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Q1 REVIEW

April – June 2020

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

S t CU ke FO ar IN S m ES e U AT h LI t FI ling AF ck Ta

G A M I N G

Q U A R T E R L Y

Covid-19 The devastation, the mitigation and... the aftermath?

Exclusive interview: New Betting & Gaming Council CEO Michael Dugher The Bingo resurgence featuring: Dragonfish, GVC, Rank, Playtech and more

THE GAMING INTELLIGENCE GUIDE TO AGGREGATION PLATFORMS


The Tumble Series is Back with a Bang!

AVAILABLE NOW A NEW GAMING ERA

Available on all devices. For quality content from Relax Gaming and our partners, please visit relax-gaming.com or contact sales@relax-gaming.com


CONTENTS

LEADER Q1 REVIEW

4 Snapshot

Top stories, top quotes, top deals and deal of the quarter

6 Gaming Intelligence at ICE 2020

The Gaming Intelligence team was at ExCeL London to hand out the Gaming Intelligence Awards

12 Thought leadership

Scientific Games and Sportradar

14 Covid-19: How the industry responded

Share prices took a battering but, for the most part, the response was positive

23 People

Exclusive interview with BGC CEO Michael Dugher. Plus, new appointments at DraftKings, MGM, William Hill and more

28 Games

A guide to aggregation platforms. Plus, a look at the quarter’s best new games from Big Time Gaming, Blueprint, Relax and more

41 Technology

Data and ethics. Plus, new tech launches from BetMGM, Hard Rock, Scientific Games and more

46 Marketing

Affiliates target the US. Plus, listed affiliates’ 2019 financial results

53 Lottery

IWG makes an impact. Plus, the latest lottery news from around the world

56 Legal

Can iGaming mitigate lockdown losses? Plus, all the latest legal developments from around the world

62 Bingo360: Bingo bounces back Bingo was in the eye of the regulatory storm, and after massive consolidation it is emerging with a fresh face

68 Finance

The GIQ20 FY2019

78 And another thing…. Exposing political hypocrisy

EDITOR IN CHIEF Bobby Mamudi bmm@gamingintelligence.com EDITOR Steve Hoare sah@gamingintelligence.com SUB-EDITOR Camilla Cary-Elwes info@thecopyeditor.co.uk ART EDITOR Alan Bingle alan@forty6design.com DEPUTY EDITOR Kio Dawson k.dawson@gamingintelligence.com CONTRIBUTORS Mark Chillingworth, Jon Harwood, Christopher Tooley ADVERTISING & SUBSCRIPTIONS Omer Uziely omer@gamingintelligence.com www.GamingIntelligence.com

GIQ Q1 REVIEW

Published by Gaming Intelligence Services Ltd Studio 15, Riverside Building 55 Trinity Buoy Wharf London E14 0FP support@gamingintelligence.com T. +44 (0)845 052 3816 GamingIntelligence, Gaming Intelligence Quarterly and GIQ are trademarks of Gaming Intelligence Services Limited. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, or stored in a retrieval system of any nature without prior written permission. Application for permission must be made in writing to the publisher. Gaming Intelligence Quarterly (Print): ISSN 2633-6219 Gaming Intelligence Quarterly (Online): ISSN 2633-6227 Copyright © 2020 Gaming Intelligence. All rights reserved.

Steve Hoare

E D I TO R

Creating opportunity, avoiding exploitation N THE WHOLE, the betting and gaming industry has reacted positively to the Covid-19 crisis. The regulated UK industry has responded by cutting marketing and increasing safer gambling measures (see back page). US casino bosses are forgoing their salaries and all but the most cutthroat of companies have resisted layoffs and looked to protect their employees. Station Casinos went as far as moving several hundred part-time employees to full-time status so that they can receive full benefits. But what are the long-term consequences for our industry? It is difficult to predict what wil l happen a fter Covid-19. Nobody knows how long lockdowns will last or what the economic repercussions will be. But some themes are emerging. There has been a huge shift in governmental policy away from market-driven neoliberalism and towards something resembling socialism. The preservation of life has taken precedence over the generation of money. Governments have spent trillions protecting companies and incomes. These are supposed to be temporary measures but history teaches us that these sort of changes are hard to undo. People’s expectations change. A decade of austerity left healthcare and social care systems ill-equipped to deal with Covid-19. If a functioning healthcare system becomes a political and economic priority then taxes are sure to rise. More obviously, the crisis has affected the way we work. Again, this could be a temporary blip, or

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companies might find that remote working, in fact, dramatically increases productivity – reducing all the unproductive time and cost associated with airports, planes, hotels and taxis. Furthermore, telecommuting allows you to hire a geographically diverse group of employees without worrying about where to house them or relocate them. Sure, there are challenges with working from home. It will not be for everybody but will the savings in commuting time mean a four-day week becomes possible? There are multiple benefits. Costs are slashed and companies can lower their carbon footprint. Flying across the world for conferences could soon be seen as not just costly, but irresponsible and unnecessary. In addition to working from home, people have been forced to shop from home. It is likely that many of those aged 60+ are shopping on the internet for the first time. The more internet savvy this generation gets, the better for online gaming companies. Some US casinos are lobbying for more states to pass iGaming legislation (see page 58) and the others would be wise to support them. Online bingo operators might also benefit from core customers becoming more comfortable online (see page 62). Innovation should flow from this mass uptake of Zoom, Skype and the rest. Betting and gaming companies have an opportunity to grow, too. Forced into the unusual position of valuing customers’ entertainment and welfare above maximising profit, they might even cease to be public enemy number one. sah@gamingintelligence.com 3


GIQ HEADLINES

Snapshot most popular news stories on GamingIntelligence.com Penn National Gaming signs first partnership with US sports league Penn National Gaming completes acquisition of stake in Barstool Sports Evolution Gaming to launch live casino products in South Africa Buenos Aires releases final iGaming regulations and begins licensing NetEnt to further integrate with Red Tiger, resulting in 120 redundancies Gauselmann Group expands online presence with stake in Bede Gaming Kambi suspends contract with National Lottery AD DraftKings sees 2019 revenue reach $323m ahead of SBTech combination Betway to pay £11.6m for inadequate social responsibility controls Kindred Group handed SEK100m penalty by Swedish regulator

Quote of the Quarter If the industry thinks that it needs to exist in a bunker and define the whole of the media as the enemy, then that is a very dumb place for the industry to be” Michael Dugher, chief executive, Betting and Gaming Council, page 24

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One step forward, two steps back in Germany

Germany’s 16 federal states approved the fourth German State Treaty on Gambling (SToG), but a court case has stopped licensing THE COMPLEX 70-PAGE draft for the new State Treaty would end Germany’s longrunning but ineffective prohibition of online casino gaming by allowing the country’s first national regulator to issue online casino licences to operators, but also allows each state to decide what form of online gaming is allowed. The draft restricts online gaming to slots and poker, but gives states authority to approve other casino games such as roulette and blackjack, while live sports betting would only be allowed on very limited markets such as the next goal. Dr Dirk Quermann, president of the German online casino association Deutscher Online Casinoverband (DOCV) asked: “[Why] are other online casino games like roulette once again treated differently on the internet? It is difficult to understand the federal state’s boundaries.” Quermann said that giving individual states authority over online casino games will only create new state monopolies in a digital world. Mathias Dahms, president of sports betting association Deutscher Sportwettenverband (DSWV), said with 60 per cent of all betting coming through in-play live betting, consumers might be tempted into the unrestricted

black market. He also questioned whether the proposed cross-operator €1,000-a-month deposit limit for players would achieve its goal of reducing problem gambling, and said that the proposed five-minute wait time for players switching sites “completely ignores the reality of life for consumers in the digital age”. Schleswig-Holstein broke away from the State Treaty in 2017 to pursue its own gambling policy that already includes live betting and online casino. The Free Democratic Party (FDP) is urging the Schleswig-Holstein parliament to quickly consider the proposal and make changes during the upcoming consultation process to align the proposed state treaty with the regulations of the state, or continue to operate alone. In a separate development, the administrative court in Darmstadt suspended the existing licensing process for sports betting operators, after an Austrian sports betting operator complained the process gives a clear advantage to operators already active in Germany.

UK bookmakers vow not to THE UK’S LEADING gambling operators agreed to provide additional safeguards to players during the lockdown caused by the Covid-19 pandemic. The UK’s industry standards body, the Betting and Gaming Council (BGC), adopted a ten-point plan to strengthen existing responsible gambling initiatives during the pandemic. The most important initiative requires BGC members to monitor the amount of time and money players spend during the pandemic

lockdown, and to intervene if this increases compared to pre-crisis levels. Online betting and gaming operators will also increase safer gambling messaging directed at all consumers across their websites and apps, and will actively promote tools which allow players to set their own deposit limits. Any marketing affiliate that acts in an irresponsible manner and breaches the BGC’s action plan during the Covid-19 crisis will immediately be dropped, and all members must ensure there is no increase in direct mar-


GIQ HEADLINES

Get the latest news from our website

GamingIntelligence.com

The new State Treaty completely ignores the reality of life for consumers in the digital age

Mathias Dahms, Deutscher Sportwettenverband

Spain limits marketing during lockdown THE SPANISH GOVERNMENT published new regulations that restrict gambling operators’ ability to market to consumers during the current Covid-19 state of emergency. More than 50 new measures were introduced through a Royal Decree to reinforce those already adopted by the Spanish government, in order to protect people from gambling too much while stuck at home during the lockdown. Marketing that makes any reference to the situation arising from the Covid-19 crisis is prohibited, as is any promotional activity aimed at acquiring new customers, rewarding the spend of existing customers, or any other type of bonus. The usual regulations for broadcast advertising have been replaced with emergency rules that prohibit licensed operators from advertising outside the hours of 1am to 5am. Spanish national lottery operator Loterías y Apuestas del Estado (LAE) went one step further and suspended the sale of all lottery games. As a result of the “serious and exceptional situation” it has suspended the sale of its games at all points of sale, as well as online play. The payment of prizes lower than €2,000 is also suspended. Lottery draws will be deferred until a later date, with tickets to remain valid for the same draws when they are finally held.

exploit Covid-19 keting to consumers, unless it is to up,” said Michael Dugher, chief “Gambling promote responsible gambling executive of the BGC. levels have tools and features. “Increasing safer gambling dropped but our “We all know that levels of measures with more monitorcommitment to gambling have plummeted, not ing and customer interventions, safer gambling is just because of betting shop or stepping up safer gambling mescasino closures, but because being stepped up” sages and measures like promotMichael Dugher, of the absence of sport, which is ing deposit limits, together with a BGC also fundamental to online bettough crackdown on affiliates and ting. Although gambling levels have calling out rogue black market operadropped during the Covid-19 crisis, our comtors, will make a big difference.” mitment to safer gambling is being stepped See interview with Michael Dugher, page 24. GIQ Q1 REVIEW

Although gambling levels have

The quarter in numbers FINANCE

€365.8m Evolution Gaming revenue in 2019

19.65%

Evolution share price gain in Q1 2020

$323m

DraftKings 2019 revenue ahead of SBTech combination M&A

$163m

Penn National Gaming’s 36% stake in Barstool Sports

€22.3m Initial cost of Betsson’s acquisition of Gaming Innovation Group’s B2C brands REGULATIONS

£13m

Record penalty for Caesars Entertainment for UK AML failings

£11.6m

Betway’s previous record penalty from UK Gambling Commission PEOPLE

22

Years served by Jim Murren at MGM Resorts before departure

120

Redundancies at NetEnt after Red Tiger integration 5


Gaming Intelligence The Stars Group chief operating officer Guy Templer (right) accepts Poker Operator of the Year Award

Playtech’s bingo team receive the Bingo Supplier of the Year Award

Skywind Group celebrates One to Watch (Supplier) Award

Playtech head of bingo Angus Nisbet and Omer Uziely, Gaming Intelligence

Gavin Isaacs, chairman, SBTech, Sports Betting Supplier of the Year

Relax Gaming wins Poker Supplier of the Year Award 6

Ronnie Whelan and Robin Chhabra, The Stars Group


at ICE

The Gaming Intelligence team was at ICE Totally Gaming to present the Gaming Intelligence Awards to some worthy winners. Congratulations to them all!

Scientific Games win Innovation of the Year for SG Vision

Lee Fenton (left), CEO, Gamesys, Bingo Operator and Management Team of the Year

Jesper Svensson and Pontus Lindwall, Betsson, Socially Responsible Operator of the Year

Evolution chief executive officer Martin Carlesund wins Casino Supplier of the Year and Game of the Year

888 chief executive Itai Pazner and team celebrate the Casino Operator of the Year Award GIQ Q1 REVIEW

7


TALKING ABOUT A At the 2020 Gaming Intelligence Awards, Evolution Gaming won Casino Supplier of the Year and Game of the Year for Monopoly Live. Here, chief product officer Todd Haushalter lifts the lid on the creative process, while chief executive officer Martin Carlesund explains how Evolution will maintain its exponential growth

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volution Gaming is in the process of reinventing online casino games. A few have tried to do that in recent years – normally ambitious startups trying to look beyond slots and table games. Some have even tried to merge the two but none have succeeded in finding the magic ingredient like Evolution has. Furthermore, Evolution has the market penetration and track record to make sure its innovation is translated into revenue and profit. “Slots are huge,” says Carlesund. “Far bigger than Live Casino but you can’t do 5x3 reels forever. You can put new music and new visuals on but somewhere the industry needed to renew something. When I arrived, this was our goal. We are going to do something different. And we did.” Haushalter takes up the story. The company released Dream Catcher in 2017. When it was released, nobody knew if it would “fall in the middle of nowhere”, because it is not a slot and it’s not really a table game. But it turned out it could pull players in from all sides. Haushalter and his colleagues realised they were on to something. Players enjoyed the chance of big multipliers. So, the conversation turned to following it up and targeting slots players directly. What was the best brand they could use? Monopoly quickly became the favourite. The brand owner Hasbro has a track record in the gambling industry and the theme is money. “Perfect,” says Haushalter. Hasbro directed Evolution to Scientific Games, which has global exclusivity on the brand, and a three-way agreement was quickly reached before the Evolution creative minds turned towards building the game. The team was determined to stay true to the spirit of the game. That meant incorporating dice and the Monopoly board. Early iterations of the game involved a giant board in the studio. Another idea was that the Dream Catcher wheel would have the Monopoly properties on it. 8

Haushalter was in a meeting with head of R&D Alex Goodman and product owner Natalija Rizka, when somebody said: “Why don’t we create a 3D world?” This brought up all sorts of issues. The developer hours needed to create a 3D virtual world was just one of them. Another was figuring out how players could be moved from the studio to the 3D world. That’s where Mr Monopoly came in and the concept of playing the game at the Monopoly World HQ, where he lives. He would hang out, reading the newspaper and sipping his tea until an exciting event happens. Then he would take the elevator downstairs and enter the 3D world. “Then we did some really bold things that Hasbro told us had never been done before,” continues Haushalter. Just like in the board game, they took the decision to send people to jail. Nobody had ever had negative events in a bonus round of a gambling game. It turns out that players love it. They agonise about throwing a six when they are six squares away from the Go to Jail square, for example. But why retain the negative events? “People gamble because they want to win,” explains Haushalter. “Beyond that, why do they play? They could gamble on the toss of a coin but that wouldn’t be much fun. They want to feel something. They want their heart to race a little bit. They want to be on a bit of a roller coaster.” The Chance and Community Chest cards also retain their negative events, which sometimes remove money from a player’s bonus. “This is the first time that has been done but we wanted to stay true to the game,” says Haushalter. “It was a joy going through the different elements and creating it.”

Reinventing table games At the end of 2018, Evolution revealed that operating revenue increased by 38 per cent to €254.5m. Profit was up 34 per cent to €67m. It followed a 2017 revenue rise of 48 per cent. It had launched

in North America. Everything was going great. Carlesund wanted more. “When I set a target in 2019 of ten new games, they thought I was crazy,” says the CEO. “We only used to do one a year. Literally, they thought I was crazy.” Haushalter was shocked when Carlesund laid down the challenge. Initially, he wasn’t sure there were ten games Evolution could make. But, on reflection, he realised it was a dream. The nightmare scenario, for chief product officer Haushalter, is the opposite – no new games and a focus on features, or building existing games in a new language, or for a new channel. The challenge also forces the Evolution team into creativity. It is difficult for Evolution to produce ten new table games. Everyone at the company is engaged in generating new ideas. Nothing is dismissed as too outlandish. “It’s a mental game,” explains Carlesund. “We put targets in place and everyone focused. And we did it.”


REVOLUTION Haushalter says: “It is hard to recognise when you are living through a little slice of history but that is what’s happening right now. I think we are creating something – a new genre of gambling that is not slots, not table games, not bingo and not sports betting. It is a new category that almost has to come from the interplay of Live Casino and the internet.” Everyone has watched Who Wants To Be A Millionaire and thought they could do better than the contestants on television. Now they have the chance. “I think it’s natural to want to bet on that stuff. I would love to see the actual game shows on television interface with Evolution so you can play along at home,” says Haushalter. “We are just launching Crazy Time and the ambition is to make it so entertaining to look at that you can just watch it. You don’t even need to play it to enjoy it.”

Martin Carlesund, Evolution Gaming

The result was a new category Evolution has dubbed Game Shows. In 2019, it launched Monopoly Live; Deal or No Deal Live; and Lightning Dice; plus the new First Person version of Dream Catcher – as well as six other variations of traditional table games. In 2020, Crazy Time and MegaBall arrived with ten more table games. This new category is attracting new players. The likes of Bethard and William Hill have launched Game Show tabs. It is only a matter of time before everyone does. As Carlesund says, his mother might like to play these games. Not necessarily for high stakes but this is entertainment. In the current climate, with its focus on responsible gambling, this could be a blessing. “A game round for a game show is typically a minute,” says Carlesund. “That is a big difference to a slot. Of course, you can place higher bets but it is slower. That is very important in this era we are living in.” GIQ Q4 REVIEW

faster than I expected,” admits Carlesund. “We are all over the world. There is a global demand for our products.” The company intensified its focus on Asia during the past year. It needed some technological tweaks and some new games. It has been rewarded with a doubling of revenue from the region, to €17.7m. North America lies at the other end of the regulatory spectrum but Evolution also managed to double revenue there to €6.6m. The company is only live in New Jersey, but is building its studio in Pennsylvania and preparing for Michigan. The state-by-state nature means progress will be slow. Evolution cannot build a superstudio in New Jersey (like it has in Latvia) and broadcast to the rest of the US. For all Evolution’s success, the nascent US market and the relatively low penetration in Asia, show that there is plenty of potential for the company to grow. SpeakDreaming bigger ing to Carlesund and HaushThe games have led to another alter, one is reminded of the “To get this astonishing leap in revenue – company culture of enthuhypergrowth we up 49 per cent to €365.8m in siasm and excitement. It is 2019, with profit up 76 per cent have right now, you a gift that has been handed to €157.5m – figures that are need luck and good dow n from Evolution’s almost unheard of for compa- timing, and multiple founders. The company has nies of Evolution’s size. recruited well. things happening “The throughput and at the same time When Haushalter joined energy and focus in the comt he c ompa ny f rom hi s to enable it” pany is so important,” says “dream job” as vice presiMartin Carlesund, Evolution Carlesund. “If you lose it, you dent of gaming operations at go downhill. If you keep it, the MGM Resorts International, momentum you can build is wow.” he was enticed by the promise: “We are inventThe momentum is certainly with Evolution ing the future. It is whatever we can dream of.” right now. “To get this hypergrowth we have Haushalter continues: “When you have right now, you need luck and good timing, and physical reel-based slot machines, there were multiple things happening at the same time to only so many combinations. A reel might have enable it,” continues Carlesund. 15 spots on it. You have 15x15x15x15 and that’s Firstly, the online casino market is growing, your jackpot. When you go to digital, you can do which helps. On top of that, the proportion of anything and that really ignited slots. We’re in revenue generated from Live Casino is growing the early days of that happening to table games. within the online casino. Thirdly, the company These are the last days of an era where table is going into new markets such as Asia, the US games do not have RNG mixed in with them.” and Canada. And finally, the company no longer He points to the likes of Lightning Roulette, just makes different versions of blackjack and Lightning Baccarat, Lightning Dice and Super roulette. It is creating new categories of games Sic Bo. These are all games made fresh with multhat attract new players. All of these things come tipliers and driven by RNG. together to help Evolution achieve the type of fig“As we compete for entertainment time, if I ures investors can normally only dream about. am going to take half an hour of your time, I need Carlesund joined the company five years to do something interesting,” says CEO Carago, when it had 1,000 staff. Now it employs 8,000 lesund “If I do that, and even if you lose a bit of people. “It is a big jump. Even I think it’s come money, you’ll say it was fun. That is our goal.” n 9


DREAMTEAM Betsson Group won the Socially Responsible Operator of the Year award for 2020 and was runner-up in the Management Team of the Year. Group CEO Pontus Lindwall and Operations CEO Jesper Svensson explain why

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he industry had a challenging year in 2019 and Betsson did not escape unscathed. Group revenue decreased five per cent over the course of the year but Group CEO Pontus Lindwall and Operations CEO Jesper Svensson have put in place a team and a culture that will enable it to thrive. Betsson’s final act of the year was to plant a tree on the island of Malta for each and every one of its 1,650 employees. With the spotlight focusing so intensely on responsible gambling, it is easy to forget that being a socially responsible company runs a lot deeper than RG. Most companies have realised that RG should be part and parcel of operating a gambling company. What Betsson has focussed on doing is operating as a socially conscious member of the local communities it operates in. The trees donation replaced the small Christmas gift Betsson usually gives its employees. Svensson sees it as indicative of the company’s move towards becoming a more sustainable business. It fits nicely into its new local community engagement strategy and policies with regard to energy and water conservation, and waste management. Betsson is the largest gaming company in Malta, with 967 staff on the island. One hundred of those joined during 2019. The rise in numbers is testament to the hard work put in by Svensson and Lindwall restructuring the organisation during 2018. “That put in place the foundation [that led] to being rated highly as a management team,” says Lindwall, pointing to the shortlist in GIQ. He continues to talk about team spirit and organisation with the passion of someone who has lived and breathed this company for over two decades. “Now, we have a dream team,” he concludes. “Without that, it is impossible to create good things. With the team we have now, I think we have all the possibilities in the world to create good things.”

Human infrastructure The genesis of the team came in September 2017 with the shake-up that saw then-chairman Lindwall replace Ulrik Bengtsson, who had 10

been Group and Operations CEO, with himself and Svensson in those roles. Bengtsson has done alright for himself since. He is now, of course, chief executive of William Hill – a role Lindwall thinks he is well suited for. Two years down the line, Lindwall continues to run the mother company in Stockholm, dealing with the stock exchange, finance, legal and tax issues, while Svensson runs the company’s operations from Malta. In establishing itself as the largest employer in the local gaming industry, Betsson has not been afraid to hire local talent. The chief financial officer of the operations team Kristian Saliba has been at Betsson for 12 years, with the last five as CFO. General counsel Corinne Valletta is a newer arrival, joining from the Malta Gaming Authority in May 2017 as head of regulatory and compliance, before being promoted to the general counsel’s office at the beginning of 2018. Chief operating officer Apostolos Dousias is an eight-year Betsson veteran, who was promoted to his current post in 2017. Ronni Hartvig was promoted to the role of chief commercial officer, following a period in charge of the NordicBet subsidiary. Chief HR officer Lena Nordin joined at the beginning of 2018 to oversee this period of change. She has had a massive influence on helping to reaffirm the company’s culture, according to Lindwall. While she was new to the company, she fully bought into Lindwall and Svensson’s vision of “bringing back the old culture”. Lindwall has an abiding belief that everybody in the company is as important as the next person. He says he does not differentiate between anyone in the company – from C-level executives to developers and support people, they are all just as valuable. “If you make people feel like they are making a difference when they go to work, then I think we have reached a long way in our culture,” he concludes. Another important member of the dream team arrived in mid-2018, with Peter Zäll joining from Svenska Spel as chief strategy officer. Chief product officer and chief technology officer Peter Frey is the most recent addition, joining in May 2019 from Bonnier Media.

