Strategic Report Providing the engine for partner success

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Kambi at a glance The global betting and gaming industry’s trusted sportsbook partner

Kambi is the leading The trusted partner to more than 30 With offices in seven global locations, independent provider of operators on six continents, Kambi including London, , Philadelphia has a track record of proven excellence and , Kambi employs a premium sports betting in online and on-property sportsbook growing team of more than 850 highly technology and services to provision, providing operators with skilled employees with a passion for the regulated global betting the high-performance technology sports and technology. The depth of and gaming industry. and regulatory certainty required to quality and expertise that runs through out-compete the market. Offering every facet of Kambi’s global team meaningful scope for differentiation provides the company with the combined with a scalable tech-stack strength of resources needed to help and unmatched sports coverage, the our partners achieve the best results Kambi sportsbook’s capability to and thrive in what is an increasingly optimise operator margin alongside competitive marketplace. boosting acquisition and retention A cornerstone of Kambi’s success drives partner growth. has been its long history of risk Kambi’s services encompass a broad management and ongoing commitment offering, from scalable technology to the highest levels of corporate and odds-compiling through to probity and sporting integrity. As a customer intelligence and risk member of the International Betting management, built on and delivered Integrity Association and ISO 27001 through a sophisticated, in-house and eCOGRA certified, Kambi operates developed software platform. Kambi in an ethical manner, ensuring it harnesses the extensive real-time only conducts business in markets data generated across our network to where gambling isn’t prohibited and continually enhance our algorithmic employing sophisticated risk processes trading models, leveraging this analysis to detect signs of sports manipulation to deliver actionable insights from at the earliest of stages. Our 24/7 which all our partners can benefit. sportsbook control team ensures all matters concerning sports integrity Expertise in matters of compliance has are handled proactively and swiftly, been a defining factor in Kambi’s rise protecting our partners, their to become the industry’s preeminent customers and the sports we love. sportsbook option for visionary operators. With more jurisdictions Kambi Group plc is listed on First regulating, and the complexity and North Growth Market at Nasdaq variation in those regulations rising, Stockholm under the symbol ‘KAMBI’. operators need technology with the flexibility to adapt, under the direction of a team with the strength and dexterity to most effectively put that versatility into practice. Kambi’s outsourced sportsbook model, which offers unparalleled adaptability while reducing costs – limiting an operator’s exposure to external uncertainties such as a global pandemic – is only becoming more attractive as regulated markets expand.

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Kambi provides partners with the high- performance technology and regulatory certainty to outperform the market

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Introduction Emerging stronger

The events of 2020 served Kambi is the trusted partner to some Kambi rose to this challenge, showing as a reminder we reach of the world’s leading operators. As strong management and dexterity always, and particularly during the to protect employees, partners and the best outcomes when past 12 months, Kambi works closely investors, leading to a record second working together. Trusted with partners to find innovative half of the year. This recovery also partnerships and close solutions to changing landscapes. illustrates the success of our partners, collaborations lead to a Kambi’s global footprint provides a with Kambi only able to succeed when continued, high-level service, even our partners succeed. Furthermore, more diverse blend of during a period of significant disruption, it shows the strength of the Kambi insight, skills and knowledge, while its revenue-share model ensures business, proving its ability to combining to solve the partners’ overheads are reduced withstand such seismic shocks and most difficult of challenges. during a time of limited sports events. record increasingly healthy operating margins. Reflecting on 2020, Kambi and its partners have emerged stronger, The commercial success of Kambi and beginning the new year with growing its partners in 2020, combined with optimism and building momentum. continuous product improvements, Although global uncertainty persists, expansion into new markets, new Kambi‘s network of visionary partners partner signings and multiple industry can operate with confidence, in the awards, has strengthened the appeal knowledge that the safety net of of the Kambi model. Kambi’s flexible Kambi’s service and commercial model technology not only ensures a scalable provides much-needed flexibility and compliant service, but provides while minimising risk. a blank canvas on which our partners can build bespoke and proprietary Despite the challenges faced, Kambi products tailored to their target made significant strides forward in audiences. 2020. It was a year in which Kambi demonstrated its scalable model, with When taken as whole, 2020 was a growth in revenue far outstripping year in which Kambi strengthened its costs, to deliver its strongest financial position in the market and, moreover, performance yet, a remarkable demonstrated the commercial success achievement in the circumstances. its business model is able to generate, Impacts of the pandemic included a illustrating its scalability, and emerging near complete suspension of sports, from the year in a stronger position with the latter part of Q1 and the than it entered. majority of Q2 only offering a minimal sporting calendar.

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Reflecting on 2020, Kambi and its partners have emerged stronger, beginning the new year with growing optimism and building momentum

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Chairman and CEO statements

Chairman’s statement Lars Stugemo

Summarising a year as remarkable as 2020 is no easy task. It really was a year like no other, one consumed and defined by the impact of a global pandemic which turned the whole world upside down and left few aspects of our lives untouched. My deepest sympathies are with those unfortunate enough to have been negatively affected – I have little doubt the ramifications of the pandemic will be felt for many months and years to come.

