Month: August 2023

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The DGE filed several complaints against Fox Bet, the sports betting joint venture between Flutter Entertainment and Fox Corporation, for violating the ban on betting on college teams based in the state.

Offences stretch back to 2021, starting with the NCAA basketball game between New Jersey’s Rutgers University and Northwestern University on 13 February 2021. Markets on another game featuring Monmouth University in November that year were also spotted by the regulator.

Fox Bet then admitted two further breaches, for games involving Fairleigh Dickinson and Seton Hall University, in December 2021 and January 2022 respectively.

This amounts to a breach of the New Jersey Casino Control Act, DGE executive director David Rebuck said, ordering the business to pay $80,000 to settle the case.

News of the penalty comes after it was revealed last month that Fox Bet is shutting down. The site stopped taking bets in New Jersey at the end of July and will go offline from 31 August.

Revenue for the affiliate decreased by 16% in a period where it also announced long-term media partnerships, appointed a new interim CFO and published new financial targets for the next two years.

Catena CEO Michael Daly said the affiliate’s Q2 was a “quarter of further evolution” as it transitions itself towards becoming a net cash-positive business operating in North America.

Daly also believes that the performance was impacted by a “backdrop of reduced marketing spend by betting operators in North America”. He added this also led to “dampened of search volume and levels of new depositing customers, particularly in sport”.

The CEO also cited seasonal factors with the “absence of a market launch similar to Ontario in 2022” and expects Q3 and Q4 to be stronger with increased sports betting activity. He also revealed that his team are preparing for the launch of licensed sports betting in Kentucky at the end of September that Catena “expect to deliver a moderate revenue boost this fall”.

Catena revenue down 16% in Q2

Catena’s 16% decrease year-on-year in revenue resulted in the affiliate earning €16.9m (£14.43m/$18.44m). This is down from the €20.1m the company was able to earn in the same period in 2022.

Within the company’s revenue, its operations in North America had a matching decrease of 16% from €14.9m to €12.5m. In this period, Catena announced a long-term partnership with Lee Enterprises to provide online sports betting and casino content.

Looking deeper at Catena’s revenue, the company saw its casino operations reduce to €10.5m representing a 20% decrease year-on-year from €13.1m. It also attracted fewer new depositing customers with this reducing by 9% to 44,660.

In terms of sport-based revenue, Catena also faced a reduction here with it managing to earn €6.4m. This is a 9% decrease year-on-year with the company posting a revenue of €7m in the same three-month period in 2022.

Adjusted EBITDA is down 60% from Q2 last year taking the revenue from €6.5m to €2.6m, while cash flow was down similarly by 52% to €8.8m.

Across the whole business, new depositing customers took a hit of 31% as the company attracted 49,770 down from 72,060 in Q2 of 2022.

Revenue down across all segments in H1

The group’s performance for the first half of the year closely follows its Q2 results, with revenue down 9% year-on-year to €55.6m. Revenue from North American operations is also down by 7% as Catena earned €41.5m.

Adjusted EBITDA took a smaller hit for the first half of the year than it did in Q2 with a 20% decrease of €22.7m, down from €28.4m Catena earned in 2022.

Similarly, cashflow fell by 16% to €23.2m and new depositing customers dropped by 19% to 147,115.

Breaking down the segments of Catena’s operations, revenue from casino-related activity was reduced by 12% and sports-based by 7%.

In this period, Catena announced that it was preparing for the 2024 North Carolina sports betting launch while also declaring in January that it saw record revenue from the launch of sports betting in Ohio.

Future direction

Despite the reduction in revenue, the company says that it remains committed to its strategic direction and financial targets as it aims to get North American revenue to $125m with adjusted EBITDA to exceed 50% by 2025.

The affiliate also expects to be net cash positive during the second half of 2023.

Catena Media recently agreed to sell its UK and Australian online sports betting brands to Moneta Communications for €6.0m, but this was announced in August which falls outside of its Q2 and H1 earnings.

Revenue from ATG’s core horse racing betting business fell 4.2% year-on-year to SEK1.01bn. However, the operator reported growth across both its sports betting and casino divisions.

This led to net gaming revenue edging up 1.1% to SEK1.34bn. Declines in agency operations and other activities meant total revenue remained flat compared to H1 2022.

