Month: March 2024

In a statement today (27 March), Baker said that the decision came after reports of athletes being harassed in relation to college prop bets.

“Sports betting issues are on the rise across the country with prop bets continuing to threaten the integrity of competition and leading to student-athletes and professional athletes getting harassed,” said Baker.

He added that some states contacted by the NCAA in reference to the threats outright banned college prop bets. “The NCAA has been working with states to deal with these threats and many are responding by banning college prop bets.”

One of these states was Ohio. Last month, its Casino Control Commission (OCCC) banned player prop bets on college sports following a request from the NCAA. Baker had reached out to the commission’s executive director Matt Schuler and requested a ban on college prop bets. Operators in Ohio had until 1 March to put the restrictions in place.

This follows the NCAA launching a number of student-athlete protection measures in recent months. These were sparked by a study it issued in September, which found one in four leading US college sports programmes had received reports of student-athletes being harassed by gambling-involved persons.

The following month it called for states to update existing laws to give more protections to college athletes and launched its first ever sports betting e-learning module.

Baker hopes states follow Ohio, Vermont and Maryland’s lead

Baker confirmed that the NCAA would continue to reach out to states regarding the harassment, specifically asking them to consider banning college prop bets.

“This week we will be contacting officials across the country in states that still allow these bets and ask them to join Ohio, Vermont, Maryland and many others and remove college prop bets from all betting markets,” he continued.

“The NCAA is drawing the line on sports betting to protect student-athletes and to protect the integrity of the game – issues across the country these last several days show there is more work to be done.”

Maryland’s prohibition on college prop bets took effect from 1 March. Vermont, meanwhile, announced its ban earlier this month.

Last week, NCAA launched ‘Draw the Line’, a campaign that aims to educate student-athletes about sports betting and gambling harm.

The industry is literally begging for a shot at competitive market. Taken together, the events that have unfolded over the last five years are truly shocking. And they are coming to a head.

Just over two weeks ago, iGB broke the news that the Office of Lottery and Gaming (OLG) had approved vendor Intralot’s proposal to hand over the lottery’s sports betting platform to FanDuel. There is no question that having access to FanDuel across The District will be an upgrade from a platform that has underperformed and been consistently criticised.

But wouldn’t The District be better served by an open, competitive market? Why does the lottery continue to be loyal to Intralot? Could the DC Council solve the sports betting disaster in DC?

The value of a competitive market

There is proof across the country that competitive markets not only serve consumers better than single-source markets, but that revenue to the state or, in this case, city, is higher. There are four legal online betting states that use the single-operator model: Delaware, New Hampshire, Oregon, and Rhode Island.

In all four cases, like in DC, the regulator is the state lottery. Of the four, only New Hampshire had a competitive bid process. All four have revenue-share models with their respective state lotteries, which get a cut of at least 49% of adjusted gross revenue.

DraftKings operates the platforms in New Hampshire and Oregon, and Casears Sportsbook handles risk management and odds in Delaware and Rhode Island.

“Broadly speaking, more competition ensures that consumers get access to better pricing, more generous promotions, and stronger products,” Chris Grove, co-founder of Acies Investments and partner emeritus of Eilers & Krejcik Gaming LLC, tells iGB. “All of that should result in a market that is also more productive from a tax perspective.”

How does DC compare to other single-operator jurisdictions?

GambetDC consistently performs so poorly that in February it was not the top performer in The District. Even though it is the only online sportsbook available throughout the city, Caesars topped the rankings. It also compares unfavorably to the four other single-operator markets in the US.

Here’s a look at tax revenue for three of the single-operator markets. Oregon, which is much larger by population, does not publicly post sports betting financials:

Delaware

Population: 1m

Total tax revenue: $1.4m (January 2024-February 2024)

Average tax revenue per month: $679,806

New Hampshire

Population: 1.4m

Total tax revenue: $104.6m (December 2019-February 2024)

Average tax revenue per month: $2.1m

Rhode Island

Population: 1.1m

Total tax revenue: $85.5m (November 2018-January 2024)

Average tax revenue per month: $1.6m

Washington, DC

Population: 678,972

Total tax revenue: $4.3m (May 2020-December 2023)

Average tax revenue per month: $97,727

Even adjusting those numbers given DC’s smaller population, the platform lags far behind platforms in other single-operator states in terms of tax revenue, and then by definition, handle and gross gaming revenue.

No platform truly has all of DC

GambetDC’s problems are well-documented. Consumers say it is difficult to navigate, the odds aren’t as competitive as in other jurisdictions and there was an outage during the Super Bowl in 2022.

But no platform is or will be truly available throughout Washington, DC. The city provided a massive challenge to GeoComply, which provides geolocation services to the lottery and operators.

Wagering is prohibited on federal lands, from the National Mall and the Smithsonians to national parks within The District and some individual buildings. Beyond that, there is a two-block exclusion zone around each of the city’s professional sports facilities. GambetDC cannot operate in those zones, which are the domain of the operators partnered with each facility.

BetMGM and Caesars operate online sports betting at Nationals Park and Capital One Arena, respectively, and within a two-block radius of those stadiums. FanDuel, partnered with Audi Field, could do the same, but has not launched a platform.

The market share argument

When the DC Council in 2019 approved the scenario that gave the lottery the option to expand Intralot’s contract and create a single-operator market, only New Jersey had launched mobile betting.

By the time GambetDC debuted in May 2020, nine other markets had gone live with digital sports betting. Of this number, six launched competitive markets and three single-operator models.

While the DC Council was considering the model, the lottery argued that expanding the Intralot contract to include wagering would allow it to get to market quickly. A 2019 study by Spectrum Gaming projected an open-bid process would delay any sports betting launch until 2022.

Looking back, the decision to go with single operator was the start of the sports betting disaster in DC. And while considering whether or not to legalise at all, one of the critical arguments was that being first to market would allow The District to “capture market share in its region”. This was based in part on the Spectrum study, in which the authors wrote the lottery would “gain a head start over its closest geographical competitors”.

Waiting to bring GambetDC to market would allow Maryland and Virginia to “establish customer relationships with portions of DC’s potential base depriving the DC potential revenue that may never be recovered”, Spectrum’s authors wrote.

It appears that happened anyway.

Maryland and Virginia get in the mix

Between 2019 and now, both DC border states – Maryland and Virginia – have launched competitive markets, with at least 10 choices for consumers. Both tax operators at 15% of adjusted gross revenue.

Maryland in February ranked fifth nationally in total handle despite being the 14th biggest legal online sports betting state. According to the Visual Capitalist, both states in 2022 ranked in the top 15 in total handle for retail and digital wagering.

On the same list, DC was ranked 22nd. Virginia launched mobile in January 2021 and Maryland launched mobile in November 2022.

The speed-to-market argument doesn’t resonate with DC Councilman Kenyan McDuffie.

“First to market?” he said during a Business and Economic Development meeting 18 January. “That didn’t play out.”

Why did it take so long for a change?

During that meeting, McDuffie pointedly questioned lottery chief Frank Suarez, who repeatedly said that approving Intralot’s proposal to subcontract with FanDuel was the “fastest solution.”

