The operator had previously projected revenue of between $2.4bn and $2.5bn, with adjusted earnings before interest, tax, depreciation and amoritsation (EBITDA) expected to be between $560m and $580m.
However, it has now downgraded the revenue figure to between $2.2bn and $2.4bn, while EBITDA projections are now between $535m and $550m.
This, it said, was due to results so far this year, as well as foreign exchange movements and lower expectations in Atlantic City.
Earnings before interest, tax, depreciaton and amortisation (EBITDA) also fell from $14.9m in the prior year period to $12.1m, a decline of 18.8%. Full House framed the decline as the product of both planned construction costs and the end of covid-era stimulus.
While much of the construction costs were planned and part of Full House’s business plan, the company’s plan for a temporary casino in Waukegan, Illinois has been delayed until Q4 owing to industrial action in certain sections of the supply chain.
The ongoing construction work at Chamonix Creek Casino also disrupted the neighboring Bronco Billy’s casino, reducing taking from this venue.
However, Colorado, where Chamonix Creek and Bronco Billy’s casino are both located, represents a relatively small chunk of the company’s total revenue. Takings from the state declined from $6.4m in Q2 2021 to $4.1m in Q2 2022.
Silver Slipper Casino and Hotel in Mississippi – the largest Full House property by revenue – brought in $21.1m in revenue in Q2 2022, versus $24.2m in Q2 2021. Full House blamed the end of covid-era stimulus on this result.
Casino continued to make up a dominant share of revenue, but declined as a total share of revenue from 74.6% to 72.7% in the three months to 30 June. Revenue from “other operations”, which includes sports wagering, increased to $5.6m from $2.8m.
The business added that one reason for the decline was also that the comparable period was a record high.
“The prior-year’s second quarter was the company’s strongest in recent years, having benefited from customers receiving government subsidy payments due to the Covid-19 pandemic.”
Full House also portioned off the lion’s share of the business’s cash reserves to the ongoing development of the Chamonix casino, as well as the construction of the temporary casino in Illinois, which is estimated to cost $100m in total to construct and licence.
Full house CFO Lewis Fanger outlined the details:
“At June 30, 2022, we had $298.4 million of cash and equivalents, including $190.2 million of cash that is reserved for the completion of Chamonix. We also have a $40 million credit facility, which is currently unutilised except for a $1 million standby letter of credit. We are confident that our existing cash, credit line availability and cash flows from operations will be sufficient to complete both the temporary casino and Chamonix.”
The mixed financial results stood in contrast with 2021’s full year results, in which revenues increased 43.6% year-on-year.
During the earnings call, analsysts asked whether it would make financial sense for the business to sell-off some of its small assets to help them through the cash squeeze.
Despite the pressure, company president and chief executive officer Dan Lee did not sound concerned.
“We don’t need the money to be honest,” he said.
For SJM Holdings’ half-year results, revenue fell by 20.9% compared to half-year 2021.
This was even lower still – down by 75.8% – if compared to pre-pandemic revenue from the first half of 2019, which was HK$17.07bn.
Revenue from gaming alone was HK$3.81bn, a decrease of 24.9% year-on-year and down 77.2% from 2019. Revenue from mass market table gaming operations made up the majority of this, at HK$3.43bn. VIP gaming operations amounted to HK$386.9m of the total, while slot machine and other gaming operations revenue was HK$248m.
The remaining HK$317.7m came from hotel, catering, retail and leasing related revenues.
Following special gaming taxes, special levies and gaming premiums, coming to a combinedt HK$1.66bn, the total net gaming revenue was HK$2.14bn.
Income related to hotel, catering, retail, leasing and other services came to HK$317.7m, while the share of profits from a joint venture also added HK$2.2m.
Despite the decline in revenue, expenses were up.
The highest expense was HK$4.36bn in operating and administrative costs, which was HK$513.9m more than in half year 2021. Finance costs amounted to HK$398m, an increase of HK$381.4m year-on-year.
The remaining HK$462.1m consisted of marketing and promotional expenses, costs of sales and services relating to hotel operations and other losses.
After expenses, the pre-tax loss was HK$2.75bn. Following tax at HK$10.7m, the total loss for the period was HK$2.77bn, 84.9% higher than the loss in the previous year.
