iGaming Wrap-Up of CW 01-02 2024
#iGaming News of the week
0.?????? S&P Warns of Financial Risks for Bidders in New York Casino Permit Race
As the race for New York City casino permits intensifies, potential operators find themselves facing a high-stakes gamble not only for the coveted licenses but also in terms of financial risk. A recent report from financial analysts at S&P Global Ratings suggests that successful bidders may find themselves shouldering substantial debt burdens.
Major Players Vie for Lucrative Downstate Casino Licenses in the Battle for the Big Apple
The New York state government is set to award three downstate casino licenses, opening the doors to what is considered one of the last untapped gaming frontiers in the United States. The competition is fierce, with major players like MGM Resorts International, Las Vegas Sands, and Wynn Resorts vying for the lucrative opportunity.
S&P Global Ratings, in a comprehensive new report, outlined the potential financial implications for the winning operators. The proposed projects range from $2 billion for expansions or redevelopments of existing properties to over $5 billion for entirely new developments. The report indicates that the impact of the associated leverage could materialize within the next 12-18 months.
One of the key concerns raised by the analysts is the strain on corporate credit metrics as companies seek to secure a foothold in the highly competitive New York market. MGM Resorts International‘s Empire City Casino in Yonkers and Resorts World New York in Queens are rumored to be strong contenders, although nothing is confirmed at this stage.
New York is not holding back in capitalizing on its sought-after status, with recent rumors suggesting that winning bidders could be slapped with licensing fees as high as $1 billion each. This figure far exceeds the initially anticipated cost of $500 million per permit. When factoring in construction costs, operators like Las Vegas Sands and Hard Rock International may be looking at a staggering total investment of up to $6 billion and $8 billion, respectively.
#Breaking News
1.?????? MPs express concern over new Cura?ao gaming law
The future of Cura?ao’s long-awaited National Ordinance for Games of Chance (LOK) hangs in the balance after facing a frosty reception in the country’s parliament.
The LOK would be the most extensive set of reforms to the island’s gambling laws in decades and aims to bring its licensing regime in line with international standards. After engaging in extensive dialogue with the industry, last month Cura?ao finance minister Javier Silvania submitted the LOK to parliament.
However, questions have arisen over whether the bill is in a fit state for passage. Among other matters, this is due to concerns about the robustness of the new regulator established under the bill’s text, the Cura?ao Gaming Authority (CGA). These were first articulated last week by the island’s independent Advisory Body, which scrutinises draft legislation. The Advisory Body said it was unclear to what extent the LOK complies with the G7’s Financial Action Task Force’s anti-money laundering package implemented in 2012. In its published opinion, the body urged the government not to submit the legislation in its current form.
“Minister Silvania was and is in a great hurry,” read the editorial. “He has already announced the law – at home and especially abroad – before the law has been introduced, even before it was properly constructed.A well-known Dutch saying states that you should not sell the skin before the bear has been shot. And in Papiamento it says ‘sopi pura to sali salu’ (soup that is prepared too quickly turns out too salty).”
During parliamentary debates on Tuesday and Wednesday, MPs queried the robustness of the bill and asked why the recommendations of the Advisory Body were not followed.
2.?????? Sportsbook operators begin New York online casino lobbying push
The New York gaming market could reach new heights with the inclusion of online casinos.
Bet on NY, a group backed by Sports Betting Alliance, believes that the authorization of online casino gaming in New York could generate up to $1 billion in additional tax revenue annually for the Empire State. An online gaming bill, which could include both iGaming and iLottery, would also create new employment opportunities and ensure consumer protections while also driving revenue.
The revenue, which would add to New York’s already robust gaming market, could be allocated toward education. In 2022, the state’s sports betting operators posted $692.8 million in tax revenue. IGaming could also help improve New York’s budget deficit, which is expected to reach $4.3 billion in 2024. State Comptroller Thomas DiNapoli estimates a $8 billion deficit in 2025.
New York is poised to host a strong iGaming market as neighboring states already reap its benefits. Those states with iGaming include Connecticut, Pennsylvania, and New Jersey.
3.?????? New York mobile sports betting handle exceeds $2bn for third consecutive month
The New York Gaming Commission has reported its mobile sports wagering figures for December 2023, recording $188.3m in gross gaming revenue (GGR).
This amount was the highest monthly GGR the Big Apple had registered throughout the entirety of 2023 and represented a 32.8% year-on-year increase.
Net revenue to education was therefore also at its highest for 2023 for December, sitting just shy of the $100m mark, with the total hitting $96m.
Mobile sports wagering handle did make a slight decline in December when compared to November, which was of course the highest month ever recorded, sitting at $2.11bn.
