iGaming Wrap-Up of CW 17-18
#iGaming News of the week
0.??????UK gambling white paper – mixed reaction from RET bodies
The UK gambling white paper was published last week after a year of delays, and it proved to be a cautious response to the government’s review of the 2005 Gambling Act. Many issues have been slated for further consultation rather than a definitive decision, and that’s resulted in mixed reactions among stakeholders.
The gambling industry itself, or at least the largest operators, has largely welcomed the proposals. However, the reaction among those working in gambling research, education and treatment is mixed. Many welcomed confirmation of a proposal for a mandatory levy on gambling operators to fund their work, but raised concerns about how it will work, which will be subject to future consultation.
EPIC Risk Management expressed “cautious optimism” but questioned how funding will be allocated. CEO Paul Buck said: “The consultation must clarify exactly who will independently commission this and ensure the funds are directed to the most effective organisations that can create the most impact. The effective commissioning of funding will be crucial and will take step-change progress.
“The other concern is that there is much talk of treatment (NHS) and research. Whilst these are crucial, we also believe that prevention is crucial, and it is a false economy that encourages harm if prevention is not front and centre of the conversation.”
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#Breaking News
1.??????Australia to ban credit card gambling in latest move to reduce harms
The policy was announced in a joint statement from Australia’s Minister for Communications, Michelle Rowland, and Minister for Social Services Amanda Rishworth.
Consultation will commence shortly on draft legislation and the technical implementation of the ban, which the government said will see Bank Identification Numbers (BINs) used to identify and block credit card payments.
The change will bring online gambling operations in line with Australia’s land-based sector, where the use of credit cards for gambling is already prohibited.
It will be implemented through an amendment to the Interactive Gambling Act 2001, and is expected to be introduced later this year.
The Australian Communications and Media Authority (ACMA) is set to receive enhanced powers to enforce the ban.
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2.??????GiG lauds high-flying Q1 to power 2023 targets
Gaming Innovation Group (GiG) cites full confidence in achieving its 2023 financial and commercial objectives, as tech units achieve all-time-high results.???
Publishing its Q1 2023 trading update, GiG announced ‘impressive group-wide results’ for Q1 2023, generating all-time high corporate revenues of €28.4m, a 49% year-on-year increase on 2021 results of €19m.?
Peak revenue performance led the technology group to achieve a 75% surge in adjusted EBITDA, reaching €11.7m (Q1 2021: €6.7m), reflecting continuous growth and robust performance.
Richard Brown, CEO of GiG, said, “The first quarter of 2023 had a multitude of successful and impressive steps forward for Gaming Innovation Group. Many of which are contributing to create excitement within the business of further potential of the companies within the group.”
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3.??????FanDuel Confident in Profitability as Customer Acquisition Soars
As Flutter Entertainment outlined its first quarter results on Tuesday, one ticket on the company’s earnings call stood out with FanDuel heading for profitability in 2023FanDuel
FanDuel is on its own a champion within Flutter’s ecosystem and one of the company’s most important assets in the US market. Group revenue increased by 54% in the first quarter, but FanDuel was the real winner as the brand’s revenue jumped by 92% on an annual basis, demonstrating that the company may indeed be getting closer to delivering on an elusive goal – profitability.
FanDuel’s Strong Gains Point to Future Profitability
The FanDuel sportsbook revenue alone increased by 147% on an annual basis, and the company’s betting operations now claim about 50% of the general regulated market in the country, making it the most significant player there is. Peter Jackson, Flutter’s CEO, earnings call address, spoke highly of what the company has been able to achieve through FanDuel in the market.
FanDuel Advantage and Flutter Edge, Jackson explained, helped significantly increase the company’s presence. Jackson spoke highly of the fact that Flutter had acquired 1.5 million customers over the period, an achievement that is a significant contribution to the company’s future prospects. The sports betting handle generated in the United States alone, some $10.9 billion, accounted for 60% of the company’s global sportsbook operations.
