GIQ - Gaming Intelligence Quarterly Jul-Sep 2018 by Gaming Intelligence Quarterly

July - September 2018

Q2 REVIEW

• JULY–SEPTEMBER 2018 • ISSUE 34

G A M I N G

I N T E L L I G E N C E

Q U A R T E R L Y

TOP OF THE

S LOT S

2018

THE INDUSTRY’S MOST POPULAR SLOT GAMES REVEALED

A GAMING INTELLIGENCE PUBLICATION

Getting to know

Greentube CEO Thomas Graf reveals all

Instant win games | PokerStars Casino chief speaks | The FOBT fight: what next?

CONTENTS

LEADER Q2 REVIEW

ANALYSIS & OPINION 4 Snapshot Top stories, top quotes, top deals and The Stars Group’s acquisition of Sky Betting & Gaming 6 Thought Leadership SG Lottery, Sporting Solutions, SBTech and Sportradar 12 People Therese Hillman takes charge as new NetEnt CEO 16 Technology & New Products The latest US sports betting platform partnerships and the quarter’s major tech launches 18 Lottery Australia bans lottery betting, Pennsylvania Lottery goes online 20 Games The launches that caught GIQ’s eye in Q2 2018 22 Social Gaming Intelligence KamaGames CEO Andrey Kuznetsov talks us through the evolution of Pokerist 28 Legal & Regulatory The latest legal developments from around the world, plus new UK ad controls and Slovakia’s re-regulation plans 35 Marketing Brand licensing under the spotlight

FEATURES 38 Top of the Slots 2018 The industry’s bestperforming slot games 50 In an instant The rise of instant win games 56 Shooting for the stars PokerStars Casino’s Bø Wänghammar speaks to GIQ 62 Getting to know Greentube An exclusive interview with Greentube CEO Thomas Graf 70 After the war What next for the UK gambling industry?

FINANCE - Q1 2018 75 GIQ Stock Index 78 Finance Global Gaming tops the GIQ Finance Chart

AND ANOTHER THING… 86 Joe Brennan on the advent of legal sports betting in the United States

Robin Harrison

E D I TO R

A QUARTER OF UPHEAVAL T HAS BEEN five years since GIQ first conducted its survey of the industryleading slot games. One supplier estimates there are now more t ha n 15 0 studios churning out games, compared to 15 to 20 when we first conducted the survey in 2013. So what does this mean for the rankings? Will IGT’s Cleopatra retain a grip on her throne? Turn to page 38 to find out. T he ver tica l is becoming larger and more diverse. T his makes it a lot more competitive. We speak to the suppliers that have succeeded in rising above the competition, who share their thoughts on what a studio needs to do to succeed. We h ave a l s o talked to two of the most respected companies in the casino market. The Stars Group may appear to be focused on sports betting following its acquisition of Sky Betting and Gaming (see page 4), but this has been facilitated by its wildly successful move into

casino. PokerStars Casino managing director Bø Wänghammar tells us why he believes the move to diversify has been so successful on page 56. Equally exciting – and more intriguing – is our interview with Greentube CEO and Novomatic CTO Thomas Graf on page 62. GIQ travelled to Vienna for an exclusive interview with Graf. He explains why he feels the time is right for Greentube to assume a leading position in the iGaming sector. In a quarter of regulatory upheaval, we also take a look at the major developments in sports betting. The UK government’s decision to slash fixed-odds betting terminal stakes to £2 is likely to have a detrimental effect on the country’s retail betting industry, and there is little sign that the antiFOBT campaigners are satisfied. They are now turning their attention to iGaming. Turn to page 70 for what the UK industry is likely to face in coming years. Of course, we couldn’t forget the US Supreme Court’s decision to overturn the Professional and Amateur Sports Protection Act. Joe Brennan, who, as CEO of iMEGA, was one of the original protagonists in the long-running fight, shares his thoughts on the ruling on page 86.

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EDITOR IN CHIEF Bobby Mamudi bmm@gamingintelligence.com

DEPUTY EDITOR Kio Dawson k.dawson@gamingintelligence.com

ADVERTISING & SUBSCRIPTIONS Omer Uziely omer@gamingintelligence.com

EDITOR Robin Harrison rhm@gamingintelligence.com

FEATURES WRITER Steve Hoare sah@gamingintelligence.com

www.GamingIntelligence.com

SUB-EDITOR Camilla Cary-Elwes info@thecopyeditor.co.uk

STAFF WRITER Macarena Rodicio m.rodicio@gamingintelligence.com

ART EDITOR Alan Bingle alan@forty6design.com

CONTRIBUTOR Joe Brennan

GIQ Q2 REVIEW

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GIQ Q2 2018

Snapshot most popular news stories on GamingIntelligence.com US Supreme Court overturns federal sports betting ban Playtech agrees €846m acquisition of Snaitech bet365 adds MGA content to Spanish iGaming offering Carnival Corporation formalises Konami technology deal Cherry CEO arrested under suspicion of insider trading Ceuta attracts interest as La Linea calls for Spanish tax reduction The Stars Group acquires Sky Betting & Gaming in $4.7bn deal Playtech brings Age of the Gods brand into poker vertical Pragmatic Play acquires Novomatic’s Extreme Live Gaming The Stars Group finalises Australian acquisitions

Quote of the Quarter I don’t think the industry can trade on fantasy stories unless they make them darker or more adult-orientated” Nik Robinson, Big Time Gaming (see page 38) 4

The strategic genius of The Stars Group’s Sky Bet deal THE STARS GROUP’S $4.7 billion acquisition of Sky Betting & Gaming took just about everyone by surprise. Most people thought Stars’ immediate future lay with William Hill, while the only big deal on most people’s horizons for SkyBet was an IPO. More fool us. With the industry focused on how Stars would kick-start growth at William Hill, and what it would do with its retail business, the operator quietly looked at alternatives. It found one that makes complete strategic sense. A key reason behind people assuming William Hill was Stars’ focus was its desire to turbo-charge sportsbook growth. With SkyBet it can do this – and without any exposure to the retail market, which is set to take a major hit from the UK government’s decision to slash maximum fixedodds betting terminal stakes from £100 to £2. It

also bolsters its casino vertical with Sky Vegas, a thriving, mobile-focused casino offering. For the first time, Stars can truly call itself a diversified business. At current growth rates, sports betting could be bigger than poker by the time its 2018 results come around. With PokerStars increasingly focusing efforts on attracting recreational poker players, SkyBet’s existing customer base can fit in nicely. According to Sky’s figures, 84 per cent of its users spent less than £250 during 2017, with the average bet-per-session coming in at between £7 and £8. This mass market focus translates into smaller stakes, but more customers. And that has led to significant revenue growth. For SkyBet’s financial first-half period ended 28 December, it reported a 47 per cent increase in revenue to £339m. The majority came from sports betting, which grew 58 per

DEAL

OF THE QUARTER

THE QUARTER’S DEALS IN 60 SECONDS Playtech has moved into the B2C space with its €846m acquisition of a 70.6 per cent stake in Snaitech, which it followed with an open market purchase of an additional nine per cent. It has now launched a mandatory takeover offer for the remaining shares. Over in Spain, private equity firm Blackstone has acquired Cirsa, excluding its Argentinian operations. It gains 147 casinos and almost 250 bingo and gaming halls in Spain, Italy and Latin America, as well as operations online. Down in Australia, PlayUp has been on a spending spree, acquiring DraftStars from Crown Bet before moving into real-money wagering with a deal for online betting operator ClassicBet, then snapping up TopBetta’s B2C assets. It topped this off with a deal for social betting platform betting.club.

TopBetta, which has repositioned itself as a B2B company after selling its B2C assets to PlayUp, then sealed an AUD$10m deal for betting data and odds solutions provider DynamicOdds. Also entering Australia is Catena Media, which has acquired stock market news and analysis site TheBull.com.au. It is one of a number of deals completed by the affiliate, which has also snapped up German financial site Broker.de, the French ParisSportifs.com and UK horse racing news portal GG.co.uk. Its financial services portfolio has been strengthened further by a deal for a network of financial trading sites, and US stock news portal The Hammerstone. Its €16m deal for Italian affiliate ASAP ITALIA may prove a misstep, coming days before the country unveiled a ban on gambling advertising.

GIQ Q2 2018

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The quarter in numbers M&A

US$4.7bn

Deal for The Stars Group to acquire Sky Betting & Gaming

€846m Cost of Playtech’s acquisition of a 70.6 per cent stake in Snaitech FINANCE

cent year-on-year to £210m, while gaming contributed £117m, up 31 per cent. Stars is acquiring a business which is growing at over 40 per cent a year. It does not need to mess with that business much. This is not a deal driven by cost synergies. Sure, there will

Stars is acquiring a business which is growing at over 40 per cent a year. It does not need to mess with that business much

be some – and the $70m in expected cost savings are significant – but to a large extent, SkyBet will be left to do what it is doing so well. Its chief executive, Richard Flint, who is firmly established as one of the industry’s leading executives, is likely to remain in his role. Coupled with its foray into Australia through the acquisitions of CrownBet and William Hill Australia, The Stars Group is no longer a poker operator looking to break out of its core vertical. It is a diversified, cash-generative and thriving business. Huge credit must go to chief executive Rafi Ashkenazi and business development chief Robin Chhabra.

US$392.9m

The Stars Group revenue in Q1 2018

£624m

Sky Betting & Gaming 2017 revenue BUSINESS

4,000

Number of UK betting shops to close as a result of the FOBT stake cut, according to the Association of British Bookmakers (see page 70) REGULATORY

In the US, there has been a flurry of M&A in the land-based sector. Nevada-based operator Eldorado Resorts has partnered Gaming and Leisure Properties (GLP) to acquire Tropicana Entertainment from Carl Icahn. GLP will acquire the bulk of Tropicana’s real estate, with Eldorado to operate properties in a number of states. Boyd Gaming, meanwhile, has acquired Illinois-based route gaming operator Lattner Entertainment Group for a total cash consideration of $100m, while Penn National Gaming is purchasing Louisiana’s Margaritaville Resort Casino for $115m. Finally, MGM Resorts International has entered into an agreement to acquire New York’s Empire City race track and casino for $850m to complement its existing properties in five other states. GIQ Q2 REVIEW

Paddy Power Betfair has made a move in the US, agreeing to merge its Betfair US subsidiary with daily fantasy sports operator FanDuel. The deal is expected to complete during Q3. MRG, formerly Mr Green & Co, has completed its acquisition of Latvian iGaming operator 11.lv, with plans underway to launch the Mr Green and Redbet brands in the market. It has also made a €1.5m payment for Evoke Gaming, acquired from Bonnier Growth Media in December 2017. Sazka Group is also looking at new markets, with the acquisition of a controlling stake in Croatian sports betting market leader SuperSport. Sazka may be interested in La Française des Jeux, with the French government confirming plans to privatise the lottery monopoly holder. Sazka already controls Greece’s OPAP and Casinos Austria.

51%

Sports betting tax imposed by US state of Rhode Island (see page 30)

£2m

Penalty for Kindred’s 32Red for failing to protect UK customers PEOPLE

Years as Microgaming CEO for Roger Raatgever 5

S P O N S O RE D E D I TO RI A L SCIENTIFIC GAMES

Where being first is a launches full sports On 5 June, Governor John Carney placed the first legal single-game bet at Dover Downs Race and Sports Book – a $10 bet on the Philadelphia Phillies in the Chicago Cubs game. This marked Delaware as the first state in the US to expand to full-scale sports betting

“We are proud to support the Delaware Lottery’s long history of industry firsts, and thrilled to be their trusted provider of an integrated sports betting programme” Pat McHugh, Scientific Games 6

THE MEDIA FRENZY surrounding the US Supreme Court’s ruling on the Professional and Amateur Sports Protection Act (PASPA) created a level of excitement that US sports fans and gaming enthusiasts have never experienced. Most in the industry would say the US gaming landscape may never be the same. Americans place an estimated $150 billion in illegal bets on professional and amateur sports every year. With the 2018 Stanley Cup Finals, the NBA Finals and FIFA World Cup coming fast, Delaware lost no time after the PASPA ruling to bring full-scale sports betting to market. The state previously offered legal sports betting on professional football, but has expanded its offering to include single-game bets on pro basketball, soccer, football, hockey, golf and auto racing. In-game wagers are not permitted. “In anticipation of the Supreme Court’s ruling, we were already working with our long-time sports providers Scientific Games and William Hill, as well as training our lottery and casino staff so we were ready,” said Vernon Kirk, director of the Delaware Lottery. Delaware, Montana, Oregon and Nevada were exempted when PASPA was enacted in 1992, and therefore allowed to continue some sports betting operations. In Nevada alone, legal sports betting is a $4.9bn a year business (2017) and growing. “As Delaware is known as ‘The First State’, it’s appropriate it was first in the nation to expand regulated sports betting after the PASPA ruling. We are proud to support the Delaware Lottery’s long history of industry firsts, and thrilled to be their trusted provider of an integrated sports betting programme, serving both casinos and lottery retailers across the state,” said Pat McHugh, senior vice president, Global Lottery Systems for Scientific Games. Since 2009, Scientific Games has managed an integrated sports betting programme through Delaware Lottery retailers and casino sportsbooks, working with William

Hill, a leading global sportsbook operator for sports risk management services, and Stadium Technology Group, which provides the sports software used to take wagers in Delaware. The programme has grown the Delaware Lottery’s sports betting revenues from $10m to more than $46m across a network of land-based casinos and lottery retailers in the state. McHugh explained that with the systems technology and retail POS infrastructure already in place in Delaware, the work leading up to a full sports betting launch was simply a matter of training staff about the sports product – and marketing to consumers. The highly publicised launch with Governor Carney went smoothly – and his Phillies won. With sports betting in full swing at the state’s three casinos, Delaware Park, Dover Downs Hotel & Casino and Harrington

S P O N S O RE D E D I TO RI A L SCIENTIFIC GAMES

tradition: Delaware betting offering Raceway & Casino, sports betting at Delaware Lottery retailers rolls out this summer. McHugh said his teams will continue to manage the Delaware sports programme, looking at continuous improvement in all channels. “Casino bettors tend to be more sophisticated at sports betting, whereas casual bettors tend to play at lottery retail locations,” he shared. No matter whose team wins, Delaware’s expanded sports offering has been very well received, driving a steady flow of bettors to the state’s casinos. Players have placed more than

GIQ Q2 REVIEW

69,000 wagers, topping $7m, since full sports betting began. “The combination of Scientific Games and NYX Gaming Group created a global leader across sports betting, iLottery and iGaming. This offers unrivalled capabilities to lotteries worldwide,” said McHugh. “As an integrated company, we are ready to serve customers like the Delaware Lottery with the gaming industry’s leading platforms, content and services.” It’s no secret Americans love sports, and no surprise that six states are already planning

to move forward with sports betting, with more expected to follow. In addition to sports betting, Scientific Games also provides lottery instant games, draw-based games including Keno, iGaming and video lottery gaming to the Delaware Lottery. The company supplies more than 150 lotteries globally, including nearly every North American lottery, and is currently the fastest-growing lottery systems supplier in the US, and the leading lottery systems supplier in Europe. n

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2018

S P O N S O RE D E D I TO RI A L SPORTING SOLUTIONS

Tightening margins demand proven solutions The key to success in a saturated market is differentiation, brand distinction and marginenhanced trading, says Simon Trim, CEO of Sporting Group THE MATURING LANDSCAPE of the global sports betting market boasts significant pressures, and these are impacting operators in a wide variety of respects. The squeeze on margins caused by a loss of pricing and trading skill in the industry has been exacerbated by a growing wave of tax and regulatory pressures. International operators (and parts of their supply chain) increasingly need to compete in a newly emerging, regulated market landscape. This is a very different proposition to the grey and black markets, where large parts of their revenues have historically been generated. As an industry, we have witnessed several responses to this. Corporate overhaul with a view to building scale has been prevalent, with M&A frequently turned to by established operator groups aiming to build and maintain their market positioning. Equally, there has also been a pronounced phase of land grab-style marketing techniques such as free bets, largely driven by short termism. Alongside tighter overrounds and spiralled operating costs, this approach has left incumbents searching for ways to reverse declining sportsbook contribution. The industry is now much more competitive than it was just a few years ago, and those damaged by the structural decline of retail or a failure to achieve sufficient scale in the online space are increasingly faced with a traditional business model that no longer works.

However, the commoditised pricing that results has only served to reduce customer satisfaction, damage the brand, shrink market share and ultimately dilute these operators’ ability to react to today’s changing market dynamics. This is especially true of the adopters of the white-label ‘turnkey’ supplier model, who historically can only find success in unregulated markets. For operators in regulated markets, a “one-size-fits-all” proposition leaves them exposed to a lack of quality across the whole value chain, especially in the areas of brand and product differentiation. Therein lies the key to success in regulated markets – differentiation. In a saturated marketplace, expert pricing and trading and a smartly balanced, well-formulated risk management capability must be at the core of an operator’s growth strategy. Without this, there is no sustainable foundation for a recognisable brand tone of voice to endure outside of marketing ‘noise’. The outcomes of a differentiated strategy are sustainable margins, a satisfied customer base and control of your own destiny. The challenge for operators currently is how to follow this optimised strategy when they no longer possess the skills (or capital resources) in-house to run a business in this way, and large parts of the supply chain do not possess the heritage or expertise to deliver a bespoke pricing, trading and risk management solution.

The third-party proposition

At Sporting Solutions, we have developed and successfully launched our Risk Management Services (RMS) product to remedy the systemic industry issue of poor pricing, which has ulti-

Outsourced pricing and trading services are a well-established feature of the sports betting industry today. Initially, traction for outsourcing was around speed to market for new products. More recently, however, it has been seen by operators as a response to the questions of cost and complexity – especially around challenging areas such as scaling in-play betting. When choosing where to outsource trading services, some market incumbents have eschewed the long-term benefits of differentiation through pricing and trading excellence in favour of immediate cost reduction and the consumption of scraped data or copied prices. GIQ Q2 REVIEW

Winning the game of fine margins

The outcomes of a differentiated strategy are sustainable margins, a satisfied customer base and control of your own destiny

mately led to a dissatisfied customer base with a high CPA. Our highly-automated Risk Adjusted Pricing means operators have access to pricing, trading and risk management techniques that are customised to their business. RMS is built around their own appetite to exposure and is reactive to the actions of their own customer base – meaning they regain control of how to position and run their own business rather than rely on sub-optimal white-label partnerships and commoditised content that can only ever deliver a ‘me too’ sportsbook. RMS’s in-built ‘self-trade’ mechanism also allows operators to maintain a local pricing strategy for their own market, using the differentiated knowledge that is so important in a competitive, regulated landscape. Local expertise allied with market-leading trading and risk algorithms ensures product differentiation, brand distinction and margin-enhanced trading in a cost-efficient manner. When utilising Profile, our in-house customer analytics tool that underpins our automated processes, operators have a new dimension on which to manage their client base – both from an integrity and CRM perspective. Our techniques are highly automated, objective and based on the methods most closely associated with portfolio management in financial markets. The result is that RMS is both a costsaver and a margin enhancer for operators, who can now drive brand success through costeffective differentiation and ensure they have a business model that is sustainable for the long term. n

S P O N S O RE D E D I TO RI A L SBTECH

The missing piece

SBTech’s Casino Hub is on course to develop the same high profile as its industryleading sportsbook solution. Underpinned by a strong technical framework and a rapidly-growing list of customers, it has benefitted from a series of major updates over the past six months. By Ian Bradley, chief product officer, SBTech

THE RANGE, DEPTH and quality of SBTech’s casino platform have made it an increasingly significant element of the group’s product offering. While SBTech’s core business has historically been sports betting, the past six months have seen intensive development of the recently-launched Casino Hub, allowing clients to seamlessly add elements such as casino games and payment providers to SBTech’s Chameleon360 iGaming Platform. This development process included major upgrades to the Hub’s infrastructure, enhancing its flexibility and capacity to integrate new casino content suppliers. Thanks to the efforts of multi-disciplinary teams across the group’s international network of R&D centres, SBTech has quickly established itself as one of the few major iGaming suppliers to offer a fully integrated sports and casino platform solution to its portfolio of operators that comes with a seamless wallet for cross-product bonusing, using advanced triggers from the complex event programming engine.

Seamless integration From an operational perspective, the implementation of the Casino Hub presents key advantages when it comes to adding new casino suppliers to the platform. These include reduced integration times, flexibility and a uniformity of processes, along with the enviable speed to market for which SBTech is renowned. Launched in early 2018, the Hub allows SBTech to easily align its product roadmap to take account of new vendor integrations. A modular and independent system, it powers superior processing times for transactions between the SBTech wallet and suppliers, and comes complete with lobby management tools which allow operators to promote, assign and order games according to widgets, game categories and user segments. In the past few months, this has enabled SBTech to seamlessly integrate casino content from leading providers, with many more in the pipeline, while also preparing the group for certification and launch in New Jersey. The integration process also applies to payments, a key differentiator for SBTech. A new payment provider can now either be integrated directly with the platform, or through the group’s APIs. This unique twin approach is

especially relevant to banking, since the data flow for transactions is far more complex than for other activities. To provide the stronger security required to protect payments data, the group has developed proprietary features for the integration of new secure payment systems. Both payments and casino providers can now proactively integrate from their side, giving them integration autonomy and freedom, while SBTech oversees the whole process. This enables faster completion and a flexibility that is unmatched by any of the group’s competitors.

Peerless personalisation In addition to the Casino Hub, SBTech is currently implementing a number of other new product features designed to provide unprecedented degrees of player personalisation through the group’s API development schedule. The end result will be that SBTech partners’ casino front ends will be tailored precisely to their players’ preferences and settings, based on their histories and unique activity records. The rollout of these advanced APIs will allow operators to seamlessly integrate all new functionalities, simply by enabling the personalised feed for each casino widget or category, permitting the personalisation API to recommend specific games to players. This can be achieved explicitly, whereby an operator tells a player that the recommended title is based on their recent selections; or more subtly, with the titles populating the lobby chosen according to the player’s location, segmentation profile and previous activity. While these projects were initiated by SBTech’s Casino division, the resulting advances have benefited the entire group. Chameleon360 is now a complete solution that enables clients to manage their operations across all channels and verticals. As a leader in the fields of data analytics, machine learning, real-time segmentation and aggregation, user experience and predictive analytics, the strength of the platform is complemented by the flexibility and configurability of its functions. Combined with the industry’s leading sportsbook, SBTech’s casino products are now at the core of the group’s success, with more Tier 1 operators than ever opting to upgrade to the sector’s premier solution. n

S P O N S O RE D E D I TO RI A L BETRADAR

Blurring the lines between virtual and reality

The launch of Betradar’s first in-play virtual sports product Virtual Tennis In-Play (VTI), which combines their real sports data with motion capture video technology, shows how far the world of virtual gaming has come WITH OVER EIGHT years’ experience in virtual sports, who better to explain how the industry has, and continues to, develop than Betradar’s general manager of virtual sports, Frank Wenzig.

Advancement in technology The younger generation relies heavily upon smartphones, and virtual sport products are brilliant for this medium. Demographicswise the perception has completely changed. Dog and horse racing may have been popular within virtuals eight years ago, but now football is the dominant sport. On top of this you have other emerging sports, such as basketball and tennis, now in the virtual world, as well as dog and horse racing. So you need to develop these sports to create a comprehensive virtual offering for clients. At the same time, betting on sports has also grown a lot over the past few years, partly due to technology. This means you also need to develop your virtual sports betting offering, especially as nowadays it can feel just like live betting. It has been a good way for us to expand, especially to assist our clients, considering a lot of them are in the betting world, too.