The proposal, McDuffie said, is rife with problems. Not the least of which is that nearly five years after the lottery made the deal and four years after GambetDC went live, the DC Council was made aware of the subcontracting idea just six months before Intralot’s sports betting contract with The District expires.

“I’m taken aback that it has taken five years for you to make a change,” McDuffie said. “And here we are in January and the contract ends at the end of July.”

McDuffie isn’t the only one who finds the timing questionable.

“I don’t think that the lottery has handled this correctly by avoiding a competitive process,” vice president of Government Affairs for Fanatics Betting & Gaming told iGB. “They’ve had four years of mismanaging sports betting in The District.

“They are now just months before the contract expires, and they have a better option? Why they have waited this long is perplexing to me. I am glad to see that Chairman McDuffie is taking the lead on providing consumers options.”

McDuffie’s bill one potential solution

Two months after that meeting, McDuffie dropped a bill that would essentially nullify the Intralot-FanDuel deal. That is where the DC Council’s power lies. While it cannot stop the lottery from making a deal with a subcontractor, what it can do is nullify a contract by creating a whole new set of rules.

McDuffie’s bill would create a competitive market, and interested operators would have to go through a bid process. The industry wholeheartedly supports the ideas of a competitive bid process and the resulting competitive market.

“They need to tear down the rule and start again,” gambling consultant Brendan Bussmann of Las Vegas-based B Global Advisors says.

The Sports Betting Alliance, a lobbying entity that represents BetMGM, DraftKings, Fanatics Sportsbook, and FanDuel, also supports a competitive market.

“The SBA is excited about the momentum around opening the marketplace,” an SBA spokesperson says. “They’ve long called for it and are looking forward to working with legislators.”

FanDuel declined to comment for this story.

DC wagering timeline for change could be tight

McDuffie’s bill was filed 20 March. Should the bill pass, the lottery would have to open a Request for Proposal and then review all the proposals to see if they meet the parameters of the RFP. From there, the lottery would then have to have vet the bids that meet the criteria before issuing licenses.

Traditionally, RFPs are open for 60-90 days, and while it’s not clear how long the lottery would need to review bids, let’s assume 60 days. In DC, bills are also required to be sent to Congress for a 30-day review period.

That means that even if the DC Council were to pass McDuffie’s bill today, it would go info effect right at, or likely past the date that Intralot’s sports betting contract expires. (Suarez couldn’t say exactly when that was, other than “in July”.)

In that scenario, District consumers could potentially be left without a mobile wagering platform that covers the city for some period of time. One source suggests McDuffie’s bill could be tagged with “emergency” status to speed up the process.

When bills are granted “emergency” status, they can move more quickly through the Council, but result is a law that lasts only 90 days.

BetMGM and Caesars to benefit?

Operators say they would be amenable to a shortened timetable. Such a situation would likely benefit BetMGM and Caesars Sportsbook, both of which are already operating online platforms in the District.

Should McDuffie’s bill become law, BetMGM and Caesars would essentially just be able to make a call to GeoComply. After instructing the supplier to lift the fences around their exclusion zone, their platforms would be available throughout DC. The process would be more time-consuming for companies not currently live anywhere in The District.

There’s value in competition

In the current scenario, it is universally accepted that many DC residents who bet leave The District to do so. And the promised wagering traffic commuters has not materialised.

In his rountable testimony, Fanatics Betting & Gaming’s Iden said that it “is no secret DC residents cross the border to Virginia and Maryland to gain access to their favourite mobile sportsbooks to place their bets”.

He went on to testify that 66% of Fanatics Sportsbook’s Maryland customer base and 7% of its Virginia customer base have tried to log into the platforms from DC. He also said that market penetration in DC hovers around 1-2% of eligible adults. On average, DC adults spent $2.32 per capita on wagering, compared to $21.27 in Maryland, and $10.85 in Virginia.

“The discrepancy between DC and its surrounding markets is an unfortunate byproduct of the difference in market structures,” he said.

Eilers & Krejcik Study shows that even in the best-case scenario a DC Lottery monopoly for DC Wagering won’t generate as much tax revenue as a multiple-operator model.

Some of Iden’s statistics came from an Eilers & Krejcik study, “Comparative Analysis: Maximizing District Revenue from Regulated Sports Betting”. The authors of the paper project a 143% increase in total revenue in a mutiple-operator market vs. a single-operator market with the lottery as the only operator.

“A number of factors impact the projected difference in total revenue generated by a DC Lottery-exclusive sports betting and a market where multiple operators are allowed to compete,” the authors wrote.

“We believe the most salient are: increased market spend, pricing and promotional competition, increased out-of-District demand capture, and increased illegal market demand capture.”

Of the single-operator model, Bussmann says: “I think you limit the market and you’re leaving money on the table and allowing the black market to get in. There’s limited choice — limited pricing, limited across the board. They don’t have to provide competition.”

Loyalty to Intralot a mystery

Dating back to 2008, when the lottery first awarded its contract to Intralot there were concerns about how aboveboard the process was. According to the City Paper, at least two councilmembers were accused of “steering” at that time.

When the DC Council legalised sports betting in DC, there was pushback from some members of the council as soon as the lottery announced that it would bypass the competitive bid process and expand Intralot’s deal with the city.

The City Paper then revealed nearly every member of the DC Council had some sort of personal or business connection to wagering lobbyists, including those lobbying for Intralot.

Soon after legalisation, then DC Council chairman Jack Evans became the focus of an ethics investigation. He was forced to resign after it came to light that his partner in his consulting business was also a lobbyist for Intralot.

Other questions arose, including why Spectrum Gaming, which has a business relationship with Intralot, was hired to do the study.

The study ultimately grossly overestimated gross gaming revenue (GGR) in The District from legal sports betting. The entire DC market has accumulated $86m in GGR since launch while Spectrum project $84m for 2023 alone for GambetDC.

Another question arose when an Intralot subcontractor with close ties to Mayor Muriel Bowser was selected for and then paid for a contract it did not fulfill, according to the City Paper. Five years later, the lottery remains loyal to Intralot.

‘The definition of insanity continues to remain true in DC’

By agreeing to install FanDuel as a subcontractor, the lottery is also agreeing to extend the Intralot sports betting contract.

In his letter to the DC Council outlining the deal, the lottery’s Suarez explains that the lottery gets a $5m “platform conversion fee” from FanDuel. If the contract is extended, Intralot will pay the lottery $10m in “guaranteed revenue per contract year for the four years following 2025”.

It’s not clear why the lottery has such an allegiance to Intralot. Suarez – the third lottery director since sports betting was approved – fell back on the “fastest to market” argument when pressed about why Intralot should be able to continue the sports betting contract.

“The definition of insanity continues to remain true in DC,” Bussmann says. “You had a no-bid process that started a market wrongly, and now you have a no-bid process that adds an extension to the term. This should be a competitive process that does what is best for the people of DC.”

The bill passed the House by a 92-43 majority on 14 March. However its Senate introduction sparked debate potential blockers such as fears of brick-and-mortar cannibalisation and an increase in gambling addiction.

HB 1319 would allow for statewide online casino in a state that has a mature retail casino market and introduced digital sports betting in November 2022.

