Month: August 2022

The new licence will enable the operator to roll out its Sportsinteraction.com site and offer sports wagering to consumers across the province.

Sports Interaction joins a host of other brands to have secured licences in Ontario, which opened its legal online gambling market in April this year. Prior to the market opening, Sports Interaction had been a major brand in the Ontario grey market.

Bally’s, PokerStars, SkillOnNet and BetVictor are among the latest licensees, while operators such as theScore, PointsBet and Bet365 were approved before the market opened.

Earlier this year, Entain acquired Avid Gaming, the business behind Sports Interaction, from Middlebrook Investments Limited in a CAD$300m deal.

Avid Gaming leases Sports Interaction exclusively to the Mohawk Council of Kahnawà:ke and the Mohawk Online socioeconomic initiative. Sports Interaction operates in Canada through Mohawk Online, with offices in Kahnawà:ke and Ireland, and a headquarters in Jersey.

Entain was already active in Canada through its Bwin and Party brands in the market.

Avid Gaming applied for an Ontario license prior to the acquisition.

“Now is the winter of our discontent,” burbled Richard III, in the famous warning of what happens when a clever clogs lets ambition outstrip means. More prosaically, winter is certainly on the mind of those in the UK as the country braces for a potential triple threat of recession, energy price shocks and generalised inflation – all of which have direct industry implications.

A combination of supply constraints, fiscal and monetary policy, as well as energy disruptions have made inflation a worldwide phenomenon – but it is most ferocious in the UK. In August, annualised inflation reached 8.5% in the US, 8.6% in Eurozone, just 6.5% in France – and 10.1% in Britain.

As our long, hot and doomed summer recedes into the middle distance, from Middlesbrough to Downing Street, Britain is blowing off its dusty old picture books of 1978 as it braces for the squeeze, and it’s not much better elsewhere. The industry better be ready.

In July, YouGov released poll showing that 30% of UK bettors would reduce their gambling activity in the face of cost of living increases – what will happen to the country’s gambling habits if American multi-national Citi are correct in predicting eye-watering 18% price increases by the end of the year?

With Tory leadership race entering its final stretch, the long-awaited Gambling Act white paper is also going to be knocking on the door soon – with the industry starting to think aloud about just how hard these affordability checks are going to be.

Safe and responsible gambling is of course an incredibly important topic that is integral for ensuring the long-term viability of the sector – but nonetheless short-term adjustments will be painful – with self-imposed restrictions already biting.

Flatland

Already, Britain is no boomtown.

The UK is a mature gaming market, with little room to grow and facing continuing regulatory uncertainty – so it’s not surprise that in this environment, many businesses reported stagnant revenues. Entain’s online revenue from the market dipped, though this was offset by retail reopenings, as did Flutter’s, though retail reopenings helped both. Kindred in its rocky Q2 also stumbled in the UK market, blaming self-imposed social responsibility measures ahead of the white paper.

“During the last year, the UK market has been impacted by stricter affordability checks self-imposed by the industry,” the Kindred board said. “These measures can be expected to continue over the coming quarters. Whilst impacting revenues in the short term, this ensures a more sustainable customer base.”

The newly combined 888-William Hill entity – with newly increased exposure to the market – was especially affected by the trend – reporting a UK revenue decline of 25%. The operator had similarly added increased social responsibility measures in anticipation of British legislative reform.

“The group’s financial performance in the period primarily reflects market conditions in the UK,” said 888 CEO Itai Pazner.

“However, we believe the proactive actions we have taken to increase player protections and drive higher standards of player safety have put the group in an even stronger position for the future.”

Right now, new markets power the growth for most global operators The US for example, is a rapidly developing jurisdiction, where new customers and new markets have the potential to soften blows in generalised downturns. The only place to go is up – compared to the mature UK market, which is already saturated and close to its ceiling.

