Category: News

In a trading update, Allwyn said gross gaming revenue (GGR) for the period to 31 March 2024 could be as high as €2.05bn. The lower range of €2bn is still almost $500m more than the Q1 figure during 2023.

Allwyn acquired UK National Lottery operator Camelot in March 2023 and became the UK National Lottery licensee on 1 February 2024. That acquisition helped Allwyn to achieve a 97.5% surge in GGR in 2023, totalling €7.87bn.

As well as the UK contribution in Q1 2024, the group also outlined solid GGR momentum across most markets. Allwyn said this reflected its continued focus on driving organic growth.

In Austria, GGR continued to progress year-on-year during the quarter, driven by a strong performance in igaming. In the Czech Republic, GGR growth was up a double-digit percentage year-on-year on a constant foreign exchange (FX) basis. This was due to growth across all major products. However, FX represented a headwind of six percentage points, resulting in mid-single-digit percentage growth on a reported basis.

In the UK, GGR was flat year-on-year on a constant FX and comparable presentation basis, with Numerical Lotteries outperforming.

Marketing costs constrain Allwyn’s earnings growth

Adjusted EBITDA will be in the range of €355m-€365m when its preliminary unaudited financial results are released on 7 June. This would be up slightly on the 2023 figure of €346.7m.

Adjusted EBITDA growth was supported by a strong rise in the contribution from equity method investees. This boost was partially offset by higher costs in marketing for new product launches and higher personnel costs.

In the UK, the result reflected strong performance in January, which was the last month of the previous licence. Allwyn saw substantially lower profitability from 1 February due to the introduction of a new profitability mechanism.

CAPEX was €45.0m in Q1 2024, which was €20.5m higher year-on-year. The increase related to higher investment in the UK. This was in support of Allwyn’s plans to transform the UK National Lottery, with other segments’ CAPEX flat.

Allwyn “well positioned” says CEO

Robert Chvatal, Allwyn CEO, said the first quarter had set Allwyn up for success in 2024.

“2024 has started well, with trading broadly in line with our expectations,” he said. “This reflects good operational and financial performance and our ongoing focus on the delivery of our growth strategies.”

“Solid momentum in GGR growth continued in the first quarter. Allwyn successfully started the next 10-year licence period of the UK National Lottery. We have delivered further progress in adjusted EBITDA. Allwyn remains well positioned for 2024 and for the next chapters of its growth story.”

During Q1, Allwyn entered into an agreement to purchase a 70% stake in online content developer Instant Win Gaming (IWG).

IWG supplies online instant win games to more than 25 national and state lotteries around the world. The IWG portfolio of content currently includes over 250 titles. For the year ended 30 April 2023, IWG posted £18.2m (€21.3m/$22.9m) in EBITDA.

$450m loan offering announced

Meanwhile, Allwyn International has also announced the launch of an offering of a Term Loan B by Allwyn Entertainment Financing. The principal amount is $450m.

The proceeds from the offering will be used to redeem in full the €400m in aggregate principal amount outstanding under the Floating Rate Notes due 2028 issued by Allwyn Entertainment Financing (UK) plc. This will pay costs, fees and expenses incurred in connection with the offering and for general corporate purposes. A substantial portion of the proceeds is expected to be swapped to floating rate EUR.

Brazil passed Bill 3,626/2023 to regulate sports betting and igaming on 21 December. President Luiz Inacio Lula da Silva then signed the bill into law later that month.

The country is currently in the process of rolling out its regulations. Licence fees are expected to cost BRL30m (£4.6m/€5.4m/$5.9m) for up to three brands.

Normative Ordinance No 722 outlined regulations on the technology and security requirements of betting systems. Operators must gain certification of their systems from accreditation entities recognised by the ministry of finance. They must also keep their systems constantly updated to maintain compliance.

With operational fees expected to be costly, smaller companies could face obstacles if they are to operate in Brazil.