4.?????? Bet365 posts ￡61.2m loss despite revenue growth in 2022-23
Bet365 reported a ￡61.2m (€71.0m/$77.6m) loss during its 2022-23 financial year despite posting an increase in sports betting and gaming revenue.
The loss comes in contrast to a ￡42.8m profit posted in the previous year. Bet365 put the loss down to an increase in costs across the business during the 52 weeks to 26 March 2023. Direct costs were 4.1% higher at ￡516.6m, with administrative expenses also up by 42.2% to ￡2.93bn.? However, Bet365 noted that higher spending allowed it to increase revenue during the year. Operating loss for the year amounted to ￡37.3m, compared to a ￡15.4m profit in 2021-22. A further ￡62.6m loss was noted in fair value on investments, although this was slightly rebuffed by ￡27.2m in interest income.
Pre-tax loss amounted to ￡72.6m, compared to the previous year’s ￡49.8m profit. However, Bet365 regained ￡3.2m in tax benefits and ￡11.4m from foreign currency translation. After accounting for other factors, including ￡3.2m loss from the re-evaluation of land and buildings, this resulted in the ￡61.2m loss.
5.?????? Kambi co-founder Kristian Nylén to step down as CEO
Kambi Group co-founder Kristian Nylén has announced his decision to step down as CEO this year once a successor has been identified. Since co-founding Kambi with Anders Str?m in 2010, Nylén has been at the helm of the Stockholm-listed sportsbook supplier. The company has already initiated the search for a new CEO.
Meanwhile, Kambi’s nomination committee has put forward Nylén’s name for election to the board at the upcoming 2024 annual general meeting (AGM) scheduled for May.
“The decision to stand down from my position at Kambi after so many enjoyable years has been difficult, but one predominantly driven by my desire to spend more time with my young and growing family,” Nylén said.
6.?????? UKGC Imposes ￡6M Penalty on Gamesys for Social Responsibility and AML Failures
A gambling business will pay a ￡6 million penalty after a Commission investigation revealed social responsibility and Anti-Money Laundering (AML) failings.
Gamesys Operations Limited – which operates 16 websites including ballycasino.co.uk, doublebubblebingo.com, jackpotjoy.com and megawayscasino.com – will also have to undergo a third-party audit to ensure it is effectively implementing its anti-money laundering and safer gambling policies, procedures and controls.
The failures were revealed during a Commission compliance assessment in May 2022.
Kay Roberts, Executive Director of Operations at UKGC, said: “Our focus as a regulator is to ensure that operators are employing policies and procedures which make gambling fair, safe and crime-free. We take this responsibility extremely seriously and whenever we find failures in policies and procedures then the business can expect significant regulatory action.”
7.?????? Several US sportsbook operators cast eye on the Brazilian market
Now that the Brazilian sports betting market is moving forward with President Lula Inacio Da Silva signature, the particulars of the market are starting to take shape.
Brazilian outlet Itatiaia has obtained and published the list of 134 operators who wrote a letter of interest to be involved in regulated online gambling in the country. These operators have not formally applied for licenses yet but have formally expressed interest to the Brazil Ministry of Finance.
The list includes a number of companies with connections to the North American market. U.S. operators who have expressed interest include Bally’s, Betway, DraftKings, MGM, Rush Street Interactive, Seminole Hard Rock.
While FanDuel was not on this list, its parent company, Flutter, is still planning on being involved in the market through sister brand Betfair. Canadian esports group Rivalry is also on the list of interested operators.
#US / Canada
8.?????? Morgan Stanley forecasts 17% CAGR in US online gaming revenue by 2026
Morgan Stanley has presented its 2024 outlook on the direction of the gambling industry in the US, projecting a 17% CAGR in online revenue between 2023-2026A businessman looking through binocularsImage Source: Shutterstock.com
Leading global investment bank and wealth management firm, Morgan Stanley, has started the year presenting its outlook on the US gambling industry.
The interesting outlook highlighted the “single highest growth opportunity” when it comes to consumer discretionary sectors, due to a projected 17% compound annual growth rate (CAGR) in online revenue for 2023-2026.
The firm, which is committed to technological innovation, added that its assumptions for the online casino world were toned down because of the slow-going legislative processes in 2024 and 2025, as well as the anticipated leveling expected at the end of a period marked by excellent growth.
A series of online sports betting and casino markets were subject to rescheduling by Morgan Stanley analysis, including North Carolina with a launch date moved on to mid-2024, or Maryland’s online casino market with an estimated launch date set to the fourth quarter of 2024.
