WEBVTT - Bally's Intralot CEO Robeson Reeves Talks Evoke Takeover 

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>The Greek lottery operator, the gaming operator bally Intralot has

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<v Speaker 2>reached an agreement to buy Evoke, is the parent company

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<v Speaker 2>for a range of internationally known gambling brands including william

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<v Speaker 2>Hill and eight eight eight Casino. Joining us now for

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<v Speaker 2>more is Robson Reeves, CEO of Bally's Intralot, who joins

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<v Speaker 2>us now after the fresh announcement just today of this

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<v Speaker 2>m and A deal. Welcome to Bloomberg Radio. Very pleased

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<v Speaker 2>to have you on. Just tell us about the motivation

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<v Speaker 2>behind this acquisition. Why this purchase? Why now?

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<v Speaker 3>Well, we've chosen to acquire Evoke. We want to become

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<v Speaker 3>a very dominant European player. We've been highly concentrated in

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<v Speaker 3>the UK market actually of Bally's Intralot as a B

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<v Speaker 3>two C provider, and this allows us to become a

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<v Speaker 3>podium per position operator across six core markets in Europe.

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<v Speaker 3>We become the number two operator in the UK and

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<v Speaker 3>this gives us the diversification we always wanted with Italy, Spain,

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<v Speaker 3>Romania and Denmark and will continue to expand internationally. These

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<v Speaker 3>are great regulated markets and I love regulation. We believe

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<v Speaker 3>that the partnership that we have with our regulators is

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<v Speaker 3>critical to future growth forever.

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<v Speaker 1>More right, and this acquisition, you know, valuing the company

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<v Speaker 1>at fifty two pence to share, it's about a twenty

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<v Speaker 1>percent increase to the company's closing price yesterday total xpvalue

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<v Speaker 1>of two hundred and forty three point one million pounds.

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<v Speaker 1>But of course if it used to be worth a

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<v Speaker 1>lot more, and it has had a tricky couple of years,

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<v Speaker 1>you go back to twenty twenty one and it was

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<v Speaker 1>worth more than a billion pounds, what do you think

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<v Speaker 1>that you would be able to do with a Vogue

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<v Speaker 1>that is going to help turn this around, to help

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<v Speaker 1>make it more profitable.

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<v Speaker 3>Well, if you look at our business and compare us

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<v Speaker 3>to Evoke operating EBITDA margins, it's above forty percent and

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<v Speaker 3>there sits at approximately twenty percent, and there's large similarities there.

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<v Speaker 3>So we'd obviously have to look at the cost structure,

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<v Speaker 3>would look at how they spend marketing money. This tax

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<v Speaker 3>increase that recently was introduced in the UK has obviously

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<v Speaker 3>caused challenges for various operators with lower margins, so I

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<v Speaker 3>expect consolidation. Our technology is very powerful, we have a

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<v Speaker 3>lot of data and we build I would say, very

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<v Speaker 3>good models which retain customers well by allowing them to

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<v Speaker 3>spend affordably for the long term. It's meant that our

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<v Speaker 3>growth in margin and profitability has been consistent every year

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<v Speaker 3>for since I can remember.

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<v Speaker 2>Yeah that you know you're talking about the gross gaming

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<v Speaker 2>yield tax that the UK has. Basically is not a

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<v Speaker 2>tax on winners or the individuals, a tax on the businesses,

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<v Speaker 2>isn't it. I mean, why are you prepared to take

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<v Speaker 2>on this increase burden in terms of the gambling tax

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<v Speaker 2>burden and also the risks that may become with a

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<v Speaker 2>government that is in flux, that might see a more

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<v Speaker 2>left leaning government.

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<v Speaker 3>This tax increase, it was a surprise to us all

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<v Speaker 3>how much it's increased by. With our margins being at

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<v Speaker 3>least ten percentage points above any of our peers, it

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<v Speaker 3>puts us in a very strong position. If there were

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<v Speaker 3>further tax increases, I think there'd only be one operator left.

