Oct – Dec 2018
• OCTOBER – DECEMBER 2018 • ISSUE 35
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
A GAMING INTELLIGENCE PUBLICATION
Expert analysis from 888, GAN, GVC, IGT, PokerStars and more Plus all the latest legal, financial, M&A, people, products and marketing news
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LEADER Q3 REVIEW
US SPORTS BETTING SPECIAL 36 State of the sports betting union Every deal in every state and the legislative state of play in those looking to legalise sports betting 47 Delaware and New Jersey revenue How much sports betting revenue has been generated in the first two states out of the blocks? 50 The art of the deal Executives from GAN, IGT and more tell us how to cut a deal in this most complex of markets 56 The scale of the black market If the states are to benefit from regulating sports betting they will have to tackle the black market 62 Stars and Stripes The Stars Group’s US chief Matt Primeaux says the world’s leading poker operator will tailor its sports betting operations for each casino’s needs – including retail 66 Power couple GVC director of corporate development and strategy Adam Greenblatt tells us what to expect from GVC’s $200m joint venture with MGM Resorts
ANALYSIS & OPINION 4 Snapshot Top stories, top quotes, top deals and deal of the quarter 6 Thought leadership SG Lottery, SBTech, Big Time Gaming and Income Access 14 People Yaniv Sherman of 888 moves to the US; plus new appointments at DraftKings, Playtech and more 18 Technology & new products Kindred Group’s new chatbot; plus new products from ATG, Kindred, Playtech and more 20 Lottery Pennsylvania becomes the first US lottery to launch virtual sports; plus news from the lottery sector 22 Games The launches that caught GIQ’s eye in Q3 26 Social gaming intelligence GAN head of product Alec Driscoll on social casino as a marketing tool 28 Legal & regulatory The latest legal developments from around the world; plus Ifrah Law on sports betting deals 32 Marketing NBA and MGM cut industry first sports betting partnership
FINANCE Q3 2018 71 The GIQ20 listed operators’ results
AND ANOTHER THING…. 82 Joe Brennan finds the missing link between David Rebuck, Calvin Ayre and Bruce Springsteen
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I N T E RI M E D I TO R
SOMETHING FOR EVERYONE? HE BIG GUNS have come out firing. MGM Resorts and GVC Holdings have vowed to plough $200m into a joint venture that, together with MGM’s tie-up with Boyd, gives them access to 15 states. Scientific Games has already opened operations for Caesars Entertainment in two states. IGT, meanwhile, has teamed up with FanDuel to launch in New Jersey and Boyd to launch in Mississippi. FanDuel’s big rival DraftKings has also begun sports betting operations in NJ. The Stars Group and 888 launched their apps in New Jersey, while William Hill seems to be the people’s choice for almost every casino outside the Big Five. Deals have been struck, with many of the biggest casinos, suppliers and bookmakers grabbing a slice of the action. It is tempting to ask if those not already present have missed the boat. (I’m looking at you, Playtech.) But there is still a lot left to play for. In terms of population, California, Texas, Florida and New York are the four biggest US states by far, with some 108.3 million inhabitants combined. Together they account for almost a third of the entire population of the United States. New York is intent on getting
sports betting up and running – it just needs to find the right route. But neither Texas, Florida or California have started to get the legislative wheels rolling, unlike the 22 other states that are profiled in our State of Play feature (page 36). The number of casinos and racetracks will provide an opportunity for just about everybody – presuming they don’t all sign up with William Hill. The bigger picture, as GVC’s Adam Greenblatt points out (page 66), is a future with a smaller number of national brands that benefit from the marketing muscle that an MGM can apply across state lines. For GVC-MGM, they expect those brands to include PlayMGM and PartyPoker, but you can be sure that DraftKings, FanDuel, PokerStars/BetStars and William Hill will be planning the same – as will others. With a population of 325 million, the US can sustain a few national betting brands, while also including a few local ones. So, while the rush to market is understandable, one only needs to look at the New Jersey iGaming market leader to see the wisdom behind patient strategy, investment and execution. This market leader is not Borgata or Caesars, it’s Golden Nugget – and it was the last to market. firstname.lastname@example.org
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GIQ Q3 2018
Snapshot most popular news stories on GamingIntelligence.com Private equity firm Apax Partners acquires Genius Sports Group Superbet begins process to downsize Gibraltar office bet365 set to enter US iGaming market with Hard Rock partnership Catena Media continues M&A with LeapRate.com acquisition PlayUp acquires US horse racing betting provider 123gaming Paddy Power Betfair completes merger of US business with FanDuel Australia’s BetMakers acquires Global Betting Services Cherry increases stake in Highlight Games Gamenet agrees €265m acquisition of Italian operator GoldBet Snaitech set for delisting as Playtech moves on remaining shares
Groundbreaking joint venture for GVC and MGM LISTED GAMING OPERATORS GVC Holdings and MGM Resorts International established a joint venture that aims to establish PlayMGM and PartyPoker as the dominant sports betting and iGaming brands across the US. The 50-50 joint venture between GVC and MGM Resorts sees the two companies provide certain assets to the venture under a 25-year agreement, alongside a capital commitment of $100m each. The JV will serve as the exclusive vehicle for all US land-based sports betting, as well as online betting and gaming (realmoney and free-play), online and major tournament poker, and other similar future interactive businesses. Under the terms of the exclusive partnership, the business will be conducted primarily under the PlayMGM and partypoker brands,
led by a board of directors comprised of two members from each company with equal governance and decision-making rights. “MGM Resorts is a world-leading entertainment business and the most trusted name in gaming, with the highest-quality brands and management, and strong sports connectivity,” said GVC chief executive Kenneth Alexander. “This, combined with GVC’s technology and experience in successfully building online gaming businesses across multiple markets presents a truly exciting opportunity for US players and our respective shareholders.” The JV will operate from its own headquarters located in a major US technology hub, with its leadership selected from both companies, alongside additional new hires. GVC has grown rapidly in recent years via the acquisition of Sportingbet, bwin.party and
OF THE QUARTER
THE QUARTER’S DEALS IN 60 SECONDS Quote of the Quarter It’s a blank canvas here in the US. There is not necessarily a preconceived notion of what sports betting should or shouldn’t be” Matt Primeaux, senior VP of US strategy & operations, The Stars Group (see page 62)
Reno-based Eldorado Resorts took a 20 per cent stake in William Hill US in a deal that will see the UK bookmaker supply in-casino, mobile and online sports to all 21 of its US properties (as regulation allows). Eldorado will also receive a share of profits attributable to its licensees, as well as $50m in shares of William Hill Plc. London-listed gaming operator 888 has launched its first sports betting offering in the United States with the roll out of 888sport in New Jersey. The Kambi-powered sportsbook offers customers a diverse selection of sports betting markets across desktop, mobile and tablet devices, with a shared wallet and login with 888’s existing
poker and casino offerings in the state. 888 works in partnership with Caesars Entertainment, which holds the bricks and mortar licence that allows 888 to operate in the state. One operator, which is more surprisingly not using Kambi, is Kindred Group’s Unibet, which is launching in the US for the first time in partnership with SG Digital and Hard Rock Hotel & Casino Atlantic City. Kambi was spun out of Unibet in 2014 as a standalone B2B sports betting supplier. It continues to supply the sportsbook to Unibet’s other operations. Despite the strange choice of Unibet, it was a good quarter for Kambi, which signed a deal with Sweden’s state-owned horse racing operator AB
GIQ Q3 2018
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The quarter in numbers BUSINESS
Initial capital commitment for GVC/MGM Resorts joint venture
Eldorado Resorts’ stake in William Hill US under exclusive 25-year deal
Ladbrokes Coral expected shop closures after FOBT stake reduction FINANCE
Ladbrokes Coral. In addition to some canny M&A it has proved itself adept at integrating these companies without falling foul of common integration issues experienced by competitors. The deal will be enhanced by MGM’s agreement with Boyd Gaming that allows the companies to offer online and mobile gaming platforms, including sports betting, in jurisdictions where either Boyd Gaming or MGM Resorts operate physical casino resorts and online licences are available.This will give the two companies and the GVC-MGM JV a path to expand their online and mobile gaming presence across 15 states. For more, see interview with Adam Greenblatt of GVC (page 66).
£1,125.1m “This presents a truly exciting opportunity for US players and our respective shareholders” Kenneth Alexander, GVC
GVC’s H1 revenue incl. Ladbrokes Coral results from 28 March
The Stars Group revenue in H1 excluding Sky Betting & Gaming (acquired on 10 July)
August sportsbook wagers in New Jersey M&A
Proceeds from Playtech’s sale of eight per cent stake in Plus500 Trav och Galopp (ATG) to supply its sportsbook in the liberalised Swedish market from January. ATG will lose its horse racing monopoly but will be able to take bets on all other sports... with help from Kambi. Kambi also signed its first national lottery supply deal with an agreement to power the launch of a new online sportsbook for Latvia’s state-owned national lottery operator SJSC Latvijas Loto. Also entering the state lottery market for the first time is UK-based Bede Gaming, which won a competitive tender to provide Canada’s Ontario Lottery Corporation and Gaming Corporation. with its new digital platform. Bede takes over from IGT (a legacy GTECH contract) in what is expected to be its largest commercial deal yet. GIQ Q3 REVIEW
On the M&A front, British private equity firm Apax Partners acquired a majority stake in sports data technology provider Genius Sports Group from the company’s founders and management, funds advised by Three Hills Capital Partners (THCP), and other minority shareholders. Meanwhile, Genius Group’s fiercest competitor Sportradar attracted North American attention with The Canada Pension Plan Investment Board and Silicon Valley-based growth equity firm TCV acquiring a stake that valued the company at €2.1bn (USD$2.4bn). Sportradar’s founder and chief executive Carsten Koerl will retain his majority stake in the business and will remain in charge of strategy following the transaction.
Playtech’s proposed bid to acquire Plus500 in 2015 before withdrawing REGULATORY
€4m Cost of Greece’s proposed five-year online betting licence
NFL’s potential annual increase in revenue from legal sports betting 5
S P O N S O RE D E D I TO RI A L SCIENTIFIC GAMES LOTTERY
What lotteries can Lottery and casino gaming are more closely linked than ever before. Not only do their games share popular brands, such as Monopoly and Willy Wonka, they share players, too. Scientific Games’ national ONE Segmentation study shows there is a high degree of player crossover in lottery and gaming channels
HALF OF INSTANT game players play slots, and 75 per cent of slots players play instant or draw games. Lotteries and casinos are entertaining many of the same players – and vying for the same players’ entertainment budget. Tim Menzia, director of consumer insights, Scientific Games Lottery, has worked on both sides of the gaming landscape. Formerly the director of market research for WMS Gaming, Menzia has over 30 years of market research experience, specialising in what drives consumer decisions. One of the co-creators of Scientific Games’ ONE Segmentation study, Menzia points out that the casino industry does a great job using data about player behaviour and insights to optimise the experience for players. “It’s challenging for players to describe what they like about certain types of games, so that’s why data is so important,” Menzia says. “The goal is to collect more information about players and use that to better understand what they like.” When it comes to using customer insights to create appealing games, lotteries can learn a thing, or ten, from casinos. Menzia identified these ten ways that lotteries can glean deeper insights in order to create better products.
Get advanced player insights using loyalty programmes Loyalty programmes are the easiest, most common and successful way to engage players. Gathering data from the same people over time provides longitudinal insights, such as how often players return to a game and if they switched or played multiple games. These valuable player insights form the basis for more advanced player and game analytics.
Kickstart player engagement to drive sales
“Data is important. The goal is to collect information about players and use that to better understand what they like” Tim Menzia, Scientific Games Lottery 6
Scientific Games conducted a national study that found 86 per cent of people in the US belong to some type of consumer loyalty programme. Loyalty programmes can be a great way to engage lottery players more effectively, and have been found to be valuable for high-value players. In states where lottery loyalty data is available, the study found that loyalty club players tend to spend more on average than the total player population. Lotteries can send messaging that is targeted to specific types of play-
ers, and reach them in different ways. Mobile apps can help determine what websites people frequent, and which apps and social media they use. Combining this valuable data with new technology enables promotions that are targeted, customisable and mobile.
Market more effectively using player segmentation Player segmentation gives marketers the information they need to group players based on game preferences, and reach them more effectively. In the gaming industry, players typically have been segmented according to demographics, player spend and purchase frequency, which don’t have much to do with why people play. Without segmentation, marketers have to rely on a one-size-fits-all approach for marketing and promotions. Scientific Games’ ONE Segmentation study determines what motivates players and makes it possible to build better games to appeal to different types of players.
Build a player panel to harness ongoing insights Player panels are an advanced form of loyalty programme. They provide a platform for player engagement when critical insights are needed for game development and tracking game performance. A big challenge for lotteries is getting enough of the right data from the same players. However, building a statistically valid sample will show how player preferences change over time, and lotteries can conduct ongoing ad hoc research with those players. That is exactly what Scientific Games did when it created the ONEVoice online research community to gain a better understanding of what motivates players of every type. Players in the ONEVoice community participate in surveys, polls and discussions, and Scientific Games uses these insights to develop new products, messaging and marketing.
Go for trial and repeat A game’s success depends on players first trying the game, then coming back for multiple repeat purchases. Knowing how often people come back and buy a game empowers lotteries to build on success. It is paramount to understand the variables that affect trial and
S P O N S O RE D E D I TO RI A L SCIENTIFIC GAMES LOTTERY
learn from casinos repeat. Player segmentation gives all analytics a deeper layer of player insights. For example, when combined with trial and repeat, segmentation provides greater understanding of which games are popular, based on repeat purchasing, across the different player segments.
Optimise sales with the right product mix Lotteries need game types for the various player segments. Just as some games are designed for niche markets and some games have mass appeal, various types of players prefer different games. By lining up the game types with the player segments, lotteries can figure out how many of each type of game to offer for their particular markets.
Understand the player journey Casinos know how consumers move across the casino floor, and they position games to maximise the overall player experience. The same principle can be applied to lottery products in a store. Observing where players start and finish, how they interact with the game dispenser, and how those patterns change lets lotteries position games where they are most effective. These insights can help determine the ideal location of a lottery vending machine or bin, as well as the games’ positions in the display.
Ignore sales (sometimes) if a game attracts new players It sounds counter-intuitive, but lotteries shouldn’t make all decisions based on a game’s
sales. Instead, consider what the games bring to the franchise. If a game appeals to player segments you want to grow, it might be worth keeping – even if it is underperforming. The game might not be a big contributor to the bottom line, but it could be more successful than a high-performing game if it is attracting the right types of players.
have generated tens of thousands of views. Many consumers watch these videos to learn more about games before playing them. Lotteries can get genuine, unaided player insights simply from these videos and the dozens of comments they generate.
Get the user experience right
It all comes down to understanding player preferences and creating games that players enjoy, Menzia says: “Everyone benefits – lotteries can help players by offering a great variety of games, so there’s something for everyone, and suppliers know what games to make more or less of. Most of all, players get to enjoy the games that offer the entertainment value they like best and expect.” Focusing on entertaining players also lets the industry drive more responsible gaming and give back to state programmes that benefit communities. And in that regard, everybody wins. n
A game only gets one shot to make a great first impression. Players are bombarded with products and stimuli all the time, and the user interface and user experience (UI/UX) can make or break a new product. Lotteries should take advantage of all research and marketing tools at their disposal, including player feedback, to develop and test the UI/UX before launching a game.
Leverage social media for genuine insights Nearly all lottery players are on Facebook (97 per cent), and about two-thirds use YouTube (64 per cent). Many use other types of social media, such as Twitter, Pinterest and Instagram. The lottery and gaming industry can learn a lot about players by simply viewing what they are sharing online. For example, videos on YouTube of players scratching off instant games GIQ Q3 REVIEW
Use market research to learn what players want
SOURCES: Participation in Any Loyalty Programme – Scientific Games’ ONE™ Segmentation study, Autumn 2014. Breakdown of Lottery Player Participation in Social Media – Scientific Games’ ONE™ Segmentation Study, Autumn 2017.
S P O N S O RE D E D I TO RI A L SBTECH
The key to launching a successful sports betting operation in the US
Chief commercial officer Andrew Cochrane offers SBTech’s platform as the flexible choice for land, online or mobile operations
WITH NUMEROUS ON-PROPERTY and the retail operation in order to allow customonline sportsbooks already live across New ers to open an omni-channel account across all Jersey and Mississippi, and many more slated channels. SBTech’s partner Churchill Downs to launch before the end of the year, it’s hard to has already gone live with its BetAmerica believe that it’s been only a few months since brand in its two Mississippi casinos and is the repeal of PASPA paved the way for state planning to launch mobile-on-premise in the authorities to legalise sports betting. future in Mississippi. From the famous Resorts Casino in Atlantic City to the Golden Nugget in Biloxi, MissisA bespoke offering sippi, US sports fans suddenly have an abunSBTech is among a very small number of softdance of options to choose from whenever they ware suppliers that can offer a bespoke prodfeel like placing a bet on the NFL, the NBA or uct, allowing an organisation to quickly add MLB, as well as numerous other sports. elements to its offering without disrupting the And, of course, this is only the start. Considuser experience. ering the enormously passionate potential cusThe company’s retail product includes tomer base, it’s no surprise that almost every powerful cashier and SSBT (self-service betcasino, gaming and entertainment organisating terminal) applications, giving players the tion is looking to get in on the act. opportunity to place bets over the counter with But while there are seemingly endless the cashier operator or directly at terminals, opportunities to take advantage of this new legal using cash or printed vouchers. framework, would-be operaThe online option is tors should always invest in powered by Chameleon360, in-depth research, rather which contains a wide range The plan could be to than diving in head first. of versatile tools designed to start off by offering provide full-spectrum player a retail product and Benefit of experience management and reportOne of the most important later add an online ing. With an Open API, the decisions is to choose a part- element, which platform takes a modular ner that can not only provide is subsequently approach, allowing an operathe necessary sports betting integrated with the tor to plug in any additional infrastructure, but has the tools they need to support its retail operation experience and understandbusiness, including out-of-theing of the local landscape to box third-party integrations build a strong basis for future success. for CRM, data, content, casino and payments. This is especially significant for operators Both the retail and online options are looking to enter multiple jurisdictions, each underpinned by SBTech’s market-leading of which have their own regulatory requiresportsbook, which offers odds on over 60,000 ments. A complex iGaming platform such as sporting events a month, including 25,000 inSBTech’s Chameleon360 – one that is regularunning events. tion ready and contains a range of configurable Operators can differentiate their offering responsible gaming tools – can help any operafrom the competition by utilising the semition satisfy a regulator’s demands and avoid a managed trading strategy, which allows them potential regulatory misstep. to trade markets directly themselves and offer Flexibility is equally important when unique sporting/non-sporting events. launching a new operation. It is essential the Add in a range of unique features designed provider is able to tailor the offering to the speto enhance the betting experience such as the cific business needs and expectations of the indipatent-pending Pulse Bet, Add2Bet and singlevidual organisation – a one-size-fits-all approach game parlay tool YourBet, and the option to is always to the detriment of the operator. take a multitude of managed services, thus For example, the plan could be to start off by allowing the operator to focus on running the offering a retail product and later add an online day to day activities, and you have the basis for element, which is subsequently integrated with a successful operation. n
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S P O N S O RE D E D I TO RI A L BIG TIME GAMING
Engaging millennials in the fledgling US iGaming market Nik Robinson, CEO of Big Time Gaming, says operators must pack their portfolios with innovative, highly volatile games to engage players and establish a successful brand in the long-term
Land-based casino players make for easy pickings, but the real long-term value lies in being able to deliver an innovative and engaging product to millennials GIQ Q3 REVIEW
THE REPEAL OF the Professional and Amateur Sports Protection Act (PASPA) has been heralded as one of the most critical moments in the evolution of legal online sports betting and gambling in the US. It is seen as a move that will unlock the true potential of the market, which some estimate could run into hundreds of billions of dollars. These numbers have caused the wider industry to leap with joy, and already we are seeing operators and suppliers from the US, Europe and elsewhere set their sights on their own version of the American dream. But in their eagerness and excitement to be the first to launch, most have failed to properly assess the state of play. Sure, the majority have plans in place for launching sports betting and online casino, and already know the games, promotions, rewards and marketing tactics they will use to engage punters and players, and drive them towards their online products. But in most cases, these are more mature players already engaged with land-based gambling products. If operators are to build a long-term business, they must also consider how they are going to tap into the psyche of millennials and make them aware that not only is iGaming legal, but it is a thrilling and fun form of entertainment that can deliver levels of excitement they currently don’t have access to. That’s going to be a tough sell; this is the smartphone generation. At the tap of a finger they can open Netflix and Instagram, as well as insanely popular online games such as Fortnite and PUBG. It’s not an impossible task – millennials are already familiar with skin betting and making in-game purchases – but standard slots are simply not going to do it. If we look at New Jersey, operators have so far prioritised offering slots from land-based manufacturers such as Scientific Games and IGT. Between them, they hold around 65 per cent of the content mix in the Garden State. Operators have primarily done this to help build trust with players new to online casino as the market finds it feet. But these games, while offering a fun and enjoyable player experience, do not pack enough of a punch to appeal to millennials who are used to fast-paced entertainment options such as
video games that offer missions, unlockables and rewards, all of which can be monitored and tracked on progress bars. Big Time Gaming understands this, and develops highly volatile games that feature complex maths and sophisticated mechanics wrapped in a canvas of stunning graphics and animations that deliver a video game-like experience. This includes our patented Megaways, Dual Reaction, Extending Reels, and Feature Drop functions. Megaways, for example, has differential symbols on each reel, with every spin offering players up to 248,832 ways of winning, while our V-Gamble system allows players to gamble a game’s volatility in the Free Spins feature. These functions have seen Bonanza become the most spun game in the UK this year. Data shows that our games are enjoyed by a broad demographic of players, but are increasingly popular with millennials. They engage them in a way that titles from other suppliers can only dream of, and as such we are helping our partners to reach this lucrative audience. Those looking to take the US market by storm should think carefully about their target audiences; land-based casino players make for easy pickings, but the real long-term value lies in being able to deliver an innovative and engaging product to millennials, and the only way to do that is to offer them games that set new standards. n 11
S P O N S O RE D E D I TO RI A L INCOME ACCESS
The next wave of iGaming affiliate marketing in the US Erica Anderson, marketing director at Paysafe Group’s Income Access, says affiliates will be just as important in the US as in Europe AFFILIATES ARE DRIVING as much as a fifth of new player registrations for New Jersey online casino and poker brands, according to Paysafe Group’s Income Access data. The recent repeal of the US Professional and Amateur Sports Protection Act (PASPA) and imminent launch of the Pennsylvanian iGaming market will likely enable the channel to scale new acquisition heights. As American gaming expands, affiliates are set to play just as important a role growing the market as they have in Europe.
