Category: News

The deal, also supported by key members of the Finalto management team, is worth up to $210m (£148m/€171m) and includes an initial up-front payment of $185m, with $15m of this deferred for up to two years.

A further $25m will be payable contingent on certain cash flow or other criteria being met by the business after the deal completes.

Playtech in March announced plans to dispose of non-core assets and simplify its business operations, with a strategic focus on its core gambling businesses. This came after seeing a 25.1% year-on-year decline in revenue to €1.08bn in its 2020 financial year.

The supplier had been evaluating its options over the Finalto business – formerly known as TradeTech – for some time, having been approached by a number of interested parties over a potential sale last year. This led to Playtech in August 2020 announcing that it would be open to selling the business.

In January of this year, Playtech revealed it was in discussions with the consortium over a possible sale, with this now having progressed to an agreement between the two parties and the Playtech board recommending shareholders vote to approve the sale.

If the sale were to complete in the current trading environment, which it said remains uncertain due to the pandemic, Playtech would retain any proceeds until there is greater market “clarity”. This, it said, would consequently reduce its net debt until the deal closes.

However, if the deal were to go through in the fourth quarter of this year as expected, and on the assumption that there is greater clarity in the market, the supplier said that it is committed to returning capital to shareholders when appropriate, while also balancing the opportunities to invest in the business.

Before the pandemic, the division had struggled, but it became a major driver of the supplier’s revenue in 2020, particularly in the first half of the year.

“Playtech has a stated strategy to simplify the group and today’s announcement is the conclusion of a two-year process in which Playtech has explored all routes to maximise value and certainty for shareholders from Finalto,” Playtech chief executive Mor Weizer said.

“The sale also offers a good outcome for all stakeholders in the Finalto business, providing certainty for colleagues, customers and trading counterparties. The consortium has a deep understanding of the Finalto business and the markets in which it operates and we wish our colleagues every future success.

“Looking forwards, Playtech will focus on its technology led offering in B2B and B2C gambling, driven by our online expertise and supported by a strong balance sheet. We have been building momentum in our business, as highlighted by our progress over the last twelve months in key markets such as the US, Latin America, and Europe. 

“The agreements we have signed with new customers in this period further demonstrate our capability as a leading technology provider and show the type of opportunities we intend to convert in the future.”

Confirmation of the agreement came as Playtech also published a trading update for the four months to 30 April, during which it said it continued to make progress against strategic and operational objectives, including in key target growth markets of the US, Latin America and Europe.

This included securing new deals with the Greenwood companies in the US and Holland Casino in the Netherlands, while it also noted a strong performance by Caliente and other operations in Latin America.

Playtech said online growth remained “very strong” in the period in both B2B and Snaitech, and as a result, it was able to increase its full-year adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) expectations.

This was despite its retail business continuing to feel the impact of the pandemic during the four-month period. Retail has now reopened in the UK, but closures in Italy have continued longer than expected, with sites in the country not expected to open until at least the end of June.

Breaking down these performances further, Playtech said that within its core B2B segment, online businesses performed well, though the retail focused parts of the business were impacted by closures for most of the period in key markets, particularly the UK and Greece.

Progress was made in the US through the strategic multi-state, multi-product deal with Parx casino operator the Greenwood companies. This has already seen content launch in Michigan, with further roll-outs planned for 2021 and 2022.

In Latin America, Playtech said Caliente was able to build on its position in Mexico, while WPlay in Colombia experienced further momentum. Playtech also noted its other structured agreements in Guatemala, Costa Rica and Panama progressed well and are set to become significant contributors to revenue over the coming years.

Turning to core B2C, while this segment was heavily impacted by Snaitech retail closures in Italy due to the pandemic, Snaitech’s online business continued the strong performance it delivered in 2020 into 2021.

In Asia, Playtech said its business in the region was stable, in line with the levels achieved through H2 2020.

Other key developments in the period included Brian Mattingley being appointed chairman designate. Mattingley is due to take over from Claire Milne, who had been serving as interim chairman, on 1 June.

In addition, Playtech took the decision to migrate its tax residency to the UK, and this has now become effective.

“I am delighted by the strong performance Playtech has delivered so far in 2021, despite the ongoing challenges posed by the pandemic,” Weizer said. “The sale of Finalto delivers on our strategy to simplify the company.

