Month: March 2021

Working in the igaming business for 7 years, Andrei Cebotaru started as an IT technician, then a product owner and operational manager, learning level by level every specific of gambling domains. Cebotaru mostly worked on the Romanian market, also interacting with most EU markets, Maltese and UK markets.

Even before the Covid-19 pandemic, retail operators were haemorrhaging customers to the digital betting world.

In Great Britain, for example, the proportion of individuals betting on sports in person nosedived by 13% to 27% from 2018 to 2019, while online betting increased simultaneously year-on-year by 9% to 81%, according to the Gambling Commission.

Operators of betting premises have long been aware of the need to evolve their offerings – and specifically the challenge to integrate aspects of the online experience into the retail experience in order to cater for a broader range of customers. However, for betting shop owners facing potentially huge shifts in consumer behaviour resulting from the pandemic, such a challenge has taken on extra urgency and significance.

It is for that reason that Betinvest believes that self-service machines like its Terminal solution is ideally suited for life’s return to a “new normal”, when operators are allowed to open their doors again.

Self-service

Betinvest’s Terminal offers a self-service betting platform with a fully integrated sportsbook, one-click deposits and quick withdrawals.

For those who prefer the privacy of betting online and avoiding social friction caused by queueing for a cashier and being served over a counter, such terminals offer clear benefits. However, such technology also remains part of the special betting shop environment, whilst offering outlets the opportunity to accept more wagers without requiring staffing resources to be scaled up.

In a similar vein, digital self-service kiosks have already transformed other sectors, such as fast-food restaurants and cinemas. Cinemark theatre’s self-service kiosks, for example, generated 32 consecutive quarterly increases of concession spending per person following their introduction.

Given the predicament of the retail betting industry, such creative solutions would therefore appear to be essential if risk is to be mitigated in the uncertain coming months.

Crucially, Betinvest believes that its Terminal product provides a bridge from the digital space into the physical betting outlet, with the technology offering the possibility of withdrawing winnings that have been secured digitally.

“Paying out real money direct from the machine is not something all terminals can offer, and this is one of the keys to creating a real self-betting environment,” says Betinvest Romania’s project manager, Andrei Cebotaru.

“Customers don’t have to deal with a cashier or other people and the bets are literally at their fingertips. We have integrated with a couple of online platforms and are looking at opportunities to connect digital wallets through the machines.

“This is only the start of the project, because we are looking to the future with many more plans to connect retail and online.”

Features and flexibility

Betinvest is exploring opportunities to integrate numerous new software features into the terminals, which are built on a technical platform that has been developed in-house.

Alongside sports betting, lotto and various other games are available, while there are options to stream live coverage of sporting events, as well as virtual games and lotteries.

There is also a function to create alerts to notify the customer about in-play changes to odds, as well as the option to accept bets automatically and to process early cash-outs.

“The greatest challenge is to keep the interface as simple as possible, so it is easy and friendly for the customer,” Cebotaru adds.

“It is also a challenge to integrate so many solutions into the machines, but we have invested a lot of time and resources into it. We have a great team that is open to new challenges and we are looking to develop the infrastructure and make it even more flexible in the future.”

Digital integrations

In the foreseeable future, Betinvest is looking into opportunities to expand upon the digital integrations within the Terminal solution. This tallies with expectations regarding broader trends in relation to the betting shop experience in the coming months and years.

“Our terminals were already working pre-pandemic, although most of the clients have stopped their operations at the moment due to the pandemic and we know a lot of players have moved online.

“As soon as players become familiar to online, it is not easy to get them back into a retail environment. Having this cross-platform solution though will ensure the customers are not taken out of their comfort zone and they will have easy access to their money.”

Crypto, a hot topic in the mainstream media since the turn of the year due to Bitcoin’s rocketing share price and Tesla’s $1.5bn investment in the currency, is another area of potential development within the Terminal technology.

“One of the future trends that we are analysing is new payment types, and the role of cryptocurrencies in the betting environment,” Cebotaru says. “Over the next two or three years the aim is to develop a wallet structure that permits us to work with crypto as well.

“Our roadmap is pretty full for this year, but the first goal is to connect the omnichannel environments even further and bring together the experience of online and retail, with cross-data feeds and wallets.