Atlantic crossing Affiliates have been an integral element in UK gaming brands’ acquisition strategies for over 15 years. Today, the channel’s results are impressive, with Income Access data revealing that a mature affiliate programme can drive up to a third of UK operators’ new player registrations. However, UK market growth has been accompanied by competition and saturation concerns for operators and affiliates alike. Against this backdrop, affiliates are looking to the US Supreme Court’s repeal of PASPA in May as a window of opportunity. The end of PASPA has enabled states beyond Nevada to regulate single-event sports betting. New Jersey and Delaware legalised the vertical in June, followed by Mississippi in August. Pennsylvania, West Virginia and Rhode Island are expected to launch sports betting markets by the year-end, while highly-populated New York indicates it will re-examine its existing legislation in 2019. Overall, 12
H2 Capital predicts that 19 states will have regulated the vertical by 2023, when estimated gross gambling win of $4.9 billion would have exceeded the $4.7 billion forecast for the UK. Looking ahead, affiliates are being granted a golden opportunity to build on the channel’s foundational phase in New Jersey. When the Garden State launched its online casino and poker market in 2013, the Division of Gaming Enforcement (DGE) adopted an inclusive approach towards affiliate marketing. The regulator licensed affiliates promoting iGaming brands. Those promoting on a CPA or flat-fee basis required free vendor registration, while an Ancillary CSIE licence costing $2,000 was needed for revenue share promotion. Neighbouring Pennsylvania regulated online casino and poker in Q4 2017. While the Pennsylvania Gaming Control Board (PGCB) has yet to formally announce its approach to affiliates, the regulator is expected to emulate the DGE’s strategy of regulation when the market launches later this year.
Lower entry barriers Affiliate marketing has flourished in the New Jersey market despite limitations. Its small population – nine million compared to the UK’s 65.5 million – and the need to target traffic
Data reveals that a mature affiliate programme can drive up to a third of UK operators’ new player registrations
within a small geographical area are just two factors to deter affiliate interest. Until now, the limited range of verticals permitted – online casino and poker, but not sportsbook – also served as an entry barrier to affiliates already wrestling with the overhead of licensing fees. Such barriers are starting to be lowered. New Jersey’s regulation of sports betting, and DraftKings, playMGM and SugarHouse online and mobile sportsbook launches in August were certainly a sign of things to come. Other operators focusing on the Garden State will likely soon add sports betting to their digital offerings – and expand affiliate programmes accordingly. Beyond New Jersey, West Virginia and Pennsylvania’s respective legislation cover online wagering, creating a potential opportunity for affiliates when the markets go live. Of course, Pennsylvania has also regulated online casino and poker, with the PGCB granting its first iGaming licence to Caesars Interactive’s Harrah’s Philadelphia in late August. If the regulator follows the DGE’s approach to affiliate licensing, affiliates could soon have a market as diverse as New Jersey to promote in terms of verticals – but more populated (14 million). In Pennsylvania and beyond, operators will also see the diverse benefits of affiliate marketing. Where gaming taxes are higher, they will benefit from the strong return on investment (ROI) and overall cost-effectiveness of the channel’s performance-based model, whereby operators only pay for player acquisitions. The US marketing landscape for online gambling is also more restricted than markets like the UK, where AdWords campaigns are permitted. With Google prohibiting the pay per click (PPC) channel for American iGaming brands, operators have an important reason to invest more in affiliates. The affiliate channel’s diverse marketing strengths have combined with multiple states’ post-PASPA regulation of sports betting and the imminent launch of the Pennsylvania iGaming market to create an important US opportunity for operators and affiliates alike. Income Access, the marketing technology and services company founded in 2002, is used by multiple US brands, and manages affiliate programmes of some of the major gaming companies and state iLotteries. n
Our man in New Jersey 888 senior vice president and head of commercial development Yaniv Sherman explains why he is moving to New Jersey YANIV SHERMAN IS moving to 888’s New Jersey office permanently. It is the first time that the Israeli company has had such a senior member of staff based in the US. Sherman is an integral member of the executive team that has been so important to this company since taking charge in 2011. However, it is not the first time Sherman has spent a significant amount of time Stateside. Back in 2013, when New Jersey legalised iGaming and Nevada regulated online poker, Sherman was there negotiating the deals that saw 888 team up with Caesars in New Jersey and Nevada. He was also involved in the establishment of the All American Poker Network, a joint venture with Avenue Capital Group, which provided the financial foundation for 888’s B2C operations in America. “This is like 2013 all over again,” says Sherman of the rush to market. “Only this time the stakes are much higher.” His move is a big deal for 888. It is also a big deal for him and his family. It has been carefully thought through. We speak immediately after his move to New Jersey is announced but before 888Sport is launched in New Jersey through the company’s licensing partnership with Caesars. I tease him that 888 is being a bit slow out of the blocks. “I don’t think it’s too late for anyone,” he counters. “You just need to find the right fit for you, culturally and commercially.” He points out that the relationship with Caesars that resulted in the launch of WSOP online in Nevada and New Jersey in 2013 was the culmination of a three-year partnership that went back to 888 powering Caesars’ expansion in the UK. GIQ Q3 REVIEW
With Mississippi another early mover – but with solely land-based sportsbooks – 888’s potential impact has been limited since PASPA was repealed. “Retail is the natural way to expand casino’s footprint. I wouldn’t discount retail but, by definition, retail’s footprint is limited. Retail can be an effective acquisition channel but I think everyone understands that sport is a mass market product and the vast majority of players will come from online. It is a matter of when not if.”
Across the lines In other ways 888 has a headstart in the US market. While it has only just launched its first sports betting solution, it is the only company able to offer poker in three states. The launch of the multi-state liquidity network has boosted Caesars and 888 New Jersey revenue by 42 per cent in the four months since launch. Figures are not so easily broken out in Nevada but 888’s smaller Delaware licensees are up even more. If Pennsylvania joins it will be a huge boon – for the entire poker market. However, Pennsylvania has caused much anguish from stakeholders dismayed at the huge licence fees and high tax rate for operators. “The only winner in the Pennsylvania market up until now is Microsoft Excel,” quips Sherman. “I don’t care where you’re from and how deep your pockets are, the Excel spreadsheet still looks the same.” However, he believes lowering the tax rate embedded in the legislation is too complicated. The more logical thing to do at this stage is remove the one sports skin per operator limitation and allow the operators to find a commercial solution. “It will be fine for 888,” he says. “We have the entire product stack ready. With sport, casino and poker all
connected to the same back office, we can crosssell and manage it and make it a success.” But for others, the start-up costs are huge and land-based operators need to be able to find enough partners to share the licence fee. Sherman acknowledges the state was trying to do the right thing in making iGaming and sports betting lucrative for the state, while appeasing land-based operators, but the balance is not quite right for everyone. He welcomes the patient approach shown in New York in the hope that the authorities get the legislation right for all its stakeholders. “The whole Eastern Seaboard is ripe for expansion,” he says, acknowledging the variety of tax rates and regulations offered by states such as Rhode Island and West Virginia. “You don’t have to operate in all states, just the ones that make commercial sense. That is the beauty of it.” The synergistic effect of one language, one currency and similar marketing channels is what makes it exciting for cross-border operators such as 888. “[Opening in multiple markets] is a proficiency you have to master in the US if you are going to carry across state lines and create the gearing effect. If you have to do it all over again time and time again, it becomes an expensive exercise.” He says a local brand such as Golden State or Parx Casino might become a market leader in its own backyard but it will be a challenge to create a brand that crosses state lines without creating an online digital identity. “Whoever does that will grow its business and that has always been our angle. It is why we have kept our powder dry for five years,” he concludes. “Now, with sports on board, there is the opportunity to create something much, much bigger.” n 15
P EO P L E Q3 NEWS
DRAFTKINGS HIRING SPREE TO BOOST SPORTSBOOK OPS DRAFTKINGS HAS HIRED a number of senior executives as the company looks to further the momentum created by its first-to-market online sports betting launch in New Jersey. The company has brought in IGT’s Jamie Shea as head of digital sportsbook operations, Caesars Entertainment’s Frank Kunovic as director of retail sportsbook operations, and former Amelco executive Sean Hurley as head of commercial growth. The new hires have been complemented by new offices
IN THE NEWS
PLAYTECH BRINGS IN FORMER SPORTECH CEO FORMER SPORTECH CEO Ian Penrose has joined Playtech’s board of directors. Penrose has been appointed as a non-executive director and will serve as a member of the company’s Audit, Risk & Compliance, Remuneration and Nominations committees. In announcing the move, Playtech highlighted Penrose’s experience of repositioning the UK-focused Sportech into a gaming and technology business focused on North America. Penrose has the sort of gravitas and intelligence that would play well across Playtech’s potential customer base in the US. It’s a shame that he will only be seen in the Playtech boardroom and not by potential customers at the negotiating table.
Gaming executives who have been making headlines and what’s in their inbox
ARISTOCRAT BRINGS IN JEFF KARP TO HELM BIG FISH ARISTOCRAT LEISURE’S SOCIAL casino business Big Fish Games has appointed Jeff Karp as its new managing director and president. Karp has a glittering CV taking in senior executive roles with the likes of EA, Zynga and GSN Games. He is credited for his role in building multi-billion-dollar franchise games, including EA Sports, Words With Friends, Farmville, The Sims franchise, Bingo Bash and GSN Casino.
His hire is a coup for Aristocrat and a sign it means business in the social casino realm. It acquired Product Madness and its Heart of Vegas app in 2012, with Plarium following in 2017 and Big Fish in January this year for $990m from Churchill Downs. The acquisition established Aristocrat as the largest social gaming operator in the world after Playtika. It has yet to use these assets in a B2B capacity and Karp’s arrival suggests this is not the strategy, but it would be a string to its bow.
WYNN POACHES IGT CHAIRMAN PHIL SATRE HAS resigned as chairman of IGT and named vice chairman of New Yorklisted casino operator Wynn Resorts. Satre has served as IGT chairman since April 2015 and has been a member of the company’s board of directors since January 2009. “I am honoured to have the opportunity to be joining Wynn Resorts at this important time and to play a role in the company’s continued success,” said Satre acknowledging the 16
in San Francisco and Las Vegas. With its Massachusetts-based workforce expected to grow by 75 per cent next year, DraftKings is also in the process of creating a state-of-theart headquarters in Boston, to open in 2019. These moves will be seen as a statement of intent. DraftKings has been swift to market in New Jersey but the launch has not come without hiccups. However, those that hoped the DFS companies would be eclipsed post-PASPA might have to think again.
events that resulted in founder Steve Wynn leaving the company. “I applaud the efforts by management and the board to respond to challenges faced by this otherwise first-class enterprise,” concluded his statement. Satre will become chairman when Boone Wayson steps down at the end of 2018. Wynn will hope that together with CEO Matt Maddox they can recover the ground lost by the turbulent conclusion of Wynn’s career.
DUTCH GAMBLING REGULATOR STEPS DOWN The chief executive of the Netherlands gambling authority, Marja Appelman, has left her position ahead of the re-regulation of the country’s gambling market. Appelman left the Kansspelautoriteit (KSA) to serve as executive director of the Housing Market Directorate, a division of the Netherlands’ Ministry of Interior and Kingdom Relations, on 1 August. She served as KSA chief executive since September 2013, preparing the authority for the re-regulation of the market and overseeing enforcement activity against unlicensed operators targeting Dutch consumers. Her departure comes at a time of renewed hope that the new Gaming Act will soon come into force following years of delays. The bill is currently awaiting approval from the upper house of the Dutch parliament, the Senate, having been approved by the lower house in 2016. Appelman’s successor will have the job of ushering it into existence.
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Unibet’s chatbot opens new route into Facebook and Whatsapp C O LU M N Steve Hoare
Kindred Futures open innovation manager Michael Franklin explains how Unibet’s new chatbot might transform the sports betting experience KINDRED GROUP TEAMED up with tech startup Artificial Solutions to launch a pioneering new chatbot on the Unibet Facebook page just in time for this summer’s World Cup. The conversation-based interface enables customers to do more; from finding odds and placing bets in thousands of markets, to asking about fixtures and getting help with account issues. Operators such as bwin and Paddy Power have experimented with chatbot products previously, but all have since been taken offline. The team at Kindred believe the Artificial Solutions chatbot is different. It i s p ow e r e d by a tech nolog y ca l led nat u ra l la ng uage processing (NLP). It bypasses click-button simplicity or keyworddriven responses and claims to understand the complexities and nuances of gambling language and everyday speech. 18
Michael Franklin, the open innovation manager at Kindred Group’s innovation unit Kindred Futures comments: “By allowing customers to talk to the chatbot as they would any other contact, it results in a meaningful interaction with customers that stays true to the interface, while building customer behaviours as it develops.” Customers are not yet able to place bets through Messenger. Facebook wanted a clear distinction that players are betting with Unibet, rather than Facebook. Franklin says t h at c u s t omer s a r e h appy with this approach, and focus groups have told them that they are more comfortable with the security of being guided into the Unibet site or app. But even if customers are unable to bet through Facebook, Unibet wanted to communicate with them through their regular channels (WhatsApp and Messenger manage over 100 billion messages every day), rather forcing them to come to the Unibet app or website. “This is an experimental p r o d u c t ,” e m p h a s i s e s Franklin, “and we’re looking to understand how customers use it; the conversations they have, the bets they want to make and the future functionalities they want.”
Customer reaction T he tea m has been thrilled with the uptake from customers during the testing period. Hundreds of users tried out the chatbot during the first couple
of weeks of the World Cup and the numbers have been growing since the European soccer season has begun. “Retention is also key for us as we want to build customer behaviours in using the chatbot, so it’s great to see a good percentage come back to use the chatbot day after day,” continues Franklin. “But most importantly for us is the qualitative feedback and insights from customers on whether it’s a useful, enjoyable
“We want to build customer behaviours in using the chatbot, so it’s great to see a good percentage come back day after day” Michael Franklin, Kindred Futures product. It was great to see the appreciation customers were having, and its ability to instantaneously serve them information in a channel they were already in, and likewise the jovial testing and banter we saw.” This is part of a wider project in which Kindred is assessing AI. Franklin says machine learning is a strategic interest, and the team is constantly exploring how it can use it in various formats, including responsible gambling. NLP is not just limited to messaging interfaces, but also offers the potential of voice interactions. “This is an area of particular interest to us, as it opens up more exciting possibilities for the future,” says Franklin. “We have previously looked at AI being highly disruptive if leveraged to develop market prices – of course using all the data that accompanies sport is already a part of statistical models, but computer vision technologies now mean that the ‘unmeasurable’ and ‘flow-of-the-game’ things can also be quantified and built in.” n
T EC H
PLAYTECH EXPANDS CALIENTE DEAL INTO RETAIL Mexican operator Caliente agreed a deal with Playtech BGT Sports to roll out self-service betting terminals across the country.
What’s the big idea? Playtech has been supplying products to Caliente since 2012, developing the Mexican operator’s online offering into probably the most successful iGaming site in Latin America. Playtech now
BIG LAUNCHES Five of the quarter’s major product launches and what they mean for those involved
GLOBAL GAMING MAKES SPORTS BETTING PLAY Ninja Casino operator Global Gaming will make its first move into the sports betting sector following a multi-year deal with Kambi Group.
What’s the big idea? Global Gaming is the latest online casino specialist to target the sports betting vertical.The Stockholmlisted operator has seen rapid growth in the past year – topping the GIQ20 chart for H1 2018 (see page 63) – driven by its flagship Ninja Casino brand which generates around 90 per cent of the company’s revenue. With Kambi signed up, the operator is following the lead of more established Nordic-facing rivals such as Mr Green and LeoVegas by entering the sports betting vertical, with a launch expected during the final quarter of this year. GIQ Q3 REVIEW
has its sights on Caliente’s wide retail business, rolling out SSBTs in over a dozen casinos across Mexico. “Our partnership with Caliente has gone from strength to strength and we continue to experience significant growth,” says Playtech BGT Sports chief executive Armin Sageder. “The extension of our relationship into retail reflects the success we have achieved and the opportunities ahead. Mexico is a fastgrowing, regulated market and an important territory for Playtech.”
KINDRED BRINGS IN SG DIGITAL TO POWER US LAUNCH
EVOLUTION UNVEILS NEW LIVE CASINO STUDIO IN NEW JERSEY
Kindred Group selected Scientific Games’ SG Digital division as its technology partner as the operator makes its first move Stateside.
Live dealer specialist Evolution Gaming opened its first purpose-built live casino studio in the United States in August.
What’s the big idea? Kindred will uti-
What’s the big idea? Evolution became the
lise SG Digital’s Open Platform System (OPS) and Open Gaming System (OGS) as part of the landmark agreement which covers New Jersey, where SG Digital already has a licence, and other US states as and when appropriate. Kindred struck a deal with the Hard Rock Hotel & Casino Atlantic City to give it market access under the casino’s licence. This will allow it to launch its flagship Unibet brand in the US for the first time. “We are delighted to partner with SG Digital in the US, giving us swift access to the market and our coming US customers a truly great gambling experience on a top technology platform,” says Kindred US senior vice president Manuel Stan.
first live casino provider to gain New Jersey preliminary waiver approval back in 2013. But it has taken its time to enter the state’s regulated iGaming market. Described as an “historic breakthrough”, Evolution’s new live casino studio marks the supplier’s 10th studio worldwide. It will initially offer operators a range of 10 online live tables and Evolution game variants, including American (double zero) roulette, baccarat and three card poker. “Our entry into the US market has been a carefully considered long-term project,” says chief executive Martin Carlesund. “Having monitored US market developments over the past few years, while reinforcing our position as live casino market leaders in Europe, we believe now is the right time to launch a studio in the US.”
ATG PREPARES FOR SWEDISH IGAMING EXPANSION State-owned horse racing operator AB Trav och Galopp (ATG) is preparing for next year’s liberalisation of the Swedish gambling market by launching new sportsbook and live casino products through Kambi and Evolution Gaming.
