How STS built a business superpower in Poland
STS has built a business worth £750 million in the Polish market and in this part of Europe, more than thirteen times its EBITDA. But how has it managed to get to this point?
To analyze the success of STS we need to go back at least to 2012. It was then that Mateusz Juroszek officially began his role as CEO of STS, and from that moment a new history of STS was written. That same year, due to problems with the technology supplier, the company could no longer exist. This is a perfect example of how a combination of business smartness and fortune can pay off.
It was in the memorable year of 2012 that the Juroszek family became the sole shareholder of the company, switching to technology provided by Betsys, which was bought out as a majority interest a few years later. In 2012, STS also began, among other things, offering betting via the Internet.
However, let’s remember what period it was. We were 3 years after the biggest gambling scandal in the history of Poland, and the law was not regulated completely. Illegal operators were operating in the country without much restriction, although at the time it was difficult to use the term because of legislative deficiencies and irregularities.
Back then, the largest bookmaker operating in Poland was Bet365. Zbigniew Boniek advertised the bookmaker Expekt, and one of Poland’s most popular sports journalists, Mateusz Borek, was the face of Betclic. At the time, it was a kind of eldorado for the companies and entities promoting the aforementioned entities. No restrictions, no site blocks, no payments and unlimited advertising opportunities. We were operating in a sick system, and this was the fate given to us by the politicians who were ruling at the time.
5 years later, in 2017, STS lived to see a law favorable to them. Most of the major players exited the market, and STS from that moment began to climb with a momentum that resembled the bookmakers currently on the rise.
Times after the amendment of the Gambling Act
Entities such as Millennium, Totolotek, Fortuna, ETOTO and, of course, STS were in the market. Against the background of the whole, it was STS that had the greatest operational agility and a CEO in the form of a business owner.
Each of the aforementioned companies had its own problems. However, STS seemed to be the most stable company, which at the time had a strongly developed network of land-based points and also developing technology under its own wings.
Mateusz Juroszek evolved from a man handing out newspapers outside the national stadium, after losing a bet with Adam Godlewski, into an effective manager and industry expert who had been in the betting business from the very beginning, and did not come by chance from the multimedia, fuel, or poultry industries. Mateusz Juroszek grew with his own company and acquired his cleverness and business wisdom from his father.
From the perspective of time and companies that had various problems in the Polish market, the biggest difference was having their own technology. In 2012, STS could have disappeared from the market, only to later rise like a phoenix from the ashes.
In 2016, Betplay International (a company controlled by STS and now Betplay Capital) acquired a 33.3% share in core technology provider Betsys. A few years later, in 2020, STS already owned 74% of Betsys and was fully secured with a full controlling interest in the company.
STS stood out from the very average competition in that it fully controlled the development of its own product. More operators were appearing on the market, but they were not fully product-independent. Mateusz Juroszek knew about this advantage, which most owners and CEOs of the other operators in the market did not.
The strongest brand
STS still has the strongest and most recognizable brand in the Polish market. Many of the current players took their first steps of their bookmaking adventure at this particular bookmaker. This shows how a big role the land-based bookmaking points played before 2012, although we see their real impact only a dozen years later.
The bookmaker at one point tried to sponsor the strongest teams – it supported and continues to support the Polish national football team. STS wanted to advertise with such teams as Lech Poznań, Vive Kielce and Asseco Resovia. The strategy at the time was consistent – we are the best and the biggest, so let’s support the biggest.
Fiasco in foreign markets
A favorable gambling law mixed with business luck resulted in a boost of confidence for STS owners and an attempt to enter foreign markets. This happened in 2019, when STS BET was granted a gambling license in the UK. International ambassadors were proudly announced, and many sports journalists gathered in large numbers for conferences repeated the phrases promoted by STS.
The overseas market brutally verified the imperial ambitions of STS, which lacked the courage to invest more in international competition, as well as a well-thought-out strategy. STS wanted to pull off the Europe using Betconstruct’s platform, which is still an industry joke.
STS could have easily competed in markets where there was not as much competition or in markets that were not fully regulated. The choice was made in the worst possible way, as they believed they could compete in the UK market, whose direction was already well known a few years ago.
However, the Juroszek family did not want to risk as much as they could and were not willing to hire people with their own opinions and duly remunerate them. The same people who had been with the company and had grown with it in the Polish market were responsible for the company’s global development, but they had no international experience. Mateusz Juroszek too often devoted himself to his intuition, which just happened to let him down in the case of the foreign market.
This gave a clear signal that a certain strategy needed to be revised and return to the Polish market.
Debut on the stock market
2021 was spent on preparations for a stock market debut. It was perhaps the ultimate and best time for such a move, moments before the unraveling inflation crisis.
The release of shares in the IPO served the purpose of partially scashing its own business. This was one of the company’s moments where Mateusz Juroszek’s father, Zbigniew, played a significant role.
The most perceptive people in the industry knew that the IPO was not intended to raise easy money to grow the business or expand overseas, despite the announced new wave of expansion in the Netherlands or the Czech Republic, for example. Through the prism of that time, one can judge who was right and rightly challenged the arguments of STS’s owners.
There was neither new expansion, and the business was simply sold off in its entirety.
Shares were decreasing, but the market was growing
Without knowledge of the industry, but looking at the indicators, everything seemed to correlate. Registrations, NDC, turnover (nominal), NGR – everything was increasing. However, looking a little closer, it was clear that STS had lost its momentum a long time ago.
STS had no idea for marketing and further product development. It copied certain solutions from other brands (ideas for campaigns from Betclic, for example), and there was no desire to change the entire strategy.
However, the market was growing much faster, so the percentage loss of market share was not noted in STS communications. As time passed, the association they controlled stopped reporting industry results, and any calculations were no longer based on turnover, but on a mythical calculation of the value of NGR excluding bonus costs, which, of course is impossible without access to data.
Just on May 31, an article on SBCnews called Mateusz Juroszek a Polish national hero. STS was described there as a bookmaker with a 51% market share. Communicatively, STS played everyone around, as, except for one media entity, no one verified the validity of the claims made.
Financial result beyond everything else
Since listing on the stock market, cost optimization has been most important. This has been noticed in almost every stage of the company’s operations.
Growth in the company’s remuneration, despite rising inflation, has slowed significantly. Expense reductions were noticed in such elements as marketing, for example. STS took a much harder look at the efficiency of the funds spent, which is nothing negative and should characterize all healthy market players. As part of the marketing cuts, funds spent on affiliate marketing were also revised.
Recently, new terms negotiated with PZPN (Polish Football Association)/Ekstraklasa have also been added, which will significantly affect financial results in 2023.
The players could certainly also feel the difference themselves, to whom the % of returned NGR was definitely lower in comparison with other bookmakers. Looking at the short term, of course, such a policy was right, because it was likely that a decision on future sales had already been made. What didn’t matter was the future loyalty of the players who might start to leave the operator. But that will be something that the bookmaker’s new owner, Entain, will already be worrying about.