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• JAN-MAR 2017 • ISSUE 28

GAMING INTELLIGENCE: CELEBRATING 10 YEARS G A M I N G

I N T E L L I G E N C E

Q U A R T E R L Y

Jan–Mar 2017

AMAYA AND 888 LEAD THE WAY IN

WHILE A NEW BREED EMERGES IN

A GAMING INTELLIGENCE PUBLICATION

AMAYA | ASPIRE | CHERRY | THE SUN | EVOLUTION | UNIBET AND MANY MORE


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CONTENTS

LEADER Q4 REVIEW

FEATURES GIQ

28 UK bookmakers in crisis Investigations into dodgy T&Cs, advertising practices and GamingIntelligence.com fixed-odds betting terminals left bookies facing Amaya calls off William Hill have The quarter in numbers and David Baazov acquisitionsmeltdown Q4 2016

Get the latest news from our website

FINANCE

38 £726m The Gaming Intelligence UK National Lottery H1 digital sales Awards and Hot 50 4% those who have Celebrating William Hill Online growth in Q3 achieved great things in 2016 £404m Power Betfair Q3 revenue and thosePaddy most likely to in 2017

IT IS INDICATIVE of a quarter of limited deal a hoax acceptance letter before raising more funds from his other advisers. activity that sees us use our Deal of the Quarter slot to analyse a deal or two that did not happen. Activist investor SpringOwl didn’t like what it saw and criticised Baazov’s bid for lack William Hill had emerged as the company most likely to acquire PokerStars owner of transparency. “If we have a credible bid with transparency, we would consider Amaya after a number of private equity houses and other operait,” said SpringOwl CEO Jason Ader. “But the current price seems low tors such as GVC Holdings had kicked the tyres. But talks were and the lack of transparency and OF THE information about the sources of terminated after Parvus Asset QUARTER Management, Hills’ largest sharefunding raises questions.” Baazov pulled out before Christholder with a 14.3 per cent stake, poured scorn on the deal, labelling it mas, saying: “It became evident that the share price premium demanded by “value-destroying”. This left the road clear for Amaya certain shareholders exceeded the price at which my investors and I would be willfounder and former CEO David Baazov to launch a $6.7bn bid to take ing to complete a transaction.” Amaya’s major shareholdthe business private. What ensued was one of the most ers Caledonia Investments and BlackRock Asset Manfarcical scenarios in the industry’s M&A history – agement have seen a company reshaped by Baazov’s and there have been a few. successor Rafi Ashkenazi. After Baazov published P re - close statements his list of backers, a Dubai firm called KBC Aldini revealed all verticals doing great business. said it had done no such thing. Baazov then said There was no longer any pressing need to sell. ■ he had been the victim of

NOT DEAL

REGULATORY

£2

proposed max. stake for UK FOBTs

ANALYSIS 5 & OPINION iGaming licences issued in

Portugal in 2016 4 Snapshot Top stories, top quotes, top deals and deal of the quarter 5 MARKETING

Gaming-related ad bans by UK’s

6 Thought leadershipASA in Q4 Lars Kollind of Aspire Global $15m THE QUARTER’S DEALS IN 60 SECONDS Deal for Catena Media to purchase used to pay down the combined Ladbrokes Coral debt. Betsson strengthened its horse race betting offering 9 People New Evolution Gaming US iGaming affiliates Playtech resumed its efforts to develop its Finanwith the acquisition of RaceBets for a price that may cials division after previous thwarted attempts with the rise to €40m. Founded in 2005, RaceBets is licensed CEO Martin Carlesund on a €34m $43.4m acquisition of London-based Consolidated n the UK, Ireland, Malta and Germany, with the GerFinancial Holdings (CFH), a trading solutions provider man Thoroughbred Racing Association holding a of Betsson’s acquisition of land-based plusPrice new offering brokers an automatedfuture; capital market and payminority stake in the business. RaceBets ments processing product. Australia’s Tabcorp agreed a AUD$6.4bn acquisiNovomatic continued its never-ending tion of rival Tatts but one senses that this one has appointments at spending Amaya, William €200m spree with the acquisition of the Albanian national a long way to run, even if Tatts did reject a rival bid Max outlay for Cherry to acquire lottery operator Lotaria Kombëtare. It did not reveal of AUD$7.3bn from The Pacific Consortium, which Hill and more remaining 51% stake in ComeOn how much it spent on the deal, which followed shortly ncluded private equity firm Kohlberg Kravis Roberts M&A

& Co and Macquarie Corporate Holdings. Betfred was the main beneficiary of Ladbrokes Coral’s enforced sale of a bunch of retail outlets. Fred Done acquired 322 shops via his holding company Done Brothers (Cash Betting) for a cash consideration of £55m, while Stan James purchased 37 venues for £0.5m in cash. The total £55.5m consideration will be

GIQ Q4 REVIEW

after its acquisition of 17 per cent of Casinos Austria,

of the Albanian company. Perhaps it was 12athepart-owner Technology cherry on the top of the larger deal’s & cake. new products 15 Speaking of Cherry, the Swedish operator acquired the remaining 51unveils per cent of ComeOn,new taking its totalB2B Cherry Yearsarm; served by departing Intralot outlay on the online casino to a possible maximum USA CEO Tom Little of €280m. plus new products from Inspired, Novomatic-Kambi, Playtech, NetEnt and more PEOPLE

5

16 Marketing UK bookmakers face uneasy questions; Q&A with Kate Bird of The Sun 78 And another thing… Steve Donoughue on UK bookies’ political crisis

FINANCE Q3 2016 61 The GIQ 20 Listed operators’ online results 75 The GI Stock Index 2016

Steve Hoare

E D I TO R

A TIME TO CELEBRATE BUT… HIS IS A strange old issue of GIQ. We mark our 10th anniversary by celebrating those who have achieved great things with the Gaming Intelligence Awards. The Hot 50 also allows us to celebrate individuals’ achievements, look at who we expect great things from and who must achieve more if he or she is to remain in the hot seat. Which brings us to the strange situation. Much of the rest of this issue is devoted to investigations and reviews which threaten large fines, shop closures, profit hits and even licence revocations. The situation in the UK has mushroomed from the political attack on fixedodds betting machines in licensed bookmakers’ offices. However, it is not limited to those with land-based concerns on the UK mainland. While FOBTs were the initial focus for the anti-gambling lobby, the political climate has broadened its scope and the authorities are looking at everybody’s marketing efforts and potential abuse of terms and conditions. The UK also has a new chief executive at the Gambling Commission. Sarah Harrison is threatening to revoke the licences of the worst abusers. It is unlikely she will rip up the licences of big operators but she might want to make an example of somebody.

The previous chief executives of the big bookmakers failed to stop this crisis developing when it flared up in 2014. They didn’t take the threat seriously and now everyone could be made to pay the price. There could be some winners though. The UK government is threatening to reduce the stake on FOBTs to £2, although most pundits predict a drop to £10. However, financial experts believe a figure of less than £30 makes them untenable. With FOBTs representing around two-thirds of land-based revenue, the likes of Ladbrokes Coral and William Hill face a huge hit. Shops may be closed in Paddy Power’s UK estate too, but UK retail only accounts for 11 per cent of group revenue compared with nearly 70 per cent at Ladbrokes. As FOBT players move online, Paddy Power Betfair could have a greater marketing budget than a crippled Ladbrokes or Hills… if they are all still standing after the investigations conclude. This is not a time to indulge in schadenfreude. If the political contagion has spread from land to online, it could easily spread to non-UK regulators, media and politicians. Please do celebrate with us, but look after your customers and they will look after you. sah@gamingintelligence.com

GamingIntelligence, Gaming Intelligence Quarterly and GIQ are trademarks of Gaming Intelligence Services Limited. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, or stored in a retrieval system of any nature without prior written permission. Application for permission must be made in writing to the publisher.

T

EDITOR IN CHIEF Bobby Mamudi bmm@gamingintelligence.com

STAFF WRITERS Kio Dawson k.dawson@gamingintelligence.com

ADVERTISING & SUBSCRIPTIONS Omer Uziely omer@gamingintelligence.com

EDITOR Steve Hoare sah@gamingintelligence.com

Robin Harrison rhm@gamingintelligence.com

www.GamingIntelligence.com

SUB-EDITOR Camilla Cary-Elwes info@thecopyeditor.co.uk ART EDITOR Alan Bingle alan@forty6design.com

GIQ Q4 REVIEW

Michelle Barber m.barber@gamingintelligence.com CONTRIBUTORS Caroline Parry, Steve Donoughue

Published by Gaming Intelligence Services Ltd Studio 15, Riverside Building 55 Trinity Buoy Wharf London E14 0FP support@gamingintelligence.com T. +44 (0)845 052 3816

Copyright © 2017 Gaming Intelligence. All rights reserved.

3


GIQ Q4 2016

Snapshot most popular news stories of 2016 on GamingIntelligence.com The Gaming Intelligence Hot 50 of 2016 – Backstage Heroes

Gaming Intelligence is 10 years old in February. Some things change, some things stay the same.

Lottoland secures Australia’s first online lottery betting licence

GAMING INTELLIGENCE OFFICIALLY launched its website on 13 February 2007. However, its unofficial launch had been the previous September, just two weeks before the US passed the Unlawful Internet Gambling Enforcement Act (UIGEA) on 13 October. Our very first feature was titled: ‘A Brand New Virtual Market’. Back when Facebook was just for college kids and Mark Pincus was yet to found Zynga, we looked at Second Life casinos and the early social fumblings of pioneers such as 888. While BetOnSports chief executive David Carruthers was arrested in July 2006, nobody expected a federal ban on online gambling to be sneaked in as an addendum to an antiterrorism bill. It may have seemed an inauspicious time to launch but our founders saw an opportunity. “We realised the industry would change and that it would need a reliable and trusted source of news as it shifted from an unregulated Wild West, where everybody and anyone could slap a casino on the internet, towards a future of fully licensed operators in regulated markets,” says editor-in-chief Bobby Mamudi. The second feature posted on GamingIntelligence.com was titled: ‘The Online Gambling Ban in the US: A long-term opportunity’. It advised a move towards a more social model and suggested operators might embrace stricter licensing laws. The third feature on our website was titled: ‘How Far Are We From an EU-wide Poker Network?’ The next feature investigated the opportunities in Asia in general and China in particular. Fast forward to 2017, with regulators plotting a scheme of Europe-wide liquidity sharing, Donald Trump’s attorney general threatening to revisit the Wire Act, and China awarding an online poker licence to AGTech, it seems that little changes. With UK MPs recommending a drop in the maximum stake on fixed-odds

Paddy Power, Playtech and William Hill bidding war for £300m OpenBet William Hill ups ante in OpenBet bid but Playtech still in pole position Amaya CEO Baazov charged with insider trading Rank and 888 form consortium to acquire William Hill What the OpenBet acquisition means for NYX and William Hill NYX acquires OpenBet in £270m deal PokerStars targets Asia as Jackpot Poker launches with Playphone The Gaming Intelligence Hot 50 of 2016

Quote of the Quarter Gambling inevitably involves taking a risk, but it shouldn’t be a con Competition and Markets Authority senior director Nisha Arora (page 28)

4

Looking back, looking forward betting terminals to £2, Ladbrokes Coral, William Hill and the rest could be facing their own UIGEA moment. You’d think that 10 years down the line from that initial slap, they might have learned some lessons. The warning signs have been there since the industry emerged from the financial crisis in relatively rude health. We’re still waiting for that long-term opportunity promised in the US but in the meantime, some played a canny game. While others retreated, PokerStars stayed put. It was very sure of its own legal standing, and while some others continued to run their businesses like cowboys, the Scheinbergs transformed PokerStars into a slickly run machine that engaged with regulators wherever it could. Of course, PokerStars has suffered more ups and downs since 2006 than any other company in the industry – arguably it has endured a more violent rollercoaster ride than any other company. Period. But Stars’ post-UIGEA strategy enabled it to build the awesome business it maintains to this day. Others might have been watching that tactic and applied the same thinking towards China. The next feature on the fledgling GamingIntelligence.com was about mergers and acquisitions. While M&A has remained a constant throughout our lifetime, it has gone into overdrive during the past three years. The OpenBet saga dominated the news pages of 2016 (see most popular stories, left) much as the bwin saga dominated the news pages of 2015 and the Amaya saga (see Deal of the Quarter, right) dominated the final quarter of last year. Like every true saga, each involved a number of individuals plotting against and with each other. These moves continue to fascinate us and shape our businesses. Today, we mark 10 years with an issue that celebrates the companies featured in the Gaming Intelligence Awards and the individuals starring in the Hot 50. Let’s see if their stories resonate 10 years from now. n


GIQ Q4 2016

Get the latest news from our website

GamingIntelligence.com

Amaya calls off William Hill and David Baazov acquisitions IT IS INDICATIVE of a quarter of limited deal a hoax acceptance letter before raising more activity that sees us use our Deal of the Quarter funds from his other advisers. slot to analyse a deal or two that did not happen. Activist investor SpringOwl didn’t like William Hill had emerged as the company what it saw and criticised Baazov’s bid for lack most likely to acquire PokerStars owner of transparency. “If we have a credible bid Amaya after a number of private with transparency, we would consider equity houses and other operait,” said SpringOwl CEO Jason Ader. tors such as GVC Holdings had “But the current price seems low kicked the tyres. But talks were and the lack of transparency and OF THE terminated after Parvus Asset information about the sources of QUARTER Management, Hills’ largest sharefunding raises questions.” holder with a 14.3 per cent stake, Baazov pulled out before Christpoured scorn on the deal, labelling it mas, saying: “It became evident that “value-destroying”. the share price premium demanded by This left the road clear for Amaya certain shareholders exceeded the price at founder and former CEO David Baazov which my investors and I would be willto launch a $6.7bn bid to take ing to complete a transaction.” the business private. What Amaya’s major shareholdensued was one of the most ers Caledonia Investments farcical scenarios in the and BlackRock Asset Manindustry’s M&A history – agement have seen a comand there have been a few. pany reshaped by Baazov’s After Baazov published successor Rafi Ashkenazi. his list of backers, a Dubai P re - close statements firm called KBC Aldini revealed all verticals said it had done no such doing great business. thing. Baazov then said There was no longer any he had been the victim of pressing need to sell. n

NOT DEAL

The quarter in numbers FINANCE

£726m

UK National Lottery H1 digital sales

4%

William Hill Online growth in Q3

£404m

Paddy Power Betfair Q3 revenue REGULATORY

£2

proposed max. stake for UK FOBTs

5

iGaming licences issued in Portugal in 2016 MARKETING

5

Gaming-related ad bans by UK’s ASA in Q4 M&A

THE QUARTER’S DEALS IN 60 SECONDS Betsson strengthened its horse race betting offering with the acquisition of RaceBets for a price that may rise to €40m. Founded in 2005, RaceBets is licensed in the UK, Ireland, Malta and Germany, with the German Thoroughbred Racing Association holding a minority stake in the business. Australia’s Tabcorp agreed a AUD$6.4bn acquisition of rival Tatts but one senses that this one has a long way to run, even if Tatts did reject a rival bid of AUD$7.3bn from The Pacific Consortium, which included private equity firm Kohlberg Kravis Roberts & Co and Macquarie Corporate Holdings. Betfred was the main beneficiary of Ladbrokes Coral’s enforced sale of a bunch of retail outlets. Fred Done acquired 322 shops via his holding company Done Brothers (Cash Betting) for a cash consideration of £55m, while Stan James purchased 37 venues for £0.5m in cash. The total £55.5m consideration will be GIQ Q4 REVIEW

used to pay down the combined Ladbrokes Coral debt. Playtech resumed its efforts to develop its Financials division after previous thwarted attempts with the $43.4m acquisition of London-based Consolidated Financial Holdings (CFH), a trading solutions provider offering brokers an automated capital market and payments processing product. Novomatic continued its never-ending spending spree with the acquisition of the Albanian national lottery operator Lotaria Kombëtare. It did not reveal how much it spent on the deal, which followed shortly after its acquisition of 17 per cent of Casinos Austria, a part-owner of the Albanian company. Perhaps it was the cherry on the top of the larger deal’s cake. Speaking of Cherry, the Swedish operator acquired the remaining 51 per cent of ComeOn, taking its total outlay on the online casino to a possible maximum of €280m. n

$15m

Deal for Catena Media to purchase US iGaming affiliates

€34m Price of Betsson’s acquisition of RaceBets

€200m Max outlay for Cherry to acquire remaining 51% stake in ComeOn PEOPLE

15

Years served by departing Intralot USA CEO Tom Little 5


S P O N S O RE D E D I TO RI A L ASPIRE GLOBAL

Aspire Global adds fresh talent to boost growth Aspire Global’s new B2B sales director Lars Kollind on his new role, his new company and its future

Lars, as the newest member of the ASG sales team, can you tell us a little bit about yourself and your professional experience? I came to Malta a few years ago from Sweden. After a number of trips for business and pleasure, I could really see myself staying here. I love the culture, climate and the fantastic food, and the opportunity to base myself on this idyllic island, which has rapidly emerged as a key global tech hub, all played a big part in my decision to join Aspire Global. On a more professional note, I have been in the iGaming industry for over 13 years in various consultancy roles across marketing, product and affiliation, including iGaming executive expert, senior product manager, adviser and marketing consultant at various key iGaming companies. My experience covers both the strategic and operational dimensions of the online casino business. As founder and CEO of Kollind Consulting, I was able to offer my expertise and insights to a wide range of international iGaming clients, an experience I’ve enjoyed immensely. The more I learn about Aspire Global’s platform and range of solutions, the more convinced I am of our potential to become leaders in the field. I’ve also been well briefed on the company’s superb growth over the past years and am fully aware of the need to maintain this momentum by identifying new prospects, conducting negotiations and closing deals.

How much did you know about Aspire Global and its solution before you started working there? I was well aware of Aspire Global’s reputation for providing a world-class white label solution for iGaming operators, combining all core services in one package. Until I made contact however, I didn’t fully appreciate the breadth and depth of the offering. It’s truly a complete solution which allows our partner operators to focus entirely on marketing and acquisition. Most turnkey platform providers don’t provide CRM or support services, whereas Aspire Global supplies the complete A-Z solution This was one of the main aspects that reinforced my decision to join Aspire Global. 6

Everyone needs the confidence that comes with genuine belief in the company they’re representing, and I’m certain I can achieve results and enhance the company’s reputation for delivering an excellent iGaming solution.

Can you tell us about Aspire Global from your point of view? Many people like to describe their new company as being like a family, but in this case it’s entirely accurate. The company has a warm, informal and supportive atmosphere, but you can also sense the energy, drive and professionalism that have contributed to Aspire Global’s phenomenal success. Employees at every level interact on a daily basis, freely sharing their knowledge, ideas and insights. And on the social side, there’s a genuine rapport. Being able to spend quality time with other gaming professionals makes our day-to-day activities much smoother and more collaborative. We all possess the same ambition – to attain even greater success for the company and to develop our careers within an environment where our team-based and individual achievements are fully recognised and rewarded.

How do you see the company expanding in the next few years?

Aspire Global is already a major international company, and with the latest addition of a sports vertical to our platform, our iGaming solution is an even more attractive proposition for new and existing partners. We work with three principal categories of companies: existing operators wanting to improve profitability, media companies with no background in iGaming that wish to leverage the strength of their brand to bring in new revenue streams, and affiliate entrepreneurs who want to move up to the next level. ASG is able to offer flexible tools, a stable platform and a superb range of products, including apps, to meet the needs of all clients. I’m convinced our company has the potential to become the go-to complete solution provider for all operators, and in order to maintain our growth over the next few years we will continue to manage our successful outreach to companies which may wish to become white labels.


S P O N S O RE D E D I TO RI A L ASPIRE GLOBAL

Everyone in the industry knows that regulatory requirements are becoming more stringent, no matter which market a company operates in. On the face of it, that might seem like a burden, but for ASG it represents a golden opportunity. We will keep searching for new markets to be regulated in, each one offering the chance for our partners to grow and for our solution to reach a wider audience. We’re in the process of entering our sixth regulated market and there are a number of key new territories also on the horizon, both in existing regulated markets and ones that are soon to become regulated for the first time. This latter category is especially exciting, since territories like these are rich in opportunities for operators which are able to get everything right – from appealing bonuses and localised games and content, to perfect UI/UX and customer support.

How do you define ASG in comparison to other similar players in the market? At Aspire Global, we believe that success goes hand in hand with professionalism, and that’s why we offer a solution which enables our partners to continue focusing on their areas of strength: marketing and acquisition, while we focus on our own areas of expertise. Our complete iGaming solution handles everything else, including support, CRM, VIP department, risk and fraud management, payments, regulation and compliance, leaving our partners to concern themselves solely with marketing efforts. After many years in the industry, I can say that very few competitors are able to provide such a complete solution, let alone to the standards we are able to offer based on our 10-plus years of knowledge and experience. We are fully licensed in all major European markets including the United Kingdom, Denmark, Italy, Belgium and Malta, and constantly work towards reaching more markets that could be relevant for us and our partners. Our international support and VIP teams allow us to provide highquality, localised customer service. We also strive to tailor our marketing offers for optimal fit and relevancy within each market. Everything we do, we are doing to enable our partners achieve their full potential. Each partner receives a dedicated professional account manager GIQ Q4 REVIEW

On the face of it, regulation might seem like a burden, but for ASG it represents a golden opportunity. We will keep searching for new markets to be regulated in, each one offering the chance for our partners to grow

with us, who will assist with any requests, queries or general concerns on a day-to-day basis. We pride ourselves on these close relationships, and are aware that this is one of the main reasons why providers choose us again and again.