Tennis In-Play Our business is growing, as is our competition, so there is a need to continue to show clients more valuable products. This is an important GIQ Q2 REVIEW

factor for us as a provider of pre-match and looks more like an old console game, so the playlive betting on real sport. As such, we created ers didn’t look real or natural. Motion capture, Virtual Tennis In-Play to imitate the way our however, involves using technology to capture live in-play tennis works, with the same distrireal movements of actual people and transferbution channels, same visualisation and the ring them to a 3D model. As a result, the graphsame betting markets. ics look much more lifelike. And this is exactly We examined 35,000 real tennis matches why we have invested in commissioning some based on analysis of our real of the best motion capture stusports data, including things dios in the world. like player strengths and sta- “From a commercial Graphics are important tistics. It features a full confor selling a product. From perspective, however, tinuous tennis match, with a commercial perspective, it’s also important a duration of approximately however, it’s also important one-and-a-half to two-and- that the product that the product looks and a-half hours. This means looks and feels like feels like a real sport. If your there is no interruption and a real sport” offering is aimed at the betis much closer to real tennis, Frank Wenzig, Betradar ting market, where the tarwith each point included, so get group is sports punters, punters have the opportunity to bet on matches then it is crucial that the probabilities and the just like real life. This is important to clients resulting odds reflect the real odds. For the avid in the sports betting industry. The next step is sports punter this makes a big difference. With our Virtual Football product released to merge together the real and virtual worlds. earlier this year in time for the World Cup, for example, we decided to show offsides, fouls, Virtually real corners, throw-ins and all sorts of details that Creating the illusion where the lines are make Virtual Football really look and feel blurred between real and virtual is the trend. A like football. It’s not just one attack following key part of a good virtuals product these days is the next attack, we spent time making it a lot the visually entertaining component. Virtuals more realistic. This is why our products are using motion-capture technology look much perceived as premium product, because the better – much more advanced and lifelike. target group, the end user, the sports punter, is Before this there was behaviour simulation. always kept in mind. n The difference is that behaviour simulation 11

NetEnt and the pursuit of greatness C O LU M N Robin Harrison

Years of remarkable growth were not enough to keep CEO Per Eriksson in a job when NetEnt’s profits dipped. Now Therese Hillman takes on the challenge of delivering on the company’s high expectations

DURING PER ERIKSSON’S tenure as NetEnt chief executive between March 2012 and March 2018, the supplier saw annual net profit grow 372 per cent from SEK117m to SEK552m. The business had developed from a well-respected supplier to a top-tier developer with the resources and products to make a splash in any regulated market it entered. This, however, was not enough to save his job. At the time of his removal as CEO, chairman Vigo Carlund said “the overall performance of the group has not been as it should”. While an unexpected profit warning in January highlighted some issues, Eriksson’s ousting from the top job still came as a surprise. To outsiders it appeared he had done little wrong. The management change did, however, show that NetEnt is an ambitious company. Failure is not an option. This has led to finance chief Therese Hillman stepping up to the CEO role to build on Eriksson’s tenure. Yes, the core games development and supply business will continue to be a focus, she says, but instead of allowing hurdles to slow the company’s progress, she aims to find a way around them. “We need to further develop our live casino, and be even more innovative when it comes to product. Due to the fact that the US is not developing as fast as one would wish, there is a need to look into other territories,” she says, ticking off a few immediate priorities. She may only have taken on the CEO role in May but already she has solutions to the challenges she has listed. The supplier will turn its attention to the Asian market as it looks to expand. Live casino is already being migrated to HTML5. The company is also looking to leverage its assets to open new revenue streams. A new media-buying

solution, launched in partnership with Ve Global, launched during Eriksson’s tenure. A social casino is likely to follow. “We need to have a strategy that will deliver higher growth numbers,” Hillman says.

Transferable skills Considering the progress made under her predecessor, Hillman faces a challenge that even an experienced iGaming executive would consider daunting. And Hillman, though an experienced executive, is a relative newcomer to the online gaming sector, having only joined NetEnt as CFO in January 2017. Her only previous industry experience was a board position with Kindred Group. She served as chief executive of sports and health goods business Gymgrossisten, a subsidiary of Swedish ecommerce giant Qliro Group, for five years before taking on the NetEnt CFO role, and admits that even her friends couldn’t understand the decision. “Everyone asked me why I went from a CEO role to CFO,” she says, laughing. “I was always fascinated by numbers, but also very business-oriented. I felt that a company like NetEnt was much bigger than my previous employer, and I always thought the CFO had to be business-oriented. U lt i m at ely, she s ays, work i n g i n ecommerce and working in gambling are very similar: “You have a password, you have products, you have sales, marketing and product development.” It should be noted that Eriksson also came to NetEnt from outside the industry, joining from Swedish IT retailer Dustin Group after a stint at computing giant Dell. It should also be noted that Hillman is not taking charge of a business in need of a turnaround – far from it. NetEnt is still creating wildly

P EO P L E

NETENT

popular games. Its 2012 release Starburst still tops Gaming Intelligence’s survey of the industry’s most popular slots in 2018 (see page 38). However, the message from the supplier’s board is that standing still is not an option. It may be doing well, but it must do better.

Asian expansion This will lead to a more expansive growth strategy. Early in Eriksson’s tenure, NetEnt had a number of regulated territories into which it could expand. The UK, Spain and New Jersey were all low-hanging fruit for the supplier. But this period of expansion has slowed as new market openings have slowed. Hillman admits that the company has grown frustrated with the slow pace of US regulation. “When we entered New Jersey the expectation was that more states would open faster, and the dream scenario would have been to enter two or three states a year,” she says. “That has not happened. Having built an organisation there, we do have a position there that we’re happy with, but the next step was to enter new states. That is not happening. “Pennsylvania was interesting to us, but then they raised the tax rate from 18 to 54 per cent [of GGR]. That caused a lot of difficulties. We haven’t heard much beyond that.” She points to the passage of an iGaming bill in the Michigan House of Representatives as a positive sign – but adds that it is the first positive development for the US online casino industry in years. This has, in part, prompted the decision to target Asian growth, rather than run the risk of allowing slow regulatory progress and taxes to erode profit further. Hillman says NetEnt will look to take advantage of “any opportunity [it] can see” there. “We need to make sure that everything is compliant with our business,” she adds. “We have been doing some business in Asia with European-licensed operators, and now have one reseller. “We haven’t done much, if any, marketing, so our brand is not very strong, but we need to explore and learn more about the market. We know it’s a big market and very competitive.” The supplier has proved adept at making successful moves into new territories. It will be intriguing to see if it can continue this hit rate with a move into Asia. GIQ Q2 REVIEW

Live struggles Hillman is frank about the problems with NetEnt’s live casino, admitting that it is “years behind” competitors. “On the technical side we are doing very well, but we have a lot to learn. We need to learn more about casino operations,” Hillman explains. “We created a technologically advanced product, but we failed on the casino experience. “Players appreciate the feeling of being in a casino for the true experience, and I think they would rather that than a perfect streaming service. We need to improve the presenter skills. I wouldn’t say we have failed entirely, but I would also say that we haven’t created a complete offering.” She points out that the desktop live-dealer product will not even be updated from Flash

to HTML5 until the third quarter of the year. “We are competing with very strong rivals and always working from behind,” she says. “We must be honest that our products are not there yet, and humble enough to admit that we have to learn. We are disappointed, but we are going to improve.” Some of t hese i mprovements wi l l come through what NetEnt has got right about its live-dealer offering, Hillman continues, namely its technical infrastructure. Using chroma key technology used for special effects in Hollywood films, its games can now feature in-play odds and match statistics behind the live roulette table. “That is what we hear and see from the operators – they’re looking for new products and something different,” she says. “We know there is high cross-sell between sportsbook and live casino, and the operators

“We are competing with very strong rivals. We must be honest that our products are not there yet, and humble enough to admit that we have to learn. We are disappointed, but we will improve” Therese Hillman, NetEnt

like this, because it’s an acquisition tool for live casino.” This focus on improving the live-dealer offering will not see NetEnt lose focus on its slot portfolio, Hillman adds. “Since the competition is very tough and we see more and more games studios popping up everywhere, where we need to focus is to ensure that every single game is of the highest quality,” she explains. “We need to speed up our development processes – you need to be fast today. Speed and quality is key. “But the total product offering is also important; we need to have strong table games and a strong live casino product. You have to be very good at everything today.” It seems as if Hillman has taken charge of NetEnt to take the brakes off. It’s less a case of tearing things up and starting again, and more a case of speeding up progress across markets and products. “It’s all about revenue,” she says in conclusion. “Revenue growth is like an ongoing competition. We love to beat the market, and that’s what we need to do.” n 13

P EO P L E Q2 MOVES

SHEEHAN STEPS DOWN AS SG CEO SCIENTIFIC GAMES HAS promoted Barry Cottle from SG Interactive chief executive to president and chief executive officer of the entire group. He replaces Kevin Sheehan, who steps down following a two-year stint as chief executive. Sheehan will remain with the business as a senior adviser, much as his predecessor Isaacs has remained as vice chairman while seeing out his non-compete agreement. Sheehan was brought in primarily to manage the debt mountain Scientific Games had accumulated through the M&A splurge that brought it together with Bally Technologies, Shuffle Master, WMS and NYX Gaming Group.

IN THE NEWS SVENSKA SPEL RECRUITS NEW CEO

Gaming executives who have been making headlines and what’s in their inbox INSPIRED CEO ALVAREZ QUITS NEW YORK-LISTED GAMING supplier Inspired Entertainment has lost its chief executive and co-founder Luke Alvarez. He will be replaced by Lorne Weil, who becomes executive chairman. The reason for Alvarez’s departure has not been made public. When asked if the exit was planned or due to strategic differences, a spokesperson declined to comment. Given the fact that the terms of departure were still being finalised two months after the announcement, we can probably ascertain that the founder’s departure was not part of a planned post-acquisition exit. It is a sad ending for one of the industry’s

SW EDEN’S STAT E - OW N ED GAMING operator Svenska Spel has appointed Telenor Sweden’s Patrik Hofbauer as its new chief executive. Hofbauer will begin his new role in mid-December, succeeding Lenna r t K ä l l who

smartest founding fathers. Alvarez launched Inspired in 2001 and led the business to the £200m acquisition by Weil’s Hydra Industries in 2016. It is a leading supplier of fixed-odds betting terminals (FOBTs) and virtual sports – two products it played a key role in popularising. Following the UK government’s decision to clamp down on FOBTs, Weil may have seen the company’s future Stateside, prompting him to take an active role. He will be supported by Brooks Pierce, who joined Inspired in April as senior vice president for North America, and will assume the role of president and chief operating officer.

INSIDER TRADING CHARGES HIT CHERRY CEO STOCKHOLM-LISTED BETTING AND gaming operator Cherry terminated the employment of the company’s president and chief executive Anders Holmgren in May, after he was charged with insider trading. Insider trading charges are difficult to prove but Holmgren was initially held in custody due to the severity of the charges.

Audit committee chair and former CEO Gunnar Lind has taken over as interim CEO. Lind and chairman Morten Klein will steady the ship while the search is conducted for a successor.

stepped down on 19 July. Hofbauer is a former professional ice hockey goalkeeper who has spent the past 11 years at telecommunications business Telenor. His spell in charge will be defined by how the company adapts to the competitive market that is due to open just one month after he starts.

RANK TURNS TO JOHN O’REILLY RANK GROUP HAS appointed industry veteran John O’Reilly as its new CEO. The appointment sees O’Reilly step into the office of the last of the UK’s leading landbased operators to be missing from his CV. He resigned from the board of William Hill to take the role after Henry Birch announced his intention to join UK online retailer Shop Direct. Previously, O’Reilly spent 18 years with Ladbrokes, followed by a three-year stint with Gala Coral. The departure of Birch and former Ladbrokes Coral CEO Jim Mullen has removed two of the industry’s more high-profile figureheads from their roles. With the anti-gambling lobby continuing its rise in the UK, it will be hoped that the genial O’Reilly will continue his successor’s attempts to unify an industry that has often been woefully split.

F I NA NC E GIQ20 Q3 2012

Five US sports betting launches Five of the quarter’s biggest launches as sports betting finally comes to the US Delaware Lottery is first off the mark DELAWARE BECAME THE first US state to launch a full sports betting offering in the wake of the US Supreme Court overturning the Professional and Amateur Sports Protection Act (PASPA). Sports betting was launched across all three casinos in the state – Delaware Park, Dover Downs Hotel & Casino, and Harrington Raceway & Casino – on 5 June with Governor John Carney placing a $10 bet at Dover Downs on that night’s Phillies game (he won). Launched under the SportsPick brand, the sports betting platform is powered by GVCowned Stadium Technology Group and Scientific Games, which has provided the Delaware Lottery with technology for its parlay betting offering since 2009. “Since Delaware is known as ‘The First State’, it’s appropriate it was first in the nation to expand regulated sports betting after the PASPA ruling,” says Scientific Games senior vice president of global lottery systems Pat McHugh.

First legal bet in New Jersey NEW JERSEY’S HARD-FOUGHT battle to regulate sports betting culminated in Governor Phil Murphy placing the first legal sports wager in the state on 14 June. He placed two bets at Monmouth Park Racetrack’s William Hillpowered sportsbook, betting $20 on Germany to win the World Cup (lost) and $20 on the New Jersey Devils to win the 2019 Stanley Cup. “We’ve been fighting this fight for more than six years in the courts, and now that this day has arrived, and judging by the response from the fans who turned out for this, it’s exciting,” says Dennis Drazin, president and chief executive of Monmouth Park operator Darby Development. “Clearly, it’s something the people of New Jersey have been waiting for.” 16

The Borgata becomes the first casino to open a sportsbook… AFTER THE FIRST wagers were placed at Monmouth Park, Atlantic City’s Borgata launched its IGT-powered sportsbook later that day to become the first casino in the state to take a legal sports bet. The bet was placed by NBA legend Julius ‘Dr J’ Erving, who wagered $5 on the Philadelphia Eagles to win the NFL. “This is a proud day for Borgata and a proud day for New Jersey,” says Borgata president and chief operating officer Marcus Glover. “Today opens a whole new era in New Jersey sports entertainment.”

…and Ocean Resort Casino the first on Atlantic City’s boardwalk WILLIAM HILL OPENED the first and only sportsbook on the Atlantic City boardwalk at the end of June, following an agreement with newly opened Ocean Resort Casino. The opening of the venue on 28 June was marked by ceremonial first bets placed by actor and former rapper Mark Wahlberg, the first of which was on the New England Patriots to win Super Bowl 53. “We are very excited to be the first sportsbook on the Atlantic City boardwalk, and to be a part of Ocean Resort Casino,” says Joe Asher, CEO of William Hill US. New Jersey Governor Phil Murphy

The best of the quarter’s deals SBTech signed a deal to provide its sportsbook technology to Churchill Downs (CDI) in markets including New Jersey, Pennsylvania and Mississippi, with CDI partnering NewJersey’s Golden Nugget to launch operations by Q1 2019. SBTech followed that up with an agreement to power Resorts Casino’s omni-channel sportsbook in New Jersey. Kambi is another sports betting supplier that has been busy, agreeing deals with Rush Street Interactive, a subsidiary of Chicagobased casino operator Rush Street Gaming. This was followed by an even bigger deal to power daily fantasy sports giant DraftKings’ real-money betting offering, initially in New Jersey, with DraftKings selecting Resorts Casino as its licensing partner in the state. Paddy Power Betfair’s US subsidiary agreed a deal to offer sports betting at two US racetracks, Meadowlands Sports Complex in New Jersey and the Tioga Downs Racetrack in upstate New York. DFS giant FanDuel, which is in the process of being acquired by Paddy Power Betfair, secured its own deal to provide sports wagering services to The Greenbrier, the West Virginia-based luxury resort owned by state Governor Jim Justice.

T EC H

Q2 LAUNCHES

EVOLUTION ENTERS NEW JERSEY WITH 888 Live dealer specialist Evolution Gaming will make its first move into New Jersey’s regulated iGaming market through a partnership with existing client 888.

What’s the big idea? Through its existing partnership with 888casino, Evolution will roll out a selection of its online live table games including American (Double Zero) Roulette, Slingshot Rou-

BIG LAUNCHES Five of the quarter’s major product launches and what they mean for those involved

SBTECH POWERS ADDISON’S FIRST BRAND MOPLAY Sportsbook provider SBTech has launched a new mobile-first sportsbook for Gibraltarbased operator Addison Global.

What’s the big idea? MoPlay.co.uk is the long-awaited first brand to be launched by Addison Global, which began recruiting a team of high-profile executives in Gibraltar last year and is looking to establish a presence in the UK sports betting market. Powered by SBTech’s Chameleon360 iGaming platform, the site is positioned to resonate with a millennial audience and “push the boundaries of what can be achieved in mobile gambling”. The site was soft-launched in June, with the operator’s marketing strategy to centre around the new football season in August. This will see the company invest significantly in sponsorship activity and release a MoPlay app. GIQ Q2 REVIEW

lette, Three Card Poker and Ultimate Texas Hold’em Poker. “Both companies approach each new market in a systematic way to mitigate risk and maximise the opportunity for success,” said Evolution director of business development and land-based sales James Stern. “New Jersey is no different. From Evolution’s perspective, the time is right and we are delighted to be working with 888’s New Jersey team.”

RUSH STREET ENTERS COLOMBIA WITH KAMBI

888’S TRI-STATE US POKER NETWORK LAUNCH

Chicago-based Rush Street Interactive (RSI) became the first US operator to launch a regulated online sportsbook in Colombia.

888 became the first and likely only operator to pool poker liquidity across three US states after New Jersey officially joined Delaware and Nevada in the Multi-State Internet Gaming Agreement (MSIGA) at the end of April.

What’s the big idea? RSI launched its Rushbet.co sportsbook in June after becoming the latest operator to be licensed by Colombian gambling regulator Coljuegos. While the market remains dominated by leading Spanish operators such as Codere and Sportium, Rushbet.co is the first site to be launched by a US operator and the first in the market to be powered by Kambi. RSI plans to apply the same successful formula from its PlaySugarHouse.com online casino, bringing the “functionality, excitement, and innovation” that has worked well in New Jersey to the Colombian market for the first time.

What’s the big idea? As the only operator licensed in each territory, 888’s poker network allows players to compete against each other in cash games, though only via 888 and its partners WSOP.com in Nevada, The Delaware Lottery and the New Jerseybased All American Poker Network (AAPN). New Jersey Division of Gaming Enforcement director David Rebuck said the state was pleased for the opportunities the MSIGA agreement provides, and predicted that other states would join Delaware, Nevada and New Jersey on the network in future.

NORSK TIPPING GOES BINGO WITH IGT UPGRADE Norway’s state-owned gaming operator Norsk Tipping is upgrading its online bingo platform under a new long-term agreement with International Game Technology (IGT).

What’s the big idea? IGT has been powering Norsk Tipping’s online bingo platform since Norway’s National Lottery operator launched

its iGaming platform in 2014. The supplier will revamp the product after winning a new five-year contract. The deal includes a range of online casino and instant-win titles, including third-party side games. The Norsk Tipping deal includes the option for the supplier to manage a bingo network linking other World Lottery Association member lotteries. 17

LOT T E RY Q2 NEWS

BIG LOTTERY STORIES This quarter’s lottery lowdown AUSTRALIA PASSES LEGISLATION TO BAN LOTTERY BETTING LEGISLATION BANNING LOTTERY betting providers passed both legislative houses in Australia late in June, and will come into force at the end of 2018. The Interactive Gambling Amendment (Lottery Betting) Bill 2018 prohibits any service relating to betting on the outcome of a lottery, or betting on a contingency that may or may not happen in the course of the conduct of a lottery. The bill was introduced in March in the wake of a public relations campaign by Australian lottery operator Tatts, which accused Gibraltar-based operator Lottoland of depriving newsagents of revenue and eroding returns to good causes by marketing “fake lotteries”. Responding to the vote in parliament, Lottoland said that it would continue to deliver choice to its 700,000 Australian customers as part of its long-term plan to remain a major provider of online gaming products in Australia. 18

SG DIGITAL OVERHAULS BCLC SPORTSBOOK

SG TAKES PENNSYLVANIA LOTTERY ONLINE…

SCIENTIFIC GAMES’ INTERACTIVE division SG Digital agreed to provide an enhanced sportsbook offering for Canadian provincial lottery operator British Columbia Lottery Corporation (BCLC). BCLC has been using SG Digital’s OpenBet sportsbook for several years, with the new multi-year agreement including a full upgrade of the operator’s digital sports betting solutions. Set to go live before the end of the year, this includes improved in-play betting and promotional tools. “SG Digital and BCLC will drive the Canadian market to a new sports betting era,” says SG Digital senior vice president of sportsbook and platforms Keith O’Loughlin. “We’re thrilled to continue our partnership with a long-standing operator in the online space. Our OpenBet products are a perfect fit for BCLC, and we look forward to our continued partnership.”

PENNSYLVANIA BECAME THE seventh US state to offer lottery games online with the new offering powered by long-term partner Scientific Games. The PA iLottery-branded offering marks the first time the supplier has combined its digital lottery products with those gained through the acquisition of NYX Gaming Group. Among the titles being rolled out are Big Money Slingo, Bigfoot, Cash Buster Towers and Super Cash Buster. “Scientific Games has a long history of investing in innovative games, technology and services that maximise Lottery funds to benefit older Pennsylvanians,” says Scientific Games senior vice president of global lottery systems Pat McHugh (pict u red) . “We a re t h ri l led to combi ne Scientific Games and NYX’s market-leading capabilities and continue our support of the iLottery affiliate programme.”

“Our OpenBet products are a perfect fit for BCLC, and we look forward to our continued partnership” Keith O’Loughlin, SG Digital

LOTTOVATE LAUNCHES RAFFLD FOR DUTCH PLAYERS ZEAL NETWORK’S B2B division Lottovate unveiled the first new lottery for Dutch players in nearly 30 years, with the launch of its ‘experience’ lottery game Raffld. Based on player feedback, the charitable lottery is aimed primarily at Dutch players aged 22-36 years old, and gives them the chance to win experiences such as mountain biking in Iceland, flying a sports plane, parachuting or city trips. “Raffld is a different type of lottery,” says Lottovate Netherlands managing director Peter-Paul de Goeij. “It’s about winning experiences to share with your friends, not money. By creating a product for people who don’t currently tend to play the lottery – so-called millennials – it opens up an entirely new pool of funding for charities. With a guaranteed winner every week, that means it’s a win-win.”

…AND ROLLS OUT KENO FOR RETAIL PARTNERS ACROSS THE STATE SCIENTIFIC GAMES BEGAN the roll-out of Keno across the Pennsylvania Lottery’s retail network, with the quick-draw lottery game made available to players in more than 9,400 retail locations, including convenience stores and food and beverage locations. “The Pennsylvania Lottery is a highly valued customer, and we have a long history of investing in highly successful games, technology and services that generate the highest possible returns for the Commonwealth,” says McHugh. “Scientific Games is pleased to provide Keno games at retailers to support the lottery’s mission of funding programmes for older Pennsylvanians. We are committed to quickly delivering new products and technology that meets our customers’ requirements and our own stringent protocols for quality and security.”

GIQ games round-up

New games that caught GIQ’s eye in Q2 2018

BARCREST CELEBRATES 50 YEARS WITH RAINBOW RICHES SLOT… RAINBOW RICHES DROPS of Gold brings everyone’s favorite leprechaun back to the slot world with iconic art from SG Digital’s Barcrest studio, which recently celebrated its 50th anniversary. Drops of Gold features a unique, verticallydesigned double reel-set. Wilds and bonus symbols in the top reel-set drop onto the base reel-set below. Also featured is the popular Big

Bet option, where players can level up their bet to eliminate lower-paying symbols and maximise their chances for a massive win. “Rainbow Riches is a hugely successful brand for us, and we’re thrilled to launch this new instalment,” says Tom Wood, chief creative officer at SG Digital. “Drops of Gold, a newcomer, brings a completely new innovative game design and electric experience to our portfolio.”

…AS SG DIGITAL GOES BACK TO ANCIENT ROME WITH NEW RELEASE THE SG DIGITAL studio also took players back to Ancient Rome, with the launch of Soldier of Rome. When players match symbols on the 2x2 Money Burst reels, Lightning Spins and Mighty Reels are triggered with Mega Stacked Symbols. On any spin, landing the Centurion, Soldier of Rome’s central gladiator character, opens the Mighty Reels, creating 100 paylines for a multitude of chances to win. “Soldier of Rome delightfully combines an Ancient Rome theme with an innovative

combination of tried-and-true slot elements and intriguing gameplay,” says Ashley SandyfordSykes, executive vice president of content for SG Digital. “It’s a unique title that has something for everyone.”

