Month: July 2022

The news follows yesterday’s announcement of a new nine-member body, the Committee for Public Tendering of Concessions for the Operation of Casino Games of Fortune, which will be charged with overseeing the tender process.

The public tender is the result of a reform of Macau gaming law approved in May that replaces the previous system of three concessionaires and three subconcessionaries with a simplified model of six concessions.

Currently, the six operators permitted to offer gaming are Las Vegas Sands, SJM, Melco, Galaxy Entertainment, MGM China and Wynn, with little substantive difference between a concession and subconcession.

The new system will also give the chief executive the power to grant tax breaks, particularly if the casinos are successful in attracting non-mainland custom.

The regulations for the process were detailed in Executive Order 136/2022 which was posted on the official government gazette.

Some of the rules include a MOP$10m deposit for entrants into competition and a maximum tender term of 10 years.

The licences of the current six concessionaires are set to expire on 31 December following a six-month extension in June. The goal is to have the new or renewed licences in place from 1 January 2023.

The news takes place amid a historically bad three years for the land-based gaming sector in Macau, with the Covid-19 pandemic causing intermittent lockdowns that slashed GGR by nearly 80% from MOP$293.31bn ($36.29bn/ £29.95bn/€35.75bn) in 2019 to a nadir of MOP$61.05bn in 2020, recovering modestly to MOP$87.56bn in 2021.

Many analysts expected 2022 to be a better year for business than 2021, but China’s “zero-Covid” policy has led to a situation where even outbreaks which are relatively small by western standards are the cause of strict government action, culminating with the most recent shutdown of casinos which were only reopened on 23 July.

While all of the financial results have yet to be released for this quarter, Sands China alone reported a $422m net loss for Q2 2022, leaving hanging questions about the future profitability for the sector in this region.

The announcement affects the four operators that offer retail betting services in Bremen – Tipico, HappyBet, Tipwin and XTiP – which between them operate 32 betting shops.

A total of 24 of the operators’ franchises were “tolerated” in the state before the shutdown came into effect, according to a statement on Bremen’s state website, but were awaiting full approval.

Now, however, Bremen has issued rejection letters to all 32 betting shops after the four operators were unable to prove where their funds originated from, leading to concerns about money laundering.

Once the rejection notices were issued, it became illegal to bet in any of the bookmakers in Bremen.

The announcement came from the Bremen Landtag, after Interior Senator Ulrich Mäurer conducted a press conference explaining the closures.

“Basically, it’s about checking the reliability of these operators,” said Mäurer. “We also want to ensure that no money from shady deals such as drug or human trafficking is laundered here and can flow into the legal money cycle in this way.”

“We are breaking new legal ground with our initiative. It’s always a certain risk. But it’s worth it to us.”

Mäurer added that all four operators are now set to take legal action against the decision.

While the statement on Bremen’s parliamentary website said that to date, none of the operators had presented source-of-funds proof that met the state’s requirements, Deutscher Sportwettenverband (DSWV), a sports betting trade association in Germany, said that the documentation had been submitted. The body also branded the closures a “politically motivated arbitrary action”.

This was expressed through a statement on its website from DSWV president Mathias Dahms.

“Extensive, meaningful documents were presented to the Bremen interior authorities with regard to the operators of the betting shops and their financial resources,” read the statement. “Money laundering experts have confirmed the evidence.”

“As is usual, the authorities did not ask any questions about the documents submitted.”

Dahms also said that the “reliability” of the “legal origin” of the operator’s funds was also proven.

He added that Mäurer was “undermining” the Fourth State Treaty on Gambling, which came into force in July 2021.

“The point is to create transparency and consumer protection through a controlled, legal market with verified providers,” said Dahms. “Mäurer is doing the issue a disservice and thus massively strengthening the black market.”

“The providers operating illegally in Bremen will rejoice today.”

Tipwin was also granted a German slots licence last month, becoming only the third operator to receive the award.

The business, which operates brands including Paddy Power, Betfair and Sky Bet in the region, did not provide details of how many redundancies there would be or which roles would be affected. 

