Month: December 2022

Intralot said its improved financial health would provide it with the space to develop its long-term goals of expanding its digital presence, particularly in North America.

“Intralot’s significantly improved financial results for the nine-month period reflect the benefits from the extensive business and capital structure reorganisation efforts during 2021 and 2022 along with healthy cash flow generation and profit margins that create stability and provide us the runway to deploy our plans on opportunities, particularly in the online domain, in the US and around the world,” said CEO and chairman Sokratis Kokkalis.

Intralot already offers online sports betting in Washington DC, offering the technology for the DC Lottery’s Gambet product. However, Gambet has largely struggled, with revenue a long way behind market leader Caesars.

Gross gaming revenue for the business increased by 5.0% to €256.6m (£220.2m/$267.5m) in the nine-month period ending 30 September.

Intralot’s improved financial results in part reflects the fruits of an extensive business and capital restructuring process that has been ongoing in the previous years.   

This can be seen in the business’ earnings before interest, tax, depreciation or amortisation (EBITDA), which improved 6.6% to €88m in the period.  

In particular, Intralot CFO Andreas Chrysos pointed to “the accumulation of the efforts that the management has undertaken on the cost side in the last few years, especially at the headquarters,” in the business’ Q3 earnings call.

However, Intralot’s total turnover – which includes earnings in addition to the amount staked on its B2C operations – fell 0.3% to €301.7m.

Positive and negative shocks for Intralot

Other factors in the company’s results includes the end of pandemic restrictions in Australia, the ramp of Intralot’s operations in Croatia, improved results in certain key markets, and the positive effects of exchange rate fluctuations – especially with the US and Australian dollars strengthening against the euro.

The business also faced negative shocks, including a reduction in revenue from the US and the company’s Maltese licence expiring.

Debt burden

In 2020-21, falls in lottery tickets associated with Covid lockdowns, as well as contract renegotiations in key led to a slump in revenue. Intralot subsequently took on a substantial debt burden in order to ensure that it could pay its existing obligations. During Q3, the total debt increased to €509.6m.

The restructuring, as well as Intralot’s strong cashflow generation in the quarter, has had a positive effect on the business’ debt burden. However, since the majority of the debt is denominated in euros, currency fluctuations have been a net negative to the business debt, even while the same forces have been a boon to the business on the revenue front.    

Operators have a huge opportunity to engage new and existing customers as a month of football kicks off from 20 November. Fifa, in conjunction with Sportradar, reported a turnover of more than €136 billion from the 2018 World Cup, but how many of these players were retained post-tournament?

Retaining customers is a big challenge, especially for operators who have invested time and money into pre-tournament marketing efforts. Finding a way to reduce churn post tournament while increasing the all important lifetime customer value is critical.

In this webinar Sportradar’s Jacob Lopez Curciel, managing director of Managed Sportsbook Services at Sportradar and Andreas Hartmann, founder and CEO at VAIX – now part of the Sportradar family – will discuss how personalisation is the key to engaging customers and delivering relevant content, the importance of intuitive technology that provides reliable uptime and how deeper customer understanding driven by AI is ultimately the key to retention.

Using technology to drive success: How a reliable and scalable tech solution plays a significant role in customer retentionUtilising your live offering: Why uptime can make or break your retention efforts post-tournamentKeeping customers interested: The best engagement tools to boost your live offeringReaching new levels: How AI helps you to understand your customers and personalise their experienceIncreasing value: How to put actionable plans in place to extend players’ lifetime value

Sportradar now holds 41 licences across North America, including in US States, territories, tribal lands and Canada.

The business provides its services to a broad range of clients operating in these jurisdictions, delivering sports data and other services to a number of operators and other suppliers.

Legal sports betting is set to launch in the Buckeye state from 1 January 2023. Governor Mike DeWine signed the legislation legalising sports betting, HB 29, in December 2021. DeWine has previously been outspoken about his support for industry.    

In November, Sportradar announced that its US revenue was up 61.2% to €31.6m.

“This growth was driven by a strong increase of US betting services, driven by cross-selling non-data products to betting operators as well as benefiting from our customers’ growth as a result of a development in the underlying market and new states legalising betting,” the group said.

The Ontario regulator said that operators should stop offering any UFC betting with immediate effect.

