Month: August 2021

Financial terms of the deal were not disclosed, but it was confirmed that the arrangement included a commercial agreement whereby Boom will integrate its remote gaming server and license online casino and sports betting games for RSI to make available to its real-money and social casino players via RSI’s proprietary online gaming platform.

Boom will also develop certain custom games, with RSI having exclusivity rights to these new titles for at least one year after release.

In addition, RSI will receive market access opportunities to operate online casino and sports betting via Boom’s relationship with certain land-based casinos in Louisiana, Mississippi and New Mexico.

RSI said it expects to launch mobile sports betting in Louisiana during the upcoming football season, after the state legalised sports wagering in June.

Read the full story on iGB North America.

Revenue amounted to €96.8m, a drop from €110.7m. This was also a significant drop from its Q1 2021 revenue, which amounted to €110.7m.

However, the operator said that if not for Germany, LeoVegas would have seen 3% revenue growth. Gustaf Hagman, president and CEO of LeoVegas addressed the effects of Germany’s State Treaty on Gambling (Glücksspielneuregulierungstaatsvetrag), which mandates a €1 per spin stake limit on online slots, on the quarter. While the Treaty came into effect on 1 July, Germany is currently in a transition period wherein operators can provide poker and slots games as long as they comply with all the Treaty’s terms by October 15.

“The changes introduced in Germany during the end of the preceding year, coupled with the ongoing regulation process, have had a strongly negative impact on NGR during the last two quarters.”

NGR in Germany decreased by 81% during Q2 2021, and the German market now comprises only 4% of the operator’s total revenue compared to 18% in the previous year. This suggests a drop in revenue from around €19.9m to roughly €3.9m.

A total of 41% of LeoVegas’ net gaming revenue (NGR) was generated from the Nordic region, while 39% came from the rest of Europe. A total of 20% was made up from the rest of the world.

Costs during this quarter were higher than Q2 2020. Cost of sales and gaming duties totaled €32.4m, bringing the gross profit to €64.3m.

Sweden performed successfully this quarter, with revenue at a record high.

Sweden’s gaming market is currently under several restrictions due to the novel coronavirus (Covid-19) pandemic, including a SEK5,000 deposit limit on spending. The restrictions will be in place until November 14th 2021, a date that was extended controversially.

Marketing expenses were also higher year-on-year, totaling at €37.5m, a rise of 14.8%. Hagman put this down to a number of expansions in new markets.

“Marketing costs in relation to revenue were higher than the historic average, coupled among other things to the relaunch of Expekt and investments in a number of key markets in which we see high customer growth.”

Personnel costs came to €13.5m, while other operating expenses amounted to €7.4m. Capitalised development costs and other expenses came to $4.0m, leaving earnings before interest, tax, depreciation and amortisation (EBITDA) at €9.8m, a decrease of €13.2m compared to Q2 2021.

Depreciation and amortisation costs brought earnings before interest and tax (EBIT) to €2.7m, a decrease of 82.9% year-on-year.

Financial costs took €877,000 from the EBIT, while shares of profit after tax generated €196,000. Income tax at €1.0m left the final net profit for the period at €1.0m, a substantial decrease of €13.8m compared to Q2 2020.

“Our operating profit decreased compared with the same period a year ago, while we achieved stable earnings compared with the preceding quarter,” added Hagman.

Hagman also commented on the effects of LeoVegas’ Expekt acquisition in March, which was consolidated during the Q2 period.

“It was a successful start, and in a short time we nearly doubled Expekt’s revenue and
market share in Sweden since completion of the acquisition.”

Almost all of Entain’s net gaming revenue – at £1.59bn, up 28.4% from 2020 – was made online. After VAT, this total was £1.56bn.

Entain chief executive Jette-Nygaard Andersson – who was appointed to the role during the quarter after Shay Segev’s departure – said the business had continued its streak of double-digit online revenue growth, which she attributed to strong technology and a hard-working team.

“Entain’s platform continues to deliver,” she said. “The quality and diversification of our businesses has enabled us to deliver our 22nd consecutive quarter of double-digit online growth, while also making excellent progress on our strategic priorities. 