EYECON BRINGS TWIST TO CLASSIC BACCARAT GAME PL AY T ECH- OW N ED AUST R A LI A N GAMES developer Eyecon has created a new twist to the casino classic baccarat with the launch of Hit Me! Baccarat. With the Hit Me! Bet, a losing hand can still win, while players can purchase an extra card using dynamic odds for a chance to win up to 12 times their stake. “Baccarat has captured the imagina20

tion of players for hundreds of years, and we’re delighted to be adding a genuine variation to the gameplay with Hit Me! Bet,” says Eyecon founder Scott Murray. “While many online casinos have made visual enhancements or added side bets to baccarat in recent years, Hit Me! brings something extra and innovative to the game itself.”

GAMBLIT LAUNCHES FIRST SKILL GAME MACHINES OUTSIDE LAS VEGAS SKILL GAMES DEVELOPER Gamblit Gaming rolled out its TriStation single-player game machines at a Caesars Entertainment property in Northern Nevada. The machines went live at Harrah’s Lake Tahoe Hotel and Casino, the first time they have launched outside of Las Vegas. It follows a successful trial as part of the Nevada Gaming Control Board’s New Innovation Beta Programme. “We’re excited to introduce TriStation to players in Northern Nevada,” says Gamblit founder and chief executive Eric Meyerhofer. “We’re proud to expand our relationship with Caesars, and Harrah’s Lake Tahoe is a great property to bring this diversified portfolio of single-player games to as it offers something for everyone in an innovative new way.”

G A M ES

Q2 RELEASES

YGGDRASIL’S VIKING FRANCHISE SENT TO THE UNDERWORLD…

… AS IT PARTNERS NITRO CIRCUS FOR FIRST BRANDED SLOT

RED TIGER GAMING TO DEVELOP SLOT BASED ON UK TV SHOW

YGGDRASIL GAMING LAUNCHED the third instalment in its series of Viking-themed slot games with the release of Vikings go to Hell. Following the launch of its Vikings go Wild and Vikings go Berzerk games, the supplier’s latest 25-line slot sees the Vikings this time take on demon hordes in the underworld. “Vikings go to Hell is the third instalment of a successful series, so the only way to go was bigger and better with visuals, sounds and wins,” says Yggdrasil head of slots Jonas Strandman. “We have produced a game special enough to offer something to Vikings fans both old and new, and we can’t wait to see how players react.”

YGGDRASIL AGREED AN exclusive partnership with action sports collective Nitro first Circus to develop its fi rst branded game. The extreme sports-themed online slot will feature action images of Nitro Circus members, including co-founder Travis Pastrana, the motorsports competitor and stunt daredevil. “Yggdrasil would not take the leap into the branded games space without the perfect partner, and we’ve found that with Nitro Circus,” says Yggdrasil CEO Fredrik Elmqvist. “This slot will introduce Nitro Circus fans to the thrills of online casino, and bring the highoctane action of the arena to casino players.”

RED TIGER AGREED a deal with Endemol Shine Gaming to launch a new online slot based on the UK Channel 4 TV game show The £100k Drop presented by Davina McCall. “We’re delighted to have partnered with Endemol Shine Gaming in this ground-breaking agreement which underlines the progress we’ve made since our launch three years ago,” says Red Tiger Gaming chief executive Gavin Hamilton. “We have hugely talented commercial and technical teams, and this launch is a credit to them as we continue to expand our reach and the portfolio of great games and tools that we offer casinos.”

BLUEPRINT TURNS IT UP TO 11 WITH THIS IS SPINAL TAP SLOT

NETENT RELEASES LOST RELICS ONLINE SLOT THE LATEST SLOT from NetEnt sees players looking to uncover hidden features to net big wins. In Lost Relics, players take on the role of a treasure hunter as they look through ancient ruins to fi find five-reel, nd a range of artefacts. The fi ve-reel, five-row slot features the supplier’s unique Cluster Pays mechanic, which allows players to boost potential payouts by accumulating a cluster of winning symbols. “Lost Relics will provide a high level of entertainment for players by offering several bonus features, and if you’re interested in treasure hunting and big-win opportunities, then this is the game for you,” says NetEnt chief product officer offi cer Henrik Fagerlund. GIQ Q2 REVIEW

GAUSELMANN’S UK-BASED GAME development studio Blueprint Gaming has launched a new online slot based on the classic 1980s rock mockumentary This is Spinal Tap. Through a licensing agreement with StudioCanal, band members David St Hubbins, Nigel Tufnel and Derek Smalls all feature in the slot game, which includes strobing lights and detailed design of the band’s instruments and famous mullets. “We’re rocking out with one of the greatest and funniest UK bands of all time in what is sure to be our loudest release yet,” says Jo Purvis, director of marketing and relationships at Blueprint Gaming. “This is Spinal Tap is a cult classic and we’re confident our adaptation of the film will appeal to the masses. David, Nigel and Derek all feature as we take it up to 11 for a deafening experience.”

MICROGAMING LAUNCHES SLOT FROM STORMCRAFT STUDIOS STORMCRAFT STUDIOS HAS launched first Fortunium, its fi rst release since agreeing an exclusive supply deal with Microgaming. “Designed with the mobile market in mind, Fortunium offers a premium portrait experience that will immerse players into this stunning steampunk world,” says Microgaming games publisher David Reynolds. “The game showcases a wealth of innovative features including Mystery Reels, super-stacked Mystery Symbols and a powerful Win Booster to ramp up rewards.” first Microgaming fi rst announced it would start working with a new generation of independent game builders in February, with Triple Edge first Studios the fi rst to be announced as exclusive an provider to the supplier. 21

THE BIGGEST SOCIAL CASINO NEWS OF THE QUARTER

KamaGames looks to climb social ladder Social casino operator KamaGames has played a winning hand with Pokerist, the social poker title that has grown consistently since its 2010 launch to top App Store charts WHILE KAMAGAMES TODAY boasts a product portfolio covering social versions of blackjack, roulette, baccarat, slots and more, its success has very much been built upon its flagship title Pokerist. “In 2010, the team at the time came up with an idea to focus on social poker because the genre was still very niche and therefore had great potential,” KamaGames CEO Andrey Kuznetsov tells Gaming Intelligence. “There were a couple of poker games already in the App Store, but we knew we were able to create a better, higher-quality mobile poker app than what was currently available.” Since the title launched it has, at various points, been the top-grossing app in Apple’s App Store in 101 countries, and among the top five grossing apps in 45 countries on Google Play. Today, it boasts an average daily audience of more than 530,000 users, and claims to attract over 1.5 million unique players each month. Its success saw KamaGames’ original team of four grow to more than 250 employees worldwide and the company move its global headquarters from Russia to Dublin. The company hit new heights in 2017, with gross revenue of USD$57.5m, up 63.4 per cent year-on-year. KamaGames believes it can use this stellar growth to go toe-to-toe with industry giants. However, it still has a way to go. For any social poker operator, the app to emulate is Zynga Poker. While Zynga does not break down the daily active users for each of its verticals, its poker product accounts for between a fifth and a quarter of revenues. This suggests it attracts in the region of five-to-six million of the 25 million daily actives the social casino giant reported in Q1 2018. 22

Meanwhile, Playtika boasts in the region of 20 million daily active users, annual revenues of $1.1 billion and more than 1,700 employees. While its WSOP-branded poker product and Poker Heat apps are among its less-feted products, each is likely to outperform Pokerist in terms of users.

Number-crunching In a bid to close this gap, KamaGames maintains a near obsessive focus on KPIs. The operator prefers to focus on metrics other than the obvious headline daily active users (DAUs) figure, keeping a particularly close eye on retention, share of paying users and average revenue per paying user (ARPPU). Alongside its top-line revenue growth for 2017, Kuznetsov says that ARPPU rose 30 per cent, with the percentage of paying users up six per cent. “Over the last year, we’ve significantly increased our metrics such as ARPPU, share of paying users and number of DAUs, and we believe we are consistently wit in close reach and even some times out-performing our competition,” he says. “Looking specifically at a number of key areas of growth, the points of note would be that the quality of our portfolio has improved; we have released a number of new products, and we are executing more aggressive marketing campaigns.”

Product perspective While KamaGames’ success has been built upon Pokerist, the company has spent much of the last 18 months expanding and diversifying its product portfolio.

Baccarat, Omaha and three-card poker products were launched last year, and in February 2018 the operator went live with its first slot games, initially via Pokerist, in a bid to become the operator with the “most comprehensive portfolio of social casino games on mobile”. At the time, Kuznetsov said social slots players remained a relatively untapped market for KamaGames, although the operator lags behind the likes of Zynga and Playtika in this regard. The launch of slots via Pokerist suggests the company considers cross-selling from poker as the best way to close this gap. But it will also look to target new players – particularly women. “Based on our recent study, the slots playing audience consists of around 39-44 per cent females, compared to around 15-20 per cent for the poker-playing audience. Launching slots will allow us, as an operator, to reach a whole new audience of players,” Kuznetsov says.

Going public? The question facing KamaGames is how to continue to build upon this growth. Kuznetsov claims that if the company maintains its 2017 growth rate into

“We believe we are consistently within close reach and even sometimes out-performing our competition” Andrey Kuznetsov, KamaGames

SOCIAL GAMING

KAMAGAMES

2018, it would be well on its way to becoming the second-largest social mobile poker operator in the world by revenue, though still behind Zynga. While he adds that this is achievable “without any type of M&A”, it isn’t something he rules out. “I think at some point there could be an initial public offering or M&A,” he says. “We are always happy to meet with other companies, have an exploratory discussion and see where it goes. “However, at this point, we really are in no rush. The company was recently estimated at a value of around $500 million and growing steadily, so we’ve clearly made some good decisions in the last few years, and we all want to see where the company will be in five years’ time.” The $500 million valuation estimate is based on current earning multiples and similar acquisitions, such as Zynga’s $527 million acquisition of Natural Motion in 2014.

The future of social In April of this year, KamaGames celebrated its global player base reaching a landmark 100 million users, up five million in Q1 alone. Kuznetsov is confident there is still plenty of growth left for

the operator, much of it coming from emerging markets. “While we are continuing to grow in the current markets, we are also continuing to pursue new and emerging markets too, such as India, South East Asia and China,” he says. North America and Europe remain KamaGames’ core markets, but the Middle East and South America have also proved strong. Platforms and demographics also feature strongly in the growth equation. On the platform front, KamaGames is planning to launch on Sony’s PlayStation platform later this year as well as two other platforms yet to be announced. Pokerist is already available across iOS, Android, Apple TV, Windows Phone, Amazon, Facebook, Samsung Galaxy App store and a host of others, but the operator understands that growing its user base is often dependent on ensuring a diverse platform coverage. Further B2B deals, similar to the partnership with Rush Street, which sees KamaGames produce the Poker Nights in America app, are also in the pipeline. “We have a solid product roadmap for at least the next two years,” says Kuznetsov. With new markets, new verticals and new partnerships on the horizon, KamaGames is quietly positioning itself as the ultimate social climber. n 23

SOCIAL GAMING Q2 NEWS

Zynga revenue on the up as mobile audience increases NEW YORK-LISTED SOCIAL games developer Zynga enjoyed a seven per cent increase in revenue in the first quarter of 2018, benefiting from its highest mobile audience for more than four years. Zynga reported revenue of $208.2m for the first three months of 2018, driven by 13 per cent year-on-year growth from its mobile channel. Mobile now accounts for 88 per cent of the developer’s total revenue. This revenue growth, that surpassed the high end of the company’s Q1 projection by $8.2m, was driven by a 24 per cent increase in daily active users to an average of 23 million for the quarter. “Overall, we were pleased to see the Social Slots portfolio deliver its best quarterly monetisation in franchise history as the team introduced new features and licensed content to players that deepened their engagement,” said the company. “In summary, we’re proud of the way we started 2018 and are confident in our performance and execution ability in the year ahead.” M e a nwh i le , Zy n g a

founder Mark Pincus reduced his overall voting rights in the company to just 10 per cent in a bid to simplify the social gaming giant’s stock structure. Pincus converted all of his high voting shares into Zynga’s Class A common stock, enabling Zynga to move from a multi-class to a single-class structure. The former CEO will continue to serve on Zynga’s board as non-executive chairman.

Lightning Box strikes Penn supply deal AUSTRALIAN GAMES DEVELOPER Lightning Box has agreed a deal with Penn Interactive Ventures, the social casino and iGaming division of US racetrack and casino operator Penn National Gaming. The agreement enables the launch of a range of games from Lightning Box on Penn Interactive’s social casino apps, Viva Slots, Hollywood Casino and Big Bonus Slots. “This partnership with Penn Interactive will allow us to build on our already strong US footprint with greater penetration in the online social casino space,” Lightning GIQ Q2 REVIEW

Box managing director and co-founder Peter Causley said. Pen n I nteractive Ventures managing director Chris Sheffield added: “Lightning Box’s gaming content is proven across realmoney and social gaming platforms, and with its already established US credentials, we look forward to working together for the foreseeable future.”

IN BRIEF London-listed iGaming software provider GAN has agreed an extension to its content development and distribution agreement with Everi Holding that will see GAN develop 10 online slot games for social gaming play in the US. The games, which will be based on Everi’s portfolio of land-based titles, will also be rolled out for real-money play in New Jersey, Pennsylvania and Europe. FlowPlay has signed a cross-licensing agreement with International Game Technology, allowing it to develop games using patented features from IGT’s portfolio. Australian sports betting and fantasy sports operator PlayUp has struck a deal to acquire social betting platform Betting.club. PlayUp described the acquisition as the first step towards the in-venue use of its PlayChip cryptocurrency for wagering payments and rewards. Northern Territory-licensed Betting.club allows players to rate and share form, tips and bets, as well as share wins with friends and fellow punters. Social casino games developer Playtrex will launch in-app tournaments for its popular Wild Poker app. Set to be released on the App Store and Google Play, the new version of Wild Poker will feature an action-packed Tournament mode in which players can inhabit their favourite animal persona and challenge other poker players in real-time, synchronous tournaments. Free-to-play sports games specialist SportCaller has expanded its partnership with the Paddy Power Betfair-owned Sportsbet to roll out a series of predictions games for the Australia-facing brand. Having initially partnered Sportsbet to launch a game centred around the US National Basketball Association (NBA), the supplier was recommissioned to develop titles based on some of Australia’s most popular domestic sports. US gaming supplier American Gaming Systems (AGS) has launched Play Mohawk, a new free-to-play casino app for New York’s Akwesasne Mohawk Casino Resort. Powered by AGS’s social white label casino platform and integrated with the resort’s casino management system, Play Mohawk is designed to develop customer engagement.

NEW FROM

Launch date: 12th July2018

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ON THE FOLLOWING PAGES

30 World regulatory briefing

Does Fluffy Favourites encourage children to gamble? C O LU M N LEGAL

Steve Hoare

Amid a continuing torrent of negative media stories about the gambling industry, the UK Gambling Commission announced it is to increase its focus on youth protection THE UK MARKET is stuck right in the middle of a political and regulatory upheaval that shows no sign of abating. Following the government’s decision to reduce the stake on fixedodds betting terminals to £2 (see page 70), the attention has turned to online gambling and advertising, and youth protection in particular. Once again, the narrative has been driven by The Campaign for Fairer Gambling and Labour Party deputy leader Tom Watson, but the Responsible Gambling Strategy Board has given the issue an official stamp. The Responsible Gambling Strategy Board is an independent expert body, which advises the Gambling Commission on the research, education and treatment elements of a national responsible gambling strategy. In June, the Board published a paper entitled ‘Children, young people and gambling: A case for action’, which outlined nine principles and recommended actions to protect children and young people from gambling harm. Most of the points are inarguable general principles that any responsible operator would 28

adhere to. Points five and six might set some Operators are acting. One explains how the alarm bells ringing: company lawyer, responsible gambling manPrinciple 5: The extensive and rapidly growager and head of gaming sat down to run the ing exposure of children and young people to rule over all 500 slots in its portfolio. gambling marketing and advertising is a matter “It is difficult to differentiate. There are of concern which needs to be addressed. slots that are not aimed at children but might Principle 6: The design, content and imagery appeal to children,” said the executive. used in gambling marketing, advertising and Ultimately, each person’s opinion on what products should not have the effect of creating a is ‘suitable’ will be different but this particuparticular appeal to children and young people. lar executive believes the Commission can be It goes on to recommend a blanket ban on relied on to take a common-sense approach. television advertising before 9pm and states But anyone thinking this is a parochial UK content which has a particular appeal to political matter should think again. children should not be visible in any type of “We cannot tackle the risks to children and environment where it will be encountered by young people by acting alone,” the UKGC said. under-18s. Examples of such content include “The issue needs international coordination of Piggy Payout, Fluffy Favourites, Pirate Prinintelligence sharing and enforcement. We are cess and some National Lottery scratch cards well placed to raise awareness and share what such as Santa’s Millions. This could force we have learnt about these risks, but we need massive changes in an industry that relies on other international regulators to act with us.” television advertising and aniFor better or worse, the UK mated characters in its slots. Gambling Commission is one The Gambling Commisof the most experienced regu“It is difficult to sion’s response: “The tone, conlators and it is well respected tent and quantity of gambling differentiate. by its peers. advertising has attracted pub- There are slots “As Sweden regulates it lic concern. We share concerns that are not aimed can set standards on things that gambling advertising and at children but like advertising and responsimarketing, including sponsor- might appeal ble gambling from the beginship, could lead to gamblingning,” says another executive. to children” related harm for children and “The UK let the market go and other vulnerable people. The is now trying to rein it in.” available evidence is not clear on this matter. It There is a view in the industry that outdoes not provide a compelling case that there is going chief executive Sarah Harrison has a need to change existing rules, but the evidence politicised the Commission beyond its remit base is limited and we are working with RGSB as a regulator. Lawyers and corporate affairs and GambleAware to build new evidence.” executives we spoke to, however, view the reguThe industry has been warned. The lator’s recent actions as an overdue correction. Advertising Standards Authority has already “She has come in with an agenda to tidy chastised two operators for adverts featuring this industry up. When someone does that, fairy tale characters. GVC-owned Coral also the pendulum can swing a long way in the came under fire for its allegedly child-friendly opposite direction,” said the general counsel adverts for Rainbow Riches, Fishin’ Frenzy and of one operator. “But every single action seems Lucky Wizard. absolutely justified.” n

L EG A L

SLOVAKIA

ASK THE LAWYER…

about Slovakia’s re-regulation plans Robert Skalina of WH Partners explains what operators can expect under the proposed new regulatory framework for online gambling in Slovakia

THERE IS A need for comprehensive regulation of online gambling games in Slovakia. Currently, only the state-owned company Tipos holds an online gambling licence. Despite that, operators with land-based betting licences are also allowed to offer sports betting online, provided they have a registered office in Slovakia. This makes it impossible for foreign operators to enter the market. The new regime should open the market to operators from other EU member states. It should also end the monopoly of Tipos in the online casino market, by allowing private operators to obtain a licence. How effective has the current system of blacklisting unlicensed operators been in pushing such companies out of the market? The blacklisting – together with blocking measures imposed by internet and payment service providers based on various court orders – makes it difficult for foreign businesses to operate in Slovakia. Some of the foreign operators pulled their Slovak offerings even before this system came into force in July 2017, and others stopped targeting the Slovak market thereafter. On the other hand, many did not pull out, as they consider the current regulatory regime to be noncompliant with the EU laws, particularly the freedom to provide services within the EU.

Blacklisting – together with blocking measures imposed by internet and payment service providers based on various court orders – makes it difficult for foreign businesses to operate in Slovakia GIQ Q2 REVIEW

What will be the main changes made under the new regulations? The main changes to the current regime which are relevant for remote gambling operators are: l i t opens the Slovak market for operators from other EU member states – even operators with a registered office outside of Slovakia will be able to obtain a licence. l i t will allow private operators to obtain online licences. The current state monopoly over online gambling will continue only for numerical lotteries, special bingo and receipt lotteries. Licences for online casino will come into effect from 1 July 2019. However, online sports betting licences will only be effective as of 1 July 2020, with the application process not opening until 1 January 2019.

l i t will create a new independent regulator, called Office for Regulation of Gambling. Currently, the regulator is the Ministry of Finance. The new regulator will be financed by contributions from operators, though the exact contributions are yet to be determined. l i t includes high licence application fees. For example, a licence application fee for online games of €3m has been suggested. l i t amends the tax rates and basis for their calculation. A tax of 23 per cent of GGR for online gaming has been proposed. What is likely to happen to national lottery operator TIPOS once re-regulation is complete? Could TIPOS look to block any elements of the plans? The relevance of TIPOS in the online gambling market, particularly concerning online casino games, will diminish as it is forced to compete with private operators – something that will negatively affect its profits. As this new regulation has been prepared by the Ministry of Finance – a body that, like TIPOS, is an instrument of the state – there should in theory be no direct effort from the operator to block the changes. What is the next step – what hurdles does the legislation need to jump before it can come into force? Operators, the public and other stakeholders were allowed to submit comments on the draft laws during a consultation period that ended on 14 June. The Ministry of Finance is now assessing these submissions, and will possibly update the draft laws to take on board some suggestions. Subject to approval of the draft by the Slovak Government, it will be presented to the Slovak Parliament for approval. The draft will also have to be notified to the European Commission, and other member states will be able to comment on it. The proposed effective date of the new act is 1 March 2019, though certain provisions will not come into force until 1 July that year. n

L EG A L

AMERICAS REGULATION

World regulatory GIQ outlines the legal developments in the US and Latin America in Q2 Washington, DC The US Supreme Court has cleared the way for states to legalise and regulate sports betting by striking down the Professional and Amateur Sports Protection Act (PASPA). On 14 May the court ruled that states should have the right to regulate and tax sports betting, and that it was unconstitutional to ban them from doing so. It said that PASPA, passed by Congress in 1992, attempted to “regulate state governments’ regulation” of their citizens by preventing them from enacting sports betting laws. According to the US Constitution, Congress does not have the right to do so, the court said (see page 16 for more).

New Jersey New Jersey Governor Phil Murphy signed Assembly Bill 4111 into law, allowing for the launch of sports betting in the state. Similar to New Jersey’s licensing process for online casino and poker, sports betting operators and suppliers will initially launch under transactional waivers. New Jersey has also joined Nevada and Delaware to form the Tri-State Poker Network. This sees the three states pool poker liquidity (see page 17). The New Jersey Thoroughbred Horsemen’s Association (NJTHA), operator of the state’s Monmouth Park racecourse, has filed a lawsuit against the leading US sports leagues, accusing them of acting in bad faith by opposing the legalisation of sports betting. The suit alleges that the leagues cost the NJTHA around USD$150m in lost revenue by securing an injunction blocking it from launching sports betting in 2014. It is looking for the leagues to pay a $3.4m surety bond, plus interest. In addition, it is also seeking damages based on profits generated by the sports leagues through their involvement with DFS operators. It is also looking to secure counsel fees and costs of suit from the sports governing bodies. 30

Rhode Island Rhode Island Governor Gina Raimondo signed the state’s 2019 budget bill into law, including a provision allowing Twin River Casino to launch sports betting at its existing facility in Lincoln, as well as the soon-to-open Tiverton venue. Rhode Island’s tax rate for the vertical is the highest yet in the US, with 51 per cent of sports betting revenue going to the state.

Mississippi The Mississippi Gaming Commission adopted new sports betting regulations. The controls allow sports betting to take place at the state’s land-based casinos, with no provision for a wider online offering beyond mobile wagering inside licensed venues.. Casino licence holders can partner with third-party suppliers. Operators will be required to pay a tax of 12 per cent of gross wagering revenue, and to report any wins of more than $10,000 to the Commission.

West Virginia The West Virginia Lottery Commission also enacted s p o r t s b e t t i n g re g u l a tions. Per the West Virginia Sports Wagering Act, which passed into law in March, land-based casinos will be eligible to secure sports betting licences at a cost of $100,000, with a 10 per cent tax on gross wagering revenue.

to apply for licences in the vertical. The Pennsylvania Gaming Control Board (PGCB) also clarified that land-based casinos will be able to operate multiple skins under their iGaming licences. The clarification came as part of Temporary Rules and Regulations 125-215, and will allow companies that secure an interactive gaming certificate the right to launch multiple gaming sites.

