Month: August 2022

The Belgian government submitted the royal decree to ban gambling ads – except for those of the National Lottery – to the European Commission. Other EU states then have the ability to challenge the law if they believe it interferes with the free movement of goods, services and people across the EU.

The Belgian government outlined its reasons for putting the law in place.

“Gambling advertising is ubiquitous on television, radio, social media and the streets,” it said. “Such advertising is not without danger to public health and society. Advertising normalises gambling in society. 

“Through advertising, gambling is presented as socially and culturally acceptable behaviour and as a legitimate leisure activity. This is detrimental to more vulnerable groups such as minors, young people and gambling addicts. 

“In the absence of a rule at European Union level, member states are free to lay down the rules in this area. With a view to improving player protection, the purpose of this decree is therefore to limit the forms of advertising permitted in the field of gambling and betting and to impose rules on the content of such advertising.”

Laws submitted to the European Commission are subject to a standstill period, providing time for countries to offer objections before they may come into effect. Initially, the standstill period for the Belgian royal decree was set to end on 9 August. 

However, the government of Malta successfully pushed for this standstill to be extended to 9 September, which could delay the ultimate implementation of the act, and may suggest a further challenge from the island nation.

The new licence will enable the online gambling operator – the international arm of Kaizen – to roll out its igaming offering in the Canadian province.

The licence, issued to Kaizen Gaming’s Canadian business, will run for one year, from August 17 this year until 16 August, and cover the Betano.ca website.

Kaizen and Betano will join a host of other operators in securing a licence in Ontario, which opened its regulated igaming market launched in April.

The launch of widespread legal online gambling in the province ended the lottery’s online gambling monopoly.

Operators such as theScore, PointsBet and Bet365 were approved for licences before the market opened, while the likes of PokerStars, SkillOnNet and BetVictor have secured approval in the months following the launch.

In April, lottery and gaming operator Allwyn agreed to acquire a 36.75% stake in Betano from Greek lottery business OPAP. Allwyn – formerly known as Sazka – will pay €50m up front as part of the deal, plus undisclosed earnout payments, based on the performance of the business in 2022, 2023 and 2024.

As confirmed by the Ohio Casino Control Commission (OCCC), the two operators, along with Digital Gaming Corporation – which has the rights to the Betway brand in the US – and Stake Trade, more commonly known as Prophet Exchange, have has put their names forward for a license

WynnBet, the online gaming division of Wynn Resorts, applied in partnership with Jack Thistledown Racino. WynnBet’s efforts to launch in Ohio date back to January last year when it announced it had secured a market access deal in the state with an unnamed partner.

Carousel Group-operated MaximBet put forward its application with Jack Cleveland Casino, having in September last year revealed it had agreed a market access deal in Ohio, again with an unnamed partner.

Meanwhile, Digital Gaming Corporation sent its application to the OCCC in partnership with Belterra Park, also referred to on the submission as PNK Ohio.

Finally, Prophet Exchange applied alongside COLHOC Limited Partnership, the company behind Ohio-based National Hockey League franchise the Columbus Blue Jackets.

The applications will join those already submitted to the OCCC, with Bet365 and Tipico also among the operators seeking a mobile management services licence.

Other brands to have contacted the OCCC about a licence include BetMGM, PointsBet, Rush Street Interactive Flutter Entertainment-owned Betfair Interactive, Betfred and Penn Sports Interactive.

The agreement will cover the 2022-23 and 2023-24 seasons, with Casino Secret to become the club’s official online gaming partner in the country.

Casino Secret and AS Monaco will jointly launch an exclusive digital campaign, featuring a series of content targeted at consumers in Japan to celebrate the new partnership.

The deal comes despite Japan having not regulated online gambling.

“Since our launch in 2018, Casino Secret brand has been growing exponentially in Japan and that has led us to win several awards voted by the community of players,” Casino Secret founder Nadir Ounissi said. 

“In the past we worked with other partners in the football industry, now as one of the leading online gaming companies in Japan, it is logical to take a next step to associate with AS Monaco, a world-renowned club, with a strong digital audience of over 22 million supporters and a constant growth of this resonance.”

The new partnership comes after AS Monaco recently announced the signing of Japanese international midfielder Takumi Minamino from English Premier League team Liverpool

AS Monaco chief exectuive Jean-Emmanuel de Witt said: “AS Monaco is an iconic Ligue 1 club with a strong international dimension, and is enjoying growing interest in Japan notably due to the arrival of Takumi. 