“This performance is not only a result of our industry leading technology, but also the hard work and dedication of our talented teams of people around the world, and I would like to take this opportunity to thank them.”

Of the total revenue, £825.9m came from igaming, a 10.2% increase from what Entain noted was a “strong prior year comparative”. Entain said that growth in gaming would have been 28%, if not for Germany, where strict new regulations have impacted the operator’s ability to bring in revenue.

Meanwhile, £751.1m came from sports, up 55.4% thanks to the return of a full sporting calendar after major disruption in 2020. This sports betting revenue came on bets totalling £7.08bn, up 51.3%.

Entain noted that German sports betting revenue growth was more or less in line with other regions, as the strictest operating conditions had not come into force yet, but said because of the drop in gaming, total German online revenue was down 34% year-on-year.

Entain said that part of the reason for the decline was that while it followed the country’s new regulations as part of a transitional regime, other operators had not complied with the rules.

“In Germany, the market continues to digest the new regulatory regime and tax change,” it said. “The impact from these remains broadly in-line with our original estimates, albeit a different mix. Our slots and poker business has been operating in compliance with the tolerance policy that came into effect in phases from October 2020, however other operators have not been as compliant, creating an uneven market.

“We remain positive on the German market which we believe will return to growth once the licensing conditions have bedded in and we expect to be a leader in this market.”

While most other territories, such as the UK, Italy and Georgia experienced growth, the international Partypoker saw revenue decline 11%, mostly due to exceptionally high levels of poker activity in H1 of 2020.

Entain added that 2% of its online net gaming revenue, or roughly £320m, came from its newly acquired brands: Bet.pt in Portugal and Enlabs in the Baltics.

Entain’s retail operations – mostly from its Ladbrokes Coral UK arm – saw revenue drop 46.3% to £191.3m, due mostly to betting shops being closed for most of the period in lockdowns.

Retail sports betting brought in £99.5m, down 55.1%, as bets were halved to £527.3m. Gaming machine revenue meanwhile was down 31.8% to £91.8m.

“Since the release from tier 3 style restrictions in the UK, we have seen volumes return to levels around 90% of pre-pandemic levels,” Entain said. “Machines have performed particularly well whilst sports continues to recover steadily from the extended period of shop closures.”

Entain’s other operations brought in £15.5m, up 21.6%. The operator paid costs of sales of £630.7m, for gross profit of £1.14bn, up 10.0%. 

After administrative costs of £851.7m, of which £308.5m were related to marketing, the operator was left with £284.6m, up 16.9%.

The business then incurred £79.0m in losses from joint ventures and businesses in which it did not hold a controlling stake. Of these losses, £78.2m worth were related to its US-facing joint venture BetMGM, meaning the joint venture lost £156.4m. Entain said BetMGM’s net gaming revenue for the half-year was $520m (£375.0m/€442.8m).

“In the US, BetMGM goes from strength to strength with our position as number 2 operator firmly established in the fast-growing sports-betting and igaming market,” Nygaard-Andersson said. “We expect to be operational in around 20 states, representing 33% of the US adult population, over the next 12 months.”

After these costs were considered, Entain was left with an operating profit of £205.6m, up 128.9%.

The business then paid finance-related expenses of £36.8m, and received £77.1m in income from financial instruments and foreign exchange changes. As a result, Entain’s pre-tax profit was £246.7m, up 87.8%.

After paying £50.0m in income taxes, Entain was left with £196.7m in profit from continuing operations, a 116.5% increase.

After accounting for discontinued operations, Entain’s final profit was £194.2m, which was 129.9% more than in 2020.

Betsson will pay an initial $25.0m (£18.0m/€21.3m), though the agreement also includes a number of additional payments, contingent on Inkabet hitting certain performance targets.

An additional €4.0m will be due if Inkabet reaches agreed revenue and earnings before interest and tax (EBIT) targets in the six months after the deal closes, as well as a deferred payment of €5.0m, of which €3.0m is payable on 31 December 2022 and €2.0m the same day in 2023 if no claims have arisen.

Betsson said that the acquisition will strengthen and expand its presence in Latin America, which it described as a “strategically important region” for the business.

