Month: April 2022

In the first phase of the deal, GiG will provide its full online casino solution to the land-based operator, including its technical platform, managed services, gaming content, front-end development, CRM, compliance and marketing.

The deal is then set to expand into other verticals beyond online casino at a later date.

“Through GiG’s full turnkey managed service solution, the complexity of digitally transforming the retail business online is greatly reduced, whilst at the same time, reducing the operator’s cost of entry,” the supplier said.

The full contract with the operator is set to be signed in May or June and will last for three years. The operator is then expected to go live with its GiG-powered online product in the second half of 2022, and is expected to record a positive earnings contribution from the operation from Q4 of this year.

“I am extremely excited to partner with a prominent operator within the land-based industry that shares our values on responsible gaming, CSR and passion about the power of embracing digital transformation,” GiG chief executive Richard Brown said. “We see great potential in the UK, particularly when we can harness ‘brand equity’ and the retail footprint that the partner holds with our omnichannel solutions. 

“We look forward to working closely with their team to maximise their potential through a successful digital transformation and anticipate this to become a significant and high-value client for GiG. This type of deal is directly in our ‘wheelhouse’, helping land-based operators digitally transform and showcase our product in the UK market.”

Earlier this month, GiG announced that it had completed the acquisition of sportsbook supplier Sportnco for €51.3m, bolstering its sports betting offering. The deal was partially financed by an investment from SkyCity, which gained the right to nominate chief executive Michael Ahearne to GiG’s board of directors as a result.

As the William Hill assets are larger than the current 888 business, the merger – agreed in September 2021 – is considered a reverse takeover, and so must be approved by shareholders of 888. In a prospectus to shareholders, 888’s board outlined why it backed the deal, and provided more information about both William Hill and the effect of the Gambling Act review on the combined business.

Shareholders will meet at 10:00 am on 16 May in London to consider the deal. Those who cannot attend in person may apply for a proxy vote by 11 May.

The prospectus comes less than a month after 888 and Caesars agreed to reduce the purchase price to acquire the assets by £250m (€297.9m/$315.0m), with the cash portion of the deal now set at £584.9m instead of £834.9m.

This, it said, was due to a “change in the macro-economic and regulatory environment”. Most notably, it said that the William Hill business’ licence to operate in Great Britain was under review, and so the business had set aside £15m to cover these costs. In addition, Caesars provided an indemnity on certain brands to cover potential costs from this review.

Despite this impact, however, 888 said the deal made strategic sense for both businesses at the new purchase price. It noted that the new business would be the third-largest publicly traded online gambling operator in the world and argued that the deal “therefore represents a transformational opportunity for 888 to significantly increase its scale, further diversify and strengthen its product mix, and build leading positions across several of its key markets”.

In particular, it said the deal would help 888 diversify by increasing its exposure to sports betting, while also enhancing its position in locally regulated markets.

The business also said that its newfound scale would help it overcome a number of challenges, such as potential marketing restrictions.

By acquiring the UK’s largest retail bookmaker, 888 said the purchase would also represent “an attractive omni-channel opportunity in the UK”, with the potential to leverage its retail footprint “to deliver a better customer experience”.

Finally, the business said it expects significant cost synergies from the deal, including annual savings of £100m by 2025. This, it said, would be due to creation of a single proprietary platform for both parts of the business, as well as the removal of “duplicate marketing” and other costs such as duplicate licence fees.

The prospectus also provided details of the financial performance of the non-US William Hill business. The business made £1.24bn in revenue in 2021, up by 7.3% from 2020 but still down by 14.7% from 2019. 

Slightly more than half of this total came from UK online operations, with £628.6m, up 24.9%, thanks to £326.2m in gaming revenue and £302.4m in betting revenue.

Retail revenue declined further amid continued Covid-19 lockdowns, as the retail division brought in £336.8m, down 4.9% from 2020 and 53.0% from 2019.

As William Hill’s retail operation only exists in the UK, that market contributed £965.4m in revenue for 2021 across all channels.

International online revenue, on the other hand, dipped by 8.0% to £276.0m.

The vast majority of William Hill revenue – at £1.13bn – came from locally regulated markets.

The business reported earnings before interest, tax, depreciation and amortisation (EBITDA) of £164.3m.

However, the business recorded a net loss of £229.4 after these items were included.

The new group, therefore, would have recorded revenue of $2.68bn (£2.13bn/€2.53bn) in 2021, but recorded a net loss of $368.5m.

In addition, 888 noted the possible impact of the UK government’s ongoing Gambling Act Review on the new business, particularly given its increased exposure to that market. It said that possible policies that may be implemented include slot stake limits set somewhere between £2 and £10, “stricter criteria for affordability, including fixed deposit limits for players” and “certain types of advertising restrictions”.

