Q3 REVIEW
Oct – Dec 2020
• OCTOBER – DECEMBER 2020 • ISSUE 43
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
North and South Michigan becomes the fifth US state to adopt online gaming; while the world awaits Brazil’s regulated market
FEATURING BETSSON, CAESARS, GAMING REALMS, PLAYTECH, RELAX GAMING, WILLIAM HILL AND MORE
CONTENTS
LEADER Q3 REVIEW
4 Snapshot Top stories, top quotes, top deals and the GI Stock Index
8 Thought Leadership
Steve Hoare
Sportradar on sportsbooks emerging from lockdown
E D I TO R
12 People Rafi Ashkenazi and
Mor Weizer on the Hot 50; plus new appointments at Flutter, 888 and GVC
16 Games Gaming Realms’ Mark Segal
on Slingo; Plus all the quarter’s best new games
20 Technology Relax Gaming CEO Tommi Maijala; new tech launches from NetEnt, Gamesys, Penn National and more
24 Marketing Affiliates’ H1 results; plus the quarter’s big marketing stories
30 US SPECIAL REPORT Michigan
to adopt iGaming; Gaming Intelligence analysts track iGaming revenue in New Jersey and Pennsylvania and predict what to expect in Michigan; plus media deals focus
41 Lottery
Post-lockdown customer behaviour analysed Plus the latest lottery news from around the world
44 Legal Global regulatory update 46 BRAZIL Incumbents and
insurgents discuss the outcome of legislative proposals that might create the world’s largest regulated market
53 Finance The GIG20 H1 2020
62 And another thing… Leigh Nissim of Future Anthem believes the future is bright
EDITOR IN CHIEF Bobby Mamudi bmm@gamingintelligence.com EDITOR Steve Hoare sah@gamingintelligence.com SUB-EDITOR Camilla Cary-Elwes info@thecopyeditor.co.uk ART EDITOR Alan Bingle alan@forty6design.com DEPUTY EDITOR Kio Dawson k.dawson@gamingintelligence.com CONTRIBUTORS Paolo Personeni, Jon Harwood, Scott Longley, María Jesús Corrales, Adrián Alonso, Leigh Nissim ADVERTISING & SUBSCRIPTIONS Omer Uziely omer@gamingintelligence.com www.GamingIntelligence.com
GIQ Q3 REVIEW
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 GamingIntelligence, Gaming Intelligence Quarterly and GIQ are trademarks of Gaming Intelligence Services Limited. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, or stored in a retrieval system of any nature without prior written permission. Application for permission must be made in writing to the publisher. Gaming Intelligence Quarterly (Print): ISSN 2633-6219 Gaming Intelligence Quarterly (Online): ISSN 2633-6227 Copyright © 2020 Gaming Intelligence. All rights reserved.
Caesars bid raises more questions than answers A ESA RS ACQU ISITION OF William Hill feels like the end of an era. If you grew up in the UK pretty much any time in the second half of last century, then William Hill and Ladbrokes were where you went if you wanted to bet. Technolog y has changed all that but William Hill’s presence on the U K high street remains strong. Despite closing 713 shops after the government slashed the stake limit on fixed-odds betting terminals in 2016, there are still nearly 1,600 William Hill shops on the streets. Not for much longer it seems, as acquirer Caesars promised to sell them and William Hill’s non-US digital operations. It is only interested in the US business, which William Hill acquired – incidentally – for just $49m (£31m) in 2012. Eight years later, and following a £2.9bn bid, that £31m seems like a smart bit of business from Robin Chhabra and Ralph Topping. But this is where things get complicated. What will European acquirers be buying? Caesars would likely want to sell the whole of the non-US business but nobody will want 1,600 shops. Flutter and GVC are out of the picture because the Competition and Markets Authority will not allow them to acquire more market share in the UK. Betfred owner Fred Done has already made a small fortune from buy-
C
ing a three per cent share in the business, when the share price slumped to almost 100p in the depths of lockdown. He was rumoured to be preparing a rival bid to Caesars before denying it. However, he would seem a logical destination for the shops, but he will not want all of them. He is also the only potential buyer for the entire non-Caesars business but it would be out of character to pile into online with such aplomb. It is more likely that Betfred will acquire a proportion of the shops and leave 888, Kindred, Playtech and others to fight it out over the online business (and possibly a share of the retail estate). There are those who claim the retail estate is worth nothing but there are a fair few who still believe in the promise of omnichannel. It will take a creative dealmaker to make it work. Former GVC chief executive Kenny Alexander did it twice. First time round, he teamed up with Topping at William Hill to acquire Sportingbet, second time round Alexander came up with a financial formula for valuing LadbrokesCoral’s under-threat retail estate. Alexander has gone but don’t bet against him, Topping or someone similar returning with heavyweight backers. William Hill is down but the business is still worth a bob or two. The Caesars deal could either see the William Hill brand extinguished or a new acquirer could yet help it rise from the ashes. sah@gamingintelligence.com 3
GIQ Q3 HEADLINES
Snapshot most popular news stories on GamingIntelligence.com Ukraine President signs bill legalising gambling Caesars Entertainment and William Hill agree £2.9bn acquisition UK begins fourth National Lottery licensing process Ashkenazi steps down from board of Flutter Entertainment Brazil adds sports betting to investment and privatisation plans PointsBet stock gains 86 per cent on NBCUniversal partnership Evolution signs live casino deal with BetMGM brands across the US BGC unveils Game Design Code of Conduct for UK gambling operators European Commission to investigate Belgium’s virtual betting market UK Gambling Commission introduces new rules for VIP gambler schemes
Quote of the Quarter We are convinced regulation will happen in 2021 and this will allow Brazil to become the largest regulated market in the world” Betsson’s LatAm chief Andrea Rossi sums up the industry’s expectations, page, 50
4
UK industry reveals safe game design code THE UK’S BETTING and Gaming Council (BGC) unveiled a new code of conduct for the design of online games in a bid to improve player safety and tackle problem gambling. The code’s aim is to address concerns around player safety by ensuring that safer gambling principles are fully incorporated into the design of online games before they enter the market. Among the commitments included in the new code are minimum game cycle speeds of 2.5 seconds, the ending of turbo play, which allows players to speed up games, and the scrapping of multi-slot play, where a player can place multiple stakes on different games simultaneously. The BGC also committed to working with academics, regulators, consumers and individuals with lived experience of betting-related harm to identify best practice in game design going forward, to ensure the code of conduct keeps up to date with changes in technology. Playtech and Scientific Games led the working group that produced the new game design code after the Gambling Commission challenged the industry to come up with a code that addressed certain concerns.
In June, the Commission said the initial code of conduct proposed by the BGC did not go far enough and the BGC has extended it. The new game design code is a significant step forward in the industry’s efforts to counter its critics and to work with the Commission to make gambling safer. The Gambling Commission also made new rules introduced by the BGC on VIP schemes mandatory. The code restricts anyone aged under 25 from taking part in VIP schemes, while any customer considered for a VIP reward programme must first pass rigorous safer gambling checks and be subject to ongoing checks on their betting behaviour. Reward programmes must also be overseen by senior management. n
The new game design code is a significant step forward in the industry’s efforts to counter its critics and to work to make gambling safer
Deals roundup headline Beyond Caesars’ acquisition of William Hill, the most significant deal of the quarter was Ron Perelman’s sale of his firm’s 34.9 per cent of Scientific Games to institutional investors including Australian firm Caledonia Investments for close to $1bn. Perelman has been a hugely influential executive chairman since taking charge in 2003, with the deciding say in all the company’s large deals, hirings and firings. He hands over to former Aristocrat CEO Jamie Odell. Further down the food chain, serial entrepreneur Richard Skelhorn showed he has lost none of his knack for building and selling successful businesses, with the £40m sale of affiliate business Atemi Group to Better Collective. Skelhorn founded the business in 2015.
Betsson will be excited to acquire a 70 per cent stake in licensed Colombian operator Colbet (see interview, page 50). While Betsson made strides into North and South America, back home in Sweden/Malta, consolidation continued, with Casumo acquiring full control of CasinoSecret and Enlabs acquiring Global Gaming and Shogun Group. Aspire Global continued its growth story with a move into sports betting via the €20m acquisition of BtoBet, while boosting its portfolio by increasing its ownership of Mr.Play operator Marketplay. In addition to the disposal of Perelman’s stake in the company, Scientific Games announced a slew of B2B deals. The most significant was a fiveyear extension of its deal with Flutter to provide its OpenSports technology to a series of brands, including a deal to power all of FanDuel’s digital
GIQ Q3 HEADLINES
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Caesars elbows aside Apollo to secure William Hill deal CA ESA RS ENTERTAIN MENT TRIUMPHED over rival bidder Apollo Global Management after threatening to terminate its contract with William Hill if the private equity firm acquired the UK bookmaker. The board of William Hill recommended Caesars Entertainment’s £2.9bn bid for the company despite many analysts claiming the deal undervalued the UK-based bookmaker. According to the terms of the offer, Caesars would fully integrate William Hill’s US operation and delist the entire company from the UK stock exchange. Caesars also signalled that it intended to “seek
DEAL OF THE QUARTER
alternative owners” for William Hill’s UK betting shops and European online business. William Hill employs 11,500 people, of which 800 work in the US. UK bookmaker Betfred could be a likely taker for the retail estate, which numbered 1,586 shops at the end of 2019, with its £711m revenue accounting for 45 per cent of the group’s total revenue. The sale of the European online operations will be interesting, with 888 Holdings chief executive Itai Pazner already declaring an interest. The UK group’s chief executive Ulrik Bengtsson (left) and chief financial officer Matt Ashley would receive a £2.1m payment worth 200 per cent of their salaries if the deal goes through. n
Caesars would fully integrate William Hill’s US operation and sell its UK betting shops and European online business
The quarter in numbers FINANCE
101%
Gamesys Group’s revenue increase in H1 2020
-32%
William Hill’s first half revenue decline M&A
£2.9bn
Caesars Entertainment’s proposed offer for William Hill
€20m Aspire Global’s acquisition of sportsbook supplier BtoBet SHARES
145%
William Hill’s share price gain in Q3 2020
34.9%
Ron Perelman’s stake in Scientific Games sold to institutional investors sportsbooks across the US. Interestingly, archrival IGT announced a deal to power all FanDuel’s retail sportsbooks across the US a month before. Whatever happened to omnichannel? SciGames also succeeded Gaming Innovation Group as Hard Rock International’s casino and sportsbook platform supplier, and announced a deal to provide online sportsbooks to Wynn Resorts in Colorado and Indiana. It already provides Wynn’s sportsbook and online casino in New Jersey, but GAN has nipped in to supply Wynn’s online gaming and betting platform in Michigan. SciGames also announced that it would become NetEnt’s “primary route” into the US market. NetEnt has managed to make the US its most lucrative market under its own steam but it seems that aggregation platforms are becoming GIQ Q3 REVIEW
increasingly influential as the preferred route to market for suppliers and operators alike. Another example being Relax Gaming, which has also signed a deal with Flutter to bring its content to Betfair and Paddy Power in the UK. Relax will also be bringing its content to Germany via a deal with land-based casino operator Loewen Play (see interview, page 22). Back in the US, Playtech made its second significant announcement with a deal to provide casino content to BetMGM following its marketentry with bet365. UK-based slot developer Digital Gaming Corporation struck a similar deal with the US casino operator. Lastly, Pragmatic Play will launch online bingo for PlayOJO and Lottoland, while Gaming Realms will distribute its Slingo games across Rank Group’s portfolio of brands (see interview, page 18).
LOTTERY
4
Fourth UK National Lottery licensing process opens REGULATORY
5
US states with full iGaming market when Michigan goes live
21
Washington State becomes the 21st US state to legalise sports betting 5
GIQ STOCK INDEX
Snapshot Stocks soar as Caesars and Caledonia pounce The gaming industry’s collective share price recovered after the panic induced by Covid-19, while takeovers took the shares of Scientific Games and William Hill to renewed highs
OP. PRICE 01.07.20
CL. PRICE % CHANGE 30.09.20
SEK20.00
SEK61.00
205.00%
113.50p
278.00p
144.93%
3 Penn National Gaming
$32.18
$72.70
125.92%
4 Scientific Games Corporation
$15.48
$34.91
125.52%
5 Pointsbet Holdings
AUD$5.45
AUD$10.56
93.76%
6 Catena Media
SEK20.86
SEK38.84
86.19%
COMPANY 1 Scout Gaming Group 2 William Hill
7 DraftKings 8 Enlabs 9 Global Gaming 555 10 Gaming Realms
WITH COMBINED SHARE prices in Q2 rising by 46 per cent to offset many of the losses in Q1, the 50 publicly-listed operators and suppliers that make up the GI Stock Index saw further gains between 1 July and 30 September, with just 16 companies seeing the value of their shares fall during the period. Overall, combined shares increased by 19 per cent over the three-month period, with four companies at the top of the chart recording triple-digit increases. B2B fantasy sports provider Scout Gaming was the biggest climber as its shares soared by 205 per cent, but the big story in Q3 was Caesars Entertainment’s proposed £2.9bn offer to acquire William Hill, sending shares in the British bookmaker up to a new 52-week high of 313.00p on 25 September, the day the takeover talks were confirmed. Caesars’ bid of 272.00p to acquire the business represents a 25 per cent premium on the closing price of William Hill’s shares on 24 September. By the end of September, they had climbed a hefty 145 per cent to 278.00 pence, compared to the start of July. Penn National Gaming and Scientific Games both saw their share prices soar 126 per cent by the end of the quarter to $72.70 and $34.91 respectively, with Scientific Games’ shares climbing 63 per cent in the week that Ron Perelman, chairman and principal shareholder of the company, sold a large portion of his stake to Australian investment firm Caledonia. There were strong share price performances from Pointsbet and DraftKings, as their respective shares rose by 94 per cent and 73 per cent. DraftKings is fast-becoming the new darling of New York’s NASDAQ exchange, with its shares surging by more than 200 per cent since its IPO in April, while Pointsbet’s growth has been spectacular during the past year. There will have been plenty of satisfied shareholders in Q3, as 25 companies posted 52-week share price highs. Notable gains were made by suppliers such as Gaming Realms, Gaming Innovation Group and Kambi, as well as operators including 888, Gamesys and Kindred. At the other end of the chart, there were a number of companies that failed to see an increase in their share prices during Q3. Rank Group was the worst-performing stock in Q3 as shares dropped by more than 35 per cent to 93.30p as a result of retail closures in the UK. Other companies to see their share prices fall were Intralot, Codere, GAN, LeoVegas, bet-athome.com, OPAP and Sportech. n 6
11 Aspire Global 12 Boyd Gaming Corporation 13 Gaming Innovation Group (Oslo)
$34.06
$58.84
72.75%
SEK20.20
SEK31.35
55.20%
SEK7.31
SEK11.20
53.21%
14.00p
21.30p
52.14%
SEK25.40
SEK38.60
51.97%
$21.22
$30.69
44.63%
NOK5.50
NOK7.95
44.55%
14 888 Holdings
175.00p
252.00p
44.00%
15 Kambi Group
SEK206.80
SEK293.00
41.68%
849.00p
1,192.00p
40.40%
16 Gamesys Group 17 Caesars Entertainment Corporation
$40.65
$56.06
37.91%
18 GVC Holdings
747.20p
974.00p
30.35%
19 Zeal Network
€ 31.50
€ 40.65
29.05%
$16.95
$21.75
28.32%
285.00p
362.70p
27.26%
$8.98
$11.13
23.94% 21.48%
20 MGM Resorts International 21 Playtech 22 International Game Technology 23 Churchill Downs Incorporated 24 Aristocrat Leisure Limited 25 Kindred Group 26 Flutter Entertainment 27 FDJ Group 28 Sciplay Corporation
$134.85
$163.82
AUD$25.40
AUD$29.97
17.99%
SEK55.92
SEK65.14
16.49%
10,660.00p
12,250.00p
14.92%
SEK27.50
SEK31.42
14.25% 9.30%
$14.84
$16.22
29 Betsson
SEK64.40
SEK69.00
7.14%
30 NetEnt
SEK72.00
SEK76.50
6.25%
SEK562.80
SEK594.80
5.69%
$3.39
$3.54
4.42% 2.07%
31 Evolution Gaming Group 32 PlayAGS 33 Inspired Entertainment 34 Score Media and Gaming 35 Pollard Banknote
$2.90
$2.96
CAD$0.71
CAD$0.72
1.41%
CAD$17.69
CAD$17.59
-0.57% -0.60%
36 Tabcorp Holding
AUD$3.36
AUD$3.34
37 Better Collective
SEK126.50
SEK122.50
-3.16%
€ 8.40
€ 8.11
-3.45% -4.20%
38 OPAP 39 Zynga 40 Sportech 41 bet-at-home.com 42 LeoVegas 43 Codere 44 Webis Holdings 45 AGTech Holdings 46 500.com 47 Ainsworth Game Technology 48 Intralot 49 GAN 50 Rank Group
$9.52
$9.12
19.25p
17.75p
-7.79%
€ 38.80
€ 35.60
-8.25%
SEK41.64
SEK37.98
-8.79%
€ 1.62
€ 1.42
-12.45%
1.65p
1.40p
-15.15%
HK$0.365
HK$0.29
-20.55% -20.63%
$3.78
$3.00
AUD$0.42
AUD$0.33
-21.43%
€ 0.15
€ 0.11
-24.67%
$25.91
$16.90
-34.77%
144.20p
93.30p
-35.30%
S P O N S O RE D C O N T E N T SPORTRADAR
Sports betting:
Lessons learned from the pandemic Sportradar’s managing director of Managed Trading Services (MTS) Paolo Personeni analyses the effect of the pandemic on sports betting operators What is the key lesson you’ve learned from going through this pandemic? The pandemic has been, and continues to be, unprecedented for us all, and has impacted the industry in ways no one ever imagined. Many bookmakers are only now rethinking their traditional business models and realising the importance of having as broad a portfolio as possible. This includes alternative betting products that have proven to generate crucial revenues during the crisis. Alternative betting products such as virtual sports, esports and Sportradar’s Simulated Reality were previously viewed as complementary to live sport, however, the sudden lack of live sport this year has put these products front and centre for many global brands. This has a direct effect on trading and risk management, including Sportradar’s MTS, as the rapid and unexpected release of new betting content is accompanied by unknown and/or different risk profiles. In this case, both the risk management platform and the processes that surround it need to be highly flexible to instantly manage it. Have you (the MTS team) changed your business strategy to work more closely with your customers? There has not been a need to change our MTS strategy. We have always worked very closely with our customers and are in daily contact with them, be it through our Operational Account Managers (OAM) or ITS managers. Our main area of focus has been accelerating our processes and constantly improving the emphasis on our customers’ requirements. Our MTS Integrated Trading Solution (ITS) plays a key role in our strategy. With ITS, we give our customers full access to our technologi8
cally mature risk and trading tools, as well as our in-house developed AI-derived algorithms, which enable them to manage their operations more flexibly, and to scale processes more easily while retaining full control at all times. ITS would not be as effective without our OAM and ITS managers working side-by-side with our valued partners to create and closely monitor trading strategies. From your perspective, how have operators been impacted by the pandemic? What challenges did they face or will continue to face in the coming year? Overall, customers tell us they have faced similar challenges, coming in waves. Firstly, with the sudden lack of sporting events, bookmakers were faced with overcapacity and high fixed costs. At the same time, there was an imbalance between trading experience in popular sports and the remaining fringe sports, such as table tennis, or esports, or alternative betting products such as simulated reality. This led to the double challenge of managing the new and different risk profiles (emergency content) while maintaining a correct balance between players’ experience and risk management. In the second phase, bookmakers had to cope with a dramatic increase in sports betting content, with the majority of previously postponed events rescheduled within a narrow timeframe. This situation, together with a flow of new, emergency products, led to a congestion of content. Finally, bookmakers had to manage their internal fixed costs, while also facing reduced revenues. Several bookmakers find themselves in a dilemma. On one hand, they are striving to retain key employees, while on the other, they must take into account their loss of income. As
a result, sportsbook operators face the challenge of searching for a new ‘right balance’ between internal and outsourced capabilities. MTS works with some of the world’s largest operators, but also regional ones that may not have the full in-house technological capabilities. Do you see any differences in the way they experienced the pandemic? The key factor was, and still is, finding the right balance between internal and external capabilities and associated costs. Our partners who have used MTS ITS – regardless of whether they are large international or regional operators, have been able to expand and use most of their internal resources at a time of growth. Simultaneously, they have also benefited from MTS services and the capabilities it has to offer additional proprietary and emergency content. How do you think the industry as a whole will change/shift? One of the first consequences will be an even stronger push for consolidation in which bookmakers will bundle their capacities within a single offering. In addition, we will see the expansion of many product portfolios, especially within companies that were previously only active in retail sports betting and/or casino. This will go hand-in-hand with an accelerated shift in distribution channels towards greater concentration in online and mobile betting across the entire industry. Sportsbook trading remains one of the core competencies of a bookmaker’s business. Therefore, it was perhaps natural that bookmakers with their own trading teams and systems were initially reluctant to change and embrace innovation during the first few weeks and months
S P O N S O RE D C O N T E N T SPORTRADAR
Sportradar’s virtual baseball
of the crisis. However, throughout the summer, and as we enter the last quarter of the year, we have noticed a surge in interest in MTS ITS, particularly from more traditional bookmakers. More sports betting and gaming brands are now looking to new and alternative solutions that can transform their operations, adding more flexibility and differentiation, and making them more cost effective and robust for the future, ensuring the highest level of corporate resilience and continuity, but also facilitating growth by leveraging more effectively on their human and technological assets. In the aftermath of the initial impact of the crisis, bookmakers appreciate the role of a reliable partner that (i) constantly provides unique content, particularly during challenging times, and (ii) who can support them with innovative, future-proofed services and products that are commercially viable and financially affordable – regardless of the customer’s individual situation. In addition, the risk of large fixed-cost structures will lead to more companies rethinking their existing structures and moving towards the integration of new, flexible approaches. Will recent experiences have an impact on bookmakers’ future operational setup? What should a modern and future-proof operation look like in order to guarantee operational
resilience and business continuity, no matter what the circumstances are? In the light of an uncertain future, operators should review the areas where they can best invest their financial and human capital. There are domains where brands can benefit from integrating smart external services, such as highperformance ad hoc platforms, AI and hedging to name a few, for example. This may be an interesting opportunity for operators that have extensive market share within a single jurisdiction, but perhaps not a global scale. This is not meant to replace, but to integrate and facilitate the professional development of internal resources. Looking ahead, what can we expect from Sportradar in the months ahead? One of the areas we are focusing on is accelerating our processes and constantly improving our emphasis on customers’ requirements. However, we also working non-stop to constantly build on and improve MTS ITS with new features and functionalities that strengthen every one of our customers’ operations. We are also working on a deeper integration with our valued partner platforms, making MTS an inherent and seamless part of their services, as well as on new, innovative ways to manage a bookmaker’s exposure. Finally, we are focusing on developing innovative additional products, largely centred on an easy access to MTS AI, aimed at offering MTS benefits at a more granular level to a larger potential customer base. n 9
PEOPLE
IN THIS ISSUE 12 Flutter, GVC, 888 and more 13 Gaming Intelligence Hot 50 preview
FIVE IN THE NEWS Executives on the move Tom Watson joins Flutter in advisory role… In a surprising move, Flutter Entertainment brought in former Labour MP and deputy leader Tom Watson to help develop its safer gambling policies. Watson was an outspoken critic of the gambling industry during his time in Parliament, but will now immerse himself in all areas of the Flutter business, which includes brands such as Paddy Power, Betfair, FanDuel, SkyBet and PokerStars, bringing a “fresh and robust voice into the business”. “I have a long-standing interest in this sector and consistently called for action to protect those that may be vulnerable,” said Watson. “In taking on this role, I intend to get under the bonnet of the business – and the industry – to understand how best to develop industry-leading responsible gambling policies. I believe that working collaboratively with Flutter will allow me to continue to drive positive change.”