ATG CEO: Cost control crucial for H2 growth

ATG reduced costs during the second quarter to counteract the impact of inflation. This, chief executive Hasse Lord Skarplöth said, helped to slow down earnings declines between Q1 and Q2.

Skarplöth added that while he expects ATG to post further growth in the second half of the year, this will only be achievable with ongoing cost control.

“In a period characterised by continued high inflation and weak exchange rate, we have managed to lower our other costs,” Skarplöth said. “This is an effect of hard prioritisation, consultant turnover and cost control.

“Overall, we have slowed down the loss of earnings between the first and second quarters. It is also pleasing that the number of customers is stable at 1.3 million. Satisfied customers are a prerequisite for increased growth when the economic arrows turn upwards in the future.

“Having said that, the current economic situation is still uncertain. The way forward for us is continued focus on long-term sustainable income, consultant turnover and cost control.”

Horse betting decline slows in Q2

Betting on horse racing remained by far ATG’s main source of revenue, but this area of the business posted another decline in Q2. However, the 4.2% drop was less steep than the 12.0% year-on-year decline reported for Q1.

In contrast, revenue from sports betting was up 18.5% at SEK170.0m, helped by ongoing development of the Big 9 pool game. Casino revenue also increased by 23.6% to SEK157.0m, with ATG noting an SEK61m slot machine win in April – the second largest in its history.

In terms of geographical performance, activities in Sweden generated SEK1.26bn in revenue in Q2, up 0.2% year-on-year. Revenue from Danish operations, via Ecosys, climbed 22.9% to SEK86.0m.

Net profit edges up at ATG

Turning to costs, gaming tax was level at SEK267.0m and while personnel costs increased 11.6% to SEK144.0m, ATG reduced other operating costs by 2.6% to SEK635.0m. 

After including an additional SEK16.0m in financial income, this resulted in a pre-tax profit of SEK443.0m. This was 3.5% ahead of SEK428.0m in the same period last year.

ATG paid SEK13.0m in income tax and also noted a negative foreign currency translation of SEK2.0m. As such, net profit for the quarter hit SEK428.0m, up 2.9% on last year.

Revenue and net profit fall in H1

Despite a positive second quarter, ATG reported declines during the first half. Revenue was down 3.1% to SEK2.91bn while net gaming revenue slipped 2.4% to SEK2.54bn.

Revenue from horse racing betting declined 7.9% to SEK1.86bn. In contrast, sports betting revenue increased 13.7% to SEK373.0m and casino revenue jumped 21.8% to SEK302.0m.

Cost-wise, personnel costs were higher, but gaming tax was lower and other operating costs were cut by 4.0%% to SEK1.24bn. ATG also noted SE20.0m in additional, financial income.

However, pre-tax profit fell 5.6% to SEK764.0m. Income tax payments reached SEK26.0m and ATG also reported SEK2.0m in negative foreign currency translation. As such, bottom-line net profit was SEK736.0m, down 6.1% year-on-year.

ATG welcome new chair in Q2

The second quarter also saw ATG appoint Peter Norman as its new chairman. Norman succeeds Bo Netz, who has left the ATG board after five years as chairman.

Formerly minister of financial markets in Sweden, Norman also previously spent time as chief executive of Seventh AP Fund and director of the Riksbank at Sveriges Riksbank.

The AML unit will enforce requirements such as customer verification, collecting documents and creating money laundering and terrorist financing risk assessments. It will also monitor operations, transactions and customers flagged as suspicious and share information with authorities in other countries.

The unit sits within the NRA. This is the department which assumed control of gambling regulation in 2020 after Bulgaria disbanded the State Commission on Gambling.

The AML unit’s launch follows Bulgaria’s national money laundering risk assessment in 2020, which flagged deficiencies across a number of sectors.

Bulgaria has worked on raising standards in the years since as it prepares to update the risk assessment.

Bulgaria faces pressure from international AML bodies

International organisations are monitoring deficiencies identified by that assessment.

For example, European Union AML body Moneyval picked out the gambling industry as a particular AML risk in a May 2022 report. High-levels of organised crime and corruption pose difficulties in light of the authorities’ lack of resources it warned.

