Month: May 2022

However, in its earnings call, chief executive Neil Menashe said it could be “tough to meet or exceed our 2022 revenue guidance”.

He added that the business will issue a new guidance with its Q2 results.

Betway made up just over half of Super Group’s revenue, growing 20.0% to $187.0m, while revenue from Spin declined by 4.5% $147.5m.

Breaking revenue down geographically, North America was Super Group’s largest market, bringing in $150.5m, up 1.4%, of which $116.0m came from Spin.

Asia and the Pacific followed with $79.2m, a 16.6% increase, with $55.3m of this coming from Betway.

Africa and the Middle East revenue was up 54.3% to $65.1m and Europe revenue was $32.7m, down 29.7%. Both of these totals were almost entirely from Betway.

Latin American revenue came to $6.9m, up 7.8%, with Betway bringing in $3.3m to Spin’s $3.7m.

Looking at product meanwhile, online casino brought in $204.5m, which was 2.9% less than in Q1 of 2021. Almost all of Spin’s revenue came from online casino, plus an additional $57.5m from Betway.

Sports betting brought in a further $109.5m, up 30.4%, almost all from Betway. Betway made an additional $$19.9m from licensing out its brand and $597,000 in other income.

The business then paid $240.7m in direct and marketing expenses, up 12.2%. It also incurred $34.7m in general and administrative expenses, down 20.4%, $16.0m in depreciation and amortisation charges, down 20.0%, and $21.4m in transaction fees related to the $4.75bn merger that took Super Group public.

Super Group also made $2.4m in other operating income.

As a result, its operating profit was $24.1m, down 29.1%.

However, Super Group also incurred a large amount of non-operating costs associated with going public, highlighted by $126.3m in share listing expenses, and also including $29.4m in the change in fair value of warrant liabilities and $24.4m in the change in fair value of earnout payments.

In addition, the business had made a $10.0m gain in Q1 of 2021 from a bargain purchase, which had inflated non-operating income during that year.

As a result, the business made a $154.3m loss before tax, after a $41.5m profit the year before.

After paying $9.0m in tax, Super Group’s net loss came to $163.2m, after a $38.6m net profit a year earlier.

Alinda van Wyk, CFO of Super Group, noted that factors related to the business’ SPAC merger made it difficult to compare the bottom line from Q1 of 2022 to that of 2021.

“The results for the first quarter of 2022 reflected revenue growth and strong cash generation but were challenged on a period over period comparative basis due to industry and economic headwinds and costs related to our business combination and listing as a public company in January,” she said. “Despite tough period over period comparisons, Super Group experienced revenue growth and a period over period 39% increase in cash and cash equivalents.”

Neal Menashe, CEO of Super Group, said the business was confident it would grow further in future quarters.

“During the first quarter of 2022, Super Group began operating as a US publicly listed company and continued to expand in both existing and new markets in line with our growth strategy.” Mr. Menashe continued, “Our team has become accustomed to navigating the business through changing and challenging environments, and we believe the strategies that we are executing on will enable us to continue doing so as we take Super Group from strength to strength.”

The supplier said the extension forms part of Sportradar’s bid to enhance recreational cricket experience through electronic scoring and fan engagement applications.

The partnership includes the provision of the Play-Cricket Scorer app, Play-Cricket Live app, and the Countdown Cricket app for the next two years.

The Play-Cricket Scorer app was introduced in 2017, and more than one hundred thousand matches in England and Wales have been viewed via the platform.

The products broadcast live-scoring, streaming and video-highlights access for club admins, players and fans of all levels. The app integrates with the ECB’s Play-Cricket platform.

The launch also sees collaboration across the Countdown Cricket App, which was designed to increase entry-level participation for cricket players by enabling parents, teachers and junior coaches to organise and score countdown matches.

Alison Crowe, director of digital and data, ECB, said, “Our partnership with Sportradar enables us to deliver a quality experience to our recreational participants and fans through world class technology.

“With an ever-increasing number of participants across England and Wales, we’re looking to inspire the next generation to share their passion.”