If online wagering is any indication, online casino has the potential to be wildly successful. Maryland is already ranked among the top states for sports betting handle despite being the 14th biggest state by population to launch wagering, and set a record for its first five days.

But time is running short this session. The General Assembly is set to adjourn 8 April, and after the bill passed the House 14 March and reached the Senate 16 March, it has sat in the Budget and Taxation Committee with no action.

The delay likely means that the committee doesn’t have enough votes to move Maryland online casino, and that lawmakers continue to negotiate.

“We already have iGaming going on in the state of Maryland,” sponsor Delegate Vanessa Atterbeary told the committee. “It is illegal. You have folks going on their phones or their computers and doing iGaming with somebody in Curaçao or somewhere far away, not here in the state of Maryland. It is incumbent on us to capture that market and regulate it.”

Bill earmarks 1% of taxes for PG and RG programs

HB 1319 was one in a long list of bills introduced to the committee Tuesday, and there was no verbal public testimony. Bill sponsors were allowed to describe their bills and committee members asked questions. Committee chair Guy Guzzone did not indicate when or if a vote would be scheduled.

Atterbeary outlined the bill, including sharing that there would be money set aside for responsible and problem gambling issues, and that fears of cannibalization are overstated.

Atterbeary quoted multiple studies, saying that 1% of the population has or is at risk for a gambling problem. That number is on point for those will develop a “severe” gambling problem, according to the National Council for Problem Gambling, but the organisation projects another 2-3% of Americans are at risk.

The bill sets aside 1% of tax dollars to fund problem and responsible gambling initiatives.

Maryland online casino likely last one standing

Atterbeary addressed concerns about cannibalisation and also pointed out that the bill includes $10m for a fund for existing casino workers.

Advocates for online casino argue there is a synergy between online and retail products and that lost business is minimal. Opponents say that may be true for major companies that offer both options, but for retail-only operations, they say, the cannibalisation rate may be higher.

Senator Joanne Benson referred to a new study from Morgan State University’s Data Analytics and Sports Gaming Research department that she called “devastating for people of color” in terms of job loss.

Legalising online casino has proved a heavy lift in 2024 for myriad reasons. Lawmakers in Illinois and New York, among other states, have already abandoned the effort.

The effort in Maine stalled in late February after lawmakers in a work session were split on support vs. opposition.

It is in the “public interest” that Crown retains the licence, the VGCCC said. Crown Melbourne is the largest single-site employer in Victoria. 

The decision follows widespread changes at the casino in the wake of the Royal Commission into casino licences. The Commission was scathing in its criticism of what it deemed “illegal, dishonest, unethical and exploitative” behaviour.

In October 2021, the report published by the inquiry deemed the casino “unsuitable” to hold a casino licence in Victoria. However, Crown should not immediately lose its licence due to the potential economic impact, it added.

The Commission instead set out a series of recommendations to improve practices. Over the following two years, Crown made wholescale changes to operations to comply with such measures. These included new safer gambling responsibilities to prevent gambling harm such as a mandatory cooling-off period.

This transformation included the Melbourne Remediation Action Plan, which implemented 342 initiatives across eight workstreams. Areas of focus included financial crime, compliance and risk, governance, harm minimisation via Crown PlaySafe and culture.

The Victoria government then appointed a special manager to oversee operations and remediation at the casino. The VGCCC was created as a sole regulator for gambling in the state, with a specific set of enhanced powers with respect to the casino.

Following these steps the Commission was given the responsibility of deciding whether Crown was suitable to hold the licence. Having taken into account Crown’s effort, with the operator saying it spent over AU$200.0m (£103.4m/€120.6m/US$130.9m) on its transformation, the operator held on to its licence.

Crown addresses “systematic failures”

Speaking on the case, Commission chair Fran Thorn said the special manager’s final report concluded Crown Melbourne remediated the failings exposed in the Commission. It also established “critical foundations” to achieve sustainable overall transformation.

“There was no evidence of maladministration, or illegal or improper conduct indicative of the serious and systemic failures previously identified by the Commission,” Thorne said. “These failings had been addressed.

“In return for the privilege of an exclusive licence, Victorians have a right to expect that Crown Melbourne will never again prioritise profit ahead of the safety and wellbeing of its patrons and staff or over compliance with its legal and social obligations.”

Crown will continue to be under scrutiny in the state, Thorn added. It must deliver further transformation through a statutory direction, with details to be issued shortly.

“That transformation plan will be at the heart of our oversight, along with Crown’s legal and social obligations, and provides the next level standard for Crown Melbourne,” Thorn said.

“Crown Melbourne must continue to seek to rebuild and earn public trust by demonstrating the good character, honesty and integrity that are necessary to remain a suitable casino operator. We put Crown on notice that we will not hesitate to act if the privilege of holding the licence is again abused.”

Crown Melbourne welcomes “significant” milestone 

The decision will come as a welcome relief to Crown. The operator has already faced heavy regulatory penalties in the state in the wake of the Commission.

In November 2022, the VGCCC issued Crown Resorts two fines totalling a record $120m for a series of failings. The VGCCC said Crown failed its responsible service of gambling obligations over a number of years. Customers gambled for long periods without a break, sometimes for more than 24 hours, it found.

Retaining its Victoria licence ranks among the most significant milestones in Crown Melbourne’s 30-year history, property CEO Mike Volkert said.

“What we have achieved must be a continual focus for everyone at Crown Melbourne,” Volkert said. “We know the work doesn’t stop here, and we are committed to delivering the highest industry standards and putting the welfare of our guests at the forefront of decision-making, day in and day out.

“Crown Melbourne is now the safest venue in Victoria for gaming and entertainment. We look forward to continuing to welcome our guests.”

The Blackstone impact 

Crown Resorts CEO Ciaran Carruthers also welcomed the decision. He said the acquisition of Crown by private equity giant Blackstone in June 2022 played a major part in the successful transformation.

“Since the acquisition by Blackstone, and the appointment of new boards and a executive leadership team, Crown has pioneered one of the most complex transformations ever undertaken in Australia,” Carruthers said.

The steps taken amounted to “fundamentally rebuilding our organisation from the inside out”, in Carruthers’ eyes.

“Holding a casino licence is a privilege and an obligation we take extremely seriously. I am proud of what our team has accomplished and the safe environment Crown Melbourne now operates in.

“Together we have built a stronger, better Crown. Our unrelenting focus will remain on delivering the highest standards of integrity, harm minimisation and service excellence across our industry.”

Hailing a strong performance in 2023, Jackson highlighted growth in almost all segments at Flutter. Revenue was up across the US, UK and Ireland, and International segments with only Australia reporting a small decline. 

As reported in its preliminary results in January, operations in the US were the main driver behind its success. Through FanDuel, Jackson says Flutter holds a market leading position in the country, with activity in the US resulting in positive annual adjusted EBITDA for the first time in 2023.

Flutter’s success in the UK and Ireland was also clear to see, while its International business continues to grow. While the Australia decline is a dampener on what was otherwise a solid year, there is hope for future growth.

