Page 1

Q2 REVIEW

July – Sept 2020

Pennsylvania and Sazka thriving in lockdown and beyond

N Y

Lottery special

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

I L- SIT T rt ue AL ER JECrepo iss e IV O D R two rac P ar hts Ye lig gh hi

• JULY – SEPTEMBER 2020 • ISSUE 42 

G A M I N G

Q U A R T E R L Y

Virtual sports & esports

Lockdown favourites open fresh opportunity

A GAMING INTELLIGENCE PUBLICATION

After the lockdown Are Covid-19 rules here to stay?

SPECIAL REGULATORY ISSUE: GERMANY, NETHERLANDS, UKRAINE, THE US AND MORE


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CONTENTS

LEADER Q2 REVIEW

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

6 Thought leadership Pragmatic Play and Scientific Games Exclusive interviews with Pennsylvania Lottery and SAZKA Group, plus lottery news from around the world

40 LEGAL SPECIAL Regulation special report; The Covid-19 rules; A spotlight on the new regulatory regimes in Germany, the Netherlands and Ukraine; DOJ vs the Wire Act, plus all the latest developments elsewhere All-In Diversity Project reveals year two report, plus new appointments at Betsson, EveryMatrix, OPAP and more

18 Games Exclusive interview with Nik Robinson of Big Time Gaming, plus a look at the rebirth of virtual sports and the quarter’s best new games

28 Technology New tech launches from Jumpman, BetConstruct, Playtech and more

30 Marketing The future of conferences

61 Finance The GIQ20 Q1 2020

70 And another thing…. Rebooting reputation

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 Jon Harwood, Scott Longley, Andrey Astapov, Behnam Dayanim ADVERTISING & SUBSCRIPTIONS Omer Uziely omer@gamingintelligence.com www.GamingIntelligence.com

GIQ Q2 REVIEW

Stay alert EGU L AT ION (A N D POLITICS) are never far away from the betting and gaming world, but the Covid-19 lockdown has thrown the spotlight on the industry and the regulations governing it like never before. The anti-gambling lobby has been particularly fired up, imagining nations of lockeddown gamblers all of a sudden becoming addicts. The only way to combat this, in their opinion, is to bash an industry already reeling from closed venues and a lack of live sport. This has resulted in restrictions in Belgium, Spain, Sweden and a complete shutdown of the industry in Latvia (now thankfully lifted). In most instances regulators and politicians did not wait to study evidence. If they did they would have found no statistical evidence of an increase in problem gambling (see cover story, p42). This is the world that we are living in. The necessity of a strong industry group like the UK’s Betting and Gaming Council (BGC) has become obvious. The BGC, for its part, has reacted rapidly and decisively to make sure that more reasonable politicians can see an industry acting responsibly. A s t h e U K g ove r n m e nt gears up for its overhaul of the Gambling Act, the BGC has an increasingly difficult task on its hands dealing with the zealots. Like the Brexiteers before them, the anti-gambling extremists are a tiny minority but they will not give up. They peddle fiction dis-

R

15 People

EDITOR IN CHIEF Bobby Mamudi bmm@gamingintelligence.com

Steve Hoare

E D I TO R

35 LOTTERY SPECIAL

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.

guised as fact. They will release reports that appear to have an official stamp of authority. The All Party Parliamentary Group for Gambling Related Harm is nothing more than a group of fundamentalist backbench politicians who share a belief that gambling is immoral. However, when written out in full, the All Party Parliamentary Group for Gambling Related Harm looks mightily important and influential. These people are not important and they are not influential but like the Brexiteers before them, they have news outlets who are sympathetic to their aims. They know if they shout long and loudly enough there will be a sizable and voluble chunk of the population who will parrot their propaganda. Hence the need for a BGC equivalent in all jurisdictions. The UK is not the only country with extremist politicians. In many respects, the industry has had a good lockdown – poker is back, virtual sports are getting inventive (see p24) and online operators have done well but not excessively well. Coming out of lockdown will be a challenge. One organisation claimed UK offices will have a £328m bill for hand sanitiser, masks, floor markings and deep cleaning on day one of the return to work. Conferences have been struggling with that conundrum for the past four months (p32). It will also be a challenge with new regulations all over the place (special legal report p40-59). We will be following them. Make sure you are too. sah@gamingintelligence.com 3


GIQ Q2 HEADLINES

Snapshot most popular news stories on GamingIntelligence.com Evolution Gaming swoops in to take control of rival NetEnt SAZKA subsidiary OPAP strengthens online operations with Stoiximan DraftKings begins trading on Nasdaq following SBTech combination Evolution Gaming signs strategic US deal with Golden Nugget Germany’s further action against online gambling payment processor Swedish operators blast amended Covid-19 gambling regulations Regulated UK gambling industry generates £3bn in duties for HMRC Swedish gaming operators lash out at social security minister Betsson completes acquisition of Gaming Innovation Group B2C assets Boom Sports partners Penn National Gaming to enter five US states

Quote of the Quarter It’s a case study in how not to do things – a car crash” Charles Gillespie of Gambling.com Group pulls no punches in his assessment of Sweden’s regulatory changes (p42).

