Month: January 2023

Financial terms of the agreement were undisclosed, but Allwyn did confirm that no changes were planned for the Camelot Lottery Solutions leadership team, adding that business would continue as normal.

Allwyn added that after the acquisition completed, Camelot Lottery Solutions would have access to Allwyn’s own network of resources to support its clients.

Camelot Lottery Solutions

Headquartered in Chicago, Illinois, Camelot Lottery Solutions operates the Illinois Lottery under a private management agreement through its Camelot Illinois LLC operating company and partners with the Arkansas Scholarship Lottery to enhance its lottery operations. 

The business also runs a technology division that provides both products and services to lotteries throughout Europe and North America.

Upon completion, companies under Camelot Lottery Solutions will become wholly owned subsidiaries of Allwyn. The transaction is anticipated to close in the first quarter of 2023, subject to certain customary closing conditions. 

“We have always viewed the US market as an important part of Allwyn’s future growth story, and the acquisition of Camelot LS Group, is the right step,” Allwyn chief executive Robert Chvátal said.

“Allwyn’s goal is building better lotteries, and helping them raise more for good causes, through innovation, technology, efficiency and safety in our quest for enhanced player engagement. Both Allwyn and Camelot share a passion about the lottery business, delivering value to our customers, and growing lottery returns to communities.”

Camelot Lottery Solutions Group chief executive Wayne Pickup added: “We remain committed to serving our customers, engaging players and growing lottery revenue to benefit the communities they serve.

“As the private manager of the Illinois Lottery, we work closely with the Department of Lottery to drive responsible and sustainable growth to maximise revenue for the State of Illinois. Combining the resources, expertise, and talent of Allwyn and Camelot LS Group will only strengthen the results we help the State of Illinois and all our customers achieve.”

Allwyn-Camelot UK deal

The deal come after Allwyn in October last year also revealed it had struck an agreement to acquire Camelot UK Lotteries, the current operator of the UK National Lottery, from Ontario Teachers.

Incidentally, Allwyn will replace Camelot UK as operator of the UK National Lottery after it was awarded the 10-year, fourth UK National Lottery licence in September 2022, officially ending Camelot’s 28-year tenure as operator. Allwyn will assume control of operations on 1 February 2024.

Betano update

Meanwhile, Allwyn provided an update on its previously announced deal with OPAP over the Kaizen Gaming business and the Betano brand.

In April last year, Allwyn revealed it had brokered an agreement to acquire a 36.75% stake in Kaizen Gaming’s international brand Betano outside Greece and Cyprus from OPAP.

Allywn has now confirmed that the 36.75% interest in the business activities of Betano were transferred to Allwyn Investments Cyprus Limited, a fully owned indirect subsidiary of Allwyn International, for an aggregate consideration of €74.2m (£65.5m/$79.1m).

Additionally, as previously announced, OPAP Investment will receive earnout payments based on Betano’s performance.

Kaizen also operates the Greek-facing Stoiximan brand, though OPAP will retain its 84.49% combined stake and sole control over Stoiximan and its online gaming business in Greece and Cyprus.

Top Sport was fined €15,000 (£13,273/$15,854) over the improper installation of a digital video recording system at a betting and slots location in Vilnius.

During an inspection, the Authority found that the image quality of videos was poor and the actions of employees working at the cash desk in the facility were not clearly visible in the footage. 

The Authority also said that the way the video cameras were installed meant it was not always possible to see how much money was being paid in and paid out to customers. 

This, the regulator said, was in breach of Article 15, Paragraphs 2 and 3 of the Lithuanian Law on Gambling.

In addition, the Authority said certain parts of video recording at the betting facility were not saved, which constituted a further breach of regulations, namely paragraph 5 of Article 15 of the Law of the Republic of Lithuania.

The decision may be appealed by Top Sport.

Past Top Sport fines

This was the second time in recent months that Top Sport was fined in Lithuania for not having high enough quality CCTV installed at a retail betting facility. Top Sport was issued a €15,000 fine in September for the same reason.