In fact, such is Jackson’s and Flutter’s optimism that double-digit growth is forecast across group revenue and adjusted EBITDA for 2024. Flutter said revenue is expected to increase 17.5% and adjusted EBITDA 30.2%, both at midpoint.

“Flutter delivered a strong 2023 performance as we continued to deliver on our strategy,” Jackson said. “This was underpinned by a localised approach to technology and product coupled with the unique scale advantages of the Flutter Edge.

“As anticipated, our number one position in the US has transformed the group’s earnings profile during 2023 as FanDuel delivered a positive US full year adjusted EBITDA for the first time. 

“Outside the US we made excellent progress integrating Sisal into our International business, a business. This is a great example of our ‘local hero’ strategy at work and took market share in UKI.”

Flutter shares launch on New York Stock Exchange

The group’s focus on the US stretches beyond actual operations and into the financial world. In January, Flutter commenced trading on the New York Stock Exchange (NYSE) in the US.

This marked the end of Flutter’s secondary listing on Euronext Dublin. Flutter will, however, continue to trade on the London Stock Exchange (LSE) and will retain its premium listing on the exchange.

However, Flutter still has some work to do in relation to the US listing to ensure reporting is fully compliant with GAAP and SEC reporting requirements. This includes “ensuring full segregation of duties” and “re-designing key controls”.

Also of note is training finance and technology staff to ensure they understand their responsibilities regarding the performance and evidencing of key controls over financial reporting. This, Flutter said, will assist with the escalation of any issues or deficiencies that may occur.

Flutter shares closed at $221.99 at the end of trading yesterday (25 March). 

“I was proud to see Flutter shares trading for the first time on the NYSE on January 29,” Jackson said. “We have been encouraged by the increased focus from new US investors as a result of our US listing. 

“We are working towards a shareholder vote on 1 May to approve our primary listing move to NYSE.”

US revenue tops $4.48bn 

Staying in the US, Flutter’s breakdown of its segmental performance in 2023 showed the US led the way by some distance with revenue of $4.48bn, an increase of 40.6% from the previous year. 

Sportsbook revenue in the US was 45.9% higher year-on-year and igaming revenue jumped 47.2%. Flutter said sportsbook revenue benefitted from expansion into three additional sportsbook states, a full year’s contribution from 2022’s new state openings and 24.8% growth in pre-2022 states. As for igaming, growth was driven by strong player volumes despite a limited total addressable market.

Looking at US operations as a whole, net gaming revenue market share stood at 53.4%, up from 43.2% in 2022. FanDuel acquired over 3.7 million new betting and igaming players in 2023, 19.0% up from the previous year, with average projected payback period on investment to acquire customers in line with recent years at less than 18 months. 

“When combined with the strong contribution from our existing player base, this will drive the long-term profitability of the business,” Flutter said.

Double-digit growth for UK and Ireland and International

Away from the US, there was more success for Flutter in the UK and Ireland. Here, revenue was up 13.7% to $3.05bn, driven by continued expansion of recreational customer base. 

Sportsbook revenue in this region was 10.5% higher year-on-year while igaming revenue jumped 18.1%. Overall market share across retail and online was also 2.0% higher at an estimated 30.0%. 

“Our continuous focus on our product proposition saw us further enhance our higher-margin Bet Builder and Build-A-Bet parlay products,” Flutter said. “We added exclusive new betting markets, and launched well-received new products like ‘Acca Freeze’ on Sky Bet which drove increased penetration of these high-margin products and benefitted our net revenue margin. 

“We also rolled out new igaming features with improved cross-sell journeys for sportsbook customers to igaming products and expanded content, particularly for live casino.”

As for the International business, this covers all other markets outside the US, UK, Ireland and Australia. Revenue here increased by 34.2% to $2.81bn, with Italian-facing Sisal alone drawing $1.22bn.

In addition to Italian growth, Flutter reported a higher market share in Georgia and Armenia, as well as success in Brazil, Spain and Turkey. As for further growth in this segment, Flutter says the recent acquisition of a majority stake in Serbia’s MaxBet will support this moving forward. 

“The effectiveness of our International strategy to buy and build podium positions was evident from our strong 2023 performance with growth,” Flutter said. “We continued to focus on targeted investment and a local hero strategy in key ‘Consolidate and Invest’ markets, while optimising the PokerStars business which has a greater presence in our ‘Optimise and Maintain’ geographies.”

Disappointment in Australia 

The only segment to report a decline in 2023 was Australia with revenue falling by 7.1% to $1.45bn. Flutter said this was due to a softer racing market environment during 2023 when compared to 2022. The previous year also benefited from higher levels of customer engagement following Covid related restrictions.

Flutter noted a softness in the racing market across the second half of 2023, with this set to continue into 2024. However, there is hope for future success in the country

“We expect the challenging market, along with increased regulatory and compliance costs, to reduce Australian profitability further in 2024,” Flutter said. “However, we believe Sportsbet’s scale, 45% market share, and leadership in brand and product, position us well for the future.”

PokerStars impairment charge hits Flutter

Turning to costs for 2023 and spending was higher in most areas. Cost of sales was the main outgoing at $6.20bn, up 28.9%. Elsewhere, sales and marketing spend climbed 25.4% to $3.78bn, general and administrative expenses 36.2% to $1.60bn, and technology, research and development costs 38.6% to $765m.

Included within the sales and marketing expenses was a $725m impairment charge related to the PokerStars trademark dispute. In Q4, Flutter said that it recognised the intangible asset impairment, reflecting its ‘local hero’ strategy and PokerStars’ presence in predominantly lower growth ‘optimise and maintain” markets.

In December 2023, Flutter chose to move away from the existing capital intensive PokerStars technology. This was with the aim of improving efficiency and performance by leveraging technology and marketing resources.

As a result, Flutter revaluated its asset grouping of PokerStars’ acquired intangible assets. It decided the impact of the lower projected royalty revenue caused by the decision to change the strategy and operational model lowered the sum of undiscounted cash flows to below the book value.

As such, it had to recalculate fair value. The new estimate of fair value is $337m to $533m, depending on assumptions. This suggests PokerStars devalued by at least 57% after the impairment.

“The impairment was primarily driven by an assessment of strategy and operational model aimed at maximising the value of PokerStars’ proprietary poker assets consistent with our International segment strategy to combine global scale with local presence,” Flutter said.

Net loss reduced despite higher spending

After also taking into account non-operating spending of $542m, this left a pre-tax loss of $1.09bn, compared to $295m in the previous year. Income tax payments totalled $120m, with net loss hitting $1.21bn, wider than $370m in 2022.

However, there are more figures to note – namely the impact of foreign currency translation. In the previous year, Flutter reported a negative impact of $896m. However, for 2023, this was a positive $357m.

When also accounting for other finances including fair value of cash flow hedges, investment hedges and sale debt instruments, this had a marked impact on bottom line for Flutter. Total comprehensive net loss for 2023 amounted to $847m, compared to $1.41bn in 2022.

Furthermore, adjusted EBITDA for the year was 45.4% higher at $1.87bn, with an improved margin of 15.9%. This does not include the impact of the PokerStars impairment charge.

