Month: April 2023

The much-anticipated Gambling Act Review white paper was released this morning, after a wait that spanned close to two-and-a-half years.

Its contents are set to be transformative for bringing the online gambling industry into the digital age. But important regulations were also outlined for the land-based industry.

Simon Thomas, executive chairman of the Hippodrome Casino, said that he was pleased at the progress the white paper represents, but noted frustration at the number of consultations that are still to come.

“I’m delighted there’s progress,” said Thomas. “A two-and-a-half-year delay has been terrible.”

“I’m frustrated that that time was not used to produce clear public policies and decisions, and frustrated that we are into a consultation, of which we don’t know how long that will be.”

More details needed for mandatory levy

In reference to the white paper’s contents, Thomas said more detail is required for the mandatory statutory levy, which is to be imposed on all gambling activity in the UK.

“We would like more detail on the imposed levy,” he said. “So in terms of how much it’s going to be, taking into account that our tax rates and fixed costs are materially higher. Some idea of how the money will be used and allocated.”

But Thomas praised the Department of Culture, Media and Sport’s (DCMS) consultation on allowing contactless payments at land-based machines, hailing it as an “improvement” on the current cash-only model.

“[It is] definitely an improvement, provided they don’t try to use it as a Trojan Horse to enforce account-only play,” Thomas continued. “There’s a lot of resistance from customers about account-only play.”

“What we want is for people to have the extra option, not to have it reduced.”

“Concerns” about Commission’s involvement

Dan Waugh, partner at strategic advisory business Regulus Partners, said that there is a long way to go before the white paper’s terms are fully implemented.

“A lot of it is going to be decided outside parliamentary processes,” said Waugh. “A lot of it will be subject to the Gambling Commission consultations.”

He added that the Commission’s involvement could prove controversial, as the regulator has a “reputation” when it comes to how it handles consultations.

“It [the Commission] has a reputation – when it comes to consultations in the past, generally it decides what it wants to do, goes out to consult and then does exactly what it first thought of,” he said. “There will, understandably, be concerns about how the Gambling Commission approaches this.”

Waugh is positive about the white paper itself, viewing it as “evidence-based”, “balanced” and “proportionate”. However, he recognises that others in the industry may feel differently.

“I know we’ve had to wait a long time for this, and I know it’s not going to please everyone, there will be people who aren’t happy that they haven’t got what they wanted, but it seems to me to be a pretty coherent, sensible response from the government.”

New approaches to land-based venues

Melanie Ellis, partner at Northridge Law, said that the white paper has addressed the land-based industry’s wishes.

DCMS proposed that the existing 80:20 ratio of category B and C/D machines in land-based venues, such as bingo halls and arcades, should be scrapped in favour of a 50:50 ratio.

“The white paper is particularly helpful to land-based casinos,” said Ellis. “In particular, increasing the number of gaming machines permitted in the 1968 Casinos Act.”

“What they’ve done is try and create a bit more parity between those casinos and the 2005 Gambling Act casinos.”

John White, chief executive officer of land-based industry trade body Bacta, also praised the removal of the 80/20 rule, calling it “old-fashioned”.

“The 80/20 rule – an old fashioned rule that was designed in the days when category B3 machine was a box as opposed to now,” he said. “The 80/20 rule limited the amount of B3s you can make available to customers and was completely outdated, and we were in a position where we were unable to provide what customers wanted.”

“That’s been recognised and will now go to a 50:50 ratio.”

The ruling comprises two separate penalties; SEK65.0m for Hillside Sports and an additional SEK14.0m for Hillside Gaming. Both Bet365 operations were also handed an official warning by the Swedish regulator.

Summarising the case, Spelinspektionen said Hillside Sports and Hillside Gaming failed to take “sufficient” measures to protect customers against excessive gambling, including not helping players reduce their gambling when there has been reason to do so. 

Other failures related to how the operator allowed customers to play without having them set deposit limits, while the regulator also said Hillside Sports and Hillside Gaming failed to proactively in cases where a player’s behaviour was deemed problematic.

“In general, it has taken too long before the two companies took measures to prevent continued risky gambling,” said Spelinspektionen.