Like many leisure industries, sports betting was not immune to during those difficult months of 2020, largely due to not having the effects of coronavirus. There were unprecedented levels of to contend with the material fixed costs an in-house sportsbook disruption to the sporting calendar with countless high-profile operation demands. fixtures, leagues, and tournaments either cancelled or postponed, from Euro 2020, to the global tennis tour, to key US sports. There’s no escaping the fact that the disruption of last spring However, Kambi was able to adapt quickly and the way it executed brought some difficulties, however, Kambi’s astute leadership and its strategy during H1 was truly remarkable. Thankfully, by the sound financial management meant we were in a strong position to late summer months, most major sports and leagues had returned, navigate those choppy waters, a position which enabled us to take with a silver lining of some postponed events rescheduled for 2021, a long-term view of the situation, rather than make any knee-jerk providing us with an expected bumper year of sport. reactions. That said, had someone suggested to me a year ago that 2020 would end up being a record financial year for Kambi, I would What’s clear is that the pandemic has changed the world rapidly certainly have paused for thought. I must, therefore, commend all and permanently in terms of how we travel, socialise, meet, and Kambi partners and employees who adapted and excelled under work. And with temporary closures forcing a change in such challenging circumstances. consumer behavioural habits, the drive for digitalisation has quickly gained pace compared with 12 months ago as we’ve In short, Kambi’s position as the industry’s trusted sportsbook seen a dramatic consumer shift towards online channels. partner has only been strengthened by the events of 2020. Despite temporary shutdowns to top-tier sports, Kambi was able to emerge Underlining this expedited transition from offline to online, in fine shape with a strengthened balance sheet, demonstrating a McKinsey Global Survey of executives last year found that our robustness and capability to adapt to any situation. I believe companies had fast-tracked the digitisation of their customer/ we’re extremely well positioned to push forward and capitalise supply chain interactions and internal operations by three to four on the ongoing changes in market conditions and continue our years, while the share of digital or digitally enabled products in success over the months and years ahead. their portfolios had accelerated by seven years. So, there should be little doubt that COVID-19, like many crises before it, has been and will be a major catalyst for change.

As a predominantly online business, Kambi and its partners are in a Lars Stugemo great position to benefit from this change. Kambi was born digital and its legacy has been in the online sports betting business for more Chairman than 20 years, over which time the product has been continuously developed and improved with the end user in mind. While an even distribution of new online players would be a positive, those with a market-leading sportsbook should be set for greater gains.

One other potential gear shift as a result of the pandemic could be in how companies view their share of fixed costs. Following the global financial crisis of 2008-09, companies that deployed sustainable cost reduction programs and introduced more variable costs significantly outperformed the competition. While it’s still too early to say with any certainty how things will pan out in the coming years, it’s clear Kambi’s partners benefited even more than normal

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A view from the CEO Kristian Nylén

The COVID-19 pandemic brought unprecedented challenges for people all over the world, representing the most testing environment many industries have faced in a generation. The impact on sports betting was pronounced, but it was another year in which Kambi showed its calibre, demonstrating an ability to consistently deliver and drive growth for partners.

The resilience displayed by our staff and business model in answering milestone that expanded our relationship to cover all the sports the questions posed to the business by the pandemic has been betting brands within the wider LeoVegas Group. In addition, we particularly encouraging. The series of suspensions to the sporting also signed new partnership agreements with the Belgian National calendar saw large segments of the Kambi offering significantly Lottery and JVH gaming & entertainment in the Netherlands. With curtailed. However, Kambi’s extensive heritage as a global sports a close eye on promising developments in Latin America and Canada, betting supplier means that we have long had a broad offering across 2021 is another year in which Kambi has the potential to significantly all sports in all corners of the globe, and we were able to effectively grow our global reach. re-deploy our trading expertise to maintain a consistently deep and high-quality offer across traditionally more niche sports. Further to this, more operators than ever are harnessing the differentiation capabilities offered by the Kambi sportsbook. Despite the disruptions of the year, 2020 saw Kambi record its most The 2020 launch of Penn National Gaming’s proprietary Barstool impressive financial performance to date, posting revenue growth Sportsbook app provided a clear indication of the scope for of 28% and an increase in operator turnover of 38%. Our revenue differentiation afforded by our powerful suite of open APIs. Our growth in the second half of the year highlights the underlying price differentiation tool gives our partners the levers they need to health of the business, showing our ability to respond successfully control their competitiveness in the market and can even be used by not only to the lockdown situation, but also ensure resources were operators to offer adjusted odds in different jurisdictions, granting in place as major sports returned. We were also able to demonstrate our multi-regional partners even greater control over their strategy. the scalability of our business model, with the large growth in revenue far exceeding the modest increase in costs. I can say with Our commitment to commercial expansion through new partnerships confidence that the business is in a great place to deliver further remains as strong as ever, signing with four new partners in 2020, growth for our partners. with further additions already made in 2021. The coming 12 months offer a rich sporting calendar, and although obvious caveats apply, More than a decade after we laid out our ambition to build a the overall outlook is a positive one. sportsbook capable of leading the market through expertise not just in technology but in compliance, Kambi has held true to that vision. As I look back on a year unlike any in living memory, and the world Our consistent track record of excellence in regulatory matters transitions to a “new normal”, I am proud to be able to say that the means that operators and regulators across the globe know that business is in fantastic shape, having passed its toughest of tests. Kambi is a partner they can trust. Kambi is the established sportsbook of choice for operators with the ambition to achieve market leadership. Scalability coupled Kambi’s continued expansion as more jurisdictions put sports betting with technological and regulatory expertise have been central to frameworks into place illustrates this capability. The growth of the US our business model since the company was founded, and our focus market is a core driver for the business and remains a significant area on these areas has been vindicated by the strides we have made in of focus for commercial expansion. State-by-state regulatory efforts 2020 and the position of real strength we occupy. I am excited by continue to gather pace, with increasing emphasis being placed on the prospect of building on this progress throughout 2021 and in mobile and online in addition to on-property wagering. Our record of turn delivering shareholder value. delivery in the US speaks for itself. We are now live in 14 states, having achieved market firsts with our partners in 10. We have a diverse group of partners with ambitious plans to capitalise on the ongoing spread of regulation, and we look forward to helping them to make the most of the opportunities this affords. Kristian Nylén

We also made large strides in throughout 2020. Extending CEO our contract with long-term partner LeoVegas was a significant

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Overview and highlights 2020 in numbers

Kambi revenue: up 28% to €117.7m 14 3 million+

€46.9m 50 online and number of active Active in 14 Quarterly revenue performance on-property online player US states with 5 partner launches accounts added in 2020 €27.9m €28.1m €14.8m Annual operating margin Active players: increased 40% (Dec 2019 versus Dec 2020) Q1 Q2 Q3 Q4 27.4% 40%

