Month: August 2023

Felix, who began a period of medical leave in July, has agreed with the board that she will step down from her position as chief executive and director of the company immediately. She will cease employment with effect from 29 September.

The board has commenced a search process and expects to appoint a permanent chief executive in the coming months. In the meantime, Charlie Rozes will continue in his current role as acting chief executive and chief financial officer.

Mike McTighe, chair of IG Group said the company had improved its operations under Felix’s leadership.

“On behalf of the board, I would like to extend our best wishes to June as she continues her recovery,” he said. “We thank her for the significant contribution she has made over the past eight years as a board member and especially as group CEO for almost five years.”

“During her tenure as CEO the company has successfully pursued a strategy to diversify the business while at the same time strengthening its core OTC business resulting in a doubling of the group’s revenue and profit over the period.”

Five-year tenure as CEO

Felix was appointed as chief executive in October 2018, having served as a non-executive director from September 2015. She had previously held senior positions at Verifone, IBM and Citibank.

“It has been a great privilege to build and lead such a talented, ambitious group of people as the CEO of IG Group for nearly five years,” said Felix. “It has been through everyone’s collective effort that we have built a stronger, more diverse company. For this, I thank my executive team, all of my colleagues and the board of IG Group for an unforgettable period.”

In July, IG Group reported a year-on-year decline in net profit for its 2023 financial year despite posting record revenue.

Total revenue during the 12 months to 31 May was £1.02bn (€1.18bn/$1.32bn), up 5% on the previous year. This was also the fourth consecutive financial year of record revenue – and the first time IG Group exceeded £1.00bn in revenue.

The increase was due to a sharp rise in interest income, which rocketed from £800,000 in FY22 to €80.8m. IG Group said this was the result of higher interest rates in the market.

Mazij’s new position takes effect immediately. He is Bragg’s largest shareholder and founded Oryx Gaming, Bragg’s player account management, remote gaming server and aggregation platform.

Sherman spent just over a year in the role, having joined in June 2022. Before joining Bragg, he was SVP and head of US for 888.

Bragg said the new change in leadership took place following an evaluation by Bragg’s board. The evaluation assessed how best to align the “best interests” of Bragg and its shareholders.

Holly Gagnon, lead independent director of Bragg’s board lauded Sherman for his service and said the board would support further strategic initiatives executed by Bragg’s company.

“On behalf of the board of directors and the entire Bragg team, I would like to thank Yaniv for his leadership, commitment and contributions to the company,” said Gagnon.

“The board remains focused on supporting the company’s senior management team as they continue to execute on initiatives that drive profitable growth and the creation of new, sustainable shareholder value.”

Opportunities to expand presence in existing markets

As CEO, Mazij said he plans to initiate growth strategies for Bragg in its existing markets, including North America and Europe.

“Bragg possesses many opportunities to further grow our scale of operations across North America, Europe and evolving global regulated igaming markets,” said Mazij.

“I look forward to working with senior management and all of our team members to bring fresh perspectives that can amplify our ability to continue our successful execution of the growth strategies that we established following the acquisitions of Wild Streak Gaming and Spin Games in 2021 and 2022, respectively.”

Bragg acquired both Wild Streak Gaming and Spin Games in two separate $30m deals.

Copenhagen City Court ruled in favour of Spillemyndigheden in all 49 cases heard during a session last month.

The blocked websites mainly offer traditional casino games such as roulette, slot machines, poker and betting. In total, 13 of the blocked domains are skinbetting websites. None of the domains would be considered household names.

“It is a very important task for the Gambling Authority to ensure that Danes are not exposed to games that are offered illegally in Denmark and that do not comply with the requirements for, among other things, consumer protection laid down in gambling legislation,” said Anders Dorph, Spillemyndigheden’s director.

“At the same time, we must ensure that the game providers who have a licence to offer games in Denmark can operate in the Danish market without unreasonable competition from providers who do not have to meet Danish requirements.”

Ramping up blocking efforts

It is illegal to offer games in Denmark without a licence from the Gambling Authority. The same applies if a foreign provider targets the Danish market by using the Danish language or displaying the Danish currency.