“We believe that due to the hard work and dedication of our employees, Playtech will exit the pandemic stronger than ever. Looking ahead, we are confident that the simplified group and the exciting growth opportunities ahead will deliver significant value to shareholders.”

The costings were set out in a report compiled for Peers for Gambling Reform, carried out by Nera Economic Consulting. It estimated that the fiscal impact of the reforms set out in the group’s July 2020 report, Gambling Harm – Time for Action, would impact industry profits by between £696m and £974m annually. 

The report notes that post-tax profits for the largest operators – Entain, Flutter, Bet365, William Hill and National Lottery operator Camelot alone total £697m, at the bottom end of the estimated impact.

The 2020 report urged a root-and-branch overhaul of British gambling regulation, centring around five core goals. 

It called for stake limits for igaming products and a standardisation of play speed across physical and digital products, as well as the introduction of affordability checks to ensure players did not gamble beyond their means. 

In addition, it called for a “smart” mandatory levy on the industry to fund research, education and treatment of gambling-related harm, with the most harmful products subject to higher rates. Finally, peers recommended a ban on direct sponsorship of sport by gambling operators, and to classify video game loot boxes as a form of gambling. 

The Nera-authored follow-up report looks to quantify the impact of these reforms on the industry.

Impact of stake limits and spin speeds

The report deals first with slot stakes. It assumes that any stake cap would be set at between £5 and £1.

Nera estimates that, based on 2017 analysis of slot stakes, customers wagered £1.38bn on the virtual machines. Should a £5 limit be applied, this would reduce amounts wagered by 14%, to £1.19bn. 

A £2 limit, meanwhile, would widen the decline to 23%, reducing stakes to £1.06bn, while a £1 stake cap would take slot spend below £1bn, cutting amounts wagered by 36% to £891m.

However, the report noted, it does not look to quantify any substitution that may occur, such as customers playing for longer, or increasing lower bets to the mandatory limits. Nor does it look to estimate the effects of a spin speed limit. A mandatory 2.5 second limit was set by the Gambling Commission and is due to come into effect in October this year, while Peers for Gambling reform proposed the five second limit.

For table games, however, researchers considered the impact of time limits on table games, namely roulette. By setting a minimum spin duration of 88.6 seconds, players would increase their stake amounts, but bet place fewer stakes per session. 

This, Nera said, would reduce amounts wagered by approximately 52%, based on a spin speed of 21 seconds, and as much as 76% if a spin speed of more than one minute was applied.

Impact of affordability checks

For affordability checks, the report analysed the impact of enhanced due diligence in a number of scenarios. It assumed that individuals would be allowed to make deposits of up to £100 – or 10%, 15% or 20% of their monthly disposable income, whichever is greater. 

This based the threshold at which affordability checks would be triggered on the Office of National Statistics’ estimated median annual income for the UK of £29,000, and a mean average of £36,900. 

This was then extrapolated to balance the number of people falling into, below or above this bracket, with the number of online players in the country who would be subject to the new checks. 

It found that based on checks being triggered by people spending more than 20% of their income, gross gaming yield for online casino would be reduced by 32%, or by £1.00bn. The decline was smaller for sports betting, for which revenue was estimated to fall by 22% (£505m). 

For checks triggered by spending above 15% of their income, online casino yield would decline 38% (£1.20bn), and online betting 26% (£604m). 

The biggest decline would be caused by affordability checks once customers look to spend more than 10% of their income, with casino yield down 45% (£1.44bn), and betting yield declining 31%, by £727m.

Mandatory levy

A mandatory levy on gambling to fund research, education and treatment (RET), meanwhile, is estimated to be set at 1% of industry profits, or approximately £150m. 

According to the Responsible Gambling Strategy Board (RGSB), annual funding “if there was a commitment to making a real difference” in gambling harm would comprise at least £4.5m for research; £12m for education and “significantly more” than the £6m currently spent on treatment. 

While optimal funding could be as high as £106.5m, with an effective treatment programme similar to that available for drug and alcohol services costing an estimated £90m. However, the report said that even a scaled-back version would mark a “substantial increase” on the industry’s current RET funding of £19m.

Furthermore, at least £20m would need to support a gambling ombudsman, something else recommended in the Peers for Gambling Reform report. This, however, would help offset the additional costs incurred by the government on individuals that experience gambling-related harm, estimated between £270m and £1.17bn.

