Oct – Dec 2019
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• OCTOBER – DECEMBER 2019 • ISSUE 39
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
New William Hill CEO gives first interview as bookmaker assumes market leadership Stateside Read the big interviews with Penn National, GVC Holdings and SAZKA Group
WHERE THE BEST GAMES COME TO PLAY
GREENTUBE INTERNET ENTERTAINMENT SOLUTIONS GMBH email@example.com www.greentube.com
LEADER Q3 REVIEW
4 Snapshot Top stories, top quotes and deal of the quarter
6 Thought Leadership Scientific Games, SBTech, Sportradar, Aspire Global, Pragmatic Solutions and DWG
19 People Merkur Gaming’s Mathias Dahms on his new role; plus new appointments at BCLC, Penn National, William Hill and more
22 Games A look at the quarter’s best new games
24 Technology Amelco and the leading sports betting suppliers; plus new tech launches
33 Marketing GVC, Paddy Power and marketing responsibly; plus all the latest marketing news
38 Lottery SAZKA Group CEO on the secret behind the fastest growing lottery group; plus news from around the world
44 Legal & Regulatory Puerto Rico prepares for sports betting; plus all the latest legal developments from around the world
50 US SPORTS BETTING SPECIAL William Hill CEOs on the US and beyond; Penn National across the nation
62 Finance Special report on US states’ wagering revenues; and the GIQ20 H1 2019
78 And another thing…. Joe Brennan casts his eye over the emerging US market
EDITOR IN CHIEF Bobby Mamudi firstname.lastname@example.org
DEPUTY EDITOR Kio Dawson email@example.com
EDITOR Steve Hoare firstname.lastname@example.org
CONTRIBUTORS Jon Harwood, Joe Brennan
SUB-EDITOR Camilla Cary-Elwes email@example.com ART EDITOR Alan Bingle firstname.lastname@example.org
GIQ Q3 REVIEW
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E D I TO R
A TOUGH GIG T IS A strange situation when companies switch chief executives. Everybody tends to be very polite about the outgoing boss – praising his achievements, while accepting the need for change. In the case of William Hill, outgoing CEO Philip Bowcock was thanked by chairman Roger Devlin for guiding the bookmaker through “a period of unprecedented change”. He had to deal with one of his leading shareholders trashing a merger with Amaya (now The Stars Group); a political battle around FOBTs that had been fought so badly that defeat was inevitable; and a loss-making Australian operation. Meanwhile, rivals were merging all over the place to leave William Hill looking decidedly small. William Hill’s market cap of £1.6bn falls way below Flutter’s £5.9bn and GVC’s £4.2bn. Apart from the latter situation, Bowcock had largely ‘fixed’ those outstanding issues, only to be rewarded with his severance package. Some say he declined to commit to the company for the next five years and others suggest he was not too unhappy to leave after such a traumatic spell in charge. However, the change in tack from leisure industry finance man to tech-focused internationalist and all the talk of succession planning suggests Bowcock’s time was up.
The appointment of Ulrik Bengtsson is a curious one. His time in charge of Betsson was like a game of two halves. The first half he was chief of the company’s operational arm in Malta and the second half he also took charge of the group HQ. His performance could be best summarised in the words of Swedish compatriot Sven-Göran Eriksson, who was mocked for his less than illuminating analysis of England football games as “first half good, second half not so good”. Bengtsson is a steely character, who does not suffer fools gladly. After his removal, Betsson execs talked about “getting the Betsson culture back”. At Hills, Bengtsson will need to foster a culture that says “international technology company”, rather than “English bookie”. That will not be an easy transition. Bengtsson will need to be backed by a board that does not have those credentials. He will need new lieutenants who are sensitive to change, while driving it through. There is much talk of Eldorado making a move for William Hill once it has digested Caesars. It ticks the international box, but does not scream “modern technology company”. Perhaps DraftKings is a better fit? Some big decisions will need to be made during the first year of Bengtsson’s reign. Can the board be relied on to make the right ones? firstname.lastname@example.org
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GIQ Q3 2019
Snapshot Therese Hillman, NetEnt
most popular news stories on GamingIntelligence.com GVC exits Spanish retail market Netherlands regulator releases AML guide NetEnt swoops on £220m Red Tiger SAZKA makes €2.06bn bid for full control of OPAP BNP Paribas takes minority stake in France Pari Better Collective acquires $20m US sports affiliates Intralot sells Hellenic Lotteries stake to OPAP Net Gaming acquires Max Free Bets Robin Reed steps down as CEO of Gaming Innovation Group UKGC suspends EveryMatrix licence
Quote of the Quarter When William Hill came to Nevada, brand awareness was one per cent, because one per cent of the people were familiar with a winery in Northern California called William Hill!” William Hill US CEO, Joe Asher (page 50)
NetEnt seeks new beginning with £220m Red Tiger deal
OF THE QUARTER
NETENT ACQUIRED RED Tiger Gaming for £220m and has seen its share price rise 30 per cent since it announced the deal on 5 September. The deal immediately added lustre to a NetEnt brand that had faded somewhat in recent years, following a period where it seemingly could do no wrong. Red Tiger is a games supplier in the ascendancy, with its innovative approach to player engagement. Together with the likes of Big Time Gaming and Blueprint Gaming, it has been stealing market share from established suppliers such as NetEnt. The all-cash transaction will see NetEnt pay an initial consideration of £197m for the business, with an additional £23m becoming payable in 2022 if certain conditions are met. The maximum price of £220m payable by NetEnt represents a 12x multiple of Red Tiger’s current year EBITDA, and NetEnt expects to book transaction and financing-related costs of SEK55m (approx. £4.6m) in the third quarter. Red Tiger was launched by Nick Maughan as recent-
ly as 2014 after the sale of his previous business Cayetano Gaming to Paddy Power. The company’s growth rate has been phenomenal. Backed by a speed of game build and integration that the likes of NetEnt have been watching with envy. Since being elevated to the role of chief executive officer 17 months ago, NetEnt’s Therese Hillman has been preaching a gospel of working smarter and faster. There are few in the industry working smarter and faster than Red Tiger. Hillman will hope that knowhow is institutionalised before Maughan is off to create his next insurgent business. Red Tiger’s UK presence was a large part of Hillman’s explanation for the acquisition, and the supplier moved to bolster its presence in the world’s most saturated market with the announcement of a new London office towards the end of the quarter. Saturated it might be, but it is also NetEnt’s largest market. The shiny new office in King’s Cross, London’s fast-growing business area (also home to Google, Facebook and more), is another sign that Hillman is pulling out all the stops to make NetEnt the shining star that it has been for most of its existence.
GIQ Q3 2019
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The US has some catching up to do Q2 is traditionally a fairly slow news month but a glance down the numbers in the column to the right of this article reveals a great deal about the state of the industry THE MOST GLARING numbers are the ket for over two years but its potential was not H1 revenue figures for the US state of New enough to keep him in his job (see interview, Jersey and those of UK-based bookmaker page 50). GVC Holdings. A look at the figures to the right reveals The state of New Jersey is fast catching up a £5.9m GVC settlement with the UK Gamwith Nevada as the number one bling Commission for complidestination for sports betting. ance failures and 104 internet Nevada still leads by a fair way, You do not need domain names blacklisted in with $132.5m H1 revenue comSwitzerland. None were GVCto do the dollarpared to New Jersey’s $109.6m, but these blacklists pound conversion related but New Jersey’s growth in just – common in Eastern Europe – 18 months is extraordinary (see to register the often feature GVC-owned bwin. page 62 for more detailed analy- difference between These regulatory actions sis). Given the huge number of GVC’s £1.8bn and are becoming more commonsportsbooks in Nevada (191) Nevada’s £109m place. And the Gambling Comcompared with New Jersey’s mission’s fine is more than 15 apps and ten retail books, GVC earned in the whole of the it is clear that Nevada’s casinos need to up US in H1. This is the here and now that new their game. William Hill CEO Ulrik Bengtsson will have While the local rivalry is interesting and to manage if he is to last longer than Bowcock. indicative that the ‘mature market’ ain’t that mature, it is a far more arresting statistic that the UK’s largest bookmaker, GVC Holdings, reaped £1.81 billion in H1 revenue. You do not need to do the dollar-pound conversion to register the massive difference. GVC is a global operator with significant operations in the UK, Germany, Italy, Australia and Brazil, among others. The combined population of those countries is significantly more than 9m-person New Jersey but GVC is but one operator competing in those markets. The US is very much an emerging market. GVC (in one form or another) has been present as an online operator in markets such as the UK and Germany for over ten years. GVC chief executive Kenny Alexander once said memorably that he only needs to go to Vegas on a stag weekend for the share price to skyrocket. His (now former) counterpart at William Hill, Philip Bowcock, has been trumpeting the potential of the US marGIQ Q3 REVIEW
The quarter in numbers M&A
NetEnt deal for Red Tiger Gaming
€2.06bn SAZKA bid for full control of OPAP FINANCE
New Jersey H1 2019 sports betting revenue
GVC revenue in H1 2019 LEGAL & REGULATORY
Internet domains blacklisted in Switzerland
GVC settlement with UKGC for historic compliance failings LOTTERY
Lottery concession wins for Sisal (SuperEnalotto and Milli Piyango)
US states without a lottery as Mississippi nears launch PEOPLE
Years in charge of Gaming Innovation Group for Robin Reed before departure
Months at William Hill for Ulrik Bengtsson before being handed CEO role 5
S P O N S O RE D E D I TO RI A L SCIENTIFIC GAMES
Meeting players How do lotteries attract new players and retain existing players asks Jennifer Welshon, Scientific Games’ senior vice president marketing
level of desire to fulfil those whys, and let them know there are games they’ll enjoy.” Scientific Games uses motivational-based segmentation to guide lottery marketing programmes. One lottery’s segmentation study identifies eight segments of consumers whose behaviour to play or not play is driven by entirely different motivations.
WHILE THERE ARE many complexities, Scientific Games’ global Marketing & Insights team has experienced three core principles of marketing that led to their customers’ success: understanding the why behind behaviour, making sure the lottery offers and creates awareness of products that meet those whys, and implementing a robust mechanism to track and engage these efforts.
#1 Motivation ignites behaviour In the US, 70 per cent of adults play a lottery game annually and 52 per cent play monthly. That’s an impressive number of engaged consumers. So, what’s different about non-players? Jennifer Welshons, SVP marketing at Scientific Games, breaks it down. Why do some people buy lottery games and some don’t? What inspires that buying action? To motivate that action, we need to understand what happens BEFORE the behaviour takes place so that we can create and market game entertainment consumers want.” On the surface, the difference between a player and a non-player is a behavioural act: either I’m purchasing a lottery game or I’m not. To understand players, Welshons uses a framework that makes sense of a lot of disparate information. “Most in our industry look to classic groupings of players – or segments – like gender, age, life stage and behaviour. All have relevance in marketing, but they don’t get to the heart of the why,” she says. “Why someone buys a lottery game is grounded in their personal motivation of the experience they value from that product.” “We cannot look at behaviour alone – purchase or no purchase – and assume non-buyers are a homogeneous group. There are lots of whys behind the act of not buying,” explains Welshons. “Lotteries trying to motivate less engaged players must determine the group’s whys, gauge their 6
Of these player segments, the four in blue represent significant opportunities for the lottery based on the whys of the people in these groups. The four grey segments represent more limited opportunities because of their whys, which are either less subject to influence or focused on other areas of life. To engage this group, the lottery must determine the cost of acquisition and likelihood of retention to assess their lifetime value. A simple example of how motivations link to behaviour is comparing players in Segment 2 to Segment 7. Segment 2 dreams of a better life – not ideal or wealthy – that is more stable and consistent. They get more out of playing several types of lower-value games with the hopes of winning something that may pay off a bill or provide extra for that month’s budget. Meanwhile, Segment 7 is interested in winning, and winning big, it’s all about cash to fulfil dreams of a wealthy lifestyle. While both groups may spend $10, their motivations and product choices are different.
“With motivations as the main classification of segment grouping, behaviour should be layered in to see the non-playing behaviour in context,” shares Welshons. “Breaking out behaviour, we see how every segment is represented in what are considered lapsed and non-player groups. We can demonstrate why single-minded marketing tactics aimed at non-players may be futile.” Looking at Segment 3, which was already identified as a valuable segment to this particular lottery, there are an equal number of people from the segment playing as not playing. This shows there are consumers not engaging in buying behaviour who have the same desired experience from a lottery product – fun, small splurge for a little extra cash. For some reason, these non-buyers aren’t inspired to activate purchase. Once the lottery knows this, it can dig deeper into appealing to this segment.
S P O N S O RE D E D I TO RI A L SCIENTIFIC GAMES
at their ‘why’ Similarly, the highest-value player segment identified has 30 per cent of people engaged sometimes or not at all. Are they perhaps unaware that the lottery offers products they would enjoy? This leads us into Scientific Games’ second core principle.
#2 Behaviour a function of demand Latent demand refers to demand for something that consumers cannot satisfy for three main reasons: they don’t have enough money; the item is not available; or they don’t know the item is available. If latent demand exists, the buying action does not take place. Considering reasons two and three, does the lottery industry offer products for all interested consumers? Or perhaps there are plenty of spot-on products, but the right consumers don’t know they exist? Could it be that some of the non-playing behaviour is a function of latent demand? There is no doubt that Americans are obsessed with instant gratification. It’s evident in the US instant game category, which crossed the $50 billion retail sales mark in late 2018. Growth has come because more products are available in the market, and there are products that satisfy highly engaged consumer segments.
GIQ Q3 REVIEW
For the industry as a whole, instant games launched and total units have remained static over the past five years. However, total games in market and retail sales have grown. Many lotteries have embraced a model of keeping staple games in market for consistent success. This means reduced game launches, which may mean reduced choices for certain consumer segments. For lotteries seeking a mid-to-high investment experience, the industry has met expectations and it has paid off. “Instant products continue to flourish because they are relevant in an instant gratification society,” Welshons points out. “Understanding the instant win experience – whether print, digital or promotional – is what Scientific Games has spent decades studying.” Welshons predicts that as instant gratification continues to permeate and digital dominates, lotteries must continue to push boundaries. But there are questions. When 87 per cent of daily instant scratch game players play video games, how do lotteries remain relevant and offer complementary products? And with eSports as the emerging rage in gaming, what can lotteries do to use this and enhance their portfolios to meet consumers at their why and drive behaviour? You can’t reach everyone the same way, even if their motivations to play are the same. More traditional consumer views can be added to help
create a solid process for product development and marketing planning to reach both current and lapsed/non-players. By understanding the ‘why’ being fulfilled when someone hands over money for a ticket, lotteries can understand what to offer, when to offer and how to communicate the offer. The final consideration is making sure all of these efforts worked.
#3 What got you here, won’t get you there Measurement is the only way to gauge success and this requires change for some lotteries. “Even when a lottery understands the motivations of segments in its market – and offers products that satisfy those motivations – there still must be a mechanism to track and measure the resulting behaviour,” says Welshons. Comprehensive players’ clubs have become crucial to success. The Maryland Lottery’s My Lottery Rewards™ (MLR) programme is a good example of value alignment. Prize offerings were improved with the addition of digital content like e-gift cards, bringing MLR in line with robust loyalty programmes in other industries, e.g. Starbucks. This resulted in upticks of daily active users and the retail values of tickets entered. The Maine State Lottery is another example of solid measurement, as its Reward Me Lottery Club has brought in new users. Big jumps in player registrations occurred when the lottery added draw game entries and then again during a large Mega Millions jackpot period. The lottery continued to retain many of those new players from the jackpot well after the jackpot was hit, with record-high monthly active user rates for the subsequent several months. This exemplifies that these new members have exhibited behaviour (joined the club) but for a different motivation than existing members (they engage during big jackpot runs). “There will always be a need to adjust the ways that lotteries attract and retain players. What’s most important is understanding that the fundamentals don’t change, just the way you go about them,” she points out. After 20 years and thousands of consumer studies for lottery customers, there’s a reason her motivational segmentation approach to attracting and keeping players is working. n 7
S P O N S O RE D E D I TO RI A L SBTECH
Going with growth SBTech business development director James Coxon looks back on a busy 18 months since PASPA’s milestone repeal, and delivers a personal view on his own company’s progress across the globe
IF WE THOUGHT the industry was fast-moving 15 years ago, when I first started in betting and gaming, we were wrong. It is now moving quicker than ever before. I am constantly travelling from one country to another to discuss the opportunities that exist for tier one brands in regulated and newly regulating markets today. After 12 years in business, SBTech is undergoing huge positive, transformational change and for all the right reasons. Over the last decade we have all had to adapt to a vast number of market changes, but now that change is on our own terms, thanks to a combination of rapid regulated markets growth and our success in winning some of the biggest gaming and lottery sportsbook platform technology deals in the last 18 months in the UK, US and the Nordics. We created history in August last year by becoming the first supplier to announce sportsbook technology partnerships in the newly regulated US market, with Churchill Downs, Golden Nugget and Resorts Casino, just weeks after the repeal of PASPA. Since then, we have rapidly become the go-to sportsbook platform supplier, having won a series of major public procurement processes due to our innovative, proven, revenuegenerating platform and sportsbook technology that is recognised as the number one for speed to market, localisation and flexibility. This includes winning the contract for the Oregon Lottery, the largest in the US to date, and launching one of the most significant new brands into the competitive UK market in May this year – powering Gamesys’ new sportsbook brand Virgin Bet after agreeing a landmark fiveyear full-platform deal. My appointment as business development director in April was – and continues to be – part of a larger ongoing recruitment drive across the business to employ the best talent in the industry. This is all to do with scaling the business in line with our rapid growth, at the same time as ensuring we continue to offer exceptional products and services to our existing customers across 15 regulated markets. The business is rapidly maturing and naturally moving into a more corporate phase. This is all part of our growth strategy. We are deliberately maintaining a great balance of being both an entrepreneur-led business
alongside introducing a host of new policies, procedures, rules of engagement, due diligence and KPI management. We’re taking all the good parts of a blue chip global organisation but keeping the drive and passion alive in all that we do. Both existing and potential customers can see that, hence our winning position in so many recent large procurement processes. Customers don’t want to deal with a slowmoving business, they want a technology partner that understands what makes them and the markets they are in tick. We spend a huge amount of time with customers, as well as their end consumers,working on exactly the right solution for them. What are their specific attributes and how can we help them as a B2B provider? We select the right solutions within our toolkit to drive revenues forward in a responsible manner. This is so important in today’s market. We offer our partners a range of iGaming and sports betting solutions, but in a responsible and compliant way, supporting their return on investment back into local communities and good causes. CSR is becoming increasingly important and we’re seeing that in the many RFPs we work on. We take great care in ensuring our product offering and processes are compliant and responsible, and that we are the right partners to deal with. We’ve had a huge amount of success with that. Let’s not forget that our success and growth has also been down to our proprietary product solutions and innovations such as PulseBet, ActionBet, Exploding Jackpots and Betbuilder, as well as the customisation and personalisation we offer – making sure solutions are unique to specific markets, understanding what clients want and building it, especially around areas such as bespoke trading solutions. The market is entering a more responsible and mature phase, with personalisation and differentiation driving product development, however we have been ahead of that curve for some time. For us it is now about continuing to win further tier one, regulated market contracts, and following a structured, long-term growth plan with the right systems in place to forecast deals coming in and the best ways to resource them. The industry may be changing, but there’s one thing we will never change, and that is our passion for creating memorable experiences for both operators and their players. SBTech will be attending G2E Las Vegas, 14 to 17 October 2019.
S P O N S O RE D E D I TO RI A L SPORTRADAR
Driving engagement Sportradar managing director for sports partnerships David Lampitt explains how the company’s new partnership with the NFL will benefit customers and operators alike
THIS YEAR’S NFL season is set to be an all new ball game. When the teams run out for the opening weeks of this year’s regular season, fans in the US will not only be able to witness the action but play a part in it too, in states where wagering has been legalised. With the popularity of American football across the world, this is a huge opportunity for licensed bookmakers worldwide. The US has stepped into the industry at a time when technology has advanced sports betting and statistics to the point where fans can become immersed in the game more than ever before. Gone are the days where sports betting was simply about guessing the end score or winning team. One of the many benefits of the US opening to legalised betting is that the saturation of statistics there means more opportunities when it comes to wagering. US sports leagues are ahead of the game in terms of sports data and statistics, and utilising this in ways that engages fans in a reciprocal relationship that entertains and drives commercial gains. The NFL, for example, has invested in player and ball tracking innovation with its Next Gen Stats (NGS) for analysis and to enhance fan experience. With around 250 devices in a venue for any given game, and player pads tagged with chips, NGS is able to capture a lot of data at granular level.