A total of 276 illegal sites have been blocked since 2012. The gambling authority said that in the future it will block illegal websites twice a year rather than annually.

“We are constantly trying to optimise our efforts against illegal gambling and one of our newest measures is, among other things, to block illegal websites more often than before,” continued Dorph.

“This means that the illegal sites are active in Denmark for a shorter period, as the time from when we identify them to when they are blocked is shortened.”

Star Entertainment, which has faced a string of fines and penalties in recent years, announced $2.8bn of outgoings labelled “significant items” for the year to 30 June 2023.

This consisted of an AU$2.2bn non-cash impairment of the Sydney, Gold Coast and Treasury Brisbane goodwill and property assets. There were also regulatory and legal costs of AU$595m, debt restructuring costs of AU$54m, and redundancy costs of AU$16m.

Those costs, minus a positive and growing EBITDA of AU$317m, means an after tax loss of AU$2.4bn.

During the financial year, Star has faced a series of challenges relating to anti-money laundering and social responsibility failings. These were in the main due to connections to Chinese junket operators. These included a potential AUSTRAC fine, four class actions and two suspended state casino licences in New South Wales and Queensland.

Star Entertainment reeling after difficult year

Robbie Cooke, group chief executive and managing director at Star Entertainment, said: “To say it has been a challenging year completely understates the lived experience at the Star over the last 12 months.

“The consequences flowing from the damage to our social licence are felt daily by team members on multiple levels, reinforcing the critical need to understand the privilege and responsibility that comes with holding a casino licence.”

Cooke told investors in a call following the release of the results that the group is no longer considering the sale of its Sydney property after the NSW government recently decided to scale back a proposed tax hike.

Revenue rises after end of Covid controls

Star Entertainment’s gross revenue climbed 22% to AU$1.9bn for the 2023 financial year, a figure which Covid-19 restrictions affected last year.

Sydney revenue was up 26.5% year-on-year with EGMs up 30%, tables up 19% and nongaming revenue up 49%. Revenue was impacted by uplifted controls from mid-September 2022 increasing the number of excluded guests. It also faced increased competition from the nearby Crown Resorts property.

Star Entertainment’s Gold Coast revenue was up 20% year-on-year. This saw EGMs up 9%, tables up 7% and non-gaming revenue up 52%.

The Star Gold Coast started the year strongly benefiting from a surge in domestic tourism and consumer spending post-Covid along with a return in convention business.

Outband travel competes with domestic tourism

However this performance softened in H2 FY23 impacted by a rebound in outbound travel competing with domestic tourism. Uplifted controls resulted in an increased number of excluded guests.

Brisbane revenue was up 15% year-on-year with EGMs up 17%, tables up 8% and non-gaming revenue up 34%.

Star Entertainment reported that statutory EBITDA, excluding any significant items, grew slightly above previously announced guidance. The total of $317m was an increase of $79m.

Star waiting for outcome of AUSTRAC legal action

Star Entertainment is still waiting on the outcome of legal action launched by AUSTRAC for alleged breaches of anti-money laundering and counter-terrorism laws. It has provisioned for an AU$150 million penalty. Its rival, Crown Resorts, agreed to a $450m regulatory settlement.

CEO Cooke added: “As a team we are determined to earn back the trust and confidence of our community including our regulators, governments, shareholders, employees and guests.

“We fully understand the responsibility involved in holding our licences and are committed to transforming our leadership and culture. This journey has started and we know there is still a lot to be done.”

Cooke described remediation as Star Entertainment’s “No 1 priority” moving into the 2024 financial year. This will include significant uplift in resources in AML. A refresh of the senior executive team and board and an overhaul of all internal controls is also on the cards.

“We have commenced the uplift in our risk management, safer gambling and AML capability and are starting to embed greater accountability and more robust governance. We have invested in enhancing our control environments and are operationalising and embedding these controls.”

He added: “We are improving our financial crime management and our overall approach to harm minimisation.

“Our remediation programme will track and hold us accountable to the multi-year programme we are committed to delivering.”

During the half-year, Veikkaus said it was in favour of the introduction of a licensing model. The monopoly believes that this is the most effective way to channel consumers from unlicensed to licensed offerings.

