Over the influence

The decision from the Advertising Standards Authority to ban elements of advertising that have a “strong appeal” to minors – instead of the “particular appeal” in place previously – was met with intense reaction when it was made public in April.

In practice, the ban – which got considerably less fanfare as it came into force a week ago – mainly deals with celebrity appearances in gambling ads. Although much of the focus is on top-flight footballers, social media influencers and reality TV stars will also be included. The ASA specifically mentioned stars from Love Island, many of whom are influencers on social media.

As a whole, operators have long relied on high-profile individuals to bring attention to their products. While some figures do not have a clear appeal to under-18s – such as Bet365 ambassador Ray Winstone – many UK operators heavily rely on sporting stars in marketing material, meaning that the new rules could take marketing teams back to the drawing board.

Now that the new restrictions are in place in the UK, operators have to rethink their endorsement deals. But should they be rethinking much more than that?

The celebrity issue

Previously, featuring high-profile footballers and celebrities in gambling ads was a surefire way to capture attention. But in the years leading up to the new restrictions, operators and their celebrity partners could hardly escape criticism from those who oppose the industry.

Part of the issue lies in the fact that it’s always going to be tough to decide which ads are too appealing to children, regardless of the standard used. In 2019, a BetVictor ad featuring football manager Harry Redknapp caused a stir, partly because Redknapp’s stint – and victory – in ITV’s I’m a Celebrity, Get me Out Of Here the previous year made him arguably more recognisable to those under the age of 18.

But while the CAP’s move to protect under-18s is generally welcomed, the gambling industry has long made use of celebrity ambassadors regardless of their appeal. At a certain point you have to ask, does the industry rely too much on these ambassadors?

Operators in the UK regularly make use of sports stars, in particular current and former football players, to generate attention in their marketing. All of these partnerships inevitably get criticised for taking advantage of sports fans, and are they really worth it from an acquisition perspective?

Overreliance on celebrities seems even worse in the US, where every operator seems determined to snap up every possible star of Hollywood films and the “Big Four” sports leagues.

It goes beyond that though. Weeks ago BetMGM named former Disney Channel star Vanessa Hudgens as the operator’s newest brand ambassador. While Hudgens’ days of influencing a Disney Channel-aged audience are long gone, she has starred in four Netflix Christmas movies in the last four years – three of which are rated PG, one of which is rated 12. A similar reckoning may come in the US, and operators would be wise to decrease their reliance on celebrities ahead of that.

Don’t just think of the children

Even advertisements that feature ambassadors not specifically of influence to children are being criticised as being exploitative in different ways. In 2019, football manager Jose Mourinho featured in an advertisement for Flutter-owned Paddy Power, which promoted the operator’s new Daily Jackpots feature. The ad itself promoted 100 free spins for new customers. Several months later, The Times reported that Mourinho had faced calls to step away from the partnership, after criticism that the ad was unethical.

Clearly, advertising that features celebrities is facing an armageddon of sorts. But in today’s ever-changing world, is it even worth it to bring in the most popular public figures of the time in for ads?

Yes, there will be people who criticise every possible action taken by gambling businesses. But celebrities are much more likely to give into pressure from those groups, and make campaigns look like failures that draw attention to the worst of the industry.

And then there is an element of unreliability. Today, a celebrity could be the most respected person in any industry. Tomorrow, they could be the center of a scandal that would make any advertising bearing their image age very badly – and quickly.

But even without those concerns, the reliance on celebrity ambassadors is just lazy marketing. Can operators not find a better strategy than bringing in a retired footballer to tell you about their products?

With more change on the horizon for the GB gambling industry, this crackdown could be a preview of things to come. So operators must look towards more creative ways to market their products.

Industry criticism

But any change will not come without pushback. Those within the UK industry have taken issue with the “strong appeal” wording of the newest restrictions, arguing that it is not specific enough.

In the consultation that preceded the announcement, the Betting and Gaming Council (BGC) said that only thinking of whether content appealed to under-18s, rather than whether its appeal to children was disproportionate, did not make sense.

“Restricting the consideration of appeal to solely an under-18 audience, with no reference to the same content’s appeal to an adult audience (as proposed in the strong appeal test), is a step too far,” said the BGC.

