Revenue for the six months through to 31 December 2020 totalled AUS$40.9m (£22.9m/€26.6m/US$32.4m), up 8.8% from $37.6m in the same period in 2019.
Breaking down its revenue performance, lottery retailing was by fair Jumbo’s main source of income, with revenue in this business segment amounting to $37.8m, up 2.7% on the previous year.
Revenue from the software-as-a-service (SaaS) segment also rocketed 200.4% to $1.6m, due to the scaling up of some customers that became fully operational in the period.
Managed services revenue was also up by 655.1% to $1.5m, helped by a full six months of contributions from the Gatherwell UK lottery business, compared to just one month in the comparable period in 2019.
Jumbo also noted that total transaction value for the business, comprising the gross amount received from the sale of goods and services rendered in the half, increased by 25.6% to $47.5m as a result of growth within the SaaS and managed services segments.
“For the first time, we are reporting our results in three segments, reflecting the evolving strength and diversity of Jumbo, as we continue to leverage our superior lottery management capabilities and technology to reshape our business, making lotteries easier for our partners and customers, and underpinning our continued growth, both domestically and offshore,” Jumbo’s chief executive and executive director Mike Veverka said.
Earnings before interest, tax, depreciation and amortisation (EBITDA) for the half was up by 0.9% year-on-year to $23.1m. Lottery retailing EBITDA reached $15.4m, SaaS $10.4m, managed services $464,000 and other revenue $187,000, but Jumbo also reported a corporate loss of $3.4m.
Cost of sales in H1 was up by 45.2% to $4.1m, mainly due to the new service fee under the reseller deal agreed with Tabcorp in August 2020. Jumbo also noted a 15.5% increase in operating costs to $18.1m, primarily as a result of higher administrative costs, which climbed 36.6% to $15.3m.
This left a profit before tax of $19.1m, down 7.8% from $20.7m at the same point in 2019. Jumbo paid $5.9m in tax, resulting in a profit of $13.2m, down 8.3% year-on-year.
Jumbo also accounted for a negative impact of $109,000 as a result of foreign currency translations, meaning it ended the half with a profit of $13.1m, a drop of 9.0% on the corresponding period in 2019.
“We’re delighted with the group results which show our new business segments helping to lift results in periods when the Jackpot cycles are low,” Veverka said.
In terms of other key highlights for Jumbo during the first half, the retailer in November agreed a deal to supply the Western Australia’s Lotterywest with its online software platform and related services – its first agreement with a government-owned lottery.
Also in November, Jumbo secured a remote gambling software operating licence from the British Gambling Commission, while the retailer in September named veteran Australian executive Susan Forrester as chair of its board of directors.
The affiliate pointed out that Colombia is the only Latin American jurisdiction with a fully regulated online gaming sector, and said it was therefore the perfect place for BonusFinder to launch.
“We love operating within regulated markets, it is truly our main focus and our passion,” BonusFinder managing director Fintan Costello said.
“It means the players are better protected, the operators are all legitimate – and everything runs fairly for the players.”
“Better regulation – including affiliate licensing – represents the future of the industry worldwide, and we are delighted to be working in another well-regulated and well-respected market like Colombia.”
BonusFinder has expanded into several new markets recently, with an emphasis on its expansion into jurisdictions in the US.
In October, the affiliate extended its licence in West Virginia to cover igaming, allowing the website to collate and display a range of bonus offers from online casino operators that are licensed in the state.
Churchill Downs Incorporated has launched the process to sell the Arlington International Racecourse in Arlington Heights, Illinois, with plans for the new owner to redevelop the site.
THe operator, however, said it remains committed to running Arlington’s 2021 racing calendar, which lasts until 25 September. It said it does not expect the sale to close before this date, nor does it expect the sale to impact the schedule in any other way.
Real estate business Coldwell Banker Richard Ellis (CBRE) will market the property to new developers.
Churchill Downs Incorporated chief executive Bill Carstanjen said the racecourse’s location should make it an attractive property site for buyers.
Under the 20-year market access agreement, GNOG would launch a new online casino under Tioga Downs’ license in New York.
GNOG would pay Tioga Downs, one of only seven commercial and tribal casinos in the state, a percentage of its net gaming revenue, which would be subject to minimum royalty payments for the duration of the deal.