2020 outlook While revenue dropped five per cent in 2019, Lindwall made a point of highlighting the Group’s SEK865m operating profit, when presenting the annual report for 2019. While that represents a drop of 28 per cent on the year before, Lindwall pointed out that many Swedish operators are showing no profit at all. The company has grown in 17 of its top 20 jurisdictions – the odd ones out being Sweden, the Netherlands and the UK, which Lindwall describes as “external factors” that his team could do little to counter. Betsson is one of 21 companies awaiting the results of court cases against the Swedish regulator Spelinspektion. Betsson was hit hardest by the regulator’s interpretation of the new rules with a SEK19m fine for contravening bonus rules. “We used the first six months to learn about the market and the new competitive landscape, but also to learn about the way the Authority would read the law. Because that was not crystal clear,” explains Lindwall. “For instance, the description of bonuses is one sentence of 11 words. When you try and figure out what you can do and can’t do and the Authority can’t answer, then there will be court cases. It will take some time. Now we know how the Authority is thinking but we do not know what the courts are thinking.” Such has been the importance of bonuses, it will be a market-making decision as much as it is a decision about whether Betsson contravened the rules. Lindwall has no magic wand to wave away Sweden’s teething problems but he is confident his company is better equipped than ever before to tackle them and thrive. n


SKYROCKET There is something magical brewing at Skywind Group. Managing director Oren Cohen Shwartz explains the strategy behind the phenomenal growth

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uring 2019 Skywind developed 70 new games. It rocketed into regulated markets after securing licences in the UK, Malta, Spain, Romania, Alderney and Gibraltar, while certifying its games in Belgium, Denmark, Italy, Portugal and Sweden. It secured deals with 888, GVC, Caliente, Kindred, The Stars Group, Videoslots and plenty more. It won the Gaming Intelligence One to Watch Award for 2020. And it also threw the best party at this year’s ICE conference in London.

GIQ Q4 REVIEW

“You don’t see a lot of content provider companies release 300 games in three years. If you do not have the technology in place, you can never do that. In one year, we entered 11 regulated markets. That is unheard of. It is all about how we use technology,” says managing director Oren Cohen Shwartz. Shwartz joined Skywind Group in mid-2018 as managing director after stints at Superbet, EveryMatrix and William Hill. The company’s rocket-like trajectory has coincided with Shwartz’s arrival. There is little doubt that he has the kind of energy and enthusiasm that could put the rocket-boosters on any organisation but he is keen to credit the company’s success to a team effort. Shwartz reports to chief executive officer Hilary Stewart Jones, one of the most experienced lawyers in the industry and a former board member at Playtech. Other vital members of the team include chief technology officer Guy Balteriski and chief compliance and legal officer Ori Monheit. Balteriski and Shwartz worked together at one of the Israeli software houses William Hill acquired to create William Hill Online. Shwartz describes him as “the best techie guy ever” and he was a big influence on Shwartz joining the company. When it comes to game development, Skywind created a framework for the people who create the games – whether those are artists, game developers or mathematicians – to speed the development. The framework unifies Skywind’s studios across the world – in

Australia, Belarus, Brazil, Cyprus and the UK – and its 300 staff. “The games have a lot of shared components, which leaves them to focus on the uniqueness of the games,” says Shwartz. “Otherwise, nobody can create so many games.” In a market that produced over 1,000 new games last year, you might ask why Skywind needs so many games. Shwartz’s answer is differentiation. It has created market-specific games such as Casa de Papel for Spain and Downton Abbey for the UK. “How can you create a game that is relevant for the Swedish guy and relevant for the Romanian guy?” asks Shwartz. “You cannot. You need the development power and you need to find a cost-effective way to deliver those games for each market.” Shwartz believes the company’s engagement tools are its other USP. “You will never hear an operator tell a content provider, stop bringing me new tools. You will hear them scream that they have 80 new games. For a content provider to excel, other than having unique games in specific markets, you need good engagement tools.” The next step, says Shwartz, is adapting to the differing demands of players within markets. “Targeting specific players is getting more surgical, and you will not be able to do that if you are building games from your garage.” This is a recurring theme in Shwartz’s conversation. Skywind was founded by Playtech founder Teddy Sagi. As such, it has deeper resources than any of the multitude of startups that have begun targeting the slots market in recent years. Skywind had evolved from a close relationship with Playtech, building it social games and then games for the Asian market. Sagi’s departure from Playtech more or less coincided with a change of direction from Skywind. It did not want to be another Playtech. Skywind has an unerring focus on content. It does not want to be a platform provider, operating at the whim of consolidating operators switching to an acquired platform. And it did not want to be a service provider to the larger company. “You need deep pockets to sustain the couple of years putting the foundations in place. Skywind did not start by developing 20 games from a garage. We needed the foundation,” says Shwartz. That foundation allowed Skywind to add 20 new operators in March. It entered Denmark, Italy, Romania and Spain in the space of a month. Whether Shwartz is talking about technology or compliance, it always comes back down to the Skywind infrastructure. “The seeds for that were planted seven months ago,” says Shwartz. “Compliance takes time. Once you have the tubes ready, you can enjoy the flow of water under higher pressure.” n 11


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

Sportradar brings new realism to virtual sports Frank Wenzig on why Sportradar’s virtual baseball offering is a game-changer AT ICE IN February we spoke to Sportradar managing director of gaming Frank Wenzig. He talked to us about the latest addition to the company’s virtual sports betting offering and the importance of creating a lifelike sports betting alternative within its gaming solutions.  

What is the benefit of having virtual sports as part of a sportsbook offering? Unlike real sports, virtual sports provide the ability for bookmakers to offer a product that enables their customers to bet wherever they like, 24/7. This means even if live sport isn’t taking place, if the final whistle has blown or the season has stopped, operators can still attract audiences and keep them on site.

What was behind your reason to add baseball as a virtual sports product? Virtual in-play baseball was created as part of our official data partnership with Major League Baseball (MLB) to help the sport grow its audiences across the world. By providing our clients with the opportunity to tap into the popularity of baseball using our realistic virtual offering, it allows customers to engage with the sport 24/7, whenever and wherever they like. This also forms a key part of our US strategy to make the virtual sports portfolio even more appealing to US audiences. 12

How were the graphics developed, and how are they so lifelike? From a data perspective, we conducted an extensive analysis of MLB data so we could provide an experience as close to the real sport as possible. We also analysed a lot of American sports user interfaces and user experiences to ensure our baseball product fit with the US-specific broadcast style. The super-realistic graphics of our virtual baseball product were, like most of our virtual products, developed using a combination of the latest motioncapturing technology, our expert graphics artists team and our innovative in-house 3D engine for the video generation.

The product is an extension of your partnership with the MLB. How does official data from real games benefit virtual products? There are two main ways an official data partnership benefits a virtual product, and this is in the look and the feel of the product.

In terms of the look, it’s important to ensure the audience feels familiar with the product from a graphical perspective. In this respect, factors such as team names, uniforms and club logos are important. Additionally, so are the detailed aspects that may not be obvious at first glance – for example, the texture of the jerseys. The more it looks like the real thing, the better! In terms of the feel, this comes down to the overall way the game is played out, the betting markets and odds, as well as the typical USbroadcast style layout, which include statistic overlays. All of this detail is derived from and based on real MLB data and games. This is what helps create a betting experience that is as close to the real thing as possible. The more it feels like betting on a real-life baseball match, the better and more valuable.

Why is realism so important in virtual products? The target audience for virtual sports are the same for that of real-life betting – sports punters. Therefore, the more we can blur the line between virtual and reality, the better the perception and uptake it will have among these target audiences. As technology continues to develop, it will only be a matter of time before virtual sports become so realistic that the line between virtual and real will become even less apparent. Bookmakers need to keep up with this if they want to ensure their virtual offering stands apart from the rest.

Will virtual products continue to expand? And what is their role in emerging markets like the US and LatAm? We’re already witnessing clear indicators for the ongoing growth of virtual sports, and the resulting increasing business value. For example, we are seeing more and more jurisdictions introducing virtual sports regulations. Virtual spots are available at low cost and low risk. They have the ability to provide short-cycle events for those who are time-poor and don’t want to watch a full real-life game play out, plus, again, they run 24/7. Virtual sports are also very easy to customise and localise to suit various customer needs across the world. n


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

The future of lottery at retail Scientific Games vice president of retail solutions Randall Lex works with lotteries and retail chains to modernise the lottery experience

OFFERING MADE-TO-ORDER smoothies, beer and wine by the glass, tacos with handmade tortillas, and scan-and-go purchasing technology, 7-Eleven’s ‘lab stores’ are far from your conventional convenience store (or C-store). Hailed as a “revolutionary new store format,” 7-Eleven opened its first lab store in Irving, Texas, in March 2019. The new breed of C-store, which also includes the Amazon Go grab-and-go cashier-free stores, is designed to maximise convenience. Retailers are rethinking the tried-and-tested formulas to create a frictionless customer experience. Lottery has traditionally had a symbiotic relationship with the C-store. In the US, C-stores account for approximately 63 per cent of all lottery sales, and in some states the figure is as high as 93 per cent, according to data from LaFleur’s. Research by SwiftIQ and the Association for Convenience & Fuel Retailing (NACS) shows that lottery players’ baskets at C-stores are at least 50 per cent greater than non-players’ baskets. The lottery industry needs to be proactive in its evolution and help retailers leverage data to improve operations, says Randall Lex, vice president of retail solutions, Scientific Games. The company serves lotteries and retailers in more than 150 markets around the world and is the leading innovator of lottery retail technology. “We have to be mindful of what is happening at retail, and innovate to ensure the lottery industry continues to grow and maintain a footprint at retail,” Lex said.

Reallocation of space C-stores turn less-is-more into an art form, fitting many types of products into relatively small spaces. The modernisation of C-stores involves reallocating space and adding products and conveniences. The updates are made possible by new technology,

“We have to be mindful of what is happening at retail and innovate to ensure the lottery industry continues to grow and maintains a footprint at retail” Randall Lex, Scientific Games

such as self-service drink machines, scan-andpay devices and frozen yogurt dispensers. Data shows that C-stores are only growing in popularity, with inside sales increasing 30 per cent over the last eight years, according to NACS. “Retailers around the country are focusing their attention on strategic offerings, whether it be products and/or services that drive foot traffic to their store, reducing operational barriers and labour, and maintaining or enhancing quality and value to the customer,” Lex said. Scientific Games developed its SCiQ® retail ecosystem to modernise the instant game experience at retail by improving accounting, security, merchandising and data analytics for lottery games. SCiQ also increases data capture and player engagement, and extends the experience beyond retail. Scientific Games is working with lotteries, national and regional retail chains, and big box retailers in ten states to pilot and launch SCiQ technology. In addition to adding convenience for players and operational efficiencies for retailers, SCiQ has also been proven to boost sales. The company reports that retailers and lotteries fully adopting the features of the SCiQ ecosystem can see a 15-20 per cent increase in instant game sales.

Investing in innovation Despite great strides forward, the lottery industry still must overcome barriers to progress and the wider distribution of lottery products. Some hurdles include legal restrictions on online sales and the funding of new technology. “The development of how lottery is sold at retail must change if growth is to occur in addition to increasing player and retailer engagement. Change is the critical path as lottery is not entitled to the front space it’s always received,” Lex said. “However, the biggest thing here, I believe, is investment from the vendor-supplier community, as well as investment from lotteries to achieve the greatest growth and provide the greatest responsible gaming experiences.” Regardless of the path forward, one thing is clear – retail is changing and lottery needs to take an active role in changing to meet the modernisation of retail. “The attitude of ‘We’ve always done it this way’ will not work anymore,” Lex said. “There are many ways retailers can capitalise on lottery to enhance retail experiences for consumers and retailers.” n All ® notices signify marks registered in the United States. © 2020 Scientific Games Corporation. All Rights Reserved. 13


COVID-19 WREAKS DEVASTATION

Here, we collect all the available news on the betting and gaming industry’s reaction to Covid-19 and its impact. Kio Dawson looks for shards of light amid the emergency measures but few analysts were willing to predict much when governments remain largely in the dark 14


C OV E R F E AT U RE COVID-19

NOBODY COULD HAVE foreseen the economic devastation caused by Covid-19, a virus few had heard of at the beginning of January. After seeing their combined share prices increase by 45 per cent in 2019, the 50 publiclylisted operators and suppliers which make up the Gaming Intelligence Stock Index suffered an almighty crash during Q1 2020, as the coronavirus pandemic went global in March. Stock markets across the world suffered record losses during the first quarter as the economic costs of the pandemic became apparent. The FTSE 100 had its biggest quarterly fall since the Black Monday aftermath of October 1987 and declined by 25 per cent, the Dow Jones industrial average fell by 23 per cent, the S&P 500 declined by 20 per cent, and NASDAQ fell by 14 per cent. It was brutal. In Europe, the pan-European Stoxx 600 fell by 23 per cent, while Spain’s IBEX 35 and Italy’s FTSE MIB had their worst ever quarters, slumping 29 per cent and 27 per cent respectively, with both countries among the two hardest-hit in Europe. France’s CAC 40 dropped by 26 per cent and Germany’s DAX plummeted by 25 per cent. The hits just kept on coming.

The gaming operators and suppliers that make up the GI Stock Index saw their combined share prices fall by 24 per cent between Thursday 2 January and Tuesday 31 March. It was almost impossible for any company to avoid the ongoing uncertainty created by Covid-19, although some weathered it better than others. Overall, 47 of the 50 public companies in our chart saw their share prices decrease over the period, including double-digit percentage declines from 43 of them. On top of that, new 52-week lows were posted by 44 operators and suppliers, mostly around midMarch as lockdowns were reinforced around the world, retail venues were shut down as residents were ordered to isolate themselves, and most major sports were postponed or cancelled. While most companies have implemented cost-savings measures to ensure stability and protect their businesses, including workforce reductions and furloughs for roles that are temporarily redundant, the big worry for shareholders and the industry at large is that nobody knows how long this might go on for.

In the US, New York-listed companies made up five of the eight worst-performing stocks during Q1, as land-based casinos were closed across the States and the burgeoning sports betting market came to a halt. The shares of leading US casino operators were halved. Eldorado Resorts lost an astonishing 76 per cent, MGM Resorts International 65 per cent, Boyd Gaming Corp slid 52 per cent, Penn National Gaming was down 51 per cent and Caesars Entertainment Corp slumped 50 per cent. By the start of April, the US had the most Covid-19 cases in the world, with New York the worst hit area. There was some debate among analysts over whether Eldorado Resorts’ proposed $17.3bn merger with Caesars would go ahead but it is expected to complete later than expected over the summer. “We understand uncertainty creates fear, and we are by no means certain of much,” began Deutsche Bank analyst Carlo Santarelli. “Yes, taken at face value, both the equity and debt markets are implying the deal doesn’t get done, but we believe the likelihood of a deal is far higher than what the market is and has been implying.” 15


C OV E R F E AT U RE COVID-19

His main reason for this prediction was Hornbuckle’s first statement as acting CEO the banks’ commitment to the deal, but he saw him create a $1m employee emergency also believes the strategic upside to the tie-up grant and donate the equivalent of 400,000 remains and there is little impact to liquidity meals across the US. His second statement from the deal – a crucial factor for all compawarned of substantial operating losses to the nies in the current climate. company in March, with no material improveCaesars has temporarily moved to the ment expected until more is known regarding minimum workforce needed to maintain the duration and severity of the pandemic. basic operations, with around 90 per cent of its “Given the numerous moving parts within employees furloughed. MGM, and the considerable structural changes With the Caesars acquisition, Eldorado is over the past several months, we believe MGM set to become the largest gaming operator in has caused investors the most confusion of the US. Last year, its shares increased in value any [casino company],” cautioned Santarelli by 56 per cent to close at $59.64, with its landat Deutsche Bank. mark deal with Caesars announced on 24 June. Meanwhile, Penn National Gaming By 18 March 2020, Eldorado agreed to sell its Tropicana Resorts’ shares had sunk to a Las Vegas real estate assets new low of $6.02, before recovand the ground lease of its The big trio of ering to close the first quarter new Pennsylvania casino to at $14.40. Caesars had seen its Scientific Games, IGT Gaming & Leisure Propershare price more than double and Intralot all saw ties for $337.5m in rent credin 2019 to $13.60, but slumped their shares lose more its, helping to mitigate the to $ 3.22 on 18 March and than 60 per cent of financial impact of Covidended Q1 down 50 per cent their respective value 19. Given the uncertainty, at $6.76. and with no meaningful during Q1 2020 In a further blow, Caerevenue for the foreseeable sars was also penalised for future, Penn National also historical failings in its social responsibility implemented unpaid furloughs impacting and anti-money laundering controls at its nowapproximately 26,000 staff company-wide from empty land-based venues in the UK, agreeing to early April. pay a record £13m penalty to the UK Gambling “The casinos are over-exposed to the 60-70Commission for the failings. year-old demographic. If the casinos were to Boyd Gaming suspended its quarterly re-open at Easter, as the President wishes, I cash dividend programme, while MGM don’t think many of those customers would Resorts announced an accelerated change in risk returning. There is a very real risk they leadership to tackle the emergency. Chief opercould be the first hit and the last to recover,” ating officer Bill Hornbuckle was appointed one anonymous analyst confided. acting CEO to replace Jim Murren, who had previously intended to step down once a Suppliers succumb to zero demand suitable successor had been identified, and Gaming suppliers also felt the coronavirus board member Paul Salem replaced Murren impact with the big trio of Scientific Games, as chair. IGT and Intralot all seeing their shares lose more than 60 per cent of their respective value during Q1 2020. Scientific Games slipped to a new low of $3.76 on 18 March, but recovered

to close the quarter at $9.70, down 64 per cent compared to $26.90 price at the start of January. Scientific Games has implemented a number of cost-saving initiatives that will reduce workforce hours and pay, which it said would preserve as many jobs as possible, while certain support roles that have ground to a halt during the outbreak have been furloughed. The supplier has also set up a Hardship Relief Fund to provide financial assistance to employees impacted by the Covid-19 pandemic, while its executive leadership team agreed to a voluntary 50 per cent salary reduction, with chief executive Barry Cottle making a statement by cutting his salary entirely. “Thankfully, we came into this year with a very strong liquidity position, including substantial capacity under our revolver, and

CORONAVIRUS TIMELINE 31 December 2019 l World Health

Organization (WHO) informed of a cluster of pneumonia cases in the city of Wuhan in Hubei province, connected to Huanan Seafood Wholesale Market 16

11 January 2020

20 January 2020

l First death in China as authorities

l First US case reported in

identify a new type of coronavirus (SARS-CoV-2)

13 January 2020 l First case of coronavirus outside

of China in Thailand

Washington State

23 January 2020 l Quarantine orders

issued in Wuhan, followed by Hubei province


C OV E R F E AT U RE COVID-19

also refinanced our debt, extended our major maturities and lowered our interest expense,” said Cottle. “We are taking a variety of actions to help ensure that we meet the demands of this outbreak and are ready when the industry begins to recover. I am confident the measures we are taking now will prepare us to come out of the crisis even stronger than before.” IGT’s shares declined by 61 per cent, sliding to a 52-week low of $3.59 on 18 March, while Intralot’s shares in Athens were down 64 per cent by quarter end, including a new low of just €0.09 on 16 March. This was not a good time for new Intralot CEO Christos Dimitriadis to step into the hot seat after succeeding Intralot founder Sokratis Kokkalis. Dimitriadis has an almighty task on his hands to revitalise Intralot, with the

company’s share price down by 74 per cent in the past year. Surprisingly, Intralot has been one of the few companies yet to make a public statement on the impact of Covid-19. With coronavirus hitting its homeland Greece early in the cycle and with the company’s exposure to the US and with significant operations in Africa, one of the last continents to be impacted by Covid-19, Intralot could suffer a double hit. The big three lottery suppliers were not alone in seeing their shares decimated. Shares in Inspired Entertainment fell by more than 50 per cent to end the quarter at $3.38, although the supplier has seen increased demand for its online virtual sports and gaming products, providing the company with an important cushion against the current cessation of its land-based business. “Our customers have reported to us that they are experiencing significant demand from consumers in the US, Europe and Australasia, to bring virtual sports onto their respective systems as rapidly as possible, given the lack of live sports content for wagering,” said Inspired Entertainment executive chairman Lorne Weil. “We are doing our best to accommodate such demand at this difficult time.” One big plus for the supplier was the increased interest in its Virtual Grand National game, featuring the 40 runners and riders who were most likely to line up in the Aintree

30 January 2020 l WHO declares

outbreak a global public health emergency as 9,000 cases reported worldwide

31 January 2020 l First

confirmed cases in UK

race. It aired on primetime UK television on 4 April, in place of the real Grand National race, which was called off with the country in lockdown. A peak audience of 4.8 million watched the virtual race, which was won by 18-1 shot Potters Corner, with the 5-1 favourite finishing fourth. All bookmakers offered a maximum bet per customer of £10 to win or £10 each way per horse, with the average bet placed ending up as £2. The entire £2.6m profit was donated to NHS Charities Together, which supports NHS staff and volunteers caring for Covid-19 patients in the UK.