4

Evolution Gaming swoops for €1.86bn NetEnt It looks like NetEnt has finally solved its live casino problem… by succumbing to the charms of the market leader, Evolution Gaming THE EVOLUTION-NETENT TIE-UP left many of us thinking: “Of course. That makes perfect sense.” NetEnt is one of the industry’s most successful slots suppliers, but in recent years has given the impression of a company struggling to remain at the top in an increasingly competitive landscape. To some extent, it remedied that with the acquisition of Red Tiger Gaming. It bought the latest industry darling and admitted it would be learning a great deal from its acquired assets. One would expect the dynamic M&A management team at Evolution to wring the best out of NetEnt’s creaOF THE tives, while complementary revQUARTER enue streams should provide plenty of cross-sell for the business development teams. holder objections and rapidly moving to “What’s most surprising,” says RB Capital consolidate the deal.” co-founder Julian Buhagiar, “is the actual valuEvolution is offering NetEnt shareholdation, which comes at a 43 per cent premium ers 0.1306 shares in Evolution Gaming for over the most recent closing share price. This each NetEnt share held, valuing each NetEnt is one of the strongest indicators of a ‘bear hug’; share at SEK79.93, a 43 per cent premium on in investor terms, making an offer at a much the stock’s closing price on Tuesday 23 June. higher share price than current valuation, with This values NetEnt at SEK19.6bn or approxithe objective of minimising any sharemately €1.86bn. n

DEAL

Raising cash and M&A The main focus for many operators has been financing since Covid-19 hit. William Hill placed new shares with institutional and retail investors to raise more than £224m. After agreeing the acquisition of Caesars, Eldorado Resorts looked to boost liquidity with a range of transactions that raised $1.2bn.

Flutter Entertainment raised £812.6m from a private placement of more than eight million new shares with institutional investors including its FOX Bet partner Fox Corporation. Penn National Gaming strengthened its balance sheet by $600m with the closing of its common stock and convertible notes offering. GVC Holdings agreed a new £535m revolving credit facility (RCF) with its existing lending banks. The Golden Nugget spun out its Golden Nugget Online Gaming arm into its own


GIQ Q2 HEADLINES

Get the latest news from our website

GamingIntelligence.com

Playtech enters the US hand in hand with bet365

The quarter in numbers FINANCE

Playtech made what seemed to be a belated entry into the US market on the back of a relationship with one of its premium clients – bet365

$745m

WHILE PLAYTECH HAS been preparing platforms left standing after the departure of for market entry for some time by sorting out Microgaming from the poker market. licensing requirements with New Jersey’s “We are initially launching our online Division of Gaming Enforcement, it has lacked casino product in New Jersey and over time the client with which to give it proof of concept. will increase our products on offer to include bet365 is a key partner in other sports, platform, and live casino. We will markets and Playtech will be procontinue to expand into further states B2B viding the same casino products as they regulate,” said chief execuand platform services as it does in tive officer Mor Weizer. n OF THE other jurisdictions. QUARTER The pair will operate in New Jersey in partnership with Hard Rock Atlantic City. Playtech hopes this deal will open the floodgates – for other clients who want to enter the US market and also for land-based casino operators in the US, who might be interested in Playtech’s omnichannel sports betting solutions. The supplier expects to expand its product suite Stateside to live casino and poker soon. bet365 is one of the key clients on Playtech’s iPoker network, which is one of the few B2B poker

147%

DEAL

Golden Nugget Online Gaming’s valuation ahead of IPO

PointsBet’s Q1 revenue growth

€115.1m Evolution Gaming revenue in Q1 M&A

SEK19.6bn

Evolution’s takeover offer for NetEnt

€33m Betsson deal to acquire GiG’s B2C brands REGULATIONS

SEK5,000

New weekly deposit limit per player in Sweden

10%

Proposed tax rate for online casinos in Ukraine RESPONSIBLE GAMBLING

Nasdaq-listed entity. The transaction values the new company at a pro forma enterprise value of approximately $745m, or 6.1x GNOG’s estimated 2021 revenue of $122m. The M&A market was perhaps surprisingly active. At one end of the spectrum, Evolution Gaming acquired NetEnt (see Deal of the Quarter, above) in a deal that valued the latter at a hefty £1.86bn; and at the other end of the spectrum UK-licensed sportsbook operator BetBull acquired peer-to-peer social betting startup Wager. GIQ Q2 REVIEW

Somewhere in the middle, European lottery and gaming operator SAZKA Group (see interview, p38) acquired a majority stake in Stoiximan Group’s Greek and Cypriot businesses for €164.3m; and Betsson acquired the B2C brands of Gaming Innovation Group for €33m. The Stockholm-listed operator Betsson also found time to enter the US online sports betting market for the first time through a market access deal in Colorado with Dostal Alley Casino.