Tobias Fagerlund stepped down as CEO of Global Gaming 555 after more than a year in the role. The industry veteran had taken over as acting CEO in April 2019 and was made permanent CEO in July, having served on the board since 2016. With Global Gaming in the process of being acquired by rival Enlabs, Fagerlund has completed a remarkable turnaround for the Ninja Casino operator, which was nearly put out of business by regulatory issues in Sweden. “Tobias has implemented a large package of restructuring measures and shown evidence of a strong and clear leadership that was absolutely necessary for the company,” said Global Gaming chairman Niklas Braathen. “Tobias has thus with great success laid a good foundation for Global Gaming’s future operations.”
GVC promotes CTO to COO
… as Ashkenazi steps down from board Rafi Ashkenazi stepped down from Flutter Entertainment’s board of directors after the operator completed its acquisition of The Stars Group, where he was chief executive from March 2016. Ashkenazi was appointed chief operator officer of the enlarged group earlier this year, but after extensive discussions was instead appointed as a consultant and nonexecutive director.
Fagerlund completes Global Gaming turnaround
“I wish to take this opportunity to acknowledge the major contribution of Rafi in creating the exceptional business that is TSG,” said Flutter chairman Gary McGann. “Rafi has made a significant impact on TSG during his sevenyear tenure and was instrumental in transforming TSG from a single product operator to a diverse global leader with multiple product offerings. We wish him well for the future.”
New GVC Holdings chief executive officer Shay Segev has promoted chief technology officer Sandeep Tiku to the role of chief operating officer. Tiku steps into the role vacated by Segev when he was named CEO. Tiku joined bwin in 2014 and was made group CTO after GVC acquired bwin.party in 2016. The promotion from chief techie to COO is a career path that is not often travelled, but it highlights Tiku’s managerial strengths, and shows Segev’s willingness to think outside the box, as well as the general direction the company is going in.
Lord Mendelsohn named 888’s next chairman 888 appointed Labour peer Lord Jonathan Mendelsohn (pictured) to take over as chairman next year from incumbent Brian Mattingley, who will step down at the next Annual General Meeting in May 2021. In the meantime he will serve
12
as a non-executive director. Mendelsohn was made a Labour life peer in 2013 and has previously served as a spokesperson for PartyGaming. He cofounded gaming M&A firm Oakvale Capital and corporate and public affairs consultancy
LLM Communications. He currently serves as senior adviser to luxury outlet mall operator Value Retail. “Jon has tremendous knowledge of the global online gaming industry, extensive deal-making experience and fantastic leadership qualities,”
said Mattingley. “I am very confident that the board will benefit significantly from Jon’s vast understanding of our sector as the group continues its exciting long-term development.”
P EO P L E
AIDP REPORT
PRESENTS
2021 | 10th Anniversary Edition The Gaming Intelligence Hot 50 is 10 years old next year. To celebrate a decade of the industry’s best-loved honour, we are going down memory lane with some of its most prominent stars. First, we feature the most successful operator, The Stars Group, and the Hot 50’s most celebrated supplier, Playtech. IN AS SO CIATIO N WIT H
GIQ Q4 REVIEW
13
P EO P L E HOT 50
Rafi Ashkenazi on PokerStars and the Hot 50
PokerStars in the Hot 50 2012-2020 Isai Scheinberg l Paul Telford l Mark Scheinberg l Guy Templer l Rafi Ashkenazi (x4) l Sam Hobcraft l Eric Hollreiser l David Baazov l Stephen Fisk l Marlon Goldstein l Mike Hazell l Ian Marmion l Mark Ody l Jerry Bowskill l David Carrion l Robin Chhabra l Ian Proctor l Asaf Noifeld l Matt Primeaux l Conor Leavey l Laura Nash l
GAMING INTELLIGENCE SPEAKS to The Stars Group’s last chief executive officer Rafi Ashkenazi three months after he left the company in the hands of Flutter CEO Peter Jackson, who brought the Stars story to an end and won a place in the most recent Hot 50, when Flutter acquired The Stars Group earlier this year. Stars’ last COO Guy Templer was made Flutter Group chief transformation officer after the acquisition. He is the longest serving member of the executive team and is now responsible for the integration of The Stars Group and Flutter. The Stars story predates Ashkenazi and Templer, of course. It was founded by Isai Scheinberg and his son Mark Scheinberg in 2001. We take up the story when the first Hot 50 was published in February 2012. Less than a year earlier on 15 April 2011, PokerStars’ dotcom site was out of action – emblazoned with the US Department of Justice’s insignia and a notice that began: “This domain name has been seized by the FBI.” It was the day that soon became known by poker players as Black Friday. Lawyer Jeff Ifrah of Ifrah Law, who also featured in that very first Hot 50, was the first person on the phone to break the terrible news of the FBI’s action to general counsel Paul Telford. Scheinberg had been indicted, along with payments chief Paul Tate, plus executives at Full Tilt Poker and Absolute Poker. Chief financial officer Michael Hazel set about keeping PokerStars afloat. Suppliers started to demand payments immediately – as did thousands of players. It was like a run on the bank and could easily have sunk a less wellmanaged company.
Reputation restored Future Hot 50 honourees Templer (chief business development officer and later chief operating officer) and Eric Hollreiser (VP for corporate communications and now founder and CEO of ACE Hollreiser) joined the company on the Monday after Black Friday. “Once it became clear we were going to survive and were dealing with it in a responsible way, the appreciation of the company began to grow,” says Hollreiser. In fact, PokerStars did not just survive after Black Friday, it thrived. The contrast with Full Tilt Poker – which could not pay back players because it had not kept players’ funds in a segregated account and had spent their money – was stark. 14 24
PokerStars eventually agreed a $731m deal in July 2012 to acquire Full Tilt Poker. The deal also paid back all of Full Tilt’s players and gave Stars a clean slate with the US authorities, expressly granting it permission to apply for a US licence when regulations allowed.
Manoeuvres in New Jersey If 2011 and 2012 were tumultuous years for the company, 2013 and 2014 would not be much different. When Ashkenazi joined Rational Group it was integrating Full Tilt and in the process of attempting to acquire the Atlantic Club Casino in New Jersey. Rational Group had been deep in partnership talks with another New Jersey casino, Revel, which later went bankrupt and years later reopened as the Ocean Resort. After that setback Mark and Isai came up with the somewhat leftfield idea to forget about partnership and buy the Atlantic Club Casino. The deal would eventually collapse after a series of bitter rows with incumbents and shareholders. Less than six months later, David Baazov’s Amaya gave the Scheinbergs a $4.9bn escape route. Baazov had featured in the first Hot 50 two years previously. We characterised him as “One of the most charismatic CEOs you could hope to meet... a dealmaker extraordinaire cannily building Amaya by acquisition... Amaya and its enterprising CEO are ones to watch.” Baazov’s timing was right. The founders Mark and Isai were ready to sell.
The Amaya years The rollercoaster would not end during the Amaya years. “In order to survive we needed to work on diversification,” continues Ashkenazi. It was on Ashkenazi’s watch that PokerStars first launched casino games via the Full Tilt client. Sam Hobcraft won a place in the 2014 Hot 50 for his role in the casino launch, while Steven Fisk and Ian Marmion were honoured during the next two years as Stars diversified into sports betting. However, less than six months after the Amaya acquisition closed, the Canadian authorities were investigating it for insider trading. When Baazov quit in March 2016, Ashkenazi was made chief executive officer of Amaya Group. A new executive team was formed with Bryan Kyle as CFO, Marlon Goldstein as chief legal officer, Templer was promoted to COO, Becs Cubbon as chief people officer and Robin Chhabra as chief corporate development officer. Stars under Amaya had lost something and Ashkenazi was determined to claw it back. Stars became a consolidator and Chhabra’s role was crucial in implementing the strategy that would result in the acquisition of CrownBet, William Hill Australia and Sky Betting & Gaming. The creation of FOX Bet would follow – with Chhabra taking over as FOX Bet CEO – before Stars succumbed to Flutter’s embrace. The PokerStars story will continue but surely it’s next decade will be less tumultuous than the last one. n
PRE SENTS
Mor Weizer on Playtech and the Hot 50 THE FIRST DECADE of the Gaming Intelligence Hot 50 reflects the story of a decade in which Playtech became the most successful iGaming supplier on the planet. Chief executive officer Mor Weizer has been there throughout the journey. Along with bet365 joint CEOs Denise and John Coates and lateracquired Quickspin CEO Daniel Lindberg, he is the only CEO to have remained in the same role. “I’m not here for my CV,” says Weizer. “[Playtech has changed] from a small wannabe startup, to a medium-sized startup to a big-sized hi-tech company that still wants to remain a startup, to what it is today. It is a privilege to still be here and continue to drive it forward.” Weizer is in ebullient form as we talk about colleagues past and present. The people of Playtech mean everything to him and he is clearly proud of every single one of them. “My second home is Playtech,” he tells us from his actual home in Tel Aviv. “My wife argues it is my first home. Or it feels to her like this is the case sometimes. I am surrounded by 6,000 amazing people. I describe them as my family. I address them as my family. We try to create a family atmosphere and environment.”
From alumni to acquired “If you look at the Hot 50 every year, you will see a correlation between the names of the people and the growth of Playtech,” notes Weizer. “The names reflect the journey Playtech has followed.” The very first Hot 50 in 2012 contained the names of Weizer, Aaron Johnson, Shmuel Weiss and Shay Segev. This was old-school Playtech. Johnson and Weiss would later join founder Teddy Sagi in his post-Playtech ventures. Segev played a massive role in its transformation into modern Playtech. Weizer glows when talking about Segev and Playtech’s other most illustrious alumni Rafi Ashkenazi. The pair are the Hot 50’s most decorated individuals with four appearances apiece. He recalls joining Playtech in 2005, three weeks before Ashkenazi. Weizer was brought in to take over the commercial side of the business and oversee the company’s IPO, and Ashkenazi
was brought in to oversee operations and tech development. In 2006, Weizer recruited Segev. He worked alongside Weiss at Videobet, before succeeding him as CEO of the server-based gaming subsidiary, and then he succeeded Ashkenazi as Weizer’s second-in-command and COO of the Playtech group. He would go on to become COO of GVC Holdings and was eventually named chief executive, when longstanding CEO Kenny Alexander retired. “We created a culture that allows people to grow within the organisation. It is a microcosmos of the industry,” continues Weizer. “If you look across the industry you will find a lot of Playtech talent – both at startups, some of which we’ve gone on to acquire, and at B2C operators.” He highlights Adi Dagan (Hot 50 2018), who spent three-and-a-half years as an account manager and product manager at Playtech, before going on to launch a string of startups, one of which was data-driven marketing company Beehive, which Playtech acquired in 2019. Then he highlights Amir Askarov, who spent nearly a decade at Playtech before founding BlueRibbon Software. The second year of the Hot 50 honoured Shimon Akad, who succeeded Segev as COO and remains the man who makes the company tick today. It also featured two acquired CEOs in the shape of Ash Gaming founder Chris Ash and Mobenga founder Christian Rajter. “Many times we decided not to pursue an M&A because the people would not fit within Playtech or did not seem genuine. Playtech has a certain DNA and with every acquired company we tried to find the balance between allowing these entrepreneurs to be entrepreneurial but to fit into the overall group.” The most recent Hot 50 brings Playtech and the industry right up to date. Head of regulatory affairs and compliance Ian Ince and BetBuddy CEO Simo Dragicevic are Playtech’s most recent Hot 50 honourees. “It is a good example of how the industry has developed and the journey it is on. The judges chose well,” says Weizer. “What makes Playtech what it is, is not its technology. It is the people who create the technology and not the other way around.” n
Playtech in the Hot 50 2012-2020 Aaron Johnson l Shay Segev (x2) l Shmuel Weiss l Mor Weizer (x2) l Shimon Akad Chris Ash l Christian Rajter l Ron Hoffman l Uri Levy l Will Slater l Ian Chuter l Elliott Norris l Liron Snir l Joachim Timmermans l Anthony Evans l Daniel Lindberg l Dan Phillips l Armin Sageder l Eran Gilboa l John Pettit l Tonu Vahtra l Edo Haitin l Peter Mares l Fabio Schiavolin l Simo Dragicevic l Ian Ince l l
GIQ Q3 Q1 REVIEW REVIEW
2021 | 10th Anniversary Edition We are celebrating the 10th anniversary of the industry’s most coveted honour by expanding our coverage of the Hot 50 with a series of features looking back over the past 10 years, an enhanced nomination and research process, and, ultimately, throughout December, an endof-year celebration of the most talented, innovative and inspiring people working in online gaming. A limited number of sponsors will have the opportunity to be associated with the superstars of the gaming industry. Call sales manager Omer Uziely on +44 7557 195 170 or email omer@gamingintelligence.com
“Playtech has a certain DNA and with every acquired company we tried to find the balance between allowing these entrepreneurs to be entrepreneurial but to fit into the overall group” Mor Weizer, Playtech
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GAMES NEW RELEASES Q3 GIQ casts its eye over the quarter’s best new casino games
PRAGMATIC PLAY’S NEW MEGAWAYS SLOT Pragmatic Play released its newest Megaways slot with the launch of The Dog House Megaways. Based on one of Pragmatic’s best performing games, the 117,649 payline game includes all the popular elements of its predecessor, along with several new features. When four dog paw bonus symbols land, players are given a choice of free spins, sticky wilds or raining wilds modes. “The Dog House Megaways is an exciting take on one of our best performing titles, The Dog House,” said Pragmatic Play chief commercial officer Melissa Summerfield. “With the Megaways mechanic added to our artfully crafted gameplay, players can be more immersed than ever.”
BIG TIME GAMING DEBUTS MEGAQUADS MECHANIC Big Time Gaming (BTG) unveiled its hotly anticipated Megaquads mechanic with the release of Slot Vegas Megaquads. Megaquads builds on BTG’s recent success with its Megaways and Megaclusters engines, with each of the four Megaquads reel sets offering 256 ways to win, which can lead to a massive 65,536 ways to win. “The Megaquads engine is the latest phase in our mission to reimagine the slot machine, using technology that increases engagement and sets new standards for the industry,” said BTG chief executive Nick Robinson. “The pace of innovation at BTG has been nothing short of miraculous over the past few years, and that’s a testament to the hard work and ingenuity of my team. Slot Vegas demonstrates the breathtaking excitement the Megaquads mechanic can bring to the slots experience.”
GREENTUBE LAUNCHES SEVEN SEAS JACKPOTS Greentube takes to the seas with the latest addition to its Home of Games portfolio. Seven Seas Jackpots is a 5-reel slot with 20-win lines, with the Captain acting as the wild symbol. To trigger the Seven Seas Jackpot feature, five or more coin symbols need to appear on the reels. Respins are awarded every time an additional coin appears, while a grand jackpot is awarded when all 15-reel positions are filled with coins.