Launched in 2012 and focused on the western region of South America, Inkabet reported $25.5m in revenue for the 12 months to 30 June this year, as well as €8.8m in EBIT.

“Through this transaction, Betsson continues to build market share in the LatAm region, following the previous acquisitions of JDP Tech Ltd, Suaposta and Colbet,” Betsson chief executive Pontus Lindwall said.

“This strengthens our position in a strategically important region where we have performed well and have big ambitions for the future.”

Betsson, which plans to finance the deal through its revolving credit facility, expects to complete the deal 30 days after signing. The operator added that certain restructuring activities are also a condition for closing.

Last month, Betsson cited the growth of its sports betting business in Latin America as one of the core reasons behind it posting record SEK337.9m in profit for the second quarter.

Q2 saw Betsson expand significantly in Latin America, launching in Mexico through a new partnership with local land-based operator Big Bola Casinos.

While JKR values are our moral guideline in business, each value has a spectrum of meanings and subtopics. One of these is trust. 

My favourite definition of trust came from Jack Welch, the former chief of General Electric, who said, “You know it when you feel it.”

And the more you think of it, the more you understand that it is lack of trust that creates anxious ambiguity and prevents us from sharing the same context and taking the bold steps in our companies’ development. When there is trust among the partners, management and employees, they are enthusiastic and confident, ready to take risks and accept the challenges when we act in the trust-secured scene. 

The three types of trust

To me, there are three types of trust when it comes to partnering with people. 

First is a basic trust: trusting someone to be a decent person. If an employee submits a budget for an activity, I won’t carry out thorough research to check if the cost is market-relevant. “Be decent” is one of our core values at JKR since no matter how skilful or professionally successful a specialist may be, this partnership won’t get us far if they are not a person of integrity.

The second is trusting someone as a professional. It is vital to surround yourself with the people you look up to professionally to save yourself doubts when they make a decision. Although it seems obvious, it takes a lot of wisdom and open-mindedness to let go of how you are used to doing things and let others take ownership of the decision. But this management model enforces the growth of both parties and gradually builds a culture of trust within the company. Teams that manage to get to that point end up performing better since they don’t waste time on the bureaucracy of lengthy approvals. 

The third is to trust that your partner will pursue the idea and won’t let it fade away. If an idea or project inspires a visionary, it is essential that your partner or employee either drives it along or speaks up if they disagree with it or it is out of their interest area. At JKR, we value the honesty and boldness of those we work with to challenge the ideas or admit if they are not passionate about them. And as we believe that passion is the crucial success driver, we would rather take a pass on the idea right away than implement it with a careless attitude. 

When those you work with pass all of these trust filters, there is no place for control or doubts in your partnership.

Looking out for those you trust

The better you know each other and the more trust you have, the easier the decision-making process becomes. Otherwise, a leader becomes a bottleneck since no initiatives or actions are launched without his ultimate approval. Companies where the CEO trusts his team tend to work faster, which accelerates their growth. 

Of course, each company is different and unique in its own way, and this approach may not work for organisations with a rigid hierarchical system. However, there is a constant need for extra adaptivity and agile decision-making in quick-growing ecosystems. The downside of this is that decisions that seem univocal to the leader have the potential of hurting one’s pride. 

But if in the early stages you invest into the culture of trust and support, later on you will find yourself surrounded by partners and the team who don’t see a threat in every move you make because they know that ultimately you have their back. 

Alexander Gusev is an experienced business development professional focused on the venture capital and private equity industry. His projects include strategy, sales and marketing, operational improvements, and throughput optimisation. Gusev is an investor, co-founder, and managing partner of JKR Investment Group, an entrepreneurial investor that incites partnership within its global ecosystem and has a proven track record in the B2B companies in the entertainment industry. 

The majority of the supplier’s revenue came from Malta, at €9.4m, up 10.5% from Q2 of 2020. Curaçao made up much of the remainder, bringing in €3.8m, up 52.0%.

Revenue from Croatia rose 47.8% to €713,000, while German revenue increased almost fivefold to €404,000, thanks mostly to the liberalisation of online casino across the country through a transition period ahead of the implementation of a new State Treaty in July.

