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The latest episode of the SBC Leaders Podcast sees SBC Global Relationships Director Kelly Kehn, sit down for a chat with Fifth Street Gaming Digital's Chief Strategy Officer, Seth Young.
SBC Leaders Podcast is a series of interviews with CEOs and decision makers at some of the betting and gaming industry's biggest, best and most innovative companies. SBC's Kelly Kehn is the host who asks the questions.
Hi, everyone. This is another episode of SBC Leaders podcast, thank you for joining. I'm Kelly King, global relationship director for SBC, and today I am honored to be joined by meals on Ken Howard, who's the CEO of the Dutch National Lottery.
Now, we all know that the Netherlands, as a newly regulated market, is top of everyone's mind. So I am excited to talk to him about what's happening there and what we can expect going forward. Welcome, Niels.
Thank you, Kelly. Happy to be at the SBC.
Let's kick it off. Let's first start about what's happening in the Dutch market right now. Regulated four months ago. And so I was hoping you could tell us a little bit about what's happening now. Is the excitement still there?
Has it slowed down? What's happening?
There's two sides of that coin, this excitement still going on? And the other the other side is the panic among politicians and regulators on sheer level of advertising and how we are leading the younger people into the abyss already after three or after four months.
An advertising ban, the minister, a new government in the Netherlands, the one after the other minister is called into the parliament to be questions on how this can all come about and particularly what influence the minister wants to have on both.
The state holdings were also active in its markets on which I represent one.
I live in the UK, so none of that sounds very unfamiliar to me, but it's interesting that it's happening in other markets. You said you're not new to the market, obviously, the Dutch national lotteries incumbent, they've been in the market for quite some time.
How are you handling new competition?
We, you know, our traditional lottery organization, all this lottery in the world had a state lottery, the state lottery. 295 years old, older than the United States since 1955, Dutch Lottery also has the sports betting brand called Toto always pre-match.
And it was a very small brand. And in the last couple of years, we've managed to ignite the brand, and it's become quite significant to a number of reasons, but also in the review of preparing ourselves for, of course, the opening of the market regulating the market when this market opens October first.
The market was so incredibly well. Sales from a from a regulatory point of view, but an enormous amount of rules and regulations drawn from all the experience from other countries. Where does the UK or Scandinavia, which is often a role model for Holland as of October first or ten companies who obtained a license to operate?
But all the companies and some very large one who were active in the Netherlands before the markets was regulated so illegal they were forced by the Dutch government to go turn their screens black. And of course, we saw profit warnings from some of the product quality companies where suddenly they had a huge hit in their know and
they had to, of course, go public with that. So we had a good sense of how this was really quite hurtful. When these operators went black, their screens went black. 5% of their customers went into even worse areas.
So really illegal barriers. The other 95% probably ended up with the ten operators who got a license of which the Netherlands law, the Dutch state lottery is one.
You are the incumbent and you've been in the Netherlands since you said you're the longest standing state lottery. What what kind of advantages does that offer understanding your customer base or understanding the market at large what they want and you say you're the leader in the market as well.
So tell me where the advantages are.
Well, the advantages, of course, that you are in this market. You are very well plugged into Dutch society. You understand what the emotions are and how the different the stakeholders act and what their beliefs are and how you and you can anticipate this.
The second advantage? Well, no, not a real advantage. As we are. We have three shareholders, which is the Dutch state, which is the Dutch National Olympic Committee and a group of 18 good causes. But we have three shareholders.
But the fact that we are, you know, a majority state owned that helps us, of course, to understand much better what happens in the political arena. The third one is because of the Netherlands being so large and regulating niche markets.
If we could draw from the experience of other countries, particularly, I meant just mentioned Scandinavia, but also other countries where things went wrong or things didn't work out very well. So we had ample preparation time and the fact that we have, of course, with sports betting or.
It's only pre-match show, no life betting. We have. Well, very well known brand, which has a very strong brand equity that helped us to a flying start. And then the sheer fact that the illegal operators that, you know, had to really step out of mark this October first.
