers work you can answer a few emails on the subway. You can have embraced our products and our reports are showing play a game on your coffee break, and while in front of the Dhockey-stick looking graphs. Instead of the usual optimistic TV, you can check your social network, research your holi- forecasts, these nice graphs are based on real numbers. day or have a spin in roulette. This newly found time is obvi- Mobile is a unique channel, with different requirements ously a great opportunity for us where we can be a natural for smartphones and tablets, which is being integrated into part of the consumers’ daily multi-screening activity. our overall technical development and marketing mix. It is imperative for us to know who our mobile consumers are, From insights to action how they access our sites or applications, which devices Smartphones are the backbone of our daily media and en- they use, and what their expectations are for a positive ex- tertainment interactions. They have the highest number of perience. user interactions per day and serve as the most common starting point for activities across multiple screens. As part The new found time of the purchasing (betting) process, our customers wanted Not only do we see technology changing and consumers an easy way to get an overview of the games played on using their smartphones or tablets instead of their PCs, but a specific night and be able to see who scored the goals we see that the consumption of media is also shifting. Ac- in specific games. Based on this insight, we created the cording to Google (US) research, 90 percent of our media Betsson Live Score application, where you can subscribe consumption occurs in front of a screen. As consumers bal- to games and get push notifications with goals and results ance their time between smartphones, tablets, PCs and without even being on our site. This application has over televisions, they are learning to use these devices together 100,000 downloads and is well appreciated by our custom- to achieve their goals. Understanding this multi-screen be- ers. Next year, we will continue our focus on the customer haviour will be crucial for us to provide our customers with experience and with the help of analytics and measure- the right content, features and games for the device they ment, we will be able to optimise the mobile channel and are using at a certain time. engage with our customers even better through new, excit- The device we choose to use is often driven by our con- ing products in our various devices. Stay tuned. text; where we are, what we want to accomplish and the amount of time needed. We often use more than one screen to consume media, frequently referred to as multi-screening. A good example would be to watch a football game on your Sources: GP Bullhound — The mCommerce market opportunity, Adobe — 2012 Mobile Consumer Survey, TV while placing a live bet with your mobile device. Google — The New Multi-Screen World

– 31 – – THE ONLINE GAMING MAGAZINE – LEGAL TRENDS IN ONLINE GAMING

LEGAL TRENDS IN ONLINE GAMING

The online gaming industry has come a long way since the first online gaming sites were launched in 1996. The large public companies that dominate the market today bear little resemblance to the small and entrepreneurial companies that ran the first gaming sites from offshore locations. The legal developments during the past 16 years have, to a large extent, shaped these companies and this relationship is bound to continue.

– 32 – – THE ONLINE GAMING MAGAZINE – LEGAL TRENDS IN ONLINE GAMING

BY Martin THorvaldsson

he general legal uncertainties of trading The United Kingdom was, in 2005, the first major jurisdic- on the Internet, together with the unclear tion to offer local licensing for online gaming. France and legal situation for online gaming in many Italy followed suit in 2007 and 2008. In 2010, Estonia joined countries, have greatly influenced the in- the group. Denmark joined in 2011 and Belgium and Spain dustry, especially during the early years. entered in 2012. Many other EU members, for example As the markets emerged and matured, the Netherlands, Germany and Greece, now have plans to so did the companies, and by 2003 the regulate online gaming. The initiatives usually stem from industry had begun moving operations mainly to Malta and fiscal considerations but also from pressure from the Euro- TGibraltar which could offer more robust regulation inside pean Court of Justice and the European Commission who the EU, and better technical infrastructure. frequently have suggested that revisions of existing mo- The US ban (UIGEA) in 2006 halted industry expansion nopolistic laws are long overdue. in the US, but growth continued just about everywhere Changes in laws and regulations have, perhaps more than else. Legal developments continued on a state level de- any other factor, affected the gaming industry. Three major le- spite the UIGEA ban however, and Nevada and New Jersey gal trends can be identified: today have their own legislation and may offer online gam- ing licenses in the near future.

ONE TWO THREE

The dominant legal trend for the com- Re-regulation is likely to be followed Finally, the growth of social media and ing years will be re-regulation, and the by collaboration where the countries, social and skill gaming will eventually revisions of such re-regulation (re-re- states, gaming authorities and business lead to changes in the legal structure. regulation if you like). The current trend organisations reach out to each other to The ability to deliver gaming content in Europe of issuing local regulations create common practices and technical depending on the social interaction, and taxing online gaming is likely to standards. This too will probably be a and not necessarily random gaming continue. Many countries will be slow slow process, especially as the govern- events, will raise questions among to adapt as they struggle to modernise ments, closely connected to the existing lawmakers. The seamless integration existing state-owned monopolies. This state monopolies, are not used to this between social/skill gaming and normal will result in a reluctance to make the kind of collaboration and often believe gaming will also puzzle regulators and new regulations commercially viable they already have the best regulation probably push them to eventually act. and compliant with EU and constitution- available. We are currently looking at If land-based sweepstakes connect al law principles, requiring yet another separate regulation, control, adminis- to a skill game on Facebook, which process later on in order for the legal tration, and enforcement in each of the connects to a casino-style game on and commercial uncertainties on the 27 EU member states (and elsewhere the Internet, it will be difficult to know market to disappear. Germany, Belgium of course). This is a massive waste of where the regulated area starts and and Greece are recent examples and resources not only for the industry but which of the entities involved will be without legal certainty and the buy-in also for the gaming authorities (and governed by such regulations. It’s hard from the industry, it will be difficult subsequently a waste of tax payer’s to predict how this will happen and for them to control and tax the entire money). There are some promising signs when, but such new legislation is bound market, leading to a need for additional however with discussions on accepting to have an impact on the industry. regulatory reform at a later stage. shared liquidity in gambling networks. All we know for certain is that the Once the re-regulation trend stabilises I believe common standards and best future will hold many legal challenges. in the coming years, countries outside practices will eventually result from this, At the same time, Betsson has had Europe are likely to try the same thing. but the process could be painstakingly lots of practice in dealing with legal slow. The European Commission might challenges, and we look forward to play a role in getting this process going continuing to do so in the future as well. and some industry organisations are already working to address this issue.