PLAYTECH UNVEILS SECOND POWER ZONES TITLE Playtech’s Ash studio released Legend of Hydra, the second title in its Power Zones suite of games. In the 5x6, 15,625-ways slot, the Hydra awaits players as they look to build Power Zones that transform symbols into wins. Players can unleash a Hydra feature on any spin for four inreel modifiers, or trigger up to 50 Mighty Hydra free games for lasting Power Zones. “Legend of Hydra is the second game in the Power Zones suite,” said Ash games producer James Cook. “We wanted to introduce extra engagement by making a feature-packed game with four on-reel features and a fillable meter to chase. Each feature interacts with each other, creating situations across numerous spins.” 16
RELAX GAMING LAUNCHES MONEY TRAIN SEQUEL Relax Gaming’s biggest release of the year is the sequel to its hugely popular Money Train game, Money Train 2. With even bigger win potential and a maximum payout of 50,000x stakes, the slot sees four main characters leave the Wild West behind and journey to a steam-punk-inspired, post-apocalyptic world. “From day one, Money Train was a strong hit and has continued to attract players,” said chief product officer Simon Hammon. “Having listened intently to feedback from both players and operators, Money Train 2 delivers on every aspect, from the unique theme and experienceenhancing animations to the mechanics that make it a standout contender. It’s what a great sequel should be.”
G A M ES
Q3 RELEASES
EVOLUTION LAUNCHES INSTANT ROULETTE GAME Evolution launched its exclusive multi-wheel Instant Roulette game, the latest addition to its range of online live roulette variants, which also includes Lightning Roulette and Immersive Roulette. In Instant Roulette, 12 individual, synchronised Auto Roulette wheels spin sequentially, with the balls dropping one after the other in different wheels. The game follows standard roulette rules but has been
SKYWIND RELEASES RAINBALLS Skywind Group released RainBalls, a classic 5x3 slot that features a pin board/ball drop feature underneath, with special golden pots across the bottom. The feature area comes into play when there’s a win containing clover symbols with little silver balls sat on top. These balls can drop off the clover and into the pin board, rattling around as they make their way down to the feature pots. “With RainBalls we wanted to create a game that really boosted the excitement level,” said vice president of operations and content Uri Cohen. “Adding the ball drop feature to give it that pinball feeling of ‘is it, isn’t it’ makes for some really fun play.”
GIQ Q2 REVIEW
designed to put the player in control and play at their own pace in a live environment. “With Instant Roulette we really wanted to allow the player to control the pace of the game, similar to the RNG experience but with the trustworthiness of live,” said Evolution chief product officer Todd Haushalter. “Each and every player can take as much time as they like setting up their bets.”
NETENT TAKES TO THE SEA NetEnt is taking players on a nautical adventure in pirate-themed slot, Rage of the Seas. The 5x4 game has expanding reels that can create up to 5,488 betways, and includes Spreading Wilds and Stacked Wilds, as well as Major and Minor Reel Upgrades to boost winnings. “Rage of the Seas is one of the most feature-loaded titles in our portfolio,” said chief commercial officer Andy Whitworth. “We’ve taken the gameplay to the next level while maintaining a level of familiarity, so it is easy for players to follow instantly. The game’s classic theme and top-quality graphics create the perfect setting for the action to play out, making this a slot with enhanced engagement and retention potential.”
SCIENTIFIC GAMES UPDATES RAINBOW RICHES… Scientific Games’ latest Rainbow Riches adventure transports everyone’s favourite leprechaun into the new millennium with cheeky cluster pays. Rainbow Riches Cluster Magic keeps the action fast-paced with cascading symbols, helping to create more and more clusters. Initiating with a 4x4 grid, the game can extend up to 8x8 for exhilarating win potential with each consecutive cascade. “Rainbow Riches reincarnations have allowed SG to provide fresh gameplay for a loyal player base, that prefers a timeless, classic theme,” said SG Digital studio director Rob Procter. “To remain relevant, SG has responded to the ever-changing online landscape by producing a new Rainbow Riches version that resonates in the present.”
… AND LAUNCHES THE DEMON CODE SLOT Marking the first iGaming release across Europe and regulated US markets for SG Digital, The Demon Code combines expanding reels with an uncapped multiplier in the free spins bonus, where the two mechanics build on each other in unexpected ways. Factor in four demons with unique powers that all interact differently with the reels, including replacing symbols and delivering random wilds, block symbols or mystery symbols. The Demon Code has a forgiving base game that offers loads of action while the heart of the game lives in building up the trigger on the free games bonus and working up to a really high win multiplier and extra free games to ultimately unlock that 12th row. 17
T EC H N O LO GY GAMING REALMS
Slings and
arrows It has been a long and sometimes unsteady journey for Gaming Realms, but Slingo’s unique mix of slots and bingo is driving revenue in the right direction. Co-founder and chief financial officer Mark Segal speaks to Steve Hoare GAMING REALMS CO-FOUNDER and chief financial officer Mark Segal clearly believes his company is doing something right. Not so long ago, Gaming Realms was struggling as a hybrid bingo operator and game provider but after divesting its B2C assets, it is making the most of the brand that makes it unique – Slingo. Gaming Realms reported a 66 per cent increase in revenue to £5.2m for the first half of 2020. Within that, licensing revenue was up 104 per cent to £3.4m – half of that growth has come organically from existing partners and half came from integrations with new clients such as Sky Betting & Gaming in the UK and DraftKings in the US. These are the sort of figures that make a chief financial officer very happy. Of course, lots of online gaming companies have been doing well during the Covid-19 pandemic. “It is very hard to quantify the increase due to Covid, because we have been growing so quickly anyway,” says Segal. “We are spending a lot more resources on getting closer to our partners. Our commercial team has a business partnership management team where we are doing more promotions with partners and we are releasing more games with them.” Four new Slingo games were released during the period, including Slingo Centurion which originated from a licensing deal with Inspired Entertainment. In terms of promotions, Gala Bingo now has a Slingo tab on the navigation bar. “We are promoting Slingo as a format or genre of game, rather than just a brand,” says Segal. In the US, BetMGM in New Jersey ran a $1.5m casino super series over the course of a month (post-H1). During the first week, the seven games featured were Slingo games. 18
The US accounted for 56 per cent of H1 revenue at £2.9m, with the UK accounting for just three per cent or £0.2m. The US figure came from New Jersey but the company has applied for a Pennsylvania licence, and it will be submitting an application for a licence in Michigan shortly. Slingo games account for between 3.5 and four per cent of New Jersey’s entire online casino gross gaming revenue and Segal is confident the company can replicate that in Pennsylvania and Michigan. While Gaming Realms is based in the UK, the company is going back to its roots by focusing on the US market. “Slingo has an American heritage going back to its invention in the US in the mid-1990s,” explains Segal. It has been on scratchcards since 2000 and in the land-based casino environment from around then. In 2012, Zynga licensed Slingo from previous owners RealNetworks and amassed over 50 million unique players in a month.
The long and winding road The Zynga partnership lapsed just 18 months after Slingo was launched, but social casino was still Slingo’s dominant channel when Gaming Realms acquired the brand from RealNetworks in 2015. The Gaming Realms story reached back far beyond that to its co-founders’ origins as the founding fathers of online bingo. Simon Collins and Patrick Southon launched Foxy Bingo owner Cashcade in 2000 and Segal joined them in 2005. Cashcade was sold to PartyGaming, which merged with bwin before being acquired by GVC Holdings. “One of the reasons we sold Cashcade was because it was on the Dragonfish platform and it was not turning to a mobile focus as quickly
Right: Gaming Realms co-founder Mark Segal
as we would have liked. Patrick and Simon launched Gaming Realms – and I joined them after the earn-out period – with the idea to start in the bingo or casual gaming market, again with a focus on mobile,” explains Segal. Second time round, the B2C bingo market proved a tougher nut to crack. “In 2015, we licensed the Slingo brand to build some Slingo games. We could see how important they were for our B2C business, and that’s why we acquired Slingo,” says Segal. Following the wave of mergers and acquisitions in the bingo space started by Intertain and then accelerated with Gamesys, GVC and Rank, it was increasingly hard for a smaller operator like Gaming Realms. Up to 80 per cent of its development time was being spent on regulatory and compliance issues rather than on the nuts and bolts of producing a world-class online bingo product.
T EC H N O LO GY GAMING REALMS
“In late 2017, we took a decision that the best strategy for a company like ours to internationalise and get market share was a licensing business for our Slingo games. We were getting a lot of interest even then from our competitors. We did not want to license our games to competitors and lose our casino’s USP.” It took two years to dispose of the online casino business, which was sold in two chunks to Oslo-listed River iGaming. First brands including Vegas Casino, Casonic, Pocket Fruity, Britain’s Got Talent Games, Spin Genie, and X Factor Games were sold and then the business and in-house platform were sold in July 2019. The exit from B2C was accompanied by the departures of Collins and Southon and Gaming Realms licensed Slingo to its first European partners in Q2 2018. “It’s been going on in the background but has only been the focus during the past 12 months,” says Segal.
New team at the top Segal and executive chairman Michael Buckley have been on board for most of that journey but a new management team has taken shape since their co-founders’ withdrawal. The company inherited a “great” business development director from RealNetworks in the shape of Craig Falciglia, who is the son of Slingo inventor Sal Falciglia. He has ensured continuity in the US market and has gone after the Pennsylvania market with gusto, according to Segal. More recently, commercial director Gareth Scott joined from SG Digital, where he was commercial director for their Asia Pacific region based in Sydney, Australia. He moved back to the UK to join Gaming Realms in July this year, having enjoyed a long career in and out of Scientific Games, which acquired his previous two employers – OpenBet and Barcest. He will take charge of commercial relationships outside the US and is playing an important role in the evolution of the account management team. The company is also in the process of recruiting a new chief technology officer, who is due to join his new colleagues in a few weeks. “We had a great team before but we are now bringing in specialists in the licensing business with experience in building games and distributing them,” says Segal. The new recruits will join up with the creative minds of Dan Lamond and Phil GIQ Q3 REVIEW
Halston, who have been with the company from the start and are responsible for building the Slingo games.
Moving forward The company’s two in-house games studios have been busy. In addition to making Slingo versions of popular slots such as Inspired’s Centurion and Scientific Games’ Rainbow Riches, it has made Monopoly and Deal or No Deal Slingo games, and it builds its own games such as Slingo Advance. These games account for 85 per cent of the company’s licensing revenue. The remaining 15 per cent comes from the likes of Zynga licensing the brand to build a social version, and Scientific Games licensing the Slingo brand for physical scratchcards in the US. “These are done in adjacent markets. We do not license the Slingo brand to anyone to build
“We get to control it. We are not competing with ourselves. We get to control how Slingo is presented to the market” Mark Segal, Gaming Realms a Slingo game for the real-money world. We do that ourselves,” explains Segal. Gaming Realms has chosen to keep control of the Slingo game and its mechanics. Unlike, for example, Big Time Gaming, which has sold its Megaways mechanic to a huge range of studios, which build their own Megaways games. “We have our own remote games server, so we are able to host the games and integrate them into operators,” says Segal. “We get to control it. We are not competing with ourselves. We get to control how Slingo is presented to the market.” That side of the business continues to grow. In July and August, it grew 140 per cent on the previous year. In time, the Gaming Realms studio might turn its attention to other products – it has its own Blackjack product, for example – but for now, Slingo is a lucrative seam worth mining. Growth is likely to come from Slingo spreading through new markets. Segal says the company will launch in Spain, Italy and Denmark over the next six to 12 months, where existing partners such as Rank and Gamesys provide a ready route to market. “Europe is still important to us, but the US has been great to us, and the scale you can get there with more markets opening presents a massive opportunity for us,” concludes Segal. n 19
TECHNOLOGY FIVE LAUNCHES Who launched what for whom and why? NetEnt teams up with SG for US expansion… Scientific Games agreed a deal to make its OpenGaming platform the primary route into the US market for NetEnt.
What’s the big idea? NetEnt’s content has been a huge success in New Jersey and Pennsylvania, as the slots supplier has integrated directly with operators, but a new deal with SG Digital’s OpenGaming platform provides another route into the US iGaming market. Slots including Divine Fortune, Starburst and Gonzo’s Quest have already been made available to OpenGaming partners in New Jersey, with further launches in Michigan and Pennsylvania to follow. SG also signed an exclusive deal to bring Big Time Gaming to the US and Canadian markets. “Expanding our presence in the US market is of high importance to NetEnt,” said NetEnt Americas vice-president of commercial Brian Kraft. “Collaborating with Scientific Games, leveraging the power of their OpenGaming platform made strategic sense for us, given the company’s strong reputation and partnerships with multiple US operators.”
… while Gamesys and SG launch MONOPOLY Casino in Spain Scientific Games and Gamesys joined forces again to launch a new MONOPOLY-branded online casino, this time in Spain.
What’s the big idea? Following the launch of a MONOPOLY-branded casino site in the UK back in 2015, Monopolycasino.es has gone live in Spain’s regulated iGaming market, leveraging well-known Hasbrobranded games from Scientific Games, many of which have been localised for the Spanish market, including MONOPOLY Rising Riches
and MONOPOLY Paradise Mansion. It is the latest launch for Gamesys and SG, following last year’s Rainbow Riches Casino UK launch. “MONOPOLY is one of the most recognisable brands, and continues to entertain players all over the world with new versions of casino games inspired by the classic board game,” said Gamesys Group country manager for Spain, Raul Ibanez. “Together with Scientific Games, we’re taking the player experience to new heights with a truly localised offering for Spanish players.”
PlayOJO launches online bingo in the UK SkillonNet’s PlayOJO entered the UK online bingo market after becoming one of the first operators to launch with Pragmatic Play’s newly developed bingo platform.
What’s the big idea? Pragmatic Play has increased its investment in its online bingo offering over the past year or so, and this launch marks PlayOJO’s first move beyond online casino. The new site offers a wide range of bingo games from Pragmatic 20
Play, including 90-ball, 80-ball and 75-ball variants, as well as the supplier’s Bingo Blast game. “PlayOJO’s fun approach resonates with men and women, and makes us a natural home for bingo players,” said Andrew Steddy, head of bingo at PlayOJO. “A significant proportion of our existing player base is already interested in bingo, so we’re thrilled to give them more of what they want. We’re challenging the market incumbents with the fairest and most transparent bingo offering ever seen.”
IN THIS ISSUE 20 NetEnt, Penn National and more 22 Interview: Tommi Maijala of Relax Gaming
Penn National debuts Barstool Sportsbook app Penn National Gaming unveiled its longawaited Barstool Sportsbook mobile app in Pennsylvania.
What’s the big idea? The Barstool Sportsbook app is the centrepiece of the company’s omni-channel st rateg y, which a lso i ncludes Barstool-branded sports bars and retail sportsbooks in various US markets. The app was developed by Penn Interactive and Barstool Sports, with support from risk management and platform providers Kambi and White Hat Gaming. Since being rolled out in Pennsylvania, it has broken records for the most downloads for the launch of a new mobile sportsbook. “Since forming our sports betting and iGaming partnership with Barstool Sports in January, our product, marketing and operations teams have worked hand-in-hand with Barstool’s top talent, including Dave Portnoy and Dan ‘Big Cat’ Katz, to create a sports betting experience we’re confident will appeal to Barstool’s loyal followers, as well as our database of existing casino customers and sports betting fans at large,” said Penn National president and CEO Jay Snowden.
BetConstruct takes French casino group online BetConstruct launched a new online sportsbook for French land-based casino operator Barrière Group.
What’s the big idea? Barrière previously operated an online poker site in France through a partnership with FDJ and Caesars Interactive, but exited the market in 2013, citing difficulties surrounding the online poker market at the time. This time it has returned to the French iGaming market with BetConstruct through a new BarrièreBet online sportsbook, with horse race betting and online poker to follow. “The online gaming market is a new axis of development, which will allow the group to consolidate its positions and promote its brands, as well as increase new players and retain landbased casino customers,” said Barrière Group chairman and CEO Dominique Desseigne.
T EC H N O LO GY RELAX GAMING
Relax boards the
Money Train In the past two years Relax Gaming has emerged as one of the industry’s most popular aggregators but the company’s roots go back a decade, chief executive Tommi Maijala tells Steve Hoare RELAX GAMING CHIEF executive officer Tommi Maijala is fairly content. 2020 might have been an annus horribilis for most of us, but for Relax Gaming it is the year that the company truly took off. Revenue for the year will be up around 50 per cent on 2019 and the company now employs 205 staff across its offices in Estonia, Sweden, Malta, Gibraltar, Serbia and Finland. During the past year it has closed deals with the likes of GVC Holdings, Paf, Svenska Spel and Veikkaus, among many others. It has become everyone’s favourite aggregator, with 45 games partners and a team that will happily integrate six or seven new clients per month. “In 2018, we were mainly a supplier for tier two operators,” says Maijala. “But during the last year we have really been getting attention and attraction from tier ones.” Furthermore, its Money Train 2 slot was its most successful game launch yet with day one game win tripling the company’s previous record. Sixteen players won the maximum payout of 50,000 x their stake during the ten-day launch period, while more than 5,000 players have claimed a prize of 1,000 x their bet – the number of winners a direct result of the record amount of players enjoying the game. “It is interesting to see the development with the quality of the games. Looking at the first games like Erik the Red, and where we are now with Money Train 2. It could be the slot of the year and what I’m hearing from operators is that it’s been one of the top three launches ever. So, we have come a long way from those early days.” Maijala attributes the progress to the recruitment of chief product officer Simon Hammon from NetEnt in January 2018 and 22
the subsequent development of a dedicated game development u n it i n Serbia and Sweden. It is easy to forget that the company’s first slot, Erik the Red, was released as recently as September 2018. The difference in quality between that first release and Money Train 2 – just two years later – is astounding. “We are eager to do even better,” says Maijala, “so let’s see where we are in 12 months time.”
