GIQ - Gaming Intelligence Quarterly Apr-Jun 2019 by Gaming Intelligence Quarterly

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Q1 REVIEW

April – June 2019

• APRIL – JUNE 2019 • ISSUE 37

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

A GAMING INTELLIGENCE PUBLICATION

n o i t u l o v The re d e fi i m a g e b l l i w and more r e ig T d e eoslots, R id V , s r a t S Poker

G FEATURIN

THE POWER OF MEGAWAYS | A NEW ERA AT 888 | LICENSING IN ASIA

CONTENTS

LEADER Q1 REVIEW

4 Snapshot Top stories, top quotes, top deals and deal of the quarter

6 The GIAs and Hot 50 The winners of the Gaming Intelligence Awards and the Hot 50 were revealed at ICE Totally Gaming in February

10 Thought Leadership Scientific Games, SBTech and Sportradar

17 People

Steve Hoare

E D I TO R

FUTURE SHOCK AM GOING TO stick my neck out and say there will be two trends that shape the future of online gaming over the next 10 years: r e s p on sible g a m i n g and gamification. Of course, there are other forces. The continued rollout of regulated markets (including the US) is the most obvious but also the most dull. Talking to those driving the gamification revolution, one starts to envisage a future where the industry really can challenge the likes of Netflix for the contents of the average consumer’s wallet. To do so, it will have to engage with responsible gaming to such an extent that the stigma is removed from the industry. This will require a massive leap of faith from many executives, who are really just

fiddling around the edges of responsible gambling at the moment. Gambling is fun and it does not need to be dangerous. Stakes of £200 or £400 need to become a thing of the past for online gaming to become mainstream. The UK Gambling Commission will enforce an end to these stakes in years to come – in the same manner as it has done

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New 888 CEO Itai Pazner gives his first interview; plus new appointments at Betsson, GVC, Penn National and more

24 Games A look at the quarter’s best new games

29 Technology The gamification revolution; plus Playtech draws a portrait

41 Marketing The Megaways brand explosion; plus all the latest marketing news

47 Lottery SciGames wins the world’s third-biggest sports deal; plus news from around the world

50 Legal & Regulatory PAGCOR and Asia licensing; US sports betting bill tracker; plus all the latest legal developments around the world

65 Finance The Gaming Intelligence Stock Index Q1 2019; and The GIQ 20 FY2018

82 And another thing… An epic fail in California

EDITOR IN CHIEF Bobby Mamudi bmm@gamingintelligence.com

DEPUTY EDITOR Kio Dawson k.dawson@gamingintelligence.com

EDITOR Steve Hoare sah@gamingintelligence.com

STAFF WRITER Macarena Rodicio m.rodicio@gamingintelligence.com

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

CONTRIBUTORS Caroline Parry, Jon Harwood

ART EDITOR Alan Bingle alan@forty6design.com

GIQ Q1 REVIEW

ADVERTISING & SUBSCRIPTIONS Omer Uziely omer@gamingintelligence.com

Published by Gaming Intelligence Services Ltd Studio 15, Riverside Building 55 Trinity Buoy Wharf London E14 0FP support@gamingintelligence.com T. +44 (0)845 052 3816

‘Two trends will shape the future of online gaming over the next 10 years: responsible gaming and gamification’ with fixed-odds betting machines in high street bookmakers. If the industry can capitalise on this de-risking for the consumer – by offering an exciting and engaging product that moves the gambling world beyond your typical slots junkies and towards the games industry – then that really would be a revolution. Look at Casumo. Look at Videoslots. They have given us a glimpse of the future. But watch Sky Vegas and its colleagues at The Stars Group – they will probably be the first of the gambling industry megabrands to truly embrace the future. sah@gamingintelligence.com

GIQ Q1 2019

Snapshot

IGT and William Hill launch new sportsbook for Rhode Island’s Twin River Casino UK National Lottery unveils ‘Set for Life’ annuity game 888 gains proprietary sportsbook platform with BetBright acquisition The Gaming Intelligence Awards

Top 5 listed online operators 2018 2.0

£1.87bn

£1.55bn*

£1.54bn

1.5

1.0

£907.6m £634.4m

0.5

Quote of the Quarter THE QUARTER’S DEALS IN 60 SECONDS We have looked at four or five deals – some smaller, some bigger, some older, some newer – but this was something like love at first sight” 888 chief executive Itai Pazner gets all gooey about the company’s recent BetBright acquisition (page 18).

The flood of sports betting deals Stateside shows little sign of abating. SBTech will have been thrilled to win the tender for Oregon Lottery’s sportsbook. William Hill continued its good form Stateside with a deal to provide Iowa’s Prairie Meadows Racetrack & Casino with a sportsbook.

Such is the rush to market in the States that operators and suppliers are even tying up deals in states that are yet to regulate. Oneida Indian Nation announced plans to partner with Caesars Entertainment to launch sports betting in New York. The proposed partnership is subject to National Indian Gaming Commission review and the adoption of sports betting regulations by the New York State Gaming Commission. The pair chose Scientific Games to provide the technology. In neighbouring Pennsylvania, several new sportsbooks were launched and Kindred Group

*(converted to GBP for sake of comparison)

Netherlands approves remote gambling legislation

William Hill

DOJ reverses opinion on Wire Act throwing iGaming in doubt

Kindred Group

Paddy Power Betfair acquires 51% stake in Georgian operator Adjarabet

Paddy Power Betfair

New York lawmakers set to consider online poker legislation

than show up to gain market share. Interestingly, Paddy Power Betfair just invested £101m in the former Soviet state of Georgia. The acquisition of 51 per cent of Adjarabet – Georgia’s leading operator -– shows that there are other parts of the world with flourishing gaming markets. Georgia has a population of just 3.7 million (about seven million less than its US namesake) but its leading betting and gaming operator generated the Georgian lari equivalent of £64m in 2018. The US market will inevitably dominate, but there is a world of opportunity out there if you look closely enough. n

The Stars Group

Metric Gaming and Bethard establish US joint venture

GVC HOLDINGS’ RISE and rise has been one of the most eye-catching phenomena of the past few years. Its acquisition of Ladbrokes Coral means it sits atop the GIQ20 list of the fastestgrowing listed companies in the industry for 2018 (see page 69). GVC’s annual revenues are now just shy of an unassailable £3bn. It is a remarkable figure, far ahead of its closest competitors in the UK landbased market Paddy Power Betfair (£1.87bn) and William Hill (£1.62bn). However, the more interesting comparison with its peers comes from comparing online revenue. Here, GVC continues to rule the roost with total online revenue of £1.87bn. The Stars Group comes second with $2bn (£1.55bn) but it could only include six months of revenue from recently-acquired Sky Betting & Gaming. The Stars Group and Paddy Power Betfair are both neck and neck. These powerhouses, which have acquired peers, stand head and shoulders above Kindred Group (£907.6m), with William Hill (£634.4m) lying a distant fifth. All five companies are now present in the US market. All have taken wildly differing strategies into the market. While it is tempting to presume that it is the US that will dominate growth in future years, the market will house an incredibly diverse array of competitors. A glimpse at the New Jersey iGaming market will show you that the big brands need to do more

GVC Holdings

The Gaming Intelligence HOT 50 of 2019

Online revenue/£bn

most popular news stories on GamingIntelligence.com

Big Five search for a winning US strategy

GIQ Q1 2019

Get the latest news from our website

GamingIntelligence.com

SciGames wins Turkey deal forcing Intralot CEO to resign SCIENTIFIC GAMES’ JOINT venture – Sans Girisim – won the 10-year exclusive sports betting IDDAA contract in Turkey, Europe’s largest state-sponsored sports betting market, and among the top three in the world in sales. The Scientific Games consortium replaces Intralot’s Inteltek venture, which has run the sports betting operation for the Spor Toto State Organization for the past 15 years. The loss prompted Intralot chief executive officer Antonios Kerastaris to resign with immediate effect. Intralot’s 45 per cent stake in Inteltek contributed around 15 per cent of group EBITDA for the 12 months to 30 September 2018, and four per cent of total revenue at €39.3m. This is the biggest sports betting deal SciGames has won since it

acquired NYX Gaming and its sports betting division OpenBet in January 2018. Indeed, it is probably OpenBet’s biggest deal since the Singapore Pools in 2015. Sans Digital, an affiliate of Turkey’s Demirören Holding, will serve as the lead partner in the Scientific Games joint venture, delivering the sports betting solution across at least 5,300 points of sale in Turkey, as well as the central system hardware and software, terminals, terminal software, maintenance, and risk management solution for retail operations and interactive sports betting. It is the only legal sports betting concession in Turkey and the biggest state-sponsored sportsbook in Europe. * For more analysis on sports betting in the lottery sector, see page 48

The quarter in numbers FINANCE

£2,979.5m

GVC’s annual revenue in 2018

US$2,209.2m The Stars Group’s revenue in 2018

-55%

Global Gaming share price drop in Q1 2019 M&A

Acquisitions by 888 (JPJ bingo brands and BetBright)

£101m

Cost of Paddy Power Betfair’s 51% stake in Georgian operator Adjarabet

DEAL

REGULATORY

OF THE QUARTER

US states that have approved iGaming

116

Total approved licences in Sweden’s re-regulated market BUSINESS

entered its second US state with a deal to supply sportsbook and iGaming to Mohegan Sun Pocono. Over on the other side of the world, The New Zealand Racing Board launched a new betting platform developed by Paddy Power Betfair and SG Digital’s OpenBet. Meanwhile, in Europe, Kambi has signed an agreement to relaunch the mybet sportsbook in Germany. Kambi has been running 888’s sportsbook since its relaunch a few years back. That situation will slowly change after 888 purchased the Dublinbased BetBright for £15m. GIQ Q1 REVIEW

It was 888’s second deal of the quarter, after it acquired several JPJ Group bingo brands for £18m. Both deals could be considered small change next to the £101m that Paddy Power Betfair spent on a 51 per cent controlling stake in Georgian online operator Adjarabet. Adjarabet is the leading online operator in Georgia’s regulated market, with an estimated 40 per cent share, and also has a growing presence in the developing regulated Armenian online market, achieving a 10 per cent share of the market by the end of 2018.

Years holding Turkish IDDAA contract for Intralot’s Inteltek JV

Years exclusive contract won by Scientific Games JV in Turkey PEOPLE

Years as Intralot CEO for Antonios Kerastaris before resigning 5

Senior Marketing Executive, Samuel Hill

VIRTUAL SPORTS SUPPLIER

INSPIRED

Product manager Chris Smalley

AND THE WINNERS WERE...

SPORTS BETTING SUPPLIER

SB TECH

The Gaming Intelligence Awards 2019 were presented at ICE Totally Gaming in London in February. Awards were presented. Champagne was consumed. Congratulations to all. GAME OF THE YEAR

BLUEPRINT GAMING 6

Chief development officer Andrew Cochrane

Paul Foster, digital compliance and responsible gambling development director

CEO Gavin Hamilton

MANAGEMENT TEAM

CASINO SUPPLIER

GVC HOLDINGS

RED TIGER

International development officer Rory Sanderson SPORTS BETTING OPERATOR

CASINO OPERATOR

GLOBAL GAMING

CEO Joacim Mรถller

BET365 CTO Playtech Innovation Labs Peter Mares

ONE TO WATCH

BIG TIME GAMING GIQ Q1 REVIEW

INNOVATION AWARD

CEO Nik Robinson

PLAYTECH 7

Sam Hobcraft, founder Omnia Casino

Therese Hillman, CEO NetEnt

2019

Melissa Summerfield, CCO Pragmatic Play, and Julio CĂŠsar Tamayo, CEO wplay.co

Asaf Noifeld, director of product and innovation, The Stars Group

The Gaming Intelligence Hot 50 celebrates the most inspiring, influential and innovative people working in the iGaming sector. We were at ICE Totally Gaming to congratulate them. 8

2019 Barry Cottle CEO Scientific Games

Lucy Buckley, CEO Nektan

Simon Hammon CPO Relax Gaming

Dylan Slaney, SVP SG Digital

GIQ Q1 REVIEW

Frederik Niehusen, CCO Booming Games

Michael Probert, CCO iSoftBet

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

Brand new ball Scientific Games VP of Analytics & Insights Cameron Garrett explains how his team takes inspiration from Moneyball and applies it to the lottery industry IN A PIVOTAL scene from the 2011 film Moneyball, Oakland A’s general manager Billy Beane, played by Brad Pitt, sits at a table and tells his staff of older veteran baseball talent scouts: “We’ve got to think differently.” A major motion picture based on a 2003 book by Michael Lewis, Moneyball tells the story about how the As went from an average ballclub to one of Major League Baseball’s best by taking a highly analytical approach to scouting players. Challenging commonly-held beliefs and re-evaluating their strategy, the As built a team that would win a record 20 consecutive games in 2002 and prove that harnessing data can yield amazing returns. As a result, many teams adopted the ‘sabermetrics’ innovated by the As. To push the lottery industry forward, Scientific Games continues to put its money on analytics. Recently, the company made even more investments in its research capabilities, developing technology and adding data scientists to help lotteries think differently. Leading the charge is Cameron Garrett, VP of Analytics & Insights, Lottery, for Scientific Games. His efforts to drive the industry’s analytical future are already being recognised. In February he was one of three Scientific Games executives to feature in the Gaming Intelligence HOT 50 2019.

Rethinking analytics “At the bottom of the Oakland experiment was a willingness to rethink baseball” – Michael Lewis, Moneyball. To paraphrase this quote, at the bottom of Scientific Games’ insights-focused approach to helping their customers is a willingness to rethink analytics. As lottery systems have become more complex, there is more data available to lotteries than ever before. “The industry has a clear desire to become more datadriven, and it’s something we feel on a daily basis,” 10

says Garrett, who holds a MSc in information systems from Northwestern University. “Of course, this requires the proper resources, including the time, the people and their focus.” With so much data available, it only makes sense to analyse it in a modern and efficient way. Garrett points to the company’s iLottery systems and the SCiQ instant game ecosystem as two examples of how new technology has yielded high-value data. They bring “a wealth of consumer behaviour and engagement data, and an entirely new focus on gleaning insights at retail,” he says. This data goes full circle when it informs Scientific Games’ innovation of new products and technologies that make buying, playing and redeeming lottery games more convenient and fun for consumers.

Fielding a team “If you challenge conventional wisdom, you will find ways to do things much better than they are currently done” – Bill James, Moneyball. Like a baseball manager, Garrett has built a team of skilled professionals who excel at their individual positions, yet play well together. When he joined as a marketing analyst in 2008, analytics were not as prevalent in the lottery business as they are today, and he was one of just a few Scientific Games’ employees focused solely on analytics. Garrett has since created the company’s first Analytics & Insights department. Including Garrett, the group comprises nine members— enough to field a baseball team—with plans in the works to add more data science leadership. Each member of the team performs a key function.

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

game “We structured the team by enabling the right roles to be focused on the right tasks, and they have diverse skillsets, backgrounds and capabilities,” Garrett says. “Our experience shows us the best way to configure these resources to maximise analytical value.” Scientific Games is already reaping the benefits of this approach. “It allows the company to take on complicated predictive analytics projects that would otherwise be left to consultants who don’t know the nuances of our business as well as we do,” says Garrett. Additional benefits include the ability to rapidly build and deploy prototypes and solve complex data integration challenges without burdening other internal groups.

Covering the bases “If you have 12 different pitchers, you need to speak 12 different languages” – Rick Peterson, Moneyball. Scientific Games’ Analytics & Insights group supports the full line-up of services that the company provides, including instant games, lottery gaming systems and digital, and will be adding new verticals such as sports betting as the company expands. In what can seem like speaking several different languages, they provide the comprehensive insights that each diverse business unit values. The goal is to help the company’s account teams provide better customer support and be able to answer lottery questions with a bullpen of resources readily available. “Internally, we have made some great strides to empower our sales and account teams with these capabilities,” says Garrett. “Instead of a culture of ‘We’ll get back to you,’ we want to be proactive in bringing ideas to the table, being able to answer lottery industry and customer performance questions on the fly and have a deep understanding of what drives industry trends.” Garrett’s team is beginning to support external customers and put data directly in lotteries’ hands as well, with the company’s core business intelligence product, Infuse. Infuse combines data from players, games, retailers, equipment and logistics to offer lotteries meaningful insights, macro-level trends and key performance indicators from the industry. GIQ Q1 REVIEW

“Our people are working tirelessly across technology, business and operations to launch Infuse for several key customers,” says Garrett.

becomes borderline impossible to answer that question scientifically,” he concludes.

Squeeze play

“No matter how successful you are, change is always good. There can never be a status quo” – Billy Beane, Moneyball. Virtually every industry is becoming reliant on data, from transactional information to social media, to guide decision-making. With millions of transactions occurring every day at retail and online, there is no shortage of data at lotteries’ disposal. Lotteries have a choice of either making some changes to stay in the game or sticking with the status quo. “In an industry that is looking to become more data-driven, we have to be open to accepting that it will come with some ‘risks’ of pulling levers,” says Garrett. “But in my mind, those risks should be responsibly embraced as opportunities to test, learn, refine and ultimately improve our ability as an industry to give consumers what they want, and maximise the funding returned to beneficiaries.” Though they might not be taking the field against the New York Yankees anytime soon, the team members of Scientific Games’ Analytics & Insights group are helping lotteries play to win for the many good causes they support around the world. n

“Hypothesise, test against the evidence, never accept that a question has been answered as well as it ever will be” – Bill James, Moneyball. Squeezing the most value out of a vast amount of data takes special talents, and Scientific Games’ Analytics & Insights group is always seeking better ways to answer industry questions. Garrett and his team are actively refining their processes, data structure and outputs to maximise value. However, one of the challenges they face doesn’t lie in the mountains of data they process. It comes from an industry culture that can be very conservative and resistant to change. This is particularly difficult from a data science perspective, which requires change in order to effectively measure and provide recommendations. There is a lack of variety on a number of high-level topics, says Garrett, such as testing different payout strategies, analysing various types of prize structures on a granular level and trying new game concepts. “When you ask ‘What is our optimal payout percentage to maximise gross gaming revenue (GGR)?’ and we don’t see any payout variety, it

Calculated risk

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

Working with lotteries to create responsible and profitable propositions Andrew Cochrane, chief development officer of SBTech, on diversifying and expanding clients’ business propositions Focusing specifically on lotteries launching sports betting, how important is it to be working with World Lottery Association members?

By onboarding more WLA members, we are continually expanding our industry knowledge which, in turn, helps us to achieve even higher standards of social responsibility, how we operate and how we deliver meaningful experiences to players.

It’s important on several levels. The lottery market is changing, and looking to both expand its digital market share and diversify its source of revIs it a strategic focus enues into other verticals for SBTech to win these such as sports betting. All of contracts when WLA which contributes to increasmembers are expanding ing funds for the good causes into new verticals? What lotteries play a vital role message does it send to in supporting. your competitors when SBTech has a rich history you can win these types of providing Tier 1 operators of deals? with powerful sportsbook Winning contracts and solutions that enable cusworking with WLA memtomers to compete in their bers partners is a core focus local market. Traditionally, and major growth area for lotteries have struggled to SBTech. Successfully comcompete online with the pripleting complex RFPs and vate sector, largely due to the rigorous due diligence prosystems they use lacking the “We have a proven cedures has been a major flexibility and innovation to track record of achievement for the business drive digital player engage- growing our partner’s in recent years. Our experiment. However, SBTech has ence of working with lotterrevenues regardless changed the game and in ies has given us a deeper of whether they are recent years we have partunderstanding of the way nered with several WLA established operators” they work, their values and members across various Andrew Cochrane, SBTech goals, while the results we markets – with more to come have generated have shown shortly – delivering tailored sportsbook soluthat our flexible, agile and feature-rich technoltions that have helped to significantly broaden ogy, product suite and services complement the player base, attract new and diverse custheir offerings to create a unique and highly tomer groups and responsibly grow revenues responsible and profitable proposition within that are used to assist local communities. their local markets. In addition, WLA members have stringent We thoroughly evaluate every new business requirements around scalability, compliance, opportunity and have a proven track record of data security and corporate social responsibilgrowing our partner’s revenues, regardless of ity. Our work within this sector has enabled us whether they are established operators. Our to further enhance these areas and improved technology supports their business-critical the overall proposition for all of our partners. systems, and in the last decade, we have demon12

strated that we can deliver exceptional results for both Tier 1 gaming and lottery operators.

What lottery clients have you recently launched sportsbooks for in the past year, and are there others preparing to launch? We have launched several sportsbooks for lottery clients including Danske Spil’s (Danish Lottery and WLA member) new challenger gaming brand Youbet.dk in early 2018. Danske Spil selected our award-winning full platform solution including our industry-leading sportsbook and online casino hub. We have also recently secured a multi-year extension to our partnership with the Czech lottery Sazka where we have provided a localised sports betting solution for the Czech market since 2017. We will also be launching our sportsbook solution with two further WLA members in the first half of this year 2019, and we expect to partner with several more notable lotteries soon.

What benefits are there from working with a lottery with an established player base? How important is cross-selling in this? Typically, WLA members have an established brand presence in their local markets, often supported by extensive retail outlets and a loyal and significant number of active players across several product verticals. This is a strong base to embark on a new product vertical such as sports betting, which is why we are focused on securing these opportunities. By working with our WLA partners, we can diversify their offerings and grow their customer base as a result. Our speed to market is unrivalled and we can quickly deliver new and exciting opportunities to both their active customers and new players, offering them a new and improved user experience. This means we have more data to analyse and are constantly able to enhance our solutions to match their needs. n Andrew Cochrane is chief development officer at SBTech. He manages international business development and expansion, revenue management and commercial partnerships for the company.