£3.5m

Playtech donation to cover social responsibility failures at former subsidiary LOTTERY

$1bn

Pennsylvania’s iLottery sales since launch in May 2018 5


GIQ STOCK INDEX

Snapshot Rollercoaster ride The gaming industry’s collective share price suffered a 24 per cent fall in Q1 but rebounded with a 46 per cent rise in Q2, according to the Gaming Intelligence Stock Index

AFTER SEEING THEIR shares decimated by the havoc wreaked by the Covid-19 pandemic in March, the majority of the 50 publicly-listed operators and suppliers that make up the GI Stock Index saw their shares rally between 1 April and 30 June, making up some of the losses from Q1 2020. After suffering a 24 per cent fall in combined share prices in Q1, the shares in our chart climbed by more than 46 per cent during Q2, with 48 of the 50 public companies seeing significantly improved share price performances, of which eight companies recorded triple-digit increases. The biggest climber in Q2 was Stockholm-listed NetEnt, as its shares soared more than 37 per cent to a new 52-week high of SEK77.40 on the day that Evolution Gaming’s SEK19.6bn takeover bid was made public on 24 June. Evolution’s offer values NetEnt at approximately SEK79.93 per share, a 43 per cent premium on NetEnt’s closing share price of SEK56.00 the previous day. The announcement helped NetEnt shares rise by 199 per cent to SEK71.20 by quarter end, while Evolution’s shares also hit a 52-week high as it closed Q2 up 66 per cent at SEK555.60. Aside from NetEnt and Evolution, there were another 17 companies that posted 52-week highs during Q2, including Penn National Gaming, Gaming Realms, GAN, Kambi and Better Collective, while DraftKings’ New York IPO on 24 April already seems to be paying off, with its shares gaining 172 per cent to close June at $33.26, including a post-IPO high of $44.79 on 2 June. Another strong performing stock was New York-listed Eldorado Resorts, which saw its share price soar 193 per cent to close the quarter at $40.06, with the US casino operator further boosted by the Federal Trade Commission’s approval in late June of its planned merger with Caesars Entertainment, which saw its own shares increase 87 per cent to end June at $12.13. GAN benefited from its switch to New York’s Nasdaq market on 5 May as its shares climbed 139 per cent to $25.45 during Q2, reaching a new high of $28.73 on the final day of trading during the quarter, while Kambi’s US sports betting expansion helped the sports betting supplier’s shares more than double in value to SEK207.00, despite no major sporting events during the period. Other notable performances came from William Hill as shares rose 74 per cent to 113.80p, while Flutter Entertainment’s shares were up 46 per cent at 10,595.00p following the completion of its merger with The Stars Group, which was delisted on 4 May. Scientific Games’ shares rose 72 per cent to close June at $15.46, while shares in Playtech gained 66 per cent to 281.50p, just ahead of Betsson which saw its share price rise 64 per cent to SEK64.80. Meanwhile, there were just two companies that failed to see an increase in their share prices, with 500.com’s shares down 16 per cent at $3.85 and shares in Inspired Entertainment falling 17 per cent to $2.90. n 6

COMPANY 1 NetEnt

OP. PRICE 01.04.20

CL. PRICE 30.06.20

CHANGE

SEK23.78

SEK71.20

199.41%

2 Eldorado Resorts

$13.68

$40.06

192.84%

3 DraftKings (IPO 24 April)

$12.24

$33.26

171.73%

4 Penn National Gaming

$11.55

$30.54

164.42%

5 Gaming Realms

5.60p

13.85p

147.32%

$10.65

$25.45

138.97%

7 Kambi Group

SEK91.90

SEK207.00

125.24%

8 Score Media and Gaming

CAD$0.37

CAD$0.75

102.70% 86.62%

6 GAN (New York IPO 5 May)

9 Caesars Entertainment Corporation 10 Pointsbet Holdings 11 Scout Gaming Group 12 William Hill 13 Better Collective 14 Scientific Games Corporation 15 AGTech Holdings

