|
 NetEnt is one of a cluster of tech firms in Stockholm which are
punching above their weight globally, the best known being music
streaming site Spotify. It was founded 20 years ago by Pontus
Lindwall whose father built Sweden's largest restaurant casino
operator and whose mother was a croupier.
The Swedish firm has recently signed contracts with casino operators
in the United States, Britain and Spain to produce online games
ranging from blackjack to poker. Earnings rose more than 50 percent
last year and the share price doubled to give a market value of
around $2 billion.
"We still have big growth potential in Europe. We have approximately
a 30 percent market share and that means 70 percent to take," CEO
Per Eriksson told Reuters.
"Then, we have the U.S. waiting for us and that is something we are
looking forward to," Eriksson added.
NetEnt employs 750 people in Sweden and Malta and is expanding to
Krakow and Kiev to find programmers. Its biggest competitors are
London-listed Playtech, founded by Israeli billionaire Teddy Sagi,
and privately owned Microgaming Software Systems.
SLICE OF AMERICAN PIE
Eriksson believes increased mobile phone gaming, state lotteries and
even revenues from digital games placed inside actual casinos will
all help drive growth.
With the global industry expanding about 10 percent annually, some
analysts ask whether NetEnt can keep up its rapid rate of growth
after revenues jumped by a third last year.
It is one of a number of gambling companies that have bet on a
loosening of the rules in the U.S. market.
New Jersey was among the first states to allow online gambling and
NetEnt has signed on most major operators there. Pennsylvania may be
next, creating what Eriksson hopes will be a domino effect across
the east coast.
H2 Gambling Capital, which provides forecasts for the industry, said
any U.S. nationwide initiative on the industry would create a market
worth $6-$8 billion in gross wins overnight, about one-fifth of
today's global online winnings.
"The U.S. is at the bottom of the shift to real money in iGaming and
there is huge potential for it to grow if it is ever widely
regulated," said H2 Founder Simon Holliday.
His baseline assumption is, however, that regulation will happen
slowly on a state-by-state basis.
[to top of second column] |
VOCAL CRITICS
After graduating from the Royal Institute of Technology in
Stockholm, founder Lindwall saw potential in taking games online.
"I did the pay tables behind the slot machines, calculating how it
works under the hood," Lindwall said. "My father said if you want to
have good games you have to make sure the player wins a lot. I knew
how to do the math to make that happen."
Fast forward two decades and one of NetEnt's fastest-growing
products is Live Casino, in which players watch real dealers in real
time and can place bets on games. That will be launched on mobile
phones this June.
Playtech and local Swedish rival Evolution Gaming, started by former
NetEnt employees, were first movers in the Live Casino market.
CEO Eriksson concedes that investments in new offices and products
might temper margin growth this year.
There are other clouds on the horizon in the form of higher taxes
and concerns that the ease with which players can now gamble online
risks fuelling addiction.
France slapped taxes on operators totaling more than 30 percent and
NetEnt saw revenues there dry up overnight in 2009 as customers
left. Gambling companies in Britain have also been hit by new taxes
targeting their growing online business.
Eriksson is bemused by the opposition to online gambling.
"I feel it's a little bit like rock-n-roll in the 50s, when people
said it will destroy everything," he said. "But it's here to stay."
(Reporting by Mia Shanley; Alistair Scrutton)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
