Asia’s shift to more regulation on sports betting is positive for Entain, explains Asia Pacific Director Michael Charlton. The massive sports betting company would be happy to move back into Asia as markets enter their next phase of regulated betting, with large companies such as Entain able to pave the way through speculative investment to open the door to smaller players.
A strong example is the Philippines, with PAGCOR moving increasingly to partner with the industry to ensure regulation and compliance, while still leaving the door open for profits.
Michael Charlton APAC director for Entain. Thank you very much for being here with us here at the ASEAN Gaming Summit. Entain is obviously present in the major sports betting markets, with the US being one of the primary and most exciting ones. But what’s exciting about Asia for Entain?
Firstly, thank you, for inviting me. It’s wonderful to be at the ASEAN Gaming Summit again for the first time in a few years. It’s exciting that the industry – having gone into some sort of freeze for a few years – is opening back up again. And what’s exciting for Entain about being here is the potential for the region. Clearly, you’ve got a lot of individual territories with a huge potential market out, there a propensity to be interested in betting and gaming and gambling. The challenge we’ve got however, is obviously the regulatory side, because the Entain board has made it very clear that we will, by the end of this year, be completely removed or 99 percent removed from all unregulated markets. So that’s any form of black market or gray market or anything that doesn’t have full government approval. What’s exciting therefore, about Asia is that we have some governments over here, from some potentially very big territories, who are talking about regulating ,talking about bringing in the sorts of legislation that would allow Entain to operate legally here. So the potential for the region is what’s exciting.
It’s very exciting news for the region in general. In a regulated market, we can have those bigger players like Entain come in, can that then pave the way for smaller players?
The bigger players, the advantage we have is clearly a budget and an ability to spend more in a speculative way, with no guarantee of getting a return on your investment, compared to the small or even medium sized player, they’re looking for the lower hanging fruit. They’re looking for a more guaranteed ROI than what you could get. And plus, for some of these territories ,you’re talking about lobbying for years, it can be a very long-term play. But if the size of the prize is big enough, if the pot of gold at the end of the rainbow is big enough, to make it worth that investment, then clearly that’s something that would be interesting for Entain.
Once that legislation exists, once that door has been broken down, once that barrier has been broken down, then that potentially makes it easier for the other players. If you look at a territory like Vietnam, the 2017 sports betting decree talks about a five-year trial license for an individual operator. Now, if something like that were to come into force, then clearly whoever gets the exclusive five year license gets an advantage. But potentially at the end of that period, it’s open house for any operator. So, I’d say that’s the potential advantage of having some of the bigger players fighting the initial battles in the war, if that makes sense.
There’s so many different jurisdictions, and obviously each one of them has their own legal frameworks. How is it to try and come up with that legislation? You’d mentioned before that the majority of legislative frameworks could also translate between regions.
We’re sports betting. Ultimately, football is football, soccer, soccer, basketball is basketball. Yeah, so soccer is soccer wherever you go. And therefore you can develop and innovate around that product. But ultimately, the core product is the same. So you develop rules around that core product. And those are rules that could apply everywhere. If you look at what’s successful, then eventually there’ll be a load of innovation, but it will funnel into the most successful products. So then you can legislate around those products. So if you go to an individual territory, be it country X in Asia, then you can say 80 percent of this is aare just soccer rules, soccer legislation, the sort of soccer bets that you should allow, and that could down to whether it’s simply pre-match, or betting in play. Those are the kinds of differences and subtleties that they might want to legislate on. But with modern betting systems, you’re talking about instant reactions to things. So there’s no reason not to allow the full sports book, it’s just what the government of the territory would be most comfortable with. So we can adapt that 20 percent, say ‘look, if you’re not comfortable with betting in play, for example, if you don’t fully trust the systems, we’ll just hide that for now. Let’s legislate for what you’re comfortable with. And then we can always change it as you go along’.
