Month: April 2023

GAN blamed the delay in releasing the annual report on two deals that closed near to the 31 March filing date, causing GAN to request regulatory relief from the SEC. The business issued the document to the public on 14 April – within the 15-day extension it had been seeking from the financial regulator.

As previously reported, GAN recorded revenue of $141.5m (£113.8m/€129.1m) for full-year 2022, up by 14%.

Net loss for the year was $197.5m, a considerable increase from a loss of $30.5m in 2021.

Weaknesses with financial reporting

In the risk section of its annual report, GAN – which operates on both a B2B and B2C basis – outlined a previously announced “material weakness” in relation to its internal control over financial reporting.

“Specifically, certain time and functions previously reported as attributable to software development were not applied consistently with applicable accounting principles,” said the business.

Additionally, the company said that there were issues evaluating the accounting for revenue with customers that included significant customisation services. More problems came from deficiencies in the design of its control since, where GAN did not have effective risk assessment over segregation of duties.

This manifested with certain finance users granted “super user” access and security administration rights to the business’ financial reporting systems. The activity of these users was “not actively monitored”, and no segregation of duties over journal entry preparation and approval existed at all within its B2C operations.   

“The effects of the capitalised software development and revenue recognition errors resulted in an overstatement of capitalised software development costs, net, and an overstatement of development revenues resulting in a restatement of our quarterly reports on Form 10-Q for each of the periods ended 31 March 2021, 30 June 2021 and 30 September 2021,” read the report.

Continuing problems in B2C segment

In 2022, the business implemented a number of measures to improve its internal controls to fix the weaknesses in its reporting pipeline. GAN said that these reforms were sufficiently successful so that the “capitalised software development costs, and segregation of duties within our B2B segment existing as of 31 December 2021 has been remediated”.

“However, the material weakness related to the segregation of duties over journal entry preparation and approval within the B2C segment has not been remediated,” said the business.

“While we are designing and implementing measures to remediate the remaining material weakness in the B2C segment, we cannot predict the success of such measures or the outcome of our assessment of these measures at that time.”

According to the Australian Financial Review (AFR), the decision to sell the US business stemmed from the failed attempted sale of PointsBet’s Australian business.

PointsBet was in talks to sell the Australian arm of its company to NTD Limited – a business led by News Corp – late last year. Parties that had expressed interest in acquiring the Australian arm have since paused discussions due to the fixed AU$250m (£135.3m/€153.3m/US$168m) price tag attached, as reported by the AFT.

Subsequently, the company turned its attention to its US business. While the the division remains unprofitable and subject to intense competitive pressures, there may be assets valuable to buyers including its licences and expertise.

In response to reports, PointsBet told iGB: “We believe further industry consolidation is inevitable, and we’ll position PointsBet to take advantage of movement in the sector.”

US division performance

PointsBet’s performance in the US reached a record high for net win in the three months ended 31 December 2022.

Despite this, much of PointsBet’s costs – as highlighted in its 2022 half-year results – went to its American operations. Sam Swannel, managing director and group CEO at PointsBet, said at the time that the operator’s American strategy was “delivering” nonetheless.

Between 2023 and 2025, DKK10m will be released each year by Denmark to support problem gambling ongoing efforts and projects, with recent research having suggested that almost 500,000 Danes suffer from problem gambling in some form.

The first DKK10m will be spent on initiatives targeting children and young people, as well as for further research into gambling addiction.

Of this figure, DKK5.0m will be set aside for gambling addiction research. An application pool will be created at the Ministry of the Interior and Health, with a focus on treatments and remedies for those who suffer with addiction. 

Meanwhile, a total of DKK2.5m will be sent to gambling regulator Spillemyndigheden to use in a nationwide information campaign on gambling, targeting children and young people, as well as parents and other relatives. A further DKK1.5m will be used develop new content for use on a national platform offering advice and information on gambling addiction.

In addition, DKK1.0m was earmarked for Spillemyndigheden to launch a joint study looking at gambling addiction across all Nordic countries. This project would require the support of other nations, and if this were not to proceed, the funds would instead be allocated to the nationwide campaign in Denmark.

“The development we are seeing in the gaming area is very worrying,” Tax Minister Jeppe Bruus said. “Gambling addiction can have major and long-lasting consequences for those involved, and we have a special obligation to protect children and young people and other vulnerable groups. 

“Therefore, there is a need for us to both strengthen information efforts towards children and young people and research into gambling addiction. And I am happy that we are now adding more resources to the effort.”

An ACMA investigation found that Kayo showed gambling advertisements during the May 2022 Australian Football League (AFL) match between Fremantle and Collingwood.