DraftKings CEO Jason Robins said in the business’s Q2 financial report: “Customer engagement remains strong, and we continue to see no perceivable impact from broader macroeconomic pressures.”

But new market growth won’t last forever, and even if there’s no decline in places like the US, operators can’t count on continued rapid growth to balance out declines in mature markets like the UK.

Mountain Energei

Land-based gaming and retail betting, especially in the UK, faces a third spectre at the feast to add to regulatory uncertainty and hits to consumer spend – energy.

As we enter the sixth month of the war in Ukraine, energy bills are rising – and set to skyrocket this winter. Energy consultancy Auxilione predicts household energy to approach an average of £4000 pounds by January – which no doubt will be destructive to consumer spending – but it’s easy to forget that businesses also face the same pressures: especially those with large venues to heat.

Rank Group CEO John O’Reilly noted that those costs will have a major impact on his business.

“Whilst we have been seeing improvements in London in recent weeks, the trading environment across the UK is likely to remain difficult in the months ahead with inflationary pressures squeezing consumer discretionary expenditure and cost increases, particularly in energy prices, putting pressure on profit margins,” he said.

To give a sense of the scale of the rise, energy prices for the casino operator have already risen from £13m in 2020-2021 to £23m in the same period of 2021-22 – with a predicted 2023 cost of a staggering £46m.

While Rank is confident that it will be able to bear the cost, not every retail operator will be so lucky. Just days ago, industry trade body the British Gaming Council (BGC) called upon the next prime minister to intervene as businesses face 300% increases in bills compared to current rates. BGC chairman Michael Dugher warned that otherwise, businesses will be forced to close.

“The cost of simply doing business is rising at an exponential rate,” he said. “If urgent action isn’t taken soon, continued energy price increases could have a catastrophic impact across the hospitality and leisure sector, including hitting our members.

“Casinos are a vital pillar of the hospitality and tourism sector in cities and towns across the UK. Just like the rest of the hospitality sector they are struggling to build back after the global pandemic and now they face a new crisis.”

And energy is one topic where the UK is not facing a uniquely bad parade of horribles. Europe is ridden with energy shortages and rocketing prices, especially in certain Central European countries which are particularly dependant on Russian natural gas.

Reasons to be cheerful

But it isn’t all gloomy. The end of the year will also bring with it the first winter World Cup which will no doubt be a boon to sportsbook operators. Additionally, perhaps inflation will prove to be relatively transitory, and we will experience the fabled “soft landing” that central bankers are aiming for, combining modest monetary tightening with modest employment shocks.

Still though, perhaps that’s not the right mindset. Hope can be its own kind of poison – and the last thing we want to be in the morose position of John Cleese’s Brian Stimpson’s position in Clockwise:

“It’s not the despair, Laura. I can take the despair. It’s the hope I can’t stand.”

Revenue from igaming amounted to $1.25m (£1.06m/€1.25m). narrowly beating the previous monthly high of $1.22m set in April this year.

The July figure was also 58.1% higher than $793,017 in the same month last year, as well as 12.1% ahead of $1.1m in June this year.

Online video lottery accounted for $1.0m of total revenue for the month, with table games at $165,378 and poker rake and fees $43,944.

Players spent $39.4m gambling online, including $26.8m on video lottery and $12.6m on table games.

Delaware Park was the leading operator in the igaming sector with $377,753 in revenue off $16.2m in bets, ahead of Bally’s Dover on $377,753 from $12.9m and Harrington Raceway with $332,904 off $9.8m in wagers.

Turning to sports betting, revenue for the month stood at $383,249, down 27.5% year-on-year, but 80.1% higher than $212,768 in June this year.

Consumers wagered a total of $2.7m on sports during July, down 5.0% from $3.6m in July of last year and 22.9% lower than $3.5m in June 2022. This figure was also the lowest monthly total so far in 2022.

