Month: May 2024

Two sources told iGB that bill sponsor Zack Stephenson is short on votes to pass the bill. Earlier this month, Stephenson folded the wagering bill into one that would ban historical horse racing (HHR) machines. The betting bill is moving forward as HF 5274.

Minnesota’s 2024 regular session is set to adjourn on Monday (20 May). The legislature is running marathon sessions to get through bills about paid time off, taxes and other critical issues. Wednesday’s house session ended at midnight. It will reconvene at 11am local time on Friday.

Current bill: 20% tax, 21+, tribal exclusivity

Stephenson, a member of the state’s Democratic-Farmer-Labor (DFL) party, has been carrying legal betting for four sessions. He’s been unable to get it to the governor in part because the state’s tribes and tracks are at odds. The current iteration of the bill would give the tribes a monopoly on digital wagering. Platforms would be tethered to tribal casinos.

Stephenson’s DFL is the majority in the house, but because not all DFLers are behind the bill, it will need bipartisan support. Even if it gets out of the house, it may not pass the senate. DFL Senator Nicole Mitchell was arrested in April and then suspended from the state house. That leaves the body in a deadlock with 33 DFLers and 33 Republicans.

The bill sets a 20% tax rate on gross gaming revenue and makes the legal betting age 21. It sets aside 50% of state tax revenue to problem and responsible gaming initiatives. The bill would also legalise daily fantasy sports, which would be taxed at 10%.

Tracks, tribes, HHR make things complicated

To get the bill this far, Stephenson had to broker a deal between the state’s charitable gaming group and the tribes. The net result is that $40m of revenue from wagering to be paid to the charitable groups, who agree not to change how their pull-tab machines work.

Still at issue is how or if the state’s two horse tracks will be involved. Currently, the tracks are cut out of sports betting and $625,000 per year will be transferred to the racing commission’s economic development fund. The tracks want more, but the tribes won’t sign off a bill that gives the tracks a chance to offer wagering.

Earlier this year, Minnesota’s racing commission voted to allow HHR machines at the tracks. Stephenson almost immediately filed a bill to ban those because many stakeholders say they too closely resemble traditional slot machines.

Legal wagering has long been a fraught issue in Minnesota, and combining it with the HHR issue likely makes it more so.

The Banijay name is not a new concept for the group. In May 2022, Betclic announced it was to go public with television production business Banijay to create FL Entertainment.

Switching to the Banijay brand, the group says, reflects ambitions to be the European leader in the global entertainment space. 

Banijay Group will comprise: Banijay Entertainment, its content production and distribution business formerly known as Banijay; Banijay Live, previously Banijay Events; and Banijay Gaming, regrouping its online sports betting and gaming activities.

Betclic and Bet-at-home will retain the brands and operate without change. Bet-at-home published its Q1 results separately yesterday (15 May).

From a financial reporting perspective, Banijay will continue to report across two segments. These comprise content production and distribution, covering Banijay Entertainment and Banijay Live, and online sports betting and gaming with Banijay Gaming. 

“This strategic rebranding reflects the complementary nature of our existing activities and underlines our ambition as an integrated and diversified Entertainment leader,” Banijay CEO François Riahi said.

“Banijay Group gathers an incredible amount of talent, committed to create passion, emotion and to conceive entertaining experiences for the general public globally.”

Gaming drives growth at Banijay in Q1

Alongside the rebrand, the group has reported its first quarterly results under the Banijay name. For Q1, group revenue was 11.2% higher at €1.00bn (£858.7m/$1.09bn).

Setting out its results, the business immediately highlights the impact of the Banijay Gaming division. Here, revenue jumped 31.9% year-on-year to €321.5m.

Within this segment, sportsbook revenue rose by 25.5% to €246.8m. Online casino revenue was also up 67.0% to €51.2m, poker 24.5% to €18.9m and turf 45.3% to €4.6m. This, Banijay said, was due to a continued execution of the group’s strategy, focused on user experience.

