Month: March 2021

If you don’t have the technology you don’t have a business in the igaming sector.

As much as any other digital industry, online gaming relies upon the harnessing of technological developments. There isn’t a single part of the business that doesn’t rely on cutting edge technology, from data to marketing, content to payments.

I think back over the last few years in North America and consider some of the legislative changes that have allowed for a new, fully regulated multibillion-dollar industry.

A landscape has been created for players to enjoy games legally and for operators to vie for the attention of millions of players. In essence, that landscape is a technological battleground, and it’s those operators than can deploy technology best – or identify superior suppliers or particular disruptive technologies – that will succeed.

We’ve seen some incredible developments in the last few years with the most transformative being the smartphone – the mechanism that allows people to bet where they want, when they want.

From ease-of-use via apps to swift payments, and the revolutionary impact of in-play on betting culture, probably no other sector has been so altered as gambling by the development of smartphone technology. 

Looking forward

Discussions on technology should primarily be forward-looking. While we can and should consider the kind of innovations that have caused the sector to take the next step forward, we should always be looking ahead to anticipate how the landscape will continue to evolve and grow. 

The disruptive technologies of the coming years are not just within the purview of gambling, but also the areas that dominate the thinking of tech executives across a range of sectors, from finance to ecommerce to medicine and everything in between.

The most alluring technologies are probably as familiar to people on the street as they are to industry leaders, notably: artificial intelligence (AI), blockchain, internet of things (IoT), and virtual reality (VR) or alternative reality (AR).

We’ve read about AR in magazines, heard about blockchain on news features, bought an IoT-ready smart light bulb or maybe even seen AI leading to the end of the world in a Hollywood blockbuster. But what might they mean for the online gaming industry?

Artificial Intelligence

Perhaps top of the list is AI (or machine learning) due to its capacity for personalisation, strategic automation and responsible gambling. AI can transform intelligence around customer journeys, creating a digital view of players so they can be better and more efficiently understood.

This is particularly appealing as it can have an instant, tangible impact on business metrics.

Blockchain

On the opposite end of the scale, perhaps, is blockchain. Regularly cited as the next big thing, many might still consider crypto to be the domain of tech nerds and conspiracy theorists.

Its potential for independent banking and blockchain-based sports betting certainly means we should keep it in mind, but a clear path has never become apparent as to how it can be applied to mainstream igaming businesses.

Internet of Things

This goes back to my championing of mobile phones as being online gaming’s most transformational technological development, as it’s the linking of these gadgets with their owners and other devices that makes IoT so important.

By tracking and analyzing the right data sets, online platforms can learn over time how customers interact with and respond to games. IoT also links up mobile devices with land-based entities, such as casinos, so that operators can offer the full omni-channel service.

Virtual Reality/Alternate Reality

In terms of content, VR and AR have long been touted as potentially revolutionary for immersive gaming; enter a virtual casino or play roulette on top of your kitchen table.

However, poor uptake of the technology currently available has put the real demand for such experiences into question. Is it just a gimmick that will only ever appeal to a niche of techie types, or can it cut across to the mainstream when hardware becomes cheaper and more widely available?

Extraordinary expertise

In the coming years we can expect all kinds of unexpected and wonderful developments that will bring new colour to gambling – a pastime that dates back thousands of years.

I’d have to say the standout tech that excites me most are the possibilities presented by AI, and particularly its potential to control and diminish problem gambling.

The opportunity to learn about our players, find out what is ‘normal’ for them and make interventions when they stray from orthodox behaviour can completely transform the relationship between customer and operator.

Figures published recently by the Kindred Group, owner of Unibet, show such interventions can have a significant effect on controlling harmful gambling.

The industry should look to this as an opportunity to ensure gambling remains a safe pastime for our users and not something that potentially ruins lives. Of course, directing resources to such developments can also help build better relations with the wider public and regulators.

Let’s continue to lead in technology, and – even better – ensure the extraordinary expertise in our industry is used for good.

Chris Kape, an iGaming industry veteran of two decades, is the owner of JAMCO Capital, an early-stage venture capital and business consultancy, and is the founder and ex-CEO of Don Best Sports, which was sold to Scientific Games in 2018.

