Understanding risk is essential for informed investment decisions. Kambi's operations are subject to various risks including regulatory changes, market competition, technology developments and macroeconomic factors. Review our comprehensive risk disclosures below.
The Group’s core business is strictlyregulated by law in the markets where Kambi and its operators operate. Accordingly, political decisions, court rulings or changes in laws in the countries where Kambi or its operators have licences or commercial interests could have a material adverse effect on Kambi’s business and operations. Regulatory changes can also have a positive impact, enabling us to access a market which becomes regulated or re-regulated.
Kambi’s business is dependent on IT systems. System failures and other events that affect operations could have a material adverse effect on its business and results. The risk is mitigated by using continuous monitoring to detect any problems as early as possible. All critical servers are duplicated, i.e. if one server fails, another will immediately take over. Following any downtime, a detailed analysis is performed to ensure that the underlying reason for the downtime is understood and rectified.
Match fixing is defined as the manipulation of an event where the participants seek to fix the outcome for financial gain. To reduce the financial impact of this risk, Kambi has internal systems and alerts in place to highlight any indications of match fixing. We also collaborate with industry watchdogs and regulators. If match fixing were to lead to changes in regulatory environments, this could impact the results of operators and therefore Kambi’s financial performance.
In certain jurisdictions, regulators have begun to impose charges on licence holders for the right to offer odds, access data and use trademarks on certain sports. Any future changes in these charges could impact Kambi’s financial position.
A majority of Kambi’s revenue is currently generated from a few large operators. The loss of business with Kambi’s major operators could have a material adverse effect on the Group’s business.
Kambi’s financial performance depends on the underlying performance of its operators. This is a result of Kambi’s business model whereby the commission received is set as a portion of the operators’ net gaming revenue. A decline in the financial performance of Kambi’s operators could have a material effect on the Group’s financial position. Operators’ sports betting gross margins can vary significantly from one period to the next, depending on the outcome of sporting events.
The future success of Kambi will significantly depend on the full involvement of the board of Directors, management and certain key individuals. If one or more of these individuals were to resign or otherwise not be able to perform relevant duties, this might have an adverse effect on the Group’s financial performance and reputation.
Kambi’s growth depends on its ability to develop and sell competitive products and services. The ambition is to continue striving to offer the best B2B Sportsbook in the market and to build on the customer portfolio with successful and loyal operators.
Foreign exchange risks exist in the form of both transaction risks and translation risks. In the case of our operators handling transactions in a different currency to that which the invoice is issued in, currency movements can have an impact on the revenues generated by Kambi. Transaction risks occur in conjunction with purchases and sales of products and services in currencies other than the respective company’s local currency. Translation risks occur in conjunction with the translation of the income statements and balance sheets of foreign subsidiaries into EUR. Sales are primarily made in euros, US dollars and Colombian peso. The Group’s purchases of services and overhead costs, however, are primarily in GBP and SEK. Changes in the valuation of EUR in relation to other currencies can thus have both positive and negative effects on the Group’s profit and financial position. Currency risk is to some degree managed by means of holding funds on short-term deposit in the currencies of the Group’s principal cash outflows.
Kambi conducts its business in accordance with its interpretation and understanding of the applicable tax laws and treaties, case law and the requirements of relevant tax authorities in the countries where it operates. Changes to regulatory, legislative and fiscal regimes in key markets could have an adverse effect on the group’s results and additional costs may be incurred in order to comply with any new laws or regulations. In managing its taxation affairs, including estimating the amounts of taxation due, Kambi relies on the exercise of judgment concerning its understanding of, and compliance with, those laws assisted by professional advice.
Kambi relies on the constant availability of its staff and offices to ensure the provision of its service to partners can continue without disruption, as well as a largely unaffected sporting calendar. Therefore, Kambi can be exposed to short-term risk related to natural events outside of its control. For example, a natural disaster which may impact Kambi offices and staff, or a global epidemic which may cause office closures and/or postponement or cancellation of sporting events. Kambi is a pure sportsbook provider which means its revenues are linked to sports events – fewer events mean fewer revenue generating opportunities. Kambi has in place mitigation protocols to minimize any direct impact such events may have on its operations, such as the establishment of disaster recovery sites and the ability for staff to work from home.