Month: May 2022

Michigan joins Delaware, Nevada and New Jersey as a party to the Multi-State Internet Gaming Agreement, which allows for liquidity to be shared for online gaming between member states.

This means that players can play peer-to-peer games such as poker across state lines.

“I am happy to announce Michigan has joined the multistate poker compact, and much of the increased tax revenue from multistate poker will go to support K-12 education in Michigan,” Michigan Gaming Control Board executive director Henry Williams said.

“By joining, Michigan will almost double the potential pool of participants in multistate poker games.”

Michigan joining the agreement follows the state passing a bill to legalise interstate poker – sponsored by Senator Curtis Hertel – in December 2020, just before it launched online gaming in January 2021.

Michigan then announced in April of this year that it would join the Multi-State Internet Gaming Agreement.

“Michigan poker players will enjoy more options and will likely play for bigger money when they can compete against players from other states,” said Senator Hertel. “I am glad we were able to make this possible for Michigan poker players.”

The growth of crypto wagering and Web 3.0 are turning traditional wagering on its head.

The entire real-world wagering ecosystem is being rebuilt in virtual worlds like Decentraland, presenting opportunities and risks to established operators.

In Decentraland, players must first purchase or transfer cryptocurrency (MANA or DAI) tokens to their Decentral Games wallet, which they can stake on certain games. 

Online crypto operators, which have a similar UX to online fiat operators like FanDuel and DraftKings, are already recording extraordinary turnover.

In Q3 2021, the total number of bets placed using cryptocurrency increased by 181% yoy, while the share of bets in crypto (43.3%) is fast approaching par with fiat (source: Softswiss).

For example, crypto-focused Sportsbet.io (not to be confused with the Australian ‘Sportsbet’ business owned by Flutter) records US$2.7bn of turnover per month.

To put that in perspective, in 2021, Australia’s largest operator averaged US$1.2bn of turnover per month and has around 50% market share in the country.

Sportsbet.io has partnered with multiple renowned football clubs, including Arsenal, Southampton and São Paolo.

Monetising the metaverse

The fund has a particular focus on companies providing a critical B2B service to gaming and wagering operators. Examples of this include investments in racing data providers, voice and text to bet solutions and affiliate marketing services.

An interesting business we have seen in the Metaverse is Admix, founded by Sam Huber in 2017.

The core business of Admix is the creation and publication of in-play ads that do not impact the experience of the player. This aligns the interests of the advertiser, the game developer and the player.

Admix already counts many of the largest global brands as clients, with over 1000 brands buying Admix inventory each month.

A persistent criticism of Web 3.0 is the lack of monetisation in worlds such as Decentraland and The Sandbox. However, Admix demonstrates how critical B2B service providers can generate revenue from Web 3.0.

Admix is incredibly excited about the growth of Web 3.0 but is addressing it in a way more akin to a real estate developer. The company has been purchasing land in Decentraland and The Sandbox since 2020 and is leasing that land out to many of the brands who are existing clients of his core ‘in-play ad’ business. 

“The same concepts of proximity, how the price is created, and why you would buy versus rent, all of these are the same questions you would ask of physical real estate.”

Sam huber, CEO, AdmiX

Building experiences on land parcels and leasing it back to their clients has sometimes yielded monthly rents over $60,000, with profit margins per development of over 70% (Fast Company). For example, in Decentraland, Admix developed a display of oversized perfume bottles for L’Oreal, and has built temporary installations for events like New York Fashion Week.

It is no surprise to us that much of the current activity in Decentraland occurs in its Vegas City District, a digital Sin City.

We envision that service providers like Admix will take their experience from prior tangential ventures and apply it to the growth of crypto gaming and wagering, perhaps attracting clients like Sportsbet.io as well as mature land-based brands like Caesars, Wynn and MGM.

It would not surprise us to see many of these businesses on an Admix-owned billboard in Decentraland. 

Dominant Web 2.0 companies are generally only 20 years old and took a couple of years to begin generating meaningful revenue. Their extraordinary growth has catapulted many of these businesses to become the world’s largest by market capitalisation.

They all have one simple common characteristic – they deliver a service that their customers either need or love. For example, running an e-commerce business without Google ad spend is practically impossible today.

Burgeoning worlds like Decentraland and The Sandbox are, for the most part, letting land owners direct the path to monetisation and we are excited to see its continued development.

