Month: June 2022

The bills will now be referred to the state’s House Finance Committee and will be heard today (June 22).

The main sports wagering bill – Senate Bill 688 – had its first reading on April 8 2021.

Read the full story on iGB North America.

From the moment it acquired NetEnt in 2020, Evolution has made it clear that it wanted to be seen not simply as a giant of live casino, but as a “one-stop shop” for online casino operators.

To that degree, the rationale for its acquisition of slot developer Nolimit City is obvious.

Yet to date, Evolution’s random number generator (RNG) division has generated little in the way of organic growth going by recent results.

However, Georg Attling, equity research analyst at Pareto Securities, notes that this was mostly due to a change in strategy. The supplier shied away from frequent game launches, in favour of delivering a higher standard of slot content.

“It is true that in terms of growth, Evolution’s RNG segment has not lived up to our expectations thus far,” Attling explains. “However, this is mainly due to a reworked game launch pipeline.

“After the acquisition of NetEnt (and Red Tiger), Evolution largely scrapped the existing games launch pipeline due to it not meeting Evolution’s standards.”

This has resulted in fewer new launches, making growth “challenging” Attling suggests, though this is likely to change in the near term.

“Entering H2, we expect an increased activity of game launches which should facilitate a return to double-digit growth within the segment,” he adds. “So, the analysis [that the RNG division has underperformed expectations so far] is fair in terms of growth, but it has been a conscious decision.”

As a result, Kevin Dale of Egamingmonitor argues that Nolimit City fits in well with the strategy Evolution had already implemented with NetEnt.

“The content that Nolimit City produces is quite unique in terms of production and imagery,” he says. “Games with darker themes are their most popular, such as Mental, Deadwood, San Quentin, Misery Mining, Fire In the Hole and Tombstone. 

“They’re certainly a good fit in terms of production values as they have a clear focus on quality and innovation, rather than quantity of output.”

This distinctiveness, Evolution chief executive Martin Carlesund noted on an analyst call following this morning’s announcement, was a major part of the deal.

He claimed that gamblers tend to recognise the studio behind the slot they are playing with Nolimit City’s games, unlike those from other suppliers. As a result, Carlesund said its content appeals to “advanced slots players”.

“It’s a very specific niche content,” he explained. “It’s graphically rich, it’s very fascinating and it has good mechanics attached to it. Maybe more for the advanced player, but anyone playing Nolimit slots is attracted by that. They know they’re playing Nolimit – it’s very obvious.

“The games are filling a gap that we didn’t have before, clearly so.”

As a result, Attling says that the deal represents a further commitment to the Evolution’s slot strategy.

“It reaffirms Evolution’s commitment to the space,” he says. “I argue that it is a doubling-down on the strategy because of the identified potential rather than a way to shake up a slow-growing division.”

Smooth integration?

When it comes to integration, Dale notes that the process should be made easier by the fact that Evolution has dealt with the challenge of integrating a slot developer before. 

“It should be a bit easier for Evolution to digest than the likes of NetEnt or Red Tiger, not least as the product range is similar and they’ve been here before,” he says.

However he warns that given the differences in scale between the acquiring business and acquirer, the deal won’t give Evolution access to many more operators. 

 “It’s a smaller acquisition in terms of content with nearly 60 titles added to their existing portfolio of 630 RNG games and smaller in terms of market share too: Nolimit City would add just under 1% to Evolution’s global share of content (across more than 2,000 operators), taking them from 12% to 13% globally,” he says.

“Nolimit content has some good distribution with around 10% of all casino sites taking their content. Given the sheer reach of Evolution, however, they would gain access to just around 20 new operator sites via this deal.”

The next deal

Evolution provided brief glimpses of Nolimit City’s financials, revealing the business showed great efficiency in turning revenue to profit. The developer expects to bring in €30m in revenue in 2022, yet its earnings before interest, tax, depreciation and amortisation is expected to be around €23m.

Those margins are not dissimilar to those of Big Time Gaming, creator of the popular Megaways mechanic, which was acquired by Evolution last year.

Attling argues that – while good margins are always an advantage – the pattern is unlikely to represent a wider strategy to specifically search for the most cost-efficient businesses to acquire.