Top Sport was fined a number of times during 2022, including a €25,000 fine in May for violating the country’s wide-reaching ban on gambling promotion and €15,000 in November for allowing a player from outside the country to gamble remotely on its website.

In addition, Top Sport was issued a warning in November after the Authority ruled that its sponsorship of a prediction game for the 2022 Fifa World Cup was in breach of regulations.

Igelman is an experienced igaming executive having served in a series of roles during his 30-year career in the gambling industry. 

In recent years, Igelman co-founded Esports Capital Corp, a bespoke esports constancy, as well as the FairP2P self-regulatory organisation focused on monetised competitive peer-to-peer skill-based gameplay.

Aside from this, Igelman co-founded the Spectrum Esports Advisors strategic alliance with Spectrum Gaming, in addition to the Millennial Esports Corp. integrated mobile gaming publisher.

Prior to this, he spent over nine years as managing director at Gaming Research Partners and also spent time working in consultancy roles for Canada Bonded Attorney, Stronach Group and Progamingleague.com.

In addition, Igelman had spells as a counsel at Goodman and Carr, managing director for Canada at Businessdevelopment.com and as a barrister and solicitor. 

“I am thrilled for the opportunity to join EEG at this important time in its journey and to work alongside someone as experienced and respected as the new chair, Jan Jones Blackhurst,” Igelman said.

“The company is making significant strides to refine its focus on creating a valuable esports brand and is initially looking inward at some of its key assets to kickstart this process. The company also owns certain valuable assets and relationships in the esports sector and there is a substantial growing addressable domestic esports betting market for the company to take a leadership position in. 

“The company will continue to structure its operations and financial position to maximise value for shareholders. I look forward to bringing my experience into the leadership of the company and to focus on the execution of these transformative initiatives.”

Chair Blackhurst added: “We are excited to have Alex join the senior leadership team. He brings a wealth of knowledge, experience, and fresh perspective as we move the company forward.”

Esports Entertainment Group troubles

The appointment comes after long-time CEO and chair Johnson stepped down last month in response to a request by the EEG board. Blackhurst was revealed as its new chair shortly after the announcement.

The change in leadership followed a tough few years for EEG, with brand closures, a debt default and large operating losses. In May, EEG revealed in a quarterly financial report that there was “substantial doubt” about its ability to continue as a going concern.

In October last year, the group said it was effectively at the mercy of an unnamed creditor after the business defaulted on its debt. 

In December, the business then revealed that it had escaped delisting, but told to drastically increase its share price by February in order to remain on the Nasdaq exchange.

The igaming business set out plans restructure, with the sale of its online casino business in Spain expected to close by 12 December. Proceeds from the sale will mainly be used to pay down the principal on a senior convertible note.

Meanwhile, EEG also closed its Argyll iGaming operations – which operates RedZone and SportNation – in the UK and Ireland in December due to high operational costs and an inability to generate profit. EEG had already announced it would be shutting its RedZone and Sport Nation brands in the UK.

In addition, EEG said it would evaluate further strategic options for the igaming business, including exploring a potential sale of igaming assets due to increasing regulatory burdens and competition. 

While online casino moves at a crawl, the pace with which sports betting has spread across the US is astounding. Approximately 33 states have passed sports betting legislation (18 of these provide for online), while six others have pre-filed bills awaiting action.

Contrast this with the slow pace of igaming adoption. iCasino is legal in six states, with Connecticut the last to go live in October 2021. Since then, the development of igaming has been quiescent. 

But in 2023, the pace of sports betting adoption will slow.

The “the low-hanging fruit” has already been picked. Undoubtedly additional states (such as Alaska, Georgia, Kansas, Massachusetts and Missouri) will make moves in the vertical, but the flurry of launches will slow to a trickle. 