– 33 –

– THE ONLINE GAMING MAGAZINE – READY TO FREE UP THE GAME

READY TO FREE UP THE GAME Gustaf Hoffstedt, a Member of the Swedish Parliament, believes it is time for the government to release its monopolistic grip on gaming.

Gustaf Hoffstedt ustaf Hoffstedt is an outspo- then be working within the system,” he says. Political party: ken politician with a clear To date, about 31 companies including Moderate Party opinion about how gaming Betsson have received licenses in Denmark. Role: Member of Parliament should be managed. The This means that gaming companies are run- for Sweden’s Gotland Swedish Member of Par- ning businesses under Danish law with the County liament, representing Got- Danish state collecting taxes. Jobs are cre- Favourite games: Casino and Blackjack at a land,G believes that the government should ated – and kept within Denmark. restaurant casino where start issuing licenses to gaming companies “I can only see positive aspects with li- my fiancée and I can enjoy a meal as well! instead of continuing with its current industry censing,” says Hoffstedt. “It will be so much Favourite online monopoly. easier to work with gaming addictions when Betsson game: His plight was a lonely one in the past, but all of the companies are included in this regu- Blackjack today, all of Sweden’s political parties (with lated system, because the government and the exception of the Left Party) welcome gaming companies will be on speaking terms his suggestion – and Hoffstedt believes that with each other – and not on opposite sides it’s just a matter of time before the situation of the world.” changes. “There are indications that we will Hoffstedt says that there has been a reluc- have new legislation within this mandate pe- tance to give up the Swedish monopoly due riod, which ends in 2014,” he says. to the income that it generates. “The govern- Hoffstedt welcomes the licensing of gam- ment gets some SEK 5 billion from Svenska ing companies, something which has been Spel (the state-run gaming monopoly) and adopted in other European countries like SEK 7 billion if you include ATG horse betting. Denmark. “Rather than favouring the state, But I think the state can generate just as much all respectable gaming companies would money through issuing gaming licenses.”

– 34 – READY TO FREE UP “Sweden is one of the most successful countries in the gaming world and the way we’ve treated these companies is a sad story. Companies like Betsson have THE GAME had to work from Malta, England and other countries. We can’t have a legislation that forces our companies to work abroad. They need to feel welcome here.”

This has certainly been the case in Denmark, where the accidentally blocked from other activities such as buying a state has actually earned more money from gaming since newspaper or paying for a hotel room. I don’t think such licensing began. “What you might lose by giving up a mo- legislation would pass in Swedish parliament. It’s a matter nopoly you gain when companies are regulated in a country of freedom of speech.” and forced to pay taxes there,” Hoffstedt points out. “The Gaming and politics have shared a rocky road during state is a good referee but it should never be a player.” the 50 years that Betsson has been in business, resulting He cites three main arguments for granting gaming li- in turbulent times for companies trying to make a living censes: It generates income for the state; there are public in gaming. Hoffstedt chalks this up to a profound moral feel- health improvements in terms of controlling gaming addic- ing shared by many people about how money is earned. tions; and it provides an incentive for businesses to stay in “I think the politicians have had a problem with people mak- the country. ing money from gaming, rather than through hard work. In The Swedish gaming industry is a lucrative one, gener- our world, with traditional Christian values, people don’t ating about 5,000 jobs. “Sweden is one of the most suc- always appreciate such shortcuts to earning an income,” cessful countries in the gaming world and the way we’ve he says. treated these companies is a sad story,” Hoffstedt says. But Hoffstedt believes that the gaming industry has “Companies like Betsson have had to work from Malta, paid its dues and deserves fair treatment as with any other England and other countries. We can’t have a legislation industry. “Gaming is a mature market now, but investors that forces our companies to work abroad. They need to hesitate to invest because of the risks associated with leg- feel welcome here.” islation. Licensing, which serious gaming companies need Blocking games on the Net is also ineffective he adds. and want, will provide more stability. It’s not just a com- “We have a Wild West today with online legislation. Nor- mercial question but also one of being a respected member way and Finland have tried to block Internet gaming and it of society.” hasn’t worked. It has resulted in people’s credit cards being

– 35 – – THE ONLINE GAMING MAGAZINE – INVESTING IN STABILITY

Investing IN stability PAYS OFF THROUGH AN IMPROVED CUSTOMER EXPERIENCE

“Every tenth of a second in latency costs us 1 percent in sales.” greg linden, ex-senior manager at amazon

BY PIERRE DE BOER

It has taken just over 50 ith a long history as an offline company, Betsson has years from its start in the led the development and turned into a leader in the on- line industry. In 1999, when daily turnover was limited 1950s until now, for the to the cost of an average dinner, we operated on an, at Internet to develop into the time very advanced online gaming platform. This a vast opportunity for platform resided on one Windows NT server which commercial use that we build Whosted web applications and a database all in one with backups made on mag- our business on. It was only netic tapes. Today we operate using hundreds of servers spread over several in the mid-nineties that the data centres across the globe with each server having 120 times the capacity Internet was commercialised, compared to the ‘all-in-one’ 1999 solution. Despite this development, and our and with the introduction advances in technology, we are not alone with the challenge of keeping our of mail, instant messaging infrastructure and platform available and performing. and social networking, as There have been a number of cases in recent years where even the biggest players in online business have suffered serious downtime, such as Google who well as e-commerce and experienced two days of Gmail outages, or Microsoft which allegedly wiped online gaming, endless out Hotmail accounts making them unavailable for 48–72 hours. Both incidents opportunities have opened up. occurred during 2011. According to Dun & Bradstreet, 59 percent of Fortune 500 companies experi- ence a minimum of 1.6 hours of downtime per week. This means that if you take the average Fortune 500 Company (at least 10,000 employees), just the labour portion of the downtime could cost approximately USD 896,000 weekly, translat- ing into over USD 46 million per year.