New York is yet to legalize online casino gambling and the agreement would be contingent on the state regulating such activities. Legislation allowing casinos to operate multiple online skins would also be required as Tioga Downs currently has an agreement with FanDuel. Both pieces of necessary legislation have been introduced in this year’s legislative session.
“New York is key to our growth strategy and we look forward to the state embracing online gaming,” GNOG president Thomas Winter said. “We will remain focused on securing new market access partners in more US states.”
Organic search brought in most of Catena’s revenue, at €95.9m, up 8.6%.
Breaking this organic search figure down further, €68.2m came from casino, €23.5m sports and €4.2m financial services.
Paid search revenue declined by 29.0% to €8.5m, and mostly came from sports betting, while subscription revenue was down 39.5% to €1.6m.
Across all channels, casino revenue came to €69.6m, sports €30.6m and financial services €5.8m.
Acting chief executive Göran Blomberg said declines in Catena’s sports segment with events suspended were outweighed by growth in casino. He added that much of Catena’s growth came from the US and Japan, while the affiliate’s flagship AskGamblers brand also experienced 23% growth.
However, results in Europe were less positive, including what Blomberg called “considerable headwinds” in Germany as the country introduced a new transition period for online casino.
The affiliate’s operating costs, meanwhile, declined by 38.8% to €67.5m. This drop in expenses was almost entirely due to the fact that in 2019, Catena incurred a €32.1m expense for the impairment of intangible assets
Revenue share arrangements made up 44% of Catena’s revenue, while cost-per-acquisition was 40%, fixed fees 14% and subscriptions 2%.
Catena paid €10.1m in direct costs related to revenue, down 25.9% while staff costs were up 2.4% to €23.6m, depreciation and amortisation costs declined 18.5% to €11.6m and other operating expenses were down 11.3% to €22.8m.
This resulted in an operating profit of €38.5m, compared to a €5.7m operating loss in 2019.
After paying €7.4m in interest costs and €13.2m in losses on businesses in which Catena holds equity. The business paid an additional €3.1m in other financial income.
This resulted in a €14.8m pre-tax profit, compared to a €10.4m pre-tax loss the year prior.
After paying €2.3m in taxes, Catena made a €12.5m profit, after having made a €10.5m loss in 2019.
Looking just at the fourth quarter of the year, Catena made €26.6m in revenue, of which €23.7m came from organic search, €375,000 subscriptions and €2.6m paid search.
By gaming vertical, €16.0m of Catena’s revenue came from casino games, €9.3m sports and €11.4m financial services.
The affiliate’s operating expenses totalled €16.6m, down 69.2%, again due to the €32.1m impairment cost from 2019.
Direct costs of revenue made up €3.0m of these costs, personnel expenses €5.0m, depreciation and amortisation €2.4m and other operating expenses €6.8m.
This left a €10.0m operating profit, compared to a €27.3m operating loss in 2019.
After financial costs and taxes, Catena’s final profit was €7.7m, after having made a loss of €31.1m in 2019.
Blomberg added that the business experienced a very strong January, thanks in part to the opening of the Michigan and Virginia markets in the US. Revenue was up 58% year-on-year for the month.
“Catena Media has a very strong market position and good momentum in most business areas. The transformation programme within our legacy business will increase efficiency and enable future revenue growth,” Blomberg said. “After a very good start to 2021, I have every reason to believe in positive developments for the entire year.”
Last month, Catena announced that Michael Daly, currently head of its US business, would take over as chief executive on 1 March. Blomberg will then resume his position as chairman of the board.
Overall revenue for the 12 months to 31 December 2020 amounted to €91.2m (£78.3m/$110.9m), up 35.3% from €67.4m in the previous year.
Revenue share affiliation was by far the main source of income for the affiliate in 2020, as revenue from these operations increased by 20.3% year-on-year to €53.7m.
Cost-per-acquisition revenue more than doubled from €10.9m to €22.3m, while subscription revenue climbed 43.6% to €5.6m and other affiliate revenue hiked 41.2% to €9.6m.
As of the fourth quarter of 2020, following its acquisition of the Atemi Group in October, Better Collective now operates two different business models in terms of customer acquisition, with each segment having different earnings profiles.
The publishing segment covers organic traffic in its existing business but excludes pay-per-click (PPC). The paid media segement, meanwhile, the PPC-focused Atemi Group’s activity, plus existing PPC at Better Collective.
Setting out the revenue split between these two segments, publishing revenue for the full year was €74.2m, up 9.9% on the previous year, while paid media revenue rocketed by 529.6% to €17.0m, due to the acquisition of Atemi.
