GREEK gaming outfit Intralot is to continue to lend its considerable experience of solutions, gaming technology and lotteries to the English-speaking Caribbean’s largest gaming company, Supreme Ventures, as it looks to deepen its presence in the region.

Intralot had acquired a stake in Supreme Ventures back in 2008 but in 2010 it announced that it had increased its equity position in Supreme Ventures. Intralot’s parent company holds a 50.1 per cent stake in Intralot Caribbean Ventures Limited, which in turn increased its stake in Supreme Ventures Limited to 49.9 per cent. This equates to 1.3 billion shares priced at J$1.95 per share.

Supreme Ventures, based in Jamaica, opened for business in 2001 and in short order became the largest gaming and lottery company in the country. Its Cash Pot , Lotto and Pick 3 games have become mainstays on the Jamaican landscape. It has also established gaming emporiums Acropolis in Kingston, Portmore and May Pen as well as Coral Cliff in Montego Bay.

Nikos Nikolakopoulos

In July last year, Supreme Ventures appointed Intralot’s managing director for the Latin America region, Nikos Nikolakopoulos, to its board of directors. This move makes sense, bearing in mind that Intralot provides an electronic monitoring system, called iGEM for all Supreme Ventures machines, and training support for the technical staff of the gaming lounges. Supreme Ventures uses Intralot’s technology for its sports betting operations under the JustBet brand.

Nikolakopoulos hails from the information technology industry. He began his career as an application developer in the automotive industry. He then joined a French multi-national company where he specialised in information technology before moving on to the behemoth that is Microsoft where he did the marketing for Greece.

He then became the general manager of the biggest software company in Greece. With his considerable international experience, he was headhunted by Intralot where he started as the strategy director of the group. After a year-and-a-half, the CEO of the group, Constantinos Antonopoulos promoted him to managing director for Latin America.

Speaking with Caribbean Business Report from Supreme Ventures’ headquarters in the Sagicor Building in New Kingston, Nikolakopoulos said: “About four years ago we initially had a 10 per cent stake in Supreme Ventures. We were impressed with the management and the running of Supreme Ventures and this was a crucial factor in our decision to increase our investment in the company.

Even though we are now the majority shareholder we have not changed the management structure. Supreme Ventures has a lot of potential and what we at Intralot need are people who know the culture and can do a good job on the ground here.”

A footprint across the Caribbean

Nikolakopoulos went on to add that Supreme Ventures can now enter different lines of business other than its traditional one and it is here that Intralot brings its expertise to the table.

“What we bring with our experience and as a value-added partner is a different opportunity for growth. Here I refer to the lounges, video lottery terminals (VLTs), the monitoring systems, sports betting and so on.

“We would like Supreme Ventures to be our vehicle for expansion into the Caribbean. We need to bring the experience, the technology and the know-how we have to the management and brand name of Supreme Ventures in order to expand here in Jamaica and also in the region. I see no reason why Supreme Ventures cannot play a critical role in the region regarding lotteries and gaming,” said Nikolakopoulos.

He noted that in 10 years, Supreme Ventures has become not only the undoubted market leader of lotteries and gaming in Jamaica, but also one of the three most recognisable brands in the country. This, he said, is not an easy thing to accomplish, given that you have to constantly deliver as well as become a commendable corporate citizen at the same time.

He tipped his hat to Supreme Ventures’ chairman Paul Hoo and CEO Brian George’s ability to be innovative while at the same time elevating the industry to the position it currently enjoys.

“This is why we decided to further our investment and why we want to replicate this effort in other jurisdictions in the Caribbean,” explained Nikolakopoulos.

No plans to cross-list

Any effort to expand across the Caribbean will no doubt be capital-intensive, so would Intralot like to see Supreme Ventures cross-list, rather like what GraceKennedy has done?

Recently, Supreme Ventures took the decision to delist from the Trinidad & Tobago Stock Exchange. Explaining this move, Supreme Ventures’ Brian George said: “We did so in anticipation of the establishment of the Caribbean Stock Exchange. We believe that anyone in the Caribbean should be able to easily purchase shares in Supreme Ventures without all of the challenges that cross-listing brings. From that point of view we think we are an attractive investment to people of the region.”