Average monthly unique active players increased 24.0%, despite Q1 2023 benefiting from the Fifa World Cup at the end of 2022.

In terms of geographical performance, Banijay said it continued to reinforce its positions in its core markets and moved into new territories. It notes Ivory Coast as a particular success, saying during the football Africa Cup of Nations in January and February, the Betclic app was downloaded 127,000 times.

Linking in with this, Banijay says 99% of all gaming and betting revenue came from locally regulated markets in March 2024.

As for the Banijay Entertainment and Banijay Live businesses, these together generated €679.7m in revenue in Q1, up 3.5%.

Adjusted net profit edges up to €73.4m

Looking at the group as a whole, costs were higher across several areas. The main outgoing was external expenses, which increased 15.8% to €566.3m.

After also accounting for finance costs, pre-tax profit was €32.6m, a rise of 73.0%. Banijay paid €13.9m in tax, meaning a net profit of €18.7m, up 122.3% year-on-year.

However, in terms of adjusted net profit, this was only 4.5% higher at €73.4m. This figure was adjusted to account for certain factors such as restructuring costs and other financial costs. 

As for adjusted EBITDA, this climbed 13.3% year-on-year to €163.7m.

As reported by CasinoNieuws.nl, the budgetary appendix to the agreement stated gambling tax in the Netherlands would be altered from 30.5% to 37.8% should the agreement become implemented.

The state treasury would be provided with an additional €202m (£173.3m/$219.6m) per year in gambling tax contributions. The PVV, VVD, NSC and BBB were the parties involved in the agreement.

In November, seven parties announced their intention to generate an additional €200m-€400m in state contributions with an increased gambling tax.

The coalition agreement, entitled “Hope, Courage and Pride”, is set to be presented today (16 May).

Netherlands proposes tax increase amid slot ban controversy

The move to raise the gambling tax in the Netherlands comes after the country’s house of representatives voted to ban online gambling advertising, as well as “high-risk” gambling, which includes online slots.

The house voted to ban all targeted advertising. The Netherlands has already prohibited untargeted advertising, with a new ban placed into effect in July 2023. The Netherlands banned mass advertising through communication forms such as television and radio, as well as sport sponsorships.

Additionally, the house voted for a ban on online slots. This is due to fears over the lack of player control over the outcome of such gaming. Socialist party MP Michiel van Nispen put forward the motions.

Although the bans passed a house vote, it will be down to the Netherlands minister for legal protection, Franc Weerwind, to review the law and decide whether to approve the changes.

The motions have faced fierce industry opposition. The Netherlands Online Gambling Association (NOGA) claims the bans would instead drive players towards the black market.

NOGA described the proposed changes as “thoughtless and irresponsible”. The organisation’s director, Peter-Paul de Goeij, is concerned that the motions are based on inaccurate figures.

“A majority in the house of representatives is taking an expensive gamble with online players who are now consciously opting for the legal offer,” De Goeij said.

“If we soon find that politicians have made the wrong decisions too hastily, the house will be responsible for the negative consequences.”

The Gibraltar move, Buzz Bingo says, will offer several strategic advantages to the business. These include greater proximity to its key suppliers and a platform to pursue international opportunities.

Buzz Bingo also says the relocation supports its omnichannel growth plans. In 2023, group retail revenue increased 5% year-on-year while online revenue jumped 31%.

“With demand for Bingo growing, and our exceptional online performance, Buzz Bingo is positioning the business for accelerated growth, which is the key rationale behind our decision to move our digital business to Gibraltar,” Buzz Bingo chief executive Dominic Mansour said.

“These are exciting developments for Buzz Bingo as we continue to implement our omnichannel strategy to be the nation’s number one choice for bingo across both online and retail and to deliver on the international opportunity.”

Buzz Bingo set for double Merkur purchase 

Meanwhile, as part of wider growth plans, Buzz Bingo is in talks to acquire two UK bingo clubs from Merkur.

The clubs in question are located in Cricklewood in London and Northampton. Should the deal go through as expected, both venues will join the Buzz Bingo UK retail estate.