Delaware Park also claimed top spot in the sports betting market with $203,322 in revenue from $1.4m in wagers. Bally’s Dover ranked second with $93,683 in revenue off a $668,294 handle, then Harrington Raceway on $86,725 from $579,359.

YGAM said it hopes the newest trustees – which have been approved by the Charities Commission – will broaden the board’s experience and bench of talent as well as prove to be assets in the upcoming drawing up of a new three-year strategic plan. The latest board members are professionals with experience in a range of fields including fundraising, research, finance, esports and video gaming.

YGAM chair Mike Wojcik commented: “I’m thrilled to welcome our new trustees to the charity and delighted we continue to attract professionals with such ability, experience, and knowledge.

“They are joining the board at a crucial time as we build on our reputation as a sector leading education charity and develop our ambitious new strategy which will be launched at the start of 2023. It’s already apparent that the newly revitalised board will achieve great things in supporting the excellent staff team to achieve impact our social purpose.”

The new trustees include veteran fundraiser Anna Greaves, sports industry professional Clive Reeves, accounting expert Paul Morris, video gaming old hand David Miller, and Glen Fendley – an experienced charity director.  

Greaves spoke positively of her appointment, noting the importance of the work done by YGAM.

“YGAM is an exciting organisation doing vital, ground-breaking work and I’m delighted to have been appointed to the trustee board.

“I hope to contribute both my extensive experience as a fundraiser and lived experience of the gaming sector to their work. I’m passionate about ensuring that gaming spaces are safe for everyone – especially women and girls and the LGBTQ+ community.” 

 YGAM in recent months has announced a number of new partnerships with a variety of different organisations such as slot arcade business Merkur Group and the University of Plymouth.

The raids took place on 18 August at The Cellular Vault and Cellular Bank, with investigators confiscating 11 video slot machines, 56 computers and $10,141 in suspected gambling proceeds and gift cards.

The machines, cash, associated equipment and business records were removed as part of joint investigations of the two businesses by the Michigan Department of Attorney General and the Michigan Gaming Control Board (MGCB).

The Cellular Vault held 39 computers used to play slot-style games, while 11 slot machines, as well as 13 computers used to play slot-style games, were discovered at Cellular Bank.

The investigation also found that Cellular Bank had been providing patrons a card with a PIN number, allowing them to wager online from offsite locations including their own homes.

“The MGCB received several anonymous tips regarding both Flint locations, and we thank the public for their help in rooting out possible illegal gambling activities,” MGCB executive director Henry Williams said.

“Patrons at alleged storefront casinos do not have access to the consumer protections required for legal, regulated gambling. The operations also can draw other types of crime to the surrounding neighbourhoods.”

The latest round of confiscations comes after investigators in April removed 100 devices used for gambling and $29,200 in suspected gambling profits from two other alleged storefront casinos.

The State Road Spot in Davison and The Bristol Spot in Burton remain under investigation.

Holography has been an emerging technology for a number of years. In the gambling industry, it is becoming a selling point for operators that wish to offer the most in-demand technologies – mainly around slots and games.

But in the realm of safer gambling, holography could provide a more effective way of intervening when players show signs of harm.

2mee allows an individual affiliated with an operator to record videos that appear on-screen as players are using the platform. This could be used to notify a player that they have lost a significant amount of money in a short amount of time while gambling.

The supplier’s chief executive James Riley emphasises that the hologram technology presented by 2mee has the potential to encourage responsible play.

“It allows operators to directly reach out to potentially at-risk players with a message that is truly human and use the emotional engagement it creates to ensure players are happy and healthy at all times.”

Developed in conjunction with IBM engineers at the University of York, Riley explains 2mee as a multi-faceted platform technology that personalises the player experience for customers.

“2mee allows businesses and brands to build empathy with their audiences and leverage the power of emotional marketing,” he says. “Anyone can record a message on their smartphone and then 2mee delivers that message to an operator’s entire player base or a single customer.