Virginia Virginia Governor Ralph Northam signed a bill to legalise new betting machines at the state’s defunct Colonial Downs racetrack in a bid to resurrect horse racing in the state. House Bill 1609 allows racetracks and their satellite facilities to host terminals offering pari-mutuel pools based on past horse races. Northam must still approve regulations for the operation of the machines, which were drawn up by the Virginia Racing Commission.

Nevada BCH Gaming, operator of the Boomtown Casino in Reno, has been fined $40,000 by the Nevada Gaming Control Board for promoting illegal online gambling websites. The casino operator linked to offshore online casinos through its own website, believing that it was offering visitors access to freeplay games. At no time was it aware that these sites also offered access to real-money games, it said. Boomtown offered access to the sites under a deal with Affiliate Edge and Deck Media and may have earned a fee on the referrals.

Pennsylvania Pennsylvania’s Gaming Control Board begun the process to license sports betting operations in the state. The regulator is now accepting petitions from casino licence holders requesting approval to offer sports betting, after passing temporary regulations in late may. It has also enacted fantasy sports regulations, allowing operators

New York The New York Gaming Commission confirmed that it is working on sports betting regulations under the 2013 Upstate New York Gaming Economic Development Act. This act authorised the casinos to conduct sports betting in the event of a change in federal law. 30

L EG A L

AMERICAS REGULATION

update Michigan Michigan’s House of Representatives voted in favour of a bill to allow land-based casinos to offer iGaming. The bill sets a fee of $200,000 for licence applicants, alongside a $100,000 annual renewal fee over each licence’s five-year term. Licensees would be taxed at eight per cent of gross gaming revenue. The legislation is now before the state Senate for further scrutiny.

Washington A ruling by the US Court of Appeals, which states that social casino games constitute illegal gambling under Washington state law, has led to lawsuits being filed against a number of leading operators. Class action suits have been filed in Washington against Double Down Interactive, Playtika, High 5 Games and Huuuge Games. The suits claim that the operators of the social casinos violated Washington law and illegally profited from tens of thousands of consumers by offering illegal online casino games. However, DoubleDown owner DoubleU Games has refuted the claims.

Colombia Colombia has decided it will not push forward with poker liquidity sharing as it considers it to be “risky” for the local gaming industry. The country’s gambling regulator announced plans to enter into liquiditysharing compacts with other jurisdictions last year, but has now decided against the move in order to protect local operators.

The Bahamas The Bahamas government is proposing to significantly increase the tax rate paid by internet gaming houses in a move that has been attacked as “draconian” by the country’s gambling industry. The government of Prime Minister Hubert Minnis aims to GIQ Q2 REVIEW

raise the tax on establishments that offer online gaming – the only place where natives are permitted to gamble – from the current rate of 11 per cent of gross gaming revenue (GGR) to a new rate of between 20 to 50 per cent of GGR. Gaming house operators are currently taxed at either 11 per cent of revenue or 25 per cent of earnings before interest, tax, depreciation and amortisation, whichever is greater. The new proposals will also see patrons be subject to a five per cent tax on deposits.

Antigua and Barbuda Antigua and Barbuda’s Ambassador to the United States, Sir Ronald Sanders, has appeared before the World Trade Organization (WTO), accusing the United States of ignoring mutually beneficial proposals aimed at ending the iGaming dispute between the two countries. Sanders said that the United States’ ban on online gambling has cost the twin-island nation US$315m since 2003. The WTO ruled in 2005 that the United States acted in breach of its commitments under the General Agreement on Trade in Services (GATS) when it banned online gambling operators licensed in Antigua from serving US customers. 31

L EG A L

EUROPEAN REGULATION

World regulatory GIQ outlines legal developments across Europe and the rest of the world in Q2 UK The UK government confirmed that the maximum stake on fixed-odds betting terminals (FOBTs) will be cut from £100 to £2, accompanied by an increase in taxes paid by iGaming operators. The stake reduction, which requires parliamentary approval, applies to the controversial Category B2 machines following a consultation involving the public and the gambling industry. The Department of Culture, Media and Sport (DCMS) said that it wanted to reduce the potential for large losses on the machines. Having reviewed the consultation and taken advice from the UK Gambling Commission (UKGC), the £2 stake was the best way to achieve this, the department said. The Association of British Bookmakers said the measure would have “far-reaching implications” for high street bookmakers. It predicted a devastating hit on licensed betting offices, estimating that 4,000 shops would have to close, with 21,000 employees to lose their jobs as a result. Meanwhile, the UK arm of Australian operator Tabcorp has agreed a £84,000 settlement with the UK Gambling Commission for offering odds on Sutton United reserve goalkeeper Wayne Shaw eating a pie on camera. The regulator said that Tabcorp UK, trading as Sun Bets, had failed to properly manage the risks associated with offering novelty bets in relation to the incident, which has since become known as “piegate”. This prompted a review of Tabcorp UK’s licence, which uncovered significant failings in its self-exclusion processes. Players were able to change their user name and use a different bank card and email address, allowing them to gamble while excluded.

The Association of British Bookmakers predicted a devastating hit on betting offices, estimating 4,000 shops would have to close 32

LeoVegas was also fined for self-exclusion failings by the regulator. It was found to have failed to return account balances to players that had closed their accounts, and sent marketing emails to excluded players. The operator and its affiliates were also found to have published 41 misleading emails between April 2017 and January 2018. As a result it was fined £600,000 by the UKGC. Kindred Group’s 32Red brand was another to fall foul of the Gambling Commission after it was found to have failed to protect a consumer from gambling-related harm. Checks and balances to ensure the customer was not gambling beyond their means, were not properly carried out. As a result Kindred agreed a £2m penalty package with the regulator.

Malta The implementation of Malta’s new gambling legislation was delayed until at least 1 August. Having originally aimed to bring the regulations into force from 1 July, the Maltese government has pushed this back in light of comments by the European Commission and European Union member states. The legislation was submitted to the EC for scrutiny in March.

Australia The Australian states of Victoria, Queensland, New South Wales and the Australian Capital Territory (ACT) have agreed to implement a new point-of-consumption tax on wagering operators. Queensland will bring in a 15 per cent tax on net wagering revenue from 1 October. Western Australia and the ACT will enforce a tax of 15 per cent from 1 January 2019, with New South Wales enforcing a 10 per cent rate from the same date. Operator body Responsible Wagering Australia has already attacked the 15 per cent tax rate as “punitively high”.

Sweden The Swedish government expects to have its new iGaming regulations approved in Q3, with the new controls having secured approval from the country’s parliament

in June. The application process is set to start from 1 August, with the market to open when the new laws come into effect on 1 January 2019. Swedish authorities have also launched an insider trading investigation into Anders Holmgren. The former Cherry chief executive has lost his job as a result (see page 14).

Germany 888 Holdings has filed a complaint with the German Federal Constitutional Court, arguing that a court ruling issued last year infringed on its constitutional rights. The ruling by the Federal Administrative Court in Leipzig said that Germany’s prohibition of all iGaming products beyond sports betting was constitutional. This set a precedent for German state authorities to crack down on operators active in the market under licences from other European jurisdictions. The operator argued that this constituted a breach of its rights under European Union law, including its freedom to provide services.

Slovakia Slovakia’s Ministry of Finance has announced plans to overhaul the country’s gambling legislation, including the creation of a new national regulator and licensing for online casino operators. The proposed law would legalise and licence online casino operators, who would be required to link their gaming systems with the new national regulator to optimise supervision. They would also be required to allow players to exclude themselves from gambling activities via a central register (see page 29).

Norway The Norwegian government has notified the European Commission (EC) of proposed changes to gambling regulations that would strengthen the prohibition on payment processing for unlicensed operators. The new rules were notified to the European Commission on 4 June and are subject to a standstill period ending 5 September. A public consultation on the proposed regulations was conducted in August.

L EG A L

EUROPEAN REGULATION

update

Lithuania The government of Lithuania aims to introduce new restrictions on gambling advertising. This will see operators only allowed to promote their brand, trademarks and the types of gambling offered. The new legislation also bans those under 18 from slot, bingo and totalisator arcades, as well as bringing in an age limit of 21 for land-based and online casino. The rules are scheduled to come into force from 1 January 2019.

warnings from political parties such as the Jungen GrĂźnen that site-blocking provisions would set a dangerous precedent for web censorship. The party had previously secured 50,000 signatures to force the referendum on 10 June, and 492,247 votes against the adoption of the Geldspielgesetz. Despite this, 1.33 million voters backed the new law. Switzerlandâ&#x20AC;&#x2122;s licensed land-based casinos will now be permitted to launch games such as poker and roulette online for the first time.

Switzerland Swiss voters have overwhelmingly approved new gambling legislation. The gambling law (Geldspielgesetz) was approved by 72.9 per cent of voters, despite GIQ Q2 REVIEW

The Netherlands The Netherlands government has introduced a range of new consumer protection controls as it looks to shepherd the

countryâ&#x20AC;&#x2122;s Gambling Act through the upper house of the Dutch legislature. This has seen the requirement for operators to have a physical presence in the Netherlands removed for companies based in the European Union or wider European Economic Area. Licensees will also have to hire a Netherlands-based responsible gambling expert, as well as contribute 0.25 per cent of revenue to fund research into gambling addiction.

Spain Spain has reduced the tax on iGaming operators from 25 to 20 per cent of gross revenue under its 2018 budget. It also slashed taxes in Ceuta and Mellia to enable competition with neighbouring Gibraltar. 33

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Blockbuster games While no branded games made it into the 2018 Top of the Slots rankings, there are many who maintain that licensed slots are crucial for attracting players. A selection of suppliers, brand licensing experts and operators explain why

GIQ Q2 REVIEW

But what exactly turns a popular film or THERE’S NOTHING LIKE a big name to character into a successful slot game for the draw crowds and create a huge buzz. In the iGaming industry? online casino world, licensed slots provide exactly that, with the appeal of Hollywood Bringing the games to life seemingly knowing no bounds. Stephanie Kupperman, director of business There’s an abundance of games now development at Creative Licensing Corporaavailable in the marketplace based on classic tion (CLC), works closely with slot developers films and TV shows, as well as famous charon the creation of these types acters. Of the most recent of games. Through every releases, Blueprint Gaming stage of development, from has brought the legendary “Licensed games the initial concept design to rock band Spinal Tap, from complement infinal stages with the inclusion the 1984 film This is Spinal house developed of music, CLC makes sure the Tap, back together in a very content as they final game is on-brand to a loud online slot game. For operators, these types appeal to a different particular film or TV show. “We are looking for develof games are proving to be audience, while also opers who want to celebrate a very popular with players, as driving revenues” classic title through a game, Andy Whitworth, head of conAndy Whitworth, GVC and not those who are looking tent and commercial manageto ‘re-skin’ an existing game ment (casino) at GVC explains: or make a game that is already in their pipeline “Licensed slots are an effective acquisition and fit a licence to it,” she says. tool for us. These instantly recognisable films Those thoughts are echoed by Jo Purvis, and shows grab the attention of users immedidirector of marketing and relationships at ately and keep them entertained for a lengthy Blueprint Gaming. “To make these types of amount of time.” games a real success, you have to build them from scratch and truly understand the film’s theme or character’s persona,” says Purvis. “We’ve enjoyed great success in previous years with licensed slots such as Ted and Top Cat, largely because everyone involved in the production process was well aware of what exactly was required to bring these games to life.” Many of the games that are licensed lean on classic titles, rather than capitalising on films that have just been released at the cinema, as Kupperman explains: “The licensed games that work best are those that sit at the intersection between being instantly recognisable to players and also having a nostalgic quality to them,” she 35

M A RK E T I N G BRANDED GAMES

“To make these types of games a real success, you have to build them from scratch and truly understand the film’s theme or character’s persona” Jo Purvis, Blueprint Gaming

says. “Players want to relive some of the joy and excitement they felt when they saw these films in theatres for the first time, and we feel if a game is done correctly it should be evocative of just that.” When Blueprint collaborated with CLC to transform the rock mockumentary film This is Spinal Tap to the online casino world, expectations were high for the UK-based studio to deliver a user experience which would appeal to its large fanbase. Band members David St. Hubbins, Nigel Tufnel and Derek Smalls all feature in this latest release, along with some of the film’s memorable moments, including a volume dial next to the reels which goes up to 11. Kupperman believes the gameplay Blueprint has produced makes the player feel like they are actually at a Spinal Tap concert. “Both the playfield and the surrounding art pay homage to the film in a modern and unique way,” she says. “Furthermore, they understand that the charm of This is Spinal Tap is in the nuanced jokes, and Blueprint was not shy about including such details that will surely delight fans. This game is a textbook on how to develop a licensed slot.” Purvis reveals the team at Blueprint believe they have done the brand justice with the new game. “This is Spinal Tap is a cult classic and we’re confident our adaptation of the film will appeal to the masses,” she says. “David, Nigel and Derek all feature as we take it up to 11 for a deafening experience.”

Long-term engagement Almost all prominent casino sites will have branded titles positioned prominently in their slot rankings. New licensed slots are promoted

heavily to catch customers’ attention, banking on the recognition factor to draw in players and ensure a successful launch. But these games tend to feature at the upper end of the rankings well beyond their initial launch date. For instance, Blueprint Gaming’s Ted, which was launched last year, consistently features in the top 20, highlighting its stickiness despite the abundance of new games entering the marketplace across the year. For operators, the longevity of these games is a huge plus point. “These licensed games are great at retaining players for the long term,” says GVC’s Whitworth. “Players are loyal to a brand they love, which keeps them coming back for more.” However, Whitworth is keen to point out that there is still room for original content and that there should be no fear about cannibalisation. “It’s important to have a diverse range of games available to players. Licensed games complement in-house developed content, as they appeal to a different audience, while also driving revenues.”

Bright future What does the future hold for licensed slots? With Hollywood churning out films faster than ever, it’s likely this genre will be a strong product for years to come. One area of caution, which all stakeholders agree upon, is that iconic films which may target children should not be considered for license. Instead, Kupperman believes there are a number of thrillers which could be converted into slots sometime in the future. “A few titles we would like to see converted into games include Escape from New York, Evil Dead 2, Mulholland Drive, and perhaps Nightbreed,” she says. Blueprint Gaming has its eye on developing more licensed material for the foreseeable future. Later this year, the studio is launching an online fruit machine-style game based on the popular Channel 4 TV show Deal or No Deal. “There’s huge potential for further growth in the licensed slots market,” says Purvis. “The demand is strong and there are many avenues for us to explore to provide more entertaining games based on famous films and TV shows.” With these licensed games proving to be a key revenue driver for operators, as well as an effective acquisition and retention tool, thoughts inevitably wander as to which blockbuster will receive the iGaming treatment next. n

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TOP OF THE

S LOT S

2018

CAS I N O FO C U S TOP OF THE SLOTS

Five years on from Gaming Intelligence’s first survey of the industry’s top slots, the 2018 edition reveals an increasingly diverse sector catering to an increasingly sophisticated player base. By Robin Harrison

CASINO FOCUS 2018

LEOPATRA HAS LOST her throne. The fiveyear reign of the queen of the 2013 Gaming Intelligence slot survey has come to an end, with that survey’s second-placed slot Starburst sitting atop the 2018 rankings. The NetEnt game is joined by another title from the supplier’s portfolio, Gonzo’s Quest in the rankings. These are the only two titles from 2013 to have made it into the 2018 list. Two things are immediately clear from the 2018 list. First, the slot industry appears to have grown more diverse. This year’s rankings are a mix of the usual suspects – Playtech, NetEnt and Scientific Games – alongside upstarts such as Big Time Gaming, Red Tiger and Yggdrasil. Stars Technologies, the games development arm of The Stars Group, also makes an appearance. NetEnt is the only supplier to have more than one title on the list. Second, big brands are conspicuous by their absence. The Disney-owned Marvel did not renew its licensing deals with iGaming partners, most notably Playtech. This has not led to a brand exodus. Familiar faces still battle it out on casino sites. Titles featuring Lara Croft, DC Comics characters such as Batman, Superman and even the Monty Pythoninspired Spamalot are heavily promoted by a range of operators. But none of these titles made it into the top 10, which was based on a survey of leading international operators. Only Age of Gods – Playtech’s in-house replacement for the Marvel titles, and the first in an ever-growing product suite – could be considered a branded game.

Increasing volume of everything SG Digital executive vice president of content, Ashley Sandyford-Sykes, says that one of the major changes has been “the increasing volume of everything”. “There are more games, more suppliers and more players than there ever have been before,” he says. “You’ve also got a variety of experience levels and size all around, including operators, suppliers and players.” Big Time Gaming chief executive Nik GIQ Q2 REVIEW

C AS I N O FO C U S TOP OF THE SLOTS

The GIQ Top Slots of 2013

1 2 3 4 5 6

leopatra C IGT Starburst NetEnt antastic Four F Playtech Rainbow Riches Scientific Games enie Jackpots G Blueprint Gaming/ William Hill Harry Trotter Blueprint Gaming/ William Hill

KISS 7 Williams Interactive Incredible Hulk 8 Playtech Gonzo’s Quest 9 NetEnt ucky Duck 10 LBlueprint Gaming/ William Hill

Robinson estimates that there are around 150 als move from operator to operator. There are slot studios jostling for space in the sector. no secrets in this industry as to which “Five years ago, we were looking at 15 to 20 suppliers produce the best KPIs, and evestudios,” he says. ryone wants those games as they make the This greater range of games does not necmost money.” essarily mean that all suppliers are maintainHowever, Playtech head of content ing high standards, Red Tiger chief executive Eran Gilboa points out, today there is less of Gavin Hamilton argues. a blueprint for what to do when developing He says that over the past five years there new games. There is less of a clear indication has been a general focus on “quantity, and less as to what themes work when developing new quality”, though admits there are a number of titles. Egyptian and Irish themes are widely exceptions. In Hamilton’s eyes, there are a numregarded as the most popular themes, and stuber of suppliers that survive on one smash-hit dios still churn out these titles. But only one title, or investors’ money, rather than Egyptian-themed title appears in the any great talent as a slot studio. 2018 top 10. “They will come and go,” he says. “People are looking for differSeparating these compaent things today,” Gilboa says. nies from the studios with a “There’s not one key element CASINO chance of long-term survival is that people want, but more FOCUS difficult, Hamilton continues. a desire for variety. Players 2018 This, however, can be a boon for want to choose a game that suits the industry. them.” “It’s a healthy evolutionary state Rather than playing each and of affairs, and you never know which every slot, players tend to have a clear of the small suppliers will deliver the goods,” idea of what they want from a game, whether he says. Suppliers have to continually try to it’s big wins, lucrative bonus rounds, or engagimprove what they offer clients, to avoid being ing themes. Sandyford-Sykes argues that this overtaken by both existing and emerging comcomes down to the “growth and maturity” of petitors. players over the past five years. Ultimately, he says, good studios are per“With more content available, players are petually in demand. better at learning and voicing their prefer“Look at Red Tiger, Big Time Gaming, ences,” he says. Thunderkick and others that emerged from nowhere very quickly. If you make great Responsible branding games, every casino will take them,” HamilThis could be a sign that there is less emphasis ton explains. “News travels fast. Professionon creating so-called ‘blockbuster’ titles, often

CAS I N O FO C U S TOP OF THE SLOTS

Vikings Go Berzerk Yggdrasil Gaming Launched: 2016

What they say: Vikings Go Berzerk was a perfect mix of gameplay, theme and maths. With the first in the Vikings series, Vikings Go Wild, we established a set of characters and game mechanics which proved popular. Vikings Go Berzerk upped the ante, perfecting the mechanisms supercharging the graphics and introducing new features. It was a case of building upon a previously successful game with something that still felt fresh.

using well-known brands, with focus shifting to developing games with long-term appeal for smaller groups of players. As a result, games based on high-profile brands are perhaps not the big draw they once were. Jeff Cabral of Stars Technologies, The Stars Group’s slot development studio, says that while the familiarity of the brand can be a useful acquisition tool, there is arguably more pressure on the team to make as strong a game as possible. “[Brand] alone does not make a game popular or ensure its long-term success,” Cabral says. “I think it depends on an operator’s player base. Some players respond to branded games more readily than others.” He says that PokerStars Casino

players are, in fact, “a little indifferent” to the branded content it offers, preferring in-house content. However, Hamilton adds that there is “definitely” a place for branded titles, “provided – most importantly – the developers have been careful to ensure they appeal to the right audience.” “We have a strong responsibility to ensure that games are appropriate and correctly targeted,” he adds. Hamilton is alluding to an ongoing crackdown on content that may appeal to minors. Anti-gambling campaigners in the UK are working hard to push this issue into the foreground, and it appears the UK Gambling Commission has taken up the cause. This, of course, does not just affect

Stars Mega Spin Stars Technologies

Launched: 2017

What they say: Stars Mega Spin is the second in-house slot Stars has created. It’s part of our Mega Jackpot series of games, which has a minimum $1 million dollar linked progressive jackpot. While this is a great draw in itself, when we sat down to develop the format we decided we wanted this game to be a fresh take on a slot with some classic symbols. We liked the combination of classic slot iconography and a galactic space theme, which often appeals to a wide range of players. We did take some inspiration from classic land-based slots for the theme and injected some of the space feel to make it more fun and visually interesting.

GIQ Q2 REVIEW

branded content – any title that may seem too child-friendly could be under threat. Robinson believes that any theme can avoid this trap “as long as it’s done with an adult audience in mind”. “[I] don’t think the industry can trade on fantasy stories unless they make them darker or more adult-orientated,” he explains. “I see little future in making cartoon slots that appeal to minors, and the nostalgia factor is wearing a little thin with the likes of the Flintstones and Danger Mouse, as most of the cartoon houses are repurposing these properties for today’s networks,” he says. “Themes are going to change for the good of the industry and homepages will certainly be looking very different in the years to come.”

“Diversity is key as content is becoming more commoditised. Innovation and agility will play a big part in who will survive in the short and long term” Therese Hillman, NetEnt 41

C AS I N O FO C U S TOP OF THE SLOTS

Merlin’s Millions Superbet SG Digital

Launched: 2012

What they say: Merlin’s Millions is built on a great game engine with great art and great animations – they’re the building blocks of any good slot. The brand has done exceptionally well in all markets over a long period. The game originally came out in Flash, then we did a mobile version, and more recently we refreshed the art to make it high definition. A key factor is that it’s one of our first titles to feature the Superbet mechanic, and we’re

now seeing that element being adopted by other suppliers. Superbet essentially allows players to adjust the volatility themselves, adding in more wilds and tweaking the game to their preferences. Merlin’s Millions, packed with magical aesthetics and paired with the Superbet mechanic, was one of the first to let the wilds multiply up the wins. Maths is the heart and soul of these games, and Merlin’s Millions has that.

Niche appeal

“Slots are all about maths. Creating exciting payout distributions in different areas of each game is what makes them fun” Gavin Hamilton

So how does an aspiring developer or studio in need of a hit decide on a theme for its games? NetEnt chief executive Therese Hillman says the company looks to find niche groups to target, as well as creating titles that appeal to those in newly-regulated markets and meeting players’ needs as they mature. “This means diversity is key as content is becoming more and more commoditised,” she says. “We are also seeing a lot of saturation of specific game mechanics and ‘me-too’ products as the competition increases. Innovation and agility will play a big part in who will survive and who will fail in the short and long term.” This focus on diversity is reflected in the range of different themes in the 2018 top 10. Few of the games could be mistaken for another on the list. Hillman says that this is due in part to regulation. With legislation coming into force in more and more jurisdictions, there is a more fragmented market for suppliers to target. This means cultural nuances are more important from market to market. The one-size-fits-all approach of historically popular themes will not necessarily offer the same results. For example, Hamilton says that Swedish players prefer “cleaner games with specific mathematical models, simple features and crisper colours”. Sandyford-Sykes adds that this is partially due to Scandinavian players maturing as well as cultural preferences. But even coming to such a conclusion on general Swedish player preferences is not easy. Hamilton notes that it took a long time for Red Tiger to figure out the maths profiles that characterised the country’s slot players. The English, meanwhile, love “big multifeature games,” Hamilton continues. “This inevitably has a meaningful impact on theme,”

he says. “You need to fit one to the other.” Sandyford-Sykes adds: “Spain is different. The market demographic skews younger, and those players tend to prefer softer games. Frequent-win opportunities keep those players engaged.” Player preferences do change from region to region. While operators reported a variety of titles that appeared in their top 10 slots, many appeared across a number of different lists, despite being made available to different markets and different players with different preferences. The games were the same, but the order was different. Sandyford-Sykes argues that this is down to different game features appealing to different players. For example, he says, the Superbet mechanic that was in SG Digital’s Merlin’s Millions helped make the game a hit in New Jersey, as it was unique among players, but also that the frequent opportunities to win appealed to Spanish customers. Localisation can improve a game’s performance in target markets, but it’s the titles that have something for a range of different preferences that tend to last. This may all be rather disappointing for those hoping for a cut-out-and-keep guide to making a blockbuster game. After all, the core message here is that there is no guaranteed strategy. Maths, however, is key, Hamilton says. “Slots are all about maths. Graphics and sound are the sizzle, not the steak,” he says. “Creating exciting payout distri-

CAS I N O FO C U S TOP OF THE SLOTS

butions in different areas of each game is what makes them fun. “Players want to be surprised, to enjoy random acts of generosity and to anticipate the unknown.” “This is about game play, but it’s all driven by maths. The features are a result of the maths,” he continues. “They are inherently inseparable. Look at the amazing three-reel, one-line, no-feature games. Some of them perform really well, even when they have the most minimal graphics and audio.” Robinson takes up the food analogy: “Slots are like recipes. They need to have a good balance of ingredients. “Yes, of course, the code, graphics and sound are tremendously important, but if we were talking Colonel Sanders, the maths is the 11 herbs and spices that make up the secret seasoning.”

