Month: February 2024

Revenue fell 14.6% to AU$865.7m (£445.4m/€520.7m/US$564.3m) in H1 at Star. However, the operator moved into the black with a small net profit of $9.1m, compared to a $1.26bn loss in the previous year.

The large loss in H1 of 2023 was caused by the writedown in the value of casinos in Sydney, Gold Coast and Brisbane. This came in the wake of a series of anti-money laundering and social responsibility failings and the venues.

While Star seemingly began to recover somewhat in H1 of 2024, recent news casts some doubt over its future. This month, the New South Wales Independent Casino Commission (NICC) confirmed a second inquiry into Star.

Running for 15 weeks, with a final report due 31 May. Adam Bell SC, who oversaw the first Bell report, will lead the inquiry, looking at how Star has implemented recommendations from the first inquiry. Star was declared unsuitable to hold a casino licence in New South Wales in September 2022 after the first inquiry.

Delayed H1 results make for mixed reading

Incidentally, this announcement led Star to delay its H1 results announcement, with this being pushed back to today (29 February). While the results make for mixed reading, and the operator faces a nervous few weeks while the inquiry takes place, CEO Robin Cooke says Star achieved several key regulatory milestones in H1.

“While the group continues to operate in a challenging regulatory environment, Star has achieved a number of significant milestones in the period,” Cooke said. “Our remediation plan was approved in Queensland. The resolution of the proposed increase to NSW casino duty rates has removed significant uncertainty for our Sydney property and has protected thousands of jobs for our team members in New South Wales.

“Notwithstanding these achievements, there is still much work to be done. Remediation remains our number one priority. We continue to uplift our risk management, safer gambling and AML capabilities and are starting to embed greater accountability and more robust governance.”

Star working to regain player trust

These efforts, Cooke says, form part of an effort to regain player trust after the first inquiry exposed failures. Work is ongoing, with Cooke saying Star has made progress on this front.

He adds that Star welcomes the latest inquiry and will work with authorities on the report. 

“Despite the challenges of the past 18 months, as a team we are progressing and continuing to work hard to do all that we possibly can to restore our suitability and earn back trust,” Cooke said.

“As a team we are committed to our strategic ‘North Star’ looking to deliver sustainable outcomes for our guests, our team members, the communities in which we exist and our shareholders, by providing entertainment, gaming, and leisure experiences in a safe, responsible, and ethical way.

“We welcome the inquiry called in NSW to assist the NICC in forming a view as to what, if any, action it should take in respect of Star. This inquiry will provide an objective forum in which Star will be able to demonstrate in NSW it is capable of returning to suitability with particular reference to the actions that have been put in place since the Bell report was published.”

Revenue falls across all Star properties 

Breaking down Star’s performance in H1, domestic gaming activity remained its main source of revenue at $683.3m. However, this was 16.7% less than the $820.2m posted in the first half of 2023.

There was also a decline in non-gaming revenue, which fell 5.6% to $176.4m. In addition, other revenue slipped 3.2% to $6.0m.

As for its three casino properties, revenue was lower at each venue. Star Sydney was again the core site for Star with $450.0m, though this was 16.9% lower than the previous year. The operator put this down to new regulatory and responsible gambling measures at the casino, as well as weaker consumer spending.

Meanwhile, revenue at Star Gold Coast dropped 13.6% to $238.1m. Star said this was due to the normalisation of consumer spend, following the benefit of a post-Covid spending surge in 2023. It also again noted the impact of a necessary uplift in the Treasury Brisbane environment in line with its company-wide changes.

Finally, revenue at the Treasury Brisbane was down 9.6% to $177.6m. Again, Star highlighted the impact of new controls, but also noted that visitation in the region is still subdued after the pandemic. In addition, it said increased competition from larger pubs and clubs that underwent renovation projects, introduced loyalty programs and had more promotional activity saw market share shift.

Back in the black after spending reduced

Turning to spending, costs were lower across the board. Operating expenses were cut by 5.0% to $541.6m and gaming tax and levies spend fell 13.6% to $210.5m. Depreciation and amortisation was also 38.3% down at $62.2m.

This left $51.4m in earnings before interest and tax, an increase of 48.0%. Star also noted several other financials, including $18.6m in net funding, down 44.6%, and $3.7m in net profit from an associate.

Star paid $11.5m in tax, leaving a net profit of $25.0m before significant items, down 42.7% from $43.6m in 2023. However, after accounting for $15.9m in significant items, compared to the $1.31bn in the previous year caused by the write-downs, bottom line looked very different. 

Statutory net profit after tax hit $9.1m, compared to the $1.26bn posted in 2023. However, EBITDA before significant items fell 43.1% to $113.6m.

How has H2 started for Star?

Looking to H2, Star said early revenue and EBITDA is mainly consistent with H1 and only slightly softer than the previous year. 

Group EBITDA run rate of $20.0m per month as maintained in January. During the month, group EBITDA was down 6.5%, while EBITDA was also lower across all three of its casino properties. 

“The start of this calendar year has seen revenue and earnings continue to track our first half run rate,” Cooke added.

