Gaming and Corona: A challenge for all, says Jesper Kärrbrink

They say adversity is the only true test of leadership. As the COVID-19 pandemic presents the gaming sector with an unprecedented challenge, CasinoBeats is looking to the sector’s leaders. Here, Jesper Kärrbrink, executive chairman at Green Jade Gaming and former CEO at both Mr Green and Svenska Spel, has his say.

I think it’s fair to say that we have a situation no one has experienced before. We have a coronavirus pandemic – and we have a global infodemic. 

Together this has created an unprecedented level of fear and anxiety. We are closing borders, putting cities in lockdown, stopping public events, threatening people with fines if they are out walking outside in groups. Six months ago, this could only be found on a Netflix episode of some zombie movie, watched by few and believed by none. Now it is happening.

The big question facing business at this moment is: “How will this affect the gaming industry and what are the options we have?” 

Firstly, it will affect all but some more than others. Being a resort casino today is probably a nightmare. Having a dependency on sports betting, is perhaps a similarly difficult experience but with a lower fixed-cost base. Being any of these and sitting on a debt-driven balance sheet is beyond a bad dream – it’s what Hollywood colourfully calls a ‘clusterfuck’. Believe me, been there done that (Eniro 2008).

However, most igaming companies are not in this situation, but actually in a better spot than many other industries suffering through the corona crisis. We are coming from higher EBITDA margins than most, and our product is digital with a 100 per cent variable cost of sale. The most substantial spend is marketing, which is relatively easy to cut. 

“The players are still playing their favourite games online”

The second-largest cost is people and this has – in most igaming companies –  been a focus area the last few years with increased regulation and shrinking margins. Having a balanced workforce is key to any company and situation. When it comes to the staff and the current situation, I believe the focus has to be on keeping the spirits high without promising too much. Transparency is the key word now, everyone understands the seriousness. 

But most importantly right now we have a product that people like and consume also in times of crisis!

With regard to sports, lacking popular betting events and matches due to leagues shutting down and major tournaments postponed makes it very hard to bet – but playing my favourite slot or table game is so far unaffected. Perhaps even there will be an increase, with more people working from home, spending less on restaurants and bars and having more time. Talking to providers, both large and small, this seems to be true. The players are still playing their favourite games online.

The challenge for most igaming companies is rather on the human resources side, setting up functional call centres with the agents working from home, getting 100 per cent from teams that are unable to meet up, having employees turning their living rooms into a combo of home office for two and a schoolroom for the kids and at the same time performing at full capacity. 

This is a management challenge which will prove who the real leaders are. And looking around the industry and talking to people on different levels, we don’t lack leaders. There are numerous examples of strong leadership where remaining cool and focused, communicating clearly and adapting to new situations are the order of the day. Some have even started joking about it. And that’s always a good sign.

“In a crisis, focusing on getting out of it must be the first priority. But it is essential to start looking ahead again. Things will get back to normal”

The key for most CEOs now seems to be to shift focus from long-term planning to day-to-day operations, constantly monitoring customer behaviour and cost. This is the right way to go: when in a crisis, focusing on getting out of it must be first priority. But at some point it is essential to start looking ahead again. Things will get back to normal.

At this point, while there will be some damage from the coronavirus itself, the real cost to business is driven by market psychology. Viruses have been with us forever. According to a Goldman Sachs report published last week, stock markets should fully recover in the second half of the year. 

Furthermore, Goldman Sachs’ conclusion is that there is no systemic risk. It feels more like 9/11 than it does like 2008. But I think this can change fast depending on how we as a society handle this crisis. The wheels need to start spin again.

So is this a (major) bump in the road but not the Armageddon one might think when reading newspapers and browsing the internet. Will it impact the igaming industry? Yes it will, but once again, except for betting, we will come out relatively well considering the shit-show the world is experiencing at present.

One will come out in a net better position, especially those focusing on entertainment and value for the player (in contradiction to player value). Some of the measurements taken as an effect of the corona crisis – like having remote customer service operations, more video meetings, etc – can also become a new way of operating, leading to even higher quality and lower cost. 

And it is worth repeating – from a leadership perspective, there are some real superstars out there managing the challenge!