Revenue from Romania grew more than eight times over to €425,000, while revenue from Serbia doubled to €243,000 and other revenue ticked slightly upwards to €559,000.

The supplier’s costs of revenue came to €8.5m, up 20.0%, for a gross profit of €7.0m.

After €8.9m worth of general and administrative expenses, up 114.5%, Bragg’s operating loss was €1.8m, more than 15 times the loss it made in 2020.

Following interest expenses and taxes, the business made a net loss of €2.3m, up 283.3%.

Looking at the first half of 2021, Bragg’s revenue was €29.7m, which was up 42.1% year-on-year. Gross profit was up 50.6% to €13.7m, while operating losses declined 46.5% to €2.3m.

Bragg’s net loss was €3.4m, a decline of 44.3% from the €6.1m loss made in 2020.

“Throughout the second quarter, we made meaningful progress with our strategic growth initiatives including expanding existing customer relationships, building out a pipeline of premium in-house igaming content, and providing our content and offerings to new markets throughout North America and Europe,” Bragg chief executive Richard Carter said.

“We believe our growth initiatives will not only help to rapidly mitigate the near-term impact from the new Germany regulatory structure, but more importantly will help drive our execution on future revenue growth opportunities and lead to significant expansion of our EBITDA margins over the medium term.”

The business agreed to acquire Nevada-based B2B gaming content provider Spin Games in May, in order to enter the US market. 

Later in the quarter, it acquired Las Vegas-based content studio Wild Streak Gaming, in another $30m deal. The sellers of Wild Streak received $10.0m in cash at closing and will receive $20.0m worth of common shares of Bragg over the next three years.

“Bragg had strong 2021 second quarter financial performance while also continuing to advance our in-house content development strategy and new market entry plans, including entry into the North American market, and also making progress on our Germany mitigation strategies,” Carter said. “Our effectiveness in helping online casino operators connect with players is clearly reflected in the 21% year-over-year increase in the number of unique players using Bragg content, and in the 41 new customers using our games and services we’ve added over the last twelve months.”

Carter said the two acquisitions would help support Bragg’s existing offerings while allowing it to enter a new market.

“Our recent acquisition of Wild Streak brings to Bragg a fast-growing leading game development studio with a strong online content pipeline and expands on the in-house development capabilities of our Oryx Gaming studio,” he said.

“Further, our pending acquisition of Spin Games will accelerate our entry into North American igaming markets, help us port high-performing European online content into North America, and bring a wealth of US market and compliance expertise to Bragg.” 

Carter added that the acquisition would help Bragg rapidly increase the number of games it can offer.

Last week, Bragg subsidiary Oryx Gaming secured an A1 licence to supply its content to operators in Greece.

Overall online gambling revenue reached €125.0m (£105.9m/$146.5m) in the three-month period, up from 68.7m in the corresponding period last year, but slightly down on €128.3m in the first quarter of 2021.

Sports betting revenue hiked from €20.8m to €67.5m, with this mainly down to the easing of novel coronavirus (Covid-19) restrictions. Betting options in Q2 last year were severely limited as almost all sports events were cancelled or postponed due to the pandemic.

A wider array of betting options in the quarter, including the early stages of Uefa’s European Championship national football team tournament, also saw the amount bet on sports online rocket 236.2% to €304.9m.

Incidentally, football was the most popular sport to bet on, with 77.5% of all online sports bets being on football in Q2. Tennis ranked second with 9.6% of the market share, followed by basketball with 8.7%

Online casino also saw some growth, with revenue here increasing 20.0% to €57.5m and the amount spent by consumers rising 25.2% year-on-year to €1.65bn.

Slots remained by far the game of choice for consumers, accounting for 76.0% of all casino bets in Q2, followed by roulette on 10.1% and blackjack with 5.4%.

A total of 151,900 new players signed up for online gambling accounts in the quarter, while 93,600 people had self-excluded from online betting by the end of the period, up from 56,600 at the end of Q2 last year.