Revenue for the six months to 31 December hit AU$27.8m (£14.3m/€16.7m/US$18.1m), up from $24.7m in H1 of 2023 at BlueBet. This, BlueBet said, was driven by record wagering turnover of $319.5m for the half.

The six-month period saw BlueBet further grow its Australian business, with revenue rising 13.0% to $27.9m. Active customers in the country were also up 13.0%, which in turn helped pushed turnover up 6.9% to $298.7m.

However, against this background of growth in Australia was some bad news for BlueBet. In August, the Victorian Gambling and Casino Control Commission charged BlueBet for breaching state rules on advertising. If found guilty BlueBet could face a fine of up to AU$945,187.

US expansion continues for BlueBet

Over in North America, BlueBet posted a loss of $131,000 for H1. This was wider than the $71,000 loss reported in the same period in the previous year as costs rise amid its ongoing expansion efforts in the country. 

However, the important news for BlueBet is the significant rise in turnover, with this hiking by 1,050.0% to $20.7m. Active customers also jumped during H1 in line with expansion into new states. 

BlueBet is now operating in four US states: Colorado, Indiana, Iowa and, as of last month, Louisiana. The ClutchBet B2C brand is active in Louisiana via a partnership with Louisiana Downs casino and horseracing track.

Speaking last month, BlueBet CEO Bill Richmond said continues progress continues towards the second stage of its US market entry. This focuses on launching a white-labelled B2B sportsbook-as-a-solution offer, with discussions ongoing with potential B2B partners.

Cost increase hits bottom line

Looking at spending in H1, BlueBet said costs were higher across several areas. This includes cost of wagering, which climbed 12.9% to $13.1m in line with revenue growth.

As for other expenses, staff benefits costs were the main outgoing here at $8.5m. However, advertising and marketing, previously the core area of spending, was reduced by 27.2% to $8.3m.

Higher spending on the whole offset revenue growth and left a pre-tax loss of $12.1m, wider than $11.4m in 2023. BlueBet did receive $1.8m in tax benefits but, after also accounting for a $61,000 negative impact from foreign currency translation, this did not stop net loss rising.

For H1, net loss amounted to $10.4m, compared to $9.9m in the previous year. However, the operator was able to reduce consolidated EBITDA loss from $10.5m to $9.2m during the half.

Player spending in January amounted to $73.3m (£57.9m/€67.7m). This was 24.6% behind $97.2m in New Hampshire last January and 7.0% lower than $78.8m in December. It was also the second consecutive month of handle decline in the state.

Of this total, $62.7m was spent betting on sports online, while players wagered $10.6m at retail sportsbooks.

Looking to gross gaming revenue, there was mixed news in the state. Revenue was down 20.3% from the record $12.3m in January 2023 but 27.3% ahead of $7.7m in December.

Some $8.9m of all revenue in January came from online betting. A further $951,079 was generated from wagering at retail sportsbooks across New Hampshire.

DraftKings remains the exclusive operator in the state’s online sports betting market. This arrangement has been in place since November 2019 when DraftKings secured the rights.

In terms of tax, this amounted to $4.5m for the month. Online betting accounted for $4.0m of this total, with retail’s share at $427,987.

Year-to-date handle exceeds $450.0m in New Hampshire 

As to how January impact the year-to-date figures in New Hampshire, the state was able to pass one major milestone in terms of handle.

In the seven months through to the end of January, players spent $450.9m on sports betting. This includes $390.8m with DraftKings online and $60.1m at retail facilities.

As for revenue, this reached $47.5m for the same period. Online wagering generated a total of $42.4m and retail betting $5.1m.

Tax from sports betting amounted to $20.9m, with $18.6m coming from online activity and $2.3m retail.

The year had been eventful for Lottomatica, with the company announcing an initial public offering (IPO) on the Euronext Milan exchange in April, which ran between 24-27 of the month. The price range was set between €9 and €11, giving a market capitalisation of €2.67bn.

The IPO has had a lasting effect on Lottomatica’s earnings. In its third quarter 2023 results, it reported €2.8bn in gross gambling revenue (GGR).

During November, Lottomatica acquired SKS365 Malta, which had an enterprise value of €639m at the time. In the same month, Lottomatica announced that it would issue and sell €500.0m in notes to help fund the acquisition. The deal with Lottomatica proved to be the nail in the coffin for Playtech, which had previously opened talks to acquire SKS365.

Guglielmo Angelozzi, CEO of Lottomatica, said the year had seen the company grow on all business fronts – including the IPO.

“2023 marked a very strong year for our group, in which we consolidated our leadership position across all segments and brands,” said Angelozzi. “We exceeded expectations set at IPO and subsequent upgrades, with revenues of €1,632 million and adjusted EBITDA of €596 million at normalised payout.”

“We continued to grow both organically, increasing market share for the fifth quarter in a row and, through M&A, signing the acquisition of SKS365 and executing our bolt-on strategy.”

Online segment and bets stand out for Lottomatica

The full-year revenue was up 12.0% on a pro-forma basis. The report noted that the pro-forma numbers take Lottomatica’s acquisition of Betflag – which occurred in November 2022 – into account for the whole 2022 year.