“This could be for a promotion or bonus offer, driving engagement via a brand ambassador or even to reach out to players from a customer support perspective.”

The human connection

Riley believes that this personalised alternative could create a more trusting relationship between operator and bettor, cultivating an environment where someone could feel more confident about reaching out for help.

“The first part of the equation is that having human face-to-face engagement is tangible, which creates trust and loyalty,” he says. “It engenders a feeling of being directly involved with the business or brand.”

He argues that the hologram technology creates an unparalleled personal connection, one that rivals the text-based alternative.

“But a lot of technology in customer relationship management is text-based, so does not foster the same connection between brand and customer as a hologram message – and the deep connection it provides – does. Text contains no empathy or human touch.

“Wouldn’t it be better if a person pops up to deliver empathy?”

Many operators would argue that they already have means of developing personal connections with their customers. Traditional channels – such as contacting a player through text or phone call, or deploying responsible gambling campaigns in the media – have been employed to address problem gambling for quite some time.

But Riley says customers are receptive to the 2mee hologram technology, and points to partnerships with prominent operators as proof.

“With our current customers, such as Sportsbet.io, the engagement rate with human hologram messages is more than 50%,” says Riley. “For emotional marketing, we’ve created campaigns for affiliate powerhouse Racing TV.

“Instead of having a banner for Sky Bet and BetVictor, these operators are using their brand ambassadors to deliver hologram messages across the RacingTV website. This provides a new way for brands to create an emotional marketing connection via their ambassadors and use it to drive new customer sign-ups through their affiliate partners.”

Future-proofed

Riley says the response to 2mee has been positive, with the company receiving favourable feedback from operators and players. This is down to how efficient its technology has proved, he suggests.

“In terms of reliability, it has proven itself,” he says. “It’s delivered at scale and delivered empathy at scale.”

But much like every emerging technology, the reliability of holography can be brought into question. While a pop-up text box could be viewed as a depersonalised approach, it is arguably more secure than deploying a hologram. But Riley says 2mee is “future proofed”, ready to face any present-day challenges and those to come.

“In terms of the problems it could face, there really are none,” he continues. “This is a full, robust, scalable platform that has been tried and tested with operators and affiliates.

“2mee has been future-proofed so that businesses and brands can unlock the power of emotional marketing now and over the years to come.”

Although the holography is unique in itself, Riley emphasises that 2mee’s emotional marketing is a similarly unique selling point. He explains that the emotional marketing aspect can act alongside 2mee’s responsible gambling capabilities to cultivate customer engagement.

“It all comes down to providing that emotional marketing connection, a subset of marketing that is extremely marketable,” says Riley. “If you can deliver engaging emotional marketing, customers are more likely to remain engaged with a betting brand and continue to spend with them, too.”

Striking this balance between encouraging customer engagement and promoting responsible gambling can be tricky. Riley explains that operators must consider customer wellbeing first and foremost in order to achieve this, adding that emotional marketing can be a critical element of success.

‘They [operators] need to market their products and players responsibly and to customers they know – and can – engage with their sportsbooks and casinos,” he says. “2mee allows them to do this by leveraging the power of emotional marketing and sending direct messages to specific player segments.”

In crowded, competitive markets such the US, Riley believes operators should hone in on what makes them unique, picking out local sports stars in key states as an example. In turn, 2mee’s technology can place operator ambassadors directly within the betting experience.

“Brands need to be heard above the noise being made by their rivals and some of those rivals have multi-million-dollar marketing budgets that not everyone can compete with,” says Riley. “Operators not only need to be able to engage new players but retain existing customers if they are to achieve a sustainable return-on-investment from their marketing spend.

“The state-by-state nature of the market means that local campaigns are crucial, so too is leveraging the power of state sports stars and celebrities. 2mee allows operators to do this.”