Company Revenue (US$m)First Full YearFirst Full Year +2First Full Year +5First Full Year +10First Full Year +152021Meta (Founded 2004)915377712,46670,697117,929Google (Founded 1998)0.22703,1802,37065,670257,637Amazon (Founded 1994)0.51147.82,7608,49034,204469,822Twitter (Founded 2006)041062,5305,0775,077Nvidia (Founded 1993)*13.3374.51,3693,0693,99826,914*1997 taken as First Full Year due to lack of private company data

Since inception in August 2019, Waterhouse VC has achieved a total return of 2,057% as at 30 April 2022, assuming the reinvestment of all distributions. See our long-term performance table at the end of this newsletter. 

Please note the above information in relation to Admix, DraftKings, Decentraland, The Sandbox, Sportsbet.io, Meta, Google, Amazon, Twitter, Nvidia, Caesars Entertainment and MGM Resorts is based on publicly available information in relation to the company and should not be considered nor construed as financial product advice. Waterhouse VC has a position in Flutter, Meta and Google. The information provided in this document is general information only and does not constitute investment or other advice. Readers should consult and rely on professional investment advice specific to their individual circumstances.

Participants will bid for one of 10 online gambling licences on offer, with each lasting 15 years.

All bidders must provide their “legal documentation, legal capacity [and] history of technical and economic/financial capacity” to operate online gaming, as well as their offer for a licence fee.

Operators will have until 5 July to submit bids, with plans for licences to come into effect from 14 September.

The licence will allow an operator to offer online casino games and betting on sports, horse racing and certain non-sporting events. Each vertical will be subject to a 10% gross gaming revenue tax rate.

 Córdoba – which is home to 3.3 million people – passed a bill to legalise online gambling in January, after it was introduced at the end of 2021. The original version of the bill only allowed for five licences, before this was expanded to 10.

Argentina allows for gambling to be regulated on a province-by-province basis.

The province of Buenos Aires awarded licences to seven operators last year, while online gambling in the city of Buenos Aires officially launched in December 2021.

The case, which was initially heard in the Gießen Regional Court in September last year, relates to activity on the German-language website between January 2018 and February 2020, a period in which the customer lost more than €26,000.

The court said that the casino was operated by a business based in Gibraltar and did not hold a licence to offer online gambling anywhere in Germany. At the time, Schleswig-Holstein was the only state in which online gaming was legal.

The GlüNeuRStV, which expanded Germany’s igaming market outside online betting, did not come into effect until 1 July 2021.

The Gießen Regional Court ruled in favour of the player, with the Frankfurt Higher Regional Court also agreeing that the losses should be reimbursed as the online casino was operating without a licence.

“Since the operator violated the ban on online gambling in accordance with Section 4 (4) of the State Treaty on Gambling with their offer, they obtained the stakes without any legal reason,” the player’s attorney István Cocron said. “We have therefore demanded that our clients must be fully compensated for the loss.”

Cocron added that while the decision could be appealed by the operator, it is unlikely to be successful given the nature of the original decision, saying that the introduction of GlüNeuRStV does not change this breach.

Referring to the player breaching the State Treaty on Gambling, the Frankfurt court said it cannot be certain that the player was aware of the ban on online gambling, nor that he was breaking rules set out in the Treaty.

Therefore, the court ruled that the original decision of the Gießen court was correct and the consumer was entitled to reimbursement.

“Numerous courts have already ruled that online casinos must compensate players for their losses,” Cocron said. “The decision of the Frankfurt Higher Regional Court shows that the arguments of the providers of online gambling are in vain and the players therefore have a very good chance of recovering the money they thought they had lost.” 

The ruling comes after the Regional Court (Landesgericht) for Köln, in Nordrhein-Westfalen, in March ruled that an online casino operator must reimburse a player for €25,375 they lost while playing with the operator before online casino gaming was legalised in Germany.

The consumer played online casino games hosted by the unnamed operator in question between October 2017 and April 2020.

This was the first case of its kind in Germany in which a regional court sided with the player, though lower courts had found the same, with earlier, similar cases having been dismissed.

At a meeting held earlier today (20 May), some 92.05% of shareholders present and voting were in favour of the acquisition, and 99.91% of the votes cast by shareholders were in favour of the acquisition.

This vote had been due to take place on 26 April but was postponed as Blackstone had not received all of the relevant regulatory approvals.

While Blackstone is yet to secure full regulatory approval, Crown has scheduled a court hearing for approval of the scheme on 24 May. However, as regulatory approvals are not expected to be finalised by this date, Crown will request an adjournment until 6 June to allow Blackstone more time.