$6.50

$12.13

AUD$2.86

AUD$5.30

85.31%

SEK11.20

SEK20.00

78.57% 73.79%

65.48p

113.80p

SEK72.20

SEK125.00

73.13%

$9.01

$15.46

71.59% 68.92%

HK$0.222

HK$0.375

SEK334.50

SEK555.60

66.10%

17 Playtech

170.00p

281.50p

65.59%

18 Betsson

SEK39.50

SEK64.80

64.05%

SEK4.50

SEK7.32

62.67%

$5.50

$8.90

61.82%

SEK15.84

SEK25.40

60.35%

22 Sciplay Corporation

$9.36

$14.83

58.44%

23 Webis Holdings

1.05p

1.65p

57.14%

SEK35.95

SEK55.72

54.99%

25 Boyd Gaming Corporation

$13.65

$20.90

53.11%

26 MGM Resorts International

$11.01

$16.80

52.59% 47.84%

16 Evolution Gaming Group

19 Global Gaming 555 20 International Game Technology 21 Aspire Global

24 Kindred Group

27 LeoVegas

SEK28.18

SEK41.66

28 Flutter Entertainment

7,250.00p

10,595.00p

46.14%

29 bet-at-home.com

€ 26.70

€ 38.70

44.94%

30 Zeal Network

€ 22.50

€ 31.95

42.00%

31 888 Holdings

123.00p

174.60p

41.95%

SEK14.50

SEK20.45

41.03%

538.00p

740.60p

37.66%

$2.47

$3.38

36.84% 36.40%

32 Enlabs 33 GVC Holdings 34 PlayAGS 35 Churchill Downs Incorporated

$97.62

$133.15

SEK15.44

SEK20.84

34.97%

AUD$2.55

AUD$3.38

32.55%

38 OPAP

€ 6.40

€ 8.45

32.03%

39 Codere

€ 1.30

€ 1.70

30.77%

40 Sportech

15.00p

18.63p

24.20% 22.26%

36 Catena Media 37 Tabcorp Holding

41 La Française des Jeux

€ 22.46

€ 27.46

42 Gamesys Group

709.00p

859.00p

21.16%

43 Rank Group

123.00p

146.40p

19.02%

AUD$22.38

AUD$25.50

13.94%

NOK5.10

NOK5.50

7.84%

46 Ainsworth Game Technology

AUD$0.395

AUD$0.41

3.80%

47 Pollard Banknote

44 Aristocrat Leisure Limited 45 Gaming Innovation Group (Oslo)

CAD$16.94

CAD$17.10

0.94%

48 Intralot

€ 0.14

€ 0.14

0.00%

49 500.com

$4.58

$3.85

-15.94%

50 Inspired Entertainment

$3.51

$2.90

-17.38%


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BINGO360 PRAGMATIC PLAY

Bingo: it’s all about Pragmatic Play vice-president of bingo Claire McDaid talks about the community spirit surrounding bingo, how the game successfully transitioned from land-based to online, and why communication is of the utmost importance in these challenging times BE IT HUMANS thousands of years ago sitting and talking around campfires, to work colleagues discussing business on a Zoom meeting, communication is a key component of both physical and mental wellbeing. The world is currently facing an unprecedented and challenging period, and with our ability to safely interact now curtailed, the importance of socialisation has been highlighted more than ever. Bingo has always been a game centred around the enjoyment of playing with friends and just shooting the breeze. Its appeal has grown over the years, leading it to become one of the most popular gambling offerings across the globe. Over time, the popularity of bingo has seen it grow into a perennial favourite among gamblers. While other elements of the sector have seen peaks and troughs, the attraction to bingo has rarely faded. The land-based bingo halls of the late 20th century were melting pots, bubbling and thriving with a social buzz that only bingo nights could muster. But as use of the internet exponentially grew in the early 2000s, people realised that online communication was just as easy, if not more expansive. Early on, some critics were sceptical about the nature of such a social game moving online, but the key was companies having the ability to make the experience as realistic as possible. Pragmatic Play’s bingo product was founded on creating engaging, immersive mobile experiences which replicate the bingo hall environment, marrying it with the convenience of mobile play. Our bingo network continues to grow through the development of not 8

just classic bingo titles, but through bringing truly innovative products to an industry with a proud heritage. Our Bingo Blast game is aimed at revitalising the vertical while continuing to provide the thrilling engagement factor of bingo. We’ve accelerated the initial phase of the game, and balls are blasted out of the machine, quickly filling a player’s bingo card. This removes the initial time-consuming start to many bingo products and transports players to a 2-to-Go or 1-to-Go state. This means the game retains the thrill of the chase element of bingo, as players eagerly await a winning ball to drop, while combining time-friendly gameplay for mobile players. By creating a product that retains the muchappreciated in-game features, combined with a speedy, devicefriendly gameplay designed for mobile players, Pragmatic Play has tapped

into a previously inactivated bingo market – the modern player. While cutting-edge slots may be immersive and hugely exciting, they’re a one-player game. The thrill of watching a roulette wheel is perfectly developed for those who wish to be kept on tenterhooks and enjoy the expedited nature of one spin at a time. Though even that sector is now utilising social-inspired engagement tools such as slot tournaments and live roulette dealers. It’s clear that the gambling world has awoken to the importance of adding communication and socialisation to gaming. However, bingo has always been about fun and the delight of playing a game with others. Meeting new people, seeing old friends, and connecting with other players is at the very heart of it. And now, when someone shouts ‘bingo’, it isn’t just heard among excitable players in an online forum – but resonates across the entire gambling sector. n


BINGO360 PRAGMATIC PLAY

connection

What is Bingo360? Bingo360 provides the gaming community with a knowledge hub centred around Gaming Intelligence’s unrivalled insight, reports and networking events. It provides gaming industry executives with an online forum for networking opportunities and, when conditions allow, a real-life

GIQ Q2 REVIEW

networking opportunity and a chance to hear from the experts making the industry tick. This is supported by the market-leading insight of the Gaming Intelligence editorial team, which will be running a series of features and reports highlighting the latest technological developments and market trends.

