The KKV’s overall assessment was that the reform of Finnish gambling was “on the right track”. However, it said, there is still room for improvement and that Veikkaus should have prevented and reduced gambling-related harm “in a more targeted way than has happened”.
It said that one way to facilitate this improvement would be by making Veikkaus revenue go into the treasury instead of directly towards certain funding areas.
Currently, just over half of Veikkaus revenue goes to the Ministry of Education and Culture for sports, science and arts funding, while 43% goes to the Ministry of Social Affairs and Health for improving health and social welfare. A further 4% is used to fund horse racing through the Ministry of Agriculture and Forestry.
However, the KKV said this created a situation where any efforts to reduce gambling harm risked leading to underfunding for these areas.
“If active efforts are made to reduce gambling disadvantages, Veikkaus beneficiaries will not be able to anticipate their funding, as reducing gambling disadvantages is likely to have an impact on the amount of Veikkaus revenues distributed to beneficiaries,” KKV research professor Mika Maliranta said. “On the other hand, if the gambling monopoly does not actively seek to reduce harm, the monopoly system does not meet the purpose or justification of the law.
“This contradiction has hampered the social debate about Veikkaus’ responsibility”.
The KKV added that the change would bring “predictability and stability” to the funding of Veikkaus’ current beneficiaries.
In addition, the KKV said Veikkaus’ governance should come under the power of the Ministry of Social Affairs and Health (STM) rather than the Prime Minister’s Office.
“STM is already responsible for monitoring, researching, evaluating and developing prevention and treatment of gambling disorders,” the KKV said. “Thus, it would be best placed to steer the company in a direction where gambling causes less harm to individuals and society.
“This is also in line with the state’s corporate governance principles. The solution would be in line with the alcohol policy, as STM is also responsible for [state-owned alcohol retailer] Alko Oy’s corporate governance.”
In addition, the KKV said further reform of the Finnish monopoly system should be undertaken in a data-driven manner, and that Veikkaus’ own data should be made available to the research community.
The KKV has issued a series of reports on Veikkaus in the past. In September of last year, it determined that the monopoly broke Finland’s Procurement Act by making substantial changes to its supply contract with International Game Technology (IGT).
In 2019, the KKV argued that there should be a central regulatory body for the country’s gambling sector as it said the current framework was not fit for purpose.
Under the agreement, Inspired will supply its virtual sports products in Cage’s retail outlets and its V-Play Plug & Play (VPP) online and mobile solution for Cage’s interactive channels throughout the region.
VPP features a number of custom sports variants for Cage customers, including virtual cricket, which Inspired will introduce for the first time as part of its VPP solution.
Cage and its affiliates will also be able to sublicense the products to third-party operators in the Caribbean.
“The Cage Companies have established themselves as the Caribbean’s premier gaming route operator and we are looking forward to working with them and extending our partnership to deploy our leading content into the market,” Inspired’s president and chief operating officer Brooks Pierce said.
Revenue for the 12 months through to 31 December 2020 amounted to €29.4m (£25.6m/$35.5m), up from €23.9m in the previous year.
Casino accounted for 85.1% of all revenue, compared to 68.4% in 2019, but sport’s share was down from 27.0% to 11.5%, with this area most impacted by the novel coronavirus (Covid-19) pandemic. Other activities accounted for the remaining 3.4% of revenue.
In terms of geographical performance, the share of total revenue generated in the Nordics was 80.4%, but this was down from 93.1% in 2019, whereas rest-of-world revenue share increased from 6.9% to 19.6%.
Raketech said the acquisitions it made in 2020 were a major factor in revenue growth, with all purchased assets delivering in terms of growth and anticipated industrial benefits.
These acquisitions included igaming affiliate network Lead Republik, which it purchased for an initial €1.4m in March, as well as US-facing affiliate website American Gambler in November.
“I am pleased to see that the acquisitions we made during 2020 are delivering over expectations in terms of growth and that the anticipated industrial benefits such as knowledge transfer, best practice, overhead costs reduction, central controlling, resource pools, platforms, BI systems and more, so far are being realised to a large degree,” Raketech chief executive Oskar Mühlbach said.
Looking at spending for the year, operating expenses increased 28.1% year-on-year to €22.8m, partly due to higher depreciation, amortisation and impairment costs of €5.4m related to the acquisitions.
Direct expenses also climbed to €7.9m due to increased efforts within paid media, primarily through Lead Republik and the Rapidi white label casino.
Earnings before interest, tax, deprecation and amortisation (EBITDA) reached €12.0m, up 13.6% from €12.0m, while, operating profit also edged up 8.2% to €6.6m.
