Month: January 2024

In her new role, Campbell will oversee activities at Star Sydney the second largest casino in Australia. 

Campbell brings more than two decades of experience in the casino industry. She was most recently senior vice president for finance in Macau at Melco Crown Entertainment.

Prior to this, she was chief financial officer at Oaks Hotels and Resorts. Campbell also worked in several senior finance roles at Conrad Jupiters and Treasury Casinos Queensland.

Prior to joining the sector, Campbell was financial controller at Conrad Treasury in Brisbane.

“I am excited to be joining Star at a pivotal moment in the company’s history,” Campbell said. “I’ll help shape the future for a venue that has been an iconic Sydney destination for almost 30 years.

“I am clear on the strategic priorities, including the urgent focus on ensuring remediation actions drive a return to suitability and the removal of the existing licence suspension. In parallel we need to ensure that building the trust and confidence of our regulators, guests, team members, other stakeholders and the broader community is always front of mind while building a culture of high-performance excellence.

“We want to be known for delivering world-class experiences. I’m looking forward to Star Sydney shaping a successful future of sustainable long-term growth.”

Star group CEO and managing director Robbie Cooke added: “I’m delighted to welcome Janelle to the team as part of our organisational restructure. Janelle is a highly regarded, very experienced and extremely talented senior casino executive.

“I look forward to working with Janelle on our ongoing transformation program at Star Sydney as we pursue our objective of returning our Sydney casino to suitability.”

Latest CEO hire completes organisational restructure phase

The appointment of Campbell completes the recruitment of CEOs for Star destinations in Sydney, Gold Coast and Brisbane. Star has been creating property-based operational business units, covering locations in Brisbane, the Gold Coast and Sydney.

This week, Star also announced Daniel Finch as CEO of its Brisbane operations. This came after Jess Mellor was promoted to lead the Gold Coast. All regional CEOs will report directly to Cooke.

The new regional CEOs will support efforts by Star to demonstrate it is fit to operate its land-based casinos in Queensland. Star was sanctioned in Queensland in December 2022 over a series of failings and told its licence would be suspended.

The group was found “unsuitable” to hold a licence in Queensland. This followed an inquiry into its operations at Star Gold Coast and Treasury Brisbane. 

Star was given 12 months to resolve these issues, with a deadline on 1 December 2023. However, ahead of this date, Star was handed an additional six months to bring operations in line with the demands of regulators.

The group now has until 31 May 2024 to satisfy the demands of Queensland authorities.

With the rise of online casino causing Casino Cosmopol’s visitor numbers to fall in recent years, the Swedish land-based casino brand of Svenska Spel has decided to permanently close the doors on two of its three venues to “limit losses”. Union negotiations will now be held before a final decision is made.

The Gothenburg and Malmö closures mean the only remaining land-based casino in Sweden will be a Casino Cosmopol in Stockholm. The liquidations could affect around 200 jobs.

Ola Enquist, chief executive of Casino Cosmopol, said: “This is an emotionally tough step to take as it affects many of our employees.

“We have taken a number of measures in an effort to increase revenue and reduce costs. Despite hard work, we see that the measures are not sufficient.”

Casino Cosmopol: December AML penalty compounds financial misery

The planned closures come after Casino Cosmopol was fined SEK2m (£154,000/€180,000/$200,000) for anti-money laundering (AML) failings after a probe by Swedish regulator Spelinspektionen. Svenska Spel were also warned.

A foreshadow of what was to come for Casino Cosmopol came in October. Svenska Spel’s Q3 report revealed a stall in revenue and earnings due to market-wide pressures on the retail sector.

The Casino Cosmopol and Vegas areas of Svenska Spel’s business saw net gaming revenue decrease 11% to SEK247m. Svenska Spel blamed increased competition from online games and restaurant casinos for the drop. Casino Cosmopol and Vegas also recorded a SEK35m loss.

In response, Svenska Spel adapted business practices at Casino Cosmopol, including introducing new opening times to combat restaurant casino competition. These measures haven’t worked though with losses continuing, forcing Svenska Spel’s hand.

New tax a blow to Swedish operators

In September, Sweden’s government (Regeringen) outlined plans to raise the gambling tax rate in the country from 18% to 22% of gross gaming revenue (GGR). If approved, the tax rise will come into effect in the country from 1 July 2024.

Regeringen believes such a move could bring in an additional SEK540m in additional tax revenue each year. However, the move has predictably been met with strong opposition from the industry.

