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• JAN – MAR 2018 • ISSUE 32

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

January – March 2018

Q4 REVIEW

The complete package SCIENTIFIC GAMES CHIEF KEVIN SHEEHAN ON THE NYX ACQUISITION FURTHER EXCLUSIVE INTERVIEWS WITH… A GAMING INTELLIGENCE PUBLICATION

Celebrating the industry’s best and brightest

GVC CHIEF EXECUTIVE KENNETH ALEXANDER MANSION GROUP KINDRED GROUP INSPIRED ENTERTAINMENT CALIENTE INTERACTIVE GIRLS IN TECH GIBRALTAR


CONTENTS

LEADER Q4 REVIEW

ANALYSIS & OPINION 4 Snapshot Top stories, top quotes, top deals and what GVC’s Ladbrokes Coral deal means for the wider industry 6 Thought Leadership SG Lottery, SBTech, Sporting Solutions, Scientific Games and SMP Partners 17 People New CEOs for Paddy Power Betfair and Betsson, plus Nevada gets a new regulator 18 Technology & New Products NetEnt reinvents the reels with Finn and the Swirly Spin 20 Lottery What lies in store for Lottoland in 2018? 22 Games The launches that caught GIQ’s eye in Q4 27 Social Gaming Intelligence The state of play in social M&A 31 Legal & Regulatory The latest regulatory updates from around the world, and all you need to know on the EU’s General Data Protection Regulation

FEATURES 36 2018 Look-ahead Why social responsibility and new market openings will be key to the industry’s growth 44 Salary Survey GIQ offers a comprehensive insight into iGaming executive salaries, how this compares to other industries, and what is being done to address the industry’s gender imbalance 62 HOT 50 & Gaming Intelligence Awards 2018 Who’s made the list and which companies have won the top prizes in our annual run-down of the industry’s brightest and best 84 GIQ Interviews Some of the industry’s leading lights from the sector’s bestperforming businesses talk to GIQ

FINANCE – Q3 2017 103 GIQ Stock Index 106 Finance Nordic-listed companies continue to dominate the GIQ20

AND ANOTHER THING… 118 Steve Donoghue shares some gloomy predictions for the year ahead

Robin Harrison

E D I TO R

BLUEPRINT FOR THE YEAR AHEAD UDGING AND COMPILING the Hot 50 and Gaming Intelligence Awa rds shows us just how many talented individuals and progressive companies there are in iGaming. The industry is emerging from a particularly difficult year, and few would expect things to instantly improve in 2018. However, in doing our annual run-down of the sector’s best, we have been able to identify a lot of progress, which bodes well for the year ahead. This is reflected in the winners of this year’s GIAs (see page 62). The companies that refuse to stand still have cleaned up. This is good for the industry – every company pushes others to keep evolving. Scientific Games chief executive Kevin Sheehan sums this up nicely, describing the industry as being in constant flux (see page 96). This is reflected by the M&A merry-go-round, led by GVC’s deal for Ladbrokes Coral (see page 4). It’s not going to be the only deal struck in 2018. This ongoing evolution is also reflected in new product development, such as NetEnt

doing away with slot reels for a new title (see page 18) or Playtech proving that a proprietary title can compete in a casino market dominated by branded content. Perhaps most importantly, social responsibility and diversity are becoming pressing concerns, rather than afterthoughts. The industry is starting to make moves away from being a boy’s club. Girls in Tech Gibraltar is taking the lead in encouraging women to enter the iGaming industry (see page 56), but this has been facilitated by a number of trailblazers. Kindred’s Maris Bonello has revolutionised how operators identify problem gambling (see page 88). Shelly SuterHadad has spearheaded Mansion’s resurgence (see page 94). And Lucy Buckley has leapt up the corporate ladder at Inspired to lead its Interactive division (see page 84). We’ll see more of these talented executives in the years to come. However social responsibility remains a key issue. Some operators are waking up to its importance. Others are yet to do so (see page 36).There may be some struggles ahead, but a process of constant evolution and improvement will see the industry through the worst.

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.

J

EDITOR IN CHIEF Bobby Mamudi bmm@gamingintelligence.com

DEPUTY EDITOR Kio Dawson k.dawson@gamingintelligence.com

ADVERTISING & SUBSCRIPTIONS Omer Uziely omer@gamingintelligence.com

EDITOR Robin Harrison rhm@gamingintelligence.com

FEATURES WRITER Steve Hoare sah@gamingintelligence.com

www.GamingIntelligence.com

SUB-EDITOR Camilla Cary-Elwes info@thecopyeditor.co.uk

STAFF WRITER Macarena Rodicio m.rodicio@gamingintelligence.com

ART EDITOR Alan Bingle alan@forty6design.com

CONTRIBUTORS Steve Donoghue, Sandford Loudon, Andrew Bulloss, Michael Drew

GIQ Q4 REVIEW

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 © 2018 Gaming Intelligence. All rights reserved.

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GIQ Q4 2017

Snapshot most popular news stories on GamingIntelligence.com Australia’s NSW considers lottery betting restrictions GVC proposes £3.9bn acquisition of Ladbrokes Coral Betsson first to integrate Perform’s new data visualisation solution Novomatic wins BCLC lottery terminal contract Vermantia and ARC launch greyhound racing channel for YangaBet Ladbrokes rolls out omni-channel wallet in the UK Scientific Games install systems for Washington’s Snoqualmie Casino William Hill stake in NYX threatens acquisition by Scientific Games German court upholds federal ban on iGaming Former Gala Coral CEO steps down from Ladbrokes Coral board

GVC-Ladbrokes Coral set to crank up M&A merry-go-round As Kenneth Alexander pulls another deal out of the bag, has he fired the starting pistol on a new wave of industry consolidation?

DEAL

OF THE QUARTER

KENNETH ALEXANDER SHOWS time and time again that he is a master of structuring a deal. With GVC’s agreement to acquire Ladbrokes Coral, he may have surpassed all previous agreements. With the outcome of the government’s Triennial Review of the UK betting industry looming large, it has been structured to take into account any potential outcome. Stakes that players can place on fixed-odds betting terminals (FOBTs) will be reduced from £100, that is for sure. Whether maximum stakes will be simply halved to £50, or slashed as low as £2, remains unclear. The £2 limit is particularly popular among politicians. The Labour, Liberal Democrat and Scottish National Parties all support this new minimum stake, as does the Democratic Unionist Party, which is propping up the Conservative government. Should political pressure prevail and the stakes be slashed to £2, the transaction value will be in the region of £3.1bn. Should the government decide on a higher maximum

Kenneth Alexander

Quote of the Quarter THE QUARTER’S DEALS IN 60 SECONDS If you are a woman, dressed professionally and trying to discuss technology, many still won’t take you seriously or think you are flirting with them” Cristina Turbatu, Girls in Tech Gibraltar (see page 56) 4

GVC’s offer for Ladbrokes Coral was preceded by a smaller deal to snap up online bingo operator and supplier Cozy Games. The deal sees GVC take charge of an additional 120 bingo sites. GVC has also sold its Turkish-facing subsidiaries to Ropso Malta in a deal worth up to €150m, significantly reducing the operator’s exposure to grey markets. Playtech, meanwhile, is stepping up its responsible gambling focus with the acquisition of BetBuddy. BetBuddy provides responsible gambling analytics solutions to gaming operators, including state lotteries, and has worked with Playtech since early 2017 to trial

technology and methodologies to detect at-risk gambling behaviour. Scandinavian gaming companies were busy on the M&A front in Q4 2017. Mr Green acquired Redbet-owner Evoke Gaming in a deal worth up to €8.5m from Bonnier Growth Media, the venture capital arm of Swedish media group Bonnier. Another Stockholm-listed business, Cherry, has agreed to increase its shareholding in affiliate business Game Lounge to 95 per cent. Cherry also exercised an option to increase its stake in virtual sports specialist Highlight Games to 37.5 per cent.


GIQ Q4 2017

Get the latest news from our website

GamingIntelligence.com stake, the deal should be completed for showing the huge benefits of constant evoluaround £3.9bn. tion for iGaming giants. In Ladbrokes Coral’s 2016 financial year, The Stars Group might well reactivate its revenue from FOBTs came in at £802m. So interest in William Hill. It has strengthened the range effectively plans for the removal of its position since the bookmaker’s largest the machines entirely. What remains unclear, shareholder Parvus Asset Management put however, is how many shops may be closed as the brakes on a merger in October 2016. Its five a result of slashing the stakes. Total UK retail objections were Stars’ large debt burden, an revenue for the operator totalled £1.4bn in $870m claim in Kentucky, structural decline 2016. The biggest uncertainty hanging over in the poker market, limited revenue synerthe acquisition is how much – if at all – overgies and limited opportunities for cross-sell. the-counter revenue will hold up without You could argue that four of those perceived the machines. issues are no more. While the Whatever happens, the deal threat of the Kentucky case is quickly moving towards clolingers, Stars has built a £350m Alexander’s deal casino business purely on crosssure. The board of directors for will surely spark the combined business is already sell. It has sports betting in its competitors being populated, with GVC’s Lee sights and a tie-up with Wilinto action. Feldman to serve as chair, and liam Hill would speed up that Alexander as chief executive. process immeasurably. He has shown Ladbrokes Coral’s Paul Bowtell Furthermore, Stars has the that regulatory will be the expanded business’s back-office infrastructure, a uncertainty is no chief financial officer. rejuvenated executive managebarrier to major Alexander and Bowtell will ment team and a governance acquisitions be joined on the management structure that would improve team by Andy Hornby and Shay the muddled decision-making Segev as joint chief operating officers. Hornby of William Hill. It has also pushed poker back will assume responsibility for all retail busiinto growth. In doing so, it has reduced its debt ness in the UK and Europe, as well as digital mountain considerably. marketing. Segev will take charge of technolSimilarly, one wonders if 888’s gaming ogy, product and customer service, and overexpertise might improve the fortunes of see all operational and technology integration. Paddy Power Betfair, which has allowed its The transaction is likely to be finalised casino infrastructure to age and its revenues by the end of the first quarter of 2018, or early in the vertical to flatline. On the surface, a deal in Q2, GVC says. Alexander’s latest deal will makes sense. One can expect such moves, or surely spark competitors into action. Not only similar, by spring 2018. Alexander is showing has he shown that regulatory uncertainty is exactly how much money can be made on this no barrier to major acquisitions but he is also M&A merry-go-round. n

The quarter in numbers M&A

£3.9bn

Maximum outlay for GVC to acquire Ladbrokes Coral

$990m

Sum paid for Big Fish Games by Aristocrat Technologies FINANCE

260%

Rise in Scientific Games’ share price in 2017 (page 103)

$245.6m

New Jersey internet gaming win in 2017

-3%

Paddy Power Betfair online revenue decline in Q3 2017 (page 106)

£515,000

Average basic salary for iGaming CEO ( page 44)

40%

Caliente Interactive’s contribution to Grupo Caliente revenue (page 90) REGULATORY

LeoVegas was another Scandinavian company to cut a deal in Q4, acquiring Royal Panda for a maximum consideration of €120m. Even the Swedish state-owned operators got in on the act. AB Trav och Galopp (ATG) has signed an agreement to acquire Danish online casino and sportsbook operator Ecosys. The deal is dependent on new gaming legislation coming into force in Sweden. Catena Media shows no sign of slowing down its acquisition spree. During Q4 it acquired football news site Squawka; poker comparison site PokerScout; financial services GIQ Q4 REVIEW

affiliate Beyondbits Media and sports betting affiliate Baybets. Heading Down Under, Tatts shareholders voted in favour of being acquired by Tabcorp. Tabcorp completed the sale of its Odyssey Gaming Services machine monitoring subsidiary as a result. Australian casino operator Crown Resorts has agreed to sell its 62 per cent stake in online betting business CrownBet. The majority holding will be sold to an entity associated with other shareholders in CrownBet, including the operator’s management team led by CEO Matthew Tripp, for AUD$150m (€97.3m).

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Number of Colombian iGaming licences issued by Coljuegos

£2.3m

Penalty issued to Gala Interactive for social responsibility failings

$154m

Projections for the Pennsylvanian iGaming market in year one (page 40) 5


S P O N S O RE D E D I TO RI A L SCIENTIFIC GAMES LOTTERY

The next generation of lottery loyalty Over the past nine years, Scientific Games has changed the face of customer loyalty programmes in the gaming industry

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IT’S CHALLENGING TODAY to find a consumer product or service that doesn’t offer some sort of loyalty rewards programme. From health foods to hardware, retail stores use loyalty to drive traffic. And big brands, from shoes to shampoos, use loyalty programmes to stand out from their competition and drive sales. In fact, according to a Harris Interactive Poll performed for Transera, in the US alone there are now over 3.3 billion loyalty programme memberships. That’s approximately 29 programmes per household. Just count how many bar-coded loyalty cards are on your key chain or mobile – or in your wallet. The consumer psychology behind successful loyalty rewards programmes is fascinating and well beyond the scope of this article. But it essentially boils down to motivation. Are your players sufficiently motivated to engage with your loyalty programme on a regular and ongoing basis? Or do they become bored with the programme over time and become inactive? Over the past decade, the lottery industry has slowly embraced the concept of engaging players beyond the moment of purchase. Most lotteries offer some version of a players’ club that enable players to receive news and notifications (e.g. jackpot alerts and new game launches). Some lotteries take it a bit further by creating promotions for players to enter non-winning tickets in second-chance draws. These second-chance promotions can be a valuable component to a lottery’s overall marketing effort, but are usually short-term, since they are typically associated with a specific and finite promotional period. A loyalty rewards programme, by contrast, is an on-going effort that contributes to a lottery’s long-term strategic goals. Scientific Games has innovated loyalty rewards programmes for the lottery industry since 2009. In nine years, we have learned a great deal about what motivates players to join a loyalty programme, stay engaged, and keep coming back. So when we set out to develop our latest loyalty rewards programme, we looked beyond just the lottery space to the broader

world of gaming to see if there were lessons to be learned. And there were several. “We realised that earning points only goes so far in motivating players,” said Amy Hill, vice president, Digital Content Studio at Scientific Games. “There needs to be a more active component to the programme that excites players beyond just watching their points balance grow. We also need a way to modify a programme’s rewards on-the-fly so that we are able to quickly make adjustments that influence player behaviour in a way that aligns with a lottery’s business objectives.” Adam Faust, Scientific Games’ director of product management, explains: “When we looked at what Bally (acquired by Scientific Games in 2014) was doing with its player rewards programme, we saw that their members were far more engaged because they weren’t just accumulating points and banking them – they were using their points to play additional games or participate in some activity in order to win even more points. Essentially, they had moved from earning points to winning points, which is a lot more active and a lot more fun. And that translated to significantly higher engagement rates.”

Bonusing So how do you move from a place where members are focused on earning points to an environment where members are focused on winning points? That’s where bonusing comes in. Bonusing allows players to use their points at various intervals to play for even more points by engaging in certain activities like playing a game on their mobile device or entering a draw. An important component of bonusing is the use of achievement-based thresholds which can be customised to encourage certain behaviours (more on this later). These thresholds are typically easy to reach and offer members the opportunity to engage in some desirable activity like spinning a wheel for the chance to win extra points. What makes these achievementbased thresholds so important is that they keep members engaged with the programme on an


S P O N S O RE D E D I TO RI A L SCIENTIFIC GAMES LOTTERY

on-going basis, versus simply watching their points balance grow over time. Players aren’t rewarded just once after accumulating and exchanging a large number of points, they are continually rewarded and motivated at all levels of participation. This combination of thresholds and bonuses becomes a powerful tool for impacting buying behaviour in a way that supports a lottery’s business objectives. Say, for example, that a lottery wants to drive sales of its lower-price-point instant games. It would simply make $1 and $2 instant games the entry vehicle for these more focused activities, thus driving sales of the $1 and $2 games. In fact, Scientific Games has experienced great success leveraging loyalty rewards to help lotteries drive sales of targeted price points. In 2013, the Georgia Lottery launched a Scientific Games loyalty promotion designed to help boost declining $1 and $2 instant game sales. The promotion offered players a unique combination of second-chance and loyalty rewards. Players earned entries into monthly draws by entering $1 and $2 instant tickets online. More than 18.6 million tickets were entered into the promotion, with 122 millionplus points redeemed by players. In addition to improving $1 instant game sales by seven per cent and $2 instant game sales by nearly one per cent, the promotion helped the lottery boost membership levels in its Players Club by approximately 99,000 members. Even more exciting from a marketing perspective, is that all of this loyalty member activity can be aggregated and tracked in a way that provides enormously valuable insights which can then be used to further support the lottery’s business objectives. Does the data show that female members between the ages of 35-44 respond especially well to a certain offer or are entering a particular game at a higher rate? This kind of information can be used to develop messaging and create content that drives this particular demographic to retail. Are males between the ages of 25-34 entering a draw for a particular event prize (e.g. a concert or GIQ Q4 REVIEW

sporting event) at a higher rate? Why not create It’s all about options a game that features a similar theme to drive Lotteries with successful loyalty rewards prosales among that demographic? grammes achieve consistently high engageAnd demographic segmentation is just ment rates by offering their members a wide the beginning. Scientific Games’ ONE™ variety of options. The Missouri Lottery’s My player segmentation study enables loyalty proLottery® Players Club, for example, has three gramme members to be grouped by motivation different ways to win (Prize Points, Draw as well. That means we not only know Points and Instant Wins) and a number who is buying our products, but of ways for members to spend why. The Acquaintance segthose points. Prize Points ment, for example, has can be spent on digital an affinity for instant downloads, including games, but tends to premusic, eBooks, audio fer lower price points books and software. and seasonal/holiPrize Points can also day tickets. Knowing be used to get couthis, a lottery might pons for discounted offer a special loyalty lot t e r y pr o duc t s rewards programme and gift cards for a r ou nd $ 1 a nd $ 2 popular products and holiday games to see if services such as Amathe number of Acquaintzon, Walmart and Target. ance members grew as a Draw Points can be used to result of the programme, enter draws for concerts, and whether there was an sporting events, merchanincrease in participation dise, vacations, cars, and among existing Acquaintyes, everyone’s favourite Loyalty member activity – lottery tickets and cash.       ance members. Motivacan be tracked in a way tional segmentation goes Remember, every ticket that provides valuable b eyond d e mo g r aph ic that is entered, every point segmentation, enabling that is redeemed, every insights which can lotteries to develop far then be used to further draw that is entered, and deeper relationships with every game that is played support the lottery’s their players. means a database that business objectives “That’s what is so excitgrows ever more robust. ing about our latest loyalty This database provides a rewards platform,” says Jessica Diorio, Scienwealth of information on player behaviour and tific Games’ senior director of planning and motivation that can be used to increase memcustomer engagement. “It’s not a one-size-fitsber engagement, provide a better experience for all programme – we designed it to be flexible players, and, ultimately, grow sales. and customisable so that any promotion a lotSince launching the industry’s first comtery may run aligns exactly with their busiprehensive loyalty rewards programme in ness objectives. A single lottery might have 2009, Scientific Games has supported 14 loyalty two, five or 10 different loyalty rewards prorewards programmes and promotions, nine of motions running at any one time, depending which are currently live. More than 2.1 million on their business objectives. And our platform members have entered tickets totalling more supports this.” than $5.4 billion in retail value. n 7


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

The live betting revolution continues In-play sports betting has led the line in the online gaming industry for the past decade, but now new technological advances are poised to deliver even greater success with fresh demographics, explains Ian Bradley, chief product officer at multi-award-winning provider SBTech IN-PLAY BETTING IS one of the most competitive battlegrounds for bookmakers, with players constantly demanding new ways to enjoy real-time action. Almost 75 per cent of all bets are placed live, delivering between 50 and 80 per cent of online revenue, while a recent player survey showed that the range of in-play options is as important as special offers when it comes to choosing a betting site. Drawing inspiration from across the online sector, and leveraging the power of faster data transmission and analysis, the industry’s top tech suppliers are now redefining the live experience.

Rising to the challenge Offering in-play markets is a highly intensive process. During any given football match, SBTech generates hundreds of thousands of market updates and more than 43,000 price and status updates during the 90 minutes. Push notifications and page-specific data requests must also be handled for more than 60,000 events per month across dozens of sports. And because live betting is driven principally by mobile, it requires features such as live streaming, stats and match trackers to deliver the complete experience, putting additional pressure on infrastructure. The current priority for technology providers is to create more in-play opportunities during short betting sessions. Faster data feeds for quick-fire sports like snooker and darts will soon enable bets on individual shots and throws. Smarter suspension logic, meanwhile, enables in-play markets to be frozen for shorter periods, such as pausing the ‘next scorer’ market when a specific player is about to take a penalty.

Sports and casino convergence In-play betting and casino gaming increasingly go hand in hand, especially for casual players who want instant results. This is where gamification, both through innovative interfaces and novel rewards programmes, comes in. 8

Maximising time on site and LPV requires engaging customers more effectively, offering them timely opportunities on slots and live casino in between their sports bets. SBTechpowered operator Betser, for example, awards points according to the relative risk of each bet, which can then be exchanged for free bets or free spins. Operators in regulated markets are also focused on appealing to younger players who have grown up with social media and P2P gaming. Marrying the different verticals, especially though eSports betting, will therefore be crucial to the long-term success of many operators. The available markets in this new arena are currently very limited, but in the years ahead, we can expect to see an explosion in live eSports betting, with bet types on every imaginable action. However, if it is to become a true mass-market proposition, simpler, more viewer-friendly titles than the likes of League of Legends must take centre stage.

whether a free kick, red or yellow card, corner or dangerous attack. The result of extensive research into live betting behaviour, Action Betting’s machine-learning algorithm is designed to promote appropriate markets without being too intrusive.

Staying on top of the action

Closer control

Tailored betting journeys, built around individual player data, now allow the promotion of specific live betting opportunities based on previous selections and successes. Action Betting, SBTech’s new mobile-first feature, dynamically suggests quick-betting markets when a specific incident occurs,

Online bookies must also provide features that enable players to take ever-greater command of all their activity. Flexible cash-out and bank-my-stake options on both pre-match and live markets are now at the core of most leading offerings. Cash-out accounts for around three per cent of turnover across the sector, and unlocking the value of active bets has long been a goal for operators, allowing players with zero balance to continue their sessions without redepositing. SBTech’s new Add2Bet feature takes the logic a step further – players can now add banker selections to an active bet that’s open for cash -out, creating a new double, treble or acca using the same funds as the new stake. With 2018 set to be a critical year across the iGaming industry, it can’t be overstated that in-play innovation remains the key to achieving success. n

“Operators are focused on appealing to younger players who have grown up with social media and P2P gaming. Marrying different verticals, especially though eSports betting, is therefore crucial” Ian Bradley, SBTech


S P O N S O RE D E D I TO RI A L SPORTING SOLUTIONS

Risk management and reward

Ed Peace, head of commercial at Sporting Solutions, examines how sportsbooks can channel new risk dynamics to drive margins IT’S WELL DOCUMENTED that many operators’ sportsbooks are suffering from margin decline driven by increased competition, higher CPA levels, extensive costs of regulation and the price of content. While new products can enhance revenue in the short-term, many lotteries and operators are faced with a more fundamental question about how to change their operating model to stay competitive and enhance sportsbook contribution to the bottom line. Simplifying the product offering isn’t an option in a personalised, request-a-bet world, and standardisation is only an answer for those operators that are willing to risk market share by following a white-label, me too, sportsbook route. Recent years have seen a significant fragmentation of the sports betting market, with a corresponding growth in outsourced products and services. While the product proposition has exploded – and the operating model of sportsbooks has changed to a degree alongside it – improving risk management as a discipline has been largely overlooked. It remains an internal function because it is viewed as a specialist skill, but processes are often suboptimal as they are reactive, labour intensive and biased towards subjective decision-making. Evolving the way risk is managed is the key driver to growing revenues. While media attention is often directed towards a new product release, it is the overhaul of the backoffice risk management function that will ultimately decide which businesses improve their

“A risk management function should be equally driven by customer welfare and integrity as it is by profit” Ed Peace, Sporting Solutions 10

competitive position in a saturated market. Most importantly, a best-of-breed risk function will ensure that customer welfare, sports integrity, compliance and regulatory adherence are naturally embedded within the dayto-day operations of the business and co-exist with improved profitability. In many ways, a successful risk function should be regarded as a utility, empowering and underpinning the rest of the business. There are three distinct strands to building this. Firstly, core processes need to be automated to both improve business efficiency and provide a seamless consumer experience. Prices should be objectively adjusted for current or potential risk exposure to give the operator the confidence to offer instantaneous, personalised content delivered in real-time. Risk management should be a component that enhances the customer journey, not something that disrupts it. Secondly, risk management needs to

embrace big data and behavioural economics. Automated analytics tooling built to query anonymised customer information provides a basis for objective risk management, allowing for price optimisation based on a specific set of consumers rather than generic market movements. Similarly, understanding where bias is likely to occur in the market (towards teams or results, for example) allows operators to position themselves proactively. Overseeing these automated processes through expert domain knowledge ensures risk management algorithms can both be monitored effectively and improved. Lastly, it is imperative to access a strong risk management culture developed over many years of operating in highly regulated and competitive markets. A risk management function should be equally driven by customer welfare and integrity as it is by profit. The same analytics tooling that can identify market inefficiency for operators should be used to alert for harmful player patterns. Similarly, managing risk in real-time is the only meaningful way to alert on potentially nefarious betting activity. It should be the risk management function that empowers marketing campaigns to ensure a robust and safe sales and service approach.     For many market participants, attaining these levels of operational, cultural and technical excellence is going to be difficult to achieve. Many operators have prioritised different areas of the business ahead of the risk function, and no longer possess the expertise to do it themselves, while new entrants often become too reliant on commoditised content. The ability to outsource the risk function is going to grow in importance. At Sporting Solutions, we have developed our newly launched Risk Management Services to help solve these problems for our partners, and ensure they can evolve their operating model costeffectively. All this while also delivering margin improvement, customer welfare and satisfaction, regulatory adherence and business integrity. n


S P O N S O RE D E D I TO RI A L SCIENTIFIC GAMES

The unified gaming experience How can the different elements used to create a game become a seamless whole that engages players and provides an immersive experience? Tom Wood, chief product officer – B2B at Scientific Games explains the importance of unifying elements in game development

“If maths is the anchor to reality, art is the doorway to a new world. Art and animation also create an opportunity to surprise and engage a player through an immersive experience” Tom Wood, Scientific Games 12

A VIEWER’S ENJOYMENT of a movie is dependent on a variety of factors. Is the story compelling? Are the characters multidimensional? Is each frame artfully executed? How does the music, or lack thereof, make them feel? When any game creator releases a new title, it is their objective to provide each player with a full and holistic experience. Just as when creating a film, a game producer has to consider the unified elements required to make the game a cohesive whole. Every step towards the final product is as much a milestone along the process as it is a cog in the virtual machine that makes the game a final, full and multidimensional journey for the player. The development of a game is the collection of various parts: maths, art, sound, animation, special features, and, of course, the producer who nurtures the game from its infancy all the way to launch. A game that begins as a simple idea, theme or spreadsheet grows into an enjoyable title through every step of development, and the unified product should find its roots in the very elements that led to its conception. Maths serves to anchor a game in reality – determining whether each spin is a win, a loss or a bonus trigger. It is the driver behind random features and the pay-lines in any game. On a much higher level, maths sets the gambling industry apart; it’s actually strategic maths that draws players to their favourite titles time and again, and creates that undeniable rush when the reels spin. If maths is the anchor to reality, art is the doorway to a new world. Art and animation also create an opportunity to surprise and engage a player through an immersive experience. Grass may sway in the wind, or characters may make slight movements in the background. Plus, animations and subtle visual clues give players hints as to when they should pay attention and when to get excited. The entirety of aesthetic execution can bring a game to life and captivate the player. Sound and music create a deeper emotional experience and immersion within the game. Sound can trigger an array of emotions – from anticipation and exhilaration, to serenity and

contentment. It also draws the player deeper into the experience, with music that reflects the game theme and sound effects that match the visuals, diluting the border between the game and reality. Features, bonuses and other gameplay mechanics round out the core pieces of the cohesive player experience. They provide a break from the status quo, serving as mini climactic moments throughout a game’s story arc. Even on non-winning spins, the shift in gameplay is rewarding and suspense contributes to the player journey. It is crucial to remember that simply because a component of the game is strong, it doesn’t automatically fit within the larger whole. For example, the award-winning score for Jaws is undeniably compelling, but that doesn’t mean it should play during the equally compelling final scene in Casablanca. Suppliers need to remember to take a step back and look at the big picture. What wind sound complements how that grass is swaying? What coin shower animation matches the grandeur of that win? Which feature should go here to reinforce aspiration? Perhaps most importantly, how should a player be feeling at this given moment? Every game is only as good as the sum of its parts. The best way for a creator to gauge how a game transports someone? Play it and then ask: is this an experience I’d want to have again? n


Be Informed What do the world’s most successful interactive gaming companies have in common? They have empowered their organisations from the top down with the information they need to succeed in a rapidly evolving market. Ffitifi tifififififitifi tifififi fiti CEO fitififififififififiti fififififi fitifi fififififififitififi fitifitifififititititi fitifitififififi fitififififififiti fifitififififi fififififitifififitififiti fitifi fitififififififi fitifififitifi fifitifififififi fifififitifi fitifififififififitififi fifitifififififi fi titififififitifi fitififififi tifi tifififi fitifi fitifififififififitififi titi fififififififi fitifi fitifififitifitifififi Sfifiti fifi fitifififi fifi fifififififififitififitifififififififitififififitifi fitifi jtifiti fififi fifitifififitififi tifi fitififififififi fifitifififififititifififi fifiti fifififi titi fifififitifi fitifififififififitififi fiti fififififififi fififitifififi tifififitifififi fitifitifififitititifi fifififitifi fitifififififififitififi’fi fitififififififi fififififitifi tifififi fitifi fitififififififi fifi fififiti fifififififitififi titi Dtifi Jtitififi Ffifitifififi

The industry’s leading source of independent news & analysis.


S P O N S O RE D E D I TO RI A L SMP COMPLIANCE ACADEMY

Compliance beyond compare

With the UK Gambling Commission warning its licensees to address deficiencies in money laundering controls and ensuring staff are adequately trained in responsible gaming, Gaming Intelligence speaks to David Hudson of SMP eGaming about the first 12 months of its proprietary training platform, the SMP Compliance Academy

14

SMP EGAMING, THE specialist gaming compliance and regulatory consultancy, launched its SMP Compliance Academy in February 2017. It recently made headlines with the announcement that William Hill had signed up to the platform with a subscription for 1,300 of its digital employees in Gibraltar, the UK and further afield. The SMP Compliance Academy is an interactive management and communication suite allowing for the distribution, management and reporting of compliance and regulatory training content across organisations. It was established in response to the growing regulatory and compliance pressures being placed on licensees by the UK Gambling Commission (UKGC) and from regulators in overseas jurisdictions such as the Isle of Man and Gibraltar. “Throughout its licence conditions, the UKGC makes reference to the requirement for licensees to adequately train their people in their policies, procedures and controls, and to ensure that records are maintained. Failure to provide such training and maintain records is a breach of the licence conditions, and opens operators up to the possibility of fines, sanctions and potential licence reviews,” SMP Partners group business development director David Hudson explains. ‘We believe the standards of compliance within the sector should be beyond compare,” he says. “When we reviewed the market for our licensed client portfolio, it was clear to us that the existing provision of compliance and regulatory training was leaving licensees open to risk, not least because the training content available in the market did not address the very distinct needs of senior executives and operators, but also because there was no referencing back to the licensee’s actual policies and procedures, and very limited reporting and audit capability. “The Compliance Academy addresses these deficiencies. So far, we have received many plaudits, not only for the quality of the training

content, but because the platform provides licensees with a customisable white label solution.” The goal of the Compliance Academy is to make best-in-class compliance training accessible to all. To achieve that, it has moved away from the traditional per-person, per-course model and adopted a per-user monthly subscription that makes all the course content available to all subscribers at the discretion of the company’s administrator. Hudson says: “If the industry is really going to raise the standards of compliance – which it needs to do – staff at all levels need to be trained on regulation and informed about their company’s policies, procedures and controls. To achieve that, we believe training content should be specific to the company and accessible to all those that want to learn and develop their skills and capabilities. “We moved away from the per-course, perperson transactional model, preferring a subscription-based model that creates an on-going, interactive and engaging relationship with the licence holder to ensure that staff are kept up to date with regulatory developments, and course content is always current. Given that our aim is to make content accessible to all, we do not want cost to be an inhibitor and, as such, our business model provides the licensee with a customisable platform with access to our entire course library, on a per-user monthly subscription that is less than the cost of a coffee and a cake!” n

“If the industry is going to raise the standards of compliance, all staff need to be trained on regulation and informed about their company’s policies, procedures and controls” David Hudson, SMP eGaming


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P EO P L E Q4 MOVES

PADDY POWER BETFAIR CEO OVERHAULS EXEC TEAM

IN THE NEWS

NEW PADDY POWER Betfair chief executive officer Peter Jackson stepped into his new office at the beginning of the year and immediately set about revamping his senior management team. Dan Taylor, formerly managing director of the group’s UK and Irish operations, was handed the newly created role of European chief executive officer, with responsibility for Paddy Power and Betfair brands across all channels and geographies outside of the USA and Australia. The operator’s Australian business, Sportsbet, also has a new CEO, with chief commercial officer Barni Evans taking over from Cormac Barry, who is stepping down from the role to pursue a career outside the gaming industry. First priority for the new team will be to complete the integration of the Paddy Power and Betfair sports betting products, having

FANDUEL ENTERS A NEW ERA

Peter Jackson

successfully merged the two companies. Then they can turn their attention to a gaming product that has stagnated in recent years. Paddy Power Betfair is inherently strong but it cannot afford to rest on its laurels.