Q4 2020 Bets placed: Quarterly Q1 Q3 16.0% increased 27% operating 47.3% 27% (year-on-year) margin 24.5% 23.3% Q2 2019 -22.7% Monthly transactions: 530,000,000

partners across new partner signings 30+ six continents 4 in 2020 Industry awards: Winner Winner Kambi Kambi Sports betting supplier Sportsbook platform supplier

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Strategic review Redefining sportsbook creation

In 2009, Kambi co-founders In short, the sports betting industry partner can impact the probability Kristian Nylén and Anders was beginning to mature and, as and subsequently benefit partners witnessed in many other industries, operating in different parts of the Ström could see the sports there could be no guarantees the world. This means Kambi’s partners betting sector was changing. business model that had generated are stronger together, gaining from Having enjoyed success so much success during these times the volume of network data that any in Europe on the B2C side would also be the most effective in single operator struggles to match. the years to come. In anticipation of Furthermore, not only does the partner of the industry, it was these more testing business conditions, network benefit through the addition becoming increasingly including the establishment of a of new partners, but Kambi’s scalable complex patchwork of regulation from apparent that the barriers business model means that new jurisdiction to jurisdiction, Nylén and to entry were rising. Not additions to the network come at Ström created Kambi, with the aim minimal additional cost. With the large only was there considerable of redefining sportsbook creation by majority of Kambi’s costs fixed, it change taking place in the providing operators the means to offer creates the scalability which enables a compliant, scalable and high-quality consumption and delivery a greater flow of revenues through to sportsbook product at a fraction of of sports betting, primarily the bottom line along with increased the cost. through the expansion of capacity to invest in product in-play and mobile betting, In the decade since, the Kambi model development. This scalability was has enjoyed great success, with Kambi proven in 2020, as Kambi delivered but regulation was beginning partnering with visionary operators increased operating leverage, to be introduced on a across the world to create a global particularly in the latter part of the country-by-country level, network that gets stronger with every year following the return of sports. new partner added. The pooling of replacing the dot.com On top of its technology and network resources and data across the network intelligence, Kambi has carefully model which had to this are the unique ingredients with which created a platform that acts as a blank point simplified compliance Kambi can continually develop and canvas, providing partners with the requirements. iterate its sportsbook, perfecting its ability to create experiences unique product and service to deliver the to them and true to their brand. Kambi leading sportsbook on the market. partners are increasingly building Therefore, the more Kambi grows, the proprietary technology on the open stronger it gets. Kambi is focused on Kambi platform, complementing continuously delivering inch-by-inch Kambi’s high-performance sportsbook product gains, resulting in the marginal engine with bespoke functions and improvements that in combination features that utilise the Kambi APIs are the difference between a good to create desired differentiation. sportsbook and an excellent When coupled with Kambi’s price sportsbook. differentiation tool, enabling operators It is this aggregated network data that to adjust odds and margin within sets Kambi apart from both B2B and certain parameters, no two Kambi B2C competition. The insight gathered partners need look or feel the same. from the activity of millions of players Indeed, many Kambi partners compete around the world is fed back into the successfully against one another in the evolvement of Kambi’s product and same markets, leveraging the flexibility services. For example, data points of the sportsbook to appeal to different taken from a bet placed with one player segments.

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Compliance as a competitive In addition, current partners can Kambi has become a key member advantage quickly scale up their business by of the International Betting Integrity leveraging Kambi’s technology to Association, raising alerts and Kambi’s network also provides expand internationally. A recent trend escalating any potential issues at the significant advantages in the area has seen B2C operators, hamstrung by earliest possible opportunity. Kambi’s of regulation and compliance, a core inflexible technology, either decline prominence and effectiveness in this focus for Kambi, and a vital piece of the international expansion opportunities area not only form a key pillar of its puzzle for partners. Each additional due to an inability to comply or sustainability strategy (see pages piece of regulation that’s built into outsource the technology they require 38-45) but protect sports, operators Kambi’s technology and sportsbook to expand. Kambi’s partners are in the and end users from exposure to, and offering benefits the rest of the advantageous position of being able to effects of, manipulation. network. As an example, a new partner view Kambi’s vast global footprint and signing with Kambi can, from day one, expand as they wish, when they desire. take advantage of Kambi’s compliant and licensed status in regulated Kambi’s extensive global network is jurisdictions across the globe, creating also a powerful contributor to its additional revenue-generating efforts to lead the fight against match opportunities and enhancing speed to fixing. With the ability to detect market. And as regulations continue to suspicious betting patterns ahead of evolve, the Kambi service adjusts to the event in question taking place, provide a compliant yet competitive offering at all times.

Kambi’s partners are in the advantageous position of being able to view Kambi’s vast global footprint and expand as they wish, when they desire

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Global sports betting market Sports betting the dominant vertical

The global appeal of sports The limitations placed on elite-level pandemic, and not an indication of the betting is indisputable. sport over the last 12 months naturally potential of the sector. Illustrating this, had an impact on market growth, but H2GC projects the sector will rebound With hundreds of millions the swift revival in engagement as major to €67.7bn in 2021 and grow to be all over the world placing leagues and tournaments returned worth an annual €89.7bn by 2025, wagers, it is a hugely popular pointed to the underlying health of representing a compound annual growth pastime through which an industry that is thriving with the rate (CAGR) of 10.2% from 2020. ongoing spread of regulation. The rise The same firm estimates that sports bettors can engage with in technological interconnectivity, betting alone (separated from horse their favourite sports. coupled with the expansion of regulated racing) will grow from €30.3bn to markets, is providing sports betting €58.6bn between 2020 and 2025 – with the foundations upon which to a CAGR of 14.1%. This is the highest capture the imaginations of an ever- CAGR of any betting and gaming growing player base. vertical, underlining the prudence of Data and intelligence firm H2 Gambling Kambi’s singular focus on its status Capital (H2GC) valued the global as the world’s trusted sports betting sports betting market at €55.2bn in partner. The graph below, denoting 2020. Although this represents a fall global online gross gambling revenue on the figure for 2019, this decrease by product vertical, further highlights should be viewed as an impact of the that sports betting is where the aforementioned curtailment of global greatest opportunity exists, and where sport brought about by the COVID-19 a leading B2B provider of Kambi’s