Strong start to 2024

As for current performance, Jackson said Flutter has had a good start to 2024. He referenced record Super Bowl engagement contributing to US revenue growth of 55.6% for the period from 1 January to 17 March. FanDuel also launched in North Carolina during this period.

Outside the US, revenue grew 6.3% as the market driven decline in Australia was more than offset by growth in the UK and Ireland and International businesses.

“We believe that our strategy and competitive advantages position us well to continue to grow the business through both organic and inorganic opportunities,” Jackson said.

From the outside looking in

Offering an independent take on the results, Edison Group’s head of consumer Russell Pointon says the results reflect a “nuanced” performance during 2023. Increased costs will be of concern, he adds.

“While the company achieved growth in key metrics such as average monthly players and revenue, it reported a net loss for the year driven by very high exceptional costs totalling $1.68bn including impairment charges,” Pointon said.

“Within this reported net loss, further adjusted EBITDA increased by 45.4%, notwithstanding challenges from customer-friendly sports results in Q4, which prompted investor scrutiny earlier this year. The US segment notably expanded, achieving its first year of positive Adjusted EBITDA, while internationally, a diversified portfolio contributed to overall growth.

“Looking forward to fiscal year 2024, Flutter anticipates continued growth, with revenue projected to increase by 17.5% and further adjusted EBITDA by 30.2% at the midpoint, reflecting confidence in future earnings and cash flow potential. 

“Adjustments to leverage ratio targets reflect confidence in the company’s earnings and cash flow potential, positioning it for sustained success. Attention will now shift to the shareholder vote in May to approve the move of the primary listing to the US.”

After a quarter century of virtually uninterrupted success, Naga Corporation faces two unprecedented challenges. For the operator of NagaWorld, the monopoly integrated resort in Cambodia’s capital Phnom Penh, one situation is far more easily addressed than the other.

In the post-Covid climate of decreased mainland Chinese international travel and the Middle Kingdom’s diminished appetite for overseas investment amid domestic economic woes, NagaWorld’s 2023 gross gaming revenue of US$514.8m was down 70% from US$1.7bn in 2019.

Its net profit fell 71% to US$52.3m, and EBITDA was off 56% to $295.3m. Naga shares traded in Hong Kong have fallen from an all-time high of HK$14.28 (US$1.83) in October 2019 to below HK$4 now. 

Beyond the numbers, Naga founder and CEO Chen Lip Keong passed away in December at age 75. Born in Malaysia and trained as a physician before finding success in property, Chen came to Cambodia during the early 1990s looking for oil.

Instead he struck gold in gaming, transforming Cambodia tourism from a punk rock punchline into a reality, boosting his fortunes and the host nation’s.

“Dr Chen’s biggest contribution and the thing I admired about him was his ability to envision what others scoffed at,” former Naga adviser Adam Steinberg says.

“If you think about the mid-1990s when he commenced operations at Naga, Cambodia was only 20 years removed from a civil war with a decimated population and widespread poverty. He had a vision to invest in the country, bringing in tourism to grow the economy.”

“First world destination”

Chen, the casino billionaire with whom I spent the most time and spoke with at greatest length, realised his ambition of creating “a first world destination in a developing nation”. Naga began gaming in 1995 on a rusty barge in the Bassac River off the Mekong. It holds a 70-year gaming licence to 2065, including a monopoly in Phnom Penh, extended to 2045 in 2019.

“Dr Chen was a visionary who knew exactly what he wanted and how best to achieve those goals,” Euro Pacific Asia Consulting managing partner Shaun McCamley says. “He was instrumental in putting Cambodia on the gaming destination map.”

In Steelman Partners CEO Paul Steelman’s eyes, “Dr Chen’s innovative approach established him as one of the original pioneers in the Asian gaming industry.

“His emphasis on maximising space utilisation by designing compact yet luxurious hotel rooms demonstrates a keen understanding of the preferences and habits of Asian gamblers.”

Steelman, architect of the Naga2 expansion opened in 2017 that elevated Naga to the top rank of Asian IRs, adds: “[Chen’s] insistence on achieving high quality standards while adhering to reasonable budgets underscores his pragmatic approach to realising his grand vision for Naga.”

Savvy politics

“Dr Chen illustrated the ability to develop an integrated resort in what many could consider a challenging political environment,” GMA Consulting managing partner Steve Gallaway says. “He did a fantastic job of weaving his way through Cambodian and Chinese politics to see the success of Naga come to fruition.”

Naga has long worked closely with Cambodia’s Ministry of Tourism. The company was instrumental in engaging state-owned China International Travel Service to organise tours from second-tier Chinese cities to Angkor Wat and Phnom Penh. The business also partnered with CITS affiliate China Duty Free on the retail section of Naga2.

In 2006, NagaCorp became the first gaming company to list in Hong Kong. This move was less about seeking financing than legitimacy, Chen told me. When Cambodia had only rudimentary anti-money laundering practices, Naga instituted its own AML regime based on global best practices and hired international experts to monitor compliance.

Stormy weather

“Naga’s openness to share their performance with investors and have open investor relations allowed them to weather many storms,” Gallaway says.

It faces perhaps its most dangerous storm in the wake of Covid, partly due to its own success. During its formative years, NagaWorld catered to neighbouring markets – Naga’s gaming is for foreigners only – starting with Vietnam, which opened its first casino for locals in 2019, plus Chen’s native Malaysia, which has only one casino, Resorts World Genting.

As Naga grew, it looked to Thailand, which has no casinos yet. Naga also dabbled in the VIP market, engaging with junket promoters too small for Macau or looking for a change of pace. 

But Chen also had his eye on the big prize – China. Chen mused about surrounding China with a necklace of casino resorts, beginning in a special economic zone outside Vladivostok. The business pushed for a high speed rail link from China to the capital of Russia’s far east.

Naga’s Vladivostok project was postponed indefinitely in March 2022, following Russia’s Ukraine invasion and ensuing international sanctions. But it hopes to revive the project when geopolitics allow.

VIP explosion

Back in Phnom Penh, Naga incentivised employees to learn Chinese and, with Naga2 upping the room count to 1,700, declared itself China-ready, able to deliver player experiences comparable to other regional IRs at a lower cost of living it up.

Without Macau’s 39% gaming tax rate – Naga made nominal payments in lieu of gaming tax until Cambodia’s long awaited 2020 gaming law mandated a 4% tax on VIP revenue and 7% on mass play – and 1.25% commission cap, Naga could offer sweeter deals. Macau junkets dove in.

In 2016, the year before Naga2 debuted, Naga’s mass gaming revenue was greater than VIP – US$275.2m to US$225.7m. In 2018, Naga2’s first full year of operation, mass revenue rose 33% to US$365m while VIP revenue rose 374%, topping US$1bn. Then in 2019, Naga’s VIP revenue of US$1.24bn matched that of MGM China’s two properties in Macau.

Going for three

In April 2019, Naga announced Naga3, a 544,801 square metre (5.86 million square foot) triple tower project with 4,720 guest rooms to cost US$3.5bn and be completed by 30 September 2025. 

Naga’s Hong Kong stock exchange filing stated: “The vision of the group is to build the largest comprehensive, multi-entertainment riverine integrated resort in the world and position the group as another gaming powerhouse in Asia Pacific, further securing its firm footing on the competitiveness of the group.”