9


SPONSORED CONTENT SCIENTIFIC GAMES

Data in motion Consumer analytics guiding the new norm

Scientific Games market research director Tim Menzia and consumer insights manager Kisha Eltagonde highlight 10 trends impacting lotteries

2

THE COVID-19 PANDEMIC has affected businesses and economies globally, including lotteries and their retail partners – and vital funding for beneficiary programmes like health and welfare, education, the environment and infrastructure. Shifts in consumers’ behaviour and challenges accessing lottery games make it difficult to adapt and anticipate what lies ahead. Consumer insights and data analytics are more important than ever. Since the crisis began, Scientific Games has relied on decades of consumer research experience to help guide lotteries on how the pandemic has affected consumer behaviour, retail operations and sales. Several trends have emerged in the last few months that lotteries must consider as they navigate these uncertain times.

Working from home Retail visit frequency has changed with more people working from home. And many expect to stay working from home at least part-time after the crisis has abated. How does this affect retail traffic patterns to and from the workplace, and what will lotteries need to do to adjust? This shift in routine may have a profound effect on convenience stores in particular.

1

Less than five out of 10 trips

Cash is no longer king Due to concerns about germs when using cash, credit and debit cards are now the preferred payment options for retailers. What does this mean for lotteries? There will likely be less impulse buying with the change received after making a cash purchase. At the same time, many lotteries don’t allow for card payments. Even pre-Covid, more consumers were moving to cashless convenience. 10

WORKING FROM HOME In 10 trips to and from work, on average how often did you stop and purchase instant scratch lottery tickets?

52% 21% 27% Five out of 10 trips or more

None of the above

After stay at home restrictions end, those who have been working from home more plan to:

18% 19% 63% Work from home much more often than I did before Covid-19

Work from home a little more often than I did before Covid-19

Return to my usual schedule and work location

3

Reaching consumers With fewer commuters on public transport and more people working from home, where should lottery marketing efforts be focused to ensure the maximum return on spend? Social media usage continues to increase but there are other options such as music streaming which has also seen an uptick in usage.

4

Can’t touch this Covid-19 has created a lot of germaphobes and for valid reasons. This affects instant games in particular; the purchase of which often involves some degree of interaction and handling of tickets. In-lane purchase solutions may provide one less touch point for players, while self-service vending machines may eliminate the need to interact with another person. Each option will likely appeal to different people.

5

Think digital When bricks-and-mortar retail operations are constrained and safety concerns are a priority, providing online and/ or mobile options enables consumers to stay engaged with brands and purchase products. This is true across the board and the lottery industry is no exception.


SPONSORED CONTENT SCIENTIFIC GAMES

REACHING CONSUMERS

THINK DIGITAL

Share of social media users in the US who believe they will use select social media more if confined at home due to the coronavirus, as of March 2020

Year-over-year in average monthly in-home data usage by device in the United States, from January to March 2020. (Change in-home data usage by device in the US 2020) 35

6

More grocery options needed With some retailers offering limited or adapted operations, it is important that lotteries have solutions for the new norm. Grocery stores were initially named as essential, but the lack of in-lane solutions and hard-to-locate self-service vending machines equated to a missed opportunity to recapture lost sales resulting from the closure of nonessential retailers.

7

Loyalty is key Keeping lottery loyalty club members active with the right value propositions is essential, especially if those members have come from the casino world, which is known for its strong loyalty programmes. This is the time to strengthen player club offerings so members feel they are getting maximum value. Are there

Twitch

TikTok

LinkedIn

Blogs

Snapchat

Pinterest

Twitter

Instagram

Facebook

YouTube

PC/Mac

0

5 0 -5 -10

opportunities to offer members more compelling second chance drawings or promotions? And remember, player engagement is more than email marketing. Players can be reached through different social media sites, digital coupons and more.

8

New and lapsed players There has been a surge of new and lapsed lottery players playing lottery games during the pandemic, because other gaming options were not available. What can lotteries do to keep these players engaged when other gaming options become available? Finding out what they liked most and least about their recent lottery experience is a good place to start. A lottery’s loyalty club is also a key strategic tool to keep these players engaged and your products top of mind.