What’s the big idea? The re-regulation of the market on 1 January 2019 will see ATG lose its
horse race betting monopoly in Sweden, which it has held since 1974, while also allowing it to expand into other verticals for the first time. The Kambi and Evolution deals are the latest step in ATG’s preparations for the new Swedish iGaming market, which has seen the operator acquire Denmark’s Ecosys, operator of the Bet25.dk, Rød25.dk and Casinogo.dk brands. 19
F I NA NC E GIQ20 Q3 2012
Inspired brings virtual sports to US lottery sector C O LU M N TECHNOLOGY
Pennsylvania became the first major US lottery to launch Inspired Entertainment’s virtual sports games. The supplier’s president and chief operating officer Brooks Pierce explains why animated sporting events might entice millennials to the lottery THE PA LOTTERY initially went live with two virtual sports games on 14 August, across more than 9,000 retail locations throughout Pennsylvania, under the Xpress Sports brand. It is the latest innovation from the lottery, which also includes the launch of Keno and an iLottery platform, as part of its continuing mission to modernise its business and generate new funds to benefit older Pennsylvanians. The lottery’s expanded offering has drawn the ire of the state’s casinos, who claim that the new games combine elements of online casino games, sports betting and slot machines, infringing on rights granted exclusively to the commonwealth’s casinos. A lawsuit later filed in August made no mention of virtual sports though, and focused only on the state’s iLottery offering. Inspired has invested heavily in R&D and took 18 months to create the first products designed specifically for the US lottery player, Xpress Football and Xpress Car Racing, which have been integrated with the 20
lottery’s Scientific Games-powered central “Inspired is speaking with several US gaming system. lotteries about launching virtual sports In order to create the most realistic football products across retail and interactive platproduct possible, a former Super Bowl chamforms,” Pierce confirms. “US lottery providpion player was brought in to be involved in the ers are very interested in offering their playcreation of the game, providing direction durers our virtual sports content. They see our ing the motion-capture process and reviewing products offering an effective opportunity to the game throughout development to help creexpand their player base, and we have a provate a true-to-life final product that accurately en record of driving incremental revenues for reflects the way modern football is played. customers globally.” “We researched lottery players and Pierce believes that this new style of lottery employed the services of sport experts in order product has the ability to attract new players to produce betting structures and content that who have not traditionally played lottery were relevant, engaging and entertaining,” games. Citing the games’ popularity in Europe, explains Pierce. “We used the world’s most particularly in the UK and Italy, he says that advanced motion-capture facilities to produce the games give players something to wager on ultra-realistic animation that would generate in real-time during the lulls between real-world a true depiction of a football game that we knew games or races. He also points out that, empirilottery players would embrace.” cally, operators who have added virtual sports The athlete models were developed in to an existing sportsbook have experienced a ultra-high resolution, including facial rigs and 25 per cent increase in revenue. muscle systems, allowing for “The New Jersey launch the use of super-close-up showed us that we need to cameras for the first time. educate players and make “Virtual sports Pierce describes the them comfortable with the betting is a good way concept in order to speed up games as ‘quick-draw’ animated sports products that to attract a younger performance metrics, since offer high entertainment demographic who this is a new concept for most and instant gratification. like sports as well as players and there is so much Scheduled virtual sports computer games” traditional slot content to events are displayed in retail Brook Pierce, contend with on these sites,” venues, bars and taverns he says. “Virtual sports betInspired Entertainment throughout Pennsylvania via ting is a good way to attract two dedicated channels every a younger demographic who five minutes throughout the day. In both games, like sports as well as computer games, and in prizes range up to $250 from a $1 play. the US it’s a great way to prepare for betting on “The simple game play and win-picking feareal-world sporting events.” tures are similar to traditional lottery products, The company says it has benefited from but with more immediate impact,” he says. a surge in interest in the US for virtual While the supplier’s games have been sports content, following the Supreme Court available for online play in New Jersey since ruling on PASPA. While major US lotteries the start of the year through licensed casino have so far been slow to embrace sports betoperators such as Golden Nugget, Caesars and ting, virtual sports could be their best way of Resorts Casino, Pennsylvania is so far the only attracting new players. At least Inspired will lottery to roll out the games. be hoping so. n
LOT T E RY
MISSISSIPPI SET TO CREATE STATE LOTTERY The US state of Mississippi looks set to approve plans to establish its own state lottery, leaving Alabama, Alaska, Hawaii, Nevada and Utah as the only US states without a lottery. Lawmakers in the Senate and the House narrowly adopted the measure at the end of August, with Governor Phil Bryant given a mid-September deadline to approve the bill, which seemed likely at the time of going to press, since Bryant has been backing the creation of a state lottery for the past year. Bill SB 2001 was approved by the Senate by a vote of 31 to 17, although the House initially voted against before finally approving the bill by a margin of 58 to 55. The Mississippi Lottery Commission will administer the lottery through retail venues, with internet ticket sales and games prohibited alongside video lottery terminals. Proceeds will repair and maintain highways and bridges in the state until June 2028.
BIG LOTTERY STORIES This quarter’s lottery lowdown SCIENTIFIC GAMES POWERS KANSAS LOTTERY SCIENTIFIC GAMES SUCCESSFULLY rolled out a new gaming system for the Kansas Lottery, the culmination of a project which began more than two years ago. It is part of the lottery’s strategic plan to responsibly increase revenue for the state, with the SG-powered system replacing technology provided by IGT since the lottery’s inception 30 years ago. Retail point-of-sale terminals have been introduced across the lottery’s network of 1,700 retailers, while players also have access to a range of draw games and virtual race game Racetrax. “We are thrilled to welcome the Kansas Lottery to the Scientific Games’ systems family,” says Pat McHugh, senior vice president of Global Lottery Systems for Scientific Games. “The new enterprise gaming system and related services from Scientific Games will help the lottery achieve the strategic goals it set to maximise returns to state of Kansas programmes.” GIQ Q3 REVIEW
PENNSYLVANIA ILOTTERY UNDER FIRE FROM CASINOS
BRAZIL’S CAIXA TAKES LOTTERY ONLINE
PEN NSY LVA N I A’S R I VA L CASINO operators joined forces in August in an attempt to restrict the Pennsylvania Lottery’s online gaming offering. Seven casino operators have filed suit against the state Department of Revenue, which oversees the lottery, asking the court to declare that the Pennsylvania iLottery offering simulates slot machines and casinostyle games, and so to prohibit such games. The casinos argue that the iLottery breaches state lottery law and Act 42 of 2017. The suit was filed by the operators of Pennsylvania’s Parx Casino, Hollywood Casino, Harrah’s, The Meadows Casino, Stadium Casino, Valley Forge, and Mohegan Sun. The law authorising the lottery to offer games online states that all online lottery products must be based around numbers, letters or symbols being revealed. Casino-style games, including poker, roulette, slot machines and blackjack, are strictly prohibited.
BRAZILIAN LOTTERY CONCESSION holder Caixa Econômica Federal launched an online lottery for players across the country in August, aiming to reach younger players by bringing popular land-based lottery games such as Mega-Sena, Lotofácil, Quina and Lotomania online. The iLottery platform is open to registered players over the age of 18 who hold a credit card, although the operator is already considering including debit cards. The only existing game not available on the new Loteriasonline.caixa.gov.br site is the Loteria Federal. The minimum and maximum online bet range has been set at BRL30 (approx €6.38) to BRL500 (€106.41), with those wanting to place bets outside this range having to use Caixa’s retail network. Caixa expects the new platform to account for three per cent of total lottery sales within a year, equivalent to around BRL457m (€97.3m).
KAMBI SIGNS WITH LATVIAN NATIONAL LOTTERY OPERATOR KAMBI SIGNED ITS first national lottery supply deal in July with an agreement to launch a new online sportsbook for Latvia’s state-owned operator SJSC Latvijas Loto. The long-term deal will see Latvijas Loto expand its product portfolio by integrating the Kambi Sportsbook into its player management platform, with a launch scheduled for later this year.
“To meet the standards required by Latvijas Loto, Kambi had to demonstrate the highest levels of compliance and security, as well as showcase a market-leading sports betting product,” says chief executive Kristian Nylén. “Having proven ourselves to be the secure and quality choice, we’re delighted Latvijas Loto has selected Kambi as its sportsbook supplier and look forward to a strong and lasting partnership.” 21
GIQ games round-up
New games that caught GIQ’s eye in Q3 2018 RELAX GAMING LAUNCHES FIRST PROPRIETARY SLOT Relax Gaming released its first proprietary slot title with the launch of its Viking-themed Erik the Red game. The four by five video slot sees Erik and his wife, Helga, searching for an idyllic new land for their crew, lining the reels with helms, axes and shields as players establish their first settlement on the untouched shores of Greenland. The slot features stacked reels and random stacked wilds, with three scatter symbols triggering the free spins mode. “Erik the Red is the perfect game to spearhead the launch of our anticipated video slots portfolio, featuring larger-than-life characters and gameplay, both are easy to pick up for new slots fans and engaging for veteran players,” says chief product officer Simon Hammon.
QUICKSPIN REVAMPS HIDDEN VALLEY SLOT
YGGDRASIL ROLLS OUT HANZO’S DOJO Yggdrasil is challenging players to become a martial arts master with its latest Asian-themed game Hanzo’s Dojo. The game transports players to the home of martial arts, as players use two kinds of free spins and expanding wilds to impress the Dojo’s sensei, Hattori Hanzo, and prove they are worthy of being called the greatest warrior alive. “Besides the stylish artwork, the coolest part of the game is Hanzo’s unique mini-slot that offers players a host of bonuses, including wild reels and mini games, plus extra features and free spins,” says head of slots Jonas Strandman. “This adds an extra layer of fun and can turn dead spins into profitable ones in the blink of an eye. We’re sure this will be a game mechanic that will get people coming back for more.” 22
Playtech-owned Quickspin revamped its popular Hidden Valley game to provide players with more immersive gameplay. A major hit when released in 2015, the five-reel, 40-payline slot now features improved HTML5 technology that delivers imagery at 60 frames per second. The game offers an array of treasures during the player’s journey, including multiplier wilds and a free spins feature, triggered when three or more bonus symbols appear anywhere on the reels. “Hidden Valley has proved popular since it was first released and was always one of our most visually appealing games,” says CEO Daniel Lindberg. “Now, thanks to HTML5 technology, the game is even better. Combined with a host of engaging features, we’re confident players will enjoy the latest version even more.”
GREENTUBE LAUNCHES OKTOBERFEST-THEMED GAME Novomatic’s interactive division Greentube is getting in the mood for Oktoberfest with the launch of Stein Haus. Taking players to a place where their beer glass is never empty, the 50 win line and five reel slot celebrates Munich’s annual beer festival. In the game, the bigger the Stein, the bigger the wins. The appearance of the bonus symbol takes players to the after-party, where free games with even bigger steins await. The stein symbol is the wild and substitutes for all symbols except for the scattered bonus symbol. Ten free games can be won if three or more scatter symbols appear anywhere on the reels. During the feature, the bonus symbols become large wild stein symbols that cover two positions on the reel, substituting other symbols and increasing the chances of a bigger win.
G A M ES
VIVA LAS VEGAS FOR BOOMING GAMES
SG DIGITAL GOES MEDIEVAL WITH KINGDOM’S EDGE…
… AND ROLLS OUT LATEST IN ITS JACKPOT JESTER SERIES
Booming Games is showing players the glitz and glamour of Las Vegas with its newest slot. Vegas VIP Gold is a 30 line, five by three game which features scatter wins, random credit awards, free spins and the possibility to win up to €10,000. “Vegas VIP Gold is a truly engaging game,” says director of product Shane Cotter. “Players can even gamble their random credit awards, giving them the chance to increase their award and their excitement exponentially. This game has something to grip all slot lovers.”
SG Digital’s NextGen game development studio released Kingdom’s Edge, the supplier’s latest slot which captures the whimsical essence of a medieval fairytale adventure. King Trenin DeSaxe and his ragtag band of heroes take centre stage, amplified by a moonlit backdrop that reflects the grandiose nature of a vast kingdom. Strong mechanics underpin the powerful impact of Kingdom’s Edge and are bolstered by player-favourite features. In the Rally the Troops feature, a gold wild stack is held on the first reel as silver wilds expand to fill all positions. Wins are multiplied with each silver wild that appears, while the Defend the Gates feature offers up to 25 free games that can be re-triggered indefinitely if luck is on the player’s side.
Jackpot Jester 200,000 is the latest in the supplier’s popular series and third instalment of the game. Developed by SG Digital’s NextGen studio, the first game in the series offered up to 50,000 coins in winnings, while the second boasted up to 100,000. This title offers prizes up to 200,000 coins. Similar to the previous instalments, Jackpot Jester 200,000 features super game functionality, where players collect coins during the base game. When they collect 100 or more, they can trigger the super game and choose when to cash out their winnings. During the super game, higher potential returns are enabled, and wild jesters become stacked and also play as scatter symbols.
MICROGAMING UNLEASHES EXOTIC CATS
RED TIGER LAUNCHES TIKI FRUITS
NETENT CLAIMS INDUSTRY FIRST WITH BERRYBURST NetEnt’s introduction of its Berryburst video slot marked the supplier’s first double release in its mixed volatility product line. The fivereel, three-row slot features NetEnt’s popular cluster pays mechanic, allowing players to see big wins together with the proven expanding, stacked wild re-spins mechanic, which now features across all five reels. Berryburst MAX broadens the new game’s appeal by offering a higher win potential using the same mechanics as the regular version. Chief product officer Henrik Fagerlund says: “We’ve listened to players and operators and know the importance of diversifying the volatility in our game portfolio. With Berryburst and Berryburst MAX, operators can cater to different player needs, once again showing our position as the leader in slots innovation.”
Microgaming launched Exotic Cats, a five by three, 243 ways online slot set deep in the jungle and featuring vertical wilds and a host of creatures, including a lion, tiger, panther, leopard and cougar acting as symbols. “The vertical wilds feature gives players the opportunity to earn spectacular prizes in the exotic cats’ den, where up to five reels can be turned entirely wild by the powerful felines with a single swipe,” says games publisher David Reynolds. “With a friendly minimum bet of 0.15 and wins up to 106,000, Exotic Cats is the perfect game for first-time adventurers as well as more experienced players.”
Red Tiger Gaming has drawn inspiration from Polynesian culture for its latest video slot Tiki Fruits. It is the supplier’s first cluster game played on a unique eight by 10 grid, where players look to build up groups of symbols to scoop big wins. Players can also fill a bonus bar to trigger the Tiki Spins free spins mode, giving them a chance to win rewards of up to 2,000 times their original stake. “Tiki Fruits is another innovative addition to our expanding portfolio and it’s very exciting for us to offer a new concept to our players,” says chief executive Gavin Hamilton. “With huge prizes to play for, we believe this game can really pack a fruit punch, especially with the amount of free spins that are on offer. We are sure it will be a big hit with players.” 23
Launch date: 1st NOVEMBER2018
www.RedTigerGaming.com Contact your Red Tiger Gaming account manager or get in touch at Enquiries@RedTigerGaming.com
Can social casino survive the rollout of real-money gaming? Social casino is far more than a revenue generator for the clients of GAN, Novomatic and Scientific Games, it is an essential marketing tool WHEN IGT SOLD DoubleDown Interactive erty revenue. Yes, we saw increases at the brick to South Korea’s DoubleU Games for $825m and mortar buildings, and it was 100 per cent in April 2017, it seemed like an admission that attributed to engaging players through online.” the product did not really work as a B2B product. But the sale was probably driven by the Building loyalty $325m gain that would be used to write down One of the failures of the IGT model of DoubleIGT’s debt. Down was that it was never linked to the landThe likes of GAN, Novomatic and Scientific based casino’s loyalty programme. SciGames Games continue to believe in social casino as has just closed a deal (see opposite) with Casino a viable product. Novomatic’s Greentube subArizona that shows exactly what casinos should sidiary provides a social cas no to the likes of be using social casino for. Connecticut’s Foxwoods Resort Casino and the Driscoll argues that this is its best use – an Seminole Tribe’s Hard Rock International. In extension of loyalty for the casino. the last issue of GIQ, Greentube CEO Thomas “We make it a point to have the loyalty card Graf argued that social casino acts as one of the front-and-centre on our sites. When we do that, best marketing tools that a land-based casino the site then becomes a physical extension of can employ. the loyalty club; the value, the messaging,” says GAN’s VP of product Alec Driscoll could perDriscoll. haps be social casino’s strongThat connection is used as est advocate. Driscoll was the a starting point for much of the head of iGaming at American experience, whether that be Casino & Entertainment Propincentives for making purchaserties (ACEP), the operator of es, extra features and functions Las Vegas’s iconic Stratosphere on the site, or special rewards Casino. He was so impressed and bonuses. GAN figured with GAN’s simulated gaming out very early on that customproduct (its brand for social casiers who are in the loyalty club no) that he joined the company are much more valuable to the after ACEP was sold to Golden Alec Driscoll, GAN casino than an unknown player. Entertainment in 2017. “Our goal is to provide a great “The main benefits that I witnessed on the experience for online players and keep them GAN-provided acePLAY site had a lot to do with with a casino brand,” continues Driscoll. “The the impact on the associated casino properties,” online space is fairly promiscuous in that playsays Driscoll. ACEP had a strong contingent of ers can more easily try out many sites, whereas local players and out-of-market players who it is a lot harder to get in their car and drive from played on the site. They would play a few times property to property. Because of that behaviour a day, and ACEP found that players who played pattern, we really value the loyalty relationship online came into the casinos more often. between the patron and the brand.” “We saw incremental and accretive behavIt seems that Driscoll and Graf are almost iour; visits, trips, online revenue and on-proparguing that the marketing benefits actually
“Our goal is to provide a great experience for online players and keep them with a casino brand”
outweigh the incoming revenue from social casinos. This is a way of keeping the brand in front of customers when they leave the building. It is also a method of re-engaging lapsed customers and bringing them back to the bricks and mortar casino. “The cherry on top is that it also makes revenue,” says Driscoll. “It is one of the only (probably the only) channel that creates revenue from a marketing communication piece. Direct mail, emails, billboards... they drive guests to revenue centres, but do not drive revenue onto themselves. Online does both.” But the $50m question is whether social casino can live alongside real-money gaming. The remaining beauty of it, argues Driscoll, is that it can be used to engage players outside the state’s boundaries. The same argument has been used to justify daily fantasy sports as it prepares to do battle with sports betting. “I think from that standpoint a casino marketer would always want that communication channel,” concludes Driscoll. “Additionally, the casino guests have different wants and interests, and these serve both gambling or entertainment. It is definitely a complimentary offering.” n
SOCIAL GAMING Q3 NEWS
PokerStars ramps up social casino offering THE STARS GROUP has extended its social casino app PokerStars Play with the addition of new live dealer games from BetGames.TV and a white-label social casino solution from New York-listed gaming supplier PlayAGS. The PlayAGS solution will be PokerStars Play’s first foray into social slots after focussing on poker until now. AGS president and chief executive David Lopez said: “It is an honour and an important milestone in the growth of our AGS Interactive business that The Stars Group, one of the largest online gaming businesses in the world, with millions of registered players, selected us to power their first social casino focused on slot content, following their incredible success in online poker.” The new games War of Bets and Bet on Poker are live play-money games combining betting with a live casino and feature live presenters, an enhanced user experience and optimised gameplay for mobile devices. In War of Bets, players and the live dealer go head-to-head to see who is dealt the highestvalue card. In various betting rounds, the player must decide whether their card or the dealer’s will be the highest. Additional bets can be placed on the colour, suit and value of the cards. In Bet on Poker, the live dealer deals 12 cards, face-up, to six positions. Like Texas
hold’em, the five community cards are also dealt face up and combined with the six sets of hole cards to create the best five card combination. The goal of the game is for players to predict and bet on which of the six positions will win. Additional bets can be placed on what the winning combination of cards may be. Lloyd Melnick, director of social gaming at Stars Group, said: “We are excited to bring our players a live casino experience that can be enjoyed whether they are on the go, or in the comfort of their own home.”
KamaGames enters Blockchain market with KamaGames Token Social gaming operator KamaGames has entered the blockchain and cryptocurrency landscape with the launch of its own KamaGames Token (KGT). Working in a similar method to other tokens, KGT will use existing blockchain technology and the Ethereum cryptocurrency platform. This marks the first time that a social casino operator has issued tokens linked to in-game currency chips. “We always try to offer something new and exciting to our players, and the launch of the KamaGames Token is a perfect example of this,” said Andrey Kuznetsov, CEO of KamaGames. “It’s a fantastic opportunity to not only thank our players but also show how KamaGames is passionate about embracing new technologies. In fact, we are the first social casino developer ever to offer a bespoke cryptocurrency to our players. “The launch of the KamaGames Token will help us to attract a new, additional audience as well as rewarding our existing players. We are confident that this launch will continue to raise our profile and help maintain the tremendous momentum we’ve had this year. 2018 is shaping up to be our strongest year to date for growth, revenue and new game releases.”