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WHERE THE BEST

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

Becoming a world leader is about quality customer care too Across the last two decades, Sportradar has developed into the world’s leading provider of sports data and betting solutions. But this success isn’t just because of its commitment to developing a truly comprehensive range of products and services. It is also thanks to the company’s approach to quality, says Customer Care director Daniel Rossmann H AV I N G R E C E N T LY R E C E I V E D re-certification for ISO 9001:2015, Sportradar’s German Data Production Unit has been ISOcertified without interruption since 2014. This signifies Sportradar’s dedicated approach, with an official quality management system (QMS) in place to ensure the integrity of their data procurement process, from recruitment through to live coverage of a sporting match. In what is another coup for the company, Sportradar’s Customer Care Unit also recently received re-certification for ISO 9001:2015. This unit is committed to “going above and beyond the standard to make and keep clients happy”, a tough task when you’re a multinational company with clients of all sizes spread across the globe. As Sportradar’s director of Customer Care, Daniel Rossmann explains, it’s about creating a ‘wow’ factor for customers every day by delivering an outstanding service and experience that exceeds expectations.

What led to the formation of Sportradar’s Customer Care Unit? Customer Care has always been a part of Sportradar, ever since our very first clients. Initially, client enquiries were handled individually by those within the operating units. Over the years, however, the number of client requests increased as our business success grew, and our products and services developed into bestsellers. As such, a more dedicated approach was required. It was at this point that we created official customer support representatives and built a global 24-7 support programme. Since then, we have further established appropriate structures and teams to offer a truly responsive service.

How does the unit operate day to day? We have a number of different support teams focused on each phase of the customer relationship life-cycle. This starts with consultation during the initial sign-on phases, before set14

up and integration teams take over to ensure clients have everything swiftly installed and tailored based on their needs and deadlines. At the same time, we also run training sessions so that each client can use the services in full, right from the beginning of our cooperation. This process is followed by a handover to our regular ongoing customer support, where we provide customers with information, communication channels and best practice procedures on a daily basis. We’re on call 24/7. It’s much more than just customer support. Our aim is to create a unique customer experience through consistent availability and fast responsiveness. We do this through live chats, on-site visits, email and other innovations, which we need to place a higher priority on given we are a tech-driven company. In 2018, we were able to ensure an average first-response time of eight seconds for live chats. While this might seem competitive in terms of market standards, what is of importance to us is that our clients are happy and their requests handled personally, instead of through automatic responses.

What are the unit’s biggest achievements? Clearly the big milestone for us was when customer care passed its first ISO certification in 2014. It demonstrated that we had successfully implemented a quality management system for

“We never stop developing our customer integration services, methodologies, tools and portals” Daniel Rossmann

customer support, as audited by an external body. To be recognised with this internationally respected certification, be able to maintain those standards and have it renewed twice already, demonstrates a great team effort, and so I am truly proud. The feedback we receive after each customer service ticket request is closed is critical for us, too. We also offer client surveys and, regardless of whether the results are good or bad, we learn from this and use the feedback to make further improvements.

How do you cater to such a wide global client base? We currently have six hubs around the globe, in Germany, Asia, Norway, Estonia, Slovenia and the US. Each hub consists of trained and experienced multinational support representatives and technical engineers, covering all key functions and services. This ensures 24/7/365 availability, too.

What sets the unit apart? We collect customer experiences, views and feedback continuously, and use these to create clear objectives for product, development, business and services to ensure we exceed individual customer and market demands. We never stop developing our customer integration services, methodologies, tools and portals to ensure a fast and seamless on-boarding and integration process. And we utilise the latest technology, for example, our new Customer Care 360 portal, to assist. We are also committed to investing in the best possible on-boarding, training and development approaches for all customer service representatives and engineers. Our aim is to continue to invest and focus on efficiency, state-of-the art processes, stability and scalability. So, in a nutshell, it’s about trying to create a continuous circle of cooperation and support and always striving for better quality. n

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PEOPLE FIVE IN THE NEWS Gaming executives who have been making headlines Betsson appoints Frey as new CTO and CPO

Icahn’s people to dominate Caesars board

BETSSON HAS APPOINTED Peter Frey (pictured below) as its new chief product officer (CPO) and chief technology officer (CTO). Frey is CTO of Swedish media giant Bonnier News and will join Betsson in a newly merged role that the operator claims reflects its “focus on efficiency and closing the gap between technology and business”. Efficiency has been the order of the day for the past two years at Betsson, as it has looked to recover ground lost to its competitors. Betsson faces fierce competition in its homeland, where entrepreneurs are constantly pushing the envelope. Frey’s task will be to maintain the efficiency, while pushing the innovation needed to keep an ageing platform up to date.

CAESARS ENTERTAINMENT HAS agreed to give three board seats to individuals representing the Icahn Group. The appointments give investor Carl Icahn greater influence over the future of the company, in which the Icahn Group owns a 17.75 per cent shareholding. In addition to the three board seats, Caesars has agreed to give the Icahn Group the right to appoint a fourth board member, if a new chief executive who is acceptable to the new directors is not named by mid-April. Political machinations are never far from the surface at Caesars. Icahn’s arrival as the company’s biggest shareholder adds a whole new dynamic. Whoever is eventually appointed CEO will be certain of one thing only in this volatile environment – he or she needs a decent relationship with the guy who controls a quarter of the company’s board.

Penn recruits from Comcast to replace Sheffield PENN NATIONAL GAMING has appointed Jon Kaplowitz to replace Chris Sheffield as senior vice president of interactive gaming. Sheffield is a compulsive entrepreneur, who intersperses new ventures with spells at highprofile corporates looking to add a touch of his entrepreneurial sauce. He was the perfect person to launch Penn Interactive Ventures, but with Pennsylvania regulators dilly-dallying over the launch of regulated iGaming, it is the perfect time to hand over. Kaplowitz has led the new businesses team for media conglomerate Comcast Corporation for the past seven years. His expertise structuring joint ventures and complex partnerships will be essential as Penn navigates the new sports betting landscape. GIQ Q1 REVIEW

IN THIS ISSUE 17 Five in the news 18 Exclusive first interview with new 888 CEO Itai Pazner

Humberstone leaves GVC trading team GVC HOL DI NG S ’ LONG-SERVING head of trading Jim Humberstone is departing for pastures new and will be replaced by his deputy Tom Ritzema (pictured). Humberstone was GVC’s chief operating officer between 2014 and 2016, taking over the group director of trading role following the bwin.party acquisition in February 2016. His trading expertise has been a huge factor in the company maintaining its success throughout its remarkable recent growth curve. Ritzema, who has nearly 20 years’ experience in bookmaking and trading, joined GVC as head of trading in April 2013 following the company’s acquisition of Sportingbet. He should be the perfect replacement. GVC is also rejigging its investor relations and communications after department head Nick Batram was promoted to group director of corporate strategy and development, where he will report directly to chief executive Kenneth Alexander, focusing on M&A activity and the group’s broader strategic direction. Ladbrokes Coral head of IR Paul Tymms t a k e s B a t r a m’s old role.

Quickspin co-founders depart Quickspin has been one of the industry’s most successful new slot suppliers since chief executive Daniel Lindberg appeared in the Gaming Intelligence Hot 50 in 2012, before the company had even released a game. As anyone who has attended the company’s ICE parties would attest, Lindberg and his co-founders Joachim Timmermans and Mats Westerlund have fostered a culture that has allowed creativity to thrive. Timmermans and Westerlund announced their departures at the beginning of the year. Quickspin was acquired by Playtech two years ago and has managed to remain semi-autonomous, as Playtech have trusted it to continue doing what it does so well. Erik Gullstrand (pictured) has been promoted to replace Westerlund as chief product officer. As an employee since the beginning, he should have no problem maintaining the company’s culture. His challenge will be to maintain the company’s innovative product portfolio in an industry that is embracing the gamification revolution (see page 30).

P EO P L E 888

Meet the new boss at

In his first major interview since being appointed chief executive, Itai Pazner talks about M&A, the US opportunity and the beauty of owning bingo, casino, poker and – most recently – sports betting technology

ITAI PAZNER IS the new chief executive officer of 888 Holdings. He takes over from his good friend Itai Frieberger, who leaves the company after 16 years – the last eight as chief operating officer and chief executive officer. Frieberger’s last significant announcement as CEO was the $28m deal to buy out joint venture partner Avenue Capital from the All American Poker Network. Pazner has continued along the same route, with two M&A deals in quick succession – the £18m acquisition of the Mandalay bingo operations from JPJ Group and, most recently, the £15m deal for sports betting company BetBright. “We continue along the same strategic path that we laid down over a year ago [to find a solution to take control of our sports betting technology]. We ››

P EO P L E

888

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P EO P L E 888

have looked at four or five deals – some small“I have to make sure things are done the way er, some bigger, some older, some newer – but I want them to be done.” This succession has this was something like love at first sight, and been carefully planned. Pazner was always the the more we looked into the detail, the more we heir apparent. Frieberger designed the manliked the deal,” says Pazner. agement team so that all the operational manBusiness development chief Yaniv Sheragement of the company reported into Pazner, man oversees M&A, with business developwith only chief financial officer Aviad Kobrine ment VP Marcel Elfersy taking charge on this reporting separately into the CEO. deal. However Frieberger, Pazner and longSo, Pazner is fully tuned in to every aspect serving chief financial officer Aviad Kobrine of the company. As such there is no need for have formed a tight-knit team for many years an overarching COO at present. That might and the BetBright deal can be seen as the fruichange in the future, but Pazner gives the tion of an M&A strategy that has experienced impression that is fairly unlikely. Never say some failure – noticeably on the bids for bwin. never but… party and William Hill. Pazner has his own style, but the change at Though the £15m investment in BetBright the top is unlikely to herald much of a change can hardly be seen as an equivalent to the of strategy. Frieberger and Pazner were part multi-billion pound bids for bwin.party andHills, of the management team that succeeded Gigi it might eventually take 888 to the same place. Levy in 2011. They were joined on the executive 888 has acquired 100 people in team by Sherman, Yaniv Schwartz Ireland (“A country with sports betand head of product technologies Hila ting in its blood,” points out Pazner). Klein. The BetBright platform has been 888’s share The tightly-knit team (together live in the UK for three years and in price high in with chairman and former CEO Brian development for six. There has been June 2018 Mattingley and CFO Kobrine) has a multi-million pound investment been responsible for the turnaround in its technology and team, but not that has seen the company’s rise and quite enough to give it the firepower rise, until a bit of a stutter over the needed to become a great brand in the past year or so. UK market. The 888 team feel like they 888’s share We will return to the stutter later have a bargain. A year ago it would price on the but Pazner makes the point that as an day of Pazner’s integral member of this team he had not have been nearly as cheap. “It is a modern, scalable sports bet- promotion in already assumed responsibility for ting platform that uses a new way of January 2019 the company’s strategic direction. trading and risk management that is That will not change. based on technology and algorithms However, Frieberger is not the only rather than manpower. If you add our member of that team to leave. His sucback end and marketing ability, we will cessor as VP of product technologies, Slide in value add a lot of value,” explains Pazner. Klein, has also left the company, with The team has discontinued the her role being assumed by Gili BrandBetBright brand and will integrate 888Sports shtein, who is also something of an 888 veteran to the platform, market by market – probably having joined the company in 2006. going live in early 2020. It gives 888 a sports betContinuity has been a theme since Frieting platform for the US market and it gives 888 berger and Mattingley took over as COO and control of its own technology across the casino, CEO in 2011. Pazner aims to nourish that culpoker, bingo and sports betting verticals. Few ture but there will be some changes. operators have that capability.

£3.18

£1.69

53%

A smooth succession Pazner and Frieberger followed similar career paths at 888. Like Frieberger, Pazner was COO before becoming chief executive and was senior VP and head of B2C before that. Both were groomed for the top job during their time as COO. However, there will be no new COO with the same responsibilities as Pazner and Frieberger. At least not in the short-tomedium term. “I have to be hands-on,” asserts Pazner. 20

From top: Itai Frieberger, ex-CEO of 888; Hila Klein, ex-SVP head of product technologies, 888

Regulatory challenges

To some extent it feels like a good time for this change. The company’s share price has slumped from a high of GBX318 in June 2018 to just GBX169 on the day that Pazner’s promotion was announced. 888 is just one of 37 gaming companies to see its share price slump during 2018, according to The Gaming Intelligence Stock Index 2018. Revenue has maintained an upward trajectory throughout Frieberger’s tenure. The stutter referred to earlier only applies to the

“I am not a technology or a product person but I am a demanding consumer. And I will be very demanding in the business to get the best products out there” Itai Pazner, 888

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888

888’s launch in Denmark

drop in profit that has accompanied a major overhaul of the company’s compliance regime enforced by the UK Gambling Commission. While that unenviable task is never fully completed, the company has restructured to support the changes and it would be understandable if Frieberger thought the time was right for a change. Pazner talks about operational changes that have been accompanied by a change of mindset that understands this is how the world of online gaming is going to be everywhere in the future. The company carried out the changes very quickly and aggressively. It is not a process Pazner would necessarily choose to do – it took a toll on profit – but he is happy with the results. “Unfortunately and fortunately, we were GIQ Q1 REVIEW

one of the first to go through this process. Eventually we came out of it a better operator – an operator that is ready for the next phase of the industry,” he says. “The bigger and smaller operators that won’t adapt will not be able to continue operating in the industry.” While each regulator has its own demands and requests, 888 is putting in place the processes in each of the regulated markets in which it operates.

Opening up market by market So a new chapter begins. While Pazner would change nothing his predecessor did, and will pursue a similar strategy, he will bring his own style and focus. “I am very much growth-driven,” says Pazner. “I am a growth-first and growthfocused person. That is my nature. I always

look for growth opportunities and I always push for growth opportunities.” He wakes up every morning, and when the email or SMS comes in with the day’s numbers, he stops everything and rakes through it line by line to analyse every part of the business. He will then start sending emails to the relevant departments to ask questions and catalyse improvements. The most obvious driver of growth is geographic expansion. The company is seeing good results in the majority of regulated markets it is launching in. He mentions Spain, Italy, Romania and Denmark. And while he acknowledges that it is only early days in Sweden, he says it is performing significantly better than ever before because of the localisation of the product, payment methods and everything else. “We finally did Sweden properly,” says Pazner. “A market like Sweden, which might be the most competitive market in the world after the UK, requires that attention, adaptation and localisation. We just needed the regulation to push us into doing it because we were busy growing elsewhere.” He believes it will be Europe’s third biggest market after the UK and Italy. So many of the industry’s suppliers and operators are Swedish and the population is receptive to the industry. “Remember, I’ve been in this industry forever. In the early 2000s, one of the first markets we tested the water with was Denmark. Unexpectedly it outgrew other much bigger markets. As a culture they adapted to online and to gaming.” Portugal is the second market that 888 has launched in this year. When we speak, it has only been live for a short time, so Pazner is unable to share much insight on the company’s prospects. However, Portugal will share poker liquidity with Italy and France, and that fact alone fills Pazner with optimism. He is less enthusiastic about Germany, which had been placed under review (normally a euphemism for closing down), but continues to operate despite a local court ruling against 888 earlier in the year. He diplomatically describes the regulatory situation as “unstable and unclear”. “We believe at least online sports will be regulated and the industry will be able to participate as it does in other markets in Europe. Hopefully, casino and poker will be somehow regulated but it is one of the more complex, sensitive jurisdictions at the moment.” Since our interview Germany has agreed a third State Treaty on Gambling which only allows sports ›› betting. 21

P EO P L E 888

“When I use something like Netflix and they know what I want and what I’m thinking about before I even know what I want, that’s where I want to be in terms of our product” Itai Pazner, 888

The promised land The next new market would have been Pennsylvania but the state’s launch of online gaming has been put on hold while regulators ponder the impact of the Department of Justice’s new interpretation of the Wire Act. “The US is the promised land that keeps getting a bit further away, but it is still the promised land. I am Israeli and to get to the promised land I know you have to work hard,” he jokes. While some lawyers have dismissed the DoJ opinion as politically motivated and legally unsound, Pazner is cautious. “It will have an impact,” he asserts. The company and its lawyers are analysing the opinion and its impact, but he thinks it will add operational complexity and cost rather than stopping the market dead in its tracks. His interpretation is that it might force operators to place a data centre in each state, which was how the industry started in the US before pooling resources into fewer data centres. Potentially, it might also have an effect on the tri-state poker network that 888 launched in May last year. “The opening of sports betting is incomparable to the complexity that comes with this new opinion. It is another drag. It is a bit more time and a bit more money but it does not change the size of the prize.” When I suggest that 888’s progress has been slow in the US, he says it takes time to launch in each jurisdiction with the right partner. He still views it as a medium- to longterm opportunity. If you look at the company’s progress in Europe, it has come slowly, jurisdiction by jurisdiction. However, it has been successful in each new regulated market it has entered and he is confident the model can and will be applied to the US. He says the company still has a lot of catching up to do in the one market that it is operating in. It does not have the latest version of its casino platform operating in New Jersey, it does not have enough games on the site and it compromised on quality to rush-release its 22

sports betting product. “We are working on all of those fixes. Sometime during the first half of the year it will be ready and we will be able to put more marketing dollars behind it.”

The technology piece A company owning all of its own technology will continually have work to do on its various platforms. “I am obsessed with products,” says Pazner. “I am very judgmental about products in my personal life. I am picky and get annoyed when I have bad product experiences. I am not a technology or a product person but I am a demanding consumer. And I will be very demanding in the business to get the best products out there.” He says the new Orbit casino platform is a great example of what the 888 team can do when it invests in the right areas. Consumers have apparently responded with enthusiasm. He talks about doing a good job in each vertical but also on the “unified experience” that comes around them. For the Orbit project, they brought together the marketing, product and technology teams and gave them the time and resources to complete it. It took almost two years. “The result is above and beyond what we expected,” continues Pazner. “It just does it right. It does it smoothly. It has the right content. It has the right AI features and recommendation engines. It loads quickly. There is

no magic there. It just does everything well and is delivered in a user-friendly way.” He compares it to Netflix and, like Netflix, 888 generates 50 per cent of its content itself but also releases games from everyone’s favourite suppliers. “When I use something like Netflix and they know what I want and what I’m thinking about before I even know what I want, that’s where I want to be in terms of our product.” He believes they got it right with casino. Now, of course, there will be a big project on the BetBright integration. A new front end for bingo is set to be launched during the next few months. The next iteration of the poker platform – Poker 8 – is also being tested for a phased rollout over the coming quarters. With all this work to do, can we expect a break in the mini M&A frenzy? “A big part of my role is not to chase the deals but to bring the business to a position of strength, so that when the opportunity comes we get the right kind of deal,” says Pazner. “There is momentum in the market around those big, transformative deals but we continue to focus on being a standalone business.” In this day and age, the M&A door is never closed but 888 is happy with its lot. “We have an amazing team in place,” concludes Pazner. “There has been a lot of distraction around compliance and regulation during the past two years but we have proved that when we focus that team in the right direction we can achieve a lot.” n

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GAMES NEW RELEASES Q1 GIQ casts its eye over the quarter’s brightest new games

RED TIGER LAUNCHES PIRATES’ PLENTY

PLAYTECH EXPANDS SPORTING LEGENDS SERIES

Red Tiger’s latest release sees players search for sunken treasure aboard a submerged lanternlit galleon in Pirates’ Plenty. Developed as a ‘portrait-first’ slot, the game’s 5x3 reels are filled with the spoils of the ghostly skipper’s buccaneering lifestyle, offering rum and riches at every turn. A mystery sixth treasure reel offering big prizes is unlocked when players collect every piece of the treasure map during the base game, with the slot’s volatility changing when they hit the unique feature. “Players can enjoy real progress with Pirates’ Plenty, with more spins giving them more pieces of the treasure map in order to unlock the sixth reel,” says director of business development Carl Ejlertsson. “Players will love the gamification and sense of achievement in Pirates’ Plenty, and our operator partners will really value its ingame retention qualities.”

The latest game in Playtech’s Sporting Legends suite of slots features Northern Irish horse racing legend AP McCoy, who rode a record 4,358 winners and was Champion Jockey 20 consecutive times. The first in the series to include Playtech Power Play, an enhanced spin option with extra features to boost players’ win potential, AP McCoy: Sporting Legends also features in-game voiceover and video clips from its star, including a fortune wheel bonus round hosted by the former jockey. As with all games in the suite, AP McCoy: Sporting Legends gives players the chance to win one of three jackpots; the daily, weekly and mega jackpots. Each jackpot can be triggered on any spin and with any stake, and if the daily jackpot is won before 9pm, it automatically retriggers, with the weekly jackpot running until midnight every Friday.

NETENT LAUNCHES FIRST SPORTS-BRANDED GAME NetEnt has launched its first sports-branded slot, based on eight-time Champion Jockey Peter Scudamore MBE, who rode 1,678 winners in a 15-year riding career. Launched ahead of Cheltenham Festival in March and the Grand National at Aintree in April, Scudamore’s Super Stakes is a five-reel, three-row, 20 bet lines slot offering a base game with Random Lucky Horseshoe Wilds and the Bet Slip feature, a game within the game where players can bet on a certain symbol landing in a certain number of spins. “We’re delighted to partner with Peter; he’s not just a true legend of the sport but a 24

true personality that has imbued his knowledge, charm and character into this game,” says games director Bryan Upton. “The bet slip feature alone we feel will be popular with players and punters throughout the year, but Peter’s presence, voiceovers and advice throughout the development process should win over most of the horse racing fans out there.”