The operator said that revenue from slots in the UK for Q1 of 2022 would be approximately £370m for the combined business, of which a percentage in the “low single digits” would come from stakes of more than £10 per spin.

If a £2 per spin limit were introduced, it said it would expect a revenue hit of £55m and reduced earnings before interest, tax, depreciation and amortisation of £16.6m per year.

When looking at affordability, 888 said it was harder to calculate a financial impact, but noted that it was set to lower its trigger for these checks to £500, after reducing it from £2,000 to £950 last year. The business had previously been fined by the Gambling Commission for a number of failings found in a 2020 review, many of which related to the fact that its triggers were set at £40,000 at the time.

The business added that it had already experienced advertising restrictions in Spain and Italy, which it said had a slight positive effect on profitability. As a result it said it “does not expect the potential advertising restrictions to cause a significant negative impact on the enlarged group’s EBITDA, if at all”.

Looking at its plan for employees, 888 said that it would conduct a full review of the William Hill business after the deal closes, with this review looking for opportunities to reduce costs by eliminating unnecessary duplication. No decisions in this area have been made yet, however.

The deal is set to close this quarter, with a long stop date of 30 June.

“The board believes that the integration of the target group can be achieved without causing any material disruption to the underlying operations of 888 group or the target business,” 888’s board said.

888 had agreed to acquire the non-US assets of William Hill soon after the entire WIlliam Hill business was bought by Caesars, which intended to dispose of all but the US arm.

In an investors webcast today (28 April), Tjärnström explained how Kindred implements affordability checks and said that the risk of these driving some customers away had been a challenge.

“With the tools we have at our disposal to estimate affordability, basically requiring questions to be asked to the customers, the customers – especially those in a high-net-worth segment- are reluctant to provide the documents necessary to clear them,” Tjärnström said.

“As a consequence we are unable to accept that kind of business.”

He added that this affected Kindred’s high value segment throughout Q1.

“That’s the biggest impact we’ve seen during the quarter, especially in the high-value segment.”

Tjärnström went on to explain that Kindred has implemented “various initiatives” related to affordability, and has input backstops on every customer account.

However, he criticised current regulation related to affordability, calling it “unclear”.

“We’ve gone over and above what is required,” he continued. “But it’s always a question of what is enough.”

Elsewhere Tjärnström commented on Kindred’s activity in the North American market, focusing on the company’s investments.

“We’re working very hard on optimising our investments and also returns we’re getting, especially on the North American market,” said Tjärnström.

This optimisation comes at a price, he continued, as Kindred “scaled back” its investments in the first quarter in favour of prioritising certain states.

“We have scaled back on own investments, not participating at the leading edge of these marketing and customer incentives, ” said Tjärnström. “We’re focusing our fundamentals, reducing our offers and marketing to some extent, but we’re still concentrating more on investments in fewer select states, then scaling up.”

Tjärnström added that Kindred is “optimistic” about its presence in Ontario, where it has already had a “small presence”.

Looking towards the Netherlands, Tjärnström said that it would be difficult to comment on Kindred’s presence in the country “… until we [Kindred] have a licence, until we’re back and can see tangible results of the efforts we’re doing.”

Kindred ceased activity in the Netherlands in 1 October 2021– the day its online market launched – as per the conditions to receive a licence stipulated by the Dutch regulator, Kansspelautoriteit.

Kindred reported revenue of £246.7m (€293.8m/$308.5m) in its Q1 2022 results today- a year-on-year drop of 30.2%, which the company attributed to its exit from the Netherlands.

he will start at the affiliate business from 1 June 2022.

Munch-Jacobsgaard will succeed Christina Bastius Thomsen, who has moved to the role of head of corporate compliance and sustainability.

Munch-Jacobsgaard previously held the position of institutional equity sales at Danske Bank and SEB, where he advised on equity investments in Nodic markets.

“In Better Collective we have known Mikkel for a long time, through our investor relations work, and have always been impressed with his knowledge of Better Collective’s business, the trends driving our industry and not least his deep understanding of the dynamics of the equity markets,” said Flemming Pedersen, chief financial officer at Better Collective.

“In our management team we are convinced that Mikkel’s professional skills and personality is a perfect match for Better Collective and our ambition to further build strong relations to our external stakeholders.”

Last week Better Collective acquired esports site Futbin, in a deal worth €105m.

