French monopolies under the social responsibility spotlight

It is stating the obvious to say that the level of scrutiny and regulatory oversight of online operators’ marketing activities across European markets has increased significantly in recent years. 

The current situation in Great Britain is a case in point. In England alone eight Premier League clubs have gambling operators as shirt sponsors. And with marketing being the most high-profile of the industry’s activities, it was always bound to be closely scrutinised. 

In that respect Italy and Spain have gone further. The former has banned bookmakers and casinos from all major advertising platforms and the latter is set to introduce its own ban in the coming weeks. 

France is steering a different course on the matter. There is no talk of forbidding operators from advertising on radio or TV; even if there are regular complaints, from both inside and outside the industry, bemoaning the volume of adverts for online bookmakers during half-time breaks. 

Regulated operators also point out that marketing enables them to channel the vast majority of players to legal betting and gaming sites, even if context is also important in this instance. 

A recent report in the financial newspaper Les Echos highlighting the €1.4bn unregulated online casino industry that targets French players was shared widely by the European Gaming and Betting Association and other stakeholders to put pressure on EU regulators. 

When it comes to advertising however, it also showed that legal advertising was not always needed to develop a substantial vertical. Black and white hat SEO and online advertising are very efficient in developing a strong, albeit unregulated, igaming activity in a highly regulated market. 

“Serious concerns” 

In late January, France’s igaming regulator the Autorité Nationale des Jeux(ANJ) published a statement in laying out its roadmap for monitoring operators’ promotional strategies for 2021. Few could have expected to read its blunt words about the marketing practices of national lottery monopoly La Française des Jeux (FDJ) and its horse racing equivalent Pari-Mutuel Urbain (PMU). 

Describing the “specific case of the monopoly operators (FDJ and PMU)”, ANJ commented: “From an examination of the promotional strategies of these two operators under exclusive rights, it emerges that the Authority has serious concerns […], in particular with regard to the case law of the European Court of Justice and the State Council which recalls that the advertising efforts of the monopolies must remain measured and strictly limited to what is necessary to channel consumers into controlled gambling networks.

“In addition, in connection with this case law, ANJ will be vigilant to ensure that any advertising or promotional campaign by these operators does not hide behind arguments of general interest to give a positive image of gambling or to justify it.”

The wording is noteworthy and direct. Essentially ANJ is saying that FDJ and PMU are very close to glamorising gambling and giving it an overly positive image. Looking back at some of the recent decisions published by the ANJ’s monitoring committee (collège), things become clearer. 

An ANJ decision published on 21 January restated the point that under European law gambling monopolies must focus on channelling consumers to regulated products as part of a campaign of controlled growth. They must protect against excessive play and any potential for underage gambling, it continued. 

Noting the scope and ambition of both groups’ marketing strategies for 2021, ANJ warned that FDJ’s marketing should not “encourage a natural disposition towards gambling by 

making it appear commonplace or giving it a positive image linked to general interest activities or through the potential for major financial rewards.” 

Meanwhile PMU’s strategy to increase “the attractiveness of its offer and modernise its image can unintentionally lead to the targeting of young adults even though this category of the population presents a high risk of developing problem gambling” behaviours, ANJ said. 

It made similar points about FDJ’s targeting of younger demographics and in relation to both groups’ personalisation and customer loyalty strategies. It said this could increase the intensity and frequency of those consumers’ betting and gaming habits.

A quick look at this slick FDJ promotional video gives an idea of what ANJ is referring to. Furthermore, the regulator’s industry data for the third quarter of 2020 showed that 56% of operators’ marketing budgets were spent on acquisition and retention of players. This indicates why its statement focused on personalisation and customer loyalty in its statement. 

Competitive pressures

The proactive monitoring of operators’ marketing and promotional activities shouldn’t come as a surprise. ANJ’s new president Isabelle Falque-Pierrotin spelled out her intention to put players at the heart of her work in an interview with iGB last year. 

If the wording of the comments towards both historic operators was somewhat surprising, it should also be viewed within the context of the commercial and competitive pressures FDJ and PMU are under. 

The pandemic has of course had a major impact on both companies’ retail activities. FDJ’s activities suffered in 2020, while for PMU the closures of many hippodromes across France last year was keenly felt. But overall both companies’ offline activities also illustrate how they need to reform and rejuvenate their clientele. 

The average age of a PMU retail client is 45 years old, compared with 35 for an online horse racing enthusiast and around 30 years old for an online sports betting and poker player. FDJ’s core demographics, considering retail sales remain by far its largest channel, are likely to be similar. 