“The most important thing is that more gambling can be channeled into licensed offerings than before and we think that the license system best supports this goal and the development of more responsible gambling,” said Veikkaus CEO, Olli Sarekoski, introducing the H1 report.

Sarekoski added that Veikkaus is “strategically prepared” to develop its business regardless of what gambling regulation system is in place.

“However, change requires renewal and development from both Veikkaus and the people of Veikkaus,” he said.

Veikkaus reports slight year-on-year revenue growth in H1   

For the six-month period ending 30 June, Veikkaus recorded €519.3m in revenue, a 1.0% increase from the €515.9m the company reported in the same period the previous year.

This includes its main B2C business. Veikkaus’ B2B subsidiary Fennica Gaming reported €300,000 in turnover for the six months. Fennica Gaming supplies online lottery products to operators in Europe.

Veikkaus’ online casino segment drove the increase, growing 9.4% to €93.2m in H1. The monopoly put this down to a series of successful game launches.

“Veikkaus’ result and performance during the first half of the year were as expected and we can be satisfied with these as a whole,” said CFO Regina Sippel. “The first half of the year was positive, especially in Veikkaus’ digital channel.”

Business sees rising costs on all fronts

Despite the increase in revenue, the business saw increased costs which ate into any potential rise in profits. All expenses rose compared to the previous year, but some costs grew faster than others.

In particular, the costs of the lottery tax rose 48.1% to €25.9m, from €17.5m. The company’s other business expenses category, which includes development costs, increased from €51.7m to €60.5m.

The costs of Veikkaus’ employee benefits rose a more modest 10.2% to €46.0m. Meanwhile, materials and services remained comparatively stable on €61.1m, up from €59.3m.

The company’s depreciation and amortisation costs also grew, from €16.5m to €17.1m.

Increased expenses eat into profits

After taking into account the increased costs, the business’ operating profit fell 6.2% to €310.2m from the €330.8m reported year-on-year.

Due to €1.7m received in financial investments, as well as factoring in just €21,700 in financial costs, the business reported a total profit of €311.9m. As a state-owned corporation, it did not pay tax on its profits.

Veikkaus optimistic about Fennica prospects

The operator highlighted the growth of Fennica during the period. The subsidiary – which was launched in May 2022 – reported €300,000 in revenue for the period, leading to a €3.4m loss. Veikkaus said this was in line with expectations.

Fennica managing director Timo Kiiskinen highlighted the business’ products.

“Fennica Gaming’s corporate clients have been very satisfied with the quality of games developed by Veikkaus and the modern technology and reliability of the game engine and platform,” he said.

End of Finnish monopoly

The Finnish government currently plans to end Veikkaus’ gambling monopoly by 2026 as part of a bid to increase the country’s channelisation rate, which is low compared to peer countries.

Under the planned new system, private companies would be able to apply for a licence to offer sports betting and online casino.

The government said it plans to divide Veikkaus into a number of separate companies within the same group. This would reverse a 2017 merger between betting brand Veikkaus, slot business Raha-automaattiyhdistys and horse race betting operator Fintoto.

The government intends to establish a national self-exclusion system, empower the regulator with sufficient resources and put in place new measures to combat money laundering and sports integrity.

The government released a report in April, which argued the current system needed to be updated. It said this could either be achieved by the introduction of a licensing model or through the strengthening of the gambling monopoly.

Shareholders at an EGM voted in favour of proposals to distribute sale proceeds and the majority of corporate cash reserves. The money will be distributed in two tranches following the completion of the US$225m sale, which was agreed in June.

Melbourne-headquartered PointsBet said the first tranche of approximately AU$315m will be distributed soon after the initial completion. That is expected to come in mid-September.

The second capital return is expected to be between AU$125m and AU$143m and is intended to be implemented soon after the subsequent completion. This is anticipated to be around March 2024.

PointsBet said in a statement: “Following the sale of the US business, the funding requirements of the company’s remaining assets will be fundamentally different to the status quo.

“Accordingly, PointsBet intends to distribute to shareholders the net sale proceeds (after applicable taxes and transaction costs) together with the majority of the company’s corporate cash reserves that will be surplus to the needs of the remaining business.”