DAILY FANTASY SPORTS operator FanDuel will begin the second phase of its life following the departure of founders Nigel Eccles and Tom Griffiths, who were chief executive officer and chief product officer respectively. Matt King, who served as FanDuel’s finance chief between 2014 and 2016, will rejoin the company and take a seat on its board as chief execu-

tive. Current CFO Andrew Giancamilli will add the COO’s responsibilities to his finance remit, and Amazon’s Mike Raffensperger has been brought in as marketing chief. Eccles and Griffiths have guided the company through its phenomenal growth curve, from launch in 2009 to the present day. Eccles is planning a new venture in the eSports space, while Griffiths is starting a new AI company.

SVENSSON APPOINTED FULL-TIME CEO AT BETSSON

TABCORP ANNOUNCES POSTMERGER TEAM

NEVADA BRINGS IN NEW REGULATORY CHIEF

STOCKHOLM-LISTED GAMING OPERATOR Betsson has appointed Jesper Svensson as chief executive of its Malta-based operational headquarters on a permanent basis. Svensson has been with the operator since 2013, serving as managing director of Betsson.com and chief commercial officer, before being appointed acting CEO of Betsson Malta following the departure of Ulrik Bengtsson in September. Chairman Pontus Lindwall had temporarily assumed the group CEO role held by Bengtsson, who was group chief executive and CEO of Betsson Malta. Lindwall will hope his partnership with Svensson can end an unusually tumultuous time for the operator. Betsson was once a byword for sound management, but has experienced some growing pains of late with a series Jesper of leadership changes. Svensson

AUSTRALIAN OPERATOR TABCORP Holdings has appointed a new executive leadership team to take charge of the enlarged company following its combination with Tatts Group. The executive team is heavily dominated by senior executives from Tabcorp’s side of the business, led by managing director and chief executive David Attenborough, who has been with the company since April 2010. Damien Johnston continues as chief financial officer, a role he has held since June 2011, while Sean Hughes has been named group general counsel, having joined Tabcorp in July of last year. The team faces an almighty integration job. Leading much of that will be Merryl Dooley, who has been appointed chief people officer. Few know Tabcorp better. Dooley will welcome her new Tatts colleagues to a company she has served since 1990.

NEVADA STATE SENATOR Becky Harris has been appointed the first female chair of the Nevada Gaming Control Board, following the departure of AG Burnett in December. Harris was involved in passing the legislation that enabled online gaming in the state. She is a lawyer by profession and has served in private practice in Nevada for many years. She has a tough act to follow. Burnett oversaw the implementation of iGaming legislation and the ground-breaking liquiditysharing compact with Delaware, which is being extended to New Jersey. He moves into private practice with Nevada-based law firm McDonald Carano after five years in the chairman’s seat and nearly 20 years working in gaming regulation. Burnett was a forward-thinking regulator. He was open to the idea of legalising casino games despite opposition from the smaller casinos. Harris will look to maintain Nevada’s reputation as one of the world’s foremost gaming regulators.

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

GIQ Q4 REVIEW

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F I NA NC E GIQ20 Q3 2012

Reinventing the reels C O LU M N TECHNOLOGY

Robin Harrison

NetEnt’s new slot Finn and the Swirly Spin shows the benefit of a collaborative approach to game development

generated to increase the chance of more wins, while randomly generated features such as Starfall Wilds, Dragon Destroy, Irish Luck and Magic Transform offer additional help. Finn and the Swirly Spin looks and feels unlike anything released before by a top-tier casino supplier. Smaller independent studios have made some strides in innovating with the core slot mechanics, but never a company of NetEnt’s size or means.

Encouraging innovation IT IS EASY to take a developer’s claim of having created “a slot with a difference” with a pinch of salt, but NetEnt’s latest title is likely to make the industry sit up and take notice Finn and the Swirly Spin is a new five-reel, five-row, Irish-themed slot, featuring a new leprechaun mascot. Nothing new there. But the supplier has done away with the traditional spinning reels, replacing them with a spiral path ending with a keyhole in the centre, and a key at the end of the path. “Symbols do not land in the standard way but follow a spiral pattern, with the key symbol starting at the outside corner and with the goal to end in the centre position,” NetEnt chief product officer Henrik Fagerlund explains. Winning patterns of three or more symbols will disappear, creating space for the other symbols to move around the path and for new symbols to enter, allowing the key to move down the path. Once the key reaches the centre it unlocks a free spin mode, ‘the Leprechaun Las Vegas’. Along the way, wilds are 18

The reel layout is certainly eye-catching, but it has gone through an equally unique development process. It is a product of NetEnt’s Lighthouse scheme, a programme through which its employees can share game or feature ideas with development teams, allowing everyone within the business to play a role in what the company creates. Encouraging employees from all over the company to muck in when developing new projects and systems is a major part of NetEnt’s culture. Alongside Lighthouse, it holds regular NetEntX meetings, where staff can present ideas they have developed to their peers, as well as the annual companywide Innovation Week.

Calculated risk Fagerlund is confident that the game will prove a hit, especially after the “considerable” research and development investment in the project. He also believes

the mathematical profiling behind the spiral spin will prove an attraction in itself, considering few companies in the industry are capable of creating such a model. The game will come under a lot of scrutiny. Very few slots deviate from the traditional reels formula. Many would argue that no successful slots have done so. “Developers have been burned in the past from deviating too far from the standard design, which may have put off some suppliers and operators,” says Gary Law, a game designer at NetEnt. That’s not to say that he sees this as a deterrent to innovation: “The key is figuring out what aspects of a slot are the key components and what parts are just creating needless boundaries. “We wi l l li kely see many more attempts at new ideas as developers get better at understanding this point, and I think this has already begun,” he says. “As new players enter the growing market, with different expectations of games, the demand for alternative experiences is increasing.” It is increasing to the extent that NetEnt is already working on developing the game’s spiral spin mechanic further. Encouraged by this increasing acceptance of new formats and concepts, art director Jenny Helström argues that it is reaching a tipping point for the industry. Developers sticking to tried-and-tested formulas may soon find they are not catering to customers’ needs. “[We] can’t view slot players as one homogeneous group that wants to be entertained in the same traditional way,” she says. “We need to expand the ways of entertaining players with different demands, and you don’t do that by playing safe and sticking to the same formula over and over. To be innovative you also need to take risks.” n


T EC H

Q4 LAUNCHES

BIG LAUNCHES Five of the quarter’s major product launches and what they mean for those involved

BETSTARS SPORTSBOOK LIVE IN CZECH REPUBLIC The Stars Group’s sports betting brand BetStars became the first international operator to go online in the regulated Czech Republic iGaming market.

What’s the big idea? BetStars.cz was launched in December, offering odds on more than 20 popular sports and a range of bet types, though licensing restrictions mean the operator’s popular Spin & Bet product cannot be rolled out. The launch further strengthens The Stars Group’s presence in the Czech Republic, with its flagship brand PokerStars the first to secure online poker and casino licences in the market. “The BetStars team have worked very hard to make this a successful launch and we hope customers in the Czech Republic will enjoy the range of betting options available,” said outgoing BetStars managing director Zeno Ossko. GIQ Q4 REVIEW

SBTECH POWERS SKY BET’S GERMAN SPORTSBOOK

KAMBI PARTNERS SOUTH AFRICA’S SUN INTERNATIONAL

Sky Betting & Gaming launched its new sports betting product for the German market in November through a partnership with leading supplier SBTech.

Kambi has struck a deal to provide South African gaming and hospitality business Sun International with a sportsbook product and related services.

What’s the big idea? SBTech was select-

What’s the big idea? Sun International

ed over Sky Bet’s existing sportsbook partner OpenBet for the launch of the site, which offers more than 2,000 bet types across 45 sports and more than 20,000 live events each month. Features popular in its core UK market, including daily odds boosts, cash-out and a bonus of up to 60 per cent on combination bets via the Combi-Bonus feature, have also been rolled out on SkyBet.de. “Germany is a great opportunity for us,” Sky Betting & Gaming chief executive Richard Flint said. “The market is growing year by year and there are loads of passionate sports fans we believe will enjoy our product.”

will migrate its SunBet.co.za sports betting site from a proprietary platform to the Kambi sportsbook, supported by Bede Gaming’s back-end platform. The deal will also see Kambi launch its retail product suite across Sun International’s resort casinos in South Africa, with a roll-out for its retail partners also in the pipeline. “Sun International is one of the largest and most respected gaming companies in South Africa and Latin America, and we are therefore very excited by the potential of this new partnership,” said Kambi chief executive Kristian Nylén.

GAMING INNOVATION GROUP TO SET UP GAMES STUDIO Gaming Innovation Group (GIG) confirmed plans to establish an in-house game development studio which will see the supplier roll out its first titles later this year.

What’s the big idea? GIG Games will be the newest addition to the company’s range of B2B solutions, which it claims will help capture further revenue and achieve cost and business

synergies. Significant technological progress has already been made, with three games currently in production – all are scheduled to launch in Q3. Game development will be scaled up going forward, and the studio hopes to have up to eight titles live by the end of 2018. An aggregator solution will also be launched for operators running on proprietary platforms, allowing them to seamlessly integrate the GIG games.

GVC GOES RUSSIAN WITH BWIN SPORTSBOOK LAUNCH GVC Holdings has rolled out its bwin sportsbook in the Russian iGaming market, after becoming one of the first foreign gaming brands to secure a licence in the country.

What’s the big idea? Powered by GVC’s technology platform, bwin.ru operates under a licence from Digital Betting, a sports betting operator owned by Alexander Mamut, chairman of Russian me d i a g i a nt R a mbler & C o. T he site of fers odds that have been

formulated specifically for Russian customers in order to ensure that bwin.ru can compete with other operators active in the market. “We are pleased to officially announce the launch of bwin in Russia,” said Digital Betting

general director Dmitry Sergeev (pictured). “We have worked extremely hard to adapt the platform in line with the regulatory r e qu i r e m e nt s and we are excited to be live in the market.”


F I NA NC E GIQ20 Q3 2012

Lottoland left bobbing in regulatory storm C O LU M N LOTTERY

Steve Hoare

Changes to regulations in the UK and Australia are forcing Lottoland to adapt its business model. Can it weather the storm? IN NOVEMBER, THE UK government added to the growing regulatory noise around Lottoland when it announced plans to stop all lottery betting operators from accepting bets on EuroMillions draws taking place outside the UK. The UK action follows a torrid period for Lottoland in Australia, where all six Australian states have made moves to – or noises about – banning the operator. The UK ban will be introduced through a new licence condition, which aims to bring non-UK EuroMillions draws in line with the UK draw. Lottoland and its ilk will still be allowed to accept bets on the outcome of other international lotteries such as the Irish Lottery or New York State Lottery, but not domestic draw games. The UK’s Department for Digital, Culture, Media & Sport (DCMS) said that the changes will be made to ensure that EuroMillions draws receive the same level of protection in relation to funds for good causes as those received by The National Lottery. The changes have been made because of a loophole barring betting operators from accepting bets on EuroMillions draws in the UK but allowing them to place bets on the draws in the eight other participating countries. Although 20

each country’s game relates back to a single draw held in Paris, the nine games are technically separate.

The Aussie backlash Down Under, the only state in which Lottoland holds a licence – the Northern Territory – has announced a similar move to that of the UK government. In November, its attorney general announced that Lottoland would be banned from allowing customers to bet on the outcome of Australian lotteries. As in the UK, the operator would still be able to accept bets on international lotteries, which form the bulk of its business. Arguably, the UK and Northern Territory are forcing Lottoland and its fellow lottery betting operators to focus on external, rather than domestic, lotteries – a model many feel it should have adopted from the start. The likelihood is that Lottoland will continue to prosper with a revamped and focused business model, but there will be more stormy waters to navigate. Australian politicians have been getting more and more vociferous in their denunciations of what some are branding “fake lotteries”, “pretend lotteries”, or even “synthetic lotteries”. Tasmania and Western Australia are planning on legislating against Lottoland. If they did so, they would be following in the footsteps of South Australia, which is the only state in which the Gibraltar-based company does not operate.

Incoming taxes While CEO Nigel Birrell has nobly stood up to the critics, Lottoland’s practical actions look like an acceptance of the need to limit its offer to betting on overseas lotteries.

The company offered Australian newsagents the chance to advertise Lottoland in stores in return for a 10 per cent cut of any bets placed by players responding to the ads. The offer was limited to betting on international lotteries. Lottoland has also ramped up its “don’t ban us, tax us” plea. It claims to pay corporate and income tax “just like everybody else in Australia”. As of 1 July 2017, Lottoland also began to pay goods and services taxes. But outside the Northern Territory there are no gambling taxes applicable to lottery betting. That might soon change. South Australia recently introduced a 15 per cent point-of-consumption tax and Western Australia is to do the same. Federal lawmakers are planning a similar scheme, based on the South Australia model. The Australian government said that all states support a national tax except the Northern Territory. However, the government’s proposal is for a tax on horse, harness and greyhound racing, as well as sports and general betting (such as betting on election results or the Academy Awards). This is the South Australia model that the federal government is seeking to copy and, of course, lottery betting is not a legitimate category of gaming in South Australia. The federal government said the point-ofconsumption tax would be accompanied by new rules for online gambling and protections for those betting online. To date, nobody has specifically mentioned licensing for lottery betting operators. Given the fury of lottery operators and politicians, a ban cannot be ruled out. Lottoland will probably weather the storm but the waters will get very choppy. n


LOT T E RY Q4 NEWS

ZEAL LAUNCHES UNICEF LOTTERY IN NORWAY

BIG LOTTERY STORIES This quarter’s lottery lowdown

ZEAL NETWORK’S LOTTOVATE subsidiary launched Norway’s first online-only charitable lottery in November, under a partnership with the UNICEF international children’s charity. UNICEF-lotteriet is expected to generate millions for UNICEF Norway over the nine-year licence term, with 30 per cent of each ticket sold going to the charity. “Every day, for 70 years, UNICEF has been working for the rights of children across the globe to improve their lives. We have made major

progress, but we need to keep doing more,” said UNICEF Norway managing director Camilla Viken. “And that’s why, in UNICEF Norway, we have been thinking about how we generate sustainable income over the long-term. The UNICEF-lotteriet is one of the ways in which we’re doing that; giving Norwegians the chance to support our work and win at the same time.”

IWG BRINGS INSTANT-WIN GAMES TO CANADA

CAMELOT GLOBAL UPDATES SWISS LOTTERY PLATFORM

ONLINE INSTANT-WIN GAMES provider IWG saw its games go live in December with Canada’s Atlantic Lottery Corporation, following an integration with Scientific Games. Twenty new games have already been launched, including Cash Buster, Monopoly and Slingo, with another 20 games set to be released over the next 12 months. “Atlantic Lottery’s entire instant-win catalogue is now made up of our exciting content, reflecting a spread of mechanics and price points, prize levels and styles to appeal to a full lottery player base,” said IWG chief executive Rhydian Fisher. “Following on from our integration with Michigan Lottery, we are continuing to expand our presence in North America and Canada, with more deals lined up in the near future.”

CAMELOT GLOBAL LAUNCHED a new online lottery platform for Switzerland’s Loterie Romande as part of its ongoing efforts to modernise and enhance the lottery’s jeux.loro.ch offering. The updated site features a new range of instant-win games, access to popular lottery games including EuroMillions, Swiss Loto and Loto Express, as well as a sports betting platform, which is being provided by FDJ Gaming Solutions. “Through this successful partnership, we have acquired a new system to enable us to develop an online games site that is fun, modern and secure,” said Loterie Romande CEO Jean-Luc Moner-Banet. “The aim is to fulfil the expectations of a new generation of players who are ever keener on using their mobile devices. We are proud of this new platform, which will continue to evolve regularly to offer players new features.”

LOTTOLAND SIGNS B2B DEAL WITH PLAYTECH BGT SPORTS LOTTOLAND SOLUTIONS HAS agreed an exclusive deal with Playtech BGT Sports (PBS) which will allow UK betting shops to offer lottery betting products to their customers via self-service betting terminals (SSBTs). Venues operated by the likes of Ladbrokes Coral, Paddy Power, Betfred, and Boylesports will allow customers to place bets on the outcome of a range of international lotteries from Lottoland’s retail portfolio of more than 15 products. “Bookmakers have offered bets on lottos for years as part of their numbers betting portfolio and it has been popular on our terminals for some time now, but we believe the innovation and customer service delivered by this partnership will take us a step further to becoming a one-stop shop for all betting operators and bookmakers,” said John Pettit, managing director for UK, Ireland, Asia and Australia at Playtech BGT Sports. GIQ Q4 REVIEW

SCIGAMES LAUNCHES GAMING SYSTEM FOR DANSKE SPIL

“Following on from our integration with Michigan Lottery, we are continuing to expand our presence in North America and Canada” Rhydian Fisher, IWG

SCIENTIFIC GAMES HAS successfully rolled out a new gaming system for Danish state-owned lottery operator Danske Spil. The platform supports Danske Spil’s multi-channel environment which integrates sales across a network of 3,200-retailers, 5,000 supermarket in-lane point-of-sales, as well as mobile and internet. “We knew we were looking for a flexible, channel-agnostic system for our lottery,” said Danske Spil CEO Susanne Mørch Koch. “Our strategy for the lottery market is aggressive and progressive, and a new system is a core part of that strategy. We need our technology platforms to be scalable, so that we can ramp up or down and add hardware components that would not require replacing the entire system. This has been a must-have requirement for our new lottery solution.” 21


GIQ games round-up New games that caught GIQ’s eye in Q4 2017 MICROGAMING RELEASES PHANTOM OF THE OPERA SLOT ISLE OF MAN-BASED supplier Microgaming has released a new branded slot based on the 2004 film adaptation of The Phantom of the Opera. Inspired by the classic Andrew Lloyd Webber operetta, the game is a 243-ways, 5x3-reel slot that features the musical’s worldrenowned scores and the film’s iconic characters. “The Phantom of the Opera is a mesmeric game, combining a new game mechanic with visually stunning artwork and a musical score that is legendary,” says Microgaming games publisher David

Reynolds. “Our talented game studio have truly realised the brand. Working with The Really Useful Group to bring this game to market has been a pleasure; we are excited to see how the game performs in the coming months.”

NETENT GOES IRISH WITH LATEST SLOT

PRAGMATIC PLAY LAUNCHES PANDA’S FORTUNE

NETENT CLAIMED AN industry first with its launch of Finn and the Swirly Spin, a new mobile-first slot featuring spiral reels and builtin gamification features. The Irish-themed game features a new character, Finn the leprechaun, and sees players attempt to move a key down a spiral board to a keyhole in the middle. “This is a really special production from NetEnt,” says chief product officer Henrik Fagerlund. “The game is a visual masterclass from our designers and its new features, which include the brilliant unique spiral spin function, add a fun and never-before-seen element that will leave players thrilled to have met Finn.” (See page 18 for more.)

MALTA-BASED SLOT DEVELOPER Pragmatic Play’s latest slot takes players on a journey through bamboo forests in Panda’s Fortune. The game is a 3x5 video slot, complementing koi fish, bonsai trees and yin and yang symbols with a soothing soundtrack. “We are proud to launch Panda’s Fortune, a game that is both visually charming and expertly modelled, offering a truly unique gameplay experience,” said Catalin Bratosin, head of games production at Pragmatic Play. “Releasing two new games a month throughout the year is one of our key commitments, and this speed to market without any sacrifices in quality is a significant string to our bow.”

22

IWG OFFERS HIGH JACKPOTS FOR ONLINE INSTANT WIN GAMES IWG HAS PARTNERED jackpot risk management specialist RISQ to launch a range of online instant-win games with multi-million-pound jackpots. The games developed through the collaboration will be the first of their kind, using RISQ’s insurance-backed Jackpot RNG solution to offer prize pots of up to £25m. “We’re committed to delivering the best instant-win games that entertain and engage players, and RISQ’s flexibility and escalating limits set them apart,” says IWG CEO Rhydian Fisher. “As the market develops, it’s critical to harness the ability to offer huge jackpots which enhance the playability of our games suite, and this partnership with RISQ secures that future.”

YGGDRASIL SWAPS SLOTS FOR BINGO WITH NEW LAUNCH CASINO GAMES DEVELOPER Yggdrasil Gaming is moving into online bingo with the launch of a new mobile-first product set to be released early this year. The game will encourage social interaction through a mobile-optimised secure-chat function, while allowing operators to incorporate Yggdrasil slots to enable simultaneous gameplay. “We’ve been analysing bingo for some time and have realised there’s exciting potential to innovate in what has become a relatively dormant area of the industry,” says Yggdrasil chief executive Fredrik Elmqvist. “With our inhouse social and gaming expertise, we believe we can offer a fresh dimension to bingo.”


G A M ES

Q4 RELEASES

NEXTGEN LAUNCHES SAMURAI SPLIT NYX GAMING’S INDEPENDENT game development studio NextGen Gaming has launched a new Japanese-themed slot game. Samurai Split is a 25-line, five-reel slot which has gone live for operators on the NYX OGS platform, and features a soundtrack with hip-hop beats and artwork with a Mangainspired twist. “Join a zany Samurai warrior as he dramatically splits symbols and awards your win up to 32 times,” explains NextGen. “Try not to blink, as warrior spins can occur at any time and, if you are lucky, you could be honoured with up to 480 free games.”

PLAY’N GO LAUNCHES SLOT BASED ON DANISH TROLL HUGO PLAY’N GO’S LATEST slot is the second to be based on celebrated Danish animated troll Hugo. It is a five-reel, 10-payline slot, which sees players join Hugo the troll on the hunt for treasure, while evading the evil witch Afskylia. First seen on Danish TV screens in 1990, the children’s TV show Hugo aired in more than 40 countries and spawned a number of video games, books and magazines. “The Hugo franchise and Play’n GO’s original slot have given fans and casino players plenty of joy over the years, and so we’re delighted to return to the troll’s adventures and deliver Hugo to to them,” says Play’n GO CEO Johan Törnqvist. “With enjoyable new features, detailed graphics and prolonged gameplay potential, this title is another strong addition to our games portfolio and we expect it to be even more successful than its predecessor.”

QUICKSPIN LAUNCHES MIGHTY ARTHUR SLOT

GREENTUBE HEADS TO ANCIENT EGYPT IN LATEST RELEASE

PLAYTECH-OWNED SLOTS SPECIALIST Quickspin has brought the legend of King Arthur back to life in its newest slot Mighty Arthur. The game features the mythical king who expands into a 3x3 wild symbol with massive wins on offer. It also features Quickspin’s innovative Achievements Engine, designed to offer players a more entertaining experience. “Mighty Arthur promises to be one of our most magical slots yet, with stunning graphics and an eye-catching storyline which will have widespread appeal,” says Quickspin CEO Daniel Lindberg. “Players across multiple markets will be rewarded with great gameplay and the riches of legend, thanks to Arthur and Merlin.”

NOVOMATIC’S INTERACTIVE DIVISION Greentube unveiled its latest slot with the release of Queen Cleopatra. Based on the legendary queen of ancient Egypt, a powerful ruler who enchanted both Julius Caesar and Mark Antony with her mystical beauty, the game is a five-reel, 10-win-line slot. In the game, players must decipher the hieroglyphs with a magical book and open the gates to the queen’s beautiful treasure chambers. The aim of Queen Cleopatra is to land five matching symbols on one of up to 10 win lines. The book is the scatter symbol and triggers 10 free games if it appears three, four or five times in any reel position.

GIQ Q4 REVIEW

SG’S SWORD OF DESTINY REPURPOSED FOR ONLINE PLAY SCIENTIFIC GAMES HAS released an online version of its popular land-based slot title Sword of Destiny. Based on popular card and role-playing games, it is designed to appeal to a fan base familiar with epic online fantasy games, and has a reel array which varies between 5x3 and 5x5. During the base game, the reels randomly expand upwards, adding two additional rows and 25 new pay lines. “Sword of Destiny was unique as a landbased title for Scientific Games, and we’re excited to bring it to the real-money online space,” says Tom Wood, VP and chief product officer, B2B for SG Interactive. “This game stands out as a premiere portrait-mode title that captures the aura of a high fantasy world and is unlike anything we currently have in our portfolio.”

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THE BIGGEST SOCIAL CASINO NEWS OF THE QUARTER

The state of play in social M&A C O LU M N Sandford Loudon

Sandford Loudon of Oakvale Capital explains why rapid consolidation and larger barriers to entry will be no deterrent to M&A in the social casino space in the coming year

“Gambling and social casino operators are looking beyond the casino vertical in search of complementary demographics and different game genres to continue growth” Sandford Loudon, Oakvale Capital

GIQ Q4 REVIEW

THE LAST TWO years have been significant in terms of social casino M&A. Some of the giants of the sector have been sold, most notably Playtika to a consortium led by China’s Giant (USD$4.4bn), DoubleDown to DoubleU Games ($825m) and Big Fish to Aristocrat Technologies ($990m). This has been accompanied by several smaller, more strategic deals, such as Penn National’s acquisition of Rocket Games for its dominance in classic slots, Scientific Games’ purchase of Spicerack Games for its bingo product, and Gamepoint’s acquisition of Luck Genome to improve its mobile capabilities. Most recent was South Korean-listed operator ME2ON’s acquisition of Chinese social casino developer Zenjoy to diversify into solitaire. Since the inception of the industry there has been approximately $8bn worth of transactions driven by traditional gaming companies wanting to digitalise and leverage existing relevant databases, existing operators extracting synergy around user acquisition, and slot manufacturers looking for a wider audience for their content. The recent big deals are a reflection of an industry that has matured extremely quickly since its advent in 2009, with five operators now generating 60 per cent of the global revenue. It was in 2012 that IGT acquired Doubledown and Caesars acquired Playtika. Both acquirers will look back on these transactions positively. In particular Playtika, which is the number one social casino operator and grew from a 10-person start-up to a highly profitable and growing games company with 1,300 employees, before its $4.4bn sale to the Giantled consortium. Caesars was particularly smart in doing deals on one-year earn-outs, ensuring it shared the upside with the selling entrepreneurs and was clear about the value-add it could bring to sustain growth. Following these deals, the industry looks like it will continue to be dominated by the larger players given rising acquisition costs

and a need for scale. It is no coincidence that those that are successful in the space bring some form of strategic advantage across one of three key pillars – content, distribution and meta-games. I expect to see more M&A over the coming years, with buyers looking to enhance in each of these three areas. There are also clear signs that there are still ways to succeed, as independent operators continue to find profitable growth by unlocking new niches in social casino. Murka, Rocket Games and Huuuge are all fine examples of companies that have managed to scale revenues rapidly by doing things better than the top five operators and succeeding with, and in different, demographics and geographies. There have been a number of transactions recently, including Aristocrat’s acquisition of Plarium. This suggests gambling and social casino operators are looking beyond the casino vertical in search of complementary demographics and different game genres to continue growth. This will spark further transactions in the years to come. Moreover, the buyer landscape is still cashrich and diverse enough to support continued consolidation. For example, South Korean listed social casinos are becoming a greater force, with access to capital, demonstrated by both ME2ON and DoubleU’s recent acquisitions. In terms of valuation at the moment, there are a wide range of multiples being paid for social casino companies, ranging from four times trailing 12-month EBITDA up-front, to the high watermark of Playtika at 13 times EBITDA. Valuations in the space are a function of both fundamental financial indicators such as growth rates, platform split (mobile vs web) and profitability, as well as strategic factors including product focus, from slot type (classic, video slot) through to game type (bingo to solitaire), as well as the quality and size of a studio’s team. Ultimately, markets at this scale and maturity are primed for further consolidation, so I fully expect more big deals this year. n 27


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MAY 15 - 17, 2018 | 2018年5月15-17日 THE VENETIAN MACAO | 澳门威尼斯人


SGI

Q4 NEWS

Zynga boosts card game Aristocrat catches portfolio with $100m deal $990m Big Fish ZYNGA HAS AGREED to acquire the card game studio of Turkish mobile specialist Peak Games for USD$100m. The acquisition will see Zynga add Spades Plus and Gin Rummy Plus, the most popular spades and rummy mobile games in the market, to its existing card game range, which includes the Zynga Poker franchise and Solitaire titles. It will also take ownership of a number of other card titles developed by the studio, including titles popular in Peak Games’ native Turkey, such as Okey Plus. Zynga will pay the $100m acquisition cost in cash. “We’re excited to welcome the talented team behind Peak Games’ mobile card game portfolio to Zynga,” Zynga senior vice president of games Monty Kerr said. “The social card games they’ve developed have broad, evergreen appeal to millions of people around the world, and build on Zynga’s strong foundation as we continue to grow our card portfolio over the long-term.

“We’re excited to welcome the talented team behind Peak Games’ mobile card game portfolio to Zynga” Monty Kerr, Zynga

“When combined with the recent growth of our franchise Zynga Poker and our Solitaire titles, at closing, the addition of Peak Games’ mobile card games will give Zynga the world’s largest portfolio of mobile casual card games,” he added.

AUSTRALIAN GAMING SUPPLIER and social casino operator Aristocrat Leisure has completed its US$990m acquisition of Churchill Downs’ social gaming business Big Fish Games. Aristocrat said that all conditions and requirements for closing the acquisition have now been satisfied, establishing the company as the second largest social casino operator in the world behind Playtika. “The strategic and financial benefits of this acquisition are highly compelling,” said Aristocrat chief executive Trevor Croker. “Big Fish will immediately provide scale across our entire digital platform, and our social casino business will become the second largest social casino publisher globally. “Big Fish’s digital-first social casino content and industry-leading meta-game capability and applications are highly complementary to Aristocrat’s existing and industryleading land-based digital content business. We are excited to work with the Big Fish team to take advantage of the opportunities this combination will create for shareholders and all stakeholders.”

IN BRIEF KamaGames Social casino games developer KamaGames has partnered with Yoozoo Games to launch a new white label social poker title in the Indian market. The new game is based on KamaGames popular Pokerist title, with localisation for the Indian market, and was available for download at the end of last year from the App Store and Google Play.

Playtrex International Boxing Hall of Fame inductee Floyd Mayweather has become the new face of the free-to-play mobile game Wild Poker (pictured). Mayweather has been added into the game, developed by Israeli start-up Playtrex, as a presenter, introducing new hands and offering players tips on how to win. He will also become a playable character, with users able to choose him as an avatar, giving them access to a range of special in-game skills.

High 5 Games Australian games developer Lightning Box has agreed a deal to launch a selection of games on the High 5

GIQ Q4 REVIEW

Casino free-to-play app. The deal marks the first time that High 5 Games has added third-party content to its social casino app, and Lightning Box’s Chilli Gold launched in December 2017. The game is one of five that will be made available for social play exclusively on High 5 Casino, with Silver Pride – known as Silver Lion in Europe – to follow this year.

Scientific Games Tribal gaming operator Osage Casinos has signed a deal to launch Scientific Games’ SG Universe interactive product suite. The Osage Nation-owned operator will roll out the solution across its seven Oklahoma properties, including mobile and desktop apps, as well as the Play4Fun social casino product.

29


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L EG A L

US REGULATION

World regulatory update Gaming Intelligence outlines the latest legal developments in the US and Latin America

UNITED STATES Pennsylvania Governor of Pennsylvania Tom Wolf has signed legislation to authorise a major expansion of gambling, in the process becoming the fourth US state to regulate iGaming. The bill legalises iGaming and iLottery, creates 10 new satellite slot machine locations, permits video game terminals (VGTs) at truck stops, and regulates fantasy sports contests.

New Jersey The governors of New Jersey, Nevada and Delaware, the three US states with a regulated online gaming market, have reached an agreement to pool their online poker liquidity. This will allow New Jersey poker players to compete online against players in Nevada and Delaware for the first time. New Jersey’s State Assembly has approved legislation that would authorise horse racetracks to offer internet gambling on their premises. Introduced by Republican Assemblyman Ronald Dancer in October of last year, the bill would allow racing patrons who hold an internet gaming account to place wagers at running or harness horse racetracks across the state. The racetracks would be required to hold a partnership agreement with an Atlantic City casino, or with a venue’s licensed online gaming affiliate, with these agreements subject to approval by the New Jersey Division of Gaming Enforcement (DGE). New Jersey Senator Raymond Lesniak has unveiled legislation that will enable the state’s licensed iGaming operators to pool liquidity with international jurisdictions. Lesniak’s S3536 seeks to amend New Jersey’s 2013 online gambling law which requires internet gaming equipment to be located within Atlantic City, a requirement that has scuppered previous attempts at international liquidity pooling.

LATIN AMERICA Florida A Florida Senate Committee has approved a bill which aims to classify fantasy sports contests as a game of skill. Senator Dana Young’s bill SB374 states that fantasy sports results are determined by the skill and knowledge of the participants, rather than the performance of a sole team or athlete, making them games of skill that do not fall under the jurisdiction of the Florida Department of Business and Professional Regulation or state gambling laws.