How do you see your role at ASG? If you had to describe your mission, what would it be? I will be principally responsible for implementing the strategy set forward by the company in order to achieve its sales goals by continuing to offer the complete iGaming solution to operators in markets around the world.   I’ll achieve this by leveraging my extensive network of contacts, and by talking directly with new operators who are not yet acquainted with us, about Aspire Global’s solution and unique proposition – the fact that we offer a complete iGaming solution for operators and white labels. I will explain the nuts and bolts of how we’re different and the simplicity we provide, demonstrating how every operator can save time and money, avoid headaches, grow their business and increase profitability.  

What do you predict for ASG in 2017?

I think Aspire Global will cement its reputation as a leading player in the iGaming industry this year. 2017 is definitely going to be Aspire Global’s year, as we hit new heights in terms of partnership agreements. The signing of a contract with a new partner is the beginning of our journey together, as we walk through the entry into the iGaming world hand in hand, ensuring a seamless and successful start. Some of our operators have been with us for over 10 years now, since the foundation of the company, and many of them are so pleased with their results that they keep opening new brands with us. I fully expect this trend to continue. There will also be some very nice surprises for our partner operators over the next 12 months, so watch this space! n

7


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10 PokerStars, William Hill and more

Carlesund eyes land-based market as Evolution CEO C O LU M N Robin Harrison EVOLUTION GAMING IS a company that is not afraid to follow its own path. It takes an economically cautious approach to licensing in newly-regulated markets, it maintains a lasersharp focus on its core live dealer offering, and it has never acquired another company. True to its name, it looks to continuously evolve its business rather than revolutionising what it does, and this strategy has proven resoundingly successful. Evolution is also the name of the game when it comes to management changes, with founder and chief executive Jens von Bahr moving up to serve as executive chairman, clearing the way for Evolution Malta chief executive Martin Carlesund to assume the group CEO seat. Taking over from von Bahr to head the industry’s leading live dealer specialist looks like a mammoth task, but for Carlesund it is simply an evolution of his previous role. “After being chief executive of the Malta business it wasn’t that big a change of role, when it came to me shifting over to group CEO,” he says. “As Malta CEO I already had Latvian operations in my remit, so to the wider industry it may have seemed a bigger change, but ultimately it wasn’t that major a shift.” The evolution mantra can also be seen in his approach to the new role, where his focus is on continuing to do what Evolution does, only better. “We are continually looking to distance ourselves from the competition,” Carlesund explains. “We want to ensure that we continue GIQ Q4 REVIEW

Having taken over from Jens von Bahr as Evolution Gaming’s group CEO in October last year, Martin Carlesund is looking to the land-based sector as he bids to sustain the supplier’s rapid growth to do everything we do better than anyone else. We need to keep that urge.” So what comes next for Evolution? When Golden Nugget announced Ezugi as its live dealer partner in New Jersey, it seemed as though Evolution’s smaller rival had stolen a march on the industry leader. Not so, according to Carlesund, who sees the rush into the US market as being somewhat premature. “The market is a little bit small,” he suggests. “We are too business-savvy just to blunder into the US without the right market conditions. It’s more likely than not that we will go into the US in 2017, but we don’t want to rush it. We’ve got a slightly different approach to other companies. “It’s so easy to see New Jersey as a path into the US, but it’s a very small market,” he states. M&A is also treated warily. For years Evolution has been named as a potential acquisition target for Playtech, and it has dismissed those rumours for just as long. It has never been involved in any M&A activity because it has never needed to, says Carlesund. Rival NetEnt, which has been slowly but steadily building its own live dealer offering, has also long been mooted as a potential partner. Carlesund admits that he can see why people suggest the tie-up, but insists there are no discussion taking place between the two. However, the company is not oblivious to the

industry consolidation taking place around it, and there have been internal discussions about potential targets. But Carlesund insists that the supplier will only consider the right deal. In the meantime its focus is fixed on the land-based sector. London’s Hippodrome and The Ritz Club casinos have launched Evolution’s Dual Play Roulette product, which von Bahr has described as a “breakthrough” for the company. “Such partnerships with such prominent venues are key for us, as their offering meshes perfectly with Evolution’s products. We feel that casinos will become increasingly digitised, with more moving online, and the natural product to bridge the gap between online and land-based is Dual Play Roulette,” he asserts. This is Evolution’s long-term play. “It’s not going to be this year, or maybe even next year, but strategically it’s very important,” he says. Talk of taking bricks-and-mortar casinos online has been focused on the US in recent years, but Evolution, and Carlesund, believe that it can and should be a global phenomenon. After all, who else is better equipped to rival the online-only market-leaders? You can expect Evolution to continue to live up to its name under Carlesund’s leadership, and if 2017 is its year for moving into the US and entering the M&A fray, possibly a dab of revolution as well. n 9


PEOPLE Q4 NEWS

POKERSTARS RECRUITS NEW CASINO CHIEF

IN THE NEWS

Gaming executives who have been making headlines and what’s in their inbox

Wänghammar’s appointment as managing director of PokerStars’ casino busi ness shows how Bo Wänghammar highly rated he is in the managing director PokerStars Casino industry. Compared to his predecessor Sam Hobcraft he has limited iGaming experience. Aside from two years as CEO of Mr Green’s operating division and just under a year as the company’s business development director, he has predominantly worked in eCommerce. But his tenure at Mr Green saw the company expand its presence outside of Scandinavian markets and by the time of his departure these new markets accounted for over 50 per cent of revenue. This bodes well for his new role, where he will have to grow PokerStars relatively fledgling casino business in a whole host of markets. We say ‘relatively fledgling’, because in a short space of time it has grown to rival the casino offering of some of the industry’s veterans. Wänghammar has shown that he can take a strong business and move it forward, and alongside BetStars CEO Zeno Osskó forms an impressive management team for PokerStars’ new products.

WILL NEW SPANISH REGULATOR RING THE CHANGES? Spain’s recent government reshuffle has seen gambling regulator La Juan Espinosa García Dirección General de director general, La Dirección Ordenación del Juego General de Ordenación del Juego (DGOJ) integrated into the country’s Ministry of Finance, with Carlos Hernández Rivera stepping down after leading the regulator for three years. Espinosa García arrives at an interesting time. The restructuring has been completed to cut government costs, and comes at a time when momentum towards increased cooperation between gaming jurisdictions is growing. Spain’s online poker market is dominated by 8 8 8 and PokerStars, but revenue is falling. With Portuguese and French regulators actively pursuing European liquidity sharing, Espinosa García may jump at the chance to couple the cost-cutting drive with a way to revive poker’s fortunes. 10

HYDRA RECRUITS BIG SHOT TO SPEND BIG MONEY Silvers was a voluble presence as the board represent ative of bwin.party investor SpringOwl Asset Management. His new role as chief strategy officer of Hydra Industries gives him a chance to put his words into action. He is on an annual salary of $350,000, with a bonus of up to 200 per cent. As Scientific Games’ former lead investment banker while at Bear Stearns he knows Hydra CEO Lorne Weil well, and is well regarded. Matthews Lane Capital Partners, the advisory firm Silvers established after leaving SpringOwl, is also being given $500,000 for advisory services to Hydra. With those sort of numbers bandied around, Silvers needs to prove his worth. Hydra’s first acquisition was good. What will be next? Daniel Silvers chief strategy officer, Hydra Industries

John O’Reilly, Mark Brooker, Robin Terrell non-executive directors, William Hill

WILLIAM HILL RECRUITS EXPERIENCE TO BOLSTER BOARD The appointment of two experienced iGaming industry executives and a customerfocused commercial expert to the William Hill board must be music to shareholders’ ears. GIQ has previously highlighted the lack of industry and big business experience on the company’s board, and in O’Reilly it has gained one of the industry’s elder statesmen. Brooker, with his experience as COO and executive director of Betfair, as well as MD of its fixed-odds business, can hopefully bring new ideas. Terrell may not have gaming experience but as a former Amazon, Tesco and John Lewis executive he brings a commercial nous sorely missing from the board. These appointments are an excellent start to addressing the operator’s problems. Now all it needs is a CEO.

THOMPSON-HILL DEPARTS OPENBET WITH A JOB WELL DONE Jeremy Thompson-Hill’s long tenure with OpenBet is coming to an end. His role has been restructured out of existence and a new sportsbook section head is due to be appointed to take over the OpenBet business. Management changes were all but inevitable after NYX completed its acquisition of the business, and he will have received a healthy bonus as part of the deal. On his watch the company retained all major clients, almost stole a march on Playtech with its focus on omni-channel, and scored a big win with the Singapore Pools. His next move will be watched with interest.

Jeremy Thompson-Hill, advisor, NYX Gaming Group


F I NA NC E GIQ20 Q3 2012

Cherry backs its technology with B2B launch C O LU M N TECHNOLOGY

Kio Dawson

Cherry’s increased focus on iGaming has seen it embark on an M&A binge which culminated in last year’s acquisition of operator ComeOn. Cherry believes the technology supporting these sites could make it a force as a supplier. B2B chief Dario Arruda explains why

12

own board. Arruda ultimately reports into Cherry’s group CEO Fredrik Burvall, although with Burvall stepping down in the summer, Anders Holmgren will take over. “We see ourselves as a hub for entrepreneurs and this is the ideal structure to facilitate growth,” says Arruda. XCaliber has 45 employees at present, split between offices in Malta and Poland, but by the end of this year that number is expected to have risen. The business will focus predominantly on regulated markets in Europe, bringing in THE LAUNCH OF independent B2B divieither established operators who are trying to sion XCaliber leverages Cherry’s investget to the next level, or exciting new companies ment in its technology over the years. It with something different to offer. includes the gaming platform, front-end “The way our platforms are built gives us framework and development, as well as a great deal of flexibility to move quickly into affiliate software and payment gateway new markets all over the globe without much systems – products used to power Cherry’s investment,” says Arruda. “We are focused own online casino brands such as EuroSlots on European regulated markets at the and Sunmaker. moment, although as a group we are always But it is entering a tough market, with the keeping an eye on developments in other parts likes of Playtech, Microgaming and EveryMaof the world.” trix enjoying a massive head start, and there is XCaliber expects to announce its first deal a continuous stream of new companies emergwithin the first quarter of 2017. It is adopting ing, such as Gaming Innovaa selective strategy regardtion Group. It won’t be easy ing potential clients. It is for XCaliber. a new business area for “The investment Following the sale of its Cherry, but the company we made in our maritime gaming business believes that its experience XCaliber platform and struggles with its Swedand heritage within online and technology was a gaming can drive the busiish land-based restaurant casino business in recent game-changing move” ness forward. years, Cherry invested sig“Some systems look great Dario Arruda, Cherry nificantly to create a full and have amazing features, spectrum of iGaming prodbut they fall down under ucts within its business. These include two pressure,” says Arruda. “Complementing a other B2B divisions – game development studio great set of features allowing for personalisaYggdrasil Gaming and performance marketing tion and player engagement, we have a proven provider Game Lounge. track record to support the exponential growth “We’re always looking at ways to expand that is taking place in online gaming.” the business, and setting up XCaliber was a Arruda claims its technology platform expenatural fit,” explains Arruda, CTO for Cherry rienced a 1,000 per cent increase in transactioniGaming for the past five years and the new al activity during the last year and has survived CEO of the B2B business. “The investment we that particular stress test. made in our cutting-edge platform and technol“We see huge potential in XCaliber, simply ogy was a game-changing move for the business. down to the technology we’ve built and the We now have the platform, the processes and forquality of our team. When you have invested midable people.” heavily in everything from the bottom up it With XCaliber, Cherry has five individual makes absolute sense to offer the solutions and business divisions which have been given services that you’ve built to the wider industry,” autonomy to run their operations under their he concludes. n


NE W PRODUCTS

Q4 LAUNCHES

INSPIRED SET FOR VIRTUAL SPORTS ROLLOUT IN NEVADA Hydra Industries-owned gaming supplier Inspired is launching virtual sports products in Nevada after a successful trial at William Hill-operated sportsbooks in Las Vegas.

What’s the big idea? Inspired’s games have been certified by the state’s Gaming Control Board, marking the first time its

BIG LAUNCHES GIQ identifies five new ventures and asks: “What’s the big idea?”

NOVOMATIC AND KAMBI PARTNER UP TO TARGET LOTTERIES Au st r i a n ga m i n g g i a nt Novom at ic has joined forces with Swedish sportsbook supplier Kambi t o p r o v i d e g o v e r n m e nt regulated lotteries with a combined gaming offering.

What’s the big idea? Combining Novomatic Lottery Solutions’ lottery

MINNESOTA TRIBE TO LAUNCH GREENTUBEPOWERED SOCIAL CASINO

NETENT MAKES LATIN AMERICAN MOVE WITH CODERE

Greentube will launch a new social casino offering for the Prairie Island Indian Community, operator of the Minnesota-based Treasure Island Resort and Casino.

The Swedish casino games supplier has made its first move into the Latin American market through an agreement with Spanish gaming operator Codere.

What’s the big idea? It is Greentube’s

What’s the big idea? The launch is part

second deal with a native American tribe, after poaching Connecticut’s Foxwoods Resort Casino from rival GAN. Treasure Island’s free-to-play product is to be released in the first quarter of 2017, and has been built on a custom platform designed by Greentube subsidiary BlueBat Games and powered by the Greentube Pro social marketing solution. The social casino will feature a range of desktop and mobile games.

of NetEnt’s long-term strategy to enter and grow in new regulated markets, with Codere already licensed to operate the Codere.mx site in Mexico. The agreement expands NetEnt’s existing supply deal with Codere, which saw it roll-out its games in the Spanish iGaming market back in April 2015. Codere is also a major force in Argentina, Brazil and Colombia, as well as being one of Mexico’s largest casino operators.

GIQ Q4 REVIEW

land-based virtual sports products can be officially deployed in the US. The games will be shown alongside live sports in land-based casinos’ sportsbook areas, with players able to place bets via William Hill’s CBS platform, both over the counter and via self-service terminals. The roll-out is scheduled to take place over the course of this year.

platform with Kambi’s sports betting service, the two companies will offer lotteries a fullservice omni-channel solution in response to increasing demand in the lottery sector. The co-branded service will be marketed as NLS Sports Betting – Powered by Kambi, offering what it bills as a modern best-in-class solution to help government-regulated lotteries expand into the interactive gaming arena across all verticals.

PLAYTECH TO SUPPLY NEWLY MERGED FINNISH MONOPOLY Playtech sealed a landmark agreement to provide its full suite of exclusive games and casino content to Finland’s newly merged state-owned gaming company Veikkaus.

What’s the big idea? The deal builds on Playtech’s successful six-year partnership with Finland’s slot machine association RAY, which was extended by a further 20 years in 2015. RAY has now been merged with the country’s two other state-owned gaming monopoly operators, Veikkaus and Fintoto, to form an enlarged gaming operator under the Veikkaus name. Playtech has worked with RAY since 2010, providing casino and poker games as well as a series of localised RAY-branded exclusive games. 13


F I NA NC E GIQ20 Q3 2012

ON THE FOLLOWING PAGE

17 Inside marketing with The Sun

Perception and politics C O LU M N MARKETING

Caroline Parry

Why the industry is bracing itself for an advertising crackdown

“We have to accept that if the public and politicians perceive there to be too much advertising, the gambling industry, not just bookmakers, have a real problem” Kristof Fahy, Ladbrokes Coral

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AS 2016 DREW to a close so too did yet another review of gambling advertising in the UK, and with it comes the very real threat of a blanket ban on all pre-9pm advertising on TV and social media. There is no doubt that this review, combined with the wider investigation into fixedodds betting terminals that closed on 4 December, is significant. Influential media analyst Claire Enders, founder of Enders Analysis, has warned media owners to brace themselves for the worst, as talk of a ban appears to be coming from ‘the highest levels’ in government. The concern this time is not simply the content of the ads, but that the sheer volume of them now shown during live sports events is ‘normalising’ betting behaviour to children and teenagers. Speaking as the review was announced, a Tory source told several newspapers: “As it stands, betting sites can basically advertise to children all weekend.” Few in the industry would dispute that the level of advertising has risen over recent years, but whether it is by as much as is claimed is a grey area. “It’s clear that the advertising of gambling has grown,” says Kristof Fahy, chief customer officer at Ladbrokes Coral. “The introduction of the lottery sparked a surge in gambling advertising, as did the introduction of more live sports as subscription television operators saw the opportunity sport offered to grow audience and revenue.” Bookmakers have been part of that revolution, he admits, but not in the numbers that have been suggested. However, he concedes this point is immaterial. “Whether we agree with all the statistics and evidence might be up for discussion, but we have to accept that if the public and politicians perceive there to be too much, the gambling industry, not just bookmakers, has a real problem.”

As discussed on these pages before, there is a widely held perception that betting and gaming ads regularly flout advertising regulations for achieving cut-through. While the Advertising Standards Authority (ASA) received more complaints in 2016 than in the previous year, this is still just a fraction of the overall complaints the watchdog receives. Indeed, betting and gaming accounts for less than three per cent of all complaints received by the ASA. In 2016, up to and including 13 December, it resolved 1,460 gambling complaints relating to 666 cases, compared to 911 complaints relating to 593 cases in the previous year. According to Dan Smith, head of advertising at law firm Gowling WLG, the industry has seen one upheld ASA complaint almost every week of 2016. “The current regime is strict and the vast majority of gambling ads are compliant,” he says. “But the volume of ads and subjective nature of some of the rules mean that there are bound to be some that stray over the line – often on quite technical grounds like the prominence of conditions on a free bet offer.” The most complained about gambling ad of the year was a repeat of Paddy Power’s ‘Blind Footballers’ ad, in which a blind footballer kicks a cat instead of the ball. The ASA investigated the ad back when it was first shown in 2013 but did not uphold complaints. This explains the spike in 2016 figures, says ASA spokeswoman Shabnum Mustapha. “There is a lot of press when a gambling ad gets banned,” says Kate Bird, chief marketing officer at The Sun, who oversees the brand’s betting and gaming marketing team. “That makes it a highprofile story every time it happens and bears out this perception that it happens frequently.” Independent body The Senet Group was launched in September 2014 directly in response to concerns around gambling advertising, both in-store and on TV. Members agreed to a voluntary ban on sign-up offers, such as free bets and free money, before 9pm. Membership so far is limited to the bigger operators, including Wil-


INSIDE MARKETING WITH...

THE SUN Kate Bird, chief marketing officer at The Sun on editorial alliances and the future of Sun Bets How is the marketing team structured around News UK’s gambling products?

Paddy Power’s blind footballer advert led to a flurry of complaints to the ASA

liam Hill and Ladbrokes Coral, with not one of the big internet brands yet convinced to join. “At the time it was a big move but the space vacated by these offers soon got replaced by new entrants,” says Fahy. “The truth is that in such a competitive market, voluntary steps need to be followed by more wide-ranging action, otherwise the void just gets filled. “Even I, who accepts that on advertising everyone has an opinion and always thinks their work is the best, believe that some operators have gone too far. The tone of the adverts or the frequency is damaging public perception.” It is also popular to call for a ban on advertising, warns Smith. “Someone is always demanding tougher rules on gambling ads, or alcohol, or junk food – it’s presented as an easy solution to complex problems, with scant regard for how tough the rules already are or how compliant existing advertising is. The Committee of Advertising Practice’s recent clampdown on high-fat, salt and sugar food advertising and the recent noises from government will no doubt embolden campaigners to push for (at least) harsher scheduling restrictions to apply to gambling ads.” With submissions in by 4 December and no date yet set for the review to be published, the industry has no choice but to wait out its fate. “If we were to voluntarily walk away, do we think the space would go unfilled?” asks Fahy. “We know that won’t happen and that there needs to be a united effort with broadcasters and regulators to really make a difference. “Advertising agencies, broadcasters and everyone in the industry needs to realise that it is easier to be part of the conversation rather than outside being the topic of the conversation.” n GIQ Q4 REVIEW

Sun Bets, Sun Bingo and fantasy football manager game Sun Dream Team have a team that looks after everything right through the line from TV advertising through to CRM – the whole breadth of marketing. The betting and gaming team has 12 people and a six-strong social team but it is a joint marketing effort with our partners – Tabcorp on Sun Bets and Playtech on Sun Bingo. Each brand has a dedicated marketing head who is ultimately responsible for the numbers. My role has been expanded to include The Sun brand and we are closely aligned with the editorial team. There is an obvious synergy between the Sun Bets and the sports editorial team. It’s what sets us apart from other bookmakers. While other betting brands do create their own content to drive their offer forward, we have journalists across the country at sporting events making our content more relevant.