Mitigating disaster London-listed operators and suppliers did not fare any better, and those with retail operations were hit the hardest. Shares in William Hill declined by 64 per cent to 68.14p, and at one point were trading at 28.63p at its lowest point

11 February 2020 Novel coronavirus disease named Covid-19 by WHO

from Covid-19 in Wuhan

2 February 2020

9 February 2020

l First death outside

l China death toll (811) surpasses

China in the Philippines GIQ Q2 REVIEW

8 February 2020 l First US citizen dies

SARS epidemic in 2002/03 17


C OV E R F E AT U RE COVID-19

on 19 March. With over half of the company’s 2019 revenue generated through its sportsbook business, William Hill expects full-year EBITDA to be reduced by £100m to £110m, with each additional month of closure impacting results a further £25m to £30m. “We are working closely with our banking partners to enhance our liquidity position,” the bookmaker said in a statement. It was no surprise therefore that the company suspended all dividends until further notice, including its 2019 final dividend. It was far from alone in taking this action. William Hill was at least able to name its new finance chief after being forced back to the drawing board as CFO-designate Adrian Marsh decided against moving to the bookmaker in light of the “current unprecedented circumstances”. Just one week later, William Hill appointed Matt Ashley to the role, who will join from London-listed transport provider National Express. He replaces Ruth Prior, who stands down on 15 May, while Flutter Entertainment integration director Stephen Parry will also be joining the business later this year as chief operating officer. Playtech also suspended all shareholder distributions, including cancelling its 2019 final dividend, to save over €65m of cash outflows. The three-month period had seen its shares lose 58 per cent of their value to drop to 169.70p by the end of March, with the company warning of a significant impact to its B2B sports business, as well as its Snaitech retail business in Italy, which was the first European country to introduce a lockdown in early March. During 2019, Playtech’s sports betting business had shone, with revenue up 56 per cent to €52.7m, while casino slumped 22 per cent, bingo dropped 11 per cent and poker was down 12 per cent. With sporting events cancelled or post-

poned, Playtech looked to its casino business for light amid the darkness. Its live casino had seen limited impact from Covid-19, although its live casino facility in the Philippines was closed, with traffic redirected to other facilities. However, its poker and bingo businesses saw increases in activity following the restrictions on physical movement put in place by various governments. In Asia, revenue for March was expected to be €7m, the same level as February. The company’s TradeTech financials business benefited the most from the recent increase in market volatility and has already exceeded the company’s EBITDA expectations for the year. “Given the uncertainty and rapidly changing nature of the situation, Playtech is working to protect its cash flow by proactively managing its capital expenditure and working capital as well as identifying opportunities for cost savings that will not impact the long-term success of the company,” it said. Rank Group shares decreased by 54 per cent to 129.80p over the quarter, with the closure of its UK casino and bingo venues resulting in monthly net cash costs of around £25m before mitigating actions. While the UK was slower to implement movement restrictions, the company had already been forced to close its venues in Spain and Belgium. The company maintains a strong balance sheet, although it is due to pay around £40m in tax and duty payments in April. GVC Holdings got off relatively lightly as its shares fell by 36 per cent to 561.00p. The operator was able to put in place a number of mitigating actions, which cut the initially expected impact on EBITDA from around £100m a month to £50m a month. “For example, in the UK GVC is eligible to receive the government grant towards employment costs as we furlough retail colleagues and retain them on full pay, as well as the business

CORONAVIRUS TIMELINE

9 March 2020

14 February 2020

29 February 2020

l First case in Africa in Egypt. Global

l First coronavirus

death tolls passes 1,500. First death outside of Asia in France

21 February 2020 l Outbreak begins in Italy

26 February 2020 l First case in Latin

America in Brazil 18

rates relief, which together the Group estimates will reduce costs by nearly £20m per month,” a spokesperson outlined. In Italy and Belgium, GVC operates a franchising model where the store operating costs (rent, employment, utility and other costs) primarily reside with the franchisee. Other measures taken include reductions in online sports marketing, sports content and trading costs. In the current political climate, the UK bookmakers declined the opportunity to turn their marketing firepower onto other products. With up to a quarter of the global population in some form of lockdown in March, GVC said there was a clear risk that house-bound individuals may become isolated, depressed or be

death in the US, in Washington State

Wall Street stocks suffer big fall, triggering first automatic halt in trading in over two decades

3 March 2020 l Outbreak begins in Spain

8 March 2020 l Italy begins

lockdown

11 March 2020 l WHO declares outbreak as

a pandemic. Cases in the UK reach 456 l NBA suspends all basketball games


C OV E R F E AT U RE COVID-19

The Gaming Intelligence Stock Index Q1 2020 OP. PRICE 02.01.20

CL. PRICE 31.03.20

% CHANGE

$12.19

$2.65

-78.26%

$60.26

$14.40

-76.10%

2.75p

0.80p

-70.91%

MGM Resorts International

$33.52

$11.80

-64.80%

Intralot

€ 0.39

€ 0.14

-64.10%

Scientific Games Corporation

$26.90

$9.70

-63.94%

188.50p

68.14p

-63.85%

$15.13

$5.95

-60.67%

SEK39.70

SEK15.68

-60.50%

Playtech

402.00p

169.70p

-57.79%

Rank Group

281.50p

129.80p

-53.89%

Sportech

32.00p

15.00p

-53.13%

Boyd Gaming Corporation

$30.22

$14.42

-52.28%

Penn National Gaming

$25.97

$12.65

-51.29%

AUD$0.77

AUD$0.38

-50.65%

$6.82

$3.38

-50.44%

Caesars Entertainment Corporation

$13.62

$6.76

-50.37%

Gaming Realms

10.60p

5.35p

-49.53%

CAD$0.77

CAD$0.39

-49.35%

€ 53.45

€ 27.36

-48.81%

AUD$4.85

AUD$2.60

-46.39%

$8.41

$4.52

-46.25%

Tabcorp Holding

AUD$4.54

AUD$2.53

-44.27%

Aspire Global

SEK28.05

SEK15.84

-43.53%

€ 11.80

€ 6.93

-41.27%

COMPANY PlayAGS Eldorado Resorts Nektan

William Hill International Game Technology Catena Media

in financial distress. To address the additional risk, and building on its Changing for the Bettor safer gambling strategy, GVC has taken a number of decisive actions, including proactive communication with all customers to remind players to gamble responsibly and direct them to the group’s suite of safer gambling tools. It also increased responsible gambling messaging on the homepage and throughout all sites. “At this time of unprecedented uncertainty, we are more committed than ever to keeping our customers safe while they enjoy our products,” said GVC CEO Kenneth Alexander. “We are hugely sensitive to the potential for increased risk for some, who are isolated at home or may have

GIQ Q1 REVIEW

Ainsworth Game Technology Inspired Entertainment

Score Media and Gaming bet-at-home.com Pointsbet Holdings 500.com

OPAP

12 March 2020

13 March 2020

l Wall Street stocks suffer worst

l National emergency declared in

losses since Black Monday in 1987, second 15-minute trading halt triggered. l MLB suspends spring training and start of season, NHL pauses current season. NCAA cancels both men’s and women’s college basketball tournaments, known as March Madness

the US as first land-based casinos temporarily closed l First death in the UK 14 March 2020 reported in Spain begins lockdown. Scotland. English Premier League suspended, as well as many other sports.

19


C OV E R F E AT U RE COVID-19

financial difficulties with reduced access to work. Our enhanced tools give customers the power to manage their spending and time in an effective way, and we are backing this up by carefully monitoring play through our markers of harm.” Similarly, Flutter Entertainment warned that EBITDA could be reduced by as much as £110m if the current restrictions on sports fixtures remain in place until the end of August, while the closure of its UK and Irish betting shops would incrementally reduce EBITDA by a further £30m per month. Its shares ended the quarter down 22 per cent at 7,228.00p, though it remains on course to complete its merger with The Stars Group, which emerged relatively unscathed in Q1, with its shares down ‘just’ 15 per cent. The Stars Group remains confident of delivering revenue growth this year, with 62 per cent of 2019 revenue generated from poker and gaming. “We are pleased with the performance of our business so far this year, which has seen continued strong underlying momentum within our UK and Australia segments, and a sequential improvement in our international segment from the fourth quarter of

2019,” said The Stars Group CEO Rafi Ashkenazi. “Overall, we are so far performing ahead of our expectations and currently expect to see strong year on year growth in revenue for the first quarter. We therefore remain confident in our ability to continue driving revenue growth in the years ahead, despite the inevitable disruption in the sports industry during 2020.” Shares in 888 Holdings were down 24 per cent at 124.40p, having recovered well from its 52-week low of 68.40p on 18 March. With only 16 per cent of its 2019 revenue derived from sports betting, 888 remained hopeful that there were strong growth opportunities from its online gaming business, having enjoyed a solid start to trading during the first quarter period. Peel Hunt analyst Ivor Jones agreed: “We believe online gambling will be relatively well-insulated from the negative impacts of Covid-19, and that 888, with a solid net cash position, will bounce back strongly after the crisis.”

Relatively unscathed The Stockholmlisted companies fared better than most. Evolution Gaming continued where it left off last year as its shares climbed 20 per cent to close at SEK338.00,

reaching a new high of SEK424.00 on 21 February, proving the ongoing strength of its business. The live casino specialist didn’t totally escape the Covid-19 effects as it was forced to close its studio in Georgia for most of March due to movement restrictions. Indeed, Evolution Gaming was one of only three companies to record share price gains during Q1, alongside online lottery provider Zeal Network (up 13 per cent) and online bingo-led operator Gamesys Group (up three per cent). All three look good bets to avoid the worst of the current crisis. NetEnt shares fell by five per cent to SEK24.75 during the quarter, although the company’s shareholders had already suffered enough in 2019, losing nearly a third of their value during the year. The supplier’s canny acquisition of Red Tiger has already exceeded expectations and boosted financial results. On the flip side however, NetEnt had to lay off 120 employees in Stockholm and Malta as it fully integrates the business. The restructuring is expected to deliver annual savings of SEK150m and will mainly affect NetEnt’s Stockholm base. Shares in LeoVegas fell by five per cent to SEK28.56, with the operator looking to mitigate the effects of Covid-19 by shifting its focus to its casino product. In Q4 2019, 91 per cent of LeoVegas’ revenue was derived from casino, with just nine per cent generated from sports betting. Betsson’s shares were down nine per cent to SEK39.94, with the operator boosting its casino portfolio with the €22.3m acquisition of Gaming Innovation Group’s B2C brands, including Guts, Kaboo, Rizk and Thrills. Last year, less than a quarter (24 per cent) of Betsson’s revenue was derived from sports betting. Kambi Group’s shares lost 30 per cent of their value as the supplier faces up to a world without sporting events for the time being, while shares in Kindred Group declined by 36 per cent to SEK37.05, having at one stage

CORONAVIRUS TIMELINE 15 March 2020 l US travel ban extended from

Schengen to include to UK and Ireland

16 March 2020 l British Prime Minister Boris

Johnson advises against “nonessential” travel and contact. l France begins lockdown. 20

l Trading on Wall Street halted

18 March 2020

19 March 2020

for third time as stocks suffer worst losses since Black Monday in 1987 l Intralot shares hit new 52-week low of €0.09

l Trading halted on Wall Street

l New lows for UK-listed William

17 March 2020 l European Union

announces 30-day ban on non-essential incoming travel

for fourth time in two weeks. New lows for Scientific Games ($3.76), MGM Resorts ($5.90), IGT ($3.59), Eldorado Resorts ($6.02), Caesars Entertainment ($3.22), Penn National Gaming ($3.75), Boyd Gaming ($6.44) and Churchill Downs Inc ($52.90)

Hill (28.63p), Playtech (111.00p), Rank Group (78.20p) and GVC Holdings (292.70p)

23 March 2020 l New York City becomes epicenter

of US outbreak, with 21,000 cases l PM Johnson tightens restrictions

on freedom of movement in the UK (but not as strict as Italy and Spain) as deaths climb to 422


C OV E R F E AT U RE COVID-19

fallen as low as SEK20.35 on 18 March. Kindred Group was another to withdraw its proposed 2019 dividend, so it can be well capitalised to take advantage of future opportunities. In order to reduce the earnings impact of temporarily lower sports revenue, the operator will adapt its cost base through reduced levels of marketing spend, lower operating costs and delaying certain investments. “While the current situation presents several challenges, I remain very positive about Kindred’s future outlook,” said CEO Henrik Tjärnström. “Kindred will continue to benefit from a wide geographical reach and a broad product mix as well as a business model which has been resilient during previous times of economic downturns.” While Gaming Innovation Group is transitioning away from gaming operations to focus on its B2B offering, its shares continued to decline in Q1 2020, and closed down 39 per cent at NOK5.00 in Oslo. Aspire Global’s shares finished the quarter down 44 per cent at SEK15.84, while Catena Media was the worst-performing Stockholm-listed company as its shares fell 61 per cent to SEK15.68. Nektan’s shares were temporarily suspended for most of January after the company failed to publish its audited results for the year ended 30 June 2019. The company attributed the delay to the ongoing significant restructuring of its operations, including the sale of its UK B2C operations. While progress has been made in its transformation to a B2B business, in light of the impact of Covid-19, Nektan is now in discussions with advisers and stakeholders regarding the future of the group, including efforts to secure funding by the issue of new equity to provide the necessary additional working capital. Tough times indeed for all. Perhaps the only bright spark is that the sports betting will return at some point. We just don’t know when. n

l All 465 US

commercial casinos closed, with at least 97 per cent of the country’s 524 tribal properties also closed

27 March 2020 British Prime Minister Boris Johnson and Health Secretary Matt Hancock test positive for the virus as deaths in the UK reach 759, with 14,579 confirmed cases

26 March 2020 l Confirmed US cases

(82,404) surpass China’s 81,782 and Italy’s 80,589 GIQ Q1 REVIEW

The Gaming Intelligence Stock Index Q1 2020 COMPANY

OP. PRICE 02.01.20

CL. PRICE 31.03.20

% CHANGE

Enlabs

SEK24.30

SEK14.60

-39.92%

NOK8.19

NOK5.00

-38.95%

AGTech Holdings

HK$0.360

HK$0.229

-36.39%

Aristocrat Leisure

AUD$33.50

AUD$21.35

-36.27%

GVC Holdings

878.20p

561.00p

-36.12%

Kindred Group

SEK57.70

SEK37.05

-35.79%

Kambi Group

SEK134.10

SEK93.65

-30.16%

Churchill Downs Incorporated

$137.87

$102.95

-25.33%

888 Holdings

163.00p

124.40p

-23.68%

Gaming Innovation Group

Sciplay Corporation Flutter Entertainment Pollard Banknote GAN Webis Holdings The Stars Group (TSX) Scout Gaming Group Better Collective Global Gaming 555

$12.39

$9.52

-23.16%

9,254.00p

7,228.00p

-21.89%

CAD$19.92

CAD$15.75

-20.93%

181.50p

144.00p

-20.66%

1.25p

1.05p

-16.00%

CAD$33.97

CAD$28.78

-15.28%

SEK13.15

SEK11.20

-14.83%

SEK80.00

SEK69.00

-13.75%

SEK5.25

SEK4.53

-13.71%

Betsson

SEK43.78

SEK39.94

-8.77%

LeoVegas

SEK30.14

SEK28.56

-5.24%

€ 23.92

€ 22.70

-5.10%

SEK26.00

SEK24.75

-4.81%

Gamesys Group

708.00p

732.00p

3.39%

Zeal Network

€ 20.50

€ 23.15

12.93%

SEK282.50

SEK338.00

19.65%

La Française des Jeux NetEnt

Evolution Gaming Group

31 March 2020 l More than one third of the world

under some form of lockdown, including 80 per cent of the US, as 35 states issue stay-athome orders

1 April 2020 l 922,000 confirms cases of

Covid-19 confirmed by authorities, with 47,000 deaths so far, including more than 2,000 in the UK and 5,000 in the US 21


PEOPLE FIVE IN THE NEWS Executives on the move, and issues in their inboxes Hornbuckle gets crisis CEO role at MGM MGM Resorts’ chief operating officer Bill Hornbuckle stepped in as acting president and CEO in mid-March in the midst of an unprecedented crisis in the US, with the travel and hospitality industry grinding to a near halt due to the Covid-19 pandemic. Hornbuckle succeeded Jim Murren following an accelerated change in leadership to enable MGM Resorts to address the rapidly changing environment that the industry found itself in. Murren had previously announced his intention to step down after 22 years in the role once a suitable successor was identified. With a strong cash position, MGM Resorts expects to be able to fund its current obligations for the foreseeable future, although the company incurred substantial operating losses in March and does not expect to see a material improvement for a while.

Covid-19 causes CFO to back away from William Hill THE CORONAVIRUS OUTBREAK ruined William Hill’s chances of hiring its first-choice finance chief, after Adrian Marsh decided against joining the UK bookmaker. William Hill had named Marsh as the company’s CFO in waiting to replace Ruth Prior, who announced her resignation at the start of the year. Less than six weeks later, as a result of the current unprecedented circumstances, Marsh informed the operator that he intended to remain in his current position as group finance director of packaging business DS Smith, where he has served for the past seven years. William Hill has since named Matt Ashley as its new CFO, joining from London-listed transport provider National Express, where he has served since 2010.

Gaming Realms co-founder Southon steps down

DraftKings hires responsible gaming expert Christine Thurmond

Christos Dimitriadis takes on Intralot CEO role

DRAFTKINGS HAS STRENGTHENED its responsible gambling efforts with the appointment of Christine Thurmond as director of responsible gaming. Thurmond will lead the expansion of DraftKings’ responsible gaming framework across its iGaming, sportsbook and fantasy sports products. Reporting into chief compliance officer Tim Dent, she joined DraftKings from the Massachusetts Council on Compulsive Gambling (MCCG), where she has been a senior business contributor for the past two and a half years. Prior to her time with the MCCG, Thurmond spent nearly 20 years working at Harvard Medical School, where she served in various leadership positions, including on the original team that created the Division on Addiction, which has been working with GVC Holdings to explore research on anonymised player data provided by the operator.

FOLLOWING A TRANSITION period of reorganisation during the past year, Intralot promoted Christos Dimitriadis to the role of group CEO in early March. He succeeds the company’s founder Sokratis Kokkalis, who assumed the chief executive’s duties a year ago following the departure of Antonios Kerastaris, shortly after Intralot confirmed the loss of its bid to continue operating Turkey’s sports betting concession. Kokkalis will continue to serve the company as executive chairman. New CEO Dimitriadis has been with Intralot for more than 12 years, helping to shape the group’s technology strategy and managing the delivery of the company’s services to 47 jurisdictions worldwide. He is tasked with evolving the company, with a key emphasis on digital technology, as it looks to close the gap on major rivals IGT and Scientific Games, as well as other upstarts in the industry.

GIQ Q1 REVIEW

IN THIS ISSUE 23 MGM, DraftKings, Intralot and more 24 Interview: BGC chief Michael Dugher

IT WAS THE end of an era for Gaming Realms as chief executive and co-founder Patrick Southon stepped down after six years in charge. He follows co-founder Simon Collins, who left last November after the sale of the last of the company’s B2C assets in July 2019. Southon, who also founded Cashcade with Collins, has guided the company through the changing regulatory landscape in the UK and subsequent restructuring. Non-executive chairman Michael Buckley will take over as executive chairman on an interim basis, supported by chief financial officer Mark Segal. They will launch the company’s new era as it focuses entirely on B2B game development and its licensing strategy for the Slingo brand.

23


P EO P L E

MICHAEL DUGHER

A fresh Steve Hoare meets Michael Dugher, the new chief executive officer of the Betting and Gaming Council (BGC), a new industry body that brings together the UK’s bookmakers with casino operators and iGaming operators for the first time BEFORE JOINING THE BGC in March, Michael Dugher was chief executive of UK Music; the Member of Parliament for Barnsley East; shadow secretary of state for transport; shadow secretary of state for culture, media and sport; and from 2008-10, he was chief political spokesman for Prime Minister Gordon Brown. He is the ‘heavyweight’ the industry was seeking to tackle the unprecedented media, political and regulatory storm it finds itself in the middle of. Dugher is a tough cookie. On two issues he refuses to accept the premise of the question – not sticking his head in the sand but looking at the situation practically. “I learnt a long time ago to not worry about things you cannot control. The industry should not get distracted. Our job is to stand up for our sector and show we are an industry that is part of the cultural life of Britain. It is rooted in every community across the country and makes a significant contribution to the economy, delivering over £3 billion to the Treasury and employing large numbers of people. “We should stand up for that industry and make it clear that the regulated sector is committed to the highest standards, and driving even higher standards in the future. That will be my unrelenting mission, and I will not get distracted for a single second by any of the noises off from that.” Dugher is on a roll by the time we get to this point in the interview. We are discussing the anti-gambling rhetoric in the public realm – in Westminster, in the mainstream media and on social networks. “There are clearly one or two newspapers with an agenda and a campaign. I have been around the media and dealt with the media for 25 years in a number of jobs – including my time at Number 10 – and I understand how 24

newspapers work. It is a declining industry that is desperately trying to prop up hemorrhaging circulations,” says Dugher. One or two newspapers? The Daily Mail, The Guardian, The Sun, The Mirror, The Independent, The Daily Telegraph, The Times and even the BBC adopted the pejorative “crack cocaine of gambling” to describe fixed odds betting terminals (FOBTs). “I don’t accept that the BBC is antigambling,” interrupts Dugher. “They do hardhitting investigations and they do it for all industries – it’s part of our democracy.” “If the industry thinks it needs to exist in a bunker and define the whole of the media as the enemy, then that is a dumb place for the industry to be. I don’t think the industry does. You have a couple of newspapers with a couple of reporters who have agendas, verging on obsessions, and have campaigns. We will engage with them. We have engaged with them. I think the rest of the media is pretty fair-minded.” The mention of FOBTs is enough to get him riled. “The BGC is all about the future of our industry. We are not going to be like the last Japanese soldier in the jungle, fighting the last war. There is a settled position on FOBTs and that’s ancient history. The industry has moved on and I hope politicians have too.” But my question regarding FOBTs was that anti-gambling campaigners were quite happy with the £2 maximum stake as a solution to ‘the FOBT problem’ and also seem happy with it as a solution to the ‘online slots problem’. “One of the reasons we are having this review [of the Gambling Act] is that people suggest it is an analogue act for a digital age,” continues Dugher. “My reticence about stakes is it looks a lot like an analogue solution to a more complex digital picture.”

It was Dugher’s former Labour Party colleague, Tom Watson, who repeatedly talked about an analogue act for a digital age when talking about the need for a review of the 2006 Gambling Act. Like Dugher, Watson has stepped away from Westminster politics but he still views reform of the gambling industry as “unfinished business”. From the man who led the fight against FOBTs, that reads like a threat, but it is not so aggressive when you hear him talking about it. He accepts the FOBT saga felt like a fight to the bitter end. “I think there is a recognition on all sides that it was very unproductive,” Watson told ICE Totally Gaming in February. “We don’t want the next five years to be typified by that sort of culture.”

Tackling critics The realisation that the five-year fight was unproductive was one of the reasons behind the formation of the BGC. It represents a new beginning for the UK gambling industry. Watson was certainly in a more conciliatory mood at this year’s ICE. His characterisation of the false choice between prohibition and the status quo is the exact same position as that of his old friend Dugher. The pair are godfathers to each other’s children and Dugher might lament his friend’s decision to quit frontline politics. The rhetoric coming out of the Gambling Related Harm All Party Parliamentary Group and its figureheads Carolyn Harris and Iain Duncan-Smith makes Watson seem like the voice of reason. “I understand and share their concerns about problem gambling,” says Dugher. “Carolyn Harris is right when she speaks so eloquently and passionately about a family that has lost a family member. We share that concern. There is no difference between us in that sense.”


P EO P L E

MICHAEL DUGHER

start Some commentators have claimed the industry has no friends in the House of Commons nowadays, barring the likes of Laurence Robertson and Philip Davies, chair and vicechair of the All Party Parliamentary Racing and Bloodstock Group. “As someone who speaks to lots of MPs from all parties and has sat among them for several years, I think most people are pretty fair-minded about the industry,” says Dugher. “They may not make the most noise, and you have a noisy minority who have very, very strong personal views. I respect that but I do not think it is shared by most fair-minded politicians.” The difference between Dugher and the likes of Harris and Duncan Smith comes in their ideas about a means towards ensuring safer gambling. “Technology is our friend and technology will be part of the answer,” asserts Dugher. “It is naive to think there is one simple silver bullet to fix these problems.” This is a mantra for Dugher – as it should be. Technology cannot eradicate addiction but it can make gambling as safe as it is possible to be. Dugher points to the progress made with pop-ups, emails, phone calls and accounts closed down due to the signs of problem gambling; of technology as a means of verifying age; and imposing deposit limits. But he accepts this is a work in progress. The BGC’s operators and suppliers are working with the Gambling Commission on a number of challenges; from ways of addressing the problematic field of loyalty schemes, to a new code of design to create safer games. “You might find that our ambition for change is far greater than that of our harshest critics,” asserts Dugher.

