First among equals

Achieving the status of market leader in the online poker sector in France is no mean feat. But it is what French firm Winamax has managed to do. Overtaking the world leader in cash game player numbers for the past seven months, maintaining that lead and organising the country's biggest poker tour are some of the achievements Winamax has accomplished since France regulated its online gaming and betting industry in May 2010.

If some doubted the potential and long-term viability of the Winamax project: the group set on a single-market, single-product strategy, backed up by huge marketing spend, the French operator has confounded its doubters and is now looking to expand beyond its home market. Winamax is also different when set against many of its competitors: all its employees work out of a central Paris office, meaning it pays all French corporation taxes and VAT, the latter charge alone adding an extra 20% to the company's operating costs.

The point may seem trivial but there are only a few such operators in France (Barrière Poker/FDJ and PMU) and the cost of doing business in the country coupled with high taxes (42% of gross gaming revenues for poker) mean operators have to be able to withstand those financial pressures.

Having achieved its goal in its key market, the company is now looking abroad and more specifically to the US. Most European operators have already pencilled their deals and partnerships with US gaming groups, but Canel Frichet, chief executive of Winamax, says there is still time for her company to find the right partner as the legal framework is far from complete and will take some time to confirm.

Gaining pole position

But before discussing all these topics, InsidePoker Business wanted to find out how Winamax became the market leader in France. Such an issue may seem parochial, but it is worth remembering that so far it is the only poker site in the sector that has managed to take on PokerStars and beat it on a specific market. Did PokerStars rest on its laurels or take its eye off the ball?

'Our strength comes from two factors: the goal we set ourselves and our focus,' says Frichet. 'Rather than looking out for what was happening with our competitors we stayed with our goal to become the leading poker site with a dedicated offer that worked for French players. We then focused on achieving this goal every day. The strategy wasn't without risks, although these can sometimes be easier to handle when the goal is clear.'

Clarity of focus, allied to a mid-size team of developers and marketers of around 75 people means Winamax is very 'agile and quick', she explains. But if all seems easy in the Winamax garden two years after the market has opened, Frichet points out that reliable technology and educating players have been just as important.

'You have to remember that for many people the game is new so it's about educating them about a new product, on a platform they are not accustomed to, making sure we have 100% uptime and that we can add new features quickly and efficiently. Our teams are flexible, we have development cycles of two to three weeks, which gives us an important advantage on many of our competitors.'

If product was the first vital ingredient for Winamax, marketing has been the other. The company, like its contemporaries in the sector, does loads of it, but with a difference. 'We control all our acquisition tools and are entirely focused, passionate and dynamic. We produce new offers and content every three days. It's heavy going but the creativity is there because our marketing and design teams are having fun. This, coupled with our heavy media plan, is what has enabled us to have brand-recognition levels that are well above our competitors, including PokerStars. It's the mix of these components, which has meant we have been able to gain market share. We went ahead (of PokerStars) in January and have around 35% market share. I wouldn't be surprised if we gained another 10% in the next two years,' says Frichet.

The French market is very competitive, generates very low margins and operators have to put all their energies into it so that the content is, according to Frichet, 'rich and attractive'. 'Also, we listen to our players, the cycle between their suggestions and comments and our marketing or technical teams responding is very short. This is all done from our offices with our staff working as a block.'

'The fact we own our technology and make a point of being responsive is what enables us to meet expectations, suggestions and criticisms head-on and quickly. I can't think of another company throughout the industry worldwide that can act with the same speed,' she claims.

Communication, communication, communication

While many operators like to talk about how much they communicate with their players, this is confirmed when questioning some of them in advance of this interview. One of them explains: 'The company organises many meetings between the players and its marketing teams, and its sponsored players are well thought-of and friendly.'

The pure player, poker-focused player sponsorships Winamax has put in place seem relevant. If its figurehead is former pop singer, actor and Winamax investor Patrick Bruel (who is also a seasoned player, it must be said), the others are players the company identified as having potential. Contrast this with its main rival PokerStars at one time sponsoring rugby player Sébastien Chabal or tennis player Gaël Monfils, both well-known but not particularly talented at poker, and the difference in focus is easy to spot.