Patterson is an economist and partner at Redirection International, which specialises in M&A and has a team working in Brazil. His comments were made in relation to a new study on the Brazilian sports betting market, released today (21 May).

Patterson believes that hefty costs could be a key driver in increased M&A activity in the country.

“We see great potential for a boom in M&A in the sports betting sector, a universe where Brazilian passions for sports and technology are combined,” Patterson said.

“The trend towards M&A activities is driven in part by the substantial regulatory costs associated with the licensing process, including authorisation fees that can be as high as BRL30m ($6m), technical certifications and tax obligations. Collectively, these factors pose a significant challenge to the economic sustainability of small betting operators.”

M&A activity increasing

In preparation for the market regulating, operators are jostling for a position in Brazil’s market.

For instance, Better Collective acquired Brazil sports media platform Torcedores.com in September last year. Esportes da Sorte, meanwhile, acquired Loyalty Group in the hopes of building out its digital offering.

The rise in M&A activity is expected to increase further. However, Patterson also believes that despite global influences, local operators can still compete with the right strategies.

“It is expected that the legal requirement that companies have a Brazilian shareholder to obtain an operating license will foster mergers and acquisitions here in Brazil,” Patterson continued.

“It may be that the number of websites and companies will decrease, as has happened in Colombia, but we can expect significant changes, ranging from marketing, new technologies, to the large-scale deployment of private equity investments, as well as access to capital markets, including future initial public offerings.”

Brazil sports betting market expected to grow 50% annually

Redirection International’s study projected that Brazil’s online sports betting market will grow by an annual average of 50% until 2028. The M&A firm attributed this to rising popularity, technological innovations and the market entry of large international companies.

Patterson believes Brazil will be one of the biggest global online sports betting markets. He said: “Brazil is already the country with the largest number of users on sports betting sites. In 2022 alone, Brazil registered 3.2 billion accesses, and all this in a market still without consolidated regulation.”

Data from Aposta Legal Brasil indicates that 80% of Brazilians who bet online in Brazil wager on football. A total of 13% bet on esports, while 12% wager on basketball.

Data and market information platform Datahub found that between 2020 and 2022, the number of sports betting companies jumped from 51 to 239, a rise of 368.6%. Datahub also revealed 80% of betting revenue comes from online casino. Total sector turnover increased by 130% in 2023 to approximately BRL120bn.

Brazil regulation incoming

Brazil is currently rolling out its regulation in four stages, expecting to completely announce it by the end of July.

Earlier this month, Normative Ordinance No 2,191 established a 15% tax on player winnings above BRL2,824. The tax will be taken at source at the time of winnings being awarded.

In response, the Brazilian Institute of Responsible Gaming (IBJR) described the tax system as “harmful” and “legally questionable”, believing it could impact the success of the market.

“The rule will put at risk all the good work regulating the market done so far by the national congress and the MF prizes and betting secretariat and it also fails to understand that the objective of regulation is to encourage positive behaviour from both operators and bettors, including contributing to tax collection,” IBJR said.

Previously, Normative Ordinance No 615 banned operators from taking credit card or cryptocurrency payments. The aforementioned Normative Ordinance No 722, meanwhile, outlined special circumstances for data centres to be located outside Brazil.

Eduard Fumás Cases, Alea’s chief technology officer, speaks of the importance of sustainable and healthy platform growth. He explains the three key principles by which Alea is developing its technological capabilities: security, scalability and robustness.

In Latin America (LatAm), somewhat surprisingly, no country has an official state religion. However, many associate Christian denominations with the region, finding LatAm in general synonymous with faith.

“The Latin American people are, for the most part, Christian,” says Magnho José, editor of BNLData and president of the Instituto Brasileiro Jogo Legal. “In most countries, this figure exceeds 80%, including Catholics and evangelicals.”

And according to both José and Hugo Baungartner, vice-president of global markets at Aposta Ganha, religion is having an increasing impact on politics in the region.