A ban on offshore online gambling operations has come into effect in Uruguay, ahead of a potential re-regulation of the market. The legislation banning unlicensed online gaming was signed into law by the Uruguay president, Tabaré Vázquez, in September 2017 and came into force on 1 January, prohibiting online poker and casino offerings in the country. It also confirms that state-owned lottery operator La Banca de Quinielas is the only authorised provider of sports betting and online lottery games.

Ohio Ohio Governor John Kasich has signed into law a bill to regulate daily fantasy sports (DFS). HB 132, introduced in March 2017, gives the Ohio Casino Control Commission jurisdiction over fantasy sports, and requires all operators to secure a licence. These licences will run for a term of three years, with companies to pay a fee of $30,000, paid in annual instalments of $10,000.

Washington DC Hopes that New Jersey may succeed in overturning the US federal ban on sports betting have been raised. The Supreme Court began hearing the state’s challenge to the Professional and Amateur Sports Protection Act (PASPA) late in 2017. Former US Solicitor General Ted Olson, representing the petitioners, argued that PASPA did not clearly state a federal policy to prohibit sports betting and that the statute was unconstitutional, as it could not be repealed. A final decision in the case is expected later this year.

Pennsylvania Governor Tom Wolf has signed legislation to authorise a major expansion of gambling, in the process becoming the fourth US state to regulate iGaming GIQ Q4 REVIEW

Uruguay

Brazil Hopes for legal online gambling in Brazil have again been raised after the president of the country’s Federal Senate announced that the legislative house will consider the matter, though disagreements over the distribution of gaming taxes are already emerging. Senate President Eunicio Oliveira said that he will include the legalisation and regulation of gambling on the Senate’s plenary agenda, as it looks at ways to generate additional public funds. The Senate will debate PLS 186/2014, a bill drafted by Senator Ciro Nogueira that looks to legalise various forms of online gambling, during the current legislative session. Nogueira’s bill has secured support from Senator Benedito de Lira, who has amended the text to legalise bingo, video bingo, sports and non-sports betting, online casinos, casino resorts and the popular animal-based lottery game Jogo de Bicho for an 18-year period.

Colombia Colombian gambling regulator Coljuegos has published a draft decree which aims to allow licensees to pool poker and exchange betting liquidity internationally. The draft decree also aims to expand the range of available games to include live-dealer roulette, blackjack and baccarat games, virtual sports, keno and online scratchcards. 31


L EG A L

WORLD REGULATION

World regulatory update Gaming Intelligence outlines the latest legal developments in Europe, Asia, Africa and Australia UK An assessment by the UK Gambling Commission (UKGC) of its licensees’ compliance with anti-money laundering and customer interaction regulations has identified failings that could result in five operators losing their licences. Investigations have been launched into 17 operators, with five facing a licence review. The operators in question were found to have failed to carry out effective due diligence on customers, or react when players showed signs of problem gambling. UKGC has also warned licensees to review their terms and conditions relating to bonus offers or risk being charged with breaking consumer protection laws. The regulator said that its ongoing work with the Competition and Markets Authority (CMA) into the use of unfair terms and misleading practices by iGaming operators would see consumer protection efforts stepped up in 2018. Among key issues under scrutiny are deposit restrictions, bonus terms and conditions and breaches of data protection laws.

Italy Italy’s gambling regulator has released an updated blacklist of unlicensed online gaming sites. The blacklist now includes 6,774 domains which the regulator has identified as targeting Italian players without a valid Italian licence. More than 50 new sites were blacklisted in the final month of 2017.

Sweden The Swedish government has unveiled long-awaited new gambling legislation that will authorise private operators to legally offer online gaming services in the country. Licences will be valid for a period of five years, and available for all key product verticals. The legislation was notified to the European Commission on 19 December and is subject to a standstill period expiring 20 March 2018. Sweden aims to open its market on 1 January 2019.

Spain The Spanish Ministry of Finance has confirmed that it will issue new online gaming licences this year. A year-long licensing window will open once the measure is published in the official state gazette. 32

Spain’s gambling regulator la Dirección General de Ordenación del Juego (DGOJ) has launched a new public consultation on a number of amendments to existing controls for gambling advertising. The changes set out in the draft decree are focused on ensuring players are aware of the risk posed by problem gambling, and protecting minors.

Norway Gambling regulator Lotteritilsynet has ordered the country’s banks to cease payments to and from payment processors Trustly and Entercash due to their involvement in online gaming transactions. The regulator ordered the ban after finding evidence that they changed their account numbers in response to an earlier warning to cease gambling transactions between Norwegian players and unlicensed operators.

Hungary The government of Hungary has published draft amendments to the country’s gambling legislation to require payment processors to block financial transactions with unlicensed operators. The payment blocking rules were notified to the European Commission on 15 December and are subject to a standstill period expiring 16 March 2018.

Latvia Live casino suppliers based in Latvia will pay a fixed annual fee of €400,000 to broadcast games from the country, effective from January of this year. The new charge represents something of a step-down by the country’s parliament, which originally proposed a fee of €11,700 per table.

Germany The Federal Administrative Court of Leipzig has ruled that Germany’s prohibition of online casino, scratchcard and poker games is constitutional, despite the ongoing impasse in the awarding of sports betting licences. This has prompted critics of the State Treaty on Gambling to point to the ruling as confirmation of the lack of effective regulatory controls for gambling in the country, renewing calls for an overhaul of gambling laws.

The Netherlands A temporary 1.1 per cent increase in gaming tax in the Netherlands has been approved by the lower house of the country’s parliament, in a bid to recoup costs resulting from the delayed introduction of new iGaming legislation. Gaming tax looks set to rise from 29 per cent to 31.1 per cent, pending the adoption of the country’s new gambling legislation, scheduled for January 2019.

Slovakia Slovakia’s Ministry of Finance has expanded its blacklist of unlicensed online gaming sites. The updated blacklist, which requires internet service providers to block access to the listed sites, now includes 75 domains, with 66 new URLs added and one – 888.com – removed. High-profile operators such as Betsson Group, Kindred Group, William Hill, The Stars Group and Paddy Power Betfair have all had sites banned.


L EG A L

WORLD REGULATION

EU The European Commission (EC) has confirmed that it will drop infringement proceedings relating to online gambling and the treatment of relevant complaints against a number of Member States. The Commission said that cases relating to iGaming were not a high priority, and that member states had ultimate jurisdiction over gambling. The Remote Gambling Association (RGA) and European Gaming and Betting Association (EGBA) have accused the EC of abandoning its responsibilities to the sector by dropping the proceedings.

Belgium The Belgian government has also submitted new gambling advertising to the European Commission. The new laws will ban gambling advertisements during the course of a game, although sports betting operators will be allowed to GIQ Q4 REVIEW

advertise before and after matches. Advertising gambling services within 15 minutes before or after a programme aimed specifically at children will also be prohibited, as will all sports betting advertising prior to 8pm, excluding those before and after sports broadcasts.

Kenya A new 35 per cent tax on all gambling in Kenya has come into force, with the move prompting local operator SportPesa to withdraw from the market and end all sponsorship activity. The operator’s withdrawal from its sponsorship agreements is set to cause a funding crisis for the country’s professional sports teams, which depend heavily on support from SportPesa.

Zimbabwe The government of Zimbabwe has announced an ambitious plan to improve the country’s sports and recreation

infrastructure, which it will finance through a five per cent levy on bookmakers. Under the proposal submitted by finance minister Patrick Chinamasa, bookmakers in Zimbabwe are required to pay five per cent of their gross revenue to the government from 1 January of this year. The government estimates that the country’s bookmakers currently generate US$30m annually from sports betting.

Australia Radio commercials relating to gambling will be banned from airing during daytime sports broadcasts under new proposals drawn up by the industry body for commercial radio broadcasters in Australia. Under the new proposals from Commercial Radio Australia, which are open to public consultation, commercials relating to betting and gambling during live sports events will be prohibited between the hours of 5am and 8.30pm. 33


ExCeL London, UK 6-8 February 2018

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L EG A L

EUROPEAN REGULATION

ASK THE LAWYER

European data protection regulations Dr Wulf Hambach and Dr Stefanie Fuchs from Hambach & Hambach explain the impact of the new European General Data Protection Regulation IN 2015, AFTER years of back-and-forth negotiations, the European Commission reached an agreement on the text of the new European General Data Protection Regulation (GDPR), replacing the out-of-date Data Protection Directive adopted in 1995. The aim of the GDPR is to unify data protection laws across EU member states and place greater emphasis on accountability. Although many of its key points are similar to those currently in place, the new law has some far reaching and more meaningful implications. Coming into force on 25 May, the new regime is set to have a significant impact on the online gambling industry. One of the most notable differences, which has raised eyebrows, is the level of fines that can be imposed on those who breach their obligations. Under the new regulation, businesses can face fines of up to four per cent of their global annual turnover. The reform also states that companies will be obliged to provide documented evidence of compliance. This means ensuring that members of management and organisational teams examine how they organise themselves around data management. How a company collects, stores, manages and uses personal data will have a direct impact on the structure of the organisation. Requirements under the new regime include an obligation to designate a data protection officer, broader rights for individuals such as the “right to be forgotten” and data portability, as well as stricter standards for obtaining valid consent and customer profiling requirements. This will be the first time many of these gambling companies are required to produce documented evidence of compliance or appoint a data protection officer. All organisations headquartered in the EU will be impacted by the new GDPR. GIQ Q4 REVIEW

The new law will also apply to companies outside the EU, which provide products and services to customers based within EU borders, and to companies that monitor the behaviour of EU citizens. Under the new scheme, EU authorities can take enforcement action against gambling operators based outside the EU but promoting their services in EU jurisdictions. Under existing legislation, many service providers are not directly accountable for data protection infringements. This will no longer be the case under the GDPR, with data processors being held directly accountable for their responsibilities. One of the reasons behind the introduction of the GDPR is the misuse of personal data information by multinational corporations such as Facebook. While much of the attention has so far focused upon the possible fines that could be levied against companies, a potentially greater threat is the impact a breach could have on an organisation’s public image. The impact of image damage is much higher with the GDPR than under the current legislation, as the GDPR imposes stricter reporting obligations in cases of infringements of personal data. In addition, individuals must be informed when their rights and freedoms are at risk.

Exactly how GDPR will be enforced remains uncertain, and many companies are unsure how best to put new compliance processes into place

It is unclear how data infringement offences will affect a business’ image, but once a breach becomes public the damage will likely be critical. The goal of the new GDPR is to modernise the law and provide a higher level of safety for consumers. However, exactly how GDPR will be enforced remains uncertain, and many companies are unsure how best to put new compliance processes into place. Gambling companies have spent much time and money over the past few years setting up sophisticated systems to gather and process data on their customers. They are now faced with a race against time to ensure these processes are compliant with the new legislation. This is a major challenge for the industry, and will require significant planning to ensure a smooth transition. The penalties for failing to comply should provide ample motivation for operators to place GDPR compliance high on their list of priorities for 2018, but certainly some will be caught short. All the indications are that there will be zero tolerance for breaches, so those who do not suitably prepare will have to face the consequences. n 35


THE YEAR AHEAD SOCIAL RESPONSIBILITY

Playing it safe The debate about social responsibility in gaming has only intensified over the past year, leading to calls for tighter regulations. Is the industry doing enough to address its failings? By Robin Harrison SAVVY OPERATORS HAVE learnt that a sustainable business is a good business, and the results of their efforts are beginning to show. Others still have a long way to go. The past year saw anti-gambling campaigners renew their attacks with a vitriol and sense of purpose not seen before in this century, and many operators have been slow to react. The warning signs were all there. Late in 2016 the UK Competition and Markets Authority launched its investigation into gambling terms and bonus offers, with dire pronouncements of what would befall those who continued to mislead players, intentionally or not. This prompted a lot of discussion about social responsibility over the past year and put pressure on operators to do more to protect their players. But beyond a select few, what are operators actually doing? There are companies whose efforts to ramp up player protection efforts deserve praise (see page 82). Kindred Group, Sky Betting & Gaming, Mr Green and The Stars Group all

2018AHEAD

appear to do more than most. But at the same time that the industry’s controls improved, people’s expectations of responsible controls have also moved on, considerably.

Unhealthy habits Some simply haven’t moved on from the promotions that encourage unsustainably high spending. One well-known UK online bookmaker offers new players a £1,000 sign-up bonus, broken into a number of stages. The bonus is subject to a 50-times playthrough requirement. Different products contribute different percentages. For example, table games contribute eight per cent, so if a player wagers £100 on roulette, they will have unlocked £8 of their bonus money. If the full bonus sum is to be unlocked, players must gamble £50,000 in total. Furthermore, the welcome bonus is valid for just seven days from the player’s new account being registered. If they reduce the sum of each stake they place by more than 60 per cent, the bonus is void. The offer terms and conditions end by saying the operator in question “considers all the above terms to be fair”.

Another operator – one that has boasted of simplifying the bonusing process and claimed to value transparency in its offers – expects users to gamble £3,500 to receive a £100 reward. That is essentially a 2.8 per cent rebate on their spend, which is not bad, but the average recreational customer being targeted is unlikely to want to spend £3,500 in a week gambling online. This then raises questions about an operator’s commitment to responsible gambling. Does it fit with your responsible gambling policy to encourage new players to spend large sums of money in a short space of time?

Increasing Transparency There are others who say that they have increased transparency about the payouts of their games and advertise this as one of their responsible controls. The Return to Player (RTP) percentages listed can range between 90-something per cent to over 100 per cent. What does that tell me as a new player? If you read and click for long enough you can find an explanation for the RTP, but it doesn’t feel like a transparent gaming experience.

THE YEAR

36

LeoSafePlay


THE YEAR AHEAD SOCIAL RESPONSIBILITY

Safer play There are signs of progress on the player protection front. A number of operators have integrated solutions such as PlayCheck into games, allowing players to click on an icon and immediately see how much they have spent and how long they have been playing. Others have made efforts to make their responsible gambling resources more accessible – though in many cases will still offer odds or games alongside advice on how customers can better control their gambling. LeoVegas’ LeoSafePlay is one of the more interesting attempts to help players rein in bad habits, operating on the principle that at-risk players should “get out of the casino”. LeoSafePlay is a dedicated destination site for responsible gambling resources. The logic is that players should be able to access the information on responsible gambling, without any temptation to gamble. Cynics might say that this avoids having social responsibility controls affect gameplay, but the operator does make the same tools available on its gaming site. “We believe it’s more accessible for relatives and friends to find information on a separate site,” says Rikard Ljungman, chief commercial officer at LeoVegas. “In the long term, we would love to rank high on search terms related to responsible gaming to provide help to an audience outside of our core customer group.” LeoVegas is also honest about why it wants to protect customers. It protects revenue: “In many cases, gaming addiction actually means you are playing above your limits, and eventually reach the point where you can no longer play, so the customer is lost forever,” Ljungman says. He admits this focus on sustainable play may see the company miss out on some short-term highspenders, but believes it can create profitable long-term relationships .

Pointing out the problem This is also true of Mr Green’s new sportsbook which is powered by the Kambi platform and utilises a solution that uses customer data to track and understand individuals’ playing habits. Bettorlogic’s product allows Mr Green to tailor each customer’s homepage based on their personal preferences. They register and see a page of the most popular markets and sports in their geographical location. As they place bets and view markets, the homepage evolves to feature their preferences. 38

“In the long term, we would love to rank high on search terms related to responsible gaming” Rikard Ljungman, LeoVegas

This tracking has a second use; by identifying activity patterns, it allows the operator to better monitor player activity and quickly spot and assess changes to play patterns. “This ties in with [Mr Green’s responsible gambling tool] Green Gaming, as we can identify someone who may have a problem, and gives the opportunity to engage with them or restrict their activity when required,” Bettorlogic chief executive Andrew Dagnall explains. “We can also encourage them to return to old betting patterns, when they were betting for entertainment rather than to chase losses. “When people are chasing their losses, they increase the number of bets they have. Their win percentage basically hasn’t delivered, and they’ll be convinced they just need to win one bet and everything will be fine. We need to make clear to them that it’s a ridiculous strategy.” This is where Green Gaming comes in. Mr Green requires newly-registered players to fill out a survey on what they believe their gambling habits to be. This can be crossreferenced with THE YEAR general player

AHEAD

behaviour, and used to alert the operator – and player – to changes in their habits. The operator can view spending and activity levels, and choose to share these with customers, adding in a crucial sanity check to help lead players away from unhealthy patterns of play. “It’s a case of educating people of the realities, and of how to get enjoyment from betting. Bettors that get out of control are not enjoying the process,” Dagnall says. “Just to be able to access a few sensible ground rules can help.” By refining player monitoring the solution has a secondary use, helping identify the percentage of savvy bettors that are mistakenly flagged as problem gamblers and have their accounts restricted. Monitoring and reacting to problem gambling remains an inexact science. Kindred Group’s Player Safety Early Detection System (PSE-DS) has led an industry shift towards detection and early intervention, putting the onus on the operator to identify and weed out problem behaviour. However some punters have access to their accounts restricted when there is no real evidence of a problem. Using the data gathered from Bettorlogic, Mr Green can choose to monitor an account for which activity increases, or bets are being placed at unusual times. It can then check this against past behaviour to identify patterns of increasing or slowing activity. “If you know your customers, you can run more effective risk management,” Dagnall argues. “You can gauge whether someone is an astute bettor or whether they are simply gambling more, rather than seeing all bets placed at certain times as a sign of at-risk behaviour.” Others are looking to follow suit. Playtech acquired analytics specialist BetBuddy in October, its products to be used to develop new technology and methodologies to detect at-risk gambling behaviour. Furthermore, Mr Green is confident about the effectiveness of the Green Gaming solution. It brought in chartered psychologist Dr Richard Wood, an expert in gambling behaviour, to evaluate how effective the solution is, and plans to release his final report to the industry. However, the fact that heavily complex and misleading promotions and features are still the norm suggests the industry has a lot more to learn about social responsibility in 2018. Mr Green CEO Jesper Kärrbrink was honest last year when he admitted the company had lost its focus on responsible gambling under its previous management. The majority of other gaming CEOs would not dare make such a pronouncement, which hardly bodes well for the industry at large. n


Opening

2018AHEAD THE YEAR

40

WHEN WE LOOK ahead to the opening of new markets, it seems as though we are in for a busy period. The Netherlands, Sweden and Switzerland are cranking through the legislative gears. All have promised re-regulation. However, this is a long, slow process. The Dutch gambling regulator Kansspelautoriteit has said it is preparing for the country’s new Gaming Act to come into force on 1 October 2018, subject to the adoption of secondary regulations, with the first licences to be issued by 1 April 2019. Switzerland’s new gambling act is due to come into force in January 2019. However, political organisation the Jungen Grünen

has secured enough public support to force a national referendum on whether the legislation should be enacted. The legislation has been doing the rounds in draft form since 2014, so maybe we shouldn’t hold our breath waiting for its enactment. The new Swedish Gambling Act is also due to come into force on 1 January 2019. The regulator has insisted the market will open at this time, even if it is forced to issue temporary authorisations to meet the deadline. There are huge decisions to be taken over the future of government monopoly Svenska Spel, which could affect the wider market. The framework is now in place and has been notified to the European Commission. Nordic operators have been preparing for re-regulation for a while and have backed this up with acquisitions to reinforce their positions. The Swedish government and


R EG U L AT I O N NEW MARKETS

soon

The Netherlands and Sweden might not re-regulate for another year or two, but the US market is hotting up, writes Steve Hoare

“If there is one thing the years from 2013 to 2017 have taught us, it is that the US is complicated and it is binary – either something happens or it doesn’t” Yaniv Sherman, 888

and signed the state’s own iGaming act. For business development directors and their colleagues in legal and compliance teams, Pennsylvania is the only new market worth worrying about right now. “If there is one thing that the years from 2013 to 2017 have taught us,” says 888’s head of commercial development, Yaniv Sherman, “it is that the US is incredibly complicated and it is binary – either something happens or it doesn’t. And if it happens, it happens very quickly.”

How much is it worth?

the country’s regulatory body the Lotteriinspektionen are facing a busy 2018. Just five years ago, anyone who suggested that the US was the most likely source of a new regulated market would have been laughed out of the building. Since the passing of the Unlawful Internet Gambling Enforcement Act in 2006, we had been promised legislative progress on so many occasions, only to have hopes dashed. Chief executives would shake their heads and state clearly that they would not be basing any business plans on the prospect of a liberalised US market. That changed in 2013 when New Jersey Governor Chris Christie signed the state’s Internet Gambling Act into law. That has not exactly opened the floodgates, but four years on, Governor of Pennsylvania Tom Wolf has finally followed Christie’s lead GIQ Q4 REVIEW

The exact timetable of Pennsylvania’s rollout was unclear at the time of going to press. But if it is anything near as proficient as New Jersey, which moved swiftly from the governor’s signature to a live market in less than 12 months, then preparations should be made. Before then a few things need to be sorted out. The bill leaves the Pennsylvania Gaming Control Board a fair bit of leeway when it comes to secondary regulations. Of primary importance to potential market entrants is exactly who will be allowed in. There are 36 licences available and separate licences are needed for casino games, slots and poker. From information available in the legislation signed into law by Pennsylvania Governor Tom Wolf, it seems land-based casino operators will have the opportunity to acquire all three licences for $10m during the first 90 days of the licensing process. There are 12 landbased operators in Pennsylvania, although it would be a big surprise if Sheldon Adelson’s Las Vegas Sands applied for a licence (as Adel-

son has been iGaming’s fiercest opponent). If any licences remain after the first 120 days of licensing (and the figures above suggest that might just be three), then “other licensed entities” will be allowed to apply for a licence at $4m each. It is not exactly clear on the definition of “other licensed entities”. Does this mean US casinos licensed in other states, or could licensed online operators apply? Such are the details that need to be thrashed out. The cost of the licences explains the state’s prediction of first year revenues of $239m for the state budget. The 11 local casinos could, in theory, account for $110m in licensing fees. (Although whether operators such as Rush Street Gaming, which runs two PA casinos, would or should take six licences is debatable.) It is predicting tax income of $100m a year thereafter, which, like Governor Christie’s outlandish predictions back in 2012, is a bit of a stretch. In March 2012, Christie predicted that online gaming would generate $180m in tax revenue, which would have meant gross gaming yield of around three-quarters of a billion dollars. He was justly ridiculed. When the state budget was signed into law in July of the same year, this had been revised down to $160m. By the time the iGaming bill was passed, that forecast was whittled down to just $34m for the fiscal year ending 30 June 2014. Christie was playing politics. In reality, New Jersey reaped $49.9m in taxes from gross gaming yield of $196.9m in 2016. While Pennsylvania is proposing a higher rate of tax, it would be surprising if it could double New Jersey’s tax 41


R EG U L AT I O N NEW MARKETS

intake. When it comes to market predictions, it is best to ask statisticians and analysts rather than politicians. Back in 2010, iGaming lobby group iMega engaged economics consultants Econsult Solutions to make some predictions. The market has matured over the course of four years and its predictions seem pretty accurate, despite the fact it could have had no idea of the final tax rate when it made the predictions. NEW JERSEY iGAMING TAX REVENUE Econsult prediction 2010

NJ actual 2016

GGY   

$210-250m                      

$196.9m

Jobs  

1,586-1,903                 

1,259

Wages  

$71-86m                             

$77m

Taxes    

$47-55m                             

$49.9m

Source: Econsult/iDEA

After Governor Wolf signed the bill, Cannacord Genuity analyst Simon French quoted predictions of $154m gross gaming revenue in year one, rising to $275m in year five. Those sorts of figures should not be unattainable. New Jersey will have added about $90m to its first-year revenues of $130m by the end of 2017. Pennsylvania is a larger state. It has 12.8 million inhabitants, while New Jersey has nine million. It also has two major metropolitan areas in the shape of Pittsburgh and Philadelphia. Looking further afield, in five years the Danish market has grown from around $138m in 2012 to $498m (including $225m from sports betting) in 2016. However, Denmark did not restrict the number of licences it handed out. All in all, French’s figures seem more reliable than the politicians’ hopeful punts.

The playing field As Sherman points out, when change comes, it comes fast. Pennsylvania has been considered the ‘next state to legalise iGaming’ since New Jersey launched in 2013, but when the governor’s signature came, it was almost unexpected, as the final legislation was rushed through to help ease the state budget. Some of the state’s operators have been preparing for this moment for years. Penn National Gaming hired experienced iGaming executive Chris Sheffield as managing director of its Penn Interactive Ventures arm at the beginning of 2015. It has been 42

focusing mainly on social gaming through a partnership with Scientific Games and its own acquisition of Rocket Games. It would be a surprise if it was not ready come launch day. Rush Street Gaming, which runs the Sugarhouse Casino in Philadelphia and the Rivers Casino in Pittsburgh, launched its interactive arm way back in 2012. It also operates casinos in Illinois and New York, which are states mooted to follow Pennsylvania in the not-too-distant future. It launched a social casino for Sugarhouse in 2015 and followed that a year later with a real-money site for Sugarhouse in New Jersey (utilising Golden Nugget’s licence). It, too, should be ready for action come launch day. Caesars has a casino in Pennsylvania and the company has a contract with 888 to operate its WSOP sites across the US. 888 has already done so in Nevada and New Jersey, and it also operates the HarrahsCasino.com brand in NJ, which would seem to be a pertinent brand for its Pennsylvania property – Harrah’s Philadelphia Casino and Racetrack. However, Caesars chose first Amaya and then NYX for its CaesarsCasino.com site in New Jersey. All these decisions were taken under previous management. Caesars has undergone a huge restructuring since then and its new management team will have its own ideas. Whatever partnership it chooses, Caesars will have plans for the new state. Connecticut-based Mohegan Tribal Gaming Authority, which operates Atlantic City’s Resorts Casino and Mohegan Sun at Pocono Downs in upstate Pennsylvania, also has some online experience. Resorts has an agreement with PokerStars for a New Jersey poker site but the contract is with the Resorts management team run by Morris Bailey, and not the operator Mohegan. Likewise, Resorts has a casino site powered by NYX. Mohegan, however, is a member of Scientific Games’ Play4Fun social casino network, and it also turned to NYX for its own MoheganSunCasino.com, which is another skin operating under Resorts’ licence. The last Pennsylvania operator with an online presence is Parx Casino, which has a social casino powered by GAN. This also has an exclusive contract to supply a real-money gaming platform when regulation allows. This is the only internet gaming contract announced by a Pennsylvania casino to date.

There are not many viable options available for omni-channel sports betting in the US

Preparing for launch This is the competitive terrain that market participants will be entering once secondary regulations have been settled upon. If New Jersey tells us anything, it is that getting the product right is more important than a quick entry. Golden Nugget, for example, started late but has shot to the top of the market. NJ OPERATORS GROSS GAMING REVENUE Operator

Full Year GGR 2017

Golden Nugget

$68.6m

Borgata

$48.5m

Caesars

$43.0m

Resorts

$42.9m

Tropicana

$42.6m

Source: New Jersey Division of Gaming Enforcement

Golden Nugget stands out from the other New Jersey operators in one other aspect: it is the only operator with an in-house team to run its interactive operations. In that respect, Penn National and Rush Street Gaming could be seen to be following a similar model. Indeed, Penn is the only operator to have invested significant funds in its own digital operation, Rocket Games – the social casino it acquired for $60m in 2016. Penn also has an agreement with Sportech Racing and Digital


R EG U L AT I O N NEW MARKETS

to power its online and mobile pari-mutuel betting offerings at its racetracks and offtrack betting locations across the States. If you talk to any iGaming executive with an interest in the US market, they will say that forthcoming bills in California, Illinois, Michigan and New York are of interest. However it is unlikely that any one of these jurisdictions could get up and running before the likes of Netherlands, Sweden or Switzerland. The opening of New Jersey’s iGaming market was followed by enthusiastic predictions about which states would come next, but it is only in 2018 that another is set to follow. However, it is the prospect of sports betting being rolled out across the US that has really got people buzzing with excitement. “Sports betting will open the floodgates. If it happens, it will be a very big thing. Sport is entertainment and it is not just casinos that will be interested,” says Sherman at 888. If the Supreme Court decides in favour of New Jersey, a lot of pieces still need to fit into place before legalised sports betting will be a reality in the US. However, such are the potential riches on offer, and land-based casinos across the country are already scoping out their options. European-based consultants have suddenly found themselves inundated with work from US operators assessing the best means of rolling out sportsbook GIQ Q4 REVIEW

technologies in their properties and online. Scientific Games has been an early mover with its CAD$775m bid to acquire NYX Gaming Group. The immediate boon of the deal for SG is the NYX online platform, which supports four clients in New Jersey (Caesars, Golden Nugget, Resorts and Mohegan Sun). At least three of those will want a slice of the Pennsylvania market if they can get it. SG also has a number of lottery clients in the US and beyond, who will need an online back office at some stage. The sports betting technology is perhaps the cherry on the cake. And it is why they fought so hard to complete the deal. Simply put, there are not that many more viable options available for good omni-channel sports betting technology. “More and more operators want to own a sportsbook,” says Oakvale Capital vice president Sandford Loudon, “but it is very, very tricky for a US business to buy one.” “Sports betting operators want to own their technology so they can control their product roadmap,” Loudon explains. “It is challenging for US companies to find a target that fulfils all their criteria, from valuation through to profitablity to compliance, due to a scarcity of reasonably-priced quality assets.” Furthermore, US buyers do not want to be saddled with a product that might not be used for several years. Betsson, for example, acquired the Dutch-facing Kroon and Oranje Casino brands in 2014 with the expectation that the Netherlands market would be opening in 2015. As previously noted, they are still waiting. While Betsson is continuing to make revenue in the market, it had asked the European Commission to open infringement proceedings against the Dutch government, only for the Commission to close such gambling-related cases. This is the sort of hassle that a buyer can do without. US buyers have made mistakes before. Bally Technologies bought the unheralded Chili Gaming platform back in 2012, before realising that it was not really fit for purpose. It needed a huge amount of work to make it serviceable. It was sold to Golden Nugget in New Jersey, which replaced it with NYX at the earliest possible opportunity. Scientific Games, which acquired Bally in 2014, is now prepared to spend CAD$775m correcting the mistake via the acquisition of NYX. That sort of error costs people jobs. There is also the danger that European technology providers completely underestimate the challenge of the US market. “Very few European suppliers are ready for the US,” an experienced technology consultant suggests. “They will need a completely different product to what they offer in current markets.”