– 36 – – THE ONLINE GAMING MAGAZINE – INVESTING IN STABILITY

“Users really Customer experience and expectation respond to speed. As an online company with all of its turnover and revenue depending on the Half a second in availability and performance of technology, stability is key to success. As we grow our number of customers, turnover and traffic, the cost of any platform search page downtime increases. The cost comes in the form of lost revenue, damaged generation time reputation and severed productivity. We are becoming much more sensitive drops traffic by to disturbances and subsequently the cost of maintaining uptime increases. To 20 percent.” handle this, we need to deliver significantly higher quality, more innovation and marissa mayer, ex-vp google we need to change the organisation, processes and tools to cater to the increase in uptime demand. There is a significant opportunity to offer our customers a supreme product by delivering more stability and better performance than our competition. Num- bers show that only a few milliseconds in latency can have a significant effect on web traffic, and subsequently revenue. Google ran an ex- periment showing that a .5 second delay meant a 20 percent drop in traffic. Everything we do is guided by our drive to optimize the customer experience and the stability of our product. Even given the challenges mentioned, with the right focus, competence and investments we believe we have the right mindset to deliver the market´s best products.

The next 50 years Despite the aggressive development in our different channels, mobile phones, tablets and the emerging always-online behaviour of our customers, we feel well positioned to deliver world-class service and products to our customers. One of our strategic pillars going forward is our one-platform objective where we invest heavily in a gaming platform to give our custom- ers the solid experience they expect. Over the past few years, we have been developing the right architecture and infrastructure to facilitate this and we are now capitalising on this development. We feel confident that we have a pole position in the race for customers as they change behaviours and raise their expectations. Stability, performance and quality are our technology drivers as we take on the next half century. – THE ONLINE GAMING MAGAZINE – A Sustainable Company

For obvious reasons, the bulk and emphasis of Betsson’s social responsibility and sustainability efforts are focused on responsible gaming because this is where we have the greatest impact. It doesn’t stop here though. At Betsson, our sustainability work is integrated in the daily operations and every employee contributes to the end result.

BY Hillevi Stuhrenberg Timeline for Responsible Gaming developments at Betsson:

2004 sible gaming accreditation 2008 ing Review awards in London. Awarded a Maltese Online company which audits Shortlisted for the “Most This achievement led to many Gaming license by LGA websites, company policies Socially Responsible Opera- speaking requests at large showing that Betsson and procedures in respect tor” award at the eGaming international conferences. was fully compliant in all to responsible gaming. All Review awards in London. respects of the law and Betsson owned and operated The Swedish student award is 2010 the responsible gaming sites are audited annually. created with the intention of Launch of the Maltese requirements in particular. creating more awareness and student award, held and 2007 stimulating research in the organised in close 2005 Betsson creates a full- area of responsible gaming. collaboration with the One of the first online gaming time post dedicated to University of Malta. companies to be certified the management of re- 2009 by the Global Gambling sponsible gaming. Betsson wins the “Most 2011 Guidance Group (G4), Socially Responsible Betsson enters an agreement an international respon- Operator” award at the eGam- with the Danish prevention

– 38 – – THE ONLINE GAMING MAGAZINE – A Sustainable Company

etsson contributes to the community All Betsson offices have waste and recycling management at large by being a good employer procedures in place and carbon offsets are bought in order who exceeds any legal requirements to minimise the impact of necessary staff travel. Whenever when it comes to working condi- possible, energy saving appliances are used and internal tions, health and staff welfare, ad- company communication is done electronically. vancement and equal opportunities. Betsson aims to be a good community member and We have an open-door policy and promoter of the fun and fair in gaming. This is done in sev- staff is encouraged to express their eral ways. One is by supporting research and knowledge views anonymously in the annual employee satisfaction transfers within the area of responsible gaming. For several Bsurveys. The employee satisfaction surveys have a very years, Betsson has been supporting research in Sweden high participation rate and confirm that Betsson is consid- and in Malta with the aim of identifying preventive tools ered to be one of the most attractive employers in the area and measures. In 2012, Betsson supported two internation- of online gaming in Europe. Our workforce is culturally and ally renowned non-profit conferences which are unique in ethnically diverse which contributes to a healthy, happy and that they focus solely on responsible gaming. These confer- open-minded workplace. This is supported by the code of ences attracted an international audience of researchers, conduct and by the staff handbook which give examples policymakers, government representatives and treatment of how one is expected to behave towards colleagues, specialists. customers and others. The code of conduct, as well as the We are keen on having a dialogue with all of our stake- staff handbook, are based on the Betsson values: Fun, Fair, holders in order to learn and develop, but also to contribute Dynamic, Passionate and Creative. with our knowledge and experience. This is particularly im- The many company-subsidised activities promote health portant seeing that political decisions are not always based and well-being as well as aid teambuilding. There are regular on a broad knowledge foundation. fitness challenges and opportunities to do sports together The projects concerning children are of particular impor- with colleagues, be it floor ball, swimming or Zumba. tance to us. We support ECPAT, which works to prevent Betsson’s business is by nature a clean business as we children from being sexually exploited. We support some are online and nearly entirely paperless. Additionally, our organisations that try to educate parents, young people customers use our products and services from the comfort and teachers about drug abuse so that fewer young people of their own homes, which means no extra travel. Betsson will start using drugs. Betsson supports the My Great Day promotes the use of new technology for meetings and con- Foundation which distributes funds and coordinates events ferencing in order to minimise travel. When travelling is nec- to make very ill children’s wishes come true, whether it is essary, public transport is encouraged through a re-imburse- just visiting the zoo or meeting their idols. ment policy that always takes into consideration whether a public transport option is available.

and treatment centre for ers with an online self-help sary to secure the long-term expect a trend towards in- Ludomani to partly finance tool. Betsson complies with sustainability of our industry. creased personalisation and a prevention project aimed a new set of Danish respon- It is highly likely that develop- options for players to tailor at young people and other sible gaming requirements, ments within the area of their gaming experience. By vulnerable groups. ROFUS, where a player can responsible gaming are going giving players tools to help register and then be blocked to continue to be industry monitor and control their 2012 at all Danish licensed sites driven and will create greater gambling we are actively Shortlisted for the “Socially for their chosen period of collaboration between opera- promoting healthy long-term Responsible Online Opera- time – or permanently. tors, researchers and policy- customer relationships. tor of the Year” award at makers. Betsson is already Only companies who are the eGaming Awards in The Future promoting this way forward truly committed to re- London. A collaborative Player protection is going to and is actively pursuing sponsible gaming and the project is initiated between become more and more im- partnerships in this regard. investments this requires Betsson and Spelinstitutet portant and continued focus Tool development is another will be able to compete and to provide Betsson custom- and investments are neces- important area where we can grow in the long term.