“We look forward to starting this new partnership with Casino Secret to grow our presence in Japan and to provide Japanese football fans with some unique jointly created content.”

The UK government’s review of the 2005 Gambling Act has been rumbling on for almost two years now, further pushed back following the resignation of Prime Minister Boris Johnson in July.

This leaves operators, suppliers and affiliates expecting change to come but not knowing what that change will be or how long till new requirements come into force, Bojoko chief executive Joonas Karhu says. 

“Of course, over the past few months, there have been several ‘leaks’ as to some of the changes being considered, with stake limits on slots, enhanced affordability checks and a ban on football team shirt sponsorships just some of the measures being considered.

Karhu continues, “while everyone in this industry wants to ensure players are fully protected at all times, there is a real risk that we are heading towards overregulation, and that is certainly the case with one of the other measures being mulled over – a ban on free bets and free spins.

For operators and affiliates, this would be a concerning change to regulations and could potentially have the opposite effect as that intended by the UK government.”

Free bets and free spins are a major factor for consumers when deciding to play and are also one of if not the key aspects of online casino that affiliates create content around and used to engage players and drive them to their licensed operator partners.

What does this mean for operators?

This, of course creates major issues if GB-licensed operators are no longer allowed to offer free bets and free spins to players. 

“If UK operators and affiliates can no longer use free bets to engage consumers and promote brands, where will that leave the sportsbooks and casinos and the affiliates that promote them?

“It must be remembered that it is not illegal for UK players to wager at offshore sites, although it is illegal for those sites to actively target UK players. Could a ban on free bets and free spins ultimately push more UK players to these sites? I would say that is a real possibility.”

Karhu recognises that if this does happen then players are not afforded the same protections – if any protections at all – as they do when playing at a Gambling Commission-licensed site. 

“The UK is already considered to be one of the most stringent when it comes to responsible gambling. A mass player exodus could lead to the British market no longer being viable for a growing number of operators and, as we have seen in recent months and years, could lead to several licensed brands withdrawing from the market, further reducing customer choice.” 

“If there are bigger opportunities for running offshore sportsbooks and casinos, could this lead to more operators investing in these sites rather than pursuing regulated markets?”

At Bojoko, Karhu draws upon part of Adam Smith’s free market theory and the idea that capital moves towards economically worthwhile investments.

“Smith’s theory would also apply to affiliates, who may find that in order to meet the needs of their visitors and members they need to start promoting offshore sites, too. 

“Affiliates do a tremendous job of ensuring players are channelled to licensed sites while also educating players on the importance of safe gaming and the tools available to them to help them stay in control of their play.”

But if it is no longer viable for affiliates to work with and promote GB-licensed online casino and sportsbook brands, it is not unreasonable to expect many to push players to offshore sites that can offer free bets and free spins. Ultimately these sites will allow them to generate more revenue.

Considering gambling rates

He points out that problem gambling rates are at a record low in Great Britain. The latest Gambling Commission report found that just 0.2% of the UK population was considered to have a gambling problem.

Karhu says that lessons should be learned from markets such as Sweden, where restrictions are even tighter than in Great Britain. “Operators can only offer one welcome bonus with no further bonuses or incentives allowed. This has led to relatively low channelisation rates for licensed operators.”

A report published back in May suggests that if some restrictions were lifted, channelisation rates could jump from around 80% to 90% and generate an additional SEK1bn in tax revenue.

“It is my belief that all of the questions I have raised about the impact a ban on free bets and free spins could have on the UK market must be considered before any decision is taken by the government,” Karhu adds. 

There is a real risk of taking action for the sake of taking action, and in this case, it could do untold harm to operators, affiliates, the wider industry and most importantly the players we are all seeking to protect.”

The results – for the second quarter of the year – were the first to include sportsbook supplier Sportnco. GiG acquired Sportnco for €51.3m (£43.2m/$56.7m at the time) as the quarter began after agreeing the deal in December.

The business set an all-time record in revenue with €22.1m, up 37.1% year-on-year. While the acquisition helped the business, GiG also noted the total was up by 24.0% organically.

Media – covering GiG’s affiliate brands – continued to make up the majority of revenue, with €14.8m, up by 35.1% year-on-year, and by 5.0% from the previous record high set in Q1.

Of this total, €9.8m came from publishing brands and the remaining €5.0m from paid media. New launches for the division included a brand focused on the Ontario igaming market, while at the same time, the business noted diversification of its paid media strategies, with new acquisition channels such as ads on streaming service Spotify.