“M&A continues to shape our business and performance, striving to become the leading sports betting aggregator in the world,” Better Collective chief executive Jesper Søgaard said.
“Atemi Group is one of the world’s largest companies specialised within lead generation for igaming through paid media (PPC) and social media advertising.
“Integrating the [Atemi] has brought Better Collective in the absolute leading position when it comes to premium customer acquisition for the online operators.”
Looking at spending, full-year costs excluding special items and amortisations was up 36.3% to €54.8m, due to the addition of Atemi Group and HLTV.org to the business.
However, such was the impact of revenue growth that earnings before interest, tax, depreciation and amortisation (EBITDA) and special items increased 30.3% to €36.6m.
Operating profit was also up 43.9% to €30.5m, while after accounting for both financial income and expenses, profit before tax was €28.7m, up 51.1% year-on-year.
Better Collective paid €6.8m in tax in 2020, leaving it with a profit of €21.9m for the year, up 57.6% from €13.9m in 2019.
“Looking back at 2020, I am very satisfied with the performance and I firmly believe we have a much stronger company than we had a year ago,” Søgaard said.
Better Collective also published its results for the fourth quarter, during which revenue reached €36.7m, up 87.2% from Q4 of 2019.
Revenue share accounted for €17.6m of total revenue in the quarter, up 50.4%, while cost-per-acquisition revenue rocketed 308.8% to €13.9m. Subscription revenue slipped 4.8% to €2.0m, but other affiliate revenue was up 39.1% to €3.2m.
In terms of the new business split, publishing revenue amounted to €22.8m, up 23.2%, while paid media revenue jumped 1,163.6% to €13.9m on the back of the Atemi acquisition.
Quarterly cost excluding special items and amortisation amounted to €23.0m, almost double the €12.5m spend last year, but revenue growth meant EBITDA before special items was 93.0% higher at €13.7m.
Operating profit climbed 116.4% to €11.9m, and after including financial costs, profit before tax was €11.0m, double the €5.5m posted in Q4 of 2019.
Income tax payments amounted to €2.6m, meaning Better Collective ended Q4 with €8.5m in profit after tax, an increase of 157.6% on the previous year.
“Better Collective will continue the strategy to become the leading sports betting media group,” Søgaard said. “We will continue our efforts in leading an industry consolidation through M&A-activities and our current pipeline is stronger than ever.
As we look to the year ahead, industry experts share their thoughts on the opportunities and challenges facing the industry.
In the final part of our eight-part series, we talk to experts in social responsibility. In part one we heard from igaming operators and suppliers, then in part two land-based operators and suppliers.
Part three brought in finance experts, followed by marketers in part four and recruiters for part five. Technology and innovation was the focus of part six and part seven covered regulation.
Interviewees
Maris Catania, head of responsible gaming and research, Kindred Grainne Hurst, group corporate affairs director, Entain Daniela Johansson, deputy CEO and chief responsibility officer, PAF Matt Zarb-Cousin, founder, Clean Up Gambling
Looking back at 2020, what – other than the Covid-19 pandemic – did you feel was transformational for the industry? And how much of a lasting effect do you think the Covid-19 pandemic will have going forward?
Maris Catania
Maris Catania: I think one of the more transformational things for the industry was the fact that we had to shift to working from home with less than a week’s notice. For some colleagues this might have rendered quite a difficult transition, whereas to others, we can see that it has calmed down our hectic lifestyle. Being someone myself who would need to travel at least once a month, moving to not travelling for almost a whole year, I can see that remote working and participating online in conferences has become the new norm. I think both these aspects will have a major impact for operators as we are seeing a new way of working, which perhaps might help people look into more work-life balance.
Grainne Hurst: Technology without a doubt has been one of the key drivers of keeping everyone connected during the pandemic. What is most interesting is how technology can be a disruptive force for good – both in protecting our players but also in offering them new experiences. A great example of this was during the first UK national lockdown. With the absence of some significant sporting events, we saw a rise in virtual sports.
Daniela Johansson: Social responsibility and sustainability is now seen as a strategic necessity for at least a majority of the operators and suppliers in the industry. We can definitely see that the Covid-19 pandemic has fast-forwarded the transformation in the gambling industry when it comes to social responsibility. During the year we have seen stricter regulations from a political and regulatory perspective. Even though they are said to be temporary restrictions, I do believe that they will continue in 2021 and going forward.