The place for hologram technology in the betting industry has not been clearly defined. But the way it is being used to enhance already-present emotional attachments, such as connections to sports teams and match results, has produced promising results. If holograms are further used to promote responsible gambling and engender a personal connection between customer and operator, they could become a vital tool in the social responsibility space.

In total, the business recorded €353.4m in revenue. This was more than the total recorded during the entirety of 2021, when the business brought in €304.2m, or 2020, when it brought in €333.1m. In both of those years, Holland Casino faced extended closures, as well as restrictions when its venues were allowed to open.

“Fortunately, our loyal guests have found Holland Casino again en masse,” said Noël Leise, director of operations for Holland Casino. “And our committed employees do everything they can to ensure that they have a great time at Holland Casino.”

The online gaming revenue figure of €82.8m therefore made up 23.4% of Holland Casino’s overall revenue.

Online gaming is a new vertical for Holland Casino, having only been legalised in the Netherlands in October of 2021. During the last three months of 2021, the operator made €40.4m from the vertical.

“We also see that our online guests continue to appreciate our offer despite the increasing competition,” Leise continued. “We therefore expect a positive year for Holland Casino. Of course, that still depends on the Covid-19 developments in the autumn and how quickly we can have enough employees in the tight labour market.

“But these half-year figures again form a promising basis. In the coming six months, we will continue to build a stable, responsible and future-proof company with renewed energy.”

The business reported earnings before interest, tax, depreciation and amortisation (EBITDA) of €40m. Its pre-tax profit, meanwhile, was €8.2m.

The operator also repaid €51.7m worth of taxes that had been deferred due to the impact of the pandemic during the half-year. In total, the business had €313.4m deferred. Chief financial officer Ruud Bergervoet said the operator was currently set up to pay off the remainder in 60 instalments, but it was exploring paths to pay it back more quickly.

The operator behind the Spreadex.com website will pay the money to socially responsible causes as part of a settlement with the Commission, which was agreed following a review of its business.

Between January 2020 and May 2021, Spreadex was found to have breached the Licence Conditions and Codes of Practice (LCCP), while it also failed to comply with the Social Responsibility Code.

Social responsibility failings identified by the Commission included Spreadex having in place financial alerts that were ineffective and allowed customers to lose significant amounts over a short period of time. 

The operator was also found to have placed an overreliance on financial alerts to identify customers at potential risk of experiencing harms, while it failed to sufficiently record and evaluate its customer interactions.

In one case, a customer was able to deposit £1.7m and lose £500,000 over a one-month period. The Commission noted that while customer interactions took place, these were not sufficiently evaluated and did not include considering the effectiveness of restricting the account.

Looking at the anti-money laundering failures highlighted by the Commission, the review picked out one customer who met a £25,000 financial deposit alert and had the alert for further review increased to £100,000 based on a self-declaration of income and an open-source check.

Another customer was able to deposit £365,000 and lose £284,000 over a period of three months, without a source of funds being sufficiently established, while one player was able to continue depositing after providing redacted bank statements in response to a request for evidence of their source of funds.

“Whilst it is disappointing to see anti-money laundering and social responsibility breaches occur despite our extensive published cases highlighting similar failures, we note the swift and robust action the licensee took to bring itself back to compliance,” Commission director of enforcement and intelligence Leanne Oxley said.

“We expect similar commitment and engagement across the gambling sector.”

In its ruling, the Commission said that Spreadex failed to review and update its risk assessment on an annual basis as required, nor did not take into account and consider information on the risks of money laundering and terrorist financing available by the Commission. The regulator also said Spreadex did not assess all relevant customer, product and geographical risk factors.

Spreadex was also found in breach of paragraph 2 of licence condition 12.1.1, which refers to how licensees must ensure they have appropriate policies, procedures and controls to prevent money laundering and terrorist financing.

Here, the Commission identified weaknesses and shortcomings in relation to the adequacy and maintenance of AML policies, procedures and controls, noting that some customers were able to deposit large amounts of money without sufficient interaction being triggered.