“We also noted that the original action plans lacked a description of what measures should be taken in the event of excessive gambling for young players (18-24 years) and for those who had previously been suspended.”

Bet365 Swedish consumer protection failures 

Publishing certain examples of breaches identified during its investigation, Spelinspektionen, looking at a two-month period between 17 October 2021 to 17 December 2021, picked out a number of customer cases for both brands.

One player with Hillside Sports who had a daily or weekly limit of SEK1.0m and a monthly limit of SEK5.0m deposited money on 53 of the 62 audited days and lost SEK261,593.

Another customer lost SEK386,400 during the period after increasing their deposit limits. The player in question had only registered as a customer two days before the two-month audit period.

A third player with no deposit limits lost SEK259,372 in two months and placed a total of 240 bets. Spelinspektionen also noted that the customer played daily during four of the reviewed weeks.

Turning to Hillside Gaming, Spelinspektionen looked at the same two-month period and singled out a number of customers. In one case, a player lost SEK287,623 between the dates of 17 October and 27 November, having not set any deposit limits.

Another Hillside Gaming player, who had a deposit limit of SEK20,000 per week, SEK100,00 a week and SEK250,000 per month, made 61 deposits and lost a total of SEK73,730 in the audited period.

In addition, another customer with no deposit limits in place made 105 deposits during the set period and made just one withdrawal, losing SEK104,512 in the process.

The penalties come after Spelinspektionen this week also fined Flutter Entertainment-owned Betfair SEK4.0m for offering betting on football competitions not permitted by national law.

Spelinspektionen found Betfair offered bets on the U21 Allsvenskan, the youth-level football league. Swedish law only allows wagering on the four highest levels of league football in the country. 

It was confirmed that the GB Gambling Commission will continue to hold licensee operators accountable for all marketing undertaken on their behalf by affiliate partners. July 2022 leaks also proved to be true regarding the UK government “not persuaded by arguments for online affiliates to be licensed”.

Stake limit

The Department of Culture, Media and Sport (DCMS) wishes to implement a stake limit on slots and will conduct a consultation on this limit being between £2 and £15 per spin.

Players who lose £1,000 within 24 hours, or £2,000 over a period of 90 days, will be subject to detailed checks on affordability. Meanwhile,operators will now have to perform “passive” checks on players who have a net loss beyond £125 each month, or £500 per year.

Player protection was already adequate

David da Silva, Easyodds CEO, believes that the current player protections in force are more than right for the industry.

“When correctly applied, we feel that the player protections currently in force with regulated operators in the UK are more than adequate,” said da Silva. “Adding further controls and restrictions designed to protect a small minority is likely to frustrate the majority of responsible gamblers, some of whom might be tempted to switch to unregulated offshore operators.”

The Easyodds CEO went on to add that while the government is responsible for protecting vulnerable users from potential gambling harms “it also has a duty to support UK-regulated operators to ensure they remain a viable consumer choice.”

“Ministers should be reminded that illegal offshore operators are just a click away,” said da Silva. “Over-regulation risks triggering a worst-case scenario where the government fails both consumers and the legal gambling industry.”

Restrictions too harsh

Duncan Garvie, founder and trustee of gambling charity BetBlocker and industry expert at CasinoReviews, believes that operators will see the proposed restrictions as too harsh, “affecting the sustainability of the gambling market in the UK.”

Garvie goes on to say that he thinks many of the measures listed in the white paper “appear positive in terms of protecting vulnerable players, but they’d need to be introduced carefully to prevent unintended and undesirable outcomes.”

“Where consumers feel that they are being forced to go through intrusive verification procedures, or that the products are watered down to such an extent that they no longer offer the options they want, we risk driving those people to the black market,” added Garvie.

“This is especially dangerous when we consider that the people who are most vulnerable to gambling addictions or harmful practices will receive no protection if they engage with illegal operators.”

Little to no financial impact

Denmark-based affiliate Better Collective believe that the initiatives from the white paper review will have limited to no financial impact on the company.