The marketing drives undertaken by both companies should be seen in that context: strategies to modernise their respective images and attract a younger (online) player base that they can develop and maintain on a long-term basis. In theory this largely applies to their land-based activities. 

But when it comes to online verticals and specifically sports betting, FDJ’s Parions Sport and PMU.fr lag some distance behind the leading trio of Winamax, Betclic and Unibet. Those three brands each have around a 20% share of the online market, while PMU and FDJ hover around the 5% mark along with a number of other betting brands. 

PMU started its online adventure promisingly but has faded in recent years, while Parions Sport, for a number of reasons that were not always within FDJ’s control, never really got going. In addition, newer fixed odds entrants like Zebet, the sports betting site for horse racing tote Zeturf, are growing strongly through aggressive pricing and clever marketing. 

CSR central to business model

PMU told IGB that it was focused on meeting ANJ’s stated aim of preventing underage and problem gambling and fighting money laundering. 

This was “fundamental to how PMU carries out its activities, the group will put in place all the necessary measures to respond to those aims. 

“Beyond that, PMU must be a reference when it comes to responsible gambling and executes its strategy with that in mind.” 

FDJ meanwhile told IGB that ANJ had “reminded all operators, and not only FDJ and PMU, of the need to strike the right balance in their marketing of betting and gaming activities.”

With regard to its activities, FDJ added: “Corporate and social responsibility has always been central to FDJ’s business model; the group’s aim is to market its products, but its priority is responsible gaming. 

“To this end, the group has put in place specific measures, such as the commitment to devote 10% of its TV advertising budget to responsible gaming, a commitment not made by any other French operator.”

Clearly operators need to strike a balance between marketing their products, building their appeal and attractiveness and preventing problem gambling and underage gambling. 

FDJ said its “advertising and marketing strategy aims to promote a gaming model in which many players bet small amounts”. 

“For this model to be viable over the long term, it is essential to build loyalty among existing players for the lowest-stakes games and to recruit new players, while developing a growth model that upholds responsible gaming principles,” it explained. 

“All of FDJ’s marketing materials are developed with this ultimate goal in mind. They also help channel player demand into controlled networks.”

The group added it is supportive of regulation of gaming advertising in France and the ANJ’s monitoring and oversight to prevent the negative effects of excessive advertising that could encourage irresponsible gambling behaviour. Such behaviour would be detrimental to all operators, it said. 

“However, excessive restrictions – or even a total ban on gaming advertising – would be counterproductive, as they would favour the development of illegal online gaming activities, leaving players and minors less protected,” it continued. 

“Betting and gaming advertising is useful in that it channels player demand to controlled environments, promoting games that encourage moderate and responsible use. In this regard, ANJ has a key role to play, particularly with respect to online gaming activities, where advertising by operators is especially prevalent.”

With both FDJ and PMU’s retail activities hit hard by event cancellations and high street closures, the pressure is on to make up for lost revenue. Pandemic-permitting, the rescheduled European football championships and Olympic Games will present them with a major opportunity to sign up new payers. 

They and other betting brands will be marketing their products and promotions heavily. As a result, advertising budgets are expected to rise 26% this year on 2019 total of €239m (figures for 2020 are not accounted for as they were badly impacted by the pandemic).  

Little sympathy 

Speaking to contacts working with licensed private operators in France however, there is little sympathy for either FDJ or PMU. All point to the built-in commercial and regulatory advantages those groups have benefited from since 2010. 

Many of these, such as PMU’s co-mingling of online and retail player pools for horse racing, had to be fought and eventually defeated via long and costly legal battles. 

Others point to products such FDJ’s retail app (FDJ Points de vente), a bring your own device (BYOD) solution which is distinct from its betting app and allows punters to select a bet, which generates a QR code. They can then take the QR code to a high street outlet to scan and place their wager.

The bluntness of ANJ’s press release was striking, mainly because it is so rare to see such language directed at national operators. By way of comparison, many British operators are adamant that the National Lottery should be more closely monitored when it comes to marketing and player communications.

But ANJ’s remit has also expanded considerably when compared to its online-focused predecessor L’Autorité de régulation des jeux en ligne (ARJEL). It oversees close to 80% of France’s gambling sector, including all FDJ and PMU retail outlets, whereas ARJEL only covered around 11% of the market. Its statements should also be seen in that context. 