Four years on from New Jersey’s Internet Gambling Act, Governor of Pennsylvania Tom Wolf has finally followed Christie’s lead and signed the state’s own iGaming act This is where the bigger suppliers might well come into play. IGT launched a new sports betting app for 10 MGM sportsbooks along the Las Vegas Strip last year. Through previous acquisitions of Finsoft and Lottomatica it has the technology, and although it is old, the MGM app suggests they are capable of updating it. One of the few other suppliers with technology that is capable of supporting an omnichannel sportsbook is Playtech. Europe’s leading gaming technology supplier has been absent from the US market since binning its costly SciPlay joint venture with Scientific Games in 2012. Chief executive Mor Weizer did not see enough potential revenue from the US in the immediate future back then. However, Weizer’s presence at the G2E show in Las Vegas in 2017 suggests he might have changed his mind. Furthermore, every analyst you ask will tell you that former majority owner Teddy Sagi has been winding down his stake in Playtech, easing the licensing path with US regulators. The Playtech BGT Sports solution is a genuine omni-channel product and Playtech has the resources to make it US-ready. Playtech has had a very quiet 2017. It was even forced to issue a profit warning, which is completely out of character. However, if it is winding up for a crack at the US market, SciGames and IGT might have a real competitor. n 43


Executive Salary Survey The Gaming Intelligence

Compiled in partnership with

Gaming Intelligence provides the first-ever breakdown of executive salaries across the iGaming industry


SA L A RY S U RV EY RECRUITMENT

HOW DOES SALARY FIT INTO THE RECRUITMENT PROCESS? Salaries are the deal clincher in any recruitment campaign, but they are not the motivation behind most job moves, says Odgers Berndtson head of betting and gaming, Andrew Bulloss THE BETTING AND gaming industry is becoming more and more attractive to individuals from other sectors, but it can still be a hard sell for recruitment professionals. There will always be some people who do not want to join the industry due to moral objections. However, the toxic media environment that has grown to a crescendo over the past two years has narrowed the pool of available talent further. “If people have worked in other regulated industries such as financial services or oil and gas, then they are already tarnished,” jokes Andrew Bulloss. Those individuals are used to unfavourable media headlines and can probably guess that the truth is more nuanced than the headlines would suggest. Blanket unimaginative television advertising and threatened curbs are a turn-off for some marketing people, but others will view this as a challenge. “People will see amazing brands and believe they can do something with them. It is a challenge to take those brands and change the narrative around them,” says Bulloss. The challenge of recruitment is generally left unspoken during conversations about media management and responsible gaming, but it is a nasty by-product of the current environment. There are no silver bullets to solve this. For the recruiter it means widening the net. Despite these challenges, the betting and gaming industry definitely has its attractions. “It is international, it is data-led, it is highly competitive and it is technology-led,” says Bulloss. “It is a very commercial industry. Some would say it’s not innovative but I disagree. There are some great brains in the industry.” All of these are big hooks for people working outside betting and gaming. The sector also pays well. According to Bulloss’s colleague Michael Drew, head of the technology practice at Odgers, the chief executive at a big technology company will 45


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SA L A RY S U RV EY RECRUITMENT

earn an average of £450,000 a year, with a 75 opinion is instantly important. “Being seen per cent bonus (see page 49). These figures can as the expert can play to people’s egos,” rise to well over £650,000 and over 100 per cent says Bulloss. “However, summarising peorespectively. All of this compares favourably ple’s motivation is difficult because it’s with our survey, which found that the average so personal.” gaming industry CEO earns £515,000, with a Bulloss says there is a problem of some 153 per cent bonus. The CEOs of growing tech people never really being accepted after comcompanies come in between £200,000 and ing into the industry from outside. There are £400,000, with bonuses ranging from 50 to 100+ some that want to look outside the industry per cent of salary. and learn from other sectors, but there are People are attracted to working with some others who think they have nothing to learn. of the big listed companies, but might shy away There are challenges for those entering from the smaller operators in grey markets, the industry from elsewhere, he continues. which look especially dubious to those on Firstly, people need to acclimatise to the pace the outside. of the industry; secondly, they need to get “Listed companies give an added used to the nuances and intricacies level of acceptability, credibilof the data and KPIs, and what ity and transparency, which to look for; and lastly, it’s getis important to people,” ting the ear of your colsays Bulloss. leagues – even your direct Recruiting for tierboss sometimes. one listed operators is Bulloss believes a double-edged sword, that attitudes need though. Once organisato change, because tions become too big, peorecruiting from outside ple get lost in the machine is becoming increasand start wondering how ingly necessary. He says they can add value. that in the last year there “Accountability and freehave been a lot of relatively dom to innovate as much as you senior individuals leaving the can are two of the biggest sector. They have had 10 years motivations behind a move,” The chief executive of being hit over the head by at a big technology says Bulloss. regulations, they have a nice litHe will often hear execu- company will earn an tle payout and a 12-month nonaverage of tives of large listed operators compete period. But they are telling him they would not move not going to take a year’s holito a rival. They would prefer day, so they are looking outside a startup or a new challenge the industry. outside the industry. This with a “I wouldn’t quite call it an could become a problem for exodus, but there are a lot of the industry, as consolidation people at the top who are movmakes the already big bigger ing out of the sector and their and bigger. Or it could become a bonus experience is not necessarily vicious circle as the hungry and being replaced at mid-level or innovative leave for startups, senior management level,” says which are eventually gobbled Bulloss. up by larger operators. The other stumbling block with recruiting Clearly, there is a risk to joining a startup, into the sector is location. Candidates coming and, as Bulloss points out, there have been a from a consumer technology background litany of failures. From BetButler to Betcade might be afraid they will lose their networks to Bodugi, the list of promising startups that while working offshore. And unless people are have not made it is long. looking for a complete lifestyle change, then What is often more appealing is a spin-off the sunshine of Malta or Gibraltar just isn’t from a larger business. It might be forming enough – and rain in the Isle of Man is a paran incubator business, spinning out a ticular turnoff. payments arm or launching in a new jurisdicUltimately, nobody moves solely for salary, tion or new vertical. If, for example, a casino but it is an important factor in clinching the operator was launching a sportsbook and deal. More than salary, it is important to get you are being brought in to run it, then your the package right.

£450k 75%

GIQ Q4 REVIEW

“There are a lot of people at the top who are moving out of the sector and their experience is not necessarily being replaced at mid-level or senior management level” Andrew Bulloss, Odgers Berndtson “The smaller the business, the smaller the basic salaries are but the higher the potential rewards,” explains Bulloss. There are a lot of consumer digital businesses paying out on long-term incentive plans or bonuses linked to profit-share or bonuses linked to certain KPIs. These are quite appealing to people. “Salaries in smaller businesses are about 10-20 per cent lower, but the potential upside is very attractive if the business is successful,” says Bulloss, “but that is obviously a risk.” C-level executives will often be given an equity share in the business when they start. A chief executive might get five per cent, a chief financial officer might get two per cent, and four or five other executives might get one per cent. Occasionally, Bulloss has seen chief executives awarded as much as 10 per cent of a new business. Of course, that can only be realised at sale or public listing so short-term bonus schemes are important in the meantime. Recruitment is a complex beast. People are complex. Indeed, the betting and gaming industry is complex. However, if there is one conclusion we can draw, it is probably that making it more attractive to candidates requires more than throwing money at them. n 47


SA L A RY S U RV EY RECRUITMENT

WHO EARNS WHAT IN THE iGAMING INDUSTRY? We have analysed data from a crosssection of operators around Europe, to provide the first comprehensive industrywide salary survey. By Andrew Bulloss Ask anyone what’s important to them about work and pay, and the benefits package is likely to be in the top three motivating factors. For some it’s number one, for more altruistic types it’s lower down the list. Other people will tell you that pay is not a priority, until it comes to the offer stage of a selection process and it soon becomes clear it is their number one priority. That said, there are numerous other motivating factors as to why people get out of bed in the morning: personal fulfilment; a craving to excel; freedom to be their own boss; or serving a greater purpose than fulfilling their own career ambition. The reasons are almost limitless and change through generations, seniority and geography. Equally, there are pull factors towards certain organisations: reputation, culture, people and structure, strategy, innovation, growth plans, and personal development. Interestingly, a recent study undertaken by Mercer

Human Capital looking at 2017 global talent trends suggested that 61 per cent of respondents value ‘health’ and ‘work-life balance’ as the most important factors in their choice of employer, followed by 29 per cent who stated ‘wealth’, and 20 per cent ‘career’. The current adage of ‘Help me invest in myself’, covering all aspects, from flexible working, training and development, to employee wellness and flexible benefits schedules has become popular over and above pay. However, everyone needs to keep the wolf from the door, and so remuneration continues to be one of the key drivers for employees and battle-grounds for employers. It is a major factor behind employee attraction, retention and motivation, and while the same Mercer study concluded that good colleagues outweigh good pay, remuneration remains a decisive factor for many in such a volatile and uncertain world.

A recent study by Mercer Human Capital looking at 2017 global talent trends suggested that

61%

of respondents value ‘health’ and ‘work-life balance’ as the most important factors in their choice of employer

48

METHODOLOGY The salary data is based on iGaming professionals within private and public businesses across the key European jurisdictions; the UK, Gibraltar, Malta, Isle of Man, Germany, Italy and Scandinavia. There is some variation between salaries across private and public businesses, however at mid and early senior management the differences are minimal so they have not been broken down. At CEO and CFO level, public company basic salaries will be around 20-30 per cent higher than in private businesses, however overall compensation, including bonus and long-term incentive plan (LTIP), are comparable. That being said, a small handful of private enterprises pay disproportionately well, but these tend to be the exception rather than the rule. In terms of jurisdiction, again there are some variations for a number of different reasons. Using Gibraltar as a baseline, the table shows these regional differences, although this is a guide rather than a definitive range.

SALARY COMPARISON BY JURISDICTION UK l 8-10 per cent more than Gibraltar l One of the most competitive talent markets in Europe l Gaming competes against other industries for senior talent l Cost of living is high l Tax regime is unfavourable in comparison to offshore

GIBRALTAR l Long tenure of senior people means basic salaries have stabilised l Favourable tax regime which offsets high cost of living (in Gibraltar, not Spain) l Quality of life

MALTA l Up to 7-8 per cent less than Gibraltar l Slight increase in salaries in the last 18 months to attract talent to the island l Some anomalies with larger operators such as Betsson l Not as attractive compared to Gibraltar (island life feels more remote)

CONTINENTAL EUROPE l Up to 10 per cent less than Gibraltar l Germany, Italy and Sweden pay better than Spain and France l Relatively stable senior workforce within operators in these markets l In non-English-speaking markets, roles will tend to go in-country to native speakers, so comparably less competition for talent than in other jurisdictions

ISLE OF MAN l Up to 15 per cent less than Gibraltar l Lower cost of living l Low turnover of senior roles has stabilised salary levels l Fewer operators and therefore reduced competition for talent l Private companies in the main lead to higher bonuses


SA L A RY S U RV EY RECRUITMENT

SALARY SURVEY RESULTS Average salary expectation by job title Role/title

Basic salary (£)

Avg cash bonus %

Sample size

Overview – what is the role?

Chief executive officer

515,000

153

31

Ordinarily CEO of a listed or large private business

Chief financial officer

371,220

128

20

Normally CFO, sometimes financial director

General counsel

225,000

50

14

The most senior legal role within a business. Sample covers both public (where salaries are high) and private businesses. Includes company secretarial duties for listed companies

Chief operating officer

204,200

60

7

Less about operations and more about being number two to the CEO. This role owns all operations as the title suggests, plus P&L accountability – often in place in listed companies. This person becomes the ‘coal-face’ CEO, with the actual CEO dealing with strategic planning, board and shareholders

Chief information officer/chief technology officer

202,300

73

15

Lead technology talent – CIO/CTO. Overseeing the technical vision for the business and ongoing management of in-house and third-party platforms

Group strategy director

191,200

85

10

Sometimes a board role. Always part of the exec team with responsibility for corporate development, M&A and strategic planning

Managing director

181,818

56

34

Non-board level MD roles – full business oversight and P&L responsibility as well as management of functional teams, such as finance, HR, operations, marketing etc. MD roles are often second-in-command to a CEO or lead exec in a small-to-medium-sized private business

Chief commercial officer

176,250

46

25

Oversight for P&L of multiple territories and often product management. All samples from B2C operators

Human resources director

176,100

75

15

Group HR director responsible for all talent within the company – training and development, recruitment, remuneration and reward

Operations director

165,500

38

29

Owns customer operations and customer service, fraud, payments, sometimes compliance

Marketing leadership

163,000

47

25

The most senior marketing role within an organisation, Head of, director of, or CMO all included in this figure

Country management

150,000

49

15

Typically overseeing two or more markets. Full P&L responsibility

Sales leadership/ sales director

136,000

70

27

Direct responsibility for top-line revenue, not P&L. All sample candidates are from a B2B background

Head of games design

135,000

40

15

Oversight for all creative, design and delivery of games – slots, table games, live casino – all, or a combination thereof

Trading

130,272

51

25

Trading director or head of trading – the ‘bookmaking’ team

Head/director of CRM

129,066

52

14

Strategic responsibility for CRM capability in the business. Often includes business intelligence and analytics

Head of compliance

123,000

24

10

Head of/or compliance director

Product head/ director

108,000

44

32

Product roles mainly in casino and sportsbook. Full ownership of product road map. Often with P&L accountability for a product vertical. Often includes management of third-party suppliers.

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SA L A RY S U RV EY RECRUITMENT

Incentivisation

Cash retention plans

Any overall remuneration package will certainly include some form of short-term incentive plan (STIP) in the form of a performance-related bonus (although there are some organisations in the industry that do not offer an STIP). This is typically calculated based on the performance of the individual and the performance of the business, split 50:50. As highlighted above, these STIPs range from 10 per cent of base salary to in excess of 100 per cent, however the latter is unusual. In addition to STIPs, and typically for more senior appointments in key leadership positions or in board executive roles, a long-term incentive plan (LTIP) may also be offered. These LTIPs can take many forms and vary from company to company and from private to public ownership. The following is an overview of the more popular forms of LTIP, but of course there are always variations, especially within private businesses, where more bespoke set-ups can be found. Interestingly, a portion of an employee’s STIP may well be deferred into a long-term incentive plan for up to three years, often in the form of shares/restricted stock units (RSUs)

Often called ‘golden handcuffs’ or ‘retention bonus’, this LTIP is simply a fixed amount of cash paid at a point in time in the future, as long as the recipient is still employed by the business at that time.

Equity for leadership team Often the most valuable form of LTIP for an employee and primarily used in privately owned businesses, either with an owner or private equity/venture capital fund. With this form of LTIP, a small number of senior employees are given an equity stake in the business (often not immediately but following completion of a satisfactory period – typically six months, or when certain business thresholds or KPIs are met). This equity could range from as little as 0.05 per cent of the business per individual to as much as 10 per cent of the business being granted and split among the executive team. The value of this equity is released on an ‘exit’ event, normally a trade sale or a stock market listing/initial public offering (IPO).

Share options Employees are given the option to buy a certain number of shares in the company at a predetermined price. This could be the market price when the option is granted or the market price discounted by up to 20 per cent. Employees may need to pay for the shares or be granted them on a nil-cost option basis.

Restricted stock options/units Employees are granted shares that will ‘vest’ over a period of time, often two to five years. On vesting, the employee then owns these shares. 50

EMPLOYEE

Phantom shares A cash plan designed to replicate the key elements of a share plan. Often found in private businesses where no actual ‘shares’ exist. Other LTIPs such as Save as you Earn share option schemes and Share Incentive Plans can also be found, although these are less common.

Remuneration trends in 2018 Here are some of the potential remuneration trends that we could see this year.

Basic salaries We have no evidence to suggest that basic salaries in gaming will rise anything above standard inflation in 2018. This has been the trend in 2017. In general, salaries for mid- and senior-level roles are comparatively higher than in other B2C technology industries, although this depends on the size of the organisation – small to midsize entities find it hard to compete on basic salaries, preferring instead to provide a LTIP once certain business KPI thresholds are met.

Gender pay gap A number of US states have already made it illegal to discuss remuneration with candidates. This is largely to stop future salaries being based on previous wages, which can perpetuate the earnings divide. This may have an impact on the industry with an eye on US gaming regulation and/or attracting candidates from the US (from other industries) into key roles in Europe.

Bonus clawbacks for executives In the financial services industry, senior managers face bonus ‘clawbacks’ if misconduct comes to light. Industry executives have a portion of their cash bonus (at least 40 per cent) deferred over a period of at least three years. In some cases, 50 per cent of a bonus must be paid in shares or sharelinked instruments. It would be interesting to see what impact bonus clawback for senior executives would have in the gaming industry if it was introduced as a way to improve operator performance in areas such as problem gambling. n

Shown below are the typical benefits that can be offered by an employer over and above basic salary, short-term bonus and LTIP. It is probably worth highlighting that a number of organisations offer flexible benefits, whereby employees are given an ’allowance’ to spend on benefits, then they can choose which ones are important to them. Note that this does not include benefits such as sick pay, maternity/paternity pay etc.

PENSION l Employers may or may not contribute to a pension scheme for employees. l Typical employer contributions range from 2-15 per cent, often with a minimum employee contribution.


SA L A RY S U RV EY RECRUITMENT

BENEFITS

PRIVATE MEDICAL INSURANCE

TRAVEL

ANNUAL LEAVE

l Individual or family cover. l Often includes dental and optical cover.

l In the UK, an interest-free season-ticket loan (IFSTL) often comes as standard. l Some employers will provide a travel allowance for individuals who make the decision to commute to their place of work weekly, rather than relocate.

l Ranges from 20 days with US businesses, up to 35 days a year for senior execs.

OTHER CASH ALLOWANCES l Car allowance or company car. Typical range is £6-10k pa. l Housing allowance. Typical range is 20-30 per cent of base salary. l Schooling allowance. Typically 50-100 per cent of school fees paid.

RELOCATION l Typically an allowance is offered to cover the cost of relocation. This is spent at the new employee’s discretion. A good range would be £10-20k. Some organisations provide relocation cover to a pre-agreed limit and all costs must be fully receipted.

GIQ Q4 REVIEW

INCOME PROTECTION/ CRITICAL ILLNESS COVER l Insurance that pays out to policyholders who are incapacitated and hence unable to work due to illness or accident. l Death in service/life insurance. l Typically three to five times the basic salary paid to dependents.

OTHER ‘FINANCIAL’ BENEFITS l Employee share schemes. l Workplace ISAs. l Student loan support. l Financial advice.

EMPLOYEE WELLBEING l Flexible work schedules/working from home. l Gym membership. l Employee health screening. l Workplace wellness. l Sabbatical opportunities. l Free food (or at least fruit..!).

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ESPAÑOL

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SA L A RY S U RV EY RECRUITMENT

BEYOND GAMING IN THE UK and Europe there are two sides to the technology industry. On one side, there is the homegrown sub-set; native companies that have grown up in that territory, with their full corporate head office and all sales, marketing, HR and engineering based there. Then there are the subsidiaries of the US tech giants, the likes of Microsoft and Amazon, which are sales arms of the parent company and provide delivery functions for their key services. This means you have a smaller number of chief executives, as the industry is dominated by the US companies. These native company CEOs are paid at the highest rates of the industry. There are a small number of listed tech PLCs whose CEOs are paid upwards of £500,000 as a base salary, rising to several millions through long-term incentive plans. Then there is the larger group of tech leaders, either running the local business or working as manager of the US subsidiary. These people, in the tier below C-level employees, are running either businesses or divisions, and remuneration depends on function. In the sales function, compensation is split into two. For a regional vice president of a US giant, there will be a healthy base salary of around £200,000 basic, then a performance-based bonus of up to 100 per cent of this base. The layer below will have a similar compensation structure; a base salary of around £150,000 for a country manager, with a £150,000 bonus, plus benefits and stock awards. Functional positions, as in those running professional services or regional marketing teams, will have a higher base salary. Their compensation structure will be comprised of 70 per cent base salary, with 30 per cent coming from bonuses. Salaries for functional hires are less attuned to sales performance, so are based more around softer targets and management objectives, so there is less at risk. Where we’re seeing a real rise in salaries is in individual contributor roles. Individuals selling, for example, large system solutions, have seen their pay rates rise rapidly over the past decade. Ten years ago such roles would be paid around £60,000 base, with a further £60,000 available in bonuses, but now they can command six-figure base salaries. In terms of demand, the big companies are recruiting heavily around modern technologies. Positions such as cloud architects and 54

data scientists are being sought more than ever before. This huge growth comes as the tech giants look to move clients from legacy IT to new solutions. Salaries are rising accordingly – there is a shortage of talent, coupled with huge demand, so pay naturally goes up. However, regulation and compliance hires, unlike in the gambling industry, are less in demand. Tech is less regulated, as ultimately you are selling a product without the potential social impact of gambling. This is likely to change when it comes to data regulation, as a result of the European Commission’s new General Data Protection Regulation. If you are selling or managing database solutions, this is going to be affected. There will be more debate on who owns the data, what can be done with it, and this could be a key factor in driving demand for more compliance hires. In terms of staff longevity, the tech industry is very similar to soccer. If a manager is not performing, they will be replaced, rather than the company trying to determine the root cause of the problem. It’s a competitive and performance-based space. In tech it’s a push to sell X amount of a certain product, or hit X amount of revenue each quarter. If a senior manager isn’t making that happen, the focus will fall on those that have revenue targets, such as the vice president of sales. Normally, new hires are given a full year to settle in, build a sales team, start driving revenue and hitting targets. Once they have had this bedding-in time, they are monitored quarter-by-quarter. They’re working towards targets they’ve helped set, so if they fail to meet these they will be seen as ultimately responsible. Having said that, if they hit or exceed these targets they will be handsomely rewarded, with higher margins for every dollar sold. This will also make them an attractive target for rival companies, who will be looking to poach t hem, of feri ng equity, big compensation packages and huge bonuses to lure them away from their current employer. n

Odgers Berndtson partner and head of technology and IT services Michael Drew offers some insights into key hiring and firing trends in the broader technology space

The tech industry is similar to soccer. If a manager is not performing, they will be replaced. It’s a competitive and performancebased space


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SA L A RY S U RV EY WOMEN IN GAMING

MIND THE GENDER GAP Few would deny that the technology industry, and by extension online gaming, is a bit of a boy’s club. Girls in Tech Gibraltar is determined to change this

Denise Coates, CEO of bet365

LOOKING AT THE role of women in tech“At ICE 2017 I was pleased to see a difference nology does not make for happy reading. In from previous years, and there were definitely the US, women make up 56 per cent of the fewer sexualised or objectified women on the workforce, yet only 28 per cent of proprietary floor,” she continues. “But if you are a woman, software jobs are held by women. Only 25 per dressed professionally and trying to discuss cent of IT jobs are filled by female candidates; technology, many still won’t take you seriously, 11 per cent of executives at Fortune 500 compaor they think you’re flirting with them.” nies are women, and just five per cent of techTurbatu is leading the charge for change as nology startups are owned by women. the managing director of Girls in Tech GibralIf the gender bias in technology as a whole tar, the latest chapter of a global non-profit is bad, it is arguably worse in iGaming. organisation established in 2007 to promote Any major industry conference will be domthe engagement, education and empowerment inated by men. There is also likely of women in technology. Its Gibraltar to be a number of scantily clad arm was formed in August 2016. women at these events – to the She explains that as a woman point that Clarion, organiser of working in Gibraltar she found the ICE Totally Gaming conthere were not many women ference, circulated an email in the industry with whom discouraging exhibitors she could work, share ideas from using women to promote and befriend. their offerings. “It seemed natural to bring Gambling and pornography the community here,” Turbatu have traditionally piggybacked says. “I really appreciated Girls one another online, with affiliate in Tech’s approach to driving sites featuring porn ads, and gamthe empowerment of women in bling ads appearing on porn sites. technology, how it is trying to Most of the leading gaming bring women into the sector, and operators, excluding bet365, find solutions to [gender inequalhave male chief executives. It’s no ity] rather than just point out stretch to describe the industry The number of the issues.” as a boys’ club. This, in turn, technology startups Turbatu has Playtech’s backmakes it less attractive to owned by women ing in establishing Girls in Tech female candidates. Gibraltar, and brought in her Playtech Games colleague Peter Mares, chief techInnovation Labs senior softnology officer of Games Innovation Labs, as ware developer Christina Turbusiness development and strategic partnerbatu explains: “If you don’t have ships manager. any experience of the gambling “Peter was the first team member I had, sector; if you are working in working on how to create partnerships with banking and considering movcompanies and help us run our programme,” ing into the industry, you will she says. “From there we built a team comprislook at websites or conference ing different skill-sets and companies.” pictures and see women sexuGirls in Tech Gibraltar runs multiple alised,” she says. “This gives events throughout the year, ranging from techthe impression that you won’t nology talks to discussions and debates specifibe taken seriously, or will simcally on women in technology. It is also going to ply be seen as an object. run a bootcamp for people with no experience

5%


SA L A RY S U RV EY WOMEN IN GAMING

Girls in Tech founder Adriana Gascoigne, Playtech COO Shimon Akad, Girls In Tech Gibraltar MD Cristina Turbatu

“If you are a woman, dressed professionally and trying to discuss technology, many still won’t take you seriously” Cristina Turbatu, Girls in Tech Gibraltar

in technology, teaching them how to build websites. Other events, such as talks by experienced female technology executives and hackathons, are also being arranged. These are not restricted to female attendees. The goal is to have men and women networking, learning and creating together. “Girls in Tech Gibraltar is an all-inclusive effort, meaning that it’s not just about encouraging women to participate, but also men to raise awareness, which we feel is important for sustainable change,” Mares says. Playtech may have thrown its weight behind the initiative, but it has its own issues with gender equality. Its 2016 annual report revealed that 60.2 per cent of its workforce is male. Just 11.5 per cent of senior managers, and 14.3 per cent of its directors, are female. This is representative of the wider industry. At Paddy Power Betfair, 39.2 per cent of the workforce is female, as are 27.9 per cent of senior managers and 20 per cent of its board. Women comprise 48 per cent of Ladbrokes Coral staff; 23 per cent of senior managers and 22 per cent of board members. At William Hill women actually comprise 51.1 per cent of the total workforce, but just 23 per cent of senior managers and 20 per cent of board members. All of the companies mentioned are working on initiatives to bring in more women at all levels, and are committed to working towards creating gender balance, it should be noted. Yet Mares argues there are deeper issues at GIQ Q4 REVIEW

play here. He says that when hiring there is an “unconscious bias” when selecting candidates. This, he says, can even be found in job descriptions. “One thing that has been highlighted to me is that the job descriptions we create often suffer from their own affinity biases,” Mares explains. “I was creating job descriptions that were inadvertently aimed at men. We’re working on re-evaluating the introductory blurb and making this more gender neutral.” This only deals with an immediate problem. It is well-documented that the academic disciplines of science, technology, engineering and mathematics (STEM) are promoted more to males from an early age. This, Mares says, helped him become aware of the lack of female candidates. “When I was a hiring manager at Odobo [the company acquired to form Games Innovation Labs] I commented that I didn’t see a lot of female candidates applying for tech roles,” he says. “I didn’t have a human resources department screening them out. “I believe that the problem starts way before people actually get into their jobs, it could be happening at university – girls are not as encouraged to pick up technology as boys are. “Some of the women that do make it in tech don’t experience or register any form of bias, whereas others clearly recognise it. When you look at the general corporate make-up, you do have a frightening ratio of men to women,

hence the need for more diversity.” As a man in tech, he says that this bias is due in part to company culture. “There are some companies that didn’t tolerate the [‘boys’ club’] as part of their DNA, but there are others that simply allowed that to grow,” Mares explains. “Whether that is consciously or unconsciously created, it’s not dissimilar to the tech industry in general. I wouldn’t put it down to a gaming-specific thing, but we are dealing with the wider challenges the tech industry is facing.” However, there is no real drive to have companies enforce targets on female hires, he adds. “You don’t set guidelines, you don’t set percentage targets, you have to re-evaluate everything.” Mares and Turbatu argue that this goes beyond an ethical issue. It also makes good business sense to have a gender-balanced workforce. If you are going to build a product that can appeal to both genders, it makes sense to do so with a mixed team of various age groups. “It’s very difficult to create one product that pleases all, but having more diverse teams you’ll have more widely accepted sets of products,” Mares suggests. Considering the gender imbalance even within its founder’s own employer, it’s clear that Girls in Tech Gibraltar has a long way to go. Yet by starting in the relatively small territory of Gibraltar, Turbatu believes that it will be easier to monitor and measure change, positive or otherwise. Plans are also afoot to expand Girls in Tech to other territories where Playtech has offices. “Playtech believes what we are doing is worthwhile, and is now looking to take this globally,” Turbatu says. “They’re looking to engage with existing chapters where they have offices, and set up new ones where none exist.” It is only a year old, but Girls in Tech Gibraltar may be the driving force behind a major and necessary change in the industry, and finally take steps to address the male domination of iGaming. n 57


SA L A RY S U RV EY HR

MAKING THE MOST OF YOUR HUMAN RESOURCES Michaela Bonomini experienced almost everything the industry could throw at an HR director during 18 months at GVC Holdings. She talks to Steve Hoare about the crucial, and often overlooked, role HR can play in a successful iGaming business

58

WE SPEAK TO Michaela Bonomini just three days into her new job. Her new employer does not really exist yet. She left GVC Holdings in August before joining up with Nigel Roddis, managing director of the company that will operate the Tote when Betfred’s seven-year licence ends in July. This new company, formed by the Jockey Club and Arena Racing Company, will launch a proprietary pool betting system for 54 British racecourses. The decision to go it alone has caused Betfred owner Fred Done to announce that he is finished with British horse racing (barring his continued sponsorship of Ascot and ownership of Chelmsford racecourse). Done’s frustration is such that it was unclear at the time of going to press whether the new company would inherit the Tote business or whether TUPE (the UK employment regulation governing the transfer of employees from one company to another) will apply. The latter is one of the key reasons why Bonomini has been brought in so early and will take a senior role in the executive management team.

Alongside Roddis, who has overseen projects for the British Horseracing Authority, Totepool and At The Races, Neil Goulden has been appointed chairman of the project’s steering board. Another former Tote manager Tony May has joined as director of operations, while former Betfair executive Steven Johnson and former Sportech technology chief Kevan Woodcock will act as consultants. The involvement of human resources at such an early stage will cheer Bonomini, who is a passionate defender of a department that is often sidelined.

HR in M&A While Bonomini concedes that she occasionally had to fight to get in the room for certain management meetings at GVC, she has nothing but praise for chief executive officer Kenneth Alexander. Bonomini joined GVC in February 2015, just before the bwin.party takeover bid was made public in July, and left before the Ladbrokes Coral bid kicked off in earnest in late 2017.


SA L A RY S U RV EY HR

“When a big transaction like that arrives, the immediate priority is to make sure it operates efficiently and ensure that the workflow still flows,” says Bonomini. There was a lot of work done before the bwin. party acquisition to understand how work flowed through the business. It was not an easy process as bwin.party was already an unwieldy beast, with three technical hubs – in Austria, India and Ukraine. It was very disjointed and over-complicated. “One of the things we prioritised was creating a new culture for the business, which wasn’t old GVC and wasn’t old bwin or old PartyGaming,” she says. The disjointed nature of bwin.party meant that a ‘first blast restructure’ was needed to ensure that operations ran smoothly, before getting to work on synergies of £128m, which were promised to the City over two years. Head of trading Jim Humberstone had done a lot of work pre-acquisition on the structure of the trading team. There were duplications. GVC

GIQ Q4 REVIEW

had trading teams in Manilla and Malta, and bwin.party had trading running out of Gibraltar. Non-performing departments such as procurement were taken out, and some senior staff, such as former COO Joachim Baca (now at Tipico), were let go. “The first blast of restructuring was to demonstrate immediate savings and show the City we were doing what we were supposed to be doing,” says Bonomini. “Then we turned to making sure we had the right people in the right jobs, doing the right things, in the right locations.” The cultural piece was achieved by holding workshops in each country to establish five company values, which were then agreed upon in an all-country workshop. The company also launched something called The Kudos Club on its employee engagement platform. The Kudos Club was a series of challenges that related to the company values. “That helped embed it without shoving it down people’s throats,” explains Bonomini. “We made a lot of changes in HR to make us

“The first blast of restructuring was to demonstrate savings. Then we turned to making sure we had the right people in the right jobs, doing the right things, in the right locations” Michaela Bonomini

59


SA L A RY S U RV EY HR

more people-focused. I know that sounds bizarre, because we should be people-focused, but before this we were the police who always said ‘no’. My mantra was that we didn’t say no, we always solved things.” The HR function was regionalised, with three regional heads reporting in to Bonomini. A head of employee engagement was appointed in Vienna. In all, the HR function totalled some 60 people. It had been 100 when Bonomini joined.

The tricky task of synergies Bonomini’s other major role was on the synergies team. This is primarily about cost-saving, and the biggest cost-saving comes from cutting jobs. “Of course it’s about making people redundant,” agrees Bonomini, “but more than that, it’s about making the right people redundant. It’s also about shifting people into the right roles.” While doing so, the company has to comply with employment laws across a number of jurisdictions. For example, two of bwin.party’s locations – Austria and Bulgaria – have particularly tough regulations. When GVC acquired bwin.party, its trading team was based in Manilla and Malta. It was very efficient and had lower overheads than bwin’s Gibraltar base, which has a high cost-base, is difficult to recruit into, and with a talent pool that gets regurgitated around the numerous betting and gaming companies. “It was using the right countries for the right people where we could get the best talent,” says Bonomini. This sounds easy on paper but you have to dig into the detail of the local employment market. This will include a detailed analysis of your local offices. How are they rated locally by prospective employees? Do they pay well? How do they measure up against your competitors? What are their performance statistics? “We were able to get quite a lot of information up front because they were so receptive towards us taking over,” says Bonomini. “Although we did make some unpopular decisions.” For example, the trading team in Bulgaria was not performing, so was closed down. But customer services in Bulgaria was a much better financial option than customer services in Gibraltar. However, it is a struggle to recruit all the necessary language-speakers in Bulgaria. So the team needed to match the right languages to the right countries when it restructured customer services. 60

“HR should be advising the business on their recruitment strategy. It should sit at the top level” Michaela Bonomini

The value of HR The conversation comes back round to the role of human resources. Most organisations will parrot the mantra that a company is only as good as the people who work there, but few value the team that should be ensuring people flourish. This is particularly true when it comes to recruitment. “We restructured HR into a talent organisational structure. So we were heavy on talent attraction, talent acquisition and talent retention.” However, the extent to which HR was consulted on recruitment varied from department to department. bwin had a completely different attitude towards people issues. “HR should be advising the business on their recruitment strategy. It should sit at the top level. In my new job, I am trying to understand the staff model so we can be proactive rather than reactive.” Bonomini has worked in numerous sectors, from banking and marketing to technology and events. GVC was her first job in the gambling industry, so how does the industry measure up to others? She says that the younger tech-led companies such as PokerStars and Unibet have a good reputation, while the HR policies at some of the old UK bookmakers are less well-respected. “We tried to make GVC a tech business. It does not matter what the product is. Let’s make it a tech business rather than that old gambling culture, which we did with some success,” she says.

If instilling that culture at bwin.party was a challenge, it will be an even bigger one with Ladbrokes Coral. Whatever the outcome, GVC will be a new organisation once again. This was one of Bonomini’s reasons for leaving. After integrating one huge organisation, it was not massively appealing to do it all over again. An integral part of GVC’s culture is the potential to earn large financial rewards. It is a crucial part of GVC’s executive remuneration packages and its staff bonus packages. In 2016, CEO Alexander earned €22.19m (including shares), up an astonishing 373 per cent on the year before. This is the aim of the game for Alexander, and he is keen for his employees to share in the bounty. He is an expert at making that happen. GVC has hit its financial targets for four consecutive years. “That is massively attractive for some people,” says Bonomini. “But money only goes so far. Eventually that reaches its saturation point and you need to have everything else in place to back it up.” Which is what Bonomini saw as her role at GVC and will continue to do so in future roles.