The regulator added that Spreadex failed to critically review Source of Funds documentation and was over-reliant on electronic checks, while it did not have in place sufficient staff to respond to financial triggers in a timely fashion and to adequately mitigate the risk.

Finally, the Commission said Spreadex failed to comply with Social Responsibility Code 3.4.1, paragraphs 1 and 2 of which state that licensees must interact with customers in a way which minimises the risk of them experiencing harms associated with gambling. 

Summarising its findings, the Commission noted a number of aggravating factors including the serious nature of the breaches, the impact on the licensing objectives, and that some breaches arose in circumstances that were similar to previous cases and subsequently resulted in the publication of lessons to be learned for the wider industry.

However, the regulator also considered certain mitigating factors, namely how Spreadex showed insight into the seriousness of the breaches and self-suspended its casino activities for five months to mitigate risk.

The regulator noted that Spreadex also provided an action plan immediately and took action to expand and improve its compliance capacity, while the operator and its senior managers cooperated with the Commission. In addition, Spreadex made an early offer of a regulatory settlement.

After considering this, the Commission ordered a £1.4m payment in lieu of a financial penalty, with a further payment of £7,831 towards the Commission’s costs of investigating the case. 

The latest ruling comes after the Commission last week ordered Entain to pay a record £17.0m after it identified a series of social responsibility and AML failings across its online and land-based businesses.

Commission chief executive Andrew Rhodes said Entain could potentially lose its licence in Great Britain if the group continues to breach rules and regulations in the market.

Also this month, the Commission fined LeoVegas £1.3m after identifying a series of failings, many related to setting triggers too high.

Earlier this month, the MGA issued a notice of cancellation against DGV – which operates the the AurumPalace and FlipperFlip brands – after ruling that the operator breached a series of regulations.

These included rules on licence fees, with DGV having failed to pay an agreed licence fee of €25,000 (£21,134/$25,045) for the period between 23 November 2021 and 22 November 2022.

DGV also failed to pay compliance contribution fees – dating back to December 2021 – to the regulator. 

In addition, the regulator said DGV failed to submit a set of audited financial statements for the period from January 2020 to December 2020 within a 180-day period.

Finally, DGV was found to have failed to submit interim financial statements covering the period from 1 January 2021 and 30 June 2021 by a set deadline.

DGV was given 20 days from the date of the notice (4 August) to respond to the decision with a reason as to why the MGA should not proceed with the cancellation.

However, with this deadline having now passed, the MGA proceeded with the cancellation of the operator’s licence.

DGV will have 20 days from 24 August to file an appeal over the cancellation before the Administrative Review Tribunal.

Fitzdares, which has operated since 1882, will now work alongside the BGC and its network of members to influence decision-making in the UK industry.

The bookmaker allows customers to place bets via its official app, website, live chat, SMS, email and telephone, while in 2020 it also opened its first ‘Fitzdares Club’ in Mayfair, a venue for members to watch live sport.

Earlier this year, Fitzdares launched its second location in the Cotswolds, complete with an 18-hole golf course.

“As a medium-sized independent and boutique business, we wanted our voice heard,” Fitzdares chief executive William Woodhams said. “The BGC gives us the opportunity to be at the table where the key decisions are being made in UK gaming.”

Fitzdares this year also announced its expansion into the Ontario regulated market, being one of the first operators to receive a licence.

Confirmation of Fitzdares as a new member comes after the BGC earlier this week called on Great Britain’s next prime minister to tackle rising energy prices that could have a potentially “catastrophic” impact on the land-based gambling sector.

Energy prices in Britain have rocketd recent months, while the price cap on bills is expected to rise again in the autumn and again in January next year, with businesses reportedly facing an average price increase of approximately 300% on existing rates.

BGC chief executive Michael Dugher warned that if these prices hikes were to go ahead as planned, this could harm land-based gambling operations across Britain and lead to job losses.