Tech-driven culture The secret of Relax’s success is a mix of its good technology and its good people. Partners regularly tell Gaming Intelligence how easy the Relax team are to work with – that it is a refreshing change from the one-upmanship and hard negotiating style of some others. “I think we are a pretty laid-back organisation,” says Maijala on Skype from his daughter’s bedroom. “We are goal oriented and we want to succeed but we don’t really have much middle management. We have local executive teams and they are empowered to make decisions without having to refer to central management.” However, the appreciation for Relax’s culture and its easy-going personality would not exist if it was not backed up by decent technology. “If we go back ten years, Relax was mainly an Estonian tech-driven company without even a sales team. The DNA of the company has always been about driving the technology and testing new technological aspects. That is the
Relax slots Erik the Red and Money Train 2
T EC H N O LO GY
RELAX GAMING
backbone of the organisation. Others are moving into the aggregation business, having been games studios, but we built a platform and are building on top of that, so the technical foundation is truly solid and agile.” Of the company’s first 100 employees, around 70 or 80 were developers. Founder and now chairman Patrik Österåker was the chief technology officer of iGame. At heart he is a techie and has always been keen “to cherish that technology culture”, according to Maijala. Relax’s success might look like an overnight success story, but Gaming Intelligence first met Österåker almost ten years ago, when Relax had just released its Fast Poker product. He formed the company with poker pro Jani Tekoniemi in March 2010, when Relax was spun out of B2C operator iGame, which was subsequently acquired by Kindred Group (then Unibet). The ties between the three companies remain close. “iGame was the mothership and then Relax was spun out, and PlusPay was spun out and is now part of Trustly, and the rest was sold to Unibet,” explains Maijala. If iGame was Relax’s cornerstone client, then Unibet was the one that put it on the map. Relax created Unibet’s standalone poker product, which was launched in 2014, and then repeated the trick with bingo in 2015. Unibet made a significant investment in the company and the pair have enjoyed a mutually beneficial relationship ever since. Maijala joined Relax from Kindred in November last year, having previously served as CEO of iGame. He replaced Daniel Eskola,
who had joined from Kindred in January 2018. Maijala says that Eskola’s decision to step into the chief commercial officer position when Maijala joined as CEO was the trigger for Relax’s most recent run of success. “Daniel wanted to go hard on the commercial side. He could see that his strengths lie in relationship-building and sales. It was a good decision for all of us. Now we can see the outcome of Daniel building the sales team in a proper manner,” says Maijala. His devotion to the commercial team, with dedicated account managers and salespeople, has been transformative. When the company first launched, sales was almost an afterthought, and later it was almost outsourced to Quickspin. In 2015, Relax agreed to develop a platform and remote gaming server to allow the popular slots supplier to directly integrate with operators. It piggybacked off Quickspin’s growth. (The slots supplier, incidentally, was
“We have around 100 operators live and 45 games partners, so it takes a lot of dedicated resources to be on top of the game” Tommi Maijala, Relax Gaming
GIQ Q2 REVIEW
also founded by Unibet and NetEnt alumni.) That was the beginning of Relax’s evolution into aggregation. Back in 2015, 80-90 per cent of Relax’s revenue came from bingo and poker, but the aggregation business has mushroomed, and casino games now account for around two-thirds of the company’s revenue. As it became the dominant part of the company, the executive team recognised that the company’s sales and account management (or lack of) had become a bottleneck, restricting further growth. For the first five years of its existence it had grown happily through contacts in Malta at companies such as Betsson, Kindred and LeoVegas, but in order to spread its wings and target more tier one operators, it needed that push. Eskola’s burgeoning team was boosted by the arrival of Nadiya Attard from NetEnt in April as director of sales. Previously, another former NetEnt exec, Andrew Crosby, was the sole account manager but as director he now has seven, with two new account managers joining the company in the week we talk. “We have around 100 operators live and 45 games partners, so it takes a lot of dedicated resources to be on top of the game,” says Maijala. When we interviewed then-CEO Eskola in 2018, the company was on the verge of this transformation. It had just recruited Hammon and released its first slot. It was just opening in Gibraltar with a view to targeting the UK’s tier one operators. With that mission accomplished, what is next for Relax? The sales effort of 2020 has left Relax with a strong pipeline of clients to integrate in 2021. Maijala, a lawyer by training, says compliance will be one of the big challenges for the year ahead, with many of the new tier one operators demanding more complex integrations. The company recently signed a deal with German land-based operator Loewen Play and can count Interwetten among its clients. A new State Treaty promises all sorts of challenging restrictions. Last year, Relax relaunched poker for Unibet in casino-free France, and Maijala says Spain and Italy represent targets. The US market is further off, he says, but will happen as more states regulate. Relaxed they may be but Maijala and his colleagues look likely to remain busy as the company enters its second decade. n 23
MARKETING FOUR BIG STORIES This quarter’s biggest marketing news Partnerships galore, as US sports return With the return of the NFL, FOX Bet and DraftKings both partnered the Philadelphia Eagles, and DraftKings also secured a deal with the New York Giants. PointsBet agreed partnerships with the Chicago Bears and Indianapolis Colts, and BetMGM with the Detroit Lions, Las Vegas Raiders and Tennessee Titans. 888sport was named as the f i rst N F L betting par tner for UK and Ireland, similarly Betcris for Latin America. DraftKings was busy in the MLB as well, partnering the Colorado Rockies and Chicago Cubs, while Betcris was named as a betting partner for Latin America. In the NBA, PointsBet partnered the Indiana Pacers and the Denver Nuggets, while Olympic Entertainment Group became a betting partner for the Baltic region. Rivers Casino and BetRivers signed a deal with the NHL’s Pittsburgh Penguins, and PointsBet with the Colorado Avalanche. Finally, PointsBet partnered the National Lacrosse League’s Colorado Mammoth, as well as the NCAA Colorado Buffaloes.
Turn to page 30 for in-depth analysis.
Jamie Foxx in new ad campaign for BetMGM BetMGM named Academy and Grammy award-winner Jamie Foxx as the face of its US ‘The King of Sportsbooks’ ad campaign. Foxx will star in a variety of traditional and social media advertisements for BetMGM, created in partnership with creative agency 72andSunny New York, featuring Foxx levitating over Las Vegas’ Fountains of Bellagio. Foxx won an Academy Award for his portrayal of Ray Charles in the 2004 film Ray, and is also a Grammy Award-winning musician, producing four albums which have reached the top 10 of the US Billboard 200.
24
IN THIS ISSUE 24 BetMGM, AGA, US sports and more 26 Listed affiliates results 30 Focus on US media deals
Spain’s gambling ad ban comes into force Spain’s Council of Ministers approved the Royal Decree for new gambling ad restrictions designed to combat problem gambling, which came into force in October. Minister of Consumer Affairs Alberto Garzón said the restrictions will place Spain at the “forefront” of Europe, limiting gambling broadcast advertising to the hours of 1am to 5am, and prohibiting event and shirt sponsorship, as well as all advertising by unlicensed operators. Sign-up bonuses will be banned, as will the use of celebrities in marketing communications. As there has been a recent flurry of sponsorship deals in the Spanish football market, there is likely to be a short transition period for companies to terminate their contracts.
New responsible marketing code for US operators The American Gaming Association (AGA) introduced a new responsible marketing code for US sports betting operators. It will be overseen by a Code Compliance Review Board, consisting of two independent co-chairs and five AGA member representatives. The Responsible Marketing Code includes self-imposed restrictions on target audiences, outlets and branding, while mandating the inclusion of responsible gaming messages in marketing communications. The tenets of the code apply to traditional and digital media marketing activity for AGA members and non-members.
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MARKETING
LISTED AFFILIATES H1 2020
Casino vs sport and the rush to online Trying to make sense of 2020 is not easy – and the performance of the main listed affiliates in the first half of the year only serves to illustrate the problem, writes Jon Harwood
HOW THE BIG AFFILIATES HAVE FARED JAN-JUN 2020
COVID-19 HAS DOMINATED the headlines and has had a major impact on the betting landscape. The cancellation of sports events as the pandemic took hold drove many customers towards casino products – and the fortunes of the affiliates broadly reflect this. Those with a bias towards casino have prospered while those with a focus on sport – such as Better Collective – have fared less well, although increased casino revenue boosted the entire sector in Q2, with several affiliates reporting record revenues. As Charles Gillespie of Gambling.com Group puts it: “You don’t have to over-analyse it – the one sentence explanation of the first half of the year is sports versus casino.” Another big impact of the pandemic was to force customers online. With in-person betting and events cancelled, affiliates took advantage of the move to digital. Gillespie argues that 2020 has seen several years of digital adoption jammed into two months. And that could have long-term benefits for the whole industry. Even in heavily regulated markets, this helped drive up customer numbers, as bettors sought out the best bonus deals and frequently opened multiple accounts. But the pandemic has not been the only factor for the industry this year. The growth of markets such as the US has had an impact, as has increased reg-
ulation. Catena Media, for example, benefited from growth in the US and Japan, while Gambling.com Group also prospered there. Additionally firms have faced their own challenges. XL Media, the last of the big affiliates to release their figures, suffered badly from a Google manual ranking penalty (handed out to abusers of Google’s SEO guidelines), which contributed to a 35 per cent fall in revenue and a 73 per cent decline in EBITDA. XL Media has also been restructuring, as have other big players, including Net Gaming Europe, now under new management and rebranded as Acroud. Meanwhile, Gaming Innovation Group completed the divestment of its B2C business and repaid a SEK300m bond. So far the big listed affiliates have by and large navigated the unusual conditions. But looking ahead, the picture remains unclear. Raketech and Acroud have expressed concerns about the second half of the year, noting that the spike in casino traffic has tailed off – with Raketech chief Oskar Mühlbach noting some “hesitance towards marketing investments from the operators”. But Gillespie of Gambling.com Group remains bullish. He says the years of doubledigit growth may be over in some markets – but the rush to online and the promise of new markets mean there is still enough opportunity out there to “excite entrepreneurs” and keep the affiliate space buoyant in uncertain times. n
GAMBLING.COM GROUP New depositing customers: First half NDCs totalled 41,082 (2019 46,752), a decrease of 12.1 per cent. In Q2 NDCs were 24,986 (2019 19,487), an increase of 28 per cent. Revenue: First half revenue totalled €9.5m (2019 €9.7m), a decrease of two per cent. Q2 revenue totalled €5.7m (2019 €4.4m), an increase of 29 per cent. Earnings: Adjusted first half EBITDA, excluding non-recurring costs, totalled €3.99m (2019 €2.75m), an increase of 45 per cent, corresponding to an adjusted EBITDA margin of 42 per cent. Charles Gillespie, CEO: “We expect to see increased adoption of online gambling products persist post-pandemic. The net effect of all this is that online gambling in general has accelerated its adoption and take up of the overall share of the global gambling market.”
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MARKETING
LISTED AFFILIATES H1 2020
BETTER COLLECTIVE
CATENA MEDIA
New depositing customers: Fell 36 per cent in Q2 to 71,000 (Q2 2019: 111,000). For the first half of the year NDCs exceeded 186,000, a decline of 18 per cent on 2019. Revenue: Q2 revenue declined by four per cent to €15.25m (Q2 2019: €15.8m). For the half year, revenue totalled €36.2m (2019: €30.7m), an increase of 18 per cent. Earnings: In the first half of 2020, EBITA before special items totalled €14.9m (2019: €13.3m), an increase of 12 per cent. Jesper Søgaard, CEO: “We enter the second half of 2020 with cautious optimism, however still with some uncertainty, mainly regarding US sports and the lost momentum when it comes to NDCgrowth… Therefore, we see greater uncertainty than usual regarding our revenue growth targets.”
New depositing customers: Totalled 223,855 in the first half (2019: 223,988), a decrease of 0.1 per cent. Q2 saw a four per cent increase to 104,326 (2019: 99,981). Revenue: Operating revenue amounted to €54.5m (2019 €49.8) an increase of nine per cent. Q2 saw a 17 per cent increase to €27.8m (€23.7m). Earnings: Adjusted EBITDA totalled €27.7m (2019 €20.7), an increase of 34 per cent, with an adjusted margin of 51 per cent (2019 42 per cent). In Q2, EBITDA rose 56 per cent
ACROUD (Previously Net Gaming Europe)
GIG
RAKETECH
New depositing customers: The company’s Media Services division referred 62,314 customers in the first two quarters of 2020 (2019: 63,843), a fall of 2.4 per cent. Revenue: Overall revenue totalled €27.8m (2019: €23.6m), an increase of 18 per cent. In the Media Services division, revenue totalled €16.8m (2019: €17.7m), a decrease of 5.1 per cent. Earnings: Overall EBITA totalled €3.4m (2019: €3.8m), a decrease of 10.5 per cent. In the Media Service division, EBITDA totalled €9.3m (2019: €9.9m), a decrease of 6.1 per cent. Richard Brown, CEO: “I am pleased to see our Media division, that has historically had a 20 per cent revenue exposure to sports betting, move quickly to enhance casino offerings to deliver a second quarter with consecutive revenue and EBITDA growth, despite the ban on sporting events.”
New depositing customers: Amounted to 73,125 in the first half (2019: 53,582), an increase of 36.5 per cent. Q2 saw a 63.6 per cent increase to 40,847 (2019: 24,974). Revenue: Totalled €13.6m (2019: €12.1m), an increase of 12.0 per cent. Q2 revenue was €7m (2019: €5.7m), up 24.1 per cent. Earnings: First half EBITDA was €5.5m (2019: €6.4m), a decline of 14.5 per cent, corresponding to a margin of 40.2 per cent. Q2 EBITDA was €2.8m (2019: €2.9m), down 3.5 per cent. Oskar Mühlbach, CEO: “Despite us significantly increasing our revenues from outside the Nordics to close to 20 per cent, the volatility on the Swedish market due to the re-regulations makes it challenging to navigate.”
New depositing customers: Declined by five per cent, compared to a decline of 22 per cent the previous year – in Q2 NDCs increased eight per cent year-on-year. Revenue: First half revenue amounted to €6.75m (2019: €7.55m), a decline of 10.6 per cent. Q2 revenue was up two per cent at €3.57m (2019: €3.49m). Earnings: Adjusted EBITDA (before items affecting comparability) was €3.8m in the first half (2019: €4.6m), a decline of 17 per cent, corresponding to a margin of 56 per cent. Q2 EBITDA was up two per cent at €2.06m (2019: €2.02m). Robert Andersson, CEO: “The second quarter was marked by intensive change management where restructuring, refinancing and a change of name for the business have been carried out at a rapid pace to create conditions for future success and growth.”
to €14.8m (2019: €9.5m). Per Hellberg, chief executive: “This first half-year is one for the history books, given the global disruptions brought on by the Covid-19 pandemic. This also makes our second quarter report all the more remarkable.”
XL MEDIA Revenue: First half revenue was $27.7m (2019: $42.5m), a fall of 35 per cent. Earnings: Adjusted EBITDA for the first half was $5.1m (2019: $18.6m), a decline of 73 per cent.
Stuart Simms, CEO: “Our business has endured a number of unforeseen challenges during 2020 but… I believe we are seeing signs of recovery in some key areas. These green shoots, coupled with a detailed and diverse plan to mitigate the impact of the Google manual ranking penalty, give me and the executive team confidence we can enter 2021 with significant positive momentum.”
27
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Are media deals the Penn National, FOX Bet, MGM and William Hill have all chosen contrasting media strategies 30
key to US success? to compete with DraftKings and FanDuel. Which one will triumph? asks Scott Longley GIQ Q2 REVIEW
31
U S S P EC I A L MARKETING DEALS
ON THE WEEKEND of 12-13 September, Barstool Sports, which are taking existing sports fans in the US were treated to what is media brands and converting them wholly into called a ‘sports equinox’, when all four major a betting proposition. sports played games on the same day, as the Many see media deals as a means of catchstart of the NFL season overlapped with games ing up with, and competing against, the DFS from MLB, the NBA and the NHL. Throw in market leaders FanDuel and DraftKings, as the ongoing US Open tennis, college football, they give operators access to huge audiences a game from Major League Soccer (MLS) and of engaged sports fans. PGA Tour and LPGA golf tournaments, and “In understanding the integrated role sports fans have likely never had a weekend media plays in sports and sports opinion, it’s like it – at least, not since lockdown began. easy to understand why these media/betting This is clearly good news operator deals are getting for sports betting operators done in the early lifecycle of in the US and their previously sports-betting evolution in sport-starved customers. But “We believe sports the US,” says Keith McDonthe return of sport will also betting will become nell, industry consultant with provide a test of the various a top priority for KMI Gaming. high-profile deals signed media companies Or, as Chris Smith, senior between US sports-betting PR director for the PGA Tour, which have acquired operators and media organisays in the wake of the organisports rights” sations, both before and dursation’s deal with the Action Chris Smith, PGA Tour ing the Covid-19 lockdown. Network, “We believe that Such a real-time experisports betting will become a ment would hardly have been planned when the top priority for media companies which have various tie-ups and commercial links were first acquired sports rights, from a content, fan signed. Yet such is the landscape the industry engagement and commercial perspective.” will be confronted with. The return of sports betting makes it all the more vital for operators The game’s afoot to try and capture their share of the estimated The lodestar for any media/gambling tie-up 30-50 million consumers who, the AGA sugis Sky Bet in the UK, and in particular its cogested pre-crisis, will place a sports bet for the promoted Super 6 free-to-play prediction comfirst time in the next three years. petition. Nieboer points out Sky Bet was able to “Especially given the current circumleverage the Sky brand, not only to get Super 6 stances, when sports do come back, everyone onto the App Store but also in terms of cowill be very conscious of needing to acquire promotion and marketing talent. customers and reach customer eyeballs one “They were able to launch the freeway or another. Whether that is via SEO, payplay app, linked to the Soccer Saturday per-click, affiliates, above-the-line or Facebook [television] production, whereas stand– the way I see these media deals are as being ard real-money betting businesses a big and important step in that direction, but couldn’t do that,” he adds. “But not a single solution in their own right,” says what it seemed from a disCrispin Nieboer, director for corporate developtance that they were really ment and strategy at William Hill. good at was getting people In among the sports rush in mid-Septemto the free-play app and ber, William Hill and its US partner Caesars then converting them Entertainment announced a ‘co-exclusive’ deal into real money.” with ESPN that will see William Hill’s odds It is a model to which embedded within ESPN content. It is now one m a ny a spi r e, mo st of many among a panoply of deals announced clearly with FOX Bet, since regulated sports-betting opened up postPASPA, including tie-ups between MGM and Yahoo Sports, Caesars and Turner Sports, the Stars Group and FOX Sports, and even a joint venture between the Action Network and the PGATour for a new betting-focused information site called GolfBet. This is on top of the launch of theScoreBet and the deal between Penn National and 32
the joint venture between the Stars Group (which, of course, now owns Sky Bet) and FOX Sports. It has even created its US-focused Super 6. “You have to find a way of turning TV viewers to free-play customers and on to real-money players,” says Nieboer. “That’s the cycle.” As for TV, so with other media. In the case of both Penn/Barstool and theScore, the idea is to turn what were previously online sports audiences into sports-betting customers. “While others in the industry are paying huge amounts in acquisition costs and partnering with media companies to unlock access to those users, we have that addressable audience already built in,” says theScore founder and chief executive John Levy, speaking before the full effects of the crisis hit. “We are unique in that we’re the first media company to become a sportsbook, so the loyalty of our app user base is extremely valuable.” It may be the first but the model has now been copied in large part by Penn National, with its deal for Barstool Sports. Having
U S S P EC I A L
MARKETING DEALS
acquired a 35 per cent interest for an initial $135m in cash and a further $28m in convertible preference shares, Penn hopes it can convert a sizeable proportion of Barstool’s 66 million unique users via both online and land-based betting and gaming propositions. If the combination is successful, Penn will be able to up its ownership to 50 per cent in three years, with an option from that point to gain full control. It is the largest financial outlay we have seen on the media/betting crossover, but one which the analysts at Union Gaming certainly felt was justified. “In theory, Penn’s marketing and customer acquisition costs going forward should be relatively low, with full access to Barstool’s brand and digital platform,” wrote Union Gaming’s John DeCree. “Without this partnership, we estimate Penn would have had to spend at least $100m-plus on initial marketing and customer acquisition.” The challenge for Penn and Barstool (as with the other deals to date) will be whether this customer acquisition strategy works.