“While we are still focused on delivering for our existing customers this year, of course we are open to new partnerships.”

Services brought in $1.59bn of this revenue, down 12.7%, while product sales revenue was down 44.4% to $553m and instant product revenue declined 1.9% to $578m.

Scientific Games’ operating expenses slipped slightly, by 5.4% to $2.70bn, just marginally lower than revenue. 

This included costs of sales for services of $531m, for product sales of $349m and for instant products of $280m.

Selling, general and administrative expenses were down 0.9% to $701m, research and development costs declined to $166m and depreciation, amortization and impairment expenses for tangible assets were down to $554m. 

However, the business also incurred a new $54m expense for goodwill impairment, while restructuring and other costs were up 139.3% to $67m.

This led to operating income of just $22m, down 96.0%.

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The operator’s chief executive Peter Jackson described the year as “historic” for the business. The addition of brands such as PokerStars, Sky Betting & Gaming and Fox Bet to its portfolio helped revenue grow 105.5% year-on-year to £4.40bn on a like-for-like basis. 

This reflected the contribution of The Stars Group from 5 May, the date the merger completed.

On a pro-forma basis – factoring in The Stars Group’s contribution for the entire 2020 calendar year, as well as counting Stars Group revenue for year-on-year comparisons – revenue was up 27.0% at £5.26bn.

Looking at like-for-like revenue breakdown, Flutter generated £2.73bn from sportsbook operations, up 63.5%, while gaming revenue soared 253.7% to £1.67bn. Revenue was up significantly year-on-year for its Sky Betting & Gaming, PokerStars, Australia and US divisions, though fell for the British and Irish-focused Paddy Power Betfair arm. 

For Paddy Power Betfair, revenue declined 2.2% to £1.29bn, with a strong online performance dragged down by retail’s struggles. Its Paddy Power shops were closed for around 38% of the year as a result of novel coronavirus (Covid-19), it said, resulting in the channel’s contribution falling 35.9% to £200m. 

Online, despite struggling in the first half of the year amid the cancellation of sporting events, recovered in the second half, to grow revenue 8.2% to £1.09bn.

Amounts wagered on sports across both channels fell 16.3% to £5.85bn, and despite an improved net revenue margin of 10.5%, revenue came in below 2019’s total, at £813m. This was partially offset by a 12.6% rise in gaming revenue to £481m. 

The online-only Sky Betting & Gaming fared better, despite stakes for the year falling to £4.17bn. For that operation, a significantly improved net revenue margin of 13.6% resulted in betting revenue growing 33.5% to £590m. 

Once an increased contribution of £385m from gaming was factored in, Sky Betting and Gaming revenue was up 32.5% at £975m. 

Turning to Australia, Flutter’s Sportsbet brand benefitted from customers migrating online as a result of Covid-19, signing up 675,000 new players during the year. 

This led to amounts wagered jumping 43.9% to £9.71bn, and revenue climbing 57.9% to £1.08bn. Like Paddy Power Betfair, growth occurred in the second half of the year, and a condensed sporting calendar of events postponed during H1. 

In a year that saw the poker vertical enjoy a resurgence under lockdown, PokerStars also posted year-on-year growth in revenue. This segment, covering the brand’s operations in non-British and US markets, reported revenue of £1.23bn, a 20.3% improvement on 2019. 

This was comprised largely of gaming, which accounted for £1.16bn of the total. Poker revenue was up 38% in the first half of the year, though casino surged 51% over the same period. Sports betting, on the other hand, saw revenue rise 12.3% to £64m, on stakes of £748m.

However the biggest advances were reported in the US, with revenue soaring 80.1% to £695m. This division, comprising the FanDuel, Fox Bet, TVG, PokerStars and Betfair Casino brands, saw sportsbook revenue grow to £458m on stakes of £4.41bn, with gaming revenue up 288.5% to £237m. 

Flutter noted that its horse racing brand TVG performed particularly well, benefitting from the fact that racing continued at a time when Covid-19 forced the suspension of other sports. 

