While Eastern European gambling markets are becoming more regulated and more competitive in 2024, the dynamics of change are still different from Western trends.
Adam Lamentowicz, CEO of Superbet Romania, told the SBC Summit Lisbon audience that Western ‘Copy/Paste’ strategies are slowing down growth and customer engagement in Eastern Europe.
With Eastern European regulators being particularly sensitive, Lamentovics stresses that authorities are looking to establish trust and balance in gambling markets where foreign and local operators compete, which should be taken into account and respected.
SBC: Adam, great to catch up ahead of the SBC Summit in Lisbon. How are you observing recent developments in Eastern markets? What common narratives are you monitoring with intrigue?
Adam Lamentowicz: The entire CEE region is undergoing massive transformation, which is driven by several factors. The first catalyst is the changing regulatory frameworks across several countries in the region, which results in a push for digital transformation and product developments.
Another driver is represented by the changes in customer behaviors, as players have gained a deeper understanding of product features and change their betting and gaming patterns.
Furthermore, we witness a surge of new operators that used to target mainly gray markets in the .com environment, but who are now turning their attention to the attractiveness of CEE countries. These companies aim to increase their value by obtaining licensed operations, via funding which they have obtained by being present in the .com world.
All these aspects are shaping very competitive markets, where operators need to demonstrate a deep understanding of customer behavior insights and ability to remain agile in terms of pivoting strategies to respond to these commercial dynamics. In this context, the gold standard for companies that want to lead, rather than follow, is to be able to create consumer trends and set industry benchmarks.
SBC: Let’s begin by discussing the term “Eurasia” and its context in gambling. How do you view the current relationship between the Western and Eastern frontiers of gambling?
AL: The differences between Eastern and Western gambling markets are quite distinct. Often, Eastern markets are underestimated by Western experts, who are mostly aiming to copy UK operating models across the globe.
Customers across the CEE have very different value paradigms and different triggers which affect their behaviors.
The customers’ expectations and preferences differ very much in this part of the world, and this ultimately defines what kind of content CEE customers want to consume, what product features gain attention or how they want to interact with the operators.
Understanding these behaviors and customizing the product offering and content, in terms of sports and gaming, have gained traction in past years.
Nevertheless, this was a process driven by some expensive lessons which many companies had to experience directly.
I trust that now we have a growing understanding in the region that Western models work best in Western countries, where gaming is a socially and culturally accepted form of entertainment, while in the CEE region our industry is still somehow stigmatized.
This stigma is gradually diminishing, but there is still a lot of work to be done by our industry. That is why operators and business leaders across CEE have developed ambitious long-term strategies in terms of compliance, responsible gambling, commercial partnerships and product portfolio.
SBC: Post-pandemic, we have seen multiple Eastern European governments tighten their regulatory regimes for gambling. Why are EE markets moving towards stricter scrutiny of gambling?
AL: The pandemic has brought digital transformation and expedited many markets to migrate to online operations. This has also overlapped with Gen-Z audiences maturing and entering the sports and iGaming ecosystem. Both trends have changed customer profiles and increased the diversity of populations that we serve with our product offering.
The intensified competition across markets has also determined gambling companies to target these audiences more intensely, creating a “red ocean environment”, where the aggressiveness of operators increases.
The increased level of competitiveness and the aggressiveness of commercial campaigns, some of which even went beyond common sense or good taste, created a level of social pressure which has brought the attention of regulators. As a result, we have witnessed various regulatory changes that were driven by a perceived need for tighter regulations and controls on the industry.
Some of these changes are good and drive a more sustainable competitive environment, while other decisions could be perceived as over-regulation, resulting in clients going towards the black market.
Regulators need to keep a close eye on this phenomenon, as there is a thin line between good regulations which are driving sustainability and healthier customer behaviors, and excessive regulations which lead to a skyrocketing online black market. Once the black market begins to flourish, it is very hard to stop and to reverse its associated consumer trends.
