Month: May 2023

The development of sports betting in Brazil has been happening over the last 20 years, with people waiting eagerly for just as long, says Hugo Baungartner, the special guest this week on World Series of Politics.

“It’s the giant,” he says. “Everyone is talking about it. Everybody wants to come to Brazil.”

He notes that law has been in place to allow sports betting in Brazil since 2018, but that there has been no regulation yet, and nothing was made official by then-president Jair Bolsonaro.

But this regulation is imminent, Hugo insists, with ministers working for Brazil’s newest president Luiz Inácio Lula da Silva preparing a law that could be signed in the coming days.

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What can Brazil expect?

Hugo says Brazil’s government will impose a 15% tax on sports betting gross gaming revenue (GGR), as was announced last month.

But he points out that this will be on top of other Brazilian taxes already in place, which would bring the total percentage to 26% of the GGR. This worries Hugo, who has heard whisperings about white labels that would allow operators to have “Twenty, thirty, forty, fifty brands” under one licence.

Another concern is a rumoured $6m annual fee, which may be allowed to be paid over five years. He says thousands of people could enter the market – which could be good or bad.

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Go-live date?

Hugo believes that the market could go live in as little as thirty days.

This would mark the end of an arduous process that has had three presidents oversee it. Hugo says that the categorisation of sports betting as lottery in Brazilian law helps it seem more appealing to the public, as well as the government.

“It’s lottery, so it’s easier right now to pass this law, this regulation,” he says.

Looking much further ahead, Hugo says he is already sensing pressure for Brazil to have full-scale integrated resorts. But whether this will happen, or whether sports betting will be officially signed into law at all, remains to be seen.

Kindred Group, Danske Spil, Spilnu.dk, Mr Green and Betsson Group committed a total of DKK12m (£1.4m/€1.6m/$1.8m) to the committee, which will be based at the Department of Clinical Medicine at Aarhus University.

Jørgen Frøkiær, head of the department at the university, will chair the committee, while the University of Copenhagen, University of Southern Denmark, Aarhus University Hospital and Aalborg University will also be represented on the board.

The committee will focus on four key areas: Treatment of gambling addiction, prevention of harm among children and young people, preventing addition within online gambling and general knowledge gathering.

It is expected that the first applications for new research projects will be accepted at the beginning of July.

Part of the solution

“We are pleased that the gaming companies are contributing to being part of the solution, and we are now looking forward to helping a research area well on its way, which has had a difficult time for many years,” Frøkiær, said.

Kindred’s general manager for Denmark and Italy, Kim Olesen, also backed the new initiative, saying it fits in with the group’s own goal of its aim of generating zero revenue from harmful gambling. 

“We do not want to make money from players who have an unhealthy relationship with gambling,” Olesen said. “It is therefore important that we are able to help those who need help. 

“With our contribution to the Danish Gambling Committee, we want to take our share of the responsibility and support the development of better and more effective forms of prevention and treatment of gambling addiction.”

Kate Jacquerot, legal director responsible for responsible gaming at Danske Spil, added: “We want to contribute to creating a safe and secure gambling market in Denmark, and we are happy to support the Danish Gambling Committee, where new independent research can play a key role in creating knowledge about how we best prevent and take care of gamblers who show signs of addiction.”

Following the publication of the AGS Q1 report, the company has now achieved nine consecutive quarters of record revenue results.

AGS president and chief executive officer David Lopez hailed the result as a consequence of prior investment in the company bearing fruit. In a statement he emphasised the core strengths of the business:

“Our record-setting first quarter revenue and adjusted EBITDA performance is yet another testament to the way in which the strategic investments we have made in our people and products over the past several years have strengthened the underlying resiliency and vibrancy of our business,” he said.

“Supported by what I view as the strongest team and most compelling new product lineup in AGS’s history, I am extremely excited about what lies ahead for the company and our shareholders.”

PlayAGS attempts to deleverage debt burden

With a majority of the company’s revenue originating from its electronic gaming machine (EGM) business, AGS took on significant debt during the course of the Covid-19 pandemic.

The supplier has previously said that deleveraging its debt – which stood at $569.9m as of 31 March – is the company’s top priority.

AGS chief financial officer Kimo Akiona said that the organisation was “singularly focused” on optimising its operating and capital deployment efficiency to de-lever its balance sheet.

“Supported by our strong first quarter financial performance, the growing demand for our high-performing for-sale products, and the relative stability observed across our recurring revenue operations, we remain confident in our ability to exit 2023 with net leverage inside of our targeted 3.25 times to 3.75 times range, with an intermediate-term focus on returning net leverage inside of 3.0 times,” he said.

Interest payment push AGS into loss in Q1

Total revenue increased to a record $83.2m for the three-month period ending 31 March, a 14% rise from the $72.9m AGS achieved in the same period the previous year.