Loot boxes as gambling 

Further costs would be incurred, however, by the need for the Gambling Commission to take on oversight for loot boxes. This would require the regulator to hire new staff and develops significant expertise, the report noted. 

In total it estimated the cost of regulating loot boxes at £20m per year, though this would likely decline if the video game mechanic was not as widely used in console games. 

“Similar to the fees that gambling operators pay to cover the Gambling Commission’s costs of regulating gambling, we assume that video game companies with loot box content would be assessed a fee that would cover the Gambling Commission’s costs in regulating loot boxes,” it added. 

Sports sponsorship ban

One of the more controversial elements of the Peers’ report was a proposal to ban direct sponsorship of sports by gambling operators. 

Nera estimated that front-of-shirt sponsorship deals with gambling businesses tended to be worth double a non-gambling sponsor, while Sky Bet’s sponsorship of the EFL brought in £40m per year. This, it said, meant that the total amount of revenue lost across the EFL Championship, League One and League Two would total £26m – factoring in replacement sponsors – or 2.4% of annual league revenue. 

The biggest decline would be for the Championship, which lose around 2.6% – or £21m – of its yearly revenue, compared to £4m for League One and £2m for League Two, in both cases 1.9% of the divisions’ revenue. 

The Rugby Football League, which is sponsored by Betfred, could lose between £500,000 and £950,000 of annual revenue. 

To offset this, the report suggested introducing fees in exchange for the right to offer betting on the competitions, as well as a better distribution of revenue earned at the highest levels of sport such as the Premier League. 

For that top tier, the report noted that only two clubs – recently-relegated Fulham and West Ham United – were sponsored by British bookmakers. Other clubs with gambling sponsors, it said, featured white label businesses on their shirts, which did not target British customers and would therefore be exempt from the ban. 

Impact on other entertainment and hospitality sectors

The report goes on to claim that revenue diverted away from gambling would be diverted into other sectors. It assumes that 100% of gross yield no longer going into gambling would instead go to retail trade; food and beverage; creative, arts and entertainment activities, and sports, amusement and recreation. 

This, it added, could well be an over-estimate, especially if a player was spending unsustainably on gambling. They may also divert some revenue into other legal – or illegal – gambling activities, Nera noted. 

This could then have a knock-on effect on revenue generated by these non-gambling forms of recreation and refreshment, which in turn could increase revenue, employee salaries and taxes, to offset decline in gambling tax revenue.

Nera estimated that this could ultimately lead to the creation of up to 30,000 new jobs and £400m in employee earnings, by diverting spend to more labour-intensive industries. 

“This report clearly sets out the economic benefits of reforming the gambling industry with tax revenues looking set to increase, jobs that could be created and a boost to funding for research, education and treatment,” Peers for Gambling Reform chair Lord Foster of Bath commented. “The evidence base and now the economic case for reform have now been made. 

“This Government now needs the resolve to get on with it.”

One of the group’s vice-chairs, the Bishop of St Albans, said the report clarified the “fiscally responsible nature” of its original recommendations.

“By getting on with reform and expediting the introduction of legislation, we have a chance to save the thousands of lives ruined by gambling related harm each year.” 

Also known as the Safe and Regulated Sports Betting Act, Bill C-218 was passed by the House of Commons at its third reading on on April 22 and is waiting for Senate approval before it can advance to the next stage.

Canada’s parliament passed the bill after its second reading in February.

Read the full story on iGB North America.

The operator will pay €16m up front, plus an earn-out based on 12% of Bethard’s net gaming revenue for each of the next two years.

As Bethard generated net gaming revenue of $31m in 2020, this would suggest an overall purchase price of roughly $27m, if Bethard’s revenue remains level.

The deal is expected to close on 1 July, 2021, the first day of Esports Entertainment’s 2021-22 fiscal year.

As a result of the deal, the operator has raised its revenue guidance for that year from $100m to $105m.

Bethard is licensed in both Sweden and Spain and Grant Johnson, chief executive of Esports Entertainment Group, said these two licences – particularly the former – would play an important part in his business’ continued growth.

“This is another great addition for Esports Entertainment Group that substantially increases our revenues, and available markets,” Johnson said. “With this transaction, we expect to gain two new gaming licenses, including one in the strategically important Swedish market. 

“At the completion of the license handover we will have six tier one licenses.”