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Player protection in online versus offline gambling environments

it is sometimes claimed that online gambling is potentially (16–17 year-olds) gambling online on “unregulated sites” as riskier in respect to developing gambling problems than being 2 percent, which is considerably lower than underage gambling in brick-and-mortar casinos or betting shops. participation in land-based gambling venues. Whilst it is true that online gambling offers higher acces- In an offline gambling environment, personnel are able sibility, this does not necessarily equate increased risk, and to watch the customer but this rarely gives sufficient infor- more importantly, access to player protection tools is much mation to intervene on, unless someone is obviously intoxi- higher online than in land-based environments. Several cated or agitated. These displays are not always indicative studies show that despite the arrival of online gaming more of problem gambling. than a decade ago, the percentage of people with gambling problems remains the same. Customer protection systems Everything can be tracked and traced online, whilst off- Contrary to gambling in land-based facilities, in an online en- line gaming often relies on procedures which might not be vironment, customers can track every deposit, see which followed and are not easily monitored. At Betsson, we have products they spent their money on and when it was spent. reports from our customer interaction system whereby ev- Customers are able to set their own personal spending lim- ery single customer contact, be it by phone, mail or chat, is its online and we offer monthly, weekly and daily limits. logged. Those that are categorised as irresponsible gaming Customers are able to block their own access to product cases are reported in the form of an automated daily report categories that they may be experiencing problems with, to the manager for responsible gaming. This also provides or don’t want to play. Try stopping a poker player in a ca- Betsson with very useful information on the types of cus- sino from spending his winnings at the roulette table! In tomer queries, the quality of the replies given to customers an online environment this is done in a non-intrusive and and, most importantly, it gives us the opportunity to ad- non-humiliating manner by preventing the player who has dress both the individual cases as well as any other short- requested being blocked access to the product categories comings in our operations and systems in a timely manner. in question. The customer is still able to enjoy other prod- The same goes for money laundering. It is actually much ucts that he or she is not experiencing any problems with. easier to launder money in land-based establishments than It could well be that this option allows customers to make online where many checks are carried out to comply with important decisions modifying their gambling behaviour in licensing requirements and also to limit risk for the opera- such a way that they do not need to give up all forms of tor. Any transaction made online is traceable. In addition, gaming. If the only option is in or out, a customer who is stringent KYC (Know Your Customer) procedures ensure experiencing problems may opt to stay in and try to control that underage gambling doesn’t occur. his or her playing. But sooner or later, after having failed at According to a report issued by the Swedish National that, the player will feel forced to permanently close his or Institute of Public Health (Swelogs), 30 percent of young her account. people claim to have gambled prior to being the legal age, Prior to becoming a customer, we help customers iden- and they primarily gambled on lottery products or sports tify their gambling behaviour by offering self-assessment betting. The same report refers to the number of minors tests together with information on problem gambling and

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ONLINE LAND-BASED CUSTOMER GAMING GAMING

PROTECTION Governing Governing laws and laws and SYSTEMS policies policies

Customer self protection limits, self-block- ing, self-tests, etc. OUT

Company Company customer customer Manager interaction interaction report

PLAYERS PLAYERS UNDERaged money trans- UNDERaged actions DRUNK

independent assistance. You do not need to be a customer One such example is the Danish ROFUS block and register nor logged in. for players who wish to exclude themselves from online In general, the uptake of responsible gaming tools is gambling for a pre- or undetermined period of time. This likely to be higher in a “private” environment than having block becomes valid in real time and across all online gam- to request assistance face to face. The threshold for inform- bling sites licensed in Denmark. ing somebody about your gambling problems is much lower Betsson works in different jurisdictions together with electronically and from the anonymity of your home. Bets- the online gaming industry to further develop and educate son’s customer service department is highly accessible by stakeholders on responsible gaming and player protection. chat, phone or email. The fact that we are available 24/7 In Denmark, Betsson forms part of the Danish Online Gam- and that we give customers a variety of options for contact- bling Association, and in Sweden, Betsson is one of the ing us, ensures that customers who experience gambling initiators to Branschföreningen för Onlinespel, BOS, which problems or who request information, can be assisted im- is an industry association representing the majority of the mediately apart from already having access to a number of online gaming industry in Sweden. These associations are web-based tools which can help them modify their gam- important stakeholders in the dialogue regarding player pro- bling behaviour. tection and how it can be further improved in order to guar- The online gaming industry actively contributes to, and antee long term sustainability. is often the driving force behind new protective initiatives.

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BY ERIKA HARRYSSON

BUILDING THE DREAM TEAM

We have taken on Looking back challenges, overcome obstacles, The Betsson team has come a long way since its entreprenurial start 50 years outgrown offices, reshaped ago. Betsson has gone through different eras and there are many great stories the organisation, acquired and from the past years. I love the story of when Betsson, in 2006, moved part of its business from integrated companies, ventured London to Malta. The team was still very small with everyone doing a bit of every- into new countries and opened thing. Product Managers, Bookmakers and Support Agents were all sitting to- new offices, celebrated our gether in one small room, on moving boxes as the chairs had not yet arrived. At victories and pushed on when this point we launched phone support. There were five agents but only one phone. it has been uphill. It has been In 2009 I remember how we, with awe, passed the 300-person mark, feeling hard work but always with a that wow we are big now! dash of fun. There are also many examples of how the team has huddled together to launch new sites, brands and products, such as when the tech teams worked day and night in December 2011 to get the new sites out for the regulated Danish market. We proudly look back at everything that we have accomplished and how far we have come. But mostly we look forward to new challenges.