It does seem like we’re shifting completely from the pre-match bet to the in-game play. Do you think that that is going to be the only way forward now? Are we still going to see some of that pre-match betting?
I think pre-match betting will always exist. But, as we discussed on the stage earlier, if you look at the type of betting that the Asian market tends to prefer, it’s quick, it’s a win-lose, it’s a yes-no, it’s a black and white, it’s a red-green. So the idea of an anti-pre market, where you put the bet on at the beginning of the season, and if the Cowboys win at the end of the season, six months later, you’re a winner. That’s not the market that will have the greatest appeal in Asia, but it’s still hugely popular.
Where I come from, in the UK, it’s still a hugely popular market. But if you look at adapting your products for the Asian market, such as Macau, a market you know very well – you see them going and playing Sic Bo and products like that. It’s Yes-No. Immediate gratification. That’s where the bet in-play comes in. But of course, you need the systems that are sophisticated enough, because if you get targeted by people who know what they’re doing, and you don’t have the right systems in place, then you as an operator can be very challenge. But with the modern systems in place, there’s no reason not to have those markets available.
There was a talk here the other day about AI and AI potentially give advantages to players and also to operators. How can Entain look at that and then mitigate any possible influence so that there’s a playing field for everyone?
That’s so far out of my sphere of influence.
Is it something that Entain’s concerned about and should be keeping an eye on?
Concern is probably too strong a word. But then we’ve always had trading challenges over the years. You’re always looking at an operator versus player dynamic that suggests, of course, the player is trying to gain advantage. And of course, the operator is trying to stay ahead. If you go back to almost the pre-computerized era, as that came in you developed algorithms that were able to identify issues and deal with them much more quickly, which began to remove some of the player advantage. So, then what does the player do? The player looks at the next new thing, which is AI. So, all I can say is we have departments within Entain whose job is to innovate and look at what is being innovated, and then come up with a way to make the best for the company out of that. And that might be that innovation is something new for the customer. And that’s a positive thing in terms of the service and the offering that we’re giving. Or it might be that that’s something to try and maintain our profit margins, which allow us to continue to offer the same products and not take products away from customers who enjoy them and bet in a way that we are happy with, because of something new that has come in maybe only has an advantage for a very select group of customers.
Looking at the individual markets right now. Do you see that there is one country in particular which is establishing the right type of framework that would allow Entain to be to want to move back into this region a bit more?
There are lots of examples out there. It would be very easy to sit here and be negative. Let me focus on the positive. We’ve heard from the licensing director and the chairman of PAGCOR in the last couple of days. So clearly, I’m in the Philippines, I’m going to be nice but I think there’s a lot to be nice about when you hear what they’ve said and the positive attitude they’re taking to it, and the proactive attitude that they’re taking. Because I think it would be easy to be critical of governments who just put their head in the sand and say: ‘Well, if we don’t discuss this problem, it doesn’t exist’. The problem being illegal gaming, and how there’s no protection for the customer, there’s no corporate social responsibility. There’s no tax raise, there’s no welfare. So, I think what PAGCOR is doing in the Philippines is fantastic in that they’re acknowledging the issue. And they’re looking to take steps forward with actually legislating this and doing it properly. It’s not a simple journey, as we’ve discussed, and there’s lots of different nuances for individual territories. But I think what they’re doing is great.
The fact that Malaysia has talked about doing it and the previous government, unfortunately the one that lost the election in November, they’ve also recognized the benefits of doing it. They’ve acknowledged that there’s an illegal industry out there. And they’ve said that digital betting as a way of raising taxes, post-COVID, is a sensible thing to do. So that’s positive. The Vietnamese sports betting decree has been on the cards for many years. And again, it’s acknowledging that there is such a massive gray market out there. Why not do it properly? But then its tough to get these legislations through Parliament, as we discussed with Japan or South Korea or Thailand, or Myanmar. These things can be a long slog, but hopefully in a few years, we’ll start to see the benefit of the groundwork that has been laid.