Unfortunately the gambling industry doesn’t have a good reputation in the eyes of the public and we now see stricter measurements being taken from a regulatory perspective. An effect of this is that gaming companies will need to adapt to a new business model where they have to rely on another type of customer database, with players not spending as much. This will put pressure on cost efficiency and mean that new ways of working are needed in order to have a profitable and sustainable business.
Matt Zarb-Cousin: The House of Lords Gambling Industry Select Committee report definitely felt like a watershed moment in terms of foregrounding both the urgency and breadth of the gambling reform agenda. The quantity of recommendations and cross-party support of their inquiry into the impact of the 2005 Gambling Act have definitely set the tone for the recently announced Gambling Act Review, and added to an influential chorus including the Public Accounts Committee, the Gambling Related Harm All Party Parliamentary Group and the Social Market Foundation, all of which identified a consensus in what the government should prioritise when it comes up with its recommendations following the call for evidence.
What do you feel is going to be a ‘game-changer’ for the industry in the coming year?
MC: From my end I will always be considering the safer and responsible gambling approach, and I think this should really be the focus for every operator this year. The pandemic, through lockdowns and spending more time at home, might have resulted in more issues for some players, and I think this should really be the focus of what we do. Operators should really look into focusing more on consumer protection and sustainable revenue.
Grainne Hurst
GH: The rise in opportunities for online gaming and sports betting in emerging markets continues to be a game-changer. These newly regulated markets have also seen developments in online payment mechanisms and the proliferation of technology such as smartphones and tablets are key drivers for business growth. With this opportunity comes responsibility and therefore it is important to continue the high level of player protection measures in these emerging markets. Sustainability and responsibility work harmoniously together to create a successful and reputable business.
DJ: The discussion on affordability will most likely continue in the coming year. On one hand, you have the gambling companies lobbying for voluntary limits set by the players themselves and systems for detecting risky gambling patterns, which are not always easy to understand in terms of how they work or how effective they are. On the other hand, you have the policymakers and politicians, who want clear and easy to understand regulations. My guess is that we will see stricter blanket limits in several jurisdictions.
However, I don’t think that we will yet see that many global limits during 2021, where the player sets one limit that is used for all gambling across different operators. Not having global limits will mean that players who want to play more than their set limit will move across operators and brands. From a social responsibility perspective, players will still be able to lose big sums of money but the spending will be distributed at several different operators. One effect of this will probably be that we will see fewer VIP programmes in the future within the regulated markets.
MZC: There is a certain degree of inevitability to stake and speed limits for online slot and casino content, as given this has been included in the call for evidence it is very difficult to argue against parity for similar content on machines in land-based venues. The affordability model that emerges from this review has the potential to be the real game-changer, though. While the Gambling Act Review’s call for evidence is ongoing, the Gambling Commission will be deciding on the model to implement in the interim. The success or otherwise of this is likely to determine the extent to which the government will intervene further. Britain has the potential to enact a system that prevents unaffordable losses while not impacting those who can afford above a deposit threshold where more rigorous checks would take place.
On the other hand, what do you feel could disrupt the sector or slow progress?
MC: In this day and age, we see more research published, and more individuals with lived experience speaking about what consumer protection should look like. Nonetheless, at times it seems that stakeholders, including industry operators, might not be looking into this fountain of knowledge, and therefore making changes (or not making changes) that hinder consumer protection, which can negatively impact gamblers and affected others. We should be working together towards sustainable gambling and not exploitative gambling.
GH: We have seen the launch of the Gambling Act Review by the government recently. Entain has welcomed the review, and that the government has stated the outcomes must be evidence-based and proportionate to the problems they aim to solve. Player protection is paramount, however, the ‘one-size fits all’ approach to regulation is something that could cause regression in the progress the industry has been making with safer gambling. As we have seen recently with regulatory developments in countries such as Sweden, there is a danger that overzealous regulation sadly drives customers to the unregulated black market, where there are no player protection policies.
Daniela Johansson
DJ: Channelisation is a key question that will be important for the industry going forward. If the channelisation is too low, the responsible gaming measurements will only protect the players playing with regulated operators. This is neither good for the players nor for the industry. Cooperation and willingness to develop the sector will be important for regulators, politicians, operators and suppliers to avoid slowing down the progress.