Turning to outgoings, cost of sales across all divisions significantly rose as a result of the business’ expansion, more than doubling to £1.54bn. Thanks to the significant growth in like-for-like revenue, however, gross profit remained up significantly at £2.86bn.

Once sales and marketing expenses of £991m, plus £884m in other operating expenditure and £95m of corporate costs were factored in, Flutter’s adjusted earnings before interest, tax, deprecation and amortisation (EBITDA) grew 109.2% to £889m.

Depreciation and amortisation expenses of £213m – up 46.9% – then left an adjusted operating profit of £676m, more than double the prior year’s £281m total. At this point, steep rises in other outgoings hit the operator’s bottom line. 

Net interest expenses climbed to £110m, while Flutter also reported £565m in separately disclosed items, related to The Stars Group acquisition. These comprised charges related to the amortisation of acquired intangibles, as well as restructuring and deal costs, partially offset by a VAT refund related to wrongly-paid fees for gaming machines in betting shops. 

As a result Flutter’s pre-tax profit plummeted to just £1m for the year. After £35.8m in income taxes, this resulted in a net loss of £34.7m for the year. 

Looking ahead to 2021, the operator said the momentum that built in the second half of 2020 had continued into the new year. Growth in player volumes across all divisions, coupled with favourable sporting results, had helped group revenue grow 36% ahead of the prior year for the seven weeks to 21 February. 

However, it admitted that Covid-19 restrictions continued to affect its retail businesses, with British shops unlikely to open in April, and its Irish estate liable to remain closed until May. This was resulting in a £5m monthly EBITDA loss in Britain, and a £4m loss in Ireland. 

Furthermore, it noted that 2021 profits could face a hit in Germany, where proposals to impose a 5.3% turnover tax for online poker and slots is under discussion.

“While the tax is yet to be ratified, if it does come into force we believe it would effectively make the German online gaming market commercially unviable for regulated operators,” it said. That tax rate could hit its bottom line by between £15m and £25m, if it is brought in from 1 July. 

“Overall, we are very pleased with the momentum in our business as we continue to build our recreational player base globally and look forward to the future with confidence,” Flutter added.

Whittingdale (pictured) adds lotteries and gambling to a list of other responsibilities, including the media, EU and international strategy including approach to future trade deals, overall approach to union policy issues, data and the National Archives, and public appointments, among others.

The Minister has been Member of Parliament for Maldon since 1992, was chair of the Culture, Media and Sport Committee from 2005 until 2015, and served as Secretary of State for Culture, Media and Sport between May 2015 and July 2016.

Whittingdale became Minister of State for Media and Data in February 2020. His parliamentary record shows that he voted against giving local councils the powers to limit the number of fixed-odds betting terminals (FOBTs) and betting shops in their districts in 2014.

He has also voted in parliament to increase the stake and prize limits of certain categories of gambling machine, and in 2013 voted not to require gambling operators to ban players who had registered for self-exclusion.

The DCMS officially launched the long-awaited review of the 2005 Gambling Act in December last year, with stake limits, the role of the Gambling Commission and new ad restrictions to be considered. With his new ministerial brief, Whittingdale will now be responsible for this review.

The department launched a call for evidence at that time, looking into stake and spend limits, new rules around advertising and bonusing, and as additional protections for younger adults. The call for evidence will run until 31 March 2021 and its findings will inform planned changes to the 2005 Act.

The deal will include marketing placements and rights to player imagery and team logos.

In addition, the deal will include social media promotions and exclusive signup offers for fans, co-branded content on the club’s English-language social media channel and a BetMGM customer sweepstakes with “special Dortmund prizes.”

Benedikt Scholz, head of international/commercial and new business at Borussia Dortmund, said fans would also be able to stream the club’s matches trough the BetMGM app.

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The Canada-based betting operator and media business sold all 6m shares allocated for the IPO, plus all 900,000 shares in its over-allotment option, at $27.00 each.

It added that it will use the funds from the IPO for general corporate purposes, including its expansion across both the US and Canada, where the operator has backed proposals for single-event sports wagering to be legalised.

The IPO was conducted through underwriters led by joint book-running managers Morgan Stanley, Credit Suisse, Canaccord Genuity and Macquarie Capital.

