Month: November 2022

Gross profit – defined as gross revenue minus direct costs paid to game suppliers – came to €16.8m, up by 33% year-on-year. EveryMatrix noted that prior-year comparative figures no longer include the period before Germany’s Fourth State Treaty on Gambling, the introduction of which had a strong negative effect on earnings.

This total came thanks to record traffic for Everymatrix games during the quarter, resulting in operator GGR surpassing €100m in the month of September alone.

Of this €16.8m total, €7.7m came from the casino unit, up 31% year-on-year.

The business reported earnings before interest, tax, depreciation and amortisation (EBITDA) of €6.4m, which was up by 23.1%.

Future EveryMatrix investment

The business said it would continue to invest in growing across the US and in its games arm. Last month, the business announced its first US launch, through BetMGM.

During the quarter, EveryMatrix won the exclusive tender to supply its casino games to Veikkaus, effectively giving it a monopoly on supplying regulated online casino games in Finland.

“I am pleased to see a fantastic third quarter, with global sales performance and very good financial results,” chief executive Ebbe Groes said. “Even more important, we won two new Tier-1 clients in the quarter, Veikkaus in Finland and Bet-at-home in Germany and international markets.

“EveryMatrix launched with BetMGM in the US and Morroco’s state-owned lottery MDJS. The group’s record gross profit across all business segments clearly underlines our strong market position.”

The consultation will run until 14 December and invite input from relevant stakeholders on the MGA’s plans to introduce new rules and regulations regarding these areas.

As part of the consultation process, the MGA will launch a series of “Regulatory Workshops”, with the aim of introducing a more regular and structured touchpoint between industry stakeholders and the MGA and to encourage an informal exchange of views around regulatory topics.

The first of these sessions will take place next month and focus on the regulator’s proposed policies regarding ITAs, VFAs and virtual tokens. The MGA will invite interested stakeholders to participate in this workshop. 

“The ongoing consultation shall give the opportunity to such stakeholders to submit their feedback, if any, regarding the proposed policy,” the MGA said.

The consultation comes after the MGA last month pledged to introduce “detailed player protection guidelines for licensees”, having opened a separate consultation on the subject.

The MGA launched a “closed consultation” in September to cover “licensees’ obligations regarding their responsible gaming policies and procedures and the introduction of five markers of harm that must be considered by licensees when determining effective measures and processes to detect and address problem gambling”.

This, it said, followed a review of its player protection directive by “an expert in the field”, as well as MGA research and the work of its Responsible Gaming Unit.

Bragg had undergone a number of changes during the quarter. In September, the company consolidated all its businesses under one single brand. Also in September Bragg secured $8.7m in funding from investment entity operator Lind Global and facilitated Kalamba’s entry into Ontario through a partnership.

In July, Bragg appointed Mark Clayton to its board of directors.

Yaniv Sherman, chief executive officer for Bragg, said that the quarter had been successful for the company.

“In the third quarter of 2022, we generated third quarter records for revenue of €20.9m, gross profit of €10.4m, gross profit margin of 50.0% and adjusted EBITDA of €2.2m,” said Sherman. “Our operating momentum has been consistent throughout the year as for the first nine months of 2022 revenue, gross profit and adjusted EBITDA have improved significantly, compared to the same period in 2021.”

Looking ahead

Looking towards the future, Sherman said that adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) – which came to €2.2m – and revenue were both set to grow.

“Our positive adjusted EBITDA, combined with capital we raised in the third quarter positions us to continue to invest to drive further growth,” he continued.

“Looking ahead, we expect our consistent execution against our strategy and growth initiatives will drive further revenue and adjusted EBITDA growth in 2023.”

Unadjusted EBITDA came to €837,000 during the three months.

The cost of revenue for the quarter was €10.4m, a rise of 66.9%, bringing gross profit to €10.4m. This was still a rise of 58.0% year-on-year.

Selling, general and administrative expenses also grew, from €8.8m in Q3 2021 to €12.0m.