It will be interesting to follow this topic in the coming months, especially if PMU and FDJ are unable to reclaim market share in the online sports betting vertical. But so far ANJ is doing what it said it would.

Codere negotiates with lenders after 57.2% revenue drop in 2020

Of the operator’s €594.6m (£514.0m/$716.8m) in revenue, €154.7m came from Italy, down 54.9%. Spain became Codere’s second-largest source of revnue with €116.4m, down 38.7%, while revenue from Mexico fell 68.2% to €97.8m.

Argentina – previously Codere’s second largest market – saw revenue fall 77.7% to €70.7m while revenue from Uruguay decreased by 29.6% to €52.3m. Panama contributed €22.7m, a 71.0% decline and Colombia €8.7m.

Codere made a further €71.3m from its online operations.

Codere’s operating expenses totalled €572.1m, 46.6% less than in 2019.

These costs included €223.9m in gaming taxes, down 54.8%. Codere’s personnel costs dipped 32.1% to €162.5m, costs of goods sold declined 45.1% to €27.9m other expenses dropped 35.4% to €158.5m.

After €159.6m in depreciation and amortisation, down 11.4%, and €42.6m in non-recurring expenses, 32.5% more than in 2019, Codere made an operating loss of €193.4m, compared to a profit of €94.3m in 2019.

After adjusting for inflation, this loss was €204.0m. Codere then made a net €57.5m financial loss, meaning its pre-tax loss was €261.5m, just under eight times 2019’s loss.

After taxes, Codere’s loss was €236.6, more than 280% more than the loss it made in 2019.

The losses in 2020 led to what Codere described as “pressure on liquidity”. As a result, the operator has called in financial advisors to find alternative methods to enhance liquidity and or boost its capital structure.

The operator said it’s in “constructive conversations” with an ad hoc committee of senior notes holders to work out such alternatives.

“The company expects to reach an agreement in the next weeks which will provide a solid foundation for the recovery of the operations in all of its markets,” Codere said.

The operator had previously faced liquidity questions, but moved to strengthen its position in July 2020, when it agreed a refinancing transaction with noteholders of 55.5% of its existing notes. However, these notes carried an initial interest rate of 12.75% that could then be lowered to 10.75%.

Entain increases Enlabs takeover offer to SEK3.7bn

Shareholders representing the majority of Enlabs have now backed the improved offer.

Entain lodged an initial bid for the Enlabs business in January – an offer valued at SEK3.9bn – while full details of the proposal were published later in the month.

Entain’s board and shareholders owning 42.2% of Enlabs had backed the offer, and Enlabs recommended the bid be accepted, but some minority Enlabs shareholders rejected the bid, saying that it “materially undervalues” the business.

In response, Entain has now tabled an increased bid, with the acceptance period to run until 18 March. Entain previously extended this period from 18 February in order to allow enough time to secure all necessary approvals for the deal.

Enlabs’ independent bid committee informed Entain it would recommend Enlabs shareholders accept the increased offer and that its formal statement will be announced no later than one week prior to the expiry of the acceptance period.

Including the 42.2% of Enlabs shares owned by Entain board and shareholders, a total of 51.0% of shareholders with shares and votes in Enlabs have backed the new offer.

Entain said it would not increase its offer again and, subject to final shareholder and regulatory approval, hopes to complete the acquisition by the end of March.

“Entain will be the best home for Enlabs, its employees and customers,” Entain chief financial officer and deputy chief executive Rob Wood said.

“Against this background, we have decided to make a final offer of SEK53 to all shareholders, providing an opportunity to exit their investment at a very attractive valuation.

“We are pleased that shareholders with around 51% have now irrevocably agreed to accept the offer and would urge other shareholders to do the same by 18 March.”

Entain extends ethics, legal & compliance training in US

The move builds on the inaugural Gaming Law, Compliance and Integrity Bootcamp which launched at Seton Hall with the Entain Foundation US in March 2020, attended by an initial group of 50.

Entain said its goal is to make Seton Hall’s Law Bootcamp the premier annual program in the industry.

 “The Bootcamp aligns with Entain’s focus on promoting sports integrity, responsible gambling, and corporate compliance,” said Martin Lycka, senior vice president for American regulatory affairs & responsible gambling.

“We look forward to extending our partnership with Seton Hall Law School, a leading law school and a recognized global leader in compliance education, to help provide professionals with the specialist skill needed to support the growth of this sector in the U.S.”

Read the full story on iGB North America.

