TEAMING UP GAMING MARKET MOBILE CREATIVITY - Betsson AB

– THE ONLINE GAMING MAGAZINE – XXXXXXXXXXXXXT H E O N L I N EGAMINGM AG A Z I N EN o 1 1MOBILE CREATIVITYSTRIVING TO BE THE MARKETLEADER IN MOBILE GAMING5,200SEK Million in customerdeposits 2011,an increase of 34 %from last yearTEAMING UPCREATING STRONGMATCHES WITH ARSENALAND BETSAFE21%Expected annual growth ratefor mobile and tablet InternetPaths to successHow to increase your chances of building a successful gaming companyTHE MIDDLE KINGDOMWhat will happen when 600million Internet users discoverthe benefits of betting online?GAMINGMARKETEstimated sizeof gamingmarket 2012 isEUR 25 billion– 1 –

– THE ONLINE GAMING MAGAZINE – THE YEAR IN BRIEFFEBRUARYBetsson strikes a dealwith Chinese stateownedcompanyBetsson establishes a businessrelationship with alocal company in China thathas set up a joint venturein the sports lottery relatedindustry together with a Chinesestate owned company.“It is an important part ofour strategy to be presentthrough our B2B unitin the world’s major markets,”says Pontus Lindwall,former CEO of Betsson AB.APRILBetsson strengthensmanagement to preparefor continuedexpansionThe Nominating Committeeproposes that the Chief ExecutiveOfficer and GroupPresident, Pontus Lindwall,be elected to the Board atthe annual general meetingof shareholders on May12, 2011. Pontus Lindwallassumes also the positionof working Chairman ofthe Betsson AB Board. TheBoard appoints the formerChief Executive Officer forBetsson Malta Ltd., MagnusSilfverberg, to Chief ExecutiveOfficer in BetssonAB, to work in Stockholm.Henrik Persson, formerCEO of Betsafe is appointedChief Executive Officerfor Betsson Malta Ltd.“Betsson has been investing in Asia for the past three years as webelieve that the Asian markets have a great potential in the longterm. I believe that this joint venture will provide a solid platformfor us in China and I am very excited over this opportunity.”operationslive sports bettingand Joint venturescurrent trends:There are two important trends in the gaming industry today. One is that Live betting insports is increasing and the second is that operators are focusing on joint online gaming solutionswith other companies. Betsson is well positioned as regards to these trends, with a historyof successful cooperation and the strongest growing Live betting operation in Sports.Today, Betsson offers one of variety of global locations.thE dEvElopmEnt ofturnovEr 2006–2010the world’s best sportsbooks, A major aspect of Betsson’s activE playErS, thouSandS SEK millionand this is something players business model has always 350 2 000CEO of Betsson ABA YEAR OFSUCCESSFULEXECUTIONBetsson is a fast-growing group ofcompanies with close to 50 yearsexperience in the gaming industry. Thecompanies offer a wide range of first-classonline gambling products and games in asafe and user-friendly gaming environment.

– THE ONLINE GAMING MAGAZINE – THE YEAR IN BRIEFMAYBetssonacquires BetsafeBetsson AB acquiresBetsafe, a private gamingcompany based in Malta,offering sports betting,casino and poker to clientsprimarily in the Nordiccountries. Through theacquisition, Betssonstrengthens its platformin the Nordic regionand creates a strongbase for future growth.“This deal will fuel ourgrowth. We strengthenour position in the Nordicregion as well as ourorganization when mergingtwo profitable companies,each of whom haveproven their ability togain market share ina highly competitivemarket environment,”says Pontus Lindwall,former CEO of Betsson.AUGUSTBetsson in B2B cooperationwith ArsenalFootball ClubBetsson Business Solutionssigns a three year B2Bcontract with one of themost prestigious footballclubs in the world, ArsenalFootball (“the Gunners”)Club. Betsson becomesthe club’s Official BettingPartner, providing bettingservices both online,at www.gunnersgaming.com, and in the stadium forArsenal fans through anewly created brand,GunnersGaming byBetsson. Arsenal has a globalfan base and boasts thehighest paid membershipin the football world,with just under 200,000members last season alone.11.7EURmillion JACKPOTseptemberBetsson entersguiness worldrecordsIn September a 20-year oldNorwegian wins the largestonline jackpot in the worldon a free bet at Betsson’scasino. With this EUR 11.7million win, Betsson officiallyenters the GuinnessWorld Records for ‘TheLargest Online JackpotPayout’ — in the world!NOVEMBERBetsson reaches5th place on the EGRPower 50 listThe Power 50 list is a rankingof the most respectedand valued companies inthe online gaming industryand Betsson climbed upfrom 12th place last yearto 5th this year. Betssonhas done this due tothe great achievementsin all the areas judged:Financials, Strategy &Deliverability, GeographicReach and Brand Value.DECEMBER JANUARY 2012Betsson IS granted Betsson ISa gaming license in granted aDenmarkgaming licenseBetsson will be representedin Denmark by be launching inin Italy and willfour brands through B2C Italy throughoutthe year.and B2B. www.betsson.dk, www.betsafe.dk, www.casinoeuro.dk and www.danmarksautomaten.dk.“Launching major B2B contracts,the acquisition of Betsafe and ourfirst steps into China, all contributedto making 2011 an outstanding year.In addition, receiving the Danishgaming license in December and Italyin January, further strengthensBetsson’s position in Europe.”Magnus SilfverbergBetsson—OnlineSportsbook Operatorof the YearBetsson is named the winner of “Online SportsbookOperator of the Year” by IGA. The list of nominees isextensive with all major operators represented. TheInternational Gaming Awards 2012 is supported andenhanced by well renowned industry insiders as wellas gaming clients from all tiers of the gaming world.– 05 –

– THE ONLINE GAMING MAGAZINE – XXXXXXXXXXXXXXXXA DYNAMIC COMPANYIN A CHANGING MARKETPLACE ISMOVINGAHEADIn recent years Betsson has advancedquickly on the list of the largestand most influential online gamingcompanies. We are overtaking midsizedcompetition and closing in onthe market leaders. In the “EGR Power50 report” of 2011, Betsson was rankedas the fifth most influential gamingcompany in the world, up from 12thplace the year before. This is of coursea massive recognition of the hard workwe have put in and it shows that ourbusiness model is right.– 06 – 04 –

– THE ONLINE GAMING MAGAZINE – A word from the CEOwe are living in a time of change. Forten years or so, the online gaming industryhas been characterized by a lotof change: Rapid development, highgrowth, fun and crazy workplaces,but also legal and political uncertainty.Now at least the uncertainty seemsto be coming to an end. We are witnessinga change in policy in most EUmember states, which are liberalizingand re-regulating the sector. Betssonwelcomes the development, and eventhough it may place high demands onus in terms of new taxes and compliancerules, we believe that the positiveeffects of being licensed will outweighthe negative ones — as long as thelicensing regime comes with reasonabletaxes, are non-discriminatory andallows all forms of online gambling.The question many industry employeesnow pose is, “Will it be boring?” Iprefer to think that this is when thereal fun begins. We are part of a historicmoment of change, which initself will be a challenging and interestingjourney to go through. Whilegoing through the changes, and afterwards,we have all the possibilitiesin the world to continue to developour business in terms of new creativeproduct offerings and new dynamicbusiness models. And we can continueto have fun, as we have had for thelast ten years. This will not be boring,or tedious.While Europe is going throughchanges, we are taking our first stepsin Asia. The Asian gaming market ishuge and Betsson is very well positionedto take advantage of it. InChina, we have a first establishmentand we are slowly learning how to dobusiness there. In the near future, ourmain focus in Asia will be on growingthis newly established business.Meanwhile, there are other interestingopportunities in Asia that we are pursuing,mainly from a B2B perspective.Asia will continue to be an area of interestfor Betsson as we go forward.From a product perspective there isalso a lot of development and changegoing on. Good examples are the mobilesolutions being developed in theonline gaming industry, and Betssonis highly active in this area too. Webelieve that this year will be the time“We will continue to be focused and passionate aboutwhat we do. And we will be dynamic, creative andfair – in other words, we will do it the Betsson wayand continue to build this company’s culture and soul.And it will be fun.”when mobile gaming really takes off.Betsson aims at delivering world classmobile solutions that our brands canbenefit from.Speaking of brands, I often getasked what it is that makes Betssondeliver such strong growth year afteryear? Part of the answer definitely liesin the multi-brand strategy pursued bythe Betsson group. Betsson currentlyruns 17 brands, of which 13 are on behalfof our partners. These brands areoften niched at a certain market orproduct segment. This means that, togetherwith our partners, Betsson coversa very broad range of the customersegments on the market. The belief isthat customers want variety and thatthey like to play on many sites simultaneously.Betsson’s strategy caters forthat, and while many of our competitorsrun a “one size fits all” strategy, webelieve that the multi-brand approachsets us apart.The competition in the market isfierce, but in recent years, Betssonhas advanced quickly on the list ofthe largest and most influential onlinegaming companies in the industry. Weare overtaking mid-sized competitionand closing in on the market leaders.In the “EGR Power 50" report of2011, Betsson was ranked as the fifthmost influential gaming company inthe world, up from 12th place the yearbefore. This is of course a massiverecognition of the hard work we haveput in and it shows that our businessmodel is right. With Betsson’s currentdevelopment, steps are being taken tomatch the market leaders in terms ofboth product offering and geographicalcoverage. Betsson will not get carriedaway and try to do everything atonce, but the strategy is to invest in aselected number of “new” productsand markets in a focused way.On a group level, we will continueto be passionate about what we do.We will continue to be dynamic, creativeand fair — in other words, we willdo it the Betsson way and continue tobuild this company’s culture and soul.And it will be fun.MAGNUS SILFVERBERGCEO, BETSSON– 07 –