Breaking down the revenue, the largest growth was seen in Lottomatica’s online segment, which shot up 33.3% to €520.7m. But the company’s gaming segment outperformed in terms of revenue, bringing in €743.4m. This represented a rise of 2.4%. Lottomatica’s sports franchise segment generated €368.2m.

A total of €30.1bn was generated in bets, up 17.9% pro-forma. More than half of this – €16.20bn – came from Lottomatica’s online segment. Its gaming segment made up €11.10bn of the total, while the sports franchise segment made up the remaining €2.82bn.

Lottamatica GGR for the year was €3.86bn, up by 6.0%. Total online market share stood at 21.7% in Q4, while online sports market share was 22.1% during the quarter. Online gaming market share was 21.5% in Q4.

Full-year break down and 2024 guidance

Other income for Lottomatica amounted to €18.5m for the year, bringing the total revenues and income to €1.65bn. Looking at costs and expenses, cost of services delivered the largest blow here, rising 10.6% to €972.7m. Finance expenses topped €220.2m, while depreciation, amortisation and impairments hit €194.1m.

The overall costs brought the profit before tax to €137.6m, a 3.2% improvement year-on-year. Following €63.4m in income tax expense, the net profit for the year totalled at €74.2m, down from €78.4m.

Adjusted EBITDA for 2023 was €580.4m. This was up by 16.6% on a pro-forma basis.

For Lottomatica’s 2024 full-year projections, it noted that it expects revenue between €1.80bn-€1.84bn. Adjusted EBITDA is projected to be between €625m-€645m, with an estimated 53.0% generated by the online segment.

Updated guidance is set to be released after the SKS365 acquisition has closed. This is expected to take place during H1 2024.

Vietnam’s newest IR, Hoiana, wants visitors lifted into the sky. Vietnam’s first IR, The Grand Ho Tram, aims to keep travellers grounded. Corona, on Phu Quoc island, Vietnam’s only IR that allows players to gamble without a foreign passport, wants guests to do a little paperwork.

All three beachfront IRs have tempting features and all three say they’re profitable amid a paucity of mainland China tourists. The question remains whether three world class IRs make Vietnam a top-tier gaming destination for players, operators and investors. 

Hoiana opened into the teeth of Covid in June 2020. After a successful opening came difficult months of what Hoiana president and CEO Steve Wolstenholme calls “character building”. The resort remained open – as did The Grand-Ho Tram – with reduced hours and staff adjustments.

Solar eclipse

But Covid wasn’t the biggest challenge Hoiana faced. In November 2021, Macau authorities arrested Alvin Chau, chairman of junket promoter Suncity Group, a 34% partner in Hoiana and engine of the IR’s erstwhile business plan focused on mainland China high rollers.

Chau’s arrest signaled Beijing would no longer tolerate junkets moving hundreds of billions of dollars out of the PRC illegally. Hoiana terminated Suncity’s casino management agreement and took over gaming operations.

“Hoiana’s business model had to be reconfigured and it is noteworthy that they have managed to do so,” iGamiX Management & Consulting managing partner Ben Lee says.

LET acquired Suncity’s Hoiana holding and its chairman Andrew Lo sits on Hoiana’s board of directors. With the pending sale of LET’s interest in Russia’s Tigre de Cristal and its Westside City casino hotel in Manila slated to open late this year, Lo tells iGaming Business that LET is “open” to selling its Hoiana stake.

Ownership evolution

“The ownership structure is evolving,” Wolstenholme says. Once a Genting-led project, Hoiana’s largest piece is controlled by Hong Kong billionaire Henry Cheng and family, whose empire includes conglomerate New World, jeweller Chow Tai Fook and Rosewood Hotel Group (Hoiana Rosewood is planned), plus a strategic stake in Australian gaming operator Star Entertainment. Vietnam-focused investment manager VinaCapital has invested in Hoiana and The Grand Ho Tram.

Hoiana’s US$1.3bn first phase includes four hotels with 1,225 keys, a golf course, plus 20 F&B outlets laid out along four kilometres of inviting coastline. “It is a fantastic property and positioned very well for a tropical holiday getaway resort,” Lee says.

The casino for foreign passport holders features 140 tables and 300 EGMs, nearly all slot machines with a few standalone roulette consoles. No stadium area, no poker or variants, no craps, just baccarat, blackjack, roulette and sic bo, in that order of popularity. “We have all the games that our target market wants to play,” Wolstenholme says.

Card games start at US$25 with squeeze baccarat at US$100. VIP rooms off the main floor and one level above are denominated in Hong Kong dollars – HK$1,000 (US$128) for squeeze baccarat. International tour operators (ITOs), Vietnam’s term for junket promoters, provide VIPs.

Dong drop

A handful of main floor baccarat tables take bets in Vietnamese dong. “Customers [with foreign passports] who stay here long-term or live here may find it more convenient to wager in the local currency,” Wolstenholme explains. 