Entain’s online operations brought in £2.75bn in net gaming  revenue, up 27.2%, on wagers worth £11.78bn, up 5.1%. After paying £66.9m in sales taxes, its revenue from this segment was £2.68bn.

Of this revenue, sports made up £1.20bn, up 24.4%, while gaming revenue grew 28.9% to £1.53bn and business-to-business (B2B) revenue was up 5.3% to £15.9m.

The operator added that this growth reflected more than just the effect of retail closures pushing players online.

“While online net gaming revenue growth has clearly benefitted from retail closures during the year, we have also seen market share gains in all of our key territories,” Entain said.

Much of this online revenue came from the UK, where online revenue was up 27% year-on-year thanks mostly to the success of Entain’s UK gaming brands, which saw revenue grow 40%.

In Germany, meanwhile, online revenue was affected by strict restrictions on online gaming as the country implemented a transition period ahead of the Fourth State Treaty on Gambling coming into effect. While net gaming revenue was up 12% for the first nine months of the year, it was up only 3% for the year as a whole.

“Notwithstanding those changes, Germany remains a relevant market for the group and we continue to invest in the bwin brand as evidenced by the launch of the bwin.de mobile sports app,” Entain said.

Australia saw especially strong online revenue growth, of 55%, as did Italy with 53% and Brazil with 56%.

The operator’s Ladbrokes and Coral UK retail shops were hit hard by the effects of lockdown in the country. These shops saw revenue fall 39.7% to £678.6m as stakes fell by 42.1% to £1.84bn.

Within this segment, sports betting revenue was down 37.0% to £355.0m, while revenue from machines – which was also affected by the £2 limit on fixed-odds betting terminal (FOBT) stakes – was down 42.3% to £323.6m.

“Despite spending large periods of the year with our doors closed, trading has been promising whilst the estate has been open,” Entain said.

The operator noted that before 15 March, net gaming revenue was down just 5%, with most lost spending on FOBTs being channeled into sports betting instead.

Entain’s retail operations in the rest of Europe brought in £178.5m, down 38.5%, as wagers fell 44.0% to £925.5m. Sports betting revenue at these shops was down 36.0% to £138.8m, machine revenue declined 9.1% to £2.1m and other revenue dropped 46.2% to £37.6m.

Entain’s other segments brought in £27.8m. This included revenue from Telebet, Betdaq and greyhound stadia.

After costs of sales totalling £1.25bn, up 3.5%, Entain’s gross profit was £2.31bn, down 2.5%.

The operator then paid operating costs of £1.89bn, leaving a contribution of £1.74bn, 7.2% less than in 2019. Non-marketing administration costs came to £1.32bn, which meant the business made £419.1m in profit before joint ventures and associates, compared to a $156.9m loss the year before.

On these joint ventures and associates, which include the US-facing joint venture BetMGM, Entain made a £60.2m loss.

After net financial losses of £79.5m, a loss of £61.8m on financial instruments and £42.9m in foreign exchange losses, Entain’s pre-tax profit was £174.7m. In 2019, it had made a pre-tax loss of £164.4m.

The operator paid £60.9m in income tax, resulting in a £79.4m profit, compared to a £140.7m loss the year before.

Entain chief executive Jette Nygaard-Anderson, who took over from Shay Segev in January, said the results showed the benefit of Entain’s diversification in channels, brands and territories.

“Today’s results demonstrate the extraordinary resilience and professionalism of our people, as well as the importance of having a truly diversified business model that is not overly reliant on any one product, brand, territory, or channel,” Nygaard-Andersen said.

While Entain did not break down its fourth-quarter results specifically, it noted that its online operations experienced a 20th consecutive quarter of double-digit net gaming revenue growth.

After the year ended, Entain both faced interest as an acquisition target and looked to pursue acquisitions of its own. Land-based operator MGM Resorts made an $11bn (£8.08bn/€9.06bn) offer for the operator. However, after Entain’s board said that bid “significantly undervalues” the business, MGM declined to submit another.

Meanwhile, Entain made an offer to acquire Baltic-facing Optibet operator Enlabs for £250m. While this offer gained approval from the Enlabs board, some shareholders argued it was too low, prompting Entain to up the bid to £314.6m. Shareholders representing the majority of Enlabs have now backed the improved offer.