Close collaboration

Hillman says that ultimately each launch is a leap of faith: “The brilliant thing about this industry is that you can never really know. A game goes out and it goes crazy, but the fun starts when you start to analyse why, then build on it for the future.” Playtech’s Age of the Gods is a worthwhile case study. The game was always designed to be a smash-hit, and a replacement for the supplier’s wildly successful Marvel titles. Let’s not forget that two of those games appeared in the 2013 top 10. The plan was always to use Age of the Gods to kick off a new franchise. “We took the best parts of games that we knew players liked and performed strongly,” Gilboa explains. “We had to give something to the players that were losing the Marvel games, to help them adjust and engage with new titles. We couldn’t take the chance of coming up with a completely new, innovative idea, for which customers needed training to play – we needed something that was familiar. “Another thing we did was to work very closely with licensees to help

Age of the Gods Playtech

Launched: 2016

What they say: Age of the Gods was created by the Origins studio, which was Playtech’s original games studio. Origins has been creating games for more than 10 years and is Playtech’s most experienced studio. When we

GIQ Q2 REVIEW

CASINO FOCUS 2018

Wolf Gold Pragmatic Play

Launched: 2017

What they say: Wolf Gold is a great combination of an exciting base game, with two features – a stable one, the Money Respin feature and a more volatile one, the Free Spins. The fixed jackpots are ever-present at the top of the reels, and the randomised amounts on the special symbols reinforce just how much you can win, relative to your bet,

them understand the game, as well as running the biggest promotion in Playtech’s history at the time,” he continues. “It is important to work with customers to ensure the game is launched successfully.The licensee must understand the game, its key performance indicators, and everything about it.” In short, a key variable of a game’s potential to succeed concerns the way it is marketed and promoted. It is no longer a case of simply rolling out the title and hoping it does well. Suppliers will continue to work alongside the operator to ensure a game is being promoted and marketed properly.

created Age of the Gods, we were looking to mitigate the loss of the Marvel brands, and decided to create our own brand. From the start the plan was to develop a series of games. We concentrated all our efforts – art, sound, marketing, development – on one clear target: creating a blockbuster title that would be the first of a hit suite of games. All the focus was on the maths side to ensure it offered the same

increasing player dwell time. In the end, the game can lead to very large pay-outs through any of the features. The game design is what keeps players playing and coming back to the game to try their luck again. However, the lasting appeal is also due to the graphics, sound and overall design. The design is neutral but polished, and the soundtrack creates a world players want to be part of. All combine to give a great experience, with ups and downs that players can engage with.

Elsewhere in this issue, PokerStars Casino chief Bø Wänghammar argues that Starburst’s success is due in part to the fact it was heavily promoted by operators (see page 56). With a simple theme, generic brand and uncomplicated game mechanics, it was a useful title to use for bonus and free spin promotions and appeal to a range of players. This, in turn, helped it build a following, and remain so popular that it could top the slot rankings six years after its release. Customer acquisition strategies may be moving away from bonuses and free spins, but this initial phase allowed Starburst to gain traction. Things have moved forwards, with sup-

style of play as the Marvel games. I must admit that when we started I was not 100 per cent sure it would work, but it certainly did. Once it took off it really changed the market. Now Age of the Gods is part of a family of games across all verticals, it has become a brand. I think this has boosted the original title in the series, as it is seen as the ‘father’ of all Age of the Gods-branded titles.

C AS I N O FO C U S TOP OF THE SLOTS

pliers such as Red Tiger and Yggdrasil now looking to act as marketing partners as well as games providers. “It isn’t only about the games,” Hamilton says. “Building the marketing tools and creating strong technology to integrate them to external systems are also critical. We focus on this just as much as we do the games.” This initially started with the launch of tournaments, now a common feature of realmoney and social slots. Solutions are becoming increasingly sophisticated. Yggdrasil, with its Boost series of promo-

CASINO FOCUS 2018

tional tools, allows players to share big wins on social media with the Brag feature, complete objectives for bigger cash prizes using Missions, and even enter raffles. “It is important to stand out today in an extremely competitive environment, and offering promotional tools such as Boost helps us achieve this,” Yggdrasil chief product officer Krzysztof Opałka explains. “We realised early that designing good games is not enough in the current competitive landscape. “Boost tool usage was up 200 per cent in Q3 last year, which shows how important a part of our product mix it is. It is this focus on engagement and retention that has been behind Yggdrasil’s success.” Red Tiger is something of a pioneer in this space, with its daily jackpots product offering players a guaranteed payout each day. This has been complemented by its Smart Spins tool, where operators can set parameters to trigger free spins, helping avoid churn and avoid players lapsing. Just a few years back such tools would be provided by third-party marketing and retention specialists. Now they are part of the game development process. Hamilton says this is only as effective as the operators make it. He picks out William Hill as having been particularly adept at utilising the marketing features to ensure success.

Making it personal Hamilton brings up an important issue. As the ultimate point of sale, the operators play a major role in a game’s success. This makes the positioning of titles on a casino site especially important.

Gonzo’s Quest NetEnt

Launched: 2010

What they say: As with all successful products, a combination of many factors attribute to its success, and Gonzo’s Quest is no different. If we were to reflect on the game’s design specifically, then there are obvious things our players fell in love with. Firstly, the game was first to the online market with an avalanche mechanic and win multipliers. We did what we do

“While marketing can give a short-term boost, it doesn’t always ensure the long-term success Stars Mega Spin has achieved” Jeff Cabral, Stars Technologies “At the highest level, slot positioning is massively important,” Sandyford-Sykes says. “Something like 50 per cent of the activity will take place in the top eight promoted games. That’s a huge indication as to the importance of positioning.” He says there are two layers to positioning. First, the operator and the casino management team decide where content should be placed to ensure it succeeds. Then it’s down to the players.

best here, which is to lead with innovation. Secondly, the game is built on the anticipation of those stacking Win Multipliers, the free-falling new symbols and big wins. The game connected with the players’ need for excitement – which made Gonzo such an endearing and positive character, alongside the exciting gameplay. Thirdly, there’s a great sound package and groundbreaking, timeless 3D-quality graphics – both of which contribute towards a game people enjoy and stay loyal to. We genuinely believe that the acquisition quality of Gonzo, and indeed our other beloved characters, cannot be underestimated!

C AS I N O FO C U S TOP OF THE SLOTS

Dragon’s Luck Red Tiger Gaming

Launched: 2016

What they say: Dragon’s Luck is a highly engaging casino slot with exciting winning symbol anticipation and upgrades. The game is one of Red Tiger’s top performers in all markets. Exquisitely designed, with superb animations and thrilling mathematics tuned to keep the VIPs coming back for more, the game leads players on a Chinese adventure of luck and fortune, delivered in beautifully presented HTML5 graphics.

“With operators moving to dynamic website design, you see players effectively voting for the games to be higher up by playing [these titles],” he continues. “The average player only plays two to three games in each session, and you can almost guarantee that the first they play will be the first they see. It’s in the operators’ interests to have the best games prominently positioned, as it’s financially proven to succeed. Chart toppers are there for a reason.” Itai Zak, chief executive of casino operator GoWild, says each company has its own casino management strategy, but there is an increasing focus on personalisation. Using a proprietary personalisation engine, the players’ activity is logged. This, in turn, allows GoWild to populate each customer’s homepage with games they enjoy – much in the same way as YouTube or Spotify. “As soon as you log in, we know what you have played recently, what you play regularly, and what games are similar to those you enjoy,”

Zak explains. “We try to instantly present you with what will appeal to you, without you having to search for it.” He says that this does tend to mean that the major titles are the ones positioned highest. “We start with the big games, then diversify this with the recommendation engine. Usually, everyone enjoys the big titles,” Zak says. “When you suggest different, but similar, games to them, players tend to give these others a try. “We push and promote the main titles like everyone else, but we also try to showcase niche games to players.” The biggest titles will still have an advantage, however: “We try to book positions,” Zak continues. “So first might be the most popular, second the one you play regularly, third one you won big on and fourth one we’re recommending to you.” But Sandyford-Sykes adds that while position is important, quality is what ensures a game’s success. “The industry needs to understand that it makes initial decisions about posi-

tion, but it’s up to the players whether a game remains on top. “The standard operator sees hundreds of titles a month. Only a few of these get a top spot on the slot menu. Only the best stay there.” So how can operators ensure they are launching games that will stick around this top eight position? Perhaps the most popular way has been to throw out a range of titles to see what sticks. Where operators would once take the bulk – if not all – content from a single supplier, they can now take content from a variety of suppliers via content integration platforms. The likes of SG Digital have been able to offer a huge array of content to their clients from a single integration. “[We] think the operators need an awful lot of choice,” Sandyford-Sykes says. “It’s not just about content, it’s how you package it up and work with the customers who rely on that content for revenue. “Operators may work with lots of suppliers, so with an aggregation platform it’s not just being a one-stop shop but also making the user experience as simple as possible.” Hillman is wary about describing content aggregation platforms as revolutionising the slot supply space, but she says they have been important in reducing the burden of costly integrations, and helped small studios bring products to market. “This has contributed to the content saturation levels but also has shaken up the industry a little and provide better offers to players – we welcome this to keep us, as an entertainment industry, relevant,” she says. Hamilton, however, is unconvinced. Red Tiger is becoming increasingly renowned for quick integrations, and has even launched an automated integration portal, where operators integrate with an RGS

Book of Dead Play’n GO Launched: 2016

What they say: Book of Dead is a spellbindingly exciting slot that players won’t be able to tear themselves away from. Book of Dead boasts best-in-class graphics, sounds and animation, and we’re sure players can’t wait to see what everyone’s favourite slot explorer, Rich Wilde, has in store for them in his latest magical adventure.

CAS I N O FO C U S TOP OF THE SLOTS

to fast-track the process. “[Do you want to] go direct to clients, to ensure they get your latest marketing tools and other promotional technology, or to depend on someone else for that?” “However, there are some great companies out there that only want to make games and have no interest in building platform technology,” he adds. “I’m sure they have far fewer headaches, so I do understand the appeal. It depends on what you want to deliver as your business model.” Operators looking to target players with a sniper rifle rather than a blunderbuss often plump for bespoke development, where they work with suppliers to create exclusive content. “At SG Digital, we’re using our scale to build games directly with customers to suit their player profile. Our expansive portfolio holds plenty of opportunity for tweaks and customisation that can keep players playing,” SandyfordSykes says by way of an example. “We’ve got that scale and aggregation and can do much more directed deliveries. It’s not just producing the best games, it’s ensuring they’re the right games for the right operators and players.” Opalka says that the role of the games studio now goes beyond simply designing and producing slots. His company has started the YGS Masters programme, through which independent studios develop content on the Yggdrasil platform. “[We are] progressing from a standard content supplier to a supplier that can provide platform, different verticals of casino games, and promotional tools will perform better than those that solely develop games,” he says.

CASINO FOCUS 2018

Bringing it home Some operators are going even further. The Stars Group, for example, has taken matters into its own hands by developing titles in its in-house studio. The second game rolled out by Stars Technologies, Stars Mega Spin, is the only exclusive title to make the top 10. It is the second title, after Millionaires Island, in the operator’s Mega Jackpot series, which comes within a minimum USD$1m linked progressive jackpot. The wild success of PokerStars Casino, now one of the industry’s largest online casinos, with minimal marketing expenditure, has been widely noted. It is becoming clear that one of the key drivers of this success has been its proprietary games. GIQ Q2 REVIEW

Bonanza Big Time Gaming

Launched: 2016

What they say: Bonanza is a next-level product. With the combination of Dual Reaction and MegaWays, it’s taking huge strides forward in both player expectation and

“Stars Mega Spin is one of the most fullfeatured Mega Jackpot games available online,” Jeff Cabral, head of Stars Technologies’ premium slot studio, says. “The game has two interactive bonus rounds, free spins, the big symbol feature, the biggest starting progressive jackpot in the online casino industry at $1m, and a high level of polish to all aspects. “This is an HTML5 game, which can be challenging to make ultra-rich visually,” he explains. “We overcame that by creating the majority of the game’s animations programmatically. This allowed us to pack loads of animations and effects into the

“We try to instantly present you with what will appeal to you, without you having to search for it” Itai Zak, GoWild

payout potential. Our MegaWays mechanic first came to market over three years ago in Dragon Born, which introduced the concept of having more than 100,000 ways to win on a single spin. The addition of Dual Reaction to what was already a hugely successful mechanic has cut through the market like a hot knife through butter.

CAS I N O FO C U S TOP OF THE SLOTS

symbols, bonus rounds, and even transitions between features. “All this combined has proven to engage and entertain players. It’s a huge success.” A key factor in PokerStars Casino’s success has been the success of cross-selling poker and sports betting customers into the casino. This is also true of Stars Mega Spin, Cabral says. But he says that even when the game is not being heavily promoted to players, they continue to seek it out. “We add top titles from all the major third parties every month and market these to our players all the time,” he says. “But while marketing can give a short-term boost, it doesn’t always ensure the type of long-term success that Stars Mega Spin has achieved.” Cabral argues that inhouse development is the future. Aside from reducing costs on revenue share agreements, he says that good operators will know their customers. This provides a ready-made template for developing new games. “We have a unique player base comprised mostly of poker players who are also mostly male, and we have a great deal of visibility into the sorts of bonuses and features that already appeal to that existing player base,” Cabral explains. “We can make the game titles we think our players will enjoy based on our insight into player preferences and behaviours, and build up a collection of exclusive titles over time.” This, in turn, helps create new brands for the business. For an operator running a number of brands, this provides an additional differentiating factor from competitors. In Cabral’s eyes, the lines between B2C and B2B are becoming increasingly blurred. With Red Tiger and Yggdrasil among those providing a range of promotional tools to help operators ensure their games are a success, this has already happened on the supply side. Operators developing games in-house are nothing new, but will become a more important part of content strategies going forward, Cabral argues. He says that in-house studios allow operators to ensure they can offer genuinely unique content – something he feels has been made more difficult by the rise of content aggregation platforms. “B2C companies started developing their own exclusive titles to save on revenue

CASINO FOCUS 2018

GIQ Q2 REVIEW

Starburst NetEnt

Launched: 2012

What they say: When Starburst was launched in 2012 it was a perfect storm. We had massive support from our customers, less competition and a brilliantly executed game design. Starburst has a broad appeal due to the simplicity

share, but also to differentiate their B2C operator brand,” he says. “I think this trend will carry on. “Operators will continue to take B2B thirdparty content, but also keep developing their own in-house games as a differentiator. It’s the best of both worlds for us and our players.” Elsewhere in this issue (see page 66) Greentube chief executive Thomas Graf argues in favour of companies being active in both the B2B and B2C sectors. After all, the Novomatic subsidiary has successfully licensed games to customers while offering them via proprietary

“Operators will continue to take B2B third-party content, but also keep developing in-house games as a differentiator” Jeff Cabral, Stars Technologies

of its brand, aesthetic and mechanic. The feeling and excitement you get when that stacked wild appears is unforgettable. This is a phenomenon we have seen throughout the gaming industry as a whole, both land based and online, and it comes down to trust. Players trust that Starburst is going to give them the best experience and the most fun. These ‘old favourites’ have found a home in our players’ entertainment repertoire.

online and retail businesses. While the differentiating factor may be lost, the hybrid B2B and B2C model has been wildly successful for the business. Who’s to say other operators won’t look to follow in its footsteps? This sheds a light on how much potential there is in the slot sector. The diversity of the 2018 top 10 shows the dominance of the major suppliers has been broken – in part due to their own efforts through content aggregation platforms – creating a more diverse industry. It feels as if there is already a shift, especially if Cabral’s prediction rings true of operators bringing more game development efforts inhouse. This turns the onus back onto the suppliers in the top 10, and the wider industry, to ensure they can remain relevant and attractive to these companies. The days of throwing everything but the kitchen sink at players are being phased out in favour of more targeted approaches, and only those that adapt accordingly are in with a chance of making the next iteration of these rankings. n 49

C AS I N O FO C U S INSTANT WIN GAMES

in an

Instant Instant win games have long enjoyed success in the lottery sector, helping drive customers online with a digital version of the familiar scratchcard concept. Now they are emerging as a popular product for private operators, writes Macarena Rodicio INSTANT WIN GAMES were originally a preferred product for lottery operators. Now commercial operators are joining the party, with many major online casinos significantly increasing the range they offer in recent months. William Hill was perhaps one of the first to highlight this emerging trend when it noted that demand for instants had “grown exponentially in recent times” after signing a deal with IWG in December 2017. Identifying just how much this demand has grown is difficult. In the UK, the Gambling Commission does not break down instant win revenue from the broader casino games category. In June, The National Lottery operator Camelot credited record digital sales of £1.65 billion in its 2017-18 financial year to “the best-ever performance by [its] range of online instant win games”. Camelot, however, did not provide an exact figure for online instant win sales, beyond saying that combined sales of in-store scratchcards and online instant wins amounted to £2.83bn for the period. Perhaps the clearest indication of the vertical’s success is a drive by leading operators to expand the range of instants they offer, and the growing visibility of a number of dedicated suppliers in the vertical. Instant wins now have a dedicated tab on most major online casinos, including bet365, William Hill and Ladbrokes. Last year, LeoVegas celebrated its fifth anniversary with an exclusive instant win title, Be the King, created in partnership with Gamevy. There are a number of key benefits for operators in directing customers towards instants. Product innovation now delivers a far more engaging experience, which some would 50

even argue could compete with slots. However, unlike the leading casino product vertical, return to player tends to be considerably lower. There have also been signs that instants are a useful product for cross-sell, and can bring in new players that prefer a ‘softer’ gambling product. “I believe the popularity stems from familiarity due to the lotteries and corner store sweepstakes,” says Warren Steven, senior director of product and operations for online gaming at Golden Nugget. “Online scratchcards have been around since early 2010, which simulate the concept of scratching of a card to unveil a result. “The synergy with the casino player is that for a small bet you stand a chance to win big with the added value of the speed of online gameplay,” he continues. “This delivers a similar experience to the instant gratification slots players enjoy.”

CASINO FOCUS 2018

OUT OF

OF THE TOP PERFORMING LOTTERIES

That’s right – of the 25 top performing lotteries in the world for instant game sales,* Scientific Games provides games to 24. That’s not coincidence, that’s cause and effect. When you’re the best at something, as these lotteries are, you look for partners who will not only maintain your success but help you achieve the next level of success. Real performance based on real partnerships – that’s Scientific Games.

C AS I N O FO C U S INSTANT WIN GAMES

Not slots

“The beauty of instant win games is that they are very flexible. Games and themes are easily customisable” Rhydian Fisher, IWG

Instant wins took off as an online product that lotteries could offer within regulatory frameworks that prohibit them from offering slots. Camelot launched an online instant win game, Cash Couples, as part of its digital offering back in 2004. Today, commercial operators are finding there are also substantial benefits to offering them alongside slots as a complementary product within a wider casino offering. “Instant win games offer something different to slots,” says Rhydian Fisher, chief executive of dedicated instant win games supplier IWG. “Players tend to engage with them because of the fun factor more than anything else. “They provide near-instant gratification, something which really resonates with millennials, while they also work really well across mobile devices for those who want to snack on content while on the go,” he continues. “They also have a much lower return to player (RTP) than typical slot games. The average slot has an RTP of around 94.5 per cent, but with instants it is likely to be around 85 per cent, and even as low as 50 per cent in some lotteries.” Aside from RTP, the underlying mechanics of instants are a million miles from those of slots. However, the presentation layer tends to be simpler, allowing for greater customisation and faster development times. The trade off, according to Steven, is that instant wins’ lower RTP means slots tend to generate a greater average turnover. What instant wins do offer is an opportunity for operators to offer more bespoke content without the need for the long development times usually associated with exclusive slots.

This provides a cost-effective way to differentiate a casino offering from a competitor’s. “A key factor is that the simple but engaging mechanics that power instant win titles make them highly configurable to the demands of individual operators,” says Andy Jarrett, CEO of Twelve40 Group. “Instant win games naturally lend themselves to being bespoke, and providers can work closely with their partners to provide the right games to empower their strategic ambitions and ongoing growth strategies. “A game’s look and feel can be adjusted to suit the target market, and, crucially, pay tables can be easily designed to meet the objectives of the operator and can vary a great deal, depending on the style of game play required.” Fisher at IWG agrees that “the beauty of instant win games is that they are very flexible”. He identifies the speed at which the titles can be reskinned as a particular advantage when operators want to quickly roll out topical content. “Games and themes are easily customisable, depending on an operator’s requirements,” he says. “This gives them the option to offer a portfolio of content they know will appeal to their customer base and drive engagement. We can reskin games and offer seasonal graphics to reignite interest among players very quickly.”