Nikolakopoulos added: “What is important to us are the fundamentals. Supreme Ventures is a very successful company and must now look to expand outside of Jamaica. We need to be successful with this first.”

A good financial performance by Supreme Ventures

For the year ended December 31, 2011, Supreme Ventures posted revenues of $27.961 billion, a notable improvement on the $25.367 billion posted in the previous year. This generated an after-tax profit of $606.32 million, $185 million more than the $421.26 million registered for the year ended 2010.

For the year under review, direct expenses came to $24.659 billion, almost $2billion more than the $22.484 billion recorded for 2010. Operating expenses continue to climb, moving from $2 billion in 2010 to $2.43 billion for 2011. Supreme Ventures’ interest income fell to $46.37 million whereas in 2010 it stood at $71.63 million. Earnings per stock (EPS) rose to 0.23 cents from 0.16 cents in 2010.

Rationalisation exercise

Supreme Ventures underwent a thorough rationalisation exercise last year which paid off in its year-end results. The company faced challenges in reducing its operating costs for its hospitality business and realising profitability in its financial services division. In November last year, Supreme Ventures signed an agreement with Lasco Financial Services for that company to take over Supreme Ventures’ MoneyGram remittance operations. This deal allowed Supreme Ventures to reduce its operating costs and to concentrate on its core business of lottery and gaming.

In August of that year, the company announced the rationalisation of its gaming lounge operations. The gaming lounge operations at Acropolis May Pen were downsized to a betting lounge facility. Slots gaming, lottery and sports betting are now located in one common area. Hospitality operations were discontinued at this location. In September of last year, gaming floor changes were effected at Acropolis Portmore. The company is currently undergoing upgrading of the VLT network and online monitoring at its gaming lounges.

Last year also saw Supreme Ventures announcing a new contractual agreement with Intralot. The company will participate in Supreme Ventures’ wholly-owned subsidiary Prime Sports (Jamaica) Ltd Gaming Lounge operations. The contract, initially for 10 years, includes automatic renewal for successive five-year periods.

Intralot’s plans for Supreme Ventures

So what can be expected from Intralot? Nikolakopoulos says the first thing will be putting in place the monitoring systems for all the VLTs in Supreme Ventures’ lounges so as to ensure they are all interconnected.

Last month saw a pilot project underway to facilitate this ambition. The first phase of the exercise will see all the VLTs at Barbican and Portmore connected to a central system that can monitor correct accounting information and monitor the performance of the games.

Secondly, it wants to implement its Unified Gaming Experience in Jamaica. This framework allows Intralot to uniquely identify a player regardless of the platform or channel he or she is using.

“We will be able to connect a JusBet player who also plays the VLT in Acropolis. We must always bear in mind the legal framework that exists in every country. We are vendors, we do not regulate or lobby. The Unified Gaming Experience is player-centric and it is important for the future of the industry.

“We also recently introduced NEFOS which utilises cloud computing. Here we can introduce gaming as a service. This means that a small company does not have to put in a separate investment for the infrastructure, platforms and applications. They can now utilise resources through cloud computing from one specific location and be able to run their systems and applications.

“This is the way the industry will go in the coming years. With NEFOS, Intralot undertakes the administration of the provided services, while the gaming operator easily and accurately monitors and measures cloud service use and performance,” explained Nikolakopoulos.

Gaming on mobile phone handsets

With mobile telephone penetration in Jamaica at over 100 per cent, does the Intralot executive envisage a time when gaming can take place on handsets in Jamaica? What is Nikos Nikolakopoulos’ view on this?

“We have implemented this in other countries, not only on mobile phones but on tablets, more specifically Apple OS and Androids. Mobile gaming is still small but is the fastest channel for growth. There are huge opportunities with it in both Latin America and the Caribbean,” he said.