“We are the first social casino developer to offer a bespoke cryptocurrency to our players” Andrey Kuznetsov, KamaGames
SG extends Play4Fun network to Arizona SCIENTIFIC GAMES HAS rolled out its SG Universe online product suite in Arizona for the first time under an agreement with Casino Arizona. Scientific Games has launched a new Talking Stick-branded app, including its Play4Fun social casino platform, for the operator of the Casino Arizona and Talking Stick Resort venues. Ramon Martinez, director of public relations at Casino Arizona, said: “Our players will greatly benefit from an extensive online offering, and we’re excited to provide SG Digital’s top-notch game content through the app’s Play4Fun social casino. This deal is a win-win, GIQ Q3 REVIEW
signalling a bright future for our partnership.” Dylan Slaney, senior vice president of gaming for SG Digital, commented: “The Talking Stick brand resonates strongly with its audience, and extending it further using digital channels is an excellent way to enhance recognition and engagement.” Scientific Games also signed an allencompassing deal with Nevada-based Wendover Resorts to install its casino management system, as well as slot games, table products and its SG Universe product suite (including a social casino and mobile concierge app) at The Wendover Nugget Hotel and Casino, and Red Garter Hotel and Casino. 27
World regulatory update GIQ outlines legal developments around the globe in Q3 2018 Ohio Ohio Senators Sean O’Brien and John Eklund introduced a bill in July to express intent to legalise sports betting. The bill text simply states: “It is the intent of the General Assembly to develop and enact legislation legalising sports wagering”. It has three co-sponsors, while an identical bill in the House from Representative Dave Greenspan has none.
Pennsylvania The Pennsylvania Gaming Control Board issued its first interactive gaming licences in August, and opened the licensing process for sports betting after approving temporary regulations. The state’s first interactive licences went to Harrah’s, Parx, Mount Airy, Hollywood Casino and SugarHouse. Parx operator Greenwood Gaming and Hollywood operator Penn National also applied for sports betting.
Quebec The Superior Court of Quebec ruled against a law that allowed Loto Québec to require internet service providers to block access to unlicensed online gaming sites. In a case brought by the Canadian Wireless Telecommunications Association, the court ruled that the law infringed on two areas of 28
exclusive federal jurisdiction; telecommunications and criminal law. It also found that the primary aim of the law was to prevent online gambling that is not operated by the province, and not the protection of consumers or their health, which is an area of provincial competence.
has also approved a decree that increases the rate of return to players from digital lottery products to as much as 95 per cent, in an effort to improve the attractiveness of the products and corresponding receipts to the treasury.
Belgium Uruguay Uruguay’s National Department of Lotteries and Pools has blacklisted 63 online sports betting domains for targeting players in the country without a licence. All blacklisted sites are subject to blocking by internet service providers, to the benefit of local operator Supermatch, the country’s only authorised sports betting provider.
Belarus The government of Belarus has adopted new legislation to license and regulate online casino gaming. It allows online operators to secure a local licence to serve players, subject to a security deposit to cover player funds and tax liabilities, and a requirement to provide remote systems access to the regulator for monitoring purposes. The new legislation also increases the minimum gambling age from 18 to 21 for both land-based and online gaming, in an effort to minimise any negative consequences of expanded gambling. Belarus
Belgian member of parliament Els Van Hoof introduced legislation to outlaw betting on sporting events in which the majority of participants are minors. She argues that minors are susceptible to the risk of gambling addiction, and that most youth matches attract little coverage, making them susceptible to match fixing. The bill includes an exception for professional competitions in which minors sometimes participate, such as football.
Bulgaria The government of Bulgaria has unveiled changes to the country’s gambling legislation that will restrict the sale of gambling products to licensed outlets and bring gambling advertising rules in line with those for the alcohol and tobacco industries. It introduces a distinction between direct and indirect advertising, as the previous regulations only governed the former. Meanwhile, the licensed outlet proposal is in response to the rise 28
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in the number of unlicensed outlets that sell lottery tickets and scratchcards, thereby increasing the risk of fraud or parallel accounting.
Gibraltar iGaming operators based in Gibraltar have seen their tax rate cut to just 0.15 per cent of gross receipts as part of changes introduced by the government that also result in higher licence fees for operators. Fees now come in at approximately £100,000 for each B2C licence and £85,000 for each B2B licence. The changes are believed to be driven in part by the UK’s impending exit from the European Union, which will most likely affect operators’ ability to serve players in Europe under a Gibraltar licence.
Greece The Greek government has unveiled its long-awaited bill to re-regulate the online gaming market. Current legislation prevents private offshore operators from obtaining a licence, although they are tolerated if they comply with tax laws. The proposed legislation would allow operators based in the European Union or European Economic Area to apply for two categories of licence, online betting and online gaming, costing €4m and €1m respectively for a five-year term. Operators who are currently active in the Greek market and paying taxes locally will be allowed to continue operating during the transition period, subject to submitting an application for licensure within six months of the new law’s entry into force. The draft legislation also states that any operator who has been blacklisted for illegally targeting Greek players without a licence [tax return] in the preceding year will be ineligible for licensure. It is unclear when the new law will come into force.
Italy Operators in the Italian gaming market are threatening legal action against the gambling advertising ban introduced by the government in August, which comes into full force in July 2019. The ban applies to all forms of gambling advertising, except the national lottery, across television, radio, print and online. It also prohibits sports sponsorship by gaming operators and is opposed by all the major Italian sports leagues. As well as the ban on advertising, instant lottery tickets will now carry responsible gambling warnings that cover at least 20 per cent of both sides of the ticket. GIQ Q3 REVIEW
Slovakia New gambling legislation has been introduced with a view to liberalising the gaming market in March 2019. This will allow gaming operators established in the European Union or European Economic Area to apply for licensing, ending the online gaming monopoly held by national lottery operator TIPOS. Under the proposed act, a new national gambling regulator will be established to licence and regulate gambling activities, with online operators required to link their systems with the regulator to enable real-time monitoring. In the meantime, all other online gaming remains prohibited and operators found to be targeting Slovak players are subject to blacklisting, requiring internet service providers to block access to their sites. The blacklist continues to grow, with over 500 sites targeted by the Ministry of Finance between June 2017 and September 2018.
Spain The Spanish government has made good on its promise to slash online gaming tax rates in the country. The new rate came into force on 1 July and sees the current 25 per cent tax on online casino, poker and bingo reduced to 20 per cent, while pari-mutuel sports betting gets a three per cent reduction in tax to 22 per cent of gross revenue. Spain also halved the tax rate in the autonomous cities of Ceuta and Melilla to enable them to compete with neighbouring Gibraltar, a UK territory. Operators who base themselves in the cities get a 50 per cent tax rebate, cutting their gross gaming revenue tax to 10 per cent.
United Kingdom The UK Gambling Commission continues to tighten regulations for online gaming operators to address concerns about unfair terms and practices. New rules come into force at the end of October giving the regulator greater power to act against licensees, including the imposition of fines for advertising rule breaches, with licensees now also liable for the activities of their affiliates. The Gambling Commission has also launched a public consultation into new rules for online ID verification, including a proposed requirement for operators to verify the identity of a player before they can access free-play versions of gambling games. This is intended to prevent children from accessing casino-style free-play games. The UK Competition and Markets Authority has also warned online operators to withdraw unfair terms and practices such as those preventing players from
withdrawing their money. The notice followed enforcement action by the CMA against two companies whose terms allowed them to require players to withdraw funds in installments over an extended period, increasing the potential for further gambling. Their terms also allowed them to confiscate funds belonging to players who had not logged in for a certain period of time. Failings also extended to the National Lottery operator Camelot UK, which agreed to a £1.15m penalty package in August in settlement of historic control and governance failings.
South Africa Amendments to the National Gambling Act of 2004 have been introduced to give greater powers to the national regulator. The National Gambling Board (NGB) will be given the authority to suspend and withdraw licences in instances of non-compliance and will also maintain a blacklist of unlicensed operators. Blacklisted operators will be banned from securing a licence for a period of five years, with the NGB also empowered to order financial institutions and internet service providers
“Spain has halved the tax rate in the autonomous cities of Ceuta and Melilla to enable them to compete with neighbouring Gibraltar, a UK territory” to cease servicing illegal online operators. The amended bill would also transfer oversight of lotteries to the National Lotteries Commission and prohibit greyhound racing and betting on the sport.
Australia New rules from the Australian Communications and Media Authority (ACMA) came into force in September, prohibiting gambling advertising around live-sport streams on the internet during the daytime. The change to gambling advertising rules for internet-streamed sports broadly mirrors restrictions introduced in March for television broadcasts. This creates a ‘safe zone’ for children and families to watch live sports events between 5am and 8.30pm without being exposed to gambling advertising. Previous regulations prohibited gambling advertising during the daytime, except within live sports broadcasts. 29
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ASK THE LAWYER
ASK THE LAWYER ABOUT…
Sports betting in the US Jessica Fell of Ifrah Law provides a beginner’s guide to entering the US sports betting market
I am a supplier looking to enter the US sports betting market. With deals being cut left, right and centre, should I tie up a deal first or should I apply for a licence? The US market is moving so fast, suppliers need to be pursuing both their commercial agreements and licensure simultaneously. We’re already seeing large, enterprise-level agreements being put in place in addition to agreements between individual casinos and various suppliers. Furthermore, each state will determine through regulation how many opportunities are sustainable for the sponsoring casinos, so time is truly of the essence. Regulators have been understanding about the fluidity of commercial agreements and are willing to engage with suppliers without settled deals in place. Furthermore, the licensing process is quite lengthy, so suppliers should start compiling the necessary information and seeking initial meetings with regulators while commercial negotiations are underway. With some strategic planning, a supplier will have their licence in hand shortly after securing their commercial deal, allowing them to hit the ground running once the deals are finalised. Where should I apply for a licence? Right now, there are a handful of states currently accepting applications for sport betting operations. Choosing a state is in part determined by the market you identify as ideal for your business. Each state has different populations, different casinos already operating, and different socioeconomic factors that a supplier should consider. Each state also has its own application fees and tax rates, which will certainly drive the decisions for some suppliers and sportsbooks. New Jersey and Pennsylvania, for example, have very robust and thorough licensing applications, so if a supplier starts in one of those states, it should help them streamline their efforts in additional states.
Overall, securing a licence and setting up a manageable relationship now will open more doors in the future 30
I am not sure I have the resources to apply for a licence in so many states simultaneously. What should I do? Once a supplier has narrowed down targeted states based on tax rate, licensing fees, customer demographics and other priorities, they might seek to work with a smaller casino and focus on a single market. Then, once the supplier is
established in that state, they can consider further expansion. More states will legalise sports betting in the coming years, opening up new markets. And many of the exclusivity provisions currently in force in commercial agreements will end in about five years, which will create new opportunities. Furthermore, a supplier with gaming content could license its product to a platform provider under their name, and once the game establishes popularity and starts generating revenue, look to enter the market independently. Overall, securing a licence and setting up a manageable relationship now will open more doors in the future. With so many different types of casino, not to mention tax rates in different states, what should I look for in my deals with casinos? Land-based casinos will likely continue to be a required partner for online operators and other suppliers across the US. But this does not mean all commercial agreements with casinos will be the same. The first thing will be how the casino and supplier will share financial responsibility for licensing and regulatory fees. The casinos have their own fees to contend with and will likely be looking to share those costs with suppliers. Next, suppliers need to consider revenue obligations, including the share to the casinos and annual minimum obligations. Another major question has been exclusivity, as suppliers seek multiple partnerships. There’s no one right answer to these questions, but each agreement should be tailored appropriately. n
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NBA deal with MGM highlights integrity fee alternative Russell Karp, vice president of media and entertainment at technology consultancy DataArt, looks at the implications of the NBA’s data and marketing deal with MGM SINCE THE SUPREME Court struck down the federal ban on sports betting, casinos, professional sports leagues, sports data aggregators, broadcasters and digital media enterprises have all been looking for ways to enter and capitalise on the potential of this new industry. Some of the US-based professional sports leagues have argued for betting rights and integrity fees for the use of their data by sportsbooks, casinos and other betting operators. While they have not seen much traction with states such as New Jersey, New York was one state that was ready to adopt the integrity fee in its legislation (which is yet to pass). However, NBA commissioner Adam Silver admitted in mid-July: “Frankly it’s not a place where we’ve made a lot of progress.”
Private data deals sweeten the pot By the end of July, Silver had taken matters into his own hands. The NBA announced a multiyear partnership with MGM, establishing the casino company as the official gaming partner of the NBA and WNBA, with the NBA becoming the first American pro league to enter into a deal with a casino and sportsbook operator. According to ESPN, the partnership is a three-year deal worth more than $25m. The deal does not include the rights for MGM to stream live NBA games on a mobile app, which would allow gamblers to bet simultaneously. However, that could be added in the near future. Because the deal is non-exclusive, the NBA can, and likely will, sell its data and logos to other casinos and sports betting operators. However, MGM will be its official gaming partner and will receive promotions across the NBA’s various platforms, as well as produce a digital content series with the league. This deal could set the benchmark for other leagues. 32
MGM is said to “use NBA and WNBA branding across its US properties on a nonexclusive basis and share real-time data with the NBA to protect the integrity of its games”. The NBA claims that providing official statistics to bettors through MGM is crucial for maintaining and enhancing statistical accuracy and adding a layer of integrity based on the NBA brand, will lead to increased bettor confidence. This approach of going straight to the source (the league) rather than a thirdparty statistical aggregator, could be a trend that other leagues will follow.
partnerships with American professional sports leagues. The value of future deals with other sports leagues will vary based on league popularity, fan engagement, data quality and negotiating power. For example, the potential value of an NFL deal will be substantially higher than a deal with the USGA or ATP. If we want to speculate which of the American pro leagues may be next to enter a similar deal, I suggest we look at the approach they are taking with new technologies, social media awareness, fan engagement, enhanced viewing options, and overall digital strategy. And yet, while the NBA Who’s next? was in favour of legalising The deal is a big development a nd reg u l at i n g sp or t s for the emerging US legal bet ti ng, ot her leag ues “The ramifications sports betting ecosystem. were less inclined to show For the first time ever, a of licensing sports enthusiasm. Leagues such professional sports league IP and real-time as the National Hockey vent u red i nto t he new data cannot be League, whose chairman business of American sports underestimated” has said he wants a cut of betting, seeking ways to Russell Karp, DataArt betting profits, and the monetise its ownership rights MLB, acknowledge the farto team names, logos, game reaching implications of broadcasts, and official game data. the ruling but asked Congress for some sort of The ramifications of licensing sports unified regulatory framework. intellectual property and real-time data cannot The NFL, a known opponent of sports be underestimated. Clearly, this creates a new gambling in the US, recently sent a letter to the sponsorship opportunity for the leagues and a Pennsylvania Gaming Control Board that did promise of their betting revenue share, even if not include any suggestion of an integrity fee but the evolving legislation will not offer them a did state that official NFL-supplied data should guaranteed pay day. be “the standard in a legal, regulated market”. This deal opens the door and sets Whether that means it will be seeking private parameters for other gaming partners to pursue commercial data deals remains to be seen. n
M A RK E T I N G
NBA signs first sports betting partnership with MGM Resorts US CASINO GIANT MGM Resorts International secured a historic partnership in August as the operator was unveiled as the first ever official gaming partner of the National Basketball Association (NBA) and Women’s National Basketball Association (WNBA). The multi-year partnership will bring millions of NBA fans and MGM Resorts guests together through an innovative collaboration that will open new opportunities to engage with each other’s brands and products. As the official gaming partner of the NBA and WNBA, MGM Resorts will gain exposure across NBA’s digital assets, including NBA TV, NBA.com, the NBA app and social media platforms. The operator will also be able to use official NBA and WNBA data and branding, on a non-exclusive basis, across its land-based and online playMGM sports betting offering throughout the US. MGM Resorts is already closely involved with the league following its 2017 acquisition of the WNBA’s Las Vegas Aces, whose home games are played at MGM Resortsowned Mandalay Bay Events Center.
“Our collaboration will result in the best possible gaming and entertainment experience for consumers” Adam Silver, NBA
Adam Silver, NBA
“As the landscape for sports betting in the US continues to evolve at a rapid pace, MGM Resorts is a proven gaming leader for us to work with on this groundbreaking partnership,” said NBA Commissioner Adam Silver, who is in favour of a federal framework to provide a uniform approach to US sports gambling. “Our collaboration will result in the best possible gaming and entertainment experience for consumers through the use of accurate, real-time NBA and WNBA data, and our efforts to maintain the integrity of our games.”
For commentary, see opposite page
Italy bans gambling advertising from mid-2019 THE NEWLY FORMED Italian government has implemented wide-ranging restrictions on betting and gaming promotions and advertising, which are expected to be fully active from July 2019. All forms of direct marketing and sponsorship will be prohibited, as part of the recent Decreto Dignita approved by parliament in August. Despite Italy’s top sports leagues opposing the ban, which they said would only serve to damage Italian sports, the legislation prohibits all gambling-related ads except those promoting the lottery. Article 9 of Decree Law number 87 lays out a comprehensive ban across all channels, GIQ Q3 REVIEW
including sporting events, television and radio, newspapers and magazines, online and on social media. Those breaching the decree will receive a fine of 20 per cent of the value of the marketing, with a minimum fine of €50,000 for each individual breach. The fines will fund gambling addiction treatment and be distributed by the country’s Ministry of Health. For the likes of GVC and Playtech, which own retail operators Eurobet and Snaitech respectively, the benefit of running a strong retail estate in this environment will be significant as in-store recruitment of customers becomes the only viable way of attracting customers online.
EUROPEAN FOOTBALL SPONSORSHIP ROUND-UP With the top European football leagues kicking off in August, there was the usual flurry of activity as some of the leading operators – as well as some lesser-known ones – teamed up with clubs across the continent. In the English Premier League, record shirt sponsorship deals were signed by Laba360 with Burnley and Dafabet with Fulham, while Mansion became the official sleeve sponsor of AFC Bournemouth. Leicester City signed betting partnerships with Mansion’s M88, as well as another similarly named Asianfacing operator W88, 1XBet teamed up with Cardiff and as African betting partner for Tottenham Hotspur. Addison Global’s MoPlay secured deals with Manchester United and Watford, and Tempobet signed with Fulham. In the English Championship, 10Bet signed deals with West Bromwich Albion and Blackburn Rovers, LeoVegas’ Bet UK secured a shirt deal with Swansea City, and Sportito renewed its fantasy sports partnership with Queens Park Rangers. bet365 significantly expanded its presence in Spain by agreeing betting partnerships with half of the clubs in La Liga. Agreements were signed with 10 clubs including RCD Espanyol, Villarreal CF, Real Betis, Getafe CF, SD Huesca, RC Celta, Rayo Vallecano, Real Valladolid and SD Éibar. Betway sealed shirt sponsorships with three more La Liga teams – Levante UD, CD Leganés and Deportivo Alavés – while Marathonbet signed its first ever deal in Spain with Girona. Betfair also added Sevilla to its portfolio of betting partners, which includes reigning champions Barcelona. Betway has also been busy in Germany’s Bundesliga, sealing betting partnerships with Hannover 96 and Fortuna Düsseldorf. Tipwin partnered Entracht Frankfurt, while bwin secured four deals in the German second division – Cologne, St Pauli, Union Berlin and Dynamo Dresden – adding to its partnership with top flight side Borussia Dortmund and title sponsorship of the German third division, 3. Liga. Betway also entered the Italian football market for the first time through a tie-up with Roma, and LeTou was unveiled as Asian gaming partner for Inter Milan. Dafabet signed a record shirt sponsorship deal with Scottish champions Celtic, Kindred Group’s Unibet sponsored Romanian Liga 1 side Dinamo Bucharest, and France’s FDJ partnered four Ligue 1 clubs – Olympique de Marseille, Olympique Lyonnais, Monaco and Nantes – through its online betting brand ParionsSport.
STATE OF THE SPORTS BETTING UNION Since the Supreme Court fired the starting pistol for regulated sports betting in the US on 14 May, the Gaming Intelligence website has been awash with news of legislation, regulations and deals, deals, deals. On the following pages we provide you with an easy-to-digest guide to the legislative state of play across the Union, as well as all the deals that have been struck thus far
STAT E O F P L AY US SPORTS BETTING
UP AND RUNNING DELAWARE
FACT FILE POPULATION: 1M GGR: $403.5M CASINOS: 3
LEGISLATION The Delaware Department of Finance and the Attorney General’s Office wasted no time determining that there were no legal obstacles preventing full-scale sports betting in Delaware. Six days after the Supreme Court ruling, the Finance Department stated that state law passed in 2009 authorised betting on professional and college sports, with the exception of games involving Delaware-based teams. The Delaware Lottery runs all the state’s gaming operations and was all set to go under the new SportsPick brand at Delaware Park, Dover Downs Hotel and Casino and Harrington Raceway and Casino by 5 June.