“Whilst we understand CAP and UK Code of Broadcast Advertising’s aims, we don’t believe that the effect of this restriction is proportionate.”

Yet when the rules were officially announced, the BGC was much more supportive. There might be a lesson in that. Changing marketing habits can appear almost impossible, but when push comes to shove, it can lead to much more interesting campaigns.

Caesars closes new $3.0bn senior secured credit facilities

The facilities include a $750.0m senior secured term loan and a new $2.25bn senior secured revolving credit facility. The funds result from an increase and extension to Caesars’ existing revolving credit facility.

Caesars also confirmed it had retired Caesars Resort Collection’s (CRC) existing revolving credit facility, while proceeds of the new term loan were used to repay $750.0m of CRC’s existing term B loans due December 2024.

“We are excited to complete this new financing and greatly appreciate the support of our 16 domestic and international banking partners,” Caesars’ chief financial officer Bret Yunker said. “This refinancing transaction will reduce interest expense while also extending debt maturities.”

Latham & Watkins, LLP served as legal counsel for Caesars, while JPMorgan Chase Bank, N.A. will continue to serve as administrative agent.

The new financing comes after Caesars in August posted a $692.0m net loss for its digital division in the first half of its 2022 financial year, despite the business experiencing an improvement during the second quarter.

Caesars in the first quarter of 2022 posted a $576.0m net loss for its digital business, as well as negative net revenue of $53.0m. At the time, chief executive Tom Reeg said the operator had already taken steps to lower costs to help address this, particularly within marketing and advertising.

This appeared to have started to have an impact in the second quarter, with digital revenue positive at $152.0m, a significant improvement on Q1 and also 29.9% higher than last year.

However, Caesars posted a net loss of $116.0m for the division during the quarter, which, when coupled with the Q1 loss, meant the division produced a net loss of $692.0m for the first half.

DraftKings shares rocket after reported “large new partnership” with ESPN

Business news agency Bloomberg broke the story overnight, reporting that “people familiar with the matter” had indicated the existence of such a partnership.

In the wake of the story, DraftKings’ shares briefly jumped 14% to $18.26 per share in after-hours trading, up from $16.04 before the news broke. Since the after-hours peak, the share price has settled down to $17.45 per share, 8.79% above close.

ESPN speculation

The deal would be Disney’s most significant foray into the rapidly growing US sports betting market, after years of speculation, which have only increased in recent months.

In November 2021, CEO Bob Chapek hinted at the business’s interest during the its fourth quarter earnings call. On that occasion Chapek called ESPN the “perfect platform” for sports betting.

“We have done substantial research in terms of the impact to, not only the ESPN brand, but the Disney brand in terms of consumers’ changing perceptions of the acceptability of gambling,” he said.

“And what we’re finding is that there is a very significant installation. Gambling does not have the cachet now that it had, say, 10 or 20 years ago.”

Chapek followed up these comments in the business’s second quarter earnings call in August 2022. He stated that the company was in talks with “a number of different platforms”, emphasising that the company was focusing on the sports betting vertical and was “working hard” on this.

“We have found that basically our sports fans that are under 30 absolutely require this type of utility in the overall portfolio of what ESPN offers, so we think it’s important,” said Chapek.

“We’re working hard on it, and we hope to have something to announce in the future in terms of a partnership there that will allow us to access that revenue stream and also make sure that our guests are having their needs met.”

In September, speaking at a Disney’s D23 fan event, Chapek said that the business had received over 100 enquires for such a venture.

“If you have a house that you’re gonna put up for sale and you have a hundred buyers, you probably got a pretty cool house.”

ECA awards two Executive Development Programme scholarships

The scholarship, which is now in its fifth year, is sponsored by Clarion Gaming, AGEM and the UNLV International Gaming Institute.

It is open to all ECA member employees. Lagus is an employee at Veikkaus, Finland’s lottery monopoly, while Alberola works at Casino de Monte-Carlo, owned by Monte-Carlo Société des Bains de Mer, in Monaco.

Scholarship awardees will participate in the Executive Development Programme (EDP), a leadership course which is held at Lake Tahoe in the US. The scholarship covers the full cost of the programme.

“Now in its fifth year, the ECA scholarship programme has grown in renown among European casino executives who recognise the wider learnings offered by the Executive Development Programme to the daily roles of our hard-working employees,” said ECA chairman Per Jaldung.