Together, the two clubs welcomed more than 410,000 visitors in 2023. Cricklewood is the largest bingo venue in the UK. It also holds the Guinness World Record for the biggest single bingo house prize – £100,000 (€116,554/$126,702).

Buzz Bingo says the double acquisition supports its plans to capture anticipated ongoing growth in bingo in the UK. This, it says, is being driven by a younger demographic, with the number of people aged 25-34 doubling between 2018 and 2023.

“Bingo in the UK is having a renaissance,” Mansour said. “Buzz Bingo is one of the UK’s leading online bingo brands with the largest retail footprint and is therefore well-placed to capture this growth. 

“Following a period of stabilisation for the business, it is now thriving. We are delighted to be acquiring these two leading bingo clubs following a year of strong performance.”

March marked the 13th consecutive quarter of growth in US gaming revenue, according to the AGA’s Commercial Gaming Revenue Tracker. The tracker provides state-by-state and cumulative insights into the US industry’s performance, utilising state revenue reports.

Revenue in March alone was $6.1bn, the US industry’s second highest grossing month ever.

Q1 saw 11 states set new quarterly revenue records for gaming. These included New York and Pennsylvania, two of the US’ largest commercial gaming markets.

A record $14.7bn was paid to state and local governments in tax contributions deriving from direct gaming tax revenue across 2023. This was up 9.7% from 2022 and doesn’t include further contributions in income, sales or other taxes.

AGA president and chief executive Bill Miller believes 2024 will prove a crucial year for the US market.

“While gaming’s momentum remains strong, 2024 will be the new baseline for future growth after several years of sports betting legalisation and post-pandemic consumer shifts,” Miller said. “Gaming’s continued growth relies on maintaining our commitment to innovation and responsibility.”

AGA attributes record igaming Q1 to Rhode Island launch

Rhode Island became the seventh US state to launch igaming in March, with Bally’s Corporation’s online casino going live.

US igaming grossed a record $2bn in Q1, a 26.1% year-on-year increase. The AGA attributed the rise to the bolstering of the figures from Rhode Island’s igaming launch.

US retail and online gaming both grew in Q1, although the AGA noted this was at slower rates than in previous quarters.

Retail accounted for 70.7% of the total Q1 revenue with $12.3bn. This was an increase of only 0.3% year-on-year, with the AGA putting the stagnation down to adverse weather early in the quarter. Retail was responsible for 70.7% of total Q1 revenue. Online gaming, meanwhile, achieved its highest ever share of total revenue at 29.3%.

Americans bet a quarterly record of $36.9bn on sports over Q1, producing $3.3bn in quarterly revenue, a 22% year-on-year rise. Again, the AGA credited new market launches in the likes of North Carolina and Vermont for that increase.

Miller said: “As gaming expands, more communities than ever are benefitting.

“We are proud to create jobs across the country, provide world-class entertainment experiences that offer safe alternatives to the pervasive illegal gambling market and generate tax revenue to support critical public projects.”

Numerous top US brands report strong Q1

The AGA’s announcement of a record Q1 was powered by growth among some of the top brands in the US.

DraftKings, for instance, reported a 52.7% year-on-year rise in revenue to $1.2bn from the $769.7m generated in the same quarter last year.

As a result of its strong Q1, DraftKings raised its full-year guidance. The company is now targeting revenue between $4.8bn-$5bn from the initial objective of $4.65bn-$4.9bn, while it has raised its adjusted EBITDA target to $460m-$540m from $410m-$550m.

Flutter Entertainment-owned FanDuel, meanwhile, achieved over $1.4bn in Q1 revenue, with igaming gross gaming revenue market share hitting a new record of 27%.

Flutter chief executive Peter Jackson said: “We have had an excellent start to the year.

“In the US, FanDuel’s top line momentum is translating into strong growth in US adjusted EBITDA and market share gains. We are focused on continuing to expand our player base, market share and embedding future profits within our business through disciplined investment.”