Breaking this down, AGS’s EGM division drove much of the growth, with revenue increasing 14.4% to $76.6m from the $66.9m the business recorded the previous year.

The company’s Table Products segment also reported a significant rise in revenue, with the business announcing a 17.6% increase in revenue to $4.1m.

However, revenue sourced from AGS’s Interactive products experienced a comparatively modest increase, rising 2.1% to $2.5m.    

The business’s operating expenses did not experience much significant change, rising to $71.4m compared to the $67.1m the business announced in Q1 2022.

As a result, the business announced a net income of $11.7m for the quarter. However, due to the company’s ongoing debt burden, AGS’s interest expense stood at $13.7m for the period.

After receiving a $1.2m tax benefit on top of its pre-tax loss of $1.5m, the company announced a total net loss for the three-month period of $334,000.

The ITIA ruled Crepatte was involved in the fixing of three matches and noted a total of seven breaches of the TACP, including contriving the outcome or any other aspect of two events, directly or indirectly facilitating tennis betting, and failing to report corrupt approaches to the ITIA.

Crepatte, who reached a career-high ATP singles ranking of 276 in August 2019, will serve a three-year ban until 19 April 2026 and also pay a fine of $15,000 (£11,902/€13,664).

Crepatte, who contested the charges, will be prohibited from playing in, coaching at, or attending any tennis event authorised or sanctioned by the governing bodies of tennis for the duration of the ban.

Specific charges issued by the ITIA included Section D.1.b of the TACP, which states players must not, directly or indirectly, solicit or facilitate any other person to bet on the outcome or any other aspect of an event or any other tennis competition.

The ITIA also highlighted Section D.1.d, where covered personnel must not contrive or attempt to contrive the outcome or any other aspect of any event.

In addition, Crepatte was found in breach of Section D.2.a.i, which requires players and other personnel to report any approaches of match-fixing to the relevant body as soon as possible. 

The case was the latest in a series of investigations pursued by the ITIA in conjunction with law enforcement investigations in Belgium, which has seen a number of players implicated in match-fixing incidents.

In March, detectives of the Economic Security Bureau of Ukraine (ESBU) announced that it had exposed a criminal conspiracy involving officials of Ibox Bank, more than 20 subsidiaries controlled by the bank and a number of gambling operators.

The economic agency accused the participants in the scheme of working to evade taxes, highlighting more than UAH 400m(£8.53m/€9.81m/$10.77m) that the ESBU claimed was owed to the state.

The scheme involved the use of unlicensed online casino and sports betting offerings that were set up to accept payments using “miscoding” and bank transfers. Miscoding refers to the practice of entering in incorrect category details when inputting the payment to deliberately obscure the source of the funds.  

In order to top up the accounts created on the sites, users needed to physically deposit cash through a network of self-service terminals. Afterwards, the gaming businesses credited the money to their current accounts, even in cases where the figures did not match the business’s previously stated revenue.

Over the course of the criminal scheme, the ESBU said that almost UAH 20bn passed through Ibox’s accounts, amounting to UAH 400m in unpaid taxes.

KRAIL decides to cancel Ibox’s licence to offer games of chance

Following the investigation, KRAIL opted to cancel Ibox’s licence to offer gambling services. Following this, the bank sued regulator, arguing that the licence cancellation caused reputational damage to the organisation.

In a 3 May decision, the court disagreed and sided with the regulator. The Supreme Court’s resolution stated that the adoption of a decision to cancel the licence for the provision of gambling services “cannot in any way cause reputational losses to the plaintiff” given that the provision of services in the field of gambling is not related to Ibox’s activities as a banking institution.

“In itself, the fact that the defendant made decisions that concern the rights and interests of the plaintiff and limit his activities cannot automatically indicate that such decisions are obviously illegal and the failure to take measures to ensure the claim can significantly complicate the execution of the court decision, and the fact of violation of rights and interests the plaintiff is subject to proof in accordance with the procedure established by law,” said the court.

“Also, the plaintiff has not proven the inevitability of the consequences of the defendant’s adoption of any decisions regarding him and the impossibility of challenging them in the future.”

Full House experienced growth within its core Midwest and South segment during the three months to March 31, but posted declines across both its West and Contracted Sports Betting businesses.

However, chief executive and president Daniel Lee was upbeat about the performance in Q1, singling out a number of developments that he said will help drive further revenue growth in the long run.

Read the full story on iGB North America.

Player spending in the month amounted to $1.54bn, which was 10.8% higher than $1.39bn in April 2022 but 14.0% behind the $1.79bn wagered in March of this year.

Gross gaming revenue followed a similar pattern, with the $138.8m generated in April being 33.3% up from $104.1m in the same month last year, but 14.7% lower than $162.8m in March.

Read the full story on iGB North America.

Vince Sadusky, CEO of IGT, said that the quarter had “exceeded expectations” for IGT, and helped to affirm its full-year outlook.