Closing the gender gap And what about the thorny issue of diversity in the betting and gaming industry? Can companies do more to promote diversity? She laughs. “Females in gambling are pretty much relegated to the back office unless it’s bingo, which is seen as a ‘girl’s product’,” she says. “It reminds me of banking. It’s not people from the same privileged background but gambling is still seen as a bloke’s thing. It is changing but it’s a slow, slow burn. I can’t see it changing dramatically in the next 10 years.” Bonomini puts this down, in part, to the product. She says she would not dream of walking through the doors of a betting shop. Gambling companies seem determined to keep male and female customers at apart. An online operator is more likely to launch a separate brand targeting women than attempt to broaden the appeal of its core offering. In the retail space, betting shops are designed to appeal to male customers, while bingo halls target women. Little effort is put into bringing men into the halls, or women into the shops.“Until the product becomes more attractive to a more diverse crowd, the industry will be heavily maledominated,” she concludes. All that said, she says she loved working at GVC and is looking forward to life at the new Tote. The whole industry has some learning to do. It will need more executives like Bonomini to implement the lessons learned. n


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This year’s winners The operators that are evolving are the big winners in this year’s GIA, while the Hot 50 recognises stand-out, innovative individuals

THIS YEAR’S GAMING Intelligence Awards were the most popular and fiercely contested yet. Once again some of the industry’s largest companies took home the top prizes. The Hot 50 was dominated by lesser-known individuals who are helping evolve and improve the iGaming sector. It’s an interesting contrast. While the GIA results suggest the big companies are simply getting bigger, the Hot 50 shows that this is not necessarily because they are snapping up the businesses below them. Consolidation and competition mean that businesses have to work harder to maintain market-leading positions. It’s no longer good enough to talk of embracing new technology – companies have to constantly update and evolve their offerings with new products and services. Legacy systems won’t cut it in 2018. In judging this year’s awards, it became clear that relentless self-improvement was key in selecting our winners. It’s the ones looking to evolve that are the big winners this year. Those that have invested – and invested sensibly – in improving their core offering have been the ones to benefit. The likes of Sky Betting & Gaming, SBTech and GVC Holdings (for bwin and partypoker) are among the big winners here. The Stars Group takes home three prizes after a stellar year. PokerStars has reasserted itself as the dominant force in its key vertical, while also taking pole position in casino, as well as revolutionising loyalty programmes with Stars Rewards.

Scientific Games has also performed strongly. The range of solutions it offers continues to grow with every acquisition, and it disproves the notion that big corporations struggle to innovate. After missing out on prizes last year, Playtech has nabbed the poker and bingo supplier trophies, and game of the year award. It has not been a banner year for the solutions giant, but its achievements in these three categories shows that a weaker year for Playtech would still be a wildly successful one for most other companies. Another emerging theme was social responsibility, especially in the Hot 50. We now have more industry professionals working, or involved in, social responsibility efforts than in previous years. This certainly reflects on a difficult year in which operators’ processes and controls to protect players have come under greater scrutiny than ever before. Yet while the industry wants to be a more socially responsible – and in turn more highlyregarded – space, it still lags behind in terms of diversity. Just eight of this year’s Hot 50 are female. Yes, this is higher than last time, but as we say elsewhere in this issue, this is something that needs to be addressed. This year we had record numbers of entries for both the Hot 50 and GIAs, making the judging process particularly difficult. We would like to thank all those involved in selecting the final winners, and offer our congratulations to the victors. Well done.

THE JUDGES PAUL BEATTIE

SIMON DAVIES

Principal Soko Advisors

Head of European research Canaccord Genuity

ROBIN HARRISON Editor - GIQ Gaming Intelligence

ANDREW BULLOSS Partner, head of global gaming practice Odgers Berndtson

SANDFORD LOUDON Vice president Oakvale Capital

BOBBY MAMUDI Editor in chief Gaming Intelligence

PEARSE MCCABE BEN CLEMINSON Director Square in the Air

LAURA DA SILVA GOMES Founder and director Silverfish CSR

Director McCabe Brands

DAWID MYSLINSKI Corporate finance adviser Redeye AB


AWARDS/HOT 50

Kenneth Alexander

HIGHLY COMMENDED GVC HOLDINGS (BWIN)

Of all of Sky Bet’s innovations, RequestABet has proved to be particularly impressive, sparking a wave of industry imitators 64

Director eGaming & digital experience British Columbia Lottery Corporation (BCLC) Canadian provincial lottery operator BCLC was the first in North America to launch a regulated online casino product in 2010 with PlayNow.com, and Cameron Adams has been there every step of the way. He is responsible for all digital products and business operations for BCLC’s iGaming business, and has helped lead efforts in live-dealer, mobile, lottery initiatives and innovation. Adams has been described as a leader who pulls creativity and confidence from his team, and is driving the operational excellence and player experience for the governmentowned site.

SPORTS BETTING OPERATOR OF THE YEAR SKY BETTING & GAMING SKY BET HAS quietly taken over the UK gambling industry. It leads the way in innovation, and outstrips giants such as William Hill and Ladbrokes Coral in terms of revenue. Of all its recent innovations, RequestABet has proved to be particularly impressive, sparking a wave of industry imitators. This is supported by real-time promotions, crowd-boosted accumulators, and personalised programmatic marketing. The company has also become a lot more adventurous since its 2014 acquisition by CVC Capital Partners, expanding into the German and Italian markets. This operational progress has been matched by impressive revenue growth. Sports betting revenue was up 46 per cent to £314m in its 2017 financial year. The company is led by an impressive management team, with CEO Richard Flint and tech chief Andy Burton the leading lights. It has also significantly invested in new tech hubs and recruitment programmes in the north of England, ensuring it has a positive impact on its local community. Sky Bet has pushed itself into the top of the sports betting vertical. Few would disagree that this award is richly deserved.

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KENNETH ALEXANDER Chief executive officer GVC Holdings Gaming Intelligence has an unwritten rule that nobody wins entry into the Hot50 for two years in a row. The idea is to highlight those who are hot, rather than just those who are influential or important. However, GVC’s continuing rise towards world domination rips up this unwritten rule. Kenneth Alexander has been the spark that has driven industry consolidation into overdrive. His audacious and innovative approach to M&A is becoming legendary, but equally astounding is his continuing ability to hit synergy and revenue targets, while plotting his next swoop. Alexander’s name will be remembered long after he has retired.

NADIYA ATTARD Regional sales manager NetEnt NetEnt’s continued success reflects not only the quality of its games, but the people it employs and its strong culture of teamwork. There are several leaders at the company and Nadiya Attard is one of them. Together with her sales team, she has led the supplier’s recent expansion, with 45 new customers signed up in the past year alone, in markets as varied as Norway, the Czech Republic, Mexico, Canada, Spain and the UK. Attard started working for NetEnt in 2013 and has a reputation for getting results. No one can argue that she hasn’t delivered.


AWARDS/HOT 50 LYDIA BARBARA Head of innovation strategy Microgaming At Microgaming, Barbara has single-handedly developed an initiative to foster a culture of innovation. She devised the company’s in-house incubator scheme, the Ideas Factory, allowing staff to present new ideas and concepts to improve company culture, development processes and technology. The scheme has already led to the launch of one of Microgaming’s best-performing games of the year, EmotiCoins. The potential of the Ideas Factory is huge.

POKER OPERATOR OF THE YEAR POKERSTARS

YOSSI BARZELY Chief business development officer Pragmatic Play Since its foundation in 2015, Barzely has quickly established the supplier as one of online casino’s most recognisable names. He has overseen deals with a host of major operators, including William Hill, GVC and Betsson, to significantly grow Pragmatic in regulated markets, while also building a reputation for delivering some of the industry’s fastest integrations.

Lydia Barbara

NIGEL BIRRELL Chief executive officer Lottoland 2017 was the year Lottoland finally felt the full brunt of regulators’ wrath, but that just shows what an impact the company has had in disrupting the established lottery industry. He has often fought a lonely battle, but the Lottoland juggernaut continues unabashed, and the company has transformed its risk management into its own fully authorised and licensed insurance company. Birrell is an experienced iGaming veteran and the figurehead for Lottoland’s insurgence into the lottery sector. Lottoland is here to stay.

THE POKER VERTICAL is littered with companies that have gone through boom-and-bust cycles, but PokerStars has consistently remained at the forefront of the industry. This sees it once again take home the poker operator of the year prize. When a company continues to perform so impressively it makes the decision particularly easy. PokerStars has constantly reinvented itself, successfully adapting to every challenge it faces. At a time when other operators are cautious about moving into newly-regulated territories, PokerStars has the means to secure first-mover advantage in almost every territory. In the regulated New Jersey market, where it was unable to join the first wave of licensees, it is pulling ahead of Caesars Interactive as the market’s thirdlargest licensee. It holds a 75 per cent sit’n go market share, more than 10 times that of any competitor, and a 74 per cent tournament market share. The company has also made a conscious effort to expand its player base with simplified products and promotions for recreational players, and now has 113 million registered players. Efforts to tap into the eSports player base even threatens to broaden the appeal of poker beyond the core gambling demographic. In this category, no one else comes close.

HIGHLY COMMENDED GVC HOLDINGS (PARTYPOKER)

PokerStars has constantly reinvented itself, successfully adapting to every challenge it faces

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MARIS BONELLO Integrity analytics manager Kindred Group Bonello has helped change the way the gambling industry looks to tackle problem gambling. That’s quite an achievement. By putting responsible gambling at the centre of the operator’s business, rather than a necessary evil, she helped pioneer new ways to detect and treat problem gambling. Thanks to her, Kindred has long been viewed as a socially responsible business.

BINGO OPERATOR OF THE YEAR STRIDE GAMING THE MEN BEHIND 888’s Dragonfish platform, Stride Gaming founders Eitan Boyd and Darren Sims, have an outstanding bingo pedigree. In a market where few see any opportunity for growth, they have carved out space to establish themselves in the market. Net gaming revenue almost doubled to £89.9m in its 2017 financial year, with the acquisitions of Netboost Media, Tarco and 8ball all contributing to growth from brands hosted on its proprietary platform. It has also made massive strides in developing its mobile offering, with two-thirds of revenue now coming from the channel. At the core of Stride is a 10-man t e a m , le d by B oyd and Sims, which has been together since GlobalCom, the platform now more commonly known as Dragonfish. The pair have been able to retain and motivate a talented team. While Boyd and Sims’ previous bingo ventures have been snapped up by 888, Stride has already grown to the point where it could acquire the sort of companies that would have once seen it as a target. Even Jackpotjoy’s management will be looking nervously over their shoulders.

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MICHAELA BONAMINI

JERRY BOWSKILL

HR director New Tote

Chief technology officer The Stars Group

Michaela Bonamini was one of the key figures behind GVC’s stunningly successful integration of bwin.party. As HR director, she had a massive job on her hands to create a new culture at GVC, which was neither old GVC or old bwin.party. She now turns her attention to a new challenge as a founding member of the senior management team at the as-yet-unnamed new company set to take charge of the Tote when Fred Done’s contract expires. The issue of transferring staff to the new company will be the first thing in her in-tray as she sets about building a workforce to take the Tote into a new era.

Others will grab the headlines as The Stars Group powers its way into a multi-product future, but few will be as important in making sure it works as Jerry Bowskill. He could not have a more suitable CV for Stars as it looks to retain its entrepreneurial soul, while powering on into its future, as a grown-up, regulated, multi-product operator. It will be a challenge but you will not find a single soul who does not believe Bowskill will rise to the occasion.


AWARDS/HOT 50 Ian Bradley

Andy Burton

ANDY BURTON Chief technology officer Sky Betting & Gaming Burton has made SkyBet the company to emulate for operators looking to build a thriving internal tech team. Under his leadership the operator has hired professionals from other sectors, and fostered a culture similar to Silicon Valley, rather than a Leeds-based gambling business. One of the hottest tech executives in the industry.

IAN BRADLEY

LORENZO CACI

Chief product officer SBTech

Sales director Sportradar

SBTech’s constant roll-out of new products and enhancements to its core sportsbook product was a key reason behind it securing the sports betting supplier of the year award. Bradley is the man who oversees the development of these features. With the sheer quality of the SBTech solution having secured significant client wins in the past year, he is a worthy addition to this list.

Today it’s hard to find a major sporting league that hasn’t signed a data or integrity partnership with Sportradar. This is a major achievement in a competitive field, and credit must go to the supplier’s sales team, led by Caci. As efforts to preserve sporting integrity become increasingly important he has ensured Sportradar is in a position to be a major participant in this push.

radar, but now looks like one of the most shrewd moves ever taken in the sector. Playtika’s growth was driven in part by bolt-on acquisitions. DoubleDown had begun to decline before its acquisition by DoubleU Games. Aristocrat has kept pace entirely through organic growth. Now, as it looks to expand through M&A, it threatens to outstrip its rivals. In 2017 it snapped up strategy gaming specialist Plarium and Big Fish Games, giving it a casual gaming business. It is developing a product portfolio that is to become a major player in a number of free-to-play verticals, not just social casino.

POKERSTARS CASINO HAS been live for three years, and is established as a market leader. Efforts to market the product have barely begun, and already it is the world’s largest online casino in terms of unique active players. It is pushing to be Italy’s largest casino operator, is one of Spain’s top-performers, and has successfully moved into Denmark, Portugal, the Czech Republic and Bulgaria. It has roared to the top of the market, and not just by accumulating third-party games. Mindful of the need for differentiation it has established an in-house development studio, launching the Stars Mega Spin and Millionaires Island progressive jackpot games. This is supported by a series of promotional tools. PokerStars’ massive poker player base has proved a boon, with 75 per cent of players moving over to play its casino offering. When it begins to seriously market PokerStars Casino, rivals will be blown away. The move from a single- to multi-vertical business has not been without its challenges, as BetStars’ struggles show, but in casino it has replicated its success in poker.

HIGHLY COMMENDED ZYNGA

HIGHLY COMMENDED LEOVEGAS

SOCIAL CASINO OPERATOR OF THE YEAR ARISTOCRAT LEISURE THE SOCIAL CASINO market has shrunk in recent years, and a smaller number of larger providers are embroiled in a battle for market dominance. Many have seen social as a distraction. Even market leaders such as IGT and Caesars Interactive have decided to exit the market, selling off DoubleDown Interactive and Playtika respectively. All the while, Aristocrat has been enjoying strong organic growth. Digital revenue for its 2017 financial year was up 37 per cent to AUD$383m, thanks to the continued success of Heart of Vegas and the newly-launched Cashman Casino. Daily active users (DAUs) increased by 36 per cent to 1,729,859, with average revenue per DAU climbing 26 per cent to US$0.53. A deal to acquire Product Madness arguably slipped under the

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LOTTERY OPERATOR OF THE YEAR LA FRANÇAISE DES JEUX

WITH THE FRENCH government looking to raise €10bn through the sale of various state assets including FDJ, it would have been easy for these distractions to have got in the way of the National Lottery operator’s priorities to invest and grow its digital business. We are only into the third year of the company’s ambitious FDJ 2020 initiative, but FDJ is a winner because it is already seeing the benefits of its digital investment. 2017 was the

year FDJ really embraced interactive, with full-year digital sales expected to surpass €1bn for the first time (2016: €900m). FDJ has already developed one of the biggest online eCommerce platforms in Europe, and this is just the start of its modernisation drive. FDJ’s digital transformation was enhanced by the launch of a new mobile app through which players could access its entire gaming portfolio for the first time, including lottery games such as EuroMillions and LOTO, alongside its illiko-branded instantwin game platform and Bingo Live multiplayer game. FDJ’s investment in its technology has led it to establish a B2B division to offer its services to other operators, beginning with a new sports betting solution for Switzerland’s Loterie Romande. It also became the first of the traditional European lotteries to enter the eSports sector with the launch of the Parions Sport betting portal. FDJ is only at the beginning of its digital journey. We can’t wait to see where it goes next.

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SANDRA CARLSSON Head of game products NetEnt In the past year, Sandra Carlsson has set up a new product owner team; improved communications between game product owners and mathematicians, and tightened links between the development and product own-

Robin Chhabra

ROBIN CHHABRA Chief corporate development officer The Stars Group Robin Chhabra’s seven-year stint at William Hill coincided with transformative deals with the likes of Playtech, Sportingbet and US companies Brandywine and American Wagering. He is now charged with performing similar miracles at PokerStars. Number one on his list of priorities will be an acquisition or merger aimed at boosting the operator’s sportsbook. 68

DAVID CARRION Director of poker marketing The Stars Group David Carrion has taken on the challenge of his role with gusto. He promoted the second biggest online tournament in poker history and then topped it with another tournament, which culminated in the biggest prize pool in the history of online poker. Furthermore, he has been instrumental in the growth of the innovative Stars Rewards programme, which has been credited with setting the operator’s poker revenues back on an upwards trajectory. Carrion’s star is rising.

ership departments. This has helped NetEnt set new records for game deliveries and game performance in 2017. In short, Carlsson is crucial to keeping NetEnt at the pinnacle of the casino vertical.


INTERACTIVE PRODUCTS

LAUNCHED

600 interactive products launched by Scientific Games Mobile apps. Interactive games. Second-chance drawings. Websites. Ticket scanning. These aren’t demos, these aren’t concepts. These are real and working, enhancing the player experience and maximizing our customers’ sales.

Because Real Counts © 2018 Scientific Games Corporation. All Rights Reserved.


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ROBERT CHVÁTAL Chief executive officer Sazka Group Chvátal is a relative newcomer to the gaming and lotteries industry, having begun his career in the consumer goods and telecommunications sectors. This has already proved crucial in helping him turn Sazka from a struggling business into the fastestgrowing lottery in Europe between 2013 and 2016. He now runs the largest private lottery operator in Europe, and will be crucial in continuing Sazka’s upward trajectory.

ONE TO WATCH OPERATOR AWARD VIDEOSLOTS VIDEOSLOTS HAS BEEN one to watch since it launched its Battle of Slots feature in late 2015. It is now evolving from a minor industry player to a company that made significant gains in 2017. The player versus player slots format has been tried by a few but none with the success of Videoslots, which has seen gross gaming revenue climb more than 300 per cent. Videoslots does not make a profit from Battle of Slots. It was never intended to. It is this willingness to take apparent risks and pull them off that sets Videoslots apart from the pack. The genius of Videoslots is its ability to find the faults in established industry wisdom and pursue an alternative path, while retaining the parts that make online gaming such a successful business. In 2017 Videoslots took another risk with the purchase of the software behind failed poker site PKR. Videoslots chief executive Alexander Stevendahl is a poker fanatic and will approach the relaunch of PKR from a player’s perspective – just as he has done with casino games. Sweden’s online casinos are among the world’s most innovative. Here is another one. Expect it to soar.

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MATT COLE

JAMES CURWEN

Chief executive officer Blueprint Gaming

Chief gaming officer Superbet Digital

A few years back there were rumours that Blueprint was an acquisition target for the likes of Playtech and William Hill. But its parent company Gauselmann Group would be mad to sell it, as its games are always among the best performers wherever they launch. As the man in charge, a lot of the credit has to go to Matt Cole. Under his watch the company has enjoyed a great year, signing deals with GVC Holdings, LeoVegas, 888, Gamesys and Kindred. Entry to Denmark, Romania, Spain and Italy in 2018 will help him continue its upward trajectory.

James Curwen has been in the gaming industry for 20 years, but 2018 could be his most ambitious year to date. Having been part of William Hill’s successful online gaming division in the past, he will be looking to do the same for Superbet. It won’t be easy, but Curwen has the knowhow and the confidence. He also knows games. So much so that he has set up a Superbet-backed independent games studio, Golden Rock Studios, with specialist slot designer William Mathieson. Golden Rock Studios will launch its first games this year.


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ADI DAGAN Founder and chief executive officer Beehive Beehive has become a clear leader in data-driven marketing solutions for operators, and much of this is down to Adi Dagan. Having learned his craft during his time at Playtech, where he was responsible for some of the biggest platform migrations, he struck out on his own with Beehive. As one of the first to recognise that iGaming data and retention were intrinsically and progressively linked, Beehive was formed to act upon that reality with a sophisticated data-led strategy. The company is already helping change the way operators analyse big data, and for that Dagan can take much of the credit.

ANDREW DAGNALL Chief executive officer Bettorlogic Bettorlogic’s partnership with Mr Green to launch a new data-driven, personalised sportsbook product has put the supplier on the map. As a seasoned bettor himself, Dagnall is something of a rare beast. In an industry increasingly dominated by executives working in gambling rather than gambling executives, he has an innate understanding of punters’ mentalities. In a crowded supplier space, he can ensure Bettorlogic offers a differentiated – and socially responsible – product to prospective clients.

eSPORTS OPERATOR OF THE YEAR PINNACLE WHILE THE BETTING industry slowly comes to the realisation that simply offering odds on eSports events is not enough to attract a new generation of players, Pinnacle has shot ahead in the vertical. The past year has seen the range of leagues and games on which it offers markets jump 55 per cent, leading to a 119 per cent rise in total eSports wagers. It now offers 304 per cent more live-betting markets, with in-play wagers increasing 242 per cent.

This has been aided by the launch of Pinnacle’s new eSports Hub, a resource available to customers in more than 100 territories. It has been quick to realise that a new approach to how betting products are presented to customers is required for the vertical. eSports is growing into an international phenomenon, with betting on its events increasingly popular. Operators will soon be fighting for a share of this market, but will find themselves facing a formidable competitor in Pinnacle.

HIGHLY COMMENDED UNIKRN

eSports is growing into an international phenomenon. Operators will soon be fighting for a share of this market, but will find themselves facing a formidable competitor in Pinnacle

GIQ Q4 REVIEW

OPERATOR INNOVATION AWARD THE STARS GROUP – STARS REWARDS THE STARS REWARDS programme has only been live since July 2017, but has allowed the operator to expand beyond its VIP programme for poker players, allowing it to cover all verticals. Already, 85 per cent of its active players have opted into the programme. Considering its wild success it’s easy to forget that launching the Stars Rewards programme was something of a gamble for The Stars Group. Its original poker-focused programme, where players were rewarded for the volume of poker play, was particularly popular among skilled players who may have been turned off by the new, softer offering. The fact that the operator has managed to balance retaining these players, as well as attracting new recreational customers, is an impressive feat. By awarding players chests – similar to loot boxes in video games – it is bringing in reward mechanics popular among a larger audience. To date, industry loyalty programmes have mainly been a way to reward highspending players, but Stars Rewards is using it – as it should be – as a retention tool. It was a calculated risk, but it has paid off beautifully.

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AWARDS/HOT 50 Jonas Delin

LAUREN DEVINE MONAGHAN Head of responsible gaming Mr Green While Devine Monaghan has joined an operator with a sympathetic attitude towards responsible gaming, she has ushered it into a leadership position with the Green Gaming tool that offers players a deeper insight into their gambling behaviour than has ever been seen before. She will need to continue on this innovative route to ensure it stays ahead of the pack.

MARKETING CAMPAIGN OF THE YEAR LEOVEGAS – HITTA.SE OF ALL THE entries for marketing campaign of the year, LeoVegas’ partnership with Swedish search engine Hitta.se stood out from the rest. Working with a search engine is a particularly effective way to get its brand in front of customers, but rather than simply putting a banner ad on the Hitta homepage it has been a little cleverer. When a search with no results is made, customers are shown a humorous LeoVegas ad. When they use its map search feature, any sporting venue is marked with a LeoVegas logo. If a sporting event is taking place at any of these venues, live odds from LeoVegas Sport are displayed. What makes this partnership so effective is that LeoVegas is integrating its branding into an everyday tool. It’s an excellent example of creative brand-building, without being too intrusive. After a year in which gambling advertising has come in for increased scrutiny, LeoVegas has shown it is possible to innovate in how operators promote their services. This new approach to advertising partnerships is deserving of the marketing campaign prize.

HIGHLY COMMENDED 888SPORT

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HENRIK FAGERLUND JONAS DELIN Chief executive officer Authentic Gaming 2017 was a breakthrough year for the live dealer specialist, and Jonas Delin is the mastermind behind Authentic’s growth. He is a stickler for details and has a strong vision of his product. Backed by LeoVegas, the company has made inroads in the live casino sector and closed the year with a landmark deal with Connecticut’s Foxwoods Resort Casino, which will be the first time that live casino will be streamed from a US casino to European players. Delin has made the industry take notice of Authentic, the next step could be even more exciting.

Chief product officer NetEnt As NetEnt expands into new jurisdictions such as the Czech Republic, Mexico and Serbia, Fagerlund is the man in charge of maintaining the supplier’s product position and growing its technological reach. After a year of successful rollouts, which included the launch of mobile slot game Finn and the Swirly Spin, Fagerlund will lead a push into Virtual Reality in 2018 that is set to take NetEnt to t he next level of growth.


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ERAN GILBOA Head of content Playtech Gilboa is the creative mastermind behind the provider’s blockbuster Age of the Gods series. Gilboa has led the entire process, from concept to production, development and deployment, overseeing games which immediately entered the company’s list of best-performing slots, and establishing a reputation for seamlessly delivering largescale, multi-channel projects.

STEPAN DLOUHÝ Chief investment officer Sazka Group As chief investment officer of Sazka Group, Dlouhý is the man tasked with identifying key acquisition opportunities, then pushing the deal through. So far this has seen him lead the acquisitions of majority stakes in Casinos Austria and Austrian Lotteries, as well as helping Sazka secure an Italian gaming licence. If rumours are to be believed, he will turn his focus westward in 2018, with a huge national lottery in his sights. If he pulls off this deal, he will have more than earned his place in the Hot 50.

RHYDIAN FISHER Founder and CEO Instant Win Games (IWG)

ner speaks volumes. Looking at the range of solutions it offers, it is clear why it is becoming such an attractive proposition. The likes of Add2Bet and Action Betting, as well as Cash Out functionality and Enhanced Payout accumulators, are major assets to companies in search of the latest tools. This is translating into revenue growth. In 2017 GGR from live betting was up 117 per cent, with mobile in-play up 160 per cent. Active players for live betting were up 63 per cent, and up 103 per cent on mobile. SBTech has leapt from being a challenger to an increasingly dangerous competitor, making it a worthy winner of the sportsbook supplier of the year for the second year in succession.

A NUMBER OF leading US suppliers have successfully operated social casino businesses, but few have had the same level of success in creating a viable B2B product. Scientific Games is the exception. It has made its free-toplay Play4Fun Network a central part of a range of solutions that land-based operators can use to drive growth in offproperty revenue. Rather than looking at social casino as a stand-alone product, Play4Fun is integrated into a casino’s loyalty programme, supported by free-to-play variants of slots from the supplier’s range of studio brands. While Scientific Games maintains its own B2C social casino products, it uses customer research to tailor the solutions it offers to clients. This helps it to avoid falling into the trap of expecting clients to compete against its own offering. In a sector where so many gambling businesses have tried and failed to establish a significant presence, Scientific Games has successfully leveraged a range of assets to create an industryleading solution. New clients in Oklahoma and Arizona show that US land-based operators certainly agree. In the past year, no other social casino solutions provider has come close.

HIGHLY COMMENDED BETGENIUS

HIGHLY COMMENDED GREENTUBE

H av i n g o r i g i n a l ly focused on partnerships with lottery companies, IWG has recently branched out to work with some of the leading iGaming operators. Founder and CEO Rhydian Fisher has been key to the company’s expansion, and deals with the likes of GVC, 888bingo and William Hill in the past year have helped IWG become a notable casino supplier. Lotteries and operators across the world are recognising instant-win games as an integral part of their portfolio, and IWG is positioned to reap the benefits of this.

SPORTS BETTING SUPPLIER OF THE YEAR SBTECH FEW WOULD HAVE thought any emerging supplier would be capable of breaking OpenBet’s dominance of the sportsbook sector, but SBTech is well on its way to doing so. It is significantly growing its presence in regulated markets, moving into Portugal with Bet.pt, Romania with NetBet and the Czech Republic with Sazka Group. Further growth has come from new Scandinavian partnerships with Bethard, Evoke Gaming and Aspire Global. Such growth is impressive, but its partnership with Sky Bet, covering the German market, is a clear sign of its increasing importance in the industry. The fact that it was selected over the operator’s existing sportsbook part-

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ANDY HORNBY & SHAY SEGEV Joint chief operating officers GVC Holdings

POKER SUPPLIER OF THE YEAR PLAYTECH IN A STRUGGLING poker market, Playtech has embarked on a major overhaul of its iPoker network. It has made a number of shrewd strategic moves, such as launching a new player valuation system to better segment players, and creating space for new recreational players without pushing away the experienced ones. CRM tools have been improved to strengthen clients’ ability to target these players, all supported by a new centralised promotion system. In short, if an operator is looking for a third-party poker client, there are no better options. Playtech may have not seen rapid growth in new customers in the past year, but that’s simply because it already works with all the top-tier operators. Instead, it has achieved an industry first with the establishment of the cross-border poker network, through a partnership with Finland’s Veikkaus and Austria’s win2day. With legislation to facilitate pooled liquidity on both sides of the Atlantic, cross-border poker networks are the future. In Europe Playtech is working to secure a significan first-mover advantage. It has an innate ability to pick out key trends as they are being adopted, and this is the latest example of that talent being put to good use.

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Andy Hornby and Shay Segev will be jointly responsible for ensuring the GVC juggernaut rolls on. When GVC completes its acquisition of Ladbrokes Coral, Hornby will be responsible for retail business in the UK and Europe and all digital marketing, while Segev will assume responsibility for technology, product, customer service, and leadership of operational and technology integration. Their partnership will be a crucial factor in making a success of the GVC-Ladbrokes combination. While integrating Coral and bwin in their current roles, Hornby and Segev showed they are capable of making consolidation run smoothly. Delivering £100m in synergies while building a new culture and continuing to hit revenue targets will dwarf their past achievements. The company’s future rests on their shoulders.

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JESPER KARRBRINK Chief executive officer Mr Green Jesper Kärrbrink is a refreshingly different sort of CEO. As such he is probably the perfect CEO for Mr Green. The company was launched with the idea of hardwiring social responsibility into its soul but had perhaps lost track of just what that means. He has ensured that Mr Green has regained its unique selling point and he has only just begun. Mr Green was once the future of gaming, Kärrbrink has made it so again.

KFIR KUGLER Chief executive officer Ezugi

RONALD KARAUI Chief executive officer SportPesa Karaui’s company is Africa’s biggest iGaming success story since Microgaming. He has grown SportPesa from a small Kenyan business to an international operator that is hard to ignore. It is building a new European headquarters in the UK, and moving into Italy through the acquisition of RCS Gaming. It is on course to become a major player in the coming years.

Kfir Kugler has been in charge of Ezugi for the past seven years, driving the company’s growth and expansion into new markets. He has turned Ezugi into one of the leading live casino suppliers. Having started out with just one studio in Costa Rica, the supplier now has nine studios across the world, and has become a pioneer for the regulated US iGaming market in New Jersey in partnership with Golden Nugget. Ezugi’s growth trajectory can only keep climbing as the demand for live casino increases across the world.

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ADAM LEWIS Chief marketing officer GVC Holdings

BINGO SUPPLIER OF THE YEAR PLAYTECH THE ONLINE BINGO market may have been struggling in recent years, but Playtech’s investment in its bingo offering has helped create an ecosystem which is a key part of the Playtech ONE omni-channel offering. The integration with retail bingo supplier ECM and acquisition of games studio EyeCon have helped in this regard, but Playtech’s Virtue Fusion network also delivered a number of major software developments during the past year, including seven exclusive games for some of the leading operators, such as Gala, Sky, William Hill and Rank Group. Playtech has also begun repurposing its most popular bingo games for the retail sector, including Clover Rollover. Another game, Tiki Paradise, was designed with Playtech’s omni-channel approach in mind and includes cross-channel features across the ECM estate. Playtech continues to see bingo as a key acquisition channel for operators that cross-sell into casino, which just happens to be Playtech’s core strength. One of the benefits of its recent Eyecon acquisition will be the roll out of the hit slot Fluffy Favorites for retail, with a hybrid Fluffy Bingo game also in development. The bingo supplier category remains a competitive area, but Playtech deserves its award after a year of significant development and cross-channel innovation.

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Adam Lewis joined GVC when the operator acquired Sportingbet in 2013. Over the course of the next four years he was one of the fundamental building blocks upon which the seemingly unstoppable rise of GVC has been based. Chief executive Kenneth Alexander quickly identified Lewis as one of his most important lieutenants. While the operator has grown quickly by acquisition, Lewis has been one of the key figures making sure that the operations keep growing efficiently.

Rikard Ljungman

RIKARD LJUNGMAN Chief commercial officer LeoVegas Rikard Ljungman has been part of LeoVegas’ senior management team for nearly three years, a period which has seen the company grow into one of the leading operators in a number of markets. Among other things, his involvement has seen the company make its first acquisitions (Winga and Royal Panda), sign its first football sponsorship deals (Brentford and Norwich), and launch a new responsible gambling platform. 2017 was another great year for LeoVegas, but this year could bring even greater returns.


AWARDS/HOT 50 PAT McHUGH

MARK LOCKE

Senior vice president, Global Lottery Systems Scientific Games Corporation

Chief executive officer Genius Sports Having gone through a fallow period, Locke has ensured the company formerly known as Betgenius has re-emerged as a force to be reckoned with. It has quickly moved to become a pioneer in eSports betting, rapidly established a thriving data business and demonstrating that its technology can cut it with a deal to supply its sports betting platform to OPAP.