However, a spokesperson did say that it expects the majority of those whose roles are eliminated to find new positions with Flutter. As a result, there would be only a “small number” of job losses.

“These proposed changes reflect the next phase of our integration, as we look to consolidate parallel operating models and position the business to continue growing against a more challenging operating environment,” the spokesperson said. 

“While we have sought to minimise the impact this will have on our colleagues, with most employees affected being redeployed into alternative or newly created roles, the proposals may lead to a small number of job losses. 

“We are communicating with those affected as part of a consultation process and will be providing them with the support they need throughout.”

The announcement comes soon after Flutter revealed that its UK and Ireland chief executive Conor Grant would step down for a “planned career break”. Booking.com division CEO Ian Brown will replace Grant.

In the UK, the business is also likely to be heavily affected by the Gambling Act white paper, which has been repeatedly delayed. An early draft of the white paper reportedly included a £125 monthly soft cap on affordability, with harder checks for players losing £2,000 in a three-month period.

This data set is collected through phone interviews using the Problem Gambling Severity Index (PGSI), which consists of three questions scored between “never” and “almost always” that are asked to people who have gambled in the last 12 months.

For the population as a whole, the level of problem gambling was 0.2% for the six months ended 30 June. This is stable compared to the level recorded for the year to date in June 2021, which was 0.4%.

Problem gambling among males surveyed was at 0.3%. This was less than the year before but the Gambling Commission said the change was not statistically significant.

Problem gambling remained completely level among females, staying at 0.1%.

Among 16-24 year olds, the level of problem gambling was at 0.8%, which was up but again the change was not statistically significant.

For 25-34 year olds, problem gambling was 0.3%, while for the 35-44 year old age group it was 0.2%.

No members of the 45-54 year-old age group that responded to the survey were classed as problem gamblers. In total, 596 people from this group were surveyed.

Within 55-64 year olds the total was also 0.2%. For the final group recorded – those over the age of 65 – the percentage was 0.1%.

The survey also revealed that 42.9% of all respondents had participated in at least one form of gambling in the previous four weeks.

The percentage was even higher among 45-54 year olds, hitting 49.1%.

A total of 25.8% of respondents were found to have participated in at least one form of online gambling in the previous four weeks. Again, this was most prevalent – at 33.2% – among 45-54 year olds.

Of all respondents, 27.5% had taken part in the National Lottery in the last four weeks.

The Gambling Commission is currently planning a new methodology to measure prevalence and problem gambling rates. However, this has been criticised due to the fact that the survey appeared to over-index gamblers, which may have inflated the levels of harm reported.

In the first six months of 2022, a total of 43,500 people signed up for the scheme, meaning there were an average of more than 7,000 registrations per month.

This is a 9% increase from the same period last year.

Gamstop said that normally the winter months feature the highest number of registrations, but there were more people who joined in the second quarter of 2022 than the final quarter of 2021, a change in the trend.

The organisation released the report following another delay to the UK gambling white paper, the document that will point the way for legislative reform by seeking to update the country’s 2005 Gambling Act. Initially set to be released last year, it is now expected during the autumn.

Gamstop CEO Fiona Palmer said that more should be done to protect those at risk of harm.

“Our most recent data suggests gambling-related harm remains a serious problem and it is widely accepted that action is needed to protect those most at risk,” she said. “We are now recording an average of more than 7,000 new registrants each month, which is almost a double-digit increase year-on-year.”

Palmer added that both increased harm and increased awareness may play into the growth in registrations.

“Although we cannot be certain about the reasons for this, our internal analysis implies that higher volumes of self-exclusion are evidence of a sustained prevalence of gambling-related harm, as well as a greater awareness of Gamstop,” Palmer said.

“We look forward to seeing the government’s recommendations for reforming the gambling laws in the forthcoming white paper, now expected this autumn.”

Revenue for the supplier for the quarter ended 30 June was down by 18.8% from Q2 of 2022 to €34.7m (£29.2m/$35.2m), a change the business said was due to the migration of US betting giant DraftKings away from Kambi’s platform and onto the SBTech product it acquired in 2020.