With contemporary comfort in guest rooms and top notch service, Hoiana balances beachfront casual and five-star elegance. Wolstenholme, who opened Okada Manila and worked extensively in North America, says the IR has to be outstanding enough to entice guests to fly there.

Poolside F&B options range from The Edge a la carte breakfast buffet and afternoon cocktails atop Hoiana Hotel and Suites to skewers at New World Beach Hotel’s Charred. Downtime Renew Spa features Japanese showering stools, whirlpool and sauna facilities for before or after treatment. Quang Nam House is an ultra lounge for business meetings by day and unwinding after dark. Perhaps Asia’s largest and best equipped kids’ club has pottery wheels, weaving looms, two adventure playgrounds and a kitchen for cooking classes. 

Hoiana urges guests to look beyond the IR. “The value proposition is as much outside the resort as inside,” Wolstenholme says. “We want people to experience the charms of central Vietnam.”

Riverside charm

The IR is 15 minutes drive from Hoi An, its well-preserved port district from the 15th to 19th centuries, and a UNESCO World Heritage site. The ancient town features river boats, brightly painted lanterns and centuries-old buildings, where families still live and work. On the opposite riverbank, there’s nightlife reminiscent of Singapore’s Clarke Quay.

About an hour away, UNESCO heritage site My Son Sanctuary features buildings from the Champa kingdom, a Hindu civilisation that ruled central Vietnam for a millennium from the 4th century. Orange brick structures feature sandstone carvings of Shiva and other deities.

UNESCO designations, further attractions including Chu Lao Cham Marine Park, seen offshore from Hoiana, and ancient capital Hue to the north, Danang’s international airport (45 minutes from Hoiana) and miles of beaches have spawned well developed tourism infrastructure, including more than 50,000 guest rooms.

Crown International casino continues to operate in Danang and there are a few slot clubs in hotels, but Wolstenholme sees Hoiana’s main competitors as Asia’s other IR destinations, Macau, Singapore and the Philippines: “Not necessarily because of volume but more because of what we have to offer.”

Hoiana Shores Golf Club highlights that offer. The 7,004 yard links course designed by Robert Trent Jones Jr has been listed among the world’s top 100 courses with its back nine hugging the coastline. A state of the art clubhouse has teaching studios and meeting space adjacent to a miniature golf course.

Overseas patrons hail largely from Korea, travelling either independently or on group tours, often for golf. Clubhouse restaurant 1552 Bistro specialises in Korean food and the casino hotel towers have a branch of Seoul’s Obaltan.

Grand plan

The Grand Ho Tram has its own Korean restaurant and Korean players enjoying its top 100 golf course, The Bluffs, designed by Greg Norman. It has three hotels with 1,314 keys along 2.2 kilometres of beachfront with spas, water sports and kids club. The IR works with ITOs to power VIP roll beyond US$1 billion annually. But none of that is CEO Walt Power’s main objective.

“I have always submitted that every successful gaming operation has as its primary market a local component,” Power says. “Our primary gaming target market are foreign passport holders living and working in Ho Chi Minh City.”

The Grand’s location – two hours (or more, depending on traffic) south of Ho Chi Minh City – remains a defining feature.

The IR lies within driving distance of Vietnam’s commercial capital with 15 million-plus residents, including the nation’s largest cluster of expatriates with a handful of other resorts and restaurants in the vicinity. But the lengthy drive from HCMC’s airport makes it a hard sell for overseas guests.

Las Vegas Sands’ senior vice-president of operations in Macau, responsible for opening Sands Macao in 2004, Power arrived at The Grand in early 2020, just before Covid restrictions on international travel forced his team to focus on the local expat market. “The current performance of Ho Tram is multiples of the performance of 2019,” Power says.

Grand events

With pandemic restrictions fading globally, Power says, the challenge is to convince those expats to ride to The Grand rather than fly to other casino resorts. 

Events provide one draw. “International professional boxing, mixed martial arts competitions, VIP banquets, beauty pageants, golf tournaments and, yes, even horse racing on the beach have positioned the Grand as a place where something is always happening,” Power says. 

In 2019, private equity group Warburg Pincus acquired The Grand Ho Tram in partnership with VinaCapital. Power terms their ownership as “critical to the success of the project. The ability to adopt a long-term strategy to increase the value of the investment is imperative.”

Grand expansion

New ownership brought in IHG Hotels and Resorts. IHG renovated and rebranded the original Paul Steelman-designed hotel tower, opened in 2013, as InterContinental Grand Ho Tram with 543 rooms. In January 2022, IHG launched the IR’s long anticipated second hotel tower, Vietnam’s first Holiday Inn Resort with 561 rooms, catering to families.

Last August, Ixora opened with 46 villas and 164 rooms developed through Warburg-VinaCapital partnership Lodgis, operating under its wellness-oriented Fusion group. Units are sold to investors and rented to guests when not owned occupied. As at Hoiana Residences, owned units increase guest room variety while recouping some of ownership’s multibillion dollar investment that the casino licence mandates.

The Grand runs 90 gaming tables and just under 500 slots and terminals for live multigames. All play is in US dollars. With slot clubs in Ho Chi Minh City among competitors, The Grand is adding new EGMs.