Granular level of data Since 2015, Sportradar has been the exclusive distributor of the NFL’s proprietary NGS player tracking data and the league’s official playby-play statistics. Now, thanks to our recent partnership expansion with the NFL, we can officially distribute this data to licensed sports betting operators in the US and internationally where sports betting is legal and regulated. Apply this granular level of data to wagering and you can create a whole set of fast and reliable outcomes for customers to bet on, and therefore a whole new level of engagement. This goes hand-in-hand with the latest technology, like the second screen experience and personalisation that is being utilised to bring supporters closer to the game, their favourite teams and players. In regions where live, inplay, mobile and online betting is allowed, this gives fans, no
matter where they are, the opportunity to guess not only how the match will play out, but what their favourite player will do next. With the celebrity status of some of the US sports leagues’ top players, this is likely to be popular among customers, whether they are regular bettors or not. The benefit of Sportradar’s deal with the NFL then is not only the access to distribute data, which guarantees speed and accuracy for clients, but also the ability to enhance the level of engagement for the NFL and licensed operators.
Creating new markets Through our partnership we will continue to work with the NFL and their NGS to create more of such opportunities, which can also help build understanding and reach of the game as well. As we do for all of official data partners, we will utilise official NFL data to continue to create new betting markets. For player markets, for example, this already includes passing yards, passing touchdowns, carries, rushing yards and receiving yards. Our Quantitative Team has also created a whole new set of detailed wagering markets for the NFL, with everything from first drive result, total touchdowns and total field goals, to yes/no markets (such as ‘Will either side score three consecutive times without reply?’ and ‘Will there be a two-point conversion?’). As you can imagine, with the number of stats available in NFL this can and will be expanded even further. When you give customers many options for a game, you not only increase interaction levels but also enjoyment levels. At the same time, by allowing customers, both old and new, to discover these markets, you increase knowledge of the game, which for an intricate sport like NFL, can help it to grow even further in popularity among global audiences. Coupled with live audio-visual (AV) game feeds to select international markets, which are also included as part of Sportradar’s partnership with the NFL, you get more eyes on the game across the world. This not only adds to the entertainment for punters as part of a sportsbook, but can enhance the growth of the sport itself. Utilising our market-leading trading and risk management, Managed Trading Services (MTS), operators will have peace of mind knowing Sportradar’s cutting-edge technology around any sport, including the NFL, is monitored 24/7. n
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S P O N S O RE D E D I TO RI A L ASPIRE GLOBAL
¡Ay Karamba! Aspire Global CEO Tsachi Maimon talks about the company’s recent €13.1m acquisition of Pariplay, the stunning growth of Aspire’s B2B division and the progress of its flagship brand Karamba Revenue from B2B grew 70 per cent during H1. What is driving this? It is satisfying to see the hard work that we have done in the last two to three years paying off, not only from a product development perspective, but also with the partners who choose to move forward with us. Our latest partners to launch are Vipps Casino and Digibet. We are confident they have strong, experienced teams leading them and we have high expectations from their operations.
How does Aspire differentiate itself from other B2B suppliers? We have several ways of differentiating ourselves. First, a number of our competitors decided to close down their white label operations. They saw it as a burden that they couldn’t manage in a successful way. So we picked up clients and new business that way, but if anyone thinks this meant new sites were easily added to our network, they are mistaken! The fact that those competitors closed down their white label activities showed that working as a white label supplier is not simple or easy, and attention to detail, efficiency, technical excellence, lots of hard work and patience are required to be successful in this field. The fact that we operate in several regulated markets and have the ability to provide our full turnkey services at reasonable and fair prices (especially in regulated markets) has been another key to our success. The level of activity in non-regulated markets will continue to reduce over time, so operators must find ways of working in regulated markets. We enable them do this and generate margins and profits. GIQ Q3 REVIEW
What are your fastest growing B2C brands? Without a doubt it’s Karamba. On the consumer side of Aspire Global, it is where we put our focus and all of our attention.
How is the Aspire team structured with regards to B2B and B2C? We created a B2C team that is solely focused on Karamba, but is completely separate from the B2B division. This ensures complete separation between the B2C and B2B divisions, and the Karamba team is like an internal partner or client of Aspire Global’s B2B services.
Which markets are you present in, and how do you overcome challenges in markets such as the UK and Sweden? Can you help B2B clients overcome these challenges? It’s an important question and topic. We are focusing on regulated markets and are present in Denmark, UK, Ireland, Portugal and more. Each market presents different challenges. Some have new technical requirements that affect the player flow, some have very high gaming taxes and duties, while others will have more restricted offerings. We have tailored our approach to each of those markets and are able to provide a full service for each one.
ations. We will also be able to sell our proprietary games outside our platform and expect to grow B2B sales through this business line called ‘games’.
You mentioned Pariplay’s New Jersey licence in the acquisition announcement. How do you intend to approach the US market? Pariplay already has the licence to operate in the US market, which is a major advantage over other games aggregators and studios. We believe it will act as a spearhead for any potential future operations Aspire Global might want to set up in the US . Pariplay is currently in talks with a number of prospects to sign its first deals in the US, and through these agreements will expand into this important market.
How do you see Aspire evolving in the future? Our vision is to enable our partners to achieve their full potential. There are many ways of doing this: launching more partners; enabling them to offer a larger product portfolio with additional verticals; and launching into more markets. Our partners are part of our roadmap and future vision, and will play a key role in both Aspire Global’s growth and their own. n
Why did you acquire Pariplay? Will it complement your B2B and B2C efforts? Pariplay has an important and strategic position in Aspire Global’s operation. It will enable us to increase our presence across the value chain of the iGaming industry. Pariplay will also save costs, through synergies and smart commercial moves within Aspire Global oper-
“The fact that we operate in several regulated markets and have the ability to provide our full turnkey services at fair prices has been another key to our success” Tsachi Maimon, Aspire Global 13
S P O N S O RE D E D I TO RI A L PRAGMATIC SOLUTIONS
The new generation of iGaming platforms The iGaming industry is moving at a fast pace, with huge technological changes. Pragmatic Solutions business development director Mark Woollard talks about a new generation of iGaming platforms that can move at pace and keep up with these changes THE IGAMING LANDSCAPE is focused on platform can proudly guarantee a fast delivery having a standout product which leads to better time and a high-quality output. customer acquisition when compared to your competitors. There is no better way to stand Obtaining certifications out from the crowd than being innovative and Another challenging matter, in terms of evolvbringing flexibility into the picture. This is ing as an iGaming platform and expanding to why each iGaming operator should brood over new territories, resides in obtaining certificathe benefits of using platforms with a faster and tions. With compliance laws becoming tougher, more flexible architecture, switching from legservice broadening is difficult. Pragmatic acy platforms to a more open recently certified its platform approach. The busy market in the UK and Sweden, two sets harsh conditions and markets with tremendous â€œThere is no better that pushes iGaming platpotential that will open many way to stand out form providers to change and doors. The UK and Swedish from the crowd than certifications are in addievolve rapidly. being innovative This is where Pragmatic tion to the existing ones for Solutions steps in, pushing Malta, Curacao and GLI-19, and flexibleâ€? through all the challenges which covers the majority Mark Woollard, and holding fast to all current of checks for territories like Pragmatic Solutions requirements, but always leavthe US, Canada and several ing room for new changes. Pragmatic Solutions European countries. This demonstrates how is an iGaming platform (player account manwe strive to adapt to any market conditions. agement system) for regulated markets, and it Moreover, the iGaming platform is set to started its journey in 2013. expand to other markets like Denmark, Italy The platform focuses on its core product, and Spain in the near future. These offering a flexible API-based common wallet strategic steps forward, combined system that is integration focused; capable of with Pragmatic Solutionsâ€™ moduproviding dynamic segmentation; advanced lar approach, ensure a fast market business analytics, risk, fraud and product entry. management; front end and CMS; transaction processing; and player and campaign manageInnovation and adaptation ment, among other product features that prove Long-standing iGaming platforms our success and reliability for clients. Considerhave built a great reputation for ing its features, rapid evolution and stated valthemselves, but there is a challenge ues, Pragmatic Solutions can be placed in the they have to tackle: adapting to change. new generation of iGaming platforms. Pragmatic Solutions has the right architecture to manage difficult Flexibility is the pillar of operations migrations from legacy platLack of flexibility is perhaps the biggest impediforms, which can sometimes ment in the iGaming industry, because it brings seem like a project too large many limitations to the table. iGaming operators to tackle. This is one of the need a solution that is API-based and modular, many examples where which allows for shorter integration times and using a modular, agile better scalability. platform saves operators Pragmatic Solutions is fully API-based, hava lot of time (and trouble). ing over 250 APIs available. Thanks to this, the The approach drives GIQ Q3 REVIEW
Pragmatic Solutions into the new markets mentioned before, not only for old operators but also new ones that strive to obtain quick, customtailored results. The iGaming market relies on a wide range of player experiences, with each operator trying to give players the best experience possible. Once again, Pragmatic Solutions aligns with the requirements by offering extensive front-end features. By using the platform, operators can choose from a variety of UI templates or ask for a bespoke design. Consequently, they can enjoy custom front-end configuration and distinguish from other operators that may use ready-made templates instead. Because Pragmatic Solutions has both in-house and third-party CMS, as well as custom APIs with included content, payment and service providers, it allows operators to keep full control over all aspects of the business.
Preparing for upcoming challenges The changes the iGaming industry faces are inevitable, and the best way to address the situation would be to learn from these changes and become proficient in predicting them, based on how technology evolves, as well as what people want. Pragmatic Solutions is prepared to adapt to future demands. More certifications are on their way and all resources are directed towards making our core product the best. We analyse each market we plan to expand in, learning about its requirements and adapting to it. Pragmatic Solutions can meet the expectations of operators who want to expand a nd succeeds through highgrade products, modernisation, rapidity and scalability. n 15
S P O N S O RE D E D I TO RI A L DWG
You do the math Design Works Gaming (DWG) UK chief executive officer Andy Harris urges us to ignore fancy graphics and focus on math models
THERE HAS BEEN a lot of discussion in the industry lately about the improvements being made to games and the direction in which it should go. After nearly 25 years in the industry, I hope I have a pretty good understanding of the crucial elements required to make successful slot games. Luckily, Design Works Gaming (DWG) sides with me on the most important of all: that it’s the mathematical model which truly drives the game. Looking back at the industry’s top-performers over many years, it is hard to find even one slot that has succeeded due to its amazing 3D graphics and animations. Time after time it has been the games with the best math models that top the rankings. People will argue that these older games are popular simply because they were around when there wasn’t so much competition, or because the capability to produce Pixar-like ‘productions’ didn’t exist then. You only have to look at the majority of more recent successes in the industry to see this simply isn’t the case. The games that bring players back time and again are those that feature the most engaging math models. In recent times, the significant move towards mobile has accentuated the importance of math models. Although the capacity and capability of these devices continues to improve, they still can’t process games filled with 3D graphics and lots of animations effectively and still maintain an acceptable player experience. That is even more pertinent in certain emerging markets, where the most popular mobile devices are less advanced. Therefore, the onus should never be on these front-end elements of the game alone. Using my children as a reliable barometer, I watch them initiate
and consume media at such an alarming rate, with any delay in consumption resulting in instant shut down. As generation Z become adults, game loading speeds and a game’s capability of gaining and holding a player’s attention will only increase in importance. My belief in the significance of a game’s math is what drew me to DWG. The company has a massive focus on building compelling models and a huge hunger and appetite to use their data to ensure they are continuously improving them. They’ve made a strategic decision to make sure they benefit from the data they collect in ways others don’t. In the land-based arena, DWG spent time using that data to refine and innovate its models and make them more engaging. They then leveraged their position as an operator of social casinos, utilising large volumes of player data and behaviours, to help inform new math models and test hypotheses. This has allowed them to deliver continual improvement to the commercial performance of the content. Furthermore, they introduced a simple yet effective way of validating models. DWG uses a proprietary algorithm, which considers a number of key indicators and other factors, to measure the success of a game. The strongest performing models are then packaged up with alternative front ends and located in different areas of their five social casinos, to test the strength of the math. The results, with very few exceptions, show that games with the best performing models will always deliver great results despite their presentation. This hasn’t changed for all the time that DWG has been in operation. This data driven approach to creating, improving and validating math models has enabled DWG to create an immense catalogue of proven games. They are all derived from a complex process built up over many years. The emphasis is always on the mathematical model first, as we know that is the most critical part of a player deciding to come back. It is probably the case that RMG operators are taken in by too many wolves in sheep’s clothing. The risk they take in licensing untested, overly-animated games is unnecessary. The core of the casino industry, since the beginning of time, has always been rooted in numbers. The more time spent on generating and improving math models, the better games will be, leading to happy players and operators. n
MALTA 27-29 NOV 2019 WORLDâ€™S
MANILA 8-9 JUN 2020 GE iGAMING VILLA
PEOPLE FIVE IN THE NEWS Gaming executives who have been making headlines Sportech appoints yet another CEO LONDON-LISTED SPORTS BETTING technology provider Sportech has appointed board member Richard McGuire as its new chief executive, following the departure of Andrew Gaughan. Gaughan took over in March 2018 from long-standing CEO Ian Penrose, who departed the company after the board failed to back his expansion plans. A strategic review failed to find a buyer for the business, but the company remains wellplaced in the US... in theory. In the US, Sportech operates u nder 3 5 licences across 37 states. In the current climate, that sort of
access should be gold dust. The transformation from a racing-focused company to a mainstream sports betting provider should not be a difficult task but the past two CEOs have failed to make it a reality. A s i nteri m executive chairman, McGuire relocated to the company’s US headquarters in Connecticut earlier this year to support the US business. As CEO he must deliver on the company’s potential. Does he have the board’s backing to make it a reality?
William Hill switches CEO THE BOARD OF directors at William Hill has removed chief executive officer Philip Bowcock and promoted chief digital officer Ulrik Bengtsson to replace him. Bowcock has repositioned the UK bookmaker during the past three years: selling the company’s loss-making Australian business; acquiring an international arm in the shape of Mr Green; investing seriously in the US business; and beginning the restructuring of the UK retail business.
The board felt the former CFO had fulfilled his brief and it was time for a CEO with more experience of digital operations. Bengtsson becomes the first non-UK CEO of the company. He will be judged on the international expansion of the company’s digital product. It has been notoriously difficult for his predecessors. He might have a better vehicle for it in the shape of Mr Green. Does he have the personnel?
lR ead Bengtsson’s first interview as CEO on page 50
IN THIS ISSUE 20 Interview with Mathias Dahms, Merkur Gaming
BCLC forced into CEO change BRITISH COLUMBIA LOTTERY Corporation (BCLC) chief executive officer Jim Lightbody is leaving to undergo cancer treatment and recovery. Lightbody has served the Canadian lottery operator for almost 20 years – the last five as CEO. During his time at the company, BCLC has blossomed as one of the most progressive lotteries in the world. It has embraced iGaming in all its forms. It is even one of a handful of lotteries to start working in eSports. Lightbody has been replaced by board member Greg Moore on an interim basis. Gaming Intelligence wishes Lightbody best of luck with his treatment. Hopefully, Moore’s period as interim CEO will be a short one and he can welcome back a healthy Lightbody before long.
Penn National CEO retires PENN NATIONAL GAMING has appointed Jay Snowden to succeed long-serving chief executive Tim Wilmott in January. Wilmott informed the company’s board of his decision to retire as CEO and as a member of the board at the end of the year. Snowden joined the company from Caesars Entertainment in October 2011 as senior vice president of regional operations. In January 2014, he was appointed COO and in March 2017 became president and COO. He inherits a business that he has had no small hand in shaping during the past eight years. As the business enters the sports betting arena and builds its interactive business (see feature, page 56), he will be expected to build on the foundations that his predecessor laid so soundly.
GiG seeks smooth operator Of all the chief executive changes on this page, the departure of Robin Reed from Gaming Innovation Group (GiG) was perhaps the most surprising. Reed has been with the company since the beginning. During his decade in charge he has fostered an innovative and progressive culture. The company has also had some notable successes, particularly as a platform provider to Hard Rock International. However, results have been up and down and perhaps there have not been enough Hard Rocks among the client wins. The subtext of chairman Petter Nylander’s kiss-off message suggests it’s time for GiG to shake off its entrepreneurial roots and become the market leader it has often threatened to be. Chief operating officer Richard Brown takes over as interim CEO.
GIQ Q3 REVIEW
P EO P L E
Mercury rising Mathias Dahms has been the most audible industry voice in the maelstrom of Germany’s regulatory environment. He now takes charge of the country’s most prominent brand with his appointment as managing director of Merkur Sports & Gaming
“The more online you go, the more you have a requirement for an overall brand, because online is not bound by borders” Mathias Dahms 20
GERMANY’S GAUSELMANN GROUP appointed Mathias Dahms as managing director of Merkur Sports & Gaming, the group’s division for all its sports betting activities. Dahms moves on to a more strategic role, after more than five years as managing director of Gauselmann’s XTiP Sportwetten brand. Dahms will be responsible for business development; applying for licences while coordinating with the company’s government and political affairs teams. He will sit alongside Markus Ettlin, who was appointed in April as managing director for all of Merkur’s operational sports betting activities. “The market in Germany is going to be changing and there will be M&A opportunities that will be part of my role,” comments Dahms. The third version of Germany’s State Treaty, the federal law governing gambling across the country’s 16 states, comes into force on 1 January, 2020. “The whole market will change,” predicts Dahms. “The online and retail business will change, but the retail business much more so. One of my major activities will be preparing the company for this change.” The third State Treaty is still going through the ratification process, but the 16 states look to be in agreement. This will be the first State Treaty to allow an unlimited number of sports betting licences, after a previous version allowing a limited number was found to be unlawful. However, this State Treaty is only seen as an intermediate measure and a fourth State Treaty will come into play from mid-2021. “I’m pretty sure online casino regulations will be introduced in some states at least,” says Dahms. They are outlawed at present. The process of liberalising the German market, which
was monopolised by the country’s state lotteries, has been a long and painful road, involving lawsuits, rogue states and no end of confusion. Dahms has been there for the duration. As the CEO of insurgent operator Jaxx (and then mybet), he was at the forefront of the fight against monopolies, and he has continued to represent the sector in his role as president of industry association Deutscher Sportwettenverband (DSWV) for the past five years. Nobody knows the terrain better. He believes the next State Treaty might have a mechanism that allows states to opt in or out of legalising online casino. This is not an uncommon facility in German legislation. It also gives cautious states the opportunity to see how a new system works elsewhere. “This is the most probable route,” says Dahms, “but, as you know, when politicians get together there can be surprises.” Another issue that needs to be straightened out is the development of a federal regulator and where it will be based. The state of Hesse is the most experienced, after handling the first wave of sports betting licences, but it has not always pleased the industry, with a process often seen as opaque. Dahms suggests a larger state such as North Rhine-Westphalia is a likely home for the new regulator, where it can have access to the employees and civil servants it will need to man the new body.
Changes all around The emergence of a federal regulator will go some way to easing online operators’ concerns in Germany but the state-by-state model will endure in the retail sports betting market, which Dahms describes as a “black market” at present.
Operators such as Merkur compete with numerous smaller betting shops, which are unlicensed at present. This will change with the State Treaty, which will interact with each state’s regulations, governing things at a local level. “We have had minimum distances already in some state level laws but they could never be enforced because the operators have not been licensed,” explains Dahms. Each state has its own requirements but there has been political pressure to increase minimum distances between shops to lower the density of bookmakers.“People always mix up betting shops with arcades and shisha bars and all those things,” says Dahms. The enforcement of these laws will lead to fewer shops on Germany’s streets. This consolidation pressure is something Merkur hopes to take advantage of. “A lot of the smaller operators will have problems with all the restrictions and compliance GIQ Q3 REVIEW
requirements that come with regulation,” asserts Dahms. The slow evolution of state and federal laws is not limited to the gambling market. Other regulated industries such as public broadcasting have been subject to the same process. “I expect this will always be the case in the gambling industry,” says Dahms. “When I started in the gambling area in 1997, distributing lottery tickets via the internet with Jaxx, we thought the state monopoly would be diminished in four to five years. Now, here we are, 16-17 years later and we have some small changes, of course. Sports betting has evolved but in other areas it has been very slow progress.” So, how does Dahms see Merkur Sports & Gaming evolving? “We have to develop the online business,” says Dahms. “We have a strong presence on the streets. The Merkur star is probably the best known symbol in the industry and we can use that online.”
Alongside building the online presence and managing a convergence of retail and online will be the evolution of Merkur’s international presence. The group has a diverse range of brands, such as Cashpoint in Austria and XTiP in Germany, which are strong in their local markets but are not really linked together. Dahms expects this to change as the international online business evolves. “The more online you go, the more you have a requirement for an overall brand because online is not bound by borders,” he says. With another State Treaty in the offing, the consolidation of the retail market and a major push online and internationally, Dahms is sure to have his hands full. “We are seeing things a little more clearly now,” he concludes. The rest of the market will hope that the German fog clears to allow a more functional gambling market to flourish. n 21
GAMES NEW RELEASES Q3 GIQ casts its eye over the quarter’s brightest new games
REALISTIC REVAMPS SNAKES & LADDERS SLOT
Red Tiger’s Pirates’ Plenty – Battle For Gold is the sequel to the supplier’s popular Pirates’ Plenty – The Sunken Treasure slot. Marking the supplier’s 100th slot release, the game sees players taken back to the high seas in a 5x3 slot which features buccaneering symbols such as bottles of grog, pistols, cannons and pirate hats, as well as skulls and crossbones. “Pirates’ Plenty – Battle For Gold
is one of the most immersive titles in our suite of slot games,” says director of business development Carl Ejlertsson. “The free spins feature has a new take on sticky wilds, which allows players to see the potential of the game very easily. Combine this with the treasure map functionality that allows for a lower volatility introduction experience before the heat is turned up, and you have a great player experience.”