Global online GGR by product vertical

60

50

40

30 €Bn

20

10

0 2018 2019 2020 2021 2022 2023 2024 2025

Betting State Lotteries Bingo Casino Poker Skill/Other Gaming

Source: H2 Gambling Capital

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extensive capabilities can most the launch of Penn National Gaming’s the world, retail will remain a significant efficiently drive bottom line Barstool Sportsbook online in channel for years to come, albeit with enhancements for our partners. Pennsylvania in September 2020. online growing at a faster rate. The year The Barstool brand has immense 2020 was something of an outlier, with Kambi continued to expand its reach throughout the US, with more the pandemic having a negative impact commercial presence in key target than 66m monthly visitors to Barstool on retail, with many properties forced markets throughout 2020 and into Sports’ products and content. Penn to temporarily close. Despite the 2021. Our December 2020 partnership National has ambitious plans to pandemic effects, the retail GGR Kambi with JVH gaming and entertainment capitalise on the ongoing rollout of partners generated continued to grow group was a clear vindication of our regulation across the US, and Kambi’s in 2020, in fact it almost doubled strategy to capitalise on the uptake of technology and expertise will be a core year-on-year. Despite this retail growth, regulatory frameworks in new markets component in facilitating growth for the channel shrunk as a percentage of by partnering with high-potential local all of our partners as the US market overall Kambi partner GGR due to operators – with the Netherlands expands. For an in-depth look at the growth in the online channel. anticipated to regulate online sports US market, turn to pages 20-25. betting in H2 2021. In Europe, Kambi continued to support Looking to the US, Kambi is now live its partners with multiple launches, in 14 US states having most recently in markets including the UK, launched with our partners Rush Street and . Interactive and DraftKings in Virginia and Churchill Downs in Arkansas. We For Kambi, the online channel is the took the significant step of powering dominant GGR driver, however, across

Global sports betting GGR market size by channel

60

50

40

30 €Bn

20

10

0 2018 2019 2020 2021 2022 2023 2024 2025

Online betting Retail betting

Source: H2 Gambling Capital Please note this incorporates sports betting and horse racing

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US sports betting A market-leading position for Kambi

Since taking the first legal Kambi is currently live and generating revenue in 14 states, online sports wager in the and launched 11 online and 28 on-property sportsbooks throughout 2020 – which amounts to a launch every 9-10 US post-PASPA, Kambi days. We were able to continue our expansion despite the has established itself as unique challenges of the global pandemic and its impact America’s sportsbook on the bricks-and-mortar gambling sector, working closely partner of choice due to our with our partners to complete remote launches without the need to be present at the property. award-winning technology, scalability and successful We added several new US partners to Kambi’s powerful global network in 2020, including the Pokagon Band record of powering market- of Potawatomi’s Four Winds Casinos – a US tribal operator first launches across the with three locations in Michigan and one location in Indiana. country. And 2020 was In August, we also signed a multi-year agreement with certainly no different in Churchill Downs Incorporated (CDI) – a major partner win for Kambi after CDI switched from an alternative technology this regard. provider due to our proven excellence in sportsbook provision. Later in the year we also supported the launch of Penn National Gaming’s Barstool-branded online sportsbook in Pennsylvania, a partnership notable for leveraging Kambi’s differentiation capabilities and APIs to build a proprietary product.

Sports betting is currently live in 21 US states, with Illinois, Michigan, Colorado and Tennessee among those to go live in 2020 and where we maintained our strong track record of being first to market. In total, the US sports wagering sector was estimated to be worth nearly $1.5bn in annual gross revenue last year compared to $920.6m the previous year, despite the lighter sporting calendar as a result of the pandemic. Meanwhile, gambling intelligence firm VIXIO GamblingCompliance predicts the market will be worth $7.9bn to $10.8bn in total annual gross gaming revenue by 2025 (US market totals do not include horse racing which is regulated separately to sports betting).

Kambi is currently live in 14 states, and in 2020 launched 11 online and 28 on-property sportsbooks

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Indiana New York

2020 market size GGR: 2020 market size GGR: The US is just getting started $136.4m $10.8m Illinois +/– y-o-y +/– y-o-y +228% +38% Where we are today 2020 market size GGR: $125.4m Kambi partners: Michigan Kambi partners: CDI, DraftKings, +/– y-o-y DraftKings, RSI, Seneca Kindred, Penn, RSI 2020 market size GGR: N/A $18.3m

Kambi partners: +/– y-o-y N/A * The US sports betting market continues to demonstrate Iowa DraftKings, Penn, RSI New Hampshire strong growth and was a key part of Kambi’s success story Kambi partners: 2020 market size GGR: last year. However, as market estimates show, the US really 2020 market size GGR: $41.6m CDI, DraftKings, Four $23.6m is just getting started and state-by-state regulation Winds, Parx, Penn, RSI +/– y-o-y looks set to make good progress once again in 2021 with +/– y-o-y +116% N/A legislation to permit sports wagering currently pending

in numerous states. The economic impact caused by the Kambi partners: Kambi partners: pandemic may also accelerate regulation in states where DraftKings, Penn, RSI DraftKings there is a desire for additional tax revenue, as is the case in New York, with the Governor recently backing the legalisation of online sports betting in an effort to boost Colorado state tax receipts. 2020 market size GGR: Michigan (online) and Virginia both went live in early 2021, $75.8m with Massachusetts and Ohio among key states best +/– y-o-y positioned to next regulate sports wagering later this year. N/A In Louisiana, Maryland and South Dakota, voters in each Kambi partners: state approved sports betting legislation via referendums CDI, DraftKings, Penn, in November 2020, while Indian tribes in several states RSI could also launch sportsbooks this year under tribal-state gaming compacts. New Jersey