Revenue was up 9.4% compared to Q1 2023. Elias Mark, chief financial officer of Gambling.com Group, noted that the revenue growth was in spite of specific growth opportunities available in Q1 2023.

“By growing year on year in every one of our geographic reporting markets, we delivered record Q1 revenue with top line growth of 9% despite the comparable period benefiting from significantly more new state launch activity,” he said.

During Q1 last year, Gambling.com entered into a multi-year strategic partnership with US media group Gannett Co. This agreement saw Gambling.com make use of Gannett’s presence across the US.

Remarking on Q1 2024, Charles Gillespie, CEO and co-founder of Gambling.com Group, noted that Gambling.com’s prior investments were showing dividends.

“The investments we have made for years in our proprietary technology, website portfolio, and accretive acquisitions are driving consistent growth,” he said. “As we continue to expand our industry leadership and influence across global online gambling markets and leverage the many growth drivers we have, we see a clear road ahead to generate substantially higher Adjusted EBITDA and Free Cash Flow.”

During Q1, Gambling.com secured a $50.0m credit facility. This consisted of a $25.0m revolving credit facility and a $25.0m term loan facility. Additionally, the company delivered 107,000 new depositing customers and launched in North Carolina, which went live with online sports betting on 11 March.

Other Europe revenue surges in Q1

Looking at Gambling.com’s operations by market, its Other Europe segment saw revenue jump 39.3% to $3.8m. Revenue for its Rest of World segment was up 29.2% yearly.

The North America and UK and Ireland segments rose similarly. UK and Ireland hit $8.9m in revenue, up 4.6%, while North America revenue grew 4.7% to $14.8m.

By monetisation type, performance marketing generated the highest amount of revenue by far, accounting for $23.3m. The advertising and other segment accounted for $3.8m in revenue, up by 26.5%, and subscription and content syndication was up 5.1% to $1.9m.

Over to product type and Gambling.com’s Casino segment generated $19.8m in revenue, up 16.0%. However, the Sports and Other saw declines. For Sports, revenue dipped 0.6% to $9.1m and in the Other segment, revenue was down a significant 37.0% to $268,000.

Expenses cause decline in operating profit

Cost of sales for the quarter came to $2.2m, an increase of 125.3% year-on-year. This left gross profit at $26.9m, an improvement of 5.0% yearly.

Looking at other costs, sales and marketing expenses were the highest of the quarter at $9.6m. This was followed by general and administrative expenses at $6.3m and technology expenses at $3.2m. After considering $40,000 in movements in credit losses allowance, the operating profit totalled at $7.8m, a dip of 3.2%.

Finance income rocketed to $944,000 from $100,000 in Q1 2023. This was offset slightly by $454,000 in finance expenses, bringing the profit before tax to $8.3m, up 7.6%.

Following an income tax charge of $1.0m – largely similar to Q1 2023 – the net profit for the quarter was $7.2m, a rise of 10.6%.

Adjusted EBITDA for the quarter was $10.2m, marking a decline of 4.8% year-on-year.

Adjusted yearly projections

Off the back of its first quarter results, Gambling.com lowered its 2024 revenue and Adjusted EBITDA guidance today (16 May). The new guidance estimates FY revenue of $118m – $122m, compared to the initial $129m – $133m projection for FY24 made on 21 March 2024.

Adjusted EBITDA is now expected to fall between $40m and $44m, instead of the previously announced $44m to $48m. Gambling.com said the amounts were lowered due to changes in how Google treats commercial content on high authority websites. The affiliate said that this “diminishes the effectiveness of the company’s media partnerships”.

Gillespie said that Gambling.com’s operations will allow it to meet these targets in 2024.

“Even with these shifts in the digital landscape, the strength and resilience of our business will enable us to deliver strong year over year Adjusted EBITDA and Free Cash Flow growth,” he continued. “With less competition in the search engine results pages, our owned and operated assets are better positioned for the long term than ever before.”