In those heady days, President Xi Jinping’s anti-corruption campaign slowed Macau’s VIP market. Conventional wisdom suggested high rollers could escape Beijing’s prying eyes by playing in the Philippines, South Korea, Australia, Vietnam, Russia and even US Pacific territory Saipan.

In Cambodia, a casino building boom in coastal Sihanoukville fed an offshore gaming frenzy overwhelmingly targeting mainland Chinese players. President Xi prevailed upon Cambodia to outlaw offshore gaming by the end of 2019 – the Philippines continues to respectfully decline China’s requests – amid an increasingly tightening noose on underground banking and illegal money transfers plus explicit efforts to curb Chinese travellers’ overseas gambling.

The November 2021 arrest of high profile Suncity chairman Alvin Chau sent a clear message. Even when Covid ceased restricting travel and crimping economic expansion, the VIP boom had gone bust.

Covid symptoms linger

Make no mistake, Covid hurt Naga too. At first, Naga seemed to weather that storm well, relying on Phnom Penh’s residents linked to massive mainland Chinese investment. But that population dissipated as China’s economy contracted and keeping money onshore became a higher priority.

The revival of Chinese overseas travel has been slow globally, with Cambodia being no exception. In 2019, 2.4 million Chinese travellers accounted for 36% of Cambodia’s arrivals, representing the largest national grouping. Last year, Chinese travellers numbered 547,789, off 73% from 2019, as overall arrivals recovered to 5.4 million, 82% of 2019’s record 6.6 million.

Prime Minister Hun Manet, who succeeded his long ruling father Hun Sen last August, is credited with courting renewed Chinese and other foreign investment. Chinese business activity in Cambodia is reportedly on the upswing but hasn’t recovered to even 2021 levels.

Naga top management, speaking to iGaming Business on condition of anonymity, says resident expatriates drive its results. Customers from mainland China, whether residents or visitors, account for 50% of VIP play. Last year Naga’s US$337m mass revenue was 29% below 2019. VIP revenue of US$178m was 86% below 2019. The latter segment appears unlikely to approach previous heights.

‘Missing the Former Glory’

Morgan Stanley downgraded Naga’s shares to equal weight from overweight following the company’s full-year earnings announcement in February. In their report titled Missing the Former Glory, analysts Gareth Leung and Praveen Choudhary write that “concrete plans from management on how to accelerate growth and/or signs of meaningful visitation improvement are needed to turn positive on the stock”.

“Other Asian operators have pivoted to become more mass market focused,” Steinberg, managing partner of AM Steinberg Advisors, says. “Naga should be able to make the same pivot.”

In July, Naga postponed the completion date for Naga3 by four years to 2029, considering project resizing and other measures to match “revenue generation with capex expenditure”.

“Likely Naga 3 will be a slow burn through to completion,” McCamley, whose resume includes heading The Grand Ho Tram in neighbouring Vietnam, says. “In my opinion, it will be a lengthy ROI and face many challenges to fulfil its potential, given how market conditions have evolved.” 

“Delaying Naga3 was an appropriate tactic to ensure the company continues to operate in the black,” Gallaway says. “To be successful, Naga3 will need to focus on generating profit from revenue centres in addition to the casino. It’s the natural evolution of successful IRs around the world.”

Naga’s non-gaming revenue – 4% last year – has languished in the low single digits since Naga2 opened.

“That’s what Naga3 is about,” management says, adding retail, F&B, entertainment and other non-gaming amenities on a scale beyond NagaWorld’s capacity. Despite the announced delay, work continues on Naga3. Management expects project substructure to be finished by the end of June.

Unspoken agenda

Management’s unspoken Naga3 view is that completion by September 2029 doesn’t preclude opening portions of the complex sooner. “We have some flexibility. Maybe complete the podium first, with its revenue generators,” including the casino, F&B and retail. With hotel occupancy below 50%, management sees no imminent need for more guest rooms.

The decision to delay Naga3 came while Naga’s founder was still senior CEO under the company’s 5 April 2022 reorganisation. That reshuffle made his sons Chen Yiy Fon, Chen Cherchi and Chen Yiy Hwuan CEOs of different functional areas of the company.

All three sons were already Naga executives with significant histories at the company. Former FBI agent Timothy McNally remained as Naga’s chairman. Nevertheless, the unusual CEO arrangement evoked skepticism in the gaming and investment communities.

Succession planning

While the word “succession” does not appear in the April 2022 filing, Naga executives call those changes preparations to ensure a smooth transition following Chen’s passing. 

Chen Yiy Fon took the founder’s role as group CEO in December. He’s helmed three Malaysia-listed companies controlled by his father, including resort operator Karambunai, and has long been heir apparent. 

“With a proven track record of successful management and a deep understanding of the industry, Yiy Fon is poised to contribute significantly to Naga’s upcoming endeavours’ strategic direction and development,” Steelman says.

Under the founder, Naga exhibited creativity and nimbleness and some adaptations to current realities are evident around the resort.

Squeeze baccarat minimums have fallen from US$100 to US$50 on mass casino floors. The sportsbook, once shoehorned into a corner between two themed casino areas, has taken over one of those casino areas, enhanced with a sports bar. Tables for popular Southeast Asian card games nui nui, ngau ham and bai buu have proliferated throughout the resort, with minimum bets for those games $25 or less, blackjack and sic bo minimums as low as $10.

“Naga, like all gaming companies in Asia, needs to adjust their business strategy given the political dynamics of the PRC and casino gaming,” Gallaway says. “The future lies in continuing to adjust its strategy to remain profitable.”

New York officially opened the bidding process for three downstate commercial casinos in January last year. An amendment to the 2013 New York State Constitution permitted four upstate casinos, which are open for business, then three more casinos closer or in New York City at a later date.

The process has already drawn interest from several heavy hitters in the land-based casino market. MGM Resorts International, Wynn Resorts, Las Vegas Sands and Caesars Entertainment are among the operators to have set out initial plans for new casinos.

However, those hoping for a decision this year are set to be left disappointed. In a meeting yesterday (25 March), Commission executive director Robert Williams discussed the process and when it would likely move forward.

Due to lengthy reviews into environmental implications of the new properties, any decision on the three eventual sites is unlikely until the second half of 2025.

Environmental considerations for casino licence hopefuls 

All interested parties must satisfy a host of requirements to secure a licence. These include certain environmental standards, including the State/City Environmental Quality Review Act (SEQR).

Williams said that such reviews are unlikely to conclude Q1 of 2025. These could in turn require interested parties to make changes to their applications, with these being subject to further approval. Williams said pushing ahead with the licensing process prior to the reviews being completed would pose an “administrative nightmare”. 

Further delays could also come by Uniform Land Use Review Procedures (ULURPs), which all applicants must carry out. Like the SEQR, such a process will likely not be completed before early next year.

In addition, Williams noted that all applicants must represent that they can fully fund their projects before it can proceed. If not done correctly, Williams warned it could lead to more delays down the line.

“The encumbering of money well in advance of a licensing determination could increase the costs of access to capital markets, which could reduce the proposal’s size and scope,” he said at the meeting.