Crucially, the three most populous states – California, Texas 2020 market size GGR: and Florida – have all yet to permit legal sports wagering $398.5m and each have sports betting bills pending, albeit with varied +/– y-o-y possibilities of any immediate legislative movement. In New +33% York, which is the fourth most populous state, only upstate Kambi partners: casinos can currently operate on-property sportsbooks, Tennessee 888, DraftKings, which include Kambi partners Seneca and Rush Street West Virginia Kindred, Parx, RSI Interactive, yet politicians are currently debating bills to 2020 market size GGR: $27.1m 2020 market size GGR: permit online wagering in the state. This would either be via $27.3m (est.) a state-controlled monopoly operator or a multi-license +/– y-o-y Pennsylvania N/A +/– y-o-y operator-based model. 40% (est.) 2020 market size GGR: $269.9m Online wagering is certain to be a major growth driver of Kambi partners: DraftKings Kambi partners: the US sports betting market in the future with the channel DraftKings, Penn +/– y-o-y 141% accounting for 90% of annual gross gaming revenue of Arkansas $398.5m in New Jersey, which has a population of 8.9 million. 2020 market size GGR: Kambi partners: For context, Texas and New York have a population of 29.8 N/A CDI, DraftKings, Kindred, Parx, Penn, RSI million and 19.3 million respectively and are both considering Mississippi Virginia +/– y-o-y launching online betting. Kambi is well positioned to N/A 2020 market size GGR: 2020 market size GGR: capitalise on the growth of mobile betting based on our $43.7m N/A track-record of innovation, compliance and having powered Kambi partners: +/– y-o-y +/– y-o-y more online launches than any other sportsbook partner Kambi currently live CDI -2% N/A since the repeal of PASPA in 2018. Online and retail Kambi partners: Kambi partners: CDI, Penn DraftKings, RSI Retail Online RSI – Rush Street Interactive Penn – Penn National Gaming CDI – Churchill Downs Incorporated * New Hampshire sports betting authorised to lottery monopoly only

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The US opportunity US sports betting – regulatory outlook*

California California has had many stop-starts due to competing interests, but when regulated will become one CA of the biggest sports betting markets in the world with a population of 40 million and more professional sports teams than any other state. A referendum is increasingly likely to occur in 2021 or 2022 after a coalition of tribal operators secured more than 1.4 million signatures in December 2020 in support of a ballot to legalise sports betting.

Connecticut Connecticut looks set to introduce a regulated sports wagering framework later this year after its CT Governor came to an agreement with the state’s two tribes. The agreement limits market participants to the two tribes and the Connecticut Lottery, with both online and retail sports betting to be permitted.

Maryland Sports betting was legalised in the state in 2020 after a referendum in November saw a majority of MD Maryland residents vote in its favour. Legal sports wagering is expected to go live this year once legislation has been passed and signed by the Governor, and is expected to include mobile betting based on a previous bill passed by the Senate in 2020.

Massachusetts Massachusetts, the most populous state in New England, is most likely to regulate in 2021, having come MA close to doing so in 2020. The state Governor’s fiscal 2022 budget plan contains legislation to permit sports betting and expects to accrue $35m in tax revenue. At the time of writing, 14 bills had been filed to regulate sports betting, underlining the political will in the state.

New York Sports betting is currently limited to a handful of upstate casinos, but the state Governor announced NY legislation in early 2021 to authorise mobile sports wagering. The Governor said New York had the potential to create the “largest sports wagering market” in the US, although he is in favour of creating a monopoly model. Alternative bills to allow for additional online skins, including two per land-based casino, were later filed in both chambers of the state legislature.

Ohio Ohio is among the states most likely to regulate sports betting in 2021 with legislative progress expected to OH be made during the spring. The state is the seventh most-populous in the country at 11.7m. Penn National Gaming and Rush Street Interactive have announced a 20-year market access partnership deal for states in which sports betting could legalise in 2021, including Ohio.

Texas With a population of over 29 million, Texas is undoubtedly one of the biggest prizes available in US TX sports betting. Two bills were filed in February that would allow the 11 major pro sports teams in Texas to obtain their own licences or choose a “sports team designee” to operate state-wide mobile and retail sports betting.

* These outlooks are based on Kambi’s assessment of the regulatory progress in these states at the time of writing

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Latin American promise Mexico

Building on early success in the region Population: 128m

Overview: Online not explicitly regulated but is legal Latin America sports betting has been regulated but is not yet operational, with specific regulations forthcoming. There are indications With a population of approximately 650m, almost twice the a formal regime may be enacted in 2021, a move which would size of the United States, Latin America is a region that holds open a regulated market with the potential to be one of the Venezuela much potential for the sports betting industry, particularly largest in the world. As the regulated market takes shape, Population: due to the ongoing expansion of sports betting legislation in Kambi has confidence it is well positioned to take advantage 29m the area. Kambi’s pedigree as a leading supplier in Latin of the opportunities this affords. America is underpinned by the position of market leadership Overview: it holds in the Colombian market. Kambi began 2021 by announcing a multi-year partnership Colombia Currently no with Argentinian operator Casino Magic, a deal that saw active bills In 2017, Colombia became one of the first countries in the Population: in progress Kambi launch an online sportsbook in Neuquén province 51m region to offer regulated online sports betting, with Kambi by March. Argentina is in the process of regulating sports and its partners since taking a leading position in the market. betting on a province-by-province basis. This fragmented Overview: Kambi provides its technology and services to Corredor approach favours Kambi’s business model, with few Regulated market went live in 2017, Empresarial brand BetPlay, and RushBet through its sportsbooks boasting the ability to meet divergent Kambi holds partnership with Rush Street Interactive. The country is regulatory requirements as rapidly and precisely as Kambi. leading position proving to be a benchmark for how sensible regulation can Provinces including Mendoza and the City of Buenos Aires unlock market potential in Latin America. For Kambi, the are in the process of implementing licensing infrastructure. crucial factor in any market is to have the right partners, With an overall population of approximately 45 million, a Peru along with a strong localised product, and the results of fully regulated Argentine market is rich with opportunity our partners illustrate our success in this area. Population: for the sports betting industry. 33m Kambi has laid down a marker in Colombia, where we have In addition, Mexico also offers regulated sports betting while been able to illustrate our strengths in terms of both quality other major countries include Peru, which has a population of Overview: of product and compliance, putting the business in a uniquely Draft framework c.30m and a draft sports betting framework in development, currently under strong position to build on the promising signs we are seeing and Chile, which currently operates a monopoly model. development for regulation across Latin America.

