Sergei Efimenko – Favbet – Thinking East

sergeieffimenko
Favbet CEO – Sergei Efimenko

With numerous  Western European igaming markets reporting revenue declines in 2014, SBC caught up with Favbet Chief Operating Officer Sergei Efimenko to discuss Eastern European sports betting growth and how to create a betting audience in Eastern European markets.

Sergei Efimenko discusses market intricacies, social and economic impacts that effect the regions gambling markets. Giving SBC readers real insight into running a betting operation tailored for the Eastern European Market.

Sergei Efimenko (MBA) has over 10 years experience in online gambling and  has consulted numerous operators with regards  Eastern European igaming and gambling markets, operations and logistics.

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SBC:. Hi Sergei can you give our readers an overview of the Eastern European betting markets, which regions do you feel represent real growth opportunities?

Sergei: Hi, SBC and thank you for the interview.

In my opinion, Eastern European markets have high potential, due to the low rate of population engaged in betting combined with the total cash domination of the payments sector and the possibility of attracting high value/VIP customers if targeted correctly.

These are countries with almost no middle class, where there is a great divide between the rich and poor. In the majority of Eastern European countries (except maybe Poland and Czech Republic) there is still some negativity towards gambling. Unlike Western European markets,  these populations are still learning the basics of gambling and its products, so we are really describing completely new markets for igaming.

Changes in federal laws can make operations hard to manoeuvre in, meaning that companies need to be flexible in order to adjust and adapt to conditions.

At present a land-based operation is a must for operating in the majority of countries:  not just because it is the best payment method within these territories, which can provide you with much higher volumes in deposits and wagering, but also because it gives your brand trust and recognition. This is a must as much of the population in these regions is +45, and sceptical to some degree about online technology.

With regards to individual markets, we see the high potential in Romania, Moldova and southern CIS countries such as: Armenia, Azerbaijan, Kazakhstan and Tajikistan. Although some of these countries are not classified as Eastern European states, there is a logistical and operational connection for our operations.

Russia would have been considered a lucrative proposition, however in recent years there have been too many changes in laws and policies that have simply favoured national monopolies. The barriers to entry are too high and risky. Last year more than 600 betting shops and many online operators were forced to close their operations due to un-favourable market conditions imposed on them.

These changes in legislation within Eastern European markets have now become a major factor, since governments in countries such as Poland, Belarus and the Ukraine have taken up draconian business laws to favour state monopolies making it very difficult to operate in.

SBC: Eastern Europe is a huge market to cover with multiple regional intricacies, What factors do Favbet consider and research when entering Eastern European markets.

Sergei: We look at the following factors, country legislation for gaming, potential for regulatory change, economic/social wealth and knowledge/engagement of betting products.

Furthermore as a betting operator we have also got to be aware of political impacts surrounding the countries we look to operate in. This means researching political contexts, lobbying interests and cultural/social influencers; we have got to cover multiple outcomes for each region. In terms of management you have to bear in mind that the market can change very rapidly.

Studying the population in detail is also key, since we have to asses’ wealth and value dynamics of the specific country. We are dealing in very diverse economic settings, for example the salaries of citizens really differ from city to city.  When researching Russia, payment providers highlighted that 85% of deposits came from Moscow and St Petersburg, we have seen this trend followed in other Eastern European countries

Another vital factor is payment provisions within the region. You have to remember that these are cash dominant economies that have to be serviced in a specific way. Each nation will have an intricate localised payment system/network that we will have to accommodate and this is no easy matter an can take time to get right.

SBC: You have worked within Western betting operators, how do Favbet Operations differ from traditional European sports betting operators, in order to target and retain Eastern European customers?

Sergei: The difference is night and day! Put simply you cannot apply western igaming methodologies and frameworks to Eastern European betting operations, it will simply not work. Operators have to remember that working environments between Western and Eastern Europe are completely different.

Building a team is vital part to success in these regions. When targeting customers you have got to be aware of multiple intricacies with regards to your customer base. These include language (which can differ between regional states), local customs, competitors,  online habits etc… Successful operators have to build teams that are fully aware of these intricacies and conditions.  Put simply a successful operator has to know how and when to target the customer in each region.

As mentioned before you have also got to be aware of factors that may not necessarily affect Western operators. These include customer knowledge of gaming products and population dynamics. We are dealing with big diverse countries, where knowledge in gambling differs. With some customers we have to engage with knowledge/learning driven content and context. Others may have high degree of understanding, and many will have no interest in your product because of cultural circumstances revolving around mistrust of gambling and online enterprises in general.

We have also got to place a huge emphasis on fraud and bonus protection. We plan out retention and acquisition campaigns thoroughly in order not to get hit by fake accounts, multiple bonus abuse and acquisition fraud. This involves having robust customer support departments who carry out referencing checks on our customer base.

SBC:  What consumer trends and habits are you seeing in your target regions which are unique. What are the impacts of these trends on your business channels?

Sergei: Overall, I believe that customers are becoming more trusting of online payment methods which is pleasing for us. By offering a good online betting service we are starting to see more levels of referring traffic to our verticals, which is pleasing as trust (a key factor for us) is spreading.

Also, still there is a growth of mobile internet and mobile gambling here – now almost 25% of all bets are done here via mobile devices and tablets. With very cheap mobile internet combined with easy access mobile connection, this vertical  has become an easy option for many customers of all ages and social groups

Personally I believe that this is a  step by step process, Eastern European populations learn how to bet and create some form of betting culture, together with betting companies they can trust in their markets, when you drill it down the process is actually very organic.

At present Favbet , does everything possible to set the right conditions for its players, we want gambling in Eastern Europe to be  something that is fair,clean and profitable for all customers and smart businesses that choose to operate in these regions.

SBC: Finally How do you feel that Eastern European markets will progress in terms of igaming. What future impacts will come into play? 

Sergei: We expect good growth, but also increased competition in these markets. Growth will drive up,  since there is still a relatively small % of the population who are engaged with betting products. In order to increase this, there needs to be a focus on “betting eduction” and improved customer messaging by operators in these regions.

It must be noted that we are dealing with expansive online populations that are growing each year. For this reason I believe that we will see established European igaming operators re-enter markets.

Furthermore with markets likely to grow, I also believe that there will be more effective online payment solutions entering the markets, these will help operators.

The mission for Favbet  is to create the best market product and service, that in near future will be the same level or even better than the industry leaders offer, I firmly believe that is the only way to develop and grow in market realities and conditions of Eastern Europe.

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 Favbet Chief Operating Officer Sergei Efimenko

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