Following the report, the Moneyval committee placed Bulgaria on its compliance enhancing procedures. This has the Council of Europe work with individual countries to rectify AML failings.

After a period of monitoring ended in June 2023, Bulgaria is now waiting to see whether it is included on the next grey list. The FATF has worked in tandem with its regional partners at Moneyval to help Bulgaria enhance its AML framework.

If it is indeed listed then Bulgarian companies will face increased regulatory scrutiny and, in turn, higher compliance costs. There may also be additional controls or checks required to access financial and banking services.

Bulgaria will also have to take steps to enhance AML and counter-terrorist financing (CTF) controls for the task force to remove it.

The FATF will publish a new update of the grey list in October. Other industry jurisdictions such as Gibraltar and the Philippines are currently on the list, although the money laundering body removed Malta in 2022.

Total revenue for the first six months of 2023 rocketed 126.7% to HK$9.36bn (£934.2m/€1.09bn) compared to H1 2022 after Covid-19 restrictions finally eased in Macau.

Breaking this down by property, revenue at Grand Lisboa Palace – which was partially opened in 2021 – was HK$1.43bn. This consisted of HK$1.03bn in GGR and HK$396m in non-gaming revenue. Compared to Grand Lisboa’s performance in H1 2022, revenue grew HK$1.0bn.

SJM noted that during the half-year, Grand Lisboa Palace “continued to increase its market presence”. This involved holding a grand opening of its new hotel tower, The Karl Lagerfeld, as well as opening selected hotel rooms at the Palazzo Versace Macau Hotel tower.

Revenue at Grand Lisboa – a separate entity from Grand Lisboa Palace – was HK$2.40bn. This was mostly made up of GGR, which totalled HK$2.26bn. Non-gaming revenue at the property was HK$137m.

In total, this was an increase of HK$1.62bn year-on-year.

Revenue from other self-promoted casinos – consisting of Jai Alai Hotel and Sofitel at Ponte 16 – totalled HK$2.20bn, up by 200.3%.

SJM’s satellite casinos brought in HK$3.80bn in casino revenue during the quarter. In total, SJM operated nine smaller venues during H1.

Net gaming revenue for the period totalled HK$8.69bn for the six months, a significant improvement of 128.2%. This was generated by SJM subsidiary SJM Resorts.

H1 loss improves despite increased marketing costs

The total loss for the six months came to HK$1.19bn, an improvement of HK$1.56bn year-on-year.

Looking at how this loss came to be, SJM paid HK$3.67bn in special gaming tax. But it was operating and administrative expenses that affected the total most, coming to HK$4.32bn, the highest expense of the half-year.

Marketing and promotional expenses hit $1.56bn. This was a significant increase from the HK$222.6m loss generated in H1 2022.

This could be due to SJM’s increased focus on marketing, relating particularly to the Grand Lisboa Palace property.

Finance costs were HK$810.6m, an increase of HK$412.6m yearly.

The expenses were offset slightly by income relating to hotel, catering, retail and leasing, which totalled HK$666.5m. This was accompanied by other income at HK$102.7m, as well as share of joint venture profits at HK$4.2m.

Macau still seeing signs of recovery

SJM’s performance is indicative of Macau’s recovery from the Covid-19 pandemic.

In its H1 report, SJM noted that visitation had showed a “robust” recovery during the first half of the year, after “three years of severely inhibited travel”. SJM cited figures from the Macau SAR Statistics and Census Service, which showed that visitor arrivals expanded by 236.1% year-on-year.

In July – just after the quarter’s end – GGR in Macau hit a post-pandemic peak of MOP16.66bn.

First six months as a new concessionaire

H1 2023 is also the first half-year period since SJM was selected as one of the operators to receive a concession from Macau’s government. The concessions allow the chosen operators to offer gambling in Macau until 31 December 2032.

SJM received its concession in November 2022, joining MGM Resorts, Galaxy Entertainment Group, Las Vegas Sands, Melco Resorts and Wynn Resorts International.

As part of the process, SJM committed MOP14.03bn to Macau over the decade-long concession. In total, MOP12.0bn will go to non-gaming ventures.