GREENTUBE DEBUTS ENCHANTED FORTUNES LINKED JACKPOT SERIES Greentube released the first title in its new Enchanted Fortunes Linked Jackpot series of games. Book of Ra Mystic Fortunes is the first addition to the jackpot series, which sees players head to ancient Egypt in search of magical treasures. Further releases will see players discover the true power of the Egyptian goddess Isis in Goddess Rising, search for gold beneath the architectural wonders in Pyramid Fortunes, and hunt for the riches of the undead in Vampire Fortunes. All four slots feature a four-level linked progressive jackpot – mini, minor, major and grand jackpot levels – that can be won by matching the correct symbols once the feature has been triggered.

G A M ES

Q1 RELEASES

SG DIGITAL ROLLS OUT LATEST RAINBOW RICHES GAME…

THE FINAL COUNTDOWN FOR BIG TIME GAMING

BLUEPRINT ROLLS OUT TEMPLE OF TREASURE MEGAWAYS

Developed by SG Digital’s Barcrest studio, Rainbow Riches Leprechaun’s Gold brings the player-favourite series to a whole new level. Players must keep an eye out for the Lucky Leprechaun as he randomly arrives to deliver bonus symbols, and can then take a whirl on the Rainbow Ring Bonus Spinner to reveal three more bonus opportunities. Propelling a theme forward with new features and massive win potential, Rainbow Riches Leprechaun’s Gold combines the series’ classic look and feel with fresh mechanics. The game has been released as an omni-channel title which is also available for the retail sector.

Taking inspiration from the 1986 hit song of the same name by Swedish rock band Europe, Big Time Gaming released The Final Countdown through distribution partners Relax Gaming and Scientific Games. The slot combines the song with an intergalactic theme and sees players greeted by two astronauts, Vegas and Venus, who are there to help them jump on board The Final Countdown and blast off into space. “The Final Countdown is going to be a big one,” says chief executive Nik Robinson. “It’s going to punch a hole in the sky as players launch towards Planet Big Win with those iconic keyboard notes blasting away in the background. The strength of the tune combined with the incredible math and state-of-the-art mechanics has resulted in a slot that is out of this world.”

Blueprint Gaming’s new Aztec-themed slot, Temple of Treasure Megaways, is the latest to feature the popular Megaways mechanic under license from Big Time Gaming. Players who gain entry to the Temple Free Spins bonus round have the option to choose their free spins volatility and guarantee a set number of Megaways per spin. “Untold riches are on offer in our latest release Temple of Treasure Megaways, should players find their way through the jungle,” says director of marketing and relationships Jo Purvis. “The Aztec-themed slot is one of our most visually striking to date and with the Megaways feature offering up to 117,649 ways to win, players will become champion tomb raiders as they hunt down the treasure which lies hidden within the temple.”

RELAX STEPS INTO THE DRAGON’S LAIR

YGGDRASIL HEADS TO ANCIENT ROME IN LATEST SLOT

Relax Gaming is transporting players to the lair of legendary dragon Eldur in Dragons’ Awakening. Set in a fiery volcano, the 5x3 slot features four dragon spirits that guard hidden riches within their precious eggs. The Dragon’s Rage feature sees one of the four spectres replace all random Suited Rock symbols until a win is secured. “Dragons’ Awakening is an exciting addition to our portfolio of premium video slots,” says chief product officer Simon Hammon. “It offers all the pace and features that we’re focused on building into our games and sets the reels ablaze with larger than life graphics. The intricately designed Dragon’s Rage feature puts big wins within reach and we’re proud of the unique blend of engaging mechanics.”

Yggdrasil launched a new Ancient Rome-themed slot with the release of Champions of Rome. The game is set in Rome’s Colosseum in the midst of a mighty battle, where swords, tridents and maces fly through the air and make wilds appear as they smash into the reels. Its main feature is added wilds, with four wilds hitting the reels every time two scatter symbols appear in base play, as well as in every spin during each Free Spins Mode. “Champions of Rome is a visually impressive game where players are in control of how much they want to risk,” says head of slots Jonas Strandman. “Seasoned slot warriors can satisfy their thirst for adrenaline by choosing to risk it all, while more casual players can make a more conservative choice with guaranteed winnings.”

… AND REPURPOSES LAND-BASED CLASSIC FOR ONLINE PLAY SG Digital has also brought one of Scientific Games’ popular land-based titles to the online space. In Jin Ji Bao Xi: Endless Treasure, players enjoy the look and feel of another of the supplier’s popular land-based game, 88 Fortunes. The new slot features proven land-based math combined with the classic Fu Bonus in a high-paying, volatile game. Jin Ji Bao Xi offers four jackpot prizes in the Fu Bonus, in addition to the ALL UP gold symbol feature. Also new in the game is the Top Up feature, which initiates streaking respins for massive wins up to 15,499 times players’ stake, as well as a chance at the grand jackpot. GIQ Q1 REVIEW

July 17th (Wed.) â&#x20AC;&#x201C; 19th (Fri.), 2019 ď˝&#x153;Songdo Convensia, Incheon

Why Korea? Why not Korea! To Come to CIRS, or Not to Come, that is NOT the question! CIRS ASIA presents opportunities for all stakeholders from land-based to digital gaming sectors to help strengthen connections and understand practical strategies for profitable business and sustainable growth. CIRS ASIA will gather all leaders from industry, governments, and academia to debate what needs to be incorporated for the future innovation in the Asia gaming industry. CIRS ASIA begins with the theme "Next Market". Find your next lucrative opportunities in the global hub of Northeast Asia, Songdo, Incheon.

TECHNOLOGY 5 BIG LAUNCHES Five of the quarter’s major technology product launches

IN THIS ISSUE 29 News: tech launches 30 Feature: the gamification revolution 36 Feature: Playtech adopts portrait

Churchill Downs launches BetAmerica in New Jersey… KENTUCKY-BASED CHURCHILL DOWNS Inc (CDI) has launched an online sports betting and casino offering in New Jersey under its BetAmerica brand.

What’s the big idea?

FanDuel debuts retail sportsbook in Pennsylvania THE FIRST FANDUEL sportsbook officially opened its doors to the public at Valley Forge Casino Resort in mid-March, marking the operator’s retail debut in the state of Pennsylvania.

What’s the big idea? The sportsbook launch marks the start of FanDuel’s partnership with Boyd Gaming, which was agreed last August. A month later, Boyd entered the Pennsylvania market for the first time with the acquisition of Valley Forge Casino

SG unveils Connect and Amplify partner platforms SCIENTIFIC GAMES UNVEILED an enhanced casino partner programme for SG Digital, to deliver an improved service for operators, third-party content providers and games studios.

Resort for $280.5m. The FanDuel Sportsbook opened in time for the March Madness basketball tournament, with the ceremonial first bet placed by Brent Celek, former Super Bowl champion for the Philadelphia Eagles. FanDuel already operates the top sportsbook in New Jersey, at the Meadowlands Racetrack. “In less than a year, FanDuel has established itself as the leading sports-betting brand in the New Jersey market,” says Boyd Gaming president and CEO Keith Smith.

888 launches Poker 8 platform 888 has begun the phased rollout of its next-generation poker platform to new customers across the 888poker.com network.

What’s the big idea? Renamed as Connect and Amplify, the two partner streams will allow promotional features being developed on the platform to be made available across all games, not just SG’s in-house studio games. Connect and Amplify partners will have access to more than 130 global operators in 20 regulated jurisdictions. “Our newly-enhanced partner programme provides games studios with an opportunity to connect with the world’s largest online distribution network, while simplifying integration,” says SG Digital studio director Rob Procter. “At SG Digital, we have an experienced and dedicated team that can help studios produce innovative content.” GIQ Q1 REVIEW

What’s the big idea? The development of the Poker 8 platform is 888’s biggest product overhaul in recent years. The first phase involves upgrades to 888poker tables for new desktop players, with enhanced graphics, a cleaner design and improved functionality. Further upgrades are planned as part of the Poker 8 roll out during Q2, with improved graphics and enhancements to the lobby and mobile platform. “We’re thrilled with the roll-out of our Poker 8 platform,” says 888 senior vice president of B2C Guy Cohen. “Once the roll-out is complete, our best-inclass platform will offer the most entertaining and engaging experience on the market.”

CDI first unveiled the BetAmerica brand following the opening of its first retail sportsbooks at Harlow’s Casino and Riverwalk Casino venues in Mississippi last August. Through a licensing deal with Golden Nugget Atlantic City, the operator has now launched an SBTech-powered sportsbook for BetAmerica, alongside an online casino featuring products from IGT PlayDigital, NetEnt, Spin Games, Everi and Konami. “We are excited to introduce our online BetAmerica sportsbook and online casino platform to New Jersey residents,” says CDI chief executive Bill Carstanjen. “We look forward to delivering innovative, state-of-the-art products that we believe will exceed our customers’ expectations by leveraging our deep experience as the leader in online horse race wagering through our TwinSpires platform.”

… and Golden Nugget launches online sportsbook MEANWHILE, GOLDEN N UG G E T At l a nt ic Cit y became the latest operator to launch online sports betting in New Jersey.

What’s the big idea? Golden Nugget is the market leader in New Jersey’s regulated iGaming market by some distance, and will be looking to replicate some of that success with its new SBTech-powered online sportsbook. GoldenNuggetCasino.com becomes the 14th licensed website to launch sports betting in New Jersey, following the opening of the market last June. “We are very pleased to bring sports betting to our online and mobile casino patrons,” says Golden Nugget Online Gaming senior vice president and general manager Thomas Winter. “We have worked with our partners Scientific Games and SBTech to bring the best that an online casino and sportsbook can offer to New Jersey players.” 29

T EC H N O LO GY GAMIFICATION

Games without Talking to online casino software suppliers at February’s ICE conference left little doubt about the way the industry is heading – gamification. The future of gaming lies in these innovations, writes Steve Hoare GAMIFICATION IS A very broad term. In a sense, any game gamifies a website. You could view it as a ludicrous term to use for casino games. How can you gamify a game? Google the term and you will come up with the following definition: “The application of typical elements of game playing (e.g. point scoring, competition with others, rules of play) to other areas of activity, typically as an online marketing technique to encourage engagement with a product or service.” As SG Digital casino VP Dominic Le Garsmeur explains: “In our industry we see it as added experiences that engage players outside of the core real-money gameplay.” But it has come to mean more than that. There is a blurring of the boundaries – between game, lobby and even registration – that offers a glimpse into the future of online gaming.

Social, RMG and community Casumo, with its adventure-style of progression, and Videoslots, with its battles, have been the trailblazers in this area. Their growth rates have been matched by the likes of LeoVegas, but the gamified casinos are attracting a very different type of player.

Videoslots chief executive officer Alexander Stevendahl explains: “It is all about entertaining. The problem is that everyone has the same games everywhere. It does not matter if you play Starburst on William Hill or Videoslots. Why would they pick William Hill and why would they pick Videoslots? That is where gamification comes in.” Videoslots and Casumo focus more on the player that is seeking entertainment with a small amount of money, rather than the traditional gambler. “Those are the future players in my view,” says Stevandahl. “There are a lot of problems with the media and responsible gaming, which means being a traditional gambling site is going to get harder and harder.” It is a similar concept to the poker industry’s search for recreational players. It is also a very similar concept to the social casinos that have thrived on Facebook. “Our battles are very close to social,” says Stevendahl. “You play with friends and you talk to each other and you win tournaments. That is very successful but you need to balance it because a lot of those players are free players. You need to balance that with those who want to spend money.” Operators such as 888, bwin.party and Paddy Power tried to embrace social casino ›› 31

T EC H N O LO GY GAMIFICATION

›› Alexander Stevendahl, Videoslots

“We are trying to create a really tight gameplay experience from the lobby of the operator into our games, blurring the lines between the lobby and the game” Gavin Hamilton, Red Tiger Gaming

but did not manage to translate its charms to real-money gaming. However, there have been numerous examples of real-money games suppliers which have succeeded in social casino, with IGT’s DoubleDown Casino being the most obvious example. High 5 Games is another land-based supplier which made the leap to social about five years ago. “The social sites have kind of perfected gamification – doing challenges and building your investment in the game and in the site itself. I would think everyone would want that but it is a bit more difficult trying to incorporate that into real-money gaming,” says High 5 Games chief creative officer Thom Ang. Firstly, there is regulation. Some social casino sites shower you with free credits, let you win every game and make the game more addictive. That is a problem when it comes to RNG games, responsible gambling and regulators. The maths have to be 100 per cent fair and auditable to get certification from the likes of GLI or BMM Test Labs. “Social casino operators could trial mechanics a lot easier without being worried about random number generators and the like,” comments Red Tiger Gaming chief executive Gavin Hamilton. Ang also suggests there might have been some resistance from consumers who prefer to play with real money. And perhaps this is why it took new operators – Casumo and Videoslots – to succeed with this rather than the old guard of 888, bwin.party and Paddy Power. “There is a natural human element in there. Whether you are playing social or realmoney gaming, you want to feel like a winner,” says Ang. “In RMG, it’s about winning money, in social there are other ways to frame that feeling of being a winner. Being at the top of the leaderboard is one of those methods.” One of the problems in the RMG space is whether the leaderboard actually enhances the feeling of winning money. Land-based casinos straddle this divide fairly beautifully. The thousands of people gambling on $5 tables do not expect to win big. They take along $100 for the night, have a few drinks, play a few rounds and enjoy an evening’s entertainment. If they happen to take home more money than they entered the casino with then they will be very happy, but it is not the sole aim of the evening. These are the sorts of players that the Videoslots chief executive is talking about attracting online. PokerStars Casino chief Bo Wänghammar has also talked about creating a Vegas-like experience online. Stars Rewards was the company’s first step towards gamifying the Stars casino

experience. It made the status bar of Stars Rewards almost as attractive as the game itself. Recently acquired Sky Vegas has always aimed at providing a fun and entertaining environment for recreational players rather than hardcore slot players. “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,” Wänghammar told us recently. “They do not spend much but they are very loyal. I think it’s time to realise lowervalue players can be valuable and profitable. Eventually you run out of high-value players and the cost of acquiring them is escalating.” The Sky Vegas and PokerStars Casino teams are singing from the same song sheet, and the Stars Group Technologies team in Toronto is pulling in the same direction. Hamilton at Red Tiger says Stars’ new Victory Tribes slot, which was developed inhouse by the Stars Technologies team, “takes the best of everything in the space and combines it into one game”. Indeed, the Stars Tech team led by Jeff Cabral has thrown everything at this game

T EC H N O LO GY GAMIFICATION

Clockwise from left: Casumo; Videoslots’ MyRTP; Victory Tribes from PokerStars

– including the kitchen sink. Victory Tribes was Cabral’s first attempt at bringing every innovation he could think of into a single game. Victory Tribes allows players to customise their game by selecting their tribe, which you can change in-game, and taking on opponents in bonus games, which are dubbed ‘Tournament Battles’. Five times every hour, up to 50 players will battle each other for victory and big prizes. The game features Super, Extra and Mega progressive shared jackpots and every jackpot that hits is shared among up to 50 qualified players. The Mega jackpot, for which players can win a share of over $60,000, is the largest of the three. With each bet, a player adds to their Battle Meter which, once complete, qualifies them for a Bonus Tournament. Every 12 minutes, qualified players get the chance to win more in either a head-to-head tournament against another player, or a group tournament GIQ Q1 REVIEW

played against up to 50 others. “This is pretty exciting. Nobody has ever done that before. It adds to the community feel of the game,” says Cabral. The game also has a community news ticker that keep you updated on how much other people are winning, or big jackpots that are happening. It is a feature that is often used in social but is new to slots. Victory Tribes has been successful – staying in the casino’s top 30 for a few months – but it has not knocked the ball out of the park. It is possible that the game is too innovative. It is doubtful that so many features will be included in one single game in the future. But some of the community aspects of the game are likely to become industry norms. “Nobody else is making multiplayer slots but I think the advent of Victory Tribes will change that,” says Cabral. PokerStars is clearly making progress. You

can expect more innovations linking the lobby and game, but Wänghammar would be the first to admit it is not an easy task to create the Vegas-like entertainment experience online. Stevendahl says it took almost three years to create Videoslots’ Battles and another three to launch on mobile. The results, though, have been fantastic, with a 30 per cent growth in revenue during the first three months of mobile operation. However, these innovations will not be for everyone. “You have so many white labels in this industry. Very few operators have their own platform and if you don’t have your own platform you will have a big challenge to gamify,” says Stevendahl. “But you can do gamification on low-end points. A lot of suppliers are doing missions, for example. That is the most common one.”

On a mission Yggdrasil was one of the first suppliers to successfully release gamification innovations. Back in 2016, it launched BOOST, which provides features such as Super Free Spins and the network campaign tools, in-game tournaments and in-game raffles. It followed that with Missions, in which players complete missions across a number of games to win prizes. During the past year it has upgraded tools such as Cash Race, Missions and Tournaments to make them fully customisable. Instead of pre-set visuals and game combos, operators have the opportunity to add their own visuals to in-game promotions and mix and match missions and tournaments of their own preference. Scientific Games is the latest to take note ›› 33

T EC H N O LO GY GAMIFICATION

– launching its own Missions across its huge library of games. It has partnered with Amazon’s GameSparks division, which lets game developers build server-side capability for their games, by way of APIs and a cloud-based coding tool, and then manages those features after they are launched. The GameSparks’ platform has traditionally been used by casual games developers to bring leaderboards, challenges, multiplayer functionality, tournaments, teams and chat to their games. The first fruits of this collaboration are being beta-tested with LeoVegas. Missions are first but Le Garsmeur’s team at SG Digital are experimenting with leaderboards next. Another supplier, iSoftBet, launched its real-time leaderboard at ICE. It is available across all of iSoftBet’s games and those of its partners. iSoftBet chief executive officer Nir Elbaz believes the real-time element of its leaderboards is unique. In a manner similar to Yggdrasil’s innovations, you can also accumulate symbols and other artefacts. It will be available across iSoftBet’s 48 games partners and 200odd games. It was launched with Malta-based operator Gammix, the company behind the 7Gods, Fairplay Casino and Viggoslots, and has subsequently been adopted by numerous operators. “You can see an uplift,” says Elbaz. “Players see instantly what’s going on and we can react accordingly with promotions.”

Jackpots, widgets and RTP Red Tiger Gaming has perhaps come up with the gamification innovation that has made the biggest impact, with the release of its timed jackpots. The timed jackpots were an attempt to make jackpots seem more attainable for the average player than the big £20m jackpot, which just seems intangible. But they were also an attempt to bring excitement into the in-game user interface. Players can see the countdown timers in the side-panel and feel the excitement as jackpot time gets closer. “Everything we try to do – whether it is our jackpots or our bonus tools – is to create an immersive experience,” says Hamilton. Its approach has been informed by the frustrations the team felt in its previous guise as the in-house studio of Paddy Power. Hamilton explains: “When a customer leaves the casino lobby, which is owned by the operator, and enters the game, the operator loses the customer. He or she then becomes a Red Tiger or a NetEnt customer. Whether the customer has a good or a bad 34

experience in that game is dictated to by and it has been a big success,” explains Stevyour supplier. We are trying to create a really endahl. “Players know you lose at gambling tight gameplay experience from the lobby of but they prefer playing with us, where they the operator into our games, blurring the can see their RTP.” lines between the lobby and the game.” Stevendahl does not have the statistics to If you look at Red Tiger’s Paddy Power hand but he knows that around 50 per cent of Vegas tournaments lobby, which has just players have used the tool, and over a third gone live, you can see how the tournament are using it regularly. schedule is displayed in exactly the same “Players are more savvy than they are manner in-game as it is in the lobby. Game perhaps given credit for,” comments Hamilrecommendations are also available in-game ton. “Videoslots engages with its customers and there are real-time behavioural trigin a very mature way. It is a very interesting gers that operators can configure to extend functionality. I think it is something players a player’s life. want to understand. Players are very quick “We are trying to give operators greater to say a game is not lucky. To help players to control of the player jourrationalise those thoughts ney into the game to create is just sensible.” a very cohesive experience,” “For us, the platform The future explains Hamilton. This continued blurring is everything. It is One of the recurring themes of the boundaries between the full end-to-end of these conversations with lobby and game has been experience. You can suppliers is configurability. enhanced by GVC, which configure anything in Hamilton, Le Garsmeur and has developed its own widgElbaz believe these innovathe back-end but is et that helps to dynamically tions open up a new era of promote certain content, delivered through differentiation for operadepending on the time of the game window.” tors. day. Red Tiger has followed Gavin Hamilton, T he modu lar natu re this up with a similar widg- Red Tiger Gaming of the Red Tiger platform et for Betsson, Mr Green means operators can pick and others. and mix their own choice of features, choosThis particular innovation was primaring Red Tiger’s tournaments or bonuses or ily aimed at promoting Red Tiger’s timed jackpots, or all three. Scientific Games is jackpots but it could equally be applied to keen to follow a similar approach. the 3.15 at Chepstow or other events. These “We don’t want to give every one of our innovations blur the line between lobby and 130 OGS operators the same-looking feagame but also between back-end infrastructures with the same components,” says Le ture, platform and game. Garsmeur. “Some will want that but our big“For us, the platform is everything. It is ger customers want to benefit from our platthe full end-to-end experience,” says Hamform and our scale, while remaining distinct ilton. “You can configure anything in and separate.” the back-end but is delivered through the SG is opening up its toolkit to those opergame window.” ators. This is not just about how the missions Videoslots can even be seen to be blurring and leaderboards look but allowing operathe boundaries between the data the operator tors to use the building blocks to customise sees on the player and what the player sees. everything to create a unique experience. Its MyRTP feature allows players to see They should even be able to build their own beyond a game’s RTP and see their own RTP unique features using SG’s toolkit. across all games. You can see how many “Just like we have a marketplace for spins you have made, your average session games right now, we believe there should time, your average bet, which slots you have be a marketplace for features as well,” says won the most with or lost the most with. It Le Garsmeur. is useful from a responsible gaming point of In turn these gamification elements view and it is fun for those craving statistics should lead to a less homogenised industry. on their playing time. No longer will you be able to claim that all “Players love it. It was a bit scary to online casinos look and feel the same. launch and show them exactly what they win “I think it is going to become more mainand lose – because most of the time you lose stream,” says Le Garsmeur. “It is going to at the casino. But we believe in transparency become part of what you have to have.” n

Your Lottery Players Are Talking. We’re Listening. Focus groups. Player communities. UI and UX testing. Social media scraping. Sentiment analyses. Scientific Games uses all these methodologies and more to listen to what your players have to say. And we package what we hear in to actionable insights that can be used to create promotions, fine-tune product mixes, and drive sales. Because when it comes to understanding your players, we’re all ears.