This meant the business made an operating loss of €1.6m, an improvement of €579,000 year-on-year. Net interest expense was €246,000, bringing the pre-tax loss to €1.8m.

After an income tax benefit of €114,000, the net loss for the period came to €1.9m – up by €479,000.

For the nine months to date revenue is up by 43.4% to €61.0m. Cost of revenue is €28.9m, bringing the gross profit so far to €32.0m.

The operating loss for the period stands at €990,000 and the loss before income taxes is €1.5m. In total, the net loss for the nine months is €2.6m, down by €3.2m.

The Commission said it accepted the recommendation made by the Sports Betting Bureau to grant licences to seven companies, including five temporary licences.

The sports betting operators Ballers Puerto Rico Sportsbook, Liberman Media Group Gaming (LMG) and CCHPR Hospitality (Casino Metro) have been given temporary licences.

The suppliers Swish Analytics Puerto Rico and US Integrity have been granted permanent licences. Continent 8 Technologies PR LLC and Caesars Digital PR Inc have been given temporary supplier licences.

The executive director of the regulatory body Jaime Rivera Emmanuelli explained that to complete the licensing process, the seven companies will have to pay a fee to the government based on the functions they will perform in the sports betting industry.

Operators will have to pay $50,000, the service suppliers will have to pay $5,000 and the lone technology provider – Caesars Digital PR – will have to pay $15,000.

“The sports betting industry is growing under the regulations and supervision of the Puerto Rico Gaming Commission,” stated Rivera Emmanuelli. “Online betting has the potential of being an important source of jobs and the creation of commercial spaces for entertainment. In the same way, it will generate new income for the treasury.”

Operators and suppliers have been eagerly waiting for the launch of online sports betting in Puerto Rico. As of today, sports bets can only be made in person, but granting the licences will be a key step toward launch.

Total group revenue for Genius increased 28% year-on-year in constant currency. On this basis, the business’ three verticals experienced strong growth themselves with betting revenues rising by 13%, media by 41% and sports by 6%.

In adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), the business achieved profitability, reporting $7.7m compared to the $392,000 loss Genius announced the same period the previous year.

“We are pleased to deliver another quarter of growth and group adjusted EBITDA profitability, and we remain on target to achieve our full-year goals set on our investor day at the start of 2022,” said Genius CEO Mark Locke. “This year has been characterised by strong execution as we continue to deploy innovative technology, win new customers and strengthen our key partnerships across the sports, betting, media and broadcasting ecosystem, all with an eye towards cost discipline and profitable growth.”

Beyond EBITDA, Genius reported a wider loss for the business. The company outlined an 87.5% increase in quarter-on-quarter losses from $4.8m to $9m amid continuing revenue growth in US and other markets. However, this increased figure is mostly driven by a combination of currency fluctuations and changes in value of warrants.

The loss is significantly below the $70.7m the company announced in net loss in the same period the previous year, but this was mostly due to lower stock-based costs, after these had been extremely high in 2021.

The company also reported a $150m cash balance in the three-month period with $10m of this total adjusted to account for currency fluctuations. For the whole year, the company is expecting to receive revenues of $340m.

Paysafe said while the estimates set out in its previous guidance remain largely the same, its performance in the third quarter meant that it was able to present investors with a more accurate estimation heading into the final quarter of 2022.

Revenue is expected to amount to between $1.48bn (£1.26bn/€1.44bn) and $1.49bn, with the previous guidance having been $1.47bn to $1.49bn. Similarly, adjusted earnings before interest, tax, depreciation and amortisation (EBTIDA) is expected to be between $407.0m and $411.0m, compared to $400.0m to $415.0m as previously stated.

Paysafe revenue increase

This followed a third quarter in which revenue increased by 3.5% year-on-year to $366.0m. Paysafe said this was driven by a 12.4% rise in revenue from its US acquiring business to $185.4m, meaning this segment became its core source of revenue.

However, this rise was partly offset by a 4.3% drop in digital commerce revenue to $180.6m. Though ecash revenue within this segment was 4.2% higher than the previous year at $93.9m, Paysafe experienced declines in digital wallets, integrated and ecommerce solutions and intracompany revenue.