Growing up, but not old Although we have grown and evolved substantially, the Betsson culture and spirit has been strong throughout the years. We have maintained the flexibility, openness and feeling of togetherness of the smaller Betsson, but added a lot of experience and matured in how we operate our business. Many of our visitors tell us how the bubbly vibe and energy hits you as soon as you step into a Betsson office. The fact that Betsson has a clear and pronounced culture is, in our fast paced environment and global reality, an important unify- ing force in driving the company in the same and right direction. Although we >

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– 43 – – THE ONLINE GAMING MAGAZINE – THE DREAM TEAM

“Betsson has gone they are proud to work for Betsson! through different eras And, Betssonites like to spread the word that Betsson is a great place to and there are many work. About half of our new recruits great stories from come through recommendations from the past years.” our employees. This is a clear sign that we are doing a lot of things right while at the same time it is great pub- licity in our quest to draft the best. are growing up, Betsson will always have that element of stubborn bold- Growing a winning team ness that drives us to take on a bigger In addition to drafting the best, we challenge, and to pull it off! 31nationalities on also put a lot of effort into developing three continents a winning team. Leadership is a key The Betsson Roster 2013 work at Betsson. success factor in this and we train our There are currently more than 900 managers to be world class in leading people working at the Betsson Group distribution of and coaching their teams in delivering men and women in seven different offices around the great results, driving employee devel-

world. Who knows, we might soon 25% opment and fostering a high perfor- surpass the 1,000-person mark. Our mance culture. operational headquarters are located In order to keep the best people, in Malta and about 480 Betsson-em- we offer a fun and challenging environ- ployed people live and work on this ment with many opportunities to grow beautiful island in the Mediterranean. and develop and launch a successful Our technology company is based in 75% career at Betsson. A great example of

Stockholm but we also have several Men this is our Product Director who start- software development teams in our Women ed out as a country manager in 2008. offices in Kiev, Tallinn and Manila. In At that time, he had no one reporting addition to this we have a couple of Distribution of to him. Since then, he has assumed different types of roles smaller satellite offices around the different roles within the operational world, for example in China. 21% organization and, in only a few years, 35% Today we are a truly international climbed all the way into the top man- company. This is not only illustrated by agement team with over 100 people the fact that we operate in many mar- direct reporting to him.

kets, but also by the fact that our staff 22% is made up of 31 different nationalities. Playing in the 5% FC Barcelona of iGaming 17% Recruiting star players Playing in a dream team is hard work. Technical Development and Drafting the Best is one of the steps Operations We are a bunch of passionate and Supporting functions such as towards building a dream team. We Finance, Legal, Human Resources driven people who like to go “all in” have recruited many talents and we Customer Service when it comes to work. Even though are always on the lookout for more Marketing and Sales the Betssonite is competitive and am- Business and Gaming star players. Product Operations bitious, the atmosphere at Betsson is Within the industry and in Malta humble and we want to achieve and we have gone from being “one of the Being a winning team and an industry win as a team. other” gaming companies to being leader are important elements in our A co-worker once developed the one of the most popular employers. attractiveness as an employer and in expression “fast, faster, Betsson.” Slowly but surely we are also estab- addition to this we also have a high In such a fast-paced and constantly lishing the Betsson Group as an inter- level of employee satisfaction. In our changing industry as iGaming, our em- esting career choice among a broader most recent employee survey, 100 ployees need to be superheroes when international pool of candidates. percent of our employees said that it comes to finding new solutions and

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ways of doing things, and they need to do it fast. One thing that keeps us pushing on and on is that there is always a whole bunch of talented and competent col- leagues by our side that are willing to go that extra mile together. And they will do it with a smile!

Work hard, have fun We work hard but we also believe that having fun along the way will help us be a winning team. Fun is, on the one hand, a positive atmosphere, a solu- tions-oriented approach, and the pas- sion for what we do.

“At Betsson we love to win! That’s why we need to have the best team, a dream team.”

Fun is, on the other hand, about spending time and effort on activities that build the team spirit. This can be internal poker tournaments, tech- nical workshops, theme parties and We have always encouraged our staff to stay healthy. Picture shows Lillvor, events, and basically anything that Ingegerd, Britt and Gerd in Cherry's recreation centre in 1977. we think is fun and that will contrib- ute to the team spirit and culture. Betsson organises many activities Betsson organises activities such The ongoing sports activities as well for the staff but we also have a cul- as football, floorball and swimming as the training challenges are not only ture where our employees drive many where all Betssonites can participate. a way to encourage our staff to be initiatives such as the Betsson Sports In March we are kicking off the fourth healthy, but also serve as a social fo- Club that organises for example ski- annual training challenge where we rum to get to know people that they ing, hiking and surfing trips, or “Fishs- challenge our staff to work out regu- don’t normally work with. As many son” that brings Betssonites together larly for 10 weeks. A better shape, people have moved to Malta for work, over fishing rods. pride and glory and some nice prizes these activities provide an excellent Last year we challenged ourselves are awarded. If we can help our staff opportunity to meet new friends in a to reach a number of tough goals. to work out regularly for almost three relaxed and fun setting. We achieved them and therefore the months that will be a substantial whole company travelled to Ibiza to health push. Although not everyone Continued Success celebrate the success. Prior to this that signs up completes the chal- Drafting, building and engaging a we also collected some unforgettable lenge, every hour of training is benefi- dream team has brought us a long way. Betsson memories in, for example, cial for the individual’s well-being and The fact that we are a world-class em- Dubrovnik and Las Vegas. for the company. Last year, almost ployer will continue to be an essential 50 percent of all Betssonites signed success factor for the Betsson Group. Keeping the team in shape up for the challenge and half of those In order to keep up with the fast pace, managed to work out one, two or we encourage our staff to stay healthy. three days a week.

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BETS

the wealth builder

BY FREDRIK RÜDÉN

The story of Betsson started long before the company was first quoted on March 26, 1996, on THE STOCKHOLM STOCK EXCHANGE list, Bwhich later changed its name to Nordic Growth Market NGM. In June 22, 2000, the share was moved to THE STOCKHOLM STOCK EXCHANGE'S O-list, later renamed Nasdaq OMX Nordic Mid Cap List. Following the completion of an acquisition in 2006, the old casino-sounding company name Cherry was scrapped in favour of Betsson, giving the listed short name Bets B. – THE ONLINE GAMING MAGAZINE – BETS B — THE WEALTH BUILDER