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4.??????Caesars posts 23.5% revenue jump in Q1
Casino-entertainment giant Caesars has posted a net revenue increase of 23.5% for the first quarter of the year, amounting to $2.8 billion, with results driven by growth in Las Vegas and the firm’s digital business. During the three-month period, the company also managed to cut its net loss by 80%, amounting to a $136 million loss.
In conversation with investors, officials for Caesars showed their support for the Oakland Athletics’ potential plans for a Las Vegas ballpark. Similarly to MGM Resorts, Caesars believes that the prospect of the A’s in the gambling mecca is exciting. However, CEO Tom Reeg said Tuesday that he didn’t want to see tax hits that would “unnecessarily” impact Clark County or taxes that could affect customers.
During the company’s earnings call, Reeg also noted customer demand was still high in Las Vegas, as the segment reported a net income of $293 million, up 74.4% year-over-year, and revenue of $1.11 billion, a 23.7% jump. Group and convention-related hotel demand was 21% for the quarter, up from 14% the same quarter last year; and hotel occupancy reached 95%, signaling continued strength in the Las Vegas market despite looming economic concerns.
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5.??????MGM records $2.2bn in net revenue for Las Vegas in Q1
MGM Resorts has posted its Q1 financial report, showing that it made $501m in casino revenue – representing a 5% rise on Q1 2022.
Adjusted property EBITDA for its resorts on the Las Vegas Strip was up by 41% annually, totalling $836m. Meanwhile, across all its subsidiaries, the company recorded $1.1bn of consolidated adjusted EBITDA.
Additionally, MGM’s net revenue for its reports on the Strip amounted to $2.2bn, an increase of 31% on 2022.
MGM's operations in China made for an interesting comparison with Las Vegas (seen in the graph below) with MGM China seeing its net revenue increase by 131% to HK$4.8bn (US$610m). Furthermore, MGM China’s adjusted EBITDA totalled HK1.4bn, up 87% on the HK$46m posted in 2022’s Q1.
Bill Hornbuckle, CEO and President of MGM Resorts said of the resorts: "MGM Resorts is executing across all of its geographies and channels with record first quarter Las Vegas Strip adjusted property EBITDAR, consistently strong regional operations profit, MGM China's swift return to profitability, and BetMGM's anticipated positive earnings later this year.”
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6.??????LeoVegas acquires Push Gaming stake in latest Ventures move
MGM Resorts International (NYSE: MGM) announced its wholly owned subsidiary, LeoVegas, has entered into a deal to acquire the majority of a London, UK and Sliema, Malta-based game developer Push Gaming Holding Limited, and its subsidiaries.
The amount of the transaction, which is subject to regulatory and customary approvals, is expected to be completed in the third quarter of 2023.
Founded in 2010, Push Gaming is an innovative creator of highly entertaining digital games for betting and gaming companies. It offers more than 30 games, such as Razor Shark, Wild Swarm, Big Bamboo, and Jammin’ Jars to over 200 operators globally.
With the acquisition, Push Gaming’s proprietary technologies, intellectual property, and development expertise will bolster the content production capabilities of LeoVegas and support its plans for continued growth through expansion.
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7.??????Swedish regulator dishes out SEK83m in fines to bet365 and Betfair
The vast majority of those fines were issued to Hillside Gaming and Hillside Sports, the respective parent companies behind bet365’s online casino and sports betting operations in Sweden.
Hillside Sports bore the brunt of the fines as it was ordered to pay a penalty fee of SEK65m. Hillside Gaming, meanwhile, was ordered to pay a further SEK14m.
The SGA said it believed that both companies had not taken sufficient measures to protect their customers against excessive gambling.
The operator did not help customers to reduce their gambling when there were reasons for doing so, the regulator said, and also allowed customers to gamble without setting deposit limits, which is a requirement of Swedish gambling regulations.