What are Sun Bets brand values? We did a hell of a lot of work before the launch of Sun Bets [in August]. The Sun is already a huge brand but we didn’t want to be complacent. There are five key values behind the brand. Firstly we want to make it simple to use. Some products can be quite complex, so we have made ours easy to use. Secondly, we want to be cheeky and straight-talking like the headlines The Sun is known for. Paddy Power is similar but we have a different tone. A lot of our advertising is focused on headlines but we have fun with it. We made a decision early on that we didn’t want reams of prices in our creative work. It is more lighthearted than traditional bookmakers such as William Hill and Ladbrokes. We also felt it was important that punters feel we are on their side, like a friend, so we try to offer money-back deals where we can, and in addition to that, we want them to feel Sun Bets is a reliable brand with good customer service. Finally, we want to ensure customers are provided all of the relevant content and information to help them place their bets.

What is your gap in the market and who is the target market? When we looked at the market only Paddy Power occupied that fun, mischievous position so we believe there is room for another. There is a gap and we feel we are in a unique position to fill it. As much as we concentrate on football and racing, the core areas in betting, we can naturally swing to novelty bets through our current affairs and showbiz content. And we have barely scratched the surface so far. We have done lots around X-Factor, I’m A Celebrity and Strictly Come Dancing but there is much more we can do. Our core market is the 18 to 45-year-old male punter, who is key to our demographic, but we also have a big female audience. As The Sun, we already have a major reach and a big network of socially engaged readers.

How are you cross-selling? Sun Dream Team attracts a million players each season – which is a very engaged customer base and a ripe market for us. We have spent a lot of time looking at The Sun universe and looking at how to circulate customers around it. Our core ambition for Dream Team is to engage that audience with Sun Bets. We have done things already such as specific content for Dream Team players and contextual widgets in Sun.co.uk. We have started to build on it, but there will be a lot more over the next 12 months.

What will be the key challenges for the betting and gaming industry in 2017? The restrictions and legislation around marketing are evolving all the time and that is changing how we advertise. Obviously we will be looking at that. As a brand, our challenge is to carry on driving forward in a saturated market. It is still very early days for Sun Bets but it is something that News UK has wanted to do for some time. It is such a big opportunity. Our ambition is to have a one-stop shop with a suite of products that reflect our customer base. There is lots of hard work still to do. n 17


ON THE FOLLOWING PAGES

20 World regulatory update 22 Ask the lawyer... about the levy

Trump election could kick-start regulation C O LU M N LEGAL

Steve Hoare MANY WOULD ARGUE there is very little point trying to predict what President Trump might do from one minute to the next, but to refrain from doing so would be to take away what little fun might be gleaned from the Trump presidency. Trump’s choice of US Attorney General Jeff Sessions set alarm bells ringing when he said he would “revisit” the Department of Justice’s 2011 interpretation of the Federal Wire Act, as he disagreed with the ruling. However, revisit does not necessarily mean “restore”, as the likes of Sheldon Adelson meant when he backed the ill-fated Restoration of America’s Wire Act bill. Sessions’ comment was a response to a question from Senator Lindsey Graham, who described the interpretation, which sees the Wire Act as a ban on sports betting and not other forms of iGaming, as “unusual”. “I would revisit it or make a decision about it based on careful study,” Sessions told Graham, adding that he could not give a concrete response in favour or against overturning the decision until he had the opportunity to consider it. There has been much speculation about Adelson’s influence on the incoming administration after he co-chaired the inauguration committee and sat in a particularly plum position on the dais at the ceremony. However, such signs can be misread – especially by a mainstream or leftist alternative media with GIQ Q4 REVIEW

The new administration’s pledge to revisit the Federal Wire Act could push the sports betting regulation bandwagon into action little knowledge of the gambling industry. Trump was not beholden to Adelson before the election and the New York Times reported that Trump even mocked the Las Vegas Sands owner at a post-victory dinner for turning up late with his wallet. Adelson never quite committed to the Republican ‘anyone but Trump’ camp but he was closely affiliated with it. The $5m he donated to Trump was a pittance compared with the $98m he lavished on Mitt Romney in 2012. And while Trump was best man at Treasure Island owner Phil Ruffin’s wedding, he is not particularly friendly with Adelson. Unlike Adelson, Trump even has experience of online gambling through partnerships with Betfair and Ultimate Gaming in New Jersey. As does Ruffin, inci-

Trump might well see this as a good time to bolster the gambling industry rather than ban bits of it

dentally, after Treasure Island launched an online poker site last year. Trump’s online operations were out the window by the time Trump Entertainment went bankrupt in 2014 but it would be a strange U-turn to take now. Especially with all major parties lined up against a federal ban. Intriguingly, the Supreme Court of the United States has delayed a decision on whether to hear an appeal by New Jersey against the federal sports betting ban, asking the incoming administration for its views on the issue. This might be where the smart money lies. With Pennsylvania and Michigan joining the bandwagon of states introducing sports betting legislation, Trump might well see this as a good time to bolster the gambling industry rather than ban bits of it. Sessions’ thoughts, while not clearly expressed in his words, could be that sports betting should not be banned while other online gambling activities are allowed. Despite all the understandable g nashing of teeth about the incoming president, he is fervently pro-business. If the sports betting bandwagon gains momentum, Trump might quite like to take the credit for the creation of a newly regulated $12bn-a-year industry and all the accompanying jobs and tax dollars that c o m e w it h it. n 19


L EG A L

Q4 REGULATION HIGHLIGHTS

TRUMP’S AG PICK THREATENS WIRE ACT REVISION

ARJEL SURVIVES CLOSURE PLAN

Concerns have been raised Stateside that President Donald Trump’s pick for US Attorney General, Jeff Sessions, may look to overturn the Department of Justice’s 2011 interpretation of the Federal Wire Act, potentially enforcing a ban on iGaming in the country. Sessions said that having disagreed with the ruling, he would “revisit” the matter as Attorney General. The current Alabama senator described the interpretation, which sees the Wire Act as a ban on sports betting and not other forms of iGaming, as “unusual”. In December, Pennsylvania Republican Michael Fitzpatrick introduced a bill in the US House of Representatives which would render the DoJ’s opinion null and void. It is the latest attempt by Republican lawmakers to outlaw iGaming in the US.

A proposal to dissolve the country’s online gaming regulator ARJEL was rejected by lawmakers in the National Assembly, who argued that a transfer of responsibilities to a government department would create a significant conflict of interest. The proposal to close down the regulator was put forward by Jean-Luc Warsmann of the centre-right Union for a Popular Movement (UMP), but it was rejected by the ruling Parti Socialiste (PS), with representative Barbara Pompili stating that this was not the right time to consider a major change in the regulation of iGaming.

UK TAXMAN REVISES FREEPLAY RULES HM Revenue & Customs will amend current legislation that offers a more generous tax treatment for freeplays in online gaming, a move which will generate an additional £100m annually for the Exchequer by 2020. The measure is intended to bring the tax treatment of freeplays for remote gaming “more into line” with the treatment for free bets under General Betting Duty (GBD). Legislation will be introduced in the Finance Bill 2017 to ensure that where a customer makes use of an offer to gamble for free, or at a reduced rate, online gaming operators will be required to account for duty on the amount that the consumer would have paid without the offer.

World regulatory update Gaming Intelligence outlines the latest legal developments from around the globe 20

DUTCH REGULATOR PREPARES CRACKDOWN The Dutch gambling regulator has adopted a much harder line against unlicensed online gambling operators as it drops its policy of notifying intended targets of enforcement action. From 1 January, any operator found to be targeting Dutch consumers will immediately face enforcement action, which could include an administrative fine of up to €820,000 or 10 per cent of sales. Failure to comply could also jeopardise operators’ chances of securing a licence when the new regime is introduced later this year. Meanwhile, the Dutch government rejected a number of proposals to amend the country’s iGaming legislation to enforce stricter controls on advertising, after finding that the regulations were already sufficient to address concerns raised by lawmakers largely concerning the protection of minors.

BRAZIL NEARS GAMBLING BREAKTHROUGH The government is edging closer to legalising gambling in the country but lawmakers remain at odds over the details. A vote in December was delayed indefinitely after lawmakers decided to send the legislation back to committee for further review. Bill 186/2014 seeks to legalise various forms of gambling, including iGaming, and had been approved by a number of senate committees before reaching the Senate. Despite widespread support, the bill failed to reach a vote due to opposition from a number of lawmakers, as well as government entities including the Federal Tax Authority, Public Prosecutor’s Office, and the Attorney General. The legislation will be re-evaluated by the Constitution, Justice and Citizenship Commission.


L EG A L

Q4 REGULATION HIGHLIGHTS

AUSTRALIA READIES IN-PLAY BAN

NORWAY SHUNS LIBERALISATION The government announced in December that it would not liberalise the country’s gambling market or offer licences to private operators and will instead strengthen the existing monopoly. Norwegian culture minister Linda Helleland explained that it was important to maintain the current gambling monopoly to protect consumers from problem gambling and to ensure the distribution of gambling profits to social causes.

This will see the government begin work on legislation to strengthen the betting and gaming monopoly of Norsk Tipping and the horserace betting monopoly of Rikstoto, including stronger measures against unlicensed gaming operators, such as payment processing blocks and domain name server (DNS) warnings on illegal sites, as well as regulations to prevent unlicensed gambling advertising broadcasts on satellite channels targeting Norwegian citizens.

POLAND ALLOWS ALL ONLINE GAMBLING Polish President Andrzej Duda signed into law an amendment to the country’s gambling legislation which will see new rules take force from 1 April. The new regulations will help to increase player protection and reduce illegal online gambling by offering a wider selection of regulated games to players, while blocking access to the market by unlicensed sites.

All types of online gambling games will be permitted, including bingo, casino and poker, whereas Poland previously only permitted online betting and promotional lottery games. However, the new iGaming options will only be available through the state monopoly, with private operators still restricted to online betting and promotional lotteries only, although new rules allow for the advertising of online betting.

New consumer protection controls for online wagering are nearing implementation in Australia after state and territory ministers agreed to a national framework in November. The National Consumer Protection Framework is being introduced in response to a series of reform recommendations by former New South Wales Premier Barry O’Farrell in his review of illegal offshore wagering. The report has already led to new legislation being introduced to amend the 2001 Interactive Gambling Act, and which aims to ban in-play betting and gambling with offshore operators. The government also shut down the Norfolk Island Gaming Authority (NIGA) after deciding that it failed to fulfil its regulatory role to an acceptable level. Operators licensed there have until 31 March to seek licences in other jurisdictions.

GERMANY PREPARES GROUND FOR NEW STATE TREATY The government finally set about overhauling its controversial State Treaty on Gambling in November, notifying the European Commission of proposed changes to the legislation to allow all eligible applicants to operate in the market. The State Chancellery of Sachsen-Anhalt initiated the notification on behalf of all German states following the state Prime Ministers’ decision in October to overhaul

the current treaty to remove the limit on the number of available sports betting licences and to explore the possibility of regulating online casino and poker. If approved, a new State Treaty on Gambling will come into force from 1 January 2018. The notification serves to officially end the current licensing process managed by the authorities in Hesse, which was halted by legal challenges in 2015.

SWISS REGULATOR SLAMS GOVERNMENT The country’s association of information and communications technology providers Swico has attacked a proposal to allow IP blocking of unlicensed gambling sites under the country’s new Federal Gambling Act. With the government currently examining a new draft of the act which includes IP blocking as a way to stamp out illegal gambling sites, Swico has come out strongly against the

GIQ Q4 REVIEW

measure, describing it as an “inappropriate and dangerous approach” to ensuring the safety of players. Swico claims that rather than ensuring greater protection, these measures would have the opposite effect and reduce the security of the internet, and prove ‘controversial’ with regards to internet users’ fundamental rights, stunting the growth of Switzerland’s digital economy.

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L EG A L

HORSERACE BETTING LEVY

ASK THE LAWYER…

about the levy Tamsin Blow, Dan Tench and David Zeffman of Olswang explain the UK government’s proposed changes to the Horserace Betting Levy So, what is the levy? The Horserace Betting Levy was first established by the Betting Levy Act 1961 and substantially reformulated under the Betting Gaming and Lotteries Act 1963 (the 1963 Act). The levy is collected by the Horserace Betting Levy Board (HBLB) from the gross profit of betting on British horse racing to help fund the horse racing industry. The levy yield for 2014-15 was approximately £60.1m.

And the government has been trying to reform it, right? Proposals for modernisation of the levy have had a troubled history. For almost 20 years the government and racing industry have been talking about its abolition or amendment and what, if anything, should replace it. There is manifestly no obvious solution, which is satisfactory to government, racing and the betting industry, while also being compatible with EU law.

limited to profits made in respect of “Britishbased consumers” on British racing) – it seems that the rate would apply equally to oncourse and off-course bookmakers (a change from the current position); l“  enforced via a reformed statutory Horserace Betting Levy” and enacted by a statutory instrument; and l i ntroduced in April 2017 and the rate reviewed within seven years “to ensure it reflects any future changes in the market”.   The announcement also stated that in early 2018, the governTamsin Blow ment intends to transfer responsibility for collecting the levy to the Gambling Commission, by a Legislative Reform Order, with the HBLB being wound up.  

Great. Is there a catch? So does the government have a plan?

Well, firstly, given that the levy is currently In January, the government announced  its proreviewed every year and this is a highly posals regarding reform of the levy, providing dynamic area (and Brexit may make it even broadly for a flat 10 per cent levy more so), a seven-year review on all operators on their gross win seems a long time. And there may above £500,000. The government be other problems… It does not is planning that the new regime   will come into effect, with con- necessarily Such as? siderable urgency, by April 2017 – follow that State aid. The government that is when, without these chang- the proposed appears to accept that its levy es, the next levy scheme would extension of the proposals would constitute state have commenced. aid. The question therefore is levy will benefit The current announcement whether they fall within any racing in the follows a consultation which conexception. The government indilong term sidered extending the levy to overcated that it is still awaiting state seas bookmakers who take bets on aid approval for its proposals from British racing. the European Commission (and there appear to The government announcement was very be some new facts regarding the proposals for short and stated simply that the levy would be: the Commission to consider). That approval le  xtended to any gambling operator that takes may not be forthcoming and even if it were to be bets from “British-based consumers” on races granted, it may be subject to challenge. held in this country;  There are also legal issues about whether la  ssessed at 10 per cent of gross profits from the government has power to enact the changes horse races above £500,000 (and presumably via the ‘secondary legislation’ and the ‘legisla22

tive reform order’ it envisages. There is a question as to whether it is legitimate for the Gambling Commission to take on the role of levy collector. Even if the legal basis does exist to confer these collection powers on the Commission, is it right for tax collection and regulation to be undertaken by the same entity? There are also questions about this proposal affecting the freedom to provide services between member states and whether it is a proportionate means of achieving a legitimate aim.  

Oh dear. Anything else? Getting the new system in place by the start of April seems extremely tight. That is 77 days from the announcement. This needs to be laid before Parliament for a period of 40 days. But the government is not in any position to fire the starting gun on this period.   Given the uncertainty and controversy surrounding the proposals, there must be a fair chance that one or both of the committees (the Secondary Legislation Scrutiny Committee in the House of Lords and the Joint Committee on Statutory Instruments) that can consider these proposals will have grave concerns about them.  Moreover, if the proposals were to be implemented on the government’s timetable and then there were to be a successful legal challenge, that might leave racing particularly vulnerable. It is far from clear whether the existing arrangements, which would have been ostensibly abolished, would be considered to come back into life.

Will it be good for the racing industry? While racing is understandably celebrating the minister’s announcement, it does not necessarily follow that the proposed extension of the levy, if it does actually come into effect, will benefit racing in the long term. Indeed, this further addition to the ever-increasing cost of the racing product for bookmakers may well accelerate the steady decline in racing’s share of the betting pound. When one also takes into account the threat to betting shops posed by the Triennial Review; the current absence of televised racing in Ladbrokes, Coral and Betfred betting shops; the rift with the major high street bookmakers caused by the Authorised Betting Partners scheme; and the use of racing as a low-margin loss-leading product by the online bookmakers, racing’s celebrations may well be short-lived. n


27-29 March 2017 • Grand Hyatt, Macau

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26 Zynga, GAN, PokerStars and more

Is social gaming finally set for the HTML5 revolution? C O LU M N Robin Harrison

The launch of Facebook’s Instant Games in HTML5 sets a precident that should open up and boost competition in the social casino market A MAJOR U-TURN by Facebook may herald a new dawn for social casino. The struggles of smaller studios have long been blamed on a small number of operators’ dominance in the market, but equally crucial has been the limited number of platforms available. There are a number of alternatives beyond the ‘big three’ of Facebook, Apple and Google, but without a meaningful presence on at least one of these platforms an app will struggle to grow. This could all be changed by the launch of Facebook’s Instant Games. This allows users to play games within the social network’s Messenger service, competing and sharing directly with friends. Developed in HTML5, players no longer have to download apps to access games on any device, or even via their Facebook News Feed. Instant Games went live in November last year with arcade classics including Pac Man, and the likes of Zynga and King developing content for the service. The launch marks something of an aboutturn for Facebook. In 2012 its founder and GIQ Q4 REVIEW

CEO Mark Zuckerberg publicly admitted that his company had made a major error in basing its mobile strategy around HTML5, rather than native applications. It had looked to tap into a mobile market with an HTML5 gaming platform dominated by Google’s Android and Apple’s iOS, only to see the socalled Project Spartan flop badly. Following this misstep Zuckerberg, and Facebook, put all their eggs in the native app

Crucially, HTML5 takes power away from the app stores, with App Store, Google Play and Facebook no longer able to act as gatekeepers

basket. HTML5 had effectively been pushed out of the mainstream. For less technically-minded readers, HTML5 allows developers to introduce markup and complex application programming interfaces (APIs) for web applications. It is platform-agnostic, so one product can be used across multiple channels and devices. The opportunity this presents for social casino cannot be understated. Rather than having development slowed by the need to build products for multiple platforms, one size fits all. This can slash development costs. It also cuts time to market. Like standard HTML code it can easily be launched and updated. Crucially, it takes power away from the app stores, with iTunes, Google Play and Facebook no longer able to act 25


SOCIAL GAMING INTELLIGENCE Q4 NEWS ANALYSIS

as gatekeepers. It can easily be added or discoverability is better, the customer removed from any platform, meaning it is journey is easier, and there is no need to use difficult for these providers to tap developers additional data to access games.” for a share of revenue. He believes that ultimately this will Smaller studios have long bemoaned facilitate new business models for gaming the fact that they simply can’t generate the companies, who can earn without any need revenue needed to build or to pay a share of revenue to market a product capable the platform provider. of competing with market HTML5 has opened up the giants such as DoubleDown social casino market again Casino, Zynga Poker or to new entrants by offering a Slotomania. HTML5 levels simple and cost-effective soluthe playing field. tion, removing significant KamaGames’ marketbarriers to entry. In recent ing chief Danny Kashti is a years these barriers have huge believer in the potenrestricted the market to a tial of Instant Games. His small number of studios with company has been an early significant financial backing. mover in bringing its games H T M L 5 w i l l b e n e f it to messaging platforms such companies of all sizes, from “HTML5 is going as Tango and Viber but the major iGaming operators to revolutionise level of integration offered such as PokerStars to emergthe gaming space, through the HTML5 soluing studios such as Lucky just as apps did tion and the f lexibility is Fish. Established developers years back” unparalleled, he says. like DoubleDown and Play“I am a very big believer Danny Kashti, KamaGames tika are also likely to move in the HTML5 trend,” Kashinto HTML5 development, ti explains. “It’s going to creating competition which revolutionise the gaming space, just as apps should lead to innovation. did years back.” Zynga has already thrown its develop“[It’s great] from the developer’s perspecment weight behind Instant Games, and with tive. There’s no need to build for multiple a greater range of active developers and more operating systems and no need to attract impetus for the major players to do more users to a new destination site,” he conto retain their audience, the industry can tinues. “You can control the release cycle, only benefit. n

Loss dampens Zynga revenue growth in Q3 SOCIAL GIANT ZYNGA was able to beat revenue projections for the third quarter, though the sheen was taken off this better-thanexpected performance by the company’s loss, which also surpassed expectations. Revenue for the quarter ending 30 September grew to $182m. This represented a seven per cent decline from Q3 2015, but outstripped the operator’s $170m to $180m forecast for the period. Game revenue accounted for $134m of the Q3 total, with advertising and other revenue contributing an additional $49m. Mobile now generates 80 per cent of total income. This growth, however, was accompanied by $21m of impairment charges on intangible assets and a hike in mobile payment processing fees, headcount-related expenses and marketing investment for new game launches. This led to the company posting a $42m net loss for the period, higher than originally predicted. EBITDA also plummeted, falling from $32m in Q3 2015 to $4m. Despite this CEO Frank Gibeau remains positive: “As a team, we have shown good momentum in our turnaround in a number of key areas including one, delivering new, high-quality mobile games; two, growing our existing live mobile franchises; and three, unlocking more operating leverage. “Looking forward, we are focused on delivering mass market, high-quality social games that drive long-term engagement and audience growth,” he said. n

IN BRIEF Ruby Seven Studios

Pala Interactive

California-based tribal casino the Pechanga Resort & Casino has launched Best Bet Casino, a new free-to-play offering developed by its social partner Ruby Seven Studios. The offering features a selection of 20 proprietary and third-party slots, including Konami’s China Shores, as well as a range of table and video poker games. It is linked to the land-based venue’s loyalty programme Pechanga Club, allowing members to check their points balance, view upcoming events at the property and make online reservations for rooms or meals. Users are also being offered realworld prizes through sweepstakes, with an inaugural competition offering a Mustang GT as a prize.

