Month: November 2021

Craig Billings, chief executive of Wynn Interactive and soon-to-be chief executive of Wynn Resorts after Matt Maddox announced his departure from that role, said Wynn made the decision as it pursued a new strategy for its online WynnBet brand. This strategy, it said, would involve lower marketing spend, and so did not align with the capital-intensive approach that the merger would have offered.

 “With our continued roll out of product features and planned new state launches, including New York, we remain excited about WynnBET’s future,” he said. 

“As we discussed on the Wynn Resorts, Limited third quarter earnings conference call earlier this week, in light of elevated marketing and promotional spend in the sports betting industry, we are pivoting our user acquisition efforts to a more targeted ROI-focused strategy. 

“In so doing, we expect the capital intensity of the business to decline meaningfully beginning in the first quarter of 2022. WynnBET’s best days lie ahead of us.”

Wynn had initially agreed in May to spin off its Wynn Interactive subsidiary, which would combine with Auterlitz, a special purpose acquisition company (SPAC) founded by William P. Foley II, that would allow the business to list on the Nasdaq Stock Exchange. At the time, Wynn said that Austerlitz’s $640m in cash reserves would “help fuel growth”.

The combined company was estimated to have a post-transaction value of $3.2bn (£22.6bn/€26.3bn), a total 4.5 times the revenue projected by Wynn Interactive by 2023. 

However, in the wider business’ third-quarter earnings call, Billings revealed Wynn would not pursue the approach heavy on marketing spend that most rivals had opted for. 

“While sports betting remains an exciting high-growth market and will potentially be a $30 billion to $40 billion total addressable market over time, the marketplace is proving to be very competitive with multiple operators deploying meaningful marketing dollars, driving high cost per acquisition, and significant customer bonus offers,” he said. “In light of this dynamic, we are intentionally pivoting our approach to scaling. taking a more measured and long-term focus to grow healthy and sustainable business.”

Revenue for the three months to 30 September amounted to MUR255.4m, down from MUR302.7m in the corresponding period last year.

Lottotech did not publish a breakdown of its revenue performance, nor did it disclose any details of operating costs, but it did reveal that operating profit fell 39.8% to MUR21.9m.

Net finance costs amounted to MUR444,228, marginally up on last year, which resulted in a MUR21.5m pre-tax profit, down 40.3% year-on-year.

Lottotech paid MUR3.3m in tax during the quarter, leaving a net profit of MUE18.2m, down 21.1% from 2020.

In terms of year-to-date, revenue for the nine months to the end of September came in at MUR745.8m, up 17.7% on last year, while operating profit climbed 13.4% to MUR56.6m.

Pre-tax profit increased 10.0% to MUR55.2m, while after accounting for MUR9.3m in tax payments, net profit for the period was up 45.7% to MUR45.9m.

“In the context of the Covid-19 pandemic, the re-opening of the Mauritian borders on 1 October has instilled a feel-good factor in the Mauritian economy and a restoration of customer confidence,” Lottotech said.

“However, economic and trading conditions are still expected to remain challenging due to the uncertainties surrounding Covid-19 and Covid variants. Lottotech will continue to adopt all necessary measures to mitigate the downside financial risks caused by the pandemic while ensuring the safety of its employees, customers and partners. 

“The company will have adequate funds to discharge any existing commitments and obligations.”

The report, published in conjunction with the Danish Center for Social Science Research (VIVE), forms part of the government-mandated initiatives against gambling addiction which were proposed back in 2018.

While stopping short of concrete policy recommendations, the report suggested that further investigation of gambling-like mechanics is needed, and said that parents should become more involved and take co-responsibility for their children’s online activities.

It alsoargued that children should be educated further so they have greater understanding of the consequences associated with spending money on games.

“Parents have difficulty understanding children’s gaming – including the social dimensions of gaming – because the parents did not grow up with it themselves.

“But even though it seems understandable that conditions for understanding gaming are different from those of their children, it is problematic when parents’ (and other adults’) lack of understanding and experience with gaming manifests itself as stigmatising gamers and leading to conflicts and punishments.”

One problematic element highlighted by the report was that the use of loot-box microtransactions and skin betting are akin to online gambling. It added that children and young people may find these elements particularly exciting.

Loot boxes, common in games such as FIFA or Counter Strike: Global Offensive (CS:GO), give people the opportunity to spend real money on card packs or loot boxes, the contents of which are randomised. Skin betting, meanwhile, is the use of virtual objects within games to bet.