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#US / Canada
8.??????Delaware sports betting revenue down 44.5% year-on-year in March
Delaware’s sports betting revenue for March amounted to $553,465, a decline of 44.5 per cent compared to March 2021 ($966,752). Stakes fell 22.4 per cent, with players in Delaware betting $5.2m, down 22.4 per cent compared to the $6.7m wagered in March last year.
The figures were, however, better than the previous month, with revenue 464 per cent higher than the $98,135 posted in February. The handle was close to the $5.4m wagered in February month.
Players placed 168,561 wagers in the process and won $4.5m from sports betting during March. There is no online sports betting market in Delaware.
Delaware Park, which was dethroned by Dover Downs in February, reclaimed the top spot in terms of both revenue and handle. It posted $281,719 in revenue from a $2.6m handle. Dover Downs came in second place with $158,120 in revenue off a handle of $1.5m, while Harrington Raceway took $113,626 in revenue from a $1.1m handle.
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9.??????Colorado sports betting revenue up despite handle drop in March
Player spending on sports betting in Colorado declined 2.2% year-on-year in March, though the US state was still able to report an increase in revenue.
Handle for the month amounted to $494.4m, which was down from $505.6m in March 2022 but 16.3% ahead of the $425.1m wagered in February of this year.
Consumers bet $489.9m online during the month, while the remaining $4.5m was wagered at land-based, retail sportsbooks in the state.
Gross gaming revenue for March stood at $35.4m, an increase of 25.5% from $28.2m in the same month last year and also 56.6% ahead of the $22.6m reported in February this year.
Of this total, $35.3m was generated from online sports betting, while just $161,220 came from retail wagering.
#M&A & Finance
10.??Kambi gains full control by repaying full €7.5m Kindred bond
Kambi has fully repaid the €7.5m convertible bond held in its business by Kindred Group, enabling the B2B betting and gaming supplier to expand directional control.
The bond was established as part of the terms of Kambi’s divestment from Kindred back in 2014, after which Kindred became a primarily B2C-focused company via its Unibet and 32Red holdings.
Despite the divestment and bond, Kindred and Kambi have maintained a commercial partnership in the years since, with the latter providing the operator with its range of sportsbook solutions.
The partnership between the two was most recently renewed in February 2022, extending the arrangement until 2026 and factoring in Kambi’s support for the development of the Kindred Racing Platform.
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11.??FansUnite offloads Scottish-focused McBookie
FansUnite Entertainment has completed the sale of its Scottish-focused sportsbook and online casino McBookie to an arm’s length third-party.
The identity of the buyer was not disclosed, but it was confirmed that the deal was worth for over CA$5.0m (￡2.9m/€3.3m/US$3.7m), more than double the $2.2m that FansUnite paid to acquire McBookie in March 2020.
Under the ownership of FansUnite, McBookie delivered three consecutive years of revenue growth, while gross win increased 451% and a turnover jumped 305%.
Through McBookie, FansUnite held a remote gambling software licence and remote betting licence from the British Gambling Commission, enabling it to serve as a B2C operator and B2B technology provider in the British online gambling market.
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12.??Italy's Lottomatica IPO priced bottom of range at €9
Italian gambling firm Lottomatica said on Friday it priced shares in its initial public offering (IPO) at 9 euros, at the bottom of its target range.
The company, backed by Apollo Global Management, said it would debut on the Milan Stock Exchange on May 3 with a market capitalization of 2.265 billion euros ($2.49 billion).
The free float will be equal to 26.5% of the share capital, but it could rise to 30.5% in case of full exercise of the greenshoe option.
#Legal & Regulation:
13.??IBIA releases integrity report Q1 2023, 40 suspicious alerts detected
The International Betting Integrity Association (IBIA) has released its integrity report for Q1 2023.
A total of 40 suspicious alerts were detected across nine different sports, with football and tennis making up the majority of the sports.
Football leagues attracted 15 sport betting alerts, while volleyball, boxing and snooker flagged one alert each.