That was, of course, an advantage that nobody could anticipate.
Being native to the Dutch market. Does it help you pinpoint and understand when we may need to protect our customers a bit better? I see so many coming into markets without that sort of thought process. So wondering what you thought about that?
Well, responsible gaming that is in the DNA of the Dutch National Lottery, that's a state owned company. We are expected to be at least a little bit more restrictive and compared to we are just an open market where everybody competes.
Although if you don't, if you're not successful, you don't have compelling advertising, compelling propositions, a good sportsbook, you don't compete, you don't have an influence. So we are balancing this between, you know, we are the largest, we are the incumbents.
We are very successful brand. We need to compete head on with increased competition, depositing limits, playing limits. This is all very important to us because we have that responsibility and our position in Dutch society, so it is expected from us.
We have, for instance, loss restriction, which is not required by law. But when you are between 18 and 23, there's a lot of focus in Holland on protecting what we call with young adults between 1823. We have even gone a step further.
You can you are not allowed to lose more than €400 a month when you're in that age group, it's just not possible in our company. That's not something other companies do we expect in the coming couple of months.
Another ten licensees to enter the markets, which means that in a country size of Holland, which is about the size of New Jersey, I always say it will have a 20 or something companies that will offer on gaming so interesting, but a sizable market and probably good winnings to take for all companies.
It must be a really interesting and prestigious position to be in and comfort to be the CEO of the incumbent in a market that is probably Europe's most exciting at the moment. Everyone's looking at the Dutch markets to see what's going to happen right during a Winter Olympics, but also right before we get to World Cups coming
up as well. So I'd like to talk to you a little bit about your personal take, how you got to be CEO, the sort of your path and then a little bit about where you're going. So tell us first about how you got to be CEO.
What was the path that you took one you.
And so of course, important. The exciting part is you do not look at my paycheck. That is less exciting. So that's that's a bit restrictive as well as the Netherlands, but no in jest. This is a great job, one of the best jobs I've had ever, particularly because of it with the fact that I mentioned the Dutch
Olympic Committee where we are shareholder, our shareholder. That means we are a huge sponsor for them. So actually, as the Dutch are skating towards a lot of gold medals in Beijing today, you know, that's also part of our doing because of the funds we provide to the Dutch Olympic Committee.
So it's an exciting job. I am my background is a bit funny because I'm a lawyer actually by training. I've never practiced any law. I pass a law school. I mean, if they enter the fascinating world of soap and diapers and shampoos at Procter and Gamble, where I spent a long time at P&G also abroad, and then
I did a spell at Royal Philips Electronics wasn't a board of a Dutch food company and lateral in the board of the second largest Dutch food retailer called Jumbo, was CEO to food retail change. So always consumers stores production making things and at the bay at a phase in my career where somebody said, Hey, this guy is
able to merge companies in a good way and, you know, gets things going. I was asked to for this position, which was actually the merger of two lottery organization run the state owned state lottery. And the other one was the other company called Lotto, which included, by the way, all of the brands talked to all but also
scratch tickets. Both companies were in major trouble, and I was asked five years ago to join and merge the two companies and prepared them for the future. And that's my job for today. It's an exciting job, a great team here, business doing very well.
600 million of our turnover is in retail, so. You know, there's a lot of retail stores that that sell lottery tickets 800 million online, but we have also particularity and Holland that we also have a subscription model for a lottery, so people subscribe to lotteries.
And of course, that is great with about 1.2 million subscribers, and that gives a very solid base for our business.
You are my second guest actually to tell me they come from fast moving consumer goods. I had another guest that came from Unilever. Right? And I'll ask you because I'm really curious. You said a little bit about it, but what does that experience?
Because for someone who is I've had my entire career betting and gambling, I can't even picture it transferring into fast moving consumer goods. So tell me about experience, what you have and what you've sort of brought to that because I think that's really interesting training.