The main gaming floor holds about half of tables. Baccarat squeeze games have minimums of $100 and $200 with a $50,000 maximum differential. Blackjack and poker variants played against the house start at US$25, sic bo and roulette from US$10. 

VIP rooms host ITOs. Commission and share rates are higher than Macau. The Grand has marketing teams in Korea and, since last August, Taiwan, with the biggest chunk of casino play from Korea. 

“The demographics of our guests mirror the sources of FDI [foreign direct investment] within southern Vietnam,” Power says. “Given that we focus on language, food and other cultural requirements of those guests, we simultaneously are well positioned to entertain overseas visitors from those locations.”

Corona break out

At Corona Resort and Casino on Phu Quoc island, two-thirds of its guests come from overseas. But as the country’s only casino that doesn’t require a foreign passport for entry, Corona gets about 80% of its gaming revenue from Vietnamese nationals.

“Considering Covid’s impact on international travel that makes sense, as foreign players could not visit Corona for almost three years out of the five years that we have been open,” Corona general manager Goran Milosheski says.

Vietnamese nationals who want to enter Corona’s casino must show monthly income of VND10 million, about US$400, for the past three months through tax filings, bank statements or pay slips, and pay a VND1m entry fee, for 24 hours. With the right documentation, the process and approval can be completed in less than 10 minutes.

The casino has 147 tables, 875 slots and 125 ETG terminals. Main floor play is in US dollars from US$1 for roulette, US$20 for sic bo and baccarat – “Players can touch the cards in all of our games,” Milosheski says – and US$10 for blackjack and poker variants.

Corona has grown to four hotels, 20 restaurants, plus a 24-hectare amusement park, wildlife conservation park, golf course, convention centre and 500-seat theatre. Grand World, a shop house entertainment complex opened in 2021, has gondola rides, cultural performances and a nightly light and fountain show.

Bringing in the masses

Off the southwest coast of Vietnam, Phu Quoc is an hour flight from Ho Chi Minh City and two hours from Hanoi. International direct flights originate from Seoul, Busan, Shanghai, Taipei, Hong Kong, Kuala Lumpur and Bangkok.

Three-quarters the area of Singapore, Phu Quoc is seeing billions in new tourism investment along its white sand beaches fronting crystal blue water. Vietnamese authorities have provided financial incentives and infrastructure improvements, including an international airport and a new road from it to Corona.

“More resorts opening means more marketing teams are working to bring guests to Phu Quoc,” Milosheski says. December and January were Corona’s best months ever for casino visitors, averaging more than 600 per day.

Local play pilot

The government’s pilot programme that allows local gaming at Corona (and unopened Van Don in northern Vietnam) is due for review this year. Management at Hoiana and The Grand expressed eagerness to join the programme, although each claims to be profitable with their current foreigner-only casino status.

LET’s latest results show Hoiana had US$113.8m GGR for the first half of 2023, 88% from VIP play. Vietnam has a 35% gaming tax rate but allows deductions for promotional expenses, lowering the effective rate to roughly 20%. Hoiana’s EBITDA for the period totalled US$10.1m. At that rate of return, it would take 100 years to recoup the $2bn mandated investment.

“It has been proven time and again that an IR in Vietnam cannot succeed without allowing Vietnamese residents entry into the casino,” Klebanow Consulting principal Andrew Klebanow says.

In Vietnam and beyond, IR performance should improve as travel and economies regain their footing after Covid. “The PRC market, we believe, will come back,” Wolstenholme says. “And that will no doubt be a primary, if not the primary, market for us.”

VinaCapital expects solid long term returns from each IR. The firm, with US$4 billion in assets under management, writes: “We would note that both investment cases were not predicated on policy changes regarding Vietnamese passport holders being allowed entry.”

The headline number from Spain’s Directorate General for the Regulation of Gambling (DGOJ) is the €1.24bn (£1.06bn/$1.35bn) in gross gambling revenue (GGR) for 2023, up year-on-year by well over a quarter at 28.4%.

Spain’s GGR has now increased every year since 2013 bar 2021. The 28.4% hike is the largest year-on-year rise since 2017.

Deposits and withdrawals rose by 15.5% and 10.1% respectively. The number of active gamblers also edged up by 2.7% to over 1.6 million.

Casino and betting on the rise in Spain

Of that €1.24bn in GGR, casino led the way with 50.5% of the total, accumulating €624.8m in revenue for 2023. Meanwhile, betting wasn’t far behind, accounting for 39.8% with €491.8m of GGR. Poker, bingo and contests then lagged behind with €115.3m, €14.4m and €480,000 respectively.

Looking at those numbers a little closer, the casino sector grew by 25.3% from 2022’s figures, which the DGOJ largely attributed to slots. These now account for 61.6% of the casino segment, again up by 28.1% year-on-year.

Betting grew even more than casino, with a 48.7% hike on in-play sports bets helping the overall sector to sizeable growth of 36.6%. Other fixed-odds betting also rocketed up by 191.9% year-on-year.