Bethard is currently owned by Gameday Group plc. However, Swedish newspaper Aftonbladet reported last month that football star – and Bethard brand ambassador – Zlatan Ibrahimovic is a part-owner of the operator. This ownership interest would be in breach of the Code of Ethics set out by the sport’s global governing body Fifa and European football’s governing body Uefa launched an investigation into the links last month.

Esports Entertainment Group has made a number of major acquisitions in the past year. These include acquiring Lucky Dino Gaming Limited – operator of Lucky Dino, Olaspill, Kalevala Kasino and Casino Jefe – in March of this year in a deal worth around $30m and SportNation and RedZone operator Argyll Entertainment in 2020.

Last week, the Group published its financial results for the third quarter of its financial year – the three months ending March 31, 2021 – showing total revenue of $5.4m for the period, after not generating revenue in the corresponding quarter of 2020. The business made a net loss of $12.4m for the quarter, up from a $6.3m net loss for the same period in 2020.

Esports Entertainment Group also announced this week that its New Jersey GMBL subsidiary had been approved for a licence in the US state, the first in which the business will launch. It now awaits a transactional waiver in order to go live.

House Bill 697 was first introduced in April, and was approved by the House of Representatives earlier this month. 

In addition to taxing retail bets and online bets at 10% and 18% respectively, the bill also proposes a $250,000 application fee for operating licenses and a $500,000 fee on receipt of the license itself.

Read the full story on iGB North America.

Cirsa’s operating revenue was originally €189.7m, but fell to €156.4m after the variable rent expense of €33.3m was accounted for.

Operating revenue was also down by 56.0% compared to the €355.7m generated in Q1 2020.

Expenses brought the operating revenue down further. The cost of sales came to €8.7m, a decrease of 41.5% year on year. Personnel and gaming tax expenses, at €42.6m and €34.3m, also fell by €27.9m and €83.3m respectively. External supplies and services amounted to €42.0, a fall of 32.9% compared to the first quarter of 2020, while depreciation, amortisation and impairment costs fell slightly to €76.2m from $82.2 year on year. These expenses caused Cirsa to make a net loss of €47.6m, a significant drop of €54.2m compared to Q1 2020.

Operating profit of €26.8m was down by 67.7% compared to the profit of €88.8m in the first quarter of 2020.

Financial results costing €37.6m and foreign exchange results costing €18.0m brought the loss to €103.3m. Results on the sale of non-current assets, generating €1.6m, decreased the final profit before income tax to €101.7m.

However, income tax benefits and minority interests reduced these losses by €23.5m and €3.2m, respectively, totalling the net loss at €74.9m, which was €24.8m more than in 2020.

The operating profit was €28.6m EBITDA.

The operator explained that the drop in profit and revenue may be due to the effects of the novel coronavirus (Covid-19) pandemic in all of Cirsa’s markets.

“These results respond to the closures and continued restrictions on schedules and capacity derived from the pandemic, which continued to impact all markets and businesses in which the company is present during January, February and until mid-March,” it said.

Cirsa’s opening hours were reduced as a result of the pandemic.

Cirsa’s operating profit decreased by 73.3% in 2020.

William Hill took a majority holding in Alfabet in December and has now rebranded the existing BetAlfa.co sportsbook brand as WilliamHill.co to establish a presence in Colombia.

The new WilliamHill.co brand will operate via Alfabet’s existing licence in the country, which covers online gaming and sports betting.

The launch marks William Hill’s first roll out in the Latin American market.

“This launch includes the full integration of the Alfabet team into our international business hub in Malta and marks our first entry into a regulated Latin American state,” William Hill chief executive Ulrik Bengtsson said.

“We are delighted to have the Alfabet team join our international team and excited by the opportunity to deliver a very competitive product and safe player experience under the William Hill brand in Colombia.”

Upon announcing the acquisition deal, William Hill also revealed it had also brokered a new, Colombia-facing partnership with Btobet, the sportsbook technology provider acquired by Aspire Global in October last year.

The deal set out that Btobet would provide its player account management platform and sportsbook software to William Hill in the Colombian market.

Last month, Caesars Entertainment finalised its acquisition of William Hill. Caesars had previously that the target of the deal was William Hill’s US betting business and technology, with the remainder of the operator’s assets, including its UK arm, set to be sold.

The scheme would bring together people harmed by gambling and health experts, with the aim of providing a treatment and support system for people with gambling disorders and families affected by gambling.