– THE ONLINE GAMING GAMING MAGAZINE MAGAZINE – MARKET – BOARD OF DIRECTORS/senior managementA MARKETGrowingBY TOMAS JOHANSSONWITH THE SPEEDOF INTERNET–08 –12billionRememberUSD, is how much the U.S. marketfor online casinos and pokercould be worth.Source: KPMG Intl,Online Gaming 2010.given the strong underlying growth,online gaming remains an underpenetratedindustry with many years ofcontinued strong growth in the future.Currently there is a positive trend inEurope where governments in Denmarkand Italy have been taking stepsto legislate online gaming with conditionsthat will benefit both the governmentsand the operators. In addition,several other markets are in discussionson opening up to regulation andtaxation. For operators in the industry,this is a positive trend that will accelerategrowth, as markets become moreextensively available, with more opportunitiesfor marketing and otheractivities that will enable operators tocompete with state-owned monopolieson equal terms. The same liberalizationtrends are seen in the U.S. anda number of Asian countries, even ifthey are still a bit behind Europe intheir discussions. The U.S. is still an untappedmarket and a huge opportunityfor the industry and Betsson, whichis not operating in the U.S. due to theInternet ban. The U.S. and Asian countrieslike China and India will probablybe the largest online gaming marketswithin the near future — and thesemarkets are still untouched by seriousoperators. At the same time, largeparts of the world population still haveno, or inadequate, access to the Internet,which is a clear indicator that theindustry is still in an early phase.that there are about 600 millionInternet users in China alone, and thenumber is growing every day. What willhappen when they discover the benefits of“betting online?

“Source:EUROPEeurope is an important market for continuedgrowth for Betsson. Through itsdual strategy Betsson captures manyopportunities in Europe in both the B2Cand B2B segments. According to H2Gambling Capital, the European gamingmarket on the Internet will continueto grow in the coming year to an estimatedmarket size of EUR 13.9 billionin 2012, equivalent to an increase of 18percent from 2011. In 2015, the marketis estimated to be worth EUR 16.2 billionmeaning an additional marketgrowth of 39 percent, a compoundedannual growth rate of 8.5 percent. Theonline gaming market has actually increasedmore than 14 times since 2001and the yield per active account hasmore than doubled since 2003. Follow-– THE ONLINE GAMING MAGAZINE – Describing the marketThe online segment of the gambling industry is by far one of its fastestgrowing divisions and piquing the interest of the industry’s largest players.The European gaming market on theInternet will continue to grow in thecoming years to an estimated size ofEUR 13.9 billion in 2012.Interactive global totalgross gambling yieldBILLIONS EUR14.820.223.130.4KPMG Intl Online Gaming 2010ing the examples of the U.K. and Italy,and under pressure from the EuropeanCommission, many other countries arecurrently preparing for a controlledopening of their markets. Denmark andEstonia have been liberalizing their onlinegaming regulations and the marketsin Germany and Spain are expected toopen up soon. Italy, with a favorableregulation is estimated to grow with acompounded annual growth rate of 11.2percent going from market size of EUR1.23 billion in 2011 to EUR 1.87 billion in2015. Denmark, which has been live withits new regulated market since January2012, is expected to almost double interms of market size in 2015, going froman estimated market of EUR 285 millionin 2011 to EUR 550 million in 2015.6.92003 2006 2009 2011 2015Interactive Gross GamblingYield by Player Location 201128%16,4%9%46,6%EuropeAsia and Middle EastInteractive Gross GamblingYield by Product 20119%5%7%24%BettingPokerCasino14%BingoOtherState LotteriesNorth AmericaOther41%NORDICfor betsson, the Nordic market is veryimportant, especially for its B2C segmentwhere Betsson has a strong position.Even though the Nordic market hasbeen in the forefront for many years interms of online gaming growth, there isstill a huge upside with many new playersfinding the benefits of playing online.The Nordic online market is quite fragmentedwith each government managingits own gaming regulation. Denmarkliberalized and deregulated its gamingregulations in 2012 while the other countriesare still a bit behind in this regard.However, if the Danish model provessuccessful, it could very well become themodel for its neighbors.Betsson has grown faster than the marketin recent years and we see no reasonwhy we shouldn’t continue to grow inthe years to come. Since Betsson onlyhas a fraction of the total market, wehave a great position in view of i) theoverall underlying market growth andii) the ability to take market share fromthe competitors, mainly state-ownedmonopolies. We trust that the companyand the market for Internet gaming inthe Nordics will continue to performstrongly. The number of Internet usersand people who prefer gaming onlineinstead of offline are growing rapidly,which is a significant driving force in theindustry.Source: H2 Gambling Capital– 09 –

– THE ONLINE GAMING MAGAZINE – Describing the marketBroadband penetration of home internet%21.424.327.931.836.7XXX 38.439.841.543.1U.S. E-commerce as a percentage of total retail sales4th quarter%1.01.21.61.92.22.63.13.63.64.14.44.62003 2004 2005 2006 2007 2008 2009 2010 2011Source: H2 Gambling Capital2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Source: U.S. Census Bureau Retail Indicators Branch November 201121%Expected annual growth ratefor mobile/tablet Internet forthe period 2011-2015. The totalmarket is expected to morethan double within four years.Source: H2 2010Online gross gamblingyield by sub-channel 2011Computer InternetMobile phone/tabletItv87%Source: H2 Gambling Capital11%2%ONLINE GAMingDRIVING FORCESIn regions where Internet is available, we see increased confidence in online shoppingand an increasing number of users turning to the web for banking, stock trading, insurance,bookings and other activities. The changing behavior and increasing confidence inonline services and e-commerce is important for the development of the gaming market.Developments driving the growth of global online gaming include:Increased Internet penetration: Increasedaccess to the Internet in households, leadingto additional potential players.Improved broadband capacity: Improvedbandwidth enables increasingly advancedgaming functions, which attracts more potentialplayers.Mobile devices: Mobile devices like smartphonesare revolutionizing the mobile Internetexperience and have been key driversof growth in 2011. We expect this trend tocontinue in the coming years.Increased confidence in online paymentservices: Confidence in online gaming operatorsand payment services is on the rise,which contributes to the increase in thenumber of potential players.Market share shift from offline to online:A steadily increasing number of peopleplay online, instead of traditional offlinegaming. For younger players who havegrown up with the Internet, online gamingis a natural choice.Increased demand for live betting: In recentyears we have seen an increased demandin live betting, mainly on sports events.Through its Sportsbook, Betsson is well positionedto capitalize on this trend.– 10 –

– THE ONLINE GAMING MAGAZINE – About BetssonBusiness ModelAttracting new customers at low levels of cost and risk isfundamental to Betsson’s business model. Customers arrivevia direct registration at our sites or via affiliates that directplayers to us. Our products belong to two revenue models:Betsson playing against the customer (Casino, Sportsbook,Scratch Cards, Bingo and Games) and customers playingagainst each other (Poker). Within our partnerships, profitsharing between us and our partners is based on the gamingsurplus generated by the customers on the partner sites.Betsson acts as the bank for gaming in Casino, Sportsbook,Scratch Cards, Bingo and Games. Sportsbook is distinctfrom the other types of gaming as Betsson takes a riskwhen setting the bet based on probable outcome.Probability is assessed by professional odds compilers. Asthe customers’ bets are often concentrated on a certain result,earnings from bets fluctuate. This risk is, however, minimizedover time due to the large number of bets placed inthis gaming area. In the other gaming fields, the bets arebuilt into the actual product and, consequently, gamingprofits fluctuate to a much smaller degree.In the Poker operation, Betsson takes a commission(rake) on every pot within cash games and fees for tournaments.The size of the commission depends on the sizeof the pot or the buy-in for the tournament. Consequently,Betsson takes no direct risk in the gaming itself but, instead,levies a charge for managing the play.ProductsCASINOCasino is Betsson’s largestproduct. Casino games includetable games like Roulette and BlackJack, as well as video slots and videopoker. Our casino offers a large varietyof world-class casino games that do notrequire downloads. Games with an opportunityto win large jackpots are themost popular ones. In 2011, many of ourcustomers won the jackpot, including aNorwegian who won EUR 11.7 million on afree bet. With this win, Betsson officiallyentered the Guinness World Records forthe “The Largest Online Jackpot Payout”in the world.Live CasinoLaunched in 2010, Live Casino has provenvery popular. Customers interact with livedealers and other players around a physicalgame table and the gambling experienceis the next best thing to a “real life”experience.POKERAs for many products, localizedoffers are a key to success andPoker is no exception. Therefore, Betssonoffers poker from multiple suppliersin order to cater to specific local demand,thus offering unrivaled variety in a keyproduct. Ongame Networks, one of theworld’s largest networks with approximately18 million registered poker payers,is our main Poker destination. In additionto Ongame, Betsson offers Entraction andMicrogaming poker on selected markets.A much appreciated addition to gaming isour Poker School, which has helped manynew users to dare participate in full.SPORTSBOOKSportsbook has grown substantiallyin recent years andhas become a prioritized product forcontinued growth. It lets players wageron various events throughout the world.In addition to being a first-class product,this game constitutes a good introductionfor our customers, who often go onto try other products. Our Sportsbookoffering is among the widest and deepestin the industry, and one of the fastestand most attractive sports bettingexper iences available.SCRATCHBetsson’s scratch card offeringis among the most extensivein the industry. Betsson offers a range ofscratch cards with a jackpot win of EUR1 million to be paid out over a multi-yearperiod. In addition, more than 50 typesof lottery tickets are available. Commonto all of these scratch tickets is that theyprovide considerably better oppurtunitiesto win than traditional scratch tickets. Ourselection of scratch cards has a high payoutrate and every third card is a winningticket.BINGOWe offer more than 50 bingogames where bingo cardscan cost as little as EUR 0.05. In orderfor people to enjoy themselves, wehave Bingo hosts who chat and socializewith the players.GAMESGames cover many types ofamusement, from lotteries todice games. Players try their luck at virtualhorse and dog racing or play the Slotbox,Betsson’s variation on the classic gameof Tetris. Games attract players who havelimited time but want a little excitement.Today Betsson offers over 60 differenttypes of games.multiple supplier strategyWith Betsson’s multiple supplierstrategy, we ensure that we alwaysoffer our customers the best andmost attractive product mix. A firstclassoffering is essential for successin the industry and Betsson isworking hard to maintain its prominentposition through innovationand technology. We continuouslyadd new products and suppliers asopportunities and needs arise.– 12 –

