Starting today, IGN will run a biweekly feature with interviews of key figures (entrepreneurs, decision makers, politicians, investors, etc.) in the European gambling business community. The first interview is with Pontus Lindwall (born in 1965), CEO of Cherryföretagen AB, also known as the "Cherry Group." (The name "Cherryföretagen means "The Cherry Companies" and is derived from the winning "cherry" symbol on slot machines.)
Cherry is a listed Swedish gaming company with approximately 4,400 shareholders; it employs about 800 people. The company's B-shares are listed on the Stockholm Stock Exchange's O-list. The business specializes in Internet and casino gaming as well as gaming machines.
Cherry is a gaming company that has run gaming operations for almost 40 years and is now investing in technology for gaming, competitions, and lotteries based on new media--primarily for the Internet.
Political decisions and, more recently, technological developments such as the Internet, are examples of external factors that have influenced the company to a large extent. Twice the company was hit hard by external changes in the way of alternations of Swedish Laws.
International expansion and operations on cruise ships and ferries kept the company floating. Pontus Lindwall came on board in 1991 and is now the CEO and president of the company. The new captain of industry, with a Master of Engineering, turned the company around and stabilized it. He transferred "his" company (in which he holds 98,850 B-shares, 30,000 options, and 3,280 convertibles equivalent to 800,000 shares) into a high-tech business by making it a supplier and operator of live commercial gambling via the Internet and mobile devices.
Net sales for Cherry in 2004 were SEK 311.15 million; net sales for the interim period, January - September 2005, are already more than those for the whole year in 2004. Group net sales for the interim period have increased by 38 percent to SEK 315.8 million (US$228.8 million). Operating profit has increased to SEK 31.9 million ($13.7 million), and profit after financial items amounted to SEK 170.4 million ($15.8 million). Profit after tax amounted to SEK 161.1 million ($11.8 million), SEK 4.54 ($0.36) per share.
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"It is always hard to predict the future in the gaming industry, but I think that judging by the way the market has developed over the years, it will be very hard for any government to change it."
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IGN: You say your ambition is for Cherry to provide attractive, exciting alternatives to government-run gaming. What do you mean by this?
Pontus Lindwall: It is quite obvious that the state controls gaming in many jurisdictions for financial purposes. In order to retain their monopolies, the state-owned gaming companies claim to protect the players. However, these companies are very aggressive in terms of marketing and product development and the cost for the players to use their services is very high. We want to provide the players with thrilling gaming experiences in a secure environment. And we want the players to have the possibility to choose where to gamble, in the same way consumers may choose where to purchase other services from different vendors. In the end, the players will be the winners when the competition on the gaming market increases.
IGN: Cherry is in a transitional phase between traditional gaming operations and gaming on a global market with the help of new technology. Cherry operates within gaming areas that are quite suitable for electronic distribution. Could you explain that?
PL: Cherry has been working with gaming and gambling for more than 40 years. Our main product over this period of time has been traditional casino games such as roulette, black jack and slot machines. The experience that we have gained within gaming development we now apply to our Internet games. And through the nature of the Internet, our games are now distributed all over the world in a fashion that was not possible before the current technology was made available.
IGN: M-gambling, as well?
PL: We already entered the field of m-gambling back in 2000 when we developed a suite of games for Nokia. These games were based on the WAP technology, but even if they were highly functional, the gaming experience could not compete with what we could do on the Internet. We have developed some Java casino games for mobile devices and they have proved to be popular, but not on the same scale as our Internet-based games.
IGN: What brought interactivity for your company?
PL: In 1996, when the idea of Internet games was first presented to the board, they were not too enthusiastic over the idea. Most of the board members did not use e-mail at the time, and they could not figure out how gaming over the Internet could be performed in a secure way. There were also the questions about fund transfers and the predicted use of the Internet that had to be sorted. When we finally started to test the first system late 1997, most of the people in the company realized that this was a new opportunity for the company. The distribution cost was zero and the scalability was fantastic compared to other forms of gaming. But it took some time for people to accept this as a new business area.
During our development phase I heard lots of comments such as "How are things going in the kindergarten?" as these people did not believe that we would ever be successful. Now that the Internet part of our business is highly successful, it has helped the company to shift from a traditional consumer service company to a high-tech company. And our market has increased from being more or less a local market to being on a global scale.
IGN: What will be the impact of betting exchanges for your company?
PL: Cherry is the owner of Betsson, who is probably the second biggest betting exchange in the world with more than 200,000 customers. Betting exchanges will play a major role in the development of the betting industry, but it will take some time for people to learn and to understand the benefits of it. The betting behavior and the betting culture is different from market to market, but still people tend to like great odds in all markets which is a strong indicator that betting exchanges will keep on growing. Based on the success we have had so far with Betsson, I am convinced that betting exchanges will have a strong impact on our company in the future.
IGN: Your company has had its ups and downs, mainly created by the Swedish government, which blocked several "gambling" activities. Could this still happen in the future?
PL: We are now serving Internet games to some 30 to 40 companies which are licensed in different jurisdictions and we own Betsson, which is licensed in the U.K., and CasinoEuro, which is licensed in Malta. It is always hard to predict the future in the gaming industry, but I think that judging by the way the market has developed over the years, it will be very hard for any government to change it. The development of the gaming industry is part of the ongoing globalization which in most aspects is positive in itself.
IGN: Do you see yourself as a turnaround manager?
PL: No, I wouldn't say so. I would rather say that I am an entrepreneurial manager. I have been in this industry since its inception and I have strived to go in a straight direction all of the time. But there have been some bumps in the road, which is natural for a new industry. The funny thing about it is that there is more to be done now than ever before.
IGN: Your company, Boss Media AB, EssNet, QLot, Solna Leisure AB, Ericsson (Ongame, Unibet, Expekt) are some of the Swedish supporting gambling companies working worldwide. This is striking considering the Swedish population. How do you explain this?
PL: Yes, it is quite interesting, especially when you consider that virtually none of these companies have become so big from having a strong home market. I think that the reason may be that the Swedish state has created a gambling knowledge through its many years of intensive marketing and this knowledge has been adopted by some entrepreneurs and has helped them to build their companies.
IGN: Is your company confronted with negative decisions of the European Union?
PL: One of the main ideas with the EU is to make the region competitive against other parts of the world by forcing its member states to compete internally. We are strong supporters of this policy, as we do not believe that monopolies do any good. However, Brussels is still a political institution and it is impacted by the member states' politicians. We have not yet seen any negative decisions by the EU but we have seen several signs of positive work being done. The Gambelli case back in 2003 was a strong statement on the view on gambling from the EU court, and the EU commission is currently investigating the legal framework in some European countries. These countries will probably face some changes in the not-too-distant future.
IGN: Do you think that the EU has any policy on gambling?
PL: I don't think that anyone can say that the EU has a clear policy on gambling. Gambling is excluded from the Service Directive on one hand, but on the other hand the court has stated that financial monopolies are not acceptable. I don't believe that the EU will accept the monopolies in its present form forever.
IGN: What is your favorite pastime?
PL: I have a family with a wife and three kids aged three, four and five, so this takes up plenty of my time. Aside for my family, my hobbies include Italian cars and boats, and I spend allot of time refurbishing and restoring them to their original condition. My last project was to rebuild a Riva boat from 1977, which has now been fully restored and is in perfect condition.
Cherry Online owns the following gaming Web sites: Betsson.com (Scandinavia's leading betting exchange), CasinoEuro.com (an Internet casino intended for a broad European market), CherryCasino.com (an Internet casino for the global market), Casinodomain.com and Speedbet.com.