Ukraine committee approves 10% tax rate for all forms of gambling

The committee considered bill 2713-d, put forward by committee chair Oleg Marusyak, to complement the Gambling Act that legalised various forms of gambling in Ukraine and was signed into law in August 2020

This bill initially proposed a 5% GGR tax on bookmaking, 10% for online gambling and for lotteries and 12.5% for slot machines. However, the committee opted for a single rate on all verticals instead.

Operators will also be required to pay an 18% general corporate tax rate

In addition, gambling winnings of more than eight months’ minimum wage (currently UAH48,000) will be taxed as income.

The country’s Gambling Act had also previously required that online betting and gaming licence fees start out three times higher than normal, and would only be lowered once an online player monitoring system is put in place. However, the new tax bill abolishes that requirement.

The Rada will still have to approve the new tax bill, after which it may be signed into law.

Even though the bill has not come into effect, Ukraine’s Gambling Commission (KRAIL) has already approved the country’s first licences, to online operators Spaceiks , which operates the Cosmolot brand, and Parimatch. These operators must pay licence fees before the licences are officially granted, though.

Prior to 2713-D, the country had introduced four other tax bills setting different rates of gambling taxes.

500.com spends RMB226.3m on Bitcoin and Ethereum mining machines

500.com entered a definitive agreement with a subsidiary of BitDeer to secure 1,923 S17 Bitcoin mining machines for RMB31.3m, with these deployed and operational in Xinjiang, China.

The provider also agreed a deal to purchase 2,000 new ETH mining machines for a total consideration of RMB195.0m.

This agreement will see 100 Ethereum mining machines delivered between May and June this year, followed by 150 in each July and August, while the remaining 1,600 will arrive between September and December.

The purchases mark 500.com’s latest movement in the cryptocurrency sector, with the provider having this week also received 356.04342 Bitcoins and $11.5m in cash through a private placement transaction with Good Luck Information.

The placement, agreed in December, will see Good Luck Information receive 85,572,963 newly issued Class A ordinary shares in 500.com.

Last week, 500.com acquired Blockchain Alliance Technologies, owner of the BTC.com platform, while the provider in January also set out plans to acquire $14.4m worth of Bitcoin mining machines, adding a further 15,900 machines from two additional sellers this month.

BGC proposes five-point Covid-19 recovery plan to Chancellor

The proposals come ahead of 3 March’s Budget, when the Chancellor will make a series of major announcements for the upcoming financial year.

Included in the five-point plan is a proposal to extend business rates relief for a further year, with the BGC saying this would help supports betting shops and casinos that have been forced to close for much of the pandemic.

Introduced in March last year, the business rates relief meant retail, leisure and hospitality businesses were exempt from paying business rates for 12 months. This initially did not apply to gambling business, but was eventually extended to the industry following pressure from the BGC.

“With premises shut for much of the past year, this would help protect jobs and remove a major financial pressure on businesses that have suffered a significant loss of income during the pandemic,” BGC chief executive Michael Dugher said.

The BGC plan also included a call for the devolved administrations in Wales and Scotland to provide similar help to gambling businesses as part of their own Covid-19 support plans.

Meanwhile, the BGC urged the Chancellor to ensure to government keeps to its timetable for easing restrictions and allow betting shops to reopen alongside other non-essential retail from 12 April.

Prime Minister Boris Johnson confirmed this in an announcement earlier in the week as part of England’s exit from lockdown, saying betting shops could start to reopen from 12 April if certain government Covid-19 targets were met.

In relation to this, the BGC urged the government to ensure the existing 10pm curfew on casinos and other hospitality venues not come back into effect when these facilities are allowed to reopen on 17 May.

The BGC also called on the Chancellor not to introduce any increase in taxation or duties for gambling operators, again noting how the industry had suffered significant losses in 2020 as a result of Covid-19 lockdowns and restrictions.

Finally, the BGC said the Chancellor must ensure any future regulation of the betting and gambling sector does not undermine the essential support horse racing receives from betting, adding any changes could harm the racing sector.

“By any measure, the betting and gaming industry is an important contributor to Britain’s economy,” Dugher said. “It is our hope that the forthcoming Budget will be a springboard to recovery as the country begins to emerge from the Covid-19, unlocking the potential of our high street businesses to return to growth and job creation.”

Grand National remains scheduled for 10 April despite industry calls to delay

Earlier this week, Prime Minister Boris Johnson set out plans for England’s exit from novel coronavirus (Covid-19) lockdown, including allowing betting shops to reopen alongside other non-essential retail from 12 April.