“The continued focus on diversification of the player acquisition channels and launch into new geographies continues to drive up the overall earnings quality of the segment and remains a key focus point for the business unit,” the GiG board said.

Platform services revenue also grew rapidly year-on-year, thanks to the acquisition of sports betting supplier Sportnco. The business recorded €7.3m in revenue from platform services, reversing pre-acquisition quarter-on-quarter declines.

Richard Brown, CEO of GiG, said that one major benefit of the acquisition was that it allowed for more opportunities in the sportsbook-led US market. Following the deal closing, the supplier made sportsbook-led deals such as with Maryland-based Crab Sports.

“Historically we’ve been leaning more towards igaming and casino, which was limited to only a few states,” said Brown. “But now with the sportsbook being of such high quality, we’re able to pursue that much more.”

The GiG board said that already the acquisition has increased demand for GiG services.

“The increased business offering after the acquisition of Sportnco has led to an uplift in interest for combined solutions from both new and existing customers,” the board said.

“A large part of the current sales pipeline are looking at the combined product offering, a strong start after one quarter of full collaboration.”

GiG also noted that if the full operations of its only remaining white label client, SkyCity, were counted as revenue, the supplier would instead have brought in €11.7m in platform services revenue, and €26.5m in overall revenue. Instead, though, GiG only counts the percentage of revenue it receives as its own earnings, as per standard white label accounting practices.

Costs of sales were €227,000, which led to a gross profit of €22.9m. After marketing expenses and other operating expenses, GiG reported EBITDA of €7.7m, which was a 47.4% increase.

Depreciation and amortisation increased however, meaning that earnings before interest and tax only grew slightly, to €2.4m. While the business also incurred €2.0m in interest expenses, most of this was offset by foreign exchange, leaving GiG with a net profit from continuing operations of €2.0m, after a slight loss a year earlier.

Long-term plans

Given GiG’s improved cash position following the results, Brown said that the business may pursue further mergers and acquisitions, particularly given that there are many different areas where a deal could make sense.

“We believe there is going to be strong cash consideration and cash conversion in the coming years,” he said. “If there’s accretive value in M&A then we would pursue that. One of the strengths of GiG is that we’re strong in multiple areas, so there’s a lot of areas where M&A may present itself.”

Looking ahead, while GiG kept its revenue guidance for this year the same at between €87m and €90m, it improved its long-term outlook.

The business had previously expected double-digit organic annual revenue growth and a 40% EBITDA margin by 2025. However, it now expects revenue growth of around  20% and a 50% EBITDA margin by 2024.

The improved margin would come about in part because of cost-cutting measures for the platform side of the business, which are expected to save €8m. Of this total, synergies from the Sportnco deal will make up around €6m.

This would suggest that the business expects revenue of around €130m and EBITDA of around €65m by 2024, before the impact of new acquisitions.

GiG’s share price increased rapidly following the results. After closing at SEK19.71 (£1.58/€1.87/$1.90) yesterday (15 August), it reached SEK21.68 at the time of writing, a 10.0% increase.

Chief executive Dermot Smurfit also revealed that the business had already cut employee numbers in response to “current market dynamics”.

Though Smurfit said that the business continued to make “strong progress” executing its strategy during the three months to 30 June, several factors, largely out of its control, meant it was not able to reach expectations.

Smurfit, speaking on an earnings call, said these included foreign currency fluctuations against the US dollar and a tightened operating environment in certain markets in Europe that negatively impacted marketing and customer activity. 

To a lesser extent, Smurfit said results were also impacted by a slower-than-anticipated start in Ontario, the Canadian province that launched its legal online gambling market on 4 April.

However, Smurfit was upbeat about GAN’s future strategy, saying that the business has plans in place to grow and expand in the longer-term.

“We are taking specific actions to respond to changing business conditions while not losing sight that we are still in the very early innings of the rollout of US digital gaming and continue to strategically invest our capital,” Smurfit said.

“We are continuing to invest in our core B2B strategy here in the US, which remains an essential driver of shareholder value. Our one-stop shop B2B capability, now very much led by demand for GAN Sports, coupled with our seamless multistate single-wallet player account management platform remains at the heart of our right-to-win B2B market share over time, and we are excited by the visible B2B opportunities within our pipeline.

“Our B2C segment, however, did not fare so well in the second quarter despite showing strong underlying key performance indicators. We’ll continue to focus on operational excellence, but to be very clear, our B2C business remains healthy, profitable and growing.”