LICENSED AND OPERATING l Delaware Lottery rolls out full sportsbook Long-term technology partner Scientific Games enlisted the help of GVC Holdings’ Stadium Technology Group, which provided the platform technology, and William Hill, which runs the sportsbook (the pricing and risk management etc). “It is quite complicated,” SG Digital chief executive Matt Davey told GamingIntelligence.com. “But you will probably see more of that as you go through the market. And it works well.”
FACT FILE POPULATION: 9M GGR: $2.6 BILLION CASINOS: 9
LEGISLATION New Jersey was up and running almost as soon as the Supreme Court had repealed PASPA. As one of the litigants in the case, the state had been planning this move for almost a decade. A bill was heading to the governor’s office by 6 June, and on 11 June, Governor Phil Murphy signed it into law. Three days later he was placing the state’s first wager at Monmouth Park. GIQ Q3 REVIEW
LICENSED AND OPERATING SPORTS WAGERING LOUNGES l Bally’s Casino & Hotel and Harrah’s Hotel & Casino Caesars launched Bally’s sportsbook on the last day of July and one day later it was accepting wagers in Harrah’s Casino. The operator asked Scientific Games to supply OpenBet technology to its five casinos in New Jersey and Mississippi. l Borgata Hotel Casino & Spa
MGM Resorts’ Borgata was the first casino in New Jersey to open a sportsbook after it transmuted years of experience with IGT in Vegas to Atlantic City. l The Meadowlands Racetrack
The Meadowlands Racetrack opened its FanDuel sportsbook the same day as Monmouth Park, and became an early market leader with $1.4m in July revenue. l Monmouth Park sportsbook
William Hill signed a deal in 2013 to open a Monmouth Park sports lounge, so it did not take long to add a sportsbook as soon as regulations allowed – only four days, in fact.
l Ocean Resort
The second casino on the Boardwalk to open a sportsbook was also its newest resident. The second William Hill sportsbook to open in the state brought in $1m during July.
LICENSED AND OPERATING ONLINE SPORTSBOOKS l DraftKings launches first online sportsbook with Kambi and Resorts DraftKings was the first online sportsbook out of the blocks when it opened for business on 1 August. The fantasy sports specialist teamed up with Swedish sportsbook supplier Kambi, which was spun out of Sweden’s leading online gaming brand Unibet (part of the Kindred Group) to provide its sportsbook to other operators. Kambi’s USP is probably the time it takes to get up and running. It managed to get DraftKings live in New Jersey less than three months after the Supreme Court decision, and less than two months after announcing the DK deal. Similarly, in Europe, it took less than six months to integrate and launch with 888. The pair expects to extend the partnership into other states, depending on the passage of commercially viable regulation. 37
STAT E O F P L AY US SPORTS BETTING
Beau Rivage Resort & Casino
DraftKings is licensed through Resorts Casino Hotel, which also has a deal with The Stars Group to launch its BetStars brand in the state. l PlayMGM and seven others join the fray
FACT FILE POPULATION: 3M GGR: $2.1 BILLION CASINOS: 31
Mississippi enacted legislation in 2017 that The playMGM sports betting app went live allowed for sports betting in the event of three weeks after DraftKings was launched. PASPA being overturned. Its app was created by IGT. Soon after, the SugIn June 2018, the Mississippi Gaming arhouse Sportsbook, FanDuel app and WilCommission adopted implementing regulaliam Hill’s online offering arrived. They were tions that saw the state go live with legalised followed by Caesars mobile betting, 888Sports sports betting just after New Jersey. Six of and BetStars. its 31 casinos had opened sportsbooks at the Resorts is the first to use all three of its time of going to press. Twenty of the 31 casisports betting brands allowed under New Jersey nos had signed sportsbook deals at the time of regulations, with BetStars and Draftgoing to press. Kings launching their brands and Resorts set to launch its own LICENSED AND branded book in collaboration OPERATING SPORTS with SBTech. WAGERING LOUNGES l Boyd Gaming’s IP The Sugarhouse Sportsbook was launched under Casino Resort and STATE OF THE Golden Nugget’s licence. Sam’s Town SPORTS BETTING Golden Nugget also has Boyd Gaming has opened UNION partnerships with Churchits first sportsbooks outill Downs and SBTech, which side Nevada with IGT installmight mean more apps in the maring its new retail sports betting ket under its licence. platform at the IP Casino Resort and William Hill’s mobile app was launched Spa in Biloxi and Sam’s Town Hotel & Gamas part of the UK bookmaker’s long-standing bling Hall in Tunica. relationship with Momnouth Park. Paddy l MGM Resorts’ Beau Rivage and Power Betfair-owned FanDuel utilised Meadowlands’ licence and used an IGT sportsbook Gold Strike on a GAN account management system. Hard Beau Rivage Resort & Casino in Biloxi Rock signed an agreement with Kindred Group, and Gold Strike Casino Resort in Tunica held which will see its Unibet brand debut in the US, simultaneous events to accept the first sports and a letter of intent with bet365, which has yet wagers in Mississippi. Both are operating out to progress to concrete action. Caesars mobile of provisional sports betting windows while app is supplied by SG Digital and the 888Sports they finalise the design for permanent sportsapp by Kambi utilises Caesars’ licence. book offerings. 38
l Harrah’s Gulf Coast and Horseshoe
Tunica SG Digital brought its OpenBet sportsbook to Caesars’ Mississippi casinos during August, as part of a five-casino deal also involving the company’s three New Jersey casinos. The operator has introduced mobile sports betting in New Jersey and will do on-property in Mississippi via its Caesars Casino & Sports mobile app. Caesars’ sports betting offering will be fully integrated with Total Rewards, allowing guests to earn and redeem rewards through its loyalty programme. l Golden Nugget opens SBTech kiosks
SBTech is supplying self-service betting kiosks to the Golden Nugget Mississippi. l William Hill
adds Eldorado casinos
William Hill announced a deal with Eldorado Resorts, included adding sportsbooks at The Lady Luck Casino in Vicksburg, Isle of Capri in Lula and Tropicana Casino in Greenville.
OTHER DEALS DONE l Penn National adds sports at five casinos William Hill supplied sports betting kiosks to Penn’s Hollywood Casino Gulf Coast, Boomtown Casino, 1stJackpot, Hollywood Casino Tunica and Resorts Casino Tunica. l Churchill Downs continues Mississippi
expansion In July, Churchill Downs (CDI) cancelled its agreement to acquire the Lady Luck Casino in Vicksburgh, Mississippi, but it owns two other properties in the state: Harlow’s Casino and Riverwalk Casino. Both will install an SBTech sportsbook – as will CDI’s Pennsylvania property Presque Downs, when the acquisition completes.
STAT E O F P L AY US SPORTS BETTING
FACT FILE POPULATION: 1.8M GGR: $654.8M CASINOS: 5
COMING SOON: 2018
LEGISLATION The West Virginia Lottery Commission approved new regulations for sports betting in mid-June. The state’s five land-based casinos are eligible to secure licences at a cost of $100,000 each with a 10 per cent tax on gross wagering revenue. Casinos can operate up to three different skins under one licence meaning that there could be a total of 15 brands operating in the market.
FACT FILE POPULATION: 12.8M GGR: $3.2 BILLION CASINOS: 12
LICENSED AND OPERATING
l Penn National first to open
Pennsylvania’s gambling regulator received a slew of licence applications from sports betting operators and suppliers. Nine casinos in Pennsylvania took advantage of the state’s ‘early bird’ special to apply for iGaming authorisation at a discounted rate of $10m for the three categories of: nonpeer-to-peer interactive games which simulate slot machines, non-peer-to-peer interactive games which simulate table games, and peer-to-peer interactive games which simulate poker. The Pennsylvania Gaming Control Board (PGCB) opened the process for sports betting application five days before the early bird period for iGaming licences closed on 16 July. Sports wagering operator licences will allow the holder to offer sports betting invenue or via online and mobile channels, with licences restricted to the state’s land-based casinos. The big debate among potential licensees has been the state’s high tax rate. Sports betting licensees will be required to pay a licence fee of $10m, then a hefty tax rate of 36 per cent of sports betting revenue. Penn National chief executive Timothy Wilmott said: “Despite the state’s high tax rate, we chose to proceed with the hope that we can continue to work to bring the tax rate in line with that of other gaming jurisdictions around the world, and if successful, we plan to market the games to our robust database of casino and social gaming customers in Pennsylvania.” The regulations allow only one skin per operator for sports betting, despite allowing unlimited skins for iGaming. It is thought that one of the state’s influential land-based operators lobbied hard for the limitation to keep FanDuel and DraftKings out of the market. Under the current rates and regulations, analysts predict Pennsylvania will struggle
Penn National Gaming’s Hollywood Casino at Charles Town Races became the first to launch a legal sports betting offering on 1 September, with the new sportsbook powered by William Hill US. l The Greenbrier opens FanDuel book
The casino of state Governor Jim Justice chose a FanDuel-branded sportsbook, which will eventually extend to retail, online and mobile sports betting
DONE DEALS l Eldorado deal includes West Virginia
William Hill’s all encompassing deal with Reno-based Eldorado Resorts includes The Mountaineer Casino Racetrack and Resort in West Virginia. The agreement includes retail, digital and mobile sports betting. l DraftKings and IGT secure licences
The Daily Fantasy Sports operator DraftKings and supplier IGT had secured licences but had not announced deals at the time of going to press. However, IGT can be expected to power The Greenbrier’s FanDuel offering, as it does in other states.
GIQ Q3 REVIEW
to meet its revenue targets and that it will fail to eliminate the illegal market. Following a massive debate around the expansion of gaming in the state, there is a certain amount of gaming fatigue among legislators. Insiders believe the state’s politicians will wait for evidence of its failures before making any changes to the legislation.
DEALS DONE l Mount Airy teams with The Stars Group Mount Airy Casino Resort will provide players in the state with access to The Stars Group’s online poker, casino and sports betting products, subject to licensure by the PGCB.
“We hope we can continue to work to bring the tax rate in line with that of other gaming jurisdictions” Timothy Wilmott, Penn National
l Presque Isle to launch sports under
new ownership Churchill Downs agreed the acquisition of Presque Isle Downs & Casino from Eldorado Resorts in March. The acquisition agreement requires Eldorado to apply for iGaming licences and Churchill Downs has extended the strategy to include sports betting via its tie-up with SBTech. l Parx Casino deepens GAN relationship
GAN will offer its SBTech-powered sports betting solution to Parx Casino for on-property and online play, with the new offering slated for launch early next year. Parx has offered GAN’s simulated-gaming social casino to its customers since March 2015 and has previously agreed a deal to launch real-money iGaming in the state. 39
STAT E O F P L AY US SPORTS BETTING
STATE OF THE SPORTS BETTING UNION
Gina Raimondo, governor of Rhode Island signing the budget
FACT FILE POPULATION: 1.06M GGR: $619M CASINOS: 2
LEGISLATION On 22 June Governor Gina Raimondo signed the state budget, which included language allowing sports betting at the state’s Twin Rivers Casino in Lincoln and its second casino, which is due to be opened in Tiverton. Only bets placed in-person would be allowed at the two locations, as the new law does not allow mobile betting. In essence, Rhode Island is not dissimilar to Delaware. They both have a population of around a million people and, like Delaware, Rhode Island runs its casinos under the supervision of the state-run lottery. The two states’ gaming operations will become even closer, after it was announced that Delaware’s Dover Downs Casino would merge with Twin River Worldwide Holdings, which, in addition to the Rhode Island casinos, also owns the Hard Rock Hotel & Casino in Mississippi and Arapahoe Park in Colorado.
DONE DEALS l Hometown supplier IGT set to profit Each casino in Rhode Island is expected to begin offering bets from 1 October, with International Game Technology (IGT) in partnership with William Hill US providing the sports betting technology under a fiveyear contract awarded earlier this year. IGT has selected Wil40
liam Hill to provide sports betting operations and risk management. Rhode Island’s sports betting tax rate is the highest yet in the country, with 51 per cent of sports betting revenue going to the state, while IGT will receive 32 per cent of revenue and Twin River the remaining 17 per cent.
FACT FILE POPULATION: 3.6M GGR: $1 BILLION CASINOS: 2
LEGISLATION After enacting a scaled-down anticipatory law in 2017, Connecticut saw a comprehensive sports betting bill introduced in early 2018, which did not get voted on. In early August, Governor Dannel Malloy told legislators they had a week to decide whether they wanted to go ahead with a new bill. The deadline passed. Issues revolve around the state’s two tribes Mashantucket Pequot and Mohegan, which have demanded exclusive rights to sports betting and the state’s racetrack operator Sportech, which would also like to run a sports betting operation.
DEALS DONE l Sportech to use Sportradar in CT and beyond Sportech will deploy Sportradar’s turnkey sports betting platform across its retail business in Connecticut when legislation permits. The Connecticut-based racetrack operator will
also be able to offer Sportradar’s trading and risk management services, including pre-match and in-play betting services, content, trading tools and risk management. T he dea l a l lows Spor tech to of fer Sportradar’s sports betting-related product portfolio across its network of over 90 licensed operator partners, as well as other eligible operators in states where sports betting activity is legislated.
FACT FILE POPULATION: 19.85M GGR: $2 BILLION CASINOS: 24
LEGISLATION In 2013, New York passed a law to allow sports betting at four venues. After lying dormant for the past five years, the law could be revived and put into action after the Supreme Court’s decision to repeal PASPA. The New York State Gaming Commission is aiming to complete regulations “in the short term”, according to acting director Ron Ochrym. However, there are a huge number of issues to be resolved with regards to mobile betting, which was not as prevalent in 2013, and also the rights of the state’s 15 tribal casinos. The 2013 law only allowed on-premise wagering at the state’s resort casinos. Legislation that would have allowed for full-scale sports betting in New York failed in June 2018, but could be reintroduced in 2019.
STAT E O F P L AY US SPORTS BETTING
LEGISLATION PENDING ILLINOIS
FACT FILE POPULATION: 12.8M GGR: $1.4 BILLION CASINOS: 10
LEGISLATION Hearings have been held about various sports betting bills, but no formal vote has yet been taken. The House Gaming Committee will change personnel after the November midterm elections, with at least one member leaving office. With so much to be decided in the election, a comprehensive gaming bill is likely to be introduced next year.
DEALS DONE l BetChicago teams with Sportradar Sportradar has agreed a deal to provide its risk management and data services to sports betting news and analysis site BetChicago, pending regulation of sports betting in the US state of Illinois. The multi-year partnership has already seen Sportradar’s media products integrated with the newly launched BetChicago. com to enhance the site’s sports betting content. Pending the legalisation of sports betting in Illinois, Sportradar will also provide risk management and data services to Oak Brookbased BetChicago.
FACT FILE POPULATION: 6.9M GGR: $155M CASINOS: 1
LEGISLATION Massachusetts was one of the first jurisdictions to address the legality of daily fantasy sports, and legislators have studied the possibility of introducing sports betting legislation without making much headway.
FACT FILE POPULATION: 6M GGR: $1.2 BILLION CASINOS: 6
LEGISLATION Maryland House Bill No. 989 was introduced in February and calls for the establishment of a GIQ Q3 REVIEW
task force to study the implementation of sports betting in the state. However, the legislation did not move forward in the 2018 legislative session.
FACT FILE POPULATION: 6.7M GGR: $2.2 BILLION CASINOS: 13
LEGISLATION One version of a January 2018 bill introduced in Indiana would allocate a one per cent integrity fee to specific sports leagues based on wagering handle. The bill also would require a 9.25 percent tax on sports bettingrelated revenue. A different sports betting bill was introduced in the Senate. The 2018 Indiana legislative session closed with no vote on either bill.
FACT FILE POPULATION: 10M GGR: $1.4 BILLION CASINOS: 28
LEGISLATION In 2017, legislation was introduced to allow any holder of a casino licence to accept wagers on sporting events. However, this has not been taken forward. In June 2018, Michigan’s House of Representatives voted in favour of a bill to regulate online gambling in the state, but that did not include sports betting. A new bill to regulate sports betting is expected this fall. Its sponsor said it will address the fact that Marian Ilitch, who owns MLB’s Detroit Tigers and the NHL Detroit Red Wings, also owns and operates MotorCity Casino, while Dan Gilbert owns the NBA’s Cleveland Cavaliers as well as Greektown Casino.
FACT FILE POPULATION: 5.6M GGR: N/A CASINOS: 40 (+2 CARD ROOMS)
LEGISLATION In April 2018, a draft sports betting bill was circulated in the Minnesota legislature, which included a clause to enable mobile betting. However, the Minnesota legislature adjourned in May without any action on the bill. 41
STAT E O F P L AY US SPORTS BETTING
FACT FILE POPULATION: 4.5M GGR: N/A CASINOS: 0
LEGISLATION In June 2017, a bill was introduced to regulate pro and college sports betting under the supervision of the state Horse Racing Commission. In March a second bill was introduced to legalise and regulated sports betting through the state lottery. This proposal would allow the lottery to offer bets on collegiate and professional sports (excluding horse racing) via lottery retailers, horse racing tracks and simulcast facilities. A working group of legislators is looking at how best to bring these approaches together. Kentucky has no casinos but is home to nine horse tracks, including Churchill Downs (see page 56 for details of deal with SBTech), which is domiciled in the state.
In August the California attorney generalâ€™s office approved the title and description for a potential sports betting amendment to the state constitution that is eligible to appear on the 2020 ballot
FACT FILE POPULATION: 6.1M GGR: $1.7 BILLION CASINOS: 13
LEGISLATION In January and February, new bills were introduced to allow already-licensed riverboat casinos and daily fantasy companies to expand their offerings to include traditional sports betting. L egislative hea ri ngs were held i n Missouri prior to the Supreme Courtâ€™s ruling, but the bills did not advance beyond the committee stage.
FACT FILE POPULATION: 2.9M GGR: $364M CASINOS: 7
LEGISLATION Three sports betting bills have been introduced in Kansas this year. The third allowed the Kansas Lottery to offer sports betting to players over the age of 21 at facilities operated by the lottery, through 42
contracted lottery retailers, over web and mobile devices and applications, and through an interactive sports wagering platform. It also included an integrity fee for sports governing bodies, although lowered from the one per cent of wagers in the previous bill to 0.25 per cent in the latest proposal. There were a number of hearings in the months before the Supreme Court issued its decision, but no action was taken afterwards.
STATE OF THE SPORTS BETTING UNION
FACT FILE POPULATION: 3.1M GGR: $1.4 BILLION CASINOS: 22
LEGISLATION A bill proposed in January 2018 would have allowed casinos and racetracks licensed in Iowa to offer sports betting on-site and possibly online. A February 2018 amendment to the proposed bill included language more favourable to certain sports leagues lobbying in the state. The 2018 Iowa legislative window closed without any vote.
STAT E O F P L AY US SPORTS BETTING
FACT FILE POPULATION: 4.7M GGR: $2.5 BILLION CASINOS: 24
LEGISLATION New legislation, which was introduced in March 2018, would only have allowed sports betting at the four racinos already operating in the state. There are also four tribal casinos, 15 riverboat casinos and the Harrah’s New Orleans commercial casino. Its author tried to bring the legislation again later in the year but was denied by Governor John Bel Watson, who has said the state should look at it.
FACT FILE POPULATION: 39.5M GGR: $9 BILLION CASINOS: 70 (+ 77 CARD ROOMS)
LEGISLATION In July 2017, Assembly member Adam Gray introduced a constitutional amendment that would allow the state “to permit sports wagering only if a change in federal law occurs.” Any change to the constitution would require a voter referendum. In August the California attorney general’s office approved the title and description for a potential sports betting amendment to the state constitution that is eligible to appear on the 2020 ballot. If the electorate provides a positive result, any sports betting bill would still have to pass through both houses. This has proven difficult Harrahs Casino
in the past, with California’s multiple tribes and cardrooms failing to reach consensus with gaming expansion efforts relating to online bingo and poker.