ONLINE SHOPPING DURING THE COVID-19 PANDEMIC Though many who went online for more groceries report availability and pricing concerns, a high proportion still plan to buy groceries online after the crisis

23% ORDERING MORE GROCERIES ONLINE DUE TO COVID-19 Consumers report it takes an average 3+ days to receive their online orders

GIQ Q2 REVIEW

LIKELIHOOD TO BUY GROCERIES ONLINE AFTER THE STAY-AT-HOME RESTRICTIONS HAVE ENDED

36% 49% 16%

Very likely Somewhat likely Not at all likely

Smart speaker

10

10

Gaming console

20

15

Tablet

30

25 20

Streaming box/stick

40

30

Connected TV

50

Believe usage will decrease

Phone

Believe usage will increase

Grand total

60

Change in-home data usage %

Share of respondents %

70

9

All for a good cause During the pandemic, businesses across various industries (retailers, restaurants, etc.) stepped up to help others, and consumers took notice. The lottery industry is founded on the premise of supporting good causes. So it’s important lotteries continue to communicate to their constituents – players and non-players alike – about all they do to support these beneficiaries.

10

New game ideas The current crisis has created any number of new routines and activities that lend themselves to potential new lottery game ideas. Jigsaw sales have exploded. Board game sales are through the roof. These are just two obvious examples of Covid-related trends that lotteries should be taking note of when brainstorming new game ideas. Lottery games are a $300 billion+ consumer product category globally. As the ramifications of the Covid-19 pandemic continue to unfold, consumers, businesses and governments are rethinking their strategies in an effort to keep employees, retailers and players safe and ensure financial sustainability. It remains to be seen which of these adjustments will remain in place in a post-Covid world. There are strong signs, for example, that the uptick in online shopping will continue beyond the crisis. Employers have indicated that working from home, which has typically been the exception, will be more common. It is vital that the lottery industry stays attuned to these changes in behaviours and sentiments so it can continue to provide safe and entertaining products to players and drive revenues to help fund the good causes they support. n 11


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PEOPLE FIVE IN THE NEWS Executives on the move, and issues in their inboxes Scientific Games recruits new finance chief SCIENTIFIC GAMES APPOINTED Michael Eklund to serve as its new finance chief, replacing Michael Quartieri who has served as CFO since 2016. Eklund brings more than 20 years’ experience in financial and operational roles, and joins the gaming supplier from market research firm IRI, where he served as CFO since July 2019, having previously spent more than 20 years at Dell Technologies. Quartieri has agreed to stay on as a consultant until the end of the year to help the company deal with the Covid-19 pandemic.

EveryMatrix appoints CasinoEngine CEO

OPAP ramps up online strategy as Cope departs

EVERYMATRIX APPOINTED FORMER Jetbull CEO Stian Enger Pettersen as chief executive of its CasinoEngine casino integration business. Pettersen has been with the supplier since 2015 and helped to drive the development of CasinoEngine, which now offers over 11,500 games from more than 175 providers. He replaces Stian Hornsletten as CEO of the casino division, with Hornsletten moving to the role of EveryMatrix chief commercial officer. In the past five years, Pettersen’s expertise has helped operators such as Norsk Tipping and Wunderino surpass their targets, while securing partnerships with Tier 1 operators such as Paddy Power Betfair and OPAP.

OPAP CHIEF COMMERCIAL officer Jan Karas has taken over as acting chief executive of the Greek lottery operator following the departure of Damian Cope. Karas assumed the role on 1 June with responsibility for all management duties except for HR, which will be led by deputy chief executive Odysseas Christoforou. Karas will look to build up OPAP’s presence online, a key element in the company’s 2020 Vision strategy under Cope. In the past two years OPAP has been steadily implementing its strategy of developing its own online business, while also increasing its investment in leading Greek online operator Stoiximan Group.

IN THIS ISSUE 13 EveryMatrix, Betsson, OPAP and more 14 All-In Diversity Project: Year two report

Pragmatic Play brings in specialist for LatAm push PRAGMATIC PLAY IS expanding its presence in Latin America and brought in Victor Arias to head up its new regional hub. Arias has joined the multi-product provider from Patagonia Entertainment, one of the leading suppliers in the region, where he served as global business development manager for almost three years. As vice president, he will lead the supplier’s charge into Latin America from his base in Argentina, initially with a team of three executives. “We are thrilled to have Victor join us, and look forward to his impressive experience benefiting our growing team,” said Pragmatic Play chief commercial officer Melissa Summerfield. “Expanding our presence in Latin America has been a key target for us, so adding Victor is an exciting step for us.”