GIQ Q1 REVIEW

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P EO P L E

MICHAEL DUGHER

Working with government

Who is Michael Dugher? “I grew up near Doncaster, which is a working class town and a racing town. Race week (as we called it, or Ledger week) was a big week for the town. I would pass the racecourse twice a day when the bus went past it. The St Ledger is the oldest classic race, dating back to 1786. Part of the development of the town was the King coming to the St Ledger. As much as the railways or the pit was a background to my childhood, so was the races.” “I was brought up in a pit village. William Hill was at the end of the street. People enjoyed a bet. Me and my dad would go to the working men’s club on a Saturday afternoon. There were people in there who had to work hard for a living and didn’t earn a fortune. These guys paid their taxes, looked after their families

and were pillars of society. They would enjoy a couple of pints, watch the racing, have a couple of bets and wait for the football results to come in at quarter to five. They deserved every minute of that. It was part of their well-earned leisure. “There is a lot of snobbery about this industry. Lots of people enjoy a bet and do so in a perfectly safe environment. That is part of their culture and it is a perfectly good thing. There are millions of people who don’t bet and that’s OK too. “What you have to avoid is people who don’t know anything about this telling other people what they should be doing with their own money – particularly people who don’t understand working class culture. “That is one of the reasons why I felt a connection with this industry. It is part of the culture of where I’m from and who I am. If like me, you understand it, that does not mean you are in favour of the status quo. The fact you understand that culture and defend the right of working people to enjoy their leisure time and have an occasional flutter in a safe environment, that does not mean you don’t want to see ever higher standards. “The BGC is a standards body. And I am absolutely determined that the BGC will be a standards body deeply committed to big changes. I am here to help the industry make big changes – to make it an even safer and better experience for people.”

‘One of the reasons I felt a connection with this industry is it’s part of the culture of where I’m from and who I am’ Michael Dugher

Dugher might have been a prominent Labour Party politician as recently as three years ago, but he is full of praise for the Conservative government minister in charge of gambling, Nigel Huddleston, and the secretary of state for culture, media and sport, Oliver Dowden. You would expect nothing less, as Dugher will have to engage with these officials on behalf of the industry and support the government as it embarks on what is expected to be a major review of the UK’s Gambling Act. There are two main points of inconsistency that Dugher would like to see addressed. He would like the lottery’s minimum age of 16 to be brought into line with the rest of the gambling industry’s minimum age of 18. “Equally, I feel strongly that – regrettably – the black market is part of the gambling market in the UK. It does not have any of the standards that we demand of our regulated members. One of the things the government must ensure as part of the review is that it does not drive people who are potentially at risk, and potential problem gamblers, into the arms of the illegal, rogue black market operators, where there are no standards.” He sees the work the industry is doing on stakes and prizes; on using technology to better identify problem gamblers; and on advertising technology as a means to inform the government’s review. “This is quite complicated stuff. I think there is exciting work going on, but it is work in progress and will take time,” continues Dugher. “I can see the government package of changes will be really compelling in a number of areas. Cumulatively, the government will be able to say that this is the biggest transformation since the Gambling Act.” “We share the ambition of the regulator and the government that we want ever higher standards. Wherever there is one problem gambler, that is one too many. And we are determined to help that person make changes and deal with it. “It might be ‘only’ 0.6 per cent, but for those individuals or their families, that is a serious problem. Don’t forget these are our customers. There is no future for our companies if they are built on the back of problem gamblers.” Just one month into his new job, Dugher and his new team at the BGC have been more proactive than any of the body’s predecessor organisations. He has called out media misinformation and lobbied powerfully for government support for businesses suffering the effects of the Covid-19 pandemic. He has a tough job on his hands but, as Dugher says, “Who wants an easy life?” n 26


We Are One Moving Forward, Together As people and institutions we may be individuals, but as an industry we are one. Scientific Games is doing everything possible to help our lottery partners navigate these uncertain times and protect vital funding to the good causes they support.

Together we will arrive stronger and smarter than ever before.

Reimagine Next Š 2020 Scientific Games Corporation. All Rights Reserved.


GAMES NEW RELEASES Q1 GIQ casts its eye over the quarter’s brightest new games

BLUEPRINT GOES WUBBA LUBBA DUB-DUB GOLDEN ROCK STUDIOS LAUNCHES ROULETTE X2 Golden Rock Studios’ latest table game Roulette X2 awards players with double payouts for free. The feature works by giving players a dice roll after each winning round; if all four dice numbers match, the player’s win is multiplied x2. This gives the fast-paced game improved odds of 70-1, compared with standard roulette games, which have odds of 35-1. “Golden Rock Studios Roulette X2 has been built with pure gamblers in mind,” said CEO James Curwen. “Its exceptional UI and UX means you can place chips faster and smoother than any other roulette on the market, with the added benefit of our USP dice feature that can award the customer double payouts for free every winning spin.”

BIG TIME GAMING GETS MINTED WITH LATEST SLOT Big Time Gaming’s first slot release of the year is Royal Mint Megaways, a 6-reel 117,649 ways-towin game inspired by UK coin producer Royal Mint and featuring Big Time Gaming’s Megaways mechanic. Other features include Triple Reaction, which adds two horizontal reels to the game, while the free spins mode offers an unlimited Win Multiplier, which starts at one and is increased by one after each reaction. “We’ve got big plans for 2020 and some really exciting titles lined up,” said CEO Nick Robinson. “But what better way to start the year with a bang than with Royal Mint? Players who like their gaming heart-stoppingly volatile will love this new addition to our portfolio.”

Blueprint Gaming has launched a new slot based on American adult animated series Rick and Morty. In Rick and Morty Megaways, every win during the base game triggers a cascade, providing a greater chance for players to secure entry to one of three free spins rounds; Pickle Rick, Federation Wild Spins and Vindicators Free Spins. The game is enhanced by the Megaways mechanic, under license from Big Time Gaming, which generates up to 117,649 paylines per spin. “We’ve brought the popular Rick and Morty to the reels for a trippy gaming experience full of cascades and bonus features,” said director of marketing and relationships Jo Purvis. “We have a strong reputation for delivering engaging branded games that bring films and TV shows to life, and our design and development team have once again delivered an out-of-this-world slot.”

NETENT WILD WITH WILDERLAND NetEnt is taking players inside an enchanted woodland steeped in elvish magic in its new release, Wilderland. NetEnt’s Walking Wilds mechanic is back but with Walking Scatters, multiplying multipliers and stacks. “Walking Scatter Wilds is unique, powerful and simple, and gives a feeling of thrill and constant excitement,” said director of games Bryan Upton. “With the multipliers, expanding stacks and theme it will be a strong title for NetEnt. We are looking forward to our players’ response to this title.”


G A M ES

Q1 RELEASES

SG DIGITAL ROLLS OUT LATEST MEGAWAYS TITLE…

DISCO FEVER FOR PRAGMATIC Pragmatic Play is taking players to the disco with its latest slot Dance Party, a 3x5 slot which features a progressive multiplier free-spin mode triggered by landing five diamond scatter symbols in one spin. During free-spin sessions, the party steps up a level as players are transported to the middle of the dancefloor, with up to 60 free spins awarded with a multiplier that can increase payouts by up to 30x winnings per spin. “Dance Party is a high-energy, fun-filled game designed to immerse players in an atmosphere packed with the bright lights and catchy tunes of a nightclub,” said chief commercial officer Melissa Summerfield. “Transporting players back to the glory days of disco, the highlyvolatile progressive free spins mode can mean a trip to the tiles is a real success, paying out up to 36,450 times a player’s stake, for a night you’ll never forget.”

Immersing players deep in the Aztec jungle, SG Digital’s latest release, Montezuma Megaways, provides up to 117,649 ways to win through Big Time Gaming’s Megaways mechanic. In the game, winning spins make symbols in the payline disappear, and the remaining symbols cascade into the spaces they leave, opening up further win potential. The game features free spins and the Montezuma Respin Wheel with added multipliers up to 100x wagers, while the Buy Pass feature allows players to purchase a bonus round directly.

...AND REPURPOSES LAND-BASED MECHANIC SG Digital’s new King of Babylon slot game features the supplier’s successful Action Spins mechanic from the land-based sector. It delivers action-packed gameplay through the Action Spins Wheel, while Free Games provide more opportunities to trigger the feature. When a player is awarded a win combo that includes a Golden Wild Symbol, this triggers the Actions Spins feature. Awards are collected in the Action Spins Pot and the bonus wheel spins are awarded. Each spin of the wheel

offers prizes, including: three more Action Spins; the amount of the Action Spins Pot or the Pot with a 5x multiplier; and the amount of the Action Spins Pot and 25x to 1,000x their total bet.

RED TIGER TRANSPORTS PLAYERS TO EGYPT RELAX GAMING GOES DEEP IN THE JUNGLE Relax Gaming is transporting players into the Guatemalan jungle in its latest slot release, Mega Masks. The 5-reel, 41-fixed pay line slot’s Mega Symbol feature activates randomly when players merge two or more reels and land at least one Mega Symbol. The free spins round is triggered when three Bonus Symbols fall on reels 1, 3 and 5, releasing fireflies onto the game screen to clear artifacts on the vines which separate each reel. “Mega Masks’ theme is crafted with quality graphics and a gameplay that will keep players engaged over longer session times,” said chief product officer Simon Hammon. “It offers customisation for a range of audiences with different playing preferences. Combined with the slot’s free spin and win potential, Mega Masks will be a valuable addition to our partners’ portfolios.” GIQ Q1 REVIEW

Red Tiger launched a new Ancient Egypt-themed slot Wings of Ra, a 5x3 game which rewards players with a momentum-building free-spins progressive feature that builds on the supplier’s Pirates’ Plenty: The Sunken Treasure and Dragon’s Fire MegaWays games. It is the first title to be built on Red Tiger’s new PixiJS framework, enhancing the smoothness of the gameplay. “Feature progression has always been extremely popular in slots and many top performers in the market utilise progression concepts,” said director of business development Carl Ejlertsson. “Wings of Ra has a new and explosive twist on feature progression that we believe will have a strong appeal in our core markets. It’s always hard to balance games that have feature sets which are conceptually growing in an exponential manner, but we believe that we really hit the spot here.”

GREENTUBE ROLLS OUT GHOSTLY TOWERS SLOT Greentube has expanded its Home of Games slot portfolio with the launch of Ghostly Towers. The 5-reel, 20-win line slot includes a host of extra features, including three different reel modifiers and a free spins bonus to enhance the gaming experience. Whenever Pierre the ghost appears on the reels, a modifier activates, giving players a new advantage in their quest for riches in the haunted house. The free spins bonus also awards five free spins and up to ten random gems. Matching at least five gems triggers one of the modifiers. 29


GA M ES

AGGREGATION GUIDE

Where can you find all these games?

30

A


A Every where

Scientific Games can give you 2,000 games. iSoftBet offers 3,500. EveryMatrix has 8,000. Games aggregation has become as competitive as games production. Yggdrasil and NetEnt have recently entered the fray. What makes them different? Steve Hoare investigates

GIQ Q1 REVIEW

31


G A M ES

AGGREGATION GUIDE

THE FAMILY TREES of NetEnt and Yggdrasil are intimately entwined. Yggdrasil chief executive officer Fredrik Elmqvist is a former head of account management (and interim CEO) at NetEnt. The Hamberg family is NetEnt’s largest shareholder, owning almost 20 per cent of the company, and was a significant shareholder in Yggdrasil parent Cherry (at least until the latter went private last year). The Lindwall family has been a significant shareholder in both – with Betsson chief executive Pontus Lindwall sitting on the board of both, and being part of the consortium which took Cherry off the stock market. Those ties were either loosened or strengthened (depending on your point of view), when NetEnt’s chief operating officer Bjorn Krantz left to join Yggdrasil. Like his new boss, Krantz was also an interim CEO at his former company. The fact that Krantz joined Yggdrasil to head up its new publishing business (including its aggregation platform) at exactly the same time that NetEnt launched its own aggregation platform, NetEnt Connect, is surely coincidental, but noteworthy nonetheless.

Left: Rob Fell, NetEnt; Right: Fredrik Elmqvist, Yggdrasil Gaming

The ties that bind us These ties are not lost on Elmqvist, who teased Krantz’s opposite number Rob Fell on LinkedIn over the fact that the first three companies NetEnt has partnered with are all run by former NetEnt account managers. NetEnt officially launched NetEnt Connect in December last year but it had trailed the platform ten months earlier at ICE 2019. The APIs had been built prior to ICE and were then showcased to potential partners, who have been refining them over the course of the intervening year to make them as simple and seamless as possible. NetEnt Connect was launched in beta with Ellmount Gaming’s Casino Room, and with NetEnt’s own Red Tiger Gaming the only aggregated supplier. After the acquisition of Red Tiger in September, the number one priority was getting the newly-acquired company’s games live through NetEnt Connect. The Red Tiger team also assisted with adding support for any third-party supplier’s jackpots. This was followed with the addition of Bethard Group, and GML Interactive brands Stoiximan (Greece) and Betano (Germany). In late February this year the first suppliers from outside the NetEnt Group were added, with the addition of content from Jade Rabbit, Games Inc and G.Games (formed by the merger of German company Gluck and UK games supplier Gamevy), as well as Scout Gaming Group’s fantasy sports offering. 32

“They have been extremely important to us and helpful in getting the APIs and the platform to the state that it is today,” says product director Fell. He admits NetEnt is late to market. The company has been talking about this for some time. While it has been faffing around or “focussing on other areas”, as Fell would prefer it, the likes of iSoftBet, Leander Games, Microgaming, Relax Gaming, Scientific Games and Playtech have launched their own aggregation platforms. Fell believes NetEnt is doing things a little bit differently. Unlike most aggregators, NetEnt is being very selective about its portfolio of partners. It does not want direct competitors of NetEnt and Red Tiger. It is looking to round out its portfolio with bingo, instant win, fantasy sports, eSports, virtual sports or land-based slots suppliers, which do not


G A M ES

AGGREGATION GUIDE

Tommi Maijala, Relax Gaming

Relax Gaming: the commercially friendly newcomer making big waves Relax Gaming’s transparent attitude towards costs and terms has shaken up an industry that is fighting tooth and nail to squeeze prices and cut exclusive deals. Its two-tier system includes nine Silver Bullet partners, which are STHLMGAMING, Northern Lights, Kalamba, Fantasma, 4ThePlayer, Maxwin Gaming, Electric Elephant, Dice Lab and Sapphire Gaming. “We created Silver Bullet to empower up-and-coming studios with a commercially transparent route to market, rather than closing off their direct avenue to operators. Relax’s expert teams pick up the heavy lifting, removing barriers which often make it difficult for quality-driven, talented studios to make a mark in the overcrowded sector,” said a spokesperson. “By providing support on necessary expenditure, from compliance and a commercial team to technology investment, the programme gives developers

freedom to create the best games possible.” There is a second tier of 22 studios, which Relax does not represent commercially, allowing them to strike their own deals with operators but benefitting from Relax’s technology and approach. These include: Big Time Gaming, Reel Play, Quickspin, Push Gaming, Playson, Revolver, Hacksaw Gaming, Felt, NetGaming, Probability Jones, High5Games, Leander, Green Jade Games, Stakelogic, Ganapati, Spearhead Studios, Slingo (Gaming Realms), AGS, No Limit City, Skywind Group, Games inc and Plank Gaming. “This has shaken up the industry status quo where studios were offered varying rates under secretive terms and allowed for open discussions and a fair playing field.” This has seen Relax strike 60 new commercial deals during 2019. Relax is flexible too, signing two-way platform-to-platform agreements with the likes of Leander Games, which has boosted the reach of its own portfolio while adding its partners’ games to its distribution network.

Ellmount Gaming’s Casino Room

GIQ Q1 REVIEW

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G A M ES

AGGREGATION GUIDE

have much exposure to the online market. G.Games, for example, has a broad offering of scratch cards, single-player bingo and keno. “The plan is to complement and supplement the games of NetEnt and Red Tiger,” says Fell. While NetEnt is rounding out its portfolio, other aggregators are boosting their portfolios with the same content. Jade Rabbit’s games are available through Leander, while G.Games and Games Inc have both penned deals with Relax. Some partnerships, however, will be closer than others. “We are working with a number of suppliers to produce localised content that will be exclusive for NetEnt Connect as a platform,” continues Fell, “and that content will be specific to Latin America, New Jersey, Italy or the UK – to name a few examples.” Fell says this localised and diversified content is based on requests from NetEnt’s biggest customers. “Everyone is focused on localised content,” he says. “People know that the old one-size-fits-all model does not work. There is so much competition in the market. NetEnt fell victim to this by focusing on Sweden and the UK for a very long time. As other games suppliers came into the market and created great games for Germany, for example, NetEnt had nothing that could compete in those types of markets.” “We are closing those gaps,” continues Fell. “We know that numbers games work really well in Latin and Central America. We know that bingo games work really well in Spain. We know that keno-type games work really well in Greece, for example.” NetEnt acquired Red Tiger to broaden its portfolio of games and markets, and to hasten

its delivery of games to these markets. As such, while it has been in the planning stages for a very long time, NetEnt Connect can be seen as a continuation of that strategy. It is also a means of delivering the synergies that the acquisition promised. Beyond broadening the portfolio, the USP of NetEnt Connect, according to Fell, is simplicity. “If you can launch Starburst now, you can launch any game from NetEnt Connect without any changes to your platform.”

Going beyond aggregation Former NetEnt COO Krantz joined Yggdrasil at the beginning of January. His arrival coincided with a restructuring of the company into three specific areas: publishing, distribution and affiliation. Krantz leads the publishing business. The publishing business itself can also be split into three areas. The first is YG Game IP. Krantz explains this is about breaking down games into their constituent parts (sound, maths and graphics), so that they can be repackaged for retail or for social casinos. “It gives us an opportunity to widen our offering into omnichannel,” says Krantz. The second area is YG Masters. The company’s aggregation platform was launched two years ago as YGS Masters. It was sold with much the same schtick as NetEnt Connect – localised content for numerous markets; one easy integration… “Everyone is talking about aggregation but we have taken it to the next level,” explains Krantz. “We are doing something beyond aggregation. Instead of selling aggregation as a centralised offering, we are taking a decentralised approach.”

iSoftBet: fastest-growing new entrant The growth of iSoftBet’s Games Aggregation Platform (GAP) is nothing short of phenomenal. GAP now offers more than 3,500 pre-certified games and a multitude of advanced marketing and real-time gamification tools. During 2019, the company added 1,000 new games to the GAP platform and signed a record number of operator platform partners, including Gaming Innovation Group (GiG), Stoiximan, LeoVegas, Sazka, Betsson, Solverde and Interwetten. It also signed more than 20 major thirdparty providers, including SBTech, Red Tiger and Evolution Gaming, with the platform now totalling over 50 suppliers. Switzerland marked the 16th regulated market iSoftBet has entered, with its games and platform certified in multiple jurisdictions including Italy, the UK, Spain, Belgium, Portugal, Alderney, Romania, Lithuania, Latvia and Estonia.

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“We have taken aggregation to the next level. Instead of selling it as a centralised offering, we are taking a decentralised approach” Bjorn Krantz, Yggdrasil


G A M ES

AGGREGATION GUIDE

Scientific Games vs Microgaming: battle of the heavyweights Scientific Games and Microgaming are the two heavyweights of game aggregation. Last year, Scientific Games brought together its OGS content aggregation platform, which it inherited from NYX, and its OPS player account management platform from OpenBet to launch OpenGaming. Microgaming’s Quickfire solution is more established than any of the contenders in this category. It launched over seven years ago and filled the market’s need for quick and easy integrations. It is now easier to list the operators and suppliers not linked into Quickfire than those that are. Microgaming is also two years into its independent studios strategy, which has seen ten independent studios creating content exclusively for

Krantz says YG Masters has been boosted by its new GATI (game adaption tools and interface) product. Partners can use GATI to develop their games, which will then automatically be made available in all regulated markets that Yggdrasil works in. “GATI is the central piece of distribution that is enabling the decentralised network offering,” says Krantz. “We are enabling a more global collaboration.” He offers the example of a partner in Latin America collaborating with another partner in Asia. They can share their roadmaps through GATI and increase their distribution. “This is a disrupter in the market. There is nothing like this in the market today,” claims Krantz. Black Cow is the first supplier to integrate directly into GATI, but all seven of the studios signed up to YG Masters over the past two years will be developing in GATI before long. The final part of the publishing trident, YG Franchise, takes this GIQ Q1 REVIEW

approach one step further and allows partners to instantly create their own unique end-toend iGaming offering supported by Yggdrasil. The company believes this is taking white labelling to a new level. Future customers will be able to license any, or all, elements of Yggdrasil’s gaming ecosystem. It is, claims the Yggdrasil sales pitch, “giving away the keys to the kingdom”. Both Fell and Krantz talk a good game. They clearly believe in their products. Yggdrasil and Red Tiger have a good reputation for speedy integrations. However, the proof will be in the pudding. Operators will decide. From the outside looking in, it is difficult to see what either offers ahead of, say, Relax Gaming’s Silver Bullet programme, which now houses nine suppliers, while partnering with another 22, which represent themselves commercially. The Relax stable includes the recent addition of Andrew Porter and Chris Ash’s 4ThePlayer. com, which is one of Yggdrasil’s seven YG Masters, and has also recently been added to Scientific Games’ OpenGaming platform. Another recent addition to the Relax programme is Dice Lab, incidentally. It is worth a mention because it too is run by a NetEnt alumni in the shape of former managing director of NetEnt Malta, Enrico Bradamante. With its innovative take on dice games (its

Microgaming customers. During 2019, the strategy delivered 40 games from Alchemy Gaming, All41Studios, Fortune Factory Studios, Foxium, Gameburger Studios, Neon Valley Studios, Pulse 8 Studios, Rabcat, Slingshot Studios, Stormcraft Studios, Switch Studios, and Triple Edge Studios. Games such as Book of Oz, which was developed exclusively for Microgaming by Triple Edge Studios, went on to become one of Microgaming’s best-performing new slots ever. Scientific Games has 157 customers connected to its OpenGaming ecosystem. It houses a portfolio of over 2,000 games that are powered by 48 in-house and partner studios across the globe. Its only drawback is its strict restriction to regulated markets. Microgaming is now present in most of them – with the addition of the Czech Republic and Sweden it is now live in 20 regulated markets around the world.

first game is an RNG take on the classic dice game, Yahtzee), it might have been the perfect partner for NetEnt Connect but it has signed up exclusively with Relax. The NetEnt alumni network is starting to spread far and wide. So, what would its latest member Krantz say are the differences between NetEnt and Yggdrasil? “I’d prefer not to compare one company with the other but I’ll say that Yggdrasil is a very agile company. It is a company that means business. It is serious about making a difference. The mindset is about getting things done. That mindset means the world – especially in times when you need to be more clever and more agile, and prioritise and focus on what needs doing.” It is perhaps no coincidence that former Red Tiger CEO Gavin Hamilton has taken Krantz’s old job of chief operating officer at NetEnt. Red Tiger also has a good reputation for agility and getting things done. NetEnt CEO Therese Hillman has talked about learning things from the newly acquired company and Hamilton’s promotion suggests this is more than mere words. With operators increasingly bogged down in regulation, many have few resources to manage direct integrations. All these suppliers have jumped in to fill the gap. In doing so, the platform world is becoming just as competitive as the slots market. n 35


G A M ES

AGGREGATION GUIDE

The best of the rest Leander Games Leander built its RGS several years ago to conquer the slow integration times from established gatekeepers. Its early success as a platform provider for the newly-launched casino of PokerStars was a game-changer for the company. It followed that up by partnering with the likes of 2by2, Blueprint and Quickspin to become one of the first aggregators with a stable of a dozen or so partners. It now has over 40 and provides a route into the likes of Betfair, Betsson, SkyBet, Vera&John, Mr Green and many more.

GAN

Kiron Interactive, Leander, Merkur Gaming, Microgaming, NetEnt, NextGen, Ortiz Gaming, Patagonia, Pragmatic Play, Realistic, Red Tiger, Scientific Games, Tom Horn, Yggdrasil, and Zitro Interactive.

BetConstruct BetConstruct is a master of partnerships. Its SpringBME offers games from Betsoft, Endorphina, Evolution Gaming, Green Tube, Microgaming, NetEnt, Playtech, Pragmatic Play, Scientific Games and many more.