– THE ONLINE GAMING MAGAZINE – About BetssonBetsson ABBusiness ConceptBetsson AB’s business concept is toinvest in fast-growing companies operatingin the online gaming industry.“Betsson has a dual strategy with B2C and B2B fuellingthe successful multi-brand strategy with localizedofferings.”ObjectiveBetsson’s objective is to generatelong-term growth and responsibleprofitability in order to provide shareholderswith the best possible returnsin the long term.CASINOB2CStrategyBetsson AB and its subsidiaries willgrow organically, or via acquisition,PRODUCTSUPPLIERSPOKERSPORTSBOOKSCRATCHPROPRIETARYGAMINGPLATFORMinside and outside the EU.BINGOGAMESB2BBetssonSubsidiariesVisionBetsson Group shall have a stake inevery online bet.Mission• We deliver fun, fair and creative onlinegaming experiences to the people.• We strive to be the best where wechoose to play.• We are a creative and dynamic companybuilt by passionate employees.B2C and B2BOur vision “a stake in every online bet”is realized through a dual strategy withBusiness to Consumers and Businessto Business (B2C and B2B).Currently, Betsson runs 17 differentbrands, 4 within B2C and 13 withinB2B. Betsson’s B2C segment is definedas games from users acquiredby Betsson, as well as games from usersoriginating in Betsson’s networkof affiliated websites (affiliatelounge.com). Anything that is not included inthis definition is classed as B2B. In ourdirect business (B2C) we currently focuson our core markets and productsin order to consolidate our resourcestowards creating higher growth inthose areas. The Nordic region is animportant market and a platform forBetsson’s global ambitions.In our indirect business (B2B), wetarget markets as well as niche segmentsin established markets with apartner strategy, trying to break intothese markets together with stronglocal partners, since we know fromexperience that local knowledge is animportant success factor. Betsson´sB2B segment, Betsson Business Solutions,is a dedicated company withinthe Betsson Group, acting as an independentB2B division for all Betssonpartner brands. As further explainedon pages 20—21, Betsson BusinessSolutions is a unit which, together withpartners, operate gaming sites jointly.In addition to our 49 years of gamingexperience, companies choosing topartner with Betsson Business Solutionsgain access to the best gamingsolutions available on the market. Inour operations, we build on our strongcapabilities within technology, knowhowof gaming operations, innovationand quality. When combining Betsson’scapability and experience withstrong local partners who have considerablepresence on the market, wecreate huge opportunities for Betssonand our partners.During 2011, Betsson launched anew platform, which allows whitelabeling of Betsson’s entire productportfolio. With this new platformBetsson can deliver a complete gamingportal including a world-classSportsbook to numerous potentialclients.– 13 –

– THE ONLINE GAMING MAGAZINE –paths to successMULTIPLEPATHS TOSUCCESSThe online gaming industry faces many requirements and expectations.To increase your chances of building a successful gamingcompany you need to focus on customer-driven innovation, buildingstrong communication channels with your customers and establishinga clear brand strategy — and manage it well.BY HENRIK PERSSON“Do today what others will not do sothat tomorrow you will have what otherswill not have.”This quote symbolizes and encompassesthe requirements and expectationsthat organizations face today, andthe online gaming industry is no exception.The competitive nature of theindustry requires operators to be earlyadopters of new technology and products,in order to attract the customerin the right place at the right time andwith the right offering. In a world wherecustomers can easily compare productofferings and campaigns from differentoperators, each operator is compelledto offer the market the very best.The introduction of the Internet haschanged the buying pattern of traditionalshoppers, who have gone frombuying products and services locallyto becoming worldwide shoppers. Tobuild and operate a successful gamingoperation in such an environmentrequires courage, creativity and stamina.A customer-driven organization,supported by exceptional customerservice, and a strong brand are equallynecessary. In this industry you are constantlyforced to think outside the boxto find faster and more efficient waysof communication and shorten timeto market. As the Internet continuesto spread and a new generation growsup we will see the industry change itsface many times before it matures. Inthe 1940s, Thomas Watson, then chairmanof IBM, estimated the global aggregatedemand for computers at fiveunits. Today there are 35,000 new Internetsubscriptions every hour. Thegrowth offers great opportunities andchallenges for existing businesses andpotential customers.The first thing a company in this industryneeds to understand is the importanceof listening to its customers.And the goal of making money is moreeasily attained when you really listen toyour customers and understand whattheir needs are. Once you learn to spotand develop the kind of functionality,game or product that the customersees as an improvement to the service,– 14 –

„While it is true that gambling has beenaround since the dawn of mankind, thetechnology available today coupled withthe demand for transparency in the market,means we are only witnessing the beginningof the online gaming era.you have created a stronger bond andhopefully increased the lifetime valueof your customer base. Customer-driveninnovation is, and will be, one of themost important parameters in buildinga successful gaming company.Customers also want a consistent,reliable, and easy-to-use service. Asthe speed of service increases, customerexpectations grow. Therefore,making customer service friendly,easy, and solution oriented is an importantbusiness trend. At Betsson,we focus a lot on building an easily accessibleand responsive customer serviceas we truly believe that being accessiblecreates comfort for the userand builds a loyal customer base longterm. Traditional ways of providingcustomer service, such as phone andemail, will not take you all the way. TodayMSN, Live Chat, Skype, Facebook,Twitter and other channels shape thebehavior of our clients — and we needto be where our clients are. Onlinecustomers require that the companythey choose, whatever the service isabout, communicates with them inthe way that they prefer and not whatthe company dictates. The sooner yourealize that your customers talk aboutyour brand and start interacting withthem in those places, the more successfulyou will be. The cheapest wayto acquire a new customer is throughexisting satisfied customers.Companies such as Facebook andYouTube have built products and servicesthat communicate with the usersin an accurate and customized manner.They offer the customers whatthey want, when they want it, creatinga feeling among the users that theproduct was designed just for them.Online gaming companies have beenmore occupied with offering basic serviceto the users than user friendliness.This might not come as a big surpriseconsidering what this industry was20 years ago — nonexistent. However,companies like Zynga, Wikipedia, Spotifyand Skype were also nonexistent atthat time and today they manage to attractmillions of users every day.The final cornerstone required tobuild the foundation for the future isour brand. Since Betsson operatesmany different brands we focus onmaking each brand feel unique and onbuilding values into each brand. Yourproduct and service have to correspondto the requirements and expectationsof the market segment you havechosen. Your brand needs to tell a storyand promise thecustomer somethingwhen theycome to you. Creatinga brand identitythat transcends yourmarket by creating amemorable exposure isimperative. Since the firstimpression is a lasting impression it isimportant to ensure that a potentialcustomer’s initial introduction to thebrand is positive. Since statistics showthat returning visitors often buy morethan first-time visitors, it is importantto keep the site updated with pertinentinformation, while bearing in mind theimportance of branding.In summary, to increase your chancesof building a successful gaming companyyou need to focus on: 1) Customerdriveninnovation, 2) Building strongcommunication channels with your customers,and 3) Establishing a clear brandstrategy and managing it well.While it is true that gambling hasbeen around since the dawn of mankind,the technology available today coupledwith the demand for transparency in themarket, means we are only witnessingthe beginning of the online gaming era.– 015 –