Another Californian tribal operator, the Pala Band of Mission Indians, has also moved to promote its land-based venue via a social casino product. Developed by the tribe’s iGaming subsidiary Pala Interactive, MyPalaCasino is now live via a destination site as well as on Facebook and through native iOS and Android apps. All products have been developed using the proprietary social software, and are fully integrated with the Pala Privileges rewards programme.

26

Greentube The Novomatic subsidiary will bring another tribal casino online, with a product for the Prairie Island Indian Community’s Minnesota-based Treasure Island Resort &

Casino. The as-yet-unnamed product will be hosted on a custom platform developed by Greentube’s BlueBat Games division, and powered by the Greentube Pro social marketing solution. It is the supplier’s second tribal gaming partnership, after it poached the Mashantucket Pequot Tribal Nation’s Foxwoods Resort Casino from GAN.

GAN Despite losing Foxwoods, GAN remains one of the highest-profile social casino suppliers to the US land-based market, with a number of additional venues going live with its Simulated Gaming solution. The latest to roll out the product are Ohio-based Jack Entertainment and Rhode Island’s Twin River Casino. The launch with Jack Entertainment sees

GAN launch the product for three venues in Ohio; casinos in Cleveland and Cincinnati, and the Jack Thistledown Racino.

PokerStars The online poker giant aims to strengthen its social casino offering with the launch of Casino Rush, a title that combines elements of poker and slot games. Players select a game then take on the house, unlocking new titles as they play. A USP of the game is that it is accessible on- or offline. “We found that our social players want a poker experience they can enjoy quickly, whether or not they are connected to the internet,” social gaming director Lloyd Melnick said. “Casino Rush is the best of poker, casino and slots all fused into one great game.”


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F E AT U R E

INVESTIGATIONS & REPUTATIONS

THE GAMBLING INDUSTRY may find itself suffering the biggest blow to its reputation in years, and all for the sake of £40. Following a campaign by the consumer body Justice for Punters, a pressure group founded by an avid punter after an operator withheld the relatively meagre amount, industry practices have come under intense scrutiny. This has seen the Competition and Markets Authority (CMA) launch an investigation into the gambling sector, after the UK Gambling Commission raised concerns with the watchdog. There is little indication that the industry knows how to react. “Gambling inevitably involves taking a risk, but it shouldn’t be a con,” CMA senior director Nisha Arora said when announcing the review of “potentially unfair treatment” of players by operators. Such emotive language is often used in hysterical tabloid attacks or by anti-gambling groups. This can only be combated with a calm, rational and measured fact-based response.

Muted response The actual response has, to put it kindly, left much to be desired. When the investigation was announced by the CMA on 21 October last year, it was discussed at length on BBC Breakfast, the UK broadcaster’s morning GIQ Q4 REVIEW

news programme. The show attracts an average of 1.5m viewers, according to TV industry publication Broadcast. Gambling industry representatives were conspicuous by their absence. The Remote Gambling Association (RGA) attempted to address the matter by releasing a statement in which it said it believed there was “no reason to believe that there are widespread failings”, in the industry’s use of terms and conditions. It pledged to “cooperate fully with the CMA”, adding that if faults are discovered it is vital that the industry should learn lessons from these. The RGA is normally one of the most bullish and effective entities in the sector at making operators’ voices heard. If a government even glances at a proposal for a tax rate that may hit operators’ bottom lines it leaps to their defence, firing a barrage of surveys and figures to show the benefits of a more favourable system. Here it was uncharacteristically tentative. Operators were largely unwilling to comment. One said it had been ordered to keep quiet by the CMA. The authority did not respond to queries as to whether this was indeed the case. Smaller operators blame the PLCs and the never-ending demand for profit growth from financial markets, the PLCs, meanwhile,

The gambling industry has stayed largely silent since UK regulators launched an investigation into unfair practices. But behind closed doors, operators are concerned, and with Spain launching similar actions, this is not just a UK problem

29


F E AT U R E

INVESTIGATIONS & REPUTATIONS

put the blame on smaller operators unable to pay out on major bonus promotions. “A s members of Senet Group we support high standards of advertising in the promotion of gambling,” said one major operator. However Senet Group a nd t he A s s o ci at ion of British Bookmakers were also unwilling to discuss the matter. Critics may cite this lack of industry response as an admission of the operators’ supposed guilt. However it is worth noting just how much is at stake here. Offers and promotions are a key part of any operator’s customer acquisition strategy. Much is made of a lack of customer loyalty in the industry today, but figures from marketing platform provider Rocket Fuel throw this into focus. A survey carried out by the supplier reveals that 54 per cent of UK customers’ betting behaviour was “impulsive or unplanned”, meaning that it was prompted by a special offer or enhanced odds. These UK customers are less likely to be attracted by major events – 43 per cent of those surveyed are attracted by such sporting competitions – suggesting the offers are key. These customers were found to hold on average 2.4 betting accounts each. This suggests a lack of customer loyalty, meaning promotions, bonuses and offers are necessary to acquire new players. The investigation could see operators lose one of their most effective tools in bringing in new players.

What’s under scrutiny? The scope of the investigation, as explained by the Gambling Commission, shows just how much is at stake. “The Gambling Commission approached the CMA in regard to whether gambling operators are treating customers fairly,” Commission programme director Paul Hope explained. “Using information we supplied, the CMA contacted a range of gambling operators to find out about their use of potentially unfair terms and misleading practices. This comes as a result of concerns that consumers have raised about issues such as cancelling bets, altering odds after bets have been accepted, and offering misleading sign-up promotions.” 30

BOX 1

Key issues to be investigated Gambling Commission programme director Paul Hope explains the scope of the CMA investigation The CMA investigation is looking into four areas: l In order to try to access sign-up promotions, players are being locked into complex and strict wagering requirements which are difficult to understand and may be unachievable. The CMA has concerns that some promotions may even prevent people accessing their own money. lO  perators may cancel bets or alter odds after bets have been accepted with no

warning, because they made a mistake when the odds were first set. lT  erms and conditions allowing operators to impose overly severe penalties on players who, they claim, have breached them. lT  erms which place limits on customers’ ability to challenge an operator’s decision. For example, placing very short time limits on making a complaint or inaccurately suggesting that other legitimate means of redress are not available.

This gives the CMA a wide purview to investigate a range of actions by operators (see Box 1), ranging from sign-up offers with unfathomable terms and conditions to refusing bets from savvy punters.

Redefining gambling Justice for Punters’ founder Brian Chappell believes what is happening is that operators are effectively redefining what gambling means. “Gambling should be about winning or losing,” he says. “But that has been written out of the rule book. “The big operators have moved away from that completely. They have no intention of making books. The sooner they can get everyone into the casino, or gambling on a six-team accumulator, the better. If that’s their business fine, but they need to be honest about that.” Players sign up for a bonus offer and often find themselves having to pump in significant amounts of cash before they can secure a fraction of that sum for ‘free’. They might pump money into their account for years to no avail, then get lucky and have one big win. Users will suddenly find their identity being queried and face a long, torturous wait before they can obtain their winnings. If they consistently win they will suddenly find their accounts shut down or restricted to a degree that makes placing a bet pointless. And what if they play regularly and lose hefty sums? They will find the operators rolling out the red carpet for them, giving them VIP status. One big win, however, and it’s likely that this special service will end. The only way to secure an easy ride is to play and lose, or win in a way that appears to be pure

“The sooner big operators can get everyone into the casino, or gambling on a six-team accumulator, the better. If that’s their business fine, but they need to be honest about that” Brian Chappell, Justice for Punters


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BOX 2

ASA cases Complaints upheld by the ASA in which the gambling operator was found to have misled customers. lC  ozy Games: A £10 bonus offer for Big Bucks Bingo was banned after it was revealed customers would have to wager at least £80 before they could withdraw any winnings from the original promotion. lL  adbrokes: The ASA banned an ad that failed to disclose a maximum bet limit linked to a bonus promotion. A player found that after exceeding a bonus bet limit they were no longer eligible for any bonus. l TitanBet: Players complained after an offer promising to return 100 per cent of any losing bets placed at odds of 1-2 or higher turned out to only process refunds on bets settled within four days. TitanBet agreed that this key condition was not properly highlighted. lC  oral: An offer promoting enhanced odds on a football match attracted the ire of customers as it was not made clear that the special price was only available for one hour on the day of publication, between 8am and 9am. lW  illiam Hill: A website promotion was banned after offering £20 free for a £10 bet but failed to specify that users had to place bets on selections with odds of 1.5 or higher. All rulings from October 2016.

32

luck. What is clear, however, is that customers are unlikely to leave with a positive view of the gambling experience. It’s not hard to find evidence of the accusations levelled against operators. Hardly a month goes by without the Advertising Standards Authority (ASA) upholding a complaint against a promotion that it believes has misled customers. In what is becoming the norm, an operator will draw players in with promotions, then use small print that makes winning any money very difficult for the majority of players. In a promotion banned by the ASA in late 2016, Cozy Games’ Big Bucks Bingo offered players a £10 bonus, but required players to gamble at least £80 to secure this sum. In this case it was a bingo game. But it could have been a sports bet, roulette or slots offer. Such promotions are widely used by almost all UK operators, across just about every vertical.

Information is unavailable on how many punters have taken up promotions ruled to have breached advertising laws. And there is no indication that their funds are returned once the ad has been banned. It should also be noted that it takes only one complaint for these ads to be challenged and banned. How many punters tried to take up the offer, were pushed out by the complicated web of terms and conditions, but did not complain? This only serves to harm the operator. A player will walk away, often poorer and feeling duped. Not only are they unlikely to recom-


F E AT U RE

INVESTIGATIONS & REPUTATIONS

BOX 3

Punters’ grievances A cross section of players reveal how they felt conned Bettor 1 A player regularly lost thousands gambling. The individual finally won big, scooping a £20,000 win. However, when the player attempted to withdraw their winnings the operator ordered them to verify their identity. In the time it took to process the withdrawal the player had lost £7,000 of the original win.

Bettor 2 Following a big win a player was asked to verify their identity by standing next to their passport, taking a picture and sending it to the operator. They refused, only to be told they were effectively being suspected of a crime. The player attempted to take the case to an arbitration body, only to be told that this could only be accomplished via a body approved by the operator. The arbitrator found in favour of the operator.

Bettor 3 A gambler regularly played roulette and after spending an unspecified sum won £7,000. They attempted to withdraw the winnings only to be told they had to verify their identity. Having done so it took days for the withdrawal to be processed. After weeks of talking to customer

mend the site to others, they are more likely to complain to a wider group. Gambling comes up in conversation? They will repeat the story.

ASA cases Operators bemoan the high cost of acquiring new customers in the UK market. So why do they draw them in with these offers and then leave them disgruntled? It goes beyond operators simply tangling customers in terms and conditions. Even getting winnings paid out can become a struggle. This is potentially the most damaging element of the investigation, and it seems to be a genuine problem. Brian Chappell explains that he has been a bettor for more than 40 years, having been taught how to back horses by his grandfather. As he neared retirement age he began betting online. “My treatment has been appalling,” he GIQ Q4 REVIEW

says. “The policy now for online sports betting is that nobody with ability is allowed at all.” Chappell had £40 withheld and his accounts restricted or blocked after he consistently won sums ranging from £30 to £700. He denies he is a professional bettor, however, and is only now involved in Justice for Punters as he has the time as a retiree. “I treat a 16-runner handicap on a Saturday like a newspaper crossword,” he says. “It’s like trying to solve a puzzle, but I’m absolutely fuming if someone won’t let me have a £10 or £20 bet on it. I choose one of the most difficult races of the day, and if an operator’s not taking money on these then what are they taking money on?” One operator responded by saying there were “a number of reasons” why it might restrict or refuse business. “There are concerns about the use of inside information, problem gambling or professional

service representatives they were told the withdrawal was still pending. They got in touch with Gaming Intelligence, and informed the operator of this. The withdrawal was then processed within minutes.

Bettor 4 A player went into a betting shop to place a bet on the Kentucky Derby. The player’s bets were readily accepted. After watching the race, in which the player’s horse won, they returned to the shop to collect their winnings, only to be told that the shop had not been authorised to accept the bet in the first place. The player was not offered a refund. When he told his story to Gaming Intelligence and the operator was asked for a comment, the bettor received his winnings.

Bettor 5 A professional poker player and avid traveller was told that he must set up a new account when attempting to play in ring-fenced markets he was visiting. Having done so, his accounts were suspended and funds frozen for having multiple accounts.

It goes beyond operators tangling customers in terms and conditions. Even getting winnings paid out can be a struggle. This is potentially the most damaging element of the investigation

33


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bettors, and it is almost always related to issues such as multiple accounts,” a spokesperson says. “It is a tiny number affected.”

Existential crisis “Their business model is based on attracting new customers at any time, but if they show any ability they will shut them down,” Chappell suggests. “A more extreme organisation may accuse them of only targeting vulnerable people, but that hasn’t got other groups very far. It’s unacceptable and unbelievable that the authorities have allowed operators to do it,” he says. “I fully understand why professional gamblers get shut down – it’s not feasible to trade with someone who wins £50,000 a year, but now ordinary punters are affected,” he continues. He shares an example: he tried to place a £10 bet on an 11/10 drifting favourite, and was readily accepted. But when he tried to bet £10 on a 16/1 shot he was restricted to a maximum of £1.23. Paul Beattie of Soko Advisors, formerly vice president of content operations and overseas development for Openbet, sees this boiling down to an existential crisis for bookmakers. Do they want to attract savvy punters, or those who treat every form of gambling the same as playing a slot machine? “From the player’s viewpoint they’ve bought something, invested money in it, so why can’t they get it back? Every company is culpable here, to an extent,” he says. “The issue here is that European operators want to protect their margins as opposed to the absolute amount wagered,” Beattie explains. “They need to either accept lower-margin bets or accept VIP bets from sharper punters. These would erode margins, but ultimately make more money.” The stance of EU operators contrasts with that of Asian bookmakers, who want the sharp money, in order to help them gauge their prices. Bookies in countries such as the UK, where automated trading solutions are the norm, are willing to turn that money away. As customer segmentation becomes more sophisticated, players’ performance is easier to track which, in turn, can make the smart punters easier to identify. Should things keep progressing as they are currently, operators will be able to refuse to serve such customers. And what then? The offshore, unlicensed bookmakers suddenly find themselves with an opportunity to make hay. Asian bookies can take a bigger piece of the action in the UK. It may also open up space in a seemingly impenetrable market for new operators – after GIQ Q4 REVIEW

all, there is a clear opportunity for a company to muscle in by targeting the savvy punters. MadBookie is already doing so in the Australian market.

Regulatory failings This is not a UK-centric problem. In other European markets such as France and Italy, all bets must be logged on a central government server. Unless there is an extremely good reason, bets cannot just be cancelled as a result of this monitoring service. The UK, which is arguably a more liberal and established gambling market, appears to have a gaping hole in its regulations. That is ultimately a failure on the part of the UK Gambling Commission. “The Gambling Commission’s stance is that they [set out] the guidelines and operators can interpret these as they see fit,” Chappell says. “That is totally naive, and hopefully the CMA will come out and stop this.” Chappell believes that the regulator currently skews in favour of its licensees rather than consumers. This assessment is backed up by an unexpected source. “Earlier this year [Gambling Commission CEO] Sarah Harrison noted that we have recognised that, at the moment, the relationship is weighted too heavily in favour of the operators,” Hope said. The regulator is quick to highlight efforts taken to improve communication with customers, strengthening compliance requirements for terms and conditions following a review of social responsibility requirements

“Operators need to either accept lower-margin bets or VIP bets from sharper punters. These would erode margins, but ultimately make more money” Paul Beattie, Soko Advisors 35


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for licensees that concluded in 2015. It has also warned operators to ensure terms, especially those relating to bonus offers, are not unfair or overly complex. However the efforts of Muebete, a bettors’ group formed in Spain, shows the issues are not limited to the UK. It is looking for disgruntled punters to join class action suits against bet365, William Hill and bwin. party, accusing the operators of “discriminatory” practices that “seriously affect” their entertainment. It argues that the companies are contravening Spain’s consumer protection laws by restricting the bets they can place, effectively attempting to stop them from winning money as they are not profitable. This may sound familiar to a lot of seasoned UK bettors.

Time for action W here does this leave the industry? The gambling regulator can only do so much, and years of being skewed in favour of operators over consumers suggest that its licensees have not heeded its warning. This is why the CMA’s involvement is so significant. It can prosecute over unfair terms under the 2015 Consumer Rights Act, as well as enforcing the 2008 Consumer Protection from Unfair Trading Regulations.

“Don’t wait for a crisis. Act now and demonstrate to consumers that your interest in their needs is genuine” Sarah Harrison, Gambling Commission 36

Spanish bettors’ group Muebete

“Both the Gambling Commission and the CMA have a shared concern about the fairness and transparency of terms and conditions that apply when consumers gamble, particularly online,” the UKGC said. “ We t h e r e for e c on sid e r t h at t h e CMA’s expertise and powers will be the most effective means of challenging certain terms and practices which may be unfair, and setting the scene for the Gambling Commission’s ongoing compliance and enforcement activity – both online and for the wider gambling sector.” This in part explains the industry’s muted response. The Commission has brought in the big guns, and for the first time in years the gambling sector is facing a major hit to its reputation Indeed, UK GC CEO Harrison is unlikely to appreciate the industry’s wait-and-see approach: “[Don’t] wait for a crisis to happen that shakes the very foundation of customers’ trust in your industry,” she said in a speech to operators in November. “Act now and demonstrate to consumers that your interest in their needs is genuine.” These are not empty threats: “One of the principles in the Commission’s existing

statement for licensing and regulation is a preference for pursuing compliance through means that stop short of a licence review, in favour of a regulatory settlement,” Harrison continued. “We propose to remove this bias in favour of settlement. We will put access to all tools, including licence review – both of the operator and personal management licences – on an equal footing. Put simply we will use the right tool for the job. “In addition, we will propose changes to our statement on financial penalties with the likelihood of higher penalties going forward, in particular where we see systemic and repeated failings. Our principles on penalties already reflect the need to remove profits from non-compliance, take account of costs and consumer harm, and deter poor compliance – but higher penalties are likely if we do not see behaviour changing.” An update on the investigation is due early this year. The regulatory bodies have taken proactive steps to address a problem that has threatened to become a normal state of affairs for the industry. The onus is now on the industry to prove that it can positively react to such matters. n


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AWARDS/HOT 50

Dig the new breed While the big guns dominate this year’s awards, the shortlists and Hot 50 highlight the next generation breaking through THIS YEAR’S GAMING Intelligence Awards sees Amaya take home two GIAs (despite a turbulent year), with 888 also scooping two and NetEnt winning its third Casino Supplier award in a row. Respect to them all but scrape beneath the surface and you will find a surprisingly diverse industry while the big guns whisper sweet M&A nothings in each other’s ears. Nothing illustrates this better than the fact that Playtech won nothing for the first time. It still managed three Hot 50 entrants, mind – the most of any company bar Kindred Group (previously Unibet). There is certainly hard work being done there, great innovation and superb numbers, but look at its competitors in the categories it might have won. NetEnt’s slots are sweeping all before them but Evolution Gaming continues to go from strength to strength and its live casino is second to none. Blueprint Gaming’s slots perform better than most and it was unlucky to miss out on the Casino Supplier shortlist but Red Tiger Gaming did make the shortlist after having an astonishing impact this year. Founder Nick Maughan and commercial director Giles Potter also won Hot 50 awards for their roles in taking Red Tiger from success in Asia and into Europe’s mainstream. Innovative deals and innovative slots made this a breakthrough year for Maughan’s second successful slots provider (he also founded Cayetano, which he sold to Paddy Power in 2011). SBTech emerged as Sports Betting Supplier of the Year, winning a race that included Amelco, which won a hugely significant deal with Intralot; and Digital Sports Tech, which won the Innovation Award for its hugely origi-

nal Player Prop Bets. (Red Tiger also featured While founder David von Rosen-von Hoewel in that category with its Deadline Slots.) The sits quietly behind the scenes, chief commerhuge valuations SBTech is attracting suggest cial officer Matt Robinson is out there making it is no longer a minnow, but the fact that these sure everybody knows about Lottoland. The suppliers are making such progress against the move into lottery operations is a huge one for likes of OpenBet and Playtech must be hugely the bet-on-lotteries innovator. It could give the encouraging for others. moribund lottery industry an almighty scare. Little Relax Gaming triumphed over PlayEvolution Gaming is no longer a small tech and Microgaming in the Poker Supplier company but it was not so long ago. New CEO category. The company might be backed by Martin Carlesund takes charge of a near Kindred but its relative success in a tough vertibillion-dollar business and the appearance of cal shows the benefit of doing things differently. security chief Tania Johannisson in the Hot This is something that Kin50 illustrates why. Evolution dred should be applauded for. does the nuts and bolts well. It Along with Playtech, Kindred has a clear vision and delivers a There are more was the only other company to quality product without fuss or founders and win three Hot 50 Awards. Chief failure. There are a few sluggish pioneers in the executive Henrik Tjärnström suppliers who could take note. Hot 50 and more did not feature after appearing There are more founders and last year but senior members backstage heroes pioneers in the Hot 50 and more of his management team did in backstage heroes than ever appearing than the shape of Rhodri Darch and before. The Hot 50 was launched ever before Ebba Ljungerud – as did poker five years ago with these people chief Andrew West. If there was in mind. Collective awards are an award for management team nice but the individual honours of the year, you can be sure Kindred’s tight-knit allow us to look into the future. The Hot 50 is not team would have won it. just about celebrating those that have achieved They would, however, have had competition great things but to applaud others for reaching from 888, which won Bingo Supplier of the Year out for greatness. and Marketing Campaign of the Year, plus two We have a whole category reserved for the Hot 50 entrants with CEO Itai Frieberger and next generation of CEOs, who might be sitting Hila Klein. Its M&A attempts might have come on billion-dollar valuations. We’re looking at to nothing but it continues to be one of the best Alexander Stevendahl of Videoslots, who shook managed companies in the industry. things up with Battle of Slots. There’s also Casino Look through the Hot 50 and you will see Room’s Johan Bergenudd going great guns and smaller companies making big waves. None Tabcorp’s Jamie Hart, who is further down the made more of a racket than Lottoland this year. trail.New or old. Big or small. We salute you all.