Turning to retail and revenue in this sector reached €30.6m, some 166.7% higher than in the same Q2 of last year when the market was severely hit by the pandemic. Covid-19 measures meant retail was closed for almost the entire quarter, meaning consumers were limited to online gambling for a large portion of the period.

Gaming machine was the main source of retail income, with revenue here reaching €24.6m, up 159.0% from €10.2m in 2020, while other land-based gambling revenue was 223.1% up to €4.2m.

American roulette was the post popular form of non-machine retail gambling, turning €1.5m in revenue during the quarter, ahead of baccarat on €883,170 and blackjack with €775,530.

In addition to the redundancies, Veikkaus said that, the terms of the employment contracts with around 330 employees “may change substantially”.

However, the business added that it may be able to keep some people employed by directing them towards new openings in Veikkaus, particularly at its upcoming  Casino Tampere property, where it expects to employ 50 staff.

The most-affected division of Veikkaus will be its channels and sales team.

“Our future will be successful if we can adjust our operations to meet the demands of the operating environment while offering the players a responsible, high-quality customer experience,” says senior vice president for channels and sales Jari Heino said.

“We will continue to maintain an extensive network of retailers and game providers, while making the operations of our gaming arcades more uniform. We also want to keep investing in our brick-and-mortar retail network and to work to preserve its vitality.”

Veikkaus faced questions about the future of its monopoly status in 2019, with a survey that year claiming a slight majority of Finnish citizens are in favour of abolishing the country’s current regulatory framework for gambling. More recently, the European Gaming and Betting Association (EGBA) ended 2020 with a call to the Finnish government to ‘fix’ its gambling policy, by bringing an end to Veikkaus’ monopoly in the country.

This year, Veikkaus has taken a number of major consumer protection measures, including making  temporary online gambling loss limits that were put in place at the start of the novel coronavirus (Covid-19) pandemic permanent. Under these measures, players will only be able to lose a maximum of €500 (£429/$596) each day while playing online casino games with Veikkaus.

The regulator carried out the raids in the town of Manaure, in the Cesar Department and the city of Riohacha, in the La Guajira Department.

With the support of Colombia’s national police, the regulator carried out the raids and subsequent follow-up actions this week, which will result in the imposition of COP2.22bn (£401,762/€474,442/$556,668) in fines for those responsible for the illegal operations.

For each unlicensed slot machine found, a fine of 80 minimum monthly salaries, or COP72.7m, is imposed. In addition, any other gambling games operated incur a further fine of 300 minimum monthly salaries for each establishment, point of sale, outlet or vendor.

In addition to the fines imposed, those involved also face a ban of five years from operating any gambling, and may face a prison sentence between six and eight years. Any gaming machines or equipment seized will be destroyed.

Coljuegos said the operation is part of a broader strategy to combat unlicensed gaming, in order to ensure that the gambling industry continues to contribute to Colombia’s healthcare system. It therefore encouraged customers to always play in licensed establishments or with locally licensed online operators.

Last year, it was revealed that the regulator had seized a total of 871 illegal slot machines in 2020, in collaboration with the national Attorney General, army and Fiscal and Customs Police.

It said that the machines generated an estimated COP27.70bn in unlicensed revenue.

Officers in the Linz, Linz-Land, Steyr and Wels regions of central and eastern Austria carried out the action in a large scale operation.

Some venues tried to evade the police by placing signs saying “closed” and “electricity, danger to life” on their doors. Eleven locations had to be opened by a locksmith, while several machines had to be forcibly removed after being anchored to a wall.

Austria’s finance minister Gernot Blümel said: “The regular operations of the financial police against illegal gambling make it increasingly unattractive for the operators to pursue their dirty business on the back of gambling addicts. This is a severe blow to organized crime in Upper Austria and the financial police will continue to crack down on it in the future!”

This is the latest large raid of illegal gaming establishments carried out by authorities in the country, following a similar raid on 17 illegal gaming locations taking place in June.

Wilfried Lehner, head of the financial police in the anti-fraud office, added: “Neighbors and relatives of gambling addicts can breathe a sigh of relief, the Wels and Linz area has now been freed from illegal gambling dens. We will repeat these operations immediately if the bars should be reopened.”