–– THE THE ONLINE ONLINE GAMING GAMING MAGAZINE MAGAZINE –– BOARD OF DIRECTORS/senior paths management to successA STRONG MATCHbetsson operates a multi-brand strategy in order to appealto a wide audience and satisfy different client tastes andprofiles. The acquisition of Betsafe in May 2011 added aninnovative, successful and fast-growing brand to the familyof brands.Betsson acquired Betsafe, a Norwegian-founded gamingcompany based on Malta that offers sports betting, casinoand poker to clients in primarily the Nordic countries.The purpose of the acquisition was to further strengthenBetsson’s position in the Nordic region by merging twoprofitable companies, each with a strong brand and aproven ability to gain market share in a highly competitivemarket environment.In many ways, Betsafe mirrors Betsson’s own successfuljourney and rapid growth. Last year, for example, Betsafeincreased its revenues by 119 percent. Combining thestrength of the two brands in slightly different segmentswill add to overall brand family value.Betsafe will be retained as an individual brand for manyreasons. Online game clients appreciate having differentsites to choose between, since they prefer not to put alltheir eggs in one basket. By keeping two distinct brandsthat offer similar types of games and betting, the Betssonfamily of brands secures a larger share of the client’s wallet.In all, the Betsson B2C family of brands makes up for approximately70 percent of the gross profit.Opportunities for synergiesThe acquisition of Betsafe paves the way for synergies inmany areas, while the fact that the two companies sharea similar corporate culture ensures a smooth integrationof Betsafe’s 150 employees into the Betsson organization.Two strong cultures, with common values and goals, havejoined forces with the aim of further developing the businessand eventually becoming one of the largest and mostprofitable players in the market.–016 –

paths to success– THE ONLINE GAMING MAGAZINE – XXXXXXXXXXXXXDescribing B2CTaking into account thatBetsson’s brands differsomewhat in positioningand approach, Betsson„is currently developing acohesive overriding brandstrategy. The benefits of amulti-brand strategy arefar greater than the costsassociated with it.Team Betsafe, MaltaIn terms of revenues, the two brands areable to capitalize on each other’s strength.One example is race poker games, wherethe pooling of pots from Betsson and Betsafeinto a joint pot with double the prize68%Gross profitper segmentmoney, has attracted a larger number ofplayers overall as well as from competingpoker sites.In addition to added revenue, Betssonreaps synergy benefits from, for example,the integration of technical platforms and supplier contracts.Added capacity and a broader product offering areother advantages from the merger.Marketing muscleOne reason why Betsson regarded Betsafe as a near-perfectmatch is the company’s strong management skills andits proven track record in innovation, particularly in the fieldof marketing. One example is the Betmobile — a van withan Internet connection and pc screens that gives visitors atsports events a chance to enjoy online games and betting.The concept has generated tremendous attention and wonmany new clients.Like Betsson, Betsafe relies on marketing through affiliates.Independent websites offering information on onlinegame sites are a highly cost-effective marketing channel.In all, Betsson cooperates with some 6,000 websites thathelp build traffic to its B2C brands. Affiliate marketing is alow-risk, low-cost form of marketing, since Betsson doesn’t32%B2BB2Cpay the affiliate until it collects revenue fromthe traffic directed from the affiliate.Television advertising is another importantmarketing channel, as is print and radio.Overall, Betsson favors action-oriented marketingthat builds traffic and attracts clients.We prefer distinct call-to-action messagesinstead of costly, long-term brand buildingactivities such as sponsorship of top-endsoccer teams. Betsson consistently outperformsthe competition in terms of both growth and profitability,and we believe an important reason behind this isthat our marketing is generally more efficient. We are ableto focus better, we keep a keen eye on return on marketinginvestments, and we don’t sprinkle money around simplyto build our brand.Other B2C brandsBesides betsson.com and betsafe.com, the Betsson familyof brands includes cherrycasino.com and casinoeuro.com.These are dedicated casino sites favored by casino playerswho in general prefer sites that focus on casino games anddo not offer sports betting and related products.Betsson is currently in the process of developing a cohesiveoverriding brand strategy, taking into account thatour brands differ somewhat in positioning and approach.The benefits of a multi-brand strategy, however, are fargreater than the costs associated with it.– 17 –

– THE ONLINE GAMING MAGAZINE – XXXXXXXXXXXXXXXXBETTING ONTHE MIDDLEEveryone in theWest has heardabout the rise ofChina for the last20 years. Everyday we are beingfed astonishingstories about China'srapid change.There are many reasons why this isof interest but what stands out themost is that we are just in the beginningof this change. In spite of thespectacular growth, the average GDPper capita in China is still less than 10percent of the U.S. and only about 14percent of nearby Hong Kong. Whatwe are witnessing is the largest societalchange in history and it is not difficultto argue that the coming centurywill be a Chinese century. The UnitedKingdom owned the 19th century, theU.S. the 20th but the 21st will surelybelong to China.The Chinese gambling mindIn most parts of Asia and also in Chinanumerology and the perceived abilityto predict numbers is a reality. Mahjong— probably the most populargame in the world — is played everywhereand playing mahjong is an essentialpart of every Chinese wedding.In the West, Christianity labeledgambling as a sinful activity and thusit is generally speaking not seen as amoral activity. This is not the case inChina where Christianity has neverhad much influence. The belief infate is much stronger and gamblingis the ultimate way of allowing fate todecide whether you should becomericher or poorer. Thus, placing a largebet on a certain sports event or at theBaccarat table is rather viewed as aninvestment than a gamble. “Man proposes— God disposes.”Chinese lotteriesIn Mainland China the only formsof licensed gambling are operatedthrough China Sports Lottery andChina Welfare Lottery. These organizationssell a relatively wide variety ofproducts — traditional number lotteries,odds betting, scratch cards,various forms of high frequency lotteriesand they also operate a basicform of VLT halls.Internet gambling in ChinaToday one can roughly divide theChinese online market into offshore– 018 – –

OPERATING IN CHINAChinese Macau has longsince overtaken Las Vegasas the biggest gamblingcity in the world.KINGDOMBY MAGNUS GRINNEBACKand onshore. Offshore operatorsare sites operating from overseasoffering casino, sportsbook and theusual products. The size of this offshorebetting in China is difficult toestimate but some figures indicatethat it is 8-10 times the size of thelicensed market and the authoritiesfrequently clamp down on the activitiesof these sites.Onshore sites focus on selling lotterytickets from Sports and WelfareLottery online. Some of the largestsites are okooo.com and 500wan.com but lottery tickets have alsobeen sold on taobao.com (an e-commerce site), qq.com and otherlarge Internet portals. It is expectedthat new regulations for Internetsales will be put into effect duringthe coming years but the exact roadmap is still unclear. What is not unclearis that online lottery sales is apriority for both the Sports Lotteryand Welfare Lottery organizationsand we will closely follow the developmentin this area.The prospects in ChinaIn spite of the tight regulations thereare opportunities in China for a companywhich is flexible and creative inits business model and regulationsare slowly opening up. The key factoris to work together with the authorities— in particular the lotterycenters — to develop solutions thatcan be regulated and licensed andto have a long-term focus. Theseare extensive processes that cantake years and the outcome is ofcourse uncertain. However — if youachieve success in China the upsideis gigantic.Operating in China must beconsidered high risk but with suchan upside, how can a company nottry to make an effort to becomeestablished? Regulatory challenges,fierce competition and potentiallymassive rewards — to me thissounds like a perfect challenge forBetsson. We certainly believe thatbetting on the Middle Kingdom isthe responsible thing to do andafter all — did we not just learnthat betting and investment is thesame thing?– 19 –

– THE THE ONLINE ONLINE GAMING GAMING MAGAZINE MAGAZINE – BOARD OF DIRECTORS/senior paths management to successTEAMING UP WITHARSENALWorking with partners comes naturallyto Betsson. Over the yearsmany successful partnershipshave been established and todaythey make up a large shareof Betsson’s total revenues. Inorder to move the company even closer to realizing the visionof “a stake in every online bet” it is necessary to movebeyond the proprietary brands and use the innovativepower of others to extend the reach.Betsson offers a premium turnkey solution for its partnersand consequently tries to find selected partners thatbring distinctive value that Betsson cannot offer on itsown. The partner process is often internally referred toas a ‘dating process’ rather than a sales pitch. Partnerships,just like relationships, sometimes do not work outas planned and that is one of many reasons we put asmuch effort into selecting the partner as the partner doesin selecting Betsson.Passion about partnershipsWhen Betsson first contacted Arsenal FC to discuss a potentialpartnership, the idea was that the right club — withthe right approach and a big enough following — wouldmake a great partner for a niche gaming site tailored to thefans. A lot of time was spent initially to create a shared visionof the partnership and the club was quick to catch on.Through a process of elaboration and discussion we managedto find a model that suited both parties.Betsson Business Solutions finally signed a three-yearB2B contract with the club and by doing so Betsson becamethe Club’s Official Betting Partner, providing bettingservices both online under www.gunnersgaming.com and in-stadia for Arsenal fans through a newly cre-–020 –

– THE ONLINE GAMING MAGAZINE – XXXXXXXXXXXXXDESCRIBING B2BTo team up with Arsenal FC is justone example of innovative approachby Betsson. By being close to themarket and being passionate aboutevery partnership we have the potentialto share success in a numberof partnerships and ultimatelyget a stake in every online bet.Gross profitper segment68%32%B2BB2Cated brand, GunnersGaming by Betsson. Arsenal has aglobal fan base and boasts the highest paid membershipin the world of football with just under 200,000 memberslast season alone. It also has a massive following on Facebookof more than 8 million people.GunnersGaming by Betsson is a unique site that combinesthe proven experience of Betsson with the passionof the Arsenal brand. With a clear Arsenal-branded solution,and exclusive Arsenal specific prizes, Betsson deliversa unique offering.Entering large and competitive virgin territoryThe UK market is virgin territory for Betsson and whilethe market is large and well established it is also knownto be highly competitive. Entering the market with a B2Bpartnership makes sense in multiple ways. It offers a localconnection and an opportunity to learn about the market,while the brand presence is boosted by a ripple effect thatcomes from being associated with a strong brand.The opportunity to leverage the platform, processesand expertise of a successful gaming company with astrong brand is always exciting. Even though pure gamingbrands will remain dominant in this field, niche whitelabels are an excellent way to approach customers in theway they prefer.To team up with Arsenal FC is just one example of theinnovative approach by Betsson Business Solutions. Bybeing close to the market and being passionate aboutevery partnership, Betsson has the potential to sharesuccess in a number of partnerships and ultimately get astake in every online bet.– 21 –