GAN is another of the more established companies offering aggregation services. Its main focus is on the US, but it is well established in Europe – particularly in Italy, where it supplies games from the likes of Aristocrat, Ainsworth, IGT, Novomatic and Scientific Games.

Nektan

EveryMatrix

One of the less recognisable aggregators on this list but it still manages to aggregate games from usual suspects such as BetSoft, EGT, NetEnt, NYX and Pragmatic Play.

EveryMatrix’s Casino Engine claims to feature 8,000+ games, 95+ vendor integrations and 140+ content suppliers. Used by the likes of Flutter, Tipico and Norsk Tipping.

Oryx Gaming A key supplier in Germanic markets. Claims over 8,000 games available from the likes of AMATIC Industries, Aristocrat, Bally Wulff, BetSoft, Blueprint Gaming, Booming Games, Bongo, Casino Technology, Colchian, EGT, Elk Studios, Evoplay, Evolution Gaming, Extreme Live Gaming, Gamomat, Givme Games, Golden Hero, Green Tube, iSoftBet, Kalamba Games,

Nektan’s E-Lite aggregation platform includes games from the likes of Pragmatic Play, Leander, Realistic Games and Red Tiger.

SoftSwiss

Iforium Iforium’s GameFlex aggregation platform features everyone from Big Time Gaming and Blueprint Gaming, to IGT and SG Digital, plus 2by2, Booming Games and many more.

Playzido Playzido’s key partner is Endemol Shine, but it also distributes the likes of Bulletproof Games, Adoptit, 2by2 and Sigma Gaming.

Solid Gaming

Asian-based aggregation platform with a huge number of supplier partners. It has recently signed deals with NetEnt and Microgaming to add to the likes of Tom Horn, BetSoft and Habanero. It has a strong live-dealer portfolio via deals with Asia Gaming (AG), MG Live, Lotus, Gameplay Interactive (GPI), eBET, Evolution Gaming, SA Gaming, Ho Gaming, Super Spade, NetEnt Live and Ezugi.

Playtech

Playtech has joined this trend belatedly but with some style. Its acquisition of Odobo morphed into the Playtech Open Platform (POP), which then morphed into the Playtech Games Marketplace. The Marketplace brings together content from Playtech’s nine in-house studios such as Ash, Eyecon and Quickspin, but it is also an open platform that allows you to use Playtech platform tools on third-party content from the likes of Blueprint Gaming, IGT, Red Tiger and even arch-rival Microgaming. The times really are changing.

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

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

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TECHNOLOGY FIVE LAUNCHES

Five of the quarter’s major product launches and what they mean

F1 goes virtual with new esports series Formula 1 launched a new F1 Esports Virtual Grand Prix Series in March to replace races postponed by the ongoing Covid-19 pandemic.

What’s the big idea?

Hard Rock goes social with KamaGames KamaGames secured a landmark partnership in the US to launch a new social casino product with iconic casino and themed restaurant operator Hard Rock International.

What’s the big idea? Hard Rock Blackjack features popular casino-style games from the KamaGames portfolio, including a range of 3D table games such as roulette, craps, baccarat and blackjack, slots and video poker games, as well as a social poker game based

IN THIS ISSUE 41 KamaGames, BetMGM, F1 and more 42 Focus: data and ethics

on KamaGames’ flagship Pokerist app. Available in 28 different languages, the social casino will allow Hard Rock to stay connected with its guests in a new and creative way between

visits to its cafés, hotels and casinos around the world. “For KamaGames, this partnership holds an unparalleled opportunity for growth,” said KamaGames CEO Andrey Kuznetsov.

Featuring a number of current Formula 1 drivers and celebrities, including Lando Norris, Sir Chris Hoy and One Direction’s Liam Payne, the series has been created to enable fans to watch virtual F1 races during the disruption caused by the coronavirus outbreak. The virtual races, which are strictly for entertainment purposes, see drivers compete in the official Formula 1 2019 game by Codemasters, using identical rigs and car setup. The races run in place of every postponed Grand Prix and are broadcast live from the Gfinity Esports Arena. “We are pleased to bring some light relief in the form of the F1 Esports Virtual GP in these unpredictable times,” said F1 head of digital business initiative and esports Julian Tan. “With every major sports league in the world unable to compete, it is a great time to highlight the benefits of esports and the incredible skill that’s on show.”

Blueprint Gaming launches third-party developer programme

Scientific Games enhances sportsbook with AI specialist Vaix

BetMGM launches mobile apps in West Virginia and Indiana

In the increasingly competitive casino supplier market, Blueprint Gaming has become the latest to launch a third-party developer programme.

Scientific Games has expanded its artificial intelligence (AI) capabilities through a new partnership with AI specialist Vaix.

Roar Digital, the joint venture between MGM Resorts International and GVC, has launched its BetMGM sports betting app in West Virginia and Indiana.

What’s the big idea?

Vaix will offer an AI model through the OpenMarket branch of Scientific Games’ OpenSports platform to offer personalised recommendations and betting choices to bettors in real-time. Using an automated betting history, marketodds data-feed integration and multiple options to integrate personalised recommendations into the user interface, the supplier’s sportsbook partners will be able to launch personalised experiences for their users without the added cost of building a complex AI setup. “We’re thrilled to partner with Vaix to incorporate AI into our sportsbook products,” said Keith O’Loughlin, senior vice president of sportsbook, digital for Scientific Games. “Players want a tailored experience, and with Vaix we can offer a personalised experience through our OpenSports products.”

Following in the footsteps of the likes of Yggdrasil and NetEnt, the new initiative allows independent games studios to distribute their content through Blueprint’s RGS platform and extensive network. UK-based studio BB Games is the first developer to sign up to the programme. “This is a really exciting new programme that will grant independent studios a huge opportunity to cut through the noise and have their content accessible to operators across the globe through our RGS,” said Blueprint Gaming head of business development Siôr Walbyoff. “We’re delighted to have BB Games on board and are looking forward to working with the team to develop fun and engaging slots that incorporate features never seen before.” GIQ Q1 REVIEW

What’s the big idea?

What’s the big idea? The BetMGM app offers players in-app livestreamed sports events from across the world, and provides West Virginia sports bettors with access to promotions only available inside the Mountain State. It was launched through a licensing partnership with The Greenbrier, which has also launched a FanDuel app and retail FanDuel sportsbook. Roar Digital chief executive Adam Greenblatt commented: “West Virginians will notice the care we’ve put into making this a mobile betting experience for die-hard sports fans and novices alike.” In Indiana, the BetMGM app was launched under a licence issued to Belterra Casino Resort, which is owned by Gaming and Leisure Properties and operated by Boyd Gaming. 41


T EC H N O LO GY ETHICAL DATA USE

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T EC H N O LO GY ETHICAL DATA USE

THE RISE OF artificial intelligence (AI) and machine learning (ML) technologies is developing an awareness among consumers that their data, whether as gamblers, shoppers, patients, travellers or citizens is both highly valuable, but also personal. Consumers feel, perhaps rightly, that the business community has excessive power and they have lost their privacy. No matter the industry, this is creating a realisation that an ethical approach to data is necessary if customers are to be retained and pleased. For the gambling industry this means balancing the power of data to improve the business, to increase customer satisfaction and, of course, to meet regulatory demands. “Culturally we are more sensitive to people’s vulnerabilities, especially when dealing with customers,” says Rorie Devine, an interim CIO who recently worked with Camelot and Ladbrokes Coral, and was CTO of Betfair for four years. “I don’t think the customer has become more data aware, but it does depend on your customer profile,” says Nick Maroudas, CTO of mobile gaming operator Kwiff. “A Betfair customer, for example, is far more data aware because it is exchange betting.” “More immediately there are concerns about transparency in the use of data; and rising concerns that AI will further damage diversity and opportunity in society,” says Accenture director Rumman Chowdhury, an expert on data and AI. In her research, Chowdhury found that data can have an immediate, impactful and invisible effect on the lives of gamers and other consumers. This, she believes, is driving the public’s demand for a more ethical approach to the use of data. Data became front-page news following the revelations that data firm Cambridge Analytica was able to influence the US presidential election and the UK referendum on EU membership, through its relationship with Facebook. “The hype leads to misunderstanding, excessive expectations and excessive fear,” says Andrew Burgess, an independent advisor and author on data and AI.

Ethical demand “Gambling-related harm is now recognised as a public health issue,” Gambling Commission CEO Neil McArthur said in a recent speech. “That is an important change and I think it presents an opportunity to turn the change in tone from the top operators into tangible actions that will benefit consumers.” GIQ Q1 REVIEW

McArthur says the transition of gamblers from land-based establishments to online creates risks and opportunities. Increasingly, customer data can be seen as one of the most important tools to promote safer gambling. But the gaming industry is not alone. Society is undergoing a demand for a more ethical approach to how technology and therefore data is used. The World Economic Forum last year called for responsible development and adoption of new technologies, and greater public participation in how technologies are deployed, with close attention to values and ethics. “To fight growing inequality and resulting populism, greater awareness of technologies’ impact on human rights is required, as well as their inclusive integration into societies and economies,” the World Economic Forum stated in a paper titled Values, Ethics and Innovation. In the UK, McArthur of the Gambling Commission has set three challenges to the industry to raise standards and reduce harm across the sector. These challenges cover game and product design, advertising technology and customer incentives – all three are reliant on data collected from the customer. “This industry is definitely becoming more ethical, and that includes its use of data,” says Chris Conroy, chief data scientist with Future Anthem, a data science business in the gambling industry. “There is a pretty big culture change happening and within the industry forums, player protections is far more prevalent as a topic.” But Maroudas of Kwiff warns: “Outside of the UK and Sweden it is the Wild West. The UK set a precedent early on.”

Society is demanding the ethical use of data by all companies. For gambling operators, this will be mission critical, writes Mark Chillingworth in the first of a series of articles focusing on the use of data

“Culturally we are more sensitive to people’s vulnerabilities, especially when dealing with customers” Rorie Devine 43


T EC H N O LO GY ETHICAL DATA USE

Data power In a data-driven economy, data has the power to be both the most dangerous and the most beneficial asset an organisation holds. It is therefore at the heart of ethical debate in the business. Burgess says the most important thing to do is be clear about the business problem that data will help understand, which is likely to shape the ethical data approach. “You have an obligation to ingest customer data and understand it end to end,” says Ian Cohen, group CIO of transport company Addison Lee, of how part of the ethical approach to data is to ensure you deliver good customer service. “It’s not your data anyway, it’s entrusted to you by your customers, so how dare you not make the effort to understand its end-to-end value and provenance.” “Gambling firms have never really thought about how to externally monetise their data, because they have always realised that this was sensitive data,” says Conroy of Future Anthem. “Customers will find more barriers at the beginning of joining a gaming service than they will in retail. When placing the first bet or making the first withdrawal there is a set of real barriers,” he says, adding that a consumer can spend £200 on a pair of trainers on a retail website that may only be minutes old with few or no obstacles. Devine argues that because gaming is a highly profitable sector, selling secondary data was not seen as important, whereas retail and financial services organisations operate on “wafer-thin margins”.

“The moral role of technologies that concern the values and ethics of technological development must be addressed” Marc Benioff, Salesforce

44

Data not only protects the customer, it can improve the consumer’s experience, and in the online economy where choice is prevalent and instant, gaming organisations have to continually improve their products and services. As the Gambling Commission recently revealed, a good single view of the customer has “the potential to be extremely powerful for player safety”. “One of the challenges this sector has is that it is complex. The ecosystem of many different suppliers makes it a challenge to operationalise some of the data and tie it into your ecosystem,” Conroy of Future Anthem says. As well as the complexity of the industry, Chowdhury of Accenture says the rapidly growing data levels could pose a challenge to the sector soon. “We will reach a point where we have too much data,” Chowdhury said, adding that the gaming sector will need to introduce strong information management practices to ensure it remains compliant and ethical with its data usage. “We can learn the most from librarians and archivists, because they have experience of knowing what to keep and what to discard. There needs to be a narrative around what data we keep and what we don’t,” Chowdhury says. The narrative around data ethics and retention has already begun and it was the r e g u l at or s

who opened the conversation. General Data Protection Regulations (GDPR) came into full force in 2018, and similar regulations are being created in Asia, South America and California. These regulations have teeth. In the case of GDPR, 40 per cent of annual turnover is at risk. The Facebook and Cambridge Analytica revelations have tarnished the social media giant’s name and, at least for now, hobbled plans by Facebook to launch a financial services provider, emphasising the business value of having a strong data ethic. “GDPR has been phenomenal in that it has made firms sit up and take notice,” says Maurice Coyle, chief data scientist with Truata, a Dublin-based data specialist. “Gaming was always a highly regulated sector. As a CTO you were audited and that is now coming into sectors such as financial services,” Devine says. He believes the size of Gambling Commission fines has changed the culture of the sector rather than a newfound desire to be ethical. The arrival of GDPR across the European Union has strengthened the interest on how to use data ethically, Chowdhury of Accenture suggests. Organisations like Facebook used to rely on ‘explainability’, stating that they have previously relied on consumers reading the terms and conditions for an app or online service, but now Facebook messages the consumer to check they are happy with their privacy settings. “GDPR was revolutionary as it put a stake in the ground so that we all have a common point for discussions about our data,” she says. That discussion, Chowdhury believes, will begin a society-wide debate about data ethics. A surprising supporter of the increased regulatory burden is Marc Benioff, chairman and CEO of Salesforce, the cloud computing software giant. Benioff told the World Economic Forum in 2018 that regulations “set a true north” that define not only how companies create platforms for collecting data, but also how they create data tools. He added: “The moral role of technologies that concern the values and ethics of technological development must be addressed at this critical moment history and industry is asking for guidance.” n


MARKETING AFFILIATES

Affiliates aim for the US

Listed affiliates are focusing a great deal of attention on the emerging US gambling market. But can they fend off local competition, and are they neglecting Asia and Latin America? asks Jon Harwood AS MORE LICENCES are issued and deals struck, the US is front and centre of the big affiliates’ planning for 2020, although many have been preparing for this moment for several years. Catena Media, for example, last year agreed final terms for several US assets acquired in December 2016. Better Collective has made a series of acquisitions in the US. And Gambling.com Group has been pushing its Bookies.com brand. But in a market as complex as the US, where regulation varies from state to state and the rules are so tight, how can affiliates take advantage of the opportunities? And how will they fare in a country that already has plenty of web-savvy entrepreneurs who know how to exploit an opening when they see one? Indeed, is it really worth the time and effort, when there are other emerging markets around the world where the pickings could be a lot easier? In short, according to the big listed affiliates, the answer is yes – although the battles that lie ahead are unlikely to be for the faint-hearted. 46

“There is definitely a gold-rush mentality, but there is gold to be had at the end of the rainbow. This is not a fiction,” says Charles Gillespie, CEO of Gambling.com Group. “It’s tough to compete in the States, and people are investing a lot of time, money and energy in it. So if you are not prepared to go all in it’s risky. It’s almost better not to have a strategy and do nothing if you are not going to go hell for leather.” And it is worth remembering that the affiliates have to rely on what the operators are doing, as illustrated by Catena Media CEO Per Hellberg, who noted that while his company had done well in Pennsylvania after it legalised betting, “some new operators were a bit slow out of the blocks”.

REGULATION It’s not just operators who have to jump through hoops in the US, explains Raketech co-founder Johan Svensson. “As an affiliate you need to team up with an operator in each state. To my knowledge there isn’t a limited number of affili-

ate licences, but since the process is quite comprehensive, the smaller affiliates might not have the resources to submit the applications and secure the licences,” he says. Stuart Simms, group CEO of XLMedia, adds that the rules vary from state to state, but affiliates do need to be approved by regulators: “At its simplest level, licensing is a registration process. However, for more meaningful participation, such as a revenue share, it may be a more material process in terms of depth of investigation, time and cost.” This could benefit the bigger players, he says. “XLMedia sees that as an opportunity with our significant assets and long-standing public company status.” Raketech has secured a vendor licence in New Jersey and earned its first revenue through paid marketing last year. Svensson, now in charge of the company’s US strategy, says: “We are in the process of securing all available licences to further scale the US operations. As a public listed leading affiliate company, we benefit from having a strong internal


MARKETING AFFILIATES

GIQ Q1 REVIEW

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MARKETING AFFILIATES

Catena Media

Better Collective

Listed: Nasdaq Stockholm HQ: Malta Although profit was down in Q4, revenue was on a par with 2018, and CEO Per Hellberg did not seem downhearted. The US was responsible for 18 per cent of revenue in the year, and while the company continues to rebuild its European operations, Catena expects US operations to continue growing in 2020. New depositing customers: Decreased 11 per cent in Q4 to 113,283 (Q4 2018: 127,805). For the year, NDCs were down 19 per cent to 436,706 (Q4 2018: 539,475). Revenue: Q4 revenue fell by three per cent to €26.6m (Q4 2018: €27.3m). Jan-Dec 2019 revenue decreased by two per cent €102.8m (Q4 2018: €105m). Earnings: Q4 EBITDA decreased by 29 per cent to €8.5m (Q4 2018: €12m).

Listed: Nasdaq Stockholm HQ: Cophenhagen The last quarter of 2019 saw Better Collective deliver the highest revenue and operational earnings in company history. And after a stellar year that saw some big acquisitions in the US, including RotoGrinders and VegasInsider.com, CEO Jesper Sogaard declared himself “very satisfied”. New depositing customers: Exceeded 118,000 in Q4 (growth of 55 per cent YOY). For the year NDCs exceeded 431,000 (growth of 66 per cent on 2018). Revenue: Q4 revenue grew by 61 per cent to €19.6m (Q4 2018: €12.1m). Full-year revenue grew 67 per cent to €67.4m (Q4 2018: €40.5m). Earnings: Q4 EBITDA before special items increased 32 per cent to €7.1m (Q4 2018: €5.4m). Full-year EBITDA before special items grew by 69 per cent to €27.2m (Q4 2018: €16.1m).

team managing compliance, licensing and the consistent, so the XLMedia brands and conrelationship with regulators.” sumer propositions do not need to differ greatly Affiliates may be under scrutiny but not by state.” as much as the operators, points out Jonas However, tailoring products to indiAmnesten of Redeye. Despite the regulations, vidual markets does makes sense, and affiliates face fewer compliance challenges wil l be necessary in some cases due than the bookmakers themselves. And he sugto regulation. gests that rather than looking Marc Pedersen, VP of at the US as a single market, it business development and should be compared to Europe M&A, and CEO of Better Col“The regulations as a whole. Others agree – after lective US, which has purwill differ from all, each US state could prove sued an aggressive policy of t o b e a s lu c r at ive a s a state to state, as in US acquisitions, says: “Since Europe. But in the European country. we entered the US market, we have been aware of the end, there will be STRATEGY fewer linguistic and fact that each state should be Amnesten of Redeye says: cultural issues” viewed and analysed as an “The regulations will difindependent market due to Jonas Amnesten, Redeye fer from state to state, as in each states’ individual reguEurope. But in the end, there latory landscape. We see some will be fewer linguistic and cultural issues. I overlap between the states in which we operate believe the US market is less fragmented than and can scale some aspects of our operations the European market and I do not expect that across states.” it will cause any major problem for strategy Per Hellberg, CEO of Catena, last year outand branding.” lined his company’s strategy for its PlayUSA XLMedia’s Simms says: “Although some brand, which will also operate other ‘Play’ may point to the state-by-state nature of the brands targeted by state. market as a weakness, recent numbers from Gambling.com Group has a similar both New Jersey and Pennsylvania show many approach. Its Bookies.com site has shown states are as large as European countries in 100 per cent traffic growth month on month online sports and gaming revenue and thus XL but CEO Charles Gillespie says: “We’ve got a is encouraged by the size of the market through combination of national brands and stateits component parts.” specific brands. He adds: “The US consumer’s love of sports “Sites need to be focused to compete. If is ubiquitous and the way they consume it is it was national you could have just one site, 48

but because it’s not, you need to build a lot more product, but that also means there are more opportunities.” Gambling.com Group runs sites including TopNJsportsbooks.com for New Jersey and has similar sites in Michigan and Pennsylvania. The sites it launches are decided by the nature of each state’s legislation, he adds. Net Gaming Europe has also launched New Jersey-focused sites BettingGuideNJ.com and CasinoGuideNJ.com, and has other ‘niche sites’ planned, while at the same time putting faith in the overarching PokerListings brand. R a ketech, mea nwhi le, is focusi ng on organic growth. “We have identified synergies between our existing products in the European market and opportunities in the US, for example our TV sports guides,” says Johan Svensson. “During 2019 we managed to secure the domain HowToBet.com. This product will be targeting the US market and guiding first-time sports bettors to a safe and responsible sports betting experience in regulated states.” However, it is also keeping an eye on possible M&A opportunities and strategic partnerships, that “have been a successful strategy in Europe, and which we are now expanding into the US”. XLMedia also mentions partnerships as a way forward, while GiG has signed a deal with PokerStars to use its marketing compliance tool, GiG Comply. Raketech has said it is also interested in forging alliances.


MARKETING AFFILIATES

XLMedia The company was due to publish its annual results in early April. In the first half of 2019 it reported revenue of $42.46m, down ten per cent on 2018’s half yearly figures ($47.18m). Its operating profit for the first half of the year was $14.32m, down 20.6 per cent on 2018 ($184m). And in a December trading update, it forecast that revenue was likely to be a third down on 2018 at $78m (Q4 2018: $117.9m). It estimated that its adjusted EBITDA would be £32m, down more than a quarter on 2018 ($43.9m). Since then it has revealed it, like many other affiliates, suffered a “significant decrease in traffic” after Google altered its algorithm, which will further impact its revenue.

CASINO VS SPORTS One area where some of the big affiliates face a challenge is the increasingly sports-led nature of the US gambling market. Net Gaming Europe, which has traditionally focused on casino, has announced a new emphasis on betting – which some would say is a clear indication of its interest in the US market. In its end-of-year results presentation, CEO Marcus Teilman, who has since left the company, said: “Globally, betting accounts for about 50 per cent of the iGaming market, so for us this is a natural growth path to further develop. We see good opportunities to continue to drive growth through both existing and new products in the segment.” The new man at the helm is former Catena Media CEO Robert Andersson, who will be tasked with returning the company to growth and developing its US presence. Gambling.com Group’s promotion of its new Bookies.com brand was also prompted by the nature of the US market. “Gambling.com is a very powerful SEO asset, but it is casino led. So there has been a decision internally to develop a sports-first brand that is of the same calibre – and that’s what Bookies.com is,” says Gillespie.

THE COMPETITION So who will the affiliates be up against in the US, a country that knows a thing or two about a gold rush, and where the entrepreneurial spirit is alive and well? Will European affiliates find themselves competing with tech-savvy coders from Silicon Valley? GIQ Q1 REVIEW

Gillespie of Gambling.com believes there will be locals keen to muscle in on the action. “The people I pay most attention to is the competition, and by and large it is based in the US,” he says. “But it’s not radically different to Europe in that respect. Most of our competitors in Germany are German, for example.” Analyst Jonas Amnesten of Redeye says there has been an increase in interest in the sector from US investors, but believes the established affiliates will have the upper hand – provided they have done their homework. “Better Collective has acquired some strong assets in the US, with massive traffic volumes and strong brands, for example,” he says. “It should give them a large lead compared to any new startups within the sector. Nonetheless, entrepreneurs with an innovative mindset could always disrupt the business, and the US seems to have plenty of them.” Experience will be key, says Stuart Simms of XLMedia. “The market has no preexisting affiliate ecosystem,” he points out. “While there are no doubt plenty of popular sports fan sites in the US, they lack the performance publishing and conversion expertise that companies like XLMedia bring.”