Realistic Games’ Snakes & Ladders Deluxe is a revamped version of one the supplier’s iconic titles, with the deluxe version maintaining the original game’s math model and mechanics. In the board-game bonus round, players roll the two dice to move around the board, climbing the ladders and sliding down the snakes until they land on an award to claim their respective prize. “Snakes & Ladders, a favourite with both operators and players, has maintained its position as a top performer in our catalogue and will undoubtedly continue to deliver with the new polished look,” says commercial director Robert Lee. “The nostalgic board-game theme resonates with all types of players and with the improved graphics, sounds and assets, Snakes & Ladders Deluxe makes a valuable addition to our growing collection of 3D titles.”
BIG TIME GOES MEDIEVAL WITH KINGMAKER
SG DIGITAL INTRODUCES LATEST MEGAWAYS SLOT…
… AND NEW MEGA DROP JACKPOT FEATURE
Rainbow Riches Megaways is the latest installment in the popular Rainbow Riches series from Scientific Games. Making full use of partner Big Time Gaming’s mechanic, the game features 117,649 ways to win, randomly determined by the arrangement of each spin’s Megaways symbols. “It made sense for us to take Rainbow Riches and up the ante for players with the Megaways mechanic,” says SG Digital chief creative officer Tom Wood. “We’re thrilled at how it has performed already. It marries our beloved IP with a beloved mechanic and wraps it with new innovations and new bonus bank features.”
Players embark on a high stakes treasure hunt in Scientific Games’ Book of Relics, one of a series of games to feature the new Mega Drop Jackpot system, a three-tiered, must-drop multi-level jackpot system, which provides players with a chance to win one of three progressive jackpots. The system is designed to supply more games with quicker guaranteed jackpot drops. “Book of Relics is a great theme and game, and a perfect fit for our growing Mega Drop Jackpot system portfolio,” says Wood. “Mega Drop is the first in a series of new jackpot innovations from us.”
RED TIGER RELEASES PIRATES’ PLENTY SEQUEL
Big Time Gaming launched a new slot which combines the supplier’s Megaways mechanic with gem multipliers and free spins with multipliers. In Kingmaker, players must raise the multipliers within the four kingdoms in order to become king. The longer the feature takes to trigger, the bigger the base game pays, with unlimited multipliers being attached to the four top paying symbols. “Kingmaker takes players to a medieval kingdom where they are given the chance to take the throne and the riches that come with it,” says CEO Nik Robinson. “The game uses our Megaways mechanic. This, combined with the unlimited multipliers in the base game, sets the game on a perfect trajectory to deliver wins.” 22
G A M ES
RELAX GAMING TAKES THE MONEY TRAIN
MICROGAMING ENTERS THE DRAGON IN RELIC SEEKERS
Relax Gaming’s Money Train is a 5x4, 40 fixed payline slot set in the Wild West, where players can win of up to 20,000 times their original bet. The Money Cart bonus round is triggered when bonus symbols land on reels 1, 3 and 5, awarding free spins and multipliers, while the in-game buy feature allows players to fast-track to the action for a chance to crack open the game’s safes. “With buy-in features that offer players a chance to win lock, stock and barrel, Money Train’s high volatility and dynamic gameplay make it a great addition to any portfolio,” says chief product officer Simon Hammon. “Our inhouse game content is going from strength to strength and Money Train is set to propel that momentum by an immersive gameplay which drives retention and engagement rates.”
Microgaming launched fantasy adventure slot Relic Seekers, a game developed for the supplier by Pulse 8 Studios. The five-reel, 25-payline game takes players on a journey through the ancient tomb of the Dragon’s Vein to follow three adventurers. The Rolling Reels feature is triggered on any winning combination, causing symbols to explode and make way for new symbols to drop in, while the Symbol Turn Wild feature is triggered after consecutive Rolling Reels, turning more high character symbols wild. “Offering an immersive playing experience with captivating visuals and features, Relic Seekers sets the bar high for future releases from Pulse 8 Studios, who we are delighted to be working with on an exclusive basis,” says director of global operations James Buchanan.
GREENTUBE HEADS TO EGYPT Greentube expanded its Home of Games portfolio with a new Egyptian-themed slot Heart of Egypt. Taking players on an expedition to explore ancient pyramid tombs, the game is an ALLPay slot which does not feature win lines. Instead, the goal is to target symbol combinations for one of 243 ways to win across five reels. The Extra Bet feature allows players to increase their total bet amount, while the Free Games options includes an extra five free games while the Extra Bet feature is active. During these free games, players can freely pick the number of free games and win a multiplier level range from five to 25 free games, and a win multiplier level range from x2 to up to x30.
BLUEPRINT GOES APE WITH RETURN OF KONG MEGAWAYS Blueprint Gaming launched its latest slot to incorporate Big Time Gaming’s Megaways mechanic. Return of Kong Megaways is the second game to feature the legendary ape, with popular characters and symbols from the original King Kong Cash game making an appearance. “Following the success of King Kong Cash, the reel king makes a spectacular return in this action-packed adventure full of new features,” says director of marketing and relationships Jo Purvis. “The addition of the Megaways mechanic creates an extra layer of excitement to the gameplay, set deep in the jungle, which is bound to attract the interest of those who loved our original slot featuring the eighth wonder of the world.” GIQ Q3 REVIEW
PLAYTECH UNVEILS CASINO STUD POKER Playtech expanded its live poker portfolio with the launch of Casino Stud Poker. Broadcast from the supplier’s Eurolive facility in Riga, each round sees the player and dealer both receive five cards, with the best hand winning. Players win Playtech’s live jackpot by scoring a Royal Flush. “At Playtech we’re committed to developing fresh and innovative game variants to deliver the
diversity our customers demand, and to offer live casino players a superior experience,” says head of live casino innovation Kevin Kilminster. “Following the success of Live Casino Hold’em and Three Card Brag, and with another exciting new variant due to launch later this year, Playtech continues to lead the way on delivering exciting, versatile live poker options for our customers.” 23
TECHNOLOGY 5 BIG LAUNCHES
Five major product launches and the thinking behind them
IN THIS ISSUE 26 Amelco makes waves Stateside
GameCo begins Las Vegas field trial Skill games developer GameCo has launched a field trial of its video game gambling machines in Nevada.
What’s the big idea? Having received its jurisdictional manufacturer and distributor licence from the Nevada Gaming Commission earlier this year, GameCo aims to streamline the field trial process towards the goal of wider availability of the company’s entire product portfolio in 2020. Initially, GameCo will be launching its basketball game Nothin’ but Net 2 in Las Vegas at The LINQ and MGM Grand, and in Reno at Atlantis Casino Resort Spa. The supplier is also entering the iGaming sector for the first time with an interactive Match 3 gambling game, Scarlet’s Heart. The game features high velocity betting, Power-Ups, and a Frenzy Bonus for big wins. Built in HTML5 for mobile and desktop distribution, Scarlet’s Heart will be showcased at G2E Las Vegas and is the first of number of iGaming products planned by GameCo.
New Zealand’s SkyCity goes online Gaming Innovation Group (GiG) has taken New Zealand’s leading casino operator SkyCity Entertainment Group online.
What’s the big idea? Following a landmark agreement in March, GiG has provided a fully managed solution to SkyCityCasino.com, including the technical platform, managed services, gaming content, front-end development, CRM, compliance and marketing. The New Zealand-facing online casino site operates under GiG’s Maltese licence and is expected to make a significant contribution to GiG’s revenue from 2020 onwards. “This is an exciting day for SkyCity and one we have been working towards for some time alongside SkyCity Malta and our partner GiG,” said SkyCity CEO Graeme Stephens. “While ultimately a regulated online gaming market in New Zealand remains the preferred solution, the site launch is another step on our journey of pursuing opportunities to grow and diversify our earnings, addressing a new, fast growing industry which is highly complementary to our land-based activities and offering customers a multi-channel gaming experience.”
SG rolls out sports betting in Turkey Scientific Games’ Turkish joint-venture Sans Girisim successfully upgraded the IDDAA national sports betting program in Turkey.
What’s the big idea? Sans Girisim won the exclusive ten-year sports betting contract in Turkey in March, with a full turnkey sports betting solution now live across retail and through companies licensed to provide interactive sports betting. Scientific Games has rolled out its central gaming systems technology and nearly 5,000 WAVE retail betting terminals, alongside six online live betting sites. The sports betting solutions are fully traded by Scientific Games through its OpenSports managed trading services. 24
KamaGames’ social sports betting
New UK-facing betting startup Wager launches Two 25-year-old punters who met at Oxford University launched a new UK-facing social betting start-up called Wager.
What’s the big idea? Backed by London-based venture capital fund Forward Partners, the friend-to-friend football betting app has been developed by co-founders Leo Barnes and Elliott Robinson, and launched ahead of the new football season in August, with the aim of making betting more social and friendly. Friends can place real-money bets against each other and track these bets, while also viewing their performance in head-to-head stats, friend leagues and activity feeds. “As the new season gets going, we want to introduce the latest betting app that will create a buzz between friends up and down the country,” said Robinson. “On Wager, bets are always between mates, which is important to us, as healthy social competition is at the core of what we do.”
European social casino operator KamaGames has upgraded its Pokerist app with the launch of a new social sports betting feature for the first time.
What’s the big idea? KamaGames has been working on a number of upgrades to its Pokerist app and has been developing its new sports betting product over the past year. The launch allows Pokerist players to use their chips to bet on real-life sport events, including pre-odds and live odds, as well as accumulator bets and single bets. In addition to regular sports, KamaGames has also recognised the growing popularity of eSports by including Counter Strike, Dota 2, StarCraft 2, Overwatch and League of Legends as part of the new social sports betting feature. “We’re constantly looking at new avenues for innovation in the social casino landscape and our Social Sports Betting feature is a prime example of that,” says CEO Andrey Kuznetsov. “We contend that social sports betting will appeal to players in the same way our social casino games do, allowing them to enjoy the thrill of wagering on live events but without the risk associated with real money betting.”
T EC H N O LO GY AMELCO
TechReady Sports betting technology suppliers have been busy since the repeal of PASPA. Amelco will be powering FOX Bet in the US, and as a B2B provider it is making its own way across the States. Chief executive Paul Manning and US president Rob Bone speak to Steve Hoare THE STARS GROUP was not the only company celebrating its recent deal with FOX Sports to create FOX Bet. Stars’ sportsbook supplier Amelco was also given a vote of confidence as the technology supplier that will power FOX Bet across the US. It powered FOX Bet’s recent launches in New Jersey and Pennsylvania. Furthermore, it is about to take its first independent steps with the launch of online/mobile sportsbooks for an Iowa-based tribal casino and a casino in Indiana. When Stars appointed Amelco to provide the technology behind BetStars’ launch in 2015 it opened a few people’s eyes to a supplier that had previously been content to provide trading services under the radar. The Stars deal was Amelco’s first headline sportsbook deal. It might have felt threatened by Stars’ acquisition of Sky Betting & Gaming, which uses OpenBet and SBTech, but the deal was renewed earlier this year and it will be utilised across the US as soon as FOX Bet can put in place the access deals to make it possible. A national strategy is starting to take shape at FOX Bet. Deals with Eldorado Resorts and Penn National have the potential to take the pair into 16 states, in addition to New Jersey, Pennsylvania and New York, where Stars/FOX has separate deals. With Caesars perhaps adding more states after the Eldorado acquisition, Amelco could be very busy indeed. “We are very pleased that we will be involved,” says Amelco chief executive Paul Manning, in typically understated fashion. Manning and his colleagues find it difficult to blow their own trumpet. It is just not in their nature. This is a company that was launched by techies, remains run by techies and has technology hard-wired into its DNA. Self-promotion just doesn’t come easy. 26
But with the US opening up for sports betting, Manning and his colleagues attended the Global Gaming Expo in Las Vegas for the first time last year and the company will have a stand at this year’s G2E for the first time. Manning has even hired a PR firm as he seeks to tell the world a little bit more about his company.
Beyond fintech Amelco has been telling everyone it is the industry’s “best kept secret” for years. With a client list that takes in the likes of Flutter, GVC Holdings, The Stars Group and William Hill, it is not too much of a secret, but it does keep a low profile. Amelco was launched in 2006 by owner Damian Walton, who used the first two initials of his daughters’ names to christen his new company. Walton, Manning, chief technology officer Kilian Heneghan and three others formed a tight-knit team, which split from Prebon Yamane after the financial services company was acquired by Collins Stewart Tullett.
The FOX Bet mobile app
“We thought we were going to carry on in the fintech space but very early on we got introduced to William Hill,” explains Manning. “Back then, most of the bookmaking processes and workflow were manual. We saw an opportunity to use our IP to automate the process.” The team had watched the finance sector evolve during the late 1990s and early 2000s from a human-driven process to one that was almost entirely automated. After being introduced to William Hill, Amelco embarked on a journey that would drive the automation of the bookmaking process across the industry. “We demonstrated how things can be automated and how algorithmic trading could be used in the sports betting space, and it took off from there,” explains Manning. The company still works in the fintech space but in 2008, when the financial crisis hit, bookmaking seemed like a more solid foundation, and it remains the core of what it does today. Today, the company has 160 staff, based mainly in its City of London office. It also launched an office in Warsaw, Poland, about 18 months ago, which houses around 20 staff. “It is a lean organisation,” says Manning. “We try to bring the same efficiencies to our own com-
T EC H N O LO GY AMELCO
A COMPLETE GUIDE TO LEADING TECH SUPPLIERS’ LIVE OPERATIONS IGT New Jersey The New Meadowlands Racetrack (FanDuel retail and mobile books)
New York Resorts World Catskills (retail) l Tioga Downs (FanDuel retail book) l
KAMBI Indiana Penn National (online to come; retail in East Chicago and Lawrenceburg) l Rush Street (online to come; retail in French Lick Resort) l
Churchill Downs (retail and online for Bet America at Presque Isle Downs & Casino)
Arkansas Churchill Downs (retail book for Oaklawn Racetrack and Casino)
Iowa Penn National (online to come; retail in Ameristar Council Bluffs)
Indiana Blue Chip Casino (FanDuel retail and mobile books) l Belterra Casino Resort (FanDuel retail and mobile books)
Oregon Oregon Lottery (online and retail)
Iowa Catfish Bend Casino (retail) Q Casino (retail) l Diamond Jo Casino – Dubuque and Northwood (FanDuel retail book) l
New Jersey DraftKings (online and retail at Resorts Casino) l 888 (online) l Rush Street (online) l Unibet (online) l
Rhode Island Rhode Island Lottery (William Hill retail and mobile book)
DraftKings (retail at del Lago Resort & Casino) l Rush Street (retail at Rivers Casino & Resort Schenectady) l
Automation trailblazer Amelco has been at the forefront of the automation revolution – with SBTech and then others following in its wake. Automation has changed everything, with data taken directly from various feeds and then fixtures created and updated automatically, so customers are kept up to date. This became increasingly important with the advent of in-play. The industry has evolved from one where you would have a team of people manually typing in fixtures, with another team compiling odds and a trader looking after a few matches, to one where you can have two traders looking after an entire Saturday afternoon’s football. It means traders are often more involved with risk management than setting prices, with a focus on suspicious activity alerts. “The traditional way of doing things is very heavy on process and very heavy on time,” continues Manning. “So we have invested a lot in machine-learning to produce prices. One of the benefits of that is that we now have models that never suspend.” That process has been accelerated during the last year to the extent that all of Amelco’s GIQ Q3 REVIEW
The Greenbrier (FanDuel retail and mobile books)
Mississippi olden Moon Hotel & Casino G (retail and mobile on-premises) l Silver Star Casino (retail and mobile on-premises) l Bok Homa Casino (retail and mobile on-premises) l Scarlet Pearl Casino (retail) l IP Casino Resort (retail) l Sam’s Town Hotel & Gambling Hall (retail) l Magnolia Bluffs Casino (retail) l Beau Rivage Biloxi (retail) l Gold Strike Tunica (retail) l
V alley Forge Casino (FanDuel retail and mobile books)
Nevada MGM Resorts (retail and mobile for ten properties)
New Jersey Caesars Entertainment (retail at Bally’s Casino Hotel sportsbook and Harrah’s Casino Hotel sportsbook)
Pennsylvania reenwood Gaming and G Entertainment (online and retail at Parx Casino, Valley Forge Turf Club and South Philadelphia Turf Club) l Rush Street (online and retail at Rivers Casino and SugarHouse Casino) l
Caesars Entertainment (retail and on-property mobile at Harrah’s Gulf Coast and Horseshoe Tunica)
pany that we bring to our customers. We like to follow our own advice.”
SG DIGITAL Mississippi
West Virginia DraftKings (online)
SBTECH New Jersey Churchill Downs (Bet America brand online) l Resorts Casino (online only) l Golden Nugget (online and retail) l
Mississippi Churchill Downs (retail books for Bet America at Harlow’s Casino Resort & Spa and Riverwalk Casino Hotel) l Golden Nugget (retail at Biloxi Casino)
Pennsylvania Caesars Entertainment (retail at Harrah’s Philadelphia Casino and Racetrack)
Indiana Caesars Entertainment (retail at Indiana Grand Racing & Casino in Shelbyville, Horseshoe Hammond, Horseshoe Southern Indiana Hotel and Casino, and Harrah’s Hoosier Park Racing & Casino, plus off track betting locations in Indianapolis, Clarksville and New Haven)
Iowa Caesars Entertainment (retail at Horseshoe Casino and Harrah’s Hotel & Casino in Council Bluffs)
New York Oneida Indian Nation (retail at Yellow Brick Road Casino, Turning Stone Resort and Point Place Casino)
T EC H N O LO GY AMELCO
new sports pricing is based on machinelearning technology. “Automation and scalability go together. We don’t think you can scale without the automation,” says Manning. “If we sign up another ten customers, that does not mean we need ten more traders. There are economies of scale.”
own regulations,” says Bone. “They can forge a path forward quicker than a casino.” With legislation passed as recently as May, Amelco is on schedule for a swift rollout in Iowa. “We have been pulling this together so it can be seen as one solution and one package that we can get out to our customers quickly,” says Manning. “It is a complete end-to-end solution Into Iowa and beyond that we think is perfect for going into America, Talk of ‘scale’ naturally brings the conversawith all the different state regulations. We call tion back to the US and the it a hub and spoke model, where potential for it to become the the player database sits in state world’s biggest sports betting and we can still control it cenmarket. “If you look at Ameritrally from a single point.” ca, operators are only offering “We will tailor each operaa small amount of markets. tion to the state, whether they When that grows, you will not can offer college sports or inhave to hire another 20 traders play, or whether they have difto sit in Nevada [for example].” ferent sign-up conditions. All D u r i n g 2 018 , A melc o that can be satisfied centrally,” launched Amelco USA, a 50-50 says Manning. “Our system is joint venture with experienced very highly configurable and gaming executive and investor very scalable. I think we can Rob Miller, who has invested probably meet those challenges $1 billion-plus in the US gambetter than anybody else.” “Automation and ing industry. He has deep roots Amelco has been providing in the tribal gaming environ- scalability go different prices depending on ment, which Amelco USA together. We the delivery channel (online, president Rob Bone, who will don’t think you mobile or retail) and segmentabe leading business develop- can scale without tion since the company started. ment Stateside, hopes will open the automation” “So, the things we have to do a lot of doors for the company. for America are not bolt-ons or Paul Manning, Amelco “To have a very well-versed redesigns or back to the drawplatform and very capable teching board for us,” says Mannology, which Amelco does, ning. “It is just leveraging what and then to also bring the ability to fund it, is a we already have, which just happens to be pervery important value proposition,” says Bone. fect for America. Many suppliers are reluctant That has already happened in Iowa, which to customise the product for specific customers, will be the company’s first operational sportsbecause it is not a scalable business strategy,” book within the next two months. Bone says continues Bone. “We built a white that the sovereign immunity enjoyed by tribal label solution that is 100 per casinos means that they gain some efficiency cent based on customisation and speed from operating outside Iowa Racing and specifics that support and Gaming Commission regulations. That, of their brand.” course, will apply in any state. “Once the governor has signed the bill, the tribal compacts allow them to launch without waiting on the IRGC regulations. They are governed by their
And Bone is keen to point out that Amelco is supporting its customers’ brand, rather than attempting to import its own operation into the US. “One thing that is very important – especially in the US – is to choose the right supplier, to future-proof the product,” says Manning. “If operators don’t want to be too European and offer thousands of markets on thousands of sports, that’s great. They need a supplier that can offer key markets and key sports now and then. As the market matures and people get more sophisticated, they can grow with them.” With different states rolling out different regulations, Bone is planting seeds across the country. He notes the differences between a state like Tennessee, which will be an online/ mobile-only market, and Washington DC, which will have three types of licence – for lottery; stadiums and sports venues; and bars. Bone highlights his colleague Miller’s experience in distributed gaming and operating video lottery terminals in the bars and venues of states such as Louisiana, Illinois and Pennsylvania. “It translates well,” says Bone. “We have a lot of credibility in those VLT/bar markets and now we are just presenting sportsbooks as opposed to slot machines.” The pair have confidence in their product and their ability to make an impact. If Amelco’s progress in Europe could be described as stealthy, Bone and Miller have the background and drive to make a lot more noise in the US. “Our long-term goal is to come to Nevada,” says Bone. “Las Vegas is still the Mecca of sports betting in the US and we think the market has been under-served with respect to innovation.” While Manning is keen to point out that the European business remains key, one senses that the US is going to become a very big part of Manning’s life for the foreseeable future. n
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IN THIS ISSUE 34 GVC and responsible gambling 36 Paddy Power on unsponsoring
FIVE BIG STORIES This quarter’s biggest marketing news Norwegian Chess rejects Kindred THE NORWEGIAN CHESS Federation has voted against a proposed five-year sponsorship deal with gaming operator Kindred Group. The agreement would have contributed NOK10m (approx. €1m) annually to Norwegian chess, while putting the federation at odds with Norway’s state-owned gaming monopoly Norsk Tipping. The sponsorship proposal had sparked months of debate among members. The Norwegian gambling regulator warned the federation against the deal, although it admitted that the agreement would not be illegal. Kindred Group public affairs manager Rolf Sims said: “We will continue in our work towards an alternative gambling model in Norway. Such a model would benefit everyone more than the current system, where half of all online gamblers fall outside of the purview of the Norwegian government, and where a large section of Norwegian sports, culture and volunteer work is not supported by gambling funds.”
