The placement, agreed in December, will see Good Luck Information receive 85,572,963 newly issued Class A ordinary shares in 500.com.
The Bitcoin part of the transaction is equivalent to $11.5m, based on the Bitcoin to US dollar exchange rate on January 21, 2021, thus valuing the placement at a total of $23.0m.
Based on today’s (23 February) price, the 356.04342 Bitcoins are worth $17.3m.
The placement represents 500.com’s latest activity in the cryptocurrency sector, with the provider having last week acquired Blockchain Alliance Technologies, which owns BTC.com.
The latest announcement initially saw 500.com’s share price increase to $28.43, but its shares have since dipped to $24.20 at the time of writing, down from an opening price of $26.35 at the start of trading today (23 February).
In an earnings update, ATG chief executive Hans Lord Skarplöth said the revenue growth came across verticals, with horse racing revenue up 19% from 2019, sports betting revenue up 51% despite the suspension of almost all sports for much of the year, and casino revenue up 20%.
Skarplöth said he was especially proud of the fact that both ATG’s revenue and operating margin increased.
“Growing with good profitability is always something to be proud of, growing with increased profitability feels great,” Skarplöth said.
The ATG chief executive added that three-quarters of ATG’s sales were online, due mostly to the effects of the novel coronavirus (Covid-19)
While ATG did not reveal its fourth-quarter revenue, Skarplöth said he was pleased to see horse racing revenue increase by 20% year-on-year during the period despite the return of traditional sports.
Prime Minister Boris Johnson yesterday (22 February) set out how measures would be eased in a phased approach, allowing business and venues to reopen over the coming months, with the aim of removing almost all restrictions by 21 June.
Betting shops will be permitted to reopen during stage two of the roadmap, which is due to come into effect no earlier than 12 April, while other gaming venues will reopen in phase three from 17 May.
Sporting events will also be able to welcome spectators during phase three, with indoor events limited to half capacity or 1,000, and outdoor evens half capacity or 4,000 people. However, for larger venues with a capacity of 40,000, then up to 10,000 fans will be permitted.
The BHA welcomed the plans, setting out how the racing sector has been hit hard by Covid-19 measures. Racing was initially halted during the first UK lockdown in March last year, and did not resume until June, but fans have remained absent, with the exception of a small number of trial events.
“The whole sport has worked hard to abide by our race-day protocols to allow racing to continue behind closed doors and support the many livelihoods that depend on our industry,” the BHA said. “British racing’s classification as an elite sport made this possible.
“But we do miss owners and we do miss spectators whose presence at meetings contributes so much to the thrill of our sport.
“We have already introduced additional measures to reduce the risks of transmission of the virus and have further options under consideration. We will now engage with government to highlight our ability to move beyond the current limitation on essential staff only as soon as that is possible and allow the return of owners.
“We have further discussions with officials scheduled, which will enable us to draw up specific proposals for race meetings, including potential pilot events.”
The roadmap only applies to England, though similar plans are expected to be put in place by the governments of Scotland and Wales in the coming days.
The BHA added that while the publication of potential reopening dates is a “very positive” sign, the ongoing absence of fans continues to place financial pressure on the racing sector, which is in need of more support as a result.
“This has been exacerbated by the closure of betting shops,” the BHA said. “Our financial discussions with government are ongoing.”
The facility would span 1.6m square feet and include a casino with 2,500 slot machines, 90 table games, 30 poker tables and a high-limit gaming area.
Other on-site amenities would include a sportsbook, 250-room hotel, 13 food and beverage venues, retail outlets and a flexible space for live entertainment and conferences.
Bally’s would build the resort on a 61-acre site located north of Powhite Parkway and east of Chippenham Parkway, on the western border of Richmond.
Construction would take approximately 18 months, with Bally’s hoping to open the new facility in 2024. Once operational, Bally’s said the resort could welcome up to 3.7m visitors each year and create 1,700 full-time jobs in the city.
The operator will offer 5m Class A Subordinate Voting Shares for sale through the offering. These will be offered through a syndicate of underwriters led by Morgan Stanley, Credit Suisse, Canaccord Genuity and Macquarie Capital, as joint book-running managers.
This offering remains subject to theScore agreeing a satisfactory underwriting agreement with this syndicate, which will also set out customary closing conditions.
Once this agreement is reached, the pricing of the offering, including the expected proceeds, will be announced.
As part of this, theScore will grant the underwriters an over-allotment option of up to 15% of the Class A shares sold through the offering.
These proceeds will be used to fund working capital and other general corporate purposes. This includes the continued growth and expansion of its sportsbook offering theScore Bet, which is currently live in four states.
Gaming made up almost all of Enlabs’ revenue, at €48.0m, up 31.9%, while media revenue was down 22.8% to €1.6m and other revenue totalled €886,000, down 18.6%.