Turning to costs, spending was higher in several areas. However, the business reported a sharp drop in impairment expense on goodwill and intangible assets – which fell from $322.2m to just $4.0m. This expense in Q3 of 2021 was because the business had been required to perform a goodwill impairment test because of a slide in its share price that year, resulting in goodwill being written down. With a more stable share price this quarter, goodwill did not need to be written down further.

As a result of the lower impairment costs, expenses on the whole were lower.

Small profit

After including $3.6m in net financial costs, the business was left with a pre-tax profit of $8.3m, in contrast to the $234.0m loss posted at the same point in 2021. Paysafe paid $7.3m in income tax, which resulted in a net profit attributable to the company of $978,000, compared to $147.1m loss last year.

However, when also including a $33.5m loss on foreign currency translation, this meant that total net loss for the quarter was $32.6m, though this was still a significant improvement on the $153.8m loss in 2021.

However, adjusted EBITDA declined 10.2% to $95.5m, with the 2021 figure not including the large impairment charge.

“We are pleased with our third quarter financial results, including 10% year-over-year constant currency revenue growth, marked by continued resiliency in the US SMB market and improvement in digital commerce,” Paysafe chief executive Bruce Lowthers said. 

“I want to thank our employees for their hard work and dedication during this period of change and I am confident that the actions we are taking to reinvigorate growth will set us up for further improvement in 2023 and beyond.”

Thornton will join the Star board immediately upon the receipt of all necessary regulatory approvals, while Page will become a board member on 1 February next year.

Page is an experienced company director and chair with experience spanning ASX listed, private, public sector and regulated entities including in the property, utilities, insurance, technology, renewables and funds management sectors.

She is currently the chairman of Pendal Group and a non-executive director of Brickworks, Growthpoint Properties Australia Limited and Service Stream Limited, while she was also previously chair of Investa Listed Funds Management.

Thornton has worked in corporate finance and strategic advisory experience for more than 15 years. She is currently a non-executive director of G8 Education Limited and CS Energy, as well as companies including Millovate Pty and Habitat Early Learning.

Prior to this, she was a non-executive director of South Bank Corporation, Devcorp, Gallipoli Medical Research Foundation and Triathlon Queensland, while she also spent time in senior roles with JBWere, Goldman Sachs JBWere, and National Australia Bank in her executive career.

“On behalf of the board, I welcome Deborah and Toni during this time of significant organisational and cultural change,” Star chairman Ben Heap said. “They bring a fresh set of skills and diversity of experience to our board. 

“Deborah and Toni will each play an important role as we continue to remediate and transform The Star.”

The appointments come after Star was this week dealt a further blow after being served with a securities class action lawsuit in the Supreme Court of Victoria.

The claim, filed by law firm Maurice Blackburn, alleged that in the period between 29 March 2016 and 16 March 2022, Star made a series of misleading representations.

These were in reference to Star’s systems and processes for compliance with anti-money laundering and counter-terrorism financing obligations, that it failed to disclose relevant information it had about those matters to the market and conducted its affairs contrary to the interests of the members of Star as a whole.

Star last week was also issued show cause notices for its two Queensland casinos by the Office of Liquor and Gaming Regulation (OLGR).

The notices came in the wake of the Gotterson Review, which concluded last month. The report uncovered a host of institutional failings, resulting in the state government declaring that the casino was “unsuitable” to hold its licence.

The show cause notices give Star until 25 November to give evidence that may prevent the implementation of enforcement action against the operator.

The KSA investigated both operators, neither of which have been identified, and found that players, including young adults, had been allowed to deposit and lose thousands of euros over a short period of time without either operator taking action.

This, the KSA said, was in breach of the country’s Money Laundering and Terrorist Financing (Prevention) Act (WWFT).

Specific cases included how a 21-year-old lost €17,000 (£14,839/$17,378) between October and December 2021, while a 26-year-old lost almost €114,000 in November 2021 alone.