“The ECA has awarded two outstanding candidates from Monte-Carlo Société des Bains de Mer and Veikkaus” to take part in the programme to promote the individual growth of gaming professionals who, through their actions, have supported and enhanced diversity and inclusion within the industry.“

The EDP is the result of a partnership between the UNLV International Gaming Institute and the University of Nevada, Reno College of Business and Extended Studies.

“The land-based casino sector is, by definition, an in-person industry, and so the return of the Executive Development Programme to the picturesque surroundings of Lake Tahoe is a significant moment for the casino sector,” said Hermann Pamminger, general secretary of the ECA.

“It is with great satisfaction that the ECA has awarded two diversity scholarships in 2022, at a value of €12,000 each, as a reward for the dedication and career-orientated focus of two casino professionals who will gain unique knowledge and insights from the EDP to utilise in their everyday roles.”

“We look forward to charting the progress of Kirsi and Celine and wish them both every success in the future.”

Building tomorrow’s lottery 

It’s fair to say that Pat McHugh knows a thing or two about lotteries. With 17 years under his belt at the former Scientific Games, now Light & Wonder, where he eventually became chief executive of the company’s Lottery Division – McHugh has worked across lottery systems of one kind or another since the mid-Obama administration.

Since Light & Wonder spun out its lottery division to private equity firm Brookfield Business Partners, McHugh has been chief executive full stop. 

Scientific Games Chief Executive Pat McHugh

The newly nimble lottery business confusingly enough then decided to adopt the Scientific Games name for itself. But maybe that’s because, as McHugh says, despite the new ownership, the “strategy really hasn’t changed”. 

“What it’s done though is it gives greater capacity for investment,” McHugh says. “As a company and as an individual business unit, we’re 100% focused on the lottery.”

“That’s a bit of a change from the broader company and again with Brookfield’s backing, we’re in a much, much greater position to increase investment and really both parties have a long-term view of the business and growth.”

Long-term view

So what does the long term view of business and growth look like in practice? 

Lottery is a segment which has been traditionally slower to adopt wider technological trends – digitisation, personalisation and integration with other verticals has often been a gradual process. It can often seem to be an old-school retail business that is rife with state-owned monopolies and a mass ticket-buying public: not especially fertile soil for groundbreaking innovation.

But nonetheless, innovation has to happen. According to McHugh, lottery must stay competitive not just with other forms of gambling, but entertainment in general.

“I think the environment for lotteries today is still about casual entertainment, but that is engaging in a way that is competitive not just with other forms of gaming, but entertainment in general for people – and that’s where we really add value.” 

“I think that’s why, when we were being spun out as a separate company, that we were attractive to investors and that’s why we’re being very successful in involving our customers into modern forms of lottery, but again it’s around casual play.”

But with casual consumers increasingly found online, what is the business’s strategy? 

I, lottery

McHugh says you only need to look at obvious consumer trends to see that digital is “key”. One direct effect of the new slimmed down Scientific Games is that its digital segment is no longer in competition with igaming within the company: 

“We’re investing very significantly in digital and as we carve out from [the old] Scientific Games, we’ve taken the what we call the ilottery or internet lottery assets with us and no longer splitting between serving the igaming mark and ilottery. We’re 100% focused there,” he says.  

Through SGEP, Scientific Games partners lotteries in management of instant games

McHugh gives a concrete example of this in practice:

“One of our core programs is called Scientific Games, Enhanced Partnership, referred to as SGEP. It’s regarding the instant scratch game retail scratch game category.”

“While traditionally we may have been more advising lotteries in printing games rather than on the sell-through of those games – in SGEP we partner with the lottery to do full category management of the instant game. So from the portfolio up, not just designing individual games, but the entire portfolio planning.”

McHugh makes the observation that outside the US, most lotteries are already serving their products via the internet and mobile. Within the US, partly a consequence of the regulatory difficulties brought to bear by the Wire Act, progress remains relatively slow. 

“Less than one fourth of the states have really gone fully in with ilottery. So we expect a significant enhancement over the coming years in terms of legislation passing and expanding it,” says McHugh.

 “And it’s really vital to keep that beneficiary funding going. It’s vital that that lotteries continue to modernise so that they’re selling their products in ways that are attractive to up-and-coming players that are looking to buy those products.”