“Currently, the strength of religion on the continent and the advancement of a religious influence in institutional politics is notorious and more and more religious people, whether progressive or reactionary, have come together to propagate their projects in the public sphere,” José explains.

Baungartner adds, “[Religious] influence has been growing year by year with the increase of different religion types. Nowadays they even have their own politicians, including forming groups to execute their power and influence.”

Influence on Brazil’s legislative outcomes

Few LatAm countries have seen religious influence on their gambling policy like Brazil, despite being a religiously free country, which even boasts a national day devoted to the principle – 7 January.

According to the Global Religion 2023 study – carried out across 26 countries – Brazil has the highest percentage of citizens who believe in God or a higher power, at 89%. Predictably, this has bled into the country’s political regime.

“Over the last 82 years, several topics have caused controversy in Brazil and among them is the legalisation of gambling,” explains José. “Those who do not live in Brazil will have difficulty understanding the lack of objectivity and common sense of Brazilian politicians when it comes to gambling. Religious issues end up contaminating and distorting the debate.”

Brazil has been rocked by the evangelical movement over the last few years, with around a third of its population identifying as evangelical in 2022. It is no surprise, then, that evangelical lawmakers greatly opposed Bill 3,626/2023, the long-awaited law to regulate sports betting and igaming, almost stopping its progress completely.

“The most important country that faced [religious opposition] was, and will be, Brazil,” says Felipe Fraga, an expert on Latin America.

“The reason is that when we look over the most populated countries, no one has more than 20% of an evangelical population. Also, the movement of neo-pentecostalism is very powerful in Brazil and the political connections they have are very strong.”

Unintended effect of the black market

As with any regulating market, concerns remain over the presence of black and grey markets in Brazil. For Baungartner, the religious-centred aspect of the evangelical argument might do more harm than good in this respect.

“They say that [gambling] is against their faith and their God which, also, is against it,” he explains. “They use it to influence other politicians.

“Literally, for them it is devil’s business. They don’t understand that the world changed and it is better to have it regulated, instead having the grey market.”

Fraga – an evangelical himself – agrees, proposing that regulation will safeguard Brazilian citizens.

“They claim about a social point of view, looking to risks of addiction and how it can affect society, also arguing about money laundering and match-fixing,” he explains. “They say that the bill will allow or facilitate bad behaviour and criminal acts, which is completely wrong, since the idea of regulation guarantees for the country itself taxation and societal safety.

“It is exactly what the industry is looking for: fair rules for keep offering modern ways of entertainment.”

Right at the forefront of evangelicalism’s strongly-held beliefs about gambling is family values, according to José. He notes that at the recent National Conference of Bishops of Brazil (CNBB), gambling was slated as bringing “irreparable moral, social and, particularly, family damage”.

The following was heard at the event: “A vote in favour of gambling will, in practice, be a vote of contempt for life, for family and its fundamental values.”

But the dispute goes beyond a moral perspective. Evangelicals and other religious politicians also point to legitimate industry concerns, such as money laundering and tax evasion – which regulation would naturally address.

A long winding road to regulation

Religion’s influence on gambling law in Brazil stretches back much further than the last few years. Gambling was banned in the country in 1946 due to religious influence and bingo was legalised between 1994 and 2005 before being prohibited once again.

This is why the passage of Bill 3,626/2023 received such a positive reception when it passed in December – it was a long time coming.

Brazil is currently in the process of regulating its igaming and sports betting market. The country’s ministry of finance, in conjunction with the newly established regulator – the Regulatory Policy of the prizes and betting secretariat – is continually publishing rules for the market, which include prohibiting credit card and cryptocurrency payments.

Could Brazil backtrack on gambling regulation?

But to those rejoicing in the market regulating, José warns them not to get comfortable.