The consultation response was published today (16 May). This forms part of the government’s smarter regulation programme of regulatory reform measures. The reform was brought about by the publication of the ‘Smarter regulation to grow the economy’ policy document in May 2023.

The measures assessed through the consultation were outlined in the government’s Gambling Act Review white paper last year. While many of the proposals addressed the online gambling industry – and attempted to bring it up to speed with the digital age – a number of significant measures were outlined for the land-based industry.

At the time, the land-based industry expressed disappointment over the unspecified timeline for implementing the measures, as well as the role of the GB Gambling Commission.

The consultation round for the land-based proposals was open from 26 July to 4 October 2023. Off the back of this, today, the UK government said it intends to implement five land-based proposals:

Removing the ban on the direct use of debit cards on gaming machines, relative to the implementation of applicable player protection measuresPermitting a 2:1 ratio of Category B to Category C and D gaming machines in bingo halls and arcadesAllowing casinos under the 1968 Act to raise the number of gaming machines to 80, if they meet the sizing conditions of a Small 2005 Act casino. Also permitting smaller 1968 Act casinos to have more than 20 machines on a pro rata basis, and authorising betting in casinosIntroducing an 18-or-over age limit for low stake Category D slot-style machines that pay out cashRaising the licensing fees for maximum chargeable premises by 15%

Aligning the industry with modern payment methods

The DCMS said that the proposal to lift the ban on direct debit card payments was driven by the aim to “strike an appropriate balance” between modern payment methods and consumer benefits.

Announcing the response, gambling minister Stuart Andrew explained that the move would align the industry with modern methods of payment.

“The prohibition on the direct use of debit cards on gaming machines was intended to protect players,” said Andrew. “However, the use of non-cash payments has increased greatly across society since these rules were put in place and some sectors, particularly machines in pubs, are seeing business disappear because customers do not carry cash.”

“We will help future-proof the industry by removing this prohibition subject to appropriate player protections being put in place.”

These player protections would be enacted as amendments to the Gaming Machine (Circumstances of Use) Regulations 2007 and the Commission’s Gaming Machine Technical Standards. Certain aspects of these measures – such as minimum transaction times and safer gambling messaging – will be consulted upon further.

In response to today’s announcement, Rank Gaming Group said it welcomes the lifting of the ban. It added that it will work with the Commission on its implementation.

“We welcome the Government’s commitment to removing the prohibition on direct debit card payments on gaming machines, alongside the introduction of appropriate player protections, and will now work closely with the Gambling Commission to ensure that customers are able to benefit from this change at the earliest opportunity.”

Amended 2:1 ratio transformative for Rank

The proposal to amend the ratio of gaming machines has also been met positively.

DCMS said it wished to “support a sector which has experienced significant commercial challenges in recent years” by providing more flexibility in how they offer games. This is in addition to ensuring customers have the option to play on lower-staking machines, to challenge the potential for gambling-related harm.

Rank noted that the amended ratio will allow it to phase out less modern offerings from its portfolio.

“In land-based bingo, the introduction of a 2:1 ratio in clubs, allowing operators to site two Category B3 machines for each Category C or D machine, will enable us to increase our current Category B3 cabinet numbers by c. 500 machines,” Rank’s statement read.

“This change will allow us to gradually remove ageing, reel-based machines from our Mecca estate. Overall, the Government’s policy will enable us to reduce the number of cabinets across our Mecca estate.”

The proposal to add more gaming machines was also well received. However, this will be optional for casinos. Under the proposal, the number of Category B gaming machines will rise from 20 to 80 per location. This will be regardless of how many premises licences are owned.

Notably, sports betting will be authorised in casinos. Andrew noted that this would align Britain’s casino offerings with “international jurisdictions”. There will be a sliding scale for the number of self-service betting terminals permitted on each casino site.

Allowing a child to use a Category D machine to be considered an offence

Once the consultation responses are implemented, it will be an offence to invite, cause or permit a child or young person to play on a ‘cash-out’ Category D slot-style machine.