Rules of attraction
Partners, says with Barstool, Penn has bought Michael Daly, Americas general manager at a brand that has been built on the unconvenCatena Media, says that while media is obvitional personality of its forthright founder ously important, and in a younger market Dave Portnoy. That has not been a problem plays a huge part in awareness and education, for Paddy Power in the UK, which built its the actual sports betting element of that audibrand on controversial marketing (often at the ence could be relatively small. expense of a ticking off from the Advertising “A large sports fan media site may have Standards Authority), but Portnoy’s schtick challenges tailoring content for sports bettors, can be extreme. particularly without alienating the larger “PNG has not created an arms-length sports fan audience,” he says. “And then makagreement to benefit from the reach while maning that content work in such aging the risk,” says Leyland, a way that is different from its suggesting that if Penn opts to traditional model, which is to dilute the Barstool message capture users to ‘stick’ on their “What operators to suit the tastes of gambling crave is the content regulators, it risks “killing sites for as long as possible.” “What operators crave is to keep users on the golden goose that lays the the content to keep users on their platforms, as betting eggs”. their platforms, as well as an “If they don’t, they potenwell as an audience audience to market to,” says tially put that brand at risk: to market to” Levy from theScore. “These with politicians, regulaare arguably the two hardest John Levy, theScore tors and material cohorts of elements to crack.” customers,” he warns. Penn National certainly thinks it has found its audience with Barstool which it recently After the crisis soft-launched in Pennsylvania. It skews heavAs Nieboer says, the key for operators when the ily towards those with a “high propensity” to crisis is over will be in attempting to re-engage bet, according to Union Gaming, with 44 per and acquire customers in quick time. Operacent of its monthly visitors saying they bet at tors with media partnerships already up-andleast once a week. running – BetMGM and Yahoo, FOX Bet, WilIn terms of the media deals we have seen so liam Hill and CBS/ESPN – will doubtless be far, and even when compared to theScore, it is quick to leverage a sport-starved audience. fair to say that the Barstool audience is potenBut they will once again face formidatially unlike any other. “With Barstool, there’s ble competition from the market leaders a loyalty and an interest that doesn’t exist FanDuel and DraftKings which, as Charles with the traditional sports media compaGillespie, chief executive of affiliate group nies,” says Steve Ruddock, content direcGambling.com says, are not reliant on others to tor at BettingUSA. “How that translates drive traffic. to customer acquisition and retention “Their strategies will be hard to replicate, remains to be seen.” as a large media database is not the same as a Then there is the repularge DFS database, and a third-party database tational risk. To an extent, is far less valuable than one’s own client base,” this goes for all media he says. All of which would suggest that for all partnerships and helps the inevitable on-rush of engagement and reexplain why most deals engagement strategies that will occur once the are arms-length. But as current crisis fades, there is every chance the Paul Leyland, consultmarket will remain ‘as you were’. ant with gambling As Leyland says about the Penn/Barstool consultancy Regulus deal, there is an element of the company deciding that ‘something’ had to be done to “counter the stranglehold of DFS conversion and the coming of FOX Bet”. For all the deals we have seen so far – and those to come – these ‘somethings’ have uncertain returns. Given the economic climate during the pandemic, this is perhaps apt. Something has to be better than nothing. Doing the deal is the first stage, but execution will be key. n 33
U S S P EC I A L MICHIGAN
Next stop
Michigan
34
U S S P EC I A L
MICHIGAN
Michigan can learn from the experience of New Jersey and Pennsylvania, as it becomes the fifth state to launch online casino games, writes Kio Dawson. It could be set for record revenues in record time ACROSS EUROPE, WIDESPREAD restrictions implemented as a result of the coronavirus pandemic have provided a boon for the iGaming industry as players are stuck at home and turn to online entertainment. And even after emerging from lockdown, more players are comfortable with spending more leisure time online. For players in the US, the options are rather more limited, with just four states (New Jersey, Delaware, Pennsylvania and West Virginia) currently offering online casino games. As Michigan looks set to become the next big iGaming market to open its doors, Gaming Intelligence has assessed the outlook for the Wolverine State. New Jersey has set the benchmark. Along with Delaware (and excluding Nevada’s limited online poker market), it was the first to go online, back in November 2013. In its first full year of iGaming in 2014, New Jersey generated revenue of $123m, a decent start but well below its initial $300m projections. Back then, just six of New Jersey’s landbased casinos were ready to go online at launch, operating a total of 13 websites. Seven years later, the market has grown year-on-year, with 26 sites now operational, including new entrants such as bet365, and soon Tipico. Led by long-time market leader Golden Nugget, iGaming delivered $483m in revenue last year, and it continues to grow. This year, New Jersey has already smashed that figure with $598m generated in the first eight months. At the current run rate it would reap $897m, but with a fair wind (and possibly further lockdowns) it could smash the billion dollar barrier. Like New Jersey, Pennsylvania saw iGaming explode from April of this year, as more
players came online as a result of Covid-19. After opening its market in July 2019 with three of the state’s casinos going online, the first 12 months of iGaming generated $240.4m in revenue. This was nearly double New Jersey’s first year, but 2013 suddenly seems like a long time ago and a very different world. Operators and suppliers have been far quicker to market, having lived the New Jersey experience already. Since April 2020, Pennsylvania’s iGaming market has generated revenue of more than $50m a month. At this run rate, the market could hit $500m in revenue in 2020. These are the kind of numbers that Michigan will be trying to match. With the state’s online licences reserved for tribal operators and Detroit casinos, this has already set off a rush of deals since the start of this year, involving the likes of PointsBet, FOX Bet, Scientific Games, William Hill, Golden Nugget, BetAmerica, Rush Street Interactive, DraftKings and FanDuel. The big boys will all be there, but just how big an iGaming market can Michigan become?
Tribal gaming With 24 Tribal casinos in operation, Michigan has tribal-state gaming compacts with 12 tribes. There are seven tribes operating under compacts agreed to in 1993, four tribes under compacts agreed in 1998 and one tribe operating under a compact agreed in 2007. Detroit’s land-based casinos pay a 19 per cent tax rate, with 10.9 per cent going to the city and 8.1 percent going to the state, as well as an additional 1.25 percent municipal tax. Meanwhile, all Tribes pay two per cent of annual net win to local units of government in Michigan. There are also only two tribes under the 1993 compact that share revenue with the state (Keweenaw Bay provides eight per cent and Hannahville two-to-seven per cent), while under the 1998 compacts, Tribes are required to make payments calculated on a sliding scale between eight and 12 per cent of annual net win.
The Wolverine State Located in the Midwestern region of the US, Michigan is boarded by four of the five Great Lakes and is the only state that consists of two peninsulas. The sparsely populated Upper Peninsula relies on tourism, while the Lower Peninsula is home to Detroit Metro, one of the nation’s most populous and largest metropolitan economies, with around 50 per cent of the state’s population residing in the metro area. It is largely known as the centre of the US automotive industry, which was hit particularly hard
US iGaming revenue 2013
2014
2015
2016
2017
2018
2019
2020 YTD
New Jersey (Nov 2013)
$8.4m
$122.9m
$148.9m
$196.7m
$245.6m
$298.7m
$482.7m
$598.0m*
Delaware (Nov 2013)
$0.3m
$2.1m
$1.8m
$2.6m
$2.4m
$2.6m
$3.6m
$5.7m*
Pennsylvania (July 2019)
n/a
n/a
n/a
n/a
n/a
n/a
$33.6m
$317.0m*
West Virginia (July 2020)
n/a
n/a
n/a
n/a
n/a
n/a
n/a
$1.1m*
*Up to and including Aug 2020
GIQ Q3 REVIEW
35
by the global financial meltdown in 2008, and ultimately led to the City of Detroit filing for bankruptcy in 2013. Since then, the land-based casino industry has become a key cog in the state’s recovery. According to the American Gaming Association, Michigan’s land-based casino market has an annual economic impact of $6.3bn. The figures for Pennsylvania and New Jersey are remarkably similar, at $6.3bn and $6.5bn respectively. Michigan has more land-based casinos (27) than both Pennsylvania (12) and New Jersey (9), most of which are tribal casi-
nos. Its population of just under ten million also compares favourably with New Jersey’s 8.9 million, although it is below Pennsylvania’s 12.8 million. Out of the three states however, Michigan has the lowest per capita income of $30,336, compared to Pennsylvania’s $32,889 and New Jersey’s $40,895. While Michigan has more casino operators, its current regulations only allow for two online skins per operator, compared to New Jersey’s five skins and Pennsylvania’s unlimited skins. In addition, its iGaming tax is on a sliding scale between 20 and 28 per cent of gross
iGaming states fact file Land-based casinos
Tribal casinos
Population*
Per capita income*
iGaming GGR tax
New Jersey
11
0
8.9m
$40,895
15%
Delaware
3
0
1.0m
$33,989
20% (table games) and 52.5% (slots)
Pennsylvania
12
0
12.8m
$32,889
16% (poker/table games) and 54% (slots)
West Virginia
5
0
1.8m
$25,479
15%
27
24
10.0m
$30,336
20-28%
Michigan *Source: United States Census Bureau July 2019
36
revenue, higher than New Jersey’s 15 per cent, though Pennsylvania’s remains the most punitive, with a 16 per cent tax on online poker/table games and 54 per cent tax on online slots. Overall, Michigan seems well-placed to establish a sizeable iGaming market, and with a second wave of the coronavirus seemingly unavoidable, iGaming revenue in 2021 is likely to surpass New Jersey and Pennsylvania’s first years in operation. “In time, Michigan’s market could be as successful as New Jersey,” says Jeff Ifrah, founding member of industry association iDEA Growth, “but it will take a significant amount of time for Michigan to build up its market to generate New Jersey-like revenue numbers.” “Michigan has a reasonable regulatory and tax structure that will foster growth, while Pennsylvania should be the biggest [market] but the tax rate and regulatory scheme are holding it back. Michigan should emerge as the number two market behind New Jersey in the next five years.” Analysts at Gaming Intelligence estimate that Michigan should exceed Pennsylvania’s first-year GGR by some distance. Suppliers and operators such as BetMGM, Scientific Games, FanDuel, DraftKings and Golden Nugget are raring to go and know what they are doing. We estimate first year revenues of $390m, potentially rising to $400m if Covid further limits
U S S P EC I A L
MICHIGAN
The final step
“Michigan has a reasonable regulatory and tax structure that will foster growth. It should emerge as the number two market behind New Jersey in the next five years” Jeff Ifrah, iDEA Growth land-based operations. “I am hopeful that Nevada will finally jump on the online gaming train,” continues Ifrah. “Nevada casinos suffered during Covid, and revenue from mobile casino could help bring in much-needed revenue as the Nevada casino industry seeks to recover. Keep an eye on Indiana as well. Having launched a successful sports betting programme, Indiana is primed to now add iGaming.” With the pandemic forcing casinos across the country to close or introduce occupancy limits to ensure social distancing, state and local governments are being deprived of revenue when they need it the most, prompting another look at iGaming. Michigan is the latest to join the gold rush, but other states won’t be far behind. n GIQ Q3 REVIEW
The Michigan Gaming Control Board (MGCB) began the rulemaking process for online casino (as well as online sports betting and fantasy sports) in February of this year. At a public hearing in September, the MGCB confirmed it was on track with its proposed rules for the new activities, with the first iGaming operator expected to go live before the end of this year. Licences cannot be issued until the proposed iGaming rules have been reviewed and certified by the Michigan Office of Administrative Hearings and Rules, and the Legislative Service Bureau. The rules will then be submitted to the Michigan Legislature’s Joint Committee on Administrative Rules for final approval, expected during October. iGaming operator licence applications will cost a one-off $50,000, with $100,000 to be paid following issuance of a five-year licence, and $50,000 to be paid in annual licence fees. The regulator is not in charge of retail sports betting at tribal casinos, which is covered under federal law and the Tribal-State Class III Gaming Compacts between the tribal communities and the state. The MGCB authorised retail sports betting at Detroit’s commercial casinos in March of this year, just days before Covid-19 forced the casinos to close for all of April, May, June and July. They were authorised to reopen in early August with a 15 per cent maximum occupancy level.
Michigan’s land-based casinos and their iGaming partners to date: Detroit Casinos MotorCity Casino Hotel – FanDuel MGM Grand Detroit – BetMGM ● Greektown Casino – to be confirmed (TBC) ● ●
Michigan Tribal Class III Casinos Bay Mills Indian Community – DraftKings ● Bay Mills Resort & Casino, Brimley ● Kings Club Casino, Brimley Grand Traverse Band of Ottawa and Chippewa Indians – William Hill ● Leelanau Sands Casino, Peshawbestown ● Turtle Creek Casino, Williamsburg Hannahville Indian Community – Churchill Downs Incorporated’s BetAmerica ● Island Resort & Casino, Harris Keweenaw Bay Indian Community – Golden Nugget Online Gaming ● Ojibwa Casino Resort, Baraga ● Ojibwa Casino, Marquette Lac Vieux Desert Band of Lake Superior Chippewa Indians – PointsBet ● Northern Waters Casino Resort, Watersmeet Little River Band of Ottawa Indians – Rush Street Interactive ● Little River Casino Resort, Manistee Little Traverse Bay Bands of Odawa Indians – FOX Bet ● Odawa Casino Resort, Petoskey ● Odawa Casino, Mackinaw City Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians – Parx Casino/GAN ● Gun Lake Casino, Wayland Nottawaseppi Huron Band of the Potawatomi – Scientific Games ● FireKeepers Casino, Battle Creek Pokagon Band of Potawatomi Indians – TBC ● Four Winds Casino Resort, New Buffalo ● Four Winds Casino Hartford, Hartford ● Four Winds Casino Dowagiac, Dowagiac Saginaw Chippewa Indian Tribe – TBC ● Soaring Eagle Casino & Resort, Mount Pleasant ● Soaring Eagle Slot Palace, Mount Pleasant ● Saganing Eagles Landing Casino – Standish Sault Ste. Marie Tribe of Chippewa Indians – Wynn Resorts/GAN ● Kewadin Casino – Christmas ● Kewadin Casino – Hessel ● Kewadin Casino – Manistique ● Kewadin Casino – Sault Ste. Marie ● Kewadin Casino – St. Ignace
37
U S S P EC I A L iGAMING
US iGaming soars during lockdown Since the Covid-19 pandemic, revenue has soared in the four US states that have legalised online gaming PENNSYLVANIA IGAMING 2020 PENNSYLVANIA’S REGULATED IGAMING market generated revenue of $33.6m in 2019 after the first operators went live in July of that year. But as with New Jersey, the state’s iGaming revenue really took off in April of this year, as all of the state’s 12 land-based casinos were forced to close due to mandated restrictions to prevent the spread of coronavirus. This led to a surge in interest in iGaming, with revenue in May more than double the total generated in March. This growth has been maintained throughout summer, with the overall market on course to top $500m in its first full year of operation. Rivers Casino Philadelphia continues to lead the way as Pennsylvania’s iGaming market leader, with its SugarhouseCasino.com and BetRivers.com brands helping revenue reach $93.9m in the first eight months of this year, well ahead of Mount Airy Casino Resort’s $56.9m, which includes $25.9m from online poker via PokerStars – still the only online poker operator in the market. Boyd Gaming’s Valley Forge Casino Resort and partner FanDuel generated $54.0m in iGaming revenue over the same period, while Penn National Gaming generated a total of $53.0m, comprising $33.2m from HollywoodCasino.com and $19.8m from DraftKings.com. Parx Casino’s iGaming revenue amounted to $38.8m, while Mohegan Sun Pocono and partner Unibet accounted for a further $14.9m. Cordish Gaming’s Live! Casino Philadelphia was the most recent operator go online on 14 August via PlayLive.com, following Wind Creek Bethlehem, which went live with its Pala Interactive-powered WindCreekCasino.com at the beginning of the month. 38
Gross revenue (US$)
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
YTD
Rivers Casino Philadelphia
3.5m
4.8m 6.8m 13.7m 17.6m 15.0m 15.5m 17.1m 93.9m
Mount Airy Casino Resort
3.5m
3.2m 6.0m 10.4m 10.9m 7.7m
8.3m
6.9m 56.9m
Valley Forge Casino Resort
2.1m
6.1m
5.0m
7.9m
8.0m
7.8m
8.4m
8.7m 54.0m
Parx Casino
1.6m
2.4m
2.7m
4.1m
6.9m
6.2m
7.4m
7.5m 38.8m
Penn National: HollywoodCasino.com
2.4m
2.3m 2.6m 4.6m
5.3m
5.4m
5.4m
5.2m 33.2m
Penn National: DraftKings.com
0
0
0
0.1m
3.7m
4.2m
5.3m
6.6m 19.8m
Mohegan Sun Pocono
0.8m
0.7m
0.8m
1.8m
2.4m
2.5m
2.9m
3.0m 14.9m
Harrahs Philadelphia
0
0
0
0.1m
0.1m
Wind Creek Bethlehem
0
0
0
0
0
0
Live! Casino Philadelphia
0
0
0
0
0
0
Presque Isle Downs and Casino
TOTAL
0.2m 0.9m 0.8m 0.8m
0.4m 0.2m
0.1m
0.7m
3.5m
0.1m
1.7m
0.1m
0.2m
0.2m
0
0.1m
0.1m
0.5m 0.3m
14.0m 19.5m 24.3m 43.1m 55.8m 50.1m 54.4m 55.9m 317.0m
U S S P EC I A L
iGAMING
NEW JERSEY IGAMING 2020 NEW JERSEY’S REGULATED iGaming market has had a record-breaking year already, as revenue from iGaming surged past 2019’s $482.7m total. In the first eight months of 2020, iGaming operators generated nearly $ 600m in revenue, with monthly revenue exceeding $80m over the past five months. This has been led by the Golden Nugget, which continues to dominate the market and has contributed over a third of the state’s iGaming revenue so far this year. With a New York stock market listing on the horizon, Nug-
Gross revenue (US$)
Jan
Feb
Mar
get Online Gaming is one of a number of operators with a keen eye on Michigan. While Golden Nugget’s growth has been impressive, it is not the only one setting records. Borgata returned to form this year with revenue soaring 153 per cent to $115.2m, while Resorts Digital has also been on the charge with revenue growth of 115 per cent to $124.8m. New Jersey is now closing in on a huge landmark – becoming the first US state to generate $1bn in iGaming revenue – but it may have to wait until next year for that honour.
Apr
May
Jun
Jul
Aug
YTD
WEST VIRGINIA IGAMING 2020 SINCE GOING LIVE in mid-July, West Virginia’s nascent iGaming market has generated $1.1m in revenue, with just two operators online by the end of August. The bulk of the total was generated by Penn National Gaming’s Hollywood Casino at Charles Town Races and its licensee DraftKings, which became the first operator to launch an online casino in July. BetMGM became the second operator to launch iGaming in August, in partnership with The Greenbrier, while state law also permits West Virginia’s three other casino racetracks (Mardi Gras, Mountaineer and Wheeling Island) to launch iGaming, with each facility allowed up to three online gaming partners.
Golden Nugget
21.2m 19.8m 23.3m 27.6m
29.1m
29.1m
31.5m
27.7m 209.3m
Resorts Digital
11.9m
12.5m 13.5m
16.1m
17.7m
17.2m
18.0m
17.9m 124.8m
Borgata
10.4m
8.1m
12.2m
15.9m
16.7m
16.9m 15.3m 19.8m 115.2m
Caesars Interactive
4.2m
4.5m
6.7m
8.7m
9.4m
8.8m
9.7m
9.3m
61.3m
Tropicana
4.4m
3.8m
5.2m
6.0m
6.7m
6.0m
6.2m
6.5m
44.7m
Gross revenue (US$)
Hard Rock
2.5m
2.8m
3.3m
4.5m
5.4m
5.8m
5.6m
6.0m
35.9m
Charles Town
Ocean Casino
0.5m
0.4m
0.7m
1.1m
1.0m
1.0m
1.2m
0.7m
6.8m
Greenbrier
TOTAL
55.1m 52.0m 64.8m 80.0m 85.9m 84.9m 87.5m 87.8m 598.0m
TOTAL
Jul
Aug
YTD
0.55m 0.49m 1.04m 0
0.06m 0.06m
0.55m 0.56m
1.11m
DELAWARE IGAMING 2020 IT HAS BEEN seven years since the state’s three licensed casinos went online, all integrated with the Delaware Lottery’s iGaming platform via 888 and Scientific Games. Delaware’s population of a million means it will never generate the kind of figures seen in New Jersey and Pennsylvania, but it too is having a stellar year.