Group revenue for the quarter reached $35.0m (£29.1m/€34.5m), which was up 1.7% from $34.4m in the corresponding period last year.

B2B revenue increased 36.5% to $14.2m, helped by growth in the development services and other segments, though B2C gaming revenue slipped 13.3% to $20.8m due to a lower sports margin and unfavourable foreign currency fluctuation.

Operating costs rocketed by 96.0% to $72.7m, though this was primarily due to a non-cash goodwill impairment charge of $28.9m related to the acquisition of Coolbet.

Spending was also up across sales and marketing, product and technology, general and administrative and depreciation and amortisation, though Smurfit said cost-saving initiatives and other productivity measures are in place and working. This includes reducing the number of people employed by the business, where Smurfit said major steps have already been taken.

“On the expense side, our biggest expense item is labour,” he said. “We have implemented some headcount reductions and our ending headcount in June was 675 as compared to 730 at the start of this year.”

After accounting for an additional $1.3m in financial costs, this left a pre-tax loss of $38.6m – far wider than the $2.8m loss posted in Q2 of 2021. GAN received $229,000 worth of tax benefit, but ended the quarter with a net loss of $38.3m, compared to $3.8m last year.

In addition, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 62.9% to $1.3m.

As to how this impacted its first-half results, revenue for the six months to 30 June reached $72.5m, up 17.9% year-on-year. B2B revenue climbed 18.5% to $27.5m, while B2C revenue was also 18.0% higher at $45.2m.

Operating costs increased 65.3% to $114.4m, again mainly due to the impairment charge, while after including a further $1.3m in finance-related spending, pre-tax loss was $42.7m, in contrast to the $7.7m loss last year.

GAN paid $157,000 in income tax during the first half meaning it ended the period with a net loss of $42.8m, far wider than the $9.4m loss recorded in 2021. However, adjusted EBITDA edged up 4.9% year-on-year to $4.3m.

With GAN expecting a continued difficult foreign exchange environment and European headwinds to temporarily impact its results in the second half of the year, it reduced its full-year revenue forecast to between $142.5m and $152.5m, and adjusted EBITDA to a range of $10.0m to $15.0m.

“We expect a robust launch schedule for GAN Sports throughout the US in 2023, which will further our position as a leading provider of a true omnichannel gaming experience,” Smurfit said.

“We are excited about the prospect of a stronger second half of the year, supported by the Fifa World Cup.”

Let’s be honest – it’s the rivalries that make it fun. Celebrating a goal might be one thing, but it’s all the sweeter seeing the away fans slumped head-in-hands, defeated.

You could call it an oppositional identity. To have yourself a community you need to define what you are – but importantly what you’re not. Yes, the feelings of togetherness can be heightened because of what you are, but perhaps just as importantly by what you’re not.

Coming home

Charlotte Emery, chief brand officer for William Hill, places this strategy highlighting community and rivalry at the centre of the company’s new advertising strategy for the start of the season.

“We’re coming into a new football season with all of the old rivalries reignited – and then we’ve got the first ever winter World Cup where you go from being rivals with your mates to coming back together and your rivalry is against nations now,” said Emery.

“And then we come back into January and it’s back to being team rivalry. So it’s like a really lovely, different rhythm to be able to talk about.”

Last year’s campaign featured many of same the totems of English football used in this campaign: the stadium, the pals, Sweet Caroline, Jermaine Jenas – but the emphasis was more intimate and personal to thematically link to the national mood as the UK’s gruelling lockdown receded into the distance.

“What we were celebrating was more that sense of coming together – we were coming out of lockdown and we were just reminding people how really good it was to connect together and sport and gaming was sort of within there, but it was much more about those bonds of friendship, getting back together, the age old jokes that you do every time, like the gag with the guys moving the car,” she said.

Epic

This time around the word of the day is epic, the feelings William Hill is trying to create are big, bold, brash and celebratory.

“When we came into this year and we were like, ‘we’re out of lockdown, we want to capture a same sense of positivity, but we now want to pat ourselves on the back, we’ve got the most amazing, extraordinary epic football season coming’,” she said.

“And we want to capture that sentiment around football and really show that we understand what it’s like to be a fan. And we talk about this season being extraordinary and epic because obviously we’ve just come off the back of the most amazing Euros for the lionesses.”

“And that’s why we talk about this season being epic, football’s epic anyway, but this season more than any other feels like there are going to be and already has been some amazing epic stories with the lionesses.”