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The Malta-licensed Lucky Dino was advised in the acquisition by RB.capital.

By acquiring Lucky Dino’s business assets, Esports Entertainment Group now has access to its own casino platform, which the company said offers impressive simplicity, scalability and flexibility.

Lucky Dino’s proprietary technology stack includes affiliate marketing software, payment servers, and a CRM system with a gamification and loyalty engine, offering automated player management.

“Over the past five years, Lucky Dino has evolved from a single brand white-label casino operator into a multi-brand, class-leading casino operator and technology business,” said Grant Johnson, chief executive of EEG.

“In addition to further strengthening our tech stack, Lucky Dino’s assets will give us a substantial foothold in multiple new jurisdictions across Europe, particularly in Scandinavia where esports are extremely popular, and with Lucky Dino’s 25k monthly active casino players we will have tremendous cross-selling opportunities with our SportNation and VIE.bet betting platforms.”

Johnson went on to describe Lucky Dino’s growth record in recent years, reporting an 86% compound annual growth rate on revenue for the five years to June 30, 2020.

Ultimately, he said, the company will aim to bring Lucky Dino’s online casino platform to US markets in the future, alongside its VIE.bet esports offering.

EEG announced the acquisition in December last year, with the $30m fee to be financed through a debt facility produced by the company.

It is the company’s latest acquisition completed this year, after finalising a deal for esports event organiser Esports Gaming League (EGL) in January.

Later that month, EEG finalised a binding agreement for the acquisition of two brands, Helix eSports and ggCircuit.

Helix eSports owns five esports centres and also operates Genji Analytics, an analytics provider in the esports sector, while ggCircuit is a B2B software provider that supplies cloud-based management for LAN centres, a tournament platform and integrated wallet and point-of-sale solutions for enterprise customers.

The permit will allow SoftSwiss to work with licensed operators in Nigeria and deploy its igaming software in Africa’s most populous country.

SoftSwiss said the new licence forms part of its ongoing strategy to focus on growth in regulated markets around the world.

“Entering the Nigerian market marks an exceptional turning point for SoftSwiss, as we’re expanding our global presence to a brand new continent,” the supplier’s founder Ivan Montik said.

“Nigeria is considered one of the most fast-paced igaming markets in terms of growth and we cannot wait to begin providing our services there.

“Nigeria is a great achievement for us and we’re planning on moving even further into other regulated markets.”

The licence comes after SoftSwiss last week announced the launch of Affilka, a new affiliate marketing platform designed for sportsbooks.

Alina Yakirevich at CMO of Fonbet with extensive experience in all marketing areas – TV, Digital advertising, BTL-communications, printed and radio advertising, PR, SMM, SEO and context, content and native advertising, as well as B2B marketing. Yakirevich has reorganised and set up the work of Fonbet’s marketing team in all divisions and established KPIs that reflect the most important business goals of the company.

In the current climate, people’s focus seems to be firmly on the future – but in this people can forget their roots. 

Knowing where you’re going is one thing, but the strongest strategies are built on learning’s from the past. With this in mind, iGB spoke with Alina Yakirevich, CMO at Fonbet to learn about their origins, and what lessons they picked up on the way.

Founded in 1994 by a chess grandmaster who saw an opportunity in gambling, Fonbet’s roots are firmly in sports fanaticism. Yakirevich says: “Due to the interest of just a single founder, we grew into the largest and most recognisable betting company in the CIS. If you do what you love and you’re good at that, then you’re bound to succeed.”

Setting up for success

The early days established a strong sense of independence in the team at Fonbet, with Yakirevich saying they always created their own odds.

Today, this strategy has paid off, allowing Fonbet to pivot quickly in times of crisis, such as its esports focus in light of COVID-19. Yakirevich continues, explaining that generally, Fonbet handles a lot of its business in-house: “One of our main competitive advantages is that we have our own development and marketing teams. Our business is quite complicated and niche, so we feel it is important to help our staff grow from within.”

However, the journey has not been without its challenges – despite this, Yakirevich says the company always strives to turn difficulties into opportunities: “For example, more than a decade ago, when our main business was offline, a new law on user verification was passed in Russia. 