Poker experienced a 16.9% year-on-year rise, while bingo also increased, albeit by a slender 0.9%. The contest sector was an outlier, though, shrinking by nearly half at 48% over 2023.

Marketing up in 2023 despite increased regulation

The DGOJ reported a 7.6% jump in marketing expenditure for 2023, reaching €402.8m for the year. Sponsorship grew the most, up by 38.4% year-on-year, while affiliates, advertising and promotions increased by 21.7%, 9.2% and 2.8% respectively.

Of the €402.8m in marketing spend, promotions accounted for €199.9m, while advertising was responsible for €148m. The rest was made up by €50.6m in affiliation expenses and €4.3m in sponsorship.

The increase in marketing expenditure was in spite of the DGOJ looking to further tighten the already tight restrictions on advertising in 2023, extending them to lottery.

The controversial 2020 Royal Decree of Commercial Communications banned sponsorship deals with operators. Advertising on TV, radio and YouTube was also restricted to the hours of 1am to 5am. Across social media platforms, operators in Spain can only share ads with their followers.

The marketing restrictions come as part of a wider push in Spain to enhance the country’s responsible gambling measures. These have met fierce opposition from the industry, with Spanish online operator association JDigital highlighting that the country already has one of the strictest regulatory regimes in Europe.

In March 2023, Spain’s council of ministers approved over 30 youth-focused measures, including defining at-risk players as those who accumulate a net loss of €600 – or €200 if the player is under 25-years-old – over a period of three straight weeks.

Operators are now required to send a message warning at-risk individuals if potentially harmful behaviour is detected, as well as a monthly summary of their gaming activity. Also, users who are in this category will not be able to use credit cards to finance their gambling spend.

Primmer takes on the new role immediately. He will report directly to Aristocrat CEO and managing director Trevor Croker.

This represents Primmer’s most senior role with Aristocrat since joining the group in August 2014. Primmer was most recently chief product officer for Aristocrat’s land-based business, serving in the position for four years.

Prior to this, he spent time as executive vice-president and senior vice-president of global products and insights. He also had a spell as senior director of portfolio planning and strategy for the Americas at Aristocrat.

Before joining the business, Primmer worked as domestic product marketing manager at Ainsworth Game Technology. Other roles include CEO of United Technology Services and sales executive for Shuffle Master.

CEO welcomes “proven gaming experience” to executive team 

Speaking about the appointment, CEO Croker says he is delighted to welcome Primmer to the company’s executive team.

“Over the past decade, Matt has made a strong contribution to building and extending Aristocrat’s global product leadership, fostering our outstanding creative and technical talent, championing D&D (design and development) and placing customer needs at the centre of our product strategy,” Croker said.

“Matt’s appointment brings additional, proven gaming experience to the executive team. In his new role Matt will help us maintain an enterprise view of product strategy as our business grows to encompass a broader range of product verticals, while also ensuring the most effective allocation of D&D investment.”

Revenue rises 13% at Aristocrat in 2023

The appointment comes after Aristocrat posted a 13.0% rise in revenue for its 2023 financial year. Published in November, the results show revenue for the year amounted to AU$6.30bn (£3.23bn/€3.78bn/US$4.09bn).

Figures reveal widespread success in the gaming and technology business, with EBITDA and certain measurements of profitability rising.

For the group, net profit after tax and before amortisation of acquired intangibles was 46.7% higher at $1.54bn. In addition, normalised EBITDA amounted to $2.11bn, up 33.2% from the previous year.

At the time, Croker highlighted the impact of acquisitions. These include Roxor Gaming in January 2023, which led to the wider development of the Anaxi online arm. 

Aristocrat is also closing in on the acquisition of NeoGames, with a $1.20bn deal struck in May. This is set to complete before the end of H1 in calendar 2024. 

With this, Croker hinted at more acquisitions in 2024 as Aristocrat continues to seek out new growth opportunities.

IGT will spin off its Global Gaming and PlayDigital businesses, which will then combine with Everi. Under the agreement, IGT shareholders are expected to own around 54% of shares in the combined business. Everi stockholders will own the remaining 46%.

The move, which values the merged businesses at $6.2bn (£4.9bn/€5.7bn) based on enterprise value, has been approved unanimously by both companies’ boards of directors. The deal is expected to close either later this year or in early 2025.

Following the close, Everi will change its name to International Game Technology Inc. It will also trade on the New York Stock Exchange under the ticker IGT.

Marco Sala, executive chair of IGT’s board, said the deal would integrate two companies with similar business capabilities and potential.

“The transaction will combine two robust gaming platforms with complementary capabilities, geographic footprints and enhanced growth opportunities.”

IGT chief executive Vince Sadusky will lead the combined company. In addition, Everi executive chairman Michael Rumbolz will serve as chairman of the board of directors.

“We are bringing together two businesses with complementary strengths that are stronger and more valuable together,” Sadusky added. “The combination results in a comprehensive and diverse product offering, addressing more aspects of the gaming ecosystem across land-based gaming, igaming, sports betting and fintech.”