9.?????? California: Key US sports betting operators join tribes against proposed state sports betting Initiative
A coalition comprising major US sports betting operators, including FanDuel, DraftKings, BetMGM, and Fanatics, has aligned with prominent California Indian tribes to express their opposition to a sports betting initiative in California. The Sports Betting Alliance (SBA) officially declared its stance on Tuesday, signaling a collective resistance to the upcoming initiative proposed by Kasey Thompson and Reeve Collins of Eagle 1 Acquisition Co, and Ryan Tyler Walz.
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“We recently learned that the authors of two sports wagering initiatives in California are trying to find financial support for signature gathering from sports betting operators. In the interest of clarity, and consistent with our previously stated opposition to these measures, we can commit that SBA won’t be funding or otherwise supporting either of these sports wagering initiatives,” a media statement released by a spokesperson of the alliance read.
The signature-gathering process for the California sports betting initiatives, intended for the November ballot, was scheduled to commence last weekend.
10.?? Georgia Legislator Reintroduces Sports Betting Bill
Georgia Sen. Bill Cowsert has reintroduced SB 172, a bill that would legalize retail and mobile sports betting in the state and received an initial stamp of approval this week.
The bill advanced out of the Senate Regulated Industries Committee Tuesday by an 8-4 vote. It could eventually see discussion on the Senate floor, where it failed last legislative session.
Cowsert’s legislative effort reignites the push for legalized gambling in Georgia. State legislators have discussed legalizing sports betting for several years, but they’ve been unable to reach consensus on it.
Last year, legislators hotly debated whether a constitutional amendment was required for gambling expansion in the state. Cowsert is among those who believe a constitutional amendment is needed, which means two-thirds of both the House and Senate would need to approve the bill. Voters statewide would then also need to approve it. Some legislators believe a constitutional amendment isn’t necessary.
“The safe play is to do a constitutional amendment,” Cowsert said Tuesday.
11.?? ESPN Bet takes 6.7% of the Iowa market during December
The December revenue reports are starting to trickle in, giving the industry its first look at how ESPN Bet has performed with a full month of operation.
In Iowa, the app landed fourth behind DraftKings, FanDuel and Caesars Sportsbook. Altogether, Iowa sportsbooks posted $282.7 million in handle, which was a drop off from the near-record numbers in November when sportsbooks generated almost $290 million in handle.
DraftKings led the pack with $94.7 million in handle, followed by FanDuel with $67.5 million. Caesars nearly doubled ESPN Bet’s take with $36.7 million compared to ESPN Bet’s $18.8 million. During December 2022 Barstool Sportsbook handled $7.2 million, so it is a positive step. With 6.7% of handle though, there is still a lot of work to do for Penn and ESPN to reach its 20% market share goal.
Sportsbooks posted $26.3 million in gross gaming revenue for a hold percentage of 9.3%. Both DraftKings and FanDuel held in excess of 10% with $9.9 million and $7.1 million respectively. ESPN Bet posted $1.7 million in revenue for the month.
12.?? New record set in Maryland as sportsbooks report $559M handle
In a record month, sports wagering in Maryland contributed over $6.5 million to the state's coffers in December, the Maryland Lottery and Gaming Commission said Wednesday.
The state's 13 retail and 12 mobile sportsbooks handled $559 million in wagers last month, with mobile sportsbooks doing the heavy lifting at $541 million handled.
The December contribution tops last October's record of $5.8 million for the state, and also surpassed last November's handle of $550.7 million.
"The numbers we're seeing over the last six to 12 months reflect the maturation of the market," Maryland Lottery and Gaming Director John Martin said in a statement.
"Initial projections were that sports wagering would generate $25 million to $30 million annually for the state as the market was ramping up," Martin continued. "We've now had more than a year of mobile wagering, and we expect the annual contribution to settle in at more than $40 million."
#M&A & Finance
13.?? Golden Entertainment completes $213.5m sale of Nevada operations
Gambling operator Golden Entertainment has completed the sale of its distributed gaming operations in Nevada to an affiliate of J&J Ventures Gaming.
J&J Ventures Gaming will pay cash consideration of $213.5m (￡167.3m/€194.5m) to acquire the Golden Entertainment operations. It will also purchase cash of approximately $37.5m.
The sale was announced in March 2023 as part of a wider deal that also included gaming operations in Montana. Golden Entertainment finalised the $114.0m Montana sale, which covered video lottery terminals, in September.
J&J Ventures is a privately held business and distributed gaming operator with a presence in a number of states.