“Evolution has stated that it prioritizes growth over margins, and still, it has achieved industry-leading margins,” he says. “I think the same rationale goes for acquisitions. Growth and quality come first, and high margins is a nice-to-have but not a must in the short term. A lower-margin business wouldn’t be out of scope in terms of acquisition target if Evolution believes it has the capability of expanding them at a more mature state.”

Carlesund himself gave hints as to the future of Evolution’s M&A strategy. He said that slots was a natural vertical for Evolution to continue to acquire, but also wouldn’t rule out moves in the supplier’s core live casino vertical, ifs it presented an opportunity to add something new to its portfolio.

“I don’t see the potential in buying a company in live, but who knows? Maybe it occurs,” he said. “But there might be pieces of technology like Digiwheel where we just need this piece of hardware or software or a combination of growth in order to make our games better.

“In slots, we have a clearer view of where we want to be. We want to be a complete supplier but above all we want to hand over the best content in the world to our users.

“There we need some pieces but I think we’ve found those right now.”

According to FAQs published regarding the announcement, BetBull customers will be able to log into their accounts until the closing date to withdraw funds. After this date, the customer support team will process withdrawals manually.

BetBull stopped accepting deposits yesterday (20 June).

The operator will stop accepting bets from midnight on 24 June.

Between 24 June and 3 July customers will only be able to conduct withdrawals, after which the site will close down.

However, open bets on events that will take place before 26 June will be considered active and will be settled normally.

BetBull was founded as a “social” betting operator, with features for users to share their bets.

Land-based operator Wynn Resorts acquired a stake in BetBull in 2018, before Wynn Interactive acquired BetBull in 2020.

Reports last year suggested Wynn considered selling off its interactive business, though CEO Craig Billings last year said the operator was still committed to online.

“This week BetBull will cease trading; it has been a great journey – seeing the brand take it first bet to its last,” said Paul Archer, marketing director at BetBull.

“Thanks to everyone for their efforts in the past years and a special thanks to those I worked most closely.”

It was proposed that Baden – which owns Canadian property business Midway property – would acquire all of the outstanding shares of NorthStar in exchange for shares of Baden. Shareholders would be given the option to cnvert their NorthStar shares into Baden shares.

The reverse takeover remains subject to a number of conditions, including the negotiation of definitive documentation by 27 June and the receipt of required regulatory approvals.

Baden would also be required to delist from the Canadian Securities Exchange and join the Toronto Stock Exchange Venture Exchange in order to proceed with the proposed deal.

The two companies noted that there is no assurance that the proposed transaction will go ahead.

NorthStar Gaming is both the owner and operator of NorthStar Bets, an online casino and sportsbook gaming platform that went live in the Canadian province of Ontario earlier this month.

The NorthStar Bets brand went live with support from both Playtech and Kambi. Playtech supplied its IMS platform, casino and live casino technology to the platform, while Kambi provided its sportsbook technology. 

The launch followed the opening of Ontario’s regulated online gambling market on 4 April this year. The market’s opening was the culmination of three years of work, following the announcement that the province was ending the lottery’s legal monopoly on online gambling in 2019.

The importance of the Netherlands’ igaming market was arguably highlighted by the operators that were ineligible for a licence. As a number of high-profile names shut off access to Dutch consumers, the financial impact they outlined showed how much business they had been doing, even without actively marketing to local consumers or offering services in their local language. 

Kindred, for example, said earnings before interest, tax, depreciation and amortisation (EBITDA) would be cut by £12m each month it spent out of the market. When it finally secured a licence in June 2022, its share price jumped by around 10%. 

Betsson faced a hit of around SEK25.0m (£2.0m) per month, and Entain said monthly EBITDA would be reduced by around £5.0m.

This, in turn, has created space for local brands to flourish. Local lottery Nederlandse Loterij, with its Toto brand, has been an early winner, as has casino monopoly Holland Casino. Joining these businesses on the podium is BetCity, a brand that only launched online in October last year, but seemingly came from nowhere to become a leading brand. 

And Entain has now acquired the business for an initial €300m, in a deal brokered by Conexus Group’s M&A consultancy arm Partis. For Paul Richardson, the deal came just weeks after he officially joined as a partner. 

