Interview with Gábor Czepek, new CEO of the Hungarian National Lottery

After working as the Undersecretary of State and the Permanent Secretary of State for the Ministry for National Development, Gábor Czepek, dr. jur. was later appointed Secretary of State in charge of the management of state assets. In his new role of CEO of Szerencsejáték Zrt (Hungarian National Lottery), he will continue to work as the Ministerial Commissioner responsible for the management of certain high priority national assets. Mr. Czepek graduated in law and is a chartered tax advisor.

Gábor Czepek, CEO, Hungarian National Lottery

Szerencsejáték Zrt. is one of Hungary’s largest, dynamically developing state-owned enterprises: What were the most pressing tasks in this initial period for you?

Following my appointment, we have reviewed the operations and most important workflows of key functions at the Lottery. As a result, we have finalised a new organisational structure to fulfil expectations, while addressing future challenges. It aims to underline and facilitate the predictable, long term and sustainable growth of the lottery and allow us to act on our social mission.

We have also reviewed the strategy of key functions at Szerencsejáték Zrt. My goal as the CEO of a company with the 14th largest revenue in Hungary is to improve profitability by capitalising on digital innovations and new trends in gambling in line with the market logic on the revenue side and therefore making it possible as a responsible state-owned lottery to make contributions to community projects, promote sport and culture, while sustaining our active CSR by helping the most deprived and vulnerable social groups in the country.

What product portfolio does Szerencsejáték Zrt. currently have?

As the popularity continues to rise in Hungary, we have seen a dynamic growth in revenues over the past years, exceeding 1,500mn EUR in total. Revenues have doubled over the last six years. Sports betting is becoming increasingly popular and we now offer live betting in more than 100 sport betting markets through our digital and physical networks. This accounts for nearly half our revenues. The sale of scratch card games, our favourite product has peaked in recent years. The trend is set to continue this year with a double-digit growth rate. We have had several runs of jackpots and we are dedicated to a strong marketing promotion of social awareness on responsible gaming. As players’ needs continue to change, we need to address the market challenges and technological advances. We not, for example, have yet in our portfolio, products which would offer instant win experiences through digital channels.

What are the key trends which you need to address in the Hungarian market?

We need to address international trends and the demand for high pace products groups. Players are going more often to bookmakers and scratch card games are more popular, while lottery games with weekly draws has reduced. The net prize has increased by 140 percent, which contributes to an improved experience for players. With 7,400 points of sale, we have one of the largest own lottery networks in Europe and the largest sales network in Hungary. However, our revenues share from online sales is around 15 percent, which is considered low in international comparison and its development is a key priority for us.

Which product would you say is the ultimate favourite for Hungarian players?

It is a unique feature of the Hungarian market that lottery games have been highly popular. With more than 62 years of history, Ötöslottó has become a family tradition with lottery number combinations inherited throughout generations. Our greatest challenge, however, is to make the game appealing to the younger generation. We intend to renew our lottery draw music show in 2020 (one of the highest viewer Saturday night ratings) – and update brand communication of the product at the same time.

What measures do you need to take to sustain value creation in the long term?

Development is impossible without two features: stability and adaptability. Keeping on a permanent growth path in the long term requires us to continuously improve our organisational efficiency in response to the challenges of our rapidly changing environment and expectations. We strive to create a highly attractive, people focused workplace and positive corporate culture for 1,700 employees. Our new strategy until 2030 sets out our vision and goals and we aim to offer improved game experiences with are healthy and pleasurable.

You have emphasised the principle of responsible gaming; how is it exercised in daily operations?

Our games and communications are present in three quarters of the households in Hungary. But while this means success, it also entails responsibility. We sustain the state monopoly because our indirect contributions from revenues go to community goals and social welfare, but also the enforcement of the principles of Responsible Gaming (RG). Our RG policy defines all aspects of our operation from planning to sales. Our commitment to this principle is best illustrated by the fact that we successfully joined the EL RG programme in 2010. The review, based on the findings of an independent, third party auditor, found our compliance to be almost maximal, nearly 100 percent in all functions in 2019, which is compared to the level of 75 percent required for adequacy.

In cooperation with EL, you raise awareness about people living with disabilities and promoting their employment in Hungary. Can you tell us more?

By employing nearly 200 disabled people, we place special emphasis on embracing and promoting the social integration of people living with disabilities. We were one of the first lotteries to join the EL initiative in 2015 and implemented the ONCE programme in Hungary, a huge success in Spain for 35 years to raise awareness about gaming in schools. We have closed last year’s programme which reached almost 11,000 people. From the revenues of our Christmas scratch cards, we built inclusive playgrounds across the country to allow healthy and disabled children to play together.

What are your expectations of EL and its members?

I expect EL to further strengthen the advocacy power of the Association by promoting common European action aiming at a ban on all service providers which are unlicensed in the certain countries, and to ensure an ongoing exchange of information among members. I trust that members will actively contribute and share knowledge to cement the cohesion of the Association. We require a service which continuously monitors the market size and capacity of unlicensed betting agencies and parasite lotteries. EL is also a crucial accelerator in promoting joint developments among members and in identifying operational synergies.

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