“Better Collective welcomes the review and believes it provides an opportunity to drive further changes on safer gambling,” the company said in its statement.

In terms of the impact on its financial results, Better Collective believes that UK sportsbooks have strengthened and implemented new compliance measures since the white paper was initiated including affordability checks.

“We have now seen a normalised sports win margin and do not expect for this to change given the proposed measures,” the company said.

The affiliate has also announced that its financial targets for 2023 and 2027 remain unchanged in response to the proposed changes in the white paper review.

New advertising measures

New advertising measures were also proposed for tackling content marketing that may appeal to children as well as reviewing the role of platforms to ensure ads are safe and socially responsible.

The GB Gambling Commission will also be empowered to strengthen consent for direct marketing for online gambling.

The company also said that it has terminated previously reported talks to sell its Australian business to the News Corp-backed gaming venture behind the Betr brand. Despite this, PointsBet said it remains in discussion with “other third parties” who have expressed interest in acquiring the business.   

“Consistent with commentary previously provided to our investors and the market more generally, PointsBet continues to engage in discussions regarding strategic transactions that offer the potential to add value for our shareholders,” said the company.

Losses mount despite revenue growth

For the three-month period ending 31 March, the business recorded gross gaming revenue of AU$106.6m (£56.4m/€63.9m /$70.2m), a 39% from the $76.9m the company reported the previous year.

The business’s Australian arm saw a modest decline in year-on-year revenue declining 3% to $50.7m compared to the $52.3m PointsBet achieved in the same period the previous year.  

Expansion in the company’s North American operations drove the growth, with revenue rising 103% year-on-year to $49.8m.

PointsBets’ Canadian business also experienced rapid growth over the period; growing 21% on a quarter-on-quarter basis to $6.1m.

Despite this revenue growth, the company is expecting to make an earnings before interest, tax, depreciation or amortisation (EBITDA) loss of between $77.0m and $82.0m for H2 FY3.

Additionally, the business expects that cash outflow, including movements in player cash to be approximately 30% lower than in H1 FY23.

Due to these pressures, the company has attempted to cut costs in order to drive the business towards profitability.

“We recently completed a cost and efficiency review of our North American operational workforce,” said PointsBet. “This resulted in the streamlining of operations and resulted in a 12% reduction of headcount. This reduction is expected to result in annualized cost savings of approximately $6m”.

Falling costs in PointsBet operations

During the quarter, PointsBet cut its cost of sales 10.5% to $55.5m compared to the $61.3m that the business spent in the previous period.

While the operator saw modest rises in costs in its other spending streams, the amount was such to mean that costs ultimately fell across the board.

Sales and marketing costs rose to $69.0m from the $67.5m the business spent the previous quarter, while staff costs rose modestly to $26.8m from $25.5m. Administrational also increased $0.8m to $19.7m from $18.9m.

As of 31 March 2023, the company had $251.7m cash on hand.  

Hill previously served as the business’s chief financial officer from 2018 to March 2023, after which time Paul Edgecliffe-Johnson stepped up to replace him in this role.

The operator made the move in order to “maximise the benefits of Flutter’s global scale” as well as to support the strategic direction of the business.

Commenting on Hill’s new role in October, Flutter CEO Peter Jackson said he wished “to acknowledge Jonathan for all he has done for Flutter to date”.

“I am very pleased that the group will continue to benefit from his experience in establishing the new COO function,” he said.

Flutter shareholders approve dual US listing

Yesterday (27 April) Flutter shareholders voted to approve the company’s intention to seek an additional listing in the US, with a planned date of mid-Q4 2023.

The business has not yet confirmed whether it will attempt to list its shares of the NASDAQ stock market or New York Stock Exchange.

The operator has said that it hopes an additional US listing will enable the business to have deeper access to capital markets and US investors.

It also believes that an additional US listing will enhance the company’s profile in North America, as well as improve in the recruitment and retention of local talent.

Following the passage of the vote, Flutter will remain headquartered in Dublin, and its status as an Irish incorporated public company is not set to change.

According to ACMA, both Entain’s Ladbrokes and Neds brands accepted in-play bets on the Bangkok LIV Golf tournament in October 2022. A total of 78 bets were processed during the final day of the event.