ETS B is moving ahead with experi- Recent successes or failures will give a hint of the potential ences from a constantly changing legal in handling future challenges. Betsson has a long-earned landscape, creating value along the road experience and a proven track record as one of the most as it heads into the future. The manage- successful companies in this field. A strong entrepreneur- ment’s view is that Betsson has only ially driven company culture together with high efficiency started scratching the surface of the on- on a strategic level explains some of Betsson’s success. line gaming sector. The world is facing one of the worst financial stagnations in many years. Europe faces the threat of a breakdown of the BView of the sector euro cooperation, followed by a heavy financial crisis in a The famous Swedish entrepreneur and businessman Jan number of its member states and the heavyweight champi- Stenbeck had a clear notion of how to determine the po- on, the United States, losing its former position in the world. tential of an investment. I think his approach is useful also In these difficult times, Betsson shines bright and clear with when looking at the online gaming sector. He started off a stable above industry level growth and a decent profit level. with the perspective of what might affect the business By the end of September 2012, Betsson’s market capi- idea at its early stage, before it would be launched and talisation amounted to EUR 868 million, compared to EUR profitable. The person wanting to roll out an idea would 102 million in 2006, when the divestment period started be likely to need external funds. So banks and large invest- by divesting Cherry. The market capitalisation, including ment companies would decide if the idea would be com- divested companies, amounted to EUR 1,256 million by mercially viable. However, at an even earlier stage, political the end of September 2012. The strong long-term perfor- ideas might restrict the possibility to mance has allowed the share price launch specific business ideas. There- to grow at a compounded annual fore, politicians can set the framework “All in all, any shareholder growth rate at 48 percent over the from which ideas will develop. But, who had a share in Betsson past six years. The turnover in 2012 Stenbeck argued, technological devel- before the divestment amounted to SEK 2.3 billion which opment would restrain political influ- period started, would have corresponds to a compounded an- ence. When new possibilities arise, nual growth rate at 33 percent over when it is unclear who decides and in gained a return on invest- the past six years if not adjusted what direction we are moving, none of ment of 1,500 percent.” with divested entities. Betsson has the old rules will remain. Therefore, it is clearly outperformed the growing crucial for investors to understand the politics, technology, market where the global interactive gambling gross win, capital and human behaviour of any company existing in according to H2 Gambling Capital, grew from EUR 16.2 bil- these unstable surroundings. lion in 2006 to an estimated EUR 27 billion in 2012. Mean- Anyone viewing the online gaming sector through the while, delivering growth, the company has also delivered eyes of Jan Stenbeck, recognises the ingredients. They are a significantly stronger profitability than the portfolios of all there in a complex mix of demand, ideas, capital, politi- its peers. Profitability has kept in step with top line growth. cal visions and technical progress. To be able to evaluate a business case, investors will need to divide the complexity Industry drivers into smaller and more tangible parts. If a solid performance over a long period shows manage- ment’s ability to manoeuvre in a complicated and dynamic Outperforming the market historical environment, it also indicates management’s po- One important brick in disassembling the complexity is to tential in facing new challenges. However, the future is not view the long-term performance of the company. It will only about hard-earned experience but also about industry show how dynamic and adaptive the company has been. fundamentals.

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“The strong long-term performance has allowed the share price to grow at a compounded annual growth rate at 48 percent over the past six years.”

Demand Entertainment, which later was divest- phone usage is increasing and the Human gambling behaviour is well ed, started to develop casino games. world sees strong growth in Internet documented back to ancient times. In 2012, casino games account close penetration and the rollout of increased The thrill of a potential win was im- to 70 percent of our revenues. In the broadband capacity. These are driving portant long before technology made past ten years we have put major forces for increased online activities. gambling easily available. People from focus on creating a world-leading different cultures have always gam- Sportsbook, which today accounts Internet living and ecommerce bled on almost everything; races, for approximately 30 percent of our Internet and broadband penetration horses, cards, dices, political events revenues. The interest and demand in Betsson’s core markets is high and and much more. The need for analys- for live betting has, in the past three constitute the fundamentals for more ing and predicting more or less unpre- years, moved into this area. Today, live attractive Internet activities. There are dictable events, seem to be ingrained betting accounts for approximately changes in behaviour as people spend in our genes. Betsson mainly offers 65 percent of Betsson’s Sportsbook, more and more time in cyberspace. poker, casino and sports betting, prod- explaining a large part of the recent An increasing number of individuals ucts whose attractiveness is unques- strong organic growth at Betsson. use Internet for logging daily events. tionable. The demand is so strong that The strategy, to drive activity by They use Twitter, Facebook, Insta- many countries have found it neces- launching quality products in high de- gram and more. Never before have sary to enforce different regulations mand, has proven to work well. The so many words been typed. This ex- or restrictions with the purpose of pro- strong demand for smartphone ap- plosion of online documentation illus- tecting their citizens from gambling plications has contributed to a re- trates a new trend. People are not only in an unhealthy way. An operator like cent shift in technological focus. In using the Internet for fun or work but Betsson, who understands and can han- the past year, Betsson has launched also for carrying out daily activities, dle this demand in a responsible way, smartphone solutions for almost all of such as connecting to banks, paying will find some golden opportunities. its brands. Some of these are world bills, buying products and managing Today, the shift in demand from off- leading, such as features with live home automation. line solutions to online also makes up streaming where you can place a bet The conversion towards online liv- an important driving force for the Inter- while watching a soccer game on ing and increased trust in ecommerce net-based part of the gaming industry. your phone. Betsson was awarded are important drivers for the sector. Best Online Sportsbook Operator of Technology races on the Year in 2012, and based on new Regulation Technological developments are fo- technological land winnings, manage- Technology makes highly attractive cused on improving availability, usabil- ment expects not only higher activity solutions available to more people ity and broadening of the offer rather but also further awards. By the end of every day. But based on the strong than creating completely new games. November 2012, Betsson was award- attraction, there are some individuals Some of Betsson’s peers seem to fo- ed Casino Operator of the Year. Reve- who cannot handle their gaming. A cus on marketing while investing less nues from mobile solutions accounted player who finds him- or herself losing in end-user experience. The techno- for seven percent of the total reve- control will generate two issues for logical race is important since better nues in the fourth quarter of 2012, still the gaming operator and many more and more attractive solutions drive a relatively small part of the business, for him- or herself. First, the gaming gaming activity. but it is growing in importance every industry will look bad in the eyes of For the Betsson Group, the trans- day. Management expects strong fu- the public leading to unfavourable formation to Internet began in the ture growth in mobile betting. regulations, which will also most likely mid-nineties when the company Net In a more global perspective, smart- generate commercial barriers against