Ontario – which launched its regulated betting and igaming market on 4 April of this year – has a number of rules intended to protect sporting integrity.

All events for which betting is permitted “must be effectively supervised by a sport governing body which must, at minimum, prescribe final rules and enforce codes of conduct that include prohibitions on betting by insiders”. 

In addition, there must be “integrity safeguards in place which are sufficient to mitigate the risk of match-fixing, cheat-at-play, and other illicit activity that might influence the outcome of bet upon events”.

The UFC in October amended its rules and regulations to ban its fighters from betting on UFC events.

However, AGCO noted that other insiders – such as coaches, managers, handlers, athletic trainers and medical staff – are still permitted to bet.

AGCO said that in recent weeks, it “learned of publicised alleged incidents, including possible betting by UFC insiders, as well as reports of suspicious betting patterns in other jurisdictions”.

UFC betting integrity concerns

Last month – soon after the UFC amended its rules about fighters betting – ESPN reported that a UFC fight between Darrick Minner and Shayilan Nuerdanbieke was being investigated by an integrity body after operators reported suspicious wagering on the event.

According to the report, a large amount of money was placed on Nuerdanbieke to win the fight in the first round amid rumours that Minner was injured. Minner won by knockout in just over a minute. 

Therefore, the AGCO is now taking this step in the public interest. AGCO has indicated to operators that, once the necessary remedial steps have been taken, they may provide information demonstrating that UFC bets or betting products meet the Registrar’s Standards.

Overseen by its board of directors and assisted by financial advisor Benchmark Company, the review looked at the Allied business as a whole to establish how it could best achieve further growth, including a potential business combination transaction.

It was concluded that shareholders’ interests would be best served by restructuring the existing esports business and widening focus to include a broader array of entertainment and gaming products and services, as opposed to seeking a single business combination transaction.

In addition, the business rebranded as Allied Gaming & Entertainment with effect from 1 December. Common stock will continue to be publicly traded on the Nasdaq Capital Market under the new ticker symbol ‘AGAE’.

“After a thorough review of potential M&A opportunities across a wide range of industries, we have decided our stockholders are best served by not pursuing a single significant transaction at this time,” chief executive Yinghua Chen said. 

“Given our deep roots and established position in esports and gaming, I am confident we can bring our operational acumen, unique assets and valuable resources to restructure our existing esports business and also offer a wider range of popular entertainment products and services to the broader gaming community. 

“By building beyond esports, our new strategy will provide the next level of experiential entertainment to the world of gamers. Looking ahead, we expect to achieve strong growth through both organic expansion and reasonably sized tuck-in acquisitions to help us capitalize on this burgeoning market opportunity.”

Allied appointed Robert Proctor as the new chief executive of its Allied Esports International subsidiary to lead the restructuring effort. Proctor is a seasoned executive and entrepreneur with three decades of experience spanning a variety of industries including entertainment, technology and media.

Proctor will oversee restructuring plans that include leveraging the business’ physical assets, including HyperX Arena Las Vegas and the Allied Esports Trucks, to create and deliver new experiences across multiple content genres.

The initiative will also seek to seize the scalability of virtual audiences to establish Allied as the world’s leading live and virtual live experience content creator and broadcaster with an emphasis on direct audience monetisation.

Additional plans include strengthening the Allied brand through experiential, lifestyle and content offerings, creating proprietary brand-forward content designed to build stronger partnerships, and growing and retaining audiences and users through the development of a new consumer platform.

“Rob is a veteran business leader and entrepreneur in the broadcasting, media and entertainment industries and possesses a unique combination of experience in content creation, global media sales, brand building, operation and strategic planning knowledge,” Chen said.

“We believe he is a great fit for fulfilling the new direction of our esports business. I look forward to working closely with him on improving the Company’s cash flow and financial flexibility.”

Meanwhile, Allied will also seek to grow organically through the development of additional businesses that complement wider operations while targeting the broader global gaming market. 

Allied said it is exploring potential opportunities to expand its location-based-entertainment expertise with a focus on gaming lifestyle and experiential entertainment, as well as growing its digital footprint and monetisation capabilities through mobile gaming.

Further details of these plans will be provided at an appropriate time, Allied said.

The restructure comes following the resignation of former CEO Jud Hannigan in October. He Hannigan confirmed the news in a post on his LinkedIn page, having led the business since February 2017. He was previously senior vice-president of the group.

