With Ontario’s iGaming market going live, merchants will need to do a lot of work to set their brand apart from the rest. Working with the best gaming partners will provide merchants with the opportunity to grow their brand and acquire customers. In this episode, we will discuss the importance of gaming solutions providers in a newly regulated gaming market.
The iGaming Show, presented by Paramount Commerce, is a podcast that will analyze gaming industry trends with experts from various gaming organizations.
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Varad Mehta: Hello everyone. And welcome to the fourth episode of The iGaming Show,presented by Paramount Commerce. I’m your host, Varad Mehta.And in this podcast we explore gaming industry trends with expertsfrom various gaming organizations. In today’s episode, we will talk about the significance of gaming solution providers in a newly regulated gaming market with Jim Ryan, the Chief Executive Officerat Pala Interactive. So, without further ado, let’s get the show rolling. So Jim, I wanted to begin with a few fun questions because I like to keep it light in the beginning and then go into specifics. So I saw on the Pala Interactive website that you like playing poker. The first thing I wanted to ask you that, what’s one poker tactic or strategy that would be really useful in regular or professional life?
Jim Ryan: What happened to your list of pre-prepared questions?
VM: I’m skipping over them.
JR: That’s good. Look, once upon a time I think I was a decent poker player. My skills are pretty rusty. So I’m not sure I’m going to give you the best advice possible. But certainly following the patterns and tactics of your competitors and trying to read the, with the fullness of time, those who I know who are really good at this game have mastered that. So for what that’s worth.
VM: Okay, so it’s a helpful skill in real life, maybe as well learning poker a little bit. My second question for you was, having attended university in the 80s, did you by any chance try any of the famous hairstyles from that era?
JR: Well, I wish I had the hair I did have in the 80s. But I was a pretty conservative guy. But no mullets for me.
VM: Okay. And lastly, this is my last childish question. What’s one song that really pumps you up when you’re playing a sport, going to the gym or you just want to get ready for a Monday perhaps?
JR: More Than A Feeling by Boston.
VM: Okay, I have to listen to that now. So “More Than A Feeling” by Boston.
JR: Yes. And if you don’t have that exact reaction, I’d be surprised.
VM: Okay, I’ll do that for sure. So I’ll add that to my list today. So Jim, I looked you up, I read a little bit about you, but I just wanted to know how you got involved in the gaming industry because it seems like by taking a look at your professional profile or anything that’s possibly in the media out there, you’ve been involved with it for a long time. So could you tell me about your professional career in the gaming industry and then how you moved on into Pala Interactive?
JR: Yeah, it’s interesting. I’m showing my age, but I often say I’ve been involved with the sector since the turn of the century. But I actually got involved with it in 2001. And at that point in time you wouldn’t remember this, but there was this wonderful thing called the .com boom or the .com bubble. And I was working for an Internet based Internet commerce company, a procurement company, discovering all of the opportunities that the Internet was going to make available to all of us. And this little company, publicly traded company called Crypto Logic, was looking for a CFO. And I have always, I love games, kind of games are my life. Love to bet on who’s going to do what next. And love to play poker as you mentioned earlier. And literally throughout my childhood, I’ve always been fascinated by casino-based games. And when I realized that there was an online casino opportunity so at that point in time, I was an accountant, chartered accountants, and so I stalked the CEO until he hired me. And so that was Crypto Logic. It was a wonderful experience. And that was the beginning, and that’s why I got into the sector. The interesting thing about this sector, and it appeals to developers, it appeals to marketers. But as a finance guy, and this applies both land-based and online, this is a numbers business. And so bringing my financial acumen to a product that I already understood and then applying it by way of the Internet and the distribution opportunities of that presented, it felt like a winner. And being involved in this sector now for over 20 years, without question, it was a winning bet that I made. And hopefully we’ll continue to enjoy this market because now, in my view, it’s really just starting to begin. If it was a ball game, we’re in the second inning of a nine inning ball game with this US regulation, or call it North American regulation, which is really in its infancy. So pretty exciting time.
VM: Sure. And how did you transition into something like Pala Interactive? How did that happen?
JR: Well, it was a retirement project, believe it or not. I was the CEO of Party Gaming, which became Bwin Party. I lived in Gibraltar for over six years and came back to Canada to actually take it easy and retire early. And that didn’t work out. And I had a friend of mine, technology guy, who he and I had this joint investment in a company. It was supposed to be a lifestyle investment for us. Neither of us wanted to work that hard, wanted to make enough money to just pay the bill, so to speak. And we had a vision that the US was going to regulate. I’m taking you back to 2012, just after I left Party. And we started that business in 2013. We were six months into it, and the Pala Band of Mission Indians discovered us and actually acquired the business six months into our journey. So I became the CEO and my partner, guy by the name of Uri Kozai, became the CTO. And we’ve been at it now for nine years and loving it.
VM: And you mentioned that we can call this maybe the second innings of a long innings that might be filled with lots of more regulations coming into place. As you’ve been a veteran of this industry, what were some indications that gaming regulations would come to Canada? Because I’m sure with the US, it might have been a little bit clear with markets like New Jersey coming into the scene, but did you expect regulations to come through in Canada, starting with Ontario?