Crossing the line Aside from flexibility, perhaps the primary appeal of instant win games to commercial operators has been their strong cross-sell performance. Instants tend to perform well among softer audiences, with a number of operators

CAS I N O FO C U S INSTANT WIN GAMES

cross-selling into them from bingo as an alternative to slots. One of IWG’s first major deals with a commercial operator was with Mecca Bingo in 2016, while the provider has also struck deals with 888 Bingo and Sky Bingo. Fisher says the cross sell is one of the “key reasons why so many commercial operators have been expanding their instant win offerings”. He adds that the game mechanics are recognisable and popular among casino players, increasing time spend on the site and boosting customer engagement. Jarrett, meanwhile, emphasises that the products exhibit “great results when it comes to converting players into other verticals”. Cross-selling both into and from sportsbook has also been an area where instant wins have performed strongly. The games tend to perform well among sportsbook players with little casino experience. “That the themes and gameplay can be tailored efficiently is a major advantage when it comes to their cross-selling potential – for example, football-themed games can be easily slotted into an operator’s offering to deliver higher rates of sportsbook conversion,” Jarrett says. “By way of example, this is true of our new game Lucky Shootout, which sees players select their favourite team before trying to beat the keeper with six shots. An engaging game in its own right, it was also designed with sportsbooks in mind,” says Jarrett. Fisher says that the need for products with cross-vertical appeal was sparked by a trend that emerged two years ago. Around 2016, a number of previously casino-only operators began expanding into the sportsbook vertical. Therefore they required a product that could bridge the gap for customers. “Before the European Championships in 2016, we saw a number of specialised casinos introduce sportsbooks for the very first time, and since then, much of the focus has switched to providing a portfolio full of rich and varied content.” IWG have looked to capitalise on this opportunity with the launch of a football-themed instant win game featuring Belgian football star Eden Hazard. “The cross-sell opportunities during [a major sporting] tournament work well for table games and slots, and are equally effective for instants,” Fisher says. “Leaning on such a well-known footballer obviously helps to attract players in the first place, but the game means that those already enjoying the World Cup could play something different when matches aren’t taking place.” GIQ Q2 REVIEW

The future in an instant

instants will be in a position to challenge the Demand for instant wins continues to grow supremacy of slots. across the world, with Fisher reporting Steven argues that the games tend to be growth among both European commercial overshadowed by slots: “[The] quality of the operators and US lotteries expanding their games is generally lacking, and they are noronline portfolios. mally overshadowed by the video slots. As “We’ve seen huge growth in Europe operators, we prefer the quick wagering slots recently, with more top-tier operators expandover the slower-play scratchcards and we also ing their product portfolio to include instant see a much higher average bet on slots versus win games for the first time. Even those instant win games,” he says. who have predominantly had a sports In short, if they are to ever compete with betting focus have realised the potential of slots, developers will need to put the same this vertical and tap into additional revenues,” time and resources into creating instants as he says. they do slots. Jarrett believes this process is “Across the Atlantic, instants continue well underway. to thrive as the North American landscape “Instant wins have grown to be far evolves and more lotteries launch online more than a simple translation of scratchcards offerings for the first time. These games, into the online arena,” he says. “There backed with eye-watering jackpots, are now many more opportunities can be an effective acquisition for players to drive their own tool for new entrants into experience through addithe online lottery market, tional layers of gameplay. as they have attractive “Different players sums of money up for prefer different styles grabs and are easy of g a me s , a nd we fo r n e wc o m e r s t o are seeing in-game understand.” bonus rounds extend However, not eveto instants, which is 2018 ryone is convinced that something that has been inspired by slots.” Progressive jackpots, an increasingly popular feature of slots, are also moving into the instants arena. IWG recently introduced an insured jackpot mechanic, Rollover Jackpots, to create larger prize pools for individual operators and lotteries. Jackpots will range between £5 million and £25 million, putting jackpot instants into a similar category as progressive slots or lottery betting. Then there are more general improvements across the product: “Technological advancements mean the g raphics and general gameplay have improved greatly, particularly in the last couple of years. We’re really focused on driving innovation in the instant win sector and improving user experience,” says Fisher. With the US online market beginning to open up, instant wins may well prove a popular entry point, given the market’s familiarity with them. Instant win games remain a small part of most online casino product mixes. But their strong cross-selling performance and ability to reach audiences turned off by slots make them an increasingly powerful tool for operators looking to boost revenue in Andy Jarrett, Twelve40 Group an instant. n

CASINO FOCUS

“Different players prefer different styles of games, and we are seeing ingame bonus rounds extend to instants”

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C AS I N O FO C U S POKERSTARS

Shooting for the Stars 56

CAS I N O FO C U S POKERSTARS

PokerStars Casino continues to grow at a frightening speed but progress is not nearly as quick as casino chief Bø Wänghammar would like, for his company or the industry THE STA RS GROU P saw casino and sportsbook revenue grow 45.5 per cent yearon-year in 2017. This sort of jump in revenue is usually reported by up-and-coming operators, but for The Stars Group this represented a leap from USD$264m to $384m. At a time when most companies see revenue growth slow, it is seeing acceleration at a stunning rate. By way of comparison, casino revenue grew four per cent at 888 from $282.1m to $ 293.9m in 2017. William Hill’s gaming revenue for the same year (including poker revenue, which is probably as small as Stars’ sportsbook revenue) remains marginally larger than Stars at £308.6m ($415m), but grew just 12 per cent last year. LeoVegas continues to grow rapidly, up 53 per cent year-on-year in 2017. And while it remains smaller, with revenue of €217m ($257m), it is closing fast. If the revenue growth remains more than satisfactory – and enough to secure the GIA Casino Operator of the Year award for 2018 – PokerStars Casino managing director Bø Wänghammar reveals some frustration at the pace of change within the product. “In the UK and dot.com markets we are close to having the full portfolio, but the flow of new games is very important. In other jurisdictions, such as Spain and Italy, we have still a way to go before we have a leading games offering, combined with our inhouse bonus tools. In Italy we have made significant progress lately, and we have a massive content launch plan in Spain in order to catch up with competitors, and so far we only have table games available in Portugal.”

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“I don’t think Starburst would be so successful if it came out today. It is a legacy brand” Bo Wänghammar, PokerStars Casino Games are the reason we are talking today. Our survey of the internet’s most popular slots (see page 38) revealed NetEnt’s Starburst to be top of the heap. Starburst is one of PokerStars Casino’s best-performing games, but Wänghammar is not wholly enamoured with the NetEnt classic. “Starburst is a brand. I think it benefits hugely from coming out when it did. I don’t think it would be so successful if it came out today. It is a legacy brand,” says Wänghammar. He believes there are plenty of games with similar mechanics and similar volatility that are better games. “It’s just a classic,” he continues. “And because it’s a classic it gets used in a lot of promotions.” He admits that it is a good acquisition tool because of its low volatility and high frequency of wins, but its status as a classic ensures it has become part of a virtuous circle of promotion and popularity. 57

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CASINO FOCUS 2018

Fighting mediocrity If Wänghammar betrays a flicker of irritation at the pace of change at PokerStars Casino, his real frustration is with the wider casino industry. “There are a few classics that keep on performing from Playtech and NetEnt, but the pace of innovation in the studio industry has been very low during the last decade. A friend of mine recently returned to the casino industry after some time away and was shocked because it’s the same games as when he left.” He attributes this lack of innovation to the fact that online slots are incredibly successful and incredibly profitable. “[Some] of the major studios have fallen asleep,” he continues. “Now we’re seeing a number of studios coming up, such as Yggdrasil and Red Tiger, which are actually innovating to some degree. It’s not a massive pace of innovation in the slots industry but it is there and it’s not coming from the major studios.” The Stars Group is yet to integrate with Yggdrasil but the supplier’s success is revealed by the presence of Vikings Go Berserk in our top 10. The Swedish supplier is intent on continuing to shake things up. In the week following our interview, Yggdrasil launched Sonya Black58

jack – its first table game with 3D graphics and customisable tables. For Stars, table games are slightly more important than they might be for other casinofirst sites. It varies by market, but around 15 per cent of casino revenue comes from table games, 25 per cent from live dealer, and 60 per cent from slots. Wänghammar remembers a minimal ratio of table games players from his time as chief executive of Mr Green, although he admits it will have changed in the intervening years. However, poker players like table games. They like poker-inspired games, blackjack or live dealer titles. Four years on from sister brand Full Tilt’s launch of casino games, PokerStars Casino is still dominated by poker players. This means The Stars Group attracts more casual gamers, who like lower-volatility games. In this regard, Wänghammar says, Stars is quite similar to Sky Betting & Gaming, which it is acquiring in a $4.7 billion deal. While Stars is poker-first and SkyBet is sportsbook-led, both have a higher volume of casual casino customers than many competitors. Players on casino-first sites generally prefer higher volatility slots.

“Our customer bases are very loyal to the main brand,” explains Wänghammar. “Like Sky, we have a very high proportion of players who only play with us. This is quite unusual. Most customers have four or five accounts. The name of the game is making yourself the primary site.” With the Sky acquisition still winding its way across the desks of bankers, lawyers and regulators, Wänghammar has not had the opportunity to get to know the Sky team or its operations yet. Observing its operation from the outside, he believes there is one thing everyone can learn. “Everyone in the casino industry is chasing the high-volume players, the VIPs. Everyone thinks low-value players are a failure. But Sky has figured out how to serve so-called lower-value players,” says Wänghammar. “They do not spend much, but they are very loyal. I think it is time to realise lower-value players can be very valuable and profitable. Eventually you run out of high-value players and the cost of acquiring them is escalating.” The Stars Group is maturing as a casino operator and its customers are maturing with it. Wänghammar believes a huge number of

CAS I N O FO C U S POKERSTARS

The Stars Group’s Jerry Bowskill, Bo Wänghammar, Asaf Noifeld and Luigi Marciano scoop a trio of Gaming Intelligence Awards

“A friend of mine recently returned to the casino industry after some time away and was shocked because it’s the same games as when he left” Bo Wänghammar, PokerStars Casino

PokerStars Casino customers are new to casino games. That means they are maturing and will shift their preferences. For example, during the last year, Stars has seen a growth in the number of slots players and live-dealer players. “A fairly big percentage of our players only play with us, but players from other casinos are spending more and more with us because they think we deserve it. That is the big change during the past year. They think we take casino seriously and are shifting their play to us.”

A Stars identity There are a few ways that Stars is making sure it is seen to be taking casino games seriously. The operator is one of very few with the volume and liquidity to operate multiplayer table games, and these are proving very popular. However, the most popular game in the PokerStars Casino is the self-built Stars Mega Spin. “There is a trend of promoting the games you have made in-house,” says Wänghammar. “With 888, for example, it is clear that 70 per cent of its games promotion goes into its in-house games.” There is a clear cost-saving on revenue share with in-house games. For Stars though, GIQ Q2 REVIEW

the most important thing with its portfolio of in-house games, is knowing that it is in full control of risk appetite and compliance. He highlights Stars’ 11 licences and the need to have a homogenous offering in all markets. This has to be balanced with the compliance concerns, he says, noting suppliers such as Novomatic and IGT are removing content from markets such as Germany due to regulatory uncertainty. “Secondly, when we create our own games, we develop our own free spins mechanic. We design it to work with that and our promotional tools,” explains Wänghammar. The loyalty of Stars’ players is so strong that the team has yet to start spending marketing dollars on acquiring new players. “I have [woken up] to the fact that the crosssell from our own players could continue for quite a while. That cheered me up,” he says. Wänghammar explains the operator is only getting a fraction of the spend from players who play on multiple sites. He believes the company’s share of the players’ budget can be boosted by improving the customer experience. “We have a mantra: ‘get acquisition-ready’,” he says. “We mean we want a customer experience that is competitive, so when we spend money on acquisition, we will have a good return on investment.” The team is working on acquisition-readiness. This means getting ready across multiple jurisdictions, with customer services, payment processing, platform, games and VIP management – all the key tools. “In some markets we are already there, but in some we have a long way to go,” he states. This drive to do better is a recurring theme with Wänghammar. He says it is not just Stars that lags behind when it comes to the overall casino experience. “The industry needs to shape up in terms of games surfacing. If you do not surface games in a good way, when it comes to recommendation engines, sorting, categorising and filtering, it can be quite messy if you have a thousand games and you do not surface them properly. I think the whole industry has some work to do.” Generally speaking, the top-performing games at any one time will be the new games. You need a constant flow of new games.

“The concept of new is super-important,” says Wänghammar. “Casino players have a short attention span. It is important to have a number of games, and games from certain suppliers. If players come to us from elsewhere and we don’t have their favourite game then that will disappoint them.” He says PokerStars Casino originally looked to cherrypick the best titles, but soon realised that suppliers hold the best information about what is popular across their client lists. “If you look at our situation in some jurisdictions, where we don’t have many games, we are not being picky. We just need games,” he chuckles. The Stars Casino is at a slightly odd place in its evolution. It is racking up revenue but can’t roll-out content quickly enough. Meanwhile, Wänghammar is desperate to improve the customer experience. “The customer wants to play games like in Vegas. People want to play slots or table games or poker. But in Vegas they also come for the food, drinks and concerts. We cannot recreate that experience, so the industry needs to take a more holistic view of customers. It is not just games; we need to sell them an experience.” Last summer, Stars launched Stars Rewards, the first step towards gamifying the Stars Casino experience. Wänghammar says that when he is playing on the site he often watches the status bar of Stars Rewards more than the game itself. “Stars Rewards 1.0 was a game-changer for the industry,” he says. “We have a more ambitious plan. I am a strong believer in gamification – in providing metagames outside the games themselves.” He goes on to explain the ‘multi-purpose chests’ feature. Stars Rewards has a mechanic that is a progress bar and, when it is filled, a chest pops up and you get free spins or free bets. That is the base mechanic. “The only barrier to building on that is our imagination and creativity,” states the casino chief. “We can insert chests into different parts of the customer experience like, for example, after finishing your first deposit. “It is creating pleasure points in the experience. It’s like a free drink. It’s at least as important as the number of games and it’s where the industry needs to go.” n 59

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GREENTUBE

Getting to know Greentube Novomatic Group is aiming to dominate the global iGaming market through its interactive arm Greentube, following a major restructuring of the subsidiary. Despite being a key component of one of the industry’s largest corporations, few are truly aware of the scale of the business. In an exclusive interview, CEO Thomas Graf lifts the lid on the company FOR A COMPANY two years off its 40th birthday, Novomatic has come a long way in a relatively short space of time. The slot machine manufacturer founded in the midst of vineyards in the Austrian town of Gumpoldskirchen is now a global business. Gaming machines are still built in the town, but this is now just one of many strings to the company’s bow. It supplies slot machines, electronic table games and other land-based gaming products to clients in more than 75 countries. It also owns and operates casinos in a variety of European countries. It is an active player in the B2B lottery market. It also runs a thriving B2C sports betting business. And, of course, it is present in the iGaming market through its Greentube division and associated subsidiaries. One criticism occasionally levelled at Novomatic is that, for one of the industry giants, it has a relatively small share of the online market. The reasoning being that, while it rubs shoulders with the likes of Scientific Games and International Game Technology in the land-based sector, it arguably can’t be compared to online supply giants such as Playtech or Microgaming. It’s something worth looking at. Novomatic Group is comprised of around 300 subsidiaries, with a number of these managed directly by Greentube. Greentube is a cog in a much larger machine. In order to protect its core land-based businesses, which contributed the bulk of Novomatic Group’s €4.9bn revenue for 2017, everything must be whiter-than-white. GIQ Q2 REVIEW

“I think the speed was defined by our land-based legacy,” Greentube chief executive and Novomatic chief technology officer Thomas Graf says of the company’s online growth. “Because of our global licences we had to really look at which jurisdictions we could enter, in order to avoid threatening our breadand-butter businesses. In comparison to other companies we could have been seen as slow, but this was to protect the broader company.” It should also be noted that Novomatic did not make a concerted push into the online market until 2010, when it acquired Greentube, then a predominantly skill-based gaming business. In comparison, Microgaming was founded in 1994, and Playtech in 1999. Graf explains that while Novomatic had already supplied iGaming content to the likes of Sky Betting and Gaming, and Rank Group through a proprietary remote gaming server, the Greentube deal was designed to speed up its progress online. The business has grown steadily since, with a major restructuring

“In comparison to other companies we could have been seen as slow, but this was to protect the broader company” Thomas Graf, Greentube

CASINO FOCUS 2018

taking place during 2017 to turbo-charge Greentube’s growth. “The core restructuring was focused around three areas,” Graf explains. “One was our player-facing real-money efforts, and another was our B2B content supply business. The third was our B2B and B2C social gaming operations. “What we have done is to restructure our technology set-up, and developed a new inhouse platform called Matrix. This allows us to bring products to market faster, and roll out new B2C offerings more rapidly.” Graf says that the restructuring was largely prompted by regulatory developments. “Nowadays you see many markets have established dedicated iGaming legislation, so we have to be able to integrate these [regulatory] requirements as quickly as possible to roll out products in the market,” he says. “The regulations are not standardised, so can change from jurisdiction to jurisdiction. If you take Italy, for example, the requirements are quite different from other countries, so you have to be able to adapt as things change – as they often do – and the technology has to adapt.”

Hybrid model It could be said Greentube is perceived as a sleeping giant, as it is difficult to compare it with any other gambling business. It can’t be called a B2B business, as this fails to acknowledge the B2C elements within the company. These can’t be dismissed as showcases for Greentube’s games and systems, as the com63

C AS I N O FO C U S GREENTUBE

pany is happy to bring in third-party solutions without getting caught up in the restrictions where needed. that come with licensing branded titles. “We also use other B2B solutions for our retail and online channels because our operaBarriers to progress tions need to have best-of-breed products,” Graf A key focus for the company has been identifysays. “We are running third-party solutions side ing a way to bring the land-based and online by side with our technology. It’s a competitive business together so as to launch games across situation that drives the performance of both.” all channels, resulting in the Plurius solution. He argues that lines are blurring between This is the first product developed through the B2C and B2B markets. For years it was wideextensive cooperation between Greentube and ly believed that a B2B operator moving into the Novomatic’s development teams. B2C side would effectively kill its original busi“It is a true server-based solution, but omniness as customers evolved into competitors. Of channel at the same time,” Graf says. course, this was patently nonsense – Novomatic With Plurius, all games are hosted on and Greentube have been doing this for years. Novomatic’s servers, which means players can “Integrating B2B and B2C solutions is access games on land-based terminals, then becoming more commonplace,” Graf says. continue playing the same game session via “You see B2C companies buying or their account on a mobile or desktop developing their own technology, device. It also offers biometric so it’s becoming quite a mix of identity verification, meaning B2B and B2C. For us, this was that customers can log on to always part of our strategy the terminals with their and allows us to perfect new fingerprint. products in our own opera“The advantage of tions before offering them to this is that it is easier for the market.” regulators to control, as 2018 He admits that in the everything happens on casino market this is not the server, and from the always as easy, with potential player point of view it is more clients wary about getting into bed convenient,” he adds. Once the with a competitor. But, he adds, “If you user has created an account, they don’t have good products and they perform well, the need a player card to access their funds or B2C competitors will want them.” continue gaming sessions. And Novomatic has some strong performHowever, regulation is a roadblock to ers thanks to its land-based heritage, which are the widespread adoption of this and other now being repurposed for online play. solutions. “Because of a lack of proper “Players will seek out the games they know legislation for this type of product we are and enjoy,” says Graf. currently only using it as a VLT solution in “We have our own iconic, blue-chip games the Czech Republic and Slovakia,” Graf says. that perform well because they have solid “When regulations permit we plan to link the mechanics, have been installed on thousands online version, for a full omni-channel soluof machines, and have long shelf lives,” he tion. We think that’s where the industry is explains. “Online is quite different. If your going but it can take regulators time to adapt online casino is offering hundreds of games, to new technologies.” it’s less about the game mechanics and more Graf adds that despite the slow regulaabout where it is positioned on the site. Features tory process, Greentube is ready to go when such as jackpots, free spins and bonusing are regulations catch up. This is also true of the increasingly important. United States, where the Supreme Court “This means the move into online develophas overturned the federal ban on sports ment has been a learning curve but has also betting, following a long and protracted revealed that the cross-conversion of titles from appeals process. land-based to online works quite well,” he continues. “People who know the games from the Betting on the US land-based sector like to play them online, so Novomatic has a new omni-channel retail you don’t even need to advertise – they will find betting solution under development, Novo them, play them online and won’t quickly move Prime Sports, which is slated for an initial to another title.” launch in Italy but could be deployed in other This also enables Novomatic to offer clients markets, including the US. This, however, is games that are already popular with players, just one of many in-house betting platforms

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GREENTUBE

Greentube front desk

in the Novomatic stable. Its Serbian retail betting chain Millennium has a proprietary mobile solution, which it aims to roll out in other Balkan markets. On the B2C side, its Admiral brand has a solution that is also likely to be launched in other markets and has an increased focus on the mobile channel. “There is a lot going on. It’s not one solution fits all,” Graf says. “We just need to work out which solution works best where.” The sudden swing towards sports betting as the key US gambling vertical, after years of operators and suppliers chasing online casino and poker regulation, is forcing operators into a quick about-turn in their US strategies.Yet Graf is unsurprised. He says US players are still wary of casino gaming, while surveys have suggested that as many as 80 per cent are in favour of legalised sports betting. “Sports betting has been very restricted, GIQ Q2 REVIEW

but it’s still huge, and it’s all about channelling the players to the legal offerings,” he explains. “I don’t think there is as much negative sentiment towards sports betting [compared to casino], especially with daily fantasy sports being around for so long. “Of course, there are some issues around betting integrity, but I think in general it’s [seen as] a softer form of gaming. The popularity of US sports means it will be widely accepted.” He still believes that widespread online casino legalisation will occur at some point, but with only Pennsylvania having signed iGaming legislation into law since the New Jersey market opened in 2013, the rollout of state-regulated sports betting will happen much faster. Whenever online casino is more widely legalised in the US, Greentube will be ready, having used its Greentube Pro social platform, developed by its BlueBat Games subsidiary, to

“Sports betting has been very restricted, but it’s still huge, and it’s all about channelling the players to the legal offerings” Thomas Graf, Greentube

C AS I N O FO C U S GREENTUBE

Greentube HQ

partner land-based casinos in the market. It counts Connecticut’s Foxwoods Resort Casino and the Seminole Tribe of Florida, which owns the Hard Rock International brand, among its B2B social partners. While doubts persist around the potential convergence of social casino and real-money gaming, Graf argues it has worked well for Novomatic and Greentube. He says the social platform acts as a marketing tool for land-based partners, almost a digital marketing training aid for land-based casino marketeers who, he notes, still often communicate with customers by post. This is not a new strategy – it’s already proven to work in Europe. “O u r l a rge st [ so ci a l B2 C ] br a nd , GameTwist, has been around for 15 years. It was originally started as a skill gaming platform, before casino games were added, and it worked on a subscription model,” he says. “Early on, this model was converted to virtual currency – this was all before Facebook and other such acquisition channels – and it’s still one of the biggest social gaming platforms in Europe.” Greentube has also enjoyed B2C social 66

success in the US, via the Austria-based studio Cervo Media. In the early days of social its Pharaoh’s Way slot app was among the top 10 highest-grossing apps in the US, and it continues to be live and successful. It seems that for any vertical or market development, Novomatic has a solution stashed away somewhere. With around 300 subsidiaries under its umbrella, it probably does.

Multitasking With so many moving parts, this throws up a huge challenge for management. To ensure the business can function efficiently, Novomatic’s core management hold multiple roles. In his dual roles, Graf not only manages Greentube, but also oversees all Novomatic’s development hubs in the UK, Spain, Poland and the US, as well as jointly looking after the US business with Novomatic chief executive Harald Neumann. “This is quite common with Novomatic,” Graf says. “It’s mainly to ensure that everyone knows what is going on across the business. Because we are in B2B and B2C, it is crucial for

CAS I N O FO C U S

GREENTUBE

jurisdictions that adopt legislation to permit regulated iGaming.

Fighting on multiple fronts There are also opportunities for regulation closer to home, with Germany a prime example. Graf describes the German online market as “challenging”. Greentube pulled out of the country due to regulatory uncertainty in 2017, and he doubts any treaty to regulate gambling on a federal level will come into force anytime soon. “We are preparing a launch in SchleswigHolstein later this year,” he says, “and we will wait to see how further regulation of the German market unfolds.” In the company’s home market of Austria, Greentube may benefit from a crackdown on unlicensed iGaming. The Austrian government is looking to drive unlicensed operators out of the market, with Austrian Lotteries the only company licensed to operate online. This could present an opportunity for Greentube as a B2B provider of games to the regulated sector. Switzerland also offers opportunities. A referendum on 10 June saw almost 73 per cent of the population vote in favour of legislation that all management to understand the aspects allows the land-based casinos to launch online. of each business, to ensure synergies can This will allow Greentube to compete for new be achieved. We have regular meetings clients as these venues look to move online. where we discuss key events in each market This leaves Greentube positioned for and how we can deal with them.” growth on five continents. Even in an industry This multi-discipline approach to where companies regularly talk about management will become more the importance of an international crucial as Novomatic and outlook, this is remarkable. It Greentube look to expand has a proven track record of operations. Last year’s succeeding in almost every acquisition of a majority vertical it enters. Much of stake in Australia’s Ainswhat it does goes against wor th Game Technolreceived industry wisdom, ogy was completed with a such as using social as a 2018 view to expanding its US precursor to real-money presence, and the company gaming in soon-to-regulate is making plans to roll out its markets and running a hybrid games online to licensed operaB2B and B2C business, but it has tors in New Jersey. The acquisition also been effective. So effective that others sees Novomatic enter the Australian market, are following in its footsteps as technology prowhere it previously did not have a presence, viders, game developers and operators merge and strengthen its foothold in the US landinto one. based market. This puts Novomatic and Greentube in Beyond the US, there are plans for the B2B an enviable position. But businesses can be social product Greentube Pro to launch in acquired and markets can be entered. Novomatother parts of the world. Negotiations with ic’s strength appears to be built on its workforce. online operators are also underway for realFrom the predominantly female staff on the money gaming in the regulated Colombian manufacturing floor to the company’s founder market. This will ensure the continued growth who still keeps an eye over the business, there of the business while the remaining European is a sense of entrepreneurialism and common jurisdictions re-regulate. Greentube will suppurpose that still burns strong after almost 40 ply games and white label solutions in those years. If only that could be easily acquired. n

CASINO FOCUS

GIQ Q2 REVIEW

ESPAÃ&#x2018;OL

www.GIEspanol.com

Gaming Intelligence, la publicación económica líder en el sector global del juego, ya está disponible en español. GI Español apunta a los mercados de juego de habla hispana en auge, sin deja de lado los principales acontecimientos de la industria global que impactan a todos los operadores y proveedores. Regístrate hoy gratis en www.GIEspanol.com y convertite en el primero en recibir las últimas noticias del sector, así como los análisis exhaustivos y entrevistas de primera mano de Gaming Intelligence El medio líder de información y análisis independiente del sector desde 2007.