When accounting for €360,000 in non-operating income and €930,000 worth of financial costs, profit before tax was €6.1m, down 17.6% year-on-year, though the 2019 figure was helped by higher non-operating income, related to party liability waived in Q1 of 2019,
Raketech paid €459,000 in tax, leaving it with a net profit of €5.6m, down 22.2% from the previous year.
“All in all, we can look back at a year in Raketech’s history where we despite Covid-19 successfully executed several operational initiatives of strategic importance,” Mühlbach said.
In terms of the fourth quarter, revenue in the final three months of the year was up 44.7% to €8.5m, primarily due to the impact of the Lead Republik purchase.
Opertaing costs were 3.3% higher at €6.2m in Q4, while was 125.0% higher at €3.6m and operating profit reached €2.3m, compared to a €100,000 loss in the same period in 2019.
Profit before tax stood at €2.3m, compared to a loss of €360,000 in the previous year, while profit after tax was €2.1m, a significant improvement on its €342,000 in 2019.
“Confident by the strong Q4 results and our general achievements during 2020, we will continue our relentless efforts to widen our geographical footprint, our product offering and our asset portfolio.
“Raketech’s sound financial situation furthermore allows us to complement our organic growth strategy with continuous and potentially accelerated efforts within the area of M&A during 2021.”
Revenue was up more than tenfold from $222,392 for the first quarter of its 2021 financial year, ended 30 September, which was the first quarter for which the group reported revenue following its acquisition of online operator Argyll Entertainment in July 2020.
Turnover, net revenue and gross gaming revenue (GGR) returned to pre-Covid levels in October, the business said, with total handle above $16m for the month and GGR above $700,000.
Total handle for December was $20m, with revenue over $850,000.
Operating expenses for the three-month period came to $8.1m, up from just $700,000 for the same period in 2019. The increase was primarily attributable to the increased payroll, stock compensation, marketing, legal and professional service fees related to increase business activity, the group said.
Net loss for the period came to $7.3m, up 137.6% from 2019’s loss. This loss was driven principally by reduced revenues related to measures taken after the British Gambling Commission’s audit of Argyll Entertainment.
Including the acquisitions of Helix Esports and ggCircuit, the business said it expects to report $70 million in revenue in the fiscal year 2022.
The business also completed its acquisition of Esports Gaming League (EGL) in January, and the tournament organiser went on to announce several partnership deals with sports teams including the Philadelphia Eagles, LA Kings and LA Galaxy, to become the organisations’ official esports tournament provider.
The group yesterday completed a capital raise of $30m, in order to build resource for the continuation of its long-term business strategy.
“The foundation we have built is primed to generate rapid growth in the quarters ahead,” Grant Johnson, chief executive of Esports Entertainment Group, said.
“Revenue growth, driven by our Argyll Entertainment acquisition, accelerated throughout the fiscal second quarter. With the acquisitions of Lucky Dino, Helix Esports and ggCircuit, we have raised our revenue guidance from $13 million to $18 million for fiscal 2021.”
“Additional key milestone achievements subsequent to quarter end, including completing our acquisition of EGL and greatly expanding the eligible operating jurisdictions for our VIE and SportNation brands, provide further growth opportunities.”
Johnson went on to describe how the novel coronavirus (Covid-19) pandemic had accelerated the growth of the esports vertical, with increased exposure on mainstream television and more interest from professional sports franchises.
“Looking ahead, we are building on our momentum, and with today’s capital raise of $30 million, we have the resources to further accelerate the monetization of our robust three pillar strategy,” concluded Johnson.
While gaming continued to make up the vast majority of Boyd’s revenue, this was down 28.5% to $1.78bn.
Food and beverages brought in $178.8m, down 60.0%, while room revenue dropped 55.8% to $105.0m and other revenue was down 24.4% at $119.3m.
Almost three quarters of revenue came from casinos in the Midwest and South regions, which brought in $1.52bn, down 30.5%. Las Vegas local casinos saw revenue decline 36.2% to $94.5m.
Boyd’s casinos in downtown Las Vegas were hit hardest, with revenue down 63.3%
The #OpenDoors 2021 campaign will aim to raise awareness of how others can affect people’s professional development and recognise the fact that some do not progress in their careers without the help of someone.
The campaign, which also ran last year, will ask contributors to thank someone who opened a door for them, as well as pledge to do the same for someone else.