“There is a great risk of backsliding,” he states. “I don’t believe it will get to the point of repealing gambling laws, but the religious will hinder expansion and try to stifle existing gambling operations.

“The ecumenical opposition that criticises the possibility of legalising gambling should reflect that the positive benefits of legal gambling far outweigh the disadvantages proposed by any person or group against gambling.”

Baungartner is insistent that, at the end of the day, gambling is a business and its acceptance in other countries neutralises its standing saying: “The mentality has changed over the years.”

So outright revocation might not be on the cards – not yet, at least. As long as the industry plays ball, says Fraga, it should be a smooth road ahead for Brazil’s regulating market.

“As much the industry grows in Latin America and shows that it is an important part of society – generating jobs, moving economics, entertaining, controlling addiction, etc – there will be no reason to revoke the laws,” he says.

“Even though we can consider the risks, there will be nothing happening soon.”

Players spent more on sports betting in Louisiana, which led to a rise in revenue. However, it was very much the opposite in New Hampshire in April, where the market shrank year-on-year.

Starting in Louisiana, handle amounted to $283.0m (£222.5m/€250.4m), up 34.8% from last year but down 19.1% from March’s $350.0m total. Players spent $263.2m betting on sports online during April, in addition to $19.8m at retail sportsbooks.

As for revenue, this amounted to $33.0m in April. The monthly total is 49.3% ahead of last year and only 2.4% behind $33.8m in March this year.

The state collected $5.4m in tax during the month, with almost all of this coming from the online market. 

As for the financial year to date, total player spending in the 10 months to the end of April was $2.86bn. Of this, $2.61bn was bet online, with $257.2m wagered at retail locations.

In terms of revenue, the year-to-date figure stands at $328.4m. This includes $302.2m in online revenue and $26.2m from retail.

Different story in New Hampshire

Now looking to New Hampshire, things were not quite as positive in April. 

Player spending on sports betting amounted to $59.8m, down 8.1% year-on-year and 18.0% behind $72.9m in March. April’s total was also the lowest monthly spend since $38.8m was wagered in August last year.

Player spending on online betting amounted to $53.5m, with a further $6.3m wagered at retail sportsbooks.

Turning to revenue, this hit $5.3m in April, down 21.0% from last year and 5.4% less than the $5.6m reported in March 2024.

Almost all revenue came from online betting, with just $23,173 generated by retail betting locations in New Hampshire.

The state collected $2.3m in tax, with almost all this sourced from online betting.

As for the financial year to date, total spend in the 10 months to April was $645.7m. Of this, $565.2m was bet online and $80.4m at retail sportsbooks.

In terms of revenue, the state’s total hit $65.0m. This includes $58.7m from online betting and $6.4m retail.

March’s revenue figure of $257.1m was the highest total in Michigan so far in 2024, though comparably April’s numbers fell short. Nonetheless, April’s revenue total still beat January and February, which produced $229.6m and $218.5m respectively.

Year-on-year, April revenue was 20% ahead of the same month last year, when Michigan’s sports betting and igaming operators reported revenues of $195.7m.

Igaming revenue down but sports betting stable in Michigan

Igaming revenue fell from $215.5m in March, Michigan’s strongest igaming month to date, to $192.9m in April.

Sports betting handle, meanwhile, also dropped significantly. Michigan’s online sports betting operators took $399.1m in bets in April, down from $480.4m in March. However, April sports betting revenue stayed stable at $41.9m.

In terms of monthly adjusted gross receipts (AGR), igaming and sports betting combined for $201.9m. Of that total, $174.1m came from igaming, while online sports betting produced $27.8m. Igaming monthly AGR dropped 10.4%, while sports betting increased by $4.1m.

Year-on-year, however, igaming monthly AGR was up by 21.4%, while online sports betting AGR increased by 13.3%.

Monthly taxes and payments to the state were $37.6m in April. This was 8.5% down on March’s figure of $41.1m, with igaming contributing $35.8m of the total to online sports betting’s $1.8m. Tribal operators made $4.3m in payments to governing bodies in April.