Currently, only a few states are actively looking at online casino as an option with prime contenders being Illinois and New York. Others such as Iowa, Ohio, Maryland and Massachusetts (possibly even Kentucky) may see the igaming issue being raised, but the immediate prospects for these seem dim. 

The contrast between igaming and sports betting adoption can be attributed to several factors. The US is sports-crazy. Politicians know it has a sizeable constituency which sees sports betting as a natural extension of the overall sporting experience. 

Existing gaming operators, both commercial and tribal, view sports betting as an adjunct to existing operations. Essentially, as long as they are able to benefit from it and are ‘cut in’ on online betting, they have little to lose and much to gain. There is also the support of professional teams and leagues – powerful interests in most states.

iGaming lacks sports betting’s support

Online casino, on the other hand, is less accepted by the general public. Teams and leagues have no skin in the game. Compounding this negativity is the opposition of entrenched land-based casino operators, not to mention concern in some states online gaming would threaten these brick-and-mortar incumbents. 

These concerns have not entirely been shifted by ample evidence that online and in-person can coexist without cannibalisation.

Tax revenue was inevitably part of the argument for legalising sports betting but it was not, and could not be, a driving consideration. In contrast, new tax revenue was a key factor linked to the spread of land-based gaming in the decades between 1995 and 2015.

For example, in Pennsylvania the development of the casino sector was specifically designed to provide relief for owners on their property taxes, to support local school districts. The goal of then-Governor Ed Rendell was to raise $1bn each year for property tax relief. 

This was achieved and surpassed. However sports betting cannot provide the same level of tax relief. Much is made in the media of the vast sums wagered in sports betting, but with a hold of less than 10%, the actual GGR subject to taxation is anaemic in comparison to both land-based and online gaming.  

Contrasting tax contributions from betting and online casino

In Pennsylvania, the brick-and-mortar sector paid $962m in taxes on slots and tables to the state alone in the 2021-22 fiscal year. iGaming taxes amounted to a further $341m, while sports betting’s contribution was just $104m. 

That tax contribution from betting is inflated by one of the highest tax rates in the country, at 36% of GGR. Most states – New York being a notable exception – set GGR tax rates in the low teens, resulting in an even greater disparity between land-based and betting receipts. 

Sports betting in Connecticut generated $13m in taxes, compared to close to $40m from icasino. The contributions from slots and tables, from the state’s two tribal operators topped $215m. 

It’s New Jersey that arguably provides the most compelling case for the tax benefits of igaming. In September 2022, the Division of Gaming Enforcement reported a $16m contribution from casinos (taxed at 8% of GGR), compared to a $20m contribution from icasino (15% of GGR). Sports betting’s contribution? Just $5.3m. 

Following the money

This suggests sports betting is difficult to justify primarily from the standpoint of generating new tax revenue. Generally the largest source of new taxes are land-based casinos, but the train has already left the station for most states. New York’s efforts to issue a trio of downstate licences is a notable exception, driven by the need to shore up the state’s coffers. 

So igaming is the potentially the place for states to turn. 

It offers a modest, yet significant, avenue to raise tax revenue. Most importantly, there’s room for significant growth in the vertical. 

Why, then, has it not been adopted in more states? 

Part of the answer lies in the previously-mentioned opposition, ambivalence or hesitancy from existing land-based operators. As a new vertical there’s not as clear evidence of a player base waiting for a legal offering, and sports betting has consumed the political oxygen over the past four years. 

But with that initial gold rush slowing to a crawl, is online casino going to be the next great driver of growth in the US?

Considering that there is a looming recession and a growing need to generate tax revenue, it may well become part of the conversation. 

In this context, can we look at a state’s fiscal health as an indicator of the potential for igaming legalisation in 2023 or beyond?

State debt and gaming legislation

The following two tables look at state debt for FY2022. 

The first table below presents the 15 states with the greatest debt pile.