While DraftKings has already completed its migration, two other key clients are also taking steps to move away from its platform in favour of in-house options. Unibet operator Kindred has been building its own platform, set to launch when its partnership with Kambi ends in 2024. 

If DraftKings – which produced 25% of Kambi’s revenue the prior year – is excluded, revenue was up 16% from Q2 of 2021.

Penn National gaming, meanwhile, acquired theScore last year, due in part to the fact that the Canadian operator was building its own platform. This week, the operator hit a key milestone,  launching its proprietary in-house risk and trading platform.

In response, the business has taken steps to offer smaller products to operators that may use non-Kambi sportsbooks.

“Integral to our product and wider company strategy is our commitment to opening up our platform and modularising our service, enabling Kambi to increase its total addressable market,” Kambi chief executive Kristian Nylén said. “Not only will this enable us to develop new and exciting products at greater speed, therefore ensuring Kambi’s turnkey offering remains at the cutting edge, but it will also create additional revenue streams as we make available market-leading modules as a standalone service to operators outside of the network.

“In Q2, we hit an important milestone on this modularisation journey. As we communicated in the previous quarter, we have been focused on separating pricing functionality from our core platform and in recent weeks we were pleased to soft launch our first standalone pricing functionality for a limited number of low-tier soccer leagues.”

Nylén added that some of Kambi’s modularised products may even help operators to build their own sportsbooks.

“Our existing partners, or future partners, can now trade some of their sports themselves if they would like to,” he said.

The decline in revenue came as operator turnover was down 28% year-on-year, though this was also up by 16% when DraftKings was excluded. Operator trading margin was 8.6%, in line with the prior year and general expectations.

Kambi noted that the decline in operator turnover was faster than the decline in Kambi’s revenue largely because of the structure of its operator contracts that mean larger operators such as DraftKings pay less to Kambi per dollar of revenue than a smaller client would.

Besides the migration, Nylén noted that Kindred’s exit from the Dutch market and comparatives to the busy sporting calendar of Q2 2021 also impacted revenue, meaning that performance was “robust” when considering these factors.

New acquisition Abios – a supplier of esports odds solutions – contributed around €500,000 of Kambi’s revenue.

While revenue was down, staff costs were up by 9.5% to €14.4m. The business also paid €4.4m to data suppliers, up 40.3%. Other operating expenses were down by 10.8% to €4.4m.

As a result of these costs, Kambi recorded earnings before interest, tax, depreciation and amortisation (EBITDA) of €11.6m, which was down by almost 50% from Q2 of 2021.

After accounting for depreciation and amortisation, operating profit was €4.9m, down from €16.6m the year before.

Also taking into account finance costs, profit before tax was €4.5m. The business then paid €1.2m in income tax for €3.3m in profit compared to €13.4m a year earlier. Earnings per share, meanwhile, came to €0.109, which was down from €0.432.

The business continued to hold a strong amount of cash and cash equivalent assets at the end of the period, at €81.6m, though this was down from €91.9 a year earlier. As a result, Nylén said the business may be looking at potential mergers, though also may distribute the cash to shareholders if a suitable target cannot be found.

“We are definitely looking at M&A, as we always are,” he said. “We are definitely open to do M&A and if we can’t do that, then at some point we will look another ways of distributing the cash.”

Hawkes will join Flutter from the BCW Global communications agency, where he served as senior director and head of strategic media for almost three years.

Prior to this, Hawkes was deputy political editor at The Sun between December 2013 and October 2019, while he was also business editor at the newspaper from October 2008 and June 2013.

Between his two spells with The Sun, Hawkes spent time as consumer affairs editor for The Daily Telegraph. Earlier in his career, he was retail correspondent for the Times and deputy business editor at the Daily Mirror.

“Flutter operates some of the world’s most popular sports betting and gaming brands, including Betfair, Paddy Power and SkyBet, and is committed to leading the way in player protection and safer gambling; I can’t wait to get started,” Hawkes said.

The appointment comes after last week it was announced that Conor Grant had resigned as chief executive of Flutter’s UK and Ireland business for a “planned career break”.