US accounted for 50% of revenue

The US accounted for around 50% of PointsBet’s revenue and 40% of total net win during the first half of 2023. US operations contributed $1.6bn of the group’s total $3.2bn in the six months to 31 December 2022.

PointsBet said earlier this year that its Australian and Canadian businesses would be around break-even on a stand-alone basis.

PointsBet agreed to sell its US operation to Fanatics after the sports retail giant outbid DraftKings.

Fanatics’ FBG initially reached an agreement with PointsBet for its US business in May for $150.0m. However, in June, DraftKings submitted a higher proposal worth $195.0m. PointsBet said it would engage with DraftKings over what it said could be a “superior” proposal.

Upon confirmation of the improved FBG offer, DraftKings announced that it would no longer pursue a deal.

The UN report said victims of these human trafficking operations in South East Asia – which generate billions of US dollars each year – face serious violations and abuses.

These include threats to their safety and security. Many have already been subjected to torture, arbitrary detention, sexual violence, forced labour and other human rights abuses.  

The UN said “credible sources” indicate criminal actors force at least 120,000 people across Myanmar to take part in online criminal behaviour, including illegal gambling.

The international organisation added estimates for Cambodia stand at around 100,000. Tens of thousands more are trafficked in Laos, the Philippines and Thailand.

“People who are coerced into working in these scamming operations endure inhumane treatment while being forced to carry out crimes,” said UN High Commissioner for Human Rights, Volker Türk. “They are victims. They are not criminals.”

Covid-19 impact on criminal networks

The UN added the Covid-19 pandemic and its response by governments in region had a “drastic impact” on human trafficking operations in South East Asia.

As a result of public health measures, governments closed casinos throughout the region. This led to casino operators moving their activities to less regulated areas. These include near conflict borders, Special Economic Zones and online.

According to the UN, this has led to criminal networks increasingly targeting migrants in vulnerable situations for recruitment.

Demographics of trafficked individuals

Most people trafficked into these unlawful activities are men, although the UN noted women and adolescents also count among the victims. The victims also tend to not be citizens of the country where the trafficking takes place.

The UN highlighted that many of the individuals are well-educated, often possessing graduate and post-graduate degrees. This is because criminals target many for being computer-literate and multi-lingual.

The victims of human trafficking come from across South East Asia, including Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore Thailand and Vietnam.

However, some originate from further afield, with the UN pointing out that people from mainland China, Hong Kong, Taiwan, South Asia and even Africa and Latin America count among the victims.

Involvement of POGOs

The report highlighted many Philippines Offshore Gambling Operations (POGOs) play a significant role in the crimes committed.

President Rodrigo Duterte legalised these operations in 2016. However, regulatory gaps mean many aspects of their activities lie outside of the law.

The UN points to a 2020 Philippines Department of Finance report which estimated more than 230 POGOs were active in the country. This is despite only 60 having licences, while only 10 actually paid taxes.

The country’s gambling regulator Pagcor has cracked down on illicit activities in this sector in a series of raids.

The Philippines government has linked POGOs to offenses including kidnapping, detention of migrant workers, as well as financial crimes.

Human trafficking framework falls short in SE Asia 

The UN report said governments have failed across the region to effectively counter the human trafficking threat.

It said despite the existence of legal and policy frameworks in this area, they often “fall short of international standards”.

The UN added implementations have failed to address to the changing environment. Governments are also ill-equipped to deal with the sophistication of online criminal enterprises.

Additionally, governments often identify human trafficking victims as criminals or immigration offenders. This means they do not receive the rehabilitation and support they need. Governments also subject many to criminal prosecution.

“All affected states need to summon the political will to strengthen human rights and improve governance and the rule of law, including through serious and sustained efforts to tackle corruption,” said Türk. “This must be as much a part of the response to these scams as a robust criminal justice response.

“Only such a holistic approach can break the cycle of impunity and ensure protection and justice for the people who have been so horrifically abused.”

Dugher, the chief executive of the Betting and Gaming Council (BGC), cited Samaritans advice that “suicide is complex” when giving evidence to the Culture, Media and Sport Select Committee on gambling last month.