The business described the step as its “latest strategic move”, as part of its work to “expand its global footprint across numerous regulated markets”. The business also received a Danish licence in January of this year.
“Soft2Bet is absolutely delighted to secure this Irish licence,” chief executive Boris Chaikin said. “There’s a rapidly growing iGaming player base in Ireland and we can’t wait to join this extremely promising market at this stage in its development.
Chaikin added that the process of receiving a licence proved to be a smooth one.
“The Irish authorities have made this an incredibly smooth process, providing a positive, collaborative and helpful dialogue all the way through. We look forward to offering our services throughout the country.”

Revenue for the year remained minimal, at $25,174, which was down 66.6% from 2020. All of this total came from the Isle of Man.

Despite the lower revenue, costs of sales grew slightly, to $290,286. This was mostly due to a 24.1% increase in platform and service provider fees to $277,994, as the cost of free bets dropped by 80.8% to $12,292.

This meant the business made a gross loss of $265,112, which was up 24.8% year-on-year.

Operating expenses also increased by 62.1% to $8.4m. This included $1.9m in share-based compensation, up 113.0%, $1.7m in salaries and director fees, up 12.2%, and $1.4m in consulting fees, a 111.2% increase. The business also paid $1.3m in legal and professional fees and $943,234 in advertising and marketing costs.

After also paying $40,799 in interest income, the business’ pre-tax loss was $8.6m, up 57.0%. The business paid only $6,061 in taxes, meaning its final loss was also up 57.0% to $8.6m.

Chief executive Thomas Rosander said that while the business had focused on building its platform in 2021, it was not well-placed to work on acquiring customers.

“During fiscal 2021, our team worked to enhance and extend both our proprietary platform and infrastructure, positioning us to launch our player acquisition efforts in 2022,” Rosander said. “Our work has enabled us to develop and launch a next-generation wagering platform, powered by superior business intelligence infrastructure to support our player acquisition efforts, with the aim of optimizing marketing spend and player value.    

Rosander added that the business had added a number of new verticals including online casino as part of this.

“As part of our plan to build a betting platform for a new generation of players during 2021, we made hundreds of improvements to the platform, announced eight new partnerships and further strengthened our team,” he said. “To compliment our core esports offering, we added sports wagering, enabling fans to bet on hundreds of daily markets on sports such as football, basketball, soccer and hockey.

“We concluded the year with the online casino launch, bringing an expected near-term revenue stream in a vertical where I have had prior successes throughout my career, including my tenure as CEO of Dunder.”

“We are looking forward to launching our offerings in Ontario and expect to enter additional regulated markets during 2022.”

The chamber reviewed Senate Bill 2844, which added a clause to the Massachusetts General Laws clarifying that sports betting, whether online or land-based, was not a form of illegal gaming.

The bill would also prohibit “advertising, marketing and branding through certain identified promotional items that, as determined by the commission, tend to increase the likelihood of problem gambling, which may include giveaways, coupons or promotional gaming credits”.

In addition, the bill would ban marketing during a live sporting event and would only allow online marketing if 85% of the audience “is reasonably expected to be 21 years of age or older”.

Online sports betting would be taxed at 35% of revenue and retail sports betting at 20%.

A Category 1 sports betting licence may go to any existing gaming licensee, provided they pay a $5m application fee. The three current gaming licensees in the state are Wynn’s Encore Boston Harbor, MGM’s Springfield casino and Plainridge Park Casino from Penn National Gaming. Each of these operators may offer not only retail betting but also one online betting skin.

The state Lottery Commission may issue up to six Category 2 licences for online-only sports betting, chosen through a “competitive application process”. These licensees must also pay a $5m application fee.

In addition, Massachusetts governor Charlie Baker is instructed to negotiate with the state’s Native American tribes for a new Class III gaming compact that would also allow for sports betting.

Bettors will also not be permitted to place wagers on college sports.

After considering amendments, senators voted to replace Senate Bill 2844 with House Bill 933, which had already passed the House in 2021, and to replace all of HB933’s text with that of SB2844. The Senators then voted to approve this new version of HB933. 

As the House had already passed a version of House Bill 933, a joint conference committee of both houses will now meet to create a bil that both chambers can approve.

The initial version of the House bill did not include a ban on promos or college betting and allowed land-based operators three mobile skins each as well as unlimited online-only licences.

The bill – titled the Betting, Gaming, Lotteries and Amusements Bill – modifies several aspects of the Betting, Gaming, Lotteries and Amusements Order 1985, which regulated gambling in Northern Ireland until now.

It forms the first part of an agenda to overhaul gambling regulation, with future plans to formulate legislation to address online gaming in Northern Ireland.

One of the changes brought about through the bill is that betting shops can now open on Sundays and on Good Friday. However, betting shops will still have to close on Christmas Day.