Sweden slams immoderate marketing SWEDEN’S CONSUMER AGENCY Konsumentverket has completed an investigation into gambling advertising, concluding that many operators are failing to adhere to the principle of moderate marketing in the recently regulated market. The agency said many operators are failing to comply with market regulations by conducting misleading advertising, with the agency suggesting that calls to action such as ‘Bet now’ represent an unacceptable inducement to gamble. The agency highlights a number of issues, with the most widespread being a lack of supporting information regarding the terms and conditions of bonus offers. It also found adverts to be intrusive and misleading. It concluded: “The industry is now expected to take into account the Consumer Agency’s assessments when designing game advertising in the future.”
NFL signs first casino deal in Canada Gateway Casinos & Entertainment has signed a multi-year agreement to serve as the official land-based casino partner of the NFL in Canada. Gateway gains the right to use NFL trademarks in Canada to promote its properties around key NFL events, including the NFL Draft, Pro Bowl and Super Bowl. As part of the agreement, Gateway’s MATCH Eatery & Public House will be the exclusive presenting sponsor of the NFL Fantasy App.
GambleAware highlights threats to children
FanDuel to sponsor Breeder’s Cup FanDuel has joined Flutter Entertainment stablemate TVG in a multi-year sponsorship deal with the Breeders’ Cup. FanDuel and TVG, the horse racing television network, will serve as the official wagering partners of the Breeders’ Cup World Championships, with TVG gaining naming rights to the Breeders’ Cup Juvenile and the Breeders’ Cup Mile races. TVG will also produce the Breeders’ Cup Players’ Show, a live, wagering-focused
GIQ Q3 REVIEW
telecast of the World Championships that is sent to simulcast outlets around the world, as well as providing pre-race promotion, coverage and recaps of Breeders’ Cup Challenge Series races on TVG through the year. The agreement also gives TVG and FanDuel official sponsor designation and other promotional rights as part of NBC Sports’ coverage of the Breeders’ Cup and presenting partner status for NBCSN’s Betting the Breeders’ Cup show.
THE CHARITY GAMBLEAWARE has published a report into children’s exposure to gambling advertising in Great Britain, with eSports advertising and gambling-related social media accounts highlighted as potential threats. The interim report forms part of a large-scale research project that will conclude later this year. It found that gambling advertising is not being placed within children’s media but identified instances where much of the content of ads contained features which might plausibly appeal directly to children and young people, including celebrity endorsement, memorable songs and catchphrases. This was found in 11 per cent of gambling ads in mainstream media, rising to as high as 59 per cent of eSports gambling content on Twitter, primarily due to the use of animated-style graphics. The lack of effective age restrictions on social media platforms further increased the risk of children’s exposure to gambling. 33
MARKETING GVC HOLDINGS
Marketing responsibly Since becoming the largest player in the UK betting market, GVC Holdings has tried to position itself as the face of responsible gaming. But how does RG affect its marketing efforts and are its Spanish players less vulnerable to addiction than the Brits? Jon Harwood reports SINCE ITS ACQUISITION of Ladbrokes Coral 18 months ago, it seems GVC has rarely been out of the news, thanks to the row over fixed-odds betting terminals (FOBTs), dramatic fluctuations in its share price and media interest in CEO Kenneth Alexander (and his pay packet). But the company has also been at the forefront of the gaming industry’s efforts to clean up its image, helping drive through the whistle-towhistle advertising ban that came into force this summer after unveiling its new Changing for the Bettor strategy earlier this year. This new approach has seen the group turn its back on football sponsorship in the UK and even propose an industry-wide ban on TV ads. But where does that leave its brands in terms of branding, marketing and promotion? And is the group serious about its commitment to responsible gaming? Certainly, the Changing for the Bettor campaign appears to represent a significant shift in attitude. It has the stated aim of establishing GVC as “the most trusted and enjoyable betting operator in the world” and involves tie-ups with addiction specialists at Harvard Medical School, gambling charity GamCare, EPIC Risk Management and the Safer Online Gambling Group, not to mention a hefty financial commitment to promoting RG. Jay Dossetter, GVC’s head of CSR and corporate communications, explains that the idea for Changing for the Bettor came after Ladbrokes Coral came on board in March 2018, and GVC found itself as the biggest player in the UK gaming market. “The Ladbrokes Coral acquisition happened at the same time as the industry was coming under increased scrutiny,” he says. “RG was a hot topic and we recognised that the industry should be doing more and that we should take 34
responsibility for driving up standards. It also happened during the row over FOTBs, and there’s a PhD thesis to be written on that – the industry couldn’t have done more to shoot itself in the foot. That led to a comprehensive review of policies, and Changing for the Bettor emerged out of that. We believe it’s a multifaceted solution to a multifaceted problem.” Its most obvious impact has been on GVC’s involvement in sports sponsorships. Ladbrokesowned Betdaq had sponsorship deals for Championship sides Charlton Athletic and Sunderland but has gifted the shirt logos to the charity Children with Cancer for the current season. In Scotland, Ladbrokes remains the sponsor of the Scottish Professional Football League but that deal will finish at the end of the current season. “We also have long-term perimeter board deals with 42 English and Scottish clubs, which have been handed over to the Bet Regret campaign,” adds Dossetter, emphasising that it has been done with no GVC branding involved.
“It came to a head at the 2018 World Cup, which was wall-to-wall advertising, and that attracted a lot of negative publicity from regulators, the media and the public. Other markets are different” Jay Dossetter, GVC
Double standards? Along with that initiative, the whistle-towhistle ad ban means that GVC brands have disappeared from most live sports coverage. So far so good, but does this commitment extend across the Channel? It appears not, as GVC will not be sacrificing its deals with European clubs and leagues. But Dossetter insists that does not undermine GVC’s commitment to RG, and defends the company’s right to market its brands. The Changing for the Bettor campaign is specifically tailored towards the UK betting market, he explains, so it does not follow that it should be applied elsewhere. GVC still sponsors Valencia in Spain, the German national team and the German equivalent of the FA Cup. But Dossetter says the company is in “listening mode” in other markets and adds that the company is not marketing itself irresponsibly. “Certainly, in the German sponsorship deals RG measures are baked into the contracts,” he says. “We take a market by market approach,” he adds. “The UK is the most mature gambling market in Europe, and arguably the world, but it had become fully saturated. It came to a head at the 2018 World Cup, which was wall-to-wall advertising, and that attracted a lot of negative publicity from regulators, the media and the public. Other markets are different.” Allegations of double standards are well wide of the mark he says. “It misses the point that there is a fundamental difference in the UK market. And we are not fundamentally opposed to the promotion of our sports betting products.” That said, the company has gone on the record in the UK, not only advocating the whistle-to-whistle advertising ban but calling
GVC’s Betdaq donated its shirt sponsorship of Charlton Athletic to the charity Children with Cancer UK
for an end to all TV advertising. So, is GVC playing a clever game and trying to defend its position as the biggest player by reducing the marketing opportunities of its rivals? “No,” says Dossetter. “We have no shortage of competitors who can challenge us. Our moves on sponsorship have not been followed by our competitors.”
Market leadership GVC’s rivals have been active in the football field despite the changing landscape. 32Red attracted publicity recently after Wayne Rooney signed for Derby County and agreed to wear the number 32 shirt. Perennial disruptors Paddy Power has also made headlines with a typically leftfield campaign that has seen them ‘unsponsoring’ several clubs, including Huddersfield Town, for which they designed an eye-watering fake kit. Patrick Kerr, GVC’s interim director of corporate affairs and safer gambling, is sanguine about such moves. GIQ Q3 REVIEW
“It’s easy to be cynical, but at the end of the day we are in this position and it is incumbent upon us to do the right thing,” he says. “We want to take the industry with us. Companies that take a different approach are making problems for themselves further down the line. We are doing the right thing and we believe it is also to our advantage. There are certain operators who take a marketing-first approach and they get a lot of publicity and exposure from it. “But we live in a febrile, almost hostile, climate,” he adds making a key point that gives the industry plenty to think about. “We think it’s important to take a more holistic approach to marketing and consider how we are perceived by stakeholders – and that means the media, regulators and politicians – not just our customers.” Kerr is returning to the gaming industry after several years away and says that the mood is very different now. “Previously, people would take the line of least resistance,” he says, which helps explain the process that took the UK to its current situation, as gambling firms aimed more and more of their marketing firepower at sports and football in particular. “But we are taking a leadership role and taking responsible action,” says Kerr. “It’s quite a difficult time to be in the industry. It feels like there are a lot of people against us. Companies will need to review their marketing approach and be more complementary with RG.”
This raises the question of what GVC is doing to market itself in the current climate. Coral and Ladbrokes ads are still airing on TV, but Dossetter says the company is willing to leave that arena. And reflecting the view that the UK is a saturated market, efforts are now more focused on existing customers. “Our approach to marketing has become much more sophisticated,” he says. “We are tailoring our messages and we have CRM systems embedded in our gaming platforms. It goes beyond brand building; our communications are on a more individual level.” That said, it is clear that the Changing for the Bettor campaign has a role to play in positioning GVC in the market. After joining the company as chief marketing officer earlier this year Dominic Grounsell went on the record, saying: “Winning is about having a strong brand in the marketplace and all elements of the business lining up to deliver against the brand promise.” In that context, there is little doubt Changing for the Bettor is a marketing tool in its own right. The initiative not only informs the company’s marketing operations but helps GVC position itself as a trusted brand leader in the UK, while using focused CRM tactics for the nitty gritty of attracting and retaining players. n 35
PADDY POWER AND 32RED
What is unsponsoring? Not everyone has followed GVC’s lead, but brands such as Paddy Power and 32Red are adopting a new attitude to sponsorship While GVC has been scaling back its marketing activity around football, other brands have found ways to maintain their presence in the game within the new regulatory landscape. Paddy Power has followed GVC’s lead by removing its name from the shirts of clubs it sponsors, but – as perennial disruptors – found a typically novel way of doing it. After being named as Huddersfield Town’s new backer, it unveiled a bizarre top with the company logo on a sash. The Championship side wore the shirt in a friendly before it was revealed to be a hoax, albeit an expensive one, as it landed the Terriers with a £50,000 fine from the FA. The bookmaker subsequently announced it was removing its name from the shirt and was also ‘unsponsoring’ Motherwell, Newport County, Southend United and Macclesfield Town as part of its ‘Save our Shirt’ campaign. (It also pointed out that the fine handed to Huddersfield was larger than the one given to Millwall for racist chanting by its fans.) A spokesman for Paddy Power’s parent company Flutter, says:
“The Save Our Shirt campaign is very much in keeping with a wider industry effort to reduce the amount of advertising in televised sport, most notably through the whistleto-whistle advertising ban, which is supported by both Paddy Power and Betfair brands. “Flutter is also part of a group of five leading UK operators that have agreed to increase safer gambling messages in their advertising. This will involve the support of dedicated campaigns and the review of our marketing, advertising and sponsorships in terms of tone and content. We will also seek to support advertising technology, where it exists, to divert messages from problem gamblers.” But Paddy Power head of PR, Lee Price, insists the brand won’t go into its shell, and will still connect with supporters through marketing. “Paddy Power’s focus has always been to speak to fans and offer an insight on the game,” said Price. “The marketing and advertising landscape has changed as a result of responsible gambling and we are conscious of that. The world has also changed. The social landscape has
changed and what we do is informed by that. We want to make people laugh and provide unique insight. “The Save our Shirt campaign reflects something that people are talking about. But we also want to go further in some areas that are important to us. For example, at the World Cup in 2018, we made a donation to LGBT charities every time Russia scored to highlight their terrible record in relation to gay rights. This is something that we’ve long supported as a brand. “The main thing for me is improving brand awareness while changing perceptions.” Another betting company that has made the headlines since the
new regulations came into force is Kindred-owned 32Red, which sponsors Derby County. The club recently agreed a deal to sign former England captain Wayne Rooney, and the fact he will wear the number 32 shirt leaves little room for doubt that the brand wants to benefit from the signing. It generated a lot of hostile press coverage, but Neil Banbury, Kindred’s UK general manager, said: “32Red has a long history of sponsoring football clubs and we have been sponsors since long before any advertising ban was being discussed. We are proud of our heritage in football, and believe the benefit of club sponsorship is the link it creates between our business, the club and community. We are keen to show that football can help 32Red reach the right audience with positive messaging about responsible gambling.” The general direction of travel for marketers in the new landscape appears to be a public commitment to RG and a move towards wider branding, away from the sports arena, coupled with marketing pushes aimed at existing customers. William Hill, for example, has its own Nobody Harmed programme and said that, in the wake of several ASA rulings, it was “looking at a more brand-led approach” to its advertising, with recent TV ads featuring Anthony Joshua. And its appointment of chief digital officer Ulrik Bengtsson as chief executive hints that it, like GVC, sees technology as the way to speak to new and existing customers.
LOTTERY FIVE BIG STORIES From Turkey to Mississippi; news from the lottery world in Q3 Sisal wins SuperEnalotto and Milli Piyango deals It was a big quarter for Sisal as the Italian gaming operator scooped two lottery deals, with the award of the Italian SuperEnalotto contract and the Turkish Milli Piyango concession. Sisal is the current operator of SuperEnalotto and retained its concession after beating rival bids from IGT’s Lottomatica and Sazka Group. A month later, Sisal’s joint venture with Turkish conglomerate Demirören Group, Sisal-Sans, secured a ten-year contract to operate online number lotteries, passive lotteries and scratch cards for the Turkish state lottery Milli Piyango. Along with Intralot, Sisal again saw off competition from IGT and Sazka Group. Meanwhile, Scientific Games was also selected to exclusively supply its lottery instant games, latest generation Wave retailer terminals, and instant ticket validation system for a period of ten years to Sisal-Sans.
IN THIS ISSUE 39 SASKA Group’s expansion ambitions
IWG brings Slingo to North American lotteries GAMING REALMS EXPANDED its partnership with IWG to include distribution of its portfolio of Slingo titles to members of the North American Association of State and Provincial Lotteries (NASPL) and World Lottery Association (WLA). The agreement gives IWG exclusive rights to offer online titles such as Slingo XXXtreme and Deal or No Deal Slingo via its Progressive Play remote game server. “IWG has been a tremendous partner for us and we are delighted to have struck this deal,” said Gaming Realms chief executive Patrick Southon. “They are the leaders in iLottery instant-win content and the market access they provide is unmatched. We’re beyond excited to offer our best Slingo Original games through IWG’s RGS, spanning from New Zealand to Belgium, and across North America.”
“IWG are the leaders in iLottery instantwin content and the market access they provide is unmatched” Patrick Southon, Gaming Realms
Lottoland wins Australian jackpot betting case GIBRALTAR-BASED LOTTOLAND SUCCEEDED in its legal challenge against the Australian Communications and Media Authority (ACMA), which claimed Lottoland was in breach of Australia’s Interactive Gambling Act with its jackpot betting products. The Supreme Court of New South Wales confirmed that Lottoland’s Monday, Tuesday, Wednesday and Thursday Jackpot, as well as its US Millions and US Power games, were fully compliant with Australian law. “Lottoland Australia has always maintained that ACMA’s view of our jackpot betting products is wrong, unfair and uncompetitive – and I am pleased to say that we have been vindicated,” said Lottoland Australia CEO Luke Brill. “With this matter now settled, Lottoland Australia can finally get on with what it does best – providing new and exciting products that Australian punters love.” 38
EquiLottery readies MLB draw game
IGT to power Mississippi Lottery
EQUILOTTERY GAMES TEAMED up with Major League Baseball (MLB) to develop a new lottery draw game, Baseball Bucks, which features the official brand marks of MLB and the 30 MLB clubs. The game has a quick pick gameplay style, where players have to match at least seven winning teams from ten games played that day in order to win. Baseball Bucks is the latest live sports lottery game developed by EquiLottery following the launch of Race Car Cash in partnership with Speedway Motorsports. “We are pleased to be working with one of the most iconic leagues in professional sports worldwide,” said chief executive Brad Cummings. “I want to thank MLB for being exceptional to work with through this process as we develop a game that will increase the engagement with baseball across the US, while also returning more money to the good causes lotteries support.”
INTERNATIONAL GAME TECHNOLOGY (IGT) was selected by the Mississippi Lottery Corporation (MLC) to power the state’s new lottery. IGT will provide its central gaming system to generate tickets for computerised draw games such as Powerball and Mega Millions, as well as providing printing services for instant scratch-off tickets. The seven-year contract for IGT is a pivotal step in the lottery’s plans to launch instant ticket games, no later than 1 December, with draw games to begin in the first quarter of 2020. “We are thrilled to have IGT on board with the MLC,” said MLC president Tom Shaheen. “Every lottery relies on vendors to provide their expertise and the necessary infrastructure to provide lottery products to the public. We look forward to partnering with them in our effort as we pursue our mission of raising funds for roads and bridges throughout Mississippi.”
LOT T E RY
Lotto SAZKA GROUP
IN 2012, SAZKA Group set out on its ambitious plan to become Europe’s largest private lottery and gaming operator. First off, the company acquired SAZKA Czech, the Czech Republic’s largest lottery, buying out the 50 per cent stake held by Czech investment firm PPF Group. Next came a 33 per cent stake in Greece’s OPAP in 2013, via Czech investment vehicle Emma Delta, followed by the acquisition of an 11.4 per cent stake in Casinos Austria in 2015. The next year, the company snapped up an 11.6 per cent stake in Austrian Lotteries and a 32.5 per cent stake in Italy’s LottoItalia. Last year, SAZKA Group acquired additional share capital to take its total shareholding in Casinos Austria to 38.2 per cent, and took a 67 per cent holding in Croatia’s SuperSport. In just seven years, the company has established a wide-ranging portfolio of operations across Austria, Cyprus, the Czech Republic, Greece and Italy. This period of strategic growth has been backed up by owners KKCG, the Czech investment vehicle owned by billionaire businessman Karel Komárek, and Jiří Šmejc’s Emma Capital, which held a 25 per cent stake. In March of this year, the two Czech investment firms agreed to split the business, with KKCG taking full control of SAZKA Group, including all assets except for the SuperSport business, which was taken over by Emma Capital. For SAZKA Group chief executive Robert Chvátal, it has been business as GIQ Q3 REVIEW
SAZKA Group is the fastest growing lottery operator in Europe, but chief executive Robert Chvátal tells Kio Dawson that long-term the privatelyowned company will expand beyond its heartland and into North America
LOT T E RY SAZKA GROUP
KKCG becomes co-owner of Czech lottery operator SAZKA, and takes over sole ownership in 2012.
2012 SAZKA Group entity established.
2013 Emma Capital acquires controlling 33 per cent shareholding in OPAP from the Greek government.
2015 KKCG and Emma Capital jointly acquire an indirect share of 11.3 per cent in Casinos Austria.
2016 SAZKA Group acquires a 32.5 per cent stake in LottoItalia by establishing a joint venture with Italy’s Lottomatica, as well as an indirect 11.6 per cent stake in Austrian Lotteries. KKCG and Emma Capital merge their lottery and gaming assets into the SAZKA Group.