Regulatory progress is being made in Brazil, the largest country in Latin America, where online and land-based Chile Brazil Population: Population: 212m 19m

Overview: Overview: Regulation passed, Sports betting is licensing process controlled by the could begin in 2021 state monopoly Argentina

Population: 45m

Overview: Country regulating on province-by- province basis Latin America Regulation

Regulated In-progress

26 27 Annual report and accounts 2020 Kambi Group plc Strategic report

Canada and Europe

Canada Furthermore, a recently published report by Deloitte projected that in the first year of full legalisation, the Regulation of single-game sports wagering in Canada looks regulated Canadian sports betting market would be imminent after the federal government backed a bill which worth C$7.5bn in turnover. would repeal a country-wide ban on the activity. The same report forecast a potential rise to C$28bn within Canadian provinces and territories are currently only five years, representing a compound annual growth rate of permitted to allow parlay wagering, but the progressing 123% and illustrating the extensive growth opportunities bill would usher in single-game wagering on a province-by- that regulation could unlock. province basis, in a similar fashion to how state-by-state regulation has been introduced in the United States in The appetite for regulated sports betting is evident across recent years. the country. Ontario is the most populous of Canada’s 10 provinces, home to more than 14m people, which would National trade organisation the Canadian Gaming make it the fifth largest province or state in North America. Association estimates that approximately C$14.5bn is Ontario is also expected to be the first to launch a fully wagered on sports in Canada annually, with just C$500m regulated market, potentially by the end of 2021. of that figure bet on regulated parlays, underlining the potential that is there to bring offshore activity into a licensed and regulated environment.

Projected regulated Canadian wagering market, turnover

30

25

20

15 €Bn

10

5

0 Y1 Y2 Y3 Y4 Y5

Amount wagered (legal market), with legal single game wagering in C$ billions

Source: New stakes in the game | The timing is right for Canada to expand sports betting - Deloitte

28 Annual report and accounts 2020 Kambi Group plc Strategic report

Europe Remote Gambling Act set to come into force on 1 April 2021, paving the way for the market to open six months later Europe’s new and existing regulated markets continue to on 1 October. As a nation with a rich sporting heritage, Kambi be a core area of focus for Kambi. A number of European anticipates that the Netherlands will flourish as a regulated markets have re-regulated or are in the process of enacting sports betting market. A number of top local and new frameworks. Each have their own individual complexities international operators are primed to invest in the market for a sportsbook to manage – by way of example, barring – Kambi having already signed with major local casino sports betting on fixtures that contain a majority of under operator JVH gaming and entertainment group – while 18 participants, as is the case in . Kambi is already partnered with the online market leader Kambi is a provider that never views regulation, and the in ’s brand. intricacies thereof, as anything other than something to be Further to this, Europe’s most populous country, Germany, embraced. Having spent more than a decade successfully is moving towards the full regulation of its managing the re-regulation of Europe, Kambi, more than market. Agreed in January 2020, the Interstate Treaty on any of its sportsbook counterparts, has underlined its ability Gambling is lined up to take effect from 1 July 2021. to efficiently pivot its technology to meet any requirements while consistently delivering the highest levels of sportsbook The relative maturity of sports betting in European markets performance. Kambi is the sports betting partner to some of should by no means suggest a reduction in its potential to Europe’s most significant operators, including ATG, Kindred drive growth for forward-thinking companies with the right Group, and LeoVegas, trusted to combine unmatched blend of expertise across compliance and technology – as standards of delivery and an unblemished compliance record. indicated by the chart below. Research from H2GC indicates that online betting GGR in Europe will amount to €20.3bn by The Netherlands is on the cusp of implementing a full 2025, with retail betting staying relatively flat at €10.2bn. regulatory framework for sports betting, with the Dutch

European betting market size GGR

25

20

15 €Bn 10

5

0 2018 2019 2020 2021 2022 2023 2024 2025

Online betting Retail betting

Source: H2 Gambling Capital Please note, this incorporates sports betting and horse racing, regulated and unregulated

29 Annual report and accounts 2020 Kambi Group plc Strategic report

Kambi partners Springboarding growth across the globe

Kambi now supplies its Our US footprint continues to grow. Dedication to partner success award-winning sports We are now live in 14 states, having achieved market firsts with our Kambi’s commitment to partner betting technology to more partners in 10, and signed with success underpins our revenue share than 30 operators on six major multi-state operator Churchill business model. Kambi succeeds continents. Our commercial Downs in 2020, alongside a long-term when our partners succeed, and the company’s driving purpose is to enable team continued to build on partnership with major Midwest entertainment brand and tribal our partners to get the most out of the the foundations of our gaming operator Four Winds Casinos. abundant possibilities our technology established global presence unlocks, providing a premium service We also made significant strides in with four major customer through which they can out-compete Europe, signing with Belgium’s the market. signings in 2020, further Loterie Nationale, a World Lotteries expanding our reach in Association and European Lotteries Every single Kambi operator has the focus of a dedicated partner success regulated jurisdictions in accredited state-run lottery, and closed the year by sealing a manager, providing ongoing insight, North America and Europe partnership with JVH gaming and analysing data and helping to refine with several multi-year entertainment group, the largest and growth strategies and optimise partnerships. private casino operator in The revenue. Netherlands – paving the way for a We have made important additions launch in the Dutch online market in terms of talent and experience to on the passage of enabling legislation, our partner success team throughout anticipated for H2 2021. 2020, in particular bringing in Kambi’s commercial expansion in significant customer service and 2020 was reinforced as we extended technical expertise in our Philadelphia our relationships with a number of office to most effectively support our our existing partners. We put pen to considerable and growing array of paper on an expanded agreement US partners. Our partner success with long-term Kambi client LeoVegas managers contribute significantly to which will not only see Kambi continue maximising Kambi’s value proposition, to power the brand’s flagship LeoVegas providing the foundations upon which sportsbook, but also the operator’s all operators on the Kambi network entire stable of sports betting brands. can realise their potential through sports betting. European markets are a core focus for Kambi, and the flexibility and regulatory assurance offered by our technology was underlined by a series of new launches in markets including the UK, Spain and Estonia.