This was HK$4.5bn lower than pre-pandemic levels.
Adjusted EBITDA amounted to a loss of HK$1.17bn, more than double the HK$510m loss in the first half of 2021.
Gross gaming revenue (GGR) at Caisno Grand Lisboa totaled at HK$705m, while at Grand Lisboa Palace it was HK$231m. GGR at other self-promoted casinos – which consist of Casino Lisboa, Casino Oceans at Jai Alai, Casino Eastern and Casino Taipa – was HK$674m.
Satellite casinos, pertaining to 14 third-party promoted casinos, brought in HK$2.46bn in GGR.
The business also mentioned details of a share issue it will conduct, alongside a HK$2bn loan from parent company Sociedade de Turismo e Diversões de Macau.
Sociedade de Turismo e Diversões de Macau will loan SJM HK$2bn over six years, with a 4% interest rate per year.
Up to 1.45 billion shares will be issued as part of the fundraising efforts, priced at HK$2.08 per share. After deducting expenses, SJM Holdings expects to raise between HK$2.93bn and HK$3.01bn.
A total of HK$2.70bn of the proceeds will go towards investment in SJM Resorts. This is due to minimum level of share capital that SJM Resorts must have to qualify for to obtain one of six tenders being issued by the Macau government.
During its earnings call for its 2022 results, the business gave a particular focus to the prospects of a recession, and what this might mean for its business.
Chief executive Jay Snowden cited past data to argue that – as a regional operator – Penn would prove to be resilient against these conditions.
“Regional markets performed far better than the Las Vegas Strip following the 2007-08 downturn,” he said.
In addition, Snowden said that geographic diversification would help protect the business against market conditions.
The Penn chief executive also noted that – should revenue slow down – the business would be willing to take aggressive cost-cutting measures, which may include layoffs.
Entertainment made up JPY52.7bn of the total sales in the quarter ended 30 June, up by 11.1%.
This was followed by Pachislot and Pachinko machines at JPY10.5bn, up by 0.2% year-on-year. Resort revenue increased by JPY1.1bn to JPY2.6bn.
Other revenue increased by JPY100,000 to JPY300,000.
Revenue for the full year is forecasted to hit JPY375bn. This would be a 16.8% rise from 2021-22.
Cost of sales in the quarter totaled at JPY40.93bn, a rise of 15.7% year-on-year and 7.6% from the same period in 2019.
This meant that gross profit was JPY25.1bn, up just slightly by 4.6% year on year. However, this total was 11.3% less than Q1 2019.
Selling, general and administrative expenses also rose, from JPY20.2bn to JPY22.4bn. Aa a result, the operating income was JPY2.77bn, a decrease of 27.7%.
Non-operating income was JPY2.52bn, considerably higher than the JPY797m recorded the previous year. Non-operating expenses also rose though, increasing by 22.1% to JPY4.25bn.
Extraordinary losses of JPY149m left pre-tax income at JPY4.10bn. Following JPY942m worth of income tax, the total profit for the quarter was JPY3.16bn – 7.5% higher than in the previous year and 75.8% higher than in 2019.
This compares to the relatively robust growth the company experienced in Q1 following the business’s JustPlay.Lol acquisition. The deal was part of Playtika’s wider diversification strategy.
In total, net income declined to $36.4m from $90.0 million in the prior year period, a 59.6% collapse. Meanwhile, earnings before interest, tax, depreciation, and amortisation (EBITDA) fell to $238.9m, compared to $264.4m the previous year, a 9.6% decline.
This can be largely explained at increasing costs as revenue remained stagnant. Total costs and expenses for the three months ending 30 June rose to $568.3 from $493.8m in the same period last year. This $74.5m increase is a 13.1% change and more than explains the decline in net income.
Increased money spent on research and development, as well as general and administrative costs, largely drove the rise in expenses.
EBIDTA margin also fell to 36.2% from 40.1% for the three months ending 30 June 2021.
The business pointed to the rise of its casual portfolio as a potential bright spot, with revenue growing 10.0% year on year, to comprise 53.3% of total revenue – with revenues standing at $351.5 million and $308.1 million for casual and casino themed games respectively.
