From video games to internet security to online bingo, the companies Keith Laslop has played a key role in have one thing in common – they all took bold moves to capture market share in an effort to dominate a sector.
Laslop, the CFO of UK-listed Gamesys, which operates the JackPotJoy bingo site, says the fast growth of the business – that has seen its market cap exceed £1bn in recent weeks to reach £1.2bn by mid- August – has partly resulted from the impact of coronavirus.
The social aspect of online bingo, in which predominantly female players invite friends to play with them, has come to the fore during lockdown, says Laslop. “Our players have appreciated the ability to stay in touch with their friends. We’ve had eight marriages resulting from people meeting on our bingo sites. It is a bit of a silly statistic but it talks to the sociability of online bingo,” says the Canadian.
“Bingo is a iquidity-based game, meaning that the more players that you have playing at the same time, the more vibrant the network and the larger and more valuable you become,” he says.
In the six months to June 30 the group delivered adjusted EBITDA up 75 percent to £95m from the previous year on gaming revenue that doubled to £340m over the same period.
The push into bingo came after an assessment by Laslop and other members of the nascent Gamesys management team about which area online gaming market to enter. Given that poker was controlled by a number of very large players, and other areas might prove difficult to build a presence in, they landed on online bingo.
“We felt there was an opportunity to dominate the bingo side, hence why we started buying up bingo companies around the world, culminating in the first Gamesys transaction where we purchased all their bingo assets,” he says.
Since 2013, the firm that was previouly called JPJ, has raised over £1bn of equity and over £500m of debt to finance a roll-up strategy of bingo sites after initially acquiring a small casino and poker site. Along the way, the firm listed in Toronto and then London, and now has 17 offices in 15 countries.
In 2014 the firm bought Intertain- its first transaction- and then purchased its first online bingo operator Mandalay Media, before buying Swedish online casino operator Vera&John, which offered a Nordic presence but also a route to the Asian market.
Then in 2015 the firm acquired the bingo assets of Gamesys, which it has now taken the name from, before purchasing the rest of the company last year. “We still haven’t gotten into sports or lottery, which are the two largest elements of online gaming, but we dominate the bingo side and we are actually quite strong in the casino side as well,” explains Laslop.
The Canadian is about to move from the Bahamas, which he describes as “the closest tax jurisdiction to Toronto with a direct flight,” to London where the firm has around 800 staff, as he says its no longer effective to have the Caribbean base where he has been for the last five years.
London makes sense as the location to be based as half of the group’s revenues come from the UK, ahead of Asia where it also has a B2B service providing platform for other gaming operators, and then the rest of Europe. “We’re not where we want to be in North America, so it could mean we do acquisitions there,” he adds.
But while the UK offers many benefits, it also features significant regulatory risk. “I’d say regulatory changes in the UK have had a dramatic impact on our business here. There’s regulatory risk in all the jurisdictions that we operate in, but the greatest risk tends to be in regulated jurisdictions because there’s always an element of society in these countries that is very anti-gaming industry,” says Laslop.
“But I think the industry will be made stronger, or at least smaller in terms of the number of players, as regulators prefer to have a smaller number of operators that they have to deal with, and have closer control of,” he adds.
Boom and bust
Laslop tasted first-hand the excitement of a fast growth business, and then the negative feeling of it going sour in the dotcom boom and bust. After studying studying business administration at the University of Western Ontario he worked for PwC in Canada and then the UK, in the accountancy firm’s technology M&A group.
He joined Inktomi Corporation, a business running search engines for Alta Vista and Yahoo!, in the pre-Google days, in a business development role. The firm dominated the search engine technology space, as well as the content distribution arena, says Laslop.
“That was interesting because I saw first-hand just how fast companies can grow, it went from 200 to 1,500 employees in a year, and the downside of uncontrollable growth, as at the end of the day it blew up like a lot of other internet companies,” he reveals.
At UK video game company Elixir Studios, where he took on a similar role, Laslop gained the experience of managing organic growth, and motivating teams, until it was sold to Microsoft. “Mobile games then were just starting to take off. I was there 2001 to 2004, when mobile games weren’t nearly to the stage where they are today as we were still in the PC era, but it was an exciting time,” he says.
As president of cyber security firm Prolexic Technologies he played a key role in the company founded to protect online sports books and casinos against extortion-based cyber attacks, called distributed denial of service attack, (DDoS) where a website is flooded with so much bogus traffic it crashes. “You tended to not know why and then you’d get an email in broken English saying pay us $50,000 or $100,000 across to bank accounts in Latvia or Ukraine in three hours or we’re going to take your website off,” he informs.
“We solved the problem by routing all website traffic through one of our data centres we ended up setting up around the world. They would cleanse the traffic from bogus DDoS traffic.
“By the time we sold the company we were protecting three banks in the US, five in Europe, and it now protects the US Federal Reserve because the threat has developed into state-sponsored attacks. That was a very interesting position because it really gave me experience of how to dominate a particular niche,” says Laslop.
From there, he and other individuals set up private equity house Gendron that cast around for investment opportunities, acquiring a stake in a Bahamas-based reinsurance company and a payment processing firm focused on the gaming industry. “It was through people I met through Gendron that we decided to launch Intertain Group in 2013,” says Laslop.
Laslop says an important part of his role as CFO of Gamesys is about making sure he has the right team behind him so that he can develop a nimble organisation. “That is always a struggle as a company grows, and I’ve seen that in Inktomi, and other companies, because keeping an entrepreneurial culture alive is tough,” he says.
Gamesys looks to develop creativity by setting up ways to “meet with people and teams who you wouldn’t think would be necessary for you to meet with, people that have no connection to finance at all, or no connection to the executive management team, but might nonetheless have a titbit of thought that can start bouncing ideas,” Laslop advises.
“Sometimes more effective is just having company drinks where everyone gets together. The most exciting ideas don’t come from the executive management teams, so its about getting other people to come up with ideas, and having that funnel up to the executive management teams is key,” he adds.
Laslop believes strong CFOs should be entrepreneurial whilst having the ability to rein in others when necessary. “I always come at it from the entrepreneurial bent, to try to think outside the box. You can easily fall into the trap of saying no, being the bad cop in an organisation, and wanting the business case before you entertain any ideas of wanting to see the internal rate of return,” he says.
But working remotely as a result of the coronavirus vaccine has created challenges. He says he is open to more of the firm’s staff working flexibly. “With finance specifically it’s gone extremely well. It is one of those functional areas which people can work very effectively from home or remotely around the world,” he says.
“Having said that, we have noticed with some of our creative groups, design and others, that we’re slowly becoming less creative. So I think there’s an element of needing face to face interactions,” adds Laslop.
The lockdown may have been good for business, but it has also increased the likelihood of irresponsible gambling, says Laslop. In response the firm has increased the size of its responsible gaming team. Its also taken off air TV advertising over fears that children are being exposed to gaming ads, instead donating the six figure amount it would have spent on advertising to charity.
Looking forward, Laslop says Gamesys is eyeing up moves into online sports betting and lottery. The firm has looked seriosuly at the latter, running models on the viability of running an international lottery. “It didn’t work at the time, but that is something we’re considering. Where best to place your bets should be part of the role of any finance director,” he says.