2018 SAZKA Group completes acquisition of further shares in Casinos Austria to increase its indirect stake to 34 per cent, acquires a 67 per cent controlling stake in Croatia’s SuperSport, and increases its indirect shareholding in Casinos Austria to 38 per cent.
2019 KKCG and Emma Capital agree on the split of assets in the SAZKA Group, with KKCG becoming the sole owner of all assets except for the SuperSport business. SAZKA Group also launches a €2.1bn bid to take over full ownership of OPAP.
usual, with no change in strategy, following KKCG’s purchase of Emma Capital’s stake. “KKCG has been key to SAZKA Group’s growth and success over the past eight years, providing the entrepreneurial ownership, international reach and expertise we’ve needed to grow across five countries in Europe,” he explains. “Our ambition to position lottery as an entertainment business with a strong foundation of funding good causes remains the same. “In developed countries, lotteries are a pastime of roughly half of the adult population, and we really believe we have a duty to both innovate our products, and to offer and present them in the most entertaining fashion.” Despite losing out to Italy’s Sisal for Turkey’s national lottery tender and Italy’s SuperEnalotto concession in recent months, SAZKA’s ambitions run deep and it has other targets on the horizon. The company has offered more than €2bn to take over full ownership of OPAP and is likely to bid for the fourth licence to run the UK national lottery in 2023, despite shelving last year’s IPO in London due to market volatility. “There’s a lot of publicity around the fourth tender for the National Lottery licence
Last year Sazka Group companies generated total wagers of €18bn from its wide-ranging retail and online operations. The group reported consolidated gross gaming revenue of €1.9bn in 2018. Lotteries represented 62 per cent of the total GGR, comprising €1bn from numerical lottery games and €146m from instant lottery games. Sports betting generated €471m in revenue, while digital games accounted for €32m, with the remainder derived from VLTs, land-based casinos and other services, such as financial and payment services. These are impressive figures, which will be significantly boosted by the proposed takeover of OPAP, which should be completed before the end of this year. It had previously owned a 23.7 per cent stake in OPAP. “We have more than five years’ experience in Greece, and OPAP has become the go-to modern gaming destination for Greek players,” says Chvátal. “OPAP is one of the biggest European gaming companies and we are proud to be the force behind what has been a great turnaround for the company, which has in turn become one of the largest Greek tax contributors following its privatisation. “The VLT rollout, which commenced in 2017, is on track and this has been a key driver
in the UK – we are currently evaluating our engagement there, as we believe the profile of the tender is very complementary to the SAZKA Group’s core competencies,” says Chvátal. It would be quite some statement to steal Camelot’s crown jewels, but recent tenders in Turkey and Italy show just how competitive these tenders can be.
of growth, and critical to combating the illegal gaming machine market, which has been prevalent in the country for many years.” SAZKA Group has also been involved in the modernisation of OPAP’s retail outlets, including digital signage, unified design standards, a new relationship with agents based on performance, as well as the expansion of the operator’s product portfolio with virtual sports and VLTs. “We are also investing in the development of a digital gaming platform – with both sportsbook and e-lotteries,” continues Chvátal. “While digital already makes up about 20 per cent of revenue generated in the Czech Republic, in Greece we are just at the beginning, and I really don’t see any reason why young Greek consumers won’t embrace these exciting, consumer-friendly digital products.”
Overcoming sceptics Despite its meteoric rise since officially becoming SAZKA Group in 2012, Chvátal says that it wasn’t all plain sailing when the company started out. “At the beginning, when we started, some people did not know what to think of us. Are they committed to player protection, to responsible gaming? Isn’t the state the best type of owner, as the guardian of good cause funding? “But, over time, we’ve won over key stakeholders by creating many successful partnerships, offering our consumers a range of innovative products, through engaging formats, and ultimately delivered value to our partner governments by increasing lottery tax revenues and generating greater funding for good causes,” he says.
Expanding organically With operations in five countries, the company’s current focus is on exploring potential options for organic growth within its current footprint. In the Czech Republic, where per capita spend on lotteries is below the European average, Sazka Czech is putting an emphasis on presenting the lottery as an entertainment offering, to shift the balance between lotteries
LOT T E RY
#1 Lottery operator in the Czech Republic Lottery licence since 1956 11,400 POS
Fully owned subsidiary
#1 Lottery and casino operator in Austria
Exclusive lottery licence and operator of casinos Other gaming operations include sports betting, VLT and online gaming
#1 Lottery company in Greece and Cyprus
Exclusive lottery, land-based sports betting and video lottery terminal licences
Management and board control #1 Numerical lottery operator in Italy
Exclusive licence for Lotto 34,000 POS
Minority shareholder with strong governance and operating rights
and other gambling products, such as gaming machines and VLTs. In Italy, Greece and Cyprus, where the average per capita spend is higher, SAZKA Group is instead focusing efforts on expanding its product portfolio, as well as further improving its digital offering. “We are only at the beginning here and we see real upside moving forward,” says Chvátal. “Austria is another mature market where the challenge is to work with our retail distribution partners to make sure we are where the customers are, and to find efficiencies by stimulating demand through incentive schemes, innovation and how we market our products.” And of course, SAZKA Group continues to look for opportunities to grow inorganically through further acquisitions. It is hard to argue with the company’s recent track record of value accretive acquisitions, which includes the OPAP privatisation and the Sazka Czech takeover. “We see many opportunities, but at the same time, we are taking a rather prudent approach, having grown quite rapidly over the past few years,” says Chvátal. “We want to expand internationally but not at all costs, taking excessive GIQ Q3 REVIEW
risks, as can be seen in latest developments in Italy and Turkey. “We need to be sure we will create value for our customers and our shareholders. Every project and licence we participate in must fulfil certain requirements regarding the return on investment. We do take calculated risks but we need to be reasonably sure we will create value for both our customers and shareholders.” Another key priority for the company right now is digital, particularly the further development of its online platforms in the Czech Republic, Austria and Greece. “Technological advancement is driving change in every industry, and lotteries, bettingand gaming
“We are taking a rather prudent approach, having grown quite rapidly over the past few years. We want to expand internationally but not at all costs” Robert Chvátal, SAZKA Group
are no exception,” says Chvátal. “Our leading market positions and brands allow us to adapt and deliver innovative products and games across our lottery and gaming portfolio – so our breadth is one key differentiator – we are not a ‘single product company’.” Amid all the excitement in the US around sports betting, North America remains a longterm focus for SAZKA Group. In the short-term, the company continues to monitor regulatory developments for the lottery and gaming markets across Europe. “Beyond Europe and North America – I think it’s a long shot,” says Chvátal. “We used to have a presence in Asia through SAZKA Asia, but the unpredictability of gaming regulation over there is simply too far from the culture we have in Europe and the fundamentals that underpin our business. I think in Europe we’ll gradually see more public-private partnership schemes being set up, because we, as private owners, simply pay more attention to the level of executional detail and cost discipline.” In seven years, SAZKA Group has developed the operational, marketing and digital nous to deliver lasting growth across its portfolio of lottery products and other games. The next seven years could be even more rewarding. n 41
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World regulatory update
GIQ rounds up the major global legal developments from Q3 2019
Argentina Political upheaval in Buenos Aires has thrown the province’s iGaming licensing process into doubt, as some of the world’s largest operators wait to hear if their applications have been successful. Seven licences were expected to be issued at the start of August, but at the time of GIQ going to press, applicants including The Stars Group, William Hill and Flutter Entertainment had yet to be informed of a decision. The delay is linked to the 11 August primary elections – known in Argentina as PASO – which saw a convincing victory for the Frente de Todos over the incumbent Juntos por el Cambio party of President Mauricio Macri. The result was followed by a 20 per cent devaluation in the peso and a one-day stock market collapse of more than 30 per cent.
Austria Austria’s second most populous state, Lower Austria, notified the European Commission of its new sports betting legislation which licenses online operators for the first time. The Lower Austria Betting Act updates the state’s existing law which dates back to 1978 and covers retail sports betting operations, betting terminals and online sports betting. The proposed legislation will require all sports betting operators serving players in Lower Austria to secure a licence from the state government and provide a €150,000 performance bond, and imposes a duty of care requirement on operators. Live betting is prohibited by the new rules, except intermediate or final results (score) or a result derived therefrom (next goal scorer). 44
Also prohibited are any bets concerning people under the age of 18, individual bets of over €350, bets on animal-only events, bets on amateur and virtual sports, and any other bets deemed to be contrary to public morality.
China The Chinese government welcomed moves by Cambodia and the Philippines to suspend online gaming licensing. The Philippine Amusement and Gaming Corporation (PAGCOR) suspended all new online gaming licence applications in August, days after the Cambodian government said it would no longer issue licences to online gambling operators. China’s Foreign Ministry spokesperson Geng Shuang said that the decisions would aid bilateral relations. Cambodia’s decision to cease online gaming licensing is expected to be a long-term move, while PAGCOR has suggested that the new licence suspension may be in place until the end of the year. “As is well-known, online gambling is a most dangerous tumor in modern society, detested by people all across the world. It is a shared hope that this problem could be effectively dealt with,” he said. “China highly appreciates Cambodia’s
The Chinese government welcomed moves by Cambodia and the Philippines to suspend online gaming licensing
decision to ban online gambling. We believe it will help protect both Cambodian and Chinese people’s interests. It will also strengthen our law enforcement cooperation and friendly relations. We also note the Philippine government’s announcement and appreciate it. We hope the Philippines will go further and ban all online gambling.”
Netherlands Dutch gambling regulator Kansspelautoriteit (KSA) confirmed it had received expressions of interest from 180 companies seeking online gaming licences, and expects to issue around 90 licences. According to the KSA, around 60 prospective licensees would likely fail in their application because they are small enterprises and selfemployed people who will not be able to comply with the stringent license conditions. It will also refuse applications from any online gaming operator deemed to have targeted the Dutch market in the two years prior to the start of the licensing process, which is expected to begin in July 2020, with the regulated market opening on 1 January 2021. Meanwhile, Kindred Group and GVC’s bwin became the latest operators to be fined by the regulator in Q3 for serving Dutch players without a local licence.
United Kingdom The UK Gambling Commission has suspended the online casino and betting operator licence of EveryMatrix due to social responsibility failings.The suspension applies to EveryMatrix’s remote casino and real-event betting operat44
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ing licence and does not impact its ability to supply platforms and technology to B2B clients. As a result, EveryMatrix is no longer serving players in Great Britain through the websites bookee. co.uk, pwrbet.com, fantasino.com, playfrank. com, sportingindex.com, westcasino.com, dragonaraonline.com, jetbull.com, mrwin. com and casinomulti.com. British customers of the above sites will continue to have access to their accounts to withdraw funds at any time, and the operator will also honour any ante-post bets placed prior to the suspension. EveryMatrix said it had cooperated with the UKGC throughout the licence review, has taken steps to its social responsibility obligations and hoped the suspension would be lifted shortly.
Spain Licensed betting operators in Spain are no longer able to offer bets on sporting events which feature participants under 18 years of age. Spanish gambling regulator Dirección General de Ordenación del Juego (DGOJ) published a resolution in the Official State Gazette to prohibit betting on events played “exclusively or mostly” by minors. The scope of the ban also includes betting on events, such as football, which may have older players and younger players under the age of 18 playing together in the same team. The ban follows a study on the Spanish horse race and sports betting market conducted by the DGOJ, which found that around 5.45 per cent of sporting events bet on in 2018 involved young players, with one per cent of all bets placed in the market attributed to these games. The regulator noted GIQ Q3 REVIEW
that these were from a high number of different sports, including football, volleyball, basketball, field hockey, water polo, table tennis and ice hockey.
Sweden Swedish gambling regulator Spelinspektionen denied a request by the country’s Football Association to prohibit betting on its Division 2 Södra Svealand matches. The Swedish FA requested the prohibition after receiving reports from Sportradar and Global Lottery Monitoring Systems (GLMS) that more than 13 matches had been subject to betting-related manipulation earlier in the season. Spelinspektionen denied the request on the basis that the Swedish Gaming Act does not allow such a prohibition, but said that it is working to address the sport’s concerns. During Q3, the regulator issued fines totaling SEK20.1m to four operators for offering bets on sporting events involving players under the age of 18, in breach of Swedish regulations. ComeOn, Snabbare, Hajper and Legolas Invest became the latest operators to be warned after SEK41.2m in fines were issued to eight other operators in July for the same offence.
Switzerland The Swiss Lottery and Betting Board and Federal Gaming Commission identified a total of 104 internet domains for site-blocking under the country’s first blacklist of unlicensed online gaming operators. Publication of the blacklist follows the implementation of new iGaming regulations in July which limit online licences
to land-based casino operators, with four licences issued to date to Grand Casino Baden, Casino Davos, Grand Casino Lucerne and Casino Pfäffikon. The first blacklist features 65 domains related to betting and lotteries belonging to highprofile names such as 1xBet, bet-at-home.com, bet365, betclic, Cashpoint, Expekt, Interwetten, Pinnacle, Sunmaker, TheLotter, Tipwin and Unibet. There are also 39 blacklisted online casino sites, including 5dimes, bet365, gg.bet, iGame, Intertops, Parimatch, Slotcash and Videoslots, while a number of sites also appear on the lottery and betting blacklist.
Ukraine Ukrainian president Volodymyr Zelenskyy directed his government to legalise gambling in an effort to combat the shadow economy and stimulate investment activity in the country. Zelenskyy issued the directive as part of a wider plan to improve the business climate in Ukraine, revise existing labour legislation and introduce a single e-services system for citizens. The government has been tasked with adopting a law to stimulate investment activity and strengthen the protection of foreign investment by 1 January 2020, and to develop conditions to enable banks to increase lending to businesses by October of this year. To combat the shadow economy, Zelenskyy wants the government to submit a draft law to parliament by 1 October to legalise gambling in the country and to approve the law by 1 December. Gambling has been illegal in Ukraine since its prohibition in 2009, both in retail and online, although it continues to be available. n 45
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Bridging the divide Puerto Rico turns to sports betting as a way out of economic woe. GIQ speaks to director of games of chance at the Puerto Rico Tourism Authority, Jaime Irizarry, about its prospects
TRACKING SPORTS BETTING legislation to determine which US state presents the next big opportunity has become a favourite pastime for business development managers across the gaming industry since the repeal of PASPA. But one jurisdiction which may have slipped under the radar is Puerto Rico; not a state but an unincorporated territory of the United States that was nonetheless bound by PASPA until May 2018. In July, the since-departed Puerto Rico Governor Ricardo Rosselló signed into law legislation authorising sports betting as one of his final acts before resigning. “With the signing of this law, we are getting ready to witness the potential it provides to transform Puerto Rico into a state-of-the-art jurisdiction, while also benefiting the local economy,” Roselló said at the time. The new legislation regulates sports betting, fantasy contests and betting on eSports at casinos and online. It also creates a new Betting Commission for the territory, which will be responsible for regulating betting activities and casino games and will comprise seven members from across the public and private sector. Land-based sports betting will be taxed at seven per cent of gross gaming revenue, while online betting will be taxed at 12 per cent of 46
gross gaming revenue. There is currently no cap on the number of licences that will be issued, with the commission charged with determining all licensing matters. According to the size of the operator, a licence could cost anywhere between $2,500 to $50,000.
A bridge between markets Part of the value of the Puerto Rico sports betting market could be the way it provides operators with a bridge between two of the world’s most exciting iGaming regions: North America and Latin America. “Puerto Rico’s geographical location between North America and Latin America makes it an ideal connecting point between the two regions,” says Jaime Irizarry, director of Games of Chance at the Puerto Rico Tourism Authority. “We have a stronger and more mature casino industry than many US states, and we have also looked towards Europe and Latin America to learn lessons on how to grow this sector.” Irizarry says that by building a regulatory framework informed by successful jurisdiction in the US, Latin America and Europe, Puerto Rico can become a flagbearer for balanced gaming legislation. “We are trying to deliver a licensing process in Puerto Rico that is effective, clear and
with the right regulatory safeguards. We have pursued the best conditions in terms of costs to attract investment but we feel we have also ensured the right social protections.” Before any such investment can enter, the newly-installed Governor of Puerto Rico, Wanda Vázquez Garced, as well as the island’s senate, must proceed with the appointment of two members of the Betting Commission board, as well as an executive director, before licences can be issued. According to Irizarry, if everything goes well, the new market could be live with sports betting by the end of this year.
A question of cash The taxes collected from sports betting will be allocated to pension funds, healthcare, education and policing, as well as to fund treatment for those suffering from problem gambling. However, there are matters to be settled before licences can be awarded. There is a debate raging over an additional five per cent allocation earmarked for the Department of Recreation and Sports to support the development of sport on the island via non-profit organisations. Puerto Rico’s Chamber of Representatives has challenged this allocation with an amend-
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Sports betting in Puerto Rico: the lowdown Licensing rules To apply for a licence in Puerto Rico, companies will need to partner with an existing land-based casino or racetrack. All online operators will also be required to host servers within Puerto Rico.
Market size According to research from Spectrum Gaming, the regulated Puerto Rico sports betting market will be worth an estimated $44m-$62m in gross gaming revenue per year. This is broken down between retail GGR ($15m-$21m) and digital GGR ($29m-$41m). Recent casino revenue data is not available,
but estimates suggest the total market size to be in excess of $300m.
Leading casinos According to Puerto Rico law, all casinos must be located in a hotel or as part of a resort. Most casinos are independent operators, but a handful of local groups have emerged, including HI Development Puerto Rico Corp, which operates Tropical Casino Ponce, Tropical Casino Bayamon and Tropical Casino Mayaguez. The island’s largest casino is the Four Points by Sheraton Caguas Real Hotel & Casino, which boasts 570 machines and ten gaming tables.
a doubt, we believe it is a market with a lot of potential, which provides opportunities to generate business,” Antonio Salord, the recentlyappointed sales manager for Latin America at Magellan Robotech, Stanleybet Group’s B2B brand, told Gaming Intelligence.
ment that will see the money transferred directly to the territory’s Olympic Committee. “[The lack of direct funding] constitutes contempt for all our high-performance athletes, as well as the internationally recognised principle of sports sovereignty,” representative José Varela said in August. There is considerable optimism about the sums of money sports betting can generate for Puerto Rico. According to a study commissioned by the country’s Chamber of Commerce and carried out by The Innovation Group, sports betting will help spearhead dramatic growth in Puerto Rico’s gaming sector, with the government collecting revenues of $29m in 2020, rising to $87m in 2024. A second study, commissioned by Puerto Rico’s government and conducted by Spectrum Gaming Group, is more modest, estimating that total sports betting revenues on the island across land-based locations and online will be between $44m and $62m each year. Both figures look somewhat ambitious compared to revenues for US states that have already regulated sports betting (see page 62), particularly for an island with a population of just 3.2 million and a GDP per capita that is lower than all 50 US states. But nonetheless, the wider industry has reacted positively to the legislation. “Without GIQ Q3 REVIEW
But operators may be better served by looking towards the regulated market of Colombia rather than US states – with which the island shares little in common economically – for inspiration. Puerto Rico’s economic woes are well-publicised; the counMaking it pay try’s 2017 debt crisis, and the Once sports betting is live, devastation wreaked by HurPuerto Rico will present operaricane Maria, which left much tors with a unique challenge – a of the island without electricity market which doesn’t fall within for months have taken a heavy the traditional templates. toll. It was a search for new tax Tourism will certainly be one revenues which first saw Puerto major focus. Legislator Néstor Rico consider legal sports betting Alonso Vega noted when the bill following the repeal of PASPA. was passed that it would make But out of this turmoil there Puerto Rico the first jurisdiction is a genuine hope that strong and within the Caribbean to regulate “We are trying to sensible gaming regulation can sports betting, and would provide boost tourism and tax dollars deliver a licensing to help the country’s recovery. the island with the “tools to proprocess in Puerto Next on the roadmap for Irizarry mote tourism”. The government had previous- Rico that is at the Tourism Authority is the ly echoed these sentiments back in effective, clear regulation of the estimated 25,000 April: “The legislation will make and with the slot machines in Puerto Rico it possible for Puerto Rico to be right safeguards” which operate outside casinos. marketed nationally and internaBringing this booming cottage Jaime Irizarry, Puerto tionally as an attractive destinaindustry within the remit of Rico Tourism Authority tion for the millions of people who the regulator will not be simple bet on gambling,” it said. – legislation has already been Already home to around 20 casinos, the rejected by Puerto Rico’s senate once – but doing addition of sports betting is seen by many as so will generate new revenues and strengthen an opportunity to grow revenues and increase player protections. retention in what is already a competitive sec“We firmly believe in the creation of new tor. While overwhelmingly a Spanish-speaking frameworks that will be positive for all,” says territory, baseball – Puerto Rico’s national Irizarry. “With the sports betting measures pastime – will generate the vast bulk of sports and the formalisation of slots outside of casinos, betting revenues. With a long history of MLB Puerto Rico has the chance to become a unique superstars hailing from the island, there will jurisdiction, where the Caribbean and Central, be no shortage of marketing opportunities South and North America come together on all for operators. trends related to gambling.” n 47
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U S S P O RTS S P EC I A L WILLIAM HILL
U S S P O RTS S P EC I A L WILLIAM HILL
William Hill US has surged to market leadership Stateside, but a change of group CEO from Philip Bowcock to Ulrik Bengtsson reveals the extent of the bookmaker’s troubles elsewhere. Steve Hoare speaks to CEOs past and present, and US chief Joe Asher THE PAST THREE years have been a period of tumultuous upheaval for the betting industry in the UK – and for William Hill, in particular. A decade of economic austerity has driven a media backlash against the industry and a regulatory clampdown on its worst practices. For William Hill this has culminated with the announcement of an expected 700 shop closures and the installation of a new chief executive officer – announced midway through the writing of this article. We spoke to Philip Bowcock following the publication of the bookmaker’s H1 results in mid-August. By the beginning of September he
was gone, replaced by the company’s chief digital officer Ulrik Bengtsson. We catch up with Bengtsson on day two in his new role. He is understandably reticent to go into too much detail about any grand plans but agrees to answer a handful of questions via the protective shield of email. Bengtsson joined William Hill 18 months ago to head up the company’s online operations. His previous role was chief executive of Betsson – a Swedish onlineonly operator, known for the strength of its Casino product rather than its sports betting arm. Bowcock, on the other hand, was promoted from the role of chief financial officer. The
assumption among analysts is that Bengtsson’s appointment marks the company’s full transformation into a digital-first company. Bengtsson sees it slightly differently. “I am hugely humbled to be taking the role of CEO as the first non-British person to lead the company,” he says in his first interview as CEO. “That is a recognition of the more international nature of the business, and while retail will continue to be a key part of our company, we have a strategy in place that aims to rebalance the business to be more international and more digital.”