The study also found that influencers play a part in promoting skin betting via streaming on platforms such as Twitch or YouTube, which may be having an effect on the children who watch the gambling-like transactions are taking place on streams.

Although only a few young people from the data set were said to be affected, the report believes that these forms of gaming should be monitored more closely.

The report said: “Even though it can hardly be described as a widespread problem, this form of gambling calls for special attention, as it is clearly reminiscent of definite gambling.

“In the long run can be expected to accommodate a younger audience – even younger than the 15-to-19-year-olds surveyed, who can’t be expected to be able to control their participation in that kind of gambling.”

The report also made comparisons between gambling and online video gaming, and noted the lack of an option to set limits in online games, even though this has become commonplace in online gambling.

“Gambling-related elements of gaming appear more problematic than actual gambling because gaming uses algorithms and does not allow users to set limits on their spending. 

“Gamers (when compared to gamblers) more very often are minors (under 18 years of age) and therefore can not be expected to have the mental capacity to understand the use of gambling-related elements in games.”

Other countries have taken concrete action against certain gambling elements in video games. Belgium banned the mechanic after ruling that loot boxes are an illegal form of gambling. Spain has considered a similar approach, opening a consultation on how best to regulate loot boxes.

Financial terms of the purchases were not disclosed, but it was confirmed that all three studios will continue to develop original mobile titles in-house under the Rollic umbrella. 

The three studios have previously worked with Rollic, publishing games via the developer. 

ByteTyper is the studio behind Rollic’s Touchdrawn, while Creasaur Entertainment created Money Maker 3D and Hit Guys, and Zerosum Barista Life, Long Nails 3D and Off-Road Race.

“These studios create visually captivating, mind-teasing titles and we are excited to bring their creativity and technical skills into the Rollic family,” Rollic co-founder Burak Vardal said. 

“These acquisitions further our strategy of expanding our in-house network of innovative developers to support live services with ongoing creative updates, while also adding to our portfolio of inventive games.”

The treble acquisition comes just over a year after Zynga acquired a majority stake in Rollic in a deal worth $180m (£135m/€157m).

Last week, Zynga announced a net loss of $41.7m for the third quarter of its 2021 financial, despite also reporting record revenue and bookings for the period.

Revenue for the three months to September 30 reached $704.7m, up 40.0% from $503.3m in Q3 of 2020, while net loss was cut from $122.2m.

The grant will fund a team led by Kelsey Beninger, director at IFF Social Research Agency, in collaboration with Maria Fannin, professor of human geography at the University of Bristol; Sharon Collard, professor of personal finance at the University of Bristol; and Dominique Webb, head of programmes at GamCare, and Marina Smith, women’s programme manager at GamCare.

Following a mixed-methods, multidisciplinary and multi-sector approach, the 18-month programme will include roundtables, in-depth interviews and community committees with women with lived experience of gambling harms. 

Key objectives of the study will be to explore the reality and lived experiences of women and their engagement with and experience of gambling, gambling harms, and gambling treatment and support services.

Researchers will also seek to establish and explore the drivers of gambling harms among women in Great Britain, as well as explore the services, interventions and policies needed to reduce and prevent gambling harms for women.

The research has been commissioned as part of GambleAware’s five-year organisational strategy.

“Women’s experiences of gambling harms are under-researched, often presented as homogenous and in terms of how they differ to men’s experiences,” GambleAware research director Alison Clare said.

“We are pleased to have awarded this grant to this strong multi-agency, multi-disciplinary team which will be drilling down into the experiences and needs of different communities of women. This is an important step towards ensuring GambleAware and others are commissioning the range of treatment and support services women want and will use. 

“GambleAware is committed to delivering a whole-system public health approach to gambling harms and understanding the wider determinants that drive these – including gender, health, race, ethnicity, and inequalities – is fundamental to achieving this.”

The launch will enable customers to place pre-game, in-play, futures and parlay wagers from any mobile device while on site at the casino in Biloxi.

The app is available for download across Mississippi but geolocation technology limits users to placing bets only when on site at approved locations.

Consumers can also wager via the BetMGM app at the Gold Strike Casino Resort in Tunica, after the operator launched at the facility in September.

Read the full story on iGB North America.

The refinancing initiative included the issuance of £300m in senior unsecured bonds that are due in 2028 and carry a 3.125% interest rate.