“In the Caribbean, the possibilities are great because the penetration is far bigger than what exists with the Internet. However, there are many issues that must be addressed first, such as billing and regulatory stipulations.

“In my view this can be a new frontier for the Caribbean and can be even bigger than online and Internet gaming.”

Despite Supreme Ventures’ forays into hospitality and financial services, Nikolakopoulos sees the gaming business as the growth driver for Supreme Ventures. He sees Acropolis as a destination for gaming and entertainment.

“As far as the lounges are concerned, we would like to see good investments that provide value to both the business and the players,” he explained. “I am not sure that going from three to four lounges to 15 is such a good strategy because quality is better than quantity. The lounges are capital-intensive, but with the right management and strategy it can pay off. We are committed to Supreme Ventures’ lounges and helping the company improve them.”

No plans to get into big casino operations

With talk of the Harmony Cove project getting back on track, the issue of casinos has once again raised its head. With Intralot’s expertise in gaming, would it consider going into the casino business in Jamaica?

“As far as I understand it, casinos in the manner discussed in Jamaica centre around a hotel situation and that is not what we do. Come to think of it, we haven’t given it considerable thought. We have a different business model. We do not manage huge establishments. We focus on the community level and do not venture into the tourism aspect like that favoured in the Bahamas.”

So how does he see gaming in the Caribbean today? “In The Dominican Republic it is very mature, whereas in a jurisdiction like Jamaica, simplicity is the key. By simplicity I mean, take a game like Cash Pot or the slot machines, they are for amusement. Cash Pot is simple and it is a tradition. Everyone from a child to an elderly adult knows how to play. Now in the Dominican Republic their traditional game is very complicated with different combinations. Generally in the region I would say games that are traditional and simple are the keys to success. It is important to have a model that is fair to the operator, the government and the player.

“You cannot squeeze the operator if you are the government, and you cannot squeeze the player if you are the operator and intend to be successful in the long run. Therefore what you have to do is establish gaming as an entertainment which is part of people’s lives. Our business is one of volume.

“We need to have many players, playing for relatively small amounts. A significant proportion of the proceeds of gaming and lotteries go to good causes like education, healthcare and sports facilities, which is good for any country.”

Intralot is one of the world’s largest gaming companies

Intralot, the Athens-based developer and supplier of gaming and transaction processing systems, operates in 55 countries across all the continents of the world. Established in 1992, it is publicly listed on the Athens Stock Exchange since 1999. It has 5,400 employees and provides lotteries and state organisations around the world with an extended portfolio of service in technology, operations and marketing in the new emerging area of Internet gaming.

Its games library currently includes more than 400 types of games and variations, such as numerical lotteries, online games, TV lottery games, sports lotteries, fixed-odds betting and video lottery.

It began as a purely technology company but today less than 10 per cent of its revenues come from this arm. Now more than 50 per cent of its revenues comes from operations. Intralot has evolved from a technology provider to being a major operator utilising technology to gain a competitive advantage for its clients. In 2010 Intralot revenues exceeded euro1.1 billion.

For the nine months ended, September 30, 2011, Intralot posted total consolidated sales of euro856.5 million of which the Americas contributed euro277.3 million. This generated a gross profit of euro148.1 million of which the Americas weighed in with euro42.8 million. Total consolidated gross margin came in at 17.3 per cent with EBITDA at euro112.1 million and a margin of 13.1 per cent.

So what is the future for Intralot?

“You have to consider that we are a young Greek company that has expanded quickly. It is not easy for a company coming from a small country like Greece to become a dominant world player in its field of expertise,” said Nikolakopoulos.

“What we are doing is pursuing selective opportunities. Our ability to execute in the right way is key for us right now. It comes down to excellence in operation, good utilisation of resources and good cash management.

“Another important area for us is the convergence of the different channels. There are now established land-based operators and there are also dot com operators. Now, in many cases dot com operators operate in a grey zone where there are few regulatory impediments and this gives them a very specific advantage.

“There will be a convergence that has already started and with the brand name we have we will play a significant role in this. In short, that is the future,” said Nikolakopoulos.