Gross revenue (US$)
Jan
Feb
Mar
Having previously averaged between $2.1m and $2.6m in annual revenue in its first five years of iGaming, revenue peaked at $3.6m in 2019, and has already been eclipsed this year with revenue for the eight-month period running at $5.7m. Dover Downs has nudged ahead of Delaware Park as the market leader in 2020, with Harrington Raceway bringing up the rear.
Apr
May
Jun
Jul
Aug
YTD
Dover Downs
0.13m 0.12m 0.21m 0.34m 0.41m 0.37m 0.24m 0.33m 2.15m
Delaware Park
0.19m 0.12m 0.18m 0.31m 0.44m 0.33m 0.30m 0.26m 2.13m
Harrington Raceway 0.07m 0.09m 0.12m 0.21m 0.29m 0.26m 0.17m 0.22m 1.42m TOTAL GIQ Q3 REVIEW
0.39m 0.32m 0.51m 0.86m 1.13m 0.96m 0.71m 0.81m 5.70m 39
No Matter How You Say ‘Player,’ Scientific Games is There From casino games to lottery games, from sports betting to iLottery, Scientific Games delivers the world’s best entertainment experiences.
Reimagine Next © 2020 Scientific Games Corporation. All Rights Reserved.
LOTTERY FOUR BIG STORIES The five biggest news stories from across the lottery world Camelot brings digital scratchcards to market
Tabcorp profits from sale of Jumbo Interactive stake
CAMELOT LOTTERY SOLUTIONS (CLS) is making its eInstant games portfolio available to lotteries worldwide through the launch of its new in-house developed RGS platform. The B2B platform comprises the supplier’s portfolio of scratchcard games, which have already been distributed to major European lotteries, including the UK National Lottery, Irish National Lottery and Switzerland’s Loterie Romande. “Over the past four years we’ve been working in close collaboration with multiple lotteries in managing and further enhancing their entire eInstant programme via the continual delivery of new and innovative content,” said CLS head of gaming Leon Eaton. “Our work to date has resulted in an extensive portfolio of over 150 games, all of which has helped drive record returns to good causes.”
TABCORP SOLD ITS 11.6 per cent stake in Jumbo Interactive after extending a long-standing commercial distribution relationship with the online lottery provider, in the process making a handsome profit of AUD$69m. Tabcorp sold 7.2 million shares in Jumbo at a price of $13.52 per share to receive gross proceeds of $98m, which will be used to pay down existing drawn bank debt facilities. In a boon to shareholders, the company will also book a net profit of $69m on the sale, which will be included as a significant item in the company’s 2021 financial results. The stake sale came within months of a new reseller agreement between the two companies, allowing the resale of Tabcorp lottery products online by Jumbo in New South Wales, Australian Capital Territory, Victoria, Tasmania, South Australia and Northern Territory for the next ten years.
Scientific Games continues Turkish expansion Scientific Games rolled out a new instantticket retail and digital gaming system for the Turkish National Lottery, with games from the supplier’s portfolio being made available in Turkey for the first time. The launch is part of a National Lottery revamp which began a year ago, with Scientific Games providing an instant-ticket gaming system, 10,000 WAVE retailer terminals, as well as its Open Gaming System
GIQ Q3 REVIEW
(OGS) platform for launching first and thirdparty digital scratch game content. “We are thrilled to continue our success in Turkey with back-to-back, high-profile projects, both with significant growth objectives focused on developing retail and digital engagement,” said Pat McHugh, Lottery group chief executive for Scientific Games. “Through our collaboration with trusted, longtime partners, Sans Dijital and Sisal, Scientific Games is driving maximum sales and profits to the Turkish government and bringing great new gaming to Turkish players.
IN THIS ISSUE 41 Camelot, Scientific Games and more 42 Post-pandemic customer behaviour
UK begins fourth National Lottery competition THE UK GAMBLING Commission (UKGC) officially launched the bidding process for the fourth National Lottery licence, with Sazka Group expected to fight Camelot for the concession. The current licence to operate the lottery will expire in 2023, with the preferred applicant for the next licence expected to be confirmed next September. The UK National Lottery is currently the fifth largest lottery in the world, and has been operated by Camelot since its inception in 1994. In total, over £41bn has been raised for National Lottery-funded projects, and more than 565,000 individual grants have been made across the UK. “For the fourth licence, we will be evolving our approach to regulation to build on the National Lottery’s huge successes,” said UKGC CEO Neil McArthur. “In line with our outcomes-focussed approach to regulation, we want the next licensee to have greater autonomy to meet the needs of players in 2023 and beyond, whilst ensuring there is clear accountability for the performance of the National Lottery.”
Romanian lottery set to go online ROM AN IAN NATIONA L LOT TERY operator Loteria Romana secured regulatory approval to offer its lottery games online for the first time. The new legal framework modernises one of Romania’s long-standing institutions, which has been in operation for 114 years, and will allow the lottery to sell traditional lottery games online, including LOTO 6/49, Luck, Joker, Noroc Plus, Loto 5/40 and Super Noroc, via Loto.ro. “Digitisation is an important step for the development and modernisation of the Romanian lottery,” said Loteria Romana general manager Sebastian-Iacob Moga. “All the steps we took were supported, from the first moment, by the board of directors and the General Meeting of Shareholders and, of course, by Mr Virgil-Daniel Popescu, Minister of Economy, Energy and Business Environment. Together we kept the promise we made to the Romanian lottery players, to whom we thank for their trust and dedication, on behalf of the entire Romanian society, for our 114 years of operation.” 41
LOT T E RY
iLOTTERY SALES
Trading places Everyone’s behaviour has been affected by the Covid-19 pandemic but how has it affected lotteries? Evidence is starting to appear from North America’s lotteries – and it is encouraging, says SG Lottery senior VP marketing Jennifer Welshons SINCE THE COVID-19 pandemic, iLottery sales in some US states have grown by as much as 99 per cent. Last quarter we reported that iLottery sales at Pennsylvania Lottery were averaging around $12m a week. Within three months, that had risen to a weekly average of just over $20m, including a record $4.2m in one day. Pennsylvania is on course to reap $1bn a year in digital sales. The good news from Pennsylvania does not end there. The lottery experienced record-breaking sales of $5.2bn across retail and digital. “That’s impressive given they are already a top five performer in weekly per capita instants,” says Jennifer Welshons at SG Lottery. “To do that and not have cannibalisation of other products is notable. iLottery is so new. People would like to think it is going to replace traditional lottery products but people still like to hold things in their hands and visit shops,” she continues. She says there has been no appreciable uptick in older people enrolling in iLottery since the pandemic, despite their take-up of new technologies such as Zoom, Skype and WhatsApp. “Actually, we’ve seen an uptick in enrolment and first-time depositors (those who may have already enrolled, but never put funds in their account to actually play) across all age groups. April was when the biggest uptick occurred, and no particular age group was significantly more likely than another to enrol or deposit.”
Stores holding up In the US, much of the lottery retail network, which accounts for 70 per cent of lottery sales, is deemed essential business and has been able to operate with minimal disruption during the pandemic. The exception is bars and restaurants, where the majority of monitor games are played. Of course, customers’ daily lives have changed beyond all recognition and their routines have been disrupted, with many ordering 42
groceries online and – you would have thought – visiting their convenience stores less due to working from home. However, according to statistics from the National Association of Convenience Stores, by April nearly all products were showing year-on-year gains, with lottery and gaming the top performer. In May, lottery was increasing at a rate of over 35 per cent each week. This continued into June, despite customers making fewer trips to stores. “How quickly will other forms of gaming open up, like casinos, bars and restaurants? They are not available at the moment. That is a big unknown,” says Welshons. “Working from home has disrupted ritualistic behaviour and that is a fear for the retail community. If people are going to permanently change behaviour, which is probable given the fact that some companies are selling their headquarters, stores and lotteries need to think about the customer journey.” Some lotteries have explored home delivery of physical tickets but the more obvious option
LOT T E RY
iLOTTERY SALES
INSTANTS SALES BY PRICE POINT SINCE LOCKDOWN 50% 43.2% 39.9%
40% 29.3%
Pennsylvania eInstant and eDraw games Georgia eInstant and eDraw games Kentucky eInstant and eDraw games Michigan eInstant and eDraw games New Hampshire eInstant and eDraw games Rhode Island eInstant games and Keno Virginia eInstant and eDraw games Illinois eDraw games North Carolina eDraw games Massachusetts Subscription-only eDraw games New York Subscription-only eDraw games North Dakota Subscription-only eDraw games Maine Subscription-only eDraw games (print and play) Maryland Subscription-only eDraw games (print and play)
9.1% $30+
8.5%
$20-29
$2
0
$1
The 14 US states with some form of internet lottery product
4.9%
$10-19
10%
$5-9
20%
$3-4
12 weeks
30%
-1.4% -10%
is convincing state legislatures to approve digital sales. At present, only 14 US states (see box) have some sort of iLottery, whether that is in the form of lottery ticket sales online or eInstants. “Lotteries have a lot to figure out and the pandemic has accelerated that,” says Welshons.
Attracting new players Welshons says there has been a surge of new and lapsed lottery players playing lottery games during the pandemic, because other gaming options were not available. That is revealed by statistics that show a surge in play at higher price points. “Instant games with higher dollar amounts are more akin to casino games,” says Welshons. This has been aided by new games such as $500 Madness in Florida. These games offer a more attainable prize for many than the big lottery draws. “Some lotteries have not evolved to the more advanced portfolio of games,” says Welshons. “Pennsylvania Lottery has done phenomenally well. We always knew that some sort of digital component is good to have in your portfolio.” She says some lotteries have been reluctant to launch new games. “Some did not want to put the strain on the network. Some did not feel it was appropriate. Holding back is probably not the right thing to do,” she concludes. n 43
LEGAL
ON THE FOLLOWING PAGES 44 Round up of global regulation 46 Feature: Brazil readies new laws 50 Interview: Betsson in LatAm
World regulatory update GIQ rounds up the major global legal developments
Argentina Lawmakers in the city of Buenos Aires approved regulations to govern online and land-based gambling within the city, including an amendment to allow land-based operators to apply for online licences. The market will be regulated by the Lottery of the City of Buenos Aires (LOTBA), which began the licensing process for online operators after approving technical regulations for iGaming at the start of this year. The new regulations strengthen consumer protection measures under the three pillars of Responsible Gambling, Responsible Advertising and Social Responsibility, and include gambling addiction warnings for products across all channels and a prohibition on the location of ATMs and pawn shops within 200 meters of a gambling establishment. Meanwhile, the provincial lottery of Rio Negro filed a criminal complaint against 130 online gambling websites following a surge in unlicensed iGaming during the Covid-19 pandemic.
Brazil Brazil’s Supreme Court ruled the federal government’s lottery monopoly to be unconstitutional, arguing that while the federal government has the exclusive right to legislate how lotteries may be operated, it does not have the exclusive right to operate a lottery as a monopoly. The court said lotteries are a public service that cannot be restricted by the federal government under the constitution of Brazil, as they provide essential 44
funds for social programmes. The unanimous ruling is in response to legal challenges against the federal monopoly by the State of Rio de Janeiro and the Brazilian Association of State Lotteries. It remains to be seen what effect the ruling will have on individual states’ ability to operate their own lotteries.
Czech Republic T he Ministry of Finance launched a pilot programme in mid-September for a new national exclusion register for gambling. The pilot programme allows gambling operators to connect to the system and test functionality, ahead of the start of the exclusion regime on 20 December. The national register applies to both land-based and online operators, who will be required by law to prevent self-excluded players from entering gambling premises, as well as opening or accessing online accounts. Alongside self-excluded persons, the register will also include those receiving welfare assistance or in bankruptcy and involuntarily excluded persons in receipt of addiction treatment.
Germany The heads of Germany’s 16 federal states agreed to a transitional regime to govern iGaming ahead of the implementation of the new State Treaty on Gambling, which comes into force on 1 July 2021. The German Tolerance Policy will allow operators to continue to offer most of their products in the market, and effectively brings
forward and implements many parts of the State Treaty. From 15 October, online operators serving the German market are required to withdraw all casino table games until they are authorised on a state-by-state basis under the new treaty, and to implement €1,000 per month deposit limits across poker and slot games. It also bans parallel play on slots autospins, certain in-play sports betting markets, and advertising of poker and slots games. From 15 December, operators will have to impose a €1 per spin maximum stake on slots, as well as a five-second minimum duration for a slot spin. Leading operator GVC said the changes will likely reduce EBITDA by approximately €70m in 2021.
Netherlands Netherlands’ gambling regulator Kansspelautoriteit (KSA) confirmed a two-month delay to the opening of the regulated Dutch gambling market, after Dutch lawmakers voted in June to delay the opening to give all parties time to “overcome the shock of the Covid-19 crisis”. The announcement delays the start of the licensing process by two months to 1 March 2021, with the opening of the regulated market now slated for 1 September. A separate motion by lawmakers to extend the cooling-off period for recent unlicensed providers, in line with the delayed market opening, was also adopted, as well as a call for greater cooperation at a European level to combat illegal online gambling, and for the country’s gambling addiction prevention 44
L EG A L
WORLD REGULATION
geted at consumers aged 25 and over, unless the website can prove its adverts can be precisely targeted at over 18s. Gambling ads on search engines will in future include a message that they are for over-18s only, as well as including safer gambling messaging.
Ukraine
prog ramme to be administered by the Ministry of Health, Welfare and Sport instead of the Ministry of Justice and Security.
Norway In Norway, the government submitted its draft Gambling Act to the European Commission for approval, with the proposed new law governing all gambling activities in Norway under an exclusive rights model. This will see state-owned Norsk Tipping retain its monopoly on lottery and gaming, while Norsk Rikstoto would be the only authorised horse race betting provider. The proposed Gambling Act, which is subject to a standstill period expiring on 13 November, unifies the country’s existing Lottery Act, Gambling Act and Totalisator Act. The proposed act also gives the Gaming Board the power to stop unlawful activities and to revoke permits, order ISPs to display warning messages to Norwegian players attempting to access unlicensed sites, and to impose fines and penal sanctions.
Spain The Spanish government outlined plans to better protect problem gamblers by unifying the country’s numerous state self-exclusion registers and the national online self-exclusion GIQ Q3 REVIEW
register. The current system sees each autonomous community operate its own self-exclusion register, which prohibits excluded persons from gambling at a land-based venue within that province, but not in another province or online. Meanwhile, the national self-exclusion register operates across the country but only regulates access to online gaming and not land-based venues, presenting opportunities for self-excluded problem gamblers to fall back into gambling. The unified system is expected to be rolled out late next year or in early 2022, subject to enabling agreements between the central government and the autonomous communities.
UK The Betting and Gaming Council (BGC) unveiled new rules for its members regarding game design and spin speeds, as part of its ongoing focus on higher responsible gambling standards. The new rules apply to the majority of licensed gambling operators and include the slowing down of spin speeds, banning several gaming features which have caused concern, and improving access to safer gambling information. The BGC also introduced new restrictions on advertising by online operators to ensure that young people are not exposed to ads. These updated rules include a requirement that all sponsored or paid for social media adverts must be tar-
The prospect of legal gambling returned to Ukraine in mid-August after President Volodymyr Zelensky signed legislation to authorise and regulate online and land-based casino gaming and sports betting. The new law allows licensed operators to conduct casino gaming and sports betting in retail locations and online, as well as authorising lotteries, online poker and slot parlours. Licensed operators will only be authorised to operate under a single brand, with all online operations required to be conducted through a .ua domain and linked to a central monitoring system. Online operators must provide tools to allow players to set time and spending limits. A new gambling regulator will be established in November to regulate gambling and lotteries across the country.
US Twenty US states have now legalised sports betting, and a further 25 have considered legislation to regulate it. Of these, only eight states allow for online/mobile play, although Michigan should become the ninth state to go online before the end of this year, having launched retail sports betting in March. With the Virginia Lottery just beginning its licensing process for sports betting, Tennessee and Washington DC awarded their first licences in September. In Tennessee, the first sports betting operator licenses were conditionally granted to FanDuel, BetMGM and DraftKings. Washington DC issued an operator licence to William Hill, and supplier licences to Sportradar and Scientific Games. Washington became the 21st state to legalise sports betting in September when Governor Jay Inslee signed a bill sponsored by Representative Strom Peterson into law. In March he had legalised sports betting for tribal casinos in the state. 45
Bra
FLIEG NAANC L E GIQ20 Q3 2012 BRAZIL
moment
Bolsonaro’s government has promised a historic sports betting law, which has expectant 46
azil’s
F I NA NC L EG AE L
GIQ20 Q3 2012 BRAZIL
of truth
operators salivating at the thought of the market’s potential. By María Jesús Corrales GIQ Q4 REVIEW
47
L EG A L BRAZIL
BRAZIL FACES THE challenge of regulating gambling, more than seven decades after its federal ban in the 1940s. The Latin American giant is under the watchful gaze of operators and platform providers who are preparing to enter a market that is expected to gross more than US$2.1bn annually. In the country where football is a national obsession, sports betting creates great expectations among operators and suppliers. The question that the experts are asking is whether the adopted concession model will hinder the potential of the market by limiting the number of licences. One of the leading sports betting companies in Brazil is Betmotion, which has been operating in the country for more than ten years. Head of marketing and business development in Latin America, Alan Brincat, defines his brand as having “100 per cent Brazilian DNA”. With 50 staff employed locally, he believes it offers the most localised experience possible. “Our goal is to be one of the first, if not the first operator to obtain a licence in Brazil, once the new regulatory framework is activated,” says Brincat. “We have invested heavily over the years to build a robust product that already meets the standards set by other regulators. I think it will be a great step forward, both for operators and customers, and we are eager to continue unlocking the enormous potential of the Brazilian market,” he says. The approval of the lottery and betting legislation in Brazil in 2018 offers some certainty to operators in the market. Finally, after more than seven decades of prohibition, the government of Jair Bolsonaro stepped forward and approved a framework law. From that moment, the Brazilian Executive had four more years to develop the regulation, a period that ends in 2022. “Before December 2022, a presidential decree must come out, after three rounds of public consultation, with the specific regulation of the betting law,” explains Brazilian gambling lawyer Neil Montgomery, the founder of local firm Montgomery & Associados. Before the pandemic, in March, the most recent draft was presented. It contained an important change: licences were limited to about 30 – there is no official number yet – and would be issued by administrative concession, not authorisation. The concession method makes it easier for the state to go after operators who break the law, Montgomery says. In addition, the concession allows the state to obtain an initial payment for the licence. Hence the change in criteria. 48
“For me, the authorisation model is the best, because Brazil is a gigantic country and I believe the government should grant the maximum number of licences, so that all the operators that are today in the grey market can be regulated,” he says. Limiting licences, Montgomery believes, leaves the state dictating “exactly” how many operators will remain in the market. “I don’t think that is the role of the state, but of the market itself,” he emphasises. The immediate effect of limiting licences will be the continuation of the black market, he believes. There will be a very large number of operators who do not obtain a licence and will continue to operate in the black or grey market without paying taxes, as they do now. The government, for its part, insists it will pursue unlicensed operators. It is not a trivial matter. The grey market in Brazil was estimated at US$2.1bn GGR in 2017, according to data from KPMG. In Brincat’s opinion, “Although there have been some ups and downs in the past, the process has reached an irreversible stage. I believe that Brazil will opt for a very inclusive and open system in the future, allowing the participation of as many operators as possible. I don’t really have a preference as such, but I feel comfortable that Betmotion is well prepared and equipped for any scenario.” Soft2Bet Group’s CampoBet CEO Boris Chaikin believes: “The path to regulation undertaken by Brazil appears to offer a bright future for sports betting. Legalisation makes betting easier, safer and more enjoyable. Not to mention the innumerable economic benefits.”