Enlabs said that 70% of its revenue came from regulated markets, with Latvia as its leading market.
Enlabs paid €11.1m in costs of services offered, up 57.5% and €4.5m in gaming taxes for a gross profit of €34.9m, up 21.1%.
In addition, Enlabs’ operating costs were up 37.8% to €23.7m. Staff costs made up roughly half of this at €11.5m, up 36.9%, while marketing costs came to €7.8m. Other expenses totalled €6.6m while €2.2m in costs were capitalised and therefore eliminated on the balance sheet.
This resulted in earnings before interest, tax, depreciation and amortisation (EBITDA) of €11.2m, down 3.4%. After depreciation and amortisation costs of €3.1m, Enlabs’ earnings before interest and tax (EBIT) was €8.1m.
The operator made €6.5m in net financial income, after a €117,000 loss in this area in 2019, for a pre-tax profit of €14.6m, up 55.3%.
After a €521,000 income tax benefit, Enlabs made a €15.1m profit, 60.6% more than in 2019.
Looking just at the fourth quarter of 2020 – the first to include a full three months of activity from recent acquisition Global Gaming – Enlabs made €20.3m in revenue, up 72.1% year-on-year.
Enlabs chief executive George Ustinov said the increase in revenue was mostly due to an 88% year-on-year growth in active customers.
Gaming made up €19.7m of this total, up 91.3%. Casino gaming revenue saw especially rapid growth, by 152.3% to €16.4m. Betting brought in €3.1m, down 0.6%, and poker revenue dropped 71.4% to €200,000.
Media revenue came to €431,000 and other revenue €181,000.
Enlabs’ costs of services were €4.6m and gaming taxes €1.7m for gross profit of €14.1m.
After staff costs of €4.9m, marketing costs of €2.7m and other income of €3.2m – and after accounting for capitalised costs – Enlabs’ EBITDA was €3.9m, up 22.3%. Its EBIT, meanwhile, was €3.0m.
After a net financial loss of €1.2m, Enlabs’ pre-tax loss was €1.7m, down 32.0%.
The operator received a €482,000 tax benefit for a profit of €2.2m, down 12.0%.
Ustinov said the business’ future looks strong following the Global Gaming acquisitions. Though Global Gaming saw its licence revoked by Swedish regulator Spelinspektionen in 2019, Enlabs said it was confident it could bring its flagship Ninja Casino brand back to the market.
“The outcome of the integration process is a leaner, more agile and fully aligned organization with a common business roadmap,” Ustinov said. “Enlabs has added Nordic market sales know-how to its team and a global Pay & Play brand to its portfolio.
“This gives me certainty to say that in 2021 Enlabs will be relaunching in Sweden and will take the Ninja brand across all of its operational markets.”
Enlabs also intends to launch the Ninja Casino brand in the newly regulated Ukraine market.
In the first quarter of 2021, Ustinov said Enlabs’ gaming revenue was up 99% year-on-year so far.
Early 2021 also saw Bwin and Ladbrokes Coral operator Entain make an offer to acquire Enlabs on 7 January, in a deal worth £250m. The cash offer would see Entain pay SEK40 (£3.48/€3.97/$4.81) for each of Enlabs’ 69.9m shares.
As we look to the year ahead, industry experts share their thoughts on the opportunities and challenges facing the industry.
In part seven we talk to experts in regulation. In part one we heard from igaming operators and suppliers, in part two land-based operators and suppliers and part three finance experts. Part four then turned to those in marketing, part five recruiters and part six technology and innovation experts. In part eight we will focus on social responsibility.
Interviewees
Mark Balestra, partner, Segev LLP Melanie Ellis, partner, Northridge Law Gustaf Hoffstedt, chief executive, Branscheforenigen för Onlinespel (BOS) David McLeish, partner, Wiggin
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?
Mark Balestra
Mark Balestra: I can’t think of anything, but I’m not sure there was ever going to be much that was truly transformational. It was poised to be a year of growth and adaptation to the new legal landscape in the US, not transformation.
Like most industries, gaming and gambling has been gradually undergoing the transition into digital distribution. There are those who have for whatever reason been slow or reluctant to make the transition, but with Covid-19 they had no choice. The last year forced businesses to embrace digital channels for distributing their products, and for the most part, they’ve discovered that it is very doable. The pandemic necessitated innovation in a way that we’ve never seen.
Melanie Ellis: Aside from the obvious, some of the major challenges faced by the UK gambling industry in 2020 stemmed from increasing regulatory restrictions, including the ban on credit cards being used for online gambling from April 2020. The Covid-19 pandemic has accelerated the shift from land-based to online gambling and also led to some particular products, such as live casino and betting on esports, surging in popularity. Once restrictions are lifted there may well be a boost to land-based casinos, as people will be keen to make the most of their freedom to enjoy nights out with friends. However, much damage has been done to the sector and sadly some operators may not be able to continue.