T EC H N O LO GY PORTRAIT MODE

Portrait of a slot Playtech recently released its first mobile slot in portrait mode. Is this set to become the industry standard? Kio Dawson investigates RECENT INNOVATIONS IN slot games have centred on the game’s mechanics and features (see page 30), but the latest trend has been to enhance the player experience through portrait-first games. Any recent visitor to London’s ICE expo will have seen just how competitive the casino supplier industry has become. Aside from industry leaders such Microgaming, and challengers such as Red Tiger Gaming, the industry is awash with new, smaller developers that are looking to create unique and niche games. This is driving innovation, particularly as players are increasingly using mobile as their preferred gaming format. This is reflecting wider changes in consumer habits, where portrait is becoming the mode of choice for smartphone users, whether that is for taking a selfie, using Instagram, or playing games. People just don’t want to turn

“Landscape just does not feel natural on a phone anymore. This is a very exciting shift for the industry as it opens up so much for game developers to explore” Aaron Neill-Stevens, Playtech 36

their phones to the side anymore, it seems. With consumers spending most of their time in portrait mode, games developers have been forced to adapt and develop games for onehanded gameplay. Casino table games such as roulette are perfect for this, which explains why most of Evolution Gaming’s titles are already supported in portrait mode. Now the industry’s slot suppliers are ready to embrace the ‘one-hand’ game concept. For slot games, the reels fit nicely into landscape mode. But suppliers are now beginning to give players a fuller fruit machine experience, with Red Tiger Gaming and Blueprint Gaming both recently launching portrait-first slots in the form of Thor’s Lightning and Ted respectively. Baam Boom is Playtech’s first slot to fully utilise portrait mode. “This is a maturing of the market,” says Aaron Neill-Stevens, whose team developed Baam Boom at Playtech’s GECO Gaming studio. “There has been a real transition in the way people expect to play slots due to the way they interact with their phones. “Landscape just does not feel natural on a phone anymore. This is a very exciting shift for the industry, as it opens up so much for game developers to explore. Moving forward, you are going to see a lot of innovation in the games supplied to the market which adopt this approach.”

T EC H N O LO GY

PORTRAIT MODE

Above and left: Playtech’s Baam Boom

Playtech vice president of product strategy Anthony Evans says that a possible explanation for the slow development of portrait games is that suppliers did not see the need to make the investment, and they may not have had the data to support the decision. “Building a portrait game takes optimisations in development and additional testing,” he says. “But now operators’ expectations have increased, and suppliers are having to respond.” “It’s become the more common way to view things on mobile,” continues Neill-Stevens. “Baam Boom is a game, which I suppose for GECO, was born out of the desire to start being involved in evolving the format of the slot. “I think with mobiles now becoming the main access to these games, it is very important that we start to build the games around the technology on mobile. Baam Boom is really the beginning of our plans with regards to this.” The pirate-themed highfrequency slot is a 25-line game and begins in a 5x3 format. Once players

have collected five wilds, depicted as cannonballs, they are then encouraged to turn their mobile device to portrait mode. “This is intentional for us with regards to educating the player,” explains Neill-Stevens. “We want the player to start playing in portrait mode because you can then do a lot more innovative things with regards to game styles, gameplay, new things we can offer the player.” After collecting their wilds, players are presented with a minesweeper-type game where they can fire their cannonballs at squares on a layered grid to uncover hidden prizes. Relative to the angle in which players are holding their mobile, a 3D-effect allows them to see underneath the corners of the squares when they tilt their phone, allowing them to better see where to aim the cannonball. “This is something we are very excited about, and the start of Playtech and GECO producing games using the technologies that are available on the phone,” says Neill-Stevens. In the main feature of the game, players see a bottle floating across the sea, which opens up with a message to explain to players to turn the mobile into portrait. At that point a pirate ship sails out and the reels, which were being ›› 37

T EC H N O LO GY PORTRAIT MODE

played before, are now on the sails of the pirate ship below the target grid. This continues for the duration of the free spins, with players then returned to the base game. “There’s been a lot of positive feedback with it and a lot of people think it’s quite interesting to take something that is a classic format, in terms of minesweeper, and bring this into a slot,” says Neill-Stevens. “Within Playtech we are really encouraged to think outside of the box, and not become complacent with the typical slot landscape of 5x3 or 5x4 formats. These are formats that work well in desktop or landscape mode, replicating what you traditionally see in terrestrial casinos. Today, players are spending more and more time on their mobile, so as suppliers and developers we need to evolve the game to match that expectation from them.

“It’s obviously very important that we are building these games specific to the way that people are accessing them, the way that people are used to using their device” Anthony Evans, Playtech “These are things that are very important for us to start building into games for the future because this is what our players are becoming used to now,” he says. Evans agrees: “The Baam Boom game ticks off a number of what I would call strategic objectives for the company, when it comes to game creation, and also the direction of all our products. I think when you look at the game itself, it really gamifies the experience to another level. You’ve got that rich feature that you are interacting with the device itself, you’re using a portrait mode on mobile – which we know is very important for millennials – and there is also cross-selling from sportsbook. “We rely heavily on our relationship with sportsbooks for driving traffic to the casino environment and we see cross-sell really coming into its own in that portrait mode because sports punters are used to playing in portrait.” Evans says that the gaming format is changing and that over time the industry will see even more utilisation of the mobile device, such as being able to shake the device or use features specific to native applications. “If we are building a game that’s going to be a cross-sell from sportsbook to a casino, it’s 38

obviously very important that we are building these games specific to the way that people are accessing them, the way that people are used to using their device,” he says. “This is something that GPAS, and the platform that Playtech provides, can give to its studios to help them really think outside the box and start building some of these really innovative game ideas.”

The Playtech influence Baam Boom was developed by Sydney-based GECO, which was acquired in 2016 and is now one of nine studios under the Playtech umbrella. The game has been delivered on Playtech’s award-winning GPAS remote gaming server (RGS). Playtech’s recent investment to open up its supply chain has seen it develop the Playtech Open Platform (POP), GPAS, and Marketplace suite of products – which recently won the Gaming Intelligence Supplier Innovation Award. The product suite allows operators to pick and choose any game they want with minimum integration. “We now have nearly all of our customers running GPAS games,” says Evans. “And GPAS as a remote game server and a game delivery platform, runs across all platforms and is integrated across products. “This is really important for Playtech when it comes to distribution so both internal studios, external studios, and operators can actually develop games directly onto our platform to gain that extensive game distribution. “We have nine studios within Playtech and they’re all building different types of games, different styles of games, for different audiences, and I really see the mobile as being an exciting opportunity, because you can do so much with the device itself. “So today we’re building games like minesweeper as we have here with Baam Boom, where you can actually interact and have that perceived element of skill in the portrait mode. But tomorrow it will be different, with actual reel-based formats that will really utilise the full -screen size. “As an avid player myself, being used to playing in the landscape mode, you become that much more comfortable doing it that way,” Evans continues. “For new customers, that millennial audience who are not used to having to turn their screens, they actually find it an uncomfortable position to have their mobile phone in. It’s just alien to them.” Evans notes that devices these days have bigger screens in portrait mode compared to five or six years ago, where mobiles were a bit

smaller and had more restrictions, not only on the device but with the technology as well. “Now, you have a lot more flexibility to do things in portrait mode,” he says. “We’re trying to leverage as much as possible, obviously the assets that Playtech has, but also the data we have available to us to maximise that potential.” GECO is part of a stellar line-up within Playtech that includes the supplier’s original in-house studios, now known as Playtech Origins and Playtech Vikings, and a string of acquisitions which began with Ash Gaming in 2011, and continued with Psiclone Games (acquired in 2014), Quickspin (acquired in 2016), Sunfox Games (acquired in 2017), Eyecon (acquired in 2017), and newest addition Rarestone Gaming. “This is one of the great things about the diverse offering of studios that are within Playtech now,” says Neill-Stevens. “This is a group of studios that each take a very different approach to how they have traditionally built their games, and collectively we all come under the umbrella of Playtech, providing options and choices of games for our customers. “As a studio that’s come from the outside and brought into the fold at Playtech, it opens many new doors of opportunity and thought processes, especially having GPAS as the one development platform into Playtech’s wide offering of technology. Evans adds: “We do a pretty good job when it comes to collaboration with the studios, they have a lot of experience in different areas. One studio can lean on another in terms of delivering a certain feature and we have regular summits where all the studios come together to try and leverage those insights and experience across the breadth of content we are delivering.” Evans believes that studios have historically relied on instinct and on experience. Playtech is looking to add another layer to that by utilising its product research team to understand what the industry trends are, and to match that to its roadmaps. “It’s also the analysis of data,” Evans adds. “And this is really a critical part of our business now and moving forward, to understand what works, why does it work, and how we can understand that to tailor our product portfolio accordingly. I think this is a key differentiator for Playtech in the future.” Playtech has the platform and access to a wide array of data and resources across a spectrum of products and clients. Its studios are already reaping the benefits, but there promises to be much more to come. n

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IN THIS ISSUE 41 News: ad restrictions grow 42 Feature: The Megaways brand explosion

MARKETING

TIME TO TURN OFF?

FIVE BIG STORIES This quarter’s biggest marketing news Sweden warns new operators over bonus offers

IN NORWAY, THE Ministry of Culture has proposed an amendment to the Broadcasting Act to prevent gambling advertisements from being aired in the country. The proposal is the latest attempt to strengthen the gambling monopoly of Norsk Tipping and prevent Norwegian-language broadcasters based elsewhere in Europe from promoting offshore online gambling to Norwegian customers. The government’s proposal would serve to protect vulnerable gamblers, and give the Norwegian Media Authority the power to prevent or block ads promoting unlicensed gambling. In parallel, the Norwegian Gambling Authority would gain authority to serve DNS warning messages to Norwegian players who attempt to access unlicensed gambling sites, warning players that the games are not legal in Norway.

SWEDISH GAMBLING REGULATOR Spelinspektionen warned licensed operators to adhere to the market’s new regulations regarding bonus offers to customers. Since the re-regulation of the market at the start of the year, licensees have offered customers different forms of bonus offers, some of which involved ‘unreasonable interpretations’ of the country’s new gaming law. Under Swedish regulations, operators are only allowed to offer a bonus to online players once. Spelinspektionen pointed out that there was a clear definition in the law stating that all discounts or similar financial incentives linked to games are to be seen as a bonus. It has written to all licensees to ensure compliance with the regulations or face high penalties, or even the revocation of the company’s operating licence.

UK strengthens gambling ad standards

SPO

There are grow ing calls in some gambling mark ets to reduce the of the world’s largest ban gambling advertising comp level of advertising, or issue to see if gambling comp letely. GIQ examines the anies are being singled out for unfairly scrutiny

Norway makes move to block gambling ads

NEW STANDARDS CAME into force on 1 April to better protect children and young people from gambling advertising in the United Kingdom. It follows a review of the impact of gambling advertising on people under the age of 18 by the Advertising Standards Authority (ASA), which found that exposure to gambling ads that comply with the UK’s Advertising Codes were unlikely to harm under-18s. The new standards do not change the advertising rules, but are meant to strengthen how the rules are applied in practice. They include prohibiting online ads for gambling products being targeted at groups of individuals who are likely to be under 18, as well as prohibiting the use in gambling ads of sportspersons, celebrities or other ch a rac ters who are, or appear to be, under 25.

GIQ Q1 REVIEW

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Apr 2017: GIQ highlights growing ad concerns GIQ Q1 REVIEW

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Danish operators plot reduced TV gambling ads THE DANISH GAMBLING industry has come together to launch a new Code of Conduct to increase consumer protection and reduce the risk of gambling addiction across the country. The joint industry initiative comes into force on 1 July and intends to limit gambling addiction and ensure responsibility in marketing, including advertising towards children. With gambling ads on Danish TV reaching record levels last year, the industry will begin talks with TV stations to achieve a ‘marked’ reduction in the number of gambling ads broadcast, and also to ensure gambling ads are not displayed before children and youth-focused broadcasts.

SportPesa enters F1 with Racing Point SportPesa was unveiled as the title sponsor of new F1 team Racing Point. Formerly known as Force India, the SportPesa Racing Point F1 Team retains its pink colour with BWT continuing as principal sponsor of the team, while SportPesa’s branding will feature on the front and rear wings, as well as the engine cover. The multi-year sponsorship began well with team driver Lance Stroll securing two points after finishing ninth at the season opening Australian Grand Prix on 17 March. In a busy quarter for the Kenyan-based sports betting operator, SportPesa also agreed a partnership with the Football Association of Ireland (FAI). The two-year deal sees the FAI join SportPesa’s sponsorship portfolio, which includes Cork City and English football clubs Everton, Arsenal, Hull City and Southampton, as well as the Guinness Pro14 Rugby Championship.

18/04/2017 15:52

MARKETING MEGAWAYS

Megaways and the marketing of mechanics Big Time Gaming’s Megaways is the first mechanic to be used as a brand. Steve Hoare asks what makes it so good FROM GLOBAL HEAVYWEIGHTS such as Scientific Games and Novomatic, to relative newcomers Kalamba Games and Chance Interactive, via emerging heavyweights such as Blueprint Gaming and Red Tiger Gaming – all have licensed Big Time Gaming’s Megaways mechanic. So have Fantasma Games, Iron Dog Studio, iSoftBet, Relax Gaming and Storm Gaming Technology. Others will follow soon. Ladbrokes Coral and PokerStars have launched a dedicated Megaways tab featuring all the games that use BTG’s mechanic. The growth of Megaways is a groundbreaking success story. Never before has a mechanic been licensed by so many suppliers and used as a brand to market a game to players. Its inventor, Big Time Gaming chief executive officer Nik Robinson, explains: “Megaways is as much an evolution of slot machines as one-line three-reels moving to 20-line 3x5 reel video slots. Megaways unlocks mathematical possibilities that just aren’t available in slots of the past.” Robinson calls it an “evolution”, but this feels more like a revolution. Blueprint Gaming was the first studio to licence the mechanic in April last year, to use on its Irish Riches game, which was released in mid-2018. Blueprint chief executive Matt Cole explains: “Megaways has really struck a chord with players due to its unique and innovative gaming style. So when the opportunity arose to licence the mechanic, it was an easy decision for us.” “The mechanic is a proven hit,” agrees Red Tiger Gaming chief executive Gavin Hamilton. The first game Red Tiger added it to was Mystery Reels, which was already one of the company’s top performers. It was then rereleased as Mystery Reels Megaways, exclusively on PokerStars Casino, where it became one of the company’s biggest launches before going live with the rest of Red Tiger’s operators at the end of March. “We thought that adding the Megaways mechanic would really enhance that game,” says Hamilton. “It’s almost like doing the remix 42

of a song. Here’s a hit you already know and here’s the Megaways remix. Because the mechanic is understood and acknowledged by customers, I think they get excited by the idea of it.” Scientific Games has followed suit, taking classic titles like Raging Rhino and Rainbow Riches and giving them the Megaways treatment. Blueprint has used Megaways on 10 games, including hits like Buffalo Rising Megaways, Primal Megaways, Temple of Treasure Megaways and Slots O’ Gold Megaways. “We’ve gone on to create several titles using the standard Megaways mechanics, as seen on Bonanza, and we’ve added a few innovative tweaks of our own and have really pushed the Megaways game and brand in a positive direction,” says Cole. Robinson says studios can use the Megaways format and exploit “infinite possibilities for its use”. However, this does not make it right for every game. “We will selectively licence IP that we feel enhances our existing portfolio but it is not something we will do with every second game,” says Hamilton. Hamilton says Red Tiger will probably

Temple of Treasure Megaways and White Rabbit Megaways

MARKETING MEGAWAYS

use it for two out of the 30-odd games it releases this year. Blueprint has used it for many more but even it will not use it for all games. “Although Megaways is very much the trend with players and operators now, it would be wrong to completely move away from the traditional formats, which have given us so much success,” says Cole. “Blueprint’s key achievements, especially in the UK market, have been born from game variety and knowing the individual market style, player preferences and being flexible enough with our development process that we can react to the market trends. Although we have utilised the licence to its full, our development team continues to build on other formats which are still providing positive results outside of the Megaways fold, such as our Jackpot King progressive and Pub Fruit Series products.”

From NT Media to BTG Robinson traces the Megaways story all the way back to his time at NT Media 15 years ago, when he came up with the ‘cluster pays’ mechanic for the game Chain Reactors. He claims it was a first of its kind and that many businesses have been built on the concept. “Like Chain Reactors, the mechanics of Megaways are game changing, and deliver a monumental shift in player experience, expectation and anticipation,” says Robinson. “Not forgetting the astronomical win potential that Megaways games can deliver.” Megaways made its debut on Big Time Gaming’s Dragon Born around three years ago, but it really started to make people pay attention with the smash hits Bonanza and White Rabbit. By the time Blueprint licensed Megaways, a new BTG slot called Extra Chilli had become the most successful LeoVegas launch of all time, smashing all previous KPI’s from any provider. It was clear that Robinson had started something special. Videoslots CEO Alexander Stevendahl recalls: “I remember when Nik showed it to me before it was launched. He was so proud of that game. I see a lot of games. We have 3,500 games and maybe 10 of them are really good. That game (Bonanza) became our number one ever since. It really crushed the industry. The games they are launching are fantastic.”

What makes it so good? Cole believes the huge number of ways to win is the initial draw and the activity this creates drives player retention on a level never seen before. Coupled with cascading reels, which have GIQ Q1 REVIEW

become a standard feature alongside Megaways on many titles, the potential for huge wins makes for a very exciting gaming experience. “We are starting to see some inventive bonus games and feature functionalities which only add to the player involvement and make the brand even more appealing,” he concludes. Hamilton continues: “At first players don’t realise what is going on. When they have a big win, which is caused by the mechanic of the game, they suddenly feel like ‘eureka’, they get it. They like the game because they have invested the time to understand it and it has the potential to pay big, which a normal slot doesn’t. And because they have invested that mental effort to understand it and have a good experience of it, they are more invested in it.” “Players want to bet small and win big,” summarises Stevendahl. “They want to have a decent amount of playing time, and when they win they want to win big. That is what Bonanza delivers. That is what Book of Dead delivers. That is what Book of Ra delivers. That is what Dead or Alive delivers. These are our top games.” He makes it sound so simple, but if it was so simple then everybody would be creating blockbusters. In an industry where certain software houses make a fortune from copying others, Hamilton says players are excited by the prospect of discovering something new. “The really successful games have a novel mechanic that players know is not a repackaging of something else they have played. They understand a novel way of winning. You are never going to be able to truly differentiate on the theme or the graphics. The innovation comes from the mechanic,” concludes Hamilton. “And that’s where the success of Megaways comes from.”

More to come Traditionally, games studios have kept their innovation to themselves. So what made Robinson decide to license Megaways?