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potential co-operations with financial within the EU is that the state is better incentives to develop the products institutions, suppliers and partners. than anyone else in protecting its citi- further with broader and deeper offer- The other problem is that irrespon- zens from unhealthy gaming behaviour. ings and higher availability. People will sible gambling is simply not profitable It is clear this argument is weak. spend more and more time in cyber- in a longer perspective. When people Many countries today struggle to space since it is possible to carry out lose more than they can handle, it is create modern gaming legislation, more attractive activities there due to also negative for operators and this changing the framework for gaming higher Internet and broadband pene- is a problem for the gaming industry companies. Until settled, the busi- tration. Based on strong industry fun- which needs to be addressed. An nesses of all companies in this sector damentals, management finds there operator like Betsson, who has been are attached to a risk which negatively are reasons to assume good possibili- awarded for being socially responsible, affects their valuations. New regula- ties for future market growth. can turn that serious approach into a tions will likely increase cost levels competitive and legal advantage. giving initially lower margins. Mean- BETS B – a shareholder-friendly stock The Internet-based tools that sup- while, a higher activity from opera- Betsson has performed strongly over port responsible gaming are much tors in each market will most likely in- many years with a compounded annual more efficient than those found in crease end-user activity. It is too early growth rate at 48 percent over the traditional land-based gaming run by to have a rock solid picture on where past six years. This can be explained state-owned monopolies. These mo- this will take us. by strong performance built on com- nopolies account for approximately 75 mercial skill and technological progress. percent of the gaming sector in Scan- Market outlook Along the road, some parts of the dinavia, Betsson’s core market. The All in all, the strong demand for on- operation will not fit into the core fundamental argument for monopolies line gaming gives gaming companies business and they will represent hid- den values with a potential for strong development with their own focus. Throughout the years, Betsson has Related investment development 2006–2012 carried out three divestments. In 2006, Cherry was divested to the sharehold- 2,000 ers, in 2007 Net Entertainment was Betsson1) divested and in 2012, Angler Gaming Betsson was divested. All of the divested enti- Portfolio2) ties became quoted on different mar- 1,500 ketplaces. The total market value of all of these entities amounted to approxi- mately EUR 400 million at the end of 1,000 September 2012. Betsson has adopted a generous transparent dividend policy. This policy gives each investor a desirable predict- 500 ability, which has been highly appreci- ated, especially in the light of how our peers have delivered unpredictable

0 and less attractive yields. According to the policy, Betsson shall distribute -250 75 percent of its annual earnings to Q3 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 the shareholders. This is carried out in

1) Includes NPV of an investment done before the divesment period started an automatic redemption process de- including market value and NPV of Betsson and its divested companies. signed to create a more tax attractive 2) A portfolio of 23 online gaming related companies. situation for the receiver of the funds. Betsson occasionally carries out extra

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Amount in SEK million “There has been no com- 2012 2011 2010 2009 2008 parable company in the unless otherwise stated Internet gaming sector that has been able to shine Total Revenues 2,203.7 1,736.6 1,603.2 1,299.7 1,037.8 as brightly as Betsson.” Gross earnings 1,853.7 1,428.9 1,282.1 1,045.0 828.1 (gaming surplus) dividends above the policy. The net Operational earnings 577.1 559.7 380.6 316.9 276.6 present value on accumulated distri- Earnings before tax 573.6 555,4 382,5 318,9 280,7 butions in the past six years, including Earnings after tax 547.8 527.8 365.7 303.3 267.3 distributions given from divested com- Cash and liquid assets 467.2 509.7 497.1 529.1 373.2 panies, is approximately SEK 2 billion. The market cap before the divest- Equity 1,577.8 1,334.3 825.6 820.4 720.2 ment period started in 2006 amount- ed to approximately EUR 100 million. Gaming surplus per geographical area, B2C The value by the end of September 2012 of all dividends carried out, both The Nordic countries 1,081.3 659,6 416.6 466.5 450.2 within Betsson and in the divested EU except the Nordic countries 224.3 183.1 139.2 124.0 97.2 entities and the market cap of all com- Other Europe 6.3 3.9 0.2 -0.3 3.2 panies deriving from the same origin, Other world 15.4 14.4 5.0 2.4 2.3 amounted to EUR 1,500 million. Total 1,327.4 860.9 558.0 592.6 552.9 All in all, any shareholder who had a share in Betsson before the divest- Gaming surplus per product ment period started, would have Casino 1,248.8 955.9 745.4 670.4 481.3 gained a return on investment of Poker 116.7 83.9 106.7 131.9 158.5 1,500 percent. This is of course good, Sportsbook 432.0 326.9 367.7 206.6 159.0 but it is even better considering it was Other products 56.1 62.2 62.3 36.1 29.3 generated during a period of global Total gaming operations 1,853.7 1,428.9 1,282.1 1,045.0 828.1 financial crises. There has been no comparable company in the Internet Other operations, adjustments 0,0 0.0 0.0 0.0 0.0 gaming sector that has been able to Group Total 1,853.7 1,428.9 1,282.1 1,045.0 828.1 shine as brightly in the depressingly dark stock sky as Betsson. Other key figures Customer deposits 6,889.0 5,237.9 3,894.1 3,258.0 2,279.7 Number of registered 5,777.9 3,662.4 3,158.2 2,117.8 1,499.9 customers (thousands) Number of active cus- 520.4 403.6 300.5 288.7 167.4 tomers (thousands) Average number of employees 591 340 268 225 154 Number of employees 748 412 282 258 185 at year end Number of shareholders 17,225 12,507 11,484 9,905 5,790 Stock exchange 8,474.8 6,097.5 4,627.8 4,341.0 2,709.4 value at year end Earnings per share (SEK) 13.04 13.12 9.32 7.73 6.81 remaining operations Equity per share (SEK) 37.29 32.15 20.96 20.91 18.34 Dividend or equivalent 9.46 10.08 7.00 9.00 5.10 per share (SEK)

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Photo by Tobias Johansson – 52 – – THE ONLINE GAMING MAGAZINE – BETSSON AND MALTA