– THE ONLINE GAMING MAGAZINE – THE LEGAL ENVIRONMENTA WELLREGULATEDBUSINESSBY Martin THorvaldssonGamingregulationsfinancial andcertificationstandardsAnti moneylaunderingdataprotectionmarketingrestrictionsRules andregulationsof stockholmstock exchangeThe Betsson Group works under increasingly strict regulatory standards, which place many and varied requirements on the organization.–022 –

– THE ONLINE GAMING MAGAZINE – THE LEGAL ENVIRONMENTthe betsson group works under increasinglystrict regulatory standards,which place many and varied requirementson the organization. The mainregulatory requirements on the operatingpart of the business originatefrom the gaming regulation in thecountries where we operate. There isalso, however, many other sets of regulationsthat apply. For example, weare subject to stringent anti-moneylaundering and data protection legislationthat often have far-reaching implicationsdue to the inherent crossbordercharacter of the business. Inaddition, the operating companiesface various marketing restrictions,while the rules and regulations of theStockholm Stock Exchange (NASDAQOMX) govern many aspects of theholding company Betsson AB (publ).On top of this there are meticulousfinancial and certification standardsthat the group adheres to and continuouslyupdates.These often overlapping setsof rules are complex in themselvesbut also subject to rapid change asthe online gaming industry is evolvingand maturing. The ongoing “reregulation”ofsome online gamingmarkets, primarily in Europe, willcontinue to be a challenge for alloperators, especially as long as thenew local regulations remain immature.Betsson and other stakeholdershopes and believes therewill be a gradual harmonization anddevelopment of joint standards thatwould make it possible to “passport”approvals in one country to another,but this scenario is probably quitefar away. A common view shared bymany in the industry, is that it is likelyto become even more complex beforethe different regulations inevitablyare brought closer together.Betsson is in the process of expandinginto locally licensed marketsand in December 2011, it was granteda gaming license in Denmark. In addition,Betsson has been granted alicense in Italy during 2012. We aim toapply for additional licenses in continentalEurope during 2012, providedat all times that the relevant licensingstructures are commercially viableand compliant with the principles ofEU law. Our intention is to continueto be proactive in these processesand to work closely with the authoritiesin jurisdictions seeking to reregulate.We believe we have beenreasonably successful in Denmarkand we hope to be a vocal partnerin other jurisdictions as well, in orderto aid the development of wellregulatedand commercially attractivemarkets.EU criticism against monopoliesWhile the re-regulation has gainedmomentum we continue to tradeunder our Malta license under theprotection of EU law and internationalprivate law principles in the socalledcross-border segments. Asthe restrictions in many EU memberstates in reality protect the localmonopolies, they do not pass thetests set out in EU case law for suchrestrictions, which renders them invalid.Our position in the continuinglegal debate on whether EU memberstates may restrict gaming servicesfrom other member states wasstrengthened during 2010 by theEuropean Court of Justice decisionsin the Winner Wetten, Markus Stoss,and Carmen Media Group cases. TheEuropean Commission has continuedto criticize legislation protecting localmonopolies during 2011 — for examplethe federal legislation in Germany— with the effect of pushing the reregulationand liberalization of differentmarkets forward.The European Commission greenpaper on online gaming has also increasedawareness of the issue onthe EU level. It remains to be seenwhether the Commission will proposemeasures to address the fragmentedmarket situation once the paper ispublished in 2012. In any case, the developmenthas increased the chancesof re-regulation and liberalization inadditional EU member states and alsolowered the practical risk of enforcementagainst the Betsson Group becauseof the cross-border operationsmaintained from Malta.The level of regulation in the onlinegaming industry is likely to continueto increase. While this is certainlypainful for any company westill welcome the development as itgoes hand in hand with our ambitionto continuously invest in the credibilityof our company and our brands.Gaming is one of the most regulatedindustries in the world and we lookforward to being involved in the improvementof gaming regulations andto further improve our compliancewith new and existing legislation.– 23 –

– THE ONLINE GAMING MAGAZINE – XXXXXXXXXXXXXXXXBroader knowledgeof the players’behavior and solidcustomer protectionwill support longtermearnings whilesecuring the wayforward in the newlyregulated markets.THEDEVILIS INTHE DETAILSBY FREDRIK RÜDENthe massive number of rules and regulations that surround a listed companyin the gaming sector must be monitored closely, since they tendto develop in different directions. Every company must also take intoaccount their commercial framework and their formulated goal, missionand vision ambitions.How do you secure growth and profitability in a demanding andconstantly changing environment? Having strong control systems isessential.An important part of Betsson AB´s stewardship responsibility is toreview and approve the commercial ambitions of its subsidiaries andmake sure they implement high quality business control systems.– 024 –

– THE ONLINE GAMING MAGAZINE – Financial issuesPlayer protection is prioritizedBetsson AB constantly ensures thatthe group's operating entities protectand secure customer funds. Thisis a key responsibility that the differentgaming authorities require fromall licensed operators. The first thinga player normally does, when startinga game that involves money, is to depositfunds. In order to act as a linkin handling credit card payments, anoperator must comply with PCI DSS(Payment Card Industry Data SecurityStandard), which guarantees astable and secure infrastructure. Efficientpayment solutions are vital, anda failed deposit is a loss of revenue.History has proven that any supplierof gaming solutions that providesplayers with the means of conductingfast and secure payments enjoysa clear competitive advantage since itcontributes to, and strengthens, confidencein the company. That is whythis is a prioritized area for BetssonAB as parent of gaming subsidiaries.Following the deposit, the playercan start enjoying the different games.To be able to handle huge gaming volumeson a daily basis, investment insolid systems and high-quality routinesare ensured when Betsson ABapproves the gaming subsidiaries´budgets. Monitoring systems androutines is an important risk managementarea as a significant failure canhave an adverse effect on the incomestatement. External auditors, reportingto Betsson AB´s managementand board of directors, are importantparties in identifying weaknesses inthe group's control systems. The auditorsare an important complementto all other internally initiated checks.When the player’s game is ended— with or without a gain — the operatoror player account shows anincrease of funds. The operator isrequired to continuously report cashbalances to the gaming authority.The purpose is to ensure that thecompany can handle the balancedue the customer in the unlikelyevent of having to pay out the totalbalance. An operator with inadequatecash flow reporting or lackof respect for these procedures mayface serious problems, as evidencedby the 2011 crackdown on one largeoperator, based on its alleged lack ofcontrol regarding customer funds.Betsson AB has requested its subsidiariesto set up cash flow reportingprocedures and to view the inand out flows closely to secure compliancewith gaming regulators andcustomer funds.Knowing Our ClientsAnother framework of rules incorporatedin gaming regulations is KYC(Know Your Client). Betsson´s gamingentities are responsible for settingup a customer register and forverifying each player’s identity. Thisis the foundation on which Internetgaming is built and a good startingpoint for barring access to minors.An Internet gaming site can also bea helpful tool for player protectionin other aspects, in that players canview their own behavior, impose personalbudgets and other similar restrictions.Players can get real-timehelp or advice to support their playingambitions.Personally, I am glad not to be inthe same position, as traditional gamingmonopolies such as Svenska Spel,who recently enforced restrictions forunder-aged players but continue tosell physical games despite a lack ofdeeper understanding about the individualswho buy them. It is hard tosee how most monopolies would gainacceptance within the EU for arguingthat they are better at taking care ofplayers than the private alternatives.But there is more to the picture thanmeets the eye, since a problem playeris bad for business in many ways. Oneis that he/she is unlikely to generatesteady revenue over a longer period.Secondly, this kind of misbehavior islikely to generate bad will for the onlinegaming sector.Broader knowledge of player behaviorand solid customer protectionwill support long-term earnings whilesecuring the way forward in the newlyregulated markets.Order and clarity isvital for successAt a higher level goal, mission and visionstatements, approved by BetssonAB, must be reflected in operations.Generally speaking, goodorder in decision-making processes,clarity in areas of responsibility andaccountability is vital to Betsson’ssuccess. Viewing the subsidiaries ofBetsson AB, we place particular emphasison identifying and evaluatingthe most significant risks in routinesand work hard on controls aimed atmanaging these risks. However, thechallenge lies in preserving a dynamic,hungry company culture in whichindividuals are rewarded and appreciatedfor their efforts while risks aremanaged on a sound commercial basis.It is therefore important to find agood balance between ambition andmaintenance of detailed controls. Improvedgovernance and control in thegaming field facilitates good businessand is a competitive tool in the capitalmarket, as well as in strengtheningthe industry’s position in the eyes ofthe public.– 25 –

Mobile communication, particularlythe use of handhelddevices such as smartphonesand tablets, is an importantfuture driver for Betsson.OBILECREATIVITYBY PIERRE DE BOER