The Committee was questioning Dugher on the dangers of addictive gambling products when the suicide of Luke Ashton was raised.

The Samaritans does claim there “is usually a combination of lots of different factors”. However, in the Ashton case a coroner had concluded that a “gambling disorder” was one of two causes of death. Dugher did acknowledge this during his appearance in front of the Committee.

Responding to the Samaritans complaint, the BGC has denied that Dugher attempted to “manipulate guidance”, describing the accusations as “a smear”.

Charity lays out its concerns

Samaritans has written to both Dugher and Dame Caroline Dinenage MP to set out its concerns. Dinenage is chair of the Culture, Media and Sport Select Committee.

“I am appalled that someone would attempt to twist Samaritans’ words in an effort to deflect from the devastating harm that gambling products can cause,” said Julie Bentley, chief executive of Samaritans.

“This kind of diversionary tactic is reminiscent of what we saw from the tobacco lobby and it would seem the gambling industry is now taking a similar approach.

“Our position is that that the reasons behind suicide are complex but there is an established link between gambling-related harms and suicide risk and it has more recently been recognised that gambling can be a dominant factor in a suicide, without which the death would not occur.

“Any attempt to deny this by misusing the words of a suicide prevention charity is nothing short of disgraceful.”

Undiagnosed gambling disorder

In response to Samaritans’ accusations, a BGC spokesperson said: “Neither Michael Dugher, nor the BGC, has ever sought to manipulate guidance supplied by the Samaritans while discussing the tragedy of suicide. To suggest otherwise is a smear. 

“Michael quoted directly – word-for-word – from the Samaritans’ own public guidance on the reporting of suicide. He did not interpret it or pass comment upon it. Furthermore, Michael was clear in his evidence that whilst recognising suicide cases are complex, he understood and acknowledged the full findings of the coroner in the tragic case of Mr Ashton, including specifically that Mr Ashton was suffering with an undiagnosed Gambling Disorder, a recognised psychiatric condition, and that the coroner had highlighted a failure of the systems used by the operator at that time.”

Samaritans work on gambling harms and suicide

Samaritans is currently undertaking a programme of work around suicide and gambling-related harms.

In a publication entitled “Suicide facts for journalists and programme makers”, Samaritans says: “Suicide is complex and most of the time there isn’t one event or factor that leads someone to take their own life. It is usually a combination of lots of different factors interacting with each other to increase risk. A combination of individual, community and societal factors contribute to the risk of suicide.”

In her letters to Dugher and Dinenage, dated 17 August, Bentley said she was “concerned that Samaritans’ messaging around talking about suicide responsibly is being deliberately used to evade recognition of the established link between gambling and suicide risk”.

Dugher diectly addressed the coroner’s findings concerning Mr Ashton’s suicide when stating his evidence to the Committee last month.

“The first thing I would say is that, like all of us, I found it desperately sad to read that and to read what had happened,” he said.

“It did say that he had an undiagnosed gambling disorder, that he had discussed his problem gambling with his wife as far back as 2019, and that he clearly was suffering from what the NHS calls gambling disorder—a recognised psychiatric condition. It said that he had never been diagnosed. He had never sought help, which I thought was tragic as well and goes back to the conversation we talked about signposting the help that is out there.

“I think, to get to the heart of your question, it also talked about the failure of the system and the operator in relation to his gambling, particularly in the 10 weeks before.”

Addressing link between gambling and suicide

Bentley said she is hopeful the gambling white paper can address the link between addiction and suicide. “There is nevertheless room for BGC members to increase safety in the here and now, well in advance of any future regulatory requirements,” she added.

Gambling with Lives, a charity set up by families bereaved by gambling-related suicide, said it is backing Samaritans in its complaint.

“Michael Dugher’s cynical manipulation of Samaritans’ position on suicide is a barefaced attempt to hide the gambling industry’s role in hundreds of deaths a year,” said Will Prochaska, strategy director of Gambling with Lives.

“We commend Samaritans for standing alongside families bereaved by gambling related suicide in calling it out.”