After the

war 70

F E AT U R E FOBTS

The battle over fixed-odds betting terminals is lost. But what’s next? How does the industry deal with the anti-gambling lobby setting its sights on advertising and internet gambling?

THE UK GOVERNMENT slashed the maximum stake on fixed-odds betting terminals (FOBTs) from £100 a spin to £2. The decision brought an end to a saga that has dogged bookmakers for more than five years. The Campaign for Fairer Gambling united a loose coalition of anti-gambling crusaders such as Labour Party deputy leader Tom Watson and former Conservative minister John Hayes, with the casino and arcade industry, which saw the FOBTs as encroaching on their territory. The Campaign labelled FOBTs as “the crack cocaine of gambling” and the label stuck. The blanket media coverage of FOBTs, coupled with the post-recession political climate and the decline of sympathetic working-class MPs in the House of Commons means the gambling industry has few friends in high places. “We need to rebuild our reputation,” says gambling consultant Steve O’Donoughue. “Every other company with products that have social externalities (whether that’s sugar at Kellogg’s or alcohol at the big brewers) spends millions on being seen as good citizens. We just spend money on problem gambling, which is simply following the ‘polluter pays’ principle. It’s not enough.” With much of the population suffering under austerity economics, every time a chief executive’s million-pound salary is revealed in an annual report, it has fed into a media and political narrative of bookmakers as evil, rapacious capitalists. “It is post-truth emotive arguments versus fact. It’s never been easier for the anti-gambling campaign,” continues O’Donoughue. GIQ Q2 REVIEW

Leader of the opposition The Campaign for Fairer Gambling is helmed by Derek Webb, a former poker professional who went on to start a company named Prime Table Games, which sold electronic table games Three Card Poker and 21+3 blackjack. It was eventually acquired by US company Galaxy Gaming. He retains a five per cent stake in Galaxy, a shareholding that Webb’s enemies in the industry have used to discredit his campaign, but there is no evidence to justify the criticism. The Campaign’s only two full-time employees are former FOBT addict Matt Zarb-Cousin, whose previous experience includes a spell at a centre-left think tank and a year’s placement with a Labour MP, as well as a stint as media spokesman for Labour leader Jeremy Corbyn, and also Adrian Parkinson, a former Tote regional manager turned whistleblower. However, Parkinson left the campaign earlier this year with an almighty parting shot written in the Daily Telegraph: “The wheels on the FOBT bandwagon are greased in hyperbole, spin, misconstrued evidence and, worst of all, commercial jealousy.” Despite Parkinson’s claims, the Campaign has managed to convince the government and members of parliament across the political spectrum, the BBC and most of the country’s leading newspapers that these machines really are “the crack cocaine of gambling”. Zarb-Cousin believes the key moment in the Stop the FOBTs campaign came after a spat with Conservative MP Philip Davies at the beginning

of 2013. Davies reported the Campaign’s advertising to the Advertising Standards Authority, a move that provoked a counter attack on Davies’ links to the bookmaking industry. It ended up on the front page of The Guardian. The Davies affair bolstered support in the Labour Party, and towards the end of 2013 Watson got hold of the issue. Watson was the prime mover behind the political mauling of News International, and once he gets the bit between his teeth he does not let go. The same could be said of Webb. Together, Watson and Webb formed an alliance that the gambling industry has failed utterly to engage with or to fight.

The scale of the challenge The industry needs to learn from the FOBTs episode because Watson and Webb will not give up. Furthermore, they know which battles they can win. Webb once told this publication that he would like the gambling age to be 21 but he knows that is not going to happen. Instead, he has turned his attention to online gambling and advertising. This time round – quite differently from the beginning of the FOBTs campaign – he already has support in parliament, the media, the regulator’s office and even in the Responsible Gambling Strategy Board. For proof, one needs only to read through the comments from members of parliament that followed the announcement of the £2 stake in the House of Commons by under71

F E AT U R E FOBTS

The Campaign for Fairer Gambling has set itself up as the moral arbiter and the industry has done nothing to counter this narrative

secretary of state for culture, media and sport Tracey Crouch. Watson did not spend much time gloating. He was all set to move the agenda on: “Some of the largest companies affected by this decision have argued for restrictions on betting advertising for football in particular. Given that this is also the number one concern expressed by parents, it seems to me that the government have been hasty in ignoring it.” “It is certainly not a closed issue,” promised Crouch. Watson’s Conservative counterpart Hayes was also looking at the next target: “Will [the government] now do the right thing by taking a very close look at online gambling, and particularly online gambling that targets young children by using cartoon images and other devices to draw them in?” Labour’s Daniel Zeichner had another issue to highlight: “Will [Crouch] look at the problems of online gambling emerging through young people playing video games and third-party websites selling items from so-called loot boxes?” Zeichner’s colleague Tom Pursglove was also concerned about online gambling. Conservative Michelle Donelan was another complaining about the dramatic increase in gambling advertising online and on television. The ills of the gambling industry are one of very few issues that you will find the Scottish National Party and the Liberal Democrats agreeing with the Labour Party and the Conservatives.

Donoughue points out that there are very few working-class MPs left in the House of Commons. The new generation of MPs does not understand the world of bookies and bingo halls. “We continue to take a robust look at online gambling,” concluded Crouch.

Fighting back Like Watson, the Campaign for Fairer Gambling did not gloat about its victory on FOBTs. It immediately moved on to its next target. On the Sunday following the FOBT decision, The Observer newspaper ran a story stating that a “cross-party group of MPs and peers” announced that “gambling companies should be treated like tobacco companies and forced to display prominent health warnings about the potential harms of betting”. The “cross-party group” is led by Watson and Hayes. The description of the group gives it the appearance of an official parliamentary grouping, but it is no such thing. This is just a bunch of MPs, who have got together to continue the attack. The report goes on to describe “proposals” drawn up by an organisation called ResPublica, a right-wing, religious think tank with no love for the industry. None of this is obvious to the casual reader but it is exactly the type of propaganda that the Campaign employed so successfully with FOBTs. It has set itself up as the moral arbiter and the industry has done nothing to counter this narrative.

The Campaign is exploring other avenues bling. He was asking his colleagues to take a of attack too. It recently filed two complaints long-term view that would promote them all as with the Advertising Standards Authority responsible and sustainable businesses. (ASA) against online operators’ use of fairies, The arcades and casinos took the shortprincesses, dragons and Santa, which it claims term view that they could profit from the bookare likely to be of particular appeal to children. makers’ losses if they supported the attack on The operators were forced to drop adverFOBTs. However, even the bookmakers could tisements featuring these characters and to not agree a united approach, with some sugremove the demo mode from the games. Some gesting a ‘wait and see’ approach to see if the games were taken off the sites entirely. storm blew over. The industry needs to take proactive The storm will not blow over. One refrain and bold action. There are signs that this is heard continuously from a senior in-house govhappening. It is understood ernment relations executive is that a number of leading operathat this is just a sign of the tors and suppliers have come times. The anti-gambling lobby together under the auspices of waxes and wanes, and there is the Parliamentary All-Party little we can do to change peoBetting and Gaming Group to ple’s minds. This is the defeatdraft a series of initiatives aimed ist attitude that is about to wipe at promoting the industry as millions of pounds from booksocially responsible. makers’ bottom lines (see box). It comprises representatives As GIQ was going to press, from 12 different companies the Financial Times ran an including the likes of GVC, article about smartphone gamDerek Webb Paddy Power Betfair, Playtech bling, headlined ‘Britain’s hidand Sky Betting & Gaming, but den epidemic’. It was a typically industry leaders such as bet365 incendiary article about gamand William Hill are conspicubling addiction that did little to ously missing from the list. point out that it is a tiny minorOne of the recurring failures ity of gamblers who develop a of the industry has been its inaproblem. It had the Campaign’s bility to unite under one banner. fingerprints all over it. In 2011, then Ladbrokes This needs to be a wake-up CEO Richard Glynn invited 12 call. The industry needs to be industry representatives to a bolder than it has ever been private meeting at Mayfair’s before. A ban on advertising exclusive Mark’s Club. In attendhas been discussed and has Tracey Crouch ance were notables from the big some support. It is the time for retail and online bookmakers, grand gestures and concerted the arcades, casinos and all the major gambling action or it will be made to suffer again. And industry bodies. the pain will be felt by more than just High Glynn called on the assembled luminaries Street bookmakers. to unite behind a common approach based on The Gambling Commission’s recent polithe seemingly uncontroversial premise that cies suggest the glory days of the world’s most taxpayers should have the right to spend their liberal gaming market are almost certainly money as they wanted in a free, liberal and coming to an end. But to accept the massive regulated society, on any of their products. In clampdown that is the inevitable consequence return, he said, the industry must take the lead of the current political narrative would be a on social responsibility and responsible gamremarkable own goal. n GIQ Q2 REVIEW

The cost of FOBTs for bookmakers and suppliers The Association of British Bookmakers (ABB) estimated that 4,000 shops will have to close as a result of the £2 maximum stake, with 21,000 employees likely to lose their jobs. William Hill said the new limit could see its annual gaming net revenue fall by between 35 and 45 per cent. The company generated around 70 per cent of total gaming machine net revenue from stakes in excess of the proposed £2 limit in the first four months of 2018. Based on preliminary estimates, William Hill warned that the stake limit could see up to 900 of its icensed betting offices (around 38 per cent) closed, with a number of shops likely to be shut soon after the change is implemented. Even after taking mitigation measures, annual operating profit is likely to fall by £70m to £100m. GVC Holdings estimated an impact of around £160m on group EBITDA. It will reduce the cost of the acquisition of Ladbrokes Coral Group due to the contingency value right that was placed on Ladbrokes Coral shares. However, GVC is expecting a £25m positive effect to online as customers switch their gambling from FOBTs to the internet. FOBT supplier Playtech has stated that UK FOBT revenue is less than €10m per annum. It too will benefit from any customer exodus towards online and/or to self-service betting terminals. Playtech FOBT competitor Inspired Entertainment estimated the new rules would wipe £7-8m from its annual EBITDA figure. Paddy Power Betfair, the only operator to support a cut on the maximum stake, estimated that the direct, pre-mitigation, impact of this new stake limit would be a 33-43 per cent decrease in its total machine gaming revenue. In 2017, this would have equated to a £35m to £46m revenue impact, representing two to 2.6 per cent of group revenue.

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Live betting soLutions from the market Leader www.betradar.com

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15.03.12 14:22

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5036-MagDirectory-02-58x58mm.indd 1

03/03/16 09:51

F I NA NC E GI STOCK INDEX Q2

GAMING INTELLIGENCE STOCK INDEX Q2 2018

The US sports betting gold rush begins

iGaming companies were among the biggest beneficiaries of the US Supreme Court’s repeal of PASPA, as combined shares climbed more than 12 per cent during the second quarter of 2018, writes Kio Dawson THE US SUPREME Court ruling overturning the Professional and Amateur Sports Protection Act (PASPA) in May was a seismic event for the publicly listed companies making up the Gaming Intelligence Stock Index. The untapped potential of the US sports betting market significantly boosted the share prices of some of the leading operators and suppliers between 3 April and 29 June. Shareholders were provided a boon after US states were given the green light to legalise betting on sports. Webis Holdings and GAN, both listed on London’s junior AIM market, were two of the biggest beneficiaries, and the value of their shares soared following the 14 May ruling. As the licensed advance-deposit wagering (ADW) operator of Californian harness track WatchandWager Cal Expo in Sacramento since 2014, Webis said the ruling was a “positive boost” for its US operations, particularly in California, the most populous state in the US. The positive impact of the US sports betting rush was clear to see as GAN and Sportech hit GIQ Q2 REVIEW

52-week highs of 80.97 and 87.00p respectively in May. Kambi Group topped the Stockholmlisted companies as shares climbed 79 per cent to SEK179.80, with the supplier signing its first deals in the US with Rush Street Interactive and daily fantasy sports giant DraftKings. For the big UK bookmakers, new opportunities Stateside were tempered by their worst fears being realised as the British government slashed the maximum stakes on fixed-odds betting terminals (FOBTs) from £100 to £2 just days later. However, most of the damage to share prices was done in January when

For UK bookmakers, new opportunities Stateside were tempered by their worst fears being realised as the British government slashed the maximum stakes on FOBTs

suggestions that the government favoured the £2 limit first emerged. William Hill continued to feel the effects of this news in Q2 as its shares closed the period down eight per cent at 303.40p. The operator said that the new limit could see its gaming revenue fall by up to 45 per cent this year, and total operating profit reduced by £100m. Things look brighter for the business across the pond (see page 70). William Hill is already operational in Nevada, Delaware, Iowa and New Jersey, where it took the state’s first legal sports bet at Monmouth Park on 14 June, and opened a sportsbook at the newly opened Ocean Resort Casino in Atlantic City. London-listed GVC Holdings saw shares drop seven per cent on the day of the FOBT announcement, but ended the quarter strongly as shares rose 15 per cent to 1,051.00p. This growth was matched by Paddy Power Betfair which also saw shares rise 15 per cent, to 8,300.00p. GVC has been transformed into a £6bn giant through its acquisition of Ladbrokes Coral, and 75

F I NA NC E

is closing in on Paddy Power Betfair, which remains the biggest listed company in the GI Stock Index with a market capitalisation of £6.7bn. Toronto-listed The Stars Group, with a market cap of £4.6bn, is the biggest publicly listed online-only operator. It enjoyed a successful quarter, with its shares closing up 35 per cent at CAD$47.68. It was a momentous period for the PokerStars owner as it acquired CrownBet and William Hill Australia, then agreed a $4.7bn deal to snap up UK operator Sky Betting & Gaming. Stars’ shareholders will be hoping their shares keep on rising. In the past year the business’ share price has soared more than 113 per cent. While GVC’s Ladbrokes Coral business will be negatively impacted by the FOBT changes, it is evaluating a number of potential opportunities to expand its US business, and provided the software for the Delaware Lottery’s roll out of single-event sports betting on 5 June. Overall, exactly half of the companies in the GI Stock Index chart saw the value of their shares increase during the second quarter, of which 19 recorded double-digit growth or bet-

Half of the companies in the GI Stock Index chart saw the value of their shares increase during the second quarter, of which 19 recorded doubledigit growth or better

OP. PRICE 03.04.18

CL. PRICE 29.06.18

% CHANGE

0.84p

3.65p

334.52%

26.85p

59.50p

121.60%

SEK100.40

SEK179.80

79.08%

Sportech plc

55.20p

81.40p

47.46%

Lotto24 AG

€ 10.62

€ 14.32

34.84% 34.69%

COMPANY Webis Holdings plc GAN plc Kambi Group plc

The Stars Group Inc (TSX)

CAD$35.40

CAD$47.68

Aristocrat Leisure Limited

AUD$23.00

AUD$30.90

34.35%

€ 1.00

€ 1.22

22.00%

mybet Holding SE

SEK457.40

SEK557.00

21.78%

JPJ Group plc

Evolution Gaming Group AB

796.00p

961.00p

20.73%

Safecharge International Group Limited

290.10p

342.00p

17.89%

$41.75

$49.15

17.72%

Bettor Collective A/S (IPO June 8th)

SEK60.00

SEK70.00

16.67%

Paddy Power Betfair plc

7,200.00p

8,300.00p

15.28%

NetEnt AB

SEK41.68

SEK47.90

14.92%

915.00p

1,051.00p

14.86%

Scientific Games Corporation

GVC Holdings plc Zynga Inc

$3.57

$4.07

14.01%

Inspired Entertainment Inc

$5.50

$6.25

13.64%

Gaming Realms plc

8.50p

9.57p

12.59%

18.35p

20.00p

8.99%

SEK112.00

SEK122.00

8.93%

OPAP SA

€ 9.00

€ 9.68

7.56%

Intralot SA

€ 0.93

€ 0.99

6.45%

SEK44.35

SEK46.00

3.72%

735.00p

753.00p

2.45%

Nektan plc Catena Media plc

Mr Green & Co AB Playtech plc LeoVegas AB

SEK71.05

SEK71.00

-0.07%

SEK113.00

SEK112.80

-0.18%

Zeal Network SE

€ 27.30

€ 27.00

-1.10%

888 Holdings plc

273.60p

269.60p

-1.46%

ZAR14.75

ZAR14.50

-1.69%

$302.15

$296.50

-1.87%

CAD$21.98

CAD$21.54

-2.00%

Kindred Group plc

Phumelela Gaming and Leisure Limited

ter. In addition, there were 15 companies that saw shares hit new 52-week highs, including Lotto24, Scientific Games and Catena Media. There were good returns made from Swedish suppliers Evolution Gaming Group (up 22 per cent to SEK557.00), and NetEnt (up 15 per cent to SEK47.90), while New York-listed Scientific Games continued to see the value of its shares climb, closing Q2 up 18 per cent at $49.15 and up more than 80 per cent in the past year. On the other side of the chart, it was a disappointing quarter for Sydney-listed Ainsworth Game Technology and The Betmakers Holdings (formerly TopBetta Holdings) which were the biggest fallers. Their shares were down 44 per cent and 36 per cent respectively, while shares in London-listed Stride Gaming dropped 35 per cent in value. There were also notable share price declines for the likes of Gaming Innovation Group (down 19 per cent to NOK4.76), Betsson (down 14 per cent to SEK54.38) and Aspire Global (down 13 per cent to SEK29.00). n 76

Churchill Downs Incorporated Pollard Banknote Limited Scout Gaming Group AB

SEK43.00

SEK41.90

-2.56%

Tabcorp Holding Ltd

AUD$4.46

AUD$4.33

-2.91%

$11.05

$10.70

-3.17%

SEK63.00

SEK60.50

-3.97% -4.75%

Caesars Entertainment Corporation Cherry AB bet-at-home.com AG

€ 68.40

€ 65.15

William Hill plc

328.70p

303.40p

-7.70%

Rank Group plc

211.00p

191.40p

-9.29%

SEK33.00

SEK28.80

-12.73%

$26.71

$23.24

-12.99%

Global Gaming 555 AB International Game Technology plc AGTech Holdings Ltd

HK$0.92

HK$0.80

-13.04%

Aspire Global plc

SEK33.45

SEK29.00

-13.30%

Betsson AB

SEK63.00

SEK54.38

-13.68%

$17.15

$14.71

-14.23%

$34.24

$29.03

-15.22%

NOK5.89

NOK4.76

-19.19%

217.75p

143.00p

-34.33%

The Betmakers Holdings Ltd (formerly TopBetta Holdings)

AUD$0.14

AUD$0.09

-35.71%

Ainsworth Game Technology Ltd

AUD$1.84

AUD$1.04

-43.48%

500.com Ltd MGM Resorts International Ltd Gaming Innovation Group Inc Stride Gaming plc

*Op. Price Jan 2nd

GI STOCK INDEX Q2

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The industry’s leading source of independent news & analysis.

F I NA NC E

GIQ20 H1 2017

ON THE FOLLOWING PAGES

79 GIQ20 Q1 2018 results and analysis

The GIQ Q1 2018 THE FIRST QUARTER marked a strong start to the year for most of the industry’s operators and suppliers, with Stockholm-listed Global Gaming leading the way in the GIQ20 chart. After a breakthrough year in 2017, Global Gaming saw progress continue in Q1 as revenue soared 266 per cent to SEK198.6m. The operator is seeing spectacular growth from its Nordic-facing Ninja Casino brand and is fast catching up with its rivals. It is already generating more than half of the revenue of established rival MRG (formerly Mr Green & Co). LeoVegas’ recent M&A spurge has kept it in the chart, while the acquisition of NYX Gaming Group is already paying off for Scientific Games. Stockholm-listed Catena Media, MRG, Kindred Group and Evolution Gaming all enjoyed a strong Q1. The chart’s Swedish dominance is to be bolstered further, with Oslo-listed Gaming Innovation Group confirming plans to switch to a Stockholm listing later this year. Following its acquisition of Sky Betting & Gaming, The Stars Group will overtake GVC Holdings and Paddy Power Betfair as the biggest publicly listed operator in the industry. After a solid Q1, which saw revenue increase 24 per cent, it will soar up the chart once the $4.7bn deal for Sky Bet is completed. Paddy Power Betfair missed out on the GIQ20 chart as total revenue fell by two per cent, despite a 10 per cent improvement from its US business. With Betfair US merged with fantasy sports giant FanDuel, the business is well-placed for the US sports betting boon. n 78

The GIQ20 Q1 2018 COMPANY 1

Global Gaming 555

Q1 2018

Q1 2017 CHANGE

SEK198.6m

SEK54.3m

266%

LeoVegas

€77.4m

€43.9m

76%

Scientific Games

$167.1m

$96.3m

74%

Zeal Network

€39.8m

€24.1m

65%

Gaming Innovation Group

€37.3m

€23.1m

62%

Catena Media

€23.8m

€15.2m

57%

MRG (formerly Mr Green & Co)

SEK381.0m

SEK276.1m

38%

Kindred Group

£207.8m

£153.2m

36%

Evolution Gaming

€51.6m

€39.7m

30%

Lotto24

€6.7m

€8.6m

29%

Cherry (excluding land-based)

SEK639.7m

SEK504.4m

27%

The Stars Group

$392.9m

$317.3m

24%

Churchill Downs Incorporated (TwinSpires only)

$63.6m

$52.3m

22%

Kambi Group

€16.4m

€14.2m

15%

Aspire Global

€18.4m

€16.1m

14%

JPJ Group (previously Jackpotjoy)

£80.7m

£71.4m

13%

Betsson

SEK1,210.0m

SEK1,102.0m

10%

NetEnt

SEK430.1m

SEK393.5m

GVC Holdings (including retail)

n/a

William Hill (including retail and Australia)

n/a

F I NA NC E

GIQ20 Q1 2018

Global Gaming holds the top spot in GIQ20 chart Stockholm-listed Global Gaming has another outstanding period of growth in the first quarter as Paddy Power Betfair narrowly misses out, writes Kio Dawson LEOVEGAS 76% Net revenue (€)

TOTAL

Ninja Casino and Royal Panda (below)

GLOBAL GAMING 555 266% Net revenue (SEK)

TOTAL

Q1 2018

Q1 2017

Change

198.6m

54.3m

266%

Global Gaming enjoyed a record performance during the first quarter as revenue soared 266 per cent to SEK198.6m, marking the company’s seventh consecutive quarter of growth. The Nordic-facing Ninja Casino brand generated 82 per cent of the company’s total revenue in Q1, with approximately 71 per cent of users playing through the mobile channel. The strong revenue growth helped Global Gaming post an operating profit of SEK29.3m, with net profit for the quarter more than doubling to SEK25.8m. The company will be looking to boost its revenue following the establishment of a new B2B division, with Aspire Global’s Lars Kollind brought in to head up the business. With a number of Global Gaming’s online casino brands, such as Netticasino and Viking Slots operating on Aspire’s gaming platform, Kollind is familiar with the existing product offering and will be tasked with developing and growing the company’s B2B business. GIQ Q2 REVIEW

Q1 2018

Q1 2017

Change

77.4m

43.9m

76%

LeoVegas set another new record in Q1 after revenue climbed 76 per cent to €77.4m, including the first contributions from newly acquired Royal Panda and Rocket X businesses, which accounted for nearly 20 per cent of the total. “We got off to a flying start to the year with the acquisition of Rocket X, which has a strong footprint in the UK market, with a local multibrand strategy and the market’s most effective customer acquisition model,” said chief executive Gustaf Hagman. Following the two acquisitions, the UK has become LeoVegas’ joint-largest market alongside Sweden. The two markets each accounted for 26 per cent of revenue in Q1. Norway and Finland contributed a combined 12 per cent of revenue, with Denmark and Italy accounting for seven and two per cent respectively. LeoVegas also provided a breakdown of its revenue for sports betting and live casino for the first time, with sports betting accounting for 6.5 per cent of revenue, at approximately €5m, and live casino at 15 per cent of revenue, at approximately €11.6m.