During the half-year, SJM saw a significant change in leadership with the departure of Dr So Shu Fair from the role of CEO, executive director and vice-chairman of SJM in April.

SJM is still currently on the hunt for a replacement. It is currently led by chair Daisy Ho as executive director.

“We have begun our programme of non-gaming events and investments under the new concession and continued the ramp-up of Grand Lisboa Palace Resort,” said Ho. “As Macau recovers steadily from the pandemic, we are facing the future with optimism.”

The total amount wagered in July was 7.6% lower than wagers in July 2022 and also 4.0% less than in June this year.

Players spent $24.6m playing online video lottery games and a further $11.8m on internet table games.

Online casino revenue amounted to $1.2m in July. This was 5.6% behind July last year but 7.3% higher than June 2023.

Video lottery games generated $915,640 in revenue and table games $221,187. The other $44,861 came from poker rake and fees.

Delaware Park took top spot in the igaming market with $475,192 in revenue from $16.9m in bets. Bally’s Dover was second on $363,047 from $9.8m, then Harrington Raceway with $343,449 from $9.7m.

Sports betting revenue and wagers down

Looking at sports betting, monthly handle for the market reached $2.3m. This was down 14.8% from $2.7m last year and 23.3% behind June’s $3.0m.

Sports wagering revenue amounted to $283,025, down 26.2% year-on-year but 298.5% ahead of $71,029 in June.

Delaware Park also led this market with $112,884 in revenue from a $1.0m handle. Bally’s Dover was second with $65,565 off $566,259, ahead of Harrington on $18,446 from $170,085.

An additional $77,627 in revenue came from $514,021 in bets placed with retailers.

Rush Street Interactive to power Delaware Lottery’s igaming offering

Last week, it was announced that Rush Street Interactive (RSI), the remaining bidder for the contract to power the Delaware State Lottery’s igaming offering, had been selected as the state’s vendor.

RSI will provide its igaming solution for an initial five-year term. This is renewable for five additional one-year terms, depending on regulatory approvals.

Certain reports suggested RSI and 888 Holdings had been competing for the tender. However, RSI was in fact the only remaining bidder for the contract, after 888 exited the process in May.

New York-based firm Lux Capital led the investment round into Novig, with participation from several prominent Silicon Valley venture capitalists.

These include famous start-up accelerator Y Combinator, the inventor of the Lisp programming language Paul Graham and Dropbox co-founder Arash Ferdowsi. Also investing is former San Francisco 49er quarterback Joe Montana.

Novig CEO Jacob Fortinsky said the business was “honoured” to have the support of the tech investors.

“Our vision is clear: to reshape the sports betting landscape that has long favored exploitation over innovation, and to usher in an era of integrity, transparency, and empowerment,” he added. “Together, we’re rewriting the rules and putting the power back in the hands of bettors.”

Novig plans October launch date

Novig completed the investment round ahead of the planned launch in its first US state – Colorado – this October.

For market access, Novig entered into a 10-year partnership with Full House Resorts and its Bronco Billy’s Casino property.

This follows the completion of the exchange’s beta test in Autumn 2022. This saw 200 users compete in a two-week long pre-launch trading tournament involving 15,500 orders in 1,290 markets.

Novig said the platform provides instant confirmation of live bets. The exchange also claimed its matching engine operates 100x faster than leaders in the industry.  

“We’ve been overwhelmed by the positive reception of our product from Novig’s first users and are excited to bring our product to regulated markets beginning this fall in Colorado,” said Fortinsky.

At launch players will be able to place both pre-game and in-game bets on the NFL, NBA and MLB. Novig said it will offer Moneyline, Point Spread, Game Totals and Team Futures bets.

The US sports betting exchange landscape

Novig is just the latest sports betting exchange to attempt to bring peer-to-peer betting mainstream in the US.

In April, New York-based Prophet Exchange announced it had received $10.0m in new funding. It said this was to support the growth of its tech offering. This followed its launch in August 2022.

New Zealand-based online prediction market PredictIt, which had previously been cleared to allow users to place bets on non-sporting events, lost its authorisation to do so in February 2023.

However, the world’s largest exchange, Flutter-owned Betfair, proved unsuccessful at breaking into the market.

In September 2020, after four years of operation, it decided to exit its only live market New Jersey due to low customer numbers.