In September 2019 a consultation was launched with 66% respondents supporting the relaxation of bookmakers office hours. Most also thought that bookmakers should be allowed to open on a Sunday.

It is also now an offence to allow anyone under the age of 18 to use a gaming machine. Anyone found guilty of this offence could face 6 months in prison.

A mandatory levy on licensees will also be introduced, along with a code of practice for those holding licences.

The bill reached its final stage in March, with Communities Minister Deirdre Hargey emphasising the benefits it will bring to the wider community.

“Today sees the bill complete its legislative passage through the Assembly,” said Hargey. “It will improve protection for children and young people through the creation of a new offence of inviting, causing or permitting a young person under 18 years to play a high stakes gaming machine.”

“The bill also provides increased opportunities for local charities, sports clubs and other voluntary groups to raise more money for good causes by increasing the maximum ticket price and simplifying the rules around deduction of expenses that apply to societies’ lotteries.”

In February, Northern Ireland’s Communities Committee spoke out in support of the bill, but called for an official gambling regulator to be introduced.

The gaming operator’s turnover was AUS$1.40bn (US$1.0bn/€948.4m/£797.7m) in the three months to 31 March 2022, up from $905.2m during Q3 2021.

While there was impressive growth in both its North American and Australia segments, the 70% uptick in the former means that it now generates almost four-fifths of overall turnover. Some $818.6m was generated in North America, while Australia saw growth of 37% to $579.4m.

From this turnover figure, the group recorded gross win of $124.9m during Q3, which was up 24% year-on-year.

Gross win was up just 1% to $46.1m in the US but grew by 44% in Australia to $78.8m.

The group’s growth has been driven by launches in New York, West Virginia, Pennsylvania and Ontario during the period, and it is now active in 10 US states plus the Canadian province. PointsBet has seen a 96% rise in cash active clients in North America compared to a year ago, with that figure now at 249,497.

PointsBet said it accounts for 3.6% of overall US online gambling handle, including an 8.9% share of the Illinois market. It currently accounts for 4.3% of the fledgling Ontario betting market that went live at the start of April.

PointsBet’s iGaming product is also now live in four US states plus Ontario and generated $5.5m of net win during the period.

Growth in Australia was powered by 47% increase in cash active clients compared to the same period in 2021, with that figure now at 232,763. That number was slightly down on Q2, although PointsBet said Q3 is historically seasonally quieter due to the sporting calendar.

Total net win was up 18% to $76.9m, with Australia up 37% to $52.3m and the US down 8% to $24.6m.

After including B2B operations, PointsBet reported revenue of $78.0m for the quarter.

Cost of sales were $51.3m during the period, with sales and marketing at $53.7m, staff costs at $23.4m and administration expenses at $13.6m. The group also spent $16.5m on US business development.

Marketing costs were down quarter-on-quarter due to scaling back in Australia. Some $33.2m was spent on marketing in the US. PointsBet spent US$11m on market access payment to the Pennsylvania Gaming Control Board, while cost of sales cash payments rose as a result of increased trading activity in the US.

As a result of these costs, PointsBet made a net loss of $58.5m for the quarter.

In an update on several strategic initiatives, the group said it has successfully completed a $30m term loan with Beach Point Capital.

GAN, which owns B2C brand Coolbet and is a major B2B technology provider in North American gaming, also said it is poised for near-term opportunistic implementation of its previously announced $5m share repurchase authorisation following the public disclosure of its first-quarter results.

GAN also said it has recently begun the implementation of cost controls along with other strategic initiatives that are expected to accelerate adjusted EBITDA generation and improve profitability.

The group said that its actions reflect its commitment to driving growth, improving profitability, and maintaining a well-capitalised balance sheet.

Karen Flores, GAN’s chief financial officer, said: “Today’s announcement ensures that we have the capital available to drive improved shareholder returns going forward.

“The incremental flexibility provided by the term loan allows us to execute our balanced capital allocation plan centered around investing in our B2B offering, growing Coolbet and our B2C presence, and returning capital to shareholders during a time when we believe our share price undervalues the long-term opportunities we have ahead of us.

“We are simultaneously taking steps to accelerate our path to improved adjusted EBITDA generation and profitability as we are acutely focused on our margin profile and efficiency measures.”

GAN added that Coolbet’s sports margin for the first quarter 2022 improved sequentially and was within the historically normalised range of approximately 7%.

GAN acquired Vincent Group – the owner of Coolbet, which operates in Europe and Latin America – for $175.9m in January 2021. In 2021, GAN’s B2C segment revenue amounted to $78.6m, whereas in the previous year, it did not record any B2C revenue.