FACT FILE POPULATION: 4.1M GGR: N/A CASINOS: 9
LEGISLATION Oregon already has a law on the books permitting some forms of sports betting, and the law could be expanded in the future if lawmakers are so inclined. For years, Oregon was one of the small number of states exempted under PASPA because it offered sports betting before Congress intervened. The Oregon Lottery offered a football-themed ‘Sports Action’ game for years before mothballing it about a decade ago, after trying to add NBA games, which the basketball league objected to. The Lottery is exploring how it can reintroduce a sports product and could do so without law changes.
FACT FILE POPULATION: 1M GGR: N/A CASINOS: 15
LEGISLATION Like Oregon, Montana already has a law on the books allowing certain types of sports betting in the state. The Montana Lottery currently
offers a fantasy-type sports pool for football and racing. If Montana lawmakers sought to expand its permissible sports betting offerings, they would probably need to enact a new law or empower the Montana Lottery to release new regulations.
FACT FILE POPULATION: 3.9M GGR: $113M CASINOS: 134
LEGISLATION A bill was introduced to allow the Oklahoma governor to expand the tribal-state compact and include ‘sports pools’. However, Oklahoma’s legislative session ended with no action being taken on the bill.
FACT FILE POPULATION: 5M GGR: N/A CASINOS: 0
LEGISLATION Democrats introduced House Bill No. 3102 in 2017, which would have amended South Carolina’s Constitution to allow sports betting on professional sports. However, South Carolina is a very conservative state and the Republicans that have dominated local political life for decades have shown very little interest in the subject.
FACT FILE POPULATION: 11.7M GGR: $1.7 BILLION CASINOS: 11
LEGISLATION In July 2018, a group of five Ohio state senators formally introduced a bill to “express the intent of the General Assembly to develop and enact legislation legalising sports wagering”. The one-page bill lacks specifics, but is a placeholder of sorts for Ohio to consider fullscale legislation at a later date. Senate President Larry Obhof said the bill would be vetted in committee after the November election and is unlikely to reach a vote until 2019. He also said he believed sports betting would need to be amended into the constitution with a referendum. *State GGR figures include all commercial casinos, racetrack casinos and tribal casinos. Figures from American Gaming Association. GIQ Q3 REVIEW
US REGULATED MARKETS
Sports betting takes off in New Jersey and Delaware Since the launch of sports betting in New Jersey in June, the state’s licensed casinos and racetracks have taken a combined $152.73m in bets, writes Kio Dawson
BORGATA AND MONMOUTH Park racetrack were the first to launch sports betting on 14 June, followed by Ocean Resorts on 28 June, the Meadowlands racetrack on 14 July and Ballys AC on 30 July. The next month saw three more operators go live; Harrahs and Resorts on 1 August, and Golden Nugget on 15 August. The state’s first online betting platforms were rolled out in August, the first of which was Resorts Digital’s sportsbook.draftkings.com site on 1 August, followed by the Borgata via PlayMGM.com and Golden Nugget via Playsugarhouse.com on 22 and 23 August respectively. With nine sportsbook operators live in August, a total of $95.63m was wagered
during the month, of which $73.92m was generated through on-site sportsbooks at casinos and racetracks. Despite the limited online market so far, online sports betting handle totalled $21.71m in August, already equivalent to 23 per cent of the overall market. So far only Borgata, Golden Nugget and Resorts have both an on-site sportsbook and an online offering. It is early days for the fledgling market, but FanDuel-branded Meadowlands has emerged
NEW JERSEY SPORTS BETTING REVENUE: JUNE – AUGUST 2018 (US$) NJ Licensee
Bally’s Park Place Borgata
Resorts Casino Hotel
New Meadowlands Monmouth Park Total
*Sports betting commenced 14 June 2018
NEW JERSEY IGAMING REVENUE: JANUARY – AUGUST 2018 (US$) NJ licensee
GIQ Q3 REVIEW
US REGULATED MARKETS
NEW JERSEY ONLINE POKER REVENUE: AUGUST 2018 ($)
NEW JERSEY ONLINE CASINO REVENUE: AUGUST 2018 ($) Hard Rock 481,803 2%
Resorts Digital $650,983 36%
Tropicana 3,593,979 16%
Borgata $439,817 24% Resorts Digital 3,376,052 15%
TOTAL REVENUE: 1,815,820
Caesars Interactive $725,020 40%
Ocean Resorts 385,802 2%
Including land-based casino operations, New Jersey’s gaming market grew by 24 per cent to $303.93m in August, with iGaming representing eight per cent of total revenue
Borgata 4,215,649 18%
TOTAL REVENUE: 22,988,738
Caesars Interactive 2,762,945 12%
Golden Nugget 8,172,508 36%
as the market leader for the first two full months since sports betting was introduced, generating revenue of $3.06m in August, with Resorts Digital the second biggest with $2.97m. September saw new launches by the likes of Caesars, FanDuel, 888sport and BetStars. Alongside the start of the new NFL season, the battle for supremacy in New Jersey has only just begun. Meanwhile, New Jersey’s regulated iGaming market continues to see momentum build as revenue increased 17 per cent year-on-year to $24.80m in August. Online casino revenue climbed 20 per cent to $22.99m, offsetting a continued decline in poker, which fell 13 per cent to $1.82m. Golden Nugget accounted for just under a third of the market’s total iGaming revenue, having recorded growth of 57 per cent to $8.17 for the month. Borgata was the next best-placed
DELAWARE SPORTS BETTING REVENUE: JUNE – AUGUST 2018 ($) June
operator with revenue of $4.66m, up eight per cent compared to a year ago, with Resorts Digital revenue increasing by 14 per cent to $4.03m. The Tropicana and Caesars Interactive both posted declines compared to last year, with revenue down six per cent and 22 per cent respectively to $3.59m and $3.49m, while the newly opened Hard Rock and Ocean Resort venues contributed a further $ 0.48m and $0.39m respectively. Including land-based casino operations, New Jersey’s gaming market grew by 24 per cent to $303.93m in August, with iGaming representing eight per cent of total revenue and sports betting three per cent. For the first eight months of this year, total revenue for the market is up 3.5 per cent to $1,866.63m, comprising land-based casino revenue of $1,659.90m (up one per cent), iGaming revenue of $190.24m (up 16.5 per cent), and sports betting revenue of $16.49m.
DELAWARE Amid all the excitement in New Jersey, Delaware was the first state to launch full-scale sports betting, having previously been one of the few states to be exempted from PASPA and allowed to offer parlay bets to players. Since the 5 June launch, Delaware’s regulated sports betting market generated total stakes of $22.9m up to the end of August, already more than the whole of last year (FY 2017/18: $16.9m). A total of 313,872 bets have been placed, generating revenue of $2.0m across the three licensees. In August a total of $7.72m was wagered, though this was down six per cent compared to July, with operators generating revenue of $706,780 and market leader Delaware Park accounting for more than two-thirds of the total. Sports betting is at least proving to be more lucrative than Delaware’s regulated iGaming market, which is still struggling to generate significant revenue despite the pooling of poker liquidity with Nevada and New Jersey earlier this year. n
DELAWARE IGAMING REVENUE: JANUARY – AUGUST 2018 ($) January
GIQ Q3 REVIEW
THE ART OF
THE DEAL The flood of deals announced Stateside since the PASPA repeal and listed on the previous pages has been astonishing, and so has the complexity of them. Jake Pollard attempts to unpick the PR and establish who is doing what for whom
THE MARKET WILL no doubt be highly active, but many structures, layers and sublayers of the various agreements that have been struck can leave even the most seasoned industry observers perplexed as to the exact function of the different companies involved. Even the most experienced industry executives we spoke to for this feature agreed that the structures of many of the deals are unusual. At first it is difficult to work out who is doing what, where, and for whom. Many of these operators and suppliers are fierce industry competitors and it is unusual to see them lining up side by side. The complexity of individual state regulatory frameworks, which might limit sports betting to online, mobile, on-premises only or a mix of the three, has forced some unlikely alliances. This has been achieved through a combination of commercial arrangements, collaborative partnerships, white label provisions or straightforward technology supply deals. But while the structures and responsibilities of the different agreements leave many observers perplexed, it’s worth reminding ourselves what the various parties are after.
Gaining market access “Existing iGaming licensed operators – the land-based casinos – already have the licences and market access through their premises 50
and brands. What they need is the sportsbook technology,” says David Sargeant, consultant for a number of US casinos that have launched sports betting offerings, most recently for the Mississippi Band of Choctaw Indians. “The tech and platform suppliers need market access; hence the wave of deals announced in the past three months. Meanwhile, the rights and product owners, such as Churchill Downs for horse racing or DraftKings for fantasy sports, have the payment systems and wallets in place. Through their deals with Golden Nugget for Churchill or Resorts Casino for DraftKings, they now have the other two components in place.” In New Jersey, the casinos provide the licence and are allowed three sportsbook and five online casino brands to work off that licence as skins. This creates another layer of complexity that adds to the huge number of deals being announced, and is another reason why following industry developments in the US can get confusing.
The new gatekeepers But when thinking about what the different parties in these deals bring to the table – after all, many seem to provide similar services and products – it always seems to come back to one vital ingredient. That ingredient is the player’s
account and who manages it. In many cases that is the role GAN fulfils for US operators in 2018. GAN chief executive Dermot Smurfit tells us: “The account is the core of a betting and gaming platform. An account that is regulated (functions in a regulated environment) – and has the player’s money, their personal information, credit card details and so on – is the most important part of the set up. And the core of the platform is the player account management (PAM) system that manages all that information. That is all within GAN. We have casino products and other functionalities, but the PAM feature is the most important. It has the ability to plug in sports modules and solutions, casino games and extra features.” GAN has carved a role for itself in the US over the past six to seven years as a player account management service provider. The relations it has built up with many leading casinos and suppliers in the sector means it has won the trust of those companies and sits at a key juncture in the US gaming ecosystem. SG Digital’s OpenBet is another PAM provider, which in addition to deals with the likes of Caesars, recently announced a partnership with Kindred Group to introduce the Swedish operator’s Unibet brand to the US market. In terms of unlikely alliances, this certainly fits the bill. European observers will GIQ Q3 REVIEW
have raised an eyebrow that Kindred did not use Kambi. Kambi was spun out of Unibet several years ago as a B2B supplier and still provides the technology for all Unibet’s sports betting elsewhere. GAN and Scientific Games’ ability to offer account management services means that they act as gatekeepers to the casinos, able to grant new entrant suppliers access to the much sought-after licence holders. As an example, a firm like SBTech also provides PAM systems, but it has not been active in the US as long as GAN, and it would take too long for it to build up such a client base. The partnership the two signed in January, therefore basically means GAN has given SBTech a seal of approval. This has played an important role in enabling SBTech to sign deals with major brands such as Churchill Downs and Golden Nugget so quickly.
Under the skin The differences are not that great once companies are active in the market, according to Richard Schwartz, chief executive of Rush Street Interactive: “Operating a skin on Golden Nugget Atlantic City’s licence is technically the same as being a supplier to Golden Nugget, because a skin is considered to be a supplier, according to the New Jersey regulations.”
As a skin to Golden Nugget in New Jersey, Rush Street Interactive fully operates its own PlaySugarHouse.com site, using its own customer care, payments and risk management, marketing and acquisition, compliance, live technical operations and security, and web management teams. All of this is powered by its own in-house-developed iGaming platform. In contrast, SBTech will provide its sportsbook technology to help Golden Nugget Atlantic City run its own branded sportsbook. Chris Grove, a US-based gaming industry journalist, US affiliate and now director at gaming analysts Eilers & Krejcik, comments: “There’s no one-size-fits-all answer to this question. Some deals are very arms-length, while others are closer to partnerships. I think you’ll see that trend persist as the market moves into other states beyond New Jersey.” “As sports betting drives the iGaming bus for the foreseeable future,” adds Grove, “operators are racing to sort out relationships and launch a viable online product in time for the start of the NFL season. Then we’ll move into a phase of tying up all the loose ends created by the rushed launch. Following that, operators will start to compete in earnest against one another while focusing intensely on the question of how to move customers from the sportsbook to the casino.” 51
William Hill (sportsbook)
Delaware Park, DoverDowns, Harrington Raceway
Delaware Lottery (licence)
Beyond the sportsbook
“The secret to success will be adaptability to the individual circumstances of each state. This is true for everyone – operators, suppliers and brands” Charles Cohen, IGT
(account management system)
As outlined by Grove, individual operators’ focus – sports betting being used as an acquisition tool to cross-sell players into casino or whether they can build up a strong enough standalone vertical – will dictate the rest of their actions. For Keith McDonnell, an iGaming consultant now based in the US, the number and variety of brands operating on casino licences will provide the choice that players are looking for. “For the land-based casinos it’s about having a variety of operating brands that gives them the widest reach through all potential demographics,” he says. “They will aim to offer a good mix of sports betting brands: targeting both high-rolling customers and recreational players, using that mix to maximise customer acquisition opportunities across the calendar year around major sporting events.” A rundown of the companies involved reveals how convoluted the deals are. For example, New Jersey’s Resorts has partnerships with SBTech, which is a GAN partner, which is also in partnership with DraftKings, which is in a tie up with Kambi. Meanwhile, SBTech is also in partnership with Golden Nugget, which also has a partnership with Paddy Power Betfair, the Irish operator which owns FanDuel, which is, of course, DraftKings’ arch-rival. Confused? That is forgivable, but there will be many more of these complex partnerships in the short term. (See previous ‘State (licence) of the Sports Betting Union’ feature for a full picture.) However,
the other big players from whom not much has been heard of yet (with the recent exception of the Mississippi Band of Choctaw Indians mentioned earlier) are the Native American tribes. Many of them hold highly lucrative, exclusive gaming compacts in a number of key states, and the passing of further state-by-state gaming and betting legislation will depend on how much of an advantage they can get written into new regulations. Charles Cohen, vice president of sports betting for IGT, believes all stakeholders should be adaptable and not take anything for granted so early in the game. “To me, the most important fact is that there’s no such thing as the US sports betting market. There will be as many as 50 markets – all with distinct rules, structures and styles. Some states may not allow skins, some will allow an unlimited number. So my view is simple: the secret to success will be adaptability to the individual circumstances of each state. This is true for everyone – operators, suppliers and brands. “It’s going to get larger and possibly more complex because the growth will be both in existing states and new ones. We expect at least a half dozen more states to regulate next year, maybe up to 20 more within two years. It’s difficult to predict because a lot will depend on external factors like the outcomes of the midterms (some gubernatorial races have a betting factor) and state referenda in places where this is required to introduce betting.” This, of course, will not stop operators, suppliers and every iGaming company wanting a slice of the action from the nascent US market. The key will be how much access they can gain via deals and partnerships, and how well (or badly) the different jigsaw pieces stack up and work together in the next few years. n
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BEWARE THE BLACK MARKET Regulation of betting and gaming in the United States is welcomed by all stakeholders, but the $150 billion black market remains strong and first impressions suggest it will be hard to eradicate
F E AT U R E
THE BLACK MARKET
UNDER THE GUIDANCE of its president valued at close to $150 billion, and chief executive Geoff Freeman, the according to the trade body. American Gaming Association has been And that, to a large extent, highly effective in lobbying for the repeal of is the long and short of it in a PASPA over the past five five years. The momentous business sense. Regulation, taxaruling has sparked a sense of opportunity that tion and enforcement will be the key appears to be sweeping across the land, and drivers that help the regulated market flourish in the US. the AGA has played a key role in educating flourish US stakeholders about how the sector could be However, things are different on the effectively regulated. ground. As one industry contact who agreed to In August the AGA released the findings speak anonymously comments: “We shouldn’t of a study carried out on its behalf by Nielson forget that the offshore sportsbooks don’t really Sports, which found that: “sports betting adults target online players. They still act as the proare more affluent, affluent, younger, more diverse and cessing system for a land-based bookie working better educated than the general population”, out of his local bar and picking the bets from and 71 per cent of this crucial demographic for 20 or 30 punters at a time.” An agent system in sports leagues and broadcasters “who currentother words? “Yes, the bookie then goes home, ly bet with a bookie say they logs on and places the bets would shift some or all of their on behalf of those users. As betting activity to a regulated a system it’s similar to what “It will be valuable market if they had access to a goes on in Italy. Stopping it if sportsbook legal platform”. comes down to enforcement With 44 per cent of cur- legislation in different on the ground.” rent US sports bettors under states enables local The mention of Italy is the age of 35 and 29 per cent of authorities to use appropriate, because even them with household incomes enforcement tools though the country reguof more than $100,000, legal lated its iGaming market wagering should increase to block illegal sites” in 2008, the illegal/grey fan engagement and increase Richard Schwartz, market continues to take a revenue for sports leagues, Rush Street Interactive sizeable chunk of the action teams, broadcasters and, of there, online and offline, course, betting operators. despite a number of crackdowns and legislaHowever, the AGA’s senior vice president of tive reforms by the authorities. Although the public affairs, Sara Slane, warns: “This potenrecently-announced gambling advertising tial will only be realised with proper policy ban due to be implemented in July 2019 shows frameworks that empower consumers with there is no cover from lawmakers’ stranger competitive odds, access to all bets and the impulses, it further demonstrates the need for ability to tap into modern platforms including strong action by regulators and law enforcemobile. Without this focus on consumers, the ment against unlicensed operators to protect illegal market will continue to thrive.” the legal market. The emphasis on individual states providAnother industry insider says he has no ing a regulatory environment that is businessdoubt that the offshore books will continue to friendly is not surprising. The AGA and its take a large slice of the action in a regulated members want minimal taxes, in order to genUS market. profits and be able to compete erate maximum profits “A number of factors will continue to have against the illegal offshore sportsbooks. These an impact,” says the source. “The pay-per-head illegal sportsbooks have created a market bookmakers will continue. They have a roster GIQ Q3 REVIEW
F E AT U R E
THE BLACK MARKET
“Without a focus on consumers, the illegal market will continue to thrive” Sara Slane, American Gaming Association
of players for which the online books get a fee per player. That sub-sector is much larger than people realise and will continue because it won’t want to lose the business.” Another key factor is the gambling industry’s continued reliance on the 80/20 model, where 20 per cent of the players generate 80 per cent of an operator’s margin. “The gamblers who make up that 20 per cent are smart, know the game and enjoy playing,” he adds. “They’re the VIPs that are important to operators. But operators also want value, and offshore books can give better value and, importantly, will take the action. Meanwhile, regulated books, much as in the UK, will either refuse them or close the account after a couple of winning bets.” That last point has been amply demonstrated in recent weeks, with players highly critical of DraftKings’ lines as co-founder Paul Liberman congratulated his teams on being first first off the mark in taking US bets. Recent Twitter footage of a player being asked to leave a casino after placing some winning bets reinforces the belief that some operators will only accept losing players. It caused much criticism, with one player putting up this telling comment (see left). For the regulated sportsbooks, a ban on winning punters might mean less risk, but also lower margins from recreational players; the pool of which is surely limited, especially in low population states such as West Virginia or Mississippi. All the sources Gaming Intelligence spoke to for this article agreed that having a competitive offering will be key, with consumers 58
in general preferring to play on legal sites. But if tax rates are too high, the legal sites won’t be able to offer competitive odds, while any limitations on bet types and markets will only serve to make the illegal sites more attractive. Richard Schwartz, chief executive of Rush Street Interactive, says proactive local enforcement will be necessary. “Collectively, our industry’s number one competitor is going to be the black market books. It will be valuable if sportsbook legislation in different states enables local authorities to use enforcement tools to block illegal sites, such as IP blocking, payment blocking and criminal liability.” Keith McDonnell, consultant and founder of KMI Gaming, agrees with the overall premise of the AGA’s study that there will be a shift of players to the regulated sites, but the key questions are a) how much of a shift, and b) how long will it take? “Precedence from other markets points to revenue shifting to licensed operators, with factors such as product quality, user experience, branding, marketing and trustworthiness all being key drivers,” says McDonnell. “These don’t just come from regulation, though. They need to come from a thorough understanding of the local market by regulated operators. If they don’t understand what the online customer wants and what the offshore operator does; or is restricted by high taxation and compliance overheads from passing on at least equivalent value, any shift (to regulated operators) will be slow and lengthy”. The other key takeaway from the immediate post-PASPA environment is that the biggest and most populous states have still not passed legislation in favour of regulating sports betting. five most populated states In fact, none of the five in the country – California, New York, Illinois,
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F E AT U R E
THE BLACK MARKET
“The bottom line is that the regulated market starts at a deep disadvantage to the black market. Every decision made by policymakers and operators needs to reflect that reality” Chris Grove, Eilers & Krejcik
Texas and Florida – are close to passing online gaming or betting legislation. Their respective timetables leading into 2019 contain very few details about any gambling bills slated for discussion by the state authorities. The irony of the recent wave of US betting regulation is that many existing or potential players in those populous states (or elsewhere in the US for that matter) will have seen the news of the PASPA repeal, and it will have led them to believe that sports betting is legal across the country. Chris Grove, director at gaming analyst Eilers & Krejcik, confirms that offshore sportsbooks will still get a lot of action from the US market, notably from states where regulations haven’t been passed. “Absolutely. One of the odd impacts of the Supreme Court decision (to repeal PASPA) and the rush of state bills that followed was to create an impression among no small amount of the population that sports betting is now legal. There’s also likely a broadly increased interest in sports betting as a result of the persistent media attention.” Grove adds that there will be a case to be made for having the right regulation and the appropriate lobbying from the industry, but all stakeholders should take a holistic approach to their work, and that the AGA’s predicted player shift will also happen. “Tax matters. Marketing matters. Product quality matters,” he adds.“The bottom line is that the regulated market starts at a deep disadvantage to the black market. Every decision made by policymakers and operators needs to reflect that reality. “With that said, we agree with another conclusion of the research – that new players will make up a significant chunk of legal US sports betting. In fact, we think that new activity, as opposed to demand captured from the black market, will account for the clear majority of the regulated US sports betting market.” Consultant David Sargeant agrees that the offshore books will remain in the states where there is no legal competition. “Offshore can compete on price and the ‘convenience’ of credit-based accounts, although those also have many obvious downsides,” he says. “Bringing customers onshore will be through product or tech innovation, ease of mainstream payments and sheer weight of advertising. New Jersey’s decision to force affiliates to choose either onshore or offshore revenue is a clever one because if incentivised correctly it cuts off a big acquisition funnel for the offshore market.”