Other non-revenue metrics were signs for optimism including an increase in daily payer conversion to 3.2%, up from 2.9% in Q2 the previous year.
Playtika chief executive officer Robert Antokol remained bullish in the face of the news: “We are proud of our performance in the second quarter in a challenging economic environment.”
“We maintained growth in key strategic areas including our casual game portfolio and direct-to-consumer platforms, and demonstrated the resiliency of our business. Looking ahead to the second half, we are focused on the continued introduction of exciting new content for our existing portfolio of games and on our new game development initiatives as well.”
Despite the decline in net income, the company remained in a strong liquidity position, with $1.8bn available including $1.2bn in cash reserves as well as $600m in additional borrowing capacity.
President and chief financial officer Craig Abrahams highlighted attempts to improve optimisation and efficiency.
“We continued to optimise our business during the second quarter as we focus on execution,” he said.
“We took actions to improve our core operations and enhance product roadmaps, while adapting to maintain margin and strong free cash flow generation. We will continue to look for efficiency opportunities across our organization and capitalize on investments that position us for long-term sustainable growth.”
Following a review of the online gambling operator’s licence, the Commission found that between October 2019 and October 2020, LeoVegas breached a number of its licence conditions.
Breaking down some of the breaches, the regulator said the social responsibility failures included LeoVegas setting spend triggers for safer gambling team customer review that were significantly higher than the average customer’s spend without any explanation as to how this was appropriate.
The operator was also found to have set the point at which customers were made to take a 45-minute cool-off period at six hours of play, without explaining why.
As well as its triggers being set too high, the Commission said LeoVegas also failed to act on its own policy of interacting with customers that had denied deposits, cancelled withdrawals, long gaming sessions or gambling sessions that took place late at night or early in the morning
In addition, the Commission said LeoVegas did not sufficiently take into account guidance issued by the regulator in 2019 on customer interaction.
The AML failures included setting financial triggers for anti-money laundering reviews too high.
The Commission said LeoVegas also “relied too heavily on ineffective threshold triggers and inadequate information” to determine how much a player can spend.
The regulator also said that there were inappropriate controls to stop players that LeoVegas knew little about spending a large amount of money in a short space of time.
Specific rule breaches included paragraphs 2 and 3 of licence condition 12.1.1 on anti-money laundering, which relate to the prevention of money laundering and terrorist financing, as well as paragraph 1 of licence condition 12.1.2, also in reference to AML.
LeoVegas was also found to have failed to comply with paragraphs 1(a),1(b) and 2 of social responsibility code of practice (SRCP) 3.4.1 in relation to customer interaction.
In addition, the Commission said LeoVegas did not comply with SRCP 3.9.1 regarding the identification of customers and failed to act in accordance with ordinary code provision (OCP) 2.1.1 in reference to AML.
LeoVegas, which runs Leovegas.com, Slotboss.co.uk, Pinkcasino.co.uk, Betuk.com and 21.co.uk, will also receive an official warning and undergo an audit to ensure it is effectively implementing AML and social responsibility policies, procedures and controls.
The regulator noted that LeoVegas cooperated with the Commission throughout the investigation and has taken appropriate remedial action to address the identified failings.
“We identified this through focused compliance activity and we will continue to take action against other operators if they do not learn the lessons our enforcement work is providing,” the Commission’s director of enforcement and intelligence, Leanne Oxley, said.
“This case is a further example of operators failing to protect customers and failing to be alive to money laundering risks within their business.”
LeoVegas may soon be acquired by land-based giant MGM Resorts, after the LeoVegas board unanimously recommended shareholders approve an acquisition offer from MGM. MGM will pay SEK61 (£4.90/€5.85/$6.16) per share to acquire all of LeoVegas’ share capital. MGM said it will finance the deal through its existing cash reserves.
However, a month after the offer was announced, the Swedish Economic Crime Authority launched a preliminary investigation into suspected insider trading in LeoVegas’ shares related to the deal.
The advertisement from Rank appeared within its Lucky Night mobile casino game, and pertained to its Wolf Gold casino game.