It will this year run alongside a new scholarship fund, developed to support aspiring leaders from under-represented groups. The All-in Diversity Project has set a goal to this year raise enough to be able to fund at least two scholarships for University of Nevada, Las Vegas International Gaming Institute and University of Nevada, Reno College of Business and Extended Studies’ Executive Development Programme.
Penn National Gaming, Hero Gaming, Interactive Gaming Group, Insight Global, Playtech, Pronet Gaming, and Facebook Gaming are among the first corporate sponsors of the scholarship.
“If we really want to progress and be a more diverse and inclusive industry, we need to recognise that we did not get to where we are in our career without the help of someone along the way,” All-in Diversity Project co-founder Kelly Kehn said.
“By celebrating someone who supported your career, you are also pledging that you are willing to hold the door open for someone else who might need it. Donations to the scholarship fund are a true action where we can hold the door open for the future leaders of our industry.”
The IBIA said it teamed up with the body as part of its plan to expand its network to meet the challenges of a changing world of customers and products and the increasing spotlight on equality issues within the world of sport.
FY20 is the twelve-month period ending 30 June, 2020 in each of the states except Michigan, which concluded the fiscal year on 30 September.
The Michigan Lottery achieved a total sales increase of 86% and since its launch has contributed over $500m before operating expenses to the Michigan School Aid Fund.
The Virginia Lottery saw growth of 29% in online subscription sales in FY20, the supplier said, and the New Hampshire lottery recorded over 142% growth in sales in its first full fiscal year of ilottery operations.
North Carolina’s program, which was converted by NeoPollard to enable the sale of draw games online, was live for eight months in FY20 and achieved top line sales 57% higher than the full FY19.
“Since its inception, NPi has been dedicated to delivering the most entertaining, engaging, and profitable ilottery programs to our customers,” Liz Siver, general manager of NeoPollard Interactive, said.
“We are proud that our industry-leading products and services have helped our ilottery partners continue to drive sales, engage with players, and maximize revenue for the many good causes they support.”
As we look to the year ahead, industry experts share their thoughts on the opportunities and challenges facing the industry.
In part three we talk to finance experts. In part one we heard from igaming operators and suppliers, while in part two we covered land-based operators and suppliers. In parts four to eight we will focus on marketing, people, technology and innovation, regulation and social responsibility.
Interviewees
Julian Buhagiar, co-founder, RB Capital Simon Holliday, founder, H2 Gambling Capital Christian Tirabassi, senior partner, Ficom Leisure
Looking back at 2020, what – other than the Covid-19 pandemic – did you feel was transformational for the industry? And how much of a lasting effect do you think the Covid-19 pandemic will have going forward?
Julian buhagiar
Julian Buhagiar: 2020 was so seismic in nature it’s not clear whether sufficient time has passed for us to fully assess how transformative the year was. What’s for sure is that the M&A landscape has been transformed in just under nine months: there has been a rapid shift to virtual (but not yet e) sports, and regulation (even if just in draft stage) has taken a more forceful hold on revenues.
Despite what (pseudo) health officials are desperately trying to reassure us, Covid-19 will not be over in 2021. It’s inevitable that there will be a rise of (increasingly vaccine-resistant) strains that will continue to disrupt the airline, tourism and any other industry that relies on human contact until, just like influenza, society accepts it as the new normal. And gaming will continue to be profoundly affected. For sportsbooks, we’ll continue to see shorter and/or distributed seasons, with a significantly reduced spectator footprint. This will mean more gradual take-ups of soft virtual sports, such as eFIFA, and more gambling-related elements in sportsbooks.
The most lasting effect, however, will be in M&A. Operators and/or providers that have little diversification of revenues will have little choice but to acquire, or be acquired in turn. This is a trend that has really kicked off in 2020 and that I expect to last well through the first half of this decade.
Simon Holliday: Building on the 2019 DraftKings IPO, 2020 saw Wall Street continuing its ascent as the financial centre of the global igaming/sports betting industry, with the GAN, Golden Nugget and NeoGames IPOs, the completion of the DraftKings/SBTech merger and the injection of Apollo Global Management funds into the Great Canadian Gaming Corp, Sazka and the Italian arm of IGT.
In terms of the lasting impact of Covid, globally land-based gambling’s 2020 gross win is expected to be down more than one-third on H2’s pre-Covid-19 expectations. However, even with nearly all of Q2’s sports events cancelled or postponed, total interactive gambling came in about where expected as gains in igaming made up the shortfall. During 2020, online’s share of global gross win was catapulted from just over 13% to in excess of 20%. This is very significant given it is just five years since online’s share reached 10%, having taken the best part of two decades to reach that milestone. H2 expects this momentum to accelerate and for digital to account for the vast majority of growth going forward.