Speaking of regulators, industry observers are wondering how many enforcement actions they will launch and how effective they will be in preventing the illegal operators from recruiting players. One US source says there will be a major wave of enforcement action to sweep up the illegal operators once the regulated states have had a chance to bed down. “New Jersey has already been successful in shutting down some of the offshore casinos and we should remember that as a state it didn’t really do anything (in terms of enforcement) until online casino was regulated. It has done the same with casino affiliates who wanted to operate there; and will do the same for sports betting, operators and affiliates alike.” The most immediate means of combating the black market is making the legal operators’ odds more attractive. Judging by the comments posted by (admittedly savvy) punters, they are failing in that regard at the moment. While some oversights can be forgiven in the rush to market in time for the start of the NFL season, the legal operators will not want this state of affairs to endure for long. The next stage – in New Jersey at least, where online casino is regulated – might be the question of how to move customers from sportsbook to the more lucrative casino. However, if this is handled badly it could also mean the regulated operators lose out to offshore bookmakers. If cross-sell into casino becomes the ultimate objective for many operators, it might imply that betting is not valued, which will make attracting punters to the legal product that much more difficult. GVC director of development and corporate strategy Adam Greenblatt concludes: “The big wildcard is the illegal market.” Most operators and suppliers are very excited about the blank slate offered by US markets. They believe the market is young and immature and that they have an opportunity to create new products and guide customer preferences. But on the other hand, there’s a huge number of people betting with illegal operators, who will have an established preference. What we do not know about the illegal market is whether the vast majority of the $150bn market are high value VIPs, or whether there are large numbers of recreational bettors spending their money with the Bovadas of the world. Attractive odds is a small part of the product picture that must be filled out to tackle the illegal operators. Advertising and education are another part. But one suspects that law enforcement will be needed to win the fight. n
T H E G I Q I N T E RV I EW THE STARS GROUP
â€œOne of the more interesting and bigger opportunities in the US is being able to shape the market the way we want it, to provide the best experience across the boardâ€? Matt Primeaux, The Stars Group 62
T H E G I Q I N T E RV I E W THE STARS GROUP
Stripes Gaming Intelligence speaks to Matt Primeaux the day after The Stars Group launches its first sports betting product in America BETSTARS WAS LAUNCHED in New Jersey on 14 August, enabling players within the state to place sports wagers through their mobile phones. Stars has expanded its licensing arrangement with Resorts Casino from the PokerStarsNJ and PokerStarsCasinoNJ operations into sports betting. Matt Primeaux, Stars’ senior vice president of US strategy and operations is reasonably happy with the launch, but the crew who have been at work from 5am in the days leading up to the launch still have some work to do. The BetStars Android app has gone live and you can access BetStars within the PokerStars iOS app. The team is also in the process of releasing a standalone BetStars iOS app and a BetStars website as soon as possible. “Our concentration is going to continue to be mobile-first. The US market, in general, is typically a mobile-first market,” says Primeaux. “Especially when you are dealing with a vertical like sports, which is time and event-specific. People are constantly on the go. As we bolster out the product we will be thinking about mobilefirst and executing in a mobile-first capacity.” Mississippi is the third state to go live with sports betting since PASPA was repealed and it is anything but mobile-first. Its regulations only allow sports betting within casinos’ four walls. “I think Stars can have a role in any or all GIQ Q3 REVIEW
states that regulate,” says Primeaux. “We fully intend to operate retail books in regulated jurisdictions that we are operating in, to the extent necessary under the applicable local partnership agreements.” This would be new for Stars. Thus far, the company has in effect rented the licence from its casino partners in New Jersey and Pennsylvania in order to launch its own brands in the marketplace. Atlantic City’s Resorts Casino has its own ResortsCasino.com website, which is run in partnership with SG Digital (originally launched by NYX Gaming, which was acquired by SG) and has nothing to do with Stars. “It all depends on the nature of the partnerships we engage in. For example, Resorts is running its own sportsbook. In another state the partner might want us to run both the online and the retail sportsbook in conjunction [with them].” Retail sports betting can take many forms. While Stars might seek technological expertise to launch a traditional land-based sportsbook, it could easily operate a mobile-on-premises sports betting lounge immediately.
“We are certainly more geared towards the idea of a retail sports lounge rather than the traditional retail sportsbook with a teller and teller systems. That said, we work on an individualised basis with each partner in each state to find a solution that fits their individual property. This is not a cookie-cutter approach.” While Stars has launched its own brand, it would happily utilise and operate under its partner’s brand if it made sense in a particular market. “When it comes to discussions with local partners, obviously The Stars Group as a whole brings a certain amount of stature and prominence and global recognition with the brands that we have. That said, there are also many, many casinos and partners that have wonderful brands and operate with great levels of execution in their local markets. When speaking to partners it would be remiss of us not to use all the assets that are on the table in order to present the best for that market.”
Cultivating creativity It could be forgotten that The Stars Group is relatively new to sports betting. It only launched 63
T H E G I Q I N T E RV I EW THE STARS GROUP
Casino and beyond In New Jersey, PokerStars has a share of the online poker market that fluctuates between 35 and 40 per cent. It has dropped slightly since launch of the multistate liquidity-sharing compact, which only benefits 888, which has operations in Delaware, Nevada and New Jersey. Primeaux hopes that the pooling of liquidity will be an obvious benefit to all states in the 64
THE STARS GROUP IN NUMBERS 1000 n H1 2018 n H1 2017 800
BetStars in the UK in 2015 but in the past year it has acquired two of Australia’s leading online sportsbooks and one of the UK’s market leaders in the shape of Sky Betting & Gaming. “One of our Australian acquisitions – CrownBet, which has been rebranded BetEasy – has a wonderful solution, which is along the lines of the sports lounge setup.” A beacon system triggers your mobile phone when you enter the premises and gives you a localised offering focused on the sports you are watching in the lounge at that time. Sky has also been one of the UK’s more innovative operators. Primeaux says one of the biggest benefits of being The Stars Group is all the different options each part of the group brings from around the world that can be applied to the US market. “There are a lot of really interesting, creative and innovative ways we can engage the consumer, both online and in a retail space as the US continues to evolve,” continues Primeaux. “You have to remember that for the most part, it’s a blank canvas here in the US. There is not necessarily a preconceived notion of what it should or shouldn’t be.” “One of the more interesting and bigger opportunities in the US is being able to shape the market the way we want it to be shaped to provide the best experience across the board.” While many of The Stars Group’s sports betting assets come from around the world, it has US assets and expertise. Primeaux himself joined the company in 2015, when it acquired his Victiv daily fantasy sports company. That team in Austin remains intact despite the company closing its DFS operations due to the uncertain regulatory environment around the product a couple of years ago. The team in New Jersey also has US-specific sports betting expertise. He makes the point that it is very early days for the market and that everyone will be learning as they go. “I have been extremely impressed with our company’s ability to not only operate locally. Our approach to business and interactions with customers already feels very American.”
THE GROUP ACROSS THE GLOBE $76.1m $72.4m
n Isle of Man $197.1m
H1 2018 REVENUE
n Spain n France
n Malta n Italy
n Australia nO ther licensed
future and as more and more states regulate online poker, Stars will assume the kind of market dominance it sees throughout the rest of the world. The same cannot be said of the PokerStars casino in New Jersey. While the product has grown from zero to nearly $ 400m in a few short years internationally, PokerStarsCasinoNJ has only gained a one per cent market share. The Stars Group’s phenomenal early success in the online casino market has been driven almost solely by the cross-sell from its huge customer base of poker players. Casino chief Bo Wänghammar has repeatedly told Gaming Intelligence about the need to build out the casino product to a high standard in all jurisdictions, and New Jersey is no exception. It is not on the web yet and does not have a standalone casino app. Neither is it linked into the Stars Rewards programme, which has been
H1 2017 REVENUE
a phenomenal success in other parts of the globe. It is just a question of resources, but Primeaux says the team is intent on building out the product across different verticals as the regulatory bandwagon allows. Next up for Stars is its Pennsylvania launch in partnership with Mount Airy Casino. The multi-vertical approach of the Pennsylvania regulations allows Stars to launch in a similar fashion to in New Jersey. While the deals Stars has cut in both states look very similar, the overwhelming conclusion from the conversation is how flexible the company is determined to be in its approach to the nascent market. “Stars is one of the most licensed operators in the world, with licences or approvals in some 19 jurisdictions worldwide,” concludes Primeaux. “It gives us a level of confidence that no matter how the regulations pan out, we will be able to handle it.” n
T H E G I Q I N T E RV I EW ADAM GREENBLATT
America The joint venture between GVC and MGM is the market’s most eyecatching announcement to date. For the first time, GVC strategy chief Adam Greenblatt outlines how the vision will become a reality
GREENBLATT APOLOGISES FOR being a few minutes late for our meeting. The GVC director of development and corporate strategy had an important matter to deal with regarding the company’s joint venture with MGM. From the way he speaks, it is obviously taking up a great deal of his time. The $200m joint venture had not announced a permanent leadership team at the time of going to press. Some would argue Greenblatt would be the obvious choice to lead the team. The South African joined GVC after it acquired Ladbrokes Coral. Before ushering the latter into the arms of GVC, he spent almost eight years managing Ladbrokes’ growth strategy, including the all-important Ladbrokes-Coral merger. It is doubtful there is an in-house candidate more qualified to bring two giant companies together in a mutually beneficial manner. Greenblatt says only that the joint venture’s board has received a recommendation and will make its choice shortly. Greenblatt sits on the board with his chief executive officer Kenneth Alexander, plus MGM chief operating officer Corey Sanders and Scott Butera, MGM’s new president of interactive gaming.
The big picture Alexander has described the JV as “big and bold” and it certainly is that. Each side has invested $100m to establish the premises, people and technology needed to get it off the ground.
T H E G I Q I N T E RV I E W ADAM GREENBLATT
“PlayMGM will be our hero brand,” says Greenblatt. “PartyPoker will be the brand for poker.” MGM is present in Nevada, New Jersey and Mississippi, all of which have launched sports betting already. It also has properties in New York, Maryland, Massachusetts and Michigan, all of which GVC hopes will regulate in 2019. Through its partnership with Boyd, the joint venture will also have access to Pennsylvania, Ohio, Illinois, Missouri, Kansas, Iowa, Indiana and Louisiana. Beyond that, Greenblatt is confident that GVC-MGM will be able to negotiate an entry into every single market that regulates sports betting and/or iGaming. The intention is for the joint venture to become its own independent operating unit, building on the MGM brand and GVC technology and trading expertise. It will have its own staff and an office based on the East Coast of the US. Location is not yet confirmed but the search is well under way. “When all the states that are not opposed to betting and gaming have gone through their cycle of adoption and introduction, we will have an addressable US market of close to 200 million people and an operation of between 600 and 1,000 people just focussed on the US,” says Greenblatt. “That is our plan.”
Speed to market There is no doubting the two parties’ commitment to each other, although MGM’s initial post-PASPA movements seemed to suggest they were going it alone. It launched sports betting in Mississippi and New Jersey through IGT. And it boldly announced a marketing/ data deal with the NBA and the new off-season football competition, The Alliance of American Football. The IGT deals were an extension of the operator’s existing relationship with the supplier in Nevada. MGM has been preparing for this moment for some time and wanted to get to market quickly. On the sports deals, Greenblatt says that MGM’s commitment to investment in the sporting arena goes back decades, and that the JV will only benefit from this ongoing commitment. “One of the reasons I am excited and optimistic about our long-term prospects is that many of these other deals are very complex. One is bringing a bit of brand and another is bringing a bit of tech, and they’re using X or Y to re-purpose their European platform and are now trying to reconfigure for the US market with a single code and… it’s all a bit complicated.” GIQ Q3 REVIEW
By contrast, the joint venture will benefit from having all of its technology provided by GVC. It is all proprietary. “We control the roadmap. We have our US software business Stadium Technology. It has been built from the ground up to service the US market. We are going to build capability around that to ensure we are first or close to first to market in every state.”
The shared history GVC and MGM already have some history together. GVC-owned bwin.party teamed up with the MGM-owned Borgata in Atlantic City to launch online casino and poker. With 17 per cent of the online casino market and 24 per cent of the online poker market, this has not been a failure, but given Borgata’s stature as the landbased market leader, it is not an overwhelming success story either. Greenblatt sighs when this is pointed out and vows to improve its performance. “What I love about the deal we have now done with MGM is that there is a complete alignment of interests.
brand. Of course, they will not close down the Borgata platform and if local brands require investment then they will receive it as long as it makes sense economically. “The end game looks like a single brand with multiple states having regulated and an ability to advertise nationally and generate ROIs ahead of anybody else because of that single brand across all states.” Greenblatt is confident the GVC-MGM proposition will be attractive to racetracks, racinos and tribes in states that Boyd and MGM do not have a presence. Those local organisations will benefit from a revenue-sharing relationship with a potential market leader that should provide them with great financial benefits. It is a compelling proposition but the immediate priority is building an infrastructure that can cope with the frantic rollout of legislation that can vary hugely from state to state. “We are building a team structure that will scale. It needs to be a full-service omni-sports betting and iGaming operation,” says Greenblatt. “We feel confident that notwithstanding
“Everything is in place. Every investment GVC has made in its core platform, the joint venture will benefit from” Adam Greenblatt, GVC We have gone all-in on sports and iGaming in the US and we are both equally interested in the success of the thing we have created.” By contrast, he says the relationship between the pair in New Jersey was a B2B relationship, where, for example, the interaction with the regulator rested with Borgata but responsibility for technology supply rested with GVC. This creates a set of behaviours and communication challenges for everyone involved which are not conducive to the smooth running of a business. “We have collapsed all of that. We need one voice. We need the most expert voice, that understands the technology and the product and the operation, and that voice needs to sit in the joint venture where both GVC and MGM sponsor that voice. By doing so, we compress the chain and reduce the potential for misunderstanding.”
Future prospects You can look at the New Jersey market as an example of how the joint venture might operate in the future. At the moment, the pair operate Borgata Poker, PlayMGM poker and PartyPoker apps. In future you would expect all marketing effort to go into the PartyPoker
changes in state-by-state regulation, our technology is sufficiently flexible to accommodate that and the operating model we have designed and will be deploying caters for that, too.” This will require a great deal of recruitment but Greenblatt is confident the relatively slow pace of regulatory change will allow sufficient lead time for the JV to prepare for each jurisdiction as it comes. In the meantime, the parent company has significant resources. “Our core platform is the same that is used by GVC throughout the world. As we develop it, the US business will get the benefit of that technology. We will be on a single code base. We are not building anything new. We are also developing the Stadium sports technology, which is integrated with the core platform, to cater for wherever the US customer preference goes. We are not reinventing any wheels. Everything is in place. Every investment GVC has made in its core platform, the joint venture will benefit from.” Alexander said in the recent financial statement that “there is no doubt that the JV will be the market leader in the US”. Greenblatt broadens the vision. One wouldn’t bet against him executing on it either. n 67
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ON THE FOLLOWING PAGES
79 GIQ20 H1 2018 results and analysis
The GIQ H1 2018 THERE IS NO change at the top of the GIQ20 chart as Stockholm-listed operators Global Gaming and LeoVegas maintained their momentum from Q1. Most notably, the top eight publicly listed gaming operators and suppliers are all Nordic-listed, with Gaming Innovation Group set to further the Stockholm influence once it switches from its Oslo listing. Toronto-listed The Stars Group was the only outsider to break into the top half of the chart, and it should soar up the GIQ20 after completing the acquisition of Sky Betting & Gaming in July. Stars will also be one of a host of operators and technology providers looking to benefit from the US sports betting boom. London-listed GVC, Paddy Power Betfair and William Hill are already enjoying strong revenue contributions from their existing operations across the Atlantic, alongside 888 Holdings, which published its results too late to make this edition of the GIQ20. For others such as Kambi, Kindred Group and Gaming Innovation Group – all of whom have recently entered the US market – it may be a while until US revenue begins to make a meaningful contribution, but there is excitement about the opportunities available. To reflect this focus on sports betting and the multi-channel operations of these operators, the GIQ20 will no longer be based solely on online revenue growth, and will include retail and land-based operations. This explains the lower position for Scientific Games, GVC and William Hill, all of whom would have been higher up previously due to the rate of their online growth. GIQ Q3 REVIEW
The GIQ20 H1 2018 NGR COMPANY 1
GLOBAL GAMING 555
H1 2017 CHANGE
GAMING INNOVATION GROUP
THE STARS GROUP
PADDY POWER BETFAIR
(FORMERLY MR GREEN & CO)
F I NA NC E GIQ20 H1 2018
Nordic delight as Global Gaming leads GIQ20 chart Stockholm-listed companies dominate the top half of the GIQ20 chart as Global Gaming and LeoVegas see the biggest growth in a strong first half for operators and suppliers, writes Kio Dawson
GLOBAL GAMING 555 181% Net revenue (SEK)
Own gaming activities Own brands on another platform B2B TOTAL
Stockholm-listed Ninja Casino-operator Global Gaming maintained its position at the top of the GIQ20 chart after a stellar performance during the first half of 2018, as revenue soared 181 per cent to SEK426.4m. Of this, the company’s flagship Ninja Casino brand generated revenue of SEK370.1m during the period, nearly quadruple the previous year’s SEK92.8m. Online casino represented the bulk of revenue, equivalent to 91 per cent of the total, while the number of customers playing via mobile grew to 72 per cent. The strong revenue growth, which will be further boosted in Q3 by the newly launched SpelLandet brand, helped the operator post a 64 per cent increase in profit for the period to SEK54.7m. The fast-growing operator is
targeting further expansion after receiving licence approval to launch in Estonia, and has applied for licensure in Sweden, ahead of the opening of the new regulated iGaming market on 1 January 2019.
LEOVEGAS 76% Net revenue (€)
Stockholm-listed LeoVegas continued its recent growth trajectory as revenue grew by 76 per cent to €164.8m for the first-half period, benefiting from growing contributions from its live casino and sportsbook. After a record performance during the first quarter, the operator saw revenue increase by the same 76 per cent in Q2. The LeoVegas brand accounted for 71 per cent of Q2 revenue, with Royal Panda contributing 16 per cent and Rocket X a further 13 per cent. Online casino generated the bulk of the total with 77 per cent of revenue, with sports betting contributing eight per cent and live casino 15 per cent, despite not being offered across all of the company’s brands.
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GIQ20 H1 2018
“Our new sportsbook is our largest release in the sport vertical since we launched sports betting in spring 2016,” said chief executive Gustaf Hagman. “We have taken technical ownership of large parts of the sport client and have introduced an entirely new design that is more intuitive and more attractive.”