AGCO has updated rules to prohibit the use of athletes in marketing in the Canadian province. The Registrar’s Standards for Internet Gaming have also been extended to restrict the use of celebrities who might appeal to minors.

AGCO made the change after it identified the potential harm to those under the legal gaming age.

The amended standards will prohibit registered igaming operators in Ontario from featuring active or retired athletes. However, they will be able to feature in campaigns with the exclusive purpose of advocating for responsible gambling practices.

“Children and youth are heavily influenced by the athletes and celebrities they look up to,” said Tom Mungham, registrar and chief executive at AGCO. “We’re therefore increasing measures to protect Ontario’s youth by disallowing the use of these influential figures to promote online betting in Ontario.”

Safeguarding children and youth

AGCO said it reviewed its rules following the first year of Ontario’s regulated igaming market. It said it identified approaches that use individuals with an appeal to minors as a potential harm.

AGCO held consultations on its proposal to ban such ads and received submissions from stakeholders in April 2023. These included mental health and public health organisations, responsible gambling experts, gaming operators and the public.

The body has now determined that prohibiting the use of athletes and restricting celebrity endorsements would help to safeguard children and youth.

The amended standards also restrict the use of any role models and symbols that might appeal to minors. AGCO said this broadens the standard that previously prohibited the use of content with a “primary appeal to minors”.

National Lottery operations costs totalled at £2.4m, £178,000 less year-on-year. Meanwhile, National Lottery Competition costs came to £19.1m, down from £23.6m from the previous year.

During the financial year, the process to find the fourth National Lottery licence holder came to an end. The licence was awarded by the Commission to Allwyn Entertainment in September 2022, halting former licence holder Camelot’s tenure in its tracks.

A legal battle over the licence process was launched by Camelot after Allwyn was named as the preferred applicant in March 2022. This was withdrawn the following September.

Total fines and regulatory settlements

During the year, operators paid £20.9m ($26.2m/€24.3m) in fines. A total of £39.2m in regulatory settlements was also paid, bringing the total to £60.1m.

The year saw the largest regulatory settlement ever recorded issued to William Hill Group, amounting to £19.2m. The second-highest regulatory settlement was also recorded during the year, against Entain for £17.0m.

A total of 24 operators saw enforcement action during the period. Five operating licences and one personal management licence were also suspended.

Increased remuneration for Rhodes

Also noted in the report is the remuneration paid towards the Commission’s senior managers, including CEO Andrew Rhodes. Rhodes was paid between £255,000 and £260,000 for the financial year.

When focusing on the higher end of that scale, this would be an increase of 48.5% approximately year-on-year.

The Commission’s financial year ended weeks before the Gambling Act Review white paper was finally released, instigating a new era for gambling regulation in the UK. Following its release, Tim Miller, executive director for research and policy at the Commission, said the regulator would have “very little space” to consider non-white paper related policies in the years to come.

In the full-year report, the Commission noted that the white paper’s impact on the industry remains to be seen.

“The medium to long-term impact of the Gambling Act Review white paper on the industry is not yet clear, but we will continue to review this and the potential impact on our future income,” it read.

Income shoots up year-on-year

The report analyses the Commission’s performance over the year, as well as operator statistics and financial results.

The Commission recorded £26.0m in income from fees and other sources for the year, up by 28.8%.

This consists of £22.8m in operator annual licence fees, £2.0m in operator application fee income, £760,000 in fees for personal licences and £390,000 in miscellaneous income.

Expenditure declines 9.3%

Turning to costs other expenditure added up to £20.9m for the year. This consisted of various costs, including professional fees, research costs and external legal fees. Staff costs totalled at £19.0m.

The remaining costs were made up of interest on pensions liability, depreciation and amortisation and final lease depreciation. In total, costs for the quarter were £40.9m, a fall of 9.3%.

After considering expenditures, the net expenditure for the year totalled at £14.8m, an improvement on the £24.9m net expenditure recorded in 2021-22.

Interest and finance costs resulted in a positive contribution of £340,000. After considering other comprehensive expenditure, which was £23,000, the net expenditure for the year was £14.4m. This was an improvement of £10.5m yearly.