Gamble pays off for Inspired Gaming group
Boost in digital gambling has benefited the British gaming group, which supplies 40,000 venues across the world
When Luke Alvarez set up Inspired Gaming Group in 2001, UK tech firms were still recovering from the aftermath of the dotcom crash.
Alvarez, a Cambridge University philosophy graduate who had spent several years working in software in the United States, wanted to start his own business and spotted an opportunity in the computer gaming industry, which at the time was struggling to make the transition to web-based gambling.
Starting with eight employees in a small office in Regent Street, London, Alvarez began creating mobile gaming content. Inspired Gaming was one of the first companies to focus on mobile gaming, which in those days was only conducted by subscriptions over SMS, or text messaging.
The business developed into providing virtual sports and server-based video lottery terminals.
Video lottery allows players to compete against each other through linked terminals, while the virtual sports games enable players to participate in sporting events from horse racing to football on their computers or smartphones.
Inspired now sells its products and technology to casinos and gaming operators across Europe, Asia and South America.
The firm employs 800 people in Britain. Still based in London, it now also has offices in other locations including Birmingham, Burton on Trent, and Bangor in North Wales. It develops all its software and technology in Britain, employing 400 developers and engineers.
“There’s huge growth potential in mobile gaming,” says Alvarez. “Most of our games are multi-platform, allowing people to play on desktops, tablets and mobile phones, as well as terminals. More and more people are playing on digital devices, rather than necessarily going to a casino or betting shop.”
The company supplies its products to betting shops, arcades, casino sites and a range of online operators across 35 countries. Customers include William Hill, Paddy Power and Ladbrokes.
Its virtual sports products are played in 40,000 venues and on 200 web and mobile sites around the world.
The firm also supplies nearly half of Britain’s 34,000 fixed odds betting terminals (FOBTs), touch-screen game machines that are usually found in betting shops.
Fixed Odds Betting Terminals have been called the “crack cocaine of gambling”
Alvarez grew the firm organically and in 2010 Inspired was bought by private equity firm Vitruvian Partners for £74.4m as the company looked to step up its presence overseas.
Previously, 100pc of revenue had come from the UK, but overseas transactions now account for 40pc of total revenue. Alvarez adds that profitability has doubled as a result.
“Lots of countries want to create controlled, regulated gaming environments. Given the economic instability, governments need to raise taxes from as many sources as possible,” he says.
“In emerging economies too, where there are rising numbers of middle-class consumers, governments are recognising the need for regulated gaming and we’re one of the world leaders when it comes to software.”
China is a key market for Inspired. The country’s casino hotspot in Macau is around seven times bigger than Vegas. Although many forms of gambling are illegal in the rest of China, there are two national lotteries, supervised by the government.
Inspired recently won a major contract to supply China’s national sports lottery with virtual games including football and horse racing. Alvarez was one of 20 delegates from British tech companies invited by George Osborne, the Chancellor, to accompany him on a trade mission to China.
The Treasury described the trip as a chance to showcase “the best of Britain’s digital technology industry and strengthen ties between British and Chinese companies and help British companies gain access to the fast-expanding Chinese market”.
Inspired also recently announced it will be the first company to launch virtual games in the Philippines.
Alvarez was one of 20 delegates that accompanied George Osborne to China a year ago
Another key market is Italy, where Inspired supplies 90pc of the £1bn land-based and online virtual sports market. Yet closer to home, the UK gaming industry still attracts criticism.
FOBTs have been called the “crack cocaine of gambling”, as they allow a maximum stake of £100 to be laid every 20 seconds.
In the year to July 2014, 65pc of adults in England and Scotland gambled, according to the latest figures from the Gambling Commission, which monitors the UK’s gaming industry. That drops to 43pc when excluding people who just gamble on the National Lottery.
Alvarez acknowledges that the gambling industry can be a controversial one, but says that the company is careful to only operate in regulated markets.
He adds that all his server-based products are monitored, so that regulators can spot if a person is overplaying. Pop-up messages flag to people how much they are spending.
“Most players are having fun. By engaging in exciting games that have a bit of volatility, it gives them a buzz. We want people to win money, and to have fun playing,” says Alvarez.
- Inspired Gaming Group is one of the London Stock Exchange’s “1000 Companies to Inspire Britain”.