30 Annual report and accounts 2020 Kambi Group plc Strategic report

New partners in 2020

New partners in 2020

Four Winds Casinos The year 2020 saw the Pokagon Band of Potawatomi’s Four Winds Casinos become the third major tribal gaming operation to sign with Kambi, entering into a multi-year partnership which now sees Kambi provide its technology and services on-property and online. Consistently ranked as one of the top gaming and entertainment brands in the Midwest, Four Winds Casinos has three locations in Michigan and one in Indiana, with its flagship New Buffalo property dedicating approximately 125,000 square feet to its first class gaming floor. The Kambi sportsbook was live in the three Michigan properties within two weeks of the partnership being agreed, with plans for Indiana to follow.

Churchill Downs America’s preeminent racing, online wagering and entertainment company selected Kambi to replace its incumbent sports betting supplier in August 2020, agreeing a multi-year partnership through which Kambi will power sports betting for the TwinSpires brand. The Kambi sportsbook complements TwinSpires existing racing wagering product, one of the largest and most recognisable online horse racing wagering platforms in the US with a large customer database. Churchill Downs boasts extensive US market access, and Kambi is already live online in Michigan and Tennessee, as well as in retail across a number of states.

Loterie Nationale Loterie Nationale (the Belgian National Lottery), a World Lotteries Association and European Lotteries accredited state-run lottery, signed a long-term agreement with Kambi in October 2020. The partnership made Kambi the trusted sports betting technology and services partner to the operator’s established ‘Scooore’ sportsbook brand, which was founded in 2012 and operates online and in more than 300 retail locations across Belgium. Kambi was selected from a competitive public tender process thanks to the strength of its core product and proven history of delivery across both online and high- volume, terminal-based retail environments, alongside its record of commitment to the highest levels of sports betting integrity.

JVH gaming and entertainment group Kambi entered into a multi-year partnership with The Netherlands’ largest private casino operator in December 2020. The deal paves the way for a launch in the Dutch online market on the passage of enabling legislation and corresponding regulatory approvals, anticipated for H2 2021. The foremost casino operator in The Netherlands, JVH group currently welcomes well over four million guest visits every year across more than 80 properties under brands including Jack’s Casino and Flash Casinos.

New partners so far in 2021

Racing & Wagering Western Australia Racing and Wagering Western Australia (RWWA) is the state-run racing authority for Western Australia, responsible for a network of more than 320 retail agencies and TABtouch, its online sports betting brand. Like ATG and Churchill Downs before it, Kambi sees great potential in the crossover of RWWA’s racing bettors to a high-quality sportsbook and looks forward to working with the company to upgrade its current online and retail offer.

Casino Magic Kambi expanded its footprint in Latin America in January through a partnership with leading Argentinian casino brand Casino Magic. Argentina is currently in the process of regulating sports betting on a province-by-province basis. Casino Magic operates in the Neuquén province of Argentina, where sports betting has already been regulated. The Casino Magic sportsbook went live on 1 March.

31 Annual report and accounts 2020 Kambi Group plc Strategic report Annual report and accounts 2020 Kambi Group plc Strategic report

Our Business Model Creating value for our customers

Kambi offers a fully managed Kambi provides operators with the service, effective in generating interests. We also allow our operators the flexibility to adjust sports betting service, that freedom to customise their user significant growth in revenue and pre-match odds, up to a set level, for certain events, enabling Our business model interface, enabling them to deliver market share for both us and our them to differentiate and optimise their marketing campaigns. works with real time sports in conjunction with specific marketing operators. The scalability of our data providers, on a robust campaigns and provide a unique business model is key to this success The Kambi Turnover Index provides strong technical platform. Our experience to end users. – with little need to add extra resources for new operators, as the number of Kambi aims to achieve optimal margin, to maximise turnover operating leverage expert traders utilise Kambi’s large network enables us to users is independent of our service. growth and boost the financial performance of our see player activity across the entire proprietary tools to compile The scalability in the business model customers – both in the short and long term. We manage network, monitored by our sportsbook in a revenue-sharing odds, working alongside enabled Kambi’s customers achieving this by leveraging our sophisticated risk management tools. control team and a real-time alerts our risk management market firsts in multiple jurisdictions. system, to notify our customers of any The turnover and margins of our operators vary from quarter model, driving department to provide a suspicious activity which often leads to Creating and sustaining our state-of- to quarter and are impacted by the outcome of sporting highly competitive sports interception before any manipulation, the-art sportsbook requires continual events. In the interest of commercial sensitivity and instead of disclosing actual turnover figures, Kambi presents its Kambi’s earnings betting offer, whilst match-fixing or corruption takes place. investment in people and technology. Through our investment programme, customers’ sports betting turnover as an index called Kambi’s goal is to provide sports betting mitigating risk. we enable operators to cost-efficiently The Kambi Turnover Index, with the first quarter of 2014 growth and margin experiences that go beyond any other. offer end users a premium sportsbook, indexed at 100. We power market leading brands that delivers a first-rate experience across the world, using cutting edge Operator turnover at constant exchange rates increased expansion across mobile, online and retail. technology supported by highly skilled by 42% in 2020 which can largely be attributed to the expertise. Our user interface has been Our business model provides strong significant growth in the Americas market and the US designed to deliver a seamless omni- operating leverage in a revenue-sharing expansion into five new US states as well as growth in channel experience, which drives model, driving Kambi’s earnings growth Kambi’s historical core market Europe and the Rest of acquisition and boosts retention. and margin expansion. the World (please see definitions on page 36).