“We got off to a flying start to the year with the acquisition of Rocket X, which has a strong footprint in the UK market with a local multi-brand strategy and the market’s most effective customer acquisition model” Gustaf Hagman, LeoVegas 79

F I NA NC E GIQ20 Q1 2018

Bingo Showdown

SCIENTIFIC GAMES 74% Net revenue (US$) Q1 2018

Q1 2017

Change

Social gaming

97.4m

80.2m

21%

Digital

69.7m

16.1m

333%

–Sports and platform

25.9m

n/a

–Gaming and other

43.8m

16.1m

172%

167.1m

96.3m

74%

TOTAL

New York-listed Scientific Games reported a 12 per cent increase in total revenue to $811.8m for the first quarter, with its growing digital and social gaming businesses generating $167.1m, or just over 20 per cent of the total. Digital revenue soared 333 per cent to $69.7m, including $49.2m from the January acquisition of NYX Gaming Group. Scientific Games’ existing B2B online gaming business posted organic revenue growth of 27 per cent. Within the digital segment, sports and platform revenue amounted to $25.9m, while gaming and other revenue contributed $43.8m, up from $16.1m a year ago. Revenue from social gaming increased by 21 per cent to $97.4m, reflecting the contribution and growth of the Bingo Showdown app, along with the continued popularity of the 80

Quick Hit Slots and 88 Fortunes apps. Average daily active users (DAUs) across the social division remained stable at 2.4m, while average monthly active users climbed five per cent to 8.1m. Average daily revenue per DAU grew 22 per cent to $0.45, with three-quarters of play coming via mobile devices.

ZEAL NETWORK 65% Net revenue (€) Q1 2018

Q1 2017

38.7m

33.9m

14%

2.2m

1.8m

22%

Eliminations

(1.1m)

(11.8m)

-91%

TOTAL

39.8m

24.1m

65%

Lottery betting Lottovate

Change

Frankfurt-listed lottery specialist Zeal Group posted a 65 per cent increase in revenue to €39.8m for the first quarter, helping the company generate net profit of €6.4m for the period. Lottery betting represented the bulk of the total, at €37.1m, with growth primarily associated with instant win games and betting on US lottery products Powerball and Mega Millions. The company’s growing B2B division Lottovate contributed €2.2m, benefiting from its recent digital lottery launch in Norway last year with children’s charity UNICEF. Zeal’s

Jonas Mattsson, Zeal Network

F I NA NC E

GIQ20 Q1 2018

CATENA MEDIA

“Our active strategy of building a more diverse portfolio is paying off, with a larger range of higher jackpot products driving increased customers, spend and billings” Jonas Mattsson, Zeal Network results were also positively impacted by the reduction in exceptional prize pay-outs during the quarter, which amounted to €15m in the prior year period. “It has been a strong start to 2018 for Zeal,” said chief financial officer Jonas Mattsson. “Our active strategy of building a more diverse portfolio is paying off, with a larger range of higher jackpot products driving increased customers, spend and billings.”

GAMING INNOVATION GROUP 62% Net revenue (€) Q1 2018

Q1 2017

Change

B2C

25.4m

18.5m

37%

B2B

15.3m

6.3m

143%

Eliminations

(3.3m)

(1.7m)

94%

37.3m

23.1m

62%

TOTAL

Oslo-listed Gaming Innovation Group (GiG) enjoyed a strong quarter, with revenue up by 62 per cent to €37.3m. There was continued growth from its B2B division, which grew revenue by 143 per cent year-on-year to €15.3m, while B2C revenue climbed 37 per cent to €25.4m, of which 48 per cent was derived from regulated and soon-to-be regulated markets. During the quarter, preparations on new growth initiatives intensified, with the company’s newly established GiG Sports and GiG Games divisions ready for launch during the second half of the year. GiG also signed a landmark deal with Hard Rock in New Jersey, further expanded into regulated markets with a licence acquired in the Germany state of Schleswig-Holstein. It also purchased a 36 per cent stake in Hong Kong-based game studio D-Tech, and the company confirmed plans to delist from the Oslo Stock Exchange in favour of a Stockholm listing. GIQ Q2 REVIEW

57% Net revenue (€)

Search Paid TOTAL

Q1 2018

Q1 2017

Change

20.4m

10.9m

87%

3.4m

3.7m

-8%

23.9m

14.6m

57%

The Stockholm-listed performance marketing specialist continues to be one of the most acquisitive companies in iGaming. This, combined with organic growth of 30 per cent, helped contribute to a 57 per cent increase in revenue to a record €23.9m. Of the Q1 revenue total, €20.4m was derived from Catena Media’s Search division, with €3.4m generated in Paid revenue. Approximately 65 per cent of total revenue came from locally regulated or taxed markets. “The first quarter of 2018 resulted in Catena Media strengthening its position as one of the world’s foremost lead generators,” said acting CEO Henrik Persson Ekdahl, who has since been succeeded by Per Hellberg. “The quarter was the best to date, up 19 per cent from the fourth quarter of 2017. Through strong organic growth and successful acquisitions, we are progressing well towards our 2020 target.” Recent acquisitions by Catena include Dreamworx, BonusSeeker.com, BrokerDeal. de and ParisSportifs.com, as well as a number of assets in the financial services sector.

MRG GROUP 38% Net revenue (SEK)

TOTAL

Q1 2018

Q1 2017

Change

381.0m

276.1m

38%

Stockholm-listed iGaming operator MRG, formerly known as Mr Green & Co, reported a 38 per cent increase in revenue to SEK381m for the first quarter. This marked the sixth consecutive quarter in which revenue has grown by more than 20 per cent. The operator benefited from the first contributions from the newly acquired Evoke Gaming business, which saw revenue increase by 14 per cent since being consolidated on 2 February, including a 128 per cent improvement from the Redbet brand. In May, the company revealed a corporate rebrand aimed at better reflecting its profile as a high-growth digital business. Now known as MRG, the operator also unveiled new ventures in proprietary games and eSports, with

Per Norman, MRG Group

“MRG is a digital, high-growth company with a significantly broader operation with more brands and larger geographical presence than a year ago” Per Norman, MRG Group the development of games run by subsidiary Green Jade Games, and eSports through a joint venture with Gamingzone Entertainment. “MRG is a digital, high-growth company with a significantly broader operation with more brands and larger geographical presence than a year ago”, said chief executive Per Norman. “We invest in new innovative digital areas within iGaming and eSports. MRG is reflecting our vision to ‘shape the future of the iGaming industry’.”

EVOLUTION GAMING GROUP 30% Net revenue (€)

TOTAL

Q1 2018

Q1 2017

Change

51.6m

39.7m

30%

Despite increased competition in the live dealer space, Evolution Gaming continues to dominate the sector and enjoyed another strong performance in Q1, a period which marked its 18th consecutive quarter of growth. Revenue was up by 30 per cent to €51.6m compared to the previous year, with high demand for its live casino games, seeing the number of bet spots from endusers increase by 55 per cent to 3.1bn. Profit for the quarter also rose by 30 per cent to €16.5m. “Overall, the first quarter of 2018 has been characterised by growth and profitability 81

F I NA NC E GIQ20 Q1 2018

KINDRED GROUP 36% Net revenue (£) Q1 2018 Q1 2017 Sports betting

Change

94.7m

66.4m

43%

103.2m

77.4m

33%

Poker

4.6m

3.7m

24%

Other

5.3m

5.7m

-7%

207.8m

153.2m

36%

Casino and games

TOTAL

Stockholm-listed Kindred Group benefited from a record high number of active customers during Q1, which pushed revenue up 36 per cent to £207.8m, including £17.9m from its newly acquired 32Red business. Sports betting saw the biggest yearon-year growth as revenue increased by 43 per cent to £94.7m, of which live betting accounted for just over half of the total, and revenue from casino and games climbed 33 per cent to £103.2m. Poker revenue was up 24 per cent to £4.6m, while other revenue was down seven per cent to £5.3m. Active customers rose to a new all-time high of 1,383,201, up 12 per cent year-onyear, from a total registered customer base of over 22.5m. The strong revenue performance helped Kindred increase net profit for the quarter by 83 per cent to £29.9m. Chief executive Henrik Tjärnström noted that in Europe the development of local licensing systems had continued with Sweden voting on a new modern licensing regime, while outside of Europe the operator is “investigating if and how” the company can launch its brands in the burgeoning US market.

Kindred Group’s virtual reality poker

in-line with our expectations, considering the ongoing investments in both new studios and games,” said chief executive Martin Carlesund. “We noted a stronger performance at the end of the period, with good growth and earnings, compared with the beginning of the period.” While the UK remains the company’s largest market, Evolution has made its first move in the regulated US iGaming market through the launch of a new live casino solution for 888casino’s New Jersey players. It has also secured a landmark deal with Atlantic City’s Resorts Casino Hotel to install its Dual Play Roulette table at the venue.

“The first quarter of 2018 has been characterised by growth and profitability inline with our expectations” Martin Carlesund, Evolution Gaming

LOTTO24 29% Net revenue (€)

TOTAL

Q1 2018

Q1 2017

Change

8.6m

6.7m

29%

Frankfurt-listed online lottery provider Lotto24 started 2018 with revenue growth of 29 per cent to €8.6m during the first quarter. Billings rose 26 per cent to €58.2m following a positive jackpot trend for the panEuropean EuroJackpot game. However, significant increase in jackpot-related marketing expenses, including the launch of a test run of comparatively more expensive TV commercials in March, pushed the operator to a net loss of €1.3m for the period. L ot t o2 4 at t r ac t e d 179,500 new customers during the quarter, up 89 per cent compared to the same period last year, with total registered customers climbing 27 per cent to 1.75m. For the full year, Lotto24 said that it plans to

F I NA NC E

GIQ20 Q1 2018

increase its marketing investment in order to extend its position as one of the leading online providers of state-licensed lotteries. The company expects billings to increase by between 15 per cent and 20 per cent year-on-year, with a growing number of new customers and a rise in cost per lead.

CHERRY 27%

THE STARS GROUP Q1 2018

Q1 2017

Change

536.1m

453.2m

18%

Online marketing

56.2m

29.7m

89%

Game development

57.6m

33.3m

73%

Gaming technology

15.6m

8.8m

77%

24% Net revenue (US$) Q1 2018

Q1 2017

Change

Poker

245.9m

218.7m

12%

134.5m

86.8m

55%

12.2m

11.9m

0.3m

0.1m

n/a

392.9m

317.3m

24%

Eliminations

(26.0m)

(20.6m)

26%

Casino and sportsbook

Total

639.7m

504.4m

27%

Other gaming

Before the loss of its chief executive Anders Holmgren on insider trading charges in May, it had been a good start to the year for Cherry, as group revenue rose 27 per cent to SEK681m in the first quarter. Excluding its land-based operations, online revenue grew by 27 per cent to SEK639.7m, with B2C revenue up 18 per cent to SEK536m. After struggling with the integration of ComeOn, the division has since returned to growth and deposits from customers increased by 25 per cent to SEK1.7bn. Casino represented 85 per cent of the Q1 total, with sports betting contributing 15 per

Cherry’s ComeOn

GIQ Q2 REVIEW

“Our verticals are benefiting not only from the continued success of Stars Rewards, but also our strategy of focusing on the customer and continued improvements to our product offerings” Rafi Ashkenazi

Net revenue (SEK)

Online gaming

cent. Mobile accounted for 65 per cent, up from a 46 per cent share a year ago. In addition to the significantly improved results from ComeOn, Cherry also highlighted the strong performance of its B2B businesses Yggdrasil Gaming and Game Lounge, with the latter recording strong organic growth and making a number of acquisitions including SEO specialist TodaysWeb at the start of the second quarter.

Corporate TOTAL

Toronto-listed operator The Stars Group posted a 24 per cent increase in revenue to $392.9m for Q1, with revenue for the rest of the year expected to be significantly enhanced following its acquisitions of CrownBet, William Hill Australia, and Sky Betting & Gaming. Revenue from online poker grew by 12 per cent to $245.9m for the quarter, driven by the positive impact of the Stars Rewards loyalty programme and the introduction of shared poker liquidity in France and Spain. Revenue

from online casino and sportsbook rose a combined 55 per cent to $134.5m, of which sportsbook represented $27.8m following the first contributions from its majority stake in CrownBet. “The Stars Group’s strong first quarter results continued our organic growth trajectory,” said chief executive Rafi Ashkenazi. “We are pleased with the performance of each of our verticals – poker, casino and sportsbook – which are benefiting not only from the continued success of Stars Rewards, but also from our strategy of focusing on the customer and continued improvements to our product offerings.”

CHURCHILL DOWNS (TWINSPIRES ONLY) 22% Net revenue (US$)

TOTAL

Q1 2018

Q1 2017

Change

63.6m

52.3m

22%

Following the sale of its Big Fish Gaming business, the Kentucky-based racing and gaming operator will make a big move into the US online gaming and sports betting market through partnerships with SBTech and Golden Nugget in New Jersey. For now, the advance deposit wagering business TwinSpires.com remains its only online operations, and saw revenue grow by 22 per cent to $63.6m in the first quarter. This followed a 20 per cent rise in handle, which outpaced the US thoroughbred industry performance by 13 percentage points. Including its land-based racing and casino operations, Churchill Downs reported 13 per cent increase in revenue to $189.3m. Over half of this ($98.1m) was generated by casinos, following growth of 12 per cent year-on-year, while racing contributed $26.2m. The company is targeting the first quarter of 2019 to begin accepting legal bets for iGaming and sports betting in New Jersey, and will also look to launch online in Pennsylvania and Mississippi subject to the passage of regulations and licence approvals in each state. 83

F I NA NC E GIQ20 Q1 2018

KAMBI GROUP 15% Net revenue (€)

TOTAL

Q1 2018

Q1 2017

Change

16.4m

14.2m

15%

The Stockholm-listed sports betting supplier reported strong results as revenue and profit both grew during the first quarter. Revenue climbed 15 per cent to €16.4m, half of which was generated from locally regulated markets, with results boosted by the launch of National Lottery AD’s 7777 in Bulgaria and Colombia’s Corredor Empresarial rolling out BetPlay. The Q1 performance was enhanced by Kindred Group migrating players to the Kambi sportsbook,following its decision to scrap the Stan James platform. The quarter also saw Kambi sign up Casumo, its 16th client in total, and acquire a 25 per cent stake in virtual sports start-up Virtus Sports. Despite incurring higher expenses during the period, operating profit for the quarter climbed 43 per cent to €2m, with profit after tax climbing 36 per cent to €1.5m. Kambi is also preparing to enter the US sports betting market. It is advancing with the licensing process in New Jersey and taking steps to ensure it fulfills all necessary corporate obligations associated with trading in the US.

ASPIRE GLOBAL 14% Net revenue (€) Q1 2018

Q1 2017

Change

B2B

9.7m

7.8m

24%

B2C

8.6m

8.2m

18.4m

16.1m

14%

TOTAL

It was a solid start to the year for operator and B2B provider Aspire Global, as revenue grew by 14 per cent to €18.4m in the first quarter. Growth was driven by an increase in partners and brands operating on the company’s platform. At €9.7m, the B2B segment represented just over half of Q1 revenue, hav-

“The company became the first provider of a full-service platform solution for casino and sports operators” Tsachi Maimon, Aspire 84

ing seen growth of 24 per cent year-on-year. B2C revenue grew five per cent to €8.6m as a result of enhanced marketing activities, and the launch of a new SBTech-powered sportsbook under its proprietary Karamba brand in January. Revenue from the Nordics grew 13 per cent to €7m, while the UK and Ireland’s contribution fell 13 per cent to €2.8m. Other European markets contributed €8.1m, an increase of 69 per cent year-on-year, with the rest of the world accounting for the remaining €0.4m. “2018 started off with the launch of sportsbook, a major event as the company entered into the largest field of iGaming and became the first provider of a full-service platform solution for casino and sports operators,” said CEO Tsachi Maimon.

JPJ GROUP 13% Net revenue (£) Q1 2018

Q1 2017

Change

Jackpotjoy

59.5m

55.7m

Vera&John

21.2m

15.7m

35%

TOTAL

80.7m

71.4m

13%

JPJ Group, the London-listed online bingo-led operator formerly known as Jackpotjoy, posted a 13 per cent increase in revenue to £80.7m for the first quarter. It benefitted from a 35 per cent improvement in revenue from Vera&John, while its largest business segment Jackpotjoy recorded growth of seven per cent. Revenue for the Jackpotjoy segment, which now includes the Mandalay business, increased due to organic growth led by sharp increases in the Starspins and Botemania brands. Collectively, the two brands accounted for 24 per cent of the segment’s revenue in Q1, while Jackpotjoy UK generated 60 per cent of the total. Ac r o s s a l l of it s brands, the operator saw average active customers increase by seven per cent

to 256,699 for the year to 31 March, with monthly real-money gaming revenue per active customer climbing nine per cent to £95. “The first quarter has seen a continuation in the good underlying momentum we saw in 2017,” said executive chairman Neil Goulden. “I am confident we will continue to drive good growth and attractive returns for our shareholders over the remainder of FY18 and beyond.”

F I NA NC E

GIQ20 Q1 2018

BETSSON 10% Net revenue (SEK) Q1 2018

Q1 2017

Change

Casino

922.8m

822.9m

12%

Sportsbook

263.5m

250.3m

23.6m

28.8m

-18%

1,210.0m

1,102.0m

10%

Other TOTAL

Betsson continues to make efforts to improve its operations after an unusually turbulent few months, with the operator able to record revenue growth of 10 per cent to SEK1.21bn in Q1. The operator’s casino segment recorded the strongest growth as revenue climbed 12 per cent year-on-year, while sportsbook revenue grew by five per cent, offsetting an 18

per cent decline in other products. Excluding recently acquired businesses, Q1 revenue growth would have been four per cent. Despite the revenue growth, operating income for the quarter fell by 12 per cent to SEK211.4m, impacted by higher marketing spend, currency effects, the underperformance of acquired companies, and SEK15m in organisational restructuring costs. “We follow a detailed plan and took several actions within different areas in the first quarter, aiming at getting Betsson back on track,” said chief executive Pontus Lindwall. “The recent restructuring was made to increase efficiency in Betsson’s operations. We will continue to systematically implement further improvements.”

NETENT

GVC HOLDINGS

Net revenue (SEK)

TOTAL

Net revenue (€) Q1 2018

Q1 2017

Change

430.1m

393.5m

Online:

–Sports brands

Q1 2018

Q1 2017

n/a

17%

n/a

16%

Kenneth Alexander, GVC Holdings

included growth of 16 per cent from Sports Brands (bwin, Coral, Crystalbet, Eurobet, Ladbrokes and Sportingbet), while Games Brands (CasinoClub, Foxy Bingo, Gala, Gioco Digitale, PartyCasino and partypoker) also performed well as revenue grew by 16 per cent, and B2B revenue climbed 46 per cent. “The online operations continue to grow strongly and this is before we have started to implement best practice across the enlarged group,” said chief executive Kenneth Alexander. “Regulatory challenges across the industry cannot be ignored but through our scale, diversification, proprietary technology and people, GVC is well placed to continue to succeed.”

Change

NetEnt has also seen some big changes this year, most notably in the boardroom, with a –Games brands n/a n/a 16% new chairman and chief executive in place –B2B n/a n/a 46% (see page 12), but its business continues to UK retail n/a n/a -5% grow at a healthy rate. Revenue for Q1 was up European retail n/a n/a 32% by nine per cent to SEK430m as the number of game transactions increased to 11.3 billion, Other n/a n/a -26% despite the phasing out of deliveries to unliTOTAL n/a n/a 7% censed operators in Australia, Poland and the Czech Republic. Fresh from completing the acquisiAn 11 per cent reduction in operating tion of Ladbrokes Coral Group on expenses helped the company 28 March, GVC posted a seven per post a 27 per cent improvement cent increase in group revenue for in net profit for the period to the 20-week period ended 20 May, SEK145.8m. NetEnt signed six benefiting from double-digit new customer agreements and growth from its legacy GVC launched eight new customer casiand newly-acquired Ladbronos during the period. At the end of kes Coral online businesses. Q1, the company held agreements GVC enjoyed a good with 27 new customers that had not yet start to the year, launched.“While NetEnt continues to despite the impact focus on growth, measures were initiof adverse weather ated in March to enable margin expanon its retail busision going forward,” said new president ness which led and CEO Therese Hillman. to a five per cent “A m o n g o t h e r fall in UK retail t hi ngs, t he revenue. This was company is offset by growth of taking action 17 per cent from the Foxy Bingo to reduce costs.” online channel. This GIQ Q2 REVIEW

“Regulatory challenges across the industry cannot be ignored but through our scale, diversification, technology and people, GVC is well placed to continue to succeed”

WILLIAM HILL 1% Net revenue (£) Q1 2018

Q1 2017

Change

Online

n/a

12%

Retail

n/a

-4%

n/a

45%

Discontinued Australian operations

n/a

-22%

TOTAL

n/a

London-listed William Hill is well-placed to benefit from the upcoming sports betting expansion across the United States, with the US division seeing the strongest growth for the 17-week period ended 24 April. Alongside its online growth, this helped total revenue increase by one per cent versus a year ago, including the discontinued Australian business which was sold to CrownBet in April for AUD$313.7m. “William Hill has had a positive start to 2018, making further progress against our strategic priorities to grow UK market share, drive international revenues and deliver key transformation projects,” said chief executive Philip Bowcock. “Continued momentum in online and strong growth in the US have driven a good performance during the period.” 85

C O LU M N AND ANOTHER THING...

Welcome to the New World OPINION

Joe Brennan

SportAD chief executive Joe Brennan helped launch New Jersey’s case against PASPA in 2008. Here, he celebrates the madness of success

“In the rush past the normal things including ‘suitability’, and ‘licensing’, the important thing is to just get live” 86

t has been only a few weeks since the US Supreme Court tossed PASPA onto the ash heap of history. Yet we seem to have blown past the jubilation and driven straight into the madness of a live market. For a result that some of us have been working in earnest for since 2008, it has, in an odd way, come too quickly. I was not alone in thinking the Court wouldn’t release its decision until the end of its term in June, given the precedent it could set by overturning PASPA. The ‘anti-commandeering’ argument that had been the focus of New Jersey lawyer Ted Olson’s legal team is supremely disruptive. It may affect issues such as gun control, healthcare, abortion and other hot-button issues. Welcome, then, to the New World of legal betting. In the rush past normal things including ‘suitability’, ‘testing’ and ‘licensing’, the important thing is to just get live – but don’t make any mistakes. Delaware, whose motto ‘The First State’ acknowledges its uncanny ability to capitalise on the hard work done by others, was the first to take newly legal single-game wagers. Initial wagering volume was encouraging, giving hope that betting revenue at the state’s three racinos may one day exceed the state’s number one business: collecting tolls on the Interstate 95 highway. New Jersey took its first legal bet on 14 June, when Governor Phil Murphy placed the opening wager at Monmouth Park (pictured above).

Governor Murphy was the last of three New Jersey governors to have their name affixed to the state’s legal endeavours, preceded by Govs. Jon Corzine and Chris Christie. His first bet was, in my opinion, very un-New Jersey like: on Germany to win the 2018 World Cup. With the state’s first legal bet graded a ‘loser’, the next biggest action is on the question of who will become partners for the state’s casinos and racetracks in this new world of regulated betting. The answer: it helps if you’re British. America just celebrated its 242nd anniversary of telling Britain what it could go do to itself, yet now the country seems to be in a big hurry to surrender to King William (Hill, that is). I’ll reserve judgement on this until said UK bookies take in one bet what they normally take in one week on sports not named soccer. In the meantime, while we wait for FanDuel and DraftKings to finish their crash course in ‘How to Be a Bookie’ and for Denise Coates to resurrect the head of Ray Winstone on Garden State flat-screens, as part of a company that has been operating – legally – for the last year in the market, I would just like to welcome you all to the neighbourhood. n Joe Brennan is the CEO of SportAD, which operates the fantasy sports/betting hybrid FastPick. com for Resorts Casino in New Jersey and Pennsylvania. He is the former CEO of iMEGA

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