And I can sort of refer, of course, to P&G, which this show has been a great learning school for me. As I mentioned, I spend two years in Paris running their health and beauty care division of their P&G.
Of course, people say it's a it's a marketing company, but it really is. It's a technical company about products, superior products. So it's about great products. It's about understanding consumer needs and consumer habits, throwing it that into viable strategies, executing with excellence.
And that is really, you know, the bootcamp you're in when you're at P&G and that's what's been drilled into your brain, not working from from only intuition, but from data, from facts, from consumer not needs consumer insights, turning it into a compelling proposition for whatever product you are responsible for.
And quite honestly, whether you are developing advertising were head and shoulders, which I did in the past or developing appetizing for our total campaign, a compelling proposition for our sports betting business. There's not much difference. Well, and the other thing is, I have to admit that marketing is, of course, a profession where you have absolutely no need
of any prior knowledge or particularly particular skills. So it's also sometimes common sense.
P&G is a huge market leader, but constantly being bombarded with new competition. That seems to be a similar position that you're in at the moment. You also mentioned COVID having a big effect and moving a lot of your play or your revenue online.
So you've got a team and you are leading this team. So talk to me a little bit about how you're leading with that constant bombardment. Those new competitors coming in, the new laws, changing the screens, going black, like what kind of culture you're creating and what do you want them to take away?
Very good question. A couple of things. one is, well, that's more of a principle thing. It's only a job. So, you know, it's important to to be motivated, but it's only a job. So there are more important things in life than work.
It is a quite a intrusion on free time. I always say so that are make it a fun experience where people feel safe and feel happy to work. And if people ask me, Hey, how are things at the Dutch National Lottery, I would say it's probably pretty good because I hear a little laughter in the hallway kind
of philosophy. Secondly, I think there's also a point of having a shared sense of purpose. I think that's prevalent today in society at large. In our case as well, because, you know, ultimately we sell products that nobody needs because it's just we sell hope or a dream.
And our transaction is not concrete. It's on a year. We're selling hope. So for the people to do that kind of work, it's for them. It's important, but it's specific to the Dutch National Lottery is that the fact is that all the money we make, we basically plow back into Dutch society, into sports, into but also to
the Ministry of Finance and and obviously does good things with it for Dutch society. So that is helpful for us to kind of have this common sense of purpose in our company. second of this, I think we made a very conscious choice on people, our core values, and that does not put Post-its on a wall, but we
love them. We often take decisions which are not in the interest of turnover or profit, but are in the interest of doing the right thing and living our core values. After the merger, 75% today, each of our employees are less than three years on employment, so there's a huge change.
We've transitioned the company from what I call to the intuitive marketing to much more technology based data driven with the opening of the online markets. Clearly, we needed a lot of talent, which was international talent. We didn't have a lot of people who are experts on their online casinos or live casino or short machines.
We saw a huge internationalization in our company, so people who have settled in from places like Malta Highballs and also Las Vegas or maybe Eastern Europe have settled in with their families and they they're planning to stay for a while.
So that's what we've done.
You mentioned selling the dream, which I love, obviously, because I think for the most part, we do that. And I know that you've got some partnerships with with the Dutch Olympic Committee and Soccer. Do you have any sports heroes or do you have any heroes in general that you sort of look to when making big decisions or
lift by?
We have a few ambassadors which are basically on the payroll and we use commercially, but but also managing our stakeholders. And there's a few of these people, by the way, the guy who is the chef de mission of the Olympic team, the guy with the Olympic gold winner swimming Peter from the husband's international pretty famous.
These are people who are very much an inspiration to us as well. And we have a number of those, also some of the people skating actually at this point in time in Beijing. And we have a couple of people here or unbelievable who have grown through adversity and gone through to win Olympic medals at the Paralympics.
So we have a number of those people and they are a great inspiration and often are here in the company as well. Talk to our people or do activities with our people, and we have a program here in the Dutch National Lottery, where we actually employ some of the extreme athletes who have, you know, given all of
their life to, you know, their sport. And then there are 35 and then, OK, what is next? So actually, we just hire an Olympic medalist who was she's the sailor in the 470 class Kabaka, and she works at our sponsoring department.