According to ACMA, the promotions were streamed on the Kayo service within 5 minutes before play commenced and during scheduled breaks.

Australian law states that gambling ads must not be streamed during live sport events between 5am and 8.30pm, including the five minutes before and after the event.

“Streaming services need to comply with the rules in the same way traditional television broadcasters do,” ACMA chair Nerida O’Loughlin said.

“Gambling advertising during live sport is a major concern for Australians. Families want to watch live sport without needing to worry that children may come to think of gambling as a part of the game.”

ACMA also noted during the course of its investigation, Kayo implemented live production testing and technical enhancements to both the processes and software it uses to schedule advertising. 

In addition, the Authority said Kayo will now have senior management review and sign-off on future system changes that may impact the streaming platform’s compliance with rules on advertising.

The 4tune-Software cancellation came into effect on 28 March and was in connection to regulation 10(1)(a) of Malta’s Gaming Compliance and Enforcement Regulations, which relate to payments due to the MGA.

The Authority cancelled the licence in line with regulation 9(1) (c) and (l) of the Gaming Compliance and Enforcement Regulations, which grants the regulator powers to withdraw a licensee if the holder fails to comply with rules and requirements.

According to the MGA, 4tune-Software failed to discharge financial commitments to the Authority in relation to its operations, while it also failed to make payments within a required time frame.

As such, the MGA said 4tune-Software is no longer authorised to carry out any gaming operations under its Maltese licence and is required to settle all outstanding fees due to the Authority.

The cancellation come after the MGA this week also announced it would withdraw the licence of online pools betting specialist Totup System for similar regulatory breaches.

One of the breaches was in reference to Regulation 3(1)(b) of the Gaming Licence Fees regulations, whereby the Authority said Totup failed to pay the MGA the applicable licence fees for 2022 and 2023. The outstanding fees amount to €50,000 and remain unpaid.

Totup was also flagged for a breach of Regulation 6 of the Gaming Licence Fees regulations, whereby it repeatedly failed to pay applicable compliance contribution fees to the Authority within a set timeframe.

The partnership spans three years and will work to identify and develop cricket talent and boost Delhi Capitals Acadamy programme.  

Among the features provided by Sportradar is its live-streaming technology solution, Frogbox. The company will also provide the academy with an electronics scoring app and a mobile responsive match centre for various game statistics.  

For coaching and social media growth, Sportradar will additionally give the academy access to its fan engagement and coaching app, Lilypad.  

Jarod Pickering, head of cricket at Sportadar, said cricket academies like Delhi Capitals Academy are key in “identifying and nurturing the next generation of talent”. 

“We will be working closely with Delhi Capitals to help realise their vision for the academy and will also reach out to more academies in India to showcase how our technological solutions can be used to further develop the sport that the entire nation is incredibly passionate about,” Pickering said.  

Dhiraj Malhotra, CEO of Delhi Capitals, also hailed the value of the academy’s collaboration with Sportradar.  

“This is a key milestone as Delhi Capitals Academy has become the first academy in India to partner with Sportradar and leverage their innovative video technology to develop talent in cricket,” he said.

“This partnership adds value in several ways including enriching local talent and boosting engagement with our fans. We look forward to working with Sportradar to help grow the game.” 

The advertisement was seen on Facebook in January 2023. It contained text stating: “Who is the most underrated player at the club you support?”, and featured an image of Spanish football players Jordi Alba and Sergio Busquets playing for FC Barcelona.

The ad was challenged by the ASA itself. The organisation poised whether BetVictor had breached the Committee of Advertising Practice (CAP) Code’s prohibition on gambling ads having strong appeal to under 18s – a rule that came into force in October last year.

BetVictor’s response

In response, BetVictor said that it did not consider Alba and Busquets as well-known footballers in the UK – unlike footballers like Messi, Mbappe and Ronaldo – and therefore they would not fall into the “high risk” category as specified by the CAP.

The operator further stated that neither player had scored against a UK team and had not played against any team in the Premier League since 2019, by the time the ad was in circulation.

BetVictor added that neither player had a social media presence that was popular with under-18s, with both having profiles on Twitter and Instagram as opposed to TikTok, Snapchat or Twitch, which are social media sites that would appeal to a younger audience. The ad also did not contain any “calls to action” on betting sites and no logos apart from BetVictor’s own.

Upheld by the ASA

The ASA upheld the complaint, referencing CAP guidance that football has an inherently strong appeal to under-18s.

It added that despite neither Alba or Busquets having much association with UK clubs or the Premier League, CAP Code prohibits non-UK based elite footballers from appearing in gambling ads.