Andy McCue joins Betsson board Betsson strengthened its board of directors with the addition of former Paddy Power Betfair chief executive Andy McCue. The move comes as the operator prepares to launch its proprietary sportsbook in the US through a market access deal in Colorado. McCue spent 10 years at Paddy Power Betfair before leaving to join The Restaurant Group as CEO in 2016. He will serve on Betsson’s board alongside Patrick Svensk, Fredrik

GIQ Q2 Q1 REVIEW REVIEW

Carlsson, Eva Leach, Johan Lundberg and Jan Nord, who were all re-elected to the board at Betsson’s annual general meeting in June. Louise Nylén, former deputy CEO of rival operator LeoVegas and current chief marketing officer at payment processor Trustly, was also nominated for election to the board but withdrew due to other commitments.

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P EO P L E

AIDP REPORT

Diversity matters Following lockdown and the fallout from George Floyd’s murder, diversity and human resource management is higher on the agenda than ever before. Here, we reveal the results of the All-In Diversity Project’s 2019 annual survey and its fascinating insights FIRSTLY, THE NUMBER of companies taking part was up from 25 last year to 29 this year. Not a massive increase but it represents progress for the All-In Diversity Project and its aims. The number of employees covered by the survey is up almost 10 per cent from 117,231 last year to 128, 909 this year. This is the first year a regulator (the Malta Gaming Authority) and a charity (Canada’s Responsible Gaming Council) have taken part in the survey. One of the Project’s long-term aims is to get diversity reporting written into licensing requirements, so the relationship with the MGA is a step in the right direction. Perhaps the most significant finding of the survey is that the percentage of women working in the companies surveyed has increased from 46.5 per cent to 48.9 per cent. 65,841 employees identify as male, while 63,068 identify as female. “We think this figure might drop again next year with the increase in sportsbooks both in the US and emerging markets, as well as the growing interest in eSports and virtual sports,” says AIDP co-founder Tina Thakor-Rankin. However, women have almost achieved parity with their male counterparts on executive boards. Forty per cent of executive board members were women this year. “Obviously it is not quite 50:50 but it’s close,” says Thakor-Rankin. “This is good because this is where the decisions that shape the strategy and culture of the organisation are made.” But they are still not getting the very top jobs. While there are four women chief execu-

tives among the firms surveyed by AIDP, that represents just 15 per cent of the total, a small drop from 17 per cent last year, but so marginal that it is essentially consistent with last year’s number. Indeed, the proportion of women in leadership positions has stayed roughly the same across the board. However, there has been a small slump in the number of women sitting on nonexecutive boards, with only 22.4 per cent female non-execs compared to last year’s 28 per cent. That could be attributed to the number of mergers and acquisitions that have occurred in the industry during the past year.

Jobs for the boys It is difficult to compare data for job roles as the categories have been refined this year. However, in the last year 17 per cent of technology jobs were taken by women – in line with UK and US averages for the tech industry as a whole. This year that figure has risen to 20 per cent, ahead of the tech industry overall. The number of women working in trading and risk management, however, has dropped from 18 per cent to just eight per cent. This could be due to the rise of sports betting in the US. More surprising still is the large drop in the percentage of women working in marketing – from 50 per cent to 36 per cent. The percentage of women working in sales and business development has also dropped significantly from 55 per cent to 36 per cent (which cannot be solely attributed to the change in definition from ‘sales and commercial’, which should have been inconsequential).

“With a focus on Women in STEM/TECH, we may have taken our eye off the ball in other areas,” says AIDP co-founder Kelly Kehn. “Diversity and inclusion is not something you do once and move on from. With a huge focus on the image of the industry in the media and an increase in bad press in 2018/2019, we may have lost a good chunk of those in the sector.” “For me, the clear correlation is the increase in sports betting – which equals more traders; and sales and marketing with a bias towards men over women,” believes Kehn’s colleague Thakor-Rankin. The section of the survey that focuses on how women get their jobs provides a few insights too. About three per cent more women than men get their jobs through social media, which is probably inconsequential on a survey of this size. With around 80 per cent of men and 80 per cent of women getting their jobs through recruitment firms, it looks like parity has been achieved through that channel. The fact that 67 per cent of female appointments came through internal promotion, versus 59 per cent of male appointments, suggests women are being taken more seriously internally.

Black Lives Matter Given the political climate around race and racism, it is serendipitous that this is the first time AIDP asked questions about information other than gender metrics. “We were surprised at the fact that more companies record ethnicity than LGBTQ+ and disabilities, as hearsay evidence has suggested the opposite,” says Thakor Rankin. Twenty per cent of companies claim it is illegal to do so in their jurisdiction but another

PERCENTAGE OF WOMAN IN INDUSTRY ROLES Entry Level/New Starter

Team Leader/Supervisor

Manager

Department Head

Director, VP or C-level

(47% 2019)

(49% 2019)

(40% 2019)

(29% 2019)

(22% 2019)

48% 34% 39% 26% 23% 16 24


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PERCENTAGE OF COMPANIES REPORTING

Data

40.74% 25.93% 14.81% Ethnicity (race)

LGBTQ+

Disability (including visible and invisible)