U S S P O RTS S P EC I A L WILLIAM HILL
WILLIAM HILL – STATE BY STATE Nevada “Nevada is our core business,” says Asher. In 2012 William Hill acquired three businesses for a combined total of $55m and put them together under the management of Asher to form William Hill US. William Hill holds around a third of the market, operating 113 race and sportsbooks, with 69 per cent of wagering coming from mobile.
Delaware “We already had a presence in Delaware, providing risk management services to the State Lottery, which offered a parlaybased product prior to PASPA being repealed. This enabled the lottery to
become one of the first new states to offer full sports betting, and so we have expanded, as the lottery has offered a full sports betting service,” says Asher. William Hill runs the sportsbook (pricing, risk management etc) as a sub-contractor to Scientific Games. GVC Holdings’ Stadium Technology provides the technology.
Rhode Island “No doubt our lottery experience in Delaware helped us in Rhode Island where we provide odds-making and risk management services as part of our partnership with lottery provider IGT,” comments Asher. IGT provides its PlayShot end-to-end sports betting platform to the lottery, which operates the
Bowcock was named William Hill chief executive officer nearly four years ago. He inherited a company that was under attack in its home market from media and politicians hellbent on ridding the world of the crack cocaine of gambling (fixed-odds betting terminals, FOBTs or video lottery terminals, as you might know them, depending on your jurisdiction); and breaking the tyranny of sports betting companies “ripping people off online”. The promised land of US sports betting (beyond Nevada) was still a distant dream. “We were very, very dependent on the UK for profitability and we had a loss-making operation in Australia,” says Bowcock. The uncertain regulatory environment around the company and its inadequate international coverage needed fixing and Bowcock leaves the company feeling that he has done that job. He believed the cloudy outlook that had engulfed his company had been cleared by the repeal of PASPA; the purchase of Mr Green; the UK government’s decision to cut the maximum stake on FOBTs from £100 to £2; and the sale of the Australian business. In fact, for a man who had just announced the anticipated closure of 700 shops and the anticipated loss of 4,500 employees, Bowcock seemed really rather chipper. He clearly did not see the axe coming. As head cheerleader of a public company, he was paid handsomely to be the eternal optimist – the share price demands it. 52
sportsbooks at the Twin River Casino and Tiverton Casino Hotel.
New Jersey “We signed a deal with Monmouth Park back in 2013 and built a sportsbook on the site – in anticipation of PASPA being overturned. That foresight paid off last May,” says Asher. New Jersey is the biggest state so far to regulate, and operates an open mobile registration model as well as licensing racetracks and casinos to offer sportsbetting. In addition to registering via the William Hill mobile app, customers can bet at William Hill sportsbooks at Monmouth Park Racetrack, Ocean Resort and Tropicana Casino.
But Bowcock was clearly relieved that he had a clear message to deliver to investors. For a while, the emergence of the US market had been the light in the gloom of his public pronouncements. It has been a long time since a William Hill CEO has been able to talk about a 30+ per cent growth rate in any part of its business. But Bowcock also felt that the other parts of the business were emerging from their slumps. While a spokesperson says “the board felt it was time for a change”, he also described the decision as “a mutual thing” and talked about the intensity of the past few years. Whether Bowcock did not have the energy to complete the turnaround that he felt he was on the verge of achieving, we will probably never know. But the board felt that the former CFO had done his bit and the company needed an operations man to guide it through its next chapter. Enter Bengtsson.
A new beginning If the UK bookmaker is headed on a path of internationalisation and digitisation, it will probably need a new team in place to achieve it. Bengtsson says: “In terms of my plans, including people, it is too early to detail these but I will say I know there is considerable talent at William Hill and we will be working to ensure we progress as rapidly as we can.” Bengtsson’s 18-month reign as chief digital officer has not coincided with huge improvements in digital revenue, but it has coincided
Ocean Resort, Atlantic City
with the acquisition and integration of Swedish online operator Mr Green. William Hill has been talking about diversifying online outside the UK since Ralph Topping’s period in charge, and yet its recent launch of the William Hill brand in Sweden was the company’s first launch (aside from the US) since 2012. “There has been a lack of focus and management capability to make this happen,” explains Bengtsson. “On top of that, diversification is a challenge, with regulation constantly changing. But we have now finally made good progress with the acquisition of MRG, and with the Malta hub now acting as our international arm we are in much better shape to tackle international growth and diversification.” William Hill launched its first off-track betting shop on Park Lane, London, in 1934. Following the closure of 700 shops, it will still have around 1,600 outlets in Britain’s streets. Such is the strength of its brand at home that it has perhaps been difficult to imagine why it would not thrive abroad. But it never really has. For the first time, it now has a brand – Mr Green – that might resonate more in markets beyond the UK. “We will decide market by market,” says Bengtsson, “and we may use both brands where appropriate [as in Sweden] but the Malta team is the international hub for William Hill and will drive international expansion.” Aside from in the US, of course, where the William Hill brand is being established at quite some rate.
U S S P O RTS S P EC I A L WILLIAM HILL
“Both casinos have state-of-theart sportsbooks that offer great experiences for our customers. We expect them to be very busy in the new football season,” continues Asher.
West Virginia “After New Jersey, we expanded into West Virginia at Eldorado’s Mountaineer Casino and Penn National’s Hollywood Casino. Currently we are retail-only, but plan to launch on mobile soon,” says Asher.
Mississippi The UK bookmaker is also live in three Mississippi casinos, where regulations license retail betting but only allow mobile betting on the property. These properties include Lady Luck Casino in Vicksburg and Isle of Capri in Lula, which were Eldorado casinos before the
Hail Ceasars By any measure you care to use, William Hill has got off to a flyer in the US market since the repeal of Professional and Amateur Sports Protection Act (PASPA). It has just celebrated passing $1 billion in gross win, gross profit for 2019 is approaching $50m and it is looking forward to its strongest partner Eldorado adding another 34 casinos and five states via its acquisition of Caesars. Under the terms of the Eldorado agreement, William Hill will have access to all acquired venues – as it did when Eldorado acquired the Tropicana in New Jersey. The company estimates it has grabbed 27 per cent market share across the eight states it has opened thus far – it will also have opened sportsbooks in Iowa and Indiana (at least) by the time you read this. Its long-term aim is a more modest 15 per cent, a recognition that it has benefited greatly from first-mover advantage. It has been a fantastic effort. When PASPA was repealed last May, William Hill had 439 employees in the US. It now has 815 across the country. It has 600 people in its Nevada HQ. It has 155 people in its newly-opened digital hub in New Jersey, headed by US digital president Ken Fuchs. With a 30-32 per cent market share in its home state of Nevada – the country’s most welldeveloped sports betting market – one could be forgiven for asking whether William Hill’s longterm target of 15 per cent is too modest. GIQ Q3 REVIEW
operator sold them to Twin River. Also Eldorado’s last Mississippi property Tropicana Casino in Greenville.
Pennsylvania “In Pennsylvania we were the first to launch sports betting at the Hollywood Casino at Penn National Racecourse last November and plan to launch our mobile app in the state shortly,” says Asher.
New Mexico “Following a partnership with the Mescalero Apache Tribe in New Mexico, we began taking sports bets at the Inn of the Mountain Gods in June – our first tribal agreement outside of Nevada. We are currently only offering retail bets under the tribal licence – but we anticipate full licensing to take place in the state in due course,” comments Asher.
However, in the more liberal states that have rolled out mobile sports betting, William Hill has struggled to keep pace with the likes of DraftKings and FanDuel. In New Jersey, where William Hill was first to launch with racetrack Monmouth Park and also has sportsbooks at Ocean Resorts and Tropicana Casino (see boxout), it is lagging well behind the fantasy sports brands. According to figures released by the New Jersey Division of Gaming Enforcement, racetrack Meadowlands (in collaboration with IGT and FanDuel) was by far the biggest sports betting operator in July, with revenue of $9.1m, with Resorts Digital (which has partnerships with DraftKings and The Stars Group) the second largest operator with $3.7m in revenue. William Hill’s partner Monmouth Park, generated sports betting revenue of $2m and that includes revenue from relationships with The Score and Sugarhouse. Meanwhile, Ocean Resorts generated $0.59m and Tropicana just $126,000. “DraftKings and FanDuel were always going to get off to a fast start in New Jersey because they had the daily fantasy databases,” says William Hill US CEO Joe Asher. Asher accepts the need for significant marketing spend in a remote registration environment “to rise above the noise”. The UK bookmaker simply does not have the brand recognition or the database of customers in the US to compete in states that allow mobile sports betting accounts to be opened freely.
Iowa William Hill opened four branded sportsbooks for Eldorado Resorts’ Isle Casino Bettendorf and Isle Casino Waterloo, Affinity Gaming’s Lakeside Casino, and Prairie Meadows. It also launched its mobile app there.
Indiana The Eldorado Resorts relationship, which goes back to pre-William Hill days – it was a client of Asher’s Brandywine company – has also bequeathed the bookmaker a sportsbook in Indiana. The William Hill sportsbook at the Tropicana Evansville Casino will feature a video wall and viewing monitors to enable fans to watch and bet on the games through the William Hill mobile app and invenue kiosks. It is pending approval of the Indiana Gaming Commission.
“Clearly, in states we have a retail presence, we will try to leverage that retail presence and build a successful mobile business like we have done in Nevada,” says Asher. “A good number of our mobile sign-ups in New Jersey are coming to us from our retail presence.” While the US business has been built on its retail strength (in a similar manner to the UK business), its digital business is doing better than some might imagine. In its H1 report, it revealed that 67 per cent of revenue across the US comes from mobile (not including lottery states such as Delaware or Rhode Island, where William Hill is not the operator). “For us, it will be a question of spending smart and establishing our niche rather than competing dollar for dollar. At the end of the day, we need to build a profitable business,” says Asher. To that end, there was a lot of talk during the H1 earnings call about a media partnership that would give Hills access to a database of relevant customers. “We don’t believe this is about going out and finding a different brand,” said Bowcock. “This is about access to database – so those media companies that have quite significant databases and understand what those customers actually view on television and consume. It’s about giving access to media channels, be that by pay-perview or other social media channels.” At times during the call, it sounded like the team was in the final stages of negotiating a deal, but at another stage, chief financial officer Ruth 53
U S S P O RTS S P EC I A L WILLIAM HILL
Prior offered only that she had “real confidence” Technology overhaul about getting a “really good” partnership. With However, the progress during the past 18 months FOX Sports and MGM already signed up with gave Bowcock increasing confidence that the the Stars Group and GVC Holdings respectively, US business can become a real profit engine for the number of nationwide sports betting brands the company. is dwindling. “We are going to need to make sure we are ESPN would be the most obviously synerunderstood and that we understand the dynamgistic nationwide brand. While Disney’s sports ics of the market,” the outgoing CEO told us. brand has yet to jump into the fray as wholeHowever, he made the point that William Hill heartedly as FOX, it has signed a deal to build US is a truly American team that has grown an ESPN-branded studio at Caesars’ LINQ organically from its roots in Las Vegas. Hotel & Casino in Las Vegas, where sports betSuch are the struggles of the company in its ting-themed content will be created, along with home market that it can be forgiven for looking segments for ESPN’s recently launched sports at its “embryonic business” (Bowcock’s words) betting-related show, Daily Wager. as a potential saviour. And while Bowcock is Caesars’ data and brandkeen not to be seen as an invaing will also be integrated sive species, there are some across ESPN programming, British flavours that the paradding that its odds inforent company can bring to aid mation will be used by the its fledgling operation. sports network to develop The company is eagerly content across its platforms, upgrading its technology. including websites and apps. Bowcock has been trumpetAsher notes: “Once the ing the $70m investment in a Eldorado-Caesars deal is new omnichannel platform completed, we will talk to built specifically for the US our partners at Eldorado, market for almost a year which will then be called now. He has promised it will Caesars, and figure out be “more feature-rich than how to utilise the Caesars any sports betting platform brand.” currently live in the US”. “In states we have He p oi nt s out t h at Asher has managed to get a retail presence, we Caesars was once one of by with the minimum viable the world’s biggest sports will try to leverage product until now. The priorbrands, when the likes that retail presence ity has been speed to market. of Mike T yson, Sugar and build a successful “What we had was old Ray Leonard and the rest mobile business” and wouldn’t be good enough would duke it out at Caesars Joe Asher, William Hill US to sustain us and allow us to Palace. However, Asher be the leader in the broader is keen to point out how US. So, we went about designwell his team has done with establishing the ing, building and launching the new platform, William Hill brand in Nevada, since it acquired which has a modern architecture; it integrates his Brandywine business and two other compainto loyalty systems; and it is easier to deploy as nies in 2012. the business expands. It is a major endeavour.” “When William Hill came into the US, the Connectivity is key. The platform has been brand awareness in Nevada was one per cent,” built in collaboration with NeoGames (a compahe says. “And that’s because one per cent of the ny that is 29.4 per cent owned by William Hill). people were familiar with a winery in Northern The software provider is primarily known as California called William Hill!” a supplier to lotteries. It provides, for example, Now, everybody in Nevada knows the Wilthe online gaming and lottery platform of the liam Hill brand. It operates 113 race and sportsCzech national lottery operator Sazka. This books in Nevada with 69 per cent of wagering connects to the IGT retail lottery system and coming from mobile. The Nevada business the SBTech sportsbook. It also has experience broke through the £1 billion in amounts in the US market, where it has connected its wagered in 2018 and boosted profit an impresaccount management platform with IGT’s sive 84 per cent to £32m. retail lottery systems in Michigan and in But, of course, Nevada is unique. William New Hampshire. Hill will not be able to plaster its brand across Retail managing director Nicola Frampton 100+ casinos in any other state. is very proud of what she calls her “lovely” self54
service betting terminals (SSBTs), which are completely proprietary, meaning the company does not pay any revenue share on them like many of its competitors. The company is planning on replacing its US kiosks with the UK SSBTs, which it believes are far better and would be market-leading in the US. These would be deployed with the company’s EPOS to align the retail front ends with the front ends across the UK and the US. When this is completed it will represent a complete overhaul of the technology that William Hill acquired in 2012.
Acting responsibly The other area in which William Hill – and other UK bookmakers – might contribute positively to the US sports betting environment is responsible gambling. While certain US regulators (those in Nevada and New Jersey) like to view themselves as the gold standard in regulation, the UK Gambling Commission has driven William Hill and its peers to raise its standards with regards to responsible gambling. William Hill has responded with its Nobody Harmed strategy, which is a comprehensive campaign to overhaul the company’s culture, its products and its advertising with the ultimate aim of ensuring that nobody is harmed by gambling. It should help customers control their gambling by designing products that are less addictive. It will also control its advertising and use technology to identify customers who should not be gambling – or those at risk of developing a problem – and help them to stop. Asher is very passionate about Nobody Harmed and how it will be introduced in the US. He has appointed a new head of responsible gambling in the US – Tammi Barlow, who has held similar positions at IGT and Northstar Lottery Group – to ensure it is embedded in the culture as the business expands. Bowcock made an interesting point that there is a different cultural climate in the US, where “there is less expectation on the state or companies to get involved with what people say and what they can do”. While this is not a focus for regulators at the moment, if the market grows to the point where it is as saturated as the UK market, then responsible gambling will rise up the media and political agenda. This is an opportunity for the UK bookmaker to take a lead and get ahead of the regulatory agenda and avoid the kind of backlash that is forcing it to axe 4,500 jobs in its home market. n
National Penn National is the first US casino operator to announce a national strategy for sports betting and iGaming. Head of Penn Interactive Ventures Jon Kaplowitz talks Steve Hoare through his web of partnerships
U S S P O RTS S P EC I A L PENN NATIONAL
ONE OF THE most notable aspects of the fledgling US sports betting market has been its piecemeal nature. As operators have rushed to market following the passage of state legislation, they have announced suppliers and partners in such a haphazard fashion that is has been dizzyingly difficult to keep up to date with who is doing what for whom and where. Penn National had other ideas. It did not mind not being first. With 41 casinos across 19 states, it wanted to be in control of its own destiny, rather than selling its market access to the highest bidder. Furthermore, it has been working on its interactive strategy for longer than most of its rivals ,and sees the combination of iCasino and sports betting as a big driver of future revenue. “We wanted to take our time and evaluate the market. We wanted to see what we could learn from New Jersey, to understand where the money is and take all those data points and create a strategy that works for us and our shareholders,” says head of Penn Interactive Ventures Jon Kaplowitz. While the company has mulled and negotiated its national strategy, it engaged William Hill to launch ten sportsbooks in its casinos, in West Virginia, Mississippi, Pennsylvania and Las Vegas. “William Hill has been a great partner launching our initial sportsbooks,” says Kaplowitz, “but there are strategic and financial benefits for Penn National to launch our own operated sportsbooks in the future.” We talk one week after the company launched in Iowa under its own name, with technical assistance from Kambi. Kaplowitz says the launch at Ameristar Casino Hotel Council Bluffs went well, although he had to postpone our initial call, which was (perhaps unwisely) scheduled for launch day. Following the Iowa launch, attention turns to Indiana, where Penn will go on to launch retail sportsbooks at its two casinos there – Hollywood Casino Lawrenceburg and Ameristar Casino Hotel East Chicago – using the same model as in Iowa.