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<v Speaker 3>Very lots of companies will go under. There'll be lots

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<v Speaker 3>of job losses from the long tail. This I viewers

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<v Speaker 3>really acquiring a voke in order to become the business

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<v Speaker 3>that we always wanted to become. Which was for far

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<v Speaker 3>more diverse, so we are we're not rescuing them. It

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<v Speaker 3>actually transferm warms us into the business we wanted to become.

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<v Speaker 3>But I do expect many smaller operators to leave the

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<v Speaker 3>market because it's simply unsustainable. You should understand that this

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<v Speaker 3>tax at forty percent in ee gaming isn't a tax

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<v Speaker 3>on profits. It's a revenue based tax, which is significant.

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<v Speaker 1>And of course much of your business is now taking

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<v Speaker 1>place online. It's a very fast growing profitable area. But

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<v Speaker 1>there are also you know, hundreds of many physical shops

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<v Speaker 1>of from William Hills on high streets around the country.

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<v Speaker 1>How important are they to your business model? How core

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<v Speaker 1>do you see them moving forward?

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<v Speaker 3>I viewed them very much as a great bit of

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<v Speaker 3>signage that we have presence throughout the country. They are

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<v Speaker 3>places where many people engage again nationally, so there's different

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<v Speaker 3>audiences who go who go there. William Hill have already

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<v Speaker 3>come up with a plan and Avok have already come

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<v Speaker 3>up with a plan to reduce the number of stores

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<v Speaker 3>because they need to rationalize that footprint because not only

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<v Speaker 3>taxes increase, there's been other costs associated with the employment,

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<v Speaker 3>which has meant that many of these shops are not profitable.

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<v Speaker 3>I hope that we can keep the high street alive.

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<v Speaker 3>We've seen a mass reduction in the high street in

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<v Speaker 3>all industries over the years, so I don't have any

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<v Speaker 3>intention to change that. We believe we can fix the

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<v Speaker 3>UK online business and we get these other attractive assets alongside.

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<v Speaker 1>It would be fair to say that the high street

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<v Speaker 1>stores are not cause your plans for a Vogue and

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<v Speaker 1>william Hill moving forward.

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<v Speaker 3>We believe in omnichannel, we believe in having presence physically

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<v Speaker 3>as well as online. But I would say to make

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<v Speaker 3>this deal work for us, they are not core.

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<v Speaker 2>Okay, look, A think it's very interesting what you've told

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<v Speaker 2>us about about the agreement and sort of understanding how

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<v Speaker 2>you see this M and A I think is fascinating.

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<v Speaker 2>I want to put one other. You know, one of

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<v Speaker 2>the tough points I suppose Labour's Dawn Butler. You know

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<v Speaker 2>she's one of the key campaigners trying to get rid

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<v Speaker 2>of UK high street betting shops. She's talked about that

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<v Speaker 2>quite frequently. What would your response be to that sort

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<v Speaker 2>of political view on your business. You know, she's argued

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<v Speaker 2>quite strongly that these sorts of shops breed poverty and addiction.

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<v Speaker 2>What would be your response to that.

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<v Speaker 3>I think a lot of people spend very sustainably. They

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<v Speaker 3>spend sensibly. We only hear from the perspective of people

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<v Speaker 3>who unfortunately have developed gambling problems. You should actually look

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<v Speaker 3>at the large audiences who partake in gambling very safely

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<v Speaker 3>and they enjoy it. It's a pastime. Most people don't

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<v Speaker 3>consider betting on the lottery gambling. It is gambling. It's

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<v Speaker 3>a form of gambling. Similarly, there's other products which everyone

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<v Speaker 3>partakes in, like the Grand Nash and so on, so

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<v Speaker 3>people can engage in gambling safely. And I believe that

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<v Speaker 3>we should really focus on what the full domino effects

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<v Speaker 3>of some of these decisions are. There is significant employment

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<v Speaker 3>and significant tax generated by people having jobs, you know,

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<v Speaker 3>in these stores. William Hill employ over eight thousand people

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<v Speaker 3>across their retail footprint.