Mike Hickey: Nice, thank you. I guess the next question on your U.S. expansion, it seems–obviously some puts and takes there, I think, coming into a new market, especially one that’s expanding so fast. Just curious, I guess, any incremental early learnings after being in the market now in the U.S., and how do you think about your current resources? I think you mentioned, maybe in your prepared remarks, that maybe you would continue M&A and increasing your internal development, so I guess just broadly speaking, curious what you’re seeing in the market, what you’re learning, and how that maybe re-shapes some of your thoughts on the U.S., and then also just curious if you think there’s any further regulatory relief. It seems like online casinos is obviously behind sports betting in the U.S. in terms of opening new states. I think there is more of an effort here recently to sort of open new states. I’m curious your thinking there and the opportunity you see. Thanks guys.
Yaniv Sherman: Sure, so on the first part, there’s a lot to unpack but I’ll try to sort of summarize it. I think what we’ve learned since we ventured into the market is–and I’ve been involved in the U.S. market for a decade now, is that two things prevail here. One is the investment, the resource investment, you need to be prepared to put in and really lean into it. It’s not just another market. The prize is big but so is the investment, and in some cases it’s just a different type of DNA. I think the two acquisitions, Spin Games and have proven themselves as game changers, and going into the market directly would have probably been either prohibitive or extremely challenging for their current structure, and those acquisitions really provided us with the shortcuts that we were looking for because it’s mostly around both distribution and your ability to work with the American deployment and regulatory compliance mechanisms, which are very different from Europe or the rest of the world.
They’re very business prone but they’re very detail oriented, so this one thing, that’s exactly what we’re currently focused on in making sure that we streamline our global, European, India and U.S. delivery machine tuned towards the U.S. market and the U.S. operators were a different organ. These are different companies than one operating elsewhere, so it is a unique market in that regard. That’s one takeaway that is almost setting up a whole new operation, leveraging some of our global capabilities. The second part is on the regulation development in the U.S. Naturally, because you know it is a different–very different than sport, we have 30 sports states but only six gaming states. On one side, it is more politically charged and requires a lot of consensus and bipartisan support.
On the other side, you just see a small group of states making such a material impact and creating such enormous TAM, I think that we don’t need to get to 30 states, we only need to get a couple more across the line to do two things. One is significantly increase the TAM, which is already big, working off a low base. We don’t need additional states, but any other states added will be a net to our addressable market and help us really increase that gearing effect, and deploy the content, as I mentioned, into additional states is marginal, not dramatic. The second point is once a state adds casino to its existing sport product, I think that would serve as an important precedent because to date, the six states that have regulated gaming alongside sports betting have done it at pretty much the same time.
Once again–once, sorry, a state demonstrates its ability to pass casino on top of sports, I think that will write sort of the blueprint for other states to do that, and I think that will accelerate this, I believe, ’24 play onwards. But once we do that, and putting aside the larger states, the top three states, anything in New York, Illinois or any of the larger states, naturally will move the needle for everyone and for us as well, so that tide should lift all ships.
Mike Hickey: Thank you guys.
Operator: Your next question is from the line of David McFadgen with Cormark Securities. Your line is open.
David McFadgen: Thank you. I was wondering if you could give us an update on the German market. Have you seen much of an improvement in that market, and are you banking on much of an improvement in your ’23 guidance from Germany?
Yaniv Sherman: Hi Dave. In short, we were encouraged to see that the German local federal government has re-launched its regulatory regime, so they now have a new body issuing licenses, which was a bottleneck in the past, really slowed down the development of the market. Having said that, one thing that still remains challenging is the actual tax framework there, which is very high – it’s actually on a betting, wagering basis, which is prohibitively expensive. Without significant change in that, I think that that market will be challenged to really go back to what it used to be. Having said that, we are hearing increased conversations about addressing that in several contexts – that’s why we mentioned it, we’re encouraged. We haven’t included that in our ’23 guidance.
We are assuming that that development will take more time, but we’ve mentioned it because to us, it will be pure upside if the platform and mostly the content that we have developed and integrated into it with some of our local partners and our proprietary portfolio, we know how to operate in that market from a consumer perspective and adjusting it towards any regulation should be relatively straightforward. But again, now that they’re issuing licenses, the tax framework is probably the next order of business, and I hope they will go forward and make it an even more, call it business-oriented market as opposed to a restrictive one, but that’s our baseline assumption.
David McFadgen: Okay, thank you. Then just on the Netherlands, can you give us an update on your performance in that market? I know in the past, your market share was about 30%. I was just wondering if you could give us an update on that statistic and just how things are going in the Netherlands.
Yaniv Sherman: Well yes, we don’t have any formal data yet, or recent formal data around it, but we’re assuming we’re about the same market share, give or take a point. We’ve had great success with our partners there. We’ve launched two more operators, that those launches, as Ronen indicated in his presentation, were better than we expected. They were quickly ramping up even during the World Cup, which is typically a sports-led event, so they were able to acquire and grow inside that market, so the market is growing by a more moderate pace, naturally, since its inception, as you’d expect. There right now, we’re very focused on working with our partners to make sure that we keep adjusting and improving the platform, also from a competitive but more importantly from a compliance perspective.
The local regulators have a high bar and we aim to keep on meeting it. Some of the changes that they’re making, we’re keeping abreast with, and that’s one of our major focus areas. Having the experience in other regulated markets, we know that this isn’t–there is never a steady state. It’s very much a moving target and we are very focused on that, but so far we’re very happy with the performance in that market and we’re looking to fortify our market position there with increasing our existing partners and potentially adding new ones.
David McFadgen: Okay, and then just lastly, you talked about the content rollout in the U.S. being accelerated in the latter half of the year, so I’m just wondering, does that have the potential to potentially raise guidance as you bring out more and more titles, so is back half weighted?