Pat McHugh is an i ndu st r y vet er a n who leads Scientific Games’ lottery systems innovation projects. In the past year, he has been involved in two of the company’s landmark omni-channel systems implementations, for Canada’s Atlantic Lottery Corporation and Denmark’s Danske Spil, and has also managed five major lottery systems conversions globally. He is well-respected in the industry for innovating solutions that create value for lottery operators, including a cashless lottery retail solution for the Pennsylvania Lottery.

TIM MILLER Executive director UK Gambling Commission Over the past year Miller was a major exponent of corporate social responsibility at every industry conference he attended. With the regulator setting out an ambitious new threeyear strategy in which it looks to improve its oversight of the sector, and a change in leadership coming after Sarah Harrison’s resignation, Miller will have a significant influence on the UK gaming industry.

CASINO SUPPLIER OF THE YEAR NETENT NETENT HAS DOMINATED this category to such an extent that in recent years, the judging panel has been forced to ask the question: has anyone performed better than NetEnt over the past year? The answer, yet again, is a resounding no. While it may have been forced to issue a profit warning in January for its Q4 performance, the company remains on course to see revenue and profit growth for 2017. In the first three quarters of the year, it signed deals with 21 new operators and launched 14 of them. It opened in new markets such as Mexico, the US and the Czech Republic. Meanwhile, it strengthened its live casino and mobile product, and it continued to launch game after innovative game.

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NetEnt refused to stick to an established formula with games such as Finn and the Swirly Spin, which abandoned the traditional tumbling reels in favour of a groovy spiral. NetEnt remains the casino supplier to beat.

HIGHLY COMMENDED BLUEPRINT GAMING

In the first three quarters of the year, it signed deals with 21 new operators and launched 14 of them. It opened in new markets such as Mexico, the US and the Czech Republic

MARKETING SOLUTIONS PROVIDER OF THE YEAR BEEHIVE T H E R E A R E MOR E a nd more companies looking to offer data-driven solutions to iGaming, and Beehive has pushed its way to the top. At its core, Tel Aviv-based Beehive is an iGaming business intelligence platform that consolidates enormous amounts of data into a solid data warehouse. It has developed powerful data-driven tools that drive growth for its clients. Beehive allows operators to segment players by specific behavioural characteristics and quickly create multi-channel campaigns to target them with relevant promotions, delivering the right message at the right moment. It is a gaming marketer’s best friend. It already works with some of the biggest operators, including GVC, Ladbrokes Coral, Microgame, Snai and Markets.com, and late last year launched Pulse, a revolutionary new iGaming BI product that transforms the way operators analyse big data. The company spent years learning which KPIs drive operators in their day-to-day operations, and Pulse is the result. Alongside Beehive’s flagship Labs product, it is using new technology to offer cutting-edge solutions to its clients. It is using artificial intelligence to convert data into actionable insights, and this could be just the start of a new revolution in iGaming marketing.

HIGHLY COMMENDED OPTIMOVE

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JARL MODÉN Chief product officer LeoVegas The success of LeoVegas has been driven by a mobile-first product that stands out from the rest. At the end of last year Jarl Modén was rewarded for his part in the incredible journey LeoVegas has made since launch. He becomes the operator’s first chief product officer. Along with the technology team, Modén’s staff accounts for a quarter of LeoVegas’ personnel. His challenge will be to keep innovating while the company embarks on a new era of acquisition and integration.

GAME OF THE YEAR PLAYTECH – AGE OF THE GODS PLAYTECH FACED A major challenge in 2017, with the end of its partnership with the Disney-owned Marvel Studios forcing it to remove some of the bestperforming games from its portfolio. Playtech has plugged the gap with the launch of a wildly successful new proprietary franchise that stands out in a sector where huge importance is placed on branded content. Age of the Gods emerged from nowhere to roar to the top of the rankings. Five of the Age of the Gods slots are ranked among Playtech’s top 25 best-performing games, with two – the original title and Age of the Gods: Olympus – outperforming a number of its branded titles. The records keep tumbling. The franchise has broken records for the fastest-rising and highest revenue for the solutions giant, and also for the most unique players in one year. More of Playtech’s licensees have launched Age of the Gods titles than any of its other games – the franchise even has its own tab on Betfred’s casino page. It’s a phenomenon. In little more than a year, Age of the Gods has established a position similar to enduring gaming franchises such as Cleopatra and Rainbow Riches.

HIGHLY COMMENDED SCIENTIFIC GAMES – WILLY WONKA

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JASON WALBRIDGE Chief operating officer NYX Gaming Group Jason Walbridge is someone who is not given the credit he deserves. Joining NYX in 2016, he has been responsible for making sure its different components function as a whole. As COO, sportsbook executive vice president Keith O’Loughlin and gaming EVP Dylan Slaney report into him. Walbridge is a crucial member of NYX’s executive team, and is likely to play a similar role in Scientific Games’ new Digital division.

KEVIN O’TOOLE & SUSAN HENSEL Executive director and licensing director Pennsylvania Gaming Control Board Kevin O’Toole is the next regulator to take centre stage in the US, following Nevada’s AG Burnett and New Jersey’s David Rebuck. He will be responsible for the regulations that will govern Pennsylvania’s entry into internet gambling. His challenge is to ensure a smooth entry that stops the critics from carping or the feds from closing it down. He will be assisted by licensing director Susan Hensel, who will be the first port of call when applying for licences. She has shone as an ambassador for Pennsylvania, though the biggest challenges are yet to come.


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JUAN PEREZ HIDALGO President Coljuegos Since becoming the first Latin American jurisdiction to formally approve online gambling in 2016, the list of licensed operators in Colombia has grown rapidly. Praised by other regulators, Perez Hidalgo has shown a strong commitment to transforming the local gaming landscape while preserving the integrity of the industry. Under his guidance, we can expect to see many more companies enter the fast-growing Colombian market.

JOHN PETTIT Managing director Playtech BGT Sports Every year there is somebody on this list who personifies the challenge of making sports work at Playtech. It has to be admitted that few of the previous entries have covered themselves with glory. However, there is a feeling among many that BGT Sports sits in perfect harmony with Playtech’s omni-channel strategy. To date, BGT has been successful in winning retail clients. Pettit must prove it can do the same online. He could be the one who takes all the sports assets Playtech has acquired and turns them into a coherent and profitable whole.

Jason Robins

JASON ROBINS Chief executive officer DraftKings By the time DraftKings’ merger with FanDuel collapsed, the company had already established itself as the DFS industry leader. In 2017 it continued to grow its international presence while maintaining its place at the summit of the US market. The potential for legalised US sports betting is particularly intriguing for DraftKings – what company has a bigger database of engaged sports fans willing to risk money on their knowledge? Robins deserves huge credit for taking DraftKings from a niche business to a major player.

LOTTERY SUPPLIER OF THE YEAR SCIENTIFIC GAMES SCIENTIFIC GAMES MAY have won the lottery supplier of the year award for the fourth year running, but that is simply a testament to its continued strength. In an increasingly competitive field, the growing importance of online instant games means there are more suppliers than ever before. Scientific Games’ pure scale always makes it a force to be reckoned with, and you can’t ignore the evidence that it again out-performed the rest in 2017. The company’s games and technology are already powering some of the biggest lotteries across the world, and last year Scientific Games launched its most advanced omni-channel lottery gaming system for

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Canada’s Atlantic Lottery Corp and Denmark’s Danske Spil. The supplier also enjoyed success with its multi-state instant lottery game, Willy Wonka Golden Ticket, which has launched in 12 US states, with four more to follow this year. Through the game, Scientific Games has been able to bridge the retail and online divide by offering players the chance to win in April’s Billion Dollar Challenge event through a secondchance online draw for non-winning tickets. Then there is the supplier’s vast library of content, which last year saw the addition of nearly 30 Monopoly-themed lottery games and new licensed properties Wonder Woman and Caddy Shack.

SUPPLIER INNOVATION AWARD SCIENTIFIC GAMES’ ONEVOICE SCIENTIFIC GAMES’ RESEARCH and development team has long been one of the industry’s most prolific, but in 2017 it went one step further by inviting consumers into the research and development process. ONEVoice is SciGames’ market research online community. It asks users for their feedback on a wide range of gaming topics and then feeds back to them how their ideas helped shape the creative process. The online platform supports a community of over 2,000 consumers, who are engaged using surveys, member discussions and moderator-led discussions. F u r t her more, t he SciGa mes marketing team is also hoping to get a better understanding of non-players. By interacting directly with non-players, the company can learn what new products might be developed to appeal to their interest. It is not exactly rocket science but in opening up the creative process to its customers and beyond, SciGames has done something that that is quietly revolutionary.

In opening up the creative process to its customers and beyond, SciGames has done something that is quietly revolutionary

HIGHLY COMMENDED IWG

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ONE TO WATCH SUPPLIER AWARD RED TIGER GAMING THE RISE OF Red Tiger Gaming in just three years of operation has been little short of incredible. In a market where new suppliers often struggle with acceptance and then with integration, Red Tiger has stormed through the barricades. While any casino supplier will rise and fall on the strength of its games, Red Tiger has gone the extra mile when it comes to providing customers with inventive approaches to everything from integration to marketing. Its brilliant daily jackpots have been adopted by the likes of Paddy Power and William Hill. Effectively, Red Tiger brought the lottery jackpot draw into the casino game and – quelle surprise – everyone loves it. Red Tiger rose to prominence on the back of its Asian business, which continues to enjoy double-digit month-on-month growth, but its growth in Europe has been phenomenal. It is live with giants such as JackpotJoy, PokerStars and Unibet, and has deals in place with 40 of Europe’s top operators. It managed to integrate with OpenBet in just three weeks. Moving at this speed, it won’t be long before Red Tiger is established alongside the industry’s most successful suppliers.

Red Tiger has gone the extra mile when it comes to providing customers with inventive approaches to everything from integration to marketing 80

MATT DAVEY

SHELLY SUTER-HADAD

Chief executive officer NYX Gaming Group

COO & managing director Mansion

Since merging his Sydney-based business NextGen Gaming with NYX Interactive in 2011, Matt Davey has roared to the industry summit in a short space of time. The company has consistently grown its client base, while expanding and enhancing its product and service portfolio through M&A. It’s a testament to his drive and ambition that, having sold NYX to Scientific Games earlier this year, he will remain with the company to lead SG’s push to become the industry’s dominant sportsbook supplier.

After overcoming a series of challenges that threatened growth and sustainability in 2017, Mansion managed to turn uncertainty into opportunity. An important part of the puzzle was Suter-Hadad, who played a crucial part in driving Mansion to expand and diversify its product portfolio. The operator posted its best financial year to date in 2017 as a result. Under her leadership and through the launch of Mansionbet, 2018 will mark the first time the group has operated a sportsbook in the UK since 2009.

HENRIK TJÄRNSTRÖM Chief executive officer Kindred Group More than seven years on from becoming CEO of Unibet, Tjärnström has built the operator into one of the industry’s most powerful. The company continues to grow in regulated markets, and has built a reputation for hassle-free acquisitions, with the £175.6 million purchase of 32Red completed last year. Tjärnström has kept Kindred at the cutting edge of innovation and social responsibility.

TONU VAHTRA Head of service operations Playtech The ultimate example of a backstage hero, Vahtra is the Playtech equivalent of Scotty in Star Trek. He is in charge of the solutions giant’s support lifecycle, tasked with confronting each and every technical problem its clients may face and finding a solution. His employer describes him as one of the industry’s most knowledgeable and experienced online gaming incident management experts, balancing business expectations Henrik Tjärnström with operational capabilities.


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JONAS STRANDMAN Head of slots Yggdrasil Gaming Jonas Strandman is the man behind many of Yggdrasil’s most successful titles. Both a developer and a mathematician, Strandman oversaw the development of the Fusion Realms game mechanic, which has enabled Yggdrasil to release increasingly ambitious titles such as Jungle Book and Vikings Go Berzerk. The industry will be keenly watching what this slots visionary has planned for 2018.

Itai Zak

LUCY BUCKLEY Vice president – Interactive Inspired Entertainment Lucy Buckley’s rapid rise through the ranks at Inspired has been matched by the significant operational progress made under her leadership. When she took over its interactive division offered virtual sports and a handful of slots supplied to William Hill. Today it supplies 60 games to 20 operators and has expanded its virtuals range to ensure it remains the market leader in the vertical. If Buckley can successfully establish virtuals in the North American lottery industry, while further growing the casino and table games business her stock will rise further.

ITAI ZAK Chief executive officer GoWild Having made his mark on the supplier space during his tenure at SBTech, Zak is back to do the same on the consumer-facing side of the industry. GoWild was drifting along since establishing in 2008, but under his leadership it has had a total overhaul, launching three new brands and securing a UK licence. Its 10th anniversary will be a year to shine.

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eSPORTS SUPPLIER OF THE YEAR BETGENIUS THE eSPORTS ARMS race is only just beginning but Betgenius is charging ahead of all competitors. With more than 20 clients in regulated markets, including Unikrn – one of the highest-profile eSports-only operators – it has gobbled up an industry-leading market share. Far from simply looking to accumulate as large a customer base as possible, Betgenius is looking to offer the strongest possible product range. It has invested in developing its in-play offering, powered by a Talinn-based team of dedicated traders. It also offers data feeds for more than 40,000 events each year, making it one of the most comprehensive solutions in the market. Parent company Genius Sports has moved to support this growth by launching tailored variants of its integrity solutions to help protect competition.All this is managed by the company’s head of eSports Moritz Maurer. As the founder of one of the industry’s first eSports betting sites, GGwins, he is one of the most experienced executives in the vertical. He knows what customers expect, and has complemented a market-leading solution with a range of controls to ensure all betting is carried out in a fair and safe environment.

HIGHLY COMMENDED BETRADAR

Far from simply looking to accumulate as large a customer base as possible, Betgenius is looking to offer the strongest possible product range 81


AWARDS/HOT 50 And the winner of Responsible Gambling Operator of the Year Award for 2017 is…

no one Although some companies are moving in the right direction, there is still a way to go before the industry can say it is effectively tackling responsible gambling

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YES, WE HAD a strong range of entries from apply a fraction of the creativity used to coma number of companies doing some impresmunicate its brand and product to customers. sive things. However, our judging panel came “The industry should be deploying a simito the decision that no company had done quite lar level of energy, positivity and resources enough to justify the prize. to how it promotes responsible gambling as a No one can argue that public confidence in leisure activity,” GIA judge Pearse McCabe of the gambling industry has not deteriorated in McCabe Brands says. “It needs to be thought a number of major markets over the past year. of less as something companies have to do, and In a year in which operators have been forced to more as something which has positive outpay millions in settlements for failings in their comes for all, namely the long-term sustainabilresponsible gambling safeguards, it would ity of their brands and the industry as a whole.” have taken something particularly special to Sky Bet has recently started broadcastsecure this prize. ing TV spots which explain what the ‘When Last year Kindred walked away with this the fun stops, stop’ message carried by all prize for the work it had done, but people’s gambling ads in the UK actually means. Preexpectations of effective responsible gambling sented by Sky Sports anchor Jeff Stelling, it’s controls have moved on a long a small but effective way of What is arguably way in a year. properly communicating most important is Kindred Group’s Maris the importance of responBonello sparked the compa- for gambling operators sible gambling rather than ny’s current approach, which relegating it to a quick flash to think of responsible aims to detect rather than on the screen. gambling and corporate react to problem gambling With the UK Gambling (see page 90). Mr Green’s social responsibility as Commission and Malta renewed focus on social central to their businesses, Gaming Authority looking responsibility, Green Gam- not a necessary evil to shift to a results-based ing, is a noteworthy example, approach to regulation and led by the mastermind of responsible gambling away from the current prescriptive strategy, Jesper Kärrbrink. The Ontario Lottery and there will be more room for innovation. Gaming Corporation’s (OLG) PlaySmart is an Even small steps can have a major impact, also an excellent initiative that uses education da Silva Gomes believes. Small moves can have to help prevent problem gambling habits. huge consequences, and there are already a These are all effective approaches that number of operators and suppliers trying new should be adopted by all. “The industry needs things (see page 32). These could change the to try and solve the riddle of making gambling way responsible gambling is tackled. a safe form of entertainment,” says one of our What is arguably most important is for judges, Laura da Silva Gomes of Silverfish CSR. gambling operators to think of responsible This could begin with something as simple gambling and corporate social responsibility as allocating more resources to measuring the as central to their businesses. For many compaeffectiveness of responsible gambling controls. nies it is a necessary evil rather than a central More emphasis should be put on assessing how part of the business. any responsible gambling measure has helped When responsible gambling becomes more reduce problem gambling, or whether it has than just a way to improve a company’s image, changed the way this issue is dealt with, either and an important part of how a gambling busiin the long- or short-term. ness is run, this prize will be awarded. Some Responsible gambling efforts could be companies are moving in the right direction, boosted further if the industry is willing to but no one is quite there yet. n


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T H E G I Q I N T E RV I EW LUCY BUCKLEY

VP

From PR to

Lucy Buckley has taken an unusual route to an executive role in gaming. She tells Robin Harrison how, having started out in PR, she has risen to vice president of interactive at Inspired Entertainment

LUCY BUCKLEY HAS progressed from having privately-owned gaming machine developer Inspired Gaming Group as a PR client to running the interactive division of what is now New York-listed omni-channel games and software developer Inspired Entertainment. It’s the sort of career progression many only dream of. She began working with the company as an account manager at boutique PR agency Speed, alongside other clients such as price comparison site MoneySuperMarket and weekly magazine The Economist. “It was a fun start to my career,” she says. “I enjoyed working for entrepreneurs such as [Inspired co-founder] Luke Alvarez, which felt like a natural fit. He had started the business from a bolthole in Soho and has grown it to employ approximately 800 people around the world, and that sort of entrepreneurial drive was a big draw for me.” This led to her becoming Inspired’s marketing director in 2010, until she began to get itchy feet. “I think the common theme in my career is that I’m always looking for a challenge and don’t like to get too comfortable,” Buckley says. “I wanted to go and do a masters in business administration (MBA), to focus more on strategy and business. I just felt my talents weren’t being stretched enough in my role at that time. “Luke supported me doing the MBA, and supported my progression into different roles in the business. First working on strategy, then moving to manage the mobile remote gaming server business, before recently taking over Interactive, including online virtual sports. 84

“There’s been a lot of changes in a fairly short space of time, but I love those challenges.” She says the gaming industry was particularly attractive to her, especially having worked with Inspired as it reinvented itself from a pub-based digital gaming machine business to expand into global video lottery terminals and virtual sports, following the introducing of the UK smoking ban. “There is a lot of opportunity, and a lot of challenges with regulation and the perception of the industry, and I’ve always found that very interesting,” she says. Having evolved in the face of challenges in the past, Buckley argues that the company is in a stronger position than ever to manage the challenges of the future, such as a potential reduction on fixed-odds betting terminal (FOBT) stakes. Key to this strength is the company’s rapidly growing interactive division. “Inspired has been supplying virtual sports online for over a decade, but only recently has expanded its interactive offering to include slots, table games and on-demand virtual sports via its Remote Game Server (RGS), Virgo,” Buckley explains. “When I took the RGS business over in 2015 we were supplying a handful of slots, predominantly to William Hill. “We now have over 60 casino games, 20 operators and an enviable year-on-year growth rate driven by top-performing titles such as Centurion, Super Hot Fruits and 2 Fat Cats. 2018 looks set to be a significant year for the interactive division as we

expand our reach to more operators and regulated markets.” Casino and games may be growing, but virtual sports remains the stand-out product: “We have the most established product, we have the most sports and numbers games, graphically the best product, we have over a decade of data and experience. Generally there’s no doubt in any operator’s mind that we are the safest bet,” she says. “We have done trials before where we have outperformed competitors by around 500 per cent, so that’s why operators opt for Inspired.” Virtual sports’ versatility is particularly attractive to prospective clients and regulators, Buckley adds. “Virtual sports can be positioned as a betting product as it is odds-based and offers a similar experience to sports betting, or as a casino product, as it is based on a randomnumber generator and plays like a table game. It can also feel like a lottery game, as there is the RNG determining the result, so it is very adaptable. It can be tweaked for different markets and uses.” The products are constantly being improved, and in 2017 the company went as far as broadcasting a simulation of the Grand National on UK television, complete with fallers, unseated jockeys and animated fences. An American football game, 1st Down Football, features close camera angles to reflect the spectator experience of contact sports. Ondemand versions of the games feature chip placement and a bonus wheel to be more entertaining for casino and bingo players.


T H E G I Q I N T E RV I E W LUCY BUCKLEY

“The level of detail is amazing,” Buckley says. “We keep innovating with new sports, then going back to update our old sports. We ensure the graphics are up to date with film and TV industry trends, and adding enhanced features such as cash-out is important.” This has helped Inspired catch the eye of the lottery industry, with the Michigan State Lottery signing a contract to roll out virtuals last year. Buckley says the landmark launch will be a showcase for the rest of the North American lottery market, where discussions are already underway. “I did my MBA thesis on the digitalisation of the lottery industry, and while revenue is still going in the right direction, the player numbers are declining. In the US, sales are predominantly through retail, and they’re just not tapping into the younger generation of players that would have previously replaced the older demographic. “The industry wants change and they see virtual sports as part of that change. The product is very entertaining and offers more for your money.” In overseeing Inspired’s major growth opportunity, Buckley finds herself in an enviable – and unusual – position. Talented individuals can progress rapidly in gaming but, especially in the sports vertical, the gender imbalance is uncomfortably obvious. She acknowledges that favouring women in the recruitment process raises questions of tokenism, but also believes that the current imbalance needs a major correction. GIQ Q4 REVIEW

“It sometimes may feel wrong to talk about women-only things, but in order to achieve a level of equality and diversity, it is important to focus on women to ensure they are afforded the same opportunities as men,” she says. “There’s more that everyone needs to do and there’s more that I need to do to support other women in the industry,” Buckley states. “Denise Coates has been incredibly successful, for example, but that’s not representative of the rest of the industry. “Lotteries have been very good at hiring female executives, and there are other notable women such as [former IGT CEO] Patti Hart and [William Hill director of UK retail] Nicola Frampton in the industry. But it’s not yet anywhere near a 50-50 split between men and women in the boardroom. We need to grow and promote female talent throughout businesses.” n

“We have the most established product, the most sports and numbers games and over a decade of experience. There’s no doubt in any operator’s mind that we’re the safest bet” Lucy Buckley, Inspired Entertainment

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T H E G I Q I N T E RV I EW KENNETH ALEXANDER

Alexander the great GVC ended a stellar 2017 with another transformational deal, agreeing terms on the acquisition of Ladbrokes Coral Group for a consideration of up to £3.9bn. Chief executive Kenneth Alexander discusses the company’s progress with Robin Harrison 86


T H E G I Q I N T E RV I E W

KENNETH ALEXANDER

“You have to be prepared to evolve in our industry and I think that is one of GVC’s great strengths. Every deal is different and circumstances do change” Kenneth Alexander, GVC IN DECEMBER 2012, GVC Holdings was announced as the junior partner in William Hill’s big-budget deal for Sportingbet’s Spanish and Australian assets. Fast-forward five years and it is set to snap up Ladbrokes Coral Group. Oh, and in between it bought bwin.party. Kenneth Alexander will end 2018 in charge of bwin, PartyGaming, Ladbrokes, Gala Bingo and Coral, five of the industry’s bestknown brands. It’s the sort of rapid, stellar rise that invites comparisons with the David Baazov-era Amaya. But unlike Baazov, Alexander is an industry veteran, and combines the former’s strategic nous with remarkable operational skills that have seen him turn numerous distressed assets into thriving businesses. He took the unwanted parts of Sportingbet and transformed them into something resembling the company in its heyday. He then took one of the industry’s M&A cautionary tales, bwin.party, and brought it back to the industry summit. “I’ve been delighted with the performance of the group in 2017,” Alexander says. “We have accomplished so much but there is still so much more to come. The bwin.party integration is all but complete and the fact that we have achieved this, while at the same time continuing to enhance our customers’ experience, gives me great confidence going forward.” Had the Ladbrokes Coral deal not been announced, few would have denied that Alexander and GVC would have had a stellar year. The bwin.party turnaround is nothing short of remarkable. The company has seen doubledigit revenue growth after five years of decline. partypoker is especially impressive – a brand that was “a shadow of its former self”, he admits, has once again become a force to be reckoned with. Revenue in the third quarter of 2017 was up 48 per cent year-on-year. “We have invested in the business, improved the product and customer experience, developed partypoker LIVE, the live tour, and significantly increased marketing,” he explains. “Time will tell if this investment provides the results we expect, however, I’m confident it will. Let’s not forget, prior to GIQ Q4 REVIEW

UIGEA, partypoker was the world’s largest online gaming brand – it has huge heritage.” This heritage was also apparent within bwin, he continues. He says that his underestimation of the strength of the bwin brand was one of his personal highlights of the year, as was the strength of its technology platform. This combination of strategic thinking and operational nous has seen Alexander once again secure a place on this year’s Gaming Intelligence Hot 50. While we look to avoid simply repeating the usual suspects each year, his continued inclusion is more than merited. Every year he gets hotter and hotter. Just as he can see potential to revitalise a dying brand, he is equally willing to move on from past glories. GVC’s Turkish business was one of its most successful arms, but in November last year the decision was taken to sell the subsidiary to Ropso Malta in a deal worth up to €150m. “You have to be prepared to evolve in our industry and I think that is one of GVC’s great strengths,” he says. “Every deal is different and circumstances do change.” While Turkey has proved to be successful for GVC, it is very much a grey market, and goes against the company’s drive to focus on regulated territories. It was long seen as a potential stumbling block for any major deals, though the bwin.party acquisition, and the operator’s continuing presence in the New Jersey market suggests this was not as big an issue as previously thought. “The disposal of our Turkish-facing business was undertaken for a number of reasons,” Alexander says. “Its potential impact on M&A was one factor. Focusing the business on regulated and regulating markets was clearly another, and then there was our decision to migrate all countries onto the bwin platform. If we had done this with Turkey then we would have lost some flexibility going forwards. “GVC has consistently evolved as a business, and the disposal of Turkey is part of that evolution.” This does not mean the company will now shy away from yet-to-regulate markets, he adds. “If we feel there is a strong chance of future

regulation we will seriously consider entering. Unlike many of our peers, we have significant experience operating in developing fast-growth markets and there is a lot to be said for being in these markets ahead of regulation – you get to know what the customers are like, what works and what doesn’t work, and the ability to establish a brand.” But rather than establishing a brand, Alexander’s focus looks set to shift to improving an established brand. The deal for Ladbrokes Coral is particularly intriguing, as it is arguably the first time GVC will take over a company on the up, rather than one in decline. Many questions remain, namely what will happen to Ladbrokes Coral’s partnership with Playtech. With all of GVC’s sports brands migrating to the bwin platform, people could be forgiven for assuming that the operator aims to power its products with proprietary technology. This is given further credence by GVC’s acquisition of bingo platform provider Cozy Games in December, throwing into doubt bwin.party’s long-term partnership with 888’s Dragonfish. However, Alexander suggests that the Dragonfish partnership will not necessarily end: “Bingo was the missing piece of the jigsaw in terms of proprietary technology,” he says. “It gives us optionality going forward, but should not be viewed in terms of one particular supply contract we have.” Alexander likes to keep onlookers guessing. While GVC will be linked to each and every company potentially up for sale – William Hill was mooted in the past, and few would be surprised by a merger with The Stars Group – he says that the deal has to be right for GVC. When considering M&A targets, Alexander says that it has to be in keeping with the operator’s overall strategy. “We won’t buy things simply because they appear cheap,” he explains. “While the market will obviously judge us by the deals that we do, I also look at the deals we didn’t do as a measure of how good we are.” Whatever GVC does or doesn’t do in terms of acquisition, Alexander is on a remarkable winning streak. It’s hard to see when it will end. n 87


T H E G I Q I N T E RV I EW MARIS BONELLO

Taking responsibility seriously Maris Bonello originally planned to spend two years working for Unibet in order to pay for her masters degree. Eight years later she is still at Kindred Group, and has revolutionised the operator’s approach to responsible gambling. By Robin Harrison AS SHE APPROACHES a decade working for Kindred Group (formerly Unibet), Maris Bonello has established herself as one of the industry’s unseen heroes. Having joined as a fraud analyst, she almost singlehandedly pushed through an overhaul of the operator’s approach to detecting and treating problem gambling. She is the driving force behind the Player Safety Early Detection System (PS-EDS), a system that alerts the operator’s responsible gambling experts when players show signs of problem gambling behaviour. Alerts are then processed on a case-by-case basis, and the player is assessed and treated accordingly. When she started at Unibet, the company did not even have a dedicated responsible gambling team. She is quick to talk down her role: “I wouldn’t say I revolutionised [problem gambling detection], but I was perhaps a catalyst in it,” Bonello says. She is selling herself short. When she began working at Unibet the industry’s approach to responsible gambling was very reactive. A customer would only be targeted after they had developed a problem. Around this time, Bonello says, investment was heavily focused on fraud detection. 88

“I remember working in fraud and seeing investment in detecting fraud, and I felt that the same investment could be made to detect problem gambling,” she explains. “In fact, I went to our general counsel with the proposal that if I was given support, I would actually be able to make responsible gambling the bedrock of sustainable play rather than a necessary evil, as it was often viewed by other operators. “Luckily, our general counsel was as ambitious (and possibly as crazy) as I am, and the rest is history.” The fact Bonello is even working for Kindred is something of a lucky coincidence. Having studied psychology and begun a masters degree, she only took the job to fund her course. “The plan was to do two years until I could pay off my masters, but then I got the opportunity to combine both psychology and working at Kindred through responsible gambling.  Eight years later and I’m still here.” What is particularly impressive is that the company was prepared to support Bonello in her efforts. She admits there was some “initial scepticism”, but this is something she now understands in hindsight.

“You have a new employee questioning certain activities, promoting ideas not commonly used in the industry, and occasionally asking questions about customers,” she says. But even her new, untested and potentially radical ideas were given a fair hearing. “What I can say is that I always had support from our CEO, and every time there was resistance from management, I had the chance to explain my madness,” she says. “I never really got a ‘no’ as an answer, but would get ‘OK, why?’” This is a testament to Kindred’s company culture, Bonello says. As well as being a pioneer in responsible gambling, the operator is a leader in working towards a genderbalanced workplace – an area where the industry has traditionally lagged behind (see page 55). While efforts are being made to redress this imbalance, there are still issues, she admits. “I have had encounters where being a 30-year-old female was perceived as not being an expert or important enough to be approached. This was especially true at the beginning of my career when I would feel invisible at certain conferences, or be the only female speaker at an event,” she says. “I think


T H E G I Q I N T E RV I E W MARIS BONELLO

“A higher number of customers are resorting to a more loyal customer relationship with us rather than a quick win” Maris Bonello, Kindred Group

the worst experience I had was when I was explaining the Kindred approach to responsible gambling and actually got the comment of how can ‘someone like me’ come up with such a thing.” This is especially galling considering just how much of an impact PS-EDS has had. At a period during which the iGaming industry is facing intense scrutiny of its player protection controls, Bonello can point to clear evidence of the solution’s effectiveness. “We have seen a decrease in long-term selfexclusion, which in turn has seen an increase in customers using softer responsible gambling tools,” she says. “Therefore, a higher number of customers are resorting to a more loyal customer relationship with us rather than a quick win. “We have also seen a decrease in abusive customer communication. The reason for mentioning this is because, according to research, customers that are abusive might be showing signs of problematic gambling – they become abusive due to psychological strain connected with their gambling.” Further details are to be revealed in March, when Kindred Group will publish its first sustainability report. GIQ Q4 REVIEW

This report comes at a difficult time for the industry. Scrutiny of operating practices has increased over the past year and it feels as if there has been a sudden rush by operators to play catch-up with the likes of Kindred. Bonello denies this is purely to improve the industry’s image, but recognises that “a high number” of recent positive changes have come about because of their impact on public opinion. “Personally, I wouldn’t spend too much time pondering why the shift happened, and would focus more on the good that comes from the shift,” she explains. “If I propose a new initiative to Kindred and Kindred decide to back me, whether due to public presence or regulator pressure, it would still mean the new initiative would be in place.” Despite this, she is quick to add that more needs to be done. As part of one PhD study Bonello worked on, she contacted the customer service teams of 50 online operators and mentioned suffering from a gambling problem. In several cases she was offered bonus funds to keep her playing, despite her account being low on funds. She is adamant such behaviour needs to be stamped out. And the excuse that regula-

tions hinder innovation around responsible gambling doesn’t cut it. “Online operators are constantly offering new games, new payment methods, new opportunities… perhaps we should be focusing on offering new protection systems as well.” This is more of an observation on the wider industry than Kindred Group itself, where Bonello has found the company-wide commitment to social responsibility “almost overwhelming”. “I have a team that supports me and promotes responsible gambling internally. Also, we do roadshows and presentations across the different offices. I’ve seen that employees actually feel good being in a company where social responsibility is taken seriously,” she says. “Understandably, gambling can have quite a negative connotation and seeing that Kindred takes consumer protection seriously, does help employee engagement.” Having joined a company with no dedicated responsible gambling team, Bonello says she now regularly receives suggestions from other departments on how to better integrate responsible gambling into day-to-day operations. “At times it feels a bit too good to be true,” she says. n 89


T H E G I Q I N T E RV I EW EMILIO HANK

Turning up

the heat Mexico’s Caliente Interactive was one of the first online gaming operations in Latin America and is one of its most developed. As it prepares to expand to Colombia and eventually North America, CEO Emilio Hank describes its journey and his own. By Steve Hoare CALIENTE INTERACTIVE IS one of Latin America’s most successful regulated operators. It is one of Mexico’s strongest brands. It is also a flagship for Playtech’s online sportsbook. Until now, it has not ventured out of its home market. Chief executive Emilio Hank hopes that is about to change. He plans to launch in Colombia’s fledgling online gaming market during 2018. “Culturally, out of all the people in Latin America, Colombians are most similar to the people of Mexico. So it seems like a natural conversion to go there. We believe the experience we have in Mexico means we will hit it off in Colombia,” says Hank. He does not know at the moment whether he will launch with the Caliente brand or a local brand. That might mean partnering with a Colombian casino, retail bookmaker or media company. Hank is discussing the options but is confident that the Colombian gambling regulator Coljuegos will grant Caliente a licence soon. Coljuegos has issued seven online sports betting licences to date. These have gone to MiJugada.co, Wplay.co, Betplay.com.co, Colbet.co, Zamba.co, Codere.com.co and Royal Betting Solutions. Coljuegos chairman Juan Pérez Hidalgo has said he expects the number 90

of licensed operators to rise to 20 during 2018. Colombia also plans to legalise a number of new iGaming products, including live dealer roulette, blackjack and baccarat, virtual sports, keno and online scratchcards.