In the wake of the announcement, the Betting and Gaming Council (BGC) called for the Grand National to be delayed until after betting shops reopened to help maximise income from the event for land-based operators.

However, Dickon White, north west regional director for the Jockey Club, said that having consulted with stakeholders and considered the pros and cons of delaying the race, the event will take place on 10 April as originally planned.

“This has been a really difficult time for the retail and on-course betting industry and we very much hope that retail outlets will re-open on 12 April, but like so much in this pandemic, this is far from certain at this stage,” White said.

“The Prime Minister has been clear that timings for lifting restrictions in England are best case and not guaranteed, while already we know outlets will not be open in Scotland.

“With timings fluid and several downsides of delay, as well as some upsides that may or may not happen, there is not a solid enough basis to move one of the biggest racing fixtures in the calendar just six weeks out.

“Therefore, the three-day meeting will remain in its planned 8-10 April slot.”

BGC chief executive Michael Dugher hit out at the decision, describing it as a “disappointing blow” to the retail betting market.

“Briefly delaying the race could have provided a much-needed boost to racing, to the high street and to millions of punters who support this great sport,” Dugher said.

“Races are routinely rescheduled, including most recently because of bad weather. Of course there is always a risk with any decision, but I regret that a ‘can-do’ approach did not prevail in this instance.

“This decision will also surprise many people who understand the challenging financial climate racing currently faces.”

BetMakers revenue up to AUD$7.6m H1 FY21

Revenue for the 6 months ended 31 December 2020 was up 88% year-on-year, leaving the business with a closing cash balance of $68.6m.

However, it made a loss of $1.7m in earnings before interest, tax, depreciation and amortisation (EBITDA).

Underlying EBITDA, meanwhile, was $37,000. This was calculated after accounting for professional fees in relation to the acquisition of Sportech’s global tote and digital assets, and around $880,000 spent on the BetMakers’ US expansion, including progression of its fixed odds strategy throughout the country and in particular in New Jersey.

The board said that the acquisition of Sportech’s tote and digital assets is on track to complete during the next financial quarter.

It added that the acquisition is expected to add substantial revenue and earnings to BetMakers’ consolidated business.

On a pro-forma basis for FY20, the Tote and Digital business, combined with BetMakers’ existing operations, would have delivered $56.1m in revenue and $7.7m in EBITDA, BetMakers said.

It said it believes the acquisition will deliver transformational growth for the business in the US.

Once completed, it said, the deal will give access to 36 states across the country, with more than 100 customers including race tracks and casinos.

The company said it plans to commence an exclusive agreement with the operator of Monmouth Park race track in New Jersey, to manage fixed odds betting on horse racing as soon as the Bill introduced to the New Jersey Legislature to permit the vertical in the state becomes law.

As announced in 17 February, BetMakers has entered into an agreement with Matt Tripp as a partner to accelerate the growth of its B2B wagering strategy.

Tripp also agreed to subscribe for $25m in new shares, subject to shareholder approval, and the company completed a placement of an additional $50m from several existing shareholders.

Last month, the company raised $26.2m through an oversubscribed share purchase plan, in order to support its proposed acquisition of Sportech’s Tote and Digital business, as well as to accelerate its global expansion plans.

Peru’s top football league renamed Liga 1 Betsson

The agreement marks the first time the league has changed its name in more than 20 years, and, Betsson said it reaffirms the operator’s commitment to adding positive value to Peru’s national sport.

Liga 1 Betsson 2021 will be the 105th edition of Peru’s top flight. Its logos and branding will now feature Betsson’s logo, in both physical and digital form.

Betsson said it will promote its #JuegoResponsable (Responsible Gambling) campaign as the central axis of the league’s rebrand, in order to promote responsible gambling at all levels.

“This alliance with the Peruvian Football Federation is a historic step for Betsson Peru,” said Jesper Svensson, chief executive of Betsson Group.

“Being part of the first division of professional football is an achievement that fills us with pride, and it also implies a responsibility that we happily shoulder.”

“We are aware of the tough times that sport is going through all around the world, and for this reason, through this sponsorship, we are contributing towards the development of Peruvian football this year.”

Benjamín Romero, marketing and commercial manager of the FPF, added: “It is very important for the League that a brand as relevant as Betsson joins us as the main sponsor and that the Peruvian tournament changes the name to Liga 1 Betsson this season.

“This encourages us to continue the work and add value to the growth of the national sports industry”