THE JUDGES PAUL BEATTIE

DANIEL BURNS

RAF KEUSTERMANS

STEVEN MATSELL

DAWID MYSLINSKI

Principal Soko Advisors

Chief executive officer Carbon Group

VP & GM Plumbee Studios GSN Games

Chief executive officer Leander Games

Analyst Redeye

ANDREW BULLOSS

STEVE HOARE

BOBBY MAMUDI

MOR WEIZER

SHAY SEGEV

Head of betting & gaming Odgers Berndtson

Editor GIQ

Editor in chief Gaming Intelligence

Chief executive officer Playtech

Chief operating officer GVC Holdings

GIQ Q4 REVIEW

39


AWARDS/HOT 50

BINGO OPERATOR OF THE YEAR: JACKPOTJOY

VIGEN BADALYAN

In what was the most keenly contested category in this year’s GIAs, Jackpotjoy edged out the likes of Stride, Rank and 888 to take home the award. Its parent company Intertain may have endured a fraught year but Jackpotjoy has proved a reassuringly consistent subsidiary. For the first half of the year revenue was up an astonishing 163 per cent to CAD$169.7m. One judge suggested that Gamesys had “doubled down” on improving Jackpotjoy after losing Sun Bingo to Playtech, and this rapid growth repaid the investment. Its StarSpins and Botemania subsidiaries show that it is successfully expanding beyond its core business, but it has not done so at the expense of the flagship bingo product, which still accounts for 72 per cent of total revenue. Intertain’s decision to tie Gamesys into an extended exclusivity deal until 2019 in September last year was a savvy strategic move. Competitors will be hard pushed to catch Jackpotjoy by then.

Vigen Badalyan is the man who has grown his company from humble beginnings as a small betting shop in Armenia to the present day, as an innovative supplier with a global footprint. BetConstruct’s chairman will never forget his roots. He founded the company after large suppliers refused him access to technology. He vowed never to turn a client down and this egalitarian attitude has served the company well as it has expanded across the globe. Badalyan has a habit of fulfilling his ambitions. This year BetConstruct won a UK gambling licence. Its presence will be felt. Badalyan will make sure of it.

Executive chairman and founder BetConstruct

NICK MAUGHAN Owner and founder Red Tiger Gaming

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BARRY COTTLE For the first half of the year Jackpotjoy revenue was up an astonishing 163 per cent to CAD$169.7m 40

is generated almost entirely from free-to-play games. Cottle finds himself in a pretty enviable position; Scientific Games’ subsidiaries provide a wide range of content that can be repurposed for social, and it has an array of land-based clients to leverage deals with. Cottle’s creativity is such that we can expect more groundbreaking deals like the one SG struck with Gamesys and Hasbro. Revenues are soaring at SG Interactive, and with Cottle at the helm that looks set to continue.

Chief executive officer, SG Interactive Scientific Games Former EA and Zynga executive Barry Cottle is well-placed to lead Scientific Games’ interactive division. Interactive is something of a misnomer really; revenue for the subsidiary

Nick Maughan founded Cayetano Gaming, which was acquired by Paddy Power in 2011. He served his time, went away and founded Red Tiger Gaming in 2014. Maughan first turned his attention to Asia with a series of slots focussed on the Asian market. They were a rip-roaring success and Maughan made millions. Software proven, Maughan turned his attentions back to Europe and cut another deal with Paddy Power Betfair to provide the operator with a Macau tab populated entirely by Red Tiger games. That would have been enough to win Maughan a place in the Hot 50 but he followed that with the invention of tapered jackpots. It made Paddy


AWARDS/HOT 50

DANIEL LINDBERG Chief executive officer Quickspin Daniel Lindberg’s vision – and that of his fellow founders Joachim Timmermans and Mats Westerlund – was razor sharp from day one. It was so convincing he appeared in the Hot 50 before a single game was launched back in 2012. Lindberg positioned the company beautifully and achieved a superb deal for himself, his co-founders and for the company’s acquirer Playtech, when the latter bought it for €50m in June 2016. Lindberg sent out a prospectus and managed to create a competitive tension that resulted in a multiple far outweighing the company’s €6m revenue. But Playtech got a great deal. It acquired the best Nordic supplier not called NetEnt, expanded its portfolio of games and if it means it retains bet365 for another five years the purchase price will be paid off several times over.

Power Betfair fortunes at the summer’s Euro tournament and now everyone is trying to copy it. Maughan is a slots genius and Red Tiger Gaming is going supernova.

SUN HO Chairman and chief executive officer AGTech Before it was partially acquired by Alibaba Group last year, Sun Ho helmed a big business with lots of potential. After it was acquired by Alibaba, AGTech became part of a huge business with stratospheric potential. AGTech and Alibaba will be a force in China’s massive lottery market, but Alipay, the payments division of Alibaba, will leverage AGTech’s lottery contacts around the world in a bid to make it the largest payments provider on the planet. Add in a government-approved poker business and Ho holds the keys to a very large kingdom indeed.

JOHN O’REILLY Director William Hill John O’Reilly cannot be described as a founder but he is certainly a pioneer. If his nomination GIQ Q4 REVIEW

CASINO OPERATOR OF THE YEAR: AMAYA There is just no getting past the figures coming out of Amaya’s casino. While Amaya combines its sportsbook and casino figures, we’re told the vast majority come from casino games. So here it is: sportsbook and casino revenue rose 114 per cent during the first three quarters of 2016 to $183.9m. By the year-end it could be as big as 888’s casino. To come so far in so short a period of time is phenomenal. One can criticise the product as just slots sitting in a poker app, but each operator must adapt its product to suit its own operation. Amaya has achieved that feat perfectly. PokerStars’ casino games wiped the floor with the opposition during 2016.

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owes something to his years of service, it is his current role that has put him in the spotlight. After decades at Ladbrokes and a shorter spell at Gala Coral, O’Reilly won a triple of sorts when he was appointed to the William Hill board in 2016. The consensus is that if CEOless William Hill is going to turn around, then it will rely heavily on the experience of its newly-appointed director. William Hill needs a guiding hand from someone who has been in the trenches. O’Reilly is one of the industry’s most respected and well-liked professionals. Even his old colleagues at Ladbrokes might wish him well.

Amaya’s sportsbook and casino revenue rose 114 per cent during the first three quarters of 2016 to $183.9m 41


AWARDS/HOT 50

ARMIN SAGEDER Chief executive officer Playtech BGT Sports

LOTTERY OPERATOR OF THE YEAR: BRITISH COLUMBIA LOTTERY CORPORATION

A representative from Playtech’s sports division has been granted a place in the Hot 50 almost every year. The theory was that each individual would be given the wherewithal to challenge the established providers – none has really set the world alight. That was then, this is now. In July last year, Playtech acquired Armin Sageder’s Best Gaming Technology for €138m. BGT will provide the foundation of a bricks-to-click strategy that will combine the strength of BGT’s sports betting software for self-service systems with Playtech’s ONE omnichannel platform. Sageder is universally expected to succeed.

CHRIS SHEFFIELD SVP and managing director, iGaming Penn National Gaming

Canada’s British Columbia Lottery Corporation (BCLC) doesn’t have the biggest operations online, but it is our winner because it is one of the most proactive operators around and has vast potential in a North American market starved of online play. It has been at the forefront of the regulated online gaming market in Canada since launching PlayNow.com in 2004, and recently rolled out North America’s first omni-channel progressive jackpot game with IGT. That is the first phase in its plans to bring digital technology into the predominantly landbased lottery sector. Along with Loto-Québec’s Espacejeux. com and Ontario’s Playolg.ca sites, the provincial lottery operators are setting the benchmark and showing the US lotteries how it can be done, with backing from regulators and the government. PlayNow.com contributed revenue of CAD$135.5m in BCLC’s most recent financial year, up 24 per cent compared to the previous year. It also powers Manitoba’s iGaming site – frankly, no other lottery comes close.

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The slow progress of state-by-state iGaming regulation in the US has forced land-based operators looking to move online to shift their focus, with free-to-play gaming now a priority. Despite his real-money background, Chris Sheffield has fully embraced this challenge at Penn National, developing a formidable portfolio. Supply deals with Scientific Games and OpenWager allowed Penn to get a feel for the sector, before its $60m acquisition of Viva Slots Vegas developer Rocket Gaming and investment in fantasy sports operator iPro saw it fully commit. For someone who was dubious about the long-term appeal of social while at Betfred, Sheffield is clearly now a convert.

OWAIN WALBYOFF Managing director Endemol Shine Gaming

Despite his real-money background, Chris Sheffield has fully embraced free-to-play at Penn National, developing a formidable portfolio

Owain Walbyoff runs Endemol’s gamblingfocused games studio. He is busy creating an infrastructure that could make Endemol one of the industry’s most important names. Of course, the company is already known for licensing brands such as its Deal or no Deal slot but Walbyoff’s vision is far greater. He wants to create a safe and secure environment for big brands to enter the regulated gambling space. As such he is in talks with a whole host of household names and is investing in an RGS to enable Endemol to build a distribution business. Watch this space.


AWARDS/HOT 50

DAVID VON ROSEN-VON HOEWEL Founder and owner Lottoland Lottoland’s impact on the online gambling world has been phenomenal. And it’s all down to the vision of this man. David von Rosen-von Hoewel (picured below) has sat in the background while his chief executive Nigel Birrell has delivered that vision to the world. If the concept of betting on lotteries was not entirely new, Lottoland’s execution took it to new heights. The operator generated revenue of €300m last year and now it is looking to take the next step as a fully-fledged lottery operator. It’s a big step but don’t bet against the man with the big name.

LORNE WEIL Chief executive officer Hydra Industries This is a first Hot 50 award for Lorne Weil following his return to the limelight as CEO of Hydra, the special-purpose acquisition company that made virtual sports and gaming supplier Inspired its first purchase in 2016. He has bags of experience, having taken charge of Scientific Games from 1992 to 2008, then again from 2010 to 2013. Inspired hope this experience will take the company to the next level, which means into the lucrative US market. Weil has the contacts and knowledge to make it work. Inspired continues to grow its virtual sports business across Europe, in particular in the UK and Italy, but Stateside is where the real big bucks will be. Weil is banking on it.

THOMAS WINTER SVP and GM, online gaming Golden Nugget Winter was overlooked for the Betclic Everest CEO role when Nicolas Beraud stepped down in 2011. Judging by his success leading Golden Nugget Atlantic City’s online efforts the operator lost a major asset. His decision to delay the brand’s launch in New Jersey’s regulated iGaming market, then scrap its platform deal with Bally in favour of NYX, may have suggested teething problems. Instead they were strategic moves that have helped the offering establish itself as a major player in the state. Owned by Landry’s and with properties in a number of states, it is well-placed for further growth when new states regulate. Winter will be at the forefront of these efforts if he is not lured away to a larger role. GIQ Q4 REVIEW

POKER OPERATOR OF THE YEAR: AMAYA Since Amaya’s acquisition of Rational Group in 2014 it has become apparent that even an industry behemoth such as PokerStars is not immune to the global poker market’s decline. While focus may be pulled away from the core product by PokerStars’ expansion into sports betting and casino, and almost-constant M&A speculation, the operator has quietly and carefully made excellent progress in revitalising poker. The launch of new game formats such as Beat the Clock and Knockout Poker, coupled with an overhauled VIP programme and rake structure, helps PokerStars appeal to casual players. Recreational players have become the top target for poker operators, and PokerStars has done more than any other company to bring them in. The restorative effect of these efforts is only just starting to show, but with a foothold in the US as well, the operator is more than deserving of retaining its crown.

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Recreational players have become the top target for poker operators, and PokerStars has done more than any other company to bring them in 43


AWARDS/HOT 50

SOCIAL CASINO OPERATOR OF THE YEAR: ZYNGA CASINO To give this award to Zynga Casino may have seemed unthinkable even in 2015, but 2016 has seen the social giant successfully diversify beyond its core poker product to develop a thriving social slot offering. Zynga deserves the prize for its efforts over the past year. Its Hit it Rich! and Wizard of Oz slots apps have grown to join the poker product as one of Zynga’s main sources of revenue, with the pair generating 12 per cent of the company’s Q3 total. That period also saw more than 80 per cent of revenue come from mobile. Zynga may not be the force it once was but it has succeeded in totally overhauling its business, leveraging its assets and capabilities to enter the slot sector. Social casino was once considered closed off, but Zynga was once considered dead and buried. The fact it is once again making waves is worthy of praise.

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Zynga may not be the force it once was but it has succeeded in overhauling its business, leveraging its assets and capabilities to enter the slot sector 44

RAFI ASHKENAZI

HENRY BIRCH

Chief executive officer Amaya

Chief executive officer Rank Group

It’s not been the easiest of years for Amaya with all the headlines surrounding former CEO David Baazov, but under Rafi Ashkenazi’s (pictured below) charge the company continues to be operationally sound, and its expansion into new product verticals has been an astounding success. PokerStars stands unrivalled in the poker market, so the next challenge is to turn its sportsbook and online casino into a similar beast. Whether Amaya gets new owners or not, Ashkenazi will have his hands full whatever happens this year, and he seems to be thriving on the challenge.

How William Hill could do with Henry Birch in its management team. As Rank CEO he has steadily grown the business into an increasingly formidable competitor, properly leveraging its land-based brands to build up its iGaming business. He is not afraid to take risks, shown by the decision to drop OpenBet in favour of Bede Gaming as its new platform provider. He has a particularly intriguing opportunity on his hands, and should he develop a genuinely omni-channel offering for Rank his star will rise higher. It’s no surprise that the operator is now seen as capable of doing major M&A deals. William Hill may not have been the best fit but there will certainly be other targets.

ANDREAS MEINRAD Chief executive officer BetVictor Andreas Meinrad featured in the Hot 50 2016 for stepping into a hot seat with a huge job to do. As one of our judges put it, the company was basically dead. The turnaround he has managed to effect is phenomenal. While BetVictor remains a private company and accurate figures are hard to come by, the whispers are that profit will top €85m this year. From flatlining to anything near that will be an achievement to make the whole industry sit up and take notice.


AWARDS/HOT 50

ITAI FRIEBERGER Chief executive officer 888 A Hot 50 winner for the third time, Itai Frieberger took over the hot seat at 888 in March 2016 after a spell as COO. He leads a company in rude health, despite a slightly misfiring M&A strategy which has seen the company miss out on acquiring bwin. party and fail with an opportunistic bid for William Hill. It could be a big year for 888 in 2017 though, with results continuing to impress and backed up finally with a competitive sportsbook product. This year will be Frieberger’s 14th with 888, and it could be his most important yet.

JIM MULLEN Chief executive officer Ladbrokes Coral Jim Mullen is a Hot 50 winner for the second consecutive year, this time as CEO of three of the UK’s leading betting and gaming brands; Ladbrokes, Coral and Gala. The merger took longer than expected to be completed, so the onus is now on him to make it work. His extensive experience in the iGaming industry, first developed at William Hill and subsequently honed at Ladbrokes, should make Ladbrokes Coral a dominant force in the industry, but it won’t be easy. Paddy Power Betfair remains a serious rival and William Hill will surely get stronger. The pressure will be on Mullen to succeed.

ANDREW MCIVER Chief executive officer Intertain Group Andy McIver and his chairman Neil Goulden have undoubtedly been brought in as the safe pairs of hands needed to transform ‘the Frankenstein of bingo’ into a respectable London-listed 21st-century gambling company. McIver will have learned a great deal from his spell at post-UIGEA Sportingbet. It, too, was emerging from its Wild West period but it spluttered towards eventual breakup when William Hill and GVC teamed up to acquire what was left of it. McIver will rely on the crack teams of operators he has inherited while he uses his financial acumen to chart a course towards the UK market. With brands such as Jackpotjoy and Vera&John he has a great opportunity. Will he grab it? GIQ Q4 REVIEW

SPORTS BETTING OPERATOR OF THE YEAR: SKY BET Sky Bet has long had admirers but it has rarely seen a year like this one. Sky Betting & Gaming as a whole reported a 51 per cent increase in revenue to £373.6m during its most recent financial year. The sportsbook’s revenue shot up an even more impressive 64 per cent to £214.1m. There are bigger operators but none could match this level of growth. Behind the figures is an enviable technology suite – with OpenBet at its core – but constantly tweaked by HQ in Yorkshire to optimise results. There are few operators with such an impressive mobile offering, which now accounts for a stunning 75 per cent of revenue. While the UK remains very much its core market, progress has been made in Italy and elsewhere. Sky Bet will no doubt continue to thrive but it will be remarkable if it ever repeats a year like this one.

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There are few operators with such an impressive mobile offering as Sky Bet, which now accounts for a stunning 75 per cent of revenue 45


AWARDS/HOT 50

SOCIALLY RESPONSIBLE OPERATOR OF THE YEAR: UNIBET It’s not often Gaming Intelligence receives press releases from integrity analytics managers. But it got one from Unibet’s Maris Bonello at the beginning of 2016. The press release highlighted Unibet’s offer of free betfilter licences to treatment centres such as BreakEven in the UK. Betfilter is an online software service that customers can download and use to block themselves from all gambling operators. It is also available to be downloaded directly from Unibet’s ‘Know when to stop’ page. The company also integrated electronic authentication system BankID to its Unibet and MariaCasino brands in Sweden. BankID speeds up the authentication process while simultaneously improving safety and security. It is an innovation that is a win-win on so many levels but ultimately the customer is being better cared for. Unlike many operators, Unibet displays responsible gambling messages clearly on all its pages. In addition, it has developed self-assessment tools for players and software to flag up problem gambling. This is more than mere lip service. Unibet is Gaming Intelligence’s Socially Responsible Operator of the Year 2017.

Unibet has developed self-assessment tools for players and software to flag up problem gambling 46

SUSANNE MØRCH KOCH Chief executive officer Danske Spil Susanne Mørch Koch doesn’t start her new role as CEO of Denmark’s former monopoly operator Danske Spil until 1 April, and she will have a tough gig in replacing veteran Hans Madsen who has been in charge of the company for the past 12 years. But her experience at Danske Statsbaner, Denmark’s leading train operator and the largest in Scandinavia, should put her in good stead. Her job

will be made easier by the smooth progress made by the operator which has thrived despite the opening up of Denmark’s regulated iGaming market. Danske Spil remains the biggest operator in the market, and will benefit further from a new Scientific Gamespowered iGaming platform expected later this year.

KEVIN SHEEHAN Chief executive officer Scientific Games Kevin Sheehan faces a tricky task in replacing Gavin Isaacs as Scientific Games CEO, but at least the focus of the business has shifted to reducing its debt rather than completing more M&A. He has already proved he can handle a large listed business, having grown Norwegian Cruise Line and led the business through the global recession. He’s a safe pair of hands. His new role is particularly important after Isaacs’ frequent cries that SG’s hefty debt undermined analysts’ valuations of the company. The market conditions are far easier than those he faced when beginning his previous role, so he may quickly become renowned as more than just Isaacs’ replacement.


AWARDS/HOT 50

ANDERS HOLMGREN Interim chief executive officer Cherry

JOHAN BERGENUDD Chief executive officer Casino Room

Cherry could once be dismissed as the company that was left behind after Betsson and NetEnt were spun off, but it is now emerging as an impressive iGaming business. Cofounder Anders Holgren deserves credit for this, with the company completing a wide array of investments and acquisitions, culminating in its €280m deal for ComeOn. The strategy of investing in companies rather than acquiring them outright has been particularly noteworthy, incentivising the business and its management. Now, Holgren has temporarily stepped into the CEO’s chair. A business which was stuck in the Scandinavian market suddenly finds itself in Germany, Poland and the UK, with plans to expand further afield.