Richardson has significant experience, having worked on corporate strategy and development for Rank Group, and previously working in investment banking across European, Asian and US markets. He has been involved in deals such as Gala’s merger with Coral, William Hill’s entry to the US and working on Galaxy Entertainment’s expansion in Macau and beyond. 

The BetCity deal is particularly impressive, with the total consideration rising as high as €850m depending on performance-based incentives – though Entain said it expects the price to come to around €450m. Regulus Partners’ Paul Leyland noted that this price “represents one of the most rapid returns on effort seen in the sector”, coming just nine months after its launch. 

For Richardson, that price is indicative of “both the potential and the quality of the business”, in the “phenomenal” Dutch market. 

“The quality of the BetEnt business is first class,” he explains. “The family behind it has been running arcades in Amsterdam for 30 years; they know the market, they know the regulator.”

He says that in Melvin Bostelaar (chief executive) and Robert Koimaan (marketing director) it hired two people with a strong digital background. “They put themselves onto Kambi’s sportsbook [and] the Oryx platform and did a deal with Evolution, so they came out with a really good product and built market share by being better than the others that were still working out how to do it.”

In the fourth quarter of 2021, it has taken an estimated 20% market share, suggesting revenue of around €30m. Add in Holland Casino and Toto’s market share, and that suggests just three licensees account for around three quarters of revenue. 

This, Richardson argues, also influenced the purchase price, especially as the incoming controls on marketing will make it even harder for new entrants to catch up to the early frontrunners. 

“Obviously there’s room for the big European experts to be in the market, but Bet365 is in and is nowhere close to BetCity,” he points out. “Tombola is licensed so Flutter can do something with that, but I think the marketing restrictions are going to make it more challenging to catch up. 

“They can’t go back to their old databases, and they can’t acquire customers in the way BetCity did upon opening,” he adds. “Cost per acquisition (CPA) will be higher, tools to acquire customers will be harder, [with the influencer ban coming in from 1 July].”

He points out that another operator has suggested the marketing restrictions pledged by Minister for Legal Protection Franc Weerwind will result in an effective ban on above-the-line marketing, meaning the acquisition channels for newcomers will be significantly curtailed. 

“I think this underlines why Entain did the deal,” he adds. “That position is going to be very difficult to take away from, with a new product that’s coming in nine months later.”

This doesn’t mean that a new, differentiated product can’t secure a foothold in the Netherlands, he adds – though that’s true of every competitive, regulated market. “The punter is always looking for something new,” he points out.

But increasingly, the local market knowledge afforded by a business such as BetCity is central to most operators’ approach to M&A, Richardson adds. Companies, with the cash to do so, can buy market share rather than putting in the sums required to build it. 

“It’s why M&A happens,” he says. “You can’t launch in multiple markets at any one time, but you can buy a business, with a good management team, that has proven it can launch successfully.”

This also allows for synergies, when there is a central technology stack to migrate the newly-acquired businesses onto, as Entain is planning with BetCity, as it has done with Bet.pt in Portugal and Enlabs in the Baltics. Through the application of synergies, multiples can be reduced to single digits, something Richardson says listed corporates “will do every day of the week”. 

“Boards on the whole only let you carry on spending when they are confident you are doing it prudently, and getting out of the deal what you said you would.  The Entain strategy and M&A teams have a strong record of successful acquisition, and integration”

And with the deal coming just weeks after he officially joined Partis, it’s a statement of intent for Richardson. “It’s great to announce joining a business, by doing one of the best deals I’ve ever done two weeks later,” he says. 

Finland’s new Lottery Act will extend mandatory identification, which already exists for slot games, to include all forms of gambling, as well as payment blocking for all operators except Veikkaus.

Mandatory ID checks for coupon-based games such as Lotto and Eurojackpot is due to come into effect from 1 January 2023, but Veikkaus has requested that this date be pushed back to 1 January 2024 to allow it more time to ensure its machines are capable of carrying out such checks.

Veikkaus said it has started to replace machines in advance of the law change, but a global shortage of components due to the novel coronavirus (Covid-19) pandemic and the ongoing situation in Ukraine has made it difficult to source the components required to update all of its terminals.

As such, Veikkaus said the additional year would allow it to upgrade all of its machines and ensure that mandatory checking methods would be in place at the start of 2024.