This, IG Group said, attracted strong investor demand, and as such allowed the business to tighten pricing and increase its size from initial indications.

IG Group also secured a new £300m committed revolving credit facility (RCF), with an initial maturity of three years. This also included the option to extend to £400m and to request two maturity extensions of one year each.

In addition, IG Group was able to repay and cancel its existing £125m RCFs and £250m term loan facilities.

The initiative, IG Group said, increased its total available credit facilities from £375m to £600m, with the potential to rise again to £700m.

“This comprehensive refinancing puts in place a long-term funding structure that provides the Group with a balanced mix of senior debt arrangements with attractive maturities,” IG Group chief financial officer Charlie Rozes said.

“This will enable the board to continue to pursue its value-enhancing strategic objectives with confidence, while at the same time managing our risks by strengthening our capital base and liquidity position. 

“We welcome our bondholders as new stakeholders in the business and are very grateful to our relationship banks for their continued support.”

Revenue for the three months to September 30 amounted to $32.3m, up by 213.6% from $10.3m in the corresponding period last year.

B2C operations were the main source of revenue for the provider, with revenue within this segment reaching $21.1m. GAN did not generate any B2C revenue in Q3 last year as its acquisition of Coolbet, its sole source of B2C income, did not close until January this year.

B2B revenue also increased from $10.3m to $11.2m, with platform and content fees being responsible for $8.7m of this total, and development services and other operations the remaining $2.4m.

Read the full story on iGB North America.

The ‘fun’ factor must be preserved by iGaming operators who are determined to retain customers in a highly competitive space, according to Sergey Kobitskiy, CEO and founder of Smartico.ai, a multi-channel, real-time gamification and marketing loyalty platform.

Against a backdrop of regulatory challenges in the industry, Kobitskiy is well aware of the task facing betting operators that have to tread carefully with marketing campaigns designed to connect with specific target audiences.

However, Smartico.ai, which is seeking to power the next phase of its expansion by attracting fresh investment over the next 12 to 18 months, is underpinned by the notion that developing tools to encourage a personalised approach will pay dividends in the long term.

Gamification
This belief in a tailored strategy has gained momentum in recent years as operators grapple with rocketing acquisition costs, reflecting significant challenges in terms of not just attracting individuals into the sales funnel, but also keeping them engaged.

“It is important to focus aggressively on retaining customers, but to do so in a pleasant way for the end user, and gamification is the best approach for keeping customers interested,” Kobitskiy says.

“It is vital to make it fun for customers. This can be achieved by giving them the opportunity to participate in real-time tournaments or offering them the chance to spin a wheel and win rewards. By using these mechanics, it is possible to make it worthwhile for the individual to come back to the same place, again and again.”

Kobitskiy makes the point that marginal gains in terms of loyalty can lead to significant financial rewards for operators – and these bottom-line benefits can be amplified if the high-value customers are kept on board.

“A 5% improvement in customer retention can easily lead to an increase in revenue of more than 25%,” he says.

Regulatory challenges
Of course, operators have to contend with an evolving regulatory landscape that brings its own compliance pressures, from bans on advertising to restrictions on bonuses.

The outlook can be particularly complex if, like Smartico.ai – which is headquartered in Bulgaria and has a presence in Ukraine and Israel – business operations span different jurisdictions.

“While offering bonuses to users might become more and more problematic due to regulations, the best approach is to give the user the opportunity to grab a bonus from the marketplace,” Kobitskiy says.

“So, as the customer accumulates points or brand currency through gamification, he or she can ‘buy’ bonuses, without necessarily asking for them or having been offered them.”

A focus on finding new ways to retain customers will inevitably increase their lifetime value, helping to mitigate rising acquisition costs. This will ultimately dictate the success of a marketing strategy, as long as the operator’s business model allows the initial financial outlay to be absorbed.

“Working on retention is the best way to overcome increasing marketing expenditure, for small and big brands,” Kobitskiy adds. “Of course, big brands will need as much automation and optimisation as possible across all of their processes in order to reach their specific target audiences and ensure the potential of each and every one is maximised.

“This is where we can assist. We are able to offer extremely powerful personalisation and optimisation tools that can ‘touch’ every customer and press the right buttons for each individual.”

Personalisation
This drive for a more tailored approach tallies with broader strategic efforts across the industry. Personalisation is now expected by platform users – and high-value customers are likely to walk away if a more customised offering, reflecting their interests and motivations, is available elsewhere.