It is now feasible that globally, online gross win could reach as much as or even more than $120bn in the next five years and its share could be as high as 45% by the end of the decade. H2 expects a contraction in revenues from existing land-based outlets, as well as fewer new developments. We think Covid-19 has brought about a permanent change in habits, which together with economic headwinds, digital currency and the development of online technologies/immersive experiences including AI, will all contribute to increasing the shift away from land-based towards online.
Christian Tirabassi: From Ficom Leisure’s strategic advisory and M&A perspective in the Americas, Europe, Africa and India, there has been an acceleration in the consolidation process that has been ongoing for the past few years, additionally expedited by the Covid-19 pandemic. This consolidation creates larger operators exposed to different markets and offering all betting and gaming products.
We expect to see the effect of the Covid-19 pandemic lead to an acceleration of the regulatory processes in different territories that have already been discussing the introduction of a regulatory framework.
What do you feel is going to be a game-changer for the industry in the coming year?
JB: There are a few developing stories, but one trend vectoring at the moment is the rise of casino-based streamers. They are a growing sector, and will likely be the new face of affiliate marketing this decade. Expect to see new brands emerge as individuals and/or teams, and not wholly dissimilar to esports streamers (but with markedly different commissions).
Simon Holliday
SH: Technology, via the development of a “smart integrated gambling market”, could create a digital environment where an optimal experience may be offered to the most sophisticated players, while providing an early warning system for the vulnerable. Such a digital ecosystem, which would address player protection, sports betting integrity and market security all under one roof, would result in less player leakage to black markets. The reform of UK gambling regulation in the early part of 2021 could provide the perfect springboard for this to start to become a reality across Europe initially.
CT: The key element that will change is the number of jurisdictions that will introduce sustainable regulations. We have seen this happening in the US with the introduction of sports betting. The same would happen if and when mainly India and Asian countries regulate betting and gaming, allowing the emergence of extremely large regulated markets. Another key element will be the real effect of the esports phenomena in relation to betting.
On the other hand, what do you feel could disrupt the sector or slow progress?
JB: Regulation, or the threat of it anyway at the moment. Witness what’s happening in Germany and the Netherlands, with steering committees and transition dates seemingly pushed back on a regular basis. It will eventually happen, however, and that inevitable delay to transition places significant uncertainties on the operators, platforms, affiliates and payment solutions that depend on it. This kind of hard-left, pause, hard-left again is of significant detriment to an already oversaturated industry that is in desperate need of an overhaul, but of the right kind. And that seems hard to come by at the moment.
SH: Post Covid-19 government budget deficits are expected to provide the catalyst for more markets to legalise sports betting/igaming in the US. However, in an age of increasing risk aversion the temptation to advance too far too fast could ultimately prove a headwind.
Christian Tirabassi
CT: In regulated markets the disruption could be a tax increase leading to non-sustainable levels or undermining the current proven regulatory framework (e.g. limitation of licensing, changes in the licensing process, etc.).
Slowing down the implementation of regulation in countries that have already started the discussion could lead to slow progress, as well as the limitations on growth opportunities (like advertising bans) and further cancellations of betting events worldwide.
Do you foresee a wave of new M&A activity in 2021 in the latest wave of consolidation? Where do you think this will be focused?
JB: Yes, and it’s already happening. Given the relatively high availability of cheap capital at the hands of investors, the US is buying up a lot of (what it considers to be) cheap European assets under special purpose acquisition vehicles. This trend will continue to increase this year and for the foreseeable future, as it allows US investors to tap into publicly traded funds without any initial fanfare (or investor speculation). The immediate effect will be a rapid acquisition of independently functioning companies by (sometimes faceless) US holding companies, which will gradually drive up asking prices in Europe over the next one to two years.
SH: Already we have seen Caesars Entertainment’s acquisition of William Hill clear some major hurdles and the potential Flutter US business/Fox Bet spin-offs will create separate pure play US market stocks. The emergence of Apollo Global is a major catalyst for disruption, and despite not resulting in a deal, the recent MGM-Entain discussions will likely fuel further investment interest and a further shuffling of the cards. We expect this to continue to generate attention in the sector going forward in a buoyant M&A market predominately financed out of Wall Street.
CT: We are experiencing an acceleration of M&A activities, both for B2C operators and B2B providers. For B2C operators the focus will be on: 1) acquisitions or mergers in order to consolidate a position, for growth of market share and/or product integration; 2) M&A activities to enter new jurisdictions, mainly regulated markets or those that are about to be regulated. For example, we expect an increased number of M&A activity from international operators in order to enter the Indian market; and 3) an omnichannel strategy, where online operators are looking to integrate with land-based distribution. Conversely land-based operators looking to offer online, especially after the experience during the lockdown.