Out of all the alerts, Europe accounted for 60% of all reports, with eight coming from Spain alone. This is more than the total of any of the continents.
Khalid Ali, IBIA CEO, said: “IBIA’s monitoring and alert network provides the most comprehensive, robust and detailed intelligence on suspicious betting activity globally.
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14.??Estonia to review tax increase on all gambling products
The Ministry of Finance of Estonia has published a ‘draft law’ recommending that the new government increase taxes on online gambling, casino games, and lottery draws. An increase in gambling taxes is proposed as the Ministry cites significant growth in online casino revenue, which has surged by 260% from €78m in 2020 to €281m in 2022, as reported by the Estonian Tax and Customs Board.
The draft Tax Laws Amendment Act, submitted for approval on April 26, outlines a phased approach to raising the tax rates. Under the proposal, the tax rate for online gambling would increase to 6% in 2024 and 7% in 2026. The gaming table tax rate is set to rise by 10%, and the lottery tax rate will see an increase from 18% to 22%.
These tax increases are estimated to generate additional revenue of €8m in 2024 and 2025, €12m in 2026, and €13m in 2027. Due to the urgency of the bill, it is scheduled to enter into force on January 1, 2024. The Estonian government attributes the growth in tax receipts from remote gambling to the current low tax rate of 5%.
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15.??Brazilian sports minister backs GGR tax rate of 16%
Federally regulated sports betting in Brazil is slowly but now more surely on the way, and that means there’s the issue of tax to be resolved. The sports minister Ana Moser has put forward a proposal that would put her ministry in charge of matters.
Under Moser’s proposal, the tax rate on gross gaming revenue would be set at 15 to 16 per cent. The Ministry of Sport would be responsible for collecting tax and allocating it to public agencies and sports bodies.
Some 10 per cent of the tax collected would go to social security, 2.4 per cent to the National Social Security Fund, 1.63 per cent to football clubs and 0.82 per cent to youth initiatives. The Ministry of Sport would keep 1 per cent.
Congress is expected to consider the proposal on Friday (May 5).
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16.??Betfair issued ￡300k penalty for offering bets on Sweden’s U21 league
The Swedish gambling authority, Spelinspektionen, has fined online bookmaker Betfair for repeated breaches of its licensing conditions.
According to the authority’s announcement, Betfair offered betting odds on Sweden’s U21 Allsvenskan (soccer league). Betting on U21 sports is prohibited under Swedish gambling laws. Gambling may only be offered on the four top tiers of football in Sweden.
The announcement also reveals that Betfair has committed the same offence on multiple occasions. The company offered betting on 148 matches during 2021/22 with 224 customers placing wagers totaling SEK1,125,352 (€98,705) on 139 matches during that time.
In response to the investigation carried out by Spelinspektionen, Betfair suspended betting on all Swedish football with the exception of the top two tiers. The company also implemented a series of measures to ensure that the breach does not happen again.
17.??Caesars to introduce ‘significant tech enhancements’ to drive digital ambitions
Speaking in a Q1 earnings call, Eric Hession, President of Caesars Sports & Online Gaming, detailed that the company is set to execute on “three significant tech enhancements” to its platform during the remainder of the year.
The first will see a standalone online casino app launched during the third quarter in a bid to drive better customer engagement through a focus on increased game content, which will include new proprietary offerings and improved marketing capabilities.
Additionally, an in-house player account management system will begin testing, which will lead to a shared wallet that Caesars anticipates rolling out in 2024.
The group will also migrate all of its operations in Nevada to its Liberty tech stack ahead of the 2023 NFL season.
Regarding the internal enthusiasm at a standalone igaming app launch, Tom Reeg, Caesars CEO, commented: “We’re particularly excited about that, that’s going to improve in particular our slot business in igaming, because our existing portal is through a sports betting app, our existing icasino business leans toward tables more than our peers and igaming forward app is going to change that for us.