With that in mind, Smartico.ai is exploring opportunities to boost loyalty by diversifying its tools so that operators can engage with customers on a deeper level.

“We have several targets over the next year-and-a-half, with the aim of taking Smartico.ai to the next level, for the benefit of our clients and their customers,” Kobitskiy says.

“We are on the look-out for strategic investors that share our vision for gamification and personalised engagement, but we are also keen to invest in ramping up our back-end capabilities that will translate into improved user experiences.

“We want to extend our capabilities in artificial intelligence (AI) and machine learning in relation to loyalty tools. This will enable us to orchestrate and build AI-driven campaigns and models that will be able to predict the offers that will attract, engage and excite users.”

Loyalty tools
In an era of hyper-targeted automated marketing campaigns, Smartico.ai is determined to expand its creative approach in an industry in which brand personality matters.

Crucially, the personal touch through a customised approach can build stronger bonds between individuals and their chosen platforms – and keeping the fun in that relationship can have fruitful long-term consequences.

“It is important to improve and refine the offering continuously so users can be presented with the right games, rewards and experiences in the right way,” Kobitskiy says.

“We will create more loyalty tools that can drive these strategies for our clients. For example, we have a number of scratchcard-like mini-games in the pipeline that can broaden their offering and provide different rewards. We recently released our first mini-game – a ‘spin the wheel’ or ‘loyalty wheel’ – that is designed to reward loyal customers.

“Furthermore, we will continue to develop our Daily Rewards calendar to ensure the user experience remains fresh for established customers, as well as new arrivals. These tools will be key to making an impact as competition continues to increase in the marketplace.”

Group revenue for the three months to 30 September came to $77.6m, compared to $60.1m in the prior year period. Breaking this figure down, services brought in $68.7m, up 23.6%, while product revenue almost doubled to $8.9m.

For the first time, Inspired’s leisure segment – which includes the Playnation brand and provides gaming and arcade machines for the UK holiday and leisure industry – was the largest contributor to revenue. The segment brought in $33.4m, up 91.6% from 2020 thanks to record revenue from holiday parks and the rollout of new cashless solutions.

On the other hand, revenue from Inspired’s gaming segment declined, by 10.0% to $27.6m. This decline was exacerbated by the business receiving a $9.8m payment from a UK customer in Q3 2020, for its share of a value added tax (VAT) rebate.

Revenue from interactive gaming was up 109.6% to $6.1m, while virtual sports revenue grew 26.5% to $10.5m. During the quarter, US online gaming operator BetMGM went live with Inspired’s virtual sports products in New Jersey.

“We believe the third quarter is a good indicator of the strength of each of our segments coming out of Covid-19,” Inspired chairman Lorne Weil said. “Looking out to 2022, we see continued growth across each of our segments, with our interactive and virtual sports segments increasing their relative contribution to overall results.”

Expenses, meanwhile, came to $62.7m, a 23.2% increase. Costs of services were $13.8m, up 27.8%, while costs of product sales grew 42.4% to $4.7m. Selling, general and administrative expenses were up 48.3% to $33.0m, while depreciation and amortisation costs declined to $11.2m.

This meant that Inspired reported a net operating profit of $14.9m, 81.7% higher than in 2020.

After net interest expenses of $7.2m, more than offset by a $17.3m gain from changes in the fair value of warrants, plus $300,000 in other income, Inspired’s pre-tax profit was $25.3m. This was up significantly from the $500,000 Inspired made before tax in Q3 2020.

The business made an additional $3.2m gain from foreign currency changes, plus another $700,000 in actuarial gains and changes in value from hedging instruments, led to a comprehensive profit of $28.9m. This was a stark difference from the $4.1m loss it made in 2020.

“I am very pleased with our third quarter results, as they reflect that we have emerged from the pandemic a much stronger, leaner and more efficient company with significant momentum and increased growth opportunities,” Weil said.

“Our evolution this year, compared to pre-pandemic periods, is being driven by consistent growth in the operating performance of our capital efficient interactive and virtual sports segments, demonstrating the substantial demand that exists for our products as well as an acceleration in general industry trends.”

After the quarter ended, Inspired launched online lottery content for the first time. An extension of its existing partnership with Loto-Québec will see Scarab Treasures and Fruit Drop Scatterdrops rolled out in 2022.