14.?? LiveScore Group releases FY2023 strategic report, annual revenue increases by 49%
LiveScore Group has published its accounts for the year ending 31 March 2023. Revenue/turnover for the year was ￡129.7m ($165m), an increase of 49% when compared to the results from the year previous. And, despite still yielding a negative figure, operating loss of ￡61.8m was a 12% improvement annually.
In the report, LiveScore Group said: “While Virgin Bet, LiveScore Bet and LiveScore Media continue to contribute significantly to the growth in turnover of the group, with substantial contributions from new jurisdictions, the group incurred an operating loss of ￡61.8m in the year.
“This was in with with expectations and overall growth plans as the business incurred significant expansion and marketing costs. The decrease in operating loss is due to an increase in gross profit, which outpaced continued significant investment in marketing and the LiveScore brand.”
EBITDA also improved by 14% up to -￡50.4m while LiveScore Group continues to review opportunities to enter new markets. However, this figure is still some way the wrong side of zero.
#Legal & Regulation:
15.?? Belgian Gaming Commission releases 2024 licence fees
The Belgian Gaming Commission (GC) has disclosed the licence fees applicable for 2024. Operators within the country will contribute these specified amounts to the GC, covering operational, personnel, and establishment costs. The fee varies based on the permit class held by the licensee.
These contributions were outlined in a royal decree, greenlit by the Belgian Council of Ministers upon the proposal of Minister of Justice Paul Van Tigchelt. The current unpublished status of the royal decree means that payment invitations to licence holders are pending from the GC’s secretariat.
Once the decree is published, licence holders can expect to receive invitations. The 2024 fees range from €22,085 ($24,193) to €123 ($135), with the highest contributions anticipated from class A and G1 permit holders, and the lowest from G2 permit holders. The licence classes include A, A+, B, B+, C, D, E, F1, F1+, G1, and G2.
16.?? India’s Supreme Court grants online gaming sector final hearing against 28% GST hike
India’s online gaming industry has been given another chance to challenge the decision by PM Modi’s cabinet to increase the Goods and Service Tax (GST) levy for the sector from 18% to 28%.
The country’s Supreme Court has now asked for further comments by the Indian government in response to a plea filed by a number of online gaming entities challenging the tax slab hike, which has led to significant tax evasion notices being handed over to local businesses.
In July last year, India’s GST Council announced plans to bring the GST levy up to 28% for all types of online gaming that involve betting, to essentially equate skill-based games like poker with games of chance on the tax front – going against all previous lobbying efforts to set a clear distinction between both.
Since then, the move has been questioned by multiple online gaming industry bodies such as the E-Gaming Federation, citing concerns that this is hurting companies who are now having to lay off staff and forcibly restructure their business strategies.
Moreover, despite the tax increase being officially brought into force in October 2023, in some cases the issued tax evasion notices go back as far as 2017, leading to legal action being taken against the decision by companies like Indian casino provider Delta Corp.
17.?? MGA suspends authorisation for Rush Gaming
Rush Gaming has had its gaming licence cancelled in Malta by the Malta Gaming Authority (MGA). Despite no longer being authorised to carry out gaming operations, the company will be required to allow players to retain access to their accounts and to refund all players any funds owed.?
The suspension of authorisation has been imposed through the terms of reg. 8 (1) (f) of the Gaming Compliance and Enforcement Regulations. The sanction will be imposed ‘in accordance with reg. 9 (1) (c) of the Regulations since the Authorised Person has failed to comply with one or more applicable obligations in terms of any regulatory instrument or any other applicable law of Malta.’
Rush Gaming is the first company to have its operations deauthorised in 2024. Other companies to have faced similar rulings from the MGA include AMGO iGaming in December, SFJL Holding in November and Elite24bet Casino in August, all of whom had their gaming licences cancelled following breaches of Maltese gaming regulations last year.
The suspension comes less than three weeks before new MGA CEO, Charles Mizzi, is due to begin his role.
18.?? IGT ends legal challenge of National Lottery competition
The UK Gambling Commission (UKGC) has informed that IGT Plc has discontinued its legal challenge against the tender process of the Fourth National Lottery competition.
In July 2022, the NYSE-listed gambling technology group was granted permission by the Court of Appeal to challenge the Gambling Commission’s awarding of the Fourth National Lottery tender to Allwyn UK.
The technology partner Camelot UK, the former operating firm of the National Lottery, along with IGT, had requested an ‘automatic suspension’ of the Commission’s award of the multi-billion-pound contract, set to become effective from February 2024.
Despite upholding the appeal, in July 2023, the High Court ruled that IGT did not have legal standing to pursue a claim for damages against the Gambling Commission concerning the award of the Fourth National Lottery licence.
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