Picking partners While William Hill served the purpose of getting kiosks in casinos quickly, Penn has turned to other partners as it formulates a national strategy it hopes will allow it to do three things. Firstly, it will be able to promote its own sports betting brands in every state. Secondly, it will gain a revenue share from companies that it expects to be market leaders, wherever they operate (DraftKings and FOX Bet). And thirdly, it has taken stakes in two emerging companies
that it expects to challenge the market leaders in those two things in the right way, really good due course (PointsBet and theScore). things happen.” “If these companies do well, then we do well. Toronto-listed theScore is less well known. So we are mutually aligned,” says Kaplowitz. Penn has taken an equity stake of 4.7 per cent “Part of our strategy was to fully maximise our in the company, with the potential to increase non-primary skins. We selected four partners this stake as additional market access fees who we believe will be successful in the markets become payable. “They have created a really where they will be operating our skins.” unique and compelling mobile sports experi“We wanted companies that would be able to ence,” says Kaplowitz. “I use theScore app all drive market share, that would have a unique the time to check scores and read articles. They point of differentiation and will hopefully be know social media. It is the first company to valuable in the future, which is why we took truly integrate a sportsbook into a sports media equity stakes in a couple of our partners.” mobile app.” DraftKings gains a ten-year agreement, TheScore has signed a 20-year agreement to with the option for a ten-year extension, giving gain first skin access in Louisiana and Missisit first skin market access in Florida, Missouri, sippi; second skin access in Indiana, Iowa, MisOhio, Pennsylvania and Texas on a revenue souri, Ohio and Texas; and third skin access in share basis. DraftKings will get second skin Kansas, Maine, Massachusetts and Michigan. access in West Virginia and third skin access “We think it is going to do really well in in Indiana. New Jersey and we think that “We chose Dra ft Kings wherever it goes it will be realbecause it is the leader in New ly successful.” Jersey,” explains Kaplowitz. “It Penn has also taken a has been doing this from a fan5.28 per cent stake in Sydneytasy sports perspective for sevlisted sportsbook operator eral years. It knows how to build PointsBet, with an additional B2C digital mobile products and $2.5m access fee for Ohio, payit has a brand and database that able in cash or equity at Penn resonates in sports betting. We National’s option. think it will be one of the marPointsBet’s 20-year deal ket leaders in all states that it will see it gain first skin access launches – simply by way of its in Louisiana, Missouri and brand and database.” Ohio; second skin access in T he St a rs Group wi l l Indiana; and third skin access “We wanted to see make an upfront payment of in West Virginia. US$12.5m in cash to Penn, what we could learn “This is a company that with an additional access fee from New Jersey, really nobody had ever heard of $5m in cash for Texas, based take those data of. It does not have an estabon certain conditions. It will points and create a lished brand in the US. It does also share revenue with Penn strategy that works” not have a database. It does not National and pay a one-time Jon Kaplowitz, have a relationship with any bonus based on net gaming rev- Penn National retail casino. But it was able enue in 2023. to breakout in New Jersey – a The Stars Group will have really competitive market – first skin access to Illinois, Indiana, Ohio and and take a five per cent market share.” Texas; and second skin access to Kansas, New Kaplowitz believes it has been able to do Mexico, Maine, Massachusetts and Michigan. that down to the strength of its product, which Aside from being one of the largest publiclydifferentiates it from other operators, and its listed online gaming companies in the world, unique approach to digital marketing. “Doing with one of the world’s best-known brands, one these deals was challenging but we wanted to of the most attractive aspects of The Stars Group match their needs and what states they were priwas its recent partnership with FOX and the oritising with what we thought was a mutually creation of FOX Bet. beneficial deal,” continues Kaplowitz. “I have a media background, joining [Penn The first, second and third skin scheme National] from Comcast NBCUniversal and we works as follows. In Ohio, for example, Penn have seen first-hand the power of sports conhas four casinos. Ohio has not legalised sports tent digital companies integrating with sports betting yet but assuming the government allows media,” explains Kaplowitz. “Whether you’re one skin for each casino, then Penn National on television or online, when you can integrate would have four skins. The mother company 57
U S S P O RTS S P EC I A L PENN NATIONAL
will always retain the first skin. DraftKings, PointsBet and The Stars Group would have first skin access to Penn’s other casinos’ skins. If the government allows a second skin, then theScore would also be able to operate in the state. “We think this collection of partners will help fuel and fund our primary strategy,” concludes Kaplowitz.
Outlining the primary strategy The primary strategy is deploying its own retail and online sportsbook – and online casino – where it can under its own brand. To that end, it has chosen Swedish supplier Kambi to provide trading services, odds compiling and risk mangaming will be a really big growth opportunity agement, while it builds the front end in-house. for our company. “We believe Penn National has some founda“The fact that we have retained control of tional advantages in this industry – obviously every one of our primary skins in every one of with 41 casinos, we have a lot of people flowing our states gives us the flexibility and optionality through our properties. Just by default, we will to build our primary product the way we want be one of the largest retail sportsbooks in Amerto. It allows us the flexibility to create unique ica. We noticed in New Jersey that companies strategic partnerships with media companies or that are good at retail can drive people online.” other technology companies. We really focused By educating their casino patrons and proon that control because we think this industry is viding incentives for customers to go online, it a unique growth opportunity for Penn National.” is driving traffic towards its online operations. Rather than rushing out a product, Kaplowitz’s The full iGaming picture team is taking its time to build a product that While the company’s national sports betting he hopes will appeal to casual strategy has been clearly sports fans and hardcore thought through, its burgeonpunters alike. ing iGaming presence has not “We think a really key been immune to the piecemeal “Penn National’s advantage is our loyalty pronature of the emerging statepresence on the gram – mychoice. We have over by-state market. This is, after 5.5m active players on the pro- ground and its all, a learning experience gramme. We were, I believe, the relationships with for everyone. first casino to integrate a loyalty state regulators Kaplowitz joined the comprogramme into a retail sports- are an advantage” pany in February 2019. He sucbook kiosk [in Iowa]. We have Jon Kaplowitz, ceeded experienced iGaming integrated it into our iCasino Penn National executive Chris Sheffield, who platform in Pennsylvania.” had put many of the foundaThe idea is that with any tions in place for Penn’s initial Penn National product – online or off – you will moves into iGaming and social casino gaming. continue to earn loyalty points and stay loyal Penn acquired social casino software house to Penn National brands. While the company’s Rocket Games for $60m in mid-2016 and went Hollywood Casino is the primary brand across a on to launch its Hollywood Classic Slots app. number of states, among its 41 properties it also It had already launched its HollywoodCasino. has brands such as Ameristar, L’Auberge and com social casino app, which was supplied by Boomtown in local markets. A decision has not Scientific Games. been taken on a branding for the full omnichan“It resonates with our casino patrons,” says nel product yet – it could yet take the FOX Bet Kaplowitz. “We have integrated mychoice into approach and license a sports-related brand our social casino product, which is something from elsewhere. that people love. They love the SciGames con“For us, it was really important to retain tent and they love the fact they can leave the control of our primary strategy because we casino and continue to play for fun. We have the knew we had these foundational advantages. highest unit economics in America in average We did not want to outsource the strategy or revenue per unit. That bodes well for us in the the economics to a third party. We wanted to iCasino space. We have learned a lot from our keep that because we believe that real-money HollywoodCasino.com social casino.” 58
The company also acquired Absolute Games in mid-2018. Kaplowitz describes its Absolute Bingo product as “one of the most popular social bingo games in the world”. In addition to all the forays into social casino, Penn National launched its first real-money iGaming casino in its home state of Pennsylvania in July. IGT supplies the player account management system for pa.hollywoodcasino.com and a constantly updated suite of games, which are exclusive to the operator in Pennsylvania for a limited period of time. “We are using it as a test bed to see what we can do in subsequent states. Pennsylvania is tough market to make money in because of the tax rate. So, if you can make it in Pennsylvania, you can make it anywhere.” What strikes you when talking to Kaplowitz, is the company’s commitment to iGaming and sports betting. It also has an advance deposit wagering app provided by Sportech, which is live in 25 states. Penn National has one of the largest parimutuel track facilities in the US and Kaplowitz believes this will be integrated into the mainstream sports betting sites in time – in a similar manner to the UK and other markets. It all adds up to quite a portfolio. “It’s hard to manage – not just the different rules and regulations – but the compliance issues, the technology certification requirements, keeping track of all the accounting and different tax rates,” says Kaplowitz. However, Penn National’s presence on the ground in all these states and its relationships with state regulators are an advantage on many levels, concludes Kaplowitz. “Penn Interactive and Penn National corporate are intertwined. The fact that we are able to launch retail sportsbooks so quickly is no accident. We have a best-in-class corporate compliance and operations team, best-in-class accounting and finance team, a best-in-class general counsel and legal team – all with knowledge of how to do business in each state. The fact we can work together allows us to move faster and be smarter in how we approach the market.” n
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F I NA NC E H1 2019
New Jersey closes in on GIQ’s state-by-state breakdown of the sports betting revenue generated during H1 makes for fascinating reading, with Nevada’s supremacy already under threat
GROSS STATE REVENUES H1 2019 1
NEVADA Gross revenue (US$) Jan-19
Parlay cards Other TOTAL
N ew Jersey $109.6m
P ennsylvania $19.2m
M ississippi $15.3m
Nevada legalised all forms of sports betting in 1949 and was the only state that permitted single-game betting at the time PASPA was enacted. For now it remains the country’s biggest betting market, but New Jersey is closing in fast and took in more wagers than Nevada for the first time in May. During H1, revenue from Nevada’s sports betting market rose four per cent year-on-year
NEW JERSEY Gross revenue (US$) Licensee
R hode Island $5.8m
W est Virginia $5.4m
Bally’s AC Borgata
D elaware $4.6m
Harrah’s Ocean Resort Resorts Tropicana Meadowlands Monmouth Park TOTAL
New Jersey is closing in fast and took in more wagers than Nevada for the first time in May
to $132.5m. Basketball was the most popular sport to bet on, generating revenue of $74.2m from licensed operators in the state, followed by baseball with $31.5m and other sports with $27.2m. Parlay cards contributed a further $0.9m in revenue, partially offsetting a negative contribution from American football, which saw the NFL season end in early February.
New Jersey will likely overtake Nevada’s long-held status as the biggest sports betting market in the US in the not too distant future. Having followed Delaware in going live just over a year ago, New Jersey’s 11 licensed operators generated gross revenue of $109.6m during the first half of this year, with racetrack Meadowlands accounting for more than half the total with $57.9m. Of this, $45.1m was generated online via FanDuel and PointsBet.
The next biggest operator was Resorts Digital with revenue of $29.4m, all of which was derived online through DraftKings, BetStars and ResortsCasino. com, while Monmouth Park racetrack contributed sports betting revenue of $10.6m, including online revenue of $7.4m from William Hill and PlaySugarHouse. Ocean Resort contributed $6.4m in revenue, most of it online via William Hill, with Bally’s AC contributing $2m and the Borgata $1m.
F I NA NC E H1 2019
Nevada AS THE US begins to adjust to a new sports betting landscape, New Jersey has begun to wrestle the crown from Nevada as the biggest sports betting market Stateside. In May, New Jersey collected higher wagers than Nevada for the first time. And online, the figures are even more impressive – although Nevada doesn’t provide a breakdown for online play. During the first half of 2019, online represented 81 per cent of total wagers in New Jersey, with this figure climbing to 83 per cent by June. In gross revenue terms, Nevada’s $132.5m total for H1 was still just ahead of New Jersey’s $109.6m, of which $89.9m was generated online. Pennsylvania was the next biggest market with $19.2m, with the first operators going online in May. By the end of June, online was already growing fast and accounted for 18 per cent of total gross revenue in the state. Mississippi currently only allows retail sportsbooks and generated gross revenue of $15.3m, while Rhode Island’s $5.8m from retail surpassed West Virginia’s $5.4m, where online should explode following the launch of DraftKings and FanDuel mobile apps in August. New Mexico is the only state not to have passed specific sports betting regulations, with the Santa Ana Pueblo Tribe introducing sports betting last October under its existing tribal gaming compact. The betting landscape is dominated by the major US sports, and the NFL will provide a significant boost to operators’ revenue during the remainder of this year, while the MLB’s season comes to a climax at the end of September and the post-season begins in October. In addition, the new NBA and NHL seasons will also begin in October. Operators will expect to see revenue improve significantly across all states. GIQ Q3 REVIEW
Monmouth Park Racetrack, New Jersey
PENNSYLVANIA Gross revenue (US$) Licensee SugarHouse Casino Rivers Casino Pittsburgh
Valley Forge Casino
Oaks Race and Sportsbook
South Philadelphia Race & Sportsbook
Licensed sportsbook operators in Pennsylvania generated combined gross revenue from sports betting of $19.2m in H1 2019, with the market dominated by three casinos; SugarHouse, Rivers and Parx. Pennsylvania’s first retail sportsbooks went live last November, with SugarHouse the first to go online at the end of May, followed by Rivers in June, while FanDuel (through a partnership with Boyd
Gaming’s Valley Forge) and Parx launched in July. In June, the state’s eight licensed sports betting operators generated revenue of $2.1m, including $369,133 from online operations. In August, Parx opened the doors to its new sportsbook, replacing a temporary space used for sports betting, while Churchill Downs Incorporated launched its BetAmerica Sportsbook at Presque Isle Downs.
MISSISSIPPI Gross revenue (US$) Jan-19
Baseball Parlay cards Other TOTAL
Mississippi has over 20 licensed sportsbooks in operation, which together generated gross revenue of $15.3m for the first six months of 2019. The Mississippi Gaming Commission doesn’t provide a breakdown of revenue by operator, only by region. The Coastal region (including venues in Biloxi) accounted for more than half of the state’s total
with $8.2m in revenue, followed by the Northern region (including venues in Tunica) with $3.8m and the Central region (including venues in Vicksburg) with $3.3m. Overall, revenue from basketball amounted to $7.6m during H1, with parlay cards contributing $3.9m, baseball $2.1m, and football and other sports the remaining $1.7m. 63
F I NA NC E H1 2019
RHODE ISLAND Gross revenue (US$) Licensee
Rhode Island’s two licensed casino operators collected $5.8m in sports betting revenue during the first half period. Twin River, which was the first to launch a sportsbook last November, accounted for the bulk of the total, with revenue of $4.4m. Tiverton Casino, which opened its sportsbook a month later,
contributed a further $1.5m in revenue during the period. Sports betting is expected to go online in the state ahead of the start of the NFL season in September after Rhode Island Governor Gina Raimondo signed legislation into law in March.
WEST VIRGINIA Gross revenue (US$) Licensee Mountaineer Wheeling
West Virginia’s sports betting market opened in August 2018, but revenue has been impacted by the closure of Delaware North’s sportsbooks at Mardi Gras Casino & Resort and the Wheeling Island Hotel Casino Racetrack in early March, following a dispute with supplier Miomni. In total, the state’s licensed operators generated revenue from sports betting of $5.4m during H1 2019, with market leader Hollywood Casino at Charles Town Races contributing $3.4m of the total. Mountaineer Casino Racetrack & Resort accounted for revenue of $0.9m, with The Greenbrier contributing $0.2m. West Virginia became the fifth state to launch online in August.
Hollywood Casino at Charles Town Races
DELAWARE Gross revenue (US$) Licensee
Delaware edged ahead of New Jersey to become the first state to launch sports betting in June 2018 after the US Supreme Court repealed PASPA. Delaware was one of four states – along with Nevada, Oregon and Montana – who were grandfathered into PASPA and were exempted because of past laws related to legal forms of sports 64
betting. With just three licensed operators in the market, however, Delaware is currently the smallest US market for sports betting, generating revenue of just $4.6m during the first half of 2019. More than half of the total ($2.9m) was derived from Delaware Park, with Dover Downs contributing $0.9m and Harrington Raceway $0.7m.
LOTS MORE SPORTSBOOKS TO COME… Sports betting debuted in Arkansas on 1 July, as Oaklawn Racing Casino Resort become the first operator to go live with a retail sportsbook, while New Mexico’s Inn of the Mountain Gods Resort & Casino also opened its retail sportsbook in July. Four upstate New York casinos launched retail sportsbooks, with Rivers Casino & Resort Schenectady taking the first legal sports bet on 16 July, followed by Tioga Downs Casino Resort three days later. Oneida Indian Nation’s Turning Stone Resort in Verona and Point Place Casino in Bridgeport launched their own retail sportsbooks in August, alongside Del Lago Resort & Casino. Iowa became the 11th state to launch sports betting, on 15 August, with eight casinos launching retail sportsbooks, including Eldorado Resorts’ Isle Casino Bettendorf, Affinity Gaming’s Lakeside Casino, as well as Ameristar Casino Council Bluffs, Catfish Bend Casino, Wild Rose Entertainment and Elite Casino Resorts. This was followed a week later by the state’s first mobile app launch via William Hill, which is powering four of the casino’s sportsbooks. A number of casinos in Indiana went live with sports betting in early September after emergency rules were adopted by the Indiana Gaming Commission in August. Ameristar East Chicago, Hollywood Casino, and Indiana Grand were among the first to commence retail sports betting activities, followed by Horseshoe Hammond, French Lick Resort and Tropicana Evansville.
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The industry’s leading source of independent news & analysis.
The GIQ H1 2019 BETTER COLLECTIVE HAS been expanding at a rate of knots in Europe through an aggressive M&A strategy, which has helped take the iGaming affiliate to the top of the GIQ20 chart for the first half of 2019. Armed with an established presence in the emerging US sports betting market following the acquisitions of RotoGrinders, as well as the VegasInsider.com and ScoresandOdds.com sites, its next task is to replicate that success Stateside, which is expected to be the biggest revenue growth driver for the company in the years to come. Better Collective’s strong H1 performance pushed the company ahead of industry giants Playtech and GVC Holdings, which owed their presence at the top of the GIQ20 chart to the acquisitions of Snaitech and Ladbrokes Coral respectively. Meanwhile, Aspire Global continues to reap the benefits from its increased focus on B2B, while The Stars Group was another to benefit from recent acquisitions, with record results from its UK-facing Sky Betting & Gaming business. As in the first quarter, both operators and suppliers were hamstrung by the tightening of regulations in the UK and re-regulation of the Swedish market during the six-month period. This meant that there were again some notable absentees from the GIQ20 chart, including NetEnt, Gaming Innovation Group, Inspired Entertainment and Global Gaming 555 (see page 77). n GIQ Q3 REVIEW
IN THIS ISSUE 68 GIQ20 fastest growing companies
The GIQ20 fastest growing listed gaming companies COMPANY
THE STARS GROUP
CHURCHILL DOWNS INCORPORATED
F I NA NC E GIQ20 H1 2019
Better Collective holds off Playtech and GVC M&A surge The Danish iGaming affiliate, Better Collective, took top spot with the biggest revenue growth during H1 2019, while heayweights Playtech and GVC Holdings soared up the GIQ20 chart, writes Kio Dawson
BETTER COLLECTIVE 79% Net revenue (€)
It was a strong first half of the year for Stockholm-listed Better Collective as revenue grew by 79 per cent to €30.7m, helping the iGaming affiliate generate a profit of €7.4m, compared to a loss of €0.1m a year ago. After topping the GIQ20 chart in the first quarter of 2019, the company saw continued positive momentum as revenue increased by 64 per cent to €15.8m during Q2, benefiting from a 60 per cent rise in
new depositing customers to over 111,000. One year on from its Stockholm IPO, the company has invested more than €125m in acquisitions, which have been financed by a combination of proceeds from the IPO, cash flow from operations and committed bank credit lines. “I am very proud of the growth and development of Better Collective during the past year, and not least our ability to acquire and integrate new companies with fast pace,” said chief executive Jesper Søgaard. “The idea behind the IPO last year was to establish the foundation for growth, as we consider this pivotal for becoming a successful market leader. I believe we have demonstrated that this was the right strategy.”
GIQ20 H1 2019
Christian Kirk Rasmussen, Jesper Søgaard and Flemming Pedersen: Better Collective executive management team
PLAYTECH 69% Net revenue (€) H1 2019
London-listed Playtech returned to the upper echelons of the GIQ20 chart as revenue climbed 69 per cent to €736.1m, following a strong contribution from the company’s Snaitech customer-facing business in Italy. Revenue from B2C gambling soared 345 per cent to €438.2m, comprising €395.8m from Snaitech, €24.3m from white label brands including Sun Bingo, retail sport B2C revenue of €9.9m and casual gaming revenue of €8.2m. The company’s core B2B division fared less well, however, as revenue fell by nine per cent to €265.5m following declines in casino, bingo and poker, which offset growth in services, sport and other revenue. The B2B decline included a 35 per cent drop in revenue from Playtech’s Asia business, which has experienced struggles in Malaysia and China. “Playtech’s combination of scale and leadership in technology continues to deliver growth and strategic progress in our core gambling businesses,” said chairman Alan Jackson. “In H1 this continued progress has driven group regulated revenue to a new high of 87 per cent (H1 2018: 69 per cent).”
“Playtech’s combination of scale and leadership in technology continues to deliver growth and strategic progress in our core gambling businesses”
Alan Jackson, Playtech
GIQ Q3 REVIEW
GVC HOLDINGS 61% Net revenue (€) H1 2019
Online UK retail European retail
London-listed GVC saw online revenue surpass £1bn for the first time during H1 2019, as group revenue rose 61 per cent to £1.81bn, buoyed the acquisition of Ladbrokes Coral in March of last year. Revenue grew by five per cent on a proforma basis, with growth in online and European retail offsetting a decline in UK retail machines revenue, which was impacted by the implementation of the fixed-odds betting terminal (FOBT) stake cut on 1 April. Online revenue increased by 17 per cent on a proforma basis, with continued double-digit growth in all major territories, including the UK (up 13 per cent), Italy (15 per cent), Germany (23 per cent), Australia (48 per cent) and Brazil (52 per cent). Within online, sports betting revenue climbed 19 per cent to £462.3m, while gaming revenue was up 18 per cent to £574.6m. B2B revenue declined to £8.6m, however. In the US, GVC continues to focus on its Roar Digital joint venture, which is looking to 69
F I NA NC E GIQ20 H1 2019
The Stars Group’s Sky Casino
“While we anticipate it will take between three and five years before the majority of states are regulated, we believe the value-creation opportunity is significant” Kenneth Alexander, GVC
capitalise on the regulating US market. During H1, the JV established a head office in Jersey City, minutes from Manhattan, with all senior management roles now in place and over 100 employees already employed. “While we anticipate that it will take between three and five years before the majority of states are regulated, we believe the valuecreation opportunity is significant,” said CEO Kenneth Alexander.
ASPIRE GLOBAL 52%
“Being a B2B-company, I am also pleased with our unique ability to compensate for temporal imbalance from one market to another, following regulatory amendments or other extraordinary events,” said chief executive Tsachi Maimon. “We are able to do so thanks to a broad market presence combined with a diversified and agile partner-base. “I would, however, like to emphasise the role of B2C in the equation, constituting a fundamental platform for development and the best showroom for our B2B-offering. Thus, we will continue to do our utmost to remain at the forefront, also as an operator.”