JR: Didn’t think it would start with Ontario. Wasn’t certain that regulation would come to Canada. If I take you back probably three, four years, the Province of Quebec attempted to put in place a regulatory framework, and this was really led by Lotto Quebec, and they were seeking three, four handful of operators to partner with. So there would be multiple brands in the province of Quebec. Revolutionary idea, of course, limiting it to a set of four or whatever it was at that point in time. Therein lies the problem, because everybody wants to be involved in that marketplace. So, for reasons that I don’t completely understand, that never came to be. The Ford government, Premier Ford, the leader of theConservative Party in Ontario, pretty much out of the blue, announced the desire to regulate the sector. I suspect in large part because some of the larger operators in the sector had been lobbying for it. A frustration by the provincial government’s pardon that they had a large, vibrant market that wasn’t being taxed. Those are the drivers. And so much to my pleasant surprise, the market opened up in a regulated form on April 4 of this year. Do I have a view as to what’s going to happen next in Canada? I wouldn’t hold my breath. I’m not aware of anything meaningful that’s going on in terms of other provinces regulated. I could be wrong. I think everyone, or when I say everyone, I mean other provinces will take a look at what’s happening in Ontario, make their judgments from there. One would have to believe, much like the US states, that others will follow. How fast? Remains to be seen.
VM: That’s really interesting, because I think that people would assume that a province like Ontario would be the first one to really kick start the regulated iGaming industry. I find it really interesting about the Quebec piece. Maybe talking about your work in the US through Pala Interactive. Were there specific learning points that you had in the US that you could or have applied in a market like Ontario or into Canada or something you learned there that you feel that would be really beneficial when moving into Canada?
JR: Without a question. If you take a look at the regulatory and the compliance aspects that come along with state-based regulation, all of those learnings we’ve brought into the province of Ontario. So to bring our business into Ontario, in fact, to bring our business into any other regulated market is pretty easy now. And we cut our teeth in the state of New Jersey. Them and Nevada were the first to regulate the sector and the gold standard, so to speak. And we’ve actually developed our systems. So we didn’t bring a European system into the US marketplace. We actually built our player account management system and all of the components that we’ve integrated with it, with a keyboard in one hand and the New Jersey regs in another hand. And we launched our product the year after the New Jersey market opened up. And so have been building off the back of that, but bringing the regulatory experience, the platform that has been developed to operate in a US regulatory marketplace into the Ontario market. It’s been a pretty smooth transition.
VM: And what do platforms such as Pala Interactive play in a new iGaming market, could you maybe expand on that? What’s your role in a newly regulated gaming market?
JR: The need for platforms are really defined by who’s operating in the marketplace. And so you’ve got large operators like DraftKings and FanDuel, and MGM, and they’ve got their own platform, so we don’t play a role for them. However, there are many operators who don’t have the technology infrastructure. If you actually take a look at the US experience, land-based casinos do not run their own development shops, do not typically own their own technologies. If you take a look at what they’ve done in the land-based environment,all of the casino back office systems, the casino content, is all outsourced to third parties. And so the bet was that would be the way it would play out in the US marketplace and in the Canadian marketplace. And it has. And so we have a number of customers who are land-based casinos who come to an organization like Pala to license the infrastructure. And so we provide the lifeblood, we’re the back office. Fundamentally, a platform is nothing more than an e-commerce product, in that we happened to sell casino games on our platform. It could very well be books. But ultimately a player has got to register. A player has got to go through KYC or know your customer requirements. Players got to be geolocated. A player has to go through all of the regulatory controls, make sure they’re not on an exclusion list. They need the ability to make a deposit, the electronic wallet, credit card, debit card, bank to bank transfer. Then they need the ability to access game content, casino, poker, sports, and at the end of their game session, they need the ability to withdraw. That’s what a platform does. That kind of encompasses the full feature set. So that’s the technology that we provide. Over and above that, we provide our customers with regulatory expertise, in that every customer that we have that goes into the market has got to develop internal controls, or ICs, or in the Ontario marketplace, they’re known as a control activity matrix. We’ve done this all before, so we assist our customers with that. Once we have them live, we assist them with integrating great content, integrating marketing tools, providing advice, providing customer support, payment fraud management, marketing expertise. So it’s much more than a technology company now. It’s actually software, license and services. And that’s how we’ve grown our business. And you develop true partnerships as you do that. And many of our customers don’t come into this sector with deep online gaming knowledge. We facilitate that and other platform providers do the same thing.
VM: That’s amazing. And I think that would bring me to working with clients who may not have a background in online gaming, or maybe some who have a keen interest in entering and they have a certain amount of knowledge. How much benefit do you bring to these clients? What are the key benefits that a solution provider, a gaming solution provider like Pala Interactive, could give to your clients who are interested or possibly new and want to get into this industry that is growing rapidly?