“The mechanics of Megaways are game changing and deliver a monumental shift in player experience, expectation and anticipation” Nik Robinson, Big Time Gaming

“We’re a small studio and, as much as we would like to, we cannot evolve the entire slots market single handedly, hence we have been on-boarding licensees of note and good calibre to broaden the choice of Megaways games that are available to our players. “That said, we need to keep some things to ourselves in order to maintain our USP and point of difference. We have a new, totally awesome twist in the Megaways series due in July. And we’ll be announcing a collaboration with one of the world’s most recognisable brands in the fall, so a busy year ahead both internally, for our casino partners and for our licensees.” So will other studios take up the baton and attempt to market their games with a mechanics brand? Cole says Blueprint has touched on the mechanics marketing scenario with its Pub Fruit series of games, which bring the traditional pub fruit-style of game to the online market. “It’s not uncommon for games to be marketed in this way. It helps to build the brand for a company and attract repeat players who become aware and familiar with a developer’s certain style,” says Cole. “Megaways has certainly taken this marketing approach to another level in that this is the first mechanic being exhibited by multiple suppliers. Players are smart, they will make their own decision on whether the Megaways mechanic is the game style which resonates with them.” Cole believes this sort of game mechanic agreement can provide a perfect business model for smaller studios, which may find it difficult to break into a market that is becoming increasingly competitive. It would also give suppliers access to a broader range of operators. “Innovation is becoming more and more pivotal across the slots industry as operators seek to find defining games which will increase visitor numbers and player dwell time. Marketing tools within games rather than the games themselves will also fall into this category,” concludes Cole. He says Blueprint will be releasing a number of marketing tools which can be incorporated onto new and existing titles. These functionalities provide operators with the resources they need to help drive revenues. “Tools which gain recognition and confidence among the operators will open the opportunity for licensing these types of mechanics which can be integrated across multiple sectors.” So will Megaways success be repeated? “You just need the imagination,” says Stevendahl. “If you have the skill, I don’t see why not. Maybe it will come from the same person.” n 43

LOTTERY FIVE BIG STORIES

From the Czech Republic to Hawaii; news from the lottery world

IN THIS ISSUE 47 Lottery news round-up 48 Scientific Games wins Turkey monopoly

KKCG and Emma Capital split Sazka Group assets CZECH INVESTMENT VEHICLES KKCG and Emma Capital have agreed to split the assets held within Sazka Group after creating one of the largest groups in the European lottery and betting industry. Having previously held a 75 per cent share, Karel Komárek’s KKCG Group will hold the entire shares in Sazka Group, which will include the Sazka Czech, Greek Opap, Italian LOTTOITALIA and Casinos Austria businesses. In turn, Jirí Šmejc’s Emma Capital will take over Croatian sportsbook operator SuperSport and receive compensation of “several hundred million euros.” “I am glad that with Jirí we have managed to build the largest lottery group in Europe,” says Komárek. “At the same time, this is a great example of two Czech investors cooperating and embarking on a successful international expansion, in which we have managed to achieve six times return on our investment.”

EquiLottery swaps horses for speedway in new lottery game KENTUCKY-BASED EQUILOTTERY HAS teamed up with Speedway Motorsports to develop lottery games based on the results of live motor races across North America. They will work together to develop Car Cash, a three number draw-based lottery game based on live results. The agreement comes as EquiLottery unveiled its new draw game Win Place Show, based on the results of live horse racing, at the end of March, with the Kentucky Lottery, for a

90-day trial period in 45 retailers across the state. “This marks an important milestone as we continue to build on our vision for lottery games based on all live sports,” says EquiLottery Games CEO Brad Cummings. “We look forward to what we can accomplish with Speedway Motorsports as we realise our shared goals to develop new auto-racing fans, expand the lottery player base, and increase funding for the good causes lotteries exist to support.”

US lotteries join opposition to DOJ Wire Act opinion

Multilotto rolls out in-store gaming platform in Sweden

FOURTEEN US STATES have joined the New Hampshire Lottery Commission in its federal lawsuit opposing the Department of Justice (DOJ) opinion that the federal Wire Act’s prohibitions extend to all types of bets and wagers. The New Hampshire lawsuit is asking for a declaratory judgment that the Wire Act does not apply to state-conducted lotteries, and requesting a permanent injunction against the DOJ from acting to enforce its new opinion. New Hampshire has the support of lotteries in Kentucky, Tennessee, Virginia, Rhode Island, Colorado and North Carolina, as well as the states of New Jersey, Michigan, Delaware, Idaho, Vermont, Mississippi, Alaska and the District of Columbia.

SWEDISH LICENSED LOTTERY betting operator Multilotto has introduced an in-store gaming platform for customers at convenience store Direkten. In-store tablet devices are now available across 30 Direkten stores in Sweden, providing players with access to the operator’s lottery jackpots and games. “We are excited about this campaign as it gives us a chance to reach players who would normally interact with betting in-store rather than online,” says Multilotto Swedish country manager Niklas Fagerström. “Considering Direkten’s retail coverage across Sweden, this will offer Multilotto a great market and our players a choice when it comes to betting on the biggest global lottery jackpots.”

GIQ Q1 REVIEW

‘This is a great example of two Czech investors cooperating and embarking on a successful international expansion’ Karel Komárek’s KKCG Group

Hawaii opens door to multistate lottery games Hawaii Senator Dru Kanuha has proposed a new plan to allow Hawaii residents to participate in lottery games. Kanuha introduced a senate resolution which urges the government to examine the state’s possible participation in the MegaMillions and Powerball multi-state lottery games. The resolution aims to offer another route to access lottery revenue without the need to establish a state lottery in Hawaii or allow other forms of gambling. It follows the introduction of legislation in January to establish a lottery in Hawaii, one of only five US states without a lottery. The state lottery proposal was referred to multiple committees, but has failed to make progress so far.

LOT T E RY

SPORTS BETTING

After Scientific Games’ JV swooped in to win the Turkish sports betting tender, Kio Dawson asks if these deals with state-owned operators are the biggest in town right now

Big game hunting IN EARLY MARCH 2019, Scientific Games’ joint venture Sans Girisim won an exclusive 10-year IDDAA contract to operate sports betting in Turkey for the Spor Toto State Organization, one of Europe’s largest stateowned sports betting operators. As competitive tenders go, this was a big one. Intralot’s Inteltek joint venture with Turkcell had held the tender for the past 15 years. It was such a big deal that Intralot CEO Antonios Kerastaris resigned after missing out. Big deals like this don’t come around that often. Most of the time, the state-owned operator is more inclined to extend its current supplier’s contract rather than switch supplier completely. Up until mid-February, Intralot still believed it was in the running to win Turkey’s new 10-year betting concession, after submitting a final bid for the tender. But Scientific Games and JV partner Demirören Group had 48

other ideas, and were announced as the winning bidders on 4 March. “Scientific Games has been following the development of the IDDAA sports betting business since its inception more than 15 years ago,” explains Scientific Games president of global strategic accounts Michael Conforti, who led the company’s efforts as part of the JV. “We spent the last year exploring our bidding options and focusing on finding the right local partner, which is key to success when exploring opportunities as large and complex as the IDDAA concession in Turkey.” That partner is Demirören, one of Turkey’s largest conglomerates, with annual revenue in excess of US$3bn and interests in manufacturing, construction, tourism, education and media, including Turkish newspapers Hürriyet and Milliyet. Conforti believes that the JV allows both companies to play to their strengths while

focusing on delivering a seamless transition in the eyes of the players, retailers, interactive channel partners and the Turkish government. “With our 2018 acquisitions of NYX/OpenBet and Don Best, Scientific Games prioritised the expansion of our interactive offerings and the growth of our global sports betting footprint,” says Conforti. “Although we are already the world’s largest B2B sports betting platform provider, the Spor Toto sports betting tender in Turkey fit with our vision and drive to power market-leading operators around the globe. “Winning this account is very important to Scientific Games, as it creates great momentum following our decision to invest heavily in this very important and fast-growing market sector.” Intralot’s Inteltek JV with mobile phone operator Turkcell had held the IDDAA sports

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SPORTS BETTING

betting tender since 2004. Intralot’s 45 per cent stake in Inteltek contributed around 15 per cent of group EBITDA for the 12 months to 30 September 2018, and four per cent of total revenue at €39.3m. That’s a big hole to fill. And a nice earner for the Scientific GamesDemirören JV. “The global gaming industry is very competitive,” says Conforti, “so every new market we enter is important.”

Lotteries launch sports betting In Turkey, sports betting is operated by the government-owned Spor Toto, while lottery games come under the Turkish national lottery Milli Piyango. Across Europe, many of the World Lottery Association (WLA) members are similarly state-run organisations. In the past few years, more of these lotteries have moved into new product verticals, and this has begun to open the gates for specialist suppliers to break into the sector. For the likes of Kambi, SBTech and Playtech BGT Sports, these are not necessarily the most important deals for them, but they are the ones that can make the industry sit up and take notice. “I think it’s difficult to generalise, but there’s no doubt WLA members are attractive,” says Joni Hovi, executive director of Kambi’s state lottery business. “WLA lotteries are trusted and recognised brands in their respective markets which, when combined with a high-quality sportsbook provider, gives them a strong platform upon which to develop a successful and entertaining product.” “By securing WLA members – we now have two on our books – it shows the trust and confidence lotteries have in us to deliver a high-quality sportsbook to complement their portfolio of numbers and gaming products.” Playtech BGT Sports (PBS) chief commercial officer John Pettit backs up this argument. He says that these deals are a “great validation and accreditation” for the company’s software and services. “It gives them commercial kudos,” he explains. “It also confers great status on your reporting, integrity, and the ethics of the company.” PBS is currently in negotiations to launch omnichannel betting solutions for a number of WLA members Clockwise from right: John Pettit, Playtech; Michael Conforti, Scientific Games; Joni Hovi, Kambi; Andrew Cochrane, SBTech

GIQ Q1 REVIEW

in different territories, having been rolling out self-service betting terminals (SSBTs) for Greek lottery and betting operator OPAP since Q3 2017. Another deal will see PBS provide a new sportsbook for Sociedade de Apostas Sociais (SAS), which is majority-owned by Portuguese national lottery Santa Casa da Misericórdia de Lisboa. “Gaining traction with one WLA member also helps negotiation with others, so they are very important organisations with whom to do business,” adds Pettit. SBTech chief development officer Andrew Cochrane says that winning contracts and working with WLA members has become a core focus and major growth area for the supplier. “Typically, WLA members have an established brand presence in their local markets, often supported by extensive retail outlets and a loyal and significant number of active players across several product verticals,” says Cochrane. “This is a strong base to embark on a new product vertical such as sports betting, which is why we are focused on securing these opportunities.” Like Kambi, SBTech has been focusing on the explosion of the US sports betting market

in the past 12 months. Almost unnoticed, both suppliers also signed key agreements in the lottery sector last year. In July 2018, Kambi signed its first sportsbook deal with a national lottery operator via a long-term agreement with Latvia’s SJSC Latvijas Loto. It followed that up with an agreement with the national lottery in Bulgaria. Hovi says it is not just about securing these contracts, it is what you are able to do during the partnership that really matters. “For instance, the National Lottery in Bulgaria transitioned from a competitor to the Kambi Sportsbook, and has since experienced rapid growth, obtaining a top three market position,” says Hovi. “The message that sends to lotteries is that they must source a competitive sportsbook product if they are to compete and win market share against well-resourced international private operators.” SBTech raised eyebrows with its deal last March with Youbet.dk, a new betting and gaming brand from Denmark’s Danske Spil – a longterm OpenBet client. SBTech has also been providing its sportsbook solutions to Czech lottery operator Sazka since 2017, and has plans to launch with two more WLA members in the

“Gaining traction with one WLA member helps negotiation with others, so they are important organisations with whom to do business” John Pettit, Playtech first half of this year. In another landmark deal, it has also been selected as the sports betting vendor for the Oregon Lottery. “Successfully completing complex RFPs and rigorous due diligence has been a major achievement for the business in recent years,” says Cochrane. “Our experience of working with lotteries has given us a deeper understanding of the way they work, their values and goals, while the results we have generated have shown that our flexible and feature-rich technology, product suite and services complement their offerings to create a unique, responsible and profitable proposition in their local markets.” These types of deals are showing how competitive the supplier side of the market is right now. Intralot may be hurting from the loss of its Turkish sports betting tender, but there will be other opportunities out there for the supplier. The only problem is that its rivals will be thinking exactly the same thing. n 49

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WORLD REGULATORY UPDATE

World regulatory update GIQ outlines legal developments around the globe in Q1 2019

Australia The federal government has implemented new online wagering identity verification rules that require online sports betting operators to verify a customer’s identity within 14 days of sign-up, reduced from the current 90-day period. The new rule is designed to protect young people and vulnerable gamblers, and is the first measure to be delivered under the government’s National Consumer Protection Framework for Online Wagering, which was unveiled late last year. The National Consumer Protection Framework builds on other legislative changes that have been implemented, including action taken against illegal offshore providers, restricting advertising, and prohibiting lines of credit for online wagering and links between payday lenders and online wagering operators.

Brazil Brazilian lawmakers are considering a bill to allow casinos to be part of integrated resorts in the country. States with a population of at least 15 million would be permitted to build one casino, those between 15 million and 25 million two, and states with more than 25 million residents, a maximum of three. The bill would award 30-year licences to operators and impose a tax rate of 10 per cent of gross gaming revenue.

Germany Germany’s 16 federal states approved the third German State Treaty on Gambling in March, with the licensing process for sports betting operators set to begin in early 2020. The third iteration of the state treaty extends the sports betting ‘experiment’, which saw the state betting monopoly suspended and the market opened to private competition. It also removes the arbitrary cap of 20 available sports betting licences. The 20-licence limit in the previous state treaty led to legal challenges that prevented any licences being issued. 50

The third State Treaty on Gambling will have to be ratified by each federal state before 31 December 2019 in order to be implemented across Germany. Live betting and online casino gaming remain prohibited under the new treaty, prompting the state of Schleswig-Holstein to introduce legislation extending the expiry of its online gaming licences until June 2021. The bill would allow a transitional phase for the licensing regime to continue over the next two years, having first been enacted more than six years ago, with the aim of establishing a new regulatory framework along with the other German states from mid-2021 onwards. Current licences, which allow operators to provide online casino games to players in the state, are set to expire at the end of June.

Greece Online gambling regulations were put to a public consultation in Greece, prior to notification to the European Commission. The regulations offer detailed information on the proposed award procedure and the types of licences available, conditions for licensure, ongoing compliance, technical specifications for platforms, and rules governing permissible forms of sports betting. Two types of licence are proposed, each valid for a five-year term, with sports betting licences priced at €4m (Type 1 licence) and licences for other online games priced at €1m (Type 2 licence). Operators based in Greece or another European Union member state with a paid-up share capital of at least €200,000 will be allowed to apply

Providing online gambling services to Dutch consumers remains illegal. Operators who have served the Dutch market in the past two years will not be approved for licensure

for licensure, excluding any operators that have appeared on the country’s blacklist of unlicensed operators in the past year.

Ireland The Irish government approved the establishment of a new gambling regulatory authority, as well as an amendment to the country’s gambling regulations, to modernise the Gaming and Lotteries Act 1956. The authority will act as an independent statutory body under the auspices of the Department of Justice and Equality, tasked with developing and enforcing necessary and appropriate licensing and regulatory measures in respect of all gambling activities, including online. It will also regulate the industry in respect of protection of vulnerable persons, including age restrictions, staff training, self-exclusion measures and controls on advertising, promotions and sponsorship. The Gaming and Lotteries (Amendment) Bill 2019, which modernises the 1956 act, aims to bring clarity to the permit and licensing approach to small-scale local gaming and lottery activity, updating certain stake and prize limits and standardising the minimum gambling age at 18. This is an interim reform measure pending development of comprehensive reform in this area.

Isle of Man The Isle of Man Gambling Supervision Commission (GSC) began issuing B2B supplier licences for the first time, in a move designed to accelerate the deployment of new games with Isle of Manlicensed operators. The GSC’s Software Supplier Licence requires all games to be tested and certified for inclusion in the GSC games registry. The licence is not mandatory to supply software to Isle of Man-licensed operators, but allows any games on the registry to be deployed by licensees without additional testing, helping to speed up time to market. 50

Netherlands The Netherlands’ longawaited online gaming legislation has finally been approved, paving the way for operators to secure licences in the country for the first time. The new regulatory regime will allow operators to secure online sports betting and casino gaming licences to serve Dutch consumers and introduces a central national database of excluded players, covering remote operators and landbased slot machine and casino operations, as well as a ‘duty of care’ requirement that obliges operators to monitor players for signs of risky gambling behaviour. The remote gambling bill is expected to come into force on 1 July, 2019, with the licensing process expected to begin in late 2019. In the meantime, providing online gambling services to Dutch consumers remains illegal, and operators who have served the Dutch market in the past two years will not be approved for licensure. The Netherlands gambling regulator Kansspelautoriteit (KSA) also increased the fines for illegal online gambling, effective 1 March, with the base fine rising from €150,000 to €200,000, plus an additional €75,000 when an illegal operator offers live betting or misleads consumers regarding its licensing and supervision. Operators that have previously received a warning will be liable to a 25 per cent increase in the fine, rising to 100 per cent for repeat offendGIQ Q1 REVIEW

ers and ‘dual character’ sites – such as sites that claim to offer skill or social games but also offer games of chance. The KSA also promised significantly higher illegal gambling fines for the re-regulated market.

Norway The Ministry of Culture proposed amendments to the country’s broadcasting act to prevent unlicensed offshore operators from advertising to Norwegian consumers. Norway employs a gaming monopoly, and advertisements for unlicensed gambling are prohibited in Norwegian media, although operators have been able to target Norwegian consumers through Norwegian-language broadcasts from elsewhere in Europe. The proposed amendment would give the Norwegian Media Authority the power to prevent or block such ads, and also empowers the Norwegian Gambling Authority to serve DNS warning messages to Norwegian players who attempt to access unlicensed gambling sites, warning them that the games are not legal in Norway. The proposal is open to consultation until 17 June.

United Kingdom The UK Gambling Commission (UKGC) adopted new player identity verification rules which come into force on 7 May, requiring all licensed

operators to verify the identity of players before they are allowed to gamble online. The new policy is designed to reduce the likelihood of young people and excluded gamblers from participating in online gambling, and also applies to free-play games. UKGC licensees will have to verify player identities before they are allowed to deposit funds to their account or gamble with their own money or promotional credits. This includes verifying, at a minimum, the name, age, address and date of birth of a customer, or the age of a free-play customer. The regulator also opened public consultations on two new proposals. The first would prohibit or limit online gambling using a credit card, based on the principle that people should not gamble with money they do not have. The second aims to minimise the risk of harm on all Category B gaming machines, and follows the introduction of a lower maximum stake on Category B2 gaming machines (FOBTs), which came into force in April. The UKGC notes that Category B1 machines in casinos and Category B3 machines in arcades, bingo halls and betting shops offer maximum stakes of £5 and £2 respectively, but at up to eight times the speed of play of Category B2 games. n For all US regulatory developments, turn the page. 51

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US SPORTS BETTING

The Gaming Intelligence

US SPORTS BETTING BILL TRACKER Delaware, Mississippi, Nevada, New Jersey, Pennsylvania, Rhode Island and West Virginia are up and running, while Arkansas and New Mexico have passed bills and are ready to go. Every other state with bills in play is here ARIZONA POPULATION: 7 million LEGISLATION: A bill was introduced in January 2019 that would allow sports betting in Arizona, with Native American tribes given exclusive rights. However, it stalled in committee stage, but a second bill was approved by the Senate Appropriations Committee in February. Betting would not be restricted to tribal lands, and would be allowed through kiosks on licensed premises. The tax rate would be a maximum of 6.75 per cent – the same as in neighbouring Nevada. COMMENT: There are problems with the tribes, who, despite having exclusive rights, want sports betting to be introduced via their compacts with the state rather than legislation. But there is a political will to legalise wagering. Senator Sonny Borrelli, who introduced the bill, says: “I’m tired of seeing our money going to Nevada and tired of seeing our money going off-shore.” OPERATORS: There are 34 casinos and five race tracks in the state.

CONNECTICUT POPULATION: 3.5 million LEGISLATION: A bill to legalise sports betting was introduced in 2019 and was passed by the House Public Safety and Security Committee in mid-March. The bill proposes a tax rate of 9.89 per cent of gross revenue. Two-year operator licences are subject to a $100,000 non-refundable application fee and the same renewal fee, together with a licensing fee of $500,000, with the bill exempting the Connecticut Lottery, which wants to partner with the state, from these fees. However, the tribes which run the state’s two main casinos claim existing gaming compacts give them exclusive rights. COMMENT: There are still hurdles to overcome before sports betting becomes a reality. “The lottery would be the most profitable business model for the state of Connecticut, but the reality is that we have various stakeholders that also need to remain competitive who have invested here in the state of Connecticut,” says Representative Joe Verrengia, who chairs the House Public Safety and Security committee. OPERATORS: The Mashantucket Pequots and Mohegans run the state’s two main casinos in Bridgeport. The state also has several off-track betting clubs, under the Winners brand. There is also a state lottery.

GEORGIA POPULATION: 10.5 million LEGISLATION: Georgia has very strict gambling rules but there have recently been proposals put forward to build casinos and allow horse racing in the state. Against that backdrop, a bill was introduced in March that would allow sports betting, including mobile, in Georgia. It is due before the House Regulated Industries Committee soon. The tax rate is put at 10 per cent, a licence would be $20,000, with a $10,000 renewal every five years – no more than 10 would be allowed. The bill states that all proceeds would go to the education budget. The state lottery already sells tickets online and would be the obvious regulator. COMMENT: Conservative Georgia has no casino industry and attempts to pass legislation to allow gambling have failed amid a distinct lack of interest from lawmakers in recent years. That does not bode well for the chances of sports betting. The move would also require a constitutional amendment so would need to be put to a referendum if it is approved, and that would not happen until 2020 at the earliest. OPERATORS: There is a state lottery, and charitable gaming is also allowed, but there is no other form of gambling in Georgia.