“And we wanted to capture that sentiment in what we do and within our advertising. So we’ve created a suite of ads and assets talking about football as epic.”

Another new aspect to this campaign is an increased emphasis on the diverse face of football.

“We’ve brought back some of the friendship groups from last year’s campaign and we’ve brought in some new characters because we wanted to make sure that we really reflected football’s diverse nature.”

“So we’ve got a granddad with his granddaughter who is in her late twenties and you get the feeling that this is something they’ve been doing together for a long time.”

Tower on the hill

Much of William Hill’s strength of a brand comes from high street presence. Through its chain of brick-and-mortar betting shops, the brand has become a highly visible face of gaming in the UK.

“I think the strengths of our brand is driven by our presence on the high street – with retail we have really strong awareness. We are a well-established brand and, while we don’t like to dwell on the past, we’ve been doing this a very long time.”

Emery argues that the future of the brand will rely on the operator leaning on its strengths.

“I think we’re just going to keep building on and strengthening the strong foundations that we’ve got. We’re obviously going to be moving forward and helping build equity in relation to football.”

“You know, we came from a really strong racing heritage and that’s really important to us, but we know that being very strong in football is key.”

Putting football at the heart of the company’s strategy may prove wise – because let’s face it, the rivalries do make it fun.

The revenue was up by 129.5% compared to Q2 2021. It was also up by around $1.0m from the first quarter of the year.

In May, Playmaker acquired podcast network TPN Media Group – owner of sports betting site PropsHQ.com – and sports media business The Sports Drop.

Meanwhile, earlier acquisitions such as JuanFutbol helped boost revenue for Q2.

Jordan Gnat, CEO of Playmaker, said that the business had a “productive” second quarter.

“Q2 was a very productive quarter for us as we continued to invest in the foundation of our business, integrating recently acquired companies, and developing operational efficiencies and centres of excellence,” said Gnat.

“We completed two acquisitions subsequent to the quarter end with the key efforts on diligence and operational integration happening prior to closing the transactions.”

Cost of sales came to $666,049, over four and a half times higher than in Q2 2021.

This brought the gross profit to $6.3m, an increase of 118.1% from Q2 of 2021.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) was $1.9m.

“Though we continue to invest in growth initiatives throughout the business, we produced $1.9m of pro forma adjusted EBITDA in Q2, demonstrating our balanced focus on profitability and growth,” said Mike Cooke CFO at Playmaker.

Total operating expenses for the period came to $7.0m. The highest expense was salaries and wages, which amounted to $3.3m. Advertising, commission and fees came to $1.1m, while depreciation and amortisation costs were $1.1m.

The remaining costs consisted of web services and publishing, professional fees, general and administrative fees and share-based compensation.

This meant the business recorded an operating loss of $692,212.

After a number of further costs – including interest expense, transaction costs and other expenses – the net loss before taxes was $1.0m, $13.0m less than a year earlier.

Following tax expense at $26,995, the total net loss for the quarter was $1.1m, down by 0.5%.

For the six months ended 30 June, revenue was $12.7m, more than four times the $3.0m recorded in the same period in 2021.

Costs of sales were $1.3m for the half, $1.2m higher year-on-year.

Operating expenses came to $12.7m for the half, resulting in an operating loss of $1.3m.

After $3.0m of other costs, the total net loss before taxes was $4.4m.

After tax, the business made a net loss of $4.5m, 209.3% higher than in half year 2021.

The net cash flows used in operating activities was $776,555 during the half year.

The GC awarded the provider with B2B licences through two separate companies, allowing the business to provide gaming content to operators in Great Britain.

Spinomenal will be providing B2B gaming content through both its Panda Bluemoon and SubTech licences.

SubTech is the business’ parent company, and both businesses will be trading under the Spinomenal brand.

Great Britain is the fifth jurisdiction to grant a gaming licence to the provider, following approvals from regulators in Malta, Sweden, Netherlands and Romania.

Spinomenal’s head of partnerships Olga Sirokha praised the decision, arguing the value of the GB market for the company’s Retro Gaming studio.  

“Securing our UK gaming licence is a huge moment as it allows us to share our outstanding slots library with partners working in this prestigious market.

“Our Retro Gaming project is gaining momentum all the time and we expect this to accelerate now we’re able to target UK-licensed operators with its range of classic entertainment products.”

Spinomenal is a business found in 2014 that provides content and technological solutions to the online casino industry.

The company both develops games in-house and offers operators access to products created by third-party content providers through its Spinomenal Aggregation Platform.