JR: Well, I think the first advice I would have for anybody is an organization like Pala fundamentally, what are we? We are a software development technology company, so we provide the technology infrastructure. We don’t pretend to be operators. We have services that help operators be successful. Customer support, payment and fraud management, those are core services. We’re now starting to develop our marketing services, I’d say still in our infancy as we build out that organization and those group of people who can help our customers. But the best advice I can give to anybody who’s going into the sector, you need to have dedicated online gaming management. You should not rely on your technology provider to provide that to you. You’ll be disappointed. You got to have somebody looking at it day to day. And it should not be the same management team that runs your casino. We’ve seen it. Those of our customers who have dedicated online management and expertise are immensely successful. Those who try and leverage off of land-based resources, you’re just challenging your people who are already challenged with land-based casino and inevitably, you don’t get the same result. That would be the best advice I’d have for any operator.
VM: Yeah. And I was reading on Pala Interactive’s website, as well as the LinkedIn page,that the company’s majority stakeholders, and you mentioned, shareholders are the Pala Band of Mission Indians. So has that partnership played an important role in Pala Interactive working with First Nations gaming commissions? Like, an example I saw on your website is the Kahnawake. So has that played an important role with what you do?
JR: It’s interesting. The fact that we’re tribally owned has no bearing on how a regulator be it tribal or state-based access reacts to us. In our experience when we’re dealing with state-based regulators, they care about compliance. They obviously want you to be an organization and people of good character, but at the end of the day, you’ve got to comply with the requirements. So being owned by the Pala Band of Mission Indians hasn’t been particularly and I never expected it would be helpful in that regard. Where it has been helpful is that we have a host of tribal customers and we understand working with Pala for nine years, there is a different mindset. There’s a different mode of operation in a tribal enterprise as opposed to a non-tribal or commercial enterprise, in that tribes are there and they operate on behalf of their community and the funds generated by business activities go back to community members. So it’s never about taking 10% market share. It’s about getting a new business enterprise, cash flow positive and growing from there and actually contributing and helping enhance the community. Not everybody understands that, but we’ve got, through necessity, we have to understand that. On the back of that, we’ve got Pokagon in the state of Washington. We’ve got Mohegan that we just launched in Ontario with the Fallsview Casino. We’ve got the Poarch Creek Band in the state of Pennsylvania through four winds. Abenaki Wolinak in Canada. And then we’ve also got Pala Casino Spa and Resort that we provide our products to. So, five tribal customers, very proud of that and look forward to growing that in the future.
VM: That’s really interesting, and I guess that ties really well into my last question. Before I ask the last question, I just want to make an assumption and just say that I don’t think you’re going to retire any soon. I think you’re just going to contribute to this amazing growing industry and you’re just going to provide your expertise as it goes ahead. So, tying that with my last question. What’s next for you and Pala Interactive? Because I read online that Boyd Gaming acquired Pala Interactive, which is amazing. Big news. So what’s next for you and the company?
JR: The Boyd acquisition hasn’t closed yet,but hopefully that’s not that far off. What’s next is more of the same, only we plan on doing it better. And why do I say that? From a B to B perspective, what we’ve done over the last couple of years, it’s been about closing as many deals as we can and building our business. What happens when you start one of these things is you burn a lot of cash, as many others have done in the sector, and then there’s pressure. As I talked to you about the tribal motivations, get this thing cash flow positive. And so to do that, we put our running shoes on and we had to do an awful lot of business. And we’ve been successful in doing that. We’ve been successful, been profitable now for three years, and we’re into our third year. So we’re proud of that. But with Boyd, there’s going to be a little change in our B to B strategy. It won’t be about going out and closing 12 or 14 deals. That’s what we did last year. It’s going to be about less is more. So we’re going to have fewer customers, more focus on our existing customers, more focus on our new customers,and doing a much better job from a product perspective, the things that we are looking forward to working on, enhancing our mobile offering in a big way. Apple has driven us down a particular path in terms of integrated content,not having the ability to have a store like interface, and some people are able to get away with that, some people can’t. And so migrating and making our product better than that, adding and making sure we’re on the leading edge in terms of content payments, KYC. And then as I mentioned earlier,adding more managed services, focus on marketing so we can help our customers out. So fewer, do a better job for the few that we have, and have the few that we have in a much longer term, more of a partnership type basis. That’s the plan.
VM: And no retirement on the books?
JR: No, I am having too much fun. You’re stuck with me.
VM: No, but Jim, I really want to thank you so much for your time. I know you must be a really busy person, so thank you for taking the time to speak with me. It’s always great to learn from veterans such as yourself. And I hope whoever watches this, they get to know more about Pala, about the industry, and about you as well. Thank you so much.Thank you.
JR: Appreciate your time.Thank you. Take care.
VM: The online gaming industry’s growth has truly helped in the creation of more innovative gaming and technology solution providers. I want to thank Jim Ryan, the Chief Executive Officer at Pala Interactive, for joining us today and providing his expertise. If you enjoyed today’s episode, then please consider sharing, liking and subscribing to our YouTube channel. If you have any questions for us or Jim, then please comment them down below. Thank you so much for tuning to The iGaming Show presented by Paramount Commerce. I’m your host, Varad Mehta. And until next time, keep gaming.