Gambling.com Group HQ: Malta The end of 2019 proved “challenging” when compared to Gambling.com Group’s “exceptionally strong” Q4 the previous year, said CEO Charles Gillespie. The US was the fastest growing area for the company in Q4. Gillespie expects to see progress in Europe this year, but adds: “I am excited about our prospects in the US market, where we are beginning to see steady growth.” New depositing customers: There was a 45 per cent drop in NDCs in Q4 to 13,618 (Q4 2018: 25,133). But for the calendar year numbers were up five per cent at 78,781 (Q4 2018: 74,838). Revenue: Q4 revenue totalled €3.44m, a decrease of 30 per cent (Q4 2018: €4.94m). But Jan-Dec revenue was up six per cent at €17.3m (Q4 2018: €16.23m). Earnings: Q4 EBITDA was €-0.13m (Q4 2018: €1.44m). Jan-Dec EBITDA fell 39 per cent to €3.04m (Q4 2018: €4.98m).

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MARKETING AFFILIATES

Better Collective’s M&A activity also points to another strategy – why fight your rivals when you can buy them? In Europe the recent M&A spree saw bigger affiliates buy up many of their rivals, and the same could happen in the US.

has publicly stated that it is looking “eastward”. CEO Hellberg has made it clear that the company is interested in the Latin American and Asian markets, as well as European expansion. Last year it relaunched its AskGamblers.com website in German, Italian, Spanish, Portuguese and Japanese. OPPORTUNITIES Other affiliates say they are not blind to ELSEWHERE other opportunities but are But is the US blinding affilinot prepared to forego the US ates to other opportunities? opportunity to focus on them. “The US is going “The US expansion for sure Pedersen of Better Collectakes resources and efforts to be so big that tive says: “To run a sustainfrom other markets,” says there’s no need to able business you have to Amnesten at Redeye. “How- have another couple always seek opportunities and ever, the potential for the US of markets stacked prioritise your resources in a market is huge and everyone up in order to get way that brings the most value wants to obtain a first-mover to your business. adequate growth” advantage. For those focus“With the repeal of PASPA, Charles Gillespie, ing on regulated markets, the a new market opened that Gambling.com US is where most things are could potentially – depending happening right now.” on regulatory developments in Gillespie is unapologetic about his comeach state – become bigger than the European pany’s American strategy. “The US is going to market within five to ten years. be so big that there’s no need to have another “Undoubtedly, markets in Latin America couple of markets stacked up behind it in order and Asia also represent attractive opportunito get adequate growth,” he says. “If it really ties, as these also already have and are taking takes off, the sky’s the limit. It would only take great steps towards broader regulations of a few states to create a market as big as the online gambling.” UK. You could argue that New York and New Svensson of Raketech says that the US has Jersey alone would do that.” to take priority, but there are other options: He acknowledges that there are other mar“We view the global expansion a little like a kets out there, but for him as an American, fund; we try to have a mixed portfolio. There the US is a no-brainer. Heading to places like will be other markets which will have a more Japan, with a totally different cultural outlook, immediate impact on revenue, which we doesn’t make sense at the moment, he says. are also addressing, but our view is that Others are wary of putting all their eggs it would be irresponsible, even unforin one basket. Catena Media, for example, givable, not to invest and have a plan

Net Gaming Europe Listed: Nasdaq Stockholm HQ: Malta President and CEO Marcus Teilman described 2019 as “incredibly challenging”, and he left the company in February, to be replaced by Robert Andersson. Net Gaming has “several planned niche sites” in the US, along with the relaunch of PokerListings.com. It said: “These are investments that create good conditions in the US market.” The company has also said it will focus on improving its betting vertical. New depositing customers: NDC numbers declined by 18 per cent in Q4 compared to Q4 2018. Jan-Dec NDCs were down 19 per cent compared to 2018. Revenue: Q4 revenue was €3.3m, down 30 per cent on the previous year (Q4 2018: €4.7m). For the whole year, revenue was €14.3m, down 23 per cent (Q4 2018: €18.6m). Earnings: For Q4, EBITDA amounted to €1.9m, down 41 per cent (Q4 2018: €3.3m). For Jan-Dec 2019, EBITDA amounted to €8.4m, down 23 per cent (Q4 2018: €12.5m).

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Raketech Listed: Nasdaq Stockholm HQ: Malta New CEO Oskar Muhlbach, who replaced Michael Holmberg in December, described 2019 as “eventful and challenging” for Raketech and the entire affiliate industry. He has pledged a new strategic direction for the company and to “use any channel available – from organic comparison websites to social media, retargeting and banner ads”. He added that he would reinstate mergers and acquisitions as “as a top priority”. New depositing customers: NDCs amounted to 28,002 in Q4, down 22 per cent on the same period last year (Q4 2018: 35,948). But for the full year NDC numbers were 108,365, up nine per cent (Q4 2018: 99,599). Revenue: Q4 revenue totalled €5.8m representing a decrease of 23 per cent (Q4 2018: €7.6m). For the year, revenue was down 6.5 per cent at €23.9m (Q4 2018: €25.6m). Earnings: EBITDA in Q4 was €1.6m, down 65 per cent on the same period last year (Q4 2018: €4.5m). For the year it fell 17.8 per cent to €10.6m (Q4 2018: €12.9m).

for the continent that will represent the biggest regulated iGaming market in a few years from now.” “The Asian market is difficult from a regulatory perspective and also differs a lot from a cultural perspective. Therefore, the affiliates are focusing on the US first,” says Amneston. “However, there are some European affiliates that are operating towards the Japanese market as well as the Indian market. Several countries in South America are also legalising gambling, which should attract both operators and affiliates. “More could be done in both South A m e r ic a a n d i n Asia. I believe we will see more actions on these markets in coming years.” But in the meantime, the US gold rush is wel l a nd truly on for the affiliate players. n


LOTTERY FIVE BIG STORIES The five biggest news stories from across the lottery world Optimizer Invest takes on Lottoland with Megalotto launch The lottery betting market just got more competitive after Optimizer Invest-backed operator Megalotto went live in February via Gaming Innovation Group’s (GiG) platform. Offering players bets on some of the world’s biggest lotteries, as well as a range of instant win games and slot games, Megalotto is Optimizer Invest’s first project within the lottery vertical. The Malta-based venture capital fund also owns stakes in GiG and Catena Media, and previously invested in the likes of Casumo, Hero Gaming and Betit Group.

“Megalotto is the result of a partnership between two of our portfolio companies, bringing a worldclass customer experience,” said Optimizer Invest CEO Petter Moldenius. “It will give millions of players access to lotteries on a global scale in a mobilefirst environment that is pushing the envelope for innovation of iGaming experiences on-the-go.”

New charitable lottery launches in Germany

ALOT Solutions goes omnichannel with retail launch

ZEAL NETWORK LAUNCHED a new charitable lottery in Germany in March through a partnership with non-profit organisation BildungsChancen. freiheit+ is a lottery draw, in which players select seven numbers between one and 35. If at least three numbers match the winning numbers, a prize is paid out. The probability of winning the main prize is 21 times higher than with the German national lottery game, LOTTO 6aus49. Players can win a combined weekly prize of €5,000 a month for 15 years, plus an additional immediate payment of €250,000. For every lottery ticket sold, 50 cents is distributed to non-profit educational projects across Germany. “We are delighted to launch this exciting new lottery together with BildungsChancen,” said ZEAL Network chief executive Helmut Becker. “Not only will the lucky winners benefit from freiheit+ but also the numerous non-profit educational projects it supports.”

LOTTOLAND’S B2B ARM, ALOT Solutions, is expanding into the retail lottery sector through the launch of its new ALOT Systems division, which will provide digital retail lottery systems, games and terminals to licensed lottery operators. The launch makes ALOT an omnichannel supplier of lottery solutions, with retail traditionally the biggest lottery sales channel. Following three years of growth, Lottoland’s B2B arm was rebranded last year as ALOT Solutions in order to provide a clear distinction from its customer-facing division. “Our platform consolidates all lottery operations into a uniform and enterprise-wide system environment, streamlining processes such as retailer invoicing and clearance, sales and winning distribution, accounting, tracking of fixed assets and consumable usage control,” said ALOT Systems CEO Gary Cheung.

GIQ Q1 REVIEW

IN THIS ISSUE 53 Megalotto, Zeal, ALOT and more 56 Interview: Rhydian Fisher, IWG

Sportradar partners Intralot to serve state lotteries SPORTRADAR HAS JOINED forces with Intralot to provide official sports betting data to state lotteries across the United States. The agreement will see Intralot source all of its pre-match and live data requirements from Sportradar, including official data feeds from all major US leagues, for delivery to US lotteries including Washington DC, Montana, New Hampshire and New Mexico. “Sportradar’s commitment to the US market, together with our existing long collaboration in the rest of the world, were critical factors in our partnership process,” said Intralot US interim CEO Byron Boothe. “As more states are set to legalise sports betting, we knew we needed a partner with a similar vision as ours to fully maximise the opportunity. We’re excited for what the future holds.”

“As more states legalise sports betting in the coming months, we knew we needed a partner with a similar vision” Byron Boothe, Intralot

Alaska to establish state lottery ALASKA GOVERNOR MIKE Dunleavy introduced legislation in February to create a new lottery to help fund state expenditure. The proposed bill would establish the Alaska Lottery Corporation as a new state-owned entity within the Department of Revenue, with authority to offer in-state and multi-state draw games, scratchers, sports betting and keno. Alaska is one of only five US states that does not have any form of state lottery. Once fully operational, the Alaska Lottery expects to generate $5-8m in income annually for the state from draw-based games, rising to about $35m if offering both draw and instant games “Not only does this legislation have the potential to create new business opportunities, but the profits generated from lottery activities will be designated to K-12 education, domestic violence prevention programmes, drug abuse prevention programmes, foster care and homelessness,” said Dunleavy. “I believe it is time we, as a state, have the conversation on the potential benefits that could come from a state lottery.” 53


LOT T E RY IWG

Breaking the lottery hegemony It had to take something special to break Scientific Games’ five-year winning streak as Gaming Intelligence’s Lottery Supplier of the Year, and IWG delivered it in spades in 2019. CEO Rhydian Fisher gives us the lowdown on what was a special year for the online instant win game supplier IWG’S AWARD-WINNING PERFORMANCE in 2019 was the culmination of a number of years of strong growth for the supplier. It has broken the stranglehold that Scientific Games, IGT and Intralot previously had in the lottery market, particularly Stateside. IWG has been adept at recognising that players in every jurisdiction behave differently, and that each jurisdiction has different regulations in regard to prizes, return to player (RTP), price points, allowed features and mechanics. It has been expanding at a rate of knots, both in North America and in Europe, winning requests for proposals (RFPs) last year for the New Hampshire, Austrian, Belgian and Swedish lotteries. Recognition as Gaming Intelligence’s Lottery Supplier of the Year was the cherry on top. “It’s really a credit to the expert team we’ve assembled at IWG and the skill and hard work of our lottery partners,” explains Fisher. “Across the board, from Michigan to Pennsylvania, Atlantic Lottery, ONCE and beyond, we saw tremendous growth in 2019. Our clients mainly attributed this growth to our product innovation and close working relationships, but it’s also an indication of the sector maturing. “It’s very pleasing and important recognition for the team here and their hard work, but we’re a results-driven company. Our focus is on the results we achieve for our lottery partners and the experience we deliver to their players. Having said that, the lottery industry is dominated by giants, so it’s important that a company as relatively small and nimble as IWG builds its profile, so awards like this are genuinely valuable.” Alongside those competitive RFP wins, IWG’s primary focus in 2019 was on product innovation, and its new games provided a boon for several of its clients. Fisher highlights its 54

Jungle Tumble game which was rolled out in the US in Michigan and Pennsylvania, as well as with the Canadian provincial lotteries in Atlantic provinces, British Columbia and Quebec. The game broke sales records in each respective jurisdiction. On top of this, the supplier has been working with the Atlantic Lottery Corporation (ALC) to help deliver a three-fold increase in digital instant revenue, with the lottery taking strategic recommendations IWG put forward in an all-encompassing market report. “Credit goes fully to ALC for pulling it off, as initiating such a change in a huge organisation like a lottery is not a small task,” says Fisher. “In the lottery sector, success builds success. Because all our clients work in a separate jurisdiction, we are able to share key insights and data between operators, so each helps the other to grow. The data we get from games feeds furthers innovation and our strategic knowledge grows with every client and game launch.” While the company’s expansion in North America has grabbed the headlines recently, it is in Europe where IWG secured its biggest contract wins last year with Belgium’s Lote-

rie Nationale and Austrian Lotteries, both of which already have an established digital lottery platform and expanding player bases. “Every contract we sign with a national, state or provincial lottery is huge,” says Fisher. “We never lose sight of the fact that in all cases our partners are working to raise money for good causes, so the requirements to boost success are both real and extremely important. The Belgian and Austrian launches are absolutely key. Also, government-run public procurement RFPs don’t come around very often. “Simon (Bucknall, IWG chief operating officer) and I first went to see the team at Loterie Nationale in Belgium five years ago. We’ve been hoping to work with them and our partner there, IGT, ever since, so that gives you an idea of the time it takes to build these relationships.” IWG now has 21 WLA and NASPL clients all over the world, from the US and Canada to New Zealand, but the US remains a huge market for the company, and one it will be working hard on over the coming years. “The growth of sportsbook in the US is paving the way for iLottery, and the industry is ready to make that move,” says Fisher. “We’ve launched in Michigan, Pennsylvania, Georgia and Kentucky, with New Hampshire following soon. With each of these launches, the wider industry sees the potential. It’s the least risky thing a lottery can do to earn revenue. There are proven systems, models, games and, most importantly, iLottery does not cannibalise retail sales. It is becoming clearer to lotteries and I expect, regulation permitting, more lotteries to make their way online in the short term.” After reaching new heights last year, IWG has higher expectations for 2020, with new clients and exciting product innovations in its roadmap. IWG has succeeded in breaking the lottery hegemony, but there is more to come. n


LOT T E RY

IWG

“In the lottery sector, success builds success. We are able to share key insights and data between operators, so each helps the other to grow” Rhydian Fisher, IWG

GIQ Q1 REVIEW

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WORLD REGULATION

World regulatory update

GIQ rounds up the major global legal developments

Argentina The City of Buenos Aires launched its licensing process for online gaming operators following publication of new regulations concerning technical platforms, advertising and responsible gambling. Managed by the Lottery of the City of Buenos Aires (LOTBA), which adopted final regulations for online gambling for the city in February, the licensing process invites applications for an unlimited number of five-year licences to offer a broad portfolio of gambling products to players, including sports betting, online casino games, poker and virtual sports. Meanwhile, La Rioja is looking to become the second province in Argentina to regulate online gambling. The state gambling regulator Administración Provincial de Juegos de Azar (Ajalar) signed an agreement with its counterpart, the Provincial Institute of Lottery and Casinos (IPLyC) of Misiones, which launched its own online betting and gaming site through Misionbet.com.ar. La Rioja’s regulator will leverage the experience of Misiones to develop iGaming regulations that allow adults in the province to play games from their mobile and desktop devices.

Belgium The Belgian Gambling Commission has introduced a new weekly deposit limit of €500 for all players on online gaming sites. The new limit applies to each citizen, no matter how many accounts they hold. Players have the option to reduce their deposit limit below €500, but not to increase it. The Commission said the limit was introduced 56

to protect players. It is also encouraging players to report non-compliant operators. The introduction of the new regulation follows the appointment of Magali Clavie as president of the Belgian Gaming Commission on 1 April. She is tasked with developing a “Commission 2.0”, which is focused on player protection and strict regulation of the market.

Canada In Canada, single-event sports betting is back in the spotlight after Saskatchewan member of parliament Kevin Waugh became the latest Canadian lawmaker to try and drive through changes to sports betting legislation with the introduction of his Safe and Regulated Sports Betting Act. The bill would authorise provincial governments to offer betting on racing, sports and athletics through their lottery, including single-event bets which are currently prohibited by law. It is the third time the bill has come to the House, having passed in 2015 but stopped in the Senate. Last year, in the 42nd Parliament, the bill did not make it out of the House. According to Waugh, single-event sport wagering already exists in Canada and is worth over $14bn, the bulk of which exists underground on the black market or through offshore websites.

tem prevents people who are underage, bankrupt, in receipt of state aid, or in other ways vulnerable from opening an account or engaging in gambling. It also allows players to request selfexclusion. All operators will be required to connect to the system in order verify a player’s identity on sign-up and subsequent login or entry to a land-based venue, and will also be required to use the system to re-verify the identity of previously registered customers.

Denmark The country’s state-owned gaming operator Danske Spil proposed stricter rules to protect vulnerable players and minors from gambling, including a ban on advertising during live sports on television and the prohibition of VIP programmes and affiliates. The Danish operator claims that the market does not adequately protect vulnerable players and minors, citing the rising number of players who voluntarily exclude themselves from gambling. It has made ten recommendations to create a more responsible gambling market in Denmark, including a ban on all casino advertising on television, a total ban on bonuses in online gaming and sports betting, ID requirements for all retail betting stores and the introduction of loss limits for players.

Czech Republic The Czech Ministry of Finance, which regulates gambling, has released technical specifications for a new national monitoring and exclusion system for online and land-based gambling. Expected to be operational in mid-2020, the sys-

Germany The 16 federal German states adopted a new State Gambling Treaty in March, allowing for a fully regulated online gambling market from 1 July 2021. While there are no major changes to 56


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the previously released draft regulations, the new State Treaty will end Germany’s long-running but ineffective prohibition of online casino gaming by allowing a national regulator to issue online casino licences to operators. The state of Saxony-Anhalt will be responsible for the overall regulatory supervision of Germany’s online gambling market, with wider powers to police the market and combat unlicensed operators. At the time of going to press, the amended State Treaty had not been notified to the European Union, with a standstill period likely to be extended if another Member State, such as Malta, submits a detailed opinion to the notifying state. The Treaty must be ratified by at least 13 German states by 31 March 2021 to be able to come into force on 1 July of that year.

gaming agents and service providers subjected to a 30 per cent income tax, with foreignbased POGOs also subjected to the tax based on their gross income derived from game offerings or facilities located within the Philippines. Additionally, the bill also proposes a five per cent franchise tax on all gross receipts derived from gaming operations of both Philippine and foreign-based POGO operators.

Belgium has introduced a new weekly deposit limit of €500 for all online gaming players

Philippines Offshore iGaming operators and suppliers licensed in the Philippines may soon be liable to a 30 per cent tax on income and five per cent franchise tax under new legislation proposed in the Senate in February. The proposed legislation follows a report from the Bureau of Internal Revenue, claiming that most of the 60 licensed Philippine offshore gaming operators (POGOs) failed to pay the government an estimated total of P50bn (€905m) in withholding franchise taxes in 2019. The bill would see licensed Philippine-based POGOs, local GIQ Q1 REVIEW

Sweden T h e c o u n t r y ’s g a m b l i n g regulator Spelinspektionen imposed a SEK100m penalty on Kindred Group subsidiary Spooniker for offering unauthorised bonuses in Sweden. The penalty relates to the first six months of Sweden’s regulated iGaming market, which opened in January 2019 and limited bonuses to one per customer. A review of Spoonikeroperated sites in March 2019 found a number of unauthorised bonuses being offered to Swedish consumers, while additional checks in May and June found further breaches of the bonus rules, as well as games that the company was not licensed to offer. Meanwhile, the Swedish Competition Authority dismissed a complaint from operator association BOS, which claimed Svenska Spel had abused its dominant position in the reregulated iGaming market. The investigation focused on issues related to Svenska Spel Sport & Casino’s use of its main brand in the com-

petitive market for commercial online gaming and betting. While acknowledging that as the national lottery operator, Svenska Spel had a strong brand compared to other players in the gaming industry, the investigation found that brands were not decisive for customers’ choice when gambling, with a significant number of operators licensed in the market and limited barriers to entry.

United Kingdom The UK Gambling Commission handed out an £11.6m penalty package to operator Betway for anti-money laundering failures (AML) and inadequate social responsibility controls. An investigation by the UKGC found that as a result of a lack of consideration of customers’ affordability and source of funds checks, Betway allowed £5.8m of money to flow through the business, which was likely to be proceeds of crime. William Hill-owned Mr Green was also issued with a £3m penalty package by the UK regulator for failing to have effective procedures in place to protect consumers and prevent money laundering. The UKGC issued the penalty for systemic failings in respect of the operator’s social responsibility and AML controls, which affected a significant number of customers across its online casinos, following a compliance assessment in July 2018, prior to Mr Green’s acquisition by William Hill.n 57


L EG A L THE US

Will Covid-19 help the US finally embrace iGaming? Now that US commercial casinos have closed their doors due to the coronavirus outbreak, iDEA has launched a strategy to allow land-based operators to move online US ONLINE GAMING industry group iDEA (iDevelopment and Economic Association) has launched a three-prong strategy that would allow any land-based US operator to launch online gaming in states without iGaming legislation. Almost all US casinos have closed their doors to customers due to the Covid-19 outbreak, robbing state governments of hundreds of millions of dollars that is normally spent on education, healthcare and other services. “There is consensus that creative action has to be taken to bring revenue to casinos and back to states in the form of taxes. They are really going to need it,” iDEA consultant John Pappas told Gaming Intelligence. New Jersey’s leading iGaming operator Golden Nugget has watched customer signups increase between 100 and 150 per cent since the closure of its casinos, with revenue rising almost 20 per cent. Online casino revenue accounts for around 20 per cent of the operator’s entire gaming take. Thomas Winter, online gaming SVP and general manager at Golden Nugget owner Landry’s, commented: “Almost all US casino groups have some form of online gaming up and running in New Jersey and Pennsylvania. If we were allowed to take bets in other states, we could be up and running in a week.” 58

Winter proposes a three-pronged approach, allowing states at different stages of their legislative evolution to get online quickly. Firstly, Michigan and West Virginia have passed iGaming legislation but not regulations, which could take three to four months to formulate. Under the iDEA initiative, the states could outsource regulatory oversight to the New Jersey Division of Gaming Enforcement or the Pennsylvania Gaming Control Board for a limited period in order to get operators up and running quickly. It is understood that Michigan is exploring ways of expediting the process. Secondly, states that have passed online sports betting legislation but not iGaming legislation could allow sports betting operators already licensed in their state to outsource regulatory oversight and enforcement to Pennsylvania or New Jersey. Thirdly, states that have not passed any regulations could allow New Jersey or Pennsylvania-licensed operators to operate in their state via market access deals with local operators or through untethered licences. “We would need some form of executive order to allow any iGaming operator that is already licensed in Pennsylvania or New Jersey to take iGaming to any other state 58


L EG A L THE US

that opts in,” explained Winter. “These states could delegate the authority to license and enforce regulations to New Jersey or Pennsylvania.”

State quirks It is unclear whether the New Jersey and Pennsylvania regulators would have the resources to process a multitude of licensing applications from other states, or whether other states would have the desire to outsource their regulatory functions. This might be particularly difficult at the moment when everybody is worried about losing their jobs due to the Covid-19 pandemic. GeoComply VP of regulatory affairs Lindsay Slader highlighted the likes of Iowa and Indiana as states in the second category, which already have licensed companies for online sports betting. “They have the regulatory framework and systems in place to vet online operators,” said Slader. She pointed to New Jersey’s speed in getting online sports betting up and running because it already had the regulatory infrastructure in place from the rollout of online casino and poker. Geolocation companies such as GeoComply would be crucial in helping states get online. Slader said the company’s record rollout, from contract signature to going live was just four days. If an operator is already live with GeoComply in one state, it is almost a ‘copy and paste’ job to get them live in another. “Every state has its own unique circumstances or quirks due to regulations but everything will just be a twist on something we have done elsewhere,” continued Slader. Regulators in states with tribal lands might require licensed operators to block customers from using their technology on tribal lands, for example. In Oregon, the state lottery has the monopoly but it must exclude players from placing bets on their cellphones in any of the pockets of land held by the state’s nine native American tribes. In Washington DC, the picture is even more complex, with operators limited to the 70 square-mile district but excluded from federal buildings and land. And the exclusions vary depending on whether the operator is a lottery or a private operator. “It’s difficult but the technology can deal with it,” said Slader.