Grant will leave the business before the end of the year, with former Booking.com division CEO Ian Brown to be appointed as his replacement.

In the total, the Commission reviewed the complaints policies of 34 licence holders from a number of sectors before assessing for accessibility and ease of use.

The work was referenced in the GC’s 2021-2022 business plan where the regulator tasked itself to “explore how to improve how licensees deal with consumers when things go wrong”.

The Commission also claims that the work will complement the long-delayed government review of the gambling act which will seek to point the way to future legislative reform.

The review white paper was recently delayed again following the resignations of prime minister Boris Johnson and the minister responsible for the review, Chris Philp.

According to reports, the white paper is expected to be delayed at least until the new prime minister takes office in autumn of this year.

GC director of policy Ian Angus argued the value of good policies in this area. “Good complaints handling is vital in the gambling industry. We want consumers to be able to easily find and understand policies and be able to raise their complaints without any barriers,” he said.

“We know gambling businesses receive around 200,000 complaints every year, and while the government’s review of the Gambling Act will consider where these can be escalated to, the majority will still need to go through the licensee’s complaints process first.

“We want to help them handle these well, to improve outcomes for both them and consumers.”

Some of the advice the GC gave included to provide a link to complaints procedures on a homepage, use plain English and avoid jargon or legalese, have a short and clear process for complaints, tell people what information is needed to investigate their complaint, include details of the eight-week time limit for resolving complaints or issuing a final response and to be clear when the operator has given a final decision.

The round included funds and accounts managed by BlackRock as well as Acies Investments and valued the business at $485.0m.

BlackRock and Acies join existing investors including billionaire entrepreneur Mark Cuban, professional basketball player Kevin Durant, American football star Odell Beckham Jr, and former Paddy Power Betfair chief executive Breon Corcoran.

Underdog said the funds would go towards its plans to begin building licensed sports betting products, while it also intends to hire more than 100 new employees as part of its wider expansion plans.

“Since the start of Underdog, we’ve believed that building quality products and putting customers first is a winning recipe,” Underdog president and chairman Jeremy Levine said.

“We’re excited to continue to innovate and build new experiences from the ground up in fantasy, sports betting, and adjacent spaces. This funding round gives us the firepower to continue to build; and build we will.”

Acies Investments’ co-founder and general partner Chris Grove added: “While the typical sportsbook is spending over $500 to acquire a customer, Underdog is bringing in new users for a fraction of that. Underdog’s product is leading to competitive advantages as Underdog’s customer acquisition and retention success is best in class.

“Underdog’s success is driven by the company’s focus on building new, innovative games and delivering amazing customer experiences. As the company moves into licensed sports betting, I believe the unique focus on product and experience will reshape the industry.”

Plans to move into the sports betting sector were first announced last year, with Underdog in September acquiring sportsbook technology platform Goat Gaming.

Goat Gaming supplies risk management technology to cryptocurrency gambling operator the Coingaming group and its Sportsbet.io brand. In addition, it offers odds creation, account management and event management technology.

Clayton’s experience includes serving as a member of the Nevada Gaming Control Board and chief of the state regulator’s corporate securities division.

He also spent time as general counsel and company secretary for several US-listed gaming businesses, and as a gaming and corporate attorney for gambling-focused companies.

Between August 2014 and February 2022, Clayton was chair of Greenberg Traurig’s global gaming practice where he oversaw its international gaming practice for clients including Genting Berhad, Caesars Entertainment, Las Vegas Sands, 888, DraftKings, Flutter and Entain.

Clayton currently serves as an independent member of the Palms Resort Casino compliance committee, having previously been a member of the compliance committees at Caesars, The Cosmopolitan of Las Vegas and Silicon Gaming.

“Mark is recognised as one of the most accomplished attorneys in the gaming industry, with a career that spans decades of providing legal and strategic counsel to clients that are among the industry’s leaders,” Bragg chairman Paul Godfrey said.

“Mark’s wealth of expertise and experience will serve us well as we continue to execute on our global B2B igaming expansion initiatives.”