StateState debtGross State ProductDebt as % of GSPNew York166.51,929.108.6%California1453,571.704.1%Massachusetts76.4668.711.4%New Jersey65.3703.79.3%Illinois65.1985.96.6%Texas60.62,114.802.9%Pennsylvania57.1879.36.5%Connecticut41308.113.3%Michigan39.1600.66.5%Ohio35.4771.24.6%Virginia30.8616.55.0%Maryland30.4454.16.7%Indiana26.6448.25.9%Washington26.4705.93.7%Florida23.81,299.501.8%Source: USGovernmentSpending.com
Fiscal Year 2022
Amounts in $bn

In the second table, states are ranked based on debt as a percentage of gross state product. This is a measure of the relative size of the economy of each state).

StateState debtGross State ProductDebt as % of GSPWest Virginia13.794.914.4%Rhode Island9.769.114.0%Connecticut41308.113.3%Massachusetts76.4668.711.4%Vermont3.737.89.8%Alaska5.558.19.5%New Jersey65.3703.79.3%Hawaii8.594.39.0%New York166.51,929.108.6%Maine680.17.5%New Hampshire7.6104.87.3%South Dakota4.565.26.9%Maryland30.4454.16.7%Illinois65.1985.96.6%Michigan39.1600.66.5%Source: USGovernmentSpending.com
Fiscal Year 2022
Amounts in $bn

Looking at the above, it is not surprising there have been rumblings about Illinois and New York looking at igaming legislation. 

Public policy specialists The Pew Charitable Trusts digs deeper by analysing the fiscal health of states, looking at the cumulative share of revenue to expenses, from 2005 to 2019. Eight states’ expenses exceeded revenue during this period: New Jersey, Illinois, Massachusetts, Hawaii, Kentucky, Maryland, New York and Delaware. 

Running at a loss

The Pew Charitable Trusts then calculated how long each state could operate under existing balances, as outlined in the map below.

 

Based on this measure Illinois, New York, Mississippi, Louisiana, Virginia, Pennsylvania, New Jersey, Rhode Island and Washington – all states that have legal sports betting – fall well below the national median. 

Saving for a rainy day

However many states have established “rainy day funds” designed to allow them to continue to operate for a period under extreme disruptions (much like the effect of the pandemic).

Illinois and New York stand out again, as does Washington.

Alleviating the tax burden

Another way to look at the data is by looking at the tax burden on state residents. Reducing tax burden on citizens through the enactment of gaming expansion is a powerful motivating factor.

As the above map shows, New York, Connecticut, Illinois, New Jersey and California impose large tax burdens upon their citizens.

Shoring up pension pots

Then there’s one of the most prominent and worrying concerns for state legislation, massive unfunded pension debts.

Under this criteria states such as Illinois, Kentucky, Mississippi, New Jersey and New Mexico top the list.

Education funding

Yet another area of concern for legislators across the country is to provide adequate funding for K-12 education.  This is a strong motivator and an area that was successfully targeted by land-based gaming legislation in Pennsylvania.

In terms of education spending gap Florida, Texas and California are most in need.

What does this data tell us?

New York is desperately in need of help as it carries the largest debt of any state, and it imposes the greatest tax burden upon its residents. It is no secret that New York is looking towards not only land-based casinos, but also igaming. As Senator Joe Addabbo said in November 2022, lawmakers would look at online casino “first and foremost”. 

This explains the state’s ongoing expansion of land-based gaming, but also suggests that it is a prime candidate for gaming legislation.

Massachusetts and Maryland carry significant debt but appear less strained under other measures. In each, it will likely be more a matter of seeking consensus among stakeholders.

Where else could we see an igaming push?

Excluding states that already have igaming, where the issue is complicated by tribal considerations, and smaller markets, few others stand out. Significant unfunded pension liabilities in Kentucky and Mississippi suggests igaming tax revenue, if specifically targeted, could offer an avenue forward.  