“Everyone wants to solve theirs [sic] financial problems. Click the download button right now and start to earn,” the ad said. “In fact, it’s all very easy to do with our application. Pay off loans, buy a car and a nice house and make a lot of money!”
Text at the bottom of the ad stated “Welcome bonus £400”.
In upholding the complaint, the ASA took issue with the use of “start to earn” and “make a lot of money” as this implied that the app could provide consistent income, and therefore financial security. In addition, the body determined that the ad made an implication that the player could afford expensive items, such as houses and cars, through gambling.
Rank said that the ad was bought by WakeApp, a third-party organisation that dealt with in-app media on Rank’s behalf. Rank terminated its relationship with WakeApp following the complaint.
Rank also said that it had not been aware of the content of the ad and would not have approved it.
Ultimately the ASA concluded that the ad had breached rules 16.1, 16.3, 16.3.1 and 16.3.4 of the twelfth edition of the CAP Code.
Coral’s ad appeared on television during March 2022, and depicted a horse racing event.
The ASA concluded that the ad promoted socially irresponsible gambling behaviour in a number of ways, including how Coral branding was featured on the track, in the crowd, on the horses’ saddle cloths and in the voice over.
In addition, the ad asked, “How long have you waited for those gates to crash open?”, which could have suggested gambling occupying the mind of a bettor.
Coral, though, argued that the ad never made an explicit mention of betting.
The ad also included audio-visual effects that replicate horse racing, including shaky camera shots, shouts from the crowd and hooves on the track.
“We considered that the particular presentation of those elements of the ad, in combination with the voice over, carried a significant risk of replicating or recalling ‘highs’ associated with previous successful bets or betting in general, for viewers vulnerable to problem gambling,” the ASA said.
Both advertisements must not appear again.
In his new role, Gatto will spearhead Paysafe’s international sales function across a range of sectors including gaming, travel, and entertainment, as well as the crypto and fintech industries.
Gatto joins Paysafe after co-founding Ureeka, a community that helps small businesses go to market, while he also currently serves as a board member at RevTrax and an advisor for Ocient.
Earlier in his career, Gatto spent time working as an advisor at Audience Group, Jebbit and FlavorCloud. He was also principal at RMG Group, chief operating officer at TubeMogul, and both senior vice president of global sales and vice president of media and advertising for Neustar.
Gatto’s other roles included president of Aggregate Knowledge, chief executive at Pointroll and ShopLocal, and senior vice president of global sales for PointRoll.
“I believe Paysafe is uniquely positioned to offer an unrivalled end-to-end payment offering to both consumers and merchants in the specialised industries it focuses on,” Gatto said. “I’m thrilled to be joining Bruce and the talented Paysafe team at such an exciting time and look forward to playing my part in driving some solid growth across the business.”
Paysafe chief executive Bruce Lowthers added: “Rob is an outstanding leader with a proven track record of implementing growth strategies that deliver positive top-line and bottom-line results.
“His commercial acumen, tech savviness, and deep understanding of both market and customer needs will make him an invaluable member of the team as we transform the business and execute on our growth plan.”
The system went live in October of last year to coincide with the opening of the country’s regulated online gambling market.
The country’s new gambling act requires licensed online and retail operators to check Cruks before allowing a player to gamble. As of the end of July, Cruks had been consulted more than 148 million times.
Consumers have the option to voluntarily exclude themselves from online gambling, as well as retail slot machine arcades and Holland Casino’s land-based casinos for a minimum of six months.
Players can also be admitted to the list involuntary through a request from a partner, family member or gambling provider. KSA must first approve the application before a player is added to Cruks via this method.
Last month, KSA issued a reminder to operators that gambling can only be offered to players with an active PKI certificate, which are only valid for a limited time. Without a PKI certificate, it is not possible to check whether players are registered with Cruks.
This came after KSA in June also announced that it had launched an investigation into potential violations of Cruks by land-based operators.
In recent months, KSA said it had received a number of reports from players who had self-excluded through Cruks but were still able to access slot halls. Some players reported being able to access the venues without any restrictions, while others said their registration with Cruks was ignored.
The KSA said that if it identifies any violations of licence rules, it could impose sanctions.