Entain is also one of a number of businesses that have sought to acquire Tabcorp’s sports and media operations.

Harry Barnick, senior analyst for leisure sector companies at Third Bridge, said that after talks with MGM ended, Entain is looking to prove it can lead its future independently.

“Entain is betting on its ability to lead its own future independent of a large US casino operator,” Barnick said. 

“Jette Nygaard-Andersen has the complex job of navigating an increasingly regulated domestic market, whilst simultaneously juggling expansion in the US and acquisitions to fuel growth.”

Regulus Partners, meanwhile, said that this balance will define the operator’s future.

“Few businesses have managed organic growth and continued bolt-on M&A while also handling CEO disruption with such aplomb,” it said. “The question now is whether Entain is able to sell into US strength with its options strategically tied to MGM, becomes big enough to buy its way into US independence, or faces a series of regulatory and expectations ‘corrections’ that re-write the playbook again.”

In its final results for 2020, the gambling group – which is in the process of being acquired by Caesars Entertainment in a £2.9bn deal – said revenue fell 16% to £1.32bn amid the disruption of live sporting events, closures and restrictions to retail and casinos.

Online accounted for 61% of group revenue, up considerably on the 47% in the previous year.

Online net revenue totalled £802.8m in 2020, up 9% on 2019. Within that segment, UK net revenue was up 5% to a record £503.2m with international revenue up 16% to £299.6m thanks to the full integration of Mr Green and expansion in Europe and Latin America.

Online sportsbook revenue was up 4% to £320.6m with gaming net revenue up 12% to £482.2m.

William Hill US net revenue grew by 32% to £167.3m and now accounts for 13% of group revenue compared to 8% a year ago. It said new partnerships, entry in five new states and the launch of online casino assisted its success.

Ulrik Bengtsson, William Hill’s chief executive, said: “We are delighted with our International Online performance, where our investment in our product and technology is producing clear benefits, particularly in light of the regulatory headwinds in Germany and temporary restrictions elsewhere.

“We will continue to benefit from our agile marketing engine, and the recent agreement to acquire Alfabet S.A.S. in Colombia and our licence in Argentina both offer further promising growth opportunities in Latin America.

“The US traded well into the year-end, concluding the year with 19% market share and delivering a profitable return. Our partnerships have ensured that brand awareness has risen, our product offering has expanded, and our end-to-end proprietary tech is facilitating rapid new state openings.”

Retail was hit hardest by the impact of the pandemic with net revenue down 51% to £354.2m. Sportsbook fell 47% to £212.7m, while gaming was down 55% to £141.5m. As well as widespread lockdown closures, William Hill said it was also negatively impacted by the £2 stake limit on B2 gaming machines its shop closure programme. However, it noted its shops “traded well and profitably when open”.

William Hill reported an adjusted operating profit of £57.3m, which was down 61% year-on-year. It experienced a 91% fall in adjusted pre-tax profits to £9.1m, compared to £96.5m in 2019.

It said it acted to strengthen the balance sheet throughout the year by actions to raise capital and preserve liquidity, most notably by cancelling final dividends and employee bonuses, waiving covenants, raising of £218.6m through an equity placing and reclaiming £208.3m in VAT in H2. A reduction in costs and improved marketing efficiencies generated annualised savings of £16.5m.

William Hill noted that it topped up all UK employees’ wages to 100% while on furlough and repaid furlough monies of £24.5m in the second half due to the performance of online and retail through the course of the year.

Looking ahead, William Hill said Caesars’ current expectation is that the remaining approvals required to be obtained from the relevant US gaming authorities will be received in time to allow completion of the acquisition to occur early in the second quarter of 2021 and possibly as early as March 2021.

The group added: “We acknowledge that a number of headwinds will persist in 2021. We anticipate the Covid-19 pandemic will continue to impact the economic health of the UK high street and affect the ability of US casinos and our retail shops to fully open.

“We are also alert to the ever-changing regulatory landscape, in the UK and overseas, and will continue to monitor developments closely and act responsibly. As we deliver on our ambitions to accelerate growth and diversify internationally, we recognise the responsibility we have to ensure the products and services we offer, allow our customers to play safely.