Gustaf Hoffstedt: Sweden and Denmark passed the 50% threshold, with a larger proportion gambling online compared to land-based gambling. Approximately 10 additional EU states plus the UK are on their way to undergoing the same transformation. The pandemic will accelerate this development, but the transformation to online gambling would have happened anyway.
David McLeish: The long-awaited announcement of the government review of the Gambling Act in the UK is likely to culminate in significant changes in the domestic and, to an extent, the international landscape. The outcome of the review and the Gambling Commission’s consultation on affordability has the potential to either remove ongoing uncertainty in a positive manner or trigger further consolidation and/or UK market exits from smaller players that elect to focus their firepower elsewhere. It may also shape the approach of regulators in other regulated, or regulating, markets. That is why the industry’s approach to the calls for evidence is key.
The pandemic has undoubtedly accelerated the need for industry participants to ensure diversity in terms of both product offerings and geographical focus – particularly for historically retail-led businesses.
What do you feel is going to be a game-changer for the industry in the coming year?
MB: The sports entertainment industry has been walloped by Covid-19 and it’s going to be a long time yet before attendance at major sporting events reaches pre-Covid-19 levels. Prior to the pandemic, the courtship of sports gambling and sports entertainment was just getting underway. We were on the cusp of something big, and the need for new revenue streams will make it even more explosive than we thought it would be. We’re going to see some huge deals being made between sports teams and gambling businesses – and probably a lot of them.
Melanie Ellis
ME: Mass vaccination and the removal of Covid-19 restrictions will obviously be a game-changer for the land-based gambling industry worldwide. In the UK, the government’s review of the Gambling Act 2005 will bring much-needed certainty to the online industry in relation to future changes to regulatory requirements. I believe operators should look at the review positively, as an opportunity to engage with the government on how they are regulated in the future.
GH: Virtual Reality. But don’t listen to me, I’ve said that for a decade and so far I’ve been wrong. I just wish that the end consumer could experience what I have at some of the coolest booths at ICE.
DM: A combination of the outcome of the Gambling Act review and the reshaping of business focus, whether that is organic or, more likely, through mergers and acquisitions.
On the other hand, what do you feel could disrupt the sector or slow progress?
MB: Two things – and they overlap. First, one has to wonder how many online gambling addictions were created and/or worsened in 2020. The industry may have to reckon with the social impact of an epidemic. And in addition to grappling with the social component, the industry could be facing renewed anti-gambling efforts at the policymaking level, fuelled by the increased incidence of problem gambling. Second, and somewhat related, I would imagine disposable income will be scarce among a large portion of consumers. So, perhaps a lot of customers whom gambling operators would ordinarily count on for revenue will be either gambling with money they don’t have to spend or simply just not gambling.
ME: Increasing requirements for operators to conduct affordability checks on customers and pressure to restrict VIP programmes will increase the compliance burden next year and may well dampen revenues. Ultimately, I do not believe that operators want to take money from customers who are suffering from problem gambling, or who cannot afford their level of gambling. However, there is a risk that the measures put in place will make it difficult for customers who are gambling safely and within their means to continue to gamble as they have done in the past. I hope that both the Gambling Commission and the government, in its review of the Gambling Act, will take a pragmatic approach, bearing in mind the need to strike a reasonable balance between protecting those who are vulnerable and protecting the individual freedoms of those who are not.
gustaf Hoffstedt
GH: We operate in an industry with a low reputation. We’ve done that since our industry was born 25 years ago, but the problem has deepened. That is somewhat of a contradiction, since most jurisdictions have gone from monopolies to regulated markets, and as a consequence our legal right to exist and operate has been strengthened. But nevertheless, it appears that we haven’t seen the bottom yet. New records of decreased reputation are broken annually and it is always possible to fall another 100% in reputation compared to last year. Low reputation causes, among other undesirable things, a high political risk – a risk that can evolve in tax raises and regulations that disrupt the market.
DM: The macroeconomic impact of Covid-19 will inevitably take a toll on most industries. However, as the online gambling industry has matured, so have the sources of finance available to it (be it from private equity or via the recent rise of SPACs in the US).
Do you feel an imbalance is developing, with rapid expansion across the US contrasting with increasingly stringent regulations in the more mature European markets?
MB: It depends on what sector you’re talking about. In a lot of ways there are already imbalances – in sports betting in particular – due to Europe’s progressive policy compared to the US, and the US is actually on the way to evening things up.
ME: Liberalisation and restriction of gambling comes in waves and at the moment we see the US on the curve up towards greater liberalisation and the UK, along with a number of other European jurisdictions, a good way down the curve towards greater restriction. What might seem to be an imbalance is purely a result of those European jurisdictions beginning the move towards liberalisation 10-20 years before the US. Ultimately, the US is likely to find itself in a similar position to Europe, with each state operating its own licensing regime for gambling but potentially finding themselves needing to increase regulatory requirements in light of negative public and political sentiment.