Big picture Winter estimated that ten extra states legalising online gaming could bring in around $500m in gross gaming revenue nationwide. If that was taxed at 15 per cent, it would return $75m to cash-starved state governments. If there was mass adoption and 30 states adopted the plan, it could bring in as much as $15 billion in gross gaming revenue and $2.25 billion in tax revenue. Winter offered an affiliate programme to local land-based operators who would not have iGaming operations already in place and would want to generate revenues from their database in any jurisdiction, whereby the partner would receive 50 per cent of the profit. “I would do it in a heartbeat,” he promised. A white label solution of the Golden Nugget iGaming site could be another option but Winter said that would take a little longer to launch. While the industry could get online gaming systems up and running in a week, state governments have a healthcare crisis on their hands and numerous industries begging for assistance. Winter concluded: “A lot of industries are asking for a bail-out. That will take time and is uncertain and will cost taxpayers’ money. Before such cash comes to help the casino industry, this is an obvious first step to take and one that can be achieved without taxpayers’ money.” The biggest win for the industry would be Nevada, where the Nevada Gaming Control Board (NGCB) could regulate online gaming without the need for legislation. It would not be the biggest revenue generator, but as the gaming capital of the US it would be hugely symbolic. Initial indications suggest that various land-based casinos are keen on asking the NGCB to add online casino games to the already-allowed online poker and sports betting. It remains to be seen whether the changed economic conditions will encourage iGaming opponents such as Las Vegas Sands to change their tune. “There is huge potential upside,” said another iDEA member, who did not want to be named. “If tens of thousands of employees are losing their jobs, there’s no way online gaming can fill that hole but it can be a kind of relief fund in the short-term and a means for land-based casinos to diversify in the long-term.” n

Ten extra states legalising online gaming could bring in around $500m in gross gaming revenue nationwide

GIQ Q1 REVIEW

59


S E C N U O B 62


K C BA g for n i m a g e n l of onli a looks c i t e r r e a v o n H e e t . Stev forgot k c e a h t b e n e m looks e o d b c n s a a a g s h r n i o a k g Bin few ye t is ma t i s t a u p b e , h e t some tim he turbulence of t back over ngo’s renaissance bi ahead to 63


THE ONLINE BINGO industry has undergone a complete transformation during the past two years. During 2018, one of the UK’s most established land-based brands, Gala Bingo, rebranded to become the omnichannel Buzz Bingo. In early 2019, 888 acquired the Costa Bingo brands from JPJ Group for £18m before the latter went on to acquire Gamesys for £490m. Rank acquired Stride for £115.3m. Throughout it all, Tombola has just carried on being Tombola, sitting at the top of the tree as PokerStars does in poker and bet365 does in sports betting. The bingo networks have had a tricky time. GVC acquired Cozy Games for next to nothing. Microgaming is in the process of closing down its bingo network. 888 paid a record £7.8m fine to the UK Gambling Commission for allowing self-excluded punters to gamble on some of its Dragonfish sites, having excluded themselves on others. “Bingo was at the epicentre of the UK’s regulatory developments,” says 888 head of commercial development Yaniv Sherman, who is responsible for Dragonfish. Stride Gaming endured its own horrorshow with a UKGC penalty charge of £7.1m, ultimately leading to the sale of the business to Rank Group.

“Two years and tens of millions of poundsworth of fines for other operators has shown there is a certain way to operate. We err on the conservative side” Yaniv Sherman, Dragonfish

64

Rank Interactive chief operating officer and Stride co-founder Darren Sims says the sanction itself was not the reason for the sale but that “it was reflective of where the UK was going in terms of regulation and taxation, and scale is key.” “Since the last change to the point of consumption tax, it is a lot harder to operate a bingo business in the UK,” says Sherman. “Dragonfish is one of the only businesses left standing.” Stride’s revenue had been falling in the quarters following the regulatory action and prior to the acquisition but has stabilised since Rank acquired the company. Revenue for Rank’s digital operations rose 14 per cent to £65.2m during the first half of the 2020 financial year, as it prepares to migrate the Grosvenor and Mecca brands onto the Stride platform. “It’s very much heads down and focus on integrating the two business units,” says Sims. “It’s a work in progress. It’s quite a big job.” Sims and fellow Stride co-founder Eitan Boyd have a long history in the bingo industry, having founded a B2B bingo company called GlobalCom way back in 2002. That company was snapped up by 888 for $32.4m in 2007 and became Dragonfish. The pair then founded a number of B2C sites, which they also sold to 888 for £60m in 2009. Boyd and Sims continue to be intrinsically linked to 888. In addition to the 14 brands that run on its own platform, Stride runs a portfolio of 150-odd brands on a number of platforms, from Aspire to Jumpman Gaming to Virtue Fusion, but the largest number are on Dragonfish. Sims says this strategy of diversity will continue because different players simply prefer different platforms and you will never convince them to change.

Playtech bingo team: Gaming Intelligence Bingo Supplier of the Year 2020

Regime change Following the Gambling Commission fine, 888 embarked on a massive overhaul of its compliance and responsible gambling procedures to such an extent that Sherman says he now considers it a competitive advantage. A number of partners were terminated because they were not able to cope with the new regime. “In a sense, we sanitised the network so the rest of the operators that were compliant and were able to grow could flourish,” says Sherman. The latest available figures from 888 revealed B2B revenue was down 44 per cent for H1 2019 to just $14.8m, due largely to the Costa Bingo brands’ revenue transferring over to B2C but also due to GVC Holdings finally insourcing Foxy Bingo onto its own platform. 888’s B2C bingo revenue crept up ten per cent to $19m due to the boost from Costa Bingo. It would have slumped three per cent without it. Foxy was a big loss but it was one that had been threatened for quite some time. There is a limited number of B2B clients that 888 can go after. Most operators do not want to change platform unless they are forced


S P EC I A L R E P O RT

BINGO

WHAT IS BINGO360? Bingo360 will provide the bingo community with a knowledge hub centred around Gaming Intelligence’s unrivalled insight, reports and networking opportunities. Bingo360 will provide gaming industry executives with an online forum for networking opportunities and when conditions allow, a real-life networking opportunity and a chance to hear from the experts making the industry tick. This will be supported by the marketleading insight of the Gaming Intelligence editorial team, which will be publishing a series of features and reports highlighting the latest technological developments and market trends. Bingo360 will also feature a focus groupstyle player panel to better understand the player experience, as well as an opportunity to get a first look at, and potentially buy into, some of the best new games and technologies currently under development.

into it and 888 is much more selective in its choice of prospective partners. “It was very hard in 2018 to explain to everyone why we needed all this documentation. But two years and tens of millions of pounds-worth of fines for other operators has shown there is a certain way to operate. And we err on the conservative side,” continues Sherman. “If you look at our partner ecosystem, some of them adapted well and have enjoyed growth, and some of them did not.” He highlights Stride’s support for all its changes and its input into product improvements. (“Because those guys are real bingo experts,” says Sherman.) Other operators to flourish include Tau Marketing and Iceland Bingo operator Black Spark Media. “Our most successful partners are more online and analytical-focussed, much like our B2C business,” says Sherman. “It’s powered by an understanding of all marketing channels – of Google, social and mobile.” Since the regulatory overhaul, 888 has revamped its entire client framework, dubbing it Snow White. It was live with around half of 888’s brands at the time of going to press. GIQ Q1 REVIEW

“Along with all the improved performance tools you would expect with new technology, we have also built in compliance features that will allow us a more efficient rollout of each new feature we need to implement. It is a big step towards being a compliant bingo business in 2020,” says Sherman.

Saying goodbye While Stride, Tau and Black Spark have flourished, others have fallen by the wayside. Black Spark was established via the acquisition of sites from Gaming Realms in 2016. Like Stride, Gaming Realms was established by two of the bingo industry’s most experienced entrepreneurs – Patrick Southon and Simon Collins, who also founded Foxy Bingo many years before. Unlike Stride, Gaming Realms chose to focus on its Slingo B2B business and it sold its B2C brands (to Oslo-listed River iGaming), citing the higher costs of UK regulation and taxation. Southon and Collins have now left the business, with the latter going on to helm News UK’s online gaming efforts. News UK’s Sun Bingo is the sixth biggest bingo operation in the UK, according to Which-

Bingo. Way back in 2015, it took the decision to migrate from Gamesys to Playtech. Launched in 2005, Sun Bingo grew into one of the UK’s largest and most popular bingo websites. It was originally powered by operator Tombola, which was dropped in favour of Gamesys in 2008. After a year in which revenue increased by 43 per cent to €33.7m in 2018, Sun owner News UK agreed a 15-year extension to its deal with Playtech. However, the business recorded a loss during 2018 of €20.1m, an improvement on the €28.8m loss recorded in 2017. The latest available figures from Playtech are encouraging, with revenue up 19 per cent from €33.7m to €40m during the 2019 financial year. The addition of some Sun Vegas products has given it a broader games offering. If, to some extent, Sun is still regrouping after the migration from Gamesys to Playtech, other Playtech customers are motoring onwards following similar upheavals. Gala Leisure began to rebrand its bingo operation in May following the sale of Ladbrokes Coral’s retail bingo clubs to Caledonia Investments in December 2015. GVC retained the Gala Bingo brand for online, and 65


in late 2018, Gala Leisure launched its new omnichannel offering Buzz Bingo, powered by Playtech. At the time of launch, digital director Stevie Shaves informed us: “We spent over a year ensuring our online offering is exactly what players want. We’ve captured the in-club feeling of being among friends and delivered it online. “When players log in to Buzzbingo.com, they see where their ‘Buzz Buddies’ are playing and can join their game in seconds. This seamless process truly encompasses what we are all about as a brand.” It is not a dissimilar approach to that followed by market leaders Tombola and by Gamesys on its bingo sites. Community matters in bingo and it takes some skill to foster one.

Constant evolution “Last year there was a lot of change,” says Playtech managing director for bingo Angus Nisbet. “This year, bingo seems to be coming out of that slightly confused time, and everyone is looking at it in a different light.” He says that sports betting operators, which have shunned bingo in recent years, are starting to talk to Playtech about how it can dedicate development to bingo. With UK politicians ramping up the rhetoric about a £2 stake limit on slots, bingo’s 25-35 per cent margin starts to look a whole lot more interesting. “People are accepting that they have to leverage existing players through whatever products they have but also to target a different demographic,” continues Nisbet. The online gaming world has changed hugely during the past five years and regulatory compliance and safer gambling is now front and centre – both of which play to bingo’s strengths. As Sims at Rank says, bingo is no longer a domain for smaller operators. Compliance is a big expensive part of that, but not the only factor. Microgaming followed the closure of its poker network with the termination of its bingo network at the beginning of 2020 – a sure sign that the smaller operators on its network were struggling to cope. According to WhichBingo, the number of bingo sites operating in the UK market plum66

“My challenge is how to make bingo work outside the UK. Not many people are making bingo work beyond the UK” Angus Nisbet, Playtech

meted from 395 at the end of 2018 to 264 at the end of 2019. “Bingo is an expensive product vertical,” says Nisbet. “It is pari mutuel. You need that community aspect. You need chat moderation. And you have to constantly evolve.” Nisbet believes Playtech has driven that process. He has seen it from the other side, when working for Gala. “We initiated the development points model that allowed us to use Playtech resources to drive our development roadmap.” Each operator has its own dedicated resource within the Playtech bingo team and each of its operators have used that to creatively develop their products. Many have focussed on popular television show brands. Gala has Coronation Street, Emmerdale and The Chase. Rank’s Mecca Bingo has launched X-Factor Bingo and Britain’s Got Talent Bingo. Buzz Bingo has The Voice Bingo and Deal or No Deal Bingo. Sky has also innovated with the introduction of its Tipping Point feature.

Outside the UK Playtech licensees dominate the market to such an extent that they operate five of the

UK’s top 10 brands (Mecca, William Hill, Sky, Sun and Paddy Power), according to WhichBingo. It was much more. The consolidation of the market was accelerated by the late-2017 acquisition of Cozy Games by GVC Holdings. It was a sign of Cozy’s weakness that it was a small enough acquisition to be deemed non-pricesensitive and unnecessary to announce to the stock market. So, while the scale of its cutbacks were huge, they should not have been surprising. GVC closed 95 per cent of Cozy’s bingo brands – some 87 sites. GVC now operates 18 sites. The big ones have been migrated to the Cozy platform. Coral Bingo, Ladbrokes Bingo and Gala Bingo have all migrated from Playtech, while Foxy has left Dragonfish. The migration has done Foxy no harm at all, with net gaming revenue up 21 per cent after the migration. Because of the client migrations, Playtech’s B2B bingo revenue was down 11 per cent to €23.3m during 2019, but the supplier signed welcome contract extensions with Rank and Sky. While clients are spreading their wings with product innovation, the consolidated market is limited. “My challenge is how to make bingo work outside the UK,” says Nisbet. “Not many people are making bingo work beyond the UK.” Tombola has a big presence in mainland Europe – in Denmark, Spain, Italy and Sweden. Kindred Group pulled its Maria Bingo brand in favour of Maria Casino and pulled out of the UK after it acquired 32Red, but Maria Casino endures in Sweden, Norway, Finland, Denmark and Estonia with a bingo tab. Spain has a strong retail bingo culture but its online market is small. Rank, for example, has nine Enracha clubs, which generate annual revenue of around £35m. It acquired


S P EC I A L R E P O RT

BINGO

market but has yet to launch bingo there. Sherman is cautious about a market that at present only amounts to tens of millions of Euros and less than a handful of operators. Italy has a different regulatory regime again, with all numbers having to go through the regulator AAMS before a game is finished. This makes for a complex operation but Playtech launched an expanded bingo platform in March 2019 with the Sisal, SNAI and William Hill brands. If Italy, Spain and the UK come with complex regulatory restrictions, the US will be no different, but it is a market that intrigues Sherman at 888. the YoBingo.es site in 2018 for As head of commercial TOP UK BINGO SITES an initial €21m (rising to €52m development for the entire Brand Software depending on performance). group, Sherman has been Tombola Tombola It described its flatlining H1 permanently based in the 2019 NGR of £6.3m as “disUS since 2018, exploring the Mecca Bingo Playtech appointing” but remained opportunities offered by the William Hill Playtech “confident” about its future repeal of the Professional Gala Bingo GVC prospects. and Amateur Sports ProtecGamesys is more upbeat tion Act (PASPA) that year. Sky Bingo Playtech about Spain, where its BoteHe describes a famSun Bingo Playtech mania brand claims 14 per ily weekend away hiking at Paddy Power Playtech cent of the bingo and casino the Delaware Water Gap, a slots market, according to the national recreational area Coral Bingo GVC Gamesys annual report, and in the Appalachian MounLadbrokes Bingo GVC brings in revenue of around tains bordering New Jersey £25m. During 2020, it plans and Pennsylvania. The famCosta Bingo Dragonfish to launch another brand into ily had booked into a motel Source: WhichBingo. Note: Ranked by average player numbers at the Spanish market. nearby and after checking in, peak time over a 31-day period in 2019. Gala, Until recently, operators Sherman heard a commotion Coral and Ladbrokes sites were supplied by Playtech when ranked but have switched to have been deterred by the outside. He ventured GVC since. lack of slots in Spain but out to see what since they were legitimised it allows operaall the fuss was about and distors to pursue a model they are more comfortcovered a bingo evening in able with. Playtech is looking at revisiting the full swing. market in 2020. 888 has been relatively suc“Naturally, I sat down cessful in the Spanish online poker and casino and bought a few tickets,”

says the 888 exec. “It was a bit odd. It is not like the bingo halls in the UK, which anchored the UK bingo experience and is like a femaleoriented casino. Bingo is considered to be a charitable activity, so it is an ad hoc event.” There are bingo halls in Native American reservations but bingo is not a regulated gaming activity in the US. It is normally held in town and church halls, where there are no gaming machines bringing in additional revenue. “There is potential – especially for the Native American tribes – but sport trumps everything right now. You would need to approach it very carefully but I think the people I met in that bingo room would definitely play online,” says Sherman. In 2015, Gamesys launched a 90-ball bingo game on its New Jersey site VirginCasino. com, the iGaming site it operates through a partnership with Tropicana Entertainment. The site is doing OK – fifth in the local market but growing by 20 per cent during 2019. However, this is mainly driven by slots. Gamesys has yet to ramp up its bingo marketing. But five years on from launch, it’s still there. But even if Sherman is right, the US bingo opportunity could be another five years away and, for once, New Jersey’s casinos might not be its biggest beneficiaries. n

THE UK’S BINGO BOSSES

Lee Fenton, Gamesys GIQ Q1 REVIEW

Phil Cronin, Tombola

John O’Reilly, Rank Group 67


FINANCE

The GIQ FY 2019 EVOLUTION GAMING CAME out on top of the GIQ20 chart for 2019, capping off a memorable year which saw the live casino specialist named Gaming Intelligence Casino Supplier of the Year. It also secured the coveted Game of the Year award for Monopoly Live. Its financial results were equally impressive, as full-year revenue grew to €365.8m following its expansion in Asia and North America. It was also a transformational year for Penn National Gaming, which acquired rival casino operator Pinnacle Entertainment and has been ramping up its sports betting operations Stateside. A new era also began for Gamesys Group, which was the highest placed London-listed operator in the chart. Recent M&A action also boosted results for Churchill Downs Incorporated and Aspire Global, while the likes of The Stars Group, GVC Holdings, Kambi and Flutter Entertainment all benefited from growing contributions Stateside. Other strong performers in the GIQ20 chart of the fastest-growing companies included Playtech, SciPlay Corporation, LeoVegas and former French monopoly operator FDJ, which went public in November. It wasn’t all good news, however. Seven companies missed out on a place after posting revenue declines, including the likes of William Hill, Betsson, Gaming Innovation Group and Global Gaming. With Covid-19 likely to negatively impact revenue in Q1 2020 and onwards, things are about to get a lot tougher for everyone. 68

The GIQ20 fastest growing listed gaming companies COMPANY

2019

2018

CHANGE

€365.8m

€245.4m

49%

US$5,301.4m

US$3,587.9m

48%

£415.1m

£308.2m

35%

US$1,329.7m

US$1,009.0m

32%

€131.4m

€104.6m

26%

US$2,528.4m

US$2,029.2m

25%

1

EVOLUTION GAMING

2

PENN NATIONAL GAMING

3

GAMESYS GROUP

4

CHURCHILL DOWNS INCORPORATED

5

ASPIRE GLOBAL

6

THE STARS GROUP

7

PLAYTECH

€1,508.4m

€1,225.3m

23%

8

GVC HOLDINGS

£3,655.1m

£2,979.5m

23%

9

KAMBI GROUP

€92.3m

€76.2m

21%

10

FLUTTER ENTERTAINMENT

£2,140m

£1,873m

14%

11

SCIPLAY CORPORATION

US$465.8m

US$416.2m

12%

12

LA FRANÇAISE DES JEUX (FDJ)

€1,956m

€1,803m

9%

13

LEOVEGAS

€356.0m

€327.8m

9%

14

INSPIRED ENTERTAINMENT

US$153.4m

US$140.7m

9%

15

CAESARS ENTERTAINMENT

US$8,742m

US$8,391m

4%

16

SPORTECH

£64.8m

£63.5m

2%

17

BET-AT-HOME.COM

€117.5m

€115.1m

2%

18

SCIENTIFIC GAMES

US$3,400m

US$3,363m

1%

19

KINDRED GROUP

£912.8m

£907.6m

1%

20

NETENT

SEK1,793m

SEK1,782m

1%


FINANCE

GIQ20 FY 2019

Evolution Gaming heads to the top Live casino specialist delivers strong growth in revenue and profit during 2019 to top the GIQ20 chart ahead of Penn National Gaming and Gamesys Group, writes Kio Dawson

GIQ Q1 REVIEW

EVOLUTION GAMING GROUP 49% Net revenue (€)

TOTAL

2019

2018

Change

365.8m

245.4m

49%

Stockholm-listed Evolution Gaming enjoyed another standout year in 2019 as revenue increased by 49 per cent to €365.8m, benefiting from increased income from both new and existing customers. Wit h t he suppl ier m a ki n g st ron g inroads outside Europe, Asia contributed revenue of €49.6m and North America a

further €22m. Profit for the year climbed 79 per cent to €149.7m. In the past five years, revenue and profit have grown by an astounding 379 per cent and 648 per cent respectively. “I am proud of what we have achieved in 2019, which has been an outstanding year from both a financial and operational perspective,” said CEO Martin Carlesund. “I am very impressed with what our employees achieve every day. We now have approximately 8,000 employees working together on our eternal mission; to increase the gap to the competitors by offering the market’s best solutions.” 69


F I NA NC E GIQ20 FY 2019

PENN NATIONAL GAMING

CHURCHILL DOWNS INC

48%

32%

Net revenue (US$)

Northeast segment South segment

Net revenue (US$) 2019

2018

Change

2,399.9m

1,891.5m

27%

1,118.9m

394.4m

184%

2019

2018

Change

Churchill Downs

274.2m

195.8m

40%

290.5m

290.2m

0.1%

692.4m

449.5m

54%

72.6m

73.5m

-1%

1,329.7m

1,009.0m

32%

642.5m

437.9m

47%

Online wagering

1,094.5m

823.7m

33%

Gaming

Other

47.5m

40.4m

18%

Intersegment eliminations

(1.9m)

n/a

n/a

5,301.4m

3,587.9m

48%

West segment Midwest segment

TOTAL

It was a transformational year for New Yorklisted Penn National Gaming as revenue grew by 48 per cent to $5.3bn following its acquisition of rival land-based casino operator Pinnacle Entertainment, which added 12 new gaming properties and three new US states to its portfolio. The company also acquired a 36 per cent stake in sports blog Barstool Sports for $163m, which will be used to attract a younger demographic to its existing customer base through online and retail sports betting, as well as online casino products. “We took a long-term perspective with our investment, retaining 100 per cent of the economics from the retail and online sportsbook, as well as casino and non-gaming revenues,” said president and CEO Jay Snowden. “We see meaningful cross-selling opportunities and would expect recently enacted sports betting legislation in states such as Colorado and Michigan to positively impact our brick and mortar business.” 70

Other TOTAL

New York-listed Churchill Downs Incorporated reported a 32 per cent increase in revenue to $1.33bn for 2019, with the biggest growth derived from its land-based gaming operations, which represented more than half of the total as revenue grew 54 per cent to $692.4m.

Growth in land-based gaming revenue was driven by acquisitions in Pennsylvania and Maryland, and improved results from BetAmerica Sportsbook retail launches in Mississippi. Revenue from the Churchill Downs racing segment increased by 40 per cent to $274.2m following a full year’s contribution from Derby City Gaming in Kentucky, and higher revenue generated by Churchill Downs Racetrack due to a successful Kentucky Derby and Oaks week. Online wagering revenue rose marginally to $290.5m, despite a decline from TwinSpires, due to the exit of certain existing high volume with low margin customers in the Velocity group. The company’s new online sports betting and iGaming division generated revenue of $0.6m during the year, primarily from New Jersey.

