Could Zimpler pay the price for Swedish payments approach?

Zimpler could pay price for payments approach

Swedish news outlet?Dagens Industri ?(DI) has not held back in its reporting on payments provider Zimpler this week.

In a series of articles, the scoop-hungry newspaper revealed that Zimpler was pursuing a sale and potential exit for its shareholders – many of whom have links to Betsson and Cherry – after the company skyrocketed in value over recent months.

DI?alleged the drastic upturn in value is because Zimpler has continued to facilitate iGaming payments for operators targeting Swedish consumers without a licence. These companies have no obligation to link to the country’s self-exclusion register and are free to offer attractive bonuses to customers outside of the regulated market environment.

Zimpler’s growth is now 200% year-on-year according to?DI, with an operating margin of 50% during Q3 2022, for example.

In the piece,?DI?points out the valuation of rival payments provider Trustly has plummeted over the same period after it ceased to offer payments to Sweden’s unlicensed operators.

DI?suggested a raft of new rules being implemented by the Swedish Gambling Authority this year might make it harder for Zimpler to work alongside unlicensed operators, which could negatively impact any potential sale.

Zimpler said it had not been allowed to comment in?DI’s?coverage and swiftly put out a?release of its own ?to address the claims.

“Zimpler has zero tolerance for illegal gambling activities,” said the firm. “Therefore, we work rigorously to ensure that all our customers comply with the legislation in each jurisdiction.”

Hinting at a potential loophole, the statement read: “Since 2019, when the law was introduced, Zimpler has never provided payment services to any company that the Gambling Authority has banned and thus can be found on the Gambling Authority’s website.”

Zimpler said reports regarding a sale of the company were speculation, although admitted it has a “constant dialogue” with investors, which is “natural” for a firm in the scale-up phase.

Gambling industry professionals have likely been following this story for some time and will have made up their own minds by now.

Footballer calls on sport to boot out gambling

Professional footballer David Wheeler penned a piece for?The?Guardian ?this week, expressing his distaste at the over-exposure of gambling brands in the sport.

In nearly all of his 500 appearances in professional matches, he claimed, he has had an online gambling advert either on his own shirt or surrounding him on the pitch.

This is not news to regular viewers of English football, of course, where Premier League fixtures can feature gambling logos and adverts upwards of 700 times per match through in-stadium and shirt advertising, according to the piece.

Wheeler called out the counter argument that gambling money helps pay for footballers’ often exorbitant wages, claiming: “I’d rather be paid less if it meant not profiting from addiction, harm and suicide – and I’m not the only one.”

Recent scandals among gambling operators – including Betway’s ￡400,000 UKGC fine relating to the appearance of gambling ads on the children’s section of West Ham’s website – show that teams are willing to take the money of companies who are failing to protect the most vulnerable members of society, according to Wheeler.

“It says all you need to know about how a sport and a country treat a public health issue that we name our national league after a gambling company,” he wrote.?

“The EFL deal with Sky Bet ends next season and after Sky Betting & Gaming sent self-excluded gamblers free spins and exploited fans through sign-up offers, I would urge the league to look elsewhere for its next sponsor.”

And the fact that gambling firms contribute a relatively small proportion of their profits to supporting the sport while attempting to “lure in the next generation of lucrative profit makers” is “a bad deal for the sport and for fans,” he added. Tell us what you really think, David.?

Underlining a peculiar irony of the sponsorship deals, Wheeler pointed to several scandals involving professional footballers being punished for placing bets on the sport.?

“We are part of a strange world where we are expected to heavily promote products that could lose us our jobs if we use them,” he pointed out.

Japan’s betting boom

“All bets are off in Japan’s sports gambling craze,” argued?Financial Times ?Asia business editor Leo Lewis this week.

Lewis shone a light on a curious growing trend in Japan, where legal options for sports betting are extremely limited.

There, boat racing, motor racing, horse racing and Keirin cycling are four of the biggest attractions for bettors, and growth in recent years has gone beyond what anyone might have previously imagined.

“All four sports, in terms of betting revenues and numbers of punters, have thrived to a remarkable degree over the past three years, primarily through online portals,” Lewis wrote.

“Some analysts attribute the growth to the pervasive (but possibly temporary), entertainment-hungry ‘nesting’ dynamics that Japanese households settled into during the pandemic.”

Since the onset of the pandemic, more time spent at home among Japanese residents has led to a pronounced proliferation of sports betting, Lewis argued, with revenues rising slowly and steadily since 2013 before soaring rapidly in 2020.

And the action has not subsequently slowed down. Since March 2020, the index covering the four sports mentioned above has risen 60%, Lewis said, while the index for boat racing alone has jumped a whopping 134%.

“This expansion jumps off the page among data for sectors in which contraction – latterly because of Covid but fundamentally because of Japan’s shrinking and ageing demographics – is rife.”

But the growth has not come without cost to Japan’s unique gambling sector.

Over the same period, the former king of Japanese gambling games – vertical pinball-style game pachinko – has seen revenues plummet.

The game’s 2020 revenues were roughly half their 2006 level of $207bn, Lewis said (although a quick Google search reveals Lewis was likely referring to total stakes here, and not revenue).

In any case, it seems the limited options available are far from preventing Japanese residents from having a punt. Whether the growth continues as post-pandemic habits subside, that very much remains to be seen.

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