Michigan casino revenue down in April

Detroit’s three commercial casinos previously reported revenues of $109.4m in April.

Those figures were down 11.7% month-on-month, though only slightly lower than the $109.7m generated in the same month last year.

MGM kept its lead among the three commercial casinos, holding a market share of 46%. Meanwhile, MotorCity and Hollywood Casino at Greektown held market shares of 30% and 24% respectively.

The three casinos paid the city of Detroit $9.8m in taxes and municipal services fees during April. This fell 10.9% short of March’s total of $11m.

The lottery technology broker posted revenue of just $285,523 (€262,000/£224,000) during the three months to 31 March 2024. This was less than half the $620,200 generated by Lottery.com during the same period last year. In its condensed consolidated statement, prepared assuming that the business will continue as a going concern, the Q1 2024 figure was $259,319.

In 2021, Austin-based Lottery.com generated revenue of $16.4m for the full year.

Lottery.com attributed the continuing revenue decrease to the waterfall impact of the operational cessation on the group’s subsidiaries in July 2022. This decision was made as it did not have sufficient financial resources to fund its operations. It has performed minimal day-to-day operations ever since, impairing its ability to invest in customer acquisition and other growth initiatives.

Lottery.com moving forward

The group relaunched its B2B API Platform on a limited basis last year and plans to relaunch its B2C platform by the end of June 2024. Its Sports.com subsidiary went live after the close of the reporting period in April 2024 following the acquisition of SportLocker. Lottery.com said each of TinBu, Aganar and JuegaLotto has had its revenue remain relatively consistent or decrease slightly from pre-operational cessation levels. Each have decreased expenses.

“The cornerstone of the company’s operational progress for FY 2024 will be driven by technology, product and service/capability enhancements,” it added.

Cost of revenue for the period was $72,171, an increase of 73% compared to the prior period. The increase was driven by the increase in the revenue from higher cost products sold as compared to Q1 2023. In its condensed consolidated statement, this figure was $83,787.

The consolidated financial statements do not include adjustments relating to the recoverability and realisation of assets and classification of liabilities that might be necessary should Lottery.com be unable to continue in operation. 

Gross profit dip due to lower revenue

Lottery.com posted a gross profit of $213,352 in its results of operations, which was down 52%. This decrease was primarily due to lower revenue in the first quarter of 2024 as compared to the same period in 2023. In its condensed consolidated statement, this figure was $175,532.

Operating expenses decreased slightly despite a small increase in personnel costs. With total operating expenses of $3.4m, loss from operations was flat at $3.2m. However, in its condensed consolidated statement, greater operating expenses put the figure up to $5.8m.

Lottery.com said it continued to address legacy issues during Q1, as it had during the full 2023 year. It said it has also regained full compliance with Nasdaq rules. Changes in management were announced last year while Lottery.com said it faces “material weakness” over accounting non-compliance. This relates to a class action suit served in 2022 on behalf of investors and former high-ranking employees.

Why Lottery.com acquired SportLocker

Lottery.com announced a deal to acquire sports-streaming site SportLocker and rebrand it as Sports.com in February 2024. SportLocker, which has links to Saudi Arabia’s burgeoning sports programme, previously announced plans for club acquisition, sponsorship and media partnership programmes – focussed on UK football and the US Major Soccer League (MSL).

Lottery.com said in a statement that it would acquire S&MI, the owner of SportLocker, in a stock-based deal. The deal comes after announcements relating to the issuing of 20m shares (totalling $100m) and “a substantial expansion” in fundraising. The latter includeed commitments from new and existing investors rising to $5m from $1m.

The Sports.com platform will first roll out in the US and Europe, along with dedicated efforts in the Middle East. It aims to combine sports news, live streaming and content such as documentaries and films. There is no mention of sports betting being included on the new Sports.com platform.