Advice for applicants in New York

Due to the length of these processes, the Commission has urged applicants to use 2024 to ensure their proposals meet all requirements. This includes completing the required environmental reviews and allowing New York enough time to analyse the associated ULURPs.

The Commission said this preparation will help ensure applicants are in a “fulsome” position ahead of the wider review process. 

It is hoped that Community Advisory Committees will be ready to analyse applications in mid-2025, while the Commission hopes to complete additional reviews regarding zoning and environmental considerations by late summer 2025. 

This, the regulator said, could then clear the way for a final decision on licences by late 2025. Successful parties would be required to pay the associated licence fee at this time, with the idea of opening their new casino a year later.

“This timeline accommodates the statutory requirements for SEQR and allows sufficient time for local zoning approvals – all to bring forth the best, most comprehensive plans for commercial casino development,” the Commission said.

Who wants a licence?

Competition for one of the three new licences is heating up. In November last year, MGM set out plans to transform its Empire City Casino into a full-scale commercial casino.

The Yonkers facility runs as a video lottery racino with slots, table games, harness racing betting and international simulcasting. However, MGM is seeking to transform the facility into a larger venue with a full-scale casino featuring live-dealer tables, slots and a high-limit gaming area.

Other planned on-site amenities include a BetMGM Sportsbook and Lounge betting facility, various restaurants and a 5,000-seater entertainment venue.

Also in November, New York Mets owner Steve Cohen and Hard Rock International unveiled plans for an $8bn casino resort at Citi Field ballpark.

Included in the proposal is a Hard Rock hotel and casino and separate sportsbook site, which are subject to licences being obtained. There will also be a live music venue, tailgate park, food hall and 20 acres of new park space.

Meanwhile, Caesars Entertainment announced its intention to open a New York casino in October 2022. Working in partnership with SL Green Realty, Caesars hopes to open the venue in Times Square.

Plans include redeveloping 1515 Broadway to build Caesars Palace Times Square. Jay-Z-founded entertainment agency Roc Nation is also backing the bid.

Las Vegas Sands, meanwhile, aims to build a property on Long Island, purchasing the long-term lease for the Nassau Veterans Memorial Coliseum. Wynn is also in the mix, with a site at the Hudson Yards development on Manhattan in the works.

The company’s FY23 results comprised reported revenue of £1.71bn (€1.99bn/$2.16bn), an increase of 31.1% year-on-year. However, on a pro forma basis, revenue fell 7.5%.

Wilkins said the revenue had been affected by “regulatory headwinds”, with the UK online revenue reflecting “the player mix shift to lower-spending customers”. The report noted that this shift came as a result of additional safer gambling measures in the UK. Nonetheless, 888 saw 44.6% growth in UK & Ireland online revenue in 2023 to £658.5m.

In terms of its international performance, Wilkins said 888 had “ended the year with a smaller, but high-quality business”. Revenue in this segment ticked up 1.8% yearly, hitting £517.4m.

Wilkins also noted that corporate costs rose exponentially, coming out at £42.3m for the year – a sizeable increase of £37.4m year-on-year. But he outlined that this “is not a real increase in costs as such and more harmonisation in accounting”.

Despite the context behind 888’s financial performance, Wilkins accepted that it had fallen below expectations for FY23. “We are under no illusions that this financial performance has been disappointing.”

Evoke rebrand “a new direction”

The proposed rebranding of 888 Holdings to Evoke represents a new dawn for the business according to Widerström. He said that, although 888 has “great customer facing brands”, Evoke would create a definitive direction for the company.

“We need a corporate brand,” Widerström explained. “We need a new company name that is memorable and translatable… A new direction. A new sense of purpose.”

He emphasised that this would not happen overnight but stressed that the executive team had blazed a clear path to success.

“Today marks a new start, our new one company, Evoke,” Widerström continued. “We have a lot of work to do. It is a reset of the business. But we know exactly what success looks like and we have a clear strategy to get there.

“This will be delivered with a laser-focus on execution.”

This took Widerström into 888’s value creation plan. Announced alongside the FY23 results, he explained that this began last year with his appointment as CEO and followed on with a strengthened executive team.

“[888] are also crystal clear on where we are focused, to deliver the best returns,” Widerström explained in reference to the initiatives. “We know this is a very competitive industry.

“We want every customer to recommend our brands to their friends… [888 is] moving towards a world of infinite personalisation.”

Executing 888’s strategy

Part of the value creation plan consists of six strategic initiatives, one of the most prominent being Operations 2.0 – a data and AI strategic point, representing a step-change value creation.

Widerström assured that Operations 2.0 would focus on implementing AI in a way that improves 888’s day-to-day operations. If done correctly, this would benefit cost efficiency, training and customer-facing operations.

“I am a huge fan of AI, used in the right way,” he said. “As outlined today, Operations 2.0 is all about the right way [to implement AI].”

Executing 888’s strategy would also involve meeting certain set targets, Widerström continued. Improving profitability and efficiency through operating leverage was presented as one of the key targets. To achieve this, Widerström said 888 would “drive and improve profit margins”.

“I am, along with the executive team members, absolutely committed to this plan,” he said. “You can have the best strategy in the world, but it’s meaningless if you cannot execute it effectively.”

Choosing where and when to compete

Despite 888’s fair results in its UK & Ireland and International segments, it continued to take a close look at its geographical operations in 2023. Earlier this month, 888 announced a strategic review of its US B2C business. 888 ended its partnership with Authentic Brands as part of the review.

Widerström said that while 888 has the resources to grow globally, it must be finicky about where it chooses to invest. “Our capabilities allow us to invest almost anywhere in the world. But we know we must be selective with our time and shareholder’s money.”

He added that a “laser focus” will be placed on 888’s core markets going forward – UK, Spain, Italy and Denmark, which reflect 85% of its revenue – with more markets expected in the future.

Looking ahead, from a marketing perspective, Wilkins said 888 is “really clear about where we will compete and how we will compete… Speaking to the right customers, in the right market, at the right time.”

Key areas for finance growth going forward are a “cultural shift” and optimal resource allocation at 888. Wilkins assured that 888 is “driving and embedding a cultural shift in the business”, as well as committing to “only spend money where we see sustainable, profitable returns”.

The personnel changes became effective on 20 March but were announced on Monday (25 March). Sartini II will continue in his role as executive vice-president of operations at Golden Entertainment.

Sartini II joined Golden Entertainment back in 2007. Since then, Sartini II has acquired direct responsibility for the business’ five local casinos in Las Vegas and Pahrump.

Arcana, meanwhile, has assumed the newly created role of the company’s chief development officer (CDO). He will be tasked with finding opportunities to “unlock value” in Golden Entertainment’s excess real estate in Las Vegas, Laughlin and Pahrump.

Arcana has been with the business since 2003 and has overseen its operations in becoming a publicly traded company with a casino and tavern portfolio.

In the announcement, Blake Sartini, Sartini II’s father, said: “These management changes will allow Golden to focus on maximising performance in our core operations while exploring opportunities to drive future improvement by bringing potential new concepts to our existing portfolio.