Hasse Lord Skarplöth, Aktiebolaget Trav och Galopp (ATG) chief executive, has called on the government to rethink its proposals.

Instead of a sweeping 22% tax rate, Skarplöth is instead calling for a differentiated tax, with sports betting remaining at 18%, while igaming has its rate increased.

“It came as a shock, the proposal for a higher excise tax on gambling companies,” Skarplöth said. “Shortly afterwards, the will to fight awoke.

“Strengthened by our research, we have now put quite a lot of energy into demonstrating the advantages of a differentiated gaming tax in Sweden as well. The hope is now that our analysis will move legislators from insight to action.

“It is a good starting point for our proposal; keep the tax on horse betting and sports, but raise it on online casinos.”

Kindred’s takeover bid

In other Sweden news, and reported last weekend by the Wall Street Journal, La Française des Jeux (FDJ) have also made an offer worth SEK27.96bn to acquire the entire outstanding share capital of Kindred Group.

FDJ has offered SEK130 in cash for each Swedish Depository Receipt in Kindred. This is 24.4% higher than the SEK104.50 price of Kindred shares at close on 19 January, the final day of trading prior to the offer coming to light.

The Swedish operator Kindred has “unanimously” recommended shareholders accept the offer. The acceptance period is set to begin on or around 20 February and expire on 19 November.

In its statement, FDJ said the move would create the second largest operator in Europe’s gaming industry. It added the deal would result in a “European gaming champion” with enhanced revenue and earnings growth.

While headline figures show declines for IG Group, actions taken during H1 could support growth in the longer run.

In October, IG Group announced it is to reduce its global staff headcount by approximately 10%. This is part of wider plans to simplify and streamline its business, with around 300 jobs set to go before the end of FY24.

IG Group said the decision to streamline follows a review of cost efficiency opportunities. This was mentioned by the group during its first quarter results announcement.

Last month also saw a change of leadership with former Paddy Power Betfair chief executive Breon Corcoran becoming CEO. Corcoran officially takes over on 29 January replacing Charlie Rozes, group chief financial officer who has been serving as interim CEO for several months.

Former CEO June Felix stepped down in September, having initially taken a period of medical leave in July.

Reflecting on H1, Rozes was largely upbeat about the future for IG Group, referencing its cost-saving plans. 

“It’s encouraging to see the benefits of our diversification strategy paying off, despite a mixed trading backdrop for our clients, driven by persistently low levels of market volatility in Q1 and Q2,” Rozes said.

“While some of our businesses saw revenue weakness, others achieved strong results in the period. Our exposure to a wider range of revenue drivers will underpin further growth in the group as we deliver on our strategy. 

“At the same time, we’ve taken action to control growth in the cost base, significantly reducing the rate of cost growth from FY23, yet still making selective investments in the business. As a result, we’ve maintained attractive profit margins in the period.”

IG Group reports declines across all segments

Taking a closer look at results for the six months to 31 December 2023, IG Group said total net revenue was 9.0% lower at £472.6m (€552.3m/$601.2m).

IG Group said that were declines within all business areas. Revenue from over-the-counter (OTC) derivatives fell 21.3% to £327.7m but remained by far its main source of revenue. Exchanged traded derivatives revenue fell 5.2% to £63.6m and stock trading and investment revenue 1.8% to £11.1m.

In terms of clients, total active users in H1 fell 5.0%, with declines across all core segments. First trade users also fell 10.0% year-on-year.

Net operating profit was higher than revenue at £462.9m. This was mainly due to £71.2m in interest on client funds. 

Cost-cutting actions yet to take effect

Looking at spending, despite IG Group taking action to lower costs, these efforts are yet to be felt. Operating costs were 7.6% higher at £299.9m.

There was better news in terms of spending related to finance. Costs for finance were up to £10.7m but this was more than offset by £26.1m in finance income.

As such, pre-tax profit in H1 amounted to £162.5m, but this was still down 32.2% from the previous year. IG Group paid £43.7m in income tax, leaving a net profit of £132.7m, a drop of 31.8%. The group did not publish EBITDA figures for the period.

“We remain confident and optimistic about the outlook for IG,” Rozes said. “We continue to be well positioned to benefit from the structural growth of self-directed trading and investing. 

“We’re the home of active traders worldwide, bringing exciting and innovative new products to market, backed by the best technology and trade execution.”

Nearly 20 years ago, the mathematician Clive Humby coined the phrase “data is the new oil”.  For the industry and economy, data was to become the new wealth creator in the same way that oil has enabled new technologies and products since the mid-19th century.