WFA argues that the 2021 Florida-Seminole Tribe compact explicitly allows for wagering outside of Indian Country. That allowance, it says, violates the Indian Gaming Regulatory Act (IGRA). Last week, the DoJ wrote that the validity of the compact isn’t a federal issue and it doesn’t violate IGRA. Further, the DoJ argued that the US Department of the Interior’s (DoI) decision to allow the compact to become “deemed approved” does not violate any laws, state or federal.

WFA filed a writ of certiorari with the Supreme Court in April. At issue in the Florida wagering case is whether the DoI should have approved a compact that gives the Seminoles exclusivity to online wagering. It also allows the Seminoles to accept a digital bet placed anywhere in the state of Florida. Those bets, according to the compact, are considered placed in Indian Country if they flow through a tribal server.

WFA’s ultimate goal would be either to open the Florida market or shutter the Seminole’s Hard Rock Bet platform. The tribe launched the platform in November 2023.

WFA: Appellate court decision in conflict with SCOTUS

Previously, a US District Court judge ruled in favor of WFA, but that decision was overturned by a three-judge panel at the appellate level. WFA appealed for an en banc appellate hearing, but the full court declined to hear the case. Now, the question is whether or not SCOTUS will. That decision is expected as early as next month.

In Tuesday’s filing, WFA lawyer Hamish Hume argues that even though the DoJ believes that the compact doesn’t violate IGRA, its argument for why means SCOTUS should hear the case.

Hume wrote that the key issue in the DoJ response is that the “Court of Appeals correctly interpreted the Compact as not authorizing any sports gaming off Indian lands, and therefore the approval of the Compact did not violate IGRA.”

He goes on to say that the DoJ “concedes” that if the compact allows betting off of tribal land, the approval is an IGRA violation. Such a decision, the DoJ argued, would be in conflict with previous SCOTUS decisions, and therefore merits review. The ultimate question is whether or not the appellate court properly interpreted the compact.

Hume argues that the appellate court’s decision is simply to validate a compact approval that is “plainly unlawful.” He wrote that the DoJ did not address this and cites a previous SCOTUS decision that the decision is in conflict with. In addition, Hume argues that the “deemed” language in the compact that allows for the idea that a bet is placed where it is received is a “contrived device.” The appellate court, Hume argued, “evaded” addressing that issue.

Voters never got a say in Florida wagering case

Both sides agree that IGRA governs gaming on Indian lands. But IGRA, adopted in 1988, does not explicitly address digital gaming. Tribes, state governments, and other entities have struggled with this issue across the US. Online sports betting isn’t directly banned via IGRA. But IGRA does not directly allow for it. The 2021 compact is the first approved that uses “shall be deemed” language as a workaround.

Also at issue is a state law that requires that any expansion of gaming in Florida go to the voters. By approving the 2021 compact, WFA argues, the state legislature expanded gaming without voter approval.

While this would seem like a state issue — and Justice Brett Kavanaugh all but said it is — Hume wrote, “the state law question of whether the online sports gaming provided for in the compact is legal bounces back to a question of federal law. It is authorized only if federal law accepts the “deeming” provisions and holds that IGRA authorizes the online sports gaming that occurs off Indian lands. IGRA does not authorize such gaming, and it is the job of the federal courts to so hold.”

More than 7,000 cases are filed with SCOTUS annually. It usually hears between 100-150.

As the MGC begins to learn about why and how operators set bet limits on players, the only operator representative was Justin Black of Bally’s Interactive. That platform is licensed, but not live in the state.

BetMGM, Caesars Sportsbook, DraftKings, ESPN Bet, Fanatics Betting & Gaming and FanDuel requested executive session for the roundtable. The Massachusetts regulator declined. Most operators cited confidentiality concerns, and were ultimately left out of the conversation.