“I am confident the changes to Blake’s and Steve’s roles with the company will position us well to create additional shareholder value.”

Golden Entertainment records 2023 net profit despite Q4 struggles

The sale of assets such as Rocky Gap to Vici Properties and Century Casinos in a deal worth $260.0m pushed Golden Entertainment to a 2023 net profit of $255.8m (£202.6m/€236.6m) from $82.3m on the back of the sales.

The sales resulted in proceeds of over $600.0m, generating more than $500.0m of liquidity after taxes and transaction expenses.

However, the sales also led to a sharp drop in gaming revenue. For the 12 months to 31 December 2023, revenue was down 6.2% to $1.05bn.

Revenue reached $230.7m in Q4, down 17.5% to $230.7m. Again, this was due to a drop in gaming revenue, which fell 25.0% to $138.7m.

CFO Protell considering M&A after divestment

Following the sale of Rocky Gap Casino Resort in Maryland in July, Golden Entertainment president and chief financial officer Charles Protell suggested the operator could explore mergers and acquisitions to help create more value for the business.

“We have capacity to go out and look for deals,” Protell explained. “I think those opportunities for us would need to be in the west – casinos or portfolios of a more meaningful size. And importantly, where we think we can create value through synergies in the operations with our existing portfolio.

Sartini, meanwhile, stated the sales will further strengthen the balance sheet and the company’s liquidity. $175.0m of the Rocky Gap casino resort sale was attributed to repaying outstanding loan debt.

In total, 888 Holdings reported adjusted EBITDA of £308.3m ($390.4m/€359.6m) for FY2023, compared with £217.9m in 2022.  

For the full-year, the company reported revenue of £1.70bn compared to £1.24bn a year ago. Net loss was £56.4m compared to £120.5m in 2022. Basic loss per share from continuing operations halved to £0.126 compared to £0.283 in 2022.

888’s 2023 earnings

While revenue and adjusted earnings were up compared to 2022, adjusted profit after tax was down 25% to £48.1m.

Despite the “disappointing” numbers, the company’s FY23 performance was in-line with its January 2024 Post Close Trading Update. At the time, the company announced a raft of redundancies, which it said would help it achieve its long-term plans. 888 did not disclose which departments will be impacted.

In total, revenue stood at £1.70bn, up 38% from 2022 on a non-pro forma basis. This was driven by a pro-active shift away from dotcom markets and customer mix changes in the UK as a result of “additional gambling measures”.

The company also highlighted the change in the group’s marketing approach to focus more on sustainable revenue and profitability.

Marketing costs were significantly down, with a reduction of close to £20m for the year from £257.8m in 2022 compared to £237.6m in 2023.

Operating expenses, however, almost doubled, from £448.5m in 2022 to £819.1m in 2023. Despite this variation, operating profit remained a bright note on the balance sheet. Starting with a loss of £4.8m in 2022, the group reported £33.0m operating profit for 2023.

Adjusted EBITDA margin for FY23 stood at 18.0%. This was consistent with the previously indicated range of 18%-19% in January’s trading update. This was also up by 1.2% from 16.8% in from FY22. 888 attributed this to improved profitability and focus on higher return marketing spend. This, it says, more than offset the impact of dotcom market changes.

Cash – excluding customer balances – as of 31 December 2023 stood at £128m. Together with an undrawn revolving credit facility (RCF) of £150m, this gave the company total liquidity of close to £278m.

Net debt also fell slightly to £1.7bn. This was partially due to beneficial FX movements. In total, this resulted in an adjusted net debt/EBITDA ratio of 5.6x, stable year over year.

The UK and Ireland segment still remains the group’s main source of revenue. Revenue from this segment was also significantly higher at £658.5m, compared to £455.5m in 2022. Adjusted EBITDA also doubled from £61.6m in 2022 to £152.3m in 2023.

888 had previously highlighted said synergy delivery and focus on efficient marketing means adjusted EBITDA for UK and Ireland online was set to be “significantly” higher year over year.

Turning to its international business, revenue was also significantly up at £517.4m for the year, compared to £508.3m for 2022. This was despite the segment being impacted by compliance changes in dotcom markets but saw double-digit growth in Spain and Italy.

Retail revenue was also significantly higher at £535m in 2023. 888 put this down to a strong underlying performance driven by improved product offering through new investments. This, the operator said, more than offset a 3% reduction in estate size during the year.

Evoking a new era

In an unexpected move, 888 is also set to rebrand to Evoke plc. This will depend on shareholder approval at the 888’s next AGM. 888 says this will “better reflect the strength of the group’s multi-brand operating model”.

The rebrand proposal was announced this morning on 888’s earnings call and was explained as being part of a new strategy to improve profits.

This follows the appointment of new CEO Per Widerström joining 888 after eight years as CEO of Central and Eastern European business Fortuna Entertainment Group. He stepped down from this role in 2022.

Prior to this, Widerström worked in executive roles for a number of operators in a career spanning 17 years. These include high-profile brands such as Bwin.party and Gala Coral Interactive. 

“It is incredibly exciting to announce our Value Creation Plan, our strategy for success, our new financial targets and our new corporate identity. Today marks the beginning of an exciting new dawn for this business,” said Widerström.

888’s “new strategic framework” is set to include “a clear vision of what success looks like and the strategy to get there”. This will be formed of six strategic initiatives and could involve the rebranding to Evoke.

New “Value Creation Plan”

The company also announced its new Value Creation Plan (VCP) this morning. Widerström and the company’s senior leadership team is set to deploy this plan to deliver a long-term “strategy for success”.

As part of 888’s VCP, the group’s operating model has been “reset”. The group now plans to deliver approximately £30m of additional annual cost savings annually.

With a “clear vision of what success looks like and the strategy to get there” the company plans to unveil six strategic initiatives. These will “drive operational excellence and prepare the business for step-change value creation”.

There will also be a simplified market approach, with two categories. The first will be core markets (UK, Italy, Spain and Denmark) with in-country scale and market-leading positions. The second, optimise markets, will see a greater focus of investment where the group will “generate strong returns while maximising cash-flow from all markets”.

In line with this market focus, the strategic review of the US B2C business initiated in Q1 2024 will also consider potential for cost savings. 888 announced the potential sale of its US B2C operations earlier in the month. In numbers, 888 plans to deliver new medium-term targets to deliver “high return on equity”. This will see a target of sustainable profitable growth of 5%-9% per year.

888 will also aim to improve efficiency with an adjusted EBITDA margin expansion of c100 basis points per year. The group will also target more disciplined capital allocation, with leverage of below 3.5x by the end of 2026.

Current trading and CEO’s outlook

While the company’s earnings were categorised as “disappointing” by Widerström on this morning’s earnings call, he remains upbeat about the company’s future.

“It is incredibly exciting to announce our Value Creation Plan, our strategy for success, our new financial targets and our new corporate identity,” he said. “Today marks the beginning of an exciting new dawn for this business.

“I firmly believe that the group now has all the key ingredients for long-term success: leading positions in growing markets with high and rising barriers to entry; powerful proprietary technology; a top-class management team; and some of the strongest betting and gaming brands in the world.”

Revenue for Q1 2024 is expected to be between £420m and £430m.