Bullet Business

GTECH G2’s commercial director Leigh Nissim expects consolidation of white labels to occur on a profit-based incentive deals rather than equity purchases.

By Ritesh Gupta

The market for white label gaming solutions in Europe has witnessed significant developments including increasing competition this year.

White labels now represent an important new distribution channel, helping companies to drive their bingo sign-ups, especially for those bingo players who want to have fun with brands they know and trust.

Bullet Business spoke to Leigh Nissim, commercial director, GTECH G2, about how bingo lends itself to the white label services and relevant issues. Excerpts:

With increasing competition, how do you think the industry on the whole is pushing forward white labels as an emerging distribution channel?

Leigh Nissim: The concept of white labels has evolved significantly over the six years that we’ve been operating. The white label solution can now either be bought as a fully managed solution or as a menu of compartmentalised solutions and services – i.e. there’s much more flexibility for the licensee than there used to be.  

From our perspective, we’re pretty flattered that DragonFish (888) and Party are following our model and offering white label services.  The reality is that they are both challenged in that they have their own brands too, which always poses a problem of conflict and prioritisation.  Its clear that they have to do this to leverage their operational overhead and to widen their player acquisition channels.  

How do you think the demand and popularity of online bingo is driving refining of products and driving white label deals?

Leigh Nissim: Bingo is key to the white label and it’s pretty obvious why most mainstream brands are initially rather uncomfortable with casino and poker, which they perceive to be harder forms of gaming.  Bingo’s the perfect fit - a widely recognised “softer” form of gaming that is acceptable from a cultural, social and often regulatory perspective too.  That’s why you find it at the front of the white label model offering.  

As the network grows, its management becomes more complex. Providing tools and processes to assist operators in managing their games across regulatory borders, currencies and even platforms is vital to the competitive edge. What is the key to overcoming such challenges?
 
Leigh Nissim: Listening to your licensees. The demands on a network are becoming increasingly complex, not just in bingo but particularly in poker, too.  Our efforts are best spent working with the licensees who are proactive, committed and adequately resourced.  If you listen and regularly adapt to their requests and business opportunities and challenges, you’ll retain the commitment of your customers.  In return, they will spend more on marketing and both of your businesses will grow faster.  

To what extent do you think land-based gaming operators have been successful in tapping online gaming opportunities via white label arrangements?

Leigh Nissim: The smaller bingo clubs who typically use a white label solution have had a mixed experience.  Many have chosen inappropriate suppliers and found themselves tied in to unfavourable contracts.   

Others have taken the path to online gradually, learning their way cautiously, which is sensible in the interests of protecting their land based business which has faced unparalleled challenges (smoking ban, tax regulations, AWP restrictions etc).  I think you’ll find this group increasingly present as the online market grows as they have a natural understanding of player dynamics and can lend this to online environment as they focus on growing revenues from this channel.

The larger land-based operators have built their own operations in-house rather than white-labelling.  Their trading numbers are pretty impressive, but the overhead of managing this is high and how much is deflection of budget that would have been spent in land-based clubs in any case?  I think you’ll also see some of these operators starting to struggle with technology developments and growth as they begin to run out of land-based players to migrate online.  

A section of the industry acknowledges that it is quite tough for white labels to compete with the “big boys” where software providers/managed service providers deliberately ensure an uneven playing field by inhibiting sign up bonuses and limiting the scope of CRM programmes. In this context, it is imperative for white label operators to find ways to acquire customers somewhat below the radar of the big brands and perhaps even benefit parasitically from the success of the big brands in building the market. How do you assess the situation?

Leigh Nissim: I’m not sure I agree - Cashcade, who just sold as the largest pure UK online bingo operator, operated Foxy Bingo which is in essence a white label on the Globalcom/888 network.  All the payments, licence and software were run by a 3rd party – so who says white labels can’t compete?

By way of empirical evidence too, we find that white label partners with existing distribution channels to consumers typically acquire players at 50% less cost than through other forms of advertising.  

Do you think the perception amongst some customers about smaller white label brands providing a more intimate and personalised experience than the larger brands still holds good? Or do you think this perception is not held by the majority and consolidation amongst once dominant white labels is inevitable?

Leigh Nissim: I don’t make the distinction between big and small as others do –  a player will play where they win regularly, enjoy the entertainment experience and customer service.  This could be on a major or little-known brand.

Consolidation in our sector continues but you’ve got to ask yourself who has the access to capital to pull off the big deals?  Party’s bingo strategy is now defined and 888 own Globalcom, so it’s maybe only Playtech that is under-represented in this sector.   

I expect consolidation of white labels to occur, but more on a profit based incentive deals rather than equity purchases.  I also think these deals are more likely between customers on the same network than those on separate networks as player migrations are expensive and fraught with difficulties.  

What according to you have been new trends as far as white label deals are concerned? For instance, how do you foresee direct marketing groups specialising in customer recruitment and database management signing deals for proprietary software and technology and platform to launch casino/ bingo brands?

Leigh Nissim: Many of our successful partners are database management companies, largely because they understand how to manage data, keep it fresh and to extract value from it – so this is nothing new.  We’re finding a lot of interest from Eastern European countries recently which is a more recent development.   

The overwhelming trend of the networks is gravitation to completing larger white label deals rather than work with smaller entities.  This is being driven by regulators who require ever-more due diligence and the competitive environment – as a new licensee, you’ve got to have strong commitment and financial strength to launch and grow in this market.  

Software companies say assisting operators in communicating effectively with each segment and rewarding customers for their participation by developing bingo bonus systems, VIP rooms and proactive live chat based on bingo playing behaviour is a priority. What do you think is the key going forward?

Leigh Nissim: This has always been the priority.  The key differentiators in this market are customer experience, trust, frequency of winning and service – any tools to assist this will always drive your business forward.  In my experience, these have historically been too often under-valued, although this is changing as player retention becomes increasingly challenging in the current climate.



Nissim has been responsible for signing and launching over 70 white label gaming deals and commercial contracts across Europe since joining St. Minver in June 2005 as MD.  Following the sale of St Minver to GTECH in April 2008, Leigh became the commercial director of GTECH G2, developing its customer base across Europe, both from a white label and B2B perspective.