“This is an important measure to create a clear distinction between gambling products for adults and lower risk products accessible to children (such as crane grabbers or coin pushers) which have non-cash prizes or are entirely unlike adult gambling products,” read DCMS’s outcome.

This builds on the voluntary commitment implemented by the British Amusement Catering Trade Association (Bacta) in 2021, Andrew explained. This commitment saw under-18s banned from using Category D machines in members’ venues.

John Bollum, president of Bacta, praised Andrew for the work done to enact these consultation policies for the land-based sector.

“This is a good day,” said Bollum. “The Minister is to be congratulated for creating the conditions which will allow the land-based sector to go forward.”

“The progress achieved is a testament to the hard work of Bacta and our members in making the case for reform. I would to thank all the Bacta members who have helped in this campaign which has taken 4-years.” Bollum added that Bacta would work with the Commission to progress cashless gaming.

Maximum premises fees up by 15%

Finally, DCMS will push through an increase on maximum premises fees by 15%. The department explained that the rise ties into regulating the industry and protecting customers from harm. The fees are used on a cost recovery basis, and allow licensing authorities to carry out enforcement and administrative measures.

John O’Reilly, CEO of Rank, remarked that today’s announcement spells progress for the land-based sector – particularly in improving player experiences.

“Today’s government response to the land-based consultation is good news for Rank,” said O’Reilly. “Providing the legislation is on the statute books by recess in late July, we are looking forward to improving the customer proposition in our venues with a roadmap of investments and improvements in the months and years that follow.”

“The legislative modernisations cannot come a moment too soon, so we are pleased with the progress contained in today’s announcement.”

Gambling Act white paper proposals advancing one year on

The announcement comes just two weeks after the Commission confirmed the timeline for implementing four initial white paper consultation topics. These were:

Financial risk and vulnerability;Online games design;Improving consumer choice on direct marketing;Strengthening age verification in land-based premises.

Rules on these measures will be implemented between August 2024 and February 2025.

Most prominently, the Commission will introduce a pilot for affordability checks, one of the white paper’s most controversial topics. This pilot will span six months, and will not impact customers during its live period. The Commission stressed that it will not be rolled out in a live environment until the data-sharing process is “frictionless”.

Smolarek only took on the CTO role at Yggdrasil in January last year. However, writing on his LinkedIn page, he revealed that he has now left the provider.

An experienced professional, Smolarek worked as director of engineering at Crimson Pine Games before joining Yggdrasil. He also had a short spell as head of internal tools at Ten Square Games.

Earlier in his career, Smolarek worked across several roles at Huuuge Games, including R&D director of business applications. In addition, prior to joining the gambling industry, he spent time with itCraft in his native Poland.

“After a challenging and amazing time in Yggdrasil, it’s time for me to go on a new mission,” Smolarek said. “I’m looking for senior managerial roles in software engineering, I’m available very soon and open to travel.”

Smolarek follows McGinley out of Yggdrasil

Confirmation of Smolarek’s departure comes just weeks after Yggdrasil lost another senior member of its team.

Last month, Mark McGinley left his role as chief product officer at Yggdrasil after just six months. He also had a short spell as chief gaming officer at the provider.

Another experienced industry professional, McGinley previously worked as CEO of FunFair Games and director game studios at Entain. He was also programme director at RNG Foundry and spent time as game studio lead at Casumo.

“After much reflection on my career goals and recent changes within the executive team, I am bidding farewell to my colleagues at Yggdrasil,” McGinley wrote on LinkedIn last month.

“I am grateful for the opportunity to have worked alongside such talented individuals and cherish the memories we have created together. I want to express my deepest gratitude for the support, camaraderie and friendship shown to me during my time at Yggdrasil.”

 Neither Smolarek nor McGinley disclosed the full reasons for their departures. 

Curwen takes the wheel

The double departure comes in the wake of James Curwen taking over as CEO at Yggdrasil. Curwen was appointed to the role in August last year, officially assuming responsibilities in October and replacing Bjorn Krantz.