Ahead of the market If Colombia is the next step for Caliente’s immediate future then it can draw on an illustrious past. The company’s roots go back over 100 years, and when it comes to online gaming it can also claim to be something of a trailblazer. It launched its first sports betting website in 2002. “I think its first customer placed a bet in 2005 or 2006. For three or four years there were no customers,” Hank chuckles. “If they had launched in the UK or somewhere else, they might have been one of the giants of the industry, but they launched in the wrong market.” So Caliente was quite literally ahead of its time. There was very little eCommerce in Mexico in 2002. There were very few internet users. But Caliente had a sports betting website. From 2005 until 2011, the website started to win customers. However, it was only really Caliente’s retail customers who were aware of the website. Outside of its own shops, Caliente did very little marketing. Hank took over in 2012. He had worked


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in Caliente all his adult life, working behind the tills before managing the company’s sportsbook. In 2008, he introduced poker to Caliente’s casinos before leaving to complete an MBA in Madrid. Upon his return he was asked to launch Caliente’s online casino, poker and bingo, and to grow the customer base. His first decision upon taking charge was to switch supplier to Playtech. Caliente had built its own sportsbook but after it decided to launch an online casino in 2008, it turned to Microgaming. However, nearly three years of technical delays meant the casino was never launched. Hank decided enough was enough and turned to Playtech. “The casino website launched within six months. Playtech worked very fast and were very professional. It was the right decision,” says Hank. However, six months into his tenure, the president of Caliente sent a letter to all his managers saying they had to cut costs by a third. Hank objected, saying that he needed money for marketing and staff. “If it’s going to be a real business, then we need to invest,” complained Hank. But no. He was told to grow the business with no internal investment. After a year of working without money for operations and marketing, Hank travelled to London to meet his supplier Playtech at the ICE Totally Gaming expo. They discussed the possibility of replicating the William Hill Online joint venture that had resuscitated the UK bookmaker’s internet operations so successfully. Hank told Playtech that Caliente was “the William Hill of Mexico”, with a strong brand GIQ Q4 REVIEW

heritage and wide retail coverage. Obviously, there was a catch. Caliente had no money to spend. A year-and-a-half of negotiations ensued before a complex deal was struck that saw Playtech and Caliente launch a new company called Caliente Interactive in 2014. The 20-year deal was complicated by Grupo Caliente’s complex structure. Among other things, it had a 50-50 joint venture with Codere that operated bingo halls and slot operations in Mexico. The Caliente-Codere partnership was also keen to launch online but Caliente wanted to go it alone. (Codere eventually bought Caliente out of the partnership in 2016, with both companies taking a share of the bricks and mortar operations.) It also took a year to convince the Mexican regulator to approve a new company that was the independent internet operator of a landbased Mexican licensee. Hank became chief executive officer of the independent Caliente Interactive in 2014. Grupo Caliente owns 100 per cent of the shares, while Playtech provided a loan, which has been repaid, to get the operation up and running. In return, Playtech claimed an increased share of royalties for consultancy and marketing services. It also recommended hiring a team from the Israeli branch of Wil-

liam Hill Online, which relocated to Tijuana and San Diego, California. These were people who knew the product inside out. In addition to the online casino, Caliente migrated its proprietary sportsbook operation to Playtech’s Geneity software and more recently to Playtech’s BGT-Geneity hybrid. Caliente has also launched bingo and poker with Playtech, all running off the IMS backbone. “It is the best software out there. Compared to our proprietary system, it’s like a fishing boat next to a cruise ship,” says Hank. In 2014, internet revenue was less than one per cent of Grupo Caliente’s total revenue. Three years later, Caliente Interactive accounts for almost 40 per cent of the group’s total. The company’s workforce has grown from six to 150 people. The sportsbook has become Playtech’s flagship customer. Along with Ladbrokes, it was given credit for a 53 per cent rise in Playtech’s sports revenue in 2016. Despite this growth, Hank is aware that online gaming is still in its infancy in Mexico. This is borne out by the operator’s communication with customers, which is focused on educating them about how to play online. This means customer services teams have to be sensitive to local temperament and culture. “My goal is to create this new entertain-

In 2014, internet revenue was less than one per cent of Grupo Caliente’s total revenue. Three years later, Caliente Interactive accounts for 40 per cent of the group’s total 91


T H E G I Q I N T E RV I EW EMILIO HANK

ment form in Mexico and grow it into UK-type numbers,” says Hank. Another unique aspect of the Mexican market is customers’ brand loyalty. Players do not tend to jump from operator to operator. Once you have a customer, you have them for life. This brand loyalty is also seen offline. Hank does not believe it can be attributed to a lack of choice. The likes of Codere and Ganabet have licensed operations, while Hank sees local competition from ‘grey operators’ such as bwin and bet365. “There is a lot of grey activity in the Mexican market. We’re working with the government to close it down and I think we’re very close to doing it,” says Hank.

Heading north After that, Hank might turn his attention to North America. Caliente has a close relationship and long history with its neighbour. The company gets its name from the Agua Caliente Racetrack in Tijuana that it founded in 1916. The racetrack soon became a magnet for Californians wanting to bet, and Tijuana flourished during the prohibition era from 92

1920-33. Later, the city became an attraction for college kids and others wanting an easily accessible walk on the wild side. Hank says the racetrack retained its Californian clientele until the emergence of illegal online betting sites in the early 2000s. “There is still a lot of brand heritage in California,” he says. The company sponsors eight teams in Mexico’s soccer league, which has given it huge brand exposure among Hispanics in the US. This extends well beyond California into Texas, Florida and beyond. “We have a huge amount of traffic into our site from Hispanics in the US, but we cannot do anything with them because it’s illegal. The brand presence in the US is clear without us doing anything there,” explains Hank. Ideally, California would legalise online gaming but Hank says New Jersey and other regulated states are a possibility, such is the strength of the Caliente brand Stateside. Discussions are underway. Caliente could become online gaming’s first pan-American brand. n

Top: Caliente sponsors six teams in Mexico’s soccer league. Above: Agua Caliente Racetrack in Tijuana was a magnet for Americans during the prohibition era

“My goal is to create this new entertainment form in Mexico and grow it into UK-type numbers” Emilio Hank, Caliente


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T H E G I Q I N T E RV I EW SHELLY SUTER-HADAD

Building on

strong foundations Following its most successful year to date in 2017, Mansion has big plans to develop its presence in regulated markets in 2018. Shelly Suter-Hadad is the executive tasked with leading the push. By Macarena Rodicio

LONG ESTABLISHED IN the UK as a poker-led brand, Mansion was forced to withdraw from the market in 2014, following the passage of the country’s new regulatory regime. Having secured a licence in 2015, it reintroduced a number of casino brands to the market. The company said at the time that while the UK’s regulatory framework posed additional challenges, it was a positive for both the Mansion Group and the wider industry. Mansion enjoyed the most successful financial year in its history in 2017, suggesting Lahav was on the money. Overall, group revenue grew by nearly 40 per cent in 2017, with Mansion quadrupling its UK market share. This was mirrored by 300 per cent growth in revenue generated from the UK market. Furthermore, as a result of a number of enhancements to its mobile offering, the operator achieved a 400 per cent increase in UK mobile revenue. Turning the Gibraltar-based company into a force in regulated markets has been Shelly Suter-Hadad’s main challenge. Having held a number of senior roles within Mansion over the past nine years, Suter-Hadad now serves as chief operating officer and managing director. This makes her responsible for the established business as well as Mansion’s expansion in the highly competitive markets of the UK, Germany and Sweden. 94

“2018 promises to be a great year for Mansion, and we have plenty of developments in the pipeline to further expand our footprint in the UK,” says Suter-Hadad. Central to this will be Mansion’s flagship Casino.com brand, which was relaunched last year alongside a UK TV advertising campaign. The company will also launch MansionBet, a new sports betting brand that will go live initially in the UK, marking the first time the company has operated a sportsbook in the country since 2009. As a privately-owned business, Mansion has benefited in the past from the freedom to move swiftly to capitalise on new opportunities. Suter-Hadad’s focus now is to turn this agility into an advantage in regulated markets. “Our size allows us to focus on our customer relations, service and technology, which we believe are second to none,” she explains. She adds that this is already proving itself in the financial results. “2017 was our best financial year ever, and we have established a robust three-year plan taking us to our 2020 vision” This includes expanding the company’s portfolio with new and improved products that boost player engagement. “We will introduce gamification and social features to offer our players added excitement,” she explains.

“Gamification is an exciting new CRM approach that Mansion really believes in. It is important to enhance our players’ experience by rewarding their challenges and achievements. We are integrating with a CRM journey platform that has a strong background in social gaming in order to focus on this area, with a view to launching thrilling new features by Q2. “As a purely online brand, we can really drill down into the data we collect on our players and their preferences to ensure we offer a tailored and personal approach. The added value of surprising our customers with how well we know them will always be key for us. This is the case across all our brands and products; including the launch of our new MansionBet sportsbook.” In August last year, the operator agreed a deal with AFC Bournemouth to become the club’s first ever sleeve sponsor for the 2017/18 season. Mansion had previously partnered other Premier League sides such as Tottenham Hotspur, Manchester City and Crystal Palace. According to Suter-Hadad, the industry can expect more sponsorship agreements from Mansion in the coming years, as “it’s something we’re very passionate about”. A key area of focus for Mansion throughout 2018 will be the expansion of its most international and globally-recognised brand, Casino.com. After introducing Casino.com to German players last year, the group now intends to bring the brand to Nordic countries. “Although entering the Nordic market could be seen as a challenge, as it’s highly saturated and competitive, we believe there is always room for a brand like Casino.com. Offering these savvy players an even wider variety can only be positive,” Suter-Hadad says. The rebrand of Casino.com was only the first in a series of initiatives to increase the group’s global presence. Columbia’s newlyregulated market and the wider Latin American region could represent another attractive opportunity. The company is yet to decide on its plans for the continent, although Suter-Hadad recognises the potential. “Thanks to the strength of


T H E G I Q I N T E RV I E W SHELLY SUTER-HADAD

“The added value of surprising our customers with how well we know them will always be key for us” Shelly Suter-Hadad, Mansion

our Casino.com domain name, this brand has always acted as a global acquisition tool – with players from around the world naturally gravitating to the powerful URL. Owing to this, we have always benefited from Latin American visitors, and we recognise the size and potential of this market.” In the meantime there are issues to deal with on the home front, Gibraltar, where Mansion is headquartered, suffered a setback after the EU Court of Justice ruled in favour of the UK in its dispute with online gambling operators in the territory, resulting in the loss of some of the tax privileges that have made Gibraltar so appealing to gambling firms. “The UK point of consumption tax eroded

GIQ Q4 REVIEW

our margins from this territory significantly and forced us to re-engineer our approach,” Suter-Hadad says. The complexity and uncertainty surrounding Brexit has also raised concerns. The validity of the Gibraltar licences were underpinned by the UK’s membership of the EU. Post-Brexit, they will no longer be valid. According to Suter-Hadad, “it is possible that Brexit may have an impact on the existing border situation, which is currently favourable to Gibraltarbased companies who rely on a workforce that commute cross-border with ease.” However, despite the threats of Brexit, Mansion’s COO believes in Gibraltar’s alliance with the UK and the value it brings to the

gaming industry as a whole. “Gibraltar is still growing, as we continue to see new business and companies open here,” she says. While in 2017 the aim was to strengthen Mansion’s user experience and overall branding, this year will see the operator diversify the product offering by moving more into mobile. “Our aggressive marketing strategy has led to strong results in customer growth, with Mansion doubling the number of new customers from 2016 to 2017. In 2018, we’ll continue to extend our digital presence and enter new regulated jurisdictions while placing focus on the mobile market, as we believe that is where the future of gaming lies,” she concludes. n

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T H E G I Q I N T E RV I EW KEVIN SHEEHAN

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T H E G I Q I N T E RV I E W KEVIN SHEEHAN

The complete package Scientific Games has kicked off 2018 by completing its CAD$775m acquisition of NYX Gaming Group. The supplier is now positioned to be a market-leading force in the land-based gaming, social, lottery and iGaming sectors. Chief executive Kevin Sheehan explains how it was done. By Robin Harrison

WHEN GAMING INTELLIGENCE first interviewed Kevin Sheehan in 2016, shortly after he began his tenure as Scientific Games chief executive, he was very clear about where he would focus his attention. With the company coming to the end of an unprecedented acquisition spree, his first job was to balance the books. “[Debt] reduction and fiscal discipline, combined with enhancing existing operational activities and capitalising on future growth opportunities, will be critical for our business and key to continuing our momentum,” he said at the time. He came to Scientific Games with a proven track record at established companies such as Norwegian, Avis and Cendent, to name a few. In hindsight, the Scientific Games CEO role was perhaps not the dream job it appeared to be. The company was saddled with debt as a result of deals for Bally Technologies, Shuffle Master and WMS, and needed a coherent strategy for how these components would all function as one. This uncertainty was also having an effect on the value of the company’s shares, with analysts talking down progress with warnings of pain ahead. These issues have been managed success-

fully by Sheehan. The company’s debt has been slashed, and the acquired assets have been moulded into a functional unit. This has been achieved without sacrificing growth. Revenue for the third quarter of 2017 was up seven per cent to $768.9m, driven by growth across all three divisions. The markets are clearly responding well. The company’s share price was up 250.16 per cent year-on-year, at $54.80 per share as of 17 January 2018. This uplift has turned SG into a $4.85bn beast. “We have made extraordinary progress at Scientific Games,” Sheehan says of the past year. “We are solidifying our leadership team, executing our corporate strategies and producing unprecedented financial results. “We are beginning to leverage our technology and content across all platforms, break down silos, enhance our processes and work together towards the best outcome for Scientific Games. I am excited that we are all on a journey to position us for long-term success.” Sheehan highlights a number of key factors in driving growth over the past year, such as the company’s focus on improving customer experience through innovative new solutions. Scientific Games’ research and development team is one of the best in the industry, and

“We have made extraordinary progress at Scientific Games. We are solidifying our leadership team, executing our corporate strategies and producing unprecedented financial results” Kevin Sheehan, Scientific Games GIQ Q4 REVIEW

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“I can tell you that if and when sports betting becomes legalised in the US, Scientific Games will be prepared to move forward in the regulated markets” 98

its crowdsourced market research solution OneVoice secured the company the Supplier Innovation trophy at this year’s Gaming Intelligence Awards. Each division has performed well. The land-based SG Gaming had the highest customer wallet share of spend among suppliers, with new products such as the TwinStar and GameScape cabinets and mobile cloud-based products hitting the casino floor in Q3 2017. SG Lottery has established itself as North America’s fastest-growing lottery systems supplier over the past two years, while it remains the global market-leading supplier of instant games. The supplier’s interactive division also enjoyed a strong year, with social apps such as Jackpot Party and 88 Fortunes performing well, aided by the SG Universe product suite. The company has been bolstered further by what Sheehan calls “tuck-in” acquisitions, including social bingo studio Spicerack Media, design studio Red7 Mobile, table games specialist DEQ and lottery retail solutions provider Lapis Software. All this is impressive, but when talking about Scientific Games today, the only thing anybody wants to know about is NYX.

Game changer The announcement that Scientific Games was acquiring NYX for CAD$775m came as

something of a surprise to the industry. With William Hill and Sky Betting & Gaming both owning a stake in NYX, many thought that they would be more likely to snap up the business. Some even believed that Playtech would make a move in order to secure the OpenBet sportsbook platform. Instead it was Scientific Games, based in a country where sports betting is generally prohibited. Scientific Games’ previous foray into sports betting, through its acquisition of Icelandic solutions provider Parspro in 2012, was not a resounding success. Back in 2016 the company said it was “bullish” about the prospects for growth in sports betting, but little, if anything, has been heard of Parspro since. The general reaction to the NYX deal was that the supplier must have had some sort of insider knowledge about New Jersey’s Supreme Court appeal against the Professional and Amateur Sports Protection Act, and moved accordingly. This was not the case, Sheehan says. “We always consider opportunities to expand our market reach in gaming verticals. We have been looking at sports betting since I got to Scientific Games.” This saw the company evaluate a range of potential targets before settling on NYX. “To help us augment and optimise our existing real-money digital gaming and sports


T H E G I Q I N T E RV I EW KEVIN SHEEHAN

betting capabilities in regulated markets, we instituted best practices and evaluated a host of potential companies. Ultimately, NYX was chosen as the preferred target.” The deal is “a great strategic fit”, Sheehan says. “Combined with our own SG Interactive, we are now a world leader in iGaming, iLottery and sports betting. It is also financially compelling, as it will be accretive in 2018. “We believe that gaming, lottery and social will all contribute to our 2018 growth trajectory; and our new digital division, a combination of SG Interactive B2B and NYX, shows great promise,” he continues. “We are truly excited about the opportunities this acquisition presents.” Many still believe that Scientific Games’ decision to acquire a business that derives over 50 per cent of its revenue from sports betting is the clearest sign yet that legal sports betting is heading to the US, but Sheehan refuses to get carried away. “I’m not certain anything is ever a foregone conclusion, but I can tell you that if and when sports betting becomes legalised in the US, Scientific Games will be prepared to move forward in the regulated markets,” he says. “We think sports betting could be a fantastic opportunity, and we look forward to seeing how this shapes our industry and Scientific Games.” Rather than a move to prepare for legal US sports betting, Sheehan prefers to see the NYX deal as more of a step to consolidate his company’s leading position in the industry. Not only does the deal make Scientific Games the global leader in online gaming, lottery and betting, but also diversifies its revenue by vertical and by territory, providing a new route into regulated European markets. The deal also throws up one of the biggest challenges Sheehan will face as chief executive. He may be achieving what he set out to do as CEO by reducing the company’s debt, but this will be the first large-scale integration project he will oversee in his role. The Scientific Games’ business structure will be “refined” to incorporate NYX, he explains. Its three current divisions – Gaming, Lottery and Interactive (comprising B2C social and B2B gaming) – will be expanded into four. Gaming and Lottery will now

operate alongside Social, covering the B2C free-to-play products, and Digital, incorporating its B2B real-money gaming business and sports betting, led by former NYX CEO Matt Davey. Sheehan stresses that he is not looking to incorporate four separate businesses under the Scientific Games banner: “Our divisions are complementary; they present opportunities to leverage our omni-channel content, technology platforms, systems and services,” he explains. “We will work collaboratively to streamline management oversight, share ideas and technology, and take advantage of corporate functions and enhanced processes.” He s ays t h at Th e Founder’s Mentality, a book by Chris Zook and James Allen, has inspired his approach to leadership. “A leader must act like a bold, ambitious founder, with speed, focus and connection to customers,” he says. “Couple that with the sense of urgency to get things done, and you know what I expect of myself and our entire leadership team at Scientific Games.”

“We must invest in technology, think differently, make mistakes, and partner with customers and players to shape the future of gaming”

100

Constant improvement Looking to the future, Sheehan will not rule out further acquisitions, saying that the company will “explore all options” to ensure it remains at the forefront of the industry. He sees the gaming industry as being fluid, with new forms of entertainment and ways to gamble emerging constantly. “Scientific Games has always capitalised on these new emerging sectors, whether it has been social gaming, skill-based gaming, multi-play land-based gaming (such as our new PRIZM Game Table), lottery secondchance instant games or digital and sports betting,” he says. Sheehan has brought in Applied Minds, a technology, design, research and development consultancy founded by former Disney Imagineers, members of the Walt Disney Company’s R&D subsidiary, to help ensure the supplier remains at the forefront of technological developments. Applied Minds has worked with US corporate giants such as General Motors, Intel, Sony and Lockheed Martin. It is now helping Scientific Games devise new ways to leverage licensing agreements

for James Bond and Monopoly to create new ways to deliver games, expand its customer demographic and increase Scientific Games’ relevance to operators and players. “We don’t know for sure what the next big thing is, but you can bet we will be at the forefront of the technological landscape, ready to capitalise on all opportunities,” he says. This level of investment in research and development is crucial, with the company faced with an “ever-changing” competitive framework. “The entire gaming industry is evolving,” Sheehan says. “Suppliers are acquiring companies in similar and unique business verticals, customers are buying each other and competing against suppliers, and new competitors are still starting up. “We believe we can compete in this aggressive market by remaining focused on delivering the best, engaging game experiences and enhancing our customers’ operations and profitability. With the broadest portfolio in the industry, our unrivalled content library, the number one gaming systems in the industry, and as a global digital and sports betting leader, we are uniquely positioned to provide customers and players with omni-channel content wherever, whenever and however a player would like to engage in play.” This underpins Sheehan’s strategy for 2018. He says the company’s biggest challenge in the year ahead will be “to stay unafraid of change, and embrace it”. “To ensure the success of ourselves, our customers and our players, we need to deliver what’s new and what’s next,” Sheehan explains. “We must invest in technology, think differently, make mistakes, and partner with our customers and players to help shape the future of land-based and online gaming. “We need to think beyond the next convention and create play that re-energises and revolutionises the game.” Sheehan took on a herculean task when he took over as chief executive, but he has taken to the role with aplomb. He has made progress towards balancing the books following the M&A splurge, and strengthened the business further through the NYX acquisition. It is in a position to take on its rivals in the land-based sector, B2B lottery competitors and now iGaming giants such as Playtech and Microgaming. Having taken Scientific Games to the summit of three different industry sectors, the pressure is now on for Sheehan to ensure it can remain there. n


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F I NA NC E STOCK INDEX 2017

GAMING INTELLIGENCE STOCK INDEX 2017

Shareholders delight after buoyant year for iGaming

2017 proved to be a boon for iGaming investors, as the 50 operators and suppliers which make up the Gaming Intelligence Stock Index 2017 saw their combined share prices increase by 11.80 per cent, writes Kio Dawson

Scientific Games completed the NYX Gaming acquisition in January

GIQ Q4 REVIEW

BETWEEN TUESDAY 3 January and Friday 29 December 2017, nearly three-quarters (37) of the public companies in the iGaming sector saw the value of their shares rise, including five that experienced triple-digit increases. The biggest climber in 2017 was New Yorklisted Scientific Games Corporation, whose shares rose an impressive 260 per cent to close the year at $51.30 per share, culminating in a 52-week high of $54.95 per share on 4 December. The gaming and lottery behemoth is now valued at around $4.6bn. With the acquisition of NYX Gaming Group in the bag, the supplier has created one of the leading B2B iGaming providers and is positioned for further growth this year. For NYX there is a massive opportunity to make use of Scientific Games’ network of partners in both the gaming and lottery sectors, and its OpenBet sportsbook will be key to this, particularly if the US market opens up. This will be the last time NYX features in our stock list, having been delisted from the Toronto stock exchange on 10 January, but shareholders would have been pleased with an 83.08 per cent improvement in the company’s share price during 2017.

Stockholm-listed operator LeoVegas was another to enjoy a phenomenally successful year – which saw it make its first move in M&A, with deals for Italy’s Winga, the UK’s Royal Panda, and more recently Intellectual Property & Software (IPS). Its shares were up 128.83 per cent by the end of the year, including a 52-week high of SEK89.25 on 14 December. LeoVegas was one of 14 companies to hit 52-week highs during the final month of the year, alongside the likes of Pollard Banknote, Churchill Downs Incorporated, Kindred Group and Fortuna Entertainment Group, though the latter is expected to be delisted from the Prague and Warsaw stock exchanges after majority shareholder Fortbet Holdings made a CZK9.49bn (€371.6m) offer to take over full ownership of the Eastern European betting and gaming operator in January. Despite increased competition in its field, Evolution Gaming remains the market leader in the live-dealer casino space, with the company now hosting around 400 tables across its studios. Shares in the supplier more than doubled during the year, up 124.56 per cent to SEK580.50, despite suffering a blip in November after the company’s co-founders Jens von Bahr and Fredrik Österberg significantly reduced their stake in the business. This year is likely to be another heavily dominated by M&A action, and both GVC Holdings and Ladbrokes Coral Group ended 2017 on a high after their long-awaited tie-up, which could be worth in the region of £3.2bn and £4.0bn. Shares in GVC closed the year up 45.44 per cent at 925.00 pence per share, while Ladbrokes Coral shares climbed 55.07 per cent at 181.90 pence per share. The Stars Group and William Hill also reached new highs during December, ending the year up 52.03 per cent and 10.39 per cent. Rumours abound that The Stars Group is lining up a deal to acquire the UK bookmaker this year, despite failed talks between the two back in 2016 over a potential £4.6bn merger. GVC’s ground-breaking deal for Ladbrokes 103


F I NA NC E

Coral, which will be determined by the outcome of the UK’s ongoing Triennial Review relating to the regulation of Category 2 fixed-odds betting terminals (FOBTs), may have provided a way to see this through. Others, such as 888 Holdings and The Rank Group, may be involved in M&A activity this year, and both enjoyed a solid year as their shares rose 29.37 per cent and 24.23 per cent respectively. Tabcorp’s shares were up 14.81 per cent at AUD$5.58 by year end, having successfully completed the year’s longest-running saga – the acquisition of chief Australian rival Tatts Group. Alongside LeoVegas, another Stockholmlisted operator, Mr Green & Co, pushed forward with its own M&A strategy, with the acquisitions of Denmark’s Dansk Underholdning and Redbetowner Evoke Gaming. Shareholders would have been equally pleased with its share price, which rose 75.57 per cent over the year to SEK54.25. There were also significant gains for Oslolisted Gaming Innovation Group (up 59.03 per cent), London-listed Jackpotjoy (up 35.82 per cent) and 888 Holdings (up 29.37 per cent), as well

COMPANY Scientific Games Corporation

104

% CHANGE

$14.25

$51.30

260.00%

SEK83.75

128.83%

SEK258.50

SEK580.50

124.56%

Pollard Banknote Limited

CAD$8.15

CAD$17.40

113.50%

Fortuna Entertainment Group (PRA)*

CZK85.80

CZK177.65

107.05%

Evolution Gaming Group AB*

NYX Gaming Group Ltd

CAD$1.30

CAD$2.38

83.08%

Mr Green & Co AB*

SEK30.90

SEK54.25

75.57%

TopBetta Holdings Ltd

AUD$0.23

AUD$0.40

73.91%

NOK3.10

NOK4.93

59.03%

117.30p

181.90p

55.07%

$2.60

$4.00

53.85%

Gaming Innovation Group Inc* Ladbrokes Coral plc Zynga Inc Churchill Downs Incorporated

$151.45

$232.70

53.65%

Aristocrat Leisure Limited

AUD$15.50

AUD$23.70

52.90%

The Stars Group Inc (TSX)

CAD$19.24

CAD$29.25

52.03%

GVC Holdings plc

636.00p

925.00p

45.44%

Safecharge International Group Limited

206.50p

296.00p

43.34%

€ 7.34

€ 10.41

41.83%

610.00p

828.50p

35.82%

Lotto24 AG Jackpotjoy plc (IPO Jan 25th) Kindred Group plc *

SEK86.60

SEK117.40

35.57%

Bet-at-home.com AG*

€ 79.99

€ 104.37

30.48%

888 Holdings plc

217.75p

281.70p

29.37%

$7.75

$9.80

26.45%

OPAP SA

€ 8.40

€ 10.50

25.00%

194.40p

241.50p

24.23%

SEK87.00

SEK103.75

19.25%

Tabcorp Holding Ltd

AUD$4.86

AUD$5.58

14.81%

Scout Gaming Group AB (IPO Dec. 11th)

SEK35.00

SEK39.80

13.71%

291.70p

322.00p

10.39%

Rank Group plc Catena Media plc*

William Hill plc Intralot SA* Aspire Global plc (IPO July 11th)

as Stockholm-listed Kindred Group (up 35.57 per cent) and Catena Media (up 19.25 per cent). At the other end of the table were 13 companies that saw their share prices decline during the course of the year. There were disappointing share price performances from Gaming Realms and Zeal Network, down 44.39 per cent and 41.7 per cent respectively, while the Stockholmlisted trio of NetEnt, Kambi Group and Betsson all struggled. There were a record 11 Stockholm-listed companies in the chart, with two new additions in 2017 – iGaming solutions provider and operator Aspire Global in July and B2B daily fantasy sports provider Scout Gaming Group in December. Sazka Group could be next in line after confirming that it is considering a London IPO. With holdings including Greece’s OPAP, Sazka, LottoItalia, Casinos Austria and Austrian Lotteries, Sazka would become one of the biggest publicly-listed gaming and lottery operators in the world. n

CL. PRICE 29.12.17

SEK36.60

LeoVegas AB*

Inspired Entertainment Inc

This year is likely to be another heavily dominated by M&A action, and both GVC Holdings and Ladbrokes Coral Group ended 2017 on a high after their long-awaited tie-up

OP. PRICE 03.01.17

Stride Gaming plc

€ 1.03

€ 1.13

9.71%

SEK32.00

SEK35.00

9.38%

229.00p

247.50p

8.08%

Nektan plc

27.60p

29.50p

6.88%

International Game Technology plc

$25.52

$26.51

3.88%

831.00p

860.50p

3.55%

Ainsworth Game Technology Ltd

AUD$2.10

AUD$2.16

2.86%

Paddy Power Betfair plc

8,670.00p

8,825.00p

1.79%

€ 1.32

€ 1.33

0.76% -0.20%

Playtech plc

Snaitech SpA* Cherry AB

SEK49.40

SEK49.30

mybet Holding SE*

€ 0.39

€ 0.38

-2.56%

Sportech plc

88.50p

80.00p

-9.60%

35.60p

32.13p

-9.75%

HK$1.39

$1.21

-12.95%

GAN plc AGTech Holdings Ltd Webis Holdings plc NetEnt AB* Phumelela Gaming and Leisure Limited*

1.34p

1.13p

-15.67%

SEK71.15

SEK56.50

-20.59%

ZAR23.13

ZAR17.50

-24.34%

SEK133.50

SEK96.00

-28.09%

Betsson AB*

SEK88.85

SEK60.50

-31.91%

500.com Ltd

US$15.43

$10.11

-34.48%

€ 36.74

€ 21.42

-41.70%

15.25p

8.48p

-44.39%

Kambi Group plc *

Zeal Network SE* Gaming Realms plc

*Op. Price Jan 2nd

STOCK INDEX 2017


F I NA NC E

GIQ20 H1 2017

ON THE FOLLOWING PAGES

108 GIQ20 Q3 2017 results and analysis

The GIQ Q3 2017 CHERRY AND GAMING Innovation Group took top honours in Q3, as they did during the first half of 2017. They were the only two companies to record triple-digit growth versus a year ago as their respective M&A strategy continued to positively skew results. NYX Gaming Group has also benefitted from this in the past, but slid down the table as its Q3 results included a full quarter’s contribution from OpenBet in the prior year. This is the last time NYX will feature in the GIQ20 chart following its acquisition by Scientific Games. Indeed, the table could have a very different look to it by the end of 2018 after GVC’s proposed takeover of Ladbrokes Coral, which could set off even more M&A action, with the likes of William Hill, The Stars Group, 888 and Rank Group all expected to be involved. Now, the Nordic-listed companies continue to dominate the top end of the chart, with eight of the top 10 listed in Stockholm or Oslo. London-listed Nektan sneaked into the top three, and while its revenue is small at the moment, the mobile gaming specialist has made moves to expand into the lucrative US land-based casino sector. Ladbrokes Coral won the battle of the UK bookies, ahead of William Hill and Paddy Power Betfair – which again missed out altogether from the GIQ20 chart. GVC has succeeded in turning around bwin.party, and will be hoping for even greater growth once its takeover of Ladbrokes Coral is approved later this year. n 106

The GIQ20 Q3 2017 COMPANY

1

Cherry

2

Gaming Innovation Group

3

Nektan

4

ONLINE Q3 2016

ONLINE Q3 % 2017 CHANGE

SEK174.4m

SEK526.4m

202%

€14.5m

€30.8m

112%

£2.1m

£3.9m

88%

Catena Media

€10.7m

€17.3m

61%

5

Evolution Gaming

€29.2m

€45.7m

56%

6

LeoVegas

€39.7m

€55.6m

40%

7

Kindred Group

£142.3m

£193.6m

36%

8

Scientific Games

US$85.2m

US$111.4m

31%

9

Mr Green & Co

SEK229.9m

SEK295.1m

28%

10

Aspire Global

€15.3m

€19.3m

26%

11

The Stars Group

US$270.7m

US$329.4m

22%

12

Jackpotjoy

£66.4m

£75.4m

14%

13

Ladbrokes Coral Group

n/a

n/a

12%

14

NetEnt

SEK357.4m

SEK401.2m

12%

15

Betsson

SEK1,063.3m

SEK1,180.6m

11%

16

GVC Holdings

€221.5m

€243.5m

10%

17

NYX Gaming Group

CAD$54.4m

CAD$58.5m

8%

18

William Hill

n/a

n/a

6%

19

Churchill Downs Incorporated

US$177.8m

US$184.0m

3%

20

Kambi Group

€14.8m

€14.8m

0%

(excl. land-based)

(up to 29 Oct)

(excluding Aus and up to 24 Oct)


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F I NA NC E GIQ20 Q3 2017

Cherry and Gaming Innovation Group top the charts again in Q3 2017 Nordic-listed companies dominate the GIQ20 chart as Paddy Power Betfair misses out once more, writes Kio Dawson

CHERRY 202% Net revenue (SEK) Q3 2016

Q3 2017

Change

142.8m

448.5m

214%

Online marketing

15.9m

44.6m

181%

Game development

21.0m

44.1m

110%

Gaming technology

n/a

10.4m

n/a

Online gaming

Eliminations

(5.3m)

(21.2m)

300%

Total

174.4m

526.4m

202%

Cherry once again topped the GIQ20 chart after seeing revenue from its iGaming businesses more than triple compared to a year ago. This came despite continued issues with the integration of its ComeOn business, which negatively affected growth during the period. “Cherry’s operations continue to develop strongly,” explained chief executive Anders

Holmgren. “As the industry’s most complete gaming company, our offering has a broad base and we are able to respond quickly when we perceive opportunities. “In the third quarter, we unfortunately saw our largest business area lose momentum. But the new management, with its extensive experience of the industry, has taken measures to increase both growth and profitability.” Including the land-based restaurant casino division, Cherry’s total revenue increased by 165 per cent to SEK567m during Q3, of which 30 per cent was organic growth. Online gaming B2C revenue grew 214 per cent to SEK448m, with Cherry’s B2B businesses contributing a further SEK77.9m in revenue, including results from Yggdrasil Gaming, Highlight Games, Game Lounge and XCaliber. Alongside the revenue growth, Cherry also posted a 33 per cent increase in profit for the period to SEK42m.