For the sportsbook industry, this comment was well ahead of its time. In 2006, the in-play offering that is ubiquitously driven today by real-time game state data largely didn’t exist. Most operators at the time offered little betting action after the start of an event, even on football. Some didn’t offer in-play at all. 

Fast forward to 2024 and you could be forgiven for thinking that sports betting operators – and more pertinently the supply chain that feeds them – are fully utilising the data that is available to it.

The perception exists that the age of the internet and the use of data has facilitated growth and wealth creation within the sports betting industry that would have been impossible two decades ago. 

The reality is that this isn’t entirely true. In those markets that were regulated in 2006, once the substitutional effect of pre-match to in-play turnover is considered – alongside the shift from retail to online – the “growth” of sports betting is arguably not much greater than the general growth in overall GDP during the same time.

In that light, data hasn’t driven betting industry growth at all.

Who will be the next industry winners?

For today’s leading operators, this hasn’t presented a problem. The likes of Flutter and Bet365 have consistently been at the forefront of emerging trends, and as a result have succeeded in becoming the largest sportsbooks of the modern age, usurping the likes of Ladbrokes and William Hill, who used to dominate in a world of horse racing and betting shops.

But while sports data may not have driven industry growth in the way that is often perceived, it is likely that how operators utilise different forms of data in the future will determine who the next generation of industry winners are.

Future value growth for sportsbooks lies with a better use and interpretation of the customer data they already possess.

Going back to the analogy with oil. It is true that this black gold has driven growth and innovation around the world – but in its unrefined state it is virtually worthless. This is where the most interesting parallel with data exists.

Basing prices on real-time exposure

Ninety percent of the world’s data has been created in the last two years, and operators are now sitting on a huge wealth of potential value given to them through the information provided via the betting activity of their customer base.

However, to date, the tools that are available to sportsbooks to mine this information, refine it, understand it and objectively use it to drive increased profits are rudimentary at best, meaning that most of its value goes untapped. 

The industry currently uses in-play models that can’t incorporate or react to the pace of data evolution. Historically, these same models have enabled operators to make great strides in the arena of supplying additional content.

But the way that they are built means they are not capable of automatically managing risk in real time based on aspects such as book liability, customer skill or other immediate market information.

There is a way forward for operators, and that is to incorporate how their prices change based on their real-time exposure. Objective, data-led decision making will power an improvement in the bottom line, and for that the sports betting industry should look at the financial industry as an exemplar.

Putting the algorithm to work

Powerful algorithms can be used to make automated decisions based on information extracted in real-time from the wagers that operators receive, as well as a range of additional underlying data sources.

By overcoming the limitations of their current models, operators can optimise their prices in real time, based on their risk preferences and objective analysis of their proprietary data. And if operators upgrade their approach to risk management in this way the outcome is clear.

Increased margins, higher profits, lower volatility, improved brand differentiation and a sustainable increase in market share, all delivered with customer safety at the heart of the equation.

Proprietary data can power a new economic era for sports betting operators. But it’s how it’s used that will make the difference.

Svenska Spel’s use of the phrase, which translates to “trot and gallop” in English, was considered by the Patent and Market Court of Appeal to be an infringement on ATG’s company name.

ATG launched the initial trademark lawsuit back in December 2020. This was after a war of words between ATG chief executive Hasse Lord Skarplöth and his Svenska Spel counterpart, Patrik Hofbauer.

In a statement announcing ATG’s court victory, Skarplöth said: “That the Supreme Court also followed our line was expected. It must never be okay to use someone else’s company name and it feels good that the matter is now settled once and for all.

“It was important to establish that a competitor does not have the right to use our company name and exploit its good reputation.”

Another blow for Svenska Spel

The failed appeal comes in the wake of Svenska Spel announcing its intention to close its Casino Cosmopol venues in Gothenburg and Malmö in order to “limit losses”.

Online casino has heavily affected Casino Cosmopol’s visitor numbers in recent years, with the closures potentially impacting around 200 jobs. The liquidations mean the Casino Cosmopol in Stockholm is now the only land-based casino remaining in Sweden.

Casino Cosmopol had already been fined in December, receiving a SEK2m (£154,000/€180,000/$200,000) penalty for anti-money laundering failings. Svenska Spel was also warned.

The writing was somewhat on the wall for Casino Cosmopol in October. Svenska Spel’s Q3 report revealed a stall in retail earnings and revenue due to market-wide pressures on the sector.

In response, Svenska Spel adapted business practices at Casino Cosmopol, but ultimately it was unable to prevent the closures.