BETSSON & MALTA

BY SAMMY Landström

it’s the 24th of November and I’m enjoying the morning mer at least eight months per year gives a feeling of having sun on my terrace, dressed in shorts. Not exactly where more time, a hard currency in today’s society. I thought I would be two years ago when I was working Moving to Malta from another EU country is a really in the Betsson Stockholm office. I have a clear memory smooth process. People from Sweden are often shocked of that split-second moment when my manager asked if to hear how easy it is to find a rental apartment, with a anyone from the Stockholm office would be interested in choice of 10–15 different apartments to choose between in moving to Malta to help start up the Business Intelligence a given price range. The openness of the people here also team there. I more or less said –“I am”– right away without makes it really easy to get started with your new social life. any hesitation, just trusting that first gut feeling. It is one There is always someone doing something and the biggest of the best decisions I’ve made so far. What started out as challenge is most often what activity to choose. a one-year plan has evolved into the question: “Will I ever go back?” Betsson the employer As a Betssonite, it is a real thrill to experience the team Life in Malta as a foreigner spirit we have succeeded in creating. People want to work Living on this little gem in the middle of the Mediterranean here. The company is known for its strong values, caring for is a great experience. Thanks partly to the iGaming industry, its employees and it is a company where high performers it has become something of a melting pot of different na- thrive and have every possibility to grow, take on respon- tionalities and people. There are four different nationalities sibility and execute. We work hard and people who might in my team alone, and Betsson Malta as a whole consists of be seen as over-performers at other companies, might be more than 30 nationalities! Most of us who have taken the seen as average at Betsson. Living according to the “work step to move here are a “special breed” of open people that hard – play hard” value, Betsson is also known as a place want to go outside their comfort zone and broaden their where we have a lot of fun together. It is sometimes sur- views by going abroad. It is a way of life that is reflected in prising how much people on the Island talk about all of the how people tackle their daily life and work situations, see- fun things we do at Betsson. Just the other day, when I ing opportunities and challenges where others might see was looking for a new apartment with a real estate agent, problems and obstacles. he told me: “I wish I worked at Betsson. A company that With its three islands – Malta, Comino and Gozo – Malta sends the whole staff to Ibiza? Crazy!” But it’s not only offers a lot of exploring and things to do in one's spare time. those big events that build the Betsson team spirit. There There’s everything from old ruins and temples like the are a lot of initiatives from the employees for off-work 4,000-year-old Hagar Qim, beaches, great diving and snor- activities as well, be it an office-wide bocce tournament, kelling sites like the Blue Lagoon, to a great nightlife with an renting sailboats to go to the neighbouring islands or the overwhelming amount of restaurants, wine bars and clubs. Betsson Sports Club going to St. Anton for a weekend. All Suffice to say, one is never bored living here. Just the fact of this really makes you feel a part of something special – that Malta offers what Nordic people would consider sum- the Betsson dream team. Photo by Tobias Johansson – 53 – – THE ONLINE GAMING MAGAZINE – BOARD OF DIRECTORS/senior management Board of Directors, 2012

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< BOARD OF DIRECTORS

Pontus Lindwall Kicki Wallje-Lund Lars Linder-Aronson John Wattin Chairman of the Board. Born in 1953. Board Born in 1953. Board Born in 1947. Board Born in 1965. Board member since 2006. member since 2008. member since 1989. member since 2011. CEO of Wellnet AB. Lars has many years CEO of Investering i Employed by the group Kicki has business and of finance and capital Kunskap AB. John has since 1991, Pontus has held operational development markets experience, many years of international many positions within experience from various primarily within investment experienceof board work, Betsson AB, such as international companies banking in London, with an emphasis on President and CEO from in which she has primarily New York and Stockholm. company development 1998 to 2011. Pontus is a worked within the banking Previously, he was Head of and transformation in listed founder of the Internetbased and finance business Enskilda Securities and has and unlisted companies. business currently existing areas. Kicki has held worked for the investment He is one of the founders in Betsson AB and Net senior positions at NCR, bank Dillon, Read & Co. of Enator, Sigma and a Entertainment AB. He Digital Equipment, AT&T, Lars graduated in business number of other companies. holds a Master of Science Philips, ICL and Unisys. studies from the Stockholm John has been working from KTH Royal Institute of School of Economics. with his own investments Technology, Stockholm. Patrick Svensk for the past 20 years. Born in 1966. Board Member Carl Lewenhaupt Per Hamberg since 2005. Executive Vice Born in 1958. Board Born in 1943. Board President of Content at member since 2008. member since 1974. MTG. Patrick has experience CEO of the advertising Per is one of the co-founders from various management agency Calleolle AB.Carl is of Betsson AB (formerly positions in listed compa- Creative Director and has Cherryföretagen AB). nies. He was former CEO many years of experience He has worked as CEO and Head of Group for in international market- and has also been Board Zodiak Television. Previ- ing. He has founded, Chairman of the group ously he has worked as owned and operated and its subsidiaries. CEO of Kanal 5 and TV3 several advertising agen- Per previously studied Sweden. Patrick gradu- cies.Carl studied at IHR Business Administration ated in business studies Stockholm, NYU in New and Political Science. from the Stockholm York and at the School of School of Economics. Visual Arts in New York. Carl is a member of the Platinum Academy.

SENIOR MANAGEMENT BETSSON AB >

Magnus Silfverberg Fredrik Rüdén CEO & President, CFO, Betsson AB Betsson Group Born in 1970. Employed Born in 1973. Employed by the Group since 2008. by the Group since 2009.

SENIOR MANAGEMENT BETSSON GROUP COMPANIES >

ULRIK BENGTSSON Martin Thorvaldsson CEO, Betsson Malta CEO, Bsg Ltd & Group Born in 1972. Employed by General Counsel the Group since 2012. Born in 1970. Employed by the Group since 2010.

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Senior Management, 2012

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Football action: Bolton Wanderers 0–1 Manchester United. Five players, including United goalkeper Harry Gregg and Bill Foulkes (number 5), jump for the ball. Burnden Park, Bolton, 5th October 1963.

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– 59 – I GA N ck : KA UND T ry O: JEA N E TT HÄGGL T TI O N & IR AB PHO UNI KA T HLM KOMM Pr o duCti n: S

Betsson AB (publ) | ‌ Regeringsgatan 28 |‌ SE-111 53 Stockholm |‌ Ph: +46 (0) 8 506 403 00 |‌ [email protected] |‌ www.betssonab.com BML Group Limited (Betsson Malta) |‌ G.B. Buildings | ‌ Watar Street | ‌Ta’Xbiex, XBX 1301, Malta |‌ Ph: +356 22 603 300