While online gaming is not a panacea to fiscal struggles, its ability to generate tax revenue in comparison to sports betting could make it an important component in overall efforts to address fiscal health in a number of states.   

Therefore in approaching state legislators on igaming, a discussion of potential tax contributions play a much greater role than it has done for sports betting. iGaming offers a reasonable solution best targeted to specific areas of fiscal stress. 

Industry lobbyists should therefore work to identify prominent problems and programmes in each state that can be positively impacted by igaming taxes. By doing so they could drive greater grassroots support.  The above data can only hint at possibilities. It is necessary to identify specific problems and programs that tax revenue from igaming can help solve or support. 

Giving people HOPE

For example, funding gaps in the Helping Outstanding Pupils Educationally (HOPE) scholarship in Georgia is often linked to gaming expansion. Property tax relief associated with school districts was a key component for land-based gaming in Pennsylvania.

This is not to say fiscal issues should be downplayed in other states. Other funding needs specific to each state and local priority should be identified and directly targeted by igaming legislation. By doing so the industry adopts a natural local, and often vocal constituency, that can help build support for online casino. 

With the inflow of federal dollars during the course of the pandemic, the fiscal health of many states surprisingly improved. This may have weakened the case for online gambling over the last few years, but the looming recession is sure to exacerbate fiscal issues.

This presents an opportunity to deploy the argument that online casino can be part of the solution to states’ fiscal struggles. Even now states such as New York and Illinois offer fertile ground for the expansion of online gaming.

With the waning of the wildfire that was sports betting and a concerted effort by the industry, the opportunity now exists that the coming years will see a significant uptick in the adoption of igaming.

Ohio set out a January 1, 2023 launch date for sports betting in a bill agreed by conference between both houses of its legislature.

Among the operators going live in the state on launch day were national market leaders, FanDuel, BetMGM and DraftKings, European businesses Bet365 and Tipico and startups Betr and Prophet.

Ohio is set to represent a major opportunity to operators and suppliers as the seventh-most populous US state, with 11.8 million residents.

“Today marks a monumental day of growth for both BetMGM and the sports betting industry,” said BetMGM CEO Adam Greenblatt. “Ohio is home to thousands of passionate sports fans, who now have the opportunity to enjoy first-hand the excitement and benefits of wagering with BetMGM.”

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Sports betting has taken up much of legislators’ attention, but its tax contribution is dwarfed by igaming tax revenue.

Light & Wonder’s Glaser goes as far as calling igaming the most successful product in the history of gambling in the US, even in its infancy.

“Consumers and players love to play online and it produces significant tax revenue for states that far exceeds sport betting,” he explains. “The only hurdle right now is the industry persuading state legislatures that opening up the digital channels makes sense.”

As he says, the evidence is there. The onus will fall on the industry to communicate that to lawmakers, and address any questions or concerns they have. 

2023 predictions

Brendan and Brandt then dust off their crystal ball for some 2023 predictions. Aside from further igaming and sports betting expansion, there’s also brick-and-mortar to consider.

Brendan is sure at least two states will look to break ground on casino development in the coming year. 

And after Brandt won the wager on Maryland sports betting, there’s another bottle of Pinot at stake, over Missouri and North Carolina. 

Remember, the World Series of Politics is available on Apple Podcasts.

In an interview with MTV Uutiset, Tuppurainen said that she hopes the investigation will be underway at the beginning of 2023.

She added that both the government and opposition are united in their stance to consider ending the monopoly.

“As the minister of ownership, I myself hastened to make a report on a possible transition to a multi-licencesystem,” said Tuppurainen.

“It is only a good thing that the opposition also shares this perception.”

This comes ahead of the country’s general election on 2 April 2023. Tuppurainen wants the investigation to outline the transition to a licence system before any possible change in government.

“There are parliamentary elections next spring, and it would be ideal that by the time of the government negotiations, we would have enough information to be able to make policies in the government negotiations.”