“The new modern sales terminals enable the implementation of mandatory identification and gaming management in accordance with the requirements of both the Lotteries and Money Laundering Act and the authorities,” Veikkauss’ director of channels and sales Jari Heino said. “At the same time, they improve the customer and sales experience of the digital age.

“Due to the global shortage of components, deliveries of new sales terminals are already behind schedule. There is a risk that the required sales terminals will not be available in time for the mandatory statutory identification to be implemented from 1 January 2023. 

“This risk is not under the control of Veikkaus, nor of the supplier in all respects, although of course everything that can be done is done to reduce the risk.

“Our goal is to continue to proceed according to the original schedule. However, the risk of delays due to component shortages is so great that we need to prepare for it as well. 

“When the shortage of components eases, we will introduce the new terminals as soon as possible.”

The operator was included on German state Sachsen-Anhalt’s “whitelist” of licensed operators, which is updated once a new operator is licensed in Germany.

ComeOn will offer games on the websites sunmaker.de, comeonwetten.de and mobilebet.de.

This is ComeOn Group’s first entrance into the German market after the country’s Fourth State Treaty (GlüNeuRStV) came into force last year on 1 July last year.

It permitted online casino games to be legalised, as the country had previously only allowed online sports betting as approved by the Third State Treaty. However, currently only one online slots operator has a licence.

The GlüNeuRStV also introduced a number of strict measures for operators, including a €1 stake limit for online slots and a €1,000 loss limit that applies across all customers. Looking specifically at sports betting, in-play bets are limited to match winner markets and total goals scored.

Last week Kindred withdrew from the German market, stating that it had rescinded its applications for sportsbook and virtual slots licences amid these difficult operating conditions. The withdrawal will take effect from 1 July.

Also as a result of the strict rules, all of Germany’s 33 licensed sports betting operators joined together to launch a lawsuit protesting the operating conditions..

The Commission published guidance today (21 June) as a follow-up to its new rules for players at risk of harm, which were published in April. These rules, as outlined at the time, instructed operators licensed in Great Britain to ban marketing to customers deemed to be at-risk.

Licensees must also flag indicators of harm and take action in a timely manner, as well as  implementing automated processes for strong indicators of harm.

At the time, the Commission announced that further guidance would come in June.

This guidance has not provided specific details of what an “at-risk customer” may be, but noted that a wide range of factors may play into determining this. This includes personal and demographic factors such as age and health, situational factors such as financial difficulties, behavioural factors including attitude to risk, market-related factors such as the type of bets placed and access, which related to factors such as literacy and numeracy skills.

Specifically, the Commission highlighted certain behaviours that are much more associated with harmful play, such as “unmonitored overnight gambling”.

Rather than mentioning specific thresholds that could apply across all customers, the Commission noted that operators need to do more to create tailored thresholds based on open-source information about their customers.

“Historically, gambling licensees have not systematically considered customer affordability when developing their customer interaction policies,” it said. “Many have used deposit or loss thresholds as a main or sole prompt for a customer interaction, but these have often been set at levels that were inappropriately high, in comparison to the average amount of money that the majority of people have available to spend on leisure activities. 

“This has led to a number of examples of customers spending more than they could afford, and this not being identified sufficiently early, as seen in much of the Commission’s compliance and enforcement casework.

“Open source data exists which can help licensees assess affordability for their GB customer base and improve their risk assessment for customer interactions. Thresholds should be realistic, based on average available income for your customers.”

However, the regulator added that “most people would consider it harmful if they were spending a significant proportion of their discretionary income on gambling”. Discretionary income, it noted, excludes essential costs such as housing and bills.

The Commission also said that further guidance on financial risk will come soon, but “licensees should be considering how they manage those risks now”.

Further clues of the Commission’s definition of an “at-risk customer” came as the regulator noted that different types of gambling activity may require different strategies. Here, the regulator said that licensees must “must take account of problem gambling rates for the relevant gambling activity”, and perform customer interactions “at minimum, in line with this level”.

However, it noted that this provision cannot “mandate the outcome” of the interactions.

Quoting the 2018 Public Health England survey, it said that 8.5% of online gaming –  players are classed as problem gamblers, as are 3.7% of online sports betting customers and 1.3% of customers at lotteries other than the National Lottery.