Under the arrangement, GiG and News UK will jointly deliver sports betting, casino content and exclusive offers to consumers across the UK through News UK-owned brands The Sun and talkSPORT.

Content and offers will be featured on special sections of The Sun and talkSPORT’s websites.

GiG said it expects to go live almost immediately in order to take advantage of the 2022 Fifa World Cup, which is currently taking place in Qatar.

“A collaboration of this magnitude will allow us to provide added value to our partners in the sports betting and casino sphere, reaching new heights while showcasing our abilities to operate at a top-tier level,” GiG chief marketing officer Jonas Warrer said.

The sun’s director of betting and gaming, Tim Reynolds, added: “The partnership and new betting hub adds to The Sun’s growing digital portfolio and bolsters our suite of betting products. 

“The collaboration with GiG will increase our content output and support The Sun in continually delivering excellent results for our bookmaker partners.”

The deal comes after GiG this week also announced that it would support Belgian land-based and online operator StarCasino with its expansion into Spain, having agreed a deal to power both its sportsbook and casino offering.

StarCasino – which received licences to offer both sports betting and casino in Spain – will use GiG’s player account management system and its Sportnco sportsbook.

Last week, Rhodes made a speech at the 2022 CEO briefing, explaining how the Commission plans on working over the next few years and its view on gambling regulation.

The speech ran along a particular vein. Rhodes was definitive, painting a picture of a regulator determined to receive more industry input in how it operates, and to be viewed as impartial in all instances – no matter the reputational cost.

“Today is important for me because I think it’s a key part of my job to set out for you how I want us to work with you, as your regulator,” he said. “Let’s be clear – you don’t have a choice about us and you’re not required to like us either, but that isn’t how I like to define relationships.”

The most important line, of course, was when the Gambling Commission chief said it was not his job to make a “moral judgement” about player spend. To some that might feel like an obvious view of a regulator’s role, but it’s definitely a break from the past.

It’s not just words though. Looking at Rhodes’ time in the role so far, there’s been a renewed emphasis on consultation with operators and a new perspective on dealing with seismic industry news.

Some may see this stance as somewhat opposed to what McArthur had demonstrated during his time as CEO. McArthur was known for communicating in a certain tone, placing emphasis on not being seen as complicit with the industry – without looking at the wider implications or more pressing issues first.

Rocky Rhodes

Rhodes joined the Commission at a turbulent time. The Football Index inquiry was just ramping up, the Gambling Act review was underway and the competition for the fourth National Lottery licence was bubbling. And at the foreground of this was the Covid-19 pandemic.

Arguably, Rhodes has dealt with these developments – and others – with a broader perspective than McArthur.

McArthur saw the Commission through some of the industry’s biggest changes, and an era where media scrutiny of gambling drastically heightened. But his tenure caused some to view his approach as simplified, with some going as far as to view it as anti-industry.

It was as though McArthur was holding back slightly, perhaps fearing backlash from anti-industry groups. It was evident that he believed in the industry, but this belief was almost on a conditional basis. Compared to Rhodes’ more constructive approach, there was little guidance and more instruction.

Rhodes’ tenure has been focused on cultivating a more honest, direct relationship between UK licence-holders and the regulator.

Perhaps forgotten now is the fact that Rhodes also took charge at a time when the Commission appeared to be set to impose a £100 soft affordability cap on operators. Soon after he took charge, the regulator quietly but wisely phased it out, determining that it was better to leave that matter for the Gambling Act review.

That kind of transparency has also been reflected in a changed approach to consultations in general, with Rhodes’ Commission taking in the feedback that the regulator’s past attempts to ask the industry’s views were more of a warning of upcoming rules than a genuine attempt to ask for advice.

During his speech last week, Rhodes reaffirmed this, labeling the Commission as “predominantly a licensing regulator” and opposed to an economic one.

Now, it’s certainly true that there’s been a large amount of fines and settlements handed out. Yet it can still be argued that Rhodes has a more relaxed approach to the industry than McAuthur. This is a perspective that could work out positively in the long run, as the industry is likely to be receptive to a Commission lead that encourages licensees to operate legally while stamping out illegality where possible.