There are some smart people working behind the scenes at Sweden’s latest casino sensation Casino Room – not least former Nordic Gaming Group CEO Henrik Svensson, who knows a thing or three about how to operate a successful online casino. However, the Hot 50 vote goes to Johan Bergenudd. It’s on his watch that the operator has flown from zero to around €30m gross gaming revenues in just one year. That’s some going especially for a CEO in his first year in the hot seat.

Table games come with such a tried-andtested formula that very few developers even attempt to innovate with the format. When someone comes along with something that is both innovative and in with a genuine chance of gaining traction it’s worth sitting up and taking notice. Be The House’s Cash Out Roulette simply means that each game of roulette is no longer over after a single spin of the wheel. Players can bet on consecutive spins and outcomes such as the ball landing on a certain number in a set number of spins, or on the number of black or red numbers in ten spins, for example. It offers traditional roulette players a new way to bet on the game. It offers new players the chance to win higher payouts. It offers sports betting operators an excellent cross-sell product. It’s a worthy game of the year.

JAMIE HART Executive director Tabcorp It was a somewhat su r prisi ng move when British tabloid newspaper The Sun chose Tabcorp to power its new iGaming brand Sun Bets. What was less surprising however was Tabcorp hiring the vastly experienced former William Hill executive Jamie Hart to run the operation. There is a lot of pressure on Hart to deliver this year in what is now a massively congested market for sports betting in the UK. But Hart is passionate about gaming and if anyone can make it work, you would want him in your corner. He faces a real challenge to wrestle control from Australia and make this venture work. But if the Aussies are smart, they’ll hand Hart the keys to the kingdom and watch revenues fly. GIQ Q4 REVIEW

GAME OF THE YEAR: CASH OUT ROULETTE, BE THE HOUSE

ALEXANDER STEVENDAHL Chief executive officer Videoslots Alexander Stevendahl is another young CEO in just his second year as CEO. The former poker affiliate has created quite a site with Videoslots. Shooting up from zero to €3m gross gaming revenue in its first 18 months of operation could be attributed to Stevendahl’s marketing skills and the continued appeal of NetEnt’s games but the operator is also doing things a little differently. In late 2015, Videoslots unveiled its tournament feature: Battle of Slots. Others have tried to copy it, but our judges said Videoslots does it best.

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When something comes along that is innovative and in with a genuine chance of gaining traction it’s worth sitting up and taking notice 47


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ExCeL, London 7-9 February 2017

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AWARDS/HOT 50 MARKETING CAMPAIGN OF THE YEAR: 888SPORT When we asked 888 head of B2C Itai Pazner how he was marketing 888Sport, he replied simply: “Very aggressively”. The 888Sport brand was everywhere in 2016. London taxis were emblazoned with the home nations’ colours and 888’s innovative Treble The Odds offer was plastered alongside and on inside screens as Euro 2016 kicked off. The company later launched a new television campaign with its Take ‘Em On ads delivering a quite different message to the in-vogue live-odds ads cluttering our screens. And its marketing campaign delivered immediate results. With sportsbook revenue climbing 63 per cent in the most recently available financial results, 888Sport has overtaken the company’s bingo product for the first time. And those figures didn’t even include the latter stages of Euro2016. 888Sport has a long way to go to fulfil the opportunity it sees in sport but it’s going about it the right way.

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ANDY BURTON CTO Sky Betting & Gaming Sky Betting & Gaming has enjoyed another strong year and Andy Burton deserves more credit for this success. Proprietary technology underpins the CVCowned offering, and 2016 saw investment increase markedly, with Sky Bet looking to double the headcount in its Sheffield office. In

RHODRI DARCH Chief strategy officer Kindred Group

When we asked 888 head of B2C Itai Pazner how he was marketing 888Sport, he replied simply: “Very aggressively” 50

Kindred/Unibet continues to march on. It has one of the tightest management teams and Rhodri Darch is a key member of that team. Darch is known for asking tough questions and he creates a framework for tough decisions to be taken. While it would be wrong to credit him entirely with Kindred’s decision to go it alone with poker and bingo, the chief strategy officer is an influential voice. The move has given Kindred a different face to the competition and it is slowly reaping the rewards.


AWARDS/HOT 50

SARAH HARRISON Chief executive officer UK Gambling Commission Sarah Harrison received an MBE in the Queen’s birthday honours list last year for services to consumer protection in her former role with energy regulator Ofgem. Now she needs to do the same for the UK gambling market, with the government undertaking a review of gambling machines and social responsibility measures to balance responsible growth in the industry with the protection of consumers and communities. The Gambling Commission will have a big say in how these measures eventually get implemented and this will be the biggest challenge for Harrison since she joined the UK regulator in October 2015.

his seven years with the operator he has consistently embraced new technology and new development approaches, helping it scale for an ever-expanding customer base at a time when competitors rely on legacy platforms. The UK government’s talk of a ‘northern powerhouse’ has cooled in recent months but as a major employer in Leeds and with its growing Sheffield base, Burton is ensuring this is not just political hot air.

ANTHONY EVANS Head of product strategy Playtech Tony Evans has been around the industry for nearly 20 years and has been at Playtech long enough to be trusted with the role of lead champion for Playtech One, the business’s central omni-channel platform. As such, he is vital to the company’s strategy. Evans knows the company’s products inside out and is a key player in liaising between senior management, commercial teams and clients. He is equally adept at assisting with the rollout of existing technology or planning the next phase of emerging technology. With a research and innovation team of his very own, he will have a big influence on the future strategy of Playtech and, by extension, the gaming industry as a whole. GIQ Q4 REVIEW

BINGO SUPPLIER OF THE YEAR: DRAGONFISH

JIM HUMBERSTONE Group head of trading & operations GVC Holdings Jim Humberstone has long been GVC chief executive Kenny Alexander’s trusted lieutenant. He was chief operating officer until the operator recruited Shay Segev and Jim Humberstone was transferred to a role in which he really excels. Humberstone took the GVC trading model and implemented it at newly-acquired bwin. party. Within a year, the business had been turned around. Margins have improved by about one per cent. He has been a huge influence on making a success of an acquisition that to some looked like a massive gamble. Alexander knew better. He knew he had Humberstone’s trading know-how, which is second to none.

There is a quiet revolution going on at Dragonfish. The 888 B2B vehicle edges out its competitors to take home the award because, quite simply, it gets partners up and running – and there’s lots of them. Its sheer number of client wins is phenomenal, with 30 new bingo deals in the last year. It also added 15 casino skins on the bingo platform. That figure grows every month and while only a few of them will be hits, like relative newcomers Costa Bingo and Moon Bingo, its network ensures a healthy liquidity for everyone. Bingo has not suffered as much as poker in recent years, but the vertical has shrunk. With 120 skins on the Dragonfish open network, the company is playing a major role in ensuring a diverse, thriving sector.

ALSO SHORTLISTED: COZY GAMES GAMESYS PLAYTECH

ADELE LAWTON Head of bingo GVC Holdings Adele Lawton gained her well-deserved reputation as a bingo expert during long spells at JackpotJoy and Gala Coral but she has been unlucky with shorter stints in tricky roles at Betable and Betfred. But if B2B was not to her Continues p52

>

Dragonfish’s sheer number of client wins is phenomenal, with 30 new bingo deals in the last year. It also added 15 casino skins on the bingo platform 51


AWARDS/HOT 50

TANIA JOHANNISSON Head of game integrity and risk Evolution Gaming

CASINO SUPPLIER OF THE YEAR: NETENT NetEnt wins the casino supplier of the year award for the third year running. Its continued accomplishment is a joy to behold. Its games are simply the most successful money can buy. Operators are clambering over one another to get the games and NetEnt is launching them in new jurisdictions almost every month. It launched in Latin America with Codere, in Portugal with Betclic Everest and it rounded off the year with an exclusive deal to supply the national lottery of Bulgaria. In between big launches it continued its march into the UK with a deal to supply Paddy Power, and Inspired rolled its games out across 10,000 UK retail machines. Shock, horror – revenue was up 30 per cent during the first nine months. The juggernaut rolls on.

ALSO SHORTLISTED: EVOLUTION GAMING PLAYTECH RED TIGER GAMING

NetEnt’s games are simply the most successful money can buy. Operators are clambering over one another to get them

52

Tania Johannisson could be the very definition of the backstage hero. She started life as a dealer but has progressed throughout the organisation, and after working closely with Evolution’s COO, Johannisson was assigned to lead a project to build a tailor-made anti-fraud department from scratch. She has developed and has been managing the unit since 2011. It now comprises around 350 risk-related employees. The team monitors the activity of over 70 casino operators with up to 7,000 concurrent players and almost six million bets per day. She has introduced a series of new security procedures and tools, and is even listed as an inventor of patents filed for such fraud defence mechanisms as the Evo Shuffle Integ-

rity (to fight card games’ advantage play) and Evo Wheel Integrity (a proactive and automated surveillance tool for monitoring a Roulette wheel’s performance and its entire operational life-cycle). Johannisson’s work is so appreciated by the company’s hierachy that it is now considered one of Evolution Gaming’s USPs.

< Continued from p52 liking at Playtech, she gained a fan there in the shape of current GVC COO Shay Segev. He has recruited her to bring the glory days back to Foxy Bingo. The brand was once one of the biggest in the UK but like many of bwin. party’s once formidable brands, it has fallen down the rankings. Lawton will be determined to take it back to the top but this will be a true test of her mettle. GVC will give her the backing necessary. And those who know her will back her to succeed.

EBBA LJUNGERUD Chief commercial officer Kindred Group Ebba Ljungerud is not one of Kindred’s longest-serving executives but she has climbed the tree quickly since joining to manage Maria Bingo in 2010. When Mattias Stetz left to join Rush Street Gaming last year, she was appointed chief commercial officer. She now has about 600 people reporting to her and full commercial accountability for all of Kindred’s brands. She has the intelligence, charm and ambition to make light work of a potentially daunting task. With her new responsibilities, she is probably one of the most powerful women in the industry to boot.


AWARDS/HOT 50

HILA KLEIN SVP head of product technologies 888 Holdings T here are some who look at 8 8 8’s product and don’t see anything very exciting. There are others that marvel at its CRM and continued growth and recognise that there is something special going on in the back end. Hila Klein is largely responsible for this special sauce. She helms 888’s 500-strong technology team. While the continued evolution of a market-leading CRM system has been key, Klein has also put renewed effort into the company’s in-house slots team. The result has been games like Jack’s Pot and The Big Lebowski, which have been among 888’s best performing. Klein is one of the industry’s highest-flying female execs and a real star.

FELIPE LUDEÑA Corporate chief information officer Codere Codere launched a new online betting and gaming platform in its home market of Spain at the end of last year and is already gaining significant market share from its competitors. Having gone online in Italy in 2010, it took a while to get going in Spain but it is finally making inroads. Felipe Ludeña has been a crucial part of this and remains key to the company’s continued expansion in the iGaming sector. As a predominantly land-based business, Codere has all the assets to ensure this happens, particularly in the untapped South American markets where it already has a significant presence and operates Codere.mx in Mexico.

KRZYSZTOF OPALKA Chief product officer Yggdrasil Gaming Yggdrasil has grown strongly despite limited resources, using outsourcing effectively to ensure it can develop innovative in-game features to support its highly-regarded products. Krzysztof Opalka’s promotion to chief product officer, having spent just under a year as head of front-end development and operations, means he will play a major part in continuing to push the business forward in 2017. Having worked as a game developer for social giant King he has experience of developing exactly the kind of playful and colourful content that has helped Yggdrasil grow to prominence. Revenue for the developer rose almost 300 per cent to SEK21.0m in Q3 2016, and can be expected to continue rising this year.

LOTTERY SUPPLIER OF THE YEAR: SCIENTIFIC GAMES No other company rivals Scientific Games in the lottery supplier space. On the interactive side of things, it has put blue space between itself and the likes of IGT and Intralot. It has deployed more than 600 online/ interactive projects for 45 lotteries across the US, Canada and Europe, and is currently in the midst of one of its most significant projects to date after being awarded a contract to replace the iGaming platform for the Atlantic Lottery Corporation in Canada which should go live this year. Another big project involves replacing rival IGT as the new platform provider for Danish lottery operator Danske Spil. For the third year in a row, Scientific Games is the clear winner.

ALSO SHORTLISTED: IGT INSTANT WIN GAMES NEOGAMES

MATT ROBINSON Chief commercial officer Lottoland Bet-on-lotteries pioneer Lottoland has been making big waves by actively disrupting a multibillion-dollar industry. While it is struggling to gain market share in the Camelot-dominated UK lottery market, its success in Germany and Australia has been simply outstanding. A lot Continues p54

GIQ Q4 REVIEW

>

Scientific Games has deployed more than 600 online projects for 45 lotteries across the US, Canada and Europe 53


AWARDS/HOT 50 < Continued from p53 of Lottoland’s operational success is down to Matt Robinson, who has driven the company’s incredible growth in the past two years. In 2016, revenue reached €300m, compared to zero just four years ago. His experiences at 888, bwin. party and Betfair have been fortified at Lottoland, which will soon expand its offering to allow the resale of official lottery tickets online. Expect Robinson to drive it on in 2017.

GIL ROTEM Group director, gaming strategy bet365

MARKETING SERVICE PROVIDER OF THE YEAR: OPTIMOVE Optimove works with Zynga, Caesars Interactive, bwin.party, Codere, NYX, Novomatic, Playtech, Playtika and LeoVegas, among others. Its Customer Marketing Cloud allows for automated, multi-channel campaigns, offers realtime reporting and predictive modelling. It sends more than 4bn messages to more than 900m customers each year, and has grown by more than 100 per cent in each of the past three years. And it only launched its first funding round in 2016. For a company to go through its early years totally bootstrapped gives a sense of just how good its solutions are. It has become the leading marketing platform provider in gaming based almost entirely on the strength of its product, and with $20m raised for further research and development it will only get bigger and better.

ALSO SHORTLISTED: BEEHIVE INCOME ACCESS XL MEDIA

Gil Rotem is simply one of the best brains in the business. This is his second appearance in the Hot 50 and he has forged a mighty partnership with 2016 Hot 50 winner Chab Bogstrand to keep bet365’s gaming operation one step ahead of most of the competition. Rotem’s expertise is held in awe by colleagues and collaborators but he remains approachable, friendly and everhelpful. There are a few superstars at bet365 and Rotem is one of the brightest.

DARREN SIMS Chief operating officer Stride Gaming Stride Gaming is a company that is going places and Darren Sims is one of the chief reasons. While the company has acquired 105 brands and a 10 per cent share of the UK bingo market, it has also made significant, er, strides into the US social gaming space. And Sims has made sure that all those brands are working optimally. The figures are good, with net gaming revenue up 22 per cent to nearly £48m at the end of the last financial year. While Sims has a tough job integrating all those acquisitions, Stride is planning more. Sims will no doubt take it in his, er, stride.

WARREN STEVEN Optimove sends more than 4bn messages to more than 900m customers each year, and has grown by more than 100 per cent in each of the past three years 54

Product director, online gaming Golden Nugget Betclic Everest veteran Warren Steven was tempted to swap Europe for the US by his old boss Thomas Winter, and this partnership is achieving huge success. Golden Nugget took longer than its competitors to go live in New Jersey – something that many thought would leave

Stride Gaming is going places and Darren Sims is one of the chief reasons. It has acquired 105 brands and a 10 per cent share of the UK bingo market it lagging behind. Instead it is closing in on the state market leader Borgata. Steven’s work as product director and his European experience is helping Golden Nugget become the first to launch virtual sports and live dealer gaming in the state. He could yet help it take top spot.

JOHN STRÖMBERG Chief technology officer LeoVegas LeoVegas has been one of the revelations of the online casino industry in the past few years, and underwent a successful IPO during 2016. Its focus on mobile has been made possible through its investment in its platform, and this is where John Strömberg comes in. He has served as group CTO for the past three years and is also CEO of Gears of Leo, the technology development arm of the LeoVegas group. He has a wealth of technical experience from his time at Bonnier Group, HiQ and Rebtel, but in LeoVegas he has found a team that has backed and supported his technical expertise.

ANDREW WEST Head of poker Kindred Group In Q3 Kindred’s poker revenue doubled to £3.2m. This effectively vindicates the company’s decision to leave Microgaming’s MPN in favour of a stand-alone product developed by Relax Gaming in 2013. Andrew West has been working for the offering since before it launched in 2015, and has overseen a product that has seen revenue climb more than 30 per cent for two consecutive years, at a time when wider online poker industry income has dropped around 20 per cent. The launch of its Kindred Poker 2.0 client in December 2016 will provide a litmus test. If its casual model can continue to attract players at a time when other operators are moving towards the recreational model, it looks set to become a significant player in the market.


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AWARDS/HOT 50 MARTIN CARLESUND Chief executive officer Evolution Gaming The live dealer specialist is facing increased competition from the likes of NetEnt, Playtech and Ezugi, but it is still the market leader and a key driver for convergence in the land-based casino sector. As group CEO, Martin Carlesund has a big task on his hands and he has massive shoes to fill in replacing co-founder Jens von Bahr, but Evolution’s growth story should continue unabated. Evolution’s revenue and profit keeps growing and it has only scratched the surface in taking casinos online. He may have only been with the company since June 2015, but Carlesund has a good team in place and Evolution’s bandwagon will surely keep on rolling.

POKER SUPPLIER OF THE YEAR: RELAX GAMING Relax is by no means the biggest poker software provider in the industry but Kindred Poker’s progress in 2016 marks it out as a trailblazer. The operator’s decision to partner Relax in 2013 to develop a stand-alone poker product and leave the network model behind was potentially dangerous for Kindred. But considering the wider poker sector’s continuing decline since that year, it was a risk that was worth taking. Poker has become little more than an afterthought for many operators, but Relax has been able to create a truly differentiated product for its client. Poker revenue for Kindred – a vertical that for years was simply lumped in with games in the company’s results – is up from £1.2m to £3.2m in Q3 2016. With the launch of a new client, Kindred Poker 2.0, expect this to grow further. By working closely with its client, Relax has been able to develop a unique and attractive product that has already shown it can compete in the industry’s most difficult vertical.

ALSO SHORTLISTED: MICROGAMING PLAYTECH

Relax has been able to develop a unique and attractive product that has already shown it can compete in the industry’s most difficult vertical 56

ANDY HARRIS Chief executive officer Realistic Games

MICHAEL BRADY Founder and commercial director Bede Gaming Bede Gaming is doing things a little bit differently. By offering a fully operational tailored platform for clients, it is providing a high-end solution that should embed it closer to its clients than your average white label provider. The founding team has a lot of experience but Michael Brady is the company’s most visible face. Winning Rank as a client put Bede on the map and it is no doubt taking up a lot of its resources. Brady’s challenge is to follow that up with more deals of a similar standing. Those who know him expect Brady to triumph.

Andy Harris (pictured below) featured in 2015’s Hot 50 for his work as Realistic Games’ commercial director, and last year he moved seamlessly into the CEO role. His commercial nous helped establish the company and in the top job he has continued Realistic’s growth. What was once a Berkshire-based business now has an office in Gibraltar and a client list that features anybody who is anybody in the online gambling sector. It’s hard to see exactly where the business can go now; it has a strong portfolio of very popular games, a full roster of clients and an impressive team. But that’s part of the excitement; Harris came into Realistic with precious little B2B experience, but has turned the business into a rising star of the supplier space. He will keep it growing and expanding in 2017 and beyond.


AWARDS/HOT 50

RICHARD CARTER Chief executive officer SBTech

SOCIAL CASINO SUPPLIER OF THE YEAR: GREENTUBE The B2B sector of social casino has taken a while to get going, and is often overlooked as it is not a simple software supply arrangement common in the iGaming space. Instead companies enter into hybrid affiliate-software supply deals with land-based casinos. These may seem fairly one-sided but they play a crucial role in bringing bricks-and-mortar venues online, giving them greater reach and incentivising customers to return. Greentube is perhaps the most underrated company active in this space. With the vast resources and content library of Novomatic behind it, the social business does not get the credit it deserves. But with the Greentube Pro social marketing platform and BlueBat Games platform, it offers land-based partners a market-leading solution. More importantly, operators are clearly interested. For Foxwoods to ditch long-term partner GAN in favour of Greentube is a huge feather in the supplier’s cap. Judges described Greentube as an “amazing” business, and it seems right that after netting the biggest deal of the year it deserves this award.

ALSO SHORTLISTED: GAN SCIENTIFIC GAMES

With the vast resources and content library of Novomatic behind it, Greentube does not get the credit it deserves 58

Former Deutsche Bank analyst Richard Carter’s appointment as SBTech chief executive appeared to be a move to facilitate the company’s sale. These plans may still be bubbling beneath the surface but his first year in charge has seen him steadily grow the business, expanding its regulatory footprint by entering Portugal, Romania and Italy, as well as securing a Malta licence. It has even elbowed Kambi aside to become Spanish operator Luckia’s sportsbook platform provider. Carter’s first year in charge has been a good one. His second might transform SBTech into a true industry heavyweight.