– THE ONLINE GAMING MAGAZINE – Trends in the technical racemobile gaming and gambling growth isgetting stronger with an estimated 35percent year-on-year growth in 2011.The key driver is mobile betting, withcurrently 75 percent of total mobilegambling.Mobile communication is clearlybecoming an important online channel.We believe, however, that thechannel itself will become comparativelyless important, whereas seamlessnessand usability across differentchannels, such as the web and mobileInternet, will be the overriding aspectfor the customers.As seen in the graph below, shipmentsof mobile devices (tablets andsmartphones) were expected to surpassPCs in the fourth quarter of 2011.With the launch of Apple´s App Store,distribution of mobile content took adrastic turn and was pushed evenfurther by Google´s Android Market.According to Gartner, worldwide mobileapplication store downloads wereforecasted to reach 17.7 billion in 2011,a 117 percent increase from an estimated8.2 billion downloads in 2010.TRENDSThe clear trends in mobile developmentare new features, and mobility initself, rather than mobile apps. MobileGLOBALUNIT SHIP-MENT (MM)global unit shipment ofdesktop pcs + notebook pcsvs. smartphones + tablets,2005-2013e700,000600,000500,000400,000300,000200,000100,000020052006DesktopPCsCQ4:10: INFLECTION PT.SMARTPHONES+ TABLETS>TOTAL PCs200720082009NotebookPCs20102011Smartphones2012E2013ETabletsNote: Notebook PCs include Netbooks. Source: KatyHuberty, Ehud Gelblum, Morgan Stanley Research.Data and estimates as of 2/11.growth has triggered such features aslocation/GPS (offered by NFC, NearField Communication) and will triggerdifferent user behavior and newpossibilities for the gaming industry.Casual gaming and social networkingis another trend that willbe further fuelled by mobile communicationand smartphones havebecome powerful gaming devicesfor the mass market. This trend willcontinue and we are witnessing theemergence of new business modelsbased on subscriptions, micro transactionsand in-app billing.HTML5 and downloadable appsare fighting for space in delivering entertainmentto mobile users, and willbring new opportunities for innovativetechnology providers. We believe thistrend to be the single most importantin terms of direction of developmentand positioning of mobile business.As shipments of smartphones andtablets continue to grow, market fragmentationwill continue, forcing operatorslike Betsson to decide on strategieson how to support and developservices for diverging operating systems,hardware and customer behavior.If innovation is used wisely, this threatmay be turned into an opportunity.PossibilitiesThe power of millions of users connectedin real-time to the Internet andto each other, will have an immenseimpact on our possibilities as an onlinegaming provider. These fairly newdistribution channels create opportunitiesfor our products and new typesof partnerships. Betsson has a greatchance to not only increase revenuesby offering superior mobile products,but also to once more strengthen ourposition as an innovative and rapidlyadapting company. Customers willexpect from us (and from our competitors)to be able to use our servicesand products on all their devices connectedto the Internet, be they mobilephones, tablets, PCs or other devices.Our initiative will involve the customersin every step of the development,and we will monitor the trends andadapt our user interfaces and productsto what the customers want. Inthe coming years, we expect gamechangingmobile gambling productswill be introduced in the market andBetsson will make sure it stays at theforefront of the development.StrategyOur strategy is to use trends and possibilitiesto our advantage and to usethe mobile development as yet anotherway to generate more revenuesand satisfy our customers by:• Focusing on mobile Internet to enableall segments in all markets fullaccess as well as seamlessness betweensmartphones/tablets and PC.• Using apps as enablers for the mobileweb and using innovative approachesto reach dedicated segments,such as Live Score App.• Striving to be the market leader inmobile gaming by being fastest tomarket, with the best offering and todevelop the most innovative products.• Doing as much of the developmentin-house as possible in order to comeup with unique products, with uniquecapabilities and to be viewed as theinnovation leader.Mobile creativity the Betsson way!– 27 –

– THE ONLINE GAMING MAGAZINE – Corporate ResponsibilityResponsiblegamingOur first responsibility is to be successful,because only then can we have a positiveimpact on sustainable development. Thebulk of Betsson’s corporate responsibilitycommitment relates to issues of responsiblegaming and player protection.BY Hillevi StuhrenbergCorporate ResponsibilityResponsible gaming is an integrated part of our business,be it in contacts with customers, marketing, product offeringand when evaluating our supply chain. Betsson willonly collaborate with entities that share our values andcommitment to high standards. We strive to continuouslyimprove the ease with which customers can tailor theirpersonal gaming experience and their spending.Betsson’s investment in corporate responsibility is internationallyrecognized by the online gaming industry.We have, for example, been shortlisted for “Most SociallyResponsible Operator” at the E-Gaming Review awards inLondon three years running and we won in 2009. This yearwe are shortlisted for the same category at the InternationalGaming Awards in London, which brings togetheronline as well as land-based operators.Training for all EmployeesAll personnel, irrespective of role and position, receiveat least basic gambling awareness training, and most employeesreceive external and internal training on an ongoingbasis. To facilitate the training, Betsson collaborates withthe Global Gambling Guidance Group (G4). The trainingcovers health issues as well as problem gambling and givesour staff sufficient knowledge to recognize symptoms thatcould be indicative of problem gambling. Personnel arealso familiarized with the phases of problem gambling andwhat kind of help is available and deemed most effective.The training offers a background to the policies and proceduresadopted by the Customer Services Department.All personnel are sensitized to the importance of keepingour customers healthy and how to address any problemsthat may arise, and to be mindful of how we in our differ-– 28 –

– THE ONLINE GAMING MAGAZINE – Corporate Responsibilityent roles can have a positive and preventive impact. Ourcustomer service personnel are updated continuously andhave access to consultancy by the manager for responsiblegaming 24/7. In addition, there are monthly responsiblegaming updates in the digital Betsson staff magazine.Spelinstitutet trains our personnel in Sweden.Responsible Gaming — according tothomas Nilsson, CEO of SpelinstitutetTo be responsible is to execute an action to which one maybe held responsible and be praised or vilified for. Informationand knowledge is required for an individual to be ableto be responsible. Responsible gaming is, in short, whenan operator offers tools that aid the customers in retainingtheir intended game level. In order for the tools to beeffective, the customer has to decide prior to the gamehow much money and time he or she wants to spend. Thecustomer must be able to stop playing and have access toa self-assessment test. For the player to decide whetherto receive promotional material and in what form requirescollaboration and agreement between the operator andthe player. For an operator to offer the players an opportunityto take responsibility for their own gaming behavior,there needs to be accurate information on how theproducts are used, and that there is a risk of developinggambling problems as a result of gambling. The informationserves as the foundation on which the customer canmake informed choices, reach out for tools and decide ontheir intended game level. Once the customer has madethe choice, there is a common binding agreement betweenthe player and operator, which both parties are responsiblefor. This agreement is compulsory for the operator and wealways supply our customers with these agreements andrestraining tools.Brand association that drives recommendationPerformance90%TRUSTWORTHY80%SECURE70%60%WELL KNOWNFRIENDLYFAIR TO THE50%EXCITING CUSTOMERSEXPERTSRESPONSIBLEFUN40%30%INNOVATIVEHELPFULSOCIABLE20%0 0.1 0.2 0.3 0.4 0.5 0.6ImportanceSource: Holden Pearmain Customer Satisfaction Tracker Sept 2011their validity, degree of innovation and feasibility to thegaming industry. Betsson intends to extend its researchsupport program to additional countries in the near future.Since research is important for us in order to be proactive,we subscribe to and stay updated on any gamblingresearch that is released.Research into Gambling and Problem GamblingIn 2008, Betsson initiated a scholarship for research intoproblem gambling and gambling in general. Two awardsare granted annually in Sweden. The purpose is to stimulateinterest and research in the field of gambling in orderto contribute to the development of effective strategiesand preventive measures to decrease the incidenceof gambling problems. In 2010, Betsson in collaborationwith the University of Malta, launched an annual award,with the aim of bridging academia and business.The award ceremony is being held at the Lotteries andGaming Authority and the dissertations are assessed onMarcus Lindskog, PhD at the Institute of Psychology, UppsalaUniversity, and winner of Betsson's essay contest with the essay:“Gambling on conjunctions — a study of how feedback influencesconjunction errors”.Player Protection at BetssonBetsson has experienced an exceptional growth and it ismore important than ever that we fulfill our obligationstowards our customers, and continue to offer a fun, excitingand safe gaming environment. In addition to theplayer protection tools already available to our players,we plan to develop the tools further and add more– 29 –

– THE ONLINE GAMING MAGAZINE – CORPORATE RESPONSIBILITY“Safeguarding the playersmeans safeguarding ourindustry and our livelihood.”Hillevi Stuhrenberg, Manager for Responsible Gaming & CSRoptions. We believe that although most customers do notneed or make use of them, there are customers who feelthat the tools help them retain a comfortable gaming level.Our ventures into licenses outside of Malta require dedicationand flexibility in all respects, including the area ofresponsible gaming. Having been licensed in Malta for anumber of years has proven a good foundation, since matterspertaining to player protection and KYC proceduresare very stringent compared to some other jurisdictions.We are likely to see a lot of development in this area inview of the fact that player protection and public healthissues have been, and to some extent still are, the cornerstonesof the pro-state monopoly debate. It will thereforebe important to show that we are equal — if not better— in offering our customers a high-quality protection service,that we are just as capable of protecting vulnerablegroups as the monopolies are, and that we respond whencustomers who experience negative consequences fromgambling. In order for us to be able to excel in this area, weneed continuous investments in new tools that customerscan customize according to their own needs and wishes.The more tools we can make available for customers thatdo not require input from Customer Services, the betterwe are able to handle increasing volumes, while reducingthe risk of human error and freeing up resources for thosecustomers that need our intervention.Our EnvironmentBetsson only permits business travel that is absolutelynecessary and we promote the use of new technology andvideo conferencing. When feasible, the use of public orshared transport and other environmentally-friendly transportationis stipulated. We compensate for air travel bybuying carbon offsets. All of our offices have implementedwaste management procedures that include environmentalconsiderations when purchasing material and equipment.Betsson is a gold sponsorship level contributor tothe Swedish Nature Conservation Society, whose activitieshave a global impact. In Malta, Betsson is co-sponsoring aEU environmental educational program, aimed at primaryschool children, their teachers, families and local communities.The three-year program assists teachers in developinga curriculum to teach the importance of environmentalissues and how mismanagement of the environmentaffects society.– 30 –