A failure of gambling regulation

One potential example of McArthur’s more controversial tactics is the scandal surrounding Football Index, an operator that allowed bets to be placed on footballers’ performances in a “stock-market” like structure.

An inquiry later found that the Commission wasn’t even aware of the platform’s “sell” feature – which changed the product entirely – until it was too late. Back in 2021, The Guardian reported that the Commission had received warning that Football Index was on the verge of collapse one year before the collapse occurred.

If true, this demonstrates a lack of proactivity under McArthur’s power. In contrast, a clearly different approach has been taken by Rhodes.

And while McArthur addressed the Football Index scandal before he stepped down, his approach seemed much less harsh compared to what he’d doled out to operators for other offenses over the years.

In a sense, he had missed what had been occurring right under his nose while trying to catch much smaller fish.

Gambling Act review

But all of Rhodes’ work in turning things around could be destroyed by the Gambling Act white paper, which the industry expects to be published in the coming weeks. If it delivers the rumoured measures – which include a £125 monthly soft cap on affordability and more strenuous checks for those losing over £2,000 per month – Rhodes could be forced to deliver some unpopular news to the industry, potentially turning the tide on his administration.

More importantly, he’ll then be tasked with enforcing the product of the review. If so, regardless of how he communicates with the industry, there will likely be frustrations as licensees adjust to the measures and some likely fall foul.

Whether this happens or not is yet to be seen. But in a pre-Gambling Act white paper world, we can appreciate what Rhodes has delivered so far, at least for the time being.

All three business were ruled to have breached regulation 10 (1) (a) and regulation 9 of Malta’s Gaming Compliance and Enforcement Regulations, which relate to payments due to the MGA.

In the case of eGaming Lab, the MGA said the business failed to make licensing payments to the MGA, with a total of €50,083 (£43,950/$52,600) currently owed to the regulator. 

The Malta regulator said that eGaming Lab is still required to pay this amount despite cancelling the licence, with the business having five working days from the date of the notice (29 November) to settle the outstanding fees.

Morpheus Games also failed to make payments to the regulator in line with the conditions of its licence in the country. According to the MGA, Morpheus Games owes €80,775 to the Authority and was also given five working days to settle these fees from the date of the notice.

The MGA did not disclose the amount due from M-Hub Gaming, nor did it demand that any payment be made.

However, as was also the case with eGaming Lab and Morpheus Games, M-Hub Gaming was ordered to remove any reference to the MGA and its now-withdrawn regulatory approval. 

Right to appeal under Malta Gaming Act

In line with Article 43 (1) of the Malta Gaming Act, each of the businesses has the right to appeal the decision to cancel the licences should they feel aggrieved by the ruling.

eGaming Lab, M-Hub Gaming and Morpheus Games have 20 days from the date of their respective notices, each of which was filed on 29 November, to appeal to the Administrative Review Tribunal.

In its 2021 annual report, the MGA revealed that the number of licences it cancelled had plummeted that year, as the Malta regulator instead opted for lighter penalties such as warnings more often.

The case relates to “serious and systemic” non-compliance with anti-money laundering and counter-terrorism financing in the country, with Austrac having been investigating Star since June of last year.

In the initial statement, Austrac raised allegations related to money laundering activities against not only Star, but other land-based casino operators Crown Resorts and SkyCity Entertainment Group.

This activity, Austrac said at the time, was in breach of Australian Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (AML/CTF Rules).

The initial investigation focused on financial irregularities at Star Sydney casino resort but was expanded in January of this year to assess other entities within the group.

Having worked with state and federal agencies with a regulatory interest in the Star entities, including state regulators in New South Wales and Queensland, Austrac identified a series of failings and launched legal action as a result. 

“Criminals will always seek to exploit the financial system to launder their money and harm the community,” Austrac chief executive Nicole Rose said. “Businesses, as the front line of defence of our financial system and our communities, are often the first to be alerted to criminal activity.”

“Austrac’s investigation identified a multitude of issues including poor governance and failures of risk management and to have and maintain a compliant AML/CTF program.

“The Star Entities also failed to carry out appropriate ongoing customer due diligence which has led to widespread and serious non-compliance over a number of years.”

Inappropriate AML risk assessments

Austrac’s allegations included that Star and its entities failed to appropriately assess money laundering and terrorism financing risks and to identify and respond to changes in risk over time.