“The gambling review was launched by the UK Government in December 2020 and we look forward to engaging with the UK Government to encourage an evidence-led regulatory framework.

“We are committed to working with all stakeholders to create partnerships, solutions and policies that will create a long-term, sustainable betting and gaming ecosystem that keeps players safe.”

The acquisition will allow Sportradar to offer dynamic creative optimisation (DCO) personalisation in display and paid social. This technology shows a user content based on their website browsing, such as pages viewed, and is commonly used for retargeting. 

Fresh Eight’s platform also helps sports publishers manage the integration of native and personalised sports betting content onto their platforms.

The deal, which completed on 2 March, complements Sportradar’s existing ad:s programmatic advertising solution, which launched in January 2019.

It will broaden ad:s’ marketing channel access and optimise its performance, helping reduce cost per acquisition and increase return on advertising investment.

This could be used for paid social in particular, Sportradar said, a current focus for media spend. 

“We have developed ad:s into a substantial business for Sportradar with its platform offering and a significant portfolio of sportsbook clients,” Sportradar chief executive Carsten Koerl said. “But the market doesn’t stand still, and we must continually innovate and grow. 

“The acquisition of Fresh Eight will accelerate that growth, as we add this personalisation technology to our marketing services offering.”

Founded in 2014, Fresh Eight has grown significantly in the US in recent years, working with operators such as Flutter’s FanDuel, Entain, William Hill and LeoVegas, and publishers including ESPN, CBS, Viacom, NBC Sports and News UK. 

“We founded the business with the ambition to substantially improve advertising efficiency and returns for the world’s leading gambling operators and media groups,” its founder and CEO Andrew Sharland said. “Today we partner with some of the industry’s biggest brands in Europe and the US.

“Data is the core DNA of both companies with a shared vision of how intelligence and automation can transform marketing efforts in the betting and gaming vertical,” he continued. “The combination of Fresh Eight’s machine decisioned personalisation tools and Sportradar’s proprietary marketing technology and access to real time sports and pricing data presents customers with a compelling digital marketing offering. 

“I’m looking forward to working with Sportradar.”

As president, Howe (pictured below) joins FanDuel’s executive team, reporting directly to chief executive Matt King. She will be given responsibility for commercial functions across its sports betting, casino, daily fantasy and racing products. 

“I am delighted to welcome a leader of Amy’s extraordinary caliber to our executive team,” King said of the appointment. 

“She has a proven track record of building highly successful digital and retail businesses and I’m excited to have her leading our commercial functions during a period of enormous growth for the company.”

Howe joins from concert promoter and ticketing giant Live Nation Entertainment, where she served as global chief operating officer for Ticketmaster arm. 

Read the full story on iGB North America.

Grants of up to £18,000 will be available for venues that are only allowed to open later, such as casinos.

Chancellor of the Exchequer Rishi Sunak also announced an extension of the government’s job retention scheme for furloughed employees and an extension of business rates relief.

The “restart grants” are intended to provide more certainty to businesses that faced closures

“These steps will help to support the 44,000 people who work in the retail betting shops and land-based casinos,” the BGC said.

BGC chief executive Michael Dugher said he was glad to see the Government provide support after a difficult 2020 where thousands lost their jobs.

“We have already seen over 5,000 jobs lost and 375 businesses closed since the start of last year,” he said. “The extension of the furlough scheme and new grants for businesses are strongly welcomed by the tens of thousands of people who work in high street betting and land-based casinos. 

“Without the continued support from the Chancellor, many of these businesses would have struggled to survive.

“The decision to extend the business rates relief will be welcomed by many of our member companies who have not been able to open properly for nearly a year now.

Dugher added that the betting and gaming industries would work to help the UK economy recover from the effects of the pandemic.

“Our industry will continue to play it’s part in the national effort to combat Covid, supporting our local communities, and we look forward to contributing to the economic recovery.”

Before the budget, the BGC presented a five-point recovery plan to the Chancellor.

This plan included requests to extend rates relief, avoid an increase in betting and gaming duties and ensure that the government adheres to its current timetable for easing restrictions if possible. It also called for devolved governments to make funding available to business sectors in need and for “measured” gambling regulation going forward.

