Interview: Isaacs bets big on sports

14 January 2019

Having built up a reputation as something of a whizz when it comes to M&A, Gavin Isaacs has had a relatively quiet two years, serving as deputy chairman of Scientific Games’ board of directors.

While he turned Scientific Games into the gaming solutions behemoth that it is today with a flurry of deals, he stepped down from the chief executive role to hand the controls to Kevin Sheehan as the focus shifted to integration and cost control.

But having vacated his seat on the supplier’s board in December last year, he is headed back to the front line as chairman of sports betting supplier SBTech.

“I’m too young to be doing nothing, and I like this industry so I wanted to get back into it,” Isaacs says with a laugh.

Having been inundated with offers upon leaving Scientific Games, he ultimately took up the new role with SBTech after deciding that the opportunity was too great to pass up.

“I’ve run small gaming companies, and I’ve run large ones,” he explains. “I figured that it was time to do something different, and from my perspective I wanted to do something to be an impact in the future.

“When I came to the US I was part of the wave that brought video slots into the market, and I want to be part of the sports betting wave we’re seeing today.”

While few would doubt his credentials in the casino sector, sports betting is uncharted territory for Isaacs. All his executive roles to date have been in the casino supply market - aside from a stint working at an Australian racetrack as a student.

As chairman he jokingly says that he “doesn’t have to be a particular expert” in the vertical, though it is something that he has followed closely for years. Isaacs argues that the sports betting vertical could ultimately be a precursor to a wider wave of gambling expansion across the US.

He admits that despite the Department of Justice’s 2011 opinion effectively clearing the way for legal iGaming, the wave that many expected at the time simply hasn’t happened. Senate and House Republicans are still demanding the DoJ revises this opinion, after all.

But with the Supreme Court striking down the Professional and Amateur Sports Protection Act (PASPA) in May last year, a path has been cleared for legal betting. With a vertical that was once arguably more controversial than iGaming now regulated in eight states at the time of writing, he believes other verticals will follow.

Isaacs says this ultimately comes down to the major casino operators recognising a need to do more to attract a young, tech-savvy audience.

“iGaming will be a key part of attracting that new audience, but sports betting is going to be be the start of that wave,” he says.

He is particularly enthusiastic about the role SBTech can play in building credibility around new forms of gambling.

“SBTech is a relatively young company, that’s growing exponentially,” he says. “Everything I’ve done in the past has been about making sure I work with good people. As long as there’s good direction and appropriate goals, you can achieve great things.

“The people I’ve met at SBTech are good people, and the elements are in place for the company to grow,” Isaacs continues. “From a sport betting perspective I have lots of connections in the industry, and it’ll be a case of opening the doors for SBTech.”

In particular, he is impressed with SBTech’s focus on constantly investing and improving its technology, something he picks out as being “vitally important” in the nascent US sports betting space.

Equally, he says, working for a whiter-than-white business was crucial.

“I’ve always been part of the regulated gaming world. Having the right processes in place and working in the regulated world is very important,” he continues. "So it’s about having the philosophy, people, product, and a desire to grow.

"That didn’t leave many companies,” he adds.

Despite highlighting the technology as a key attraction of the SBTech role, Isaacs adds a note of caution. He warns that suppliers coming over and rolling out full-service online and mobile sports betting products are not necessarily guaranteed to make a splash in the market.

He points out that unlike online casino games, where players are more likely to have at least a rough understanding of the core mechanics, sports betting is uncharted territory for the vast majority of Americans. This, he suggests, means slow and steady progress will be more important than early gains in new markets.

“At the end of the day there has been [around] 65 deals announced, and all of these can be changed,” he says. “It’s going to be very important to do it properly, and to make sure [sports betting] works solidly with each partner.”

He says that with many states likely to give special status to land-based operators, as investors in local infrastructure, sports betting will have to work in tandem with other verticals and channels to succeed. This, he notes, suits SBTech, which has developed a proprietary platform alongside betting and gaming products, perfectly.

But having more than doubled Scientific Games’ revenue to $2.9bn with an unprecedented series of acquisitions in his two years as CEO, it’s impossible not to ask whether he has been brought in to spearhead some M&A activity. However, he refuses to be drawn on the subject.

Ultimately taking on the role as SBTech chair is a step into the unknown for Isaacs. It’s a smaller company, which is primarily active in a vertical that’s largely new to him. Should he play a major role in growing a business in the sports betting vertical, having already played a major role in reshaping the casino supplier market, he will only burnish his reputation further.