ATG shining in Sweden

While Svenska Spel is faltering, ATG seems to be flourishing in the Swedish market. A very successful three-month period up to 30 September 2023 saw ATG record a double-digit rise in operating profit.

Net gaming revenue increased 4.5% to SEK1.35bn, from SEK1.29bn last year. That was the second highest figure for a third quarter in ATG’s history, happening in spite of the Swedish market stalling in H1.

Meanwhile, ATG’s total revenue for the three-month period was at SEK1.53bn, up 3.0% year-on-year. The group made an operating profit of SEK497m, up 13.7% year-on-year.

Potential tax issue on the horizon

In September, Sweden’s government (Regeringen) announced plans to increase the gambling tax rate from 18% to 22% of gross gaming revenue (GGR). If the proposals are approved, the tax hike will come into effect in Sweden from 1 July 2024.

Regeringen stated the move could accumulate an extra SEK540m in additional tax revenue per year. Predictably though, the proposals have been met with fierce industry opposition.

Indeed, ATG is at the forefront of that opposition. Skarplöth called for the government to rethink its proposals earlier this week.

Skarplöth wants differentiated tax across the gambling sectors, with sports betting remaining at 18%, while igaming’s tax rate is increased.

“It came as a shock, the proposal for a higher excise tax on gambling companies,” Skarplöth said. “Shortly afterwards, the will to fight awoke.

“Strengthened by our research, we have now put quite a lot of energy into demonstrating the advantages of a differentiated gaming tax in Sweden as well. The hope is now that our analysis will move legislators from insight to action.

“It is a good starting point for our proposal; keep the tax on horse betting and sports, but raise it on online casinos.”

The deal states Underdog will host, manage, operate and support online gambling services with McConnell Golf-operated Sedgefield Country Club. Located in Greensboro, North Carolina, the venue hosts the PGA Tour’s Wyndham Championship.

Underdog said the deal is part of its licence application. Operators seeking approval to run sports betting in the state must partner with a sports team, league or venue within North Carolina.

Traditionally focused on daily fantasy sports, Underdog has recently expanded into sports betting. However, the operator is yet to launch wagering, despite having secured a sports betting licence in Ohio in late 2022.

“We’ve spent the last four years building our own technology so we can give sports fans in America new and different ways to enjoy the sports they love,” Underdog founder and co-CEO Jeremy Levine said. “We’re excited to be able to offer that to North Carolinians and look forward to evolving the experience with them.”

McConnell Golf COO Christian Anastasiadis also welcomed the deal. He said it was important to find a partner to provide a different approach to sports competitions and tournaments.

“We too believe in thinking differently and challenging the status quo and there is a lot of star power behind the Underdog Fantasy app,” said Anastasiadis. “I truly believe we found the right partner.

“This partnership was conceived with fans in mind. We’re looking forward to working with McConnell Golf to bring people together to experience their premier club properties.”

What’s the situation in North Carolina?

Including Underdog, nine operators have submitted applications for sports betting licences in North Carolina. A launch date for the market has not yet been revealed but it is hoped legal betting will go live by March this year.

The North Carolina State Lottery Commission is currently overseeing the licensing process. Chair Ripley Rand previously said the launch date will mainly hinge on how long the licence application process takes.

This process launched at the start of December after the governor, Roy Cooper, signed House Bill 347 into law in June 2023.

Earlier this month, North Carolina edged closer to launching betting after the Commission set a deadline of 26 January for operators to submit their internal controls. This means any interested parties have until this Friday to confirm their plans with the regulator.

Who can we expect to see?

Among those seeking a licence is BetMGM, which has struck a market access agreement with Charlotte Motor Speedway. The complex regularly hosts stock car racing series Nascar.

Also preparing to launch in the state is DraftKings, which will partner with Nascar. The deal makes DraftKings the exclusive daily fantasy sports partner of Nascar in the US and Canada. 

In addition, Fanatics Betting and Gaming has begun its market entry process, entering a partnership agreement with NHL’s Carolina Hurricanes. This will see Fanatics become the team’s official sports betting partner. 

Shares halted trading on Euronext Dublin yesterday (23 January) and are set to be delisted on 29 January. This is the same day Flutter expects to list on the NYSE in the US.

Flutter ordinary shares remain eligible for and continue to trade on the main market of the London Stock Exchange (LSE). Listing in the US will not impact trading in London.

The group trades on the LSE under the FLTR ticker symbol, while its NYSE ticker has already been confirmed as FLUT.