Gambling among the Swedishpopulation has decreased from88 percent in 1997 to 70 percentin 2009.This indicates that increasedavailability and accessibility togambling does not automaticallyresult in increases in gamblingactivity in a population.Swedish National Institute of Public HealthSWELOGS 2009– 031 –

Our vision is to have“A stake in every online bet”.Our mission is to deliver fun, fairand creative online gaming experiencesto the people. We strive tobe the best where we choose toplay. We are a creative and dynamiccompany built by passionateemployees.Our values are:Passion — We love what we doCreative — Challenge and exploreFun — Smile, you’re with BetssonFair — We play fairDynamic — We embracequickness, change and flexibilityWORKING AT BETSSON —MORETHAN JUST A JOBWorking at Betsson is more than just a job — to us Betsson ispersonal. We are a bunch of passionate and driven people wholike to go all in when it comes to work.The Vision, Mission and Values really capturewhat we do, how we do it and whatthe Betsson soul is all about.Working at Betsson is more than justa job — to us, Betsson is personal. We area bunch of passionate and driven peoplewho like to go all in when it comes to work. Even thoughthe “Betssonite” is competitive and ambitious, the atmosphereat Betsson is humble and we want to achieve andwin as a team. We value having an open work climatewhere our CEOs are as approachable as our receptionists.A co-worker once coined the expression “fast, faster,Betsson”. In a fast-paced and constantly changing industrysuch as online gaming, our employees need to besuperheroes when it comes to finding new solutions andways of doing things, and to do it fast.By the end of 2011 there were 581 people working forthe Betsson Group in ten offices around the world. Ouroperational headquarters are located in Malta and most ofour staff, about 400 people, live and work on this beautifulisland in the Mediterranean. Our technology company isbased in Stockholm but we also have several software developmentteams in our Kiev and Manila offices. In additionto this we have a couple of small satellite offices aroundthe world, mainly in Scandinavia, but also for example inIndia and China.– 32 –

SwedenUkraineGibraltarMaltachinaindiaphilippines30NATIONALITIES INTHREE CONTINENTSWORK AT BETSSONdistribution ofmen and women23%77%Today we are a truly international company. This is not only illustrated by thefact that we operate in many markets and have offices around the globe, butalso by the fact that our staff is made up of 30 different nationalities.The ages of our employees range from 18 to 55, but most of us are between25 and 35. About 23 percent of our employees are female.The Betsson Dream TeamTo reach our Vision we believe that we must employ the best people, to be theBarcelona of online gaming, a true Dream Team.In order to motivate and keep the best people we offer a challenging environmentwith many opportunities to grow and develop. At Betsson, you canlaunch a skyrocket career.We work hard but we also spend a lot of time, effort and money on havingfun. The Betsson Sports Club organizes skiing, hiking and surfing trips. Wehave training challenges, poker tournaments, theme parties, basically anythingthat we think is fun and will contribute to the team spirit. Last year wechallenged ourselves to reach a number of tough goals. We achieved themand the whole company traveled to Las Vegas for a conference. This year wehave the Ibiza challenge.Distribution ofdifferent types of roles24%22%MenWomen18%Technical Developmentand OperationsSupporting functionssuch as Finance, Legal,Human ResourcesCustomer ServiceMarketing and SalesBusiness and GamingProduct Operations30%6%– 33 –

– THE ONLINE GAMING MAGAZINE – working at betssonThis is what some of our employees say about what it’s like to work for the Betsson Group:Lazslo CeczerB2B Casino Manager,Games of ChanceNationality: HungarianOffice: MaltaMagnus NorlingTeam Leader,Tech OperationsNationality: SwedishOffice: StockholmHow would you describe the atmosphere at Betsson?We have a very good group of people in the company, who arepassionate about what they do. Look at the growth for the lastfive years and you’ll see how eager we are to show progress. Lookat the pictures from the last company Christmas party and you’llsee how much fun we can have! This healthy balance creates aunique atmosphere at Betsson.Why would you recommend working for Betsson?There are a lot of opportunities to grow and develop. If you area rookie, Betsson gives you the chance to show your talent andclimb up the company ladder. If you want to try in a different field,you can get that chance — just take my example; I’ve been workingin five different positions over the last three years! If you areseeking new challenges, take a look at all the new business Betssonkicked off during 2011, and you will know that this is a placewhere you can develop yourself further.What is your best Betsson memory?It is very hard to choose from all the memorable moments fromsuccessful days in business, various company events, team building,or conferences. However, what thrills me the most is still thefact that we managed to fly down the whole company to Las Vegasand had an amazing time there. How many companies of thissize are capable of doing that?!Why did you choose to work for Betsson?After almost nine years in the IT industry I decidedto find “the big challenge”. I evaluated over 150 differentpositions and at the end there was one thatstood out. I applied, and the rest is history. I challengeand develop on a daily basis and it will soonbe my fourth year in the company. My search forthe big challenge resulted in a Jackpot!How would you describe your colleagues?We come from many different backgrounds withunique expert competence within critical IT operations.My team members personify the wordshumble, competent and dedicated. This combinationmakes us a world class Tech Operations team!What is your best Betsson memory?When our Tech Department in only six months,from scratch, and with the latest technology, designed,built and launched a new production platform.The whole project was delivered with anenormous amount of innovation power and dedication.Nothing is impossible at Betsson!– 34 –

– THE ONLINE GAMING MAGAZINE – Working at BetssonJeff TaboneSportsbook ManagerNationality: MalteseOffice: MaltaHow would you describethe atmosphere at Betsson?Busy comes to mind at the moment — but it’s alsoa very fun and rewarding place to work. Everyonetakes a lot of pride in what they do and we pusheach other to be the best we can. I feel this leads toa good sense of accomplishment when we deliver— hence my description as: Busy, fun and rewarding.Anna-Katrina RomiroQA Engineer,Tech DepartmentNationality: FilipinoOffice: ManilaHow would you describe yourcolleagues at Betsson?The list of adjectives would be so long I don’t evenwant to think about starting. We have an extremelyvaried group of people (as any company as big asBetsson does). The general common denominatoris passion for our jobs. If you don’t love what youdo and put your heart into your work, then Betssonisn’t the place for you.Why would you recommend working for Betsson?It’s a place where you can impact change; if you arepassionate and motivated you can really make a differencehere. Actually seeing the changes and developmentsyou have worked on not only improvingour product but generating more profits is a verypowerful motivating factor — and very rewarding.Why did you choose to work at Betsson?I was interested in working in online gaming and Betsson alsoseemed to be a fun place to work. I was not disappointed, as thereis a lot of fun, passion, professionalism and creativity!How would you describe the atmosphere at Betsson?The five values, Passion, Dynamic, Fun, Creative, and Fair, can beseen both inside and outside of the office. For example In Manila,even in stressful times, people make sure that the atmosphereis positive. Being passionate and creative in what we do helpsus deliver the best product — in my case; making us the BESTSPORTSBOOK in the world!What is your best Betsson memory?I was awarded Ms. Techsson earlier this year. It was such a happyfeeling to be recognized as a good employee. Also, the opportunityto travel to Stockholm to work with the teams there.– 35 –

– THE ONLINE GAMING MAGAZINE – The Investment CaseGrowing MORETHAN THE MARKET— an investment caseBY Tomas Johanssonthe online gaming market is becoming increasingly attractiveas the popularity of gambling and online entertainmentcontinues to grow. Coupled with the huge potential of theopening up of major markets like Asia and the U.S., theonline gaming industry has the potential of being one ofthe fastest-growing industries overall. The gaming industrywill continue to migrate online, which favors innovativeand flexible operators such as Betsson over monopolies.Current market developments such as licensing, growingcompetition and higher demands on gaming companiesfavor large established operators. With the exception ofB2B start ups, the barrier to a successful entry into theindustry is high and rising, given that:• Strong growth in number of customers makes firstclassrobust technology a key differentiator and a keyrequirement in order to handle multiple transactionsevery second with no room for mistakes.• High demands from regulators in terms of security, operationalquality and proven levels of continuous reinvestmentfavors established operators.• The considerable investment spent on being able topresent a best in class product offering under well knownand trusted brands can only come from years of successfulCRM activities and faultless operations.Betsson has grown faster than the market in recentyears and we see no reason why the company shouldn’tcontinue to do so in the years to come. Since Betssononly has a fraction of the total market, we have agreat position in view of i) the overall underlying marketgrowth and ii) the ability to take market share from thecompetitors, mainly state-owned monopolies.In line with our strategy, we have created featuresthat will favor Betsson in the coming market development.Through the dual B2C and B2B strategy, and withthe Nordic market as a foundation with its B2C offering,Betsson is able to move towards new emerging markets.With Betsson Business Solutions, Betsson is at the forefrontby offering the best B2B product currently availableon the market. This facilitates Betsson’s entry into marketsthat otherwise would have been very costly or evenimpossible to enter due to legal restrictions.EBITGrowth, %EBITmargin, %Dividend,yield, %Share priceincrease, %2007 905 29.3 8.8 127.62008 46 26.7 7.7 15.92009 15 24.4 9.5 43.92010 20 23.7 6.4 15.52011 47 32.2 6.9 24.4Betsson´s B2B effort has already paid off in terms of muchfirst-class collaboration throughout the world. Given thebenefits of scale in B2B, Betsson can quickly enter a newmarket at a low cost and reap the benefits of local expertisethrough its partner.five year share priceSEK1501005002007 2008200920102011Betsson ABWilliam HillLadbrokesUnibet Groupbwin.Partybwin.Interact.888 HoldingsSportingbetOPAP S.A.Paddy PowerOnline gaming remains an under-penetrated industrywith high growth potential. Betsson is keeping up thehard work and is well positioned to meet this continuedgrowth. Betsson believes it has only scratched the surfaceof online gaming. High customer deposits and asoaring level of activity at Betsson sites indicate that weare on the right track.– 36 –