If the court approves the deal, a copy of the court orders will be lodged with the Australian Securities and Investments Commission, after which the scheme will become legally effective and Crown shares will be suspended from trading on the ASX.

Subject to all conditions being satisfied, it is expected that the scheme will be implemented on the seventh business day following the date on which the scheme becomes effective. At this time, Crown Shareholders will be paid their scheme consideration.

Blackstone first submitted a bid of AUS$8.02bn (£4.63bn/€5.33bn/US$5.64bn) to acquire Crown in 2021. This initial bid was rejected but after Blackstone raised the bid to $8.87bn, this was unanimously approved by the Crown board.

The offer came at a time when Crown was faced with a number of inquiries. In February 2021, Crown was deemed unsuitable to operate a casino in Barangaroo, Sydney, after an investigation uncovered evidence of money laundering in its facilities.

Later in the year Crown was also ruled as unsuitable to operate a casino in Victoria, with an investigation ruling that Crown had engaged in “illegal, dishonest, unethical and exploitative” conduct.

Similarly, in February 2022, Crown was found to be ineligible to operate its casino in Perth.

Tabcorp will lodge a copy of the orders made by the court with the Australian Securities and Investments Commission (ASIC) on 23 May, with the scheme will be effective on that date.

Shares in demerged business, which will be named The Lottery Corporation, are expected to begin trading on the ASX on 24 May on a deferred settlement basis. Tabcorp’s securities will trade on an ex-demerger entitlements basis, also from 24 May.

Tabcorp said that the demerger is expected to be implemented on 1 June, with shares in The Lottery Corporation to commence trading on a normal basis on the ASX the following day.

The court approval comes after Tabcorp shareholders last week overwhelmingly voted to approve plans for the demerger. Some 98.78% of the total votes cast during Tabcorp’s General Meeting and Scheme Meeting were in favour of the demerger, with just 0.17% voting against the proposal and 0.89% votes classed as open votes.

Tabcorp first announced plans to spin off its Lotteries and Keno arm in July 2021 following a strategic review of its operations.

The review begun four months earlier and looked at structural and ownership options for Tabcorp to create more value for shareholders, including potentially selling off its wagering and media business. 

At the time, Tabcorp said a number of unsolicited proposals had been made for the division, including an AU$3.5bn bid from Entain and $4bn bids from Betmakers and Apollo Global, but the business said none of these represented the true value of the division. 

While the review led to Tabcorp keeping the wagering arm, it instead decided to spin off the lotteries business, which would result in two separate companies. 

One of these businesses was renamed The Lottery Corporation and comprise most of the former Tatts business, but without gaming services. The second business was named New Tabcorp and would include the wagering and media arm alongside gaming services.

In March, New South Wales court approved a meeting that allowed shareholders to vote on the demerger, shortly after which Tabcorp outlined the strategies for each segment of its business following the demerger.

Honcharuk joined the business in May 2020 and was based at Playson’s development studio in the Ukrainian capital city of Kyiv.

Before his time with Playson, Honcharuk worked as a casino games consultant for more than two years, prior to which he was a games director and product owner at Techona, based in the Czech Republic.

Earlier in his career, Honcharuk was a game produce and studio manager at Playtech and also art director supervisor at NetEnt.

“We are devastated to lose such a cheerful, witty, kind, honest, and smart individual who we regarded as an outstanding colleague, but a great friend too,” Playson said.

“While his creativity and enthusiasm played a crucial role in the development of Playson’s recent top-performing games, his loss will also be felt throughout the wider industry, having worked across many companies during an igaming career spanning more than 14 years. 

“Our deepest sympathies are with Oleksandr’s family and friends. He will be sorely missed. Rest in peace, Oleksandr.”

In March, Playson said that many of its employees have volunteered to defend Ukraine in a number of ways.

Some staff took on roles to fight disinformation and help with resettling and providing food and logistics for Ukrainian refugees, while others volunteered for the Ukrainian Armed Forces.

With the country being home to a wide range of operators and suppliers, a number of businesses in the gaming industry have been impacted by the war in Ukraine.

TTB had been subject to a number of restrictions – part of the City Code on Takeovers and Mergers – as a result of its role in advising Gopher Investments, a minority shareholder in Playtech, over its potential takeover offer for the business last year. Gopher ultimately withdrew its offer less than a month after making it.

In February, TTB asked Playtech to release it from these restrictions in order to make an offer itself.