McHugh emphasises that digitisation extends beyond just selling tickets online. With new digital technologies, even a retail offering can just be one part of a wider ecosystem of customer interactions.  

“Digital just provides a whole new way to engage with players. So even if a lottery is not selling on the internet, we’re using digital CRM programs, loyalty, promotions, programmes, game add-ons so that you can have an extended experience and that lotteries can engage with their players.”

The future of lottery

The more things change, the more they stay the same. We are a long way away from an entirely digital offering, and there will be many who prefer their physical tickets for many years ahead.

“Tickets are going to continue to be accepted by consumers for decades to come,” McHugh says.  “There’s just so many more ways to integrate digital and technology into products, you’re expanding analytics and what we can do with artificial intelligence and engaging with players in more exciting ways to entertain them.” 

“And so I think what we’ll see over time is that the types of games will expand. It’s been very traditional on a scratch game or a draw game where you’re waiting for a draw, but just think of any way to engage and entertain in a game of chance.

“There’s just so many opportunities in the coming years as retail and digital technologies blur and be able to engage with a consumer that we’ll be able to evolve those games.”

Catena continues to evaluate sale options as strategic review extended

Launched in May this year in response to third parties taking an interest in acquiring certain assets, the review is looking at the possibility of Catena selling a number of its divisions including its AskGamblers brand.

The review was expanded in August to cover its entire European online betting and casino business. As part of the review, Catena already entered into a consultation process related to redundancies in the UK and Malta.

Catena originally stated that the review would be completed by September. However, in an update published today (7 October), the group said that while it expects to finish the review “in the near future”, it cannot give a specific end-date at this point.

The group added that it is still looking at a number of options for certain parts of its business and that it will communicate the results of the review as soon as the process has been completed.

“The focus remains on ensuring that the company is well positioned to fully capture the opportunities on offer in North America and other high growth markets as it seeks to maximise value for shareholders,” Catena said.

In August, Catena revealed it took steps to reduce expenditures and scaled back strategic investments during the second quarter, as a sharp deterioration in global economic conditions impacted trading in multiple markets.

Catena said the global economic situation dented performance in parts of its online sports betting and casino operations, just as the group had taken on extra costs to support new market launches and product upgrades.

To offset this, Catena reduced strategic investments from planned levels and while it did note an initial effect of these measures in Q2, it was insufficient to compensate for the full impact of lower margins.

Revenue in the three months to 30 June 2022 amounted to €28.9m, down 4.9% from €30.4m in the second quarter of the group’s 2021 financial year.

Betsson forecasts record revenue for third quarter

In a trading update, Betsson said revenue for the three-month period is likely to amount to between €199.0m (£175.1m/$194.4m) and €201m, either of which would be an all-time quarterly high for the operator and an increase from €170.0m in Q3 of 2021.

Betsson added that earnings before interest and tax (EBIT) could also reach a record high of between €37.5m and €39.0m, up from €31.7m in the same period last year. 

The operator said growth was driven by its operations in Central and Eastern Europe and Central Asia (CEECA), as well as in Latin America. 

During its second-quarter results announcement, Betsson revealed that Latin America was its largest market, with the region generating €45.7m of the total €186.3m revenue in the quarter.

Betsson also noted that the earlier start to European football leagues, ahead of the 2022 Fifa World Cup in Qatar this winter, helped its sports betting operations. The World Cup traditionally takes place in the summer, but has this year been moved to winter due to the hot weather in host nation Qatar.

Preliminary sportsbook margin for Q3 was placed at 8.3%, which is at the same level as in the previous two quarters in 2022, but higher than the average 7.7% of the eight quarters before this.

“The sportsbook continues to develop into a more important part of the total business for Betsson, thanks to investments to strengthen the product in recent years and geographical expansion to several new markets,” Betsson said.Betsson expects to publish its third-quarter results in full on 26 October.

Light & Wonder acquires loyalty and marketing specialist House Advantage

Financial terms of the agreement were not disclosed, but Light & Wonder did confirm that the deal would be an all-cash transaction.

Founded in 2004 with bases in Las Vegas, Nevada and India, House Advantage specialises in developing loyalty solutions for the gaming and hospitality industries. 