Australian law prohibits all forms of on-play betting, with ACMA issuing the infringement notice – the maximum amount it could set for this breach of the Interactive Gambling Act 2001 – in response.

Responding to the charge, Entain said that the breaches occurred due to its parent company inputting the incorrect start time for the tournament to its systems. As a result, 59 in-play bets were accepted via Ladbrokes and 19 with Neds after the event had commenced. 

Entain said it only became aware of the error when alerted by a customer three hours after the day’s play had started and proceeded to void all the in-play bets. The group added that it had reviewed and updated its in-play compliance policy to ensure such errors do not occur again.

This was the first infringement notice ACMA issued in relation to a breach of in-play betting rules.

“Online in-play betting increases the risk for those people experiencing gambling harm as it provides fast outcomes and allows for higher frequency of bets,” ACMA chair Nerida O’Loughlin said.

“Entain is a highly experienced wagering operator, and it is disappointing it did not have internal procedures in place to prevent or detect the error. “ACMA made it clear to the industry last year that they must have robust systems in place to ensure that online in-play bets are not made available or accepted.”

This was a decline of 5.9% compared to ATG’s Q1 2022 performance.

Taking agency income into account at SEK50m, and other incomes at SEK129m, the total revenue for the period was SEK1.37bn, down by 6.1%.

Hasse Lord Skarplöth, CEO of ATG, said that the first quarter of the year had continually been affected by a “troubled environment” encompassing the cost of living crisis, inflation and high interest rates. This echoed Skarplöth’s comments on ATG’s full-year 2022 results.

“The deteriorating economy during the first quarter is reflected in our operating profit… and in the parent company’s profit before transactions with owners,” said Skarplöth.

Skarplöth said both horse racing and sports betting had shown improvement, but added that there was a decrease in revenue for horse racing.

“Our product areas of sport and casino showed continued growth of 10% and 20% respectively,” he said.

“The net gambling revenue for horse racing decreased to SEK854m (-12%) in comparison with the same period last year, but we retain our market share in horse gambling.”

Q1 results

Revenue from horse racing made up 75% of the total net gaming revenue in Sweden, and 23% of it in Denmark. Sports betting made up 16% in Sweden and 23% in Denmark, while revenue from casino games generated 9% of the total revenue in Sweden and 54% in Denmark.

Other expenses made up the highest costs for the quarter, totaling at SEK613m, an improvement of 4.4%.

Gaming tax was SEK244m, up by 5.8%, while personnel costs grew by 11.2% to SEK139m.

Depreciation and write-downs of intangible and tangible fixed assets hit SEK78m, growing by SEK4m yearly, while activated work for own account added SEK19m to the total.

This resulted in an operating profit of SEK317m, a decline of 15.7%.

Results from financial terms at SEK4m brought the pre-tax profit to SEK321m. Following income tax of SEK13m, the total profit for the quarter was SEK308m, down by 16.3%

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Launched in 2019, the public service campaign aims to bring sports betting stakeholders together around a common consumer education platform, focusing on four principles of responsible wagering.

These include setting and keeping to a budget, ensuring betting is social, knowing the odds and only gambling with licensed operators.

Read the full story on iGB North America. 

The quarter proved to be a busy period for GLPI, having in January finalised its acquisition of Bally’s Tiverton in Rhode Island and the Hard Rock Hotel & Casino Biloxi in Mississippi from Bally’s Corporation for $635.0m.

Also in Q1, GLPI completed the creation of a new master lease with Penn Entertainment, covering seven of the latter’s properties. Penn’s casinos in properties in Aurora and Joliet in Illinois, as well as Columbus and Toledo in Ohio, and Henderson, Nevada were added to the new master lease.

Read the full story on iGB North America.

In the new role, Crawford will oversee the business’s investor engagement, with a focus on further institutionalising its relationships with current and future shareholders. She will report to chief financial officer Glenn Schiffman.

Crawford joins Fanatics after more than a decade with Meta, where she was most recently vice president and head of investor relations.

Read the full story on iGB North America.