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US SPORTS BETTING

Arlington Park race track, Illinois

HAWAII POPULATION: 1.5 million LEGISLATION: A surprise bill, introduced in January 2019, proposed the creation of a ‘Hawaii sports wagering corporation’ to oversee the island state’s fledgling gambling industry, which has hitherto been limited to social poker games. The initial bill faced opposition and has now been amended so that it creates a “task force to examine and make recommendations on policy issues regarding the benefits and harms of online gaming”. Four further study bills have been introduced COMMENT: Sara Slane, senior vice president of public affairs at the American Gaming Association, says Hawaii’s interest in sports betting is proof that “pigs are obviously flying”. However, the decision to rewrite the bill and establish an investigatory task force has grounded those pigs for now. The original plans included appointing a single provider whose job would have been to create an entire sports betting industry in Hawaii. OPERATORS: Hawaii is one of only two states, the other is Utah, to have no gambling, which made the proposed legislation a shock.

INDIANA POPULATION: 6.7 million LEGISLATION: A bill to legalise sports wagering in the state’s riverboat casinos, race track casinos and off-track betting facilities was passed by the Senate in February. It also allows for mobile sports betting, although online gambling had previously been banned. It has now been put before the Public Policy Committee, which will also consider a separate gambling bill. An initial $75,000 fee for a licence is proposed, with a $10,000 yearly charge. Tax would come in at 6.25 per cent. Existing operators will be able to work with other sports betting providers, providing they get a licence. COMMENT: There is a political will to introduce sports betting in Indiana, and last year the state’s gambling commission hired analysts to look into the possibilities of wagering on sports. Most of the casinos are close to state lines and tax revenues have slipped in recent years – introducing sports betting could help improve the situation. OPERATORS: Indiana has 13 riverboat, land and horse track casinos. Operators include Penn National and Caesars Entertainment.

ILLINOIS POPULATION: 12.8 million LEGISLATION: A bill allowing sports betting in casinos and online was introduced in January and after its first reading was passed to the subcommittee on gaming. Several amendments were tabled in March. The original bill included a 12.5 per cent tax, priced licences at an initial $10,000 and then $5,000 a year. Illinois Governor Jay Robert Pritzker believes it can raise more than $200m annually for the state. In his budget for 2020 he proposed to make 20 licences available, but his plans are different to those in the bill. He wants higher taxes and more expensive licences. COMMENT: There is a political will to make sports betting a reality in Illinois. Gov Pritzker said: “I am calling on the legislature to take this up immediately so that Illinois can realise millions of dollars, create new jobs, and bring sports betting into a regulated environment that will protect citizens from bad actors.” His budget proposal added: “Illinois should become the first state in the Midwest to take advantage of this opportunity.” OPERATORS: Illinois legalised riverboat gambling in 1990 and the state has 10 casinos. It also has several racing tracks including Arlington Park, owned by Churchill Downs which has a majority stake in Rivers Casino. There is a state lottery. ››

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US SPORTS BETTING

IOWA POPULATION: 3.1 million LEGISLATION: Bills to legalise sports betting in Iowa have made it past the ‘funnel’ – a deadline for proposed legislation in early March – and the committee stage. Legislation would allow for sports and fantasy sports betting in the state’s casinos and online (once customers have registered at a casino). Licences would cost $15,000 and revenue would be taxed at 6.75 per cent. COMMENT: Rep Bobby Kaufmann, chair of the committee which is overseeing the legislation, said: “Momentum is on our side. I’m very confident about getting this done and think we have the wind at our backs.” The bill is expected to go before the House in early April. OPERATORS: Iowa has an established gaming industry, with more than 20 casinos – four on tribal land – horse and greyhound tracks, parimutual betting and a state lottery. Gambling brings in well over $1 billion a year for the state. Operators include Caesars and Boyd Gaming.

KANSAS POPULATION: 3 million LEGISLATION: Two new sports betting bills were introduced in Kansas in early March, bringing the total number to five. The latest bills legislate for state-wide mobile sports betting through both the lottery and racetracks. All the bills are with the Federal and State Affairs Committee. Licence fees and the number available have not been decided, but tax is expected to come in at 6.75 per cent of revenue. COMMENT: Kansas is being tipped to become the first Midwest state to legalise sports betting, and could approve the legislation before the end of May. The Kansas Lottery is likely to be the licensee for sports betting but will not be able to operate its own platform for a decade. The bills have the backing of the Federal and State Affairs Committee which is leading the push to roll out sports betting in Kansas. OPERATORS: Kansas has five Native American casinos and four land-based operations.

KENTUCKY POPULATION: 4.5 million LEGISLATION: After plenty of groundwork and a number of bills put forward, a bill to allow sports betting, online poker and fantasy sports in Kentucky was passed by the House Licens54

ing, Occupations and Administrative Regulations Committee in February. As Kentucky has no casino infrastructure, it would allow sports betting at state-licensed horse tracks or the Kentucky Speedway in Sparta and on mobile within the state. Licences would cost $1m, with an annual fee of $50,000. Tax would be 10.25 per cent at licensed tracks and 14.25 per cent online. COMMENT: The bill faced ‘long odds’ in the House, where it needs 60 of 100 votes to pass to the Senate, and Rep Adam Koenig admitted in March that there would not be time this session for the House to vote on the bill. The current session expired at the end of March. OPERATORS: The state currently only allows gambling on horse racing and the state has no casino infrastructure. Sports betting would likely be overseen by the Kentucky Gaming Commission.

MGM National Harbor, Maryland

MAINE POPULATION: 1.3 million LEGISLATION: Several different bills were submitted in January, outlining different options for sports betting in the state. In mid-March a new bill with a vision for legislation and the backing of several lawmakers dropped. It would allow for mobile, as well as in-person betting. Interestingly, it would allow Native American tribes who do not have bricks and mortar casinos to offer online betting. Regulation would be by the Maine Gambling Control Board, tax is mooted at a hefty 25 per cent, with an annual licence fee of £15,000. COMMENT: Betting looked “fairly unlikely” for Maine before the March bill, says Geoff Hawkins senior policy analyst at MultiState Associates. But things may have changed as the new bill arrived with support, and “Maine has plenty of time, as the legislature is scheduled to be in session until mid-June”. OPERATORS: Maine has two casinos – the Oxford Country Casino, which opened in 2012, and the Hollywood Bangor Casino, which opened in 2013. There are also bingo casinos on tribal land, two race tracks and a state lottery.

MASSACHUSETTS POPULATION: 6.9 million LEGISLATION: More than a dozen sports betting bills have been tabled in Boston this year, including one from Republican Governor Charlie Baker. The various bills include measures ranging from setting up a commission to investigate sports wagering to legalis-

MARYLAND POPULATION: 6 million LEGISLATION: Bills were introduced this year that would allow the state’s existing video lottery and horse racing licensees to serve as sports betting agents for the lottery. The cost of a licence was put at $300,000, with an annual fee of $50,000. However, the matter would need to go to a referendum, which lawmakers say will not happen this year. Senator Chris West told a Budget and Taxation Committee hearing in early March: “This bill is a constitutional amendment and it is my understanding that there will be no more constitutional amendments passed this year.” COMMENT: Although it seems nothing will happen in 2019, there are concerns that Maryland is falling behind other neighbouring states with regards sports betting, and lawmakers are keen for a public vote in 2020. There appears to be public support for the idea. Sports betting operators DraftKings and FanDuel attended a truncated hearing in March that Sen. West described as a “preview of what you’ll see next year”. OPERATORS: Maryland has six casinos, the largest is MGM-owned National Harbor, with revenues of $705m in 2018. There are also five racetracks and a state lottery.

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Greektown Casino, Michigan

MICHIGAN

ing casino, retail and online operations. The bills are to be scrutinised by the Committee on Economic Development and Emerging Technologies. Proposals for tax range from 6.75 per cent to 12.5 per cent, with five-year licences expected to cost around $500,000, with a hefty application fee thrown in. The state lottery could also get involved and the industry will be overseen by the Massachusetts Gaming Commission. COMMENT: Sports betting is almost certain to become a reality in Massachusetts this year, and there are some big industry hitters keen to see it happen – not least DraftKings, which is headquartered in Boston. Lawmakers are also anxious to keep pace with neighbouring states. Lieutenant Governor Karyn Polito says gaming has become an “economic driver” for the state and that the Massachusetts Gaming Commission had already developed “a comprehensive set of regulations” that would allow “proper oversight of the industry”. OPERATORS: Betting on horse and dog racing is legal and there are two active race tracks. Massachusetts has had a state lottery since 1971, while commercial casinos were legalised in 2011. The MGM Springfield casino resort opened in 2018 and Wynn Resort’s Encore Boston Harbor is scheduled to open this year. The state’s two Native American tribes are also working to open casinos. GIQ Q1 REVIEW

POPULATION: 10 million LEGISLATION: A bill to allow online gambling in Michigan was vetoed by Governor Rick Snyder in 2018. It would have allowed the state’s casinos, both tribal and commercial, to allow online gambling. It has been reintroduced this year and contains a line that allows “internet gaming operators licensed by the division to accept internet wagers under this act on any amateur or professional sporting event or contest”. Licences are coming in at an initial $200,000 and an annual fee of $100,000 thereafter. Non-tribal operators would also pay a tax of eight per cent. The companion House and Senate bills are now at the committee stage. COMMENT: The bill was approved by both Houses last year before the governor rejected it. But Democrat Gretchen Whitmer is the new governor and may take a different view if it reaches her desk this year. However, the single line relating to sports betting in the bill makes it vulnerable to amendment and there is no bill in play that directly relates to sports betting. However, lawmakers in Michigan pass legislation all year round so there is no time pressure. OPERATORS: The 12 Native American tribes in Michigan operate 23 casinos in the state. There are three commercial casinos in Detroit, including an MGM Grand. Jack Entertainment runs the Greektown Casino, IH Gaming owns the MotorCity Casino.

MINNESOTA POPULATION: 5.6 million LEGISLATION: Bills have been tabled in each House that would allow sports betting in the

state. The bill before the Senate would establish a sports wagering commission, to develop regulations for in-person and mobile sports betting. It would allow Native American tribes and licensed racetracks to apply for licences. Tax would be 6.75 per cent and licences would be renewable annually. It has received support in committee. COMMENT: There is tribal opposition to the bill as they oppose mobile gaming. There appears to be little political momentum behind the bill – with concerns about problem gambling outweighing enthusiasm over revenue, and even the Senate bill’s backers accept it may not pass this year. OPERATORS: Minnesota has no commercial casinos but does have 21 tribal casinos and racetrack gambling. There is also a state lottery.

MONTANA POPULATION: 1 million LEGISLATION: Sports betting already exists to a degree in Montana, where the state lottery runs a pool for football and motor racing. However, new legislation was introduced in March and has gone before the Senate Business, Labor and Economic Affairs Committee. The bill states that licensed gambling operators can offer sports betting at their premises through a licensed operator. Online betting would also be allowed, but only at licenced venues. Sportsbook licences will cost $1,000 a year and expire on 30 June of each year. Tax would be 8.5 per cent. COMMENT: The bill was discussed by the committee in mid-March, but they did not vote on it. The bill’s backer, Sen. Mark Blasdel, is hopeful that because the law will not come into effect until June 2020 there is time to ›› 55

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MISSOURI POPULATION: 6 million LEGISLATION: Seven bills to legalise sports betting were tabled in Missouri this year. They would allow wagers to be laid in person on riverboat casinos and on mobile. The bills are at various stages, with some having cleared the committee stage. With various options before them there is no clear indication of how much licences will cost, but tax is likely to be around 6.75 per cent of gross revenues. If passed the new laws would come into force in August. COMMENT: Bills were introduced in Missouri last year, before the repeal of PASPA, but did not pass. This year, with PASPA gone and so many bills in play, it could be different. Governor Mike Parson is believed to be a sceptic, but has said the decision will be down to lawmakers. Another factor that could be significant is the backing of MLB sides the St Louis Cardinals and Kansas City Royals, who have come out in support of sports betting in Missouri. OPERATORS: The state has 13 casinos, which are all technically on riverboats. The main operators are Pinnacle Entertainment, Penn National Gaming and Isle of Capri Casinos, which runs four establishments.

address any problems later this year if it does not pass this session. OPERATORS: Montana has many (around 300) small-scale gambling establishments, including on tribal land. It also has a state lottery and allows betting on horse racing.

NEW HAMPSHIRE POPULATION: 1.4 million LEGISLATION: New Hampshire is leading the way in the race to be the first state to introduce sports betting in 2019. A bill to allow wagering passed the House in March and is now set to appear before the Senate. If it’s successful there, Governor Chris Sununu will embrace it with open arms. The bill allows mobile betting (giving it a jump on local rival Rhode Island) and limits the number of sportsbook operators to 10. It would be regulated by the state lottery. The bill does not detail tax or licence fees. COMMENT: Governor Sununu will be tapping his feet, waiting for the bill to pass Senate after factoring sports betting revenues into his budget in February. “Sports Betting will bring in an additional $10m in annual revenue beginning in fiscal year 2021,” he predicted. Geoff Hawkins, senior policy analyst at MultiState Associates says: “Things are looking

more positive than we predicted in January. The bill’s chances are much improved.” OPERATORS: Although New Hampshire has no casinos, gambling is allowed at the state’s horse and dog tracks. Casino cruises are also allowed into the state for 48 hours at a time.

NORTH CAROLINA POPULATION: 10.4 million LEGISLATION: A late entry in the field, a bill to allow sports betting on tribal lands iyon North Carolina was introduced in late February. It passed the first reading but there has since been back and forth between committees, with the bill now before commerce and insurance committee. It makes no mention of tax and licence fees and it does not allow for mobile betting. If it passes the state would need to agree a compact with the tribes. COMMENT: North Carolina is conservative, but there is “reason for optimism”, says blogger Reeve Segal of ATS.io. The tribes were active in pushing for the bill, which was proposed by Senator Jim Davis, who represents the districts where they operate. Reeve says it is a “good bet” that sports betting will be allowed this year. OPERATORS: North Carolina has two tribal casinos in the east of the state Harrah’s Cherokee Resort and Harrah’s Cherokee Valley River Casino & Hotel.

St Louis Cardinals support sports betting in Missouri

NORTH DAKOTA POPULATION: 0.75 million LEGISLATION: Two bills were introduced at the start of the year, but were voted down in the House. However, a motion to reconsider one of them was passed and the House then voted in favour of allowing in-person betting on sports events through charitable gaming organisations. Tax would be no more than 2.5 per cent. COMMENT: The bill only narrowly made through the House, and there has been opposition, with the head of the North Dakota University System speaking out against the legalisation of sports betting. OPERATORS: There are no commercial casinos in North Dakota but the state has several tribal casinos and allows gambling through charitable organisations. It also runs the smallest lottery in the US.

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Yonkers Raceway, New York

OHIO POPULATION: 11.7 million LEGISLATION: A placeholder bill was introduced in 2018, and in March Ohio became one of the last states to introduce legislation on sports betting. The bill allows for in person and online betting, with remote signup allowed. Licences would cost $100,000 for five years and the tax rate would be 6.25 per cent. COMMENT: Lawmakers believed sports betting was likely to be legalised even before the bill was tabled. The bill arrived one day before the governor’s budget, which does not feature revenues from sports betting. However, Gov Mike DeWine said: “I would anticipate, candidly, that certainly within the life of this budget that [sports betting] will take place in the legislature, and there will be funds in regard to that. But we didn’t want to count on that.” OPERATORS: Ohio has seven racinos with slots, which are overseen by the Ohio Lottery Commission. Cleveland, Columbus, Cincinnati and Toledo each boast a casino regulated by the Ohio Casino Control Commission.

OREGON POPULATION: 4.2 million LEGISLATION: Oregon, like Delaware, Montana and Nevada, allowed sports betting before PASPA and previously offered parlay games on the NFL and NBA. That means a new law may GIQ Q1 REVIEW

not be required to reintroduce sports betting through the state lottery. A bill was introduced that would require most of the profits to go into pension funds. COMMENT: Earlier this year a lottery spokesman said the “goal” was to introduce sports betting to Oregon in time for the 2019 NFL season. He added that the offering would be mobile-based and that the lottery would look to partner with a mobile sportsbook operator. OPERATORS: Video lottery terminals are common throughout the state. There are nine tribal casinos in Oregon.

SOUTH CAROLINA POPULATION: 5 million LEGISLATION: Joint bills that would allow sports betting in South Carolina have been introduced to the House and Senate and are in the committee stage. They contain no details of licence fees and taxes but propose to allow pari-mutuel horse race betting, betting on professional sports, skill-based casino games and games of chance. COMMENT: South Carolina currently only allows tribal bingo, casino cruises into international waters and runs a state lottery. The proposed legislation would introduce a wider betting industry including sportsbooks. However, there has been little movement on the bills and the state is conservative. OPERATORS: Big M Casino operates cruises aboard two yachts from Little River. Gambling is only allowed once you are offshore.

NEW YORK POPULATION: 19.5 million LEGISLATION: Sports betting should soon be legal in the state’s four upstate casinos, but legislation to allow mobile betting may not fare so well. A law from 2013 authorises the casinos to offer sports betting and now that PASPA has been lifted, the state gaming commission is finalising the rules and regulations. Licences will not come cheap, however, costing $15 million apiece, and the tax rate is put at 8.5 percent. Tribal casinos will also be able to offer sports betting. The major stumbling block appears to be mobile betting, which may not get the go ahead. COMMENT: Governor Andrew Cuomo has made his opposition to mobile betting clear, and has little faith in the revenue-raising possibilities of sports betting. He claimed New Jersey had made $13 million from sports betting, a figure that he described as “a rounding error in our state”. Cuomo also believes mobile betting would require a constitutional amendment, meaning a public vote. “We have sports betting that you can do through a casino and we are trying to support our casinos,” he said. OPERATORS: The four upstate casinos already have sports betting partners in place, and the Oneida Indian Nation has struck a deal with Caesars Entertainment. Elsewhere in the state, MGM bought the Empire City Casino and Yonkers Raceway in a $1bn deal last year. ›› 57

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SOUTH DAKOTA POPULATION: 900,000 LEGISLATION: Lawmakers introduced a proposed constitutional amendment that would have allowed sports betting in person in Deadwood, where gambling has been legal since 1989. However, it was defeated by the House State Affairs Committee in March. If passed it would also have allowed sports betting in the state’s tribal casinos. COMMENT: There is a chance that the matter could be put to a public vote in 2020, but there will be no more movement during this session. OPERATORS: There are around 20 casinos and gaming parlours in Deadwood, and nine tribal casinos elsewhere in the state. There is also a state lottery.

TENNESSEE POPULATION: 6.8 million LEGISLATION: Two sets of companion bills – running parallel in the House and Senate – have been filed that would allow sports betting. They have made it to the committee stage, and one version also allows mobile gaming. During a committee debate in March, House Representative Rick Staples put forward an amendment proposing a mobile-only operation, recommended increasing the tax from 10 to 20 per cent and charging $750,000 each for 10 licences. COMMENT: There appears to be serious momentum behind the push to legalise sports betting in the state. It is still unclear who would regulate the industry. The bills mention creating a Tennessee sports betting commission but there are also suggestions that the state lottery should oversee the industry, a move that could sway sceptical lawmakers. OPERATORS: Tennessee currently has no casinos or racetracks – which could make mobile-only a viable option.

TEXAS POPULATION: 28.7 million LEGISLATION: A bill to legalise sports betting was filed in February and referred to the Licensing and Administrative Procedures Committee. Tax is proposed at 6.25 per cent with five three-year licences available for $250,000. A companion bill calls for a constitutional amendment to be voted on in November. There are also proposals in play 58

to allow casino gaming at nine locations in the state, which would also require a public vote. COMMENT: With so many bills and possible outcomes it is hard to predict what will happen. Geoff Hawkins, senior policy analyst at MultiState Associates says: “With the current makeup of the legislature and the executive branch, I don’t see any bills passing this year in Texas. That would put sports betting off until at least the 2021 legislative session. At that point, Texas could be surrounded by states operating legal sports betting.” OPERATORS: There are no commercial casinos in Texas, and the three tribal casinos have had a troubled relationship with the state. There is a state lottery, and charitable and parimutual betting are allowed.

VERMONT POPULATION: 625,000 LEGISLATION: A study bill was tabled in January but in March a full-scale House bill to legalise sports betting was introduced. It allows for inperson and online betting to be regulated by the Board of Liquor and Lottery. Licences would cost an initial $100,000, with tax on a sliding scale up to 6.75 per cent. There would also be a $1 transaction fee per bet, and licensees would be allowed to extend credit to bettors. It was sent to the House Committee on General, Housing and Military Affairs after its first reading. COMMENT: Vermont, like Texas has no commercial casino industry to parachute sports betting into. Geoff Hawkins, senior policy analyst at MultiState Associates says: “With Vermont’s

low population and lack of gambling infrastructure, I don’t see the limited revenue possibilities as much of a carrot for the legislature. Vermont will also be nearly surrounded by legal sports betting in the next two years, so I don’t see legal sports betting as much of a tourist draw.” OPERATORS: Vermont has a lottery and allows charitable gaming, but has no casino or racetrack infrastructure.

VIRGINIA POPULATION: 8.5 million LEGISLATION: Gaming has become a hot topic in Virginia in 2019. The general assembly has approved a bill that would allow casino gaming, regulated by the Virginia Lottery Board, in some cities if it passes a public vote. Two bills that would allow the lottery to oversee sports betting, including online, are at the committee stage. Tax would come in at five per cent. COMMENT: The chances of sports betting legislation passing are minimal. One bill was voted down in committee and the other was passed by indefinitely, which means it is effectively dead. OPERATORS: Virginia has no commercial or tribal casinos, yet. But the state does run a lottery and there are several horse racing tracks.