Facilitated by the SCCG Management consultancy, the deal includes a number of digital and stadium assets at the team’s Coors Field home ballpark, with Betfred USA Sports to become a partner of the Rockies.

Betfred USA Sports and the team will offer a range of game-day experiences for fans, including ticket giveaways, game suites and in-game contests.

“Sports betting has seen incredible growth across the country recently and we are always looking for new and exciting ways to engage with not only our fans but all sports fans throughout the Rocky Mountain Region,” Rockies’ vice president of corporate partnerships Walker Monfort said.

The deal comes after Betfred USA Sports in September last year rolled out online wagering in Colorado, as well as in Iowa. The operator also opened the first land-based sportsbook in the state, with the facility launching at the Saratoga Casino Black Hawk in June 2020.

Read the full story on iGB North America.

Hillman’s departure was announced in December last year after the SEK19.6bn (£1.67bn/€1.93bn/$2.33bn) acquisition was finalised, when Evolution began a “total reorganisation” of the supplier. 

At the time Evolution said Hillman, who was ranked as one of the industry’s most influential women by iGB in 2019, would depart in the first quarter of 2021. 

This drive, which aims to reduce annual costs by around €30m per year, which was originally set to result in 300 layoffs at NetEnt. 

However, an industrial dispute raised by the General Workers’ Union for Malta (GWU), reduced this number by 40, and saw improved settlement offers being granted to the laid-off staff. 

In a post on LinkedIn Hillman said the business had highs and lows during her tenure, in which a to of “tough” decisions had to be made. However she added it also covered a number of positive developments such as successful game releases, the acquisition of Red Tiger.

In related news, NetEnt’s operational chief financial officer – and another Most Influential Woman grandee – Lara Falzon has also stepped down from her role. 

Falzon joined NetEnt through its acquisition of Red Tiger, playing a key role in negotiating that transaction. 

While she has not given any indication on her next role, Falzon was recently appointed to the board of Bragg Gaming Group, the B2B technology supplier that owns slot developer and aggregator Oryx Gaming. 

Issued by the Virginia Lottery, the licence will enable GiG to operate WSN.com in Virginia, which launched its regulated sports betting market in January this year.

WSN.com, which is focused on delivering sports news coverage and match stats, is also licensed to run in 10 other states across the US.

“We are excited to add Virginia to the growing list of states where we can offer legal sports betting content,” GiG Media managing director Jonas Warrer said.

“WSN continues to gain momentum throughout North America and the Virginia licence approval brings us one step closer to our ambition of turning the site into primary go-to sites for all US sports bettors.”

Read the full story on iGB North America.

The agreement, signed by Lamont and Mohegan Tribe chair James Gessner Jr, sets a 20% tax rate for online gaming, and a 13.75% rate for sports wagering. 

It makes significant concessions to the Connecticut Lottery, which will gain the right to operate 15 retail betting locations, as well as an online sports betting skin. These include new retail venues in Hartford and Bridgeport.

The lottery will also have the right to sub-license some of those locations to the state’s licensed pari-mutuel operator Sportech.

The license agreement will run for an initial ten-year term, with the option for a five-year extension, and could generate “tens of millions of dollars in new revenue for the state”, the Governor’s office said. Before the agreement can come into force, it must be approved by the Secretary of the US Department of the Interior. 

“This agreement represents months of hard work and dedication to getting a deal that’s best for the residents of Connecticut and moves our state forward when it comes to the future of gaming,” Governor Lamont explained. 

“We are incredibly fortunate to have such a devoted partner in these efforts like the Mohegan Tribe, as they have been open to negotiation, honest discussion, and a positive path forward that is beneficial for both their tribe and the State of Connecticut.”

Mohegan Tribe chairman Gessner added that the operator of the Mohegan Sun in Uncasville was proud to have struck the agreement. 

“This path will allow Connecticut to generate tax revenues from sports and online gaming that are competitive with other states, and help keep Connecticut with those states when it comes to growing our economy and benefiting the state budget,” Gessner said.

The announcement made no mention of the Mashantucket Pequot Tribal Nation, which holds exclusive rights to offer gambling in the state alongside the Mohegan Tribe. Negotiations between the tribe and the state are ongoing.

Read the full story on iGB North America.