The price of a licence The Ministry of Economy included sports betting in the Investment Privatisation Plan (PPI) in June and now the National Bank for Economic Development (BNDES) is evaluating the market to define the price of a licence in Brazil. The presidential decree that definitively authorises gambling in Brazil is expected to be published at the end of this year or early next. “There has been a lot of discussion this year about the legalisation of gambling, especially due to the pandemic. One of the big problems is the evangelical bench. Brazil is the largest Catholic country in the world. The power of the Catholic Church is very strong, and also the evangelical one – both have many representatives in Congress. It has always been a taboo. Another has been organised crime and money laundering. They have been two very strong barriers to stop the legalisation of gambling in a general way”, explains Montgomery.
L EG A L
BRAZIL
When it comes to betting, the law reflects This matter, once the regulated market in only those related to real events, but not elecBrazil enters into force, will be key. And the tronic games or eSports, in which Brazil is also most important thing, in addition to quality, a world power. “A good change in the law could certification and content, is that the platform perhaps include virtual events and other nonadapts to online, but also to retail, since the sporting events as well. For example, bets on Brazilian betting system will be mixed. Big Brother Brasil… other possibilities outside For Nolte, the important thing – in addition of football, which is the most traditional bet, are to the tools, functionalities or technology – is discussed a lot for other types of bets, ” adds the localisation of the product. Its adaptation the lawyer. to each specific market. “Our focus is always Another relevant decision concerns tax to create the best user experience. This is why rates. The 2018 law adopts a very high taxation, all tools have a location function. Thus, we have continues Montgomery, based on the volume of the best platform for each country in Latin business (turnover) and not on gross gaming America,” he says. But that would be nothing revenue (GGR). without adequate payment systems – specific “This is one of the biggest criticisms, in this case for Brazil. because in this way it is not However, for Nolte, the very profitable for operators. most difficult thing is to operIt is three per cent for online ate. Brazil will put it to the and six per cent for offline, in “Despite difficulties, test. “That’s the hard part. addition to all the other taxes the untapped And many times, the operathat every company has to potential and the tor has content, the best platpay in Brazil. It’s a very high enormous population form, good payment methods, t a x r at e ,” Mont g ome r y but he needs training to use of the region make complains. all that technology to get it worthwhile” However, to change that traffic. An excellent site is model, the Bolsonaro govern- Boris Chaikin, CampoBet useless if there is no traffic,” ment will need the support he says. of Congress, because only a federal law can On CampoBet’s side, Chaikin adds that modify it. his brand “is among the most successful in While the processes continue to advance, Brazil and has an impressive appeal for playthis expert recommends that operators and ers. Players using CampoBet, for example, suppliers establish their subsidiaries in the can watch live broadcasts of matches across country, which will be an essential condition the web and bet live on a wide range of marto obtain a state gambling licence. kets. The brand is key to our expansion plans Thus, companies will have to provide the in a continent obsessed with sports, like authorities with immediate access to their Latin America.” servers if they require it, even if their servers Using its own platform was challenging. are not in the country, and they will need to “Thorough research allowed us to better establish a tax residence in Brazil. understand the unique betting habits and One of the country’s best-known supplipreferences of the continent’s players. We knew ers is Salsa Technology. With Brazilian and that known local issues such as poor internet Portuguese origins, Salsa has established its connection speeds could be overcome. Despite headquarters in the country and considers the the difficulties of entering Latin America, the pace of the advancing gambling legislation to untapped potential and the enormous populabe firm and serious. “The regulation of this law tion of the region make it worthwhile in the is irreversible. It will happen,” affirms its CEO end,” insists Chaikin. Peter Nolte. In the end, Brazil is just a reflection of how Nolte wants Salsa to be among the first certhings are changing throughout Latin Amertified companies to enter the market. In sports ica, especially as a result of the pandemic, so betting, Salsa has already integrated Sportrathat countries become regulated markets for dar and Altenar products. Salsa also works sports betting and gaming in general. with BetGenius and others. “I believe that all economic factors are pre“The agreement with the supplier can sent so it is finally possible for gambling to be be made directly with us or with the regulated in Latin America. In the Brazilian platform provider. We integrate that content Congress there is more political will to legalise in exchange for a small commission for using gambling. At no other time was there so much the platform. Same as with casino content,” in favour of starting the legal game in Brazil,” explains Nolte. concludes Montgomery. n GIQ Q3 REVIEW
49
L EG A L BETSSON
Betsson’s new Betsson’s Southern Europe and Latin America chief Andrea Rossi tells Adrián Alonso that localisation will be key as it enters Brazil and Colombia BETSSON GROUP CONTINUES its expansion in Latin America. The operator has made great strides in the region in recent months, with the acquisition and rebrand of Suaposta in Brazil and the acquisition of 70 per cent of Colbet in Colombia. Betsson’s commercial director for Southern Europe and Latin America, Andrea Rossi, is keen to expand throughout Latin America but he is paying special attention to Brazil. He acknowledges the fact that the countries of Latin America do not comprise a single market. Each country has different characteristics, but a dedicated commitment to live gaming and the use of its app and the progressive implementation of its marketing techniques in the different markets, will be key.
The great market of Latin America Rossi believes the best strategy for the market is to have local partners with gaming licences and “a great knowledge of the market with which they help us adapt to the tastes and needs of users”. This will likely mean more acquisitions for the operator that has spent millions hoovering up smaller operators throughout Europe over the past decade. The figures for the Latin American market are staggering. It is one of the fastest-growing markets for online gaming, and Betsson is one of the first of Europe’s big beasts to make significant investments there. Revenues across the region are estimated at US$1.9bn by BTOBet,
50
although KPMG has estimated grey market Brazil is the country with the most potenrevenues in Brazil alone as high as US$2.1bn. tial. The company already has an important Steady growth is expected as more and more presence in the country with its own brand, citizens gain access to the internet. Some after having acquired the local company reports estimate that internet gambling could Suaposta in 2019. Betsson bought 75 per cent generate more than US$150bn across the entire of the horse racing market leader to establish region, but that figure looks fanciful. For now, a presence in Brazil. At the time of the Colombia is the only market we have reliable purchase, Suaposta had a turnover of figures for, with total revenues of US$291m. R$25m (US$4.45m). While legislative frameworks begin to take Andrea Rossi underlines the importance of shape, the potential of the market remains “developing the country’s regulation on online just that – potential. For example, Argentina gambling, something we are convinced will has just approved the reguhappen in 2021, because this lation of online gambling will allow Brazil to become in Buenos Aires, Colombia the largest regulated market has legitimised its online “We are talking in the world”. gambling sector with the about a huge market These bold words might creation of regulator Coljue- and, therefore, seem like hyperbole, but with gos, and Mexico has its regu- highly segmented a population of more than lation, although it is still 210 million people and little in terms of tastes very restricted. near-term likelihood of reguand preferences” “We identify Latin Amerilation in China, India or Indoca as a region passionate about Andrea Rossi, Betsson nesia, he could be right. sports, but they are increasingly enjoying online casino, so we see enorSimplicity and localisation mous potential in both options,” says Rossi. The online gambling sector has grown signifIn other words, and with the necessary icantly in recent years in Latin America, but adaptations to local preferences, Betsson wants there is still a long way to go before it reaches to gain a presence in these new markets with the scale of many European markets. the online leisure products that have made it With this in mind, Betsson’s strategy so successful in Europe. involves “new marketing strategies, such as Although Betsson’s strategy is to see Latin much simpler bonuses and offers that users America as a whole, everyone is aware that can understand easily,” explains Rossi.
L EG A L
BETSSON
horizons Betsson Group’s expansion plans underline the need to start from the utmost simplicity and then move on to “more complex offers and options that enhance our union with users”, but this is something that will take place over time. Along with the simplicity of its proposals, Betsson knows it will have to bet heavily on the localisation and the adaptation of its games for the tastes of each country. “We are talking about a huge market and, therefore, highly segmented and varied in terms of tastes and preferences,” says Rossi. “Many of these markets have things in common, but we will look for the largest possible location, knowing what makes each one of them unique.” The localisation will go far beyond marketing strategies. This is a process that should also occur in its games menu, its responsible gaming tools and in its data analysis. Of course, this also applies to game providers. In fact, Rossi acknowledges: “We are constantly looking for local studios in all these countries to sign collaboration agreements with them to help us improve the experience of our users in the offer we present to them.”
for a significant range of sports and in games such as blackjack or roulette. Tech nolog y wi l l pl ay a very important role to improve live options. “To begin with, we will offer our mobile app in all these markets, a tool that is an important part of our growth strategy. We are already developing our own app for Latin America that will provide a great service to our clients, both in sports and in the casino,” explains Rossi. Betsson is trying to figure out how other technological advancements can be applied in these new markets. While it is true that some options such as virtual reality, blockchain or cryptocurrencies have yet to show their benefits, others such as 5G will have a clear, positive effect on the industry in the long term, “especially in live gaming, which now will be faster and of higher quality”, underlines Rossi.
Importance of new technologies
The Latin American gaming market has thus far been held back by the slow pace of legislative change in the region, but recent developments offer hope to Betsson and others. For example, Brazil is very close to approving its sports betting regulations after 70 years of prohibition, Argentina continues to try to develop a law for the entire country,
Offering the best gaming experience to its users is the cornerstone of the entire Betsson Group expansion strategy. Rossi says live game options will appear in sports betting and in the casino. This trend is apparent in European markets and will be reproduced in Latin America
GIQ Q3 REVIEW
Future of the Latin American market
Left: Andrea Ross; Above: Betsson Brazil
as individual states try and go it alone, and Peru has approved its online gambling law but has not yet developed it. Despite this, it is clear to everyone that it has the potential to be one of the greatest markets for the online gaming industry. “Expectations are very high, but it is difficult to predict whether Latin America will reach the level of success of European countries because it has very particular characteristics – but it is true that its turnover will be close,” concludes Rossi. The example of Brazil looms large due to its enormous potential. Its legal advances might set an example for other countries in the region. These issues will dictate the establishment and growth rate of Betsson in the region. Surely, it will not be long before its European peers also make the leap across the Atlantic. n
51
FINANCE
The GIQ H1 2020
THE EFFECTS OF the Covid-19 pandemic were impossible to ignore during the first half of 2020, as the coronavirus wreaked havoc on operators and suppliers with retail and sports betting exposure. Despite the gloom there were plenty of glimmers of light, as lockdowns drove players online, providing a much-needed boon to the iGaming sector. Gamesys Group was the jewel in the crown as it marched to the top of the GIQ20 chart of the fastest growing publiclylisted companies, highlighting the strengths of online-only companies. There were also strong performances for fantasy sports specialist Scout Gaming, Oryx Gaming-owner Bragg Gaming and Slingo developer Gaming Realms, as demand for new and alternative content increased, while the rise of online casino during lockdown offset some of the gloom from the lack of sports, and provided momentum for operators such as 888 Holdings, Betsson, LeoVegas and Kindred Group. Flutter Entertainment was buoyed by its acquisition of The Stars Group. Likewise, DraftKings following its purchase of SBTech, while Evolution Gaming just kept doing what it does best. Rivals beware, Evolution will become an even stronger force following its acquisition of NetEnt. GIQ Q3 REVIEW
The GIQ20 fastest growing listed gaming companies COMPANY
H1 2020
H1 2019
CHANGE
£340.0m
£169.5m
101%
1
Gamesys Group
2
Scout Gaming
SEK14.9m
SEK7.6m
96%
3
Bragg Gaming
CAD$20.9m
CAD$12.0m
74%
4
Gaming Realms
£5.2m
£3.1m
66%
5
Zynga
$855.5m
$571.9m
50%
6
Flutter Entertainment
£1,522m
£1,020m
49%
7
Evolution Gaming
€243.5m
€165.0m
48%
8
888 Holdings
$379.1m
$277.3m
37%
9
NetEnt
SEK1,090.1m
SEK837.5m
30%
10
DoubleU Games
KRW326.2bn
KRW255.6bn
28%
11
DraftKings
$159.5m
$125.5m
27%
12
SciPlay Corporation
$283.9m
$236.5m
20%
13
Gaming Innovation Group
€27.8m
€23.6m
18%
14
Aspire Global
€77.4m
€66.0m
17%
15
GAN
$16.0m
$13.8m
16%
16
Betsson
SEK2,950.3m
SEK2,608.3m
13%
17
Inspired Entertainment
$67.9m
$60.4m
12%
18
LeoVegas
€200.2m
€180.7m
11%
19
Kindred Group
£484.8m
£450.6m
8%
20
Kambi Group
€42.7m
€42.6m
0.1%
53
F I NA NC E GIQ20 H1 2020
Gamesys Group takes off Online bingo-led operator navigates the Covid-19 chaos to top the GIQ20 chart in the first half of 2020, writes Kio Dawson GAMESYS GROUP 101% Net revenue (£) H1 2020
H1 2019
Change
UK
197.4m
78.0m
153%
Asia
98.9m
51.5m
92%
Europe
34.4m
36.0m
-4%
9.3m
4.0m
133%
340.0m
169.5m
101%
Rest of World TOTAL
London-listed Gamesys Group came out on top of the GIQ20 chart after seeing revenue more than double to £340.0m during the first half of 2020, a period in which many of its players were living in lockdown. The strong revenue growth reflected continued strong growth in Asia and the UK, which offset a decline in European revenue. Revenue from the Rest of World (ROW) grew two per cent, including growth of 37 per cent in the US through Virgin Casino and its B2B contract with Tropicana Casino. 54
“It has been very pleasing to oversee another strong half-year performance, with reported gaming revenues doubling across the group year-on-year,” said CEO Lee Fenton. “Our strong brands, operational control and proprietary technology have allowed us to drive growth in established markets such as the UK, while also delivering strong results in fast-growing markets in Asia and ROW.”
“Our strong brands, operational control and proprietary technology have allowed us to drive growth in established markets, and in fast-growing markets in Asia and ROW” Lee Fenton, Gamesys Group
FINANCE
GIQ20 H1 2020
SCOUT GAMING GROUP 96% Net revenue (SEK) H1 2020 TOTAL
14.9m
H1 2019 Change 7.6m
96%
Stockholm-listed Scout Gaming enjoyed a strong first half of the year as revenue grew by 96 per cent to SEK14.9m, following the addition of new esports-related markets to its B2B fantasy sports platform and the resumption of German football in mid-May. This helped to deliver a record month in June, despite Covid-19 disrupting regular sports during H1.
“The quarter began with very low activity, as most sports and leagues had breaks related to the ongoing Covid-19 pandemic,” said CEO Andreas Ternstrom. “However, we quickly managed to complete our esport offering and launch parts of it in mid-April. In mid-May, the German Bundesliga games resumed and from then on we experienced a rapid recovery. We have had accelerating growth throughout the second half of the quarter and are pleased we were able to demonstrate this so quickly after the restart of European sports.”
BRAGG GAMING Below: Gamesys’ Virgin Casino and Bragg Gaming’s Oryx Hub
74% Net revenue (CAD$)
Games and content
H1 2020
H1 2019
Change
12.1m
6.5m
85%
Software platform licensing
7.4m
4.3m
73%
Turnkey and management services
0.8m
0.9m
-11%
Other revenue
0.6m
0.3m
100%
20.9m
12.0m
74%
TOTAL
Toronto-listed Bragg Gaming continued to benefit from the expansion of its Oryx Gaming platform, which pushed H1 revenue up 74 per cent to CAD$20.9m. Games and content services accounted for the bulk of revenue following Oryx Hub launches with several customers in Romania, including Stanleybet, MaxEnt and Vavada. It signed 11 new deals in Q2 and remains in advanced discussions with over 20 potential customers in various licensed jurisdictions across Europe and Latin America. “We’re extremely pleased with the substantial progress we’ve achieved so far in 2020,” said chairman Paul Pathak. “As we expand globally, we’ve also continued to invest in our people, platforms and products. Our entry earlier this year into the burgeoning US gaming market has given us a foundation from which to build our presence, and we’re looking at a number of promising opportunities for growth.”
“Our exceptional performance is testament to the strength of the company’s strategy of developing and licensing games using our Slingo IP” Michael Buckley, Gaming Realms
GAMING REALMS 66% Net revenue (£) H1 2020
H1 2019
Change
Licensing
3.4m
1.7m
104%
Social
1.8m
1.4m
29%
Other
n/a
0.1m
-97%
5.2m
3.1m
66%
TOTAL
London-listed Gaming Realms reported a 66 per cent increase in revenue to £5.2m for the first half of 2020, boosted by strong growth in New Jersey. Licensing revenue doubled to £3.4m year-on-year, thanks to increased distribution and an expanded games portfolio, while social revenue grew by 29 per cent to £1.8m as additional Slingo content with new player engagement features was released. “Our exceptional performance in the first half of this year is testament to the strength of the company’s strategy of developing and licensing games to market-leading brands and gaming operators, using our Slingo IP, which continues to deliver high margin revenues,” said executive chairman Michael Buckley. “While our results were enhanced during the Covid-19 period of self-isolation, I am pleased to say revenues in the second half are holding onto levels achieved during the first six months.” 55
F I NA NC E GIQ20 H1 2020
Newly acquired Sky Betting & Gaming boosted Flutter Entertainment’s performance
ZYNGA
FLUTTER ENTERTAINMENT
50%
49%
Net revenue (US$)
Net revenue (£)
TOTAL
H1 2020
H1 2019
Change
855.5m
571.9m
50%
A record performance in the second quarter of 2020 helped New York-listed Zynga post a 50 per cent increase in H1 revenue to $855.5m. The social gaming operator benefited from continued growth in its live services offering, with record Q2 performances from its Social Slots portfolio, as well as the Words With Friends, CSR2 and Empires & Puzzles games. In addition, Zynga Poker had its best
H1 2020
H1 2019 Change
Paddy Power Betfair
540m
653m
-17%
Sky Betting & Gaming
149m
n/a
n/a
PokerStars
230m
n/a
n/a
Australia
348m
207m
68%
US
256m
160m
60%
1,522m
1,020m
49%
TOTAL
There was an equally impressive performance from London-listed Flutter Entertainment as revenue exceeded expectations and rose 49 per cent in the first half of the year to £1,522m. Despite UK retail closures leading to a 17 per cent decline in its Paddy Power
quarter in terms of revenue since Q3 2018. “We delivered tremendous results in Q2, achieving our highest quarterly revenue and bookings, and generating Zynga’s best quarterly operating cash flow in more than eight years,” said CEO Frank Gibeau. “We also executed our transformational acquisition of Peak and are now entering Q3 with eight forever franchises, adding significant scale to our live services foundation.” 56
Betfair business, the newly acquired Sky Betting & Gaming and PokerStars businesses contributed £378.5m to the total, while Australian revenue grew by 68 per cent and US revenue improved by 60 per cent. “In the period prior to Covid-19 related disruption, our businesses performed well, with strong customer growth and favourable sports results,” said CEO Peter Jackson. “In the period thereafter, the cancellation of sports and closure of our shops led to reduced sports revenues in the UK and Ireland. However, this was more than offset by an increase in the number of recreational customers playing our poker and gaming products globally, as people sought new forms of home entertainment.”