This model incentivises Kambi to The fully scalable sportsbook provide odds that maximise our Kambi has an impressive record of operators’ Gross Gaming Revenue providing a superior sportsbook (GGR) – creating a natural alignment of

Technical Odds & Real-time platform Trading sports data

Risk Compliance management B2C Operators End User

32 33 Annual report and accounts 2020 Kambi Group plc Strategic report

Operator trading margin

The operator trading margin can fluctuate from quarter to quarter, mainly due to the outcome of sporting events with the highest betting volumes and value. Based on the current commercial and market outlook, Kambi expects the operator trading margin for the coming 12 month period to be in the range of 7.0 – 8.5%. The operator trading margin for the past 12 month period has been 8.6%.

The operator turnover is affected by short-term variations in operator trading margins; over time there is likely to be a negative correlation i.e. a higher operator trading margin results in lower turnover.

Due to the variance in actual sporting results, there can be deviation from the 12 month expectation without prompting a change in the outlook. The operator trading margin expectations are estimated on a forward-looking rolling 12 month basis and are shared to explain short-term variations in betting patterns and therefore revenues. They are updated quarterly and when updated, previously stated expectations should be considered obsolete.

Operator turnover index and trading margin

1000 989 11.0%

900 10.0%

800 9.0%

700 669 8.0%

600 560 7.0% 505 500 6.0% 412 398 387 400 369 5.0% 334 307 281 277 300 259 273 259 4.0% 239 242 254 221 219 200 3.0% 6 7 8 8 9 20

Q1 2016 Q1 2017 Q1 2018 Q1 201 Q2 2016Q3 2016Q4 201 Q2 2017 Q3 2017Q4 201 Q2 2018Q3 201 Q4 201 Q2 2019Q3 2019Q4 2019Q1 2020Q2 2020Q3 2020Q4 20

Turnover Index Margin %

The Kambi Turnover Index illustrates the operators’ quarterly turnover and betting margin.

The Kambi Turnover Index, with the first quarter of 2014 indexed at 100, is shown on the left-hand axis and shows the index since Q1 2016. The operator trading margin is shown on the right-hand axis. The level of operator turnover is a stronger indicator of performance than margin, which can fluctuate in the short-term due to the outcome of certain events.

As can be seen in the graph above, the operator turnover levels in Q1 and, in particular, Q2 2020 were adversely impacted by the reduced sporting calendar as a result of COVID-19.

34 Annual report and accounts 2020 Kambi Group plc Strategic report

The Kambi revenue model These include:

Kambi charges its operators a fee based on a number of i) Marketing deductibles: certain capped costs for player variables including fixed fees, the number of live events incentives linked to sports betting, such as free bets. offered and commission based on a revenue share of ii) Tax: 81% (2019: 74%) of our operators’ GGR was subject operators’ Gross Gaming Revenue (GGR) less deductible costs, to betting duties incurred in locally regulated markets. such as certain capped marketing incentives and tax (i.e. NGR, as shown in the graph below). The most significant portion During the year the impact (or full year effect) of certain of Kambi’s revenue comes from the revenue-share element, other gaming related taxes, and additional deductions for which enables us to grow and be aligned with our customers. player incentives, resulted in increased growth of operators’ NGR by 46%. The graph below shows how the growth in operator turnover, ultimately drives our own revenue growth. Kambi’s commission is based on a percentage of the operators’ NGR. To promote and support growth, some While Kambi’s reporting currency is the Euro, our operators’ customer contracts include tiers with lower commission turnover originates in the currency of their end users. rates applied to higher levels of sports betting revenues. Including the impact of FX movements on the translation of The tiered commission levels run on a yearly basis. The these amounts, operator turnover grew by 38% in 2020. As development in the business of many of our operators illustrated in the Kambi Turnover Index, the operator trading and the significant operator GGR growth during the year, margin can fluctuate. Multiplying the margin by the turnover resulted in a lower effective commission rate in 2020 than generates the GGR. The 2020 operator trading margin was in 2019. Furthermore, some parts of Kambi’s revenues are 8.6%, compared to 8.0% in 2019. As a result of this higher fixed and not linked to the growth in operators’ businesses. margin, combined with a number of other factors, operator Overall, Kambi’s revenues grew by 28% year-on-year. GGR increased by 51% year-on-year. As part of Kambi’s revenue model, we share certain costs with our operators.

Operator turnover & Kambi revenue growth: 2020 vs. 2019

55%

50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0% Operator FX impact Operator margin Taxes/marketing Other**Kambi Revenue Turnover Growth * impact deductibles impact Growth

* Operator turnover growth shown is based on 2019 exchange rates ** Other includes the impact of volume-related commission tiers and fixed revenues -- Denotes components of NGR from which Kambi’s revenue share is calculated

35 Annual report and accounts 2020 Kambi Group plc Strategic report

Geographical revenue analysis

Kambi derives its revenue from numerous markets globally, which can be split into three areas of focus for the company: Europe, Kambi’s historical core market; the Americas, the largest market for Kambi by the end of 2020; and the Rest of the World, being those other opportunities that may arise outside of Kambi’s two main focal areas.

Kambi’s revenues have historically been dependent upon the European market, however, with the emergence of the US market, alongside the success of Kambi’s Central and South American operators, it can be seen from the below graph that Kambi’s reliance upon the European market has decreased substantially year-on-year to 51% (70%), with the Americas comprising 47% (27%) and Rest of the World to 2% (3%) of the total GGR. Kambi’s GGR in Europe continues to grow, although at a slower rate than the Americas due to Europe being a more mature and regulated market. The substantial increase in Americas was largely attributed to the continuing growth in both existing and new US states during the year.

Operator GGR mix by geographical area

100%

80%

60%

40%

20%

0% 2018 2019 2020

Europe Americas Rest of the World Europe Americas Rest of the World

36 Annual report and accounts 2020 Kambi Group plc Strategic report

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