Martin Storm: “Our North America’s digital business grew 300 per cent in the last year”

Martin Storm, Chairman, CEO and Owner of BMM Testlabs talks about the present of company, its challenges and the post-pandemic industry.

The CEO and owner of BMM Testlabs, Martin Storm, gave an interview in which he analyzed how the company managed to keep growing in times of pandemic and when the industry will recover from the crisis. In addition, he shared his knowledge about the gaming test labs, the company’s situation and its growth in new markets, such as North America.

How is BMM situated presently in the gaming test lab space?

BMM is a clear number 2 and rising quickly in the gaming lab market, internationally, but more particularly in the U.S. We employ more staff today than we did prior to the pandemic as we continue to grow. Our digital testing business is growing very strongly while our traditional land-based testing awaits the demand that will come from land-based casinos opening up again all over the world. We are confident about our future growth.

As more and more people in the developed world pursue vaccinations for COVID-19 and are able to return to physical casinos, how do you see demand returning in the land-based testing space?

The land-based gaming business has been deeply affected by Covid-led casino closures across the regulated gaming world. Operators had to cut costs and wait it out. Product sales and shipment opportunities for traditional manufacturers and suppliers paused, also forcing them to cut costs and carefully select short-term growth projects.

The downstream impact of that has been more specific projects but lower games volumes which has been challenging for BMM and GLI that deliver >90 per cent of land-based product certifications worldwide. Happily, with planning and discipline, our leadership and staff have managed BMM through this interrupted period as well as I could have hoped.

The question on many gaming executive’s minds is when will the land-based industry return back to normal demand? With an increasing rate of COVID vaccinations and greater accessibility to travel, I sense 2022 might be the time when we begin to see more regular CAPEX from operators driving the industry supply chain once again.

As a leading indicator for land-based gaming, Las Vegas has achieved eight consecutive record months of gaming activity, up more than 20 per cent on record 2019 results, and 19 of 25 commercial gaming states in the U.S are tracking ahead of 2019 gaming revenue levels. The period from March through August was the U.S. gaming industry’s six highest-grossing gaming months ever. So I expect mid-2022 as the period when the land-based industry gets back on track, all the way down the value chain. Importantly, BMM is ready now.

From a test lab’s perspective, what has been the story of the iGaming space?

Quite simply, with no physical assets to close and ongoing market expansion, digital or iGaming has flourished during the Covid-19 pandemic. It has reached all-time highs in terms of the number of suppliers to engage, the number of products to certify, and new markets opening, particularly in the U.S. I know all the labs have done well in this segment in Europe over the last two to three years.

However, while there are more local market labs in Europe competing for digital product testing, the opening of the North American market has very quickly changed the narrative in favor of global testlab capabilities with real and immediate market access to U.S and Canadian jurisdictions.

BMM is extremely well placed to service Sports-Betting and online gaming players wishing to spread their wings into the U.S and Canadian gaming markets, as we are licensed everywhere they need and have more than 20 years of experience in iGaming. Right now we are seeing a lot of very large European iGaming players already in or heading to North America.

Interestingly, major operators are partnering with or investing in Sports-Betting companies to drive a unique brand and value proposition for their businesses. This tells us how important digital offerings have become and now we know that most operators don’t view online business as cannibalizing their land-based business, but rather enhancing their offerings.

What do you mean by real market access in North America for gaming customers?

Strangely, it would seem, I am the only business owner of a gaming lab that has achieved full commercial gaming licensure in North America, having entered from overseas and not having been grandfathered in. It has taken BMM nearly 20 years and almost $20 million to achieve that market access. Some of the most challenging have been the commercial jurisdictions – one of them took us 13 years and cost us almost $3 million to achieve licensure.

No other lab is getting there quickly and easily. U.S. regulators make you earn the right. And if another lab tells you different, I can assure you they have neither the experience nor the track record. Just another form of hope over the stark realities.

For your customers you have to stay ahead of that market curve. Not only be well ahead in terms of market access to give them the most revenue options, but also understand completely and have real experience in the technical requirements of each and every jurisdiction. Everything that is written down and everything that isn’t. That’s the only way you can accurately certify products for your customers in new markets. If you’re starting out today, it’s already too late for your customers.

The great lesson for BMM in the North American market was that if you are not way ahead of the curve, you are always way behind it, and that ultimately costs your customer’s business opportunities they are not willing to endure. So they will go to another gaming lab that can get them there. Thank goodness that experience is over for us.

What are the global testlab capabilities you mentioned?

BMM has been a dedicated ‘trusted advisor’ for gaming product companies in all markets around the world of regulated gaming by offering experienced functional, compliance and security testing teams, combined with a great understanding of technical compliance and regulatory requirements, as well as giving customers access to any regulated market in the world, which I touched on earlier.

To generate opportunities for customers, you need professional regulatory development teams, technical compliance teams, strong account management and sales, all in multiple locations, as well as competent marketing reach. The global labs will spend >30 per cent on SG&A to revenue to deliver these capabilities. Without that kind of investment, it’s very unlikely you will achieve your goals of market expansion, and you will let customers down.

We see a lot of new entrants wanting to provide product or technical guidance to customers into new markets, yet they have no experience in product certification or testing, anywhere. They just collate the requirements and provide the information. That’s the easy bit. Knowing how to do something successfully the first time can only be provided by an experienced test lab. The cost of getting it wrong for a supplier is enormous.

BMM Europe’s digital business has grown 1000 per cent in the last 5 years, our North America’s digital business grew 300 per cent in the last year, both coming off a strong base. Given how our market works, there is probably an open 2-year window for iGaming product certification growth in North America before an inevitable retreat. Again, BMM is ready to move now.

See also: BMM Testlabs celebrates its 40th year of operations at G2E 2021