Curwen was previously chief online officer at OPAP. He also worked as CEO of Golden Rock Studios and had a spell as chief gaming officer at Superbet.

He also worked at William Hill for almost six years serving in senior positions such as chief gaming product officer. In addition, he had spells with both RandomGamesLimited UK and Ladbrokes. 

His appointment came on the back of Yggdrasil announcing a new-look business structure. In June last year, the provider revealed plans to consolidate its Product and Programmes and Studio verticals into a single unit. This now operates under the Gaming banner.

At the time, Yggdrasil said this will help increase transparency, streamline processes and offer operational benefits. This, it added, could lead to improved product roadmap quality and development process assurance, more agile content delivery, increased cross-company knowledge sharing and a focus on player and operator needs.

Incidentally, the restructure saw the now-departed McGinley take over as chief gaming officer.

Yggdrasil slapped with Swedish penalty

Other recent developments at Yggdrasil include the provider being handed a SEK300,000 (£22,062/€25,670/$27,783) penalty fee by Sweden’s gambling regulator, Spelinspektionen.

It is understood that Yggdrasil supplied content to an unlicensed website operating in the Swedish market. Yggdrasil said that the contravention had come about due to a breach in contract between itself and a retailer. It added that it had corrected the issue.

The regulator acknowledged that Yggdrasil complied with its order but added that this is expected of all licensees. As such, it issued the penalty fee and handed a warning to the provider.

Revenue for the three months to 31 March hit €19.0m (£16.3m/$20.6m), up 20.1% from Q1 last year. This, Raketech said, was driven by growth within its sub-affiliation offering, with revenue here rocketing 149.8%.

However, in contrast, Raketech noted year-on-year declines across both affiliation marketing and betting tips and subscription income. The group said the affiliation marketing drop was largely due to the “unexpected magnitude” of a Google update that completed in April.

Furthermore, increased spending in the quarter, coupled with lower-than-expected revenue, led to a drop in net profit. However, Raketech remained in the black, with acting CEO Johan Svensson positive about longer-term prospects.

“We remain confident in our market-leading product offerings and see promising growth opportunities through our strategic initiatives in sports offerings, exclusive partnerships and media deals,” Svensson said.

“These efforts will position us well for continued growth in the coming years and we remain committed to maximising shareholder value.”

Svensson retakes the wheel at Raketech

Incidentally, Svensson has retaken the helm on a temporary basis at Raketech after Oskar Mühlbach stepped down as CEO in January. 

Raketech said Mühlbach left due to different views on the strategic direction of the group. Mühlbach has served as CEO since December 2019, prior to which he had a spell as chief operating officer.

The group completed an operational review in Q1, with Svensson, who was previously CEO of Raketech before stepping aside in 2017, hailing this as a success. Key initiatives to come out of the review included reducing SEO dependency, growing the sports vertical, increasing customised partnerships and broadening overall reach. 

“Our analysis resulted in a number of strategic initiatives aimed at repositioning the current affiliation marketing model to ensure we prioritise our long-term organic growth drivers,” he said.

“Additionally, we implemented efficiency measures, including cost-cutting initiatives that will result in increased profitability, improved execution and a sharper focus on our prioritised products and markets.”

The ups and downs of Q1

While Q1 was too early to see the impact of the review, results published by Raketech show several major trends.

Beginning with the only area that posted growth, sub-affiliation revenue increased 149.8% to €9.0m. This rise meant sub-affiliation was the primary source of revenue for Raketech in Q1, ahead of affiliation marketing. This part of the business includes both Raketech Network and AffiliationCloud.

“We are enhancing platform capabilities to improve partner performance and satisfaction, expanding to new markets and onboarding new publishers,” Svensson said. “These initiatives are expected to drive sustained growth in the coming quarters.”

As for affiliation marketing, revenue dropped 18.5% to €8.8m, with Raketech blaming the Google update, particularly on its Casumba assets. Combined with a weaker Q1 from Swedish assets and steady performance elsewhere, this led to overall weaker revenue.