Commissioners didn’t hide their disappointment and anger. Interim Chair Jordan Maynard said that the Massachusetts regulator is required by an open-meeting law to have discussion in public, and that is sometimes “uncomfortable.” He also said that integrity and transparency are of paramount importance.

Commissioner Brad Hill was more direct.

“I’ll go so far as to say anger that I have today for not being able to get more information that I thought we would be able to get to start this conversation,” Hill said. “Although it was started today, it didn’t give us the starting point that I had hoped we would get.”

PG/RG sometimes used as cover to restrict players

Massachusetts is the first state in which the issue of regulating betting limits has been discussed. Forty-one US states and jurisdictions offer legal, live sports betting.

The Massachusetts regulator also heard from professional bettor Jack Andrews, problem and responsible gaming consultant Brianne Doura-Schawohl and consultant Dustin Gouker.

Doura-Schawohl offered up that in Washington, DC, a player was limited and the reason given was responsible gaming concerns. But upon further review, she said, that was just a cover story. She also shared that in Australia, regulators responded to similar concerns by implementing bet minimums.

Andrews shared that on sports betting platforms in Massachusetts, maximum and minimum bets are not posted. And when bettors are limited, they don’t know until they place a bet that is kicked back. Andrews also shared that he was limited by DraftKings in New Jersey within three weeks. He was down $600 at the time.

He later had a chance to talk with DraftKings’ traders, who told Andrews they saw him”taking second-inning lines in baseball, and we knew that anyone betting second-inning lines must know what they are doing, and we didn’t want your action anymore.”

Consumers are angry, too

The roundtable came about after the MGC began hearing from consumers that their accounts were limited after wins. The commission received dozens of letters from players claiming their accounts were limited with no explanation. What commissioners are after, Maynard said, is an understanding about why players are limited and how that information is communicated to them.

If a letter from bettor Dave Connelly is any indication, at least some players are left in the dark. Connelly wrote that he had been limited by four operators in Connecticut, and included a screen shot of a letter he received from Fanatics. “We are not able to provide any additional information about why these changes have been made to your account.”

In letters from consumers in Iowa, Ohio and Virginia, bettors wrote that they were “severely” limited by multiple sportsbooks and were happy that Massachusetts is considering the issue.

Ideas for Massachusetts regulator: new license, lower barriers

Likely the most useful information to come out of the meeting was the suggestion from Andrews and Gouker to find a way to expand the market to smaller, less restrictive operators.

Andrews said that some smaller operators offer fewer markets, higher limits and peer-to-peer or exchange wagering. But those operators are shut out of Massachusetts because the “barriers to entry are very high.” He pointed specifically to the 20% tax rate and high licensing fees.

Gowker suggested the Massachusetts regulator create a second tier of licenses for smaller or unique operators as a solution. The MGC would be unable to create a new kind of license. The state legislature would have to do that.

Reports emerged earlier today (20 May) that Hard Rock was part of a group seeking to invest in Star. News broke in the Australian Financial Review and has also been reported elsewhere.

Reports suggest all Star land-based casinos would rebrand all under the Hard Rock name. It is also reported that each site would become less reliant on casino revenue and focus more on other aspects such as live music and hotels.

Star shares initially jumped more than 21.0% when the news broke just before midday local time in Sydney, Australia. Shares are currently trading 19.5% higher than today’s opening price.

Issuing an initial response, Star said it had received “inbound interest” from several external parties over potential transactions. It added that the nature of this interest is unsolicited, preliminary and non-binding, with no approach resulting in substantive discussions.

Star acknowledges Hard Rock interest

However, not long after, it issued another response, directly referencing Hard Rock. Star said it had not received a proposal directly from Hard Rock, but again confirmed interest from some parties, including one consortium featuring the Hard Rock Hotels & Resorts Pacific regional division of Hard Rock.

“The company has received inbound interest from a number of other external parties regarding potential transactions including a consortium of investors which includes the entity Hard Rock Hotels & Resorts Pacific, which Star understands is a local partner of Hard Rock,” Star said.