Meanwhile, a 23-year-old lost a total of €87,000 between October 2021 and March 2022, and a 29-year-old lost €27,000 in the space of just two weeks.

The KSA said licensed operators are required to monitor the behaviour of their customers and take action if any unusual activity is identified. This, the KSA said, could include when a player suddenly deposits high amounts or when there is a suspicion of match-fixing, with the operator required to report incidents to the Financial Intelligence Unit Netherlands.

In its WWFT guideance, the KSA also previously pointed out the risk of high deposits, even when they come from the player’s bank account, and that source of funds checks should be carried out by the licensed operator. 

“The KSA is very concerned that gambling addicts commit criminal activities in order to continue gambling,” the KSA said.

The regulator will monitor the two operators over a three-month period to ensure relevant changes are made to their processes. A further check will take place at the start of next year.

Under the terms of the deal, Raw will have access to all casual games, customers and platforms created by Spigo. This would allow the business to expand beyond slots into another gaming space.

Spigo has developed a suite of casual games including Yatzy, Backgammon, Solitare, Match 3, as well as slot games and B2B solutions for operators.

“This is another step in our company’s evolution to provide premium products to every channel of the gaming industry,” said Raw CEO Tom Wood. “Just as in the commoditisation of slot games, within the casual games space we see the same never-ending sea of sameness.”

“Through the RAW team’s innovative game design and unique creativity, we hope to change that just as we are doing in the slots market. I look forward to seeing what the amazing RAW team can create and how we can evolve the casual game market together over the coming years.”

Spigo acquisition

Lady Luck Games announced that it would acquire Spigo in September 2021.

The deal closed by the end of that month, giving Lady Luck access to 27 games, eight customer integrations, Spigo’s platform Spigo Station and Spigo SDK, a technical game development solution.   

“This is a strategic acquisition for the company; it will give us important revenues, open up new revenue opportunities and improve our profitability,” Lady Luck Games co-founder and CEO Mads Jørgensen said at the time.

“We are adding casino games with a strong track record and several years of continuous growth to our already strong product portfolio, together with an important technical aggregation platform.”

Produced by Ipsos, the Young People and Gambling 2022 report looked at the gambling behaviour, attitudes and awareness of gambling among younger people in Britain, with the results based on a sample of 2,559 school pupils aged 11 to 16.

Core findings from the report included that 31% of the sample group gambled with their own money in the past year, though the majority of this was legal and did not feature age-restricted products.

Some 22% played arcade gaming machines such as penny pusher or claw grab machines, while 15% placed a bet for money between friends or family and 5% played cards with family or friends for money.

Meanwhile, using the youth-adapted problem gambling screen (DSM-IV-MR-J1), the report identified that 0.9% of those who gambled were identified as problem gamblers. A further 2.4% were classed as at-risk gamblers, while 27.3% were non-problem gamblers.

The report also noted that 23% of the young people who gambled spent their own money on regulated forms of gambling.

Overall, 10% said they had played some form of National Lottery game in the past year, but only 2% used their own money and the majority were in the presence of their parents, carers or guardians when making the purchase.

In terms of online gambling, the report said activity here was “low”. The most common form of online gambling was betting on esports, with 2% of young people saying they gambled on these events, while 1% spent their own money on National Lottery instant win games, betting on a website or apps, or casino games online.

Of those who did gamble, 78% did so because they saw it as something fun to do, while 21% said it made them feel happy. However, 29% disagreed that it made them happy and 29% also said there were unsure either way.

Almost one third (28%) said family members they live with gamble, of which 7% said this had resulted in arguments or tension at home. A further 11% said gambling by a family member had helped to pay for things at home such as holidays, trips or clubs.

“In this year’s survey, whilst the headline data around regulated age-restricted products is encouraging, there is clearly a group who still struggle with gambling,” the Commission said.

“We are committed to understanding and acting on these findings in more detail to help us, and a variety of other stakeholders, appreciate if and how young people are playing on regulated and non-regulated products, the challenges, and the wider implications.”