“Completion of the Google update in April prompted a revision of our full-year guidance,” Svensson said. “Drawing from past experience, we are actively addressing this challenge. Working closely with Casumba’s committed founders, we have implemented SEO recovery strategies and improved content quality.”

Finally, revenue from betting tips and subscription income also dropped 14.9% to €1.2m. Raketech put this down primarily to a slight decline at the end of the US sports high season.

“We are actively reviewing strategy for this area, with a continued focus on our subscription-based digital platform,” Svensson said.

Casino growth offsets sports betting decline

On the subject of sports betting, Raketech noted an overall drop in revenue from its sports wagering offering during in Q1. Total sports betting revenue hit €3.5m, down 7.5% year-on-year and accounting for 18.4% of all Q1 revenue.

However, this was more than offset by casino growth, with revenue here jumping 28.8% to €15.5m, accounting for 81.6% of all total revenue.

As for how Raketech generated revenue, 47.9% of Q1 revenue came from upfront payment, a rise of 6.5% on last year. Revenue share accounted for 33.2% of the total, down 1.5%, with flat fee drawing 12.4% of revenue. The other 6.5% came from betting fees and subscription income.

In terms of geographical performance, growth in the Nordics was clear to see. Here, revenue climbed 42.0% to €8.2m in Q1. Rest of Europe revenue was also up 50.1% to €852,000 but US revenue dipped 8.1 to €1.8m. The other €8.2m of revenue was generated in the Rest of World segment, a rise of 8.4%.

In addition, Raketech noted an increase in new depositing customers, with this rising 8.8% to 59,657 during Q1.

Net profit dips as spending increases

While revenue growth is good news for Raketech, this was more than offset by an increase in costs. Total operating expenses were 47.5% higher year-on-year at €17.7m, with the main outgoing being publisher costs at €6.9m.

Raketech noted an additional €855,000 in finance-related costs, meaning Q1 pre-tax profit was €407,000, down 86.6%. The group paid €300,000 in income tax but deferred €67,000 in tax.

As such, bottom-line net profit for the quarter hit €174,000, a drop of 93.8%. In addition, adjusted EBITDA fell 17.2% to €5.1m.

Adjusted gross receipts from sports betting in April was comfortably higher than $2.7m in March. Incidentally, March’s total was the lowest monthly amount since Maine launched legal sports wagering in November last year.

Maine calculates adjusted gross receipts by subtracting voided and cancelled bets, federal excise tax and player winnings from handle. Void bets in April totalled $173,638, with federal excise tax at $93,326, and player winnings $33.9m.

The revenue increase came despite a 19.5% drop in total handle to $38.3m. Players in Maine wagered $47.6m in March, a monthly record for the state.

DraftKings out in front in Maine

At present, sports betting is only available through two licensed operators in Maine: Caesars and DraftKings. To date, DraftKings has eclipsed Caesars, drawing significantly more wagers and turning a much higher revenue.

In April, DraftKings, partnered with the Passamaquoddy tribe, generated $3.8m in adjusted gross receipts. This came after players wagered $31.6m through the partnership.

Turning to Caesars, the operator is working with three Wabanaki nations: the Houlton band of Maliseet Indians, Mi’kmaq nation and Penobscot nation. Caesars posted $342,841 in adjusted gross receipts during April from $6.7m in bets.

As for the calendar year to date, adjusted gross receipts in Maine for the four months to April stands at $16.5m. Players have wagered a total of $157.8m.

Maine misses out on online casino

Despite the recent introduction of legal sports betting, Maine had no such success in also launching online casino.

Talks were ongoing with tribes to roll out online casino in the state, with a bill having been put forward to pave the way to a legal market.

However, last month, the bill was declared all-but dead. In an unusual move, after the bill tribes failed to pass the house, it was still moved over to the senate. A day later, the senate declined to pass the proposal and then voted to table the issue.

This meant it could technically revisit the bill before the end of the session. However, the bill eventually died between houses in mid-April.