– THE ONLINE GAMING MAGAZINE – The Investment Case“We believe Betsson will continue to deliver on its focus on profit growth.”Source: Analyst Oct 2011This strong performance has given the best shareholdervalue since 2006 in comparison to the competitors. Inaddition, Betsson has paid out dividends since 2006in accordance with, or above with its dividend policy,which states that 75 percent of the profits shall be distributedto the shareholders. Dividends have been paidthrough an automatic redemption process that is morefavorable than cash dividends.Several lucrativemarkets to open up— in Asia and the U.S.Some of the marketsthat are still untouchedmay eventuallybecome thebiggest markets.Non-cyclical revenues and earningsIn recent recessions, online gamingwas more or less unaffected. Onlinegaming often benefits from changingconsumer behavior as theirspending patterns react to the economiccircumstances.“A first-class productoffering with strongproprietary technologyproviding highcustomer value underestablished brandsand scale through B2Bwill keep Betsson inthe forefront in termsof market growth”Source: Company Analyst 2011Amount in SEK million unless otherwise stated 2011 2010 2009 2008 2007TotalRevenues 1,736.6 1,603.2 1,299.7 1,037.8 649.0Gross earnings (gaming surplus) 1,428.9 1,282.1 1,045.0 828.1 520.8Operational earnings 559.7 380.6 316.9 276.6 189.9Earnings before tax 527.8 365.7 303.3 267.3 179.4Liquid assets 509.7 497.1 529.1 373.2 232.7Equity 1,334.3 825.6 820.4 720.2 623.5Gaming surplus per geographical area, B2CThe Nordic countries 537.2 416.6 466.5 450.2 351.3EU except the Nordic countries 183.1 139.2 124.0 97.2 66.3Other Europe 3.9 0.2 -0.3 3.2 -1.0Other world 14.4 5.0 2.4 2.3 1.5Total 860.9 558.0 592.6 552.9 418.1Gaming surplus per productBetsson´s competitiveadvantages are many butcan be summarized by thefollowing key areas:i) Dual strategy withB2C and B2B fuellingthe successful multibrandstrategy withlocalized offerings.ii) An efficient marketingstrategy aimed at attractingnew customers at lowlevels of cost and risk.iii) Better product offeringwith a multi-supplierstrategy based on aworld-class proprietarygaming platform.iv) Cost controlpermeates theentire company.Casino 955.9 745.4 670.4 481.3 254.2Poker 83.9 106.7 131.9 158.5 193.0Sportsbook 326.9 367.7 206.6 159.0 56.8Other products 62.2 62.3 36.1 29.3 4.5Total gaming operations 1,428.9 1,282.1 1,045.0 828.1 508.5Other operations, adjustments 0.0 0.0 0.0 0.0 12.3Group Total 1,428.9 1,282.1 1,045.0 828.1 520.8Other key figuresCustomer deposits (SEK M) 5,237.9 3,894.1 3,258.0 2,279.7 1,346.6Number of registeredcustomers (thousands)3,662.4 3,158.2 2,117.8 1,499.9 996.2Number of active customers (thousands) 403.6 300.5 288.7 167.4 107.0Average number of employees 340 268 225 154 106Number of employees at year end 412 282 258 185 136Number of shareholders 12,507 11,484 9,905 5,790 5,952Stock exchange value at year end (SEK M) 6,097.5 4,627.8 4,341.0 2,709.4 3,292.8Earnings per share (SEK)remaining operations13.12 9.32 7.73 6.81 4.55Equity per share (SEK) 32.15 20.96 20.91 18.34 15.85Dividend or equivalent per share (SEK) 9.42 7.00 9.00 5.10 5.00– 37 –

– THE ONLINE GAMING MAGAZINE – BOARD OF DIRECTORS– 38 –Left to right: Kicki Wallje-Lund, Patrick Svensk, Carl Lewenhaupt

– THE ONLINE GAMING MAGAZINE – BOARD OF DIRECTORSClockwise: John Wattin, Lars Linder-Aronson, Per Hamberg, Pontus Lindwall (Chairman)– 39 –

– THE ONLINE GAMING MAGAZINE – BOARD OF DIRECTORS/senior managementPontus LindwallChairman of the Board.Born in 1965, Stockholm.Board member since 2011.Employed by the groupsince 1991, Pontus has heldmany positions withinBetsson AB, such as Presidentand CEO from 1998to 2011. Pontus is a founderof the Internet-based businesscurrently existing inBetsson AB, Net EntertainmentAB and Cherry AB.He holds a Master ofScience from KTHRoyal Institute of Technology,Stockholm.John WattinBorn in 1947, Stockholm.Board member since 1989.CEO of Investering iKunskap AB. John hasmany years of internationalexperienceof board work, withan emphasis on companydevelopment and transformationin listed andunlisted companies. Heis one of the founders ofEnator, Sigma and a numberof other companies.John has been workingwith his own investmentsfor the past 15 years.< BOARD OF DIRECTORS SENIOR MANAGEMENT>Carl LewenhauptBorn in 1958, Stockholm.Board member since2008. CEO of the advertisingagency Calleolle AB.Carl is Creative Directorand has many years ofexperience in internationalmarketing. He has founded,owned and operatedseveral advertising agencies.Carl studied at IHRStockholm, NYU in NewYork and at the School ofVisual Arts in New York.Carl is a member of thePlatinum Academy.Patrick SvenskBorn in 1966, Stockholm.Board Member since2005. Executive VicePresident of Contentat MTG. Patrick hasexperience from variousmanagement positionsin listed companies.He was former CEOand Head of Group forZodiak Television.Previously he has workedas CEO of Kanal5 and TV3Sweden. Patrick graduatedin business studiesfrom the StockholmSchool of Economics.Lars Linder-AronsonPer HambergBorn in 1943, Ekerö.Board member since 1974.Per is one of the cofoundersof Betsson AB(formerly CherryföretagenAB). He has worked asCEO and has also beenBoard Chairman of thegroup and its subsidiaries.Per previously studiedBusiness Administrationand Political Science.Kicki Wallje-LundBorn in 1953, Nyköping.Board member since2006. CEO of Wellnet AB.Kicki has business andoperational developmentexperience from variousinternational companiesin which she has primarilyworked within the bankingand finance businessareas. Kicki has heldsenior positions at NCR,Born in 1953, Saltsjöbaden.Board member since 2008.Lars has many yearsof finance and capitalmarkets experience,primarily within investmentbanking in London,New York and Stockholm.Previously, he was Head ofEnskilda Securities and hasworked for the investmentbank Dillon, Read & Co.Lars graduated in businessDigital Equipment, AT&T,studies from the Stock-Philips, ICL and Unisys.holm School of Economics.Fredrik RüdenCFO, Betsson ABBorn in 1970, Nacka.Employed by thegroup since 2008.Henrik PerssonCEO, Betsson Malta LtdBorn in 1980, Malta.Employed by thegroup since 2011.Magnus SilfverbergCEO, Betsson ABBorn in 1973, Stockholm.Employed by thegroup since 2009.Martin ThorvaldssonCEO, Bsg Ltd & GroupGeneral CounselBorn in 1970, Gibraltar.Employed by thegroup since 2010(not in the picture).–40 –

– THE ONLINE GAMING MAGAZINE – SENIOR MANAGEMENTLeft to right: Magnus Silfverberg, Henrik Persson, Fredrik Rüdén– 41 –

– THE ONLINE GAMING MAGAZINE – BOARD OF DIRECTORS/senior management–042 –

– THE ONLINE GAMING MAGAZINE – XXXXXXXXXXXXXwww.betsson.com www.betsafe.com www.casinoeuro.com www.cherrycasino.com www.affiliatelounge.com– 43 –

Betsson AB (publ) |‌ Regeringsgatan 28 |‌SE-111 53 Stockholm |‌ Ph: +46 (0) 8 506 403 00 |‌ info@betssonab.com |‌ www.betssonab.comBetsson Malta Ltd. |‌G.B. Buildings |‌ Watar Street |‌ Ta’Xbiex, XBX 1301, Malta |‌ Ph: +356 22 603 300Betsson Business Solutions |‌c/o Betsson Services |‌G.B. Buildings |‌ Watar Street |‌ Ta’Xbiex, XBX 1301, Malta |‌ Ph: +356 22 603 300 |‌ www.betssonbusiness.comProduktion: Publicera Information AB Tryck: Billes Tryckeri