WASHINGTON POPULATION: 7.5 million LEGISLATION: A bill that would allow sports betting in tribal casinos was tabled in February, followed by another bill that would also allow it at racetracks, off-track betting sites. The second bill proposes to a tax of 15 per cent, divided between various beneficiaries. This would not apply on tribal lands. Neither bill includes mobile. COMMENT: The two bills are in the committee stage. There is a desire to see sports betting introduced in Washington, particularly as Oregon is moving to legalise it. But there are disagreements over tribal exclusivity that could cause problems. OPERATORS: Gambling is big business in Washington; there are around 30 tribal casinos and more than 20 smaller commercial gambling sites in the state. There are also two racetracks and OTB sites. The state lottery generates more than $700 million annually. n California, Louisiana and Oklahoma saw some activity in 2018 but have made no progress yet in 2019. To keep up to date with all the legislative action check: www.GamingIntelligence.com

Bigger Hits?

BigTime! www.bigtimegaming.com

L EG A L PAGCOR

the

Reputation game The Philippine Amusement and Gaming Corporation (PAGCOR) has emerged as a serious licensing body, but can it regain the trust it lost when President Duterte turned on the industry three years ago?

PAGCOR RECENTLY ANNOUNCED revenue from offshore gaming operators shooting up 88 per cent during 2018 to P7.365 billion (US$140m). Just three years ago, PAGCOR’s revenue from offshore gaming was just P56m ($1m), with most of the region’s operator’s licensed in the semi-autonomous Cagayan Special Economic Zone and Freeport. President Duterte assumed office in 2016 and immediately vowed to stamp out online gaming in the Philippines. His aggressive and unpredictable style led to a mini-exodus of spooked operators, but the rhetoric soon morphed into a policy akin to a nationalisation of offshore gaming licensing. The impact was most obviously felt by First Cagayan Resort and Leisure, which was the gaming regulator based in the Special Economic Zone and Freeport. It lost about 60 of its 138 licensees to PAGCOR during 2017. It now has just 27 licensees. Meanwhile, PAGCOR revenue is ballooning and the regulator expects it to continue. “We have been asked [by the president] to grow the industry 100 times over the next 10 years,” says Jose Mari Saulo, the chief operating officer of Global ComRCI, the third party auditing partner of PAGCOR.

What is illegal gaming? While the regulatory body has clearly GIQ Q1 REVIEW

embraced offshore gaming operators, it continues to espouse the anti-online gaming rhetoric that so scared gaming executives when Duterte came to power. The reason behind this is partly a question of definition. The term ‘online gaming’ in the Philippine context can broadly be defined in four categories: games parlours aimed at domestic players that deliver games via the internet; sports betting conducted using the internet in bricks and mortar casinos; proxy betting in bricks and mortar casinos; and online casinos aimed at offshore players. When the regulator talks about strengthening the fight against “illegal online gaming” in the country, she is largely talking about illegal operators targeting the Philippine domestic market. Online gaming is illegal for Philippine residents, who are restricted to the country’s 44 land-based casinos and 288 slots emporiums for their gaming needs. However, the regulator is very clear that online gaming operators targeting offshore players are most welcome. “The regulator does not want online gaming easily accessible for Philippine citizens anywhere they want,” explains Saulo. “We come from a developing country. We are not as mature as countries like China, Japan, the US, UK or other European countries. “We have limitations in terms of education. For our local citizens, our time should be spent on vocational training etc. Maybe the time will

Rodrigo Duterte

come when we are developed. Maybe we can consider it then.” And what about the other countries that the offshore operators are targeting? “There are no limits as long as it is not the Philippines. There is no judgement. We don’t have the capabilities to police other countries. That is beyond our jurisdiction,” replies Saulo.

Local rivals There are very few licensing regimes in Asia. Cambodia has been very welcoming towards the gambling industry, and online gaming enterprises can be run in conjunction with one of the 100-plus licensed land-based casinos in the country. However, Cambodia’s reputation as a stable jurisdiction for businesses has always been questionable and was knocked further in February, when the Financial Action Task ›› 61

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Force identified it as a nation with strategic anti-money laundering and combating the financing of terrorism deficiencies. Duterte’s unpredictability is cited as the number one reason why an Asian-facing operator would choose to domicile its business in the Isle of Man. On a political level, Duterte has been getting ever closer to most operators’ biggest source of customers, China. And there are concerns that the Chinese government could force Duterte to clamp down on an industry that China might consider illegitimate. Saulo rubbishes such claims, saying that the sovereign risk is far greater in Cambodia, where China could swoop on you at any time. “And if the generals don’t like you, then good luck,” adds Saulo. “As a legitimate operator in the Philippines – unlike other countries – if you have a licence, not only are you allowed to operate, but the rules have been set and are firmly established. It is all very clear. It is not about political connections. You just need your papers in order, a good business plan and a good management team.” Furthermore, the Philippines is selling itself as a stable home for businesses. The country can reasonably claim to be the business process outsourcing (BPO) capital of the world. It is a $150 billion industry with over a million enforcing it? You need to protect the legitimacy citizens working in the sector. of the industry.” “We are the only country with that scale of PAGCOR also has links with the Antiecosystem to support the gaming industry,” Money Laundering Council and the country’s says Saulo. national banks. Saulo says the national government has thrown its Gaming vs gambling weight behind the industry PAGCOR has even set itself – and in a sense – it is now “PAGCOR has up as a champion of respontoo big to fail (or allow China taken over and sible gaming. In a manner to disrupt it). “As a result of institutionalised the similar to the world’s lotteries, this national legitimacy, all gaming industry in PAGCOR’s mission is defined government agencies have as assisting the president with a way that has not pledged support,” says Saulo. ‘nation-building’ and social been seen before” T his is most evident projects with a heavy emphawhen it comes to law enforce- Jose Mari Saulo, sis on education. ment. PAGCOR has joined Global ComRCI PAGCOR’s website lists forces with the Philippine projects including the conNational Police, National Bureau of Investigastruction of thousands of classrooms; the protion, Bureau of Immigration and the Office of duction of thousands of school desks and chairs Cybercrime under the Department of Justice, using confiscated illegal logs; the fabrication of to create an inter-agency council that handles armchairs out of old slot machine stands; the intelligence gathering, investigations and prosdevelopment of football at the grassroots level ecutions of illegal online gambling activities. to discover young talents who will compete in “If you are a legitimate operator you get major international football competitions; and protection from illegitimate market entrants,” a nationwide feeding programme that aims to says Saulo. “Illegitimate sites and scammers provide the nutritional needs of malnourished are shut down within 24 hours. That is the basic students enrolled in public schools. Saulo kind of security. It is not a matter of paper, it is claims around half of PAGCOR’s revenue is a matter of enforceability. You might say you allocated to such projects. have a licence in the Isle of Man, but who is “PAGCOR has deep roots in social responsi62

bility, unlike First Cagayan, which just generates money for the port. That is a different take on how gaming is addressed in the Philippines,” continues Saulo. “PAGCOR stands for responsible gaming. Gaming is about promoting entertainment and social interaction of people in a productive manner. People can have fun and not lose their house. Gambling is vicious. It’s players betting their car or house. It sounds like semantics but we treat the differences very seriously here.” In terms of responsible gambling measures, PAGCOR records all bets in a way similar to the New Jersey Division of Gaming Enforcement. Pacor uses companies such as Global ComRCI to audit the platform. Site-blocking for illegal operators targeting Philippine citizens is commonplace. Land-based casinos are required to identify individuals who are overspending. “So PAGCOR has taken over and institutionalised the gaming industry in a way that has not been seen before,” concludes Saulo. Despite the exodus from First Cagayan, some of the industry’s largest operators, such as Asian Logic, have stayed put. Others prefer the stability of the Isle of Man. With Malta’s regulator under pressure from local banking institutions to shun Asian gaming operators, the number of tier one licensing authorities available to Asian operators is fast receding. PAGCOR is ready to step into the breach. n

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F I NA NC E GI STOCK INDEX Q1

GAMING INTELLIGENCE STOCK INDEX Q1 2019

First quarter boon for US gaming stocks New York-listed gaming companies dominate the top of the chart as Global Gaming hits the wall in Q1, writes Kio Dawson

Below: Shares rose 33 per cent for Evolution Gaming in Q1; Right: Global Gaming shares suffered a 40 per cent single-day drop

THE 50 PUBLICLY-LISTED operators and suppliers which make up the Gaming Intelligence Stock List saw their combined share prices decline by two per cent during the first quarter of 2019. There were 32 companies that saw the value of their shares increase between 2 January and 29 March, including 18 companies that enjoyed double-digit growth. New York-listed 500.com came out on top of our chart for Q1 as its shares closed the quarter up 84 per cent at $13.96. The company is beginning to recover from a difficult year in 2018, when its shares fell by 30 per cent, and has benefited from diversifying its revenue with the acquisition of The Multi Group as it continues to await regulation of the online lottery market in China. With 500.com topping the chart, investors in New York-listed gaming companies would have been happiest, as four other companies

were among the top six performing stocks in Q1. This mirrors the strong performance of the financial markets in New York during the quarter, with Wall Street enjoying its best start to the year in over a decade. Shares in virtual sports and games provider Inspired Entertainment and social gaming giant Zynga both rose 37 per cent to end the quarter at $6.66 and $5.33 respectively, while casino operators Boyd Gaming and Caesars Entertainment saw positive momentum in their share prices as they look to become the biggest beneficiaries of the US sports betting expansion. Boyd Gaming shares were up 35 per cent at $27.36 as it opened the first FanDuel Sportsbook in the state of Pennsylvania in midMarch, while Caesars Entertainment shares climbed 32 per cent to $8.69, amid seeing activist investor Carl Icahn grow his stake in the

Stockholm-listed companies struggled, with the three worstperforming stocks during the period all listed in the Swedish capital

F I NA NC E GI STOCK INDEX Q1

operator and rumours of a potential merger with Eldorado Resorts. It was a good quarter for Stockholm-listed Evolution Gaming as shares roses by 44 per cent to SEK732.50, and was one of just two companies to record 52-week highs in March, alongside Zynga. Other notable share price performances in Q1 came from bet-at-home. com (up 22 per cent), OPAP (up 20 per cent), and Scientific Games Corporation (up 17 per cent), which snagged GIQ’s Deal of the Quarter after its joint venture in Turkey won the country’s sports betting tender from under the noses of rival Intralot. Some of the other Stockholm-listed companies struggled, however, with the three worstperforming stocks during the period all listed in the Swedish capital. Global Gaming shares declined the most, including a single-day drop of 40 per cent on 28 February after the company revealed it had missed its own internal revenue targets for Q4 2018. Its shares continued to fall, hitting a new low of SEK14.84 on 1 March, before recovering to close the quarter at SEK16.47, down 55 per cent. Catena Media’s shares fell by 34 per cent to SEK64.60, including a low of SEK61.25 on 14 March, while LeoVegas’ shares decreased by 29 per cent to close the quarter at SEK28.98, including a low of SEK28.52 on 29 March. Scout Gaming Group was the fourth Stockholm-listed company to see its shares hit a 52-week low in March, slipping to SEK22.70 on 4 March, before recovering to close the quarter at SEK25.80, still down 15 per cent compared to the beginning of January. There were also record lows set by Londonlisted operators William Hill, Paddy Power Betfair and GVC Holdings in March. Having hit a low of 148.10p on 26 March, William Hill’s shares recovered to close the quarter up three per cent at 160.55p, while Paddy Power Betfair’s shares were down seven per cent over the threemonth period to close at 5,945.00p, including a low of 5,390.00p on 8 March. GVC’s shares had lost 17 per cent of their value to 559.00p by the end of Q1. This followed an eventful quarter for the operator, which saw its share slump 11 per cent on 8 March after investors were spooked by CEO Kenny Alexander and chairman Lee Feldman selling around £20m worth of their shares in GVC, just days after the release of the company’s 2018 financial results. Oslo-listed Gaming Innovation Group (GiG) saw its shares fall by 13 per cent over the quarter, but finally completed its long-awaited listing on Stockholm’s Nasdaq OMX on 26 March, and will maintain a dual listing with Oslo Børs for the time being. n GIQ Q1 REVIEW

OP. PRICE 02.01.19

CL. PRICE 29.03.19

$7.58

$13.96

84.17%

SEK510.00

SEK732.50

43.63%

Inspired Entertainment

$4.86

$6.66

37.04%

Zynga

$3.90

$5.33

36.67%

$20.30

$27.36

34.78%

$6.58

$8.69

32.07%

Safecharge International Group

235.00p

300.00p

27.66%

bet-at-home.com

€ 46.62

€ 58.00

24.41%

Better Collective

SEK57.00

SEK69.68

22.25% 19.95%

COMPANY 500.com Evolution Gaming Group

Boyd Gaming Corporation Caesars Entertainment Corporation

% CHANGE

OPAP

€ 7.67

€ 9.20

Scientific Games Corporation

$17.49

$20.42

16.75%

136.40p

157.40p

15.40% 14.09%

Rank Group Kindred Group

SEK81.60

SEK93.10

Pollard Banknote

CAD$19.62

CAD$22.29

13.61%

Aristocrat Leisure

AUD$21.79

AUD$24.53

12.57%

Churchill Downs

$80.18

$90.26

12.57%

Playtech

387.00p

434.60p

12.30%

JPJ Group

634.00p

700.00p

10.41%

45.00p

49.00p

8.89%

AUD$4.26

AUD$4.63

8.69%

Penn National Gaming

$18.50

$20.10

8.65%

MGM Resorts International

$23.85

$25.66

7.59%

AUD$0.795

AUD$0.855

7.55%

1.82p

1.95p

7.14%

€ 0.48

€ 0.51

6.92%

HK$0.48

HK$0.51

6.25%

$22.58

$23.93

5.98%

CAD$22.27

CAD$23.36

4.89%

Stride Gaming

124.00p

128.50p

3.63%

William Hill

156.40p

160.55p

2.65%

SEK86.50

SEK87.10

0.69%

€ 12.48

€ 12.54

0.48%

Betsson

SEK73.00

SEK70.53

-3.38%

Aspire Global

SEK49.40

SEK47.55

-3.74%

Zeal Network

€ 21.00

€ 20.15

-4.05%

GAN Tabcorp Holding

Ainsworth Game Technology Webis Holdings Intralot AGTech Holdings PlayAGS The Stars Group

Cherry Lotto24

Gaming Realms

4.38p

4.20p

-4.11%

Paddy Power Betfair

6,420.00p

5,945.00p

-7.40%

NetEnt

-8.36%

SEK36.83

SEK33.75

Sportech

41.00p

37.50p

-8.54%

International Game Technology

$14.48

$12.99

-10.29%

175.30p

156.00p

-11.01%

14.00p

12.25p

-12.50%

Gaming Innovation Group

SEK23.00

SEK20.00

-13.04%

Scout Gaming Group

SEK30.50

SEK25.80

-15.41%

GVC Holdings

675.00p

559.00p

-17.19%

Kambi Group

SEK193.20

SEK158.80

-17.81%

888 Holdings Nektan

XLMedia

75.95p

61.00p

-19.68%

SEK40.58

SEK28.98

-28.59%

Catena Media

SEK98.15

SEK64.60

-34.18%

Global Gaming 555

SEK36.24

SEK16.47

-54.55%

LeoVegas

FINANCE

The GIQ FY 2018

GLOBAL GAMING LOST out to GVC in the battle to top the GIQ20 chart in 2018, but there were also strong performances from Catena Media, Playtech, Better Collective and LeoVegas during the year – all of whom saw revenue increase more than 50 per cent after successful M&A moves. Similarly, GVC’s ascension to the top of the GIQ20 was driven by its acquisition of Ladbrokes Coral last March, which helped annual revenue soar to £2.98bn, including £1.71bn generated online. This was more than The Stars Group’s £1.60bn (US$2.03bn) total, though this included just six months of results from Sky Betting & Gaming, following Stars’ own landmark acquisition last July. Watch out GVC, Stars will be gunning for that crown this year. GVC also generated more revenue online than Paddy Power Betfair’s £1.54bn (which includes US and Australia results), with Kindred Group the next biggest listed operator by revenue at £907.6m, far ahead of William Hill’s online revenue of £634.4m, which will at least grow significantly this year with the integration of Mr Green & Co. Betsson has begun to turn things around, with revenue climbing to £451.0m (SEK5.15bn), which was ahead of 888 Holdings’ £417.0m (US$529.9m), though 888 misses out on a place in the GIQ20, as revenue fell by two per cent in 2018. n

IN THIS ISSUE 70 GIQ20 FY 2018 results and analysis

The GIQ20 FY 2018 revenue COMPANY

2018

2017

CHANGE

£2,979.5m

£815.9m

265%

SEK915.9m

SEK458.0m

100%

€105.0m

€67.7m

55%

US$2,029.2m

US$1,312.3m

55%

€1,240.4m

€807.1m

54%

€40.5m

€26.3m

54%

GVC HOLDINGS

GLOBAL GAMING 555

CATENA MEDIA

THE STARS GROUP

PLAYTECH

BETTER COLLECTIVE

LEOVEGAS

€327.8m

€217.0m

51%

ASPIRE GLOBAL

€104.6m

€71.9m

45%

CHERRY

SEK3,236m

SEK2,252m

44%

EVOLUTION GAMING

€245.4m

€178.4m

38%

GAMING INNOVATION GROUP

€151.4m

€120.4m

26%

KAMBI GROUP

€76.2m

€62.1m

23%

KINDRED GROUP

£907.6m

£751.4m

21%

BETSSON

SEK5,149.8m

SEK4,716.5m

15%

CHURCHILL DOWNS INCORPORATED

US$1,009.0m

US$882.6m

14%

JPJ GROUP

£319.6m

£289.3m

10%

NETENT

SEK1,782.0m

SEK1,636.1m

SCIENTIFIC GAMES

US$3,363.2m

US$3,083.6m

PADDY POWER BETFAIR

£1,873m

£1,745m

WILLIAM HILL

£1,621.3m

£1,592.8m

*Exchange rate as of 31 Dec 2018 (US$1:£0.787; SEK1:£0.087) GIQ Q1 REVIEW

F I NA NC E GIQ20 FY 2018

GVC tops the GIQ20 as revenue soars in 2018 There were some strong performances by operators and suppliers last year, but GVC takes the crown as the industry’s biggest online operator in 2018, writes Kio Dawson GVC HOLDINGS 265% Net revenue (£) 2018

2017

Change

Online

1,712.7m

801.2m

114%

UK retail

1,014.9m

n/a

European retail

211.7m

n/a

Other

43.8m

14.7m

198%

(Eliminations) TOTAL

(3.6m)

n/a

2,979.5m

815.9m

265%

London-listed GVC topped the GIQ20 chart following the completion of its landmark Ladbrokes Coral acquisition in March of last year. Reported revenue (including Ladbrokes Coral since March) soared 265 per cent to £2.98bn 70

in 2018, although pro forma revenue was up just nine per cent for the year, despite online growth of 19 per cent following improvements across all main brands. European Retail growth of 16 per cent offset a five per cent decline in UK Retail revenue. “2018 was a transformational year for the group, with the completion of the Ladbrokes Coral acquisition in March making the group the largest online-led sports-betting and gaming operator in the world,” said chief executive Kenneth Alexander. “Excellent operational execution, effective marketing and a good World Cup helped both the legacy GVC and the acquired Ladbrokes Coral businesses perform ahead of expectations and materially ahead of the market, delivering market share gains in all our major territories.”

F I NA NC E

GIQ20 FY 2018

GLOBAL GAMING 555

CATENA MEDIA

100%

55%

Net revenue (SEK)

Net revenue (€) 2018

Own gaming activities Own brands on another platform B2B TOTAL

2017

Change

2018

2017

Change

89.9m

53.9m

67%

869.6m

401.3m

117%

28.6m

28.8m

-1%

Subscription revenue

1.1m

n/a

6.5m

18.9m

-66%

Paid revenue

14.0m

12.7m

10%

915.9m

458.0m

100%

TOTAL

105.0m

67.7m

55%

Stockholm-listed Global Gaming was finally knocked off its perch at the top of the GIQ20 chart after leading the way for most of 2018. Strong revenue growth from its Ninja Casino brand helped the company to double revenue to SEK915.9m during the year, although Global Gaming admitted it had missed its own internal targets for the final quarter of the year, sending shares in the company spiralling down by 40 per cent on 28 February. Q4 revenue increased by 35 per cent yearon-year to SEK236.4m, with the company attributing the lower-than-anticipated growth to a weak performance in December, and the impact of migrating Ninja Casino customers to a new platform. Global Gaming also warned that it was too early to evaluate the impact of the competitive re-regulated Swedish market on its business, but said that it would work to minimise any risk through product and market diversification. “We are obviously proud that in 2018 we succeeded in delivering an annual growth of 100 per cent in a highly competitive market,” said CEO Joacim Möller. “At the same time, we are disappointed that we did not achieve our internal revenue and profit targets in the fourth quarter.”