As a peer-to-peer exchange, the operators need significant liquidity in order to be viable, a problem some exchanges have struggled with in ring-fenced US markets.    

Revenue for the affiliate increased by 39% in a period when it acquired Skycon Limited for £45m. The acquisition gave Better Collective access to the British company’s display advertising expertise as well as paid advertising on channels that include sports media.

Skycon’s integration was off to “great start” according to Better Collective CEO Jesper Søgaard. “By incorporating Skycon into our paid media division, we have unlocked new avenues for growth and expanded our offering to advertising partners.”

Søgaard paid credit to the company’s commercial team in North America where he’s “happy to see the further diversification of revenue streams in this region through sponsorship sales on products like our podcasts and YouTube shows”.

Looking ahead, he continued, Better Collective is “busy exploring AI-driven solutions, potential M&As, as well as ways to leverage its potential and mitigate risks.”

In explaining the company’s growth for Q2 Søgaard credited media partnerships and “a sports win margin above our expectations” on top of North America and Skycon aas key drivers.

Q2 growth across the board

Better Collective’s €78.1m record revenue for Q2 represented a 39% increase from 2022 where it earnt €56m in the same period.

The Copenhagen-based affiliate did also see its cost increase in Q2 as well with a 13% rise here taking the figure to €49.4m.

Operating profit before depreciation, amortisation and special items saw a 135% increase to €28.7m, up from the €12.2m it recorded last year.

Looking closer at the type of revenue, Better Collective recorded a 41% growth in publishing revenue taking it to €53.5m, while its paid media division grew its revenue by 37% to €24.6m.

Operating profit before depreciation, amortisation and special items however was far greater for paid media than publishing. Paid media saw this figure rise by 240% to €7.5m, whereas publishing had an 111% increase to €21.16m.

Better Collective’s strategy change in aiming to become the world’s leading digital sports media group has seen it develop multiple partnerships with traditional news outlets. This includes deals with Goal.com, as well as Nigerian outlet Punch along with Polish media company Wirtualna Polska.

Delving into the affiliate’s regional-based revenue, North American operations reported a larger growth with a 60% increase year-on-year to €22.9m from €14.3m. Europe and the rest of the world (ROW) in the same period saw a 32% rise to €55.2m.

Operating profit before depreciation, amortisation and special items for Europe and ROW did also see 64% growth, whereas North American operations only rose by 1.2%.

Strong H1 powered by publishing arm

Better Collective also posted growth for its financials across the first half of the year as its revenue grew by 35% compared to 2022. It earnt €166m up from the previous year’s €123.4m in the same six-month period.

Operating profit before depreciation, amortisation and special items for H1 grew by 75% taking the total to €62m. This figure for paid media similar to its Q2 metric saw a 203% increase to €15.4m, while publishing recorded a 54% rise.

In terms of revenue split, publishing accounted for €112.8m with a 30% growth and paid media saw a 44% rise to €53.3m.

Europe and the rest of the world increased H1 revenue by 36% to €106m, whereas North America in the same six months grew its revenue by 32% to €60m.

Better Collective also reported a net profit after tax of €29.2m along with a cash flow before special items of €67.6m from €35.6m , representing a 90% increase.

Upgraded targets

In June, Better Collective upgraded its 2023 financial targets to a revenue figure between €315m and €325m, up from €305m to €315m. It also raised its EBITDA target to €105m to €115m, shifting the figure up by €10m on each side.

Søgaard said on the upgrade he’s “happy with the operational leverage we have seen in our business as we continuously invest in the future.”

The $250m deal allows Churchill Downs to realise significant and immediate synergies, the operator explained.

Its tracks in Virginia, Colonial Downs and Rosie’s Gaming Emporium, already house Exacta historical racing machines. This means it takes charge of the full value chain.

More historical horse racing machines (HHRMs) will be rolled out across its other properties.

Churchill Downs flexes B2B muscle through acquisition

Exacta will fold into CDI’s B2B subsidiary TwinSpires, providing content to its current third-party clients in Kentucky, Wyoming and New Hampshire.

This arm, formerly CDI’s operating business repurposed as a B2B proposition, already powers DraftKings’ horse racing app DK Horse.