The big picture: Neds eyes global expansion
After a strong start in Australia, the latest venture from former Ladbrokes Australia CEO Dean Shannon is looking next to the UK, writes Joanne Christie
Given the country’s increasingly restrictive regulatory environment and intensely competitive marketplace, to many people last October might not have seemed an ideal time to launch a new igaming venture into the Australian market.
But to former Ladbrokes Australia CEO Dean Shannon it seemed as good a time as any and so far, his new sportsbook venture, Neds, which launched with a AU$10m advertising campaign to coincide with last year’s Spring Racing Carnival, is performing better than even he had hoped.
“It has exceeded my expectations, I think up to December our budget was for 38,000 clients and we almost doubled that,” says Shannon. “In the first three months we turned over about $233m and we’ve acquired just over 80,000 clients now.
“It is going very strong and we are really looking forward to launching a few new features and products over the next few months.”
The serial entrepreneur’s success is perhaps not surprising given his stint at the helm of Ladbrokes. When the company launched Down Under in 2013 via the acquisition of Shannon’s company Gaming Investments — owner of sportsbook bookmaker.com.au — analysts were largely downbeat on the move, describing Ladbrokes as coming “late to the party”.
Fast-forward to last year and its Australian business was outperforming many of the longer-established international brands, with Ladbrokes CEO Jim Mullen describing the 67% rise in revenues as proof the company was continuing to “knock it out of the park” in Australia.
Although Shannon’s decision to depart Ladbrokes coincided with the company’s merger with Coral and various other departures, he says his motivation was largely to get back into business for himself.
“While I enjoyed my time with Ladbrokes and creating a business there with my team and I still have a very close association with it, at the end of the day I really just like being my own man and whilst the plc did give me quite a bit of rope, I still felt like I had a boss,” he explains.
“I like making my own decisions and creating my own framework and so just decided it was really time for me to move on. Certainly I left on amicable terms with everybody.”
When asked if he is looking to follow a similar pattern with Neds by exiting the business as he did with the sale of bookmaker.com.au to Ladbrokes, Shannon says: “Definitely not. It is really a different chapter in my life. I really want to create something different here in terms of creating a global brand and I’ve got a much longer-term outlook with this business.”
Global aspirations
In terms of that global brand, with Australia ticking along nicely Shannon has recently appointed former Ladbrokes colleague Paul Cherry as CEO of Neds, freeing him up to focus on the “big picture stuff”.
He now has his sights set on markets further afield, with the UK the next stop for Neds. Although acknowledging it’s a very mature market, Shannon is optimistic the company can make a mark.
“Certainly I don’t fear going into a mature market — that is what we did with Ladbrokes [in Australia] when we launched that back in 2013 – it was already very well-serviced and a competitive market but we grew that brand quite successfully.
“Even with the introduction of Neds last year we are certainly getting some very good traction and Australian is a very competitive market. Certainly while I know the UK is too and I am not taking that lightly, I do believe that if you can get going with some points of difference then you can get some traction.”
He also has plans to enter African, South American and European markets, but says the company’s primary focus will definitely be on regulated markets.
He’s also closely watching developments in the US. “Obviously we are keeping a very close eye on what happens in the US and we are actually going to look to apply for licensing through New Jersey as soon as we can, and various other states.”
Widening the offering
As well as expanding into new territories, Shannon also wants to expand into new verticals. In Australia, the options are limited thanks to the introduction of the Interactive Gambling Amendment Bill last year, which banned online casino and poker.
But elsewhere, Shannon sees potential. “Definitely we are very interested in casino certainly and poker and bingo in countries like the UK and Europe and anywhere else it is legal. It makes sense to have multiple forms of gambling all bundled up into one.”
One vertical he’s not too optimistic about at the moment is lottery. Initially, Neds was planning to launch a secondary lottery site in Australia, but he decided to shelve the idea following the issues faced by Lottoland in Australia.
“Initially we were planning a sports lottery business, which was a little bit different to the likes of Lottoland, etc, but I just felt with the amount of marketing and the trouble that had already started between the Tatts Group and Lottoland, that the government was probably going to interfere at some point so it was probably better to run with a sportsbook first in Australia.”
Indeed, he was right on the money in this respect, with the Northern Territory government in November banning betting on Australian lotteries and the Federal Government earlier this month announcing plans to ban betting on any lotteries for Australian residents.
Shannon is now cautious on the model generally. “At the end of the day it is going to become a very tough and difficult business model to sustain.
“A lot of the lotteries are run by the governments or they get a benefit from the lotteries in each country and if Lottoland starts to cut in too much to their revenues they will look to make changes to protect that revenue stream. It is not just Lottoland, it is the other lottery providers as well.
“We’ve put it on the backburner for now and we’ll just see how things go for the next 12 or 18 months.”
Crypto with a twist
The other area in which Neds has come up against regulatory hurdles is cryptocurrency, although in this regard Shannon is undeterred. In February it launched a bitcoin site in Australia, but the service was up for just one day before shutting down after the Northern Territory regulator sent out a warning that it did not consider bitcoin wagering was allowed under its framework.
While disappointed, the ‘ban’ issued by the NT was informal and Shannon says he remains in discussions with them over the bitcoin project and is hopeful of “working out a framework they feel comfortable with”.
Neds has also recently launched an ICO, aiming to differentiate itself from the plethora of ICOs in the market by offering first, an established business and second, regular returns to coin holders. “Nedscoin is something we are all very excited about,” says Shannon.
“We are really challenging the whole concept of ICOs; we are trying to create true value in a coin by giving a percentage of our turnover back to our coin holders.
“At the end of the day people just really speculate on the coins and whether or not they will go up or down the next day, whereas with ours, each quarter you get a return based on the size of your investment and how many coins you hold as a percentage of the overall pool based on turnover.”
It’s perhaps an unusual way to raise capital for the expansion of an already up-and-running igaming business, particularly given Shannon’s successful track record in the industry, but it’s also perhaps a clever way of standing out from the crowd and few would argue this isn’t a useful skill for a young company in today’s competitive igaming market.
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