We are experiencing a consolidation of the global B2B providers, where they are continuously looking to integrate additional products, platforms and games, in order to represent the largest possible portfolio of the operators, as well as owning unique products related to specific markets.
Casinostugan was given a warning and penalty fee of SEK25m (£2.16m/€2.49m/$3.00m). ComeOn Sweden received a SEK35m penalty fee in addition to its warning, while Hajper Ltd was issued with a warning and sanction fee of SEK50m. Snabbare Ltd paid the largest fee of SEK65m in addition to its warning.
Reviews of a sample customer’s account found that Casinstugan had issued a player with a total SEK21,000 in bonus funds, in addition to free spins for online slots.
ComeOn was also found to have deposited a total of SEK40,000 to a sample player in bonus funds.
A review of one of Hajper’s customer accounts found the player had been given SEK7,400 in bonus funds by the operator, as well as free bets. A second customer received SEK13,500 from Hajper in addition to free spins.
Snabbare Ltd was found to have deposited SEK6,950 to a customer’s account in bonus funds, and to have offered free spins to another player.
According to Spelinspektionen, the size of the penalty fees depends on how serious the regulatory violation is and how long it lasted, as well as operator turnover.
As all violations were similar, the differences in fees paid in this case depended largely on turnover.
According to Swedish regulations, gaming operators may only offer their customers a bonus at their first gaming opportunity, however Spelinspektionen found that these four operators had breached the legislation by offering bonuses on repeated occasions.
The authority also said it believes that by distributing gifts to vulnerable players, the companies have breached their duty of care in relation to those players.
If the warnings prove insufficient, the regulator said serious violations such as this may result in gaming licences being revoked.
Spelinspektionen’s interpretation of anti-bonusing regulations was clarified in June 2019 when Betsson’s NGG Nordic subsidiary and PlayOjo operator SkillOnNet were found to be in violation of the rules.
NGG Nordic was ordered to pay a penalty fee of SEK19m, while SkillOnNet was issued with a SEK14m fee. NGG Nordic’s fee was subsequently reduced to SEK14m after Betsson appealed the decision.
An inspection of licensees carried out last autumn found that operators in the jurisdiction must to more to provider responsible information about gambling-related harm, and links to Swedish self-exclusion scheme Spelpaus, on their websites.
Under the arrangement, Tripp will support BetMakers with its expansion plans in the Australian B2B wagering sector, with the supplier already engaged with a number of parties in relation to opportunities leveraging its technology and data platform.
Tripp will also work with BetMakers to identify opportunities in the US market, with a focus on those that can leverage the supplier’s anticipated acquisition of Sportech’s tote and digital business.
Last month, an overwhelming majority of Sportech shareholders voted in favour of the deal to sell its global tote business BetMakers for £30.9m.
In relation to the partnership, Tripp will also subscribe for $25m of new shares in BetMakers, resulting in the issue of approximately 35.7m shares.
BetMakers has also received commitments of $50.0m cornerstoned by several existing institutions. The Institutional Placement, which will be undertaken at the same price as the proposed placement to Tripp, is expected to settle on 23 February.
Betmakers said all funds raised will be used to accelerate growth, specifically in pursuing and executing strategic opportunities.
“BetMakers has cemented itself with a compelling proposition in the global racing wagering market; they have built a formidable team with a highly trusted brand and established a global footprint with a large customer base,” Tripp said.
“I am delighted to invest into the company and take on a role to assist in growing the business at scale globally.”
BetMakers chief executive Todd Buckingham added: “We are thrilled to have secured Matt Tripp’s backing, both in the form a significant investment in the Company and also as a key advisor on strategic and transformational deals that he will now pursue.
“Matt has a proven track record over a brilliant career in the online wagering industry and his support for BetMakers is a great vote of confidence in our company.”
Confirmation of Tipp’s investment came after BetMakers also announced that Buckingham signed a three-year extension to his contract.
The renewed contract will mean that Buckingham will remain as chief executive until 30 June 2024.
“Through the support of the board and the world-class team we have at BetMakers I am pleased to be in a position where the next exciting phase of growth can be delivered for the company and its shareholders,” Buckingham said.
BetMakers chairman Nick Chan added: “Todd has delivered outstanding growth and opportunity for the company through his leadership and vision and the board is delighted to have secured his commitment under agreeable terms going forward.”