House Advantage’s core HALo platform provides an omnichannel loyalty and marketing solution by integrating and collecting data from multiple systems across land-based and digital channels. 

Light & Wonder will take ownership of the technology as part of the acquisition deal.

“Loyalty is no longer just about a player’s card; it’s about the player journey across all touchpoints,” Light & Wonder’s interim chief executive Matt Wilson said. “By welcoming the HA team to L&W, we are strengthening our position and accelerating the transformation and growth of our systems business to drive greater value for our customers.

“The addition of HA’s industry leading software and technology solutions allows us to capitalise on the growing convergence of digital and land-based gaming. With HALo, we gain a powerful omnichannel player loyalty solution that complements our current product family and enables us to deliver a truly differentiated offering. 

“Further, HA adds stable, high-margin recurring revenue streams with significant growth potential to bolster cash flows for the benefit of all stakeholders.”

In connection with this transaction, Light & Wonder has named House Advantage founder and chief executive Jon Wolfe as senior vice-president and president for global systems and services.

In addition, approximately 20 other employees of House Advantage will now join the Light & Wonder team.

“By joining Light & Wonder, we will be able to expand the reach of our solutions and gain resources to accelerate the development of cutting-edge technology to help customers optimise player management,” Wolfe said. 

“Convergence of disparate platforms and unification of data across these platforms into a contiguous customer experience is our hallmark, and we’re excited that Light & Wonder shares our player-centric mindset and our vision for creating a converged, cross-platform future.”

GRID Esports receives IBIA data standards accreditation

GRID joins previous awardees Sportradar and Stats Perform.

GRID received the certification following an audit conducted by the eCommerce and Online Gaming Regulation and Assurance (eCOGRA) body. The body inspects, tests and the certifies online gambling systems.

“This is an important milestone in the evolution of the data standards accreditation, with GRID being the first esports-focused data company achieving the accreditation,” said Khalid Ali, CEO of the IBIA. “It recognises a high level of integrity in the collation and distribution of esports data by GRID, which in turn gives an important reassurance to those parties wishing to utilise that data that it is of a high level of reliability and accuracy.”

“It is essential that consumers have confidence in the integrity of the product and of the data supply chain creating that product.”

Companies that receive the data standards accreditation must comply with the IBIA’s three principal standards – data collection processes, data integrity and personal vetting and training.

“GRID has been created upon the conviction that official data assets should be standard in gaming and esports,” said Mikael Westerling, chief security officer at GRID Esports. “For the past four years, we have been building and improving our technology to ensure that the quality of our service, reliability of data, and level of support we offer to our partners enable the sustainable growth of the industry we are passionate about.”

“We are proud of what we have achieved so far and being awarded the IBIA accreditation is a testimony to the hard work of our team and a great motivation to strive for excellence.”

Kambi agrees terms for Penn Entertainment sportsbook migration

Under the arrangement, Penn, previously known as Penn National Gaming, will migrate its online sportsbook in the third quarter of 2023, with the retail switch expected to take pace in 2024.

The two parties also agreed to cooperate on additional US state launches for the Barstool Sportsbook during the transition period.

In August, Penn exercised its option to acquire all remaining shares of media brand Barstool Sports, having in February announced it would take full control of the business by early 2023.

The agreement provides for ongoing revenue share payments related to online and retail sports betting services for the duration of the provision of each respective service.

In addition, Kambi will receive one-time fees of $12.5m (£11.0m/€12.6m) for the early termination of the original sportsbook deal, as well as $15.0m for transition services, the latter payable in instalments through the transition period.

Since first partnering in July 2019, Kambi and Penn have launched together in 15 US states, covering 13 online launches and 25 retail properties.

“This agreement sets out the continued collaboration between the two parties over the coming years, one which secures certain ongoing revenue for Kambi over the transition period,” Kambi co-founder and chief executive Kristian Nylen said.

“Furthermore, the terms also provide Kambi with additional protections with regard our data and intellectual property.”

Penn’s chief executive Jay Snowden added: “Kambi has been a top-flight supplier to Penn in our digital evolution. Kambi’s well-proven, high-quality technology and services have empowered Penn as we pursued our differentiated sports betting strategy, and I’m pleased to have secured our partnership to ensure a seamless transition for both companies.”