GAMING INNOVATION GROUP Cherry’s Yggdrasil Gaming

112% Net revenue (€)

B2C B2B

Q3 2016

Q3 2017

Change

11.4m

21.9m

92%

4.3m

11.6m

170%

Eliminations

(1.2m)

(2.7m)

125%

TOTAL

14.5m

30.8m

112%

Oslo-listed Gaming Innovation Group enjoyed another strong quarter of growth during Q3 as revenue reached an all-time high of €30.8m. Boosted by its Betit operations, the company’s B2C brands saw revenue soar to €21.9m, with B2B revenue nearly tripling year-on-year to €11.6m. Higher operating expenses meant, however, that the company posted a loss of €0.5m for the quarter. “Through the quarRobin Reed, CEO of Gaming ter we continued to Innovation expand our market 108


F I NA NC E

GIQ20 Q3 2017

presence both strategically and organically,” said chief executive Robin Reed. “Near term, we have exciting launches to be made and we are also experiencing increasing interest for our offering in all segments. “GIG has a strong position in the iGaming industry and we are confident that the company is set to continue the profitable growth into 2018.” While there were 35 brands operational on its iGaming Cloud platform, the company continues to develop into one of the leading iGaming affiliates in the industry. It snapped up two more companies during Q3, including Nordic-facing STK Marketing, making a total of five new acquisitions during 2017. With the purchase of Danish performance marketing company Rebel Penguin, GIG also entered the paid media space during the period.

CATENA MEDIA NEKTAN

61%

88%

Net revenue (€)

Net revenue (£) Q3 2016 TOTAL

2.1m

Q3 2017 3.9m

Change 88%

London-listed mobile gaming specialist Nektan posted strong results for the quarter ending 30 September, as the company continues to make progress with the expansion of its USfacing Respin subsidiary. The supplier said it delivered strong growth compared to last year, with first time depositors soaring 186 per cent to 40,148. “Our core European business continued to progress in Q1 FY18 as expected,” said interim chief executive Gary Shaw. “The proposed launch of new commercial partners during the current quarter will see that growth continuing.” Nektan launched five new sites and one new partner during the quarter, and is currently powering 83 brands in total. Meanwhile, in the US, Oregon’s Seven Feathers Casino became the second US casino to sign up for Respin’s mobile gaming platform, which has previously gone live with a tribal casino in California. Nektan will integrate its Evolve invenue gaming platform with SUZOHAPP’s Interactive Pro Table, allowing guests to play video slots, bingo and poker games, as well as free-to-play content at the resort’s bars and restaurants. “I am particularly pleased with the progress being made in the US where our investment positions Nektan as one of the first movers in mobile casino gaming,” added Shaw. GIQ Q4 REVIEW

Q3 2016

Q3 2017

Change

Search

7.9m

14.5m

84%

Paid

2.8m

2.8m

-2%

10.7m

17.3m

61%

TOTAL

Performance marketing specialist Catena Media continues to make waves in the iGaming industry. The Stockholm-listed company saw Q3 revenue reach €17.3m after delivering a record number of new depositing customers to its partners. The company described the period as its strongest ever, with the number of referred new depositing customers (NDC) breaching the 100,000 mark for the first time, a 79 per cent year-on-year improvement. “Q3 2017 was Catena Media’s most successful quarter to date,” said acting-chief executive Henrik Persson Ekdahl, who replaced Robert Andersson in October. “Our key growth indicator is the number of NDCs, in other words, the delivery of new customers to our business partners. The strong growth in NDCs demonstrates the success of our business model.” In Q3 the company made a move into the Australian sports market with the acquisition

“Q3 2017 was Catena Media’s most successful quarter to date. The growth in NDCs demonstrates the success of our business model” Henrik Persson Ekdahl, Catena Media

of Caledonian Publishing, as well as into Japan with Casinoonline.jp. The Tokyo office will also act as a platform for further expansion in Asia. Since the end of the period, Catena Media has continued its aggressive acquisition strategy, picking up poker comparison site PokerScout.com, financial services affiliate Beyondbits Media, German sports betting affiliate Baybets, as well as football news website and daily fantasy sports operator Squawka.

EVOLUTION GAMING GROUP 56% Net revenue (SEK)

TOTAL

Q3 2016

Q3 2017

Change

29.2m

45.7m

56%

The live-dealer casino supplier space is becoming an increasingly competitive arena, but Evolution Gaming continues to go from strengthto-strength. In Q3, it saw revenue climb 56 per cent to €45.7m, helping profit more than double to €16.8m. Evolution said that demand for live casino games was generally high during the quarter, with the number of end-user bet spots increasing by 85 per cent to 2.4 billion. “Once again, I can summarise a strong quarter for Evolution Gaming, driven, among other things, by a high level of activity among our customers in the summer months,” said president and CEO Martin Carlesund. “We have seen continued high growth in existing studios, as several of our customers are extending their dedicated environments. “This expansion intensified during the latter part of the quarter, which meant the cost increase was somewhat lower than expected for the full period.” 109


F I NA NC E GIQ20 Q3 2017

KINDRED GROUP 36% Net revenue (£) Q3 2016

Q3 2017

Change

Sports betting

66.7m

85.7m

28%

Casino and games

68.5m

99.3m

45%

3.2m

3.0m

-6%

3.9m

5.6m

44%

142.3m

193.6m

36%

Poker Other TOTAL

LEOVEGAS 40% Net revenue (€) Q3 2016

Q3 2017

Change

142.8m

448.5m

214%

Online marketing

15.9m

44.6m

181%

Game development

21.0m

44.1m

110%

Online gaming

Gaming technology

“We have combed the gaming market in search of companies that fit in with our overall expansion strategy, which is to grow in regulated markets and markets that will soon become regulated” Gustaf Hagman, LeoVegas

110

n/a

10.4m

n/a

Eliminations

(5.3m)

(21.2m)

300%

Total

39.7m

55.6m

40%

The third quarter saw another strong period of organic growth for Stockholm-listed operator LeoVegas, but it has since made its biggest M&A deal to date with the acquisition of rival online casino brand Royal Panda in October. Organic growth was 33 per cent compared to last year, with regulated markets accounting for 25 per cent of LeoVegas’ Q3 total, up from a 13 per cent share a year ago. This figure will increase following LeoVegas’ acquisition of Royal Panda, as half of the operator’s Q3 revenue was generated in the UK. “During the past two years we have combed the gaming market in search of companies that fit in with our overall expansion strategy, which is to grow in regulated markets and markets that will soon become regulated,” explained CEO and co-founder Gustaf Hagman. “We made our first acquisition earlier this year, of Winga in the Italian market. We are now taking the next step with our acquisition of Royal Panda, which is a great fit with our strategy to establish a strong presence in the UK – plus they have a great brand.” Despite the strong revenue growth, marketing costs rose to their highest level in LeoVegas’ history, pushing net profit for the quarter down 28 per cent to €6.5m.

Benefiting from the first full quarter’s contribution from newly acquired 32Red, Kindred Group reported a 38 per cent increase in gross winnings revenue to a record £193.6m for the third quarter. Kindred said that despite the absence of a major football event this quarter, it continued to gain market share as organic revenue growth in constant currency rose 17 per cent versus a year ago, with 32Red contributing revenue of £18.6m during the period. This helped profit for the quarter increase by 42 per cent to £29.9m. “I am delighted to report record revenues and profitability for Kindred Group in the third quarter of 2017, driven by strong growth across our major markets and solid cost control,” said chief executive Henrik Tjärnström. “Our focus on mobile strategy has enabled us to remain at the forefront of industry developments.” Revenue from mobile grew by 51 per cent in Q3 compared to last year and amounted to 71 per cent of total revenue during the period, equivalent to approximately £137.5m. The revenue growth was aided by a 14 per cent increase in active customer numbers to 1,219,761, of which 120,171 were customers of 32Red. In total, Kindred had a registered customer base of more than 20.7 million at the end of the quarter.

SCIENTIFIC GAMES 31% Net revenue (US$) Q3 2016

Q3 2017

Change

Social gaming B2C

70.3m

95.1m

35%

Other interactive B2B

14.9m

16.3m

9%

TOTAL

85.2m

111.4m

31%

The New York-listed supplier will significantly strengthen its interactive business with the acquisition of NYX Gaming Group, which will likely take Scientific Games towards the top of the GIQ20 chart in future. For now, the company delivered another solid period of growth in Q3 with interactive revenue up 31 per cent to $111.4m.


F I NA NC E

GIQ20 Q3 2017

“As we broaden our offering with new verticals and enter new regulated markets, we are on our way to reaching double-digit growth” Tsachi Maimon, Aspire Global

Bingo Showdown

The company benefitted from a 35 per cent rise in social gaming B2C revenue and a nine per cent rise in other interactive B2B revenue. Scientific Games attributed the strong interactive performance to the ongoing popularity and growth of the Jackpot Party social casino and Quick Hit Slots apps, coupled with the success of more recent apps such as 88 Fortunes, which launched in Q1, and the contribution of the Bingo Showdown app (pictured), which was acquired with the April 2017 acquisition of Spicerack Media. “We are excited by the acquisition of NYX and the opportunities to grow our digital business,” said chief executive Kevin Sheehan. “We are growing our businesses, expanding our product portfolio, improving our processes, enhancing our operating margin, paying down debt, and delivering positive results.”

of SEK30.6m, compared to a loss of SEK0.9m a year ago. Growth is expected to continue into the final quarter following the launch of the operator’s upgraded sportsbook, bingo and new loyalty programme across a number of markets. Mr Green also announced a deal in December to acquire Redbet-owner Evoke Gaming for €8.5m. “We are now entering the final quarter of the year with a strong product offering and efficient customer communication,” said CEO Per Norman. “We see excellent conditions for continuing to deliver on our financial targets of an annual growth rate of 20 per cent and an EBITDA margin of 20 per cent by 2019.”

ASPIRE GLOBAL 26% Net revenue (€)

MR GREEN & CO

Q3 2016

Q3 2017

B2B

7.7m

10.1m

31%

B2C

7.6m

9.3m

22%

15.3m

19.3m

26%

28% Net revenue (SEK) Nordics

Q3 2016

Q3 2017

Change

86.6m

100.1m

16%

Western Europe

76.9m

117.6m

53%

Central, Eastern and Southern Europe

63.9m

70.7m

11%

2.5m

6.6m

163%

229.9m

295.1m

28%

Rest of the world TOTAL

For the fourth consecutive quarter, revenue from Stockholm-listed operator Mr Green & Co exceeded its 20 per cent growth target as Q3 revenue climbed 28 per cent to SEK295.1m. The company continued to strengthen its market position in large parts of Europe, with the Western Europe region seeing growth of 53 per cent versus a year ago and revenue from the Nordic region increasing 16 per cent. This helped Mr Green post a profit for the quarter GIQ Q4 REVIEW

TOTAL

Change

It was a strong quarter too for Aspire Global, with more than half of the company’s Q3 revenue generated from its B2B division, which grew 31 per cent to €10.1m. B2C revenue increased by 22 per cent to €9.3m with firsttime depositing players up 28 per cent to 27,900 and active users climbing 15 per cent to 53,100. “I am pleased to report yet another quarter of strong growth in both revenue and profit; quarter on quarter as well as year on year,” said CEO Tsachi Maimon. “We have also expanded our customer base, complementing original key accounts with a number of new partnerships that have quickly reached sizable levels.

“As we execute on our strategy; broadening our offering with new verticals (sport) and entering new regulated markets through strong local partnerships, we are well on our way to reaching double-digit growth year on year.” The Nordics represented 38 per cent of revenue during the quarter, followed by the Rest of Europe with 34 per cent. The UK and Ireland accounted for a further 19 per cent, with the Rest of the World representing 10 per cent.

THE STARS GROUP 22% Net revenue (US$)

Poker Casino and sportsbook Other gaming TOTAL

Q3 2016

Q3 2017

Change

196.8m

221.4m

13%

64.2m

95.2m

48%

9.6m

12.7m

32%

270.7m

329.4m

22%

A return to growth from its core online poker vertical helped The Stars Group’s revenue grow by 22 per cent during the third quarter. After a difficult second quarter period, poker revenue climbed 12.5 per cent to $221.4m during the period, representing more than twothirds of the company’s quarterly revenue. In addition, the company’s online casino and Tsachi Maimon, CEO of Aspire Global


F I NA NC E GIQ20 Q3 2017

“Not only did we see improvement in our poker business, but our casino continues to grow and our online sportsbook continues to see meaningful growth in turnover” Rafi Ashkenazi, The Stars Group

sportsbook continued to grow, contributing revenue of $95.2m for the quarter. “Our operations and management continued to perform in the third quarter, delivering strong year-on-year growth bolstered by the launch of Stars Rewards,” said chief executive Rafi Ashkenazi. “Not only did we see improvement in our poker business, but our casino continues to grow with a significant active player base and our online sportsbook continues to see meaningful growth in turnover. “To build upon these achievements, we plan to focus on reinvesting in our core products and increasing our investment in marketing for the remainder of 2017 and into 2018 while continuing to explore further growth opportunities.” The Stars Group completed the divestiture of its legacy non-core gaming investments in December for total proceeds of $102m, including its stakes in Jackpotjoy, NYX Gaming Group and Innova Gaming Group.

JACKPOTJOY

LADBROKES CORAL

14%

12%

Net revenue (£)

Net revenue (£) Q3 2016

Jackpotjoy

46.7m

Q3 2017 52.2m

12%

14.4m

18.4m

28%

Mandalay

5.3m

4.9m

-8%

66.4m

75.4m

14%

London-listed bingo and casino operator Jackpotjoy enjoyed a solid third quarter as revenue rose 14 per cent to £75.4m, with growth in the Jackpotjoy and Vera&John brands offsetting a decline in revenue from Mandalay. The Jackpotjoy segment contributed 69 per cent of total Q3 revenue, having grown 12 per

112

Q3 2016

Q3 2017

Change

Sportsbook

n/a

n/a

18%

Gaming

n/a

n/a

6%

TOTAL

n/a

n/a

12%

Change

Vera&John

TOTAL

Vera&John

cent year-on-year to £52.2m. Approximately two-thirds (£33.9m) of this was generated by the Jackpotjoy UK brand, with Jackpotjoy Sweden and the Starspins and Botemania brands also contributing to the growth. Revenue from Vera&John increased by 28 per cent to £18.4m, offsetting an eight per cent decline in Mandalay revenue to £4.9m, which the operator attributed to lower marketing spend. “There continues to be solid customer growth across the group, with our Vera&John business segment performing particularly well, with constant currency revenue growth of 21 per cent in the quarter,” said executive chairman Neil Goulden. Jackpotjoy confirmed in October that CEO Andy McIver would be leaving the company and will be replaced by experienced executive Simon Wykes, who assumes the role of group managing director.

London-listed Ladbrokes Coral only celebrated its first birthday on 1 November, but it is set to be part of the gaming industry’s latest mega-merger once its deal with GVC completes in the first or second quarter of this year. This will further strengthen its online offering which has seen significant improvements in recent years. In Q3, digital revenue was up 12 per cent year-on-year, comprising sportsbook growth of 18 per cent and gaming revenue growth of six per cent. The operator enjoyed strong growth from Ladbrokes.com.au in Australia and Eurobet.it in Italy, while a 10 per cent increase in revenue from Galabingo.com offset the payout of a £1m progressive jackpot at Galacasino.com. “Our digital performance is strong and the Ladbrokes brand in Australia and the Eurobet brand in Italy continue to post very strong revenue growth,” said CEO Jim Mullen. “In the UK, the Coral and Gala brands also posted very pleasing growth, and we continue to transition our approach to customer acquisition and retention in Ladbrokes.com to focus on improved profit conversion.”


F I NA NC E GIQ20 Q3 2017

NETENT 12% Net revenue (SEK)

TOTAL

Q3 2016

Q3 2017

Change

357.4m

401.2m

12%

It was decent quarter too for NetEnt as revenue increased by 12 per cent to SEK401.2m, pushing profit for the period up 19 per cent to SEK142.4m. NetEnt launched 10 new customer casinos during the period and agreed deals with eight new customers, including a deal with Italy’s Eurogames for land-based gaming machines. Mobile games accounted for 52 per cent of total revenue in the quarter, with live casino mobile games showing particularly strong growth. This will be accelerated by the launch of Standard Black Jack for mobile, which the supplier described as having been on its customers’ wish list for some time. Geographically, Great Britain and Italy contributed the most to growth during the period, with Spain and Denmark also highlighted as strong performers, while the North American market was identified as a likely source of future growth. “The future outlook remains bright and we see conditions for continued solid growth supported by new games, increasing market share in the UK, mobile growth, many new customers to launch and our expansion in North America,” said chief executive Per Eriksson.

BETSSON 11% Net revenue (SEK) Q3 2016

Q3 2017

Change 19%

Casino

731.8m

871.1m

Sportsbook

300.2m

275.1m

-8%

31.3m

34.4m

10%

1,063.3m

1,180.6m

11%

Other TOTAL

Stockholm-listed operator Betsson admitted that its third quarter performance had been unsatisfactory, after seeing organic growth of just two per cent compared to the same period last year. Total revenue was up 11 per cent, including the newly acquired Premier Casino and NetPlay TV businesses which contributed revenue of SEK55.4m. “Despite a good finish to Q3, we are not satisfied with the overall growth in the quarter and Betsson has taken action to improve performance,” said chief executive Pontus Lindwall. “Moreover, NetPlay, which Betsson acquired in April 2017, has not developed as well as planned 114

“We see conditions for continued growth supported by new games, increasing market share in the UK, mobile growth, many new customers to launch and our expansion in North America” Per Eriksson, NetEnt

and measures have been taken to get the business back on track. “The group is committed to continue to develop the product offerings and achieve good returns on marketing spend in order to further capture growth.” Casino contributed nearly three-quarters of Betsson’s Q3 revenue with SEK871.1m, although sportsbook revenue was down eight per cent to SEK275.1m. Other revenue, including poker, was up by 10 per cent to SEK34.3m during the quarter. Net income for the period was down 26 per cent to SEK187.0m, with Premier Casino and NetPlay having a negative impact of SEK11.4m and currency fluctuations further impacting income by SEK27.4m.

Pontus Lindwall, CEO of Betsson

GVC HOLDINGS 10% Net revenue (€) Q3 2016

Q3 2017

Sports brands

163.8m

181.0m

11%

Games brands

48.9m

56.3m

15%

8.8m

6.3m

-29%

221.5m

243.5m

10%

B2B and non-core TOTAL

Change

GVC’s planned takeover of Ladbrokes Coral could see the company propelled into the FTSE100 just two years after moving to the London Stock Exchange’s main market. As well as becoming one of the biggest listed gaming operators in the world, it will become one of the biggest companies in the GIQ20 chart. GVC has succeeded in turning around sleeping giant bwin.party, with Q3 revenue reaching €243.5m, including a return to growth for partypoker. Excluding the previous year’s Euro 2016 tournament and the recently disposed Kalixa business, GVC’s underlying revenue growth was 18 per cent. “Underlying growth in Q3 represents the highest rate achieved since the acquisition of bwin.party in February 2016,” said CEO Kenneth Alexander. “The quick wins made in 2016 have been supplemented by continuous improvements across all areas of the business.” Revenue from GVC’s Sports Brands, which include bwin, Sportingbet and Gamebookers, increased by 11 per cent to €181.0m. Revenue from Games Brands such as partypoker, partycasino, Foxy Bingo, Gioco Digitale increased by 15 per cent to €56.3m, while the decline in B2B and non-core revenue reflected the disposal of Kalixa in May.


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F I NA NC E GIQ20 Q3 2017

NYX GAMING GROUP 8% Net revenue (CAD$) Q3 2016

Q3 2017

Change

Royalty and licence

26.5m

35.8m

35%

Professional services

24.7m

22.6m

-9%

3.1m

0.1m

-97%

54.4m

58.5m

8%

Social gaming TOTAL

This will be the last time NYX Gaming Group will feature in the GIQ20 chart before it becomes part of Scientific Games, with the supplier delivering revenue growth of eight per cent during Q3. The UK and Europe represented more than three-quarters (77 per cent) of the Q3 total, with the Americas contributing 14 per cent and Australasia nine per cent. Net loss for the period amounted to $10.9m however, versus net income of $41.4m a year ago. “We delivered solid revenue and adjusted EBITDA growth in the third quarter along with improved adjusted EBITDA margin from the second quarter of 2017 and the third quarter of the prior year,” said chief executive Matt Davey. “The value our customers see in our proven gaming platform and business is clear, and as a management team we’ll continue to act to maximise value in a way that is in the best interests of NYX and its shareholders.” During Q3, NYX signed 18 new agreements for its platforms and successfully launched content across 12 new client websites, including PlayFortuna Casino, Solverde Casinos, 888casino and Aspire Global. At the end of the period, the supplier’s development pipeline remained strong, with agreements to launch with 40 customers.

Matt Davey, CEO of NYX Gaming Group

“We have delivered good progress. Our online business has performed particularly well, with UK wagering 14 per cent ahead of last year” Phillip Bowcock, William Hill

WILLIAM HILL

CHURCHILL DOWNS INCORPORATED

6%

3%

Net revenue (£)

Net revenue (US$) Q3 2016

Q3 2017

Change

Sportsbook

n/a

n/a

-1%

TwinSpires

Gaming

n/a

n/a

14%

TOTAL

n/a

n/a

6%

While it posted a six per cent increase in online revenue, London-listed bookmaker William Hill continued to struggle with its online sportsbook during the 17-week period ending 24 October. After seeing a one per cent fall in the first half of the year, online sportsbook revenue fell again by one per cent during the Q3 period. This was despite sportsbook amounts wagered increasing 13 per cent year-on-year, including 14 per cent growth in the UK, continuing the improving trends seen since the second half of 2016. Gross win margins were in line with expectations, but 0.8 per cent below the prior year period. Online gaming revenue was up 14 per cent following growth in both core and non-core markets. “We have delivered good financial and operational progress so far in the second half,” said chief executive Philip Bowcock. “Our online business has performed particularly well, with UK wagering 14 per cent ahead of last year, in spite of the absence of a major football tournament and an acceleration in gaming growth.”

Q3 2016

Q3 2017

Change

55.5m

66.1m

19%

Big Fish Games

122.3m

117.9m

-4%

TOTAL

177.8m

184.0m

3%

After a difficult first half of the year, New York-listed Churchill Downs Incorporated (CDI) returned to growth in Q3 due mostly to its TwinSpires online betting business which grew revenue by 19 per cent to $66.1m, primarily as a result of a 24 per cent increase in active players. Big Fish Games revenue fell year-on-year for the third consecutive quarter, down four per cent to $117.9m, with growth in social casino revenue offset by lower premium, and casual and mid-core free-to-play revenue. At the end of November CDI agreed to sell its Big Fish Games division to Australia’s Aristocrat Leisure for $990m. Explaining the rationale behind the sale, CDI chief executive Bill Carstanjen said that Big Fish was a very successful business with a bright future that will be best realised by being part of Aristocrat’s strategy and vision for their online and mobile gaming portfolio. “We thank our team members at Big Fish for their outstanding efforts over the three years since CDI acquired Big Fish,” he said. “We will refocus our strategy on our core


F I NA NC E

GIQ20 Q3 2017

Net revenue Company

Online Q3 2016

Online Q3 2017

Paddy Power Betfair (excl. US and Australia)

£222m

£216m

-3%

Lotto24

€6.4m

€5.8m

-9%

CAD$9.3m

CAD$8.5m

-9%

bet-at-home.com

€28.7m

€25.9m

-10%

ZEAL Network

€39.8m

€32.7m

-18%

mybet Holding

€10.7m

€7.8m

-28%

Tangelo Games Corp

% Change

GOING DOWN…

Bill Carstanjen, CEO of Churchill Downs Incorporated

assets and capabilities, including growing the Kentucky Derby, expanding the casino segment, TwinSpires.com and other forms of real-money gaming, and maximising our thoroughbred racing operations.”

KAMBI GROUP 0% Net revenue (€)

TOTAL

Q3 2016

Q3 2017

Change

14.8m

14.8m

0%

Stockholm-listed sports betting provider Kambi Group struggled for growth during the third quarter as revenue remained stable at €14.8m for the period. The supplier noted the tough comparable period last year, which included strong trading margins as well as the impact of the 888sport contract renewal. “In many ways, Q3 could be viewed as a springboard quarter for Kambi,” said CEO Kristian Nylén. “I’m pleased to report Kambi was able to continue its progress, with operator turnover rising 16 per cent year-on-year versus a period which included the final stages of Euro 2016 and the Olympic Games.” Kambi revealed that its new contract with operator 888 – agreed during the second quarter – had an adverse impact of €1.4m on its Q3 results. The company noted however that the financial impact of the terms of the renewal peaked in Q3 and would diminish in future quarters. GIQ Q4 REVIEW

There were six companies that saw revenue decline during the third quarter of 2017, including four Frankfurt-listed companies, as well as Paddy Power Betfair, which missed out on a place in the GIQ20 chart for the second consecutive period. The operator’s online business accounted for nearly half of Q3 revenue but fell by three per cent year-onyear to £216m, against a tough comparable period last year which included a strong contribution from the concluding stages of Euro 2016. Overall, Paddy Power Betfair reported a nine per cent increase in Q3 revenue to £440m, with growth in Australia, US and retail offsetting the online decline. German online lottery seller Lotto24 was forced to reduce its guidance for the full 2017 year after experiencing an “exceptionally weak” jackpot trend during the third quarter. The operator said that billings and revenue both fell by nine per cent compared to last year, due in part to smaller jackpots resulting in less customer interest. The comparable quarter in 2016 included particularly strong jackpots for the Lotto 6aus49 and EuroJackpot lottery games. Toronto-listed social casino operator Tangelo Games Corporation struggled again in Q3 as revenue fell by nine percent to CAD$8.5m. The company said, however, that its operational turnaround began to bear fruit during the period as paying users at Tangelo Israel grew for the first time since the acquisition of diwip, while revenue from new players at Tangelo Spain increased for the first time since the acquisition of Akamon. Frankfurt-listed operator bet-at-home. com recorded a 10 per cent drop in revenue to €25.9m in Q3, which the company attributed to the IP blocking of its site by Polish authorities. The company said that it considers the IP blocking

to be in breach of European law, adding that it has initiated extensive legal action in response. The operator’s website was also blacklisted in Slovakia during the third quarter. It was a difficult quarter too for another Frankfurt-listed company, lottery broker Zeal Network, which saw revenue decline by 18 per cent to €32.7m due to an “exceptionally” weak jackpot environment during the period and increased hedging costs due to rule changes in the EuroMillions lottery. Despite this, the company remains confident for the future with its B2B subsidiary Lottovate launching Norway’s first digital-only charitable lottery in partnership with UNICEF in November and a new social lottery product set to go live in the Netherlands. German operator mybet Holding had another quarter to forget as revenue fell by 28 per cent to €7.8m, with sports betting revenue falling 16 per cent to €5.8m following a 12 per cent decrease in amounts staked. Online casino revenue was down 58 per cent to €1.4m due primarily to its offering being blocked in Greece, which did not return to operation until November. B2B revenue grew by 12 per cent to €0.6m following a new partnership in Austria. mybet Holding

117


C O LU M N AND ANOTHER THING...

The gloves are off OPINION Steve Donoughue

The industry is set for a year of turmoil, and ignoring the attacks will only make things worse

T

his is the year that the gambling industry in the UK will really get a kicking. As with many state-sanctioned beatings there will be sufficient evidence to justify it, but the majority of the violence will simply be down to politics and new faces in the firmament wanting to state their credentials by landing a few blows. To start with, the recent appointment of the new Secretary of State for Digital, Culture, Media and Sport, Matt Hancock will not be the panacea that many trade journals have stated. The Osborne acolyte is the MP for Newmarket and has a dislike for the gambling industry that many in racing are afflicted with. Bookmakers are parasites to him and the rest worse. With the Horse Racing Levy now extended to offshore bookmakers, he may not see the need to defend fixed-odds betting terminals (FOBTs) as was done in the past, even though they prop up the betting shops that pay most of it. He will care even less about the other sectors. We will also see the new CEO of the Gambling Commission Sarah Harrison, as predicted, jump ship when a proper job came along. Being a gambling regulator is either a sinecure for a bureaucrat or a springboard for a quangocrat looking for a big-money role. One just has to keep the ship steady until semi-retirement, the other has to make some noise and shout ‘consumer focused’. Now it is a proven model, expect the next incumbent to want to tighten the screws and beat the industry up to prove their mettle for a role in government or as a utility regulator. A new addition to the playground bullies would also appear to be GambleAware. Under new chair Kate Lampard CBE it has operators in its sights. The GambleAware parliamentary 118

reception, where it aligned itself with practically every anti-gambling body there is, does not bode well for the future. Further gloom comes in the form of Tom Watson MP, the shadow spokesman for DCMS, who although not new, has shown a new face to the industry. Considering he absented himself from every meeting of DCMS Select Committee Inquiry on the Gambling Act in 2012, his recent interest is surprising. Maybe it was the financial encouragement of the antigambling campaign groups that got him re-engaged? One does think his recent suggestions that children will become problem gamblers simply by looking at a gambling brand name on a football jersey suggests he is trying to find some column inches and political relevance. Unfortunately for the industry, the bulwark against such political machinations has usually been the trade associations, but this is no longer the case. BACTA’s recent chairmen have got their very effective attack dog, John White, to link up with landbased casinos to attack the bookmakers over FOBTs. In using concerns over problem gam-

“New Secretary of State for Digital, Culture, Media and Sport, Matt Hancock has a dislike for the gambling industry”

Matt Hancock

bling as a vehicle for their purely commercial aims, they have managed to poison the well in parliament, making gambling a dirty word. Surely their members must be wondering why all their demands in the recent Triennial Review were rejected? Their internecine warfare has poured petrol on a localised fire that has now become a conflagration burning everyone in the industry. Well done guys, the foot-shooting trophy is yours. All that is left now is for some operator whose directors are too focused on their bonuses to notice that everyone is out to get them, and we will have another scandal and more restrictive regulation. We now live in a world where gambling is a dirty word and anything we do can inflame the moral minority. Be it an advert that could in any way be commercial and will be causing addiction, or a game that has fun imagery and will be targeting children. The world is out to get us, and we need to fight back – not fight each other. We need to show the world we are a useful component of society. We need a CSR project on a multi-million-pound scale if we are to survive and we need it now. Open your wallets people. n Steve Donoghue is writing in a personal capacity


GIQ magazine Jan-Mar 2018  

Gaming Intelligence Quarterly. The gaming industry's leading source of independent news and analysis.

GIQ magazine Jan-Mar 2018  

Gaming Intelligence Quarterly. The gaming industry's leading source of independent news and analysis.