Keeping betting shops in business

Maxim Kiryukhin was born in Stavropol on August 27th, 1971. He obtained two degrees in Engineer-Economics and Accounting. In the early 1990s, he sold and published books. “My partner and I successfully made the collection of household tips with the help of libraries,” Kiryukhin recalls. “It was my friends’ advice to invest money in betting.” Since 2013 Kiryukhin has been the chairman of board of directors in Fonbet. 

The closure of betting shops was one of the most immediate aftershocks of the worldwide lockdowns seen earlier in 2020 in the face of COVID-19, and many were left wondering about the fate of the industry moving forwards.

While we still lack clarity on what the future might look like, as we enter 2021 the dust is beginning to settle. Now, the industry can take stock of the changes that have been made and will continue to be made.

Following our conversation with Alexey Khobot earlier this year, we caught up with Fonbet’s chairman of the board, Maxim Kiryukhin, to find out how the company tackled the challenges faced due to the closure of betting shops and the changes that happened prior to their reopening.

Kiryukhin explains that, while about 70% of bets made by Fonbet customers are made online, the pandemic impacted the business on two fronts familiar to any sportsbook operating at the time – the cancellation of sports events and the closure of betting shops.

“Our network spans about 1,000 betting shops throughout Russia,” he explains. “When Russia introduced strict quarantine measures, restaurants, stores and other retail outlets were closed immediately. All betting shops were closed much later.

“We made a decision to close our shops before an official order came out. Our primary concern was and continues to be our customers’ safety,” Kiryukhin shares. “We also processed withdrawals from the accounts of any customer who requested it.”

He continues, explaining that as Fonbet’s betting shops have reopened, the company has taken every precaution and followed local guidelines to protect customers and staff. “It is a good thing that our betting shops are spacious, so even with social distancing we can comfortably accommodate everyone.”

No digitalisation

“It is also interesting to look at what happened during the pandemic,” Kiryukhin comments. “In most industries, customers went online and stayed there. For example, people started buying groceries online. This turned out to be more convenient, faster and better for most people, not to mention there was more variety and choice. In other words, consumer preferences shifted towards digital.”

The same thing probably would have happened in the betting industry if sports events had not been put on hold, says Kiryukhin. Since there were no sports at all, there was also nothing to bet on, whether it was online or offline. He notes that there was a massive outflow of customers who only placed bets at betting shops before quarantine, simply saying they also went on a break. However, they are now coming back to the offline shops after their reopening.

According to Kiryukhin, during the pandemic, 40% of Fonbet customers who used to only bet in betting shops did not make any bets at all, but returned to the betting shops after they reopened. 35% now play both online and offline.

“Among our customers who used to only bet in betting shops, only 15% started playing online, but they continue to bet in betting shops regularly. However, I believe this number is much lower compared to the other industries, and the percentage of customers who migrated online is probably higher,” Kiryukhin asserts. “Therefore, we cannot surely say that we had a serious transition to online betting.”

Perhaps the essence of the matter lies in the fact that under the Russian law, it is impossible to have a single account for offline and online betting. If there was a single account, then the percentage of customers playing in both segments would be higher, Kiryukhin suggests.

VIP players returned to betting shops

Fonbet’s services extend both online and offline. This meant that generally speaking, the business model remained unchanged in the face of the pandemic. Kiryukhin explains: “For many industries, the pandemic has divided business development into the two parts: ‘before’ and ‘after’. Yet, this is not the case with us – everything is back to normal, and offline is still an important part of our business.”

He adds: “after the reopening, customers returned to our betting shops straight away. They like the special atmosphere there, the concentration of like-minded individuals. For some people, it is a way to escape their routine. Some people go to the gym or saunas, but our customers go to betting shops. For them, it is a way to relax and be part of some sort of gentlemen society”.

VIP players, in particular, make up a special category of Fonbet’s betting shop customers, he says. For them, going to betting shops is not just about making bets. It is about a special form of entertainment with high-quality service.

“In our betting shops, we have special privileges for VIP players, including VIP rooms with massage chairs where customers can invite their friends to watch a game and enjoy food and drinks”, Kiryukhin explains.