“Our first quarter results exceeded expectations and put us firmly on track to achieve our full-year outlook,” said Sadusky.

He added that the quarter’s success was fuelled by performances in IGT’s Global Lottery, Global Gaming and PlayDigital segments.

While revenue for Global Lottery fell by 8.2% to $624m, revenues for Global Gaming and PlayDigital shot up by 17.2% and 17.0% respectively.

“Compelling innovation and sustained strength in customer and player demand are fueling momentum across our Global Lottery, Global Gaming, and PlayDigital segments,” continued Sadusky. “This is clear in the excellent key performance indicators achieved in the quarter.”

IGT said that Global Lottery revenue fell due to the sale of IGT’s Italian commercial services business.

First quarter results

Revenue for the Global Gaming segment hit $381m, while revenue for PlayDigital topped $55m.

By location, the US and Canada generated revenue of $666m, up by 11.4%, while revenue in Italy dropped by 18.4%.

Service revenue made up a large chunk of this, at $846m, while product sales made up the remaining $215m.

Cost of services fell by 7.0% for the quarter to $398. Selling, research and development costs hit $217m, down by 12.4%, while cost of product sales was $127m – up by $5m year-on-year.

Research and development costs also crept up by $5m, to $62m.

In total, operating expenses came to $805m – up by 0.7% – leaving operating income at $255m, a slight rise of $3m.

Total non-operating expenses, consisting of interest expense, foreign exchange loss and other non-operating costs totaled at $101m, a rise of 44.3%.

The income before provision for income taxes was $155m. Following provision for income taxes at $87m, net income for the quarter totaled at $67m, a rise of 42.7% yearly.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) was $449m for the year, a rise of 3.7%.

Q2 outlook

IGT made projections for the second quarter of 2023, with expectations of $1.0bn in revenue and an operating income margin of 22%-24%.

For the full-year, revenue is expected to lie between $4.1bn and $4.3bn, with cash from operations expected to hit between $900m and $1bn.

The operator reported “strong” growth across all of its segments, but singled out Casino & Resorts in particular, with revenue within this area of the business reaching a new record-high.

Bally’s also hailed progress within its North America Interactive segment, while adding that the recent deal with Kambi Group and White Hat Gaming, under which the two providers will power its sports betting offering, will help support long-term growth.

Read the full story on iGB North America.

In the company’s Q1 report, Genius highlighted the performance compared to its guidance made during the three-month period ending 31 March.

The provider reported adjusted earnings before interest, tax, depreciation or amortisation (EBITDA) of $8.0m, a 166.7% increase compared to the $3.0m expected by the business.

The group also saw its net loss fall 37.4% from the $40.2m recorded by Genius in Q1 2022 to $25.2m. Genius made a loss before taxes of $24.8m, and faced an income tax $648,000.

Genius co-founder and CEO Mark Locke said following a year of strong execution in 2022, the business was “pleased” to continue its momentum in 2023.

“2023 is the year in which Genius expects to significantly accelerate group adjusted EBITDA profitability and rapidly expand margins,” he said. “Our first quarter results demonstrate the operating leverage of our business model, built to benefit from positive industry trends and support sustainable, profitable growth.

“As a result, I have a greater sense of confidence in our ability to achieve full-year financial targets beyond our initial expectations, leading us to raise our 2023 outlook.”

New customer acquisition drives betting growth

In Q1 2023, Genius achieved $97.2m in revenue, a 13.2% rise from the $85.9m the company reported the same period the previous year. This compares to the $92.0m the company forecast in its first quarter guidance.

The business’s Betting Technology, Content & Services division entirely drove the increased revenue, with the segment rising 30.2% to $64.7m versus the $49.7m reported in 2022.

The company’s other two verticals – Media Technology, Content & Services and Sports Technology & Services – both experienced revenue declines. Genius’s media business declined 9.8% from $24.1m, while its Sports segment fell a further 11.2% to $10.7m as opposed to the $12.1m the company reported in the same period the previous year.

The organisation said the increased revenue for its Betting segment was a result of the impact of both new customer acquisitions and growth among existing customers. Genius said that this was due to price hikes on contract renewals and renegotiations.

Meanwhile, lower advertising spends relative to Q1 2022 and the impacts of non-cash consideration contracts caused the respective declines in the business’s Media and Sports verticals.    

Reduction in costs and expenses

Genius’s report outlined wide reductions in the business’s operating expenses, which fell 34.3% from $49.6m in Q1 2022, to 32.6m in the first three-months of the year.

During the period, the business reported that its sales and marketing expenses fell from $9.2m to $7.4m. This reduction was mirrored in its declines for research and development which fell from $7.4m to $6.3m in 2023.

The business also reported that its general and administrative costs fell 44.8% from $32.8m to $18.1m. The company’s transaction expenses were the only costs which rose during the period, rising from $128,000 to $828,000 in the first quarter of 2023.