Tuppurainen also explained that the change towards licencing would put all gambling providers on the same page. As non-Veikkaus operators are not regulated, she said that many offer no player protection, while Veikkaus has a nnumber of strict limits for deposits.

She also noted that the Finnish government does not receive any proceeds from unlicensed gambling.

“Right now the game companies from abroad operate as if in a wild grey zone. They are not subject to the same liability regulations that apply to Veikkaus,” she said.

“The situation naturally causes gambling disadvantages and at the same time the taxman’s hand is twisted, which means that the profits from gambling also go past Finland to foreign countries.”

Monopoly at risk?

Currently, Finland operates with a monopoly with government-owned Veikkaus having exclusive rights to operate gambling including lottery and slot games.

Veikkaus was formed in 2017 when the previous three monopoly operators, Fintoto, Finland’s Slot Machine Association (RAY), and lottery Veikkaus were merged into one company controlled by the state.

According to Sari Multala, MP for the National Coalition Party, Veikkaus’ monopoly on lottery and land-based casino gaming would not be impacted. She indicated that it is easier to regulate these verticals when there is only one provider.

“On the online side, the [current] regulation cannot achieve the goals we need. Monitoring is easier in the physical world than online,” said Multala.

There has long been opposition to the Finnish monopoly system. Many industry groups have made calls for the monopoly to end, while in 2023 a legislative committee said the current system is “practically broken” and other methods should be considered if Veikkaus’ monopoly can no longer be implemented..

The government acknowledged that the Spelpaus.se self-exclusion scheme in Sweden is an “important” measure to counter problem gambling and protect consumers from gambling-related harm.

However, the government also said there is a lack of knowledge as to why some people withdraw from gambling, as well as how many of those consumers go back to online gambling with operators that are not licensed and not integrated with Spelpaue.se.

The regulator will also look at the possibility of adding more options and exclusion choices to Spelpaus.se. These could include changing the length of their self-exclusion or only opting out of certain types of gambling such as online slots.

Spelinspektionen will work with the Swedish Public Health Authority on the study and will be required to report its findings and recommendations by 31 October this year.

“The possibility to disconnect from gambling via spelpaus.se is an important measure to counter gambling abuse and protect consumers,” Sweden’s Financial Markets Minister Niklas Wykman said.

“However, there is a lack of sufficient knowledge about why people withdraw from gambling and what proportion of those withdrawn choose to play with gambling companies without a Swedish licence, something that, among other things, the State Treasury has highlighted as a problem. That is why we are giving the Spelinspektionen the task of mapping this out.”

Meanwhile, the government made reference to a number of other existing requests and assignments in relation to Spelinspektionen’s future operations and activities. 

These included a commitment to continue accepting people with disabilities for internships, with updates from due on 1 April this year and 15 February 2024. Spelinspektionen is also due to file updates on a mission to continue accepting new job seekers for internships on these two dates.

In addition, Spelinspektionen is this month scheduled to report on an ongoing commitment to take energy saving measures. Further updates are due on 15 February and 15 March this year.

Revenue for the month amounted to $1.22bn, which was down from $1.32bn in November of 2021 and also 4.7% lower than $1.28bn in October 2022.

Slots remained the primary source of revenue in Nevada, with revenue from the machines amounting to $871.1m, up 1.3% year-on-year. Multi-denomination slot machines generated for $460.8m in revenue, with penny slots at $300.6m.

Read the full story on iGB North America.

The businesses operating in jurisdictions outside of the Pennsylvania can now apply to become a Qualified Gaming Entity. The designation will allow the operator to obtain one of three categories of igaming license that are available in the Commonwealth.

Historically, only companies with a brick-and-mortar presence, along with online operators with a market access agreement with such a casino, have been eligible to apply to offer online gaming. However, the PGCB periodically allows for out-of-state entities to petition to be allowed to offer games of chance in the state. The first petition occurred in late 2018, making this the second time the state’s regulator has opened the process.

[Read full story on iGB North America]