“Players used to be able to just come to betting shops, place bets, pay for them and get a receipt. There wasn’t any requirement to show ID. However, the new law required customers to verify their identity by showing their passport.”

With fears that this might damage the market due to players valuing privacy, Fonbet innovated around this regulation and developed a procedure where customers only needed to confirm their identity once.

“We also developed our own betting terminals and were the first in Russia to launch them. When customers log on, they instantly verify themselves with their Fonbet card and can bet as much as they like.” 

The introduction of betting terminals and Fonbet player cards helped the brand increase average bets, says Yakirevich: “If this law had never been adopted in Russia, then we probably would have never implemented these changes, or only done so much later.”

Maintaining focus

The mission for Fonbet has always been leading with a balanced and customer-friendly product. 

To achieve this, Fonbet committed to building a fast, reliable and convenient product: “Betting companies usually focus on and prioritise a single area, while neglecting other promising opportunities.”

“Fonbet employs more than 400 traders and offers a very fast, customer-friendly product with good marketing. We’re proud of our fast payouts and high betting and withdrawal limits. Our company is focused on the mass market customers, but we also offer a special programme for VIP players.”

Now, Yakirevich says, the road to success is in expansion, with plans to add to its list of licenses in legal markets: “Fonbet is currently developing in Kazakhstan and Belarus, with plans to expand to Ukraine and other countries as well, since our brand is already well known in these markets.”

“A lot of the marketing tools we already use in Russia also work well in the CIS. This market feels like home for us, and we expect a quick ROI. The people who live there share a similar mentality to us. However, CIS countries have certain drawbacks, including weak currencies and unstable legislation.”

New markets, new opportunities

To keep momentum and build long-term prosperity, Fonbet is also looking beyond the CIS region: ”We’re already operating in Cyprus, and also currently launching in Greece and other new markets. These European countries have a more stable currency and economy.”

Of course, with new markets come new challenges. In addition to legislation, there are also differences in marketing and development strategies: “The local mindset needs to be considered, and a new team of local specialists need to be hired to help understand all the nuances. 

Part of this is in the art of letting go: “It’s crucial to understand which processes can be carried out from the main office, and which need to be delegated to the regional level. You need to rely on local partners and employees because they’re the ones out there in the real world. 

“There’s nothing wrong with admitting a mistake and going back to the drawing board to see how to fix it. Keep your eye on the numbers and know that reports are king.”

Additionally, strategic sponsorships are key to Fonbet’s strategy: “When we enter a new market, we focus on helping to develop local sports. Our partner in Kazakhstan is the Barys ice hockey team, and we’re also currently in negotiations with top Belarusian clubs.”

“We partner with world football leaders, including Real Madrid, Milan and PSG, to help our brand reach a broad global audience. “

“In Russia, our overall strategy is to sponsor leagues and national teams (KHL, VTB United League, the Russian national football team). This ensures our media presence and helps build trust. In addition, we wanted to strengthen our presence in football and hockey, so we also partner with PFC CSKA and collaborate on KHL projects with Spartak and Avangard.”

The MGA licence will allow ESA to distribute its collection of mobile gaming products, aimed at increasing player engagement and allowing for cross-selling across sportsbook and casino players, to a range of new operator partners.

The company’s EasySwipe products are lightweight, HTML5, mobile-first games that can be integrated into sportsbooks, allowing bettors to engage in casino play without disrupting the sports betting experience.

“The accreditation of our products by the MGA marks a very exciting step for us as we look to continue our upward trajectory,” said Zorica Smallwood, the supplier’s chief executive.

“Being granted our MGA licence is vital for us as we continue to gain partners across a number of jurisdictions, while also allowing us to maintain the highest level of compliance with our products.”

In addition to its new MGA licence, ESA already holds certifications for the Italian and Colombian markets.

In October, the supplier signed a deal with Sportingtech, whose partners were subsequently granted access to ESA’s portfolio of EasySwipe titles.

In January, the MGA confirmed that it had appointed Dr Carl Brincat, previously the regulator’s chief legal and enforcement officer, as its new chief executive.

Brincat took over from Heathcliff Farrugia, who announced he would stand down from the role in October 2020.