SBC: Can you provide leadership insights into how Superbet expanded successfully across multiple Eastern European markets, navigating the complexities of localisation?
AL: Being customer centric, as mentioned by most companies in our industry in their mission statement, is not as strongly practiced as one might think.
I am confident to say that Superbet is genuinely customer centric. Our organizational DNA has remained the same since Superbet was created, in 2008, and is reminded daily by our founder – customers come first, then employees and lastly shareholders in the paradigm of needs of our company.
We do our best every day, across all markets, to offer a unique experience to our customers, and we are fortunate to see that our players notice this through customer feedback.
Our customer-obsession is shown through the way we operate in retail and online, perform trading and pricing and all the way to our activity on CRM or the work done by our operations teams in CS and APR/KYC. This customer centricity has been the driving force of our growth and has guided our product development strategy, working in close connection with operational teams in terms of local customer insights.
Another success factor is localisation. We have succeeded in building our modus operandi around strong local operating teams who know their markets and their customers extremely well. We centralize product, operational support functions and areas which can be centralized for economies of scale, with product being a key success factor of our journey.
Nevertheless, local teams have a strong ownership culture and are granted a strong decision-making power, allowing us to be agile in our approach well beyond industry standards.
SBC: With stagnant growth in Western markets, we see gambling companies targeting growth in Eastern markets. How do you view M&A developments across Eastern markets, and is it beneficial to local players?
AL: Market consolidation has happened in Western markets and now it is spreading to the CEE region, as space for growth in the “West” is limited or has even become negative, a fact driven by adverse regulatory changes.
Consolidation is a phenomenon that currently happens across industries and is not limited to gaming. Online businesses especially are still showing high-growth potential, and their scalability allows for international expansion, if capital is not an issue.
This means two things for smaller operators: some of them could be bought at healthy multiples by bigger companies entering the “red ocean waters” of CEE, while other companies that don’t show value potential or value growth could be either left out of the market or will imperatively require investments just to stay afloat.
The trend is inevitable and there is less and less space for local companies that can focus only on one market, as regulatory changes can put them out of business overnight. Hence, markets will eventually be consolidated with around 20 – 30 companies expanding regionally and globally, allowing them to have financial stability and to register sustainable growth.
SBC: As a seasoned executive, how do you develop an effective strategy for sustainable growth in Eastern markets—catering to the socio-complexities of individual consumers (online engagement, spending, localization, and customs)?
AL: An effective strategy in the stormy waters of the CEE region needs to be built around strong local teams understanding regulatory frameworks and consumer behaviors. You develop a winning strategy by having the right local talent, which is supported by a strong central expertise, using scalable technology and having a culture of knowledge sharing across the organization.
As a famous saying goes – “If you want to go fast, go alone; if you want to go far, go together”. Having a CEE region with a dynamic regulatory framework and often unclear compliance rules, our industry requires well-rounded leaders and teams that can work well in sync.
SBC: From your experience and perspective, how will Eastern markets develop towards the end of the decade, and what will be their impact on global gambling?
AL: Eastern markets are bound to grow and mature, having a higher emphasis on responsible gambling, with more demanding customers who will be more selective when it comes to sports and gaming product propositions, operational excellence and the proven values of the operators.
The level of understanding that customers have for products and their capabilities will grow and will push out of the markets the companies that have low quality products and poor operational ethics. Business standards across Eastern markets will grow and so will the social acceptance of gaming, as they will become acknowledged as a form of entertainment.
That being said, the role of operators is pivotal here, as we carry this social responsibility to self-regulate and see a long-term horizon that results from our commercial behaviors. Short-term and opportunistic approaches should be fading away, as operators will understand that opportunism and unethical behavior in the present can bring catastrophic regulatory consequences in the near future.
We all need to be mature about it and treat the markets we service with respect for their sustainability and lifetime value.
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