MZC: It would be better for all sides of the gambling debate – both reformers and the industry – if the government does not delay putting forward its recommendations following the Gambling Act Review’s call for evidence. It is expected that the white paper is likely to be published around summer 2021. Everyone concerned with this issue would prefer progress to be made as quickly as possible, and for the reforms to be enacted by 2022.
What do operators and suppliers need to do in 2021 to show their commitment to social responsibility?
MC: Actually commit to it! We need to get to a point that as operators and suppliers, what we are doing is to minimise harm and not maximise revenue. In the long run, if harm is minimised, collaborations with stakeholders (research, education, treatment, lived experiences) are formed and changes are made for consumer protection to be the main goal of the industry, then the harm prevented will outweigh any other company goal.
GH: There are a number of ways to show commitment to social responsibility, however the key thing is to make sure it is at the core every part of the business. At Entain we launched Changing for the Bettor – our safer gambling strategy, which is made of seven pillars and has transformed the way we operate by keeping safer gambling at the centre of what we do. Furthermore, we have launched the Entain Foundation, which oversees all of our CSR initiatives, and have committed to donating over £100m to the Foundation over the next five years.
DJ: Transparency will be the key in order to gain trust for the gambling industry in the eyes of the public and policymakers. As an industry we are not trusted and different surveys have found the gambling industry is one of the least trusted industries. The first step to change this is to be transparent regarding the customer database and segments and to show the effectiveness of the responsible gaming measures implemented. Also, I would like to see more true commitment to responsible gaming, where operators and suppliers really care about their customers – basic things like integrating responsible gaming into the customer journey, providing high-end tech tools and taking actions when needed, even if it will hurt the business.
Matt Zarb-cousin
MZC: Operators and suppliers should engage constructively with the gambling review. As the House of Lords Gambling Industry Select Committee found, 60% of profits coming from 5% of customers is unsustainable. This figure presents a challenge for regulators, for government and for the industry. Reducing harm will mean reducing profits in the short term, but it will mean the long-term viability and sustainability of the sector in the face of increasing public, media and political pressure.
The region has today (23 February) ended the requirement for those who had been in the city of Shijiazhuang in Hebei province and Suihua in Heilongjiang province in the prior two weeks to isolate for 14 days if entering Macau following improvements of the situation in both cities.
“That is, from 23 February, no travelers need to undergo medical observation or self-isolation because they have traveled to any place in the Mainland within 14 days,” the Macau government said.
The measure ends a series of restrictions that drastically limited casino revenue in Macau for much of 2020.
The 2021 Grand National, the UK’s showpiece horse racing event, is currently due to take place on 10 April at Aintree Racecourse, two days before betting shops will be able to resume operations after following a period of enforced closure due to novel coronavirus (Covid-19) restrictions.
Prime Minister Boris Johnson yesterday (22 February) confirmed all non-essential retail in England will be able to reopen from 12 April, as part of the country’s roadmap exit from current lockdown measures.
In response, the BGC said that delaying the Grand National until after this date would allow betting shops to cash in on one of the most popular sports betting events in the UK calendar, which would in turn benefit the racing sector that has also suffered heavy losses during the Covid-19 pandemic.
The BGC said an estimated £125m (€145m/$176m) is traditionally staked on the race by millions of punters, with nearly half of all bets being placed in high street betting shops, making it their busiest day of the year.
“Delaying the Grand National until betting shops are open is definitely an idea worth exploring,” BGC chief executive Michael Dugher said. “I appreciate that this is not without its challenges, but we are willing to do all we can to help iron out any difficulties.
“Ensuring that the once-a-year punters are able to pop in to their local bookies to have a flutter, supporting their local high street, on the world’s most famous horse race would also help make the Grand National a truly national celebration as we begin to reopen the economy.
“This would also provide a much-needed and timely boost for racing and the high street after such a torrid year for both.”
The British Horseracing Authority (BHA) came out in support of the government and its roadmap for easing restrictions, saying it would work with authorities to allow spectators to safely return to racing events as soon as they are allowed.
Unless the Grand National were to be pushed back until last May, it is likely the event would take place behind closed doors for a second successive year.
Sporting events will not be able to welcome spectators until phase three of the roadmap, which will not begin until 17 May at the earliest.
From this date, indoor events will be limited to half capacity or 1,000, while outdoor events can run at half capacity or 4,000 people, and larger venues, with a capacity of 40,000, able to host up to 10,000 fans.
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