“The guidance stated that non-UK ‘star’ footballers, particularly those at top European clubs, were considered high-risk in terms of how likely they were to be of strong appeal to under-18s,” read the ASA’s assessment. “We noted that the ad included Jordi Alba and Sergio Busquets who were both current players at the European football club FC Barcelona and played for the Spanish national team.”

“FC Barcelona was a professional, top-flight football club that competed in Spain’s top league, and were known to be one of the most widely supported and successful clubs in the world. We considered that they would be classed as a ‘top’ European club under CAP guidance.”

In addition, the ASA said that BetVictor had not done enough to exclude under-18s from viewing the ad, as Facebook does not have “robust age-verification” measures

The ASA concluded that BetVictor had breached CAP Code edition 12, rules 16.1, 16.3 and 16.3.12.

Advertising standpoint

Licensing law firm Poppleston Allen said that the ruling represented a landmark for gambling advertising in the UK.

“This latest ruling gives us a clearer picture of which football players the ASA considers to be captured by the new guidelines,” said Felix Faulkner, solicitor at Poppleston Allen. “This is the first time we’ve had a ruling on players who play for teams outside the UK, which widens the scope beyond what the ASA has looked at previously in terms of the CAP guidance that came into effect in October last year.”

“Previous rulings have made clear that current Premier League players are out of bounds but that there is a case to be made for using retired players in some circumstances. This latest ruling takes us a step further and suggests any player in a major overseas league, particularly those playing for the big clubs, is a risky choice for gambling operators.”

Under the deal, Blaze branding will be featured on the shorts of both the male and female professional teams.  

Andres Rueda, president of Santos FC, said that the deal is the beginning of a “promising future” for all parties involved. 

“Santos FC has a rich history of success and has produced some of the greatest players to ever grace the football field such as Pelé and Neymar Jr,” Blaze co-founder Nick van Gorsel said. “We believe that Santos FC will do many more good things and we hope to be able to ride this wave with them.  

“We see our partnership as a great branding opportunity, and through this partnership, we are able to create incredible experiences for fans on and off the pitch.”  

The report – which was released yesterday – examined the state of the Finland gambling market and its success at channelling consumers to Veikkaus. The study concluded by stating that maintaining the status quo was “not a recommended option”, highlighting that at present around 50% of all gaming activity takes place on unlicensed sites.

“Approximately half of all gambling online goes to games outside the system. Playing outside the system also causes significant gambling disadvantages, the effective prevention of which is challenging when operating within the framework of the current system,” said the study

Veikkaus senior leadership welcomed the report and its conclusions. CEO Olli Sarekoski emphasised the size of the offshore sector and his openness to the introduction of a licensed system to improve Finland’s channelisation rates.   

Veikkaus praises gambling report

“The report is good and balanced,” said Sarekoski. “It is important that the amount of gaming margin outside the exclusive rights system is confirmed to be in the range of 500 – 550 million, and thus also in the category we presented based on H2 Gambling Capital’s information.”

“If the system change is headed towards a license system, from Veikkaus’ point of view, it is desirable that this change happens faster rather than slowly,” he added.

The report presented two possible paths of reforming the country’s gaming market. The first option – based on the Norwegian model – would be to reduce the availability of unlicensed offerings to Finnish consumers. This would be achieved by giving new powers to the regulator and law enforcement to make it more difficult to successfully broadcast such gaming to users.

The second option would be to introduce a licensing model – the option embraced by the majority of Finland’s neighbours.  

“With the license system, it would probably be possible to achieve a higher degree of channelling in online gambling than the current situation,” said the study.

The report’s signatories were Harri Sailas , Tuija Brax , Riitta Matilainen and Mikko Alkio – and it was received by State Secretary Akseli Koskela.

According to the MGA, the breaches were serious enough to warrant a cancellation notice in accordance with regulation 10 (1) (a) of Malta’s Gaming Compliance and Enforcement Regulations, which relate to payments due to the MGA.

One of the breaches outlined by the MGA was in reference to Regulation 3 (1) (b) of the Gaming Licence Fees regulations, whereby the Authority said Totup failed to pay the MGA the applicable licence fees for 2022 and 2023. The outstanding fees amount to €50,000 (£44,111/$54,746) and remain unpaid.

Totup was also flagged for a breach of Regulation 6 of the Gaming Licence Fees regulations, whereby it repeatedly failed to pay applicable compliance contribution fees to the Authority within a set timeframe.

The MGA said Totup will have 20 days from the date of the cancellation notice (17 April) to show cause in writing as to why its licence should not be cancelled. Totup would also be required to pay any outstanding fees.

Should Totup fail to exercise its right to show cause, the MGA would then proceed with the licence cancellation.