Net revenue (€)
Aspire Global 70
Aspire Global’s focus on B2B paid off during H1, as revenue for the division grew by 70 per cent to €42.6m. This helped the company record a 52 per cent increase in total revenue to €64.3m, pushing net profit for the period up 20 per cent to €8.1m. Revenue from B2C rose 27 per cent to €25.7m, benefiting from a growing contribution from sports betting.
THE STARS GROUP 51% Net revenue (US$) H1 2019
Other revenue from customers Other sources of revenue TOTAL
GIQ20 H1 2019
Toronto-listed The Stars Group posted a 51 per cent increase in H1 revenue to $1.22bn, benefiting from a strong performance during the second quarter, which included record revenue from UK-facing Sky Betting & Gaming. For the first time, online sports betting took over as the company’s largest product vertical in Q2, as revenue soared 182 per cent to $228m, well ahead of gaming’s $196.9m total and poker’s $194.2m. “The second quarter underpinned the success of last year’s acquisitions, particularly with the record performance of Sky Betting & Gaming and our increasing product and geographic diversification, as we continue to transform and position the business to execute on our strategy for strong, sustainable future growth,” said CEO Rafi Ashkenazi. “We are committed to those key strategic priorities for the rest of the year while we also build our foundation and momentum to become a market leader in the US. We are confident that the actions we have taken over the last year, and are pursuing now, including to reassess our fixed cost base, put us in a strong position to deliver our mid-term growth targets from the end of 2019.”
EVOLUTION GAMING GROUP
Net revenue (US$)
Net revenue (€)
It was yet another impressive set of results for Stockholm-listed Evolution Gaming, as revenue grew by 49 per cent to €165m in the first half period, benefiting from the first contributions from newly acquired Ezugi, which generated revenue of €5.4m during the period. This helped push the company’s H1 profit up 72 per cent to €63.1m. “Evolution’s strong development continues, and we can report continued high growth and further improved margin in the second quarter,” said chief executive Martin Carlesund. “2019 is a year of product and innovation, and during the period, we have launched all this year’s new games. The response has been instant, and we are overwhelmed by the positive reception among both players and operators. “Our aim in the development has been to create games that attract new player types and to expand the Live vertical into new segments. So far, we are very happy with the outcome.” GIQ Q3 REVIEW
Martin Carlesund, Evolution
Advertising and other
New York-listed Zynga enjoyed strong growth across its portfolio of social games, as revenue climbed 34 per cent to $571.9m, buoyed by a record mobile performance in the second quarter. Growth was driven by the company’s live services portfolio, in particular its Empires & Puzzles and Merge Dragons franchises, as well as Words With Friends. Zynga Poker performed ahead of expectations in Q2, driven by a new Boosts feature that enhances players’ core game play experience, while Hit It Rich! slots delivered its best quarterly performance in over three years during Q2. Overall, these growth drivers were partially offset by declines in legacy slots titles, resulting 71
F I NA NC E GIQ20 H1 2019
TwinSpires boosts Churchill Downs’ online wagering
Churchill Downs’ online wagering revenue rose one per cent to $158.7m, most of which was generated by TwinSpires
in a six per cent decline in revenue from the company’s Social Slots portfolio in Q2. Zynga launched its Game of Thrones Slots Casino at the end of May and said that the title is off to a “great start”, with strong player engagement and monetisation metrics.
CHURCHILL DOWNS 31% Net revenue (US$) H1 2019
New York-listed gaming and racetrack operator Churchill Downs Incorporated posted a 31 per cent increase in revenue to $742.8m for the first half of 2019, with the company beginning to see returns from the roll out of its BetAmerica brand across the US. The Churchill 72
Downs racing segment saw revenue climb 30 per cent to $203.2m in H1, benefiting from the opening of Kentucky’s Derby City Gaming last September and a successful Kentucky Derby and Oaks week. Online wagering revenue rose one per cent to $158.7m, most of which was generated by TwinSpires. The Gaming segment recorded the biggest growth as revenue increased 58 per cent to $346.4m, primarily driven by the acquisitions of Pennsylvania’s Presque Isle and Lady Luck Casino Nemacolin, and Maryland’s Ocean Downs Casino and Racetrack. Gaming revenue was also boosted by increased revenue from the retail BetAmerica Sportsbooks at its Mississippi properties, as well as the opening of two additional off-track betting and video poker facilities in Louisiana.
KAMBI GROUP 25% Net revenue (€)
GIQ20 H1 2019
SCIPLAY CORPORATION 20% Net revenue ($) H1 2019 TOTAL
H1 2018 Change 197.2m
Fresh from its New York IPO in May, Scientific Games’ social gaming business SciPlay reported a 20 per cent increase in revenue to $236.5m for H1 2019, with net income soaring 259 per cent to $39.9m. The company benefited from a strong
mobile performance, reflecting the popularity of all of SciPlay’s core games, in particular Jackpot Party Casino, Bingo Showdown and 88 Fortunes. “In May, we took the important step of becoming a public company, and we are now focused on executing our mission to become the #1 casual mobile gaming company in the world,” said CEO Josh Wilson. “Our superior data-driven user acquisition, engagement and monetisation remain important differentiators, as we continue to grow and expand in the $35 billion social casino and casual gaming market.”
London-listed Flutter Entertainment saw revenue surpass the £1bn mark for the first time during the first half of 2019, with online contributing nearly half of the total. While there was solid growth from the online and Australia divisions, which offset a four per cent decline in retail revenue, the biggest growth came from the US. Revenue Stateside flourished and soared 163 per cent to £159.9m following the acquisition of FanDuel last July, growth in its established daily fantasy sports, TVG and Betfair Casino businesses, as well as £35m in new sports betting revenue. “We are delighted with this performance and have been encouraged by the regulatory momentum that has seen ten states regulate online sports betting since the repeal of PASPA,” said CEO Peter Jackson. “Cross-sell is an important contributor to our success, with around half our customers in New Jersey coming from our existing daily fantasy business, while strong cross-sales have delivered 15 per cent market share in online casino.”
JPJ GROUP 14% Net revenue (£)
Riding the waves of the US sports betting explosion, Kambi had a first half to remember as revenue increased by 25 per cent to €42.6m, and net profit climbed 11 per cent to €3.6m. On top of that, the supplier also secured major US supply deals with leading operators Penn National Gaming and DraftKings. After processing the first legal online sports bet in New Jersey last year, Kambi repeated the feat in Q2 by processing the first online bet in Pennsylvania with Rush Street Interactive’s PlaySugarHouse
Casino, followed by the online launches of BetRivers and Parx Casino. “The development of the competitive landscape in the US has certainly been dynamic, with operators and suppliers taking a variety of strategic routes,” said CEO Kristian Nylén. “For some, joint ventures or M&A have been the preferred choice, while for our multiple US customers, the decision to partner with Kambi has brought them immediate success, and long may that continue. As the number of regulated states steadily increases over the coming years, so too will the number of attractive opportunities.”
Ahead of the completion of its acquisition of Gamesys, London-listed JPJ Group posted a 14 per cent increase in revenue to £169.5m for H1 2019. Revenue from the Jackpotjoy division fell by six per cent to £97.7m, following a decline in both the UK and Swedish markets, due to enhanced responsible gambling measures introduced in the UK and recent regulatory changes in Sweden. Vera&John revenue increased 58 per cent to £45.4m, driven by launches in new markets
FLUTTER ENTERTAINMENT 18% Net revenue (£) H1 2019
GIQ Q3 REVIEW
“We expect the Gamesys acquisition to deliver double digit earnings in the first full financial year of ownership” Neil Goulden, JPJ Group
FINANCE GIQ20 H1 2019
bet-at-home.com reduced marketing expenses by 21 per cent to €16.7m due to a lack of a major sporting event during the period
including Germany, Brazil and Japan, as well as B2B growth across the broader Asian region. “We expect the Gamesys acquisition to deliver double digit earnings accretion in the first full financial year of ownership. Our employees will benefit from the combination of two companies with a strong commitment to responsible gaming, with a scale to further enhance our product development and technology capabilities,” said executive chairman Neil Goulden.
rose marginally to €10.2m, while VAT on electronic services fell by 51 per cent to €2.2m. bet-at-home.com reduced marketing expenses by 21 per cent to €16.7m due to a lack of a major sporting event during the period, leading to EBITDA nearly doubling to €21.3m, up from €10.9m a year ago. For the full 2019 year, bet-at-home has reiterated its previous guidance of gross betting and gaming revenue between €130m and €143m, with the decline attributable to legal uncertainties in Switzerland. EBITDA is expected to be between €29m and €33m for the full year.
12% Net revenue (€) TOTAL
Frankfurt-listed bet-at-home.com continues to generate decent returns for parent company Betclic Everest as first half revenue grew 12 per cent to €58.7m and earnings before taxes nearly doubled to €20.4m. The operator generated total betting and gaming volume of €1.59bn during the period, an increase of six per cent year-onyear, with gross revenue climbing seven per cent to €71.1m. Betting fees and gaming levies 74
KINDRED GROUP 6% Net revenue (€) H1 2019
Casino and games
GIQ20 H1 2019
LEOVEGAS 10% Net revenue (€) H1 2019 TOTAL
H1 2018 Change 164.8m
Stockholm-listed LeoVegas posted a ten per cent increase in revenue to €180.7m during H1 2019, despite the impact of regulatory changes in
“The new licensing regulation in Sweden has resulted in short-term margin pressure driven by higher betting duties” Henrik Tjärnström, Kindred Group
GIQ Q3 REVIEW
Sweden and the UK. After seeing growth of 12 per cent in the first quarter, Q2 revenue growth slowed and was up just eight per cent year-on-year to €94.4m. Excluding the UK, organic revenue would have climbed 26 per cent versus a year ago, while revenue in Sweden gradually recovered from the implementation of new regulations at the start of the year and improved during the quarter. “The investments made in 2018 and efficiency improvement work carried out thus far in 2019
Stockholm-listed Kindred Group saw growth across all of its products during H1 as revenue rose six per cent to £450.6m, despite a decline in contribution from the Nordic region during the period. The share of revenue from the Nordics fell to 29 per cent of Kindred’s H1 total, following the regulatory changes in Sweden, with Western Europe’s contribution growing to 61 per cent. Central, Eastern Germany’s and Southern Europe repLotto24 resented eight per cent, and other countries the remaining two per cent. Kindred will be hoping this latter segment will grow quickly in the future, following the US debut of its Unibet brand in New Jersey in June. “As we have highlighted for a long time and as we saw in the first quarter of 2019, the new licensing regulation in Sweden has resulted in significant short-term margin pressure driven by higher betting duties but also higher marketing, as we are investing for the longer term,” said chief executive Henrik Tjärnström.
are beginning to generate returns in the form of greater scalability of operations,” said CEO Gustaf Hagman. “Despite this, we are not content and are working continually to be even better. The external market environment in several key markets is currently more turbulent and difficult to predict than previously, which is creating new challenges and requirements, but at the same time it is presenting major opportunities for us to grow and take market share.”
ZEAL NETWORK 6% Net revenue (€)
Frankfurt-listed online lottery provider Zeal Network posted a six per cent increase in revenue to €79.3m for the first six months of 2019, driven by a positive contribution from newly acquired Lotto24. Total billings were up 26 per cent to €179.4m following the acquisition of Lotto24, which contributed billings of €41.3m, with growth partly offset by the closure of Lotto Network and Ventura24 in November and December of last year. Zeal gained 377,000 new registered customers during the period, up 29 per cent compared to the prior year period, with Lotto24 contributing 42,000 customers. 75
FINANCE GIQ20 H1 2019
BETSSON 2% Net revenue (SEK)
Casino Sportsbook Other TOTAL
SPORTECH 4% Net revenue (£) H1 2019
H1 2018 Change
Racing and digital
Exchange rate impact
London-listed Sportech just managed to achieve growth during H1 as revenue improved by four per cent to £32.6m, although this was entirely due to exchange rage impacts of £1.8m
“Even though we still have work to do, we are well on our way to achieving reunification with Lotto24 and the transformation of our German core business into online lottery brokerage, as planned” Jonas Mattsson, Lotto24
in the prior year period. On a constant currency basis, revenue would have been down two per cent year-on-year as a ten per cent decline in venues revenue offset a six per cent rise in revenue from racing and digital. “2019 marks a year of transition for Sportech with a clear focus on challenging the predominantly ‘industrial’ culture, while driving efficiencies and delivering a range of products that enhance user experience,” said chief executive Richard McGuire. “Further digitisation across existing and new business lines, the elimination of certain expensive strategies, the implementation of a lower operational cost base, and an enhanced global suite of products form the roadmap for H2, positioning the group for 2020 and beyond.”
“Even though we still have a lot of work to do, we are well on our way to achieving reunification with Lotto24 and the transformation of our German core business into online lottery brokerage, as planned,” said chief financial officer Jonas Mattsson. “We are convinced that the combination of the two companies will provide the best path to sustainable growth for the Zeal Group and will lead to tangible added value for our customers, employees and shareholders.”
Stockholm-listed Betsson squeezed into the GIQ20 chart despite seeing second quarter revenue decrease by five per cent to SEK1.28bn, following the impact of new regulations in Sweden, the planned re-regulation of the Netherlands’ market and Norway’s payment processing ban. Despite these impacts, first half revenue was up two per cent to SEK2.61bn, with growth in sportsbook offsetting declines in the company’s core casino offering, as well as other products. “I am confident in my view of Betsson’s capacity and in our strategic opportunities to pursue long-term profitable business with growth and good margins in regulated markets,” said chief executive Pontus Lindwall. “We also have a geographical spread that compensates for temporary downturns in individual markets.”
SCIENTIFIC GAMES 2% Net revenue (US$) H1 2019
New York-listed Scientific Games struggled for growth in H1 after seeing its run of 14 consecutive quarters of year-on-year growth come to an end during Q2. The supplier posted flat revenue of $845m in Q2, despite growth from its lottery and digital divisions, as well as its partially spun off SciPlay business. The company’s core gaming division saw revenue decline by nine per cent to $427m due to few casino openings and systems launched during the period, as well as lower replacement sales.
GIQ20 H1 2019
Scientific Games’ Wizard of Oz
Going Down in H1 2019 “We are pleased with the growth we are continuing to see across Lottery, Digital, and SciPlay while also stabilising gaming operations driven by the successful launches of several new games,” said president and CEO Barry Cottle.
WILLIAM HILL 1% Net revenue (£) H1 2019
US existing US expansion TOTAL
Growth from its online and US businesses helped London-listed William Hill post a one per cent increase in revenue to £811.7m during the first half of 2019. While results were negatively impacted by the £2 stake limit on FOBTs in the UK, the bookmaker said that its results were in line with expectations during a period of transition, with its expanding US business seeing over $1bn wagered in H1. “We are making good progress against the five-year strategy we outlined last year, delivering strong revenue growth in the US and other international markets and positioning William Hill well for future growth,” said CEO Philip Bowcock. GIQ Q3 REVIEW
Catena Media narrowly missed out on a place in the GIQ20 chart as revenue declined marginally by 0.4 per cent to €49.8m during H1 2019. The Stockholmlisted online lead generation specialist suffered from regulatory impacts in the UK and France, ongoing weakness in Sweden, and the traditionally slower months for sports betting in May and June, which pushed new depositing customers down by nearly a third compared to last year. International Game Technology (IGT) posted a one per cent fall in first half revenue to $2.38bn, despite seeing a three per cent improvement in second quarter revenue to $1.23bn, buoyed by growth from the company’s North America Gaming & Interactive and International business segments. NetEnt’s revenue decline continued into Q2 as results resembled that of the first quarter, with weakness in the Nordic region and specifically Sweden, driven by fewer players and lower average revenue per user (ARPU). As a result, revenue for the first half period fell by three per cent to SEK837.5m,
with profit for the period falling 16 per cent to SEK240.2m. Gaming Innovation Group was another to be impacted by Swedish woes, as revenue declined by 13 per cent to €63.4m in H1 2019. This included a 16 per cent revenue decline in Q2, with B2C revenue down 19 per cent and B2B revenue down 16 per cent. Revenue from Inspired Entertainment fell by 19 per cent to $60.4m during the six-month period, with results negatively impacted by the reduction in maximum stakes on UK FOBTs. Future revenue should be boosted by the company’s proposed acquisition of Novomatic UK’s Gaming Technology Group (NTG) which is expected to close during Q3. There was no respite for Global Gaming as revenue slumped by 31 per cent to SEK294.3m as regulatory issues in Sweden meant that its core Ninja Casino brand continued to remain offline in the country. The operator will be hoping for better luck with its new NanoCasino.com brand, which has now launched in Sweden in partnership with Finnplay.
Net revenue H1 2019
Gaming Innovation Group
Catena Media IGT NetEnt
Global Gaming 555
C O LU M N AND ANOTHER THING...
The view from America, 2019 US firms should step back and ask, does this process really need more folks who think footOPINION ball is a game played with one’s feet? In the meantime, Iowa has mobile. Well, they have the Nevada model of mobile, which means standing in a long line for a long time Joe Brennan to bet with less functionality than a Starbucks app. I can deposit on my ’Bucks app, I can deposit on my Chick-fil-A app, I can deposit on my Uber Eats app... if I had to stand in a long line a long distance away from my home to do that, I’d be at a Shake Shack in NYC. It’s inevitable that betting will find its home on our handsets. More than 80 cents of every hat a year. In a little over 15 months dollar wagered in NJ is bet on mobile. But since launching legal sports betting, those who talk about how dumb it is to have New Jersey seems to have the spotonly retail betting at casinos would do well to light to itself as the new model for building the remember how the campaign against PASPA legal US business in the correct way. Who’s began, and that the US gambling market isn’t going to be up this month... Nevada or New Jerjust about convenience. Casinos are not only sey? Speculation as to why one outperformed a tax revenue generator for states, but also job the other. Even a bit of mild trash talking (Dave creation for thousands of workers. The fear that Rebuck, I’m looking at you). anything would cannibalise that economic Can anyone make it more than just a twomachine is going to slow adoption by lawmakhorse race? Pennsylvania, ers. It’s tone deaf to say this is home to two of the most short-sighted. Expecting US important cities in sports stakeholders to fast track The Nevada model betting (Pittsburgh promobile betting is naive, of mobile means duces bookies like it used to when news from their wouldstanding in a line produce steel; Philly rivals be partners’ core markets is for a long time NYC with the size of its all about the poor health and ‘informal’ market) might be the rapid decline of their to bet with less a good candidate if it could retail businesses. functionality than proceed with expanding its Some more observaa Starbucks app operations at a pace faster tions… the British invathan the average continent. sion turned Scandinavian. New York could... no, New York can’t. NY lawWhether it’s Kambi taking the role of IKEA makers took the concept of remote betting too litfor US operators without a lot of money, furerally. It’s great that betting is legal at the Empire nishing their sports betting suites quickly State’s four commercial casinos, but those locaand inexpensively, or it’s Better Collective tions are so far out in the middle of nowhere, they snapping up affiliates and their databases. might as well be in Canada. Instead, it seems But William Hill continues to grab the lion’s New Yorkers are eating decades’ worth of ‘bridge share of new US retail business, which and tunnel’ jokes as they head to NJ to get down seems to be 80 per cent of the expense for legally, or sticking with ‘Jimmy Down the Bar’ 20 per cent (or less) of the revenue. for even greater convenience. With theScore and FOX Bet jumping West Virginia has mobile betting. Well, they into the market, speculation about how had mobile betting. Then they didn’t. Then they deep US media companies would get did again. If the sad tale of the ill-fated BetLucky into the betting business is rampant. app teaches us anything, it’s that US operators FOX really pushed the accelerator, should check under the hood of their partincorporating promotions featurner’s platform to see how much of it they built ing the talent from the network’s themselves. Also, there’s a cottage-industry of daily Lock It In show. However, the ‘experts’ parachuting in to advise US casinos on embrace of this synergy may have the selection of their betting partners. Maybe gotten the best of FOX in one case:
The SportAd chief executive casts his eye over the emerging market Stateside
an NFL Week 01 promotion for new NJ and PA players, featuring Colin Cowherd, a radio host best known here for declaring that Philadelphia “is the dumbest sports city in America”. A year ago, everyone was talking about the unfair advantage daily fantasy sports duopoly FanDuel and DraftKings had in growing their respective mobile sports betting businesses by cross-marketing to their DFS database. This year, everyone is talking about the unfair advantage the sports betting duopoly of FanDuel and DraftKings have in growing their respective online casino businesses by crossmarketing to their sports betting database. It’s enough to make you pull for a scrappy little NJ betting startup – like bet365. And finally, at a recent conference, a British bookie now plying his trade in the US remarked: “We underestimated how many sharps there are in the US. There are syndicates everywhere that will destroy you in half an hour if your pricing is off.” I guess some folks still haven’t learned their lesson from 1776 and 1812 – that underestimating America is a bad bet. n
FOX Sports’ Colin Cowherd: making friends in Philly
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