GH: It comes as no surprise that Europe is slowing down. The reasons vary of course, but one thing that unites most EU jurisdictions seems to be that the politicians fail to understand that it is not themselves, nor the gambling industry, that defines the future of the gambling market. The power is in the hands of the consumer. The consumer decides via her smartphone whether horse betting, casino or esports shall grow, and also whether the regulated or the unregulated market shall prevail.
David mcleish
DM: Online gambling is a truly global business – there have always been pockets of interest in growing markets with consequential impacts on valuations driving M&A activity on the back of it. The race to control your own technology roadmap appears to be at the forefront of minds currently in the US. However, the US and the mature European markets are at very different stages in their life cycles. The opportunities in each have their pros and cons as do the myriad of possibilities in other areas of the globe. There can only be some many winners in each market and spreading yourself too thinly could be as risky as putting all your eggs in one basket – only time will tell who gets the balance right.
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Revenue for the 12 months to 31 December 2020 amounted to €63.0m (£54.4m/$76.7m), up from €44.1m in the previous financial year.
GiG did not publish a full breakdown of its performance during the year. However, chief executive Richard Brown did say the business reached a number of “significant milestones” on it journey to become a leading B2B platform and media supplier in the igaming industry.
Among the highlights for GiG in 2020 was the launch of a new online casino brand with SkyCity Malta, a subsidiary of New Zealand-based SkyCity Entertainment Group.
GiG also agreed a strategic partnership with Genius Sports Group’s Betgenius to offer a fully integrated sportsbook and platform solution for operators in regulated markets worldwide.
In addition, GiG signed platform services deals and similar agreements with a range of new clients throughout the year, which in turn helped to grow revenue.
“I am very excited to see the work put in throughout the teams and across the company to deliver such impressive full year results for the new look, B2B only GiG,” Brown said.
Cost of sales for the year reached €3.0m, leaving a gross profit of €60.1m, while total operating expenses amounted to €49.3m, resulting in €10.7m in earnings before interest, tax, depreciation and amortisation (EBITDA), up 214.7% year-on-year.
Depreciation and amortisation costs totalled €12.1m, while the amortisation of acquired affiliate assets stood at €7.3m, leaving GiG with a loss before interest and tax of €8.7m, compared to €24.1m in 2019.
Financial expenses stood at €6.4m, and after taking into account bond losses and other income, loss before tax was €15.6m, an improvement on €32.3m in the previous year.
GiG paid €323,000 in income tax, meaning loss from continuing operations was €15.9m, less than half the €33.0m loss posted at the end of 2019. When also accounting for a €1.8m loss from discontinued operations, and a €174,000 loss from foreign exchange differences, comprehensive loss was €17.9m, compared to €66.2m in 2019.
GiG said the comparable 2019 results included a €31.7m loss from discontinued operations, primarily its existing B2C operations that were sold in April 2020 to Betsson in a deal worth €33.0m. The B2C assets included the Rizk, Guts, Kaboo and Thrills brands.
“The revenue and EBITDA growth is a testament to what has been built up through this year, and we are looking forward towards the continued improving results and growth as the actions through the second half of the year start to be delivered in 2021 and beyond,” Brown said.
The supplier also published results for its fourth quarter, during which revenue was up 66.4% year-on-year to €17.3m. This included revenue from Sky City, which GiG began working with in Q3.
Platform services revenue in Q4 was up 88.4 % to €8.1m, while media services revenue also increased by 30.0% to €9.0m, helped by an all-time high revenue result in December.
Sports betting revenue amounted to €200,000 in Q4, during which the new strategic partnership with Betgenius was implemented into operations. This brought together GiG’s platform technology with Betgenius’ end-to-end live data, trading and risk management services.
Five brands operated with GiG sportsbook in Q4, with an additional four in the pipeline for integration in 2021.
Cost of sales was €830,00 in the quarter, leaving a gross profit of €16.4m, while operating costs reached €12.3m, resulting in €4.1m in EBITDA, up from just €91,000 in the previous year.
Depreciation and amortisation costs stood at €2.8m and GiG also noted €1.5m in amortisation costs related to acquired affiliate assets, leaving a loss before interest and tax of €143,000, compared to a €6.8m loss in Q4 2019.
After accounting for financial costs, loss before tax was €3.6m, an improvement on €11.8m in the previous year. GiG paid €58,000 in tax, leaving a €3.7m loss from continuing operation for the period, compared to €12.1m in 2019.
In terms of discontinued operations, GiG noted a loss of €449,000, much lower than €35.8m in the previous year, meaning its total comprehensive loss for the quarter was €4.2m, a significant improvement from the €49.2 loss in Q4 of the previous year.