GIQ Q1 REVIEW

Search revenue

“The process of transitioning from a distinct acquisition strategy to an increased focus on organic growth is progressing and the results have already been favourable” Per Hellberg, Catena Media

Stockholm-listed Catena Media broke through the €100m revenue landmark for the first time in 2018, as the digital marketing specialist enjoyed a strong finish to the year. Revenue in Q4 rose 36 per cent, helping fullyear revenue climb 55 per cent to €105m and profit for the period to double to €12.4m. Over 76 per cent of revenue was generated from locally regulated or taxed markets, with new depositing customers climbing 13 per cent to 127,805. “The process of transitioning from a distinct acquisition strategy to an increased focus on organic growth is progressing and the results have already been favourable, with clear indicators that we are on the right path,” said chief executive Per Hellberg. “One of our largest products, Ask Gamblers, almost doubled its sales in 2018. The expansion of existing brands to territories such as Japan is returning positive signals; and the setting-up of operations in the US is progressing as planned and, at the same time, the company’s cost trend there has begun to decelerate.”

F I NA NC E GIQ20 FY 2018

PLAYTECH 54% Net revenue (€) 2018

2017

Change

Casino

320.1m

412.8m

-22%

Sport

98.0m

87.5m

12%

Services

84.6m

94.4m

-10%

Bingo

26.3m

26.2m

Poker

9.6m

9.5m

Other

27.4m

26.4m

Total gaming B2B

566.0m

656.7m

-14%

Gaming B2C

593.2m

70.3m

744%

92.9m

84.9m

(11.7m)

(4.8m)

n/a

1,240.4m

807.1m

54%

Financials division Intercompany eliminations TOTAL

THE STARS GROUP 55% Net revenue (US$) 2018

2017

Change

Poker

892.6m

877.3m

Gaming

585.8m

334.8m

75%

Betting

491.1m

49.2m

898%

59.7m

51.0m

17%

2,029.2m

1,312.3m

55%

Other TOTAL

“We completed the acquisitions of Sky Betting & Gaming in the UK and BetEasy in Australia, extended our licensed footprint to 21 jurisdictions around the world and began growing our presence in the US” Rafi Ashkenazi, The Stars Group

It was a landmark year too for Toronto-listed The Stars Group following its acquisitions of Sky Betting & Gaming (SBG) and Australia’s BetEasy. Revenue increased by 55 per cent to $2,029.2m in 2018, with SBG contributing $394.1m and BetEasy $196.9m. This helped total Betting revenue soar 898 per cent to $491.1m, while Gaming revenue was up 75 per cent to $585.8m. Together, betting and gaming now contribute more revenue than poker for the first time. Poker revenue rose two per cent to $892.5m, with other revenue adding a further $59.7m to the total. “2018 was a landmark year for the company,” said chief executive Rafi Ashkenazi. “We completed the acquisitions of Sky Betting & Gaming in the UK and BetEasy in Australia, extended our licensed footprint to 21 jurisdictions around the world and began laying the foundations to grow our presence in the US. “As we look at 2019 and beyond, we are excited to take advantage of the opportunities ahead of us by leveraging our leading positions in attractive markets, strong brands, technology and operating expertise.”

Buoyed by the first contributions from recently acquired Italian operator Snaitech, Londonlisted Playtech posted a 54 per cent increase in full-year revenue to €1,240.4m. Revenue from the company’s Gaming B2C division soared by 744 per cent to €593.2m in 2018, benefiting from a €511.9m contribution from Snaitech following completion in August. This helped to offset a 14 per cent decline in gaming B2B revenue, with revenue from the casino vertical falling by 22 per cent due to a 41 per cent decrease in revenue from Asia. “In the face of changing market dynamics, Playtech achieved significant strategic and operational progress in 2018, delivering a markedly improved financial profile,” said chairman Alan Jackson. “The group achieved new licensee wins in key regulated markets, the UK, Europe and Latin America. The combination of progress in regulated markets and headwinds in unregulated activity saw regulated group revenue increase to over 80 per cent.”

LEOVEGAS 51% Net revenue (€)

TOTAL

2018

2017

Change

327.8m

217.0m

51%

There was a strong end to the year for Stockholm-listed LeoVegas as the operator overcame struggles in the UK market to post revenue growth of 51 per cent to €327.8m in 2018. Revenue in Q4 rose 25 per cent to €84.5m, with growth affected by a continued weak performance in the UK, as in the preceding quarter.

F I NA NC E

GIQ20 FY 2018

BETTER COLLECTIVE 54% Net revenue (€)

TOTAL

2018

2017

Change

40.5m

26.3m

54%

It was a year to remember for Stockholmlisted iGaming affiliate Better Collective, which underwent a successful IPO in June and expanded into the newly re-regulated US market and prepared for its Swedish entry. Revenue grew by 54 per cent to €40.5m, with new depositing customers (NDCs) soaring 123 per cent to more than 260,000 as the company sets its sights on becoming the leading sports betting aggregator in the world. “Reviewing 2018, I dare say, a year with a main list IPO on Nasdaq Stockholm, allowing us to execute our M&A-strategy, strong business performance, and the US market beginning to regulate, are a combination of events that do not come around that often,” said CEO Jesper Søgaard. “I am highly satisfied with our achievements this year, and I am confident that we have laid the ground for an even more promising 2019 and the years to come.”

“I am highly satisfied with our achievements and confident we have laid the ground for an even more promising 2019” Jesper Søgaard, Better Collective

GIQ

“2018 was the most challenging year in LeoVegas’ history,” said CEO Gustaf Hagman. “We bumped into challenges we have not previously encountered and saw a slowdown in growth as a result. It was also a year in which we carried out a number of strategically crucial projects that have taken us large steps forward on our growth journey. There is much left to do, and there’s no doubt we can and will improve in many areas. “We have learned a lot, and our position for achieving our long-term vision – to be the global market leader in mobile casino – is good. Today we are already the most appreciated brand in our home market in Sweden, and we are live in more markets than ever before.”

ASPIRE GLOBAL 45% Net revenue (€) 2018

2017

Change

B2B

56.6m

37.1m

53%

B2C

48.0m

34.8m

38%

CHERRY

104.6m

71.9m

45%

44%

TOTAL

The Stockholm-listed operator and B2B provider rounded off 2018 with another record performance, as Q4 revenue increased by 72 per cent to €32.9m. This helped Aspire Global’s revenue surpass the €100m mark for the first time, with B2B representing just over half of the total following the launch of five new brands on the platform. “As I conclude the fourth quarter and 2018 as a whole, I feel excited and extremely proud of our progress,” said CEO Tsachi Maimon. “We maintained strong focus on regulated markets with new licences granted in Sweden and Ireland and finalised compliance for the Swedish re-regulation. The strategy going forward remains focused on B2B and B2C, but also on game development. Aspire Global will continue to pursue strong growth, both organically and through acquisitions, with a consistent focus on improving the offering, strengthening partnerships and seizing attractive opportunities in regulated markets.”

Net revenue (SEK)

Online gaming

2018

2017

Change

2,590.8m

1,823.4m

42% 63%

Game development

275.1m

169.1m

Online marketing

254.5m

145.9m

74%

Gaming technology

49.5m

38.6m

28%

Restaurant casino

157.3m

157.1m

Eliminations

(91.3m)

(82.4m)

11%

Total

3,236m

2,252m

44%

This will be the last time Cherry features in the GIQ20 chart as it prepares to go private following its SEK9.2bn takeover by a consortium consisting of private equity firm Bridgepoint Advisers and a number of Cherry shareholders. Revenue rose by 44 per cent to SEK3.2bn during the year, with Online Gaming representing the bulk of the total at SEK2.6bn. “Cherry’s development in 2018 can be summarised with one word: excellent. On almost all measurements, our operations delivered in line with our expectations,” said interim CEO Gunnar Lind. “The foundation of Cherry’s development has been, and remains, to have a clear focus on innovation, as well as offering the best workplace and development opportunities for all of our employees. We will now work with partly new owners to implement the existing strategy, while, at the same time, being able to implement efficient investments to safeguard Cherry’s market position.” 73

F I NA NC E GIQ20 FY 2018

Sugarhouse Casino

Kentucky Derby

EVOLUTION GAMING GROUP

GAMING INNOVATION GROUP

38%

26%

Net revenue (€)

TOTAL

Net revenue (€) 2018

2017

Change

245.4m

178.4m

38%

The Stockholm-listed live casino specialist posted its 21st consecutive quarter of year-onyear growth during the final quarter of 2018, as full-year revenue increased 38 per cent to €245.4m. Revenue in Q4 rose 38 per cent to €70.2m with net profit for the quarter up 42 per cent to €25.5m. Evolution’s single largest market remains the UK, representing nine per cent of gross gaming revenue (GGR) in Q4, with the Nordics accounting for nine per cent. Regulated markets accounted for 30 per cent of GGR, up from a 29 per cent share the previous year, while mobile now generates 64 per cent of GGR, up from 60 per cent in Q4 2017. “I am very pleased to summarise a good end to the year with continued favourable growth and high profitability,” said CEO Martin Carlesund. 74

2018

2017 Change

B2C

99.8m

85.8m

16%

B2B

62.7m

49.1m

27%

Eliminations

(11.1m)

(14.5m)

-23%

TOTAL

151.4m

120.4m

26%

There was a strong performance from Gaming Innovation Group (GiG) as 2018 revenue increased by 26 per cent to €151.4m, despite struggling for growth during the final quarter of the year. Q4 revenue of €39.9m was in line with the comparable period in 2017. While B2B revenue fell by nine per cent to €16.4m, GiG’s B2C segment posted record revenue of €25.8m, 70 per cent of which was derived from its in-house brand Rizk. “After investing around €16m into tech and product development in 2018, we are now offering products and services across all major verticals in the iGaming value chain,” said chief executive Robin Reed. “We have started our expansion into regulated markets with big brand partners, and have launched our online and retail sports betting platform in the USA. I am proud of what we have achieved and am looking forward to 2019.”

F I NA NC E

GIQ20 FY 2018

CHURCHILL DOWNS INCORPORATED 14% Net revenue (US$) 2018

2017 Change

Racing

295.4m

276.6m

Online wagering

291.5m

256.7m

14%

Land-based casino

411.2m

350.5m

17%

37.8m

23.7m

59%

1,009.0m

882.6m

14%

Other investments TOTAL

New York-listed gaming and racetrack operator Churchill Downs Inc recorded growth across all of its businesses as full-year revenue increased 14 per cent to $1,009m (excluding the Big Fish Games business sold in January 2018). Revenue from the online wagering segment increased by 14 per cent to $291.5m, while racing revenue was up by seven per cent to $295.4m, following a successful Kentucky Derby and Oaks week. The land-based casino segment generated $411.2m, a 17 per cent increase on the previous year, with Ocean Downs accounting for $25.9m following its consolidation on 1 September 2018, as well as improved contributions from the Oxford, Calder, Louisiana and Riverwalk venues.

KAMBI GROUP

KINDRED GROUP

23%

21%

Net revenue (SEK)

Net revenue (£) 2018

TOTAL

76.2m

2017 62.1m

367.3m

18%

Poker

17.9m

15.2m

18%

Henrik Tjärnström, Kindred Group

Other

22.3m

22.4m

-0.4%

TOTAL

907.6m

751.4m

21%

2018

2017

Change

Sports betting

435.6m

346.5m

26%

Casino and games

Change 23%

Stockholm-listed Kambi lauded 2018 as its most successful year ever after seeing revenue increase by 23 per cent to €76.2m, including the first full quarter of results from its growing US sports betting business. Revenue in Q4 rose 14 per cent to €21.7m during a quarter which saw Kambi launch on-property sportsbooks with DraftKings at Resorts Casino in New Jersey, and with Rush Street Interactive at Rivers Casino in Pittsburgh and SugarHouse Casino in Philadelphia. “Reflecting on the year as a whole, 2018 will be remembered as one of achievement and one in which Kambi reached new heights,” said chief executive Kristian Nylén. “And although much hard work remains in front of us, the strong foundations we have put in place leave me confident Kambi can remain on this upward trajectory throughout 2019.” GIQ Q1 REVIEW

431.8m

“In the fourth quarter of 2018 we have seen strong levels of activity, together with an all-time high in active customers,”

Another record performance in Q4 helped Kindred Group increase revenue by 21 per cent to £907.6m in 2018. Q4 revenue was up five per cent to £250.1m, despite strong comparables in the previous year due to an exceptional sportsbook margin of 11.7 per cent during Q4 2017. Active customers numbers climbed 18 per cent to 1.6m. “In the fourth quarter of 2018 we have seen strong levels of activity, together with an alltime high in active customers,” said CEO Henrik Tjärnström. “This has resulted in record gross winnings revenue, proving that our longterm strategy, to maintain a sustainable business by increasing the number of active customers rather than the ARPU, is paying off.” 75

F I NA NC E GIQ20 FY 2018

Jackpotjoy’s ad campaign starring Paddy McGuinness

“We have been able to show continuous results from the ‘back on track’ programme during the year” Pontus Lindwall, Betsson

BETSSON

JPJ GROUP

15%

10%

Net revenue (SEK)

Net revenue (£) 2018

2017

Change

Casino

4,077.4m

3,437.9m

19%

Sportsbook

1,244.0m

1,140.3m

98.3m

138.3m

-29%

5,149.8m

4,716.5m

15%

Other TOTAL

Stockholm-listed Betsson reported a third consecutive quarter of growth as revenue climbed 14 per cent in the final quarter of 2018, helping full-year revenue increase by 15 per cent to SEK5.4bn. Growth was driven by the casino segment, which saw revenue climb 19 per cent to SEK4.1bn in 2018, representing 79 per cent of the operator’s total revenue during the year. “For the third consecutive quarter Betsson delivered all-time high revenue and EBIT, and proved 2018 to be a turning point,” said president and CEO Pontus Lindwall. “I am happy to see how we have been able to show continuous results from the “back on track” programme during the year.”

2018

2017

Change

Jackpotjoy

216.0m

216.1m

n/a

Vera&John

103.6m

73.2m

42%

TOTAL

319.6m

289.3m

10%

London-listed JPJ Group reported a 10 per cent increase in revenue to £319.6m in 2018 following strong organic growth from its Vera&John division. It was a record performance for the online bingo-led operator, which recently sold its social gaming business and Mandalay brands to concentrate on a more focussed brand strategy in the UK. Jackpotjoy represented 68 per cent of total revenue during the year, with revenue flat at £216m compared to the previous year, mainly due to a decline in the Mandalay and Jackpotjoy UK brands. This was partially offset by growth in the Starspins and Botemania brands, while revenue from Vera&John grew by 42 per cent to £73.2m. “I am pleased with the progress we have made in 2018 as JPJ Group continued to deliver on its strategy,” said executive chairman Neil Goulden.

NETENT 9% Net revenue (SEK)

TOTAL

2018

2017

Change

1,782.0m

1,636.1m

It was a difficult year for NetEnt but the Stockholm-listed supplier still recorded revenue growth of nine per cent to SEK1.8bn, with net profit climbing five per cent to 76

F I NA NC E

GIQ20 FY 2018

biggest growth was in the US, with revenue up 75 per cent to $191m following the expansion of its FanDuel, TVG and Betfair brands. “The opening of the US online sports betting market has the potential to be the most significant development to occur within the sector since the advent of online betting,” said chief executive Peter Jackson. “Rather than announcing our plans, we have moved quickly to give ourselves the best chance to win in that market.”

PADDY POWER BETFAIR 7% Net revenue (£) 2018

2017

Online

948m

898m

Australia

403m

404m

-0.2%

Retail

331m

334m

-1%

191m

109m

75%

1,873m

1,745m

TOTAL

Change

London-listed Paddy Power Betfair, which is likely to be renamed Flutter Entertainment, reported a seven per cent increase in revenue to £1,873m in 2018, buoyed by strong growth from its expanding US operations. Online revenue grew by five per cent to £948m, with the company’s Australia business contributing $402.9m and retail a further £331.5m. The

SEK577.2m. During Q4, NetEnt announced a re-organisation to lead to a more decentralised structure with clearer areas of priority and accountability. It has also strengthened key management positions across the group and recruited a new head of live casino. This year NetEnt is increasing its pace of development and aims to release 30 to 35 new games, compared to 21 games in 2018. “In a number of our markets, we are facing higher expectations than ever as a supplier; we have to deliver more and faster, while we continue to offer innovative products and entertaining gaming experiences to custom-

“Rather than announcing our plans, we have moved quickly to give ourselves the best chance to win” Peter Jackson, Paddy Power Betfair

ers and players,” said CEO Therese Hillman. “To better meet such expectations and to drive efficiency and commercial focus, we continued to make changes in the company.”

SCIENTIFIC GAMES 9%

ever players choose to play. We are building momentum and continuing to grow our business while at the same time operating more efficiently. The entire organisation is enthused about 2019 and focused on helping our customers win, which will drive our free cash flow and create meaningful value for our shareholders.”

Net revenue (US$) 2018

2017

Change

Gaming

1,831.4m

1,844.3m

-0.7%

Lottery

846.3m

811.5m

Social gaming

415.9m

362.0m

15%

Digital

269.6m

65.8m

351%

TOTAL

3,363.2m

3,083.6m

Scientific Games posted a nine per cent increase in revenue to $3.4bn in 2018 after recording its 13th consecutive quarter of growth in Q4 2018, as well as a swing to profit for the first time since Q1 2012. Gaming represented more than half of the company’s annual revenue with $1.8bn, with lottery contributing $846.3m, and social and digital a further $415.9m and $269.6m respectively. “This is a very exciting time for Scientific Games,” said chief executive Barry Cottle. “We’re focused on developing the best games and the most innovative platforms to deliver outstanding gaming experiences wherever and when-

WILLIAM HILL 2% Net revenue (£) 2018

2017

Change

Retail

895.2m

913.1m

-2%

Online

634.4m

616.9m

US existing

79.7m

57.9m

38%

US expansion

11.8m

n/a

Other

0.2m

4.9m

-59%

1,621.3m

1,592.8m

TOTAL

William Hill benefited from strong growth across the Atlantic as its US business contributed revenue of £91.6m during the year. Online revenue rose three per cent to £634.3m, driven by a three per cent increase in online sportsbook revenue to £318.7m, and a two per cent increase in online gaming net revenue to £315.7m. This offset a two per cent decline in retail revenue to £895.2m. “2018 was a busy and decisive year for us,” said chief executive Philip Bowcock. “Key regulatory decisions in the UK and US gave us much needed clarity to set a new five-year strategy and a goal to double profits by 2023.” 77

C O LU M N AND ANOTHER THING...

California dreaming OPINION

Jon Harwood

With squabbling incumbents and a surprisingly conservative population, don’t make any plans for California

More so than in the Midwest, Southeast or Atlantic seaboard, a Californian is likely to consider gambling a vice 78

There is presently no bill pending in California, and the prospect of one in the near future does not look promising, as no additional efforts appear to be underway,” says lawyer David Klein, managing partner of Klein Moynihan Turco. Home to nearly 40 million people, the Golden State would be the golden prize for sportsbook operators if they got the green light to operate. So why is California standing on the sidelines as the rest of the country scrambles to legalise sports betting? As we have seen down the years with the struggles to pass iPoker legislation, a lot of it is down to the conflicting interests of the state’s gaming operators, with Native American tribes, cardroom operators and racetracks all at loggerheads. California has compacts with 74 Native American tribes, and there are 63 casinos, run by 61 different tribes. They, and their casino partners, have huge influence. The California Gambling Control Commission has also licensed 87 cardrooms, where players compete against each other rather than the house, although not all are operational. Horse racing is held at nine venues, where betting is allowed on site, and there are 27 satellite betting locations, including some in tribal casinos and cardrooms. The state has also had a lottery since 1985. However, commercial casinos of the type seen in Nevada and New Jersey are prohibited. “California’s powerful tribal interests, which offer games under the Indian Gaming

Regulatory Act, largely interpret it to mean they have a monopoly over anything that could be offered in a casino, including sports betting,” says Klein. “As such, they oppose any legalisation of sports betting that would not give them full control over the offerings. Cardrooms and racetracks are also powerful interests that want to make sure they also get a piece of the pie.” But it’s the tribes that are key, says one industry insider. “They are very powerful – many have operating agreements with the even bigger lobbyist-monster Vegas casino groups, especially Harrahs [Caesars]. They have been blocking the horse tracks from being able to add slot machines for 15 years at least, and several of the tracks, including Hollywood Park, have simply closed and sold their land.” With lawmakers unable to pick a path through the maze, the most recent effort to bring about the legalisation of sports betting was via a ballot measure released to amend the constitution. The proposer of that ballot measure was Sacramento-based political consultant Russell Lowery, who has attempted to build a coalition of in-state gaming interests, out-of-state gaming interests and the sports leagues. In order to qualify for a public vote in November 2020, the proposal needed around 600,000 signatures, and in February the secretary of state’s office announced that the initiative had failed to generate enough support. However, Lowery says he is still working on the measure. “I always thought it would take a vote of the people,” he says. “Lawmakers have to respect the tribes that have invested hundreds of millions in developing their casinos, and they have to make a return. I think they want to see activity but I just don’t see the politicians working it out. I think it’s down to the people.” He cites a 2017 study that suggests sports betting could contribute $1.2 billion to the state’s GDP. This involves the creation of 9,000 jobs and a tax take of more than $700m annually. But the insider doubts that Californians are ready to embrace sports betting, despite its earning potential and the state’s liberal reputation. “More so than in the Midwest, Southeast or Atlantic seaboard, a Californian is likely to consider gambling a vice. For a lot of people it’s more like cigarettes, which they don’t like, than marijuana, which they legalised,” he says. “California’s casinos are a long way from suburban LA and San Francisco. Having gambling on your phone within reach of your kids is very different to having to haul out to a reservation.” n

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