Q&A: Norbert Teufelberger, CEO of betandwin

Despite increased competition in recent months, executives with betandwin.com are optimistic about their future and are confident about the company's long-term outlook.

Officials have been busy in the last six months aligning themselves with selective partners from all around the world. Norbert Teufelberger, CEO of betandwin talked with IGN about the future of his company and some of the unorthodox approaches it has taken in planning for the future.

The Austrian-based Internet bookmaker has lofty goals and could surprise industry analysts.

IGN: betandwin has managed to continue growing its business despite a slowdown throughout the industry. What are some of the things that differentiate your company from others?

NT: betandwin was founded in 1998 and first took advantage of venture capitalist companies in 1999. Shortly after that, Manfred Bodner and I joined as co-CEOs. Our goal was to position it for a quick IPO and capitalize it and then create a vehicle that would be able to capitalize on the upcoming boom of sports betting and other e-gaming products.

We were one of the few companies that were lucky enough to still hit the window and capitalize on our IPO. We were able to raise about $50 million when we went public in March of 2000. From the very beginning we have been focused on preparing a vehicle which is aimed at being one of the top five betting sites within the next three years.

IGN: How have things progressed since you've been aboard?

NT: We openly started from minus-200, as we call it, because neither myself nor Manfred were experts in sports betting, and sports betting is very different from casino gaming. We had a lot of catching up and learning to do, which we did very quickly. What we did differently from others, though, is that we spent a lot of effort and money on creating a corporate vehicle and proprietary software which will enable us in the future to get with a strategic partner to expand into regional markets.

We had a strategy of poaching and hunting at the same time. We were Internet poaching and real hunting. The only market at this time that we are really able to hunt is Austria on a fully licensed basis.

IGN: You're looking into the Philippines too. Where does that process stand and are there other regions you hope to get into?

NT: About four weeks ago we announced our plan there. We are working together with a partner where we will be able to offer sports betting on a fully legal, local basis. We continue to work with that and fine tune it.

We are working on three big markets at this point where we think we have good chances to get a local license, and then have a good basis for growing our business.

The growth of our business at this point is still at a small scale. We are still a small company compared to many other betting and online gaming companies. But we have focused on some very specific things with partners that have long-term growth approaches to them.

We have very strong partners and very strong shareholders, like the Australian telecom, a Scandinavian broadcasting company and very strong sports marketing agency as a shareholder. They made all the contacts with professional sports groups. We were one of the very first sports betting companies that voluntarily offered to share some of the revenues with official sports associations like the Austrian Ski Federation, for example.

We are trying to leverage that internationally but we are constrained by the legal situations in certain instances and we are working on that very heavily to be able to roll that out in other markets.

IGN: So although you may not be as big as some of your competitors, it has been kind of a controlled growth?

NT: Compared to many others who are sitting on sand boxes in the Caribbean and try not to hand out business cards and do as much business as possible, we aren't as big. But we have created in Austria a good image for sports betting. We have pushed the brand awareness very high. About 70 percent of Austrians know what betandwin is all about at this point. We have a very high and clean profile. In the next year or two we will be able to know if we are able to capitalize all the investments that we have made.

But we have been growing very fast even in the last year or so. We did about $62 million in turnover last year and we will do more than $250 million this year. Our goal is to do $2-3 billion in turnover in about two to three years. If we are able to achieve that then we will be a real player.

IGN: Is there a target amount of turnover necessary for making a profit?

NT: That is very relative. It depends on how much we spend on marketing. We have about 32 million Euro in cash left, so the issue of turning the company profitable at this point is a nice one but it isn't a must. More importantly, the goal for us is to grow and to grow fast.

What we have done in the last six months is take steps to help with that growing process. We had to find a good license base with a reasonable tax rate, which we found in Gibraltar. It is part of the European Union, but only in terms of law and not taxes. We are regulated very nicely there and are still able to provide competitive prices to our customers.

Austria offers a very high tax rate, but with Gibraltar we have a sports betting license as well as a casino license, and possible a lottery license in the future. As a comprehensive online gaming operator, we need to be able to provide all products to our customers, and so far we only offer two in fixed-odds betting and casino games.

IGN: What projects are you working on for the future?

NT: We have developed a betting-terminal product for countries that have low Internet penetration, like the Philippines. We will be able to roll out 1,000 terminals within in the next two years.

We don't ever want to be a retail betting shop, but with these state-of-the-art terminals, we can go to land-based facilities. In the Philippines we will have it in the 11 government-owned casinos and we will have them in Internet casinos. Our partner there has the exclusive license for Internet casinos, which is like an Internet cafe, but the only application you can run is a casino.

We need to put our bets out to as many customers as possible and for us the terminals are just another distribution channel. We are also looking at the mobile phone. We have a WAP application, but we all know that WAP will not be the technology. We will be the first to roll out an SMS betting application in cooperation with the Austrian mobile com in about six weeks. Next will be UMTS in Europe, but it will be another three or four years before the market is ready for it on a board range.

We are also working right now on totally re-launching our entire platform. Even though the front end is quite OK, we aren't able--nor is anyone else--to do multiple pricing for different customer groups and different markets. In about three to five months, we will be the only one who will be able to do that. That means in areas like the Philippines, where we have an almost monopolistic situation, we will be able to ask higher prices and run a more aggressive odds key than we would on the Internet.

If you try to compete in the American market you will never be able to get more than 3 to 5 percent on turnover. But if you go into a market where you have little or no competition, you can get a 20 percent margin, and that should all be able to come from one back end.

People do not yet see the potential of what we have done over the last couple of years, but we are very confident that over the next year or two we will be able to capitalize on our strategic partnerships and agreements. That will be the crucial question and that will ultimately decide the success of the seed that we have planted.

The question to us is, "What happens in two or three years? Where will we be and were will our competition be?" We are already more technologically advanced than a lot of our bigger competition right now. We are not necessarily looking where we are today, but where we will be in the future. Many of the investments we are making are for the future and we believe that in a market where no player at this point has global reach due to the various legal situations, which we think will clear up, we have a good chance to take a lead role in the future.

It is a very ambitious goal, but with our partnerships and planning, we should be in good position for that.