Sam Taylor, managing director at InteractSport, part of Sportradar, said, “Sportradar is committed to supporting the growth of cricket at all levels. We believe the ongoing embedding of our digital solutions will enable the ECB to facilitate a closer connection with and relationship between recreational players. It will also add a new dimension to their engagement with the sport they love to play and watch.”

This follows Sportradar announcing the launch of its in-play virtual cricket solution earlier this month.

This, Spillemyndigheden ruled, amounted to a breach of Denmark’s Money Laundering Act.

The breach related to a case in which a young player was able to deposit approximatively DKK190,000 (£21,660/€25,537/$27,243) into their gambling account over one year, with Bet365 having sufficient knowledge of whether the funds originated from criminal activity.

Spillemyndigheden said the player’s age and the amount that was deposited should have warranted due diligence checks by Bet365, including obtaining information on the player’s income.

However, Bet365 did not carry out any form of investigation on the player, nor did it have any notes about his activity. Therefore the operator did not comply with its obligations regarding customer due diligence procedures, investigation and listing.

As such, the regulator said Bet365 violated the rules on customer due diligence procedures in Section 10, no. 1, and Section 11, subsection 1 of the Money Laundering Act, as well as the rules on the duty to investigate and the duty to list in Section 25 of the Act.

Spillemyndigheden said rules related to customer due diligence procedures, duty to investigate and duty to list are fundamental in the Act. Any violation would result in a warning, injunction or, in more serious or repeated cases, reporting to the police, it warned.

However, Spillemyndigheden said it would not pursue any prosecution of Bet365, noting the operator had subsequently introduced new business procedures for customer due diligence procedures and investigation.

As such, the regulator issued Bet365 a warning over the rule breaches.

The seven-year licence will run through to 30 June 2029, in accordance with the new State Gambling Treaty (GlüNeuRStV) and will allow Lotto24 continue offering its lottery brokerage products nationwide.

The follow-up licence is Zeal’s first issued under the GlüNeuRStV, which came into force on 1 July last year. Lotto24’s existing licence came into effect on 26 July 2017 and had been due to expire on 30 June this year.

It is also the third time its licence has been renewed, after it was approved in 2012 and 2017. Zeal noted that a separate advertising licence required under the State Gambling Treaty is no longer necessary.

The responsible gambling authority is the Lower Saxony Ministry of the Interior and Sport, though this will switch to the Gemeinsame Glücksspielbehörde der Länder, the new national gambling authority based in Saarland, from January 2023.

“We are pleased about the trust of the federal states; the licence duration of seven years underlines the company’s reliability under administrative law, which has already been proven for 10 years,” Zeal’s chief executive Helmut Becker said.

The licence renewal comes after Zeal this month reported a 101.6% year-on-year increase in net profit for the first quarter of its 2022 financial year, following a rise in revenue and reduction in operating costs.

The new State Treaty also allows for online slots and table games licences for the first time, though to date only Gauselmann Group subsidiary Mernov, which operates the Jackpot Piraten and Bing Bong brands, has been certified.

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In its quarterly report, Esports Entertainment group again said there was “substantial doubt about its ability to continue as a going concern for a least one year”. The business added that it “has not maintained compliance with certain debt covenants and is currently in default”.

As a result, chief executive Grant Johnson said the business would take action to alter its repayment plans and drastically cut costs.

“To address our liquidity position and improve our ability to invest in the business and adequately support our growth initiatives, we are actively working with our lender on key modifications to the loan and hope to have more to share on this front in the near-term,” he said.

To address these challenges and allow it to pursue growth, as well as achieve operational and profitability goals, Johnson said EEG will implement a number of strategies.

First, EEG will “dramatically simplify” its offering in the esports space, with an increased focus on SAAS-based technology under the ggCircuit brand, in-person tournaments under the EGL brands, and its peer-to-peer wagering platform. This asset-light model, Johnson said, will allow the operator to more efficiently leverage its esports assets. 