This did not occur, however, meaning TTB was still subject to the restrictions until they ended today (20 May).

Now, under the City Code, TTB must either announce its firm intent to make an offer or announce that it will not do so by 5pm on 17 June.

This deadline can only be extended with the consent of regulatory body the Panel on Takeovers and Mergers

“Discussions between the company and TTB are ongoing and progress continues to be made,” the board Playtech said. “There continues to be no certainty that an offer will be made, or the terms on which any offer may be made.  The independent committee is conscious that TTB has been considering a possible offer for Playtech for 15 weeks.” 

Playtech’s board added that, should it receive a bid, it would pursue whichever option maximises value for shareholders, and pointed to the strong performance of the supplier in its Q1 results.

“The independent committee continues to explore options for maximising shareholder value, and reiterates the strong performance of the group, as announced to the market on 5 May 2022, which has continued through the month of April and into the month of May.”

The prospective offer from TTB already appears to have the backing of Playtech chief executive Mor Weizer and former chief executive Tom Hall, who both revealed that they would “explore participating in” the bid. As a result, Weizer will recuse himself from Playtech’s committee examining the proposal.

TTB’s February request to be released from the restrictions came after a bid from Aristocrat Leisure for Playtech, which had been recommended by the Playtech board, was rejected by shareholders.

Prior to confirmation of the TTB talks, Playtech’s board said the business could be broken up and sold off in parts, a prospect first raised last month.

Should the TTB deal go through, Playtech is expected to remain publicly listed, rather than going private.

The Props Network was founded in January 2020 and publishes bookmaker reviews, sports and betting information from across the US. It also broadcasts creator content from its podcast network.

The acquisition sees the appointment of Kyle Piasecki, co-founder of The Props Network, to the role of vice president of partnerships.

Previously Piasecki worked for Caesars Entertainment, where he managed VIP departments and customer relationships for land-based and online operations.

“Kyle and his team have developed a unique approach to what today’s media networks should be by providing value to creators, consumers, and gambling industry partners alike,” said David Woodley, president and chief revenue officer at Playmaker.

“The acquisition of The Props Network and bringing Kyle on board to our team gives Playmaker additional digital channels and strategic insights in the U.S. gambling market via affiliate, podcasts and more.”

“Playmaker is a demonstrated leader in multiple sports, media, and entertainment verticals,” said Piasecki. “I cannot think of a better home for PropsHQ.com and our team.”

“The two organizations complement each other very well and I look forward to working with the Playmaker team to roll out new initiatives that engage fans and support creators.”

Group revenue for the 12 months to 31 December 2021, Paf said, was 19.5% higher than €113.0m in the previous financial year.

Revenue from the operator’s online gambling business increased by 20.4% year-on-year to €121.2m, helped by a rise in the number of active customers to 384,683, which was also a new record for the group.

Paf said this area of the business was also helped by the acquisition of the Speedy Ltd and Speedy Originals Ltd operations in August 2021, which contributed to €6.3m to the overall revenue total.

This growth also came despite Paf reducing loss limits for online customers. Players could only lose a maximum of €20,000 during the entirety of 2021, compared to €25,000 in 2020 and €30,000 in 2019.

Revenue from Paf’s land and ship-based operations also increased by 12.2% to €13.8m, which the operator was explained by a year-on-year rise in passenger numbers following the easing of novel coronavirus (Covid-19) restrictions. Other income for the group reached €6.8m.

Turning to costs and materials and services expenses were 15.2% higher at €30.3m, though staff costs were reduced by 12.7% to €23.4m. Activated development expenses stood at €721,705, depreciation and amortisation at €4.7m and amortisation of goodwill €5.4m.

After accounting for €42.1m in other operating expenses, this left an operating profit for the year of €35.7m, more than double the €17.4m posted at the end of 2020.

Financial costs amounted to €294,442, meaning pre-tax profit was €35.4m, an increase of 103.5% on the previous year. Paf paid €1.2m in tax and deferred further €179,816, which meant it ended the year with a net profit of €34.3m, up 105.4% year-on-year.

“2021 was once again a strange year with the pandemic constantly present and influencing our everyday lives and our working life,” Paf chief executive Christer Fahlstedt said. “However, we have adapted in a completely different way compared to last year, and so slowly a new way of working has emerged. 

“Now that we hopefully see the end of the acute phase of the pandemic, there are many new ideas and lessons to be learned that we will take with us and that make us a better and more flexible company for both our customers and our employees.”