GAMESYS GROUP 35% Net revenue (£)

TOTAL

2019

2018

Change

415.1m

308.2m

35%

It was also a big year for London-listed Gamesys Group as the online bingo-led operator posted a 35 per cent increase in revenue to £415.1m for 2019, boosted by results from the recently acquired Gamesys brands and organic growth in the UK and Asia. The UK


FINANCE

GIQ20 FY 2019

said chief executive Tsachi Maimon. “Our broad market presence and product offering give us a solid foundation for sustainable profitable growth. We will continue to enhance our multi-vertical offering while maintaining the search for M&A-opportunities, supported by our strong balance sheet.”

THE STARS GROUP 25% Net revenue (US$)

International

ASPIRE GLOBAL 26% Net revenue (€) 2019

2018

Change 43%

B2B

81.1m

56.6m

B2C

50.3m

48.0m

5%

TOTAL

131.4m

104.6m

26%

Stockholm-listed Aspire Global benefited from strong growth in its B2B division in 2019 as full-year revenue climbed by 26 per cent to €131.4m. The B2B division, which includes recently acquired Pariplay, grew revenue by 43 per cent to €81.1m, accounting for 62 per cent of total revenue, with B2C revenue increasing five per cent to €50.3m. Aspire Global powered 77 brands belonging to 44 B2B partners during the year, including three new partners that were signed during the fourth quarter and seven that went live. “I am pleased to conclude that we have delivered another year of strong growth, despite changes in the market environment,”

2018

Change

1,312.4m

1,440.2m

-9%

UK

946.7m

394.1m

140%

Australia

274.4m

196.9m

39%

Eliminations

(5.0m)

(2.0m)

150%

2,528.4m

2,029.2m

25%

TOTAL

represented more than half of revenue with £214.6m, an increase of 31 per cent, and revenue from Asia soared 137 per cent to £122.4m. Revenue from Europe fell by 13 per cent to £68.6m, while rest of the world revenue declined by 29 per cent to £9.5m. “I am delighted with Gamesys Group’s strong financial performance in 2019, particularly given the significant work undertaken around the acquisition and integration of the legacy Gamesys business,” said CEO Lee Fenton. “It was particularly pleasing to see the UK return to moderate growth in 2019 as we annualised the introduction of enhanced responsible gambling measures, and we expect to see similar trends in 2020.”

2019

Sports betting took over as The Stars Group’s biggest product vertical in 2019 as total revenue increased by 25 per cent to $2.53bn. Revenue growth for the Toronto-listed operator was primarily driven by acquisitions in 2018, as well as organic growth in the UK and Australia markets, which partially offset a decline in international revenue. Sports betting accounted for 34 per cent of 2019 revenue after increasing 77 per cent to $870.9m, offsetting an 11 per cent decline in poker revenue to $793.3m. Revenue from gaming grew 35 per cent to $792.3m, while other revenue was up 20.5 per cent at $71.9m. “In 2019, we continued to execute on our strategy to deliver long-term sustainable growth and become the world’s favourite iGaming destination,” said CEO Rafi Ashkenazi. “We not only began to see the full-year benefits of our transformative 2018 acquisitions, but executed on delivering a landmark media partnership in the US, with the launch of FOX Bet, strengthening our position in this emerging market.”

KAMBI GROUP 21%

“Our broad market presence and product offering give us a solid foundation for sustainable profitable growth” Tsachi Maimon, Aspire Global

Net revenue (€)

TOTAL

2019

2018

Change

92.3m

76.2m

21%

Stockholm-listed Kambi also enjoyed a strong 2019, benefiting from the launch of its Kambi sportsbook in seven US states during the final quarter of the year. This helped full-year revenue rise 23 per cent to €92.3m, with the 71


F I NA NC E GIQ20 FY 2019

GVC HOLDINGS 23% Net revenue (£) 2019 Online UK retail

2,170.7m

2018 1,712.7m

Change 27%

1,127.8m

1,014.9m

11%

289.8m

211.7m

41%

Other

70.4m

43.8m

61%

Eliminations

(3.6m)

(3.6m)

n/a

3,655.1m

2,979.5m

23%

European retail

TOTAL

There was a strong performance from London-listed GVC Holdings as revenue rose 23 per cent to £3.66bn in 2019, benefiting from a full year’s contribution from Ladbrokes Coral. Online represented 42 per cent of 2019 revenue after climbing 27 per cent to £2.12bn, while revenue from the UK retail and European retail businesses division grew to £1.13bn and £289.8m respectively, despite a decline in revenue from UK retail machines following the implementation of the £2 limit on B2 machines stakes. Over 96 per cent of revenue was derived from markets that were either regulated or in the process of regulating during 2019. “Our first year since the Ladbrokes Coral acquisition has been good, and the performance has continued to be underpinned by our unique and effective operating model,” said CEO Kenneth Alexander. “We are delighted with the progress being made on the Ladbrokes Coral integration, and in the US the launch of BetMGM on the GVC platform in New Jersey was an important milestone for our business. It enables us to remain on track to deliver on our ambitions in this exciting market.”

“Our first year since the Ladbrokes Coral acquisition has been good; underpinned by our unique and effective operating model” Kenneth Alexander, GVC

Americas contributing more than a third of revenue during Q4, after Kambi delivered online sportsbook launches in Indiana and Pennsylvania, and with its first US lottery in New Hampshire. Kambi also opened retail sportsbooks in Pennsylvania, Iowa and New York, as well as in South Africa for the first time, with Sun International’s Grand West Casino in Cape Town. “Looking back on 2019, it was another great year for Kambi, as we continued to build out a fantastic sports betting product, expanded into multiple new markets, and signed six new partners, all of which leaves us in a great place for 2020,” said CEO Kristian Nyl én.

PLAYTECH 23% Net revenue (€) 2019

2018

B2B Gambling

553.9m

566.0m

-2%

B2C Gambling

900.5m

578.1m

56%

67.9m

92.9m

-27%

(13.9m)

(11.7m)

19%

1,508.4m

1,225.3m

23%

Financials Intercompany Eliminations TOTAL

Change

London-listed Playtech saw annual revenue surpass €1.5bn for the first time as revenue grew 23 per cent to €1.51bn, driven by its B2C division, which includes Snaitech in Italy, HPYBET in Germany and Austria, and white label operations such as Sun Bingo. B2C revenue climbed 56 per cent to €900.5m during the year, while revenue from Playtech’s core B2B division, which excludes Asia, rose 15 per cent to €440m. This was offset however by a 38 per cent fall in Asia B2B revenue to €113.9m, bringing overall B2B revenue down two per cent to €553.9m. The TradeTech financial division, which is currently under review, saw revenue fall 27 per cent to €67.9m. “Our core B2B business reported strong growth in 2019,” said chairman Alan Jackson. “In addition we made strategic progress by entering newly regulated markets, signing new customers, expanding existing relationships and continuing to innovate. These lay the foundations for future growth.”

FLUTTER ENTERTAINMENT 14% Net revenue (£) 2019

2018

Change

1,006m

948m

6%

Australia

446m

403m

11%

Retail

312m

331m

-6%

US

376m

191m

97%

2,140m

1,873m

14%

Online

TOTAL

Revenue from London-listed Flutter Entertainment surpassed £2bn for the first time following growth across the operator’s online, Australian and US businesses. Revenue for the year was up 14 per cent to £2.14bn as the company took a leadership position in the


culture of our business and the quality of our people are continuing to drive our global expansion while providing our teams with the opportunities they seek to develop their careers and gain new experiences.”

SCIPLAY CORPORATION 12% Net revenue ($) 2019 TOTAL

465.8m

2018 Change 416.2m

12%

New York-listed SciPlay grew social gaming revenue by 12 per cent to $465.8m in 2019, although results came in below expectations after including a negative $4.2m adjustment relating to foreign transactions from the company’s inception through to 2018. Despite the continued popularity of its Jackpot Party, Gold Fish Casino and MONOPOLY Slots apps, total average daily active users (DAUs) fell marginally year-on-year to 2.6 million during Q4, with average revenue per DAU climbing to $0.50. “We increased ARPDAU nine per cent to $0.50 and average monthly revenue per payer increased 15 per cent to a quarterly record of $88.06,” said chief executive Josh Wilson. “We believe we are in the very early stages of a multi-year revenue growth and earnings expansion cycle at SciPlay, and we couldn’t be more excited by our future prospects and opportunities.”

US online sports betting and gaming market through FanDuel, continued to perform strongly in Australia, and expanded its European presence through the acquisition of Georgia’s Adjarabet. “2019 was a significant year for Flutter, with further successful expansion in the United States, enhancement of responsible gambling initiatives within our business and the announcement in October of our proposed merger with The Stars Group,” said chief executive Peter Jackson. “I am immensely proud of the group’s performance given the complex regulatory environment. The entrepreneurial GIQ Q1 REVIEW

LA FRANÇAISE DES JEUX (FDJ) 9% Net revenue (€)

Lottery Sports betting Other Holding company TOTAL

2019

2018

Change

1,578m

1,482m

6%

341m

297m

15%

36m

14m

157%

1m

9m

-89%

1,956m

1,803m

9%

2019 was a landmark year for the former French state-owned monopoly operator FDJ as it completed its long-awaited IPO in Paris and delivered a nine per cent increase in revenue to €1.96bn. The company recorded its highest annual growth rate since 2004 as total stakes increased by nine per cent to €17.2bn, of which €3.4bn was generated from digital, up 39 per cent. €16.1bn derived from retail points of sale, an increase of seven per cent versus the previous year. “2019 will be remembered as a landmark year for La Française des Jeux, with the great success of its initial public offering to numerous institutional investors, individual shareholders and group employees,” said chairwoman and CEO Stéphane Pallez. “2019 was also characterised by very strong growth in all our businesses, across all sales channels, both physical and digital, and the group’s excellent operating and financial performances.”

73


FINANCE GIQ20 FY 2019

“The popularity of our content continues to fuel the growth in our interactive business and we are seeing impressive results from the recent launch of six new interactive customers in North America” Lorne Weil, Inspired Entertainment

INSPIRED ENTERTAINMENT 9% Net revenue (US$) 2019

2018

Change

Server based gaming

84.5m

103.3m

-18%

Virtual sports

37.0m

37.4m

-1%

Acquired entities

32.9m

n/a

n/a

Intercompany eliminations

(1.0m)

n/a

n/a

153.4m

140.7m

9%

TOTAL

LEOVEGAS 9% Net revenue (€)

TOTAL

“During 2019 we worked hard to reduce complexity in the group, be more efficient and adapt to the changes taking place in the gaming industry” Gustaf Hagman, LeoVegas

74

2019

2018

Change

356.0m

327.8m

9%

Stockholm-listed LeoVegas posted a nine per cent increase in full-year revenue to €356m, boosted by improved performance in Sweden and Germany in Q4. Revenue during the final quarter of the year rose by three per cent to €87.1m, including record high revenue in Sweden in December. Revenue from locally regulated markets accounted for 55 per cent of Q4 revenue, up from a 33 per cent share the previous year. “During 2019 we worked to reduce complexity in the group, be more efficient and adapt to the changes taking place in the gaming industry,” said president and CEO Gustaf Hagman. “In parallel with this we have enhanced the attraction of our product through new functionality and personalisation. We have launched new brands, focused more on casino, and expanded into new markets. Towards the end of the year we intensified the integration of our previous acquisitions, which is expected to contribute to cost savings and increased economies of scale.”

New York-listed Inspired Entertainment benefited from the first contribution from its newly acquired UK gaming terminals business as revenue grew nine per cent to $153.4m in 2019. This comprised $84.5m from serverbased gaming, $37m from virtual sports and $32.9m from its newly acquired business. Net loss amounted to $37m for the year, compared to a loss of $21.1m in 2018. “We are excited about the growth prospects we are seeing across the company,” said chairman Lorne Weil. “The popularity of our gaming and virtuals content continues to fuel the growth in our interactive business and we are seeing impressive results from the recent launch of six new interactive customers in North America.”


FINANCE

GIQ20 FY 2019

CAESARS ENTERTAINMENT CORPORATION

SPORTECH 2%

4%

Net revenue (£)

Net revenue (US$) 2019

2018

Change

Las Vegas

3,919m

3,753m

4%

Other US

4,225m

4,047m

4%

598m

591m

1%

8,742m

8,391m

4%

Other TOTAL

Ahead of its merger with rival Eldorado Resorts, which is expected to complete during the first half of 2010, New York-listed Caesars Entertainment posted a four per cent increase in revenue to $8.74bn for 2019, with results boosted by the expansion of its Caesarsbranded sportsbooks to 29 locations across seven states. Revenue during Q4 rose three per cent to $2.17bn, driven by growth across all business verticals, in particular in Las Vegas, which saw healthy consumer demand and a higher-cash customer mix. “Caesars Entertainment delivered another quarter of solid operational performance,” said president and CEO Tony Rodio. “Caesars’ results were largely driven by the strong demand at our Las Vegas properties, excellent cost controls, and the addition of sports betting in several states, which drove increased visitation. In addition, our focus on costs and operating efficiencies across the company contributed to the excellent performance.” GIQ Q1 REVIEW

2019

2018

Change

Racing and digital

36.5m

34.0m

7%

Venues

28.8m

30.1m

-4%

Intercompany elimination

(0.6m)

(0.7m)

-14%

TOTAL

64.8m

63.5m

2%

“Caesars’ results were largely driven by the strong demand at our Las Vegas properties, excellent cost controls, and the addition of sports betting in several states” Tony Rodio, Caesars Entertainment

London-listed Sportech recorded a two per cent increase in revenue to £64.8m for 2019, following growth in the company’s racing and digital division, which included revenue of £2m from its North American-facing raffle business Bump 50:50. Revenue from venue-

75


FINANCE GIQ20 FY 2019

“I’m confident we have the right team in place to reach our goal to be the market leader across land-based gaming, lottery, sports and digital gaming” Barry Cottle, Scientific Games based operations in Connecticut declined by four per cent to £28.8m, comprising a four per cent drop in wagering revenue to £24.4m and a seven per cent decline in food and beverage revenue to £4.4m. “We continue to progress our strategic agenda focused on driving further development of our group platforms following 2019 growth opportunity investments, while managing the inherent cost base,” said Sportech CEO Richard McGuire. “Despite the challenging retail environment and excluding some cost measures taken to reposition the group, our performance in 2019 has been as expected.”

BET-AT-HOME.COM Net revenue (€)

Play increased by 12 per cent to $466m, while digital revenue grew by two per cent to $275m. “This past year, we made great strides in developing the best games, attracting industry leading talent, and improving our capital structure,” said CEO and president Barry Cottle. “I’m confident we have the right team in place to reach our goal to be the market leader across land-based gaming, lottery, sports and digital gaming, driven by leading content and the platforms that enable play anywhere and anytime.”

1% Net revenue (US$)

KINDRED GROUP 2019

2018

Change

1,748m

1,831m

-5%

Lottery

911m

846m

8%

SciPlay

466m

416m

12%

1% Net revenue (£) 2019

2018

Change

Sports Betting

435.5m

435.6m

0%

429.3m

431.8m

-1%

21.3m

17.9m

19%

2019

2018

Change

Digital

275m

270m

2%

Casino and Games

117.5m

115.1m

2%

TOTAL

3,400m

3,363m

1%

Poker

Frankfurt-listed bet-at-home.com generated revenue of €117.5m in 2019 as turnover climbed to a record €3.2bn during the year. Gross betting and gaming revenue fell marginally to €143.3m versus the previous year, which included the FIFA World Cup, with betting fees and gaming levies slightly below the previous year at €20.9m. VAT on electronic services were down 86 per cent to €4.9m, 76

SCIENTIFIC GAMES

Gaming

2%

TOTAL

leaving the operator with net revenue of €117.5m for the year. For the year ahead, bet-at-home.com expects to post a decrease in gross betting and gaming revenue to between €120m €132m for 2020, due to declines in Switzerland and Poland. The operator also warned that revenue could also be negatively impacted by regulatory changes in Germany.

New York-listed Scientific Games reported a one per cent increase in revenue to $3.40bn for 2019, despite seeing a decline in revenue during the final quarter of the year. Revenue from supplier’s core gaming segment fell by five per cent to $1.75bn during the year, offset by growth in all other business segments. Lottery revenue rose eight per cent to $911m, revenue from Sci-

Other

26.7m

22.3m

20%

TOTAL

912.8m

907.6m

1%

Stockholm-listed Kindred Group was able to post a 0.6 per cent increase in full-year revenue to £912.8m for 2019, despite a difficult fourth quarter which saw revenue decline by six per cent to £236.2m. The operator attributed the Q4 decline to the impact of Swed-


FINANCE

GIQ20 FY 2019

ish regulations and increasing restrictions in the Dutch market, as well as weak sports betting margins across most markets during the quarter, most notably in France. “Some of the factors that impacted the fourth quarter of 2019 were the same as we reported in previous quarters, such as the Swedish regulation and increasing restrictions in the Dutch market,” said CEO Henrik Tjärnström. “These and other headwinds are a normal part of our business that we address, adjust to and, over time, use as a competitive advantage.”

Going down in 2019

NETENT 1% Net revenue (SEK)

TOTAL

2019

2018

Change

1,793m

1,782m

1%

Stockholm-listed NetEnt sneaked into the GIQ20 as the supplier reported a marginal increase in revenue to SEK1,793m in 2019, boosted by revenue of SEK126m from newly acquired Red Tiger. After a difficult year, NetEnt posted record results in Q4 as revenue grew ten per cent to SEK512m, including a full quarter’s contribution from Red Tiger of SEK96m. Revenue growth continued to be held back by weakness in Sweden and Norway, although revenue in the US grew significantly. “Since December, we have seen all-time highs in the number of players for our live casino, which supports our belief in growing revenues from this segment,” said CEO Therese Hillman. “Since the acquisition, Red Tiger has exceeded our expectations and now forms a vital part of our ongoing improve ment efforts within the NetEnt Group.”

International Game Technology (IGT) just missed out on a place in the GIQ20 chart as revenue fell by one per cent to $4.79bn in 2019, with growth in its international and North America gaming and interactive businesses offsetting lower revenue from the North America Lottery and Italy segments. William Hill posted a two per cent drop in full-year revenue to £1.58bn, despite seeing online revenue exceed retail for the first time. Online revenue grew 16 per cent to £738.3m following the acquisition

of Mr Green, although this was offset by a 20 per cent decline in retail revenue to £717m. The growing US business contributed a further £126.4m in revenue. Betsson saw revenue decrease by five per cent to SEK5.17bn in 2019, driven by a continued weak performance in Sweden, Norway and the Netherlands, with net income falling 27 per cent to SEK787.1m for the year. Codere posted a six per cent decline in 2019 revenue to €1.39bn, despite growing contributions from its online business. Latin

Net revenue Company IGT William Hill Betsson Codere

2019

2018

% Change

US$4,786m

US$4,831m

-1%

£1,581.7m

£1,621.3m

-2%

SEK5,173.0m

SEK5,419.8m

-5%

€1,389.4m

€1,476.4m

-6%

Gaming Innovation Group

€123.0m

€151.4m

-19%

Zeal Network

€113.5m

€154.8m

-27%

SEK412.1m

SEK915.9m

-55%

Global Gaming 555

America accounted for more than half of revenue, at €796.5m, a fall of 12 per cent year-on-year, while revenue from Europe grew two per cent to €533m and online revenue grew 34 per cent to €59.8m. Gaming Innovation Group (GiG) was another to struggle in 2019 as revenue decreased by 19 per cent to €123m due to lower B2C revenue and challenging market conditions in Sweden. Having agreed to sell its B2C business to Betsson, GiG expects to return to growth as it focuses on its B2B offering. ZEAL Network reported a 27 per cent drop in revenue to €113.5m for 2019, with results impacted by a €26.3m payout from its former secondary lottery business and its change in business model. It was a tumultuous year for Global Gaming 555 as revenue declined by 55 per cent to SEK412.1m following its regulatory issues in Sweden.

77


C O LU M N AND ANOTHER THING...

Double standards Steve Hoare

UK bookmakers were several steps ahead of their critics in their response to the Covid-19 crisis

T

he UK’s larger bookmakers and online gambling companies have thus far survived an unprecedented political attack and resulting regulatory clampdown that has sunk less resilient companies. As GIQ was going to press, the Gambling Commission revoked the licence of up-andcoming betting exchange Matchbook. Two years ago, the operator told me it was “determined to succeed where so many have failed, by taking on Betfair”. But it has failed. And its failings were abundant. In addition to the anti-moneylaundering failings, which seem to catch out almost everybody, it did not conduct proper due diligence into members of gambling syndicates or “monitor its business relationships” sufficiently (whatever that means). But worst of all was its appallingly lax approach to safer gambling. One punter who had self-excluded was allowed to reopen his account six months later. He then played for ten hours a day on consecutive days and lost a large sum of money before self-excluding again. At no stage did he receive any contact from Matchbook. This is the new normal that most operators are complying with. Those that are not are being weeded out by the Gambling Commission. Since January the Commission has suspended the operating licences of four smaller operators which could not cope with the new conditions. The vast majority of operators have risen to the challenge. Companies such as Flutter, GVC, Sky Bet and 888 have all been fined by the Commission but they have overhauled their systems and given their customers a protective shield to safeguard against addictive behaviour. When Covid-19 forced the closure of retail outlets and the effective shutdown of their 78

sportsbooks, the natural response would have been to turn the marketing firepower onto other products. It surely would have done as recently as two years ago. But a new industry is emerging. It is a grown-up industry that is beginning to understand its place in society. Before the Betting and Gaming Council (see news page 3) announced lockdown guidelines, we spoke to the likes of bet365, GVC and William Hill. They had all steadfastly refused to exploit the situation. In doing so, they can claim moral superiority over their harshest critics, who sunk to new depths by doing the very thing they expected the bookmakers would do – exploiting a crisis for political (rather than monetary) gain. Member of Parliament Carolyn Harris opened fire on the pages of a national newspaper. She wrote: “Where quarantine has meant a downturn for many businesses, gambling companies may see this period as a huge opportunity to increase their profit margins.” They may (sic) have done. They may (sic) have been expected to do so in order to maintain revenues and safeguard people’s jobs. But they did not. “I am deeply concerned that as we move further into this crisis, greater numbers of people will turn to online gambling as a distraction. In the absence of legislation, the industry itself must act responsibly,” she continued. In the absence of legislation? Try telling the Gambling Commission there is no legislation regulating online gambling. Try telling that to the four companies the regulator has closed down this year. But yes, the industry has acted responsibly. GVC responded thus: “With up to a quarter of the global population in some form of lockdown, there is a clear risk that house-bound

“Where quarantine has meant a downturn for many businesses, gambling companies may see this period as a huge opportunity to increase their profit margins” Carolyn Harris MP

individuals may become isolated, depressed or be in financial distress. GVC recognises the additional risk this presents and is deeply aware of its own responsibility to protect vulnerable customers from seeking to solve financial problems through gambling, or from developing other problem gambling behaviours.” It increased all its safer gambling policies, as did all the companies that belong to the BGC. But this was not enough for Harris and her comrades. Clearly, she sees the pandemic and the thousands of deaths across the world as an excellent opportunity to hammer home her agenda. A week later, Harris used the same newspaper to say the BGC’s measures did not go far enough and begged the government to implement emergency measures to curb an industry that, like many others, was on its knees. Dr Henrietta Bowden-Jones, director of the National Problem Gambling Clinic, also signed the letter to the government. She concluded: “Now, more than ever, at this time of uncertainty, a moral code is required from the gambling industry.” The industry has revealed its moral code, and it is a lot stronger than that of its harshest critics, who have been revealed to be completely lacking one. n


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Profile for Gaming Intelligence Quarterly

GIQ - Gaming Intelligence Quarterly Apr-Jun 2020  

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

GIQ - Gaming Intelligence Quarterly Apr-Jun 2020  

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

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