SAGI IFRACH

ARI LEWSKI

Commercial director Ezugi

Founder and chief executive officer Digital Sports Tech

The live casino market has been dominated by Evolution in recent times, but it is now a highly competitive niche product with suppliers fighting for their piece of the pie. Ezugi recently grabbed headlines by powering the first live dealer offering in the regulated US iGaming market. Golden Nugget built a sophisticated studio inside its Atlantic City casino to offer the product on the NYX-powered gaming platform. Under the leadership of Kfir Kugler, Sagi Ifrach is helping to make Ezugi a force in the industry and with a deal with the Bulgarian National Lottery also in the bag, he is definitely one to keep an eye on.

The sports betting sector has been awaiting ‘the next big thing’ to follow in-play betting, and with player proposition bets it may have found it. As CEO of the first company to develop a viable prop betting product, Ari Lewski finds himself at the crest of this new wave. Digital Sports Tech can help attract new sportsbook customers as well as increase existing customer spend, and the speed at which customers have signed up to launch the solution suggests operators agree. DST is already live in Australia, the UK, and plans to launch in Mexico and Russia. If Lewski can keep to the hectic launch schedule DST is going to be a hot acquisition target.

INNOVATION: DIGITAL SPORTS TECH – PLAYER PROP BETS Proposition bets are a particularly attractive tool for operators. Experienced bettors enjoy digging down into players’ past performances to work out the best possible bets, while casual players can have a flutter on their favourite players. What’s shocking is that it has taken

so long for a company to develop a viable online variant for operators. Digital Sports Tech deserves huge credit for doing so. It has created a solution that even in its early days is gaining traction, with the likes of Ladbrokes Coral, Caliente and Russia’s Fonbet launching the product. In Australia, where live betting is banned, it is already gaining traction and it seems only a matter of time before it becomes more widely available in the UK. France could also become a key territory


AWARDS/HOT 50 GILES POTTER Commercial director Red Tiger Gaming I f his boss Nick Maughan (another Hot 50 winner) is the creative genius behind the arrival of some of the industry’s most innovative and best-performing slots, then Giles Potter is the commercial brains cutting deals aplenty. Not content with supplying half of Asia with its slots and signing an exclusive deal to provide Betfair with its Macau casino tab, Potter has followed that with deals to provide Betsson, SlotsMillion and Videoslots with its impressive content. Potter’s experience before joining Red Tiger was mainly in marketing. He has taken to his new role with aplomb.

DAMIAN WALTON Managing director Amelco

DAN PHILLIPS VP UK Operations Playtech Dan Phillips is a veteran of Chartwell, Gala Coral and more, but he could be entering his most productive period as first chief of Playtech’s bingo division, and now as VP of Playtech’s rapidly growing UK operations. This encompasses not only Playtech’s three London offices but another five offices across the country. In total this covers more than 500 employees and product areas, including all of Playtech’s bingo operations, casino retail, games content, virtual sports, open platform and casual gaming. All this and he has managed the launch of the company’s Sun Bingo project – one of the division’s biggest yet.

considering the restrictions on operators there. It feels unlikely that live betting has had its day, but it is certainly no longer a new product, and with Digital Sports Tech it seems the industry does not need to look too far afield for the next big thing.

ALSO SHORTLISTED: BOOKEE ODDSIUM RED TIGER GAMING

GIQ Q4 REVIEW

Since its launch in 2006 Amelco has quietly built up a roster of high-profile clients including the likes of PokerStars, William Hill, mybet and Intralot. The company is Damian Walton’s brainchild, and he retains full control of the business, which makes him a potential industry power-broker should he decide to sell the business. But why would he want to? Amelco has grown to the point it could conceivably usurp its larger competitors as a leading sportsbook provider. OpenBet is going through a period of change, and Playtech is still building its solution, so the established industry players may find themselves overtaken by upstarts such as Amelco. Watch this space.

SPORTS BETTING SUPPLIER OF THE YEAR: SBTECH OpenBet continues to dominate the UK market, but almost everywhere else SBTech is cleaning up. The company closed landmark deals in Argentina and Mexico, and these could just be the tip of the iceberg. While Argentina will be a tough nut to crack with SBTech’s client already in hot water with the authorities, Latin American operators are queueing up for online and omnichannel sports betting solutions. If emerging markets remain SBTech’s speciality, it also flashed a signal of intent by winning licences in more established markets such as the UK and Italy, as well as newly regulating markets such as Portugal and Romania. Other deals were closed with the Czech Republic’s largest lottery, Sazka, and with rising Nordic star ComeOn, which was acquired by another client in the shape of Cherry. SBTech’s star is clearly in the ascendancy.

ALSO SHORTLISTED: AMELCO DIGITAL SPORTSTECH OPENBET

If emerging markets remain SBTech’s speciality, it flashed a signal of intent by winning licences in established markets such as the UK and Italy 59


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ON THE FOLLOWING PAGES

62 GIQ20 Q3 2016 results and analysis 75 Gaming Intelligence stock index

The GIQ Q3 2016 NYX GAMING AND Gaming Innovation Group’s M&A splurge has accelerated their route to the top, with NYX now one of the leading suppliers in the industry, while the acquisition of operator Betit has transformed GIG’s results. NYX’s rise to the top of the GIQ20 chart for the first time followed the inclusion of OpenBet’s results, which accounted for more than half of its revenue. Its share price continues to struggle however, down nearly 50 per cent in the past year, as the company looks to find the best solution to manage the long-term debt accrued through its acquisitions – particularly the massive load taken on to acquire OpenBet. Meanwhile, LeoVegas had another outstanding quarter through organic growth, while Scientific Games’ iGaming arm had its social casino business to thank for a strong Q3 performance. Kindred and Cherry benefited from their own recent acquisitions. Overall, it was another strong period of growth by all GIQ20 companies, following the conclusion of the Euro 2016 tournament and the start of the 2016/17 European football leagues. This boosted results for UK bookmakers Ladbrokes and Paddy Power Betfair in particular. William Hill’s online business returned to growth in Q3, but the operator narrowly missed out on returning to the GIQ20 chart as revenue increased by just four per cent. Amaya and Betsson also failed to make the cut, despite growth of 10 per cent and nine per cent respectively. n GIQ Q4 REVIEW

The GIQ20 Q3 2016 COMPANY

ONLINE Q3 2015

ONLINE Q3 2016

% CHANGE

1

NYX GAMING

CAD$13.3m

CAD$54.4m

309%

2

GAMING INNOVATION GROUP

€4.8m

€14.5m

201%

3

LEOVEGAS

€22.6m

€39.7m

76%

4

SCIENTIFIC GAMES

$51.2m

$85.2m

66%

5

KINDRED GROUP

£86.1m

£142.3m

65%

6

LOTTO24

€3.9m

€6.4m

64%

7

CHERRY (EXCL. LAND-BASED)

SEK113.9m

SEK179.7m

58%

8

TANGELO GAMES

CAD$5.9m

CAD$9.3m

58%

9

ZEAL NETWORK

€26.3m

€39.8m

51%

10

LADBROKES (PRIOR TO BECOMING

N/A

N/A

48%

11

GAMING REALMS

£6.2m

£9.1m

47%

12

EVOLUTION GAMING

€19.8m

€29.2m

47%

13

PADDY POWER BETFAIR

£261m

£328m

28%

14

NETENT

SEK279.8m

SEK357.4m

28%

15

KAMBI GROUP

€12.8m

€14.8m

15%

16

CHURCHILL DOWNS

$154.0m

$177.0m

15%

17

MR GREEN & CO

SEK201.6m

SEK229.9m

14%

18

FORTUNA ENTERTAINMENT

€21.7m

€24.8m

14%

19

BET-AT-HOME.COM

€25.5m

€28.7m

12.5%

20

GVC HOLDINGS

€198.3m

€221.5m

12%

(FORMERLY IMPERUS)

LADBROKES CORAL GROUP)

(EXCL. RETAIL)

61


F I NA NC E GIQ20 Q3 2016

OpenBet contribution takes NYX to top spot in Q3 NYX and GIG were boosted by M&A strategy, while LeoVegas’s organic growth stands out yet again, writes Kio Dawson

NYX GAMING 309% Net revenue (CAD$) Q3 2015

Q3 2016

Royalty and licences

11.5m

26.5m

131%

Professional services

0.4m

24.7m

5572%

Social gaming

1.4m

3.1m

126%

13.3m

54.4m

309%

TOTAL

Change

Benefiting from the first full quarter’s contribution from OpenBet, NYX Gaming saw revenue soar by 309 per cent to CAD$54.4m during the third quarter of 2016. The revenue growth was a result of eight new customers launching during Q3 and the inclusion of $31.5m of revenue from OpenBet, while Chartwell and CryptoLogic accounted for a further $2.1m. N Y X CEO Matt Davey commented: “Through our M&A activity, we have built 62

the foundations of a world-class digital gaming software supplier that focuses on regulated markets. “The team has made significant progress against a number of key objectives that position us at the forefront of the industry opportunity. We are entering phase two of our journey now to unlock the true value of our operations and we continue to see market-leading demand for our products and services.” The quarter saw NYX sign six new agreements with the likes of TopSport, ComeOn, Televisa and OlyBet, with its Open Gaming System (OGS) platform going live with GoalBet, TonyBet and SverigeKronan. At the end of Q3, the supplier’s development pipeline remained strong, with commitments for 23 customers that have not yet launched.


F I NA NC E

GIQ20 Q3 2016

GAMING INNOVATION GROUP 201% Net revenue (€) Q3 2015 Q3 2016 TOTAL

4.8m

14.5m

Change 201%

Oslo-listed operator and platform provider Gaming Innovation Group (GIG) benefited from the first contributions from its newly acquired Betit operations, pushing revenue to €14.5m during the third quarter. The Betit brands (Thrills.com, Kaboo. com and Superlenny.com) generated a combined revenue of €2.7m since being acquired on 1 September, helping overall revenue from GIG’s B2C segment reach €11.4m, up from €3.8m a year ago, with active users increasing to 177,587 during the quarter. Revenue from B2B, comprising the iGamingCloud platform and Innovation Labs digital marketing services, soared 160 per cent to €4.9m.

“LeoVegas continues to develop in line with our vision: to create the ultimate gaming experience and be number one in mobile gaming” Gustaf Hagman, LeoVegas

“During the last year we have successfully transformed from a marketing firm to a tech nolog y c ompa ny,” said Robi n Reed, CEO of GIG. “We have throughout this period recruited approximately 250 new employees and built a strong organisation to secure growth and develop the company further.” The company also appointed Betit’s former CEO Tomas Bäckman as chief of GIG’s newly created B2C division, which will see all six of its brands administered under one dedicated leader.

“During the last year we have transformed from a marketing firm to a technology company” Robin Reed, GIG

LEOVEGAS

SCIENTIFIC GAMES

76%

66%

Net revenue (€)

Net revenue (US$) Q3 2015

TOTAL

22.6m

Q3 2016 39.7m

Change 76%

Social gaming Real-money gaming

Mobile gaming specialist LeoVegas is one of the few companies in the upper echelons of the GIQ20 to draw on entirely organic growth, as revenue reached a record high of €39.7m in the third quarter. Mobile represented two-thirds of total player deposits during the period, with total depositing customers up 77 per cent to 156,389. “LeoVegas continues to develop in line with our vision: to create the ultimate gaming experience and be number one in mobile gaming,” said LeoVegas CEO and co-founder Gustaf Hagman. “The launches of LeoVegas Sport and LeoVegas Live Casino have laid the foundation for strong growth and gave us considerable momentum into the third quarter.” The Nordics represented 58 per cent of revenue, followed by the UK with 13 per cent and Rest of Europe with 14 per cent. Rest of t he World accounted for the remaining 15 per cent.

TOTAL

Q3 2015

Q3 2016

Change

42.7m

77.1m

81%

8.5m

8.1m

-5%

51.2m

85.2m

66%

Scientific Games’ interactive business contributed 12 per cent of total Q3 revenue, up from an eight per cent share a year ago, buoyed by continued growth from its social casino operations. Revenue from interactive climbed 66 per cent to $85.2m, with social gaming revenue up by 81 per cent to $77.1m, offsetting a five per cent decline in real-money gaming revenue to $8.1m. Growth in social gaming reflected the ongoing popularity of the company’s Jackpot Party Social Casino and the success of the newer Quick Hit Slots, Hot Shot Social Casino and Blazing 7s Hot Shot Slots app. Mobile platforms represented 69 per cent of social gaming revenue, compared to 56 per cent a year ago. Across its social casino brands, average daily active users (DAUs) rose 14 per cent to 2.5m, with average month active users (MAUs) growing 27 per cent to 8m. Average revenue per DAU increased significantly by 55 per cent to $0.31, which Scientific Games attributed to a greater proportion of paying players as a result of continuous improvements in player experience and retention activity. 63


F I NA NC E GIQ20 Q3 2016

LOTTO24 64% Net revenue (€)

TOTAL

KINDRED GROUP 65% Net revenue (£) Q3 2015

Q3 2016

Change

Sports betting

39.8m

66.7m

68%

Casino and games

42.3m

68.5m

62%

1.3m

3.2m

146%

Poker

Tangelo Games’ Birds of Paradise

64

Other

2.7m

3.9m

44%

TOTAL

86.1m

142.3m

65%

Kindred Group, the Stockholm-listed operator formerly known as Unibet Group, also enjoyed a record performance in Q3 as revenue rose 65 per cent to £142.3m. Boosted by its newly acquired iGame and Stan James Online businesses, which contributed 10 per cent of the total with £14.8m, Kindred said that its high activity levels were driven by its ability to retain customers acquired in Q2 during Euro 2016. Revenue from sports betting was up 68 per cent year-on-year to £66.7m, with live betting representing 48 per cent of the total. Revenue from other products rose 63 per cent to £75.6m, with casino and games revenue up 62 per cent to £68.5m. Poker revenue more than doubled to £3.2m, while other revenue including bingo increased by 44 per cent to £3.9m. A third of Kindred’s revenue was derived from locally regulated markets in Q3, while mobile served as a key channel for the operator, more than doubling versus a year ago to account for 64 per cent of revenue.

Q3 2015

Q3 2016

Change

3.9m

6.4m

64%

German online lottery broker Lotto24 enjoyed “very favourable” market conditions, with large jackpots for the Lotto 6aus49 and EuroJackpot games, which helped third quarter revenue increase 64 per cent to €6.4m. The operator also gained 111,000 new customers during the period, up 14 per cent yearon-year, with cost per lead (CPL) down by 20 per cent to €24.90.With revenue for the first nine months of the year up by 54 per cent to €15.6m, Lotto243 raised its guidance for the full year and now expects a slightly higher number of new customers and much lower CPL. The company expects billings to grow by between 35 and 40 per cent. Having added Germany’s longest-running social lottery Deutsche Fernsehlotterie to its product offering, Lotto24 will also benefit from Jumbo Interactive’s exit from the market with players referred to Lotto24.de.

TANGELO GAMES 58% Net revenue (CAD$)

TOTAL

Q3 2015

Q3 2016

Change

5.9m

9.3m

58%

Toronto-listed social casino operator Tangelo Games (formerly Imperus Technologies) posted a 58 per cent increase in revenue to CAD$9.3m for the third quarter period. The company said that it was beginning to see the benefits from the integration of its Akamon and diwip platforms, which enabled


F I NA NC E

GIQ20 Q3 2016

CHERRY 58% Net revenue (SEK) Q3 2015

Q3 2016

Change

Online gaming

102.6m

142.8m

39%

Game Lounge

6.0m

15.9m

165%

Yggdrasil Gaming

5.3m

21.0m

296%

113.9m

179.7m

58%

TOTAL

Stockholm-listed gaming operator Cherry had another strong quarter in Q3 as its growing iGaming business helped overall revenue climb 39 per cent to SEK214.0m. Online gaming contributed 82 per cent of the total with SEK179.7m, comprising B2C revenue of SEK142.8m, together with contributions from Yggdrasil Gaming and Game Lounge, up by 296 per cent and 165 per cent respectively to SEK21.0m and SEK15.9m. “The formula for success is based on the strategy Cherry implemented two years ago,

the company to incorporate content from the Akamon slots library into diwip’s Best Casino platform, offering its players 15 new titles such as Fire Wheel 7s, Dragon Eggs, Monte Carlo and Down the Rabbit Hole. Following the integration, Tangelo initiated a headcount reduction in order to take advantage of the combined business’ economies of scale, and in Q3 reduced the headcount of its operating business by 25 per cent. “Tangelo has now completed the full integration of Akamon and diwip into a single, seamless social casino platform,” said Vicenc Marti, president of Tangelo. “The proof is our recently launched game Pixies, jointly developed by our Tel Aviv and Barcelona offices, which for the first time in the history of the company has been launched simultaneously on all of the company’s platforms.”

ZEAL NETWORK 51% Net revenue (€)

TOTAL

Q3 2015

Q3 2016

Change

26.3m

39.8m

51%

German online lottery broker Zeal Network delivered a strong set of results during the third quarter, with hedging income and higher jackpots offsetting the impact of high prize payouts. Total net revenue rose 51 per cent to €39.8m, continuing the GIQ Q4 REVIEW

in which we have developed our business areas and added strategic acquisitions of fastgrowing companies where the founders and entrepreneurs continue to stay active in the business,” said Cherry CEO Fredrik Burvall. Since the end of the quarter, Cherry has announced the launch of XCaliber, a new independent B2B division set up to leverage the operator’s proprietary infrastructure and platform, and acquired the remaining 51 per cent stake in operator ComeOn Malta, which it did not already own.

“We have added strategic acquisitions of fastgrowing companies where the founders stay active in the business” Fredrik Burvall, Cherry

positive performance achieved in the first half of the year. As a result Zeal reiterated its guidance for the full year, with total revenue expected to be between €125m to €135m. In September 2016, the company’s application for a licence in Ireland was approved, with the operator intending to launch in the market during the first quarter of this year. “Our approved licence application in Ireland represents an important step towards the internationalisation of our B2C offering,” said Zeal CEO Helmut Becker, noting also that its Norwegian licence application was progressing. The company also launched a new investment arm to provide finance and support to start-ups seeking to disrupt the lottery market. Zeal Investments will be headed up by James Oakes, the founder of lottery games developer Geonomics, which Zeal first bought into in 2012

“Our approved licence application in Ireland represents a step towards the internationalisation of our B2C offering” Helmut Becker, Zeal


F I NA NC E GIQ20 Q3 2016

“Our results have been achieved by a group of colleagues whose commitment to delivering Ladbrokes’ Plan A has been all the more impressive given the ongoing work towards our merger with Coral” Jim Mullen, Ladbrokes

LADBROKES 48% Net revenue (£) Q3 2015

Q3 2016

Change

Ladbrokes.com plus Exchanges

n/a

n/a

33%

Sportsbook

n/a

n/a

48%

Gaming

n/a

n/a

24%

Ladbrokes Australia

n/a

n/a

90%

TOTAL

n/a

n/a

48%

Prior to completing its long-awaited merger with Coral Group in November, Ladbrokes saw the resurgence of its digital business continue into Q3. Digital revenue rose 48 per cent versus a year ago, as revenue from the operator’s core Ladbrokes.com and Exchanges division grew by 33 per cent. This followed a 26 per cent rise in sportsbook stakes and a 36 per cent increase in active customers. Mobile staking increased by 32 per cent and now accounts for 79 per cent of sportsbook stakes. Sportsbook revenue was up 48 per cent yearon-year, benefiting from an increased margin of 7.7 per cent, reflecting its focus on the recreational customer. Online gaming revenue climbed 24 per cent, while revenue from its Australian business increased 51 per cent. Ladbrokes’ chief executive Jim Mullen commented: “Across all our key pillars we have been encouraged by the customer reaction. We have delivered growth for a fourth successive quarter in group net revenue, and in Ladbrokes.com an 11th in sportsbook staking and an eighth in gaming. 66

“These results have been achieved by a group of colleagues whose commitment to delivering Ladbrokes’ Plan A has been all the more impressive given the ongoing work towards completion of our merger with Coral.”

GAMING REALMS 47% Net revenue (£)

TOTAL

Q3 2015

Q3 2016

Change

6.2m

9.1m

47%

Following a strong first-half performance, there was continued growth for Gaming Realms into the third quarter as revenue climbed 47 per cent to £9.1m. Real-money net gaming revenue soared 113 per cent year-on-year to £5.9m, with social gaming and licensing revenue up 189 per cent to £2.5m. Average monthly player numbers amounted to 53,928 in Q3, in line with the group’s normal seasonal marketing phasing, with 51,884 new depositing players. The strong revenue growth helped Gaming Realms move into profitability for the first time, which the company said was an endorsement of its game performance and brand partnerships, underpinned by the development of its Remote Gaming Server and Grizzly iGaming platform. “We are pleased with both the continued top line growth and our move into profitability for the first time, especially in a quarter i n which we

Blastworks, Gaming Realms


F I NA NC E GIQ20 Q3 2016

launched several new real-money and social games,” CEO Patrick Southon said. “Our investment in our own platform is paying off through flexibility, reliability and greater player retention.”