So we, we, you know, we we try to live also doubt that part of our mission.
Do you have any role models outside of sports.
Though? There's some criticism today back to the previous CEO of Unilever. It's a guy I know, I know of quite well from the past Bill Pullman, who also xpg and pulpo on this transition or is, was in the process of transitioning Unilever to much more a purpose driven company where, you know a company is here to add
value to society and not only to add value to the shareholder about transitioning into a much more sustainable modus operandi. I have great admiration for him. So you could call him a role model, but there are many, many more.
What you see in Procter and Gamble and Unilever at the moment is they are really values based and it comes across in their marketing. What impact are you hoping to leave on the industry at large when you leave the Dutch National Lottery?
There's a number of challenges, particularly only in the online gaming market, of course, one of the things which I found is making a step from. Saying We are protecting consumers to actually making sure that is really seen in everything we do and actions we take, and I'll give you an example, there are some companies who believe that
when you you're in line arena, a problem player is somebody who calls you that he, he or she has a problem. And then they have in their statement of purpose. We don't want to make any money on people, on problem players.
Well, that's of course, an easy way. But everybody understands that when you're and player, you're not going to call. So have a uniform definition of what a problem players for every player in the markets in the Netherlands. So we can really address those problems.
But also the area, for instance, is when you know, our technology monitor's playing behavior and we have an intervention model, which is very active. But there's a lot of discussion around protection of what code young adults and I mentioned previously to you, Kelly.
But what happens if somebody is 92 and, you know, plays €25,000? Shouldn't we talk about that as well? If you think about deposits, you know, maybe every company has a deposit limits. But if somebody has six accounts, that's six times a day a person can deposits.
Shouldn't we have some kind of blockchain technology where we link all that data into some kind of foundation where when somebody has deposited a certain amount at the Dutch National Lottery that day, he cannot deposit at another company because the technology will be prohibited.
Those are things which I would really be proud of if I could have an impact. And I think that the industry itself should proactively make that happen, as opposed to wait until the regulator or the politicians. Usually they're not.
They're not often based on facts, make all kinds of decisions which are sometimes outrageous or sometimes, but it shouldn't.
Or just totally unaware of how business is right. I think that we know best has run our businesses, so why not? And if he's in the metaverse seemed to be very hot topics these days, so I wanted to give your thoughts on their role when it comes to gambling.
So have you considered NFT use as a part of what you're doing? Do you know anything about NFT NFT?
I don't own any. So I'm old school. I read about it and it's fascinating and I'm sure there's a segment to it. But I'm also an economist or the old order, which is economies thrive also on people making stuff.
And that's all and adding value and just trading bytes and bits and making money is seems to be more of a pyramid game than an actual economic viable activity. But that might be somebody's old school speaking on Metaverse, where we all understand what Mark Zuckerberg did when he renamed the company, clearly from Two-Dimensional to Three-Dimensional.
Anything which has to do with virtual reality. I do not envision myself a world where everybody is spending their lives with a 3-D goggles on and living their avatar in a dream. I must say that I enjoy having a dinner with my children over a glass of wine and talking real things in life.
But again, just an opinion.
I had dinner with someone recently who told me when I have quite young kids, when they're older, when they're old, 20, when they're young adults, it will be cool to have a farm and be off the grid sort of thing.
That will be the new, sort of very new trendy thing. And let's hope, let's hope we go back to that type of thing. But that is all the time that we have for today in the US. My sincerest thanks for joining us.
It was really good fun and really insightful. Thank you for speaking with us.
Thank you, Kelly. Thank you for inviting us and thank you for being a great host.
This has been the next episode of SBC Leaders podcast. I'm Kelly King, global relationship director for SBC, and you can watch, download or subscribe on any of your favorite podcast channels.
Thanks for watching!