“Compelling growth prospects” for IGT and Everi

The aim of the move is to create a “one-stop shop” for the businesses’ offerings. Projective pro forma revenue for 2024 stands at an estimated $2.7bn, as well as adjusted EBITDA of around $1bn for the year.

Around $85m in cost savings will be created. The strong balance sheet will also allow for flexibility for further investment and return capital to shareholders.

The deal is expected to create over $800m of annual adjusted cash flow in the second year, as well as projected pro forma 3.2-3.4x net debt to adjusted EBITDA leverage ratio.

Deutsche Bank and Macquarie Capital will commit $3.7bn to the deal, as well as a $500m revolving loan facility. Around $1bn of that will be used to refinance Everi’s existing debt, while IGT will receive around $2.6bn. The rest will be used to pay the financing fees of the combined businesses.

Strategic benefits

IGT says the move will allow for the company to operate as a pure-play global lottery business with a “focused, compelling business model” thanks to a “best-in-class” team.

Synergies created by the deal include an IP portfolio that includes successful game franchises across a range of verticals.

The move also allows for IGT to leverage its sales and distribution network to allow Everi’s content and fintech solutions to be introduced to customers outside of the US.

The revenue increase was driven by growth within its Fintech division, where revenue was up 9.4% in 2023. However, the news was not so good for the Everi Games arm, with revenue down 1.7%.

Perhaps of more concern is a drop in group revenue in Q4, despite reporting growth in the other three quarters. This was attributed to a decline within Gaming while Fintech revenue was only marginally up in Q4. Net profit dropped by 85.2%.

However, this was seemingly not enough to put off International Game Technology (IGT) from pursuing a merger with Everi. This was announced today (29 February) alongside the results. 

IGT will spin off its Global Gaming and PlayDigital businesses, which will then combine with Everi. IGT shareholders are set to own 54% of shares in the combined business, with Everi stockholders holding the remaining 46%.

Impact of acquisitions for Everi

The IGT merger will seemingly halt any further M&A activity at Everi. The group has been on something of a spree in recent years, adding several new assets to its business. 

Recent deals include acquiring the assets of electronic bingo provider Video King in April 2023. In 2022, Everi also purchased certain assets from Venuetize, as well as more assets from Atlas Gaming and several properties from XUVI in 2022.

Some of these assets have now been part of Everi for more than a year and their long-term impact is yet to be seen. However, given that Everi as a whole will soon be part of IGT and benefitting from the tech giant’s colossal industry status, there is room for development.

This opinion is shared by Everi CEO Randy Taylor, who referenced the IGT merger as an exciting opportunity for the business.

“This morning, we announced the strategic combination of Everi with IGT’s Gaming and Digital businesses,” Taylor said. “We are excited about the opportunity to bring together the two companies to create a world class leader in gaming solutions for our customers.    

“After several years of rapid growth, 2023 was a transitional year in our gaming business as we executed on our roadmap which included the introduction of four new cabinets and new content. Our FinTech business continues to perform well, adding new products and services to our suite of financial access, RegTech and loyalty solutions.”

A tale of two businesses

Looking at Everi’s segmental performance in 2023, Games produced the most revenue at $429.2m. However, this was down from $436.4m in the previous year.

Gaming operations produced the most revenue for this segment, but the $304.1m was down year-on-year. Incidentally, gaming equipment and systems revenue also dipped to $125.0m.

As for FinTech, revenue was up to $378.7m seemingly closing the gap of the Games arm. This was helped by an 8.8% rise in financial access services revenue to $225.1m, while software and other revenue increased 24.1% to $99.5m.

The only downside for FinTech, however, was hardware revenue, which slipped 8.3% to $54.1m.

Net profit falls after spending rises 

Looking at expenses, cost of revenue for Games was, understandably, lower year-on-year. Everi was also able to keep FinTech revenue costs level despite growth in the division.

However, Everi reported higher spending elsewhere. Operating expenses jumped 20.2% to $260.9m and research and development 11.7% to $67.6m. Depreciation and amortisation costs were also higher, with overall costs for Everi rising 10.4% to $628.5m.

The group also reported an additional $77.7m in finance costs, up 39.3%. As such, pre-tax profit for 2023 hit $101.6m, down 35.5%. 

Everi paid $17.6m in tax but noted a $730,000 gain in foreign exchange translation. As such, net profit for the year stood at $84.7m, a decline of 28.0%. In addition, adjusted EBITDA was 1.9% lower at $367.0m.

Q4 concerns for Everi

Turning to Q4, as already reported, revenue was down $192.0m, compared to $205.4m in 2022.

Games revenue declined 14.2% to $97.1m, reflecting a decrease in revenue from machine sales and gaming operations. FinTech revenue edged up 3.0% to $94.9m on the back of financial access services and software growth, although hardware revenue was down.

Spending-wise, cost of revenue across both Games and FinTech was lower year-on-year. However, as was the case in the full year, increased expenses elsewhere pushed overall costs up 10.9% to $170.5m.

After accounting for $19.7m in finance expenses, pre-tax profit hit $1.9m, a far cry from the $34.4m profit posted in 2022. However, Everi was helped slightly by a $2.4m gain in foreign exchange translation and a small tax benefit.