EVOLUTION GAMING 47% Net revenue (€)

TOTAL

Q3 2015

Q3 2016

Change

19.8m

29.2m

47%

The Stockholm-listed live casino specialist remains on course for another record year after releasing a strong set of results for the third quarter as revenue grew by 47 per cent to €29.2m. Evolution benefited from strong general growth and continued high demand for dedicated environments, with the likes of Mr Green, Tempobet, Marathonbet and Royal Panda among the latest to launch its live dealer products. Mobile represented 43 per cent of total revenue, up from a 28 per cent share in 2015. During Q3, the supplier launched its Dual Play Roulette game for The Ritz Club and Hippodrome in London, which Evolution described as a “big breakthrough” for landbased businesses. “Live casino continues to gain ground both in terms of strategic significance for operators and popularity with end-users, and we were therefore able to record yet another quarter of strong growth,” said chief executive Jens von Bahr, who has assumed the role of executive chairman following changes to the company’s board and management. Martin Carlesund has taken over as group CEO and Johan Nordström has been appointed CEO of Evolution Malta, the company’s operational entity previously headed by Carlesund.

Mr Green, Tempobet, Marathonbet and Royal Panda are among the latest to launch Evolution’s live dealer products 68

PADDY POWER BETFAIR 28% Net revenue (£)

Online Australia US TOTAL

Q3 2015

Q3 2016

Change

186m

222m

20%

55m

82m

50%

20m

24m

22%

261m

328m

28%

Paddy Power Betfair’s combined online operations generated more than 81 per cent of the group’s revenue in Q3, including its Australian and US businesses. Online revenue grew by 20 per cent to £222m, with sportsbook revenue increasing 20 per cent to £162m and gaming up 15 per cent to £60m. Australia contributed revenue of £82m, up 49 per cent year-on-year, driven by a 17 per cent increase in stakes and more favourable sports results, while US revenue increased by two per cent to £24m – comprising £21m from sports and £3m from gaming – due to flat revenue at TVG and a 57 per cent improvement in revenue from its online casino in New Jersey. “This was another good quarter for Paddy Power Betfair,” said CEO Breon Corcoran. “We are continuing to focus on building a


F I NA NC E GIQ20 Q3 2016

Kristian Nylén: Kambi building on retail offering

“NetEnt’s growth strategy keeps delivering results – we grow on new markets, with new products and with more customers” Per Eriksson, NetEnt

stronger combined operation by exploiting the unique assets and capabilities of each legacy business, and on using our scale to better serve our customers. “Work is underway to combine the best of Betfair and Paddy Power’s technology into a multi-brand, multi-channel, multi-jurisdictional platform that will start to unlock the full potential of the group’s scale and will lead to increased pace of development and faster roll out of new products.”

NETENT Net revenue (SEK) Q3 2015

Q3 2016

Change

279.8m

357.4m

28%

The Swedish casino games developer delivered another record performance in Q3, marking the company’s 13th consecutive quarter of growth. NetEnt saw continued strong demand for its products, with its systems handling 8.6bn gaming transactions during the period, an increase of 31 per cent year-on-year. Slot games represented 89 per cent of game win. “NetEnt’s growth strategy keeps delivering results – we grow on new markets, with new products and with more customers,” said president and CEO Per Eriksson. “During the quarter we launched our games on the regulated market in Romania and we rolled out our live casino product for mobile. Our ambition to achieve continued strong sales growth in 2016 remains.” The third quarter saw NetEnt sign 11 new customer agreements and launch games with eight new customers including Rank, with a further 32 customers yet to launch. 70

KAMBI 15% Net revenue (€)

TOTAL

28%

TOTAL

Since the quarter end, NetEnt has continued its expansion into the retail sector with deals with Merkur Gaming in Italy and Paddy Power in the UK, as well as launching its online content in Latin America with Codere and in Portugal with Betclic Everest.

Q3 2015

Q3 2016

Change

12.8m

14.8m

15%

The Swedish sportsbook supplier saw revenue growth slow during the third quarter as it announced plans to further its footprint into the retail market. Revenue was up 15 per cent to €14.8m, benefiting from “outstanding” results from the end of Euro 2016, which helped improve operators’ turnover by 37 per cent compared to the same period in 2015. This came despite Q3 normally being a quieter quarter from a sports calendar perspective. Kambi is preparing to roll out its retail betting offering in the land-based sector, securing a partnership with Novomatic Lottery Solutions (NLS) which the suppler said would enhance its position as a full service provider. “This partnership strengthens our outreach to potential clients in the lottery sector,” said chief executive Kristian Nylén. “Part of our growth strategy is to build on our retail offering. We have seen tangible results as our retail service is being rol led out i n severa l reg ions a nd is gaining momentum.”


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F I NA NC E GIQ20 Q3 2016

FORTUNA ENTERTAINMENT 14% Net revenue (€) Q3 2015

Q3 2016

Change

21.7m

24.8m

14%

TOTAL

It was another quarter of strong growth for Fortuna’s online betting business, which benefited from expansion in its three core markets of the Czech Republic, Slovakia and Poland. Online betting revenue climbed by 14 per cent versus the previous year to €24.8m, with the business now generating more than 60 per cent of Fortuna’s combined online and land-based revenue in Q3. This helped online betting revenue for the nine-month period grow 25 per cent to €75m, driven by growth in all three countries. Fortuna will be eyeing further growth this year following its collaboration with Playtech last August, which will see the two companies develop a multi-channel betting and gaming platform to cover the Czech, Polish and Slovakian markets. This comes as both the Czech Republic and Slovakia are expected to regulate online casino games later this year.

BET-AT-HOME.COM 12.5% Net revenue (€)

TOTAL

Q3 2015

Q3 2016

Change

25.5m

28.7m

12.5%

Following a solid first-half performance, Betclic Everest subsidiary bet-at-home.com saw continued growth into the third quarter as revenue grew 12.5 per cent to €28.7m.

Despite increased marketing expenses during the period, the operator posted its highestever quarterly EBITDA of €12.3m in Q3. At the end of the period, bet-at-home.com had more than 4.5m registered customers, up seven per cent compared to the same period in 2015. Assuming an unchanged regulatory and tax environment, the company’s management expects gross betting and gaming revenue for the full year to increase by 10 per cent to €134m (Q3 2016: €35m), with EBITDA to reach €30m.

GVC 12% Net revenue (€) Q3 2015 Sports betting

Change

79.1m

88.5m

12%

119.1m

132.9m

12%

198.3m

221.5m

12%

Gaming and other TOTAL

Q3 2016

GVC Holdings said that the integration of bwin.party is proceeding positively and ahead of original expectations as it posted a 12 per cent increase in third quarter revenue to €221.5m. Revenue from sports betting rose 12 per cent to €88.5m in Q3, with gaming and other revenue also up by the same percentage to €132.9m. Sports gross win margin rose to 10.5 per cent during the quarter, up from 9.3 per cent in the corresponding period in 2015. Following its recent refinanc-

ing deal and the continued positive trading performance of its brands, the company will recommence the payment of dividends ahead of schedule. GVC intends to pay a special dividend of 10 cents per share in February in respect of the 2016 financial year. It will then adopt a dividend policy of distributing 50 per cent of annualised free cash flow in 2017. “As we did following the Sportingbet acquisition, through the rapid integration of bwin.party and a solid trading performance, GVC expects to recommence the payment of dividends ahead of schedule,” said CEO Kenneth Alexander. “Our shareholders have been highly supportive and it is pleasing to be able to reward them with a dividend sooner than we had originally anticipated.”

“Our shareholders have been highly supportive and it is pleasing to be able to reward them with a dividend sooner than we had anticipated” Kenneth Alexander, GVC

GOING DOWN… International Game Technology (IGT) and mybet once again found themselves outside the GIQ20 chart after seeing revenue decline in the third quarter. They were joined for the first time by Intertain which saw results negatively impacted by the appreciation of the Canadian dollar against the British Pound. Jackpotjoy accounted for 70 per cent of Intertain’s total revenue with $79.9m, although this was down six per cent year-on-year. Revenue from Vera&John fell 4.5 per cent to $24.7m, while Mandalay revenue dropped 18 per cent to $11m. The comparable period last year was the first quarter to include a full three months’ of results from all of Intertain’s acquisitions to date. On a constant currency basis, revenue would have been up by 10 per cent versus a year ago, with double-digit organic growth from the Jackpotjoy and Vera&John brands. mybet was unable to benefit from a number of high-profile sporting events that took place during Q3, with revenue for the period falling by 12 per cent to €10.7m compared to the same period last year. The operator blamed

72

the poor performance on its sportsbook vertical, a lack of funds to properly market its casino offering, and regulatory action taken by Greek authorities. Revenue from IGT’s social casino business DoubleDown Casino fell yearon-year for the third consecutive quarter, dropping 17.5 per cent to $65.8m. Results were impacted by a 19 per cent drop in daily active users (DAUs) to 1,506,000 and a 20.5 per cent decline in monthly active users (MAUs) to 3,604,000. Bookings per DAU were up marginally by 0.3 per cent to $0.48, with mobile penetration growing to 56 per cent, up from 50 per cent a year ago. Net revenue Q3 2015

Q3 2016

CAD$122.2m

CAD$113.6m

-7%

mybet

€12.1m

€10.7m

-12%

IGT (DoubleDown only)

$79.7m

$65.8m

-17.5%

Intertain

Change


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F I NA NC E STOCK INDEX 2016

THE GAMING INTELLIGENCE STOCK INDEX 2016

Brexit and CMA impact London-listed shares

No London-listed companies made the Top 10 as the Brexit vote and UK regulatory changes hit gaming shares hard, writes Kio Dawson

Biggest share price increase: Robert Andersson, CEO of Catena

GIQ Q4 REVIEW

IT WAS A mixed year for the 50 operators and suppliers involved in the gaming sector which comprise the Gaming Intelligence Stock Index 2016. Exactly half (25) saw their share prices increase between 4 January and 30 December, but there were also 17 that experienced doubledigit declines, including significant drops by leading players William Hill, Rank Group, Betsson and NYX Gaming. Two of the biggest climbers in 2016 were Catena Media and Cherry, with the Stockholmlisted companies continuing to expand in the iGaming sector, though by very different M&A strategies. They were two of eight companies to hit 52-week highs during December to ensure a strong finish to the year. The others included Lotto24, Scientific Games, Tatts and Zynga. Catena Media vindicated its successful IPO in Sweden in February and has established a strong position in the iGaming lead-generation market following an M&A spree which has seen it acquire RightCasino, AskGamblers, Casinouk.com and licensed US-facing affiliate sites PlayNJ.com and USpoker.com. Cherry, meanwhile, benefited from its acquisition of operator ComeOn, adding a number of

Scandinavian-facing brands to its portfolio which already includes CherryCasino, Sunmaker and EuroSlots.com among others. The company also established a new B2B arm to provide its technology to the wider industry. Lotto24 continues to make headway in the German online lottery brokerage market, as evidenced by an 81 per cent increase in its shares over the 12-month period, while Gaming Innovation Group has seemingly come out of nowhere to become one of the leading Scandinavian operators and platform providers, following its purchase of SuperLenny operator Betit. Its shares were up 67.6 per cent by year-end, in what has been a transformational year for the business. The Top 10 companies comprised stock listings in Stockholm (2), Frankfurt (2), New York (2), Sydney (2), Oslo and Milan. Notable by its absence was London, despite having 18 companies listed in the GI Index. Britainâ&#x20AC;&#x2122;s shock vote to exit the EU had a big impact on the worldâ&#x20AC;&#x2122;s financial markets in late June, and the gaming sector also took a big hit. Major UK and Gibraltar-based operators suffered most, with significant share price declines across the board for Ladbrokes (prior to its merger with Coral Group), William Hill, Paddy Power Betfair, Rank Group, 888, GVC and 32Red in the two days of trading following the vote. Indeed, none of the big three bookmakers saw their shares improve in 2016, with ongoing regulatory changes in the UK also having an impact. Ladbrokes Coral was the best performer, with shares closing the year at 116p, down 2.4 per cent, ahead of Paddy Power Betfair (down 4.3 per cent) and William Hill (down 25.4 per cent). 2017 could be another tough year for all three. Sportech was top of the London-listed companies, with its shares increasing by 43.9 per cent, after hitting a 52-week high of 88.38p in late December. Despite the collapse in talks regarding the sale of its Football Pools business, shareholders were buoyed by a victory in its long-running VAT dispute with HM Revenue & Customs. It was also a good year for GVC. It has had success with the integration of bwin.party and is already growing revenue, while the company continues to be linked with a deal to acquire 75


F I NA NC E STOCK INDEX 2016

PokerStars owner Amaya, which would be another significant notch on his belt for CEO Kenny Alexander. Shares were up 38.6 per cent during the year, with shareholders also benefiting from an increase in the operator’s special dividend from 10 cents to 14.9 cents. Shareholders for other operators such as 32Red, 888 and Webis, would have been satisfied with their returns in 2016. Amaya had a tumultuous year and shares sunk as low as $13.71 in March. However, it recovered to finish up 10.4 per cent at CAD$19.01. Three of the big land-based suppliers made it into the Top 10 of the chart, with IGT nudging just ahead of perennial rival Scientific Games after its shares rose 60.1 per cent during the year, compared to SG’s 59.6 per cent growth. Australia’s Aristocrat Leisure wasn’t far off, with shares climbing 52 per cent. Somewhat bizarrely, all three online and land-based suppliers have a strong presence in the B2C social casino sector through popular apps; Double-

The Top 10 companies comprised stock listings in Stockholm, Frankfurt, New York, Sydney, Oslo and Milan. Notable by its absence was London Down Casino (IGT); Jackpot Party, Gold Fish and Dragonplay (Scientific Games); Heart of Vegas and FaFaFa Slots (Aristocrat). Nothing could separate the Australian gaming giants, Tatts Group and Tabcorp, which could be the next mega-merger to take place this year. Their shares were up 2.5 per cent and 2.3 per cent respectively over the year. There wasn’t good news for Nektan shareholders however, with the company having endured a 79.2 per cent slump in share price in 2016. The Toronto-listed trio – Tangelo Games, NYX Gaming and Contagious Gaming – also saw share values halve by the end of the year, while mybet shares were down 49.5 per cent. Betsson shares fell 42.6 per cent during the year, hitting a 52-week low in July after a challenging Q2 period which saw operating income drop by 26 per cent. Shares in Gaming Realms fell 32.4 per cent, while Mr Green & Co and Rank Group’s shares were down more than 30 per cent. Evolution Gaming and NetEnt shares were evenly matched, down by 13 per cent over the course of the year, while another Stockholm-listed company, Kindred Group, saw shares dip 18.5 per cent. n 76

COMPANY Catena Media plc (IPO 11 Feb) Cherry AB Lotto24 AG Gaming Innovation Group Inc Bet-at-home.com AG International Game Technology plc Scientific Games Corporation Aristocrat Leisure Ltd SNAI SpA Jumbo Interactive Ltd Sportech plc GVC Holdings plc

OP. PRICE 4 JAN

CL. PRICE 30 DEC

% CHANGE

SEK35.60

SEK87.50

145.79%

SEK133.00

SEK251.50

89.10%

€4.05

€7.34

81.23%

NOK1.85

NOK3.10

67.57%

€48.50

€79.99

64.93%

$15.94

$25.52

60.10%

$8.77

$14.00

59.64%

AUD$10.20

AUD$15.50

51.96%

€0.88

€1.32

49.83%

AUD$1.04

AUD$1.53

47.12%

61.00p

87.75p

43.85% 38.62%

463.50p

642.50p

32Red plc

117.75p

143.88p

22.19%

888 Holdings plc

181.75p

217.00p

19.39% 16.36%

Webis Holdings plc XLMedia plc NetPlay TV plc OPAP SA

1.10p

1.28p

81.50p

93.00p

14.11%

7.25p

8.13p

12.14%

€7.50

€8.40

12.00%

Amaya Inc

CAD$17.22

CAD$19.01

10.39%

Kambi Group plc

SEK122.00

SEK133.75

9.63%

Churchill Downs Incorporated

$139.79

$150.45

7.63%

Fortuna Entertainment Group

CZK80.00

CZK85.80

7.25%

Tatts Group Ltd

AUD$4.37

AUD$4.48

2.52%

Tabcorp Holding Ltd

2.34%

AUD$4.70

AUD$4.81

Paysafe Group plc

371.25p

371.30p

0.01%

GAN plc

36.00p

36.00p

0.00%

Playtech plc

828.50p

826.00p

-0.30%

Ladbrokes Coral plc

118.80p

116.00p

-2.36%

$2.64

$2.57

-2.65%

CAD$9.75

CAD$9.38

-3.79%

€38.35

€36.89

-3.81%

9,166.67p

8,775.00p

-4.27%

AUD$2.26

AUD$2.11

-6.64%

257.50p

226.00p

-12.23%

SEK298.50

SEK259.50

-13.07%

SEK81.17

SEK70.30

-13.39%

Zynga Inc Intertain Group Ltd ZEAL Network SE Paddy Power Betfair plc Ainsworth Game Technology Ltd Stride Gaming plc Evolution Gaming Group AB NetEnt AB Intralot SA Safecharge International Group Ltd Kindred Group plc (formerly Unibet Group)

€1.19

€1.01

-15.13%

248.00p

206.00p

-16.94%

SEK104.90

SEK85.55

-18.45%

SEK45.00

SEK36.50

-18.89%

William Hill plc

394.10p

290.20p

-26.36%

Rank Group plc

284.00p

195.00p

-31.34%

SEK46.00

SEK31.20

-32.17%

23.50p

15.88p

-32.43% -42.55%

LeoVegas AB (IPO 17 Mar)

Mr Green & Co AB Gaming Realms plc Betsson AB Contagious Gaming Inc mybet Holding SE

SEK153.00

SEK87.90

CAD$0.095

CAD$0.05

-47.37%

€0.79

€0.40

-49.49% -53.85%

NYX Gaming Group

CAD$2.73

CAD$1.26

Tangelo Games Corporation

CAD$0.14

CAD$0.06

-57.14%

130.00p

27.00p

-79.23%

Nektan plc


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C O LU M N AND ANOTHER THING...

Heading for trouble OPINION Steve Donoughue

The UK bookmaking industry has been caught in a five-year political storm that will come to a head during 2017, writes gambling consultant Steve Donoughue

A

political campaign is being waged against the gambling industry. We have the Triennial Review, which goes further than any review in my memory. Rather than just looking into stakes and prizes as it normally does, this review is looking at advertising (see page 16), asks questions about bookmakers’ shops in poorer areas and threatens to clampdown on fixed-odds betting machines. This is a review with attitude. In addition to the Triennial Review, the Competition and Markets Authority (CMA) is investigating bookmakers who hide behind inadequate terms and conditions (see page 28) and the Information Commissioner’s Office (ICO), the UK’s data privacy regulator, is threatening 400 operators with fines of up to £500,000 for failing to comply with data protection and privacy laws. This is an unprecedented attack that can only end badly. I know ours is not a perfect industry. We have had affiliates spamming people and we have had operators offering promotions with ridiculous terms and conditions, but it is an industry that has got where it has with the full knowledge and collusion of the regulator. The Gambling Commission has allowed us to operate with these terms and conditions, and has never seen the need to do anything about affiliates. The regulator could have produced a model set of terms and conditions and told operators to follow these rules. However, there is little communication between operators and the regulator, and pressure has been 78

ratcheted up several notches with the threat to ing their money on gambling. As the number start withdrawing licences. of working class Members of Parliament has Fines are no longer deemed a harsh enough declined, the number of MPs who understand penalty and the regulator’s attitude is fair working class culture (and gambling in particuenough. When operators are making £2-300m lar) has sunk to record lows. a year in profit, even a fine of £800,000 is a relaThe gambling industry no longer has any tive drop in the ocean. friends and has not done much to make them. The regulator is merely This has allowed the antiresponding to political presgambling lobby, mainly sure and the source of that in the shape of the CamThe gambling political pressure is the ongopaign for Fairer Gambling, industry no longer ing fight over FOBTs. And to flourish. has any friends and when it comes to FOBTs, Now, FOBTs will probahas not done much book m a kers on ly h ave bly be hit with a reduction in to make them. This themselves to blame. stakes to £10, and up to 2,000 If, in 2012, they had gone bookmakers shops might be has allowed the beyond what is required of closed as a result. This will anti-gambling lobby them by law, we wouldn’t be hit the small guys harder to flourish where we are now. The industhan the likes of Gala Coral, try played hardball and said which will still see income it was about revenue and jobs. But the political slashed. If operators are lucky, after the CMA argument around FOBTs was not about revinvestigation finds them guilty they will be hit enue and jobs, it was an emotional argument. by fines rather than licence revocations. But The industry thought it had done enough by there is still the possibility that the regulator setting up the supposedly independent standwill want to make an example of somebody. ards watchdog, the Senet Group in 2014. But the The industry has no friends in the mainindustry did not understand that it was facing stream media and no friends in parliament. It a campaign that was fuelled by the economic is about to pay the price. n recession, which followed the financial crash. Steve Donoughue is a gambling industry manageDuring times of trouble, we still hold the ment consultant. He is also secretariat of the ParVictorian view that the poor should not be wastliamentary All-Party Betting & Gaming Group.


Profile for Gaming Intelligence Quarterly

GIQ - Gaming Intelligence Quarterly Jan-Mar 2017  

The global gaming industry's leading source of independent news and analysis.

GIQ - Gaming Intelligence Quarterly Jan-Mar 2017  

The global gaming industry's leading source of independent news and analysis.