Ordinary shares will also launch on the NYSE, subject to the US Securities and Exchange Commission approving its Form 20-F Registration Statement. This approval is the only remaining step required for the US listing. 

Flutter expects this process to complete ahead of the market opening on 29 January.

Why is Flutter listing in the US?

The US listing was first mooted in February 2023, with Flutter saying it would support wider US growth plans. Shareholders approved the dual listing at Flutter’s AGM in April and the group has been working towards the listing ever since.

Flutter has reported significant growth within the US in recent years due to the success of FanDuel. Acquired in May 2018, while the brand was still a daily fantasy sports operator, FanDuel has grown to become a major US provider of sports betting and igaming.

Ahead of the Euronext Dublin delisting and subsequent US listing, Flutter last week posted a trading update for 2023. This included further evidence of its ongoing growth in the US.

Group revenue for the 12 months to 31 December was 25% higher year-on-year at £9.51bn (€11.01bn/$12.09bn) for its 2023 financial year. This, Flutter said, was driven by a 38% rise in revenue from operations in the US to £3.06bn. 

As was the case in 2022, US operations remain the primary revenue source for the group, drawing 37.9% of all revenue. Based on growth in previous year, this share only looks set to increase in 2024 and beyond.

On a constant currency (CC) basis, US sports revenue jumped 39% while gaming was 47% higher. Flutter also noted a 38% increase in average monthly players to more than 3.2 million.

Flutter eyes further US growth

Speaking in an earnings call after the update, Flutter CEO Peter Jackson outlined a three-year strategy for success in the US. He said Flutter plans for FanDuel to complete a race to the finish line in the final year.

“From an igaming perspective, we’re following the strategy we laid out at the capital markets day,” Jackson said.

“We said in the first year there were things that were broken that we were going to fix. We said in the second year we’d get to product parity and in the third year we’re going to get ahead of the market.”

Nasdaq issued a warning to Inspired in November over the late filing of its Q3 results. At the time, Nasdaq said Inspired could have its shares de-listed if it did not publish the figures by an agreed deadline.

Inspired said it needed more time to complete financial statements for the three months to 30 September 2023. It also said work was ongoing to restate certain previously issued financial statements.

However, Nasdaq told Inspired the late filing was in breach of Nasdaq Listing Rule 5250(c)(1). As such, Inspired was given 60 calendar days, or until 22 January 2024, to either file the form or submit a plan to regain compliance with Nasdaq Listing Rules.

The deadline date passed this week, with Inspired setting out a plan of action on 23 January. 

This plan states Inspired will file the required documents no later than February 28. These filings include a Form 10-K/A for the year ended 31 December 2022, with restated financial statements, as well as Forms 10-Q/A for the quarters ended 31 March 2023 and 30 June 2023 and a Form 10-Q for the quarter ended 30 September 2023. 

Inspired also plans to file its Form 10-K for the year ended 31 December 2023, by the March 2024 due date.

This, Inspired hopes, will regain compliance with Nasdaq rules. The provider added that the update has no immediate effect on the listing of the company’s securities on Nasdaq.

Why is Inspired late filing its results?

Q3 results filing season passed several months ago before the festive season, with Inspired not publishing any figures. Inspired had warned in early November it would not be releasing its results on time.

This, Inspired said, was due to a number of concerns. These include accounting errors relating to compliance with US GAAP in connection with accounting policies for capitalising software development costs. Errors mainly relate to relevant accounting standards to projects. 

Inspired says errors were flagged in financial statements for financial periods commencing 1 January 2021. As such, the statements can no longer be relied upon and should be restated.

The provider added that any other statements after that date including earnings releases, press releases and investor presentations that feature financial information can no longer be relied upon.

Taking action over material weaknesses

Reviewing the case, Inspired said it has identified “material weaknesses” in internal control over financial reporting. The provider is now implementing changes to address these issues. 

The restated results and new sets of figures due next month will be published in the wake of this action.

Inspired previously sought to allay investor fears over the situation. It said it does not believe the planned changes will impact its cash position or overall business plan. 

Inspired’s most recent set of results, published in August, cover the second quarter and first half of 2023.

Q2 revenue was 12.3% higher at $80.1m (£63.1m/€73.7m) after growth across all business areas. Higher rise in costs pushed net profit down 85.4% to $2.3m, but adjusted EBITDA edged up to $26.2m.

As for H1, revenue was up 11.0% to $146.4m. Spending increased year-on-year, meaning net profit declined 53.6% to $3.9m for the six-month period.

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