“We delivered tremendous results in Q2, achieving our highest quarterly revenue and generating Zynga’s best quarterly operating cash flow in more than eight years” Frank Gibeau, Zynga
FINANCE
GIQ20 H1 2020
EVOLUTION GAMING GROUP
888 saw a strong performance from poker
48% Net revenue (€) H1 2020
H1 2019
Change
243.5m
165.0m
48%
TOTAL
Ahead of its pending acquisition of NetEnt, Stockholm-listed Evolution Gaming went from strength to strength as first half revenue grew by 48 per cent to €243.5m and profit more than doubled to €124.6m. The supplier experienced “very high” demand for its products during the second quarter, partly due to the lack of sports betting as a result of Covid-19, as well as growing contributions from Asia and North America. “The strong development for Evolution continued during the second quarter,” said CEO Martin Carlesund. “The quarter has been eventful, with several product launches and a very high demand, partly due to the lack of sports betting games through a large part of the period, but we also see strong underlying growth.”
levels of customer acquisition, general consumer trends towards increased use of online services, especially during the Covid-19 lockdown period and 888’s relentless focus on product leadership,” said CEO Itai Pazner.
888 HOLDINGS
NETENT
37%
30%
Net revenue (US$)
Casino
Net revenue (SEK) H1 2020
H1 2019
Change
260.0m
175.4m
48
Sports betting
44.1m
44.5m
-1%
Poker
36.1m
23.1m
56%
Bingo
21.1m
19.5m
8%
361.3m
262.5m
38%
17.8m
14.8m
21%
379.1m
277.3m
37%
Total B2C B2B TOTAL
London-listed 888 Holdings was another to benefit from increased consumer demand for online services during the Covid-19 lockdown period, as revenue for H1 rose 37 per cent to $379.1m, buoyed by a strong performance from online casino and poker. Online poker recorded the biggest growth as revenue grew 56 per cent to $36.1m. Casino revenue rose 48 per cent to $260.0m, offsetting a one per cent decline in sports revenue to $44.1m. Bingo revenue increased by eight per cent to $21.1m and revenue from B2B climbed 21 per cent to $17.8m, following growth in Delaware and a strong performance from WSOP in the US. “ T his outcome ref lects the group’s c ont i nue d s t r on g GIQ Q3 REVIEW
TOTAL
“This outcome reflects the group’s strong levels of customer acquisition and general consumer trends towards online services, especially during the Covid-19 lockdown period” Itai Pazner, 888 Holdings
H1 2020
H1 2019
Change
1,090.1m
837.5m
30%
With a €1.9bn takeover offer from Evolution Gaming on the table, Stockholm-listed NetEnt had a first half to remember as revenue increased by 30 per cent to SEK1,090m, buoyed by a record second quarter and its Red Tiger studio. The supplier enjoyed continued growth Stateside, which accounted for 10 per cent of gross gaming revenue in Q2, including
57
FINANCE GIQ20 H1 2020
DoubleU Games – Fantasy of Oz
DOUBLEU GAMES 28% Net revenue (KRW) H1 2020 TOTAL
326.2bn
H1 2019 255.6bn
Change 28%
Korean-listed DoubleU Games posted a 28 per cent increase in revenue to KRW326.2bn (€231.6m) for the first half of 2020, boosted by a record performance during the second quarter. Revenue in Q2 rose 45 per cent to KRW187.8bn, marking its sixth consecutive quarter of growth. The social casino operator, which acquired DoubleDown Interactive from IGT in 2017 for $825m, attributed the growth to increased marketing, the launch of new slots and other games, as well as the effects of the lockdown in the US.
58
a 148 per cent increase in New Jersey and a doubling of revenue in Pennsylvania, with NetEnt now working to secure market entry for Red Tiger. “Overall, the second quarter was strong for both NetEnt and Red Tiger, resulting in record revenues, earnings and cash flow for the Group,” said CEO Therese Hillman. “We now see a greater likelihood that more US states will introduce online casino legislation in the coming years. Importantly, we expect to launch our games in both Michigan and West Virginia as the online casino markets in those states are expected to open in the second half of this year, which is earlier than previously expected.”
DRAFTKINGS 27% Net revenue (US$)
TOTAL
H1 2020
H1 2019
Change
159.5m
125.5m
27%
Despite the impact of Covid-19 on the sports calendar, New York-listed DraftKings was able to record a 27 per cent improvement in revenue to $159.5m in H1 2020, including results from B2B sports betting supplier SBTech from 24 April. While several major sports leagues including the NBA, MLB and the NHL remained on hiatus due to the pandemic, DraftKings worked to engage fans with new fantasy sports and betting products for NASCAR, golf, UFC and European soccer. “We believe that the best product will ultimately win with the American consumer,” said co-founder, CEO and chairman Jason Robins. “As a technology-first organisation, we will continue to focus on bringing new and i nnovative products to market that strengthen our engagement with customers and maintain our competitive differentiation.”
FINANCE
GIQ20 H1 2020
Mobile revenue increased by 26 per cent for SciPlay
SCIPLAY CORPORATION 20% Net revenue (US$)
TOTAL
H1 2020
H1 2019
Change
283.9m
236.5m
20%
New York-listed SciPlay was another to post a record revenue high during the second quarter, helping revenue for the first half period climb 20 per cent to $283.9m. Mobile revenue increased by 26 per cent to $195.1m, accounting for 86 per cent of total H1 revenue, with average daily active users (DAUs) remaining at the same level as last year at 2.7 million. Revenue in Q2 rose 40 per cent to $165.6m. “We are extremely pleased with the results we delivered in the second quarter,” said CEO Josh Wilson. “The strong performance was evidenced throughout our portfolio, driven by successful game updates coupled with the ‘stay at home’ dynamic.”
GAMING INNOVATION GROUP
first as a fully-fledged B2B provider, following the sale of its B2C assets to Betsson in April. In the second quarter, revenue grew by 47 per cent to €16.7m, with Platform Services revenue nearly doubling to €8.2m and revenue from Media Services remaining constant at €8.6m. “I am pleased with the development of the business over the second quarter, with the execution of several strategic initiatives completed and executed upon that will place the company in a fundamentally strong position to capture future growth,” said CEO Richard Brown.
“I am pleased with the development of the business over the second quarter, with the execution of several strategic initiatives completed” RIchard Brown, Gaming Innovation Group
ASPIRE GLOBAL 17% Net revenue (€) H1 2020
H1 2019
Change
45.9m
39.0m
18%
7.1m
n/a
n/a
B2C
24.4m
27.0m
-10%
TOTAL
77.4m
66.0m
17%
B2B core B2B games
18% Net revenue (€)
TOTAL
H1 2020
H1 2019
Change
27.8m
23.6m
18%
Oslo-listed Gaming Innovation Group (GiG) reported an 18 per cent increase in H1 revenue to €27.8m, with the second quarter marking its GIQ Q3 REVIEW
Buoyed by a record second quarter period, Stockholm-listed Aspire Global saw revenue increase 17 per cent to €77.4m in the first six months of 2020, driven by higher player activity during the pandemic. Revenue from B2B increased by 36 per cent to €53.0m, comprising an 18 per cent increase in Aspire Core revenue to €45.9m and €7.1m of revenue from newly 59
FINANCE GIQ20 H1 2020
acquired Pariplay, offsetting a 10 per cent drop in B2C revenue to €24.4m. Post quarter-end, Aspire Global acquired its own sportsbook in a €20m deal with BtoBet. “Revenues and EBITDA reached all-time high in Q2 2020 and we strengthened our position as the leading iGaming supplier,” said CEO Tsachi Maimon. “The strong development is reflecting a continued good business momentum as well as players’ preferences during the pandemic to choose online entertainment over land-based.”
onwards. We responded quickly and decisively to make changes in the offer, and I am particularly pleased to see the strong performance in casino. Our business has remained financially robust and resilient to this impact, being both diversified and flexible.”
INSPIRED ENTERTAINMENT 12% Net revenue (US$) H1 2020
H1 2019
Change
BETSSON
Server-based gaming
20.7m
41.2m
-50%
13%
Virtual gports
18.8m
19.2m
-2%
Net revenue (SEK)
Acquired entities
29.1m
n/a
n/a
(0.8m)
n/a
n/a
67.9m
60.4m
12%
H1 2020
H1 2019
Change
2,300.5m
1,930.6m
19%
Sportsbook
611.4m
638.8m
-4%
Other
38.6m
38.9m
-1%
2,950.3m 2,608.3m
13%
Casino
TOTAL
Intercompany eliminations TOTAL
Despite posting a 42 per cent drop in second quarter revenue to $15.6m, New York-listed Inspired Entertainment saw H1 revenue
Stockholm-listed Betsson was another company to hit a record revenue high in the second quarter, pushing first half revenue up 13 per cent to SEK2.95bn. The Q2 revenue growth was driven by online casino, which rose 40 per cent and represented 84 per cent of Betsson’s total during the period. “I am proud that Betsson has delivered all-time high revenues under the most challenging conditions,” said president and CEO Pontus Lindwall. “The global pandemic had immediate effect Inspired acquired UK gaming on the company from March business from Novomatic
GAN 16% Net revenue (US$)
Real-Money iGaming Simulated Gaming TOTAL
H1 2020
H1 2019
Change
11.9m
10.8m
10%
4.1m
3.0m
37%
16.0m
13.8m
16%
New York-listed GAN posted a 16 per cent increase in first half revenue to $16.0m, despite the comparable period last year including $3.0m of revenue from FanDuel, which has now deployed its own proprietary digital wallet for its sports betting business.
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GAN remains the exclusive iGaming provider of FanDuel’s online casino operations throughout the US however, launching the operator in West Virginia and Michigan. The company has also secured three new customers that will enter Michigan on the GAN platform during Q4. “Our business has proven resilient to these outside forces in recent weeks, and we believe GAN can greatly contribute to both our customers’ success and the accelerated secular shift to iGaming as casino operators continue to be impacted by the pandemic,” said CEO Dermot Smurfit.
increase 12 per cent to $67.9m. The inclusion of $29.1m in revenue from the acquired UK gaming business from Novomatic helped Inspired offset a decline in revenue from its land-based businesses as a result of Covid-19. “We are pleased with the fundamentals of our business as we have navigated the impact of the Covid-19 closures,” said executive chairman Lorne Weil. “Given these closures, we expected a negative impact in the second quarter, however the implementation of aggressive cost-savings measures and the strong demand in our online business, which more than doubled on a pro forma basis versus last year’s second quarter, helped to compensate for the retail closures and we were able to achieve EBITDA profitability during the quarter.”
LEOVEGAS 11% Net revenue (¤)
TOTAL
H1 2020
H1 2019
Change
200.2m
180.7m
11%
An increased focus on its online casino product helped Stockholm-listed LeoVegas post an 11 per cent rise in first half revenue to €200.2m. Q2 total revenue increased by 17 per cent to €110.7m, with revenue from online casino climbing 24
FINANCE
GIQ20 H1 2020
per cent versus a year ago to account for 78 per cent of the total, with live casino accounting for a further 18 per cent. “LeoVegas has delivered continued solid growth and profitability during a period of exceptional circumstances in the world around us,” said president and CEO Gustaf Hagman. “Supported by the record-large customer base that we entered the quarter with, together with our ability to quickly adapt to new conditions, the positive trend from the first quarter is continuing.”
KINDRED GROUP 8% Net revenue (£) H1 2020
H1 2019
Change
Sports betting
190.0m
215.4m
-12%
Casino and games
263.3m
212.3m
24%
Poker
17.2m
10.3m
67%
Other
14.3m
12.6m
13%
484.8m
450.6m
8%
TOTAL
Stockholm-listed Kindred Group was also buoyed by online casino, as well as growth in poker, leading the operator to revenue of £484.7m in H1 2020. Casino and games revenue grew 24 per cent to £263.3m, offsetting a 12 per cent decline in sports betting revenue to £190.0m as a result of Covid-19 disruptions. Other revenue climbed 13 per cent to £14.3m as online bingo also proved popular during the lockdown period. Kindred’s US business also contributed strongly, generating revenue of £6.0m in the second quarter, equivalent to more than 2.4 per cent of group revenue.
KAMBI GROUP
GOING DOWN IN H1 2020 The Covid-19 pandemic wreaked havoc on those with land-based operations, particularly in the US, with many still hampered by restrictions meant to limit the spread of the coronavirus. Leading New York-listed casino operators suffered the most, with MGM Resorts recording the biggest decline as H1 revenue fell 60 per cent to $2.54bn. Caesars Entertainment and its rivals didn’t fare much better, as Caesars’ revenue declined by 48 per cent to $599.5m, Boyd Gaming’s revenue fell 47 per cent to $890.4m, Penn National Gaming’s by 45 per cent to $1.42bn, and Churchill Downs Inc’s by 41 per cent to $438.0m. Tough times too for the big trio of gaming and lottery suppliers, with IGT revenue dropping 34 per
Net revenue Company
H1 2020
H1 2019
% Change
CAD$193.8m
CAD$194.7m
-0.5%
€849m
€995m
-10%
£1,616.7m
£1,810.6m
-11%
€49.1m
€58.7m
-16%
Playtech
€564.0m
€727.8m
-23%
Scientific Games
$1,264m
$1,682m
-25%
William Hill
£554.4m
£811.7m
-32%
IGT
$1,577.7m
$2,379.2m
-34%
OPAP
€335.2m
€525.6m
-36%
£20.2m
£32.6m
-38%
$438.0m
$742.8m
-41%
€43.3m
€77.5m
-44%
$1,421.6m
$2,605.7m
-45%
Boyd Gaming
$890.4m
$1,673.4m
-47%
Caesars Entertainment
$599.5m
$1,272.9m
-48%
Codere
€317.6m
€701.9m
-55%
Intralot
€168.2m
€378.1m
-56%
Global Gaming 555
SEK129.7m
SEK294.3m
-56%
MGM Resorts International
$2,542.6m
$6,400.2m
-60%
Pollard Banknote La Française des Jeux (FDJ) GVC Holdings bet-at-home.com
0.1%
Sportech
Net revenue (¤)
Churchill Downs Incorporated
TOTAL
H1 2020
H1 2019
Change
42.7m
42.6m
0.1%
Stockholm-listed Kambi sneaked into the GIQ20 chart as revenue rose marginally to €42.7m in the first half of the year, as Q2 revenue was decimated by the disruption caused by Covid-19 to major sports. Revenue in Q2 dropped by 32 per cent to €14.8m, nearly offsetting Kambi’s 33 per cent increase in Q1 revenue, although future results will likely be boosted by the supplier’s expansion Stateside, which included six new partner launches in July alone. GIQ Q3 REVIEW
cent to $1.58bn, Scientific Games revenue declining 25 per cent to $1.26bn and Intralot revenue falling 56 per cent to €168.2m. In Greece, restrictions introduced to limit the spread of the pandemic hit OPAP hard, with revenue falling 36 per cent to €335.2m. Retail closures in Spain and Latin America were to blame for Codere’s 55 per cent H1 revenue decline to €317.6m, while the lack of sports meant that bet-at-home.com’s revenue declined 16 per cent to €49.1m. In the UK, revenue at London-listed William Hill fell 32 per cent to £554.4m, as retail and US revenue fell 62 per cent and 28 per cent respectively. Revenue at GVC Holdings fell by 11 per cent to £1.62bn, as retail declines offset a strong online performance.
Zeal Network Penn National Gaming
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C O LU M N AND ANOTHER THING...
A month is a short time in the gambling sector Leigh Nissim
W
hat a month, what a year! The online gambling sector never stands still and has constantly evolved from download software through to mobile, live and beyond. Even by its own rapidly changing standards, surely these last few months and weeks have brought changes no-one could have imagined, and at lightning speed, too. For an industry that is often criticised for poor operating practices (often justifiably) and saddled with a negative public perception, it is rarely applauded for its ability to adjust to market dynamics, consumer consumption, regulatory influences and technological advancements. UK Plc seeks success stories while the government chases unicorns, yet the gambling industry is full of them. High-growth businesses like GVC and Flutter continue to outperform the FTSE index and
62
The Future Anthem chief executive believes the pace of change in the sector has just shot up a level lead the way in regulated US markets. William Hill has accepted an offer from a US leader, clearly keen on its technology and sports betting knowhow. Gamesys continues to delight with strong trading performance, while smaller public companies like Gaming Realms are also making great progress. This is only part of the story. UK gambling is leading the way in terms of player safety. The Betting and Gaming Council recently published its Game Design Code, a guide to how casino products should be built responsibly – a significant step forward. The Gambling Commission and Facebook announced new guidelines for gambling advertising, alongside changes earlier in the year for UK sports and TV advertising. There are new rules for VIP schemes, credit cards are no longer accepted, and other consultations are still in progress. The international terrain is also changing – Evolution finally made its move for NetEnt, who had only recently made its own move acquiring Red Tiger. After 17 years, Scientific Games also has a new significant shareholder – Caledonia – which also holds 10 per cent of Flutter. Rush Street and Golden Nugget have become public companies on the NYSE, and Penn National has raised $982m. The sector is not immune to Covid-19 either, with every business experiencing challenges. Like its leisure brethren, retail gambling was shut for many months globally, and is still constrained. Online businesses accelerated their shift to remote working. Rightly so, responsible gambling processes are under greater scrutiny than ever before. The seismic shifts that are changing our industry for the better would probably kill other sectors with the ferocity and pace of change. The technologies behind these
entertainment businesses are colossal, processing international currencies and risk management in microseconds, with huge compliance infrastructure as you would expect in a regulated global industry. Yet its ability to adjust, innovate and compete continues. So exactly what might the sector look like in a year’s time? The US will clearly be a focus, both for European companies seeking to gain a foothold, and also for incumbents facing the shift from retail to digital. Regulations will continue to influence, with stake limits popping up in mainland Europe, a review of gambling laws in the UK and additional advertising restrictions. Operating practices will come under greater scrutiny, with games studios
“The seismic shifts that are changing our industry for the better would probably kill other sectors with the ferocity and pace of change” Leigh Nissim, Future Anthem being required to take more responsibility for safer product design. Operators will seek ways to differentiate and studios will need to combine to achieve scale, with those producing highperforming content attractive to acquirers. How long will it be before mainstream media and digital companies move in, attracted by the robust earnings of global gambling companies built in the UK and mainland Europe? At Future Anthem, we are expecting data to play an ever-increasing role, from personalisation through to product design and player safety. While the sector grapples with the sea of changes, the Spotify generation will expect a better entertainment experience from gambling companies. While it is hard to predict the next 12 months, one thing is for sure – the sector will continue to change at pace. And that is one of my favourite aspects of the industry – it never stands still. And with change comes opportunity. n Leigh Nissim is the founder and chief executive officer of Future Anthem, the market leader in Game Data Science. He has held leadership roles