Gambling with Lives said the service would work in collaboration with the National Health Service (NHS) in Great Britain and complement existing treatment and support systems.

The charity has applied for regulatory settlement funding from the Gambling Commission to support the project, with the idea of running a pilot of the scheme with partners in Greater Manchester

Insights from this process would be used to raise the standard of the system of gambling treatment and care nationally, including offering a model for making treatment and care for gambling harms a part of NHS integrated care systems.

“It is essential that people harmed by gambling are at the forefront of designing care and treatment for gambling disorder,” Gambling with Lives co-founder Liz Ritchie said. “We know how few people access treatment, how few feel helped, and this design for a care and treatment pathway aims to redress this.”

In terms of how the new scheme was developed, Gambling with Lives said it staged a series of focus groups with people who had live experience of gambling problems, as well as workshops with input from gambling operators, other support services, clinicians and expert by experience groups to help shape how the system would run.

Setting out the core aims of the pathway in the proposal, the charity said that overarching aim is to allow more people to access help and treatment, adding that early identification of problem gambling will be key.

The charity is also keen to ensure people can easily access help and achieve what they want from this support, as well as to prevent suicides linked to gambling problems.

Gambling with Lives said that the scheme would be embedded within existing health, care and public service provision, with frontline professionals to be made aware of the pathway so as they can refer people to the scheme if necessary.

Gambling with Lives also set out how the programme would run, including the initial stage of promoting it and running education programmes to make people aware of it, as well as running professional outreach and screening projects to identify people suitable for the scheme.

The programme would then identify the next source of action, including information and education on problem gambling, early help and advice, motivational interviews, peer support and therapeutic treatment. This would also be the case for those contacting the programme on behalf of others, with advice and support to be made available.

After treatment takes place, the programme would follow up with all participants to see their progress and evaluate whether further support and treatment is required.

Gambling with Lives said that there would be a number of end goals to the project, including people stopping gambling altogether, improving their mental health, feeling they had been adequately support, having a sense of greater empowerment and understanding the impact of their gambling habits on their own lives and other around them.

Professor Henrietta Bowden-Jones, founder and director of the National Problem Gambling Clinic, welcomed the proposal, saying integration within the wider NHS network would help those suffering with gambling-related harm.

“It is essential that evidence-based services are led by the NHS to ensure quality clinical standards,” Bowden-Jones said. “I welcome this project and the work of people harmed by gambling in helping us to ensure that services are integrated with existing NHS pathways and really meet the needs of our population.”

Lord Foster of Bath, chair of peers for Gambling Reform, added:  “As parliamentarians work on improving gambling legislation to tackle gambling harm, it’s great to see people who have been harmed by gambling at the forefront of the push to enable more access to evidence-based treatment. 

“Our recommendation for the introduction of a smart levy should help fund such treatment, ensure it’s free of industry influence and led by the NHS.  We welcome the creative work of Gambling with Lives in this area which is rooted in the needs of families.”

The new proposal comes after Gambling with Lives earlier this month announced the launch of the Big Step campaign, which is calling for an end to all gambling promotion in football.

Backed by English League Two team Forest Green Rovers, the campaign aims to see the end of all gambling sponsorship and advertising in football, where currently there are thought to be 55 different gambling sponsorship or partnership deals with 44 football clubs in the top two divisions in England.

Arreche will be prohibited from competing in or attending any sanctioned tennis event organised by the governing bodies of the sport. The suspension is effective immediately.

The ITIA did not disclose further details about the case, but did say that an investigation into alleged breaches of the Tennis Anti-Corruption Program (TACP) is ongoing.

Section F.3 of the TACP 2021 states that a player can be provisionally suspended while an investigation takes place.

Arreche is currently placed 612th in the Association of Tennis Professionals (ATP) world singles rankings.

The provisional suspension comes after the ITIA earlier this month banned Kazakhstan’s Roman Khassanov for 10 years after he admitted to several instances of match-fixing. 

The instances took place between 2014 and 2018, and were in violation of the TACP. 

The move signals Bally’s latest foray into the  sports betting market, following the opening of a FanDuel-affiliated sportsbook in Atlantic City in March, but marks the first launch of its own online product.

Developed by Bet.Works – a sportsbook technology platform in the process of being acquired by Bally’s – BallyBet will contain betting options for major sports, social features and in-app parlay games.

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