CATENA MEDIA 65%
GAMING INNOVATION GROUP 49% Net revenue (€) H1 2018
Net revenue (€)
It was another busy period for Catena Media as the performance marketing specialist appointed Per Hellberg as its new CEO in June, and entered the Italian sports betting market through the acquisition of ASAP Italia. Hellberg takes charge of a company that has seen significant growth this year, with first-half revenue climbing 65 per cent to reach €50m for the first time, benefiting from strong organic growth and acquisitions. More than 70 per cent of revenue was generated from locally regulated or taxed markets. During Q2 the company expanded its gaming and financial services portfolio with a number of acquisitions, including ASAP Italia, US-based Hammerstone, Australia’s TheBull. com.au, ForexTraders.com, and the UK-facing horse racing site gg.co.uk. “We are striving for a healthy balance between acquisitions and organic growth, and during the quarter we once again proved that we nurture our acquired assets with organic growth,” said Hellberg in his first outing as CEO. “I am happy to have joined Catena Media as of June and the team and I are strongly motivated to take Catena Media to new heights.”
There was a strong performance from Oslo-listed Gaming Innovation Group (GiG) during the first half, as the company prepared for its entry into the sports betting vertical for the first time and US iGaming platform launch for Hard Rock International in New Jersey. Revenue increased by 49 per cent to €74.2m, comprised of €49.6m from its seven B2C brands and €30.9m from B2B services. GiG will look for
“We are striving for a healthy balance between acquisitions and organic growth, and during the quarter we once again proved that we nurture our acquired assets with organic growth” Per Hellberg, Catena Media
further growth to come from its newly launched sports betting offering with Rizk. com, which follows two years of internal development, as well as its GiG Core platform services launch in New Jersey with HardRockCasino.com. “A few years ago, we set out on an ambitious journey to expand across all verticals of iGaming,” said chief executive Robin Reed. “By controlling the value chain we lose dependencies, improve margins, and gain synergies.” GIG conducted a strategic review of its operations during Q2, with the company restructuring its B2C advertising and marketing activities to improve delivery, as well transitioning its SuperLenny B2C brand into an affiliate website, with SuperLenny customers set to be migrated to other GiG brands. Robin Reed, Gaming Innovation Group
MRG GROUP (FORMERLY MR GREEN & CO) 41% Net revenue (SEK)
Stockholm-listed MRG Group posted a 41 per cent increase in first-half revenue to SEK793.8m, benefiting from growing contributions from newly acquired Evoke Gaming and Latvian operator 11.lv, which combined to represent 10.5 per cent of the total. MRG continues to see strong growth in Western Europe, with revenue up 51 per cent to SEK340.0m, as well as the Nordics where revenue climbed 45 per cent to SEK270.8m following continued organic growth in Sweden, which now accounts for approximately a fifth of MRG’s overall revenue. Revenue for Central, Eastern and Southern Europe increased 21 per cent to SEK169.4m, driven by growth in Austria, while rest of the world revenue rose 19.5 per cent to SEK13.5m. Despite the revenue improvement across all regions, higher marketing expenses and personnel costs meant that profit for the period fell by 37 per cent to SEK32.9m. “During the first half of this year, revenue increased in excess of our target of 40 per cent and, as of 19 July, it has increased far beyond our growth target,” said CEO Per Norman. “We are well equipped to continue to deliver on our financial targets.” 73
F I NA NC E GIQ20 H1 2018
KINDRED GROUP 33% Net revenue (£) H1 2018
Casino and games
EVOLUTION GAMING GROUP
Evolution Gaming enjoyed another strong period of growth during the first half as revenue reached €110.8m and profit rose 34 per cent to €36.7m
Martin Carlesund, Evolution Gaming
35% Net revenue (€)
Evolution Gaming continues to set the bar as the industry’s go-to live dealer provider, and enjoyed another strong period of growth during the first half as revenue reached €110.8m and profit rose 34 per cent to €36.7m. This followed a 40 per cent improvement in revenue during the second quarter, a period which marked the company’s 19th consecutive quarter of year-on-year growth. For the first time, Evolution also provided a breakdown of its revenue by geographic region, with the Nordics representing nine per cent of Q2 revenue and the UK 16 per cent. The rest of Europe accounted for 50 per cent of the total, with the rest of world the remaining 25 per cent. Regulated markets generated 31 per cent of Q2 revenue. The close of the period saw the supplier secure two significant contract wins in its home market of Sweden with state-owned gaming operator Svenska Spel and horseracing operator ATG, as well as the opening of a new live casino studio in New Jersey.
Stockholm-listed operator Kindred Group saw first-half results boosted by record customer activity during the World Cup, with revenue climbing 33 per cent to £426.8m, following a 43 per cent improvement in sports betting revenue to £199.6m. With increased contributions from 32Red, Kindred’s share of revenue from Western Europe increased to 56 per cent, up from 51 per cent the previous year, with revenue from the Nordics declining to 35 per cent (H1 2017: 40 per cent). Casino and games remained the operator’s biggest segment however, as revenue increased 28 per cent to £207.2m, while there was also year-on-year growth for online poker and other products which include bingo. Buoyed by a successful World Cup, total active customers increased sequentially by 12 per cent in Q2 to 1,550,508, from a total registered customer base of more than 23.6m.
“With half of 2018 behind us, I can state that we are continuing to deliver on our ongoing mission to continuously extend the gap between us and our competitors,” said CEO Martin Carlesund.
CHERRY 33% Net revenue (SEK)
Stockholm-listed gaming operator and B2B supplier Cherry saw revenue increase by
F I NA NC E
GIQ20 H1 2018
a third to SEK1,434m during the first-half period, including organic revenue growth of 32 per cent. Despite recent problems integrating ComeOn, the company’s B2C online gaming division represented 79 per cent of the H1 total as revenue grew 28 per cent SEK1,137m. The biggest year-on-year growth came from the Game Lounge online marketing segment, which outperformed the XCaliber gaming technology division. Cherry’s game development division, comprising investments in Yggdrasil and Highlight Games, grew revenue by 68 per cent to SEK124.3m, surpassing Game Lounge and the land-based Restaurant Casino division as the company’s second largest business segment. Following the board’s decision to terminate Anders Holmgren’s employment as Cherry president and CEO during Q2 as a result of insider trading charges, Cherry has begun a process to recruit a new permanent CEO which will include internal and external candidates.
THE STARS GROUP 29% Net revenue (US$) H1 2018
Toronto-listed The Stars Group is likely to feature among the top performers in the next GIQ20 chart once Sky Betting & Gaming’s revenue is included in its results, following completion of the landmark acquisition on 10 July. For now, the first half proved to be a fruitful period for the operator as revenue increased by 29 per cent to $804.4m, buoyed by the first contributions from its recent Australian acquisitions. Revenue from the Australia segment, including CrownBet and William Hill Australia, amounted to $72.4m (of which $61.3m was generated in Q2), while International revenue grew 18 per cent to $732m. This comprised a 10 per cent improvement in poker revenue to $462.9m and growth of 30 per cent in gaming to $208.7m. Betting revenue soared 129 per cent to $36.3m, offsetting a two per cent decline in other revenue to $24.2m. “The continued emergence of our sports betting and casino offerings and the addition GIQ Q3 REVIEW
of our 2018 acquisitions have transformed our business and greatly enhanced the foundation and diversity of our consolidated revenue base. This will now be nearly equally split among verticals and roughly 75 per cent locally regulated or taxed,” said chief executive Rafi Ashkenazi.
ASPIRE GLOBAL 29%
“The continued emergence of our sports betting and casino offerings and the addition of our 2018 acquisitions have transformed our business and enhanced the foundation of our consolidated revenue base” Rafi Ashkenazi, The Stars Group
Net revenue (€) H1 2018
Gaming supplier and operator Aspire Global is the eighth Stockholm-listed company to feature in the top 10 of the GIQ20 chart after another period of sustained growth, which saw revenue increase 29 per cent to €43.1m. Its B2B division recorded the biggest growth, up 32 per cent to €22.1m, and outperformed the company’s B2C segment which grew 26 per cent to €21m. A record second-quarter performance included the first contributions from its newly launched sports betting vertical, with its first partners Goliath and Nossa Aposta going live with an SBTech-powered offering during the period. The product will be launched with 75
F I NA NC E GIQ20 H1 2018
Kambi Group saw revenue increase 20 per cent to €34m and profit nearly triple to €3.2m
additional partners going forward, including its own Karamba brand, with operator BetRegal also agreeing to migrate to Aspire’s platform during the fourth quarter.
KAMBI GROUP 20%
Kambi signed three new customers during the quarter, including Stanleybet Romania and its first US deals with Rush Street Gaming and DraftKings. Alongside further agreements with Swedish horse racing operator ATG and Latvia’s national lottery Latvijas Loto, Kambi has extended its portfolio of customers to 21 in total.
Net revenue (€)
The Stockholm-listed sports betting provider made its first move in the US, with the launch of the DraftKings sportsbook in New Jersey in August. This followed a strong first-half performance which saw revenue increase 20 per cent to €34m and profit nearly triple to €3.2m. The culmination of the European football season and the start of the World Cup had a mixed impact on Q2 results, with the latter stages of the Champions League providing favourable results for players. The World Cup group matches delivered largely positive results for Kambi and its operators, with betting activity up to the end of June representing 19 per cent of Kambi’s Q2 turnover. 76
ZEAL NETWORK 15% Net revenue (€) H1 2018
Lottery betting Lottovate
Frankfurt-listed lottery specialist Zeal Network performed well during the first-half period as it posted a 15 per cent increase in revenue to €74.9m, driven by billings growth of four per cent and a reduction in the value of exceptional prize payouts to €8.3m (H1 2017: €15m). The operator’s continued focus on more
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GIQ20 H1 2018
efforts more efficient. However, it will still take time until we see sustainable improvements.”
Zeal Network launches Raffld lottery in the Netherlands
SCIENTIFIC GAMES 11% Net revenue (US$) H1 2018
efficient marketing investment delivered 293,000 new registered customers, an increase of 69 per cent year-on-year, with average billings per user in the lottery betting segment rising marginally to €55.62. Zeal launched the world’s first ‘experience’ lottery Raffld through its Lottovate subsidiary in June – the Netherlands’ first new lottery in nearly 30 years. Developed based on player feedback, the digital-only lottery gives players the change to win experiences they can share with their friends. Following the recent decision by the Australian Parliament to ban lottery betting, Zeal also confirmed that it has withdrawn its myLotto24 brand from the Australian market.
progress in some areas, including better efficiency and product upgrades, the operator still had a lot more to do. “We continue to systematically follow our back-on-track plan, which is a long list of actions that are built around four main areas: growth in core markets, product and technology efficiencies, and M&A activities temporarily on hold,” he said. “We continue to work hard with the ambition to make Betsson’s product offering more competitive and the marketing
New York-listed Scientific Games posted an 11 per cent increase in revenue to $1.66bn for the first-half period, with all four of its business segments continuing to experience growth and accelerating the company’s financial momentum. While there was single-digit growth from its core gaming and lottery segments, Scientific Games’ growing social and digital gaming businesses represented a combined 20 per cent of the company’s total in H1, of which $99.8m was derived from NYX Gaming Group. “Our core businesses are strong and ready to capitalise on the significant opportunities in the marketplace to drive growth by delivering great games and robust platforms, and systems that enable them,” said president and CEO Barry Cottle. “We remain focused on delivering results, maintaining our financial discipline and strategically investing in our future to maximise shareholder return.”
Net revenue (SEK)
Casino Sportsbook Other TOTAL
Net revenue (£) H1 2018
Stockholm-listed operator Betsson benefited from a record quarterly performance in casino, which surpassed SEK1bn in revenue for the first time during the second quarter. This pushed casino revenue up 14 per cent to SEK1.9bn during the first-half period, while the World Cup contributed to an 11 per cent improvement in sportsbook revenue. As a result Betsson posted revenue growth of 12 per cent to SEK2.6bn for the six-month period. Chief executive Pontus Lindwall said, however, that while there had been GIQ Q3 REVIEW
“We continue to work hard with the ambition to make Betsson’s product offering more competitive. However, it will still take time until we see sustainable improvements” Pontus Lindwall, Betsson
Focusing solely on its core real-money gaming offering following the sale of its social business for £18m in August, London-listed online bingoled operator JPJ Group reported a 10 per cent increase in revenue to £161.1m for the first half of 2018. This comprised a solid performance from the operator’s Jackpotjoy division as revenue increased by two per cent to £115.8m, reflecting strong growth in the Botemania and Starspins brands, while revenue from the Vera&John segment grew by 37 per cent to £45.4m due to a combination of organic growth and exchange rate movements. 77
GVC HOLDINGS 8% Net revenue (£)
Executive chairman Neil Goulden said that the first half of the year had seen a continuation of the strong momentum that JPJ Group has reported since listing in the UK in January 2017, and noted several significant milestones for the group during the period, including the company’s move to a Premium Listing on the London Stock Exchange at the end of July.
Therese Hillman, NetEnt 78
London-listed GVC Holdings continues to integrate the Ladbrokes Coral business into its growing empire, and tied up one of its biggest deals to date with an agreement with MGM Resorts to create a US powerhouse in July. For now, group revenue remains on the up and climbed eight per cent during H1. This included contributions from a positive World Cup performance and online growth of 18 per cent, as brands such as bwin and partypoker benefited from a pipeline of new products and high-profile marketing campaigns. “I am pleased to report this positive trading update while at the same time undertaking the integration of the Ladbrokes Coral business,” said chief executive Kenneth Alexander. “The strong momentum across the online bu si ne s s h a s c ont i nue d a nd me a n s we are well placed to deliver against our fullyear expectations.”
PADDY POWER BETFAIR
Net revenue (SEK)
Net revenue (£)
“During the quarter we started taking action in several areas to strengthen our customer offering, cut lead times and free up resources for new commercial projects”
New chief executive Therese Hillman remains focused on the turnaround of NetEnt, which has been struggling to sustain growth at the same level as previous years. While revenue growth slowed in the second quarter, the company still posted a 7.5 per cent increase in revenue to SEK867.3m, contributing to a 13.5 per cent rise in net profit for the first-half period. NetEnt signed 14 new licence agreements in H1 and launched casinos for 15 new clients. It also retains a healthy pipeline of clients with agreements with 28 new customers that had not yet launched. “During the quarter, we came up with a plan and started taking action in several areas to strengthen our customer offering, cut lead times and free up resources for new commercial projects,” said Hillman. “These changes are necessary for us to reassert our strong market position in online casino. I look forward to a busy autumn, focused on the turnaround of NetEnt, with improved efficiency and many new products and growth initiatives that all have players and customers in focus.”
It was a solid first-half performance from Paddy Power Betfair too, as growth across all of its business divisions helped revenue increase five per cent to £867m. The company saw an improved performance during Q2, with a 12 per cent increase in revenue offsetting a two per cent decline in Q1. First-half results were also boosted by strong trading during the World Cup, which contributed revenue of £23m in June and £45m for the tournament, which concluded in July. The company’s online division accounted for more than half of H1 revenue with £462m. “It has been a busy and successful few months for Paddy Power Betfair,” said chief executive Peter Jackson. “We have made substantial progress against our strategic priorities and trading in Q2 was good, with all brands and operating divisions contributing to the group’s double-digit revenue growth.”
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F I NA NC E
GIQ20 H1 2018
PLAYTECH 4% Net revenue (€) H1 2018 H1 2017
Total gaming B2B
The first contributions from its landmark acquisition of Italian operator Snaitech helped Playtech’s revenue reach €436.5m during the six-month period, although the company continues to be hampered by ongoing struggles in Asia. Snaitech contributed revenue of €61.3m for the period, but revenue from Playtech’s core gaming B2B division fell by 16 per cent to €285.8m, driven by a 25 per cent fall in casino revenue, following continued difficulties in Asian markets such as China and Malaysia. “Playtech has had an extremely busy first half of the year, with important operational progress and new licensee wins in key strategic markets, the UK, Europe and Latin America,” said chairman Alan Jackson. “This continued progress is resulting in higher-quality earnings for Playtech, with group revenue now 69 per cent regulated.”
WILLIAM HILL 3% Net revenue (£)
US US expansion
Alongside London-listed rivals Paddy Power Betfair and GVC, William Hill is well placed to benefit from the US sports betting explosion, with its US division already seeing strong revenue growth this year as H1 revenue rose 50 per cent to £36.9m. This contributed to a three per cent increase in group revenue to £802.6m, with online growth of 11 per cent offsetting a three per cent decline in retail, which struggled despite the World Cup. After incurring significant non-cash impairments of £915.9m in the retail segment following the UK Triennial Review, the company posted a net loss for the period of £799.5m. “William Hill has performed well during the first half of 2018 and, following major regulatory decisions in the UK and US, we now have greater clarity over the challenges and opportunities that lie before us,” said chief executive Philip Bowcock.
“Following major regulatory decisions in the UK and US, we now have greater clarity over the challenges and opportunities that lie before us” Phillip Bowcock, William Hill
C O LU M N AND ANOTHER THING...
Tougher than the rest OPINION
International betting companies get a harsh lesson in politics, while the US technology engine has yet to fire up properly
“Apps have to be more than transactional, they have to be a gateway to the casino” 82
ow, with the federal ban formerly known as ‘PASPA’ a distant memory, legal US sports betting is off and running in a handful of adventurous early states, with solid casino gambling and horse racing licensees eager to sell market access to deeppocketed British and Irish bookmakers. Sure, there are a couple of ‘Americans’ in the market – FanDuel and DraftKings – but the former brand seems to be merely the hood ornament for the Paddy Power Betfair express, and the latter is still trying to get their Swedish betting platform to understand such complex mathematical concepts as baseball. New Jersey has finally become the Promised Land of Springsteen’s songs, and is approaching 10 legal brick and mortar sportsbooks as we near football season. And as of this writing, there are eight mobile offerings for those that don’t want to head to the shore or brave the swamps of North Jersey to get in on those NY Giants Super Bowl futures (the greatest bonfire of cash since the Joker lit up in The Dark Knight). But it seems like no one is particularly happy. Everyone wants more. Now! The initial figures in New Jersey were not earth-shattering. No one has released any polling yet to gauge the level of awareness among the state’s residents that, indeed, sports betting is now legal, but I’m willing to guess it is not as high as you might imagine. The part that remains unspoken is that NJ residents did not lack avenues for betting on sports before this summer. While the industry press applauds the regulated market, folks who’ve been using Bovada’s mobile site for years just shrug and point out the better prices on MLB games they’re getting from ‘the bad guys’. Sure, NJ’s chief gaming cop David Rebuck has named Bovada “Public Enemy No.1”, and has vowed to shut them down, much as his efforts after NJ legalised online poker and casino drove dark market operators to block players from the Garden State. But while he trains his sights on the moving target that is Calvin Ayre, Mr Rebuck might consider a talking-to with his state’s newest bookies, who have been quick to 86 successful early bettors from their establishments, in keeping with their practices on the opposite side of the pond. Said operator has also featured pricing that has had the sports betting Twitterati guffawing at how much more attractive the action is from the guys “in the islands”.
In the meantime, as the other states get in gear, there is a lot of glass-half-full talk. In Mississippi, they have launched sports betting in the middle of the Bible Belt, but rather than celebrations we get, “Yeah, but there is no mobile betting.” It is only available in the casinos, just like in Delaware and Rhode Island. West Virginia will eventually offer mobile and online betting, but not at first. Howls of “We’re never going to reach full potential without mobile betting” coming from operators and their transatlantic partners have been heard by lawmakers who are, I can tell you from personal experience, quite immune to suggestions of “this is how it’s done in Europe”. Most state legislators do not respond well to implications that they are not sophisticated enough to understand the importance of mobile betting to continued success. They read the annual reports and market research suggesting that mobile is cannibalising the retail business. And the projected UK high street shop closings are exactly the kind of thing that US commercial casinos, tribal casinos, racetracks and lotteries fear, and will use to put the brakes on expanded digital access in future states. Remember, the US gaming market is nothing like the UK or European gaming market, where casinos are small-time by comparison. States authorise casinos not just for the gaming tax revenue, but because their construction creates thousands of jobs. They are quasi-government infrastructure and job-creation programmes. Mobile apps outsourced to international betting companies that create very few jobs in their new state homes by comparison don’t have quite the same political draw. Fear not. Mobile betting will come soon enough, even to the early retail-only states, but only if operators can contribute to a strategy that uses mobile not only as a revenue channel, but an extension of the casino partner’s core acquisition and CRM. Betting apps have to be more than transactional, they have to be a gateway to the casino’s entire offering. Oh, and that rumbling you hear in the distance? That’s the US technology engine starting to get revved up. They’ve taken a glance at the product, they are less than impressed by what they see, and they’re getting into the race. We’re just getting started in the US, but... Baby, we were born to run. n Joe Brennan is CEO of SportAD, which operates fantasy sports/betting hybrid FastPick
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