EEG will also “aggressively” cut costs across its seven brands, including the removal of duplicative functions and de-emphasising non-core assets. Johnson said EEG expects to record material savings over the next 12 months through an amended marketing strategy and through the implementation strategies to drive operating efficiencies. 

“We have also identified further avenues to increase our cost savings and will pursue these in the coming months,” Johnson said. “We are encouraged by the early results of these efforts and expect them to have a significant positive impact on our future results, including our progress towards profitability, with a goal to achieve break-even on an annualised basis by early fiscal 2023.”

In line with these changes, as well as its focus on achieving breakeven as quickly as possible, EEG has altered its forecasts for the full year. Revenue is now expected to reach between $55.0m and $60.0m, down from the initial range of $70.0m to $75.0m.

“While we have come a long way in a short period of time, there is much work ahead of us as we become a leaner organisation that can operate more efficiently and create greater value for our partners and shareholders,” Johnson said. 

Revenue for the three months to 31 March 2022 amounted to $15.7m (£12.5m/€14.7m), up from $5.4m in the corresponding period in the previous year. The operator said this sharp increase was mainly due to the impact of M&A activity in recent years. 

This included its acquisitions of online betting and gaming operator Argyll Entertainment in July of 2020, online casino operator Lucky Dino in March 2021 and Gameday Group’s B2C business, operating as the Bethard sportsbook brand, in July 2021.

Online betting and casino revenue increased 180.8% from $5.2m to $14.6m, while esports and other revenue jumped 538.7% to $1.1m.

In terms of geographical performance, revenue from its global operations, excluding the US, reached $14.7m, up 177.4% year-on-year, while US revenue rocketed 743.7% to $1.0m.

However, costs also increase rapidly. Total operating expenses for the third quarter amounted to $66.3m, up 502.7% from $11.0m in the same period in 2021, with spending higher in all areas.

In particular, EEG noted an impairment charge of $38.6m, including $23.1m of goodwill and $15.5m of long-lived assets in the Esports Gaming League (ESL), Helix Holdings and ggCircuit business units. In contrast, there were no impairment charges in the previous year.

EEG said that it “does not see a path to attractive profitability” in the Helix business, given its significant overhead and ongoing capital expenditures, and is currently working to divest its two existing gaming centres. 

In terms of ggCircuit and EGL, the operator said it has not effectively been able to monetise these assets due to liquidity constraints. Work is ongoing internally to forecast long-term opportunities for the businesses.

Such was the impact of higher spending that operating loss widened from $5.6m in Q3 of 2021 to $50.6m in the most recent quarter. After including $12.9m in other expenses, this left a pre-tax loss of $63.6m, compared to $12.4m in 2021.

EEG paid minimal income tax in the quarter but did note $200,628 in dividend payments and a further $73,136 in additional accretion stock-related costs, which resulted in a total net loss of $63.8m, more than four times the $12.4m loss in Q3 of the previous year.

Adjusted earnings before interest, tax, depreciation and amortisation (EBTIDA) also hit a loss of $7.3m, wider than the negative $2.6m in 2021. 

Looking at year-to-date performance, revenue for the nine months through to 31 March 2022 was $46.6m, up 482.5% from $8.0m in 2021. Online betting and casino revenue jumped 441.6% to $41.7m, while esports and other revenue hiked 1,387.8% to $4.9m.

However, operating costs were 431.1% higher at $117.9m, meaning operating loss widened from $15.2m to $71.3m. Other costs reached $32.7m, leaving a pre-tax loss of $104.0m, far higher than $21.5m in the previous year.

EEG received $5.5m in tax benefits, but after accounting for $300,942 in dividend payments and $108,209 in accretion stock-related costs, resulting in a net loss of $98.9m, compared to $21.5m in 2021. Adjusted EBITDA loss also widened from $9.1m to $18.4m.

“Our fiscal third quarter 2022 results illustrate growing top-line momentum across both our igaming and esports verticals, which benefited from a more normalised operating environment in the quarter,” Johnson said.

“Despite this momentum, we are addressing several near-term challenges which are constraining our ability to grow the business and to drive that growth to the bottom line. 

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