Star also failed to include the appropriate risk-based systems and controls to mitigate and manage these risks in its AML/CTF programs, nor did it establish an appropriate framework for Board and senior management oversight of the AML/CTF programs.

Austrac also said Star did not have in place a transaction monitoring program to monitor transactions and identify suspicious activity that was appropriately risk-based or appropriate to the nature, size and complexity of the Star Entities.

Other failings included not having an appropriate customer due diligence program to carry out additional checks on higher risk customers, as well as not conducting the appropriate, ongoing customer due diligence on players who presented higher money laundering risks.

Austrac also highlighted how in the absence of appropriate ML/TF risk oversight, Star and its entities permitted customers to move money through payment channels that were non-transparent and involved high ML/TF risks.

Star was also found not to understand the sources of money moving through these channels or whether there was a risk that the source of funds was illicit, nor did it consider whether it was appropriate it continue an ongoing business relationship with higher risk customers.

As such, Austrac concluded in the absence of these risk-based controls, Star was vulnerable to criminal exploitation and that its failure to manage the ML/TF risks of its business also exposed the Australian and global financial system to systemic ML/TF risk.

“Austrac continues to work with Star entities to ensure they comply with their obligations under the law, including having appropriate systems, controls and governance in place, and reporting quality financial information and suspicious matter reports to Austrac,” Rose said.

Star civil penalty for court to decide

Austrac did not confirm whether Star would face a civil penalty as a result of the findings but did state this would be a matter for the court. 

Responding to the announcement, Star said it takes its anti-money laundering obligations seriously and co-operated with Austrac during the investigation in relation to requests for information and documents.

“We are transforming our culture, transforming our business,” Star’s new managing director and chief executive Robbie Cooke said. “We are committed to improvement but there is a lot still to do.

“Our goal is to earn back the trust and confidence of Austrac and all our regulators. We will continue to work with Austrac as we build a better, stronger and more sustainable company.”

Austrac’s statement comes at the end of what has been a turbulent year, with the operator having been involved a number of investigations and concerning findings. 

The investigation into The Star’s casino in Sydney resulted in it being classed as unsuitable to hold a licence in New South Wales. This led to the operator being issued with a AU$100m penalty and an indefinite licence suspension last month.

In recent months, the operator was also deemed unfit to hold a licence in Queensland and faced a securities class action lawsuit in Victoria.

Austrac action in sports betting

Austrac has also launched investigations this year into businesses within the Australian sports betting sector. In September, the body launched a money laundering investigation into Entain, which operates the Neds and Ladbrokes brands in the country.

Earlier this month, the body ordered an audit of both Bet365 and Flutter-owned SportsBet, to determine if the operators have broken money laundering rules.

Glitnor Ventures will have an initial focus on the recently announced investments in affiliate businesses KaFe Rocks and Time2Play – which is itself a KaFe Rocks brand – while the division also holds an interest in Indian-based game development studio RNGPlay. 

The group also counts Lucky Casino, Happy Casino and Swintt among its portfolio of brands.

Chief executive David Flynn said the venture capital arm would work with early-stage startups providing products, technology or services in any verticals within the igaming sector.

“Glitnor Group has always been very open about its ambitions to become the most entrepreneurial and fastest growing business group in the igaming industry and the creation of Glitnor Ventures is another step in this direction,” he said.

“Our goal with Glitnor Ventures, is to work with innovative projects from pre-seed to seed and support across the entire scope of products, technology and services across the igaming spectrum.  

“We are primarily an early-stage investor and add support from our expertise and network in the igaming space.”

Glitnor-KaFe Rocks acquisition

The announcement comes after Glitnor Group earlier this week said it would not proceed with a planned full-scale acquisition of affiliate business KaFe Rocks Group as the two companies mutually agreed not to go forward with the deal.

In February, the group reached an agreement to acquire KaFe Rocks, but the businesses “mutually and amicably” decided not to complete the transaction.

Glitnor said given current market conditions, it agreed with KaFe Rocks that “now is not the time to fully complete the acquisition”.

As a result, KaFe Rocks and the Time2play.com brand will continue to be managed by KaFe Rocks’ founding members and leadership team on a day-to-day basis. However, the Glitnor Group will remain a significant shareholder and continue to have a close, professional and friendly relationship with KaFe Rocks.