“The nature of the interest to date has been confidential, unsolicited, preliminary and non-binding. At this stage, none of the approaches has resulted in substantive discussions.

“Star remains focused on its remediation activities in New South Wales and Queensland and participating in the Bell Two Inquiry. Star will keep shareholders informed in accordance with its continuous disclosure obligations.”

The trials and tribulations of Star

The investment approach comes at a somewhat uncertain time for Star. The group currently finds itself the subject of yet another inquiry over its activities.

As referenced by Star in its response to the media reports, the second Bell inquiry launched in February. This is focusing on Star’s activities in New South Wales (NSW) and fallout of the first Bell report. 

One year after the first inquiry completed, a report into Star Sydney’s progress found the casino had implemented 22 of 30 recommended measures from the Bell report.

There is also an additional focus on the culture at Star. This covers risk management culture and Star’s management and reporting lines. In addition, the inquiry is examining whether Star has been able to obtain the financial resources needed to support The Star Casino.

Some relief with Queensland licence suspension extension

Alongside this, Star faces possible regulatory action in Queensland. Star was sanctioned in the state in December 2022 over a series of failings. The group was fined AU$100.0m (£52.8m/€61.6m/US$67.1m) and informed its licence would be suspended.

This came after an investigation into operations at Star Gold Coast and Treasury Brisbane. The inquiry ruled Star was found “unsuitable” to hold a licence in Queensland.

Primary issues include Star’s “concerted effort” to deliberately mislead banks and regulators on the purpose of China UnionPay transactions. Star also sought out individuals linked to criminal organisations and encouraged them to gamble. 

Other issues include social responsibility failings and deficiencies on anti-money laundering and combating terrorism financing practices. In addition, concerns were raised over historic dealings with junket operators.

Initially, Star was given 12 months to resolve issues flagged by investigators and prove it was suitable for a licence. An initial 1 December 2023 deadline was pushed back to 31 May this year after Star submitted a draft remediation plan to address issues.

Last week, this deadline was extended again to 20 December of this year. This is due to the authorities in Queensland wanting to see the results of the second Bell Inquiry before making a decision on Star’s licence. 

What else is going on at Star?

As if regulatory uncertainty were not enough, Star has also seen several senior staff leave the group in recent months.

These include group CEO and managing Robbie Cooke, whose departure was confirmed in March. Christina Katsibouba is also exiting as chief financial officer.

Meanwhile, Jessica Mellor is stepping down as CEO of Star Gold Coast and David Foster as executive chair. Foster had taken on additional duties following Cooke’s exit as CEO.

In addition, Star last month also published a trading update for Q3, with this showing a net loss of $6.8m. This, however, was an improvement on the $49.7m loss posted in Q3 of the previous year.

Q3 revenue was also down 4.6% to €419.2m, while normalised EBITDA fell 11.5% to $37.9m.

Hard Rock making moves

As for Hard Rock, the group has seen some level of movement in recent weeks and months.

Arguably the biggest news out of Hard Rock in recent times is its Hard Rock Digital business striking a deal to acquire certain US-facing B2C assets from 888.

Details of which assets Hard Rock will purchase have not been disclosed. However, 888 says it expects to the deal to complete in phases and finalise the sale by Q4 this year. The sale agreement came just weeks after 888 launched the strategic review.

Meanwhile, last week, Hard Rock revealed it will shut down The Mirage Hotel & Casino on 17 July for renovations. The group intends to develop a new integrated resort featuring a 700ft version of its iconic guitar-shaped hotel tower.

The final day for hotel occupancy at the iconic Las Vegas venue will be 14 July. Hotel and show reservations beyond this date will automatically be cancelled and refunded.

Hard Rock took over the property in 2022. Owned by Florida’s Seminole tribe, the complex is the first operated by a tribe on the Strip.