As such, it ended Q4 with a net profit of $4.3m, still some way short of the previous year’s $29.0m total. In addition, adjusted EBITDA fell 12.0% to $82.2m.

What can we expect in 2024?

Although Everi will almost certainly be operating as part of an enlarged group in 2024, given today’s news about IGT, the business still published certain forecasts for the current 12 months.

Importantly, Everi said it expects revenue growth in both the Games and FinTech segments. It also said adjusted EBITDA will be slightly higher year-on-year, with free cash flow flat or marginally down.

Looking at this segment-by-segment, Everi said continued growth in FinTech will be driven by its expectation for low-single-digit industry growth. It also noted the benefit of new products and services to both new and existing customers.

As for Games, Everi expects continued pressure in game sales and declines in the installed base in H1. This will be in line with the ongoing roll-out of new cabinets and content, as well as the removal of lower-performing gaming operations units. Everi says this will maximise return from invested capital, primarily in the early part of 2024. 

Silvania made the comments during the first reading of the LOK in the jurisdiction’s parliament. The LOK, which is set to replace the current legislation, the National Ordinance on Offshore Games of Hazard (NOOGH), first entered Curaçao’s parliament for approval last December.

Silvania acknowledged that Curaçao has garnered a negative reputation in terms of money laundering. However he emphasised that the LOK would work to change that.

“Curacao, as a small island, has faced significant challenges regarding its reputation in the online gaming industry,” Silvania explained. “We have often been portrayed as a hub for criminal activities and money laundering, contributing to a negative image. However, this perception is set to change with the LOK.”

He added it is “crucial” to recognise that online gaming offers a high risk of money laundering. In doing so, he implored parliamentarians to see how the LOK could help alleviate this.

“The new law will enhance our reputation by promoting transparency, accountability and compliance with international standards in these critical areas.” Silvania continued.

AML issue “critical” for Curaçao

The minister continued to stress the timing of the LOK’s implementation ahead of the Financial Action Task Force (FATF) and the Caribbean FATF’s (CFATF) evaluation of Curaçao later this year.

“This year, Curaçao will undergo a mutual evaluation by CFATF. Where the laws and measures taken by Curaçao to combat money laundering will be scrutinised,” Silvania explained. “Therefore, this law must be accepted and implemented as soon as possible.”

During his speech, Silvania blasted the misinformation and misreporting surrounding the LOK, which he had also previously condemned. Silvania described the misinformation as “regretful”, adding that it has the potential to do serious harm.

“The CFATF assessors who are conducting the MEVAL of Curaçao are also following our news,” he continued. “Consequently, they are also capable of believing the wrong information that comes out in the media and that certain parliamentarians are vociferating.”

Last September, Silvania noted that the LOK would provide a “safety net” from a potential grey-listing.

Beyond the AML implications, Silvania acknowledged incorrect reporting regarding the recent issuance of licences. He clarified that the licences were issued under the existing regime – the NOOGH – and not the LOK, which is incoming.

He advised that the strict conditions and policies attached to the new licences helps to align “Curaçao licence holders with the expected standards and operational responsibilities that exist in the gambling industry today – in particular with anti-money laundering which is a critical issue for Curaçao at this time.”

Silvania insists LOK is a combined effort

Silvania also addressed rumours that the LOK had been drafted privately without input from industry stakeholders.

“Nothing could be further from the truth,” he stated. “The LOK was not drafted in a bubble. Widespread local and international input and consideration is a fundamental part of what the LOK has become today.”

Further, Silvania outlined the potential benefits of the LOK for Curaçao’s economy. He explained that under the NOOGH, Curaçao’s government receives ANG120,000 (£52,894/€61,810/$66,901) per year per licence. Comparatively, in jurisdictions such as Malta or the Isle of Man, direct licence revenue can be up to €82m.

“Let me be clear – the Curaçao gambling industry has more licences than these jurisdictions combined, but the funds in Curaçao are being directed to the private sector or else offshore,” Silvania explained. “The government and the people are being robbed of their rightful income.”

Silvania confirmed details of the LOK licence fees last December. He stipulated that this would just be the beginning for Curaçao’s economy, which could see improvements to education and health.

“In a well-managed gambling jurisdiction those direct revenues to the regulator are just the beginning of the influx of money,” said Silvania. “The overall impact is monumental and demonstrates the real potential value to the economy which can start investing more in education, health and infrastructure for the long-term benefit of the entire population.”

Curaçao’s LOK: Where are we now?

The first reading of the LOK in parliament represents a milestone for the legislation, which has been creeping closer to implementation over the last six months.

The jurisdiction’s new licensing process opened on 1 September 2023, as the Gaming Control Board (GCB) opened the licence application portal. This kicked off a period of transition for Curaçao’s gaming industry.

Later that month Hilary Stewart-Jones was confirmed to be joining the GCB as an adviser. When the LOK comes into force, the Curaçao Gaming Authority will take over as the new regulator.

Last November, the licence application portal began to accept account registrations for applicants and those holding sub-licences.