The company also organised the Winamax Poker Tour between November 2011 and April 2012, the biggest free live poker event in France, with 69 regional stages across 37 cities. ‘A strong brand produces great content,' comments Frichet, ‘large events such as these make us an active stakeholder in the industry and cements our place among players. The return on investment may not be obvious, but it means today Winamax is a really good poker brand,' she adds.

Having all its teams in one place in Paris is what enables Winamax to be so bold, but it is costly. Although the reason for remaining on the French mainland has been thought through. 'It is costly and expensive, but the fact we are in France, with a team that lives and breathes the French market alongside the players, means we are always in touch with them and can hold parties where they meet our teams regularly; these are very rich exchanges. We could have done like our competitors and gone offshore and not pay VAT for example, you could even say we are paying double for this desire to be at the heart of the French market, but it has paid off, since we are leaders now.'

Interestingly, Winamax's performance in France also contradicts the theory that being single-market, single-product, means an operator will become over-reliant on one market.

American adventures

Looking further afield, starting off with Spain, Frichet is sanguine about the recently-regulated market. 'Spain is a market that is already very busy, with a number of operators that have built up market share and brand recognition over recent years. We're going to see what happens at the European level in general, but the most interesting development would be a sharing of liquidities between regulated markets.'

It quickly becomes clear that the American market is where Winamax wants to be. 'There is much reflection on the American market, which is going to open, and from which Winamax has always stayed away (pre- and post-UIGEA). So in legal terms, we are totally compliant, but we also run own our technology and have a marketing model that is easily transferable to the market. We control all player acquisition tools and strategies to produce brand communication to make the offer attractive. It has proved itself in France, where we have overtaken the world leader and the US is a great challenge for a company like us.'

Frichet's company has not yet signed any US partnerships but is in the process of launching a dot com free-play site targeting the market, with aggressive marketing in terms of rewards and player retention. Its Facebook poker app is also about to go live, 'the best poker platform outside of what is available on a Mac or PC', says Frichet.

But when can we expect to see Winamax announce a US venture? 'Similar to what we have done in France, we will always go for quick decision-making and operations. We will seek a partner who can work fast and in an effective manner, rather than managing multi-party partnerships. Some large entities have already joined forces, but we are looking for a partner who is agile and nimble. Having said that, the legal framework is still not defined, so there is still time.'

In common with the rest of the industry, Frichet and Winamax would love to have more information about the likely regulatory framework operators can expect, even if the most likely will see some states adopt their own laws and begin operations before being overseen by federal legislature.

Deals to be done

The acquisition of Chiligaming's platform by Bally Technologies is an interesting one for Winamax, since Chiligaming chief executive and Frenchman Alexandre Dreyfus is also an historic founder of Winamax. A tie up between the two firms would therefore be logical. 'Frankly, we are in discussions with everyone. There is a possibility where we could pool with other sites to enable selected operators to deploy their marketing weapons and generate strong levels of liquidity. In this case we have common interests to set up a project on the Winamax platform with shared liquidity.'

The company has set up a corporate structure in Delaware to address its free-play customers and will then think about opening a US office, be it in New York or California. Frichet is clear Winamax will be active in the market and has already spoken with card rooms, Indian tribes, racetracks and casinos.

The situation for potential US players such as Winamax is as fluid as the current regulatory developments there, but Frichet is also clear: 'We want to launch a US Winamax brand and the B2B network that goes with it. To achieve this we want to sign with an established partner who can provide access to licences in several states, California being the flagship state, and who is looking for an operator who has the expertise, know-how and powerful technology and is adaptable to the US market.'

Operating its own brand in the US market would be a major achievement for Winamax, since most of the companies that have signed US partnerships will operate their clients' brands. 'If you look at the world leader (in poker), it is their own brand, and that's what we want to do,' says Frichet. 'A world market is taking shape and we have achieved our first success on a pure-player logic. We have accomplished our first goal, this means there is huge potential in other markets and the adventure continues onto this second phase.'

The logic is bold and of course will depend on whether the American regulatory framework allows companies such as Winamax to operate their own brands, which is no certainty when one thinks of the huge casino brands in the US. Then again, don't rule out Winamax, after all, it has overtaken the world leader in online poker in the toughest regulated market there is. And to paraphrase some old crooner, if you can make it there, you can make it (almost) anywhere.