“If the licensee’s systems do not identify numbers of customers at least in line with the problem gambling rates for the relevant activity, those systems are likely to be failing to identify the right
proportion of customers,” the Commission said. “Operators must ensure that they are on track to meet the minimum levels of customer interactions over an annual period, and to do so should assess progress monthly.”

This would suggest that the regulator would expect minimum interactions with more than one in 12 online gaming customers.

“We will update the guidance over time where we consider it necessary to reflect recent problem gambling prevalence statistics,” the Commission said.

The Gambling Commission recently announced it would launch a new method of measuring harm, following a pilot survey. This method found that levels of gambling harm were higher than in the PHE survey, but it cautioned that the survey “should not be used as an estimate of problem gambling at this stage”, for reasons including the fact that it appears to oversample gamblers compared to non-gamblers.

All of the new rules will come into effect on 12 September,

Among NOGA’s members are some of the biggest international operators in the sector; including Bet365, Flutter and Entain.

The EM group ia a Curaçao-based supplier that specialises in compliance and corporate services, as well as e-gaming licence acquisition, to the online gaming industry. It becomes the second supplier to join after payment provider Nuvei.

In a statement the trade body stated that the joining of the business represented “another important step in its ambition to unite the industry,” wherein NOGA would united “providers and suppliers under one banner and promote the common interests of the sector.”

NOGA managing director, Peter-Paul de Goeij, commented on the move: “EM Group joining us is a boost for NOGA.”

“Its background in compliance, in the Netherlands under strict supervision of the Dutch Central Bank, is a great added value for us and it also offers a wealth of additional expertise and experience that can only benefit NOGA’s members and the wider industry.”

The news comes in the wake of Dutch regulator, the KSA, hinting that current regulation in the country may need to be more stringent with the potential introduction of loss limits, as well as the announcement of investigations into potential self-exclusion violations.  

Kees-Jan Avis, managing director of EM Group Netherlands says: “As EM Group we are very pleased to be part of the NOGA family. Besides the fact that as a group we bring over 15 years of experience in this industry, we have extensive experience in operating in a highly regulated environment in the Netherlands.”

 “Apart from our product in terms of segregation of player assets, EM Group also has knowledge of and extensive experience in operating as a company in the Dutch market, which extends beyond licensing requirements.”

“Consider, for example, the objectives and core values in terms of integrity and social responsibility of the sector. NOGA also endorses this and that is why we are entering into this partnership with a great deal of conviction and trust.”

Hofbauer made remarks on Svenska Spel’s corporate blog where he criticised the separate rules that restaurant casinos enjoy in the country, as well as the resulting lack of official data – which he says has implications for both addicts and money launderers.

Restaurant casinos are casinos at premises with liquor licences. While Svenska Spel has a monopoly on regular casinos through its Casino Cosmopol brand, operators can offer table games at these locations.

He continued: “Today, there are approximately 375 permits for restaurant casinos in Sweden. We do not have statistics on help-seeking players who play restaurant casino because it is not in the authorities’ official data.”

“Those who develop a gambling problem often become ‘mixed addicts’ and gamble on several forms of gambling and with several gambling companies. It is not unlikely that the same pattern is found in the guests of restaurant casinos. And without control – no control.”

Hofbauer also criticised the amount that gamblers can spend and the speed with which it is possible to do so: “With the new gaming law, the wagering limit on blackjack more than tripled, from a maximum of SEK75 ($7.44/€7.05/£6.06) to SEK236 per hand. That may sound like a little, but you can easily get rid of a thousand a minute with those conditions.”

“A high roller is not content to play just one hand or one chip. The organization Spelfriheten says that several of their help seekers have said that with alcohol in their bodies, the blackjack table at the nightclub has been more inviting for the moment than the dance floor.”

He ended his remarks with a demand to change the rules for these operators, particularly relating to safer gambling measures such as self-exclusion where rules are weaker for restaurant casinos.

“We have a requirement and wish – Away with the exception. Honest business can withstand scrutiny and equal rules of the game. Remove the exemptions from complying with the law on duty of care and money laundering.”

It’s not the first time the executive has opined on the rules operators face in Sweden; in May Hofbauer called for more regulatory stability for the industry in the wake of Swedish gambling reforms.