“With a focus on women in STEM/TECH, we have taken our eye off other areas. Diversity is not something you do once and move on from” Kelly Kehn, AIDP 20 per cent suggest they would consider recording in future, and a further 20 per cent said they would consider recording the information if employees agree to it. “The question is how 2020 will impact our industry going forward,” says Thakor-Rankin. How will lockdown change people’s perceptions and attitudes towards work? HR directors across the industry are considering the role of the office and whether they need so much space, and whether it is needed in expensive locations. Will the Black Lives Matter movement result in more diversity reporting and diversity and inclusion policies? Will regulatory restrictions in Europe mean we see a growth in emerging markets? And how might that affect the figures? The world is in such a state of flux that we can only wait until next year before we find out the answers to these questions. n

GIQ Q2 Q1 REVIEW REVIEW

MALE/FEMALE SPLIT BY ROLE

Men: 73% Women: 27% Women in 2018: 31%

Design/ creative Men: 65% Women: 35% Women in 2018: n/a

Marketing

PR/Media

Men: 64% Women: 36% Women in 2018: 50.31%

Men: 65% Women: 35% Women in 2018: n/a

Sales/ business development

Product development

Men: 64% Women: 36% Women in 2018: 55%

Men: 69% Women: 31% Women in 2018:24%

Trading

Finance

Men: 91% Women: 9% Women in 2018: 18%

Men: 49% Women: 51% Women in 2018: 61.86%

Operations

HR

Men: 52% Women: 48% Women in 2018: n/a

Men: 28% Women: 72% Women in 2018: 75.27%

Tech

Legal/ compliance

Men: 80% Women: 20% Women in 2018: 17%

Men: 50% Women: 50% Women in 2018: 53.86%

Hospitality

Other

Men: 34% Women: 66% Women in 2018: n/a

Men: 56% Women: 44% Women in 2018: n/a

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GAMES NEW RELEASES Q2 GIQ casts its eye over the quarter’s brightest new slot games

SG ADDS NEW JACKPOT TO RAINBOW RICHES FRANCHISE

YGGDRASIL’S NEW MECHANIC IN LUCKY NEKO GIGABLOX

PRAGMATIC PLAY LAUNCHES PYRAMID KING

SG Digital’s latest Rainbow Riches romp reaches entirely new levels when partnered with Mega Drop Jackpots in the new 5x3, 20-line slot Rainbow Riches Pots of Gold. Mega Drop Jackpots is the supplier’s mustdrop, multi-level jackpot system, designed to deliver breakthrough entertainment for players, giving all players – at any stake level – a chance at one of three progressive jackpots. Watch out for Pots of Gold symbols that can land players the Pots of Gold or Super Pots of Gold Bonus. When triggered, players are granted a spin of the Bonus Wheel, where even greater prizes can be won in the form of cash prize multipliers up to 5000x players’ bets.

Yggdrasil launched a new Japanese-themed 6x4 slot Lucky Neko Gigablox, which introduces a new Gigablox mechanic where the reels transform every spin to land Gigablox ranging from 2x2 up to 4x4. The slot is set in a traditional shop in Japan, with the free spins round taking place if five or more lucky cat symbols land on the reels. The free spins mode sees the possibility of a 6x6 Gigablox symbol landing on the reel, potentially leading to a massive payout. “With the Gigablox the next big win is just around the corner and the free spins offer serious win potential,” said Yggdrasil senior product strategist Jonas Strandman. “We continue to drive innovation throughout the industry and can’t wait to see how the Gigablox mechanic is received by our fans across the globe.”

Pragmatic Play is taking players into the deserts of Ancient Egypt with its new 5x3, 25-payline slot Pyramid King. Featuring several high-paying symbols, including an ankh, ring, cobra and Anubis mask, all of which can lead to big wins, the pharaoh mask acts as a wild and if three ancient scroll bonus symbols land on the reels, the free spins mode is unlocked. “Pyramid King takes a fun, recognisable theme and adds a Pragmatic Play twist with both respin and free spin features,” said Pragmatic Play chief commercial officer Melissa Summerfield. “Its action-packed gameplay and mini-jackpots offer players an exciting quest to take the riches of the fearsome king back home with them after a successful adventure.”

BLUEPRINT EXPANDS JACKPOT KING RANGE Blueprint Gaming has added the popular King Kong Cash slot to its Jackpot King series. First launched in 2016, the game now gives players the chance to enter the progressive jackpot system and win big from the Reel King. All features from the original 5x3 slot remain, with three or more Kong Bonus symbols activating one of five bonus games, including Golden Kong Free Spins, Empire Free Spins and King Kong Trail. “The Reel King has swung into the Jackpot King series, much to the delight of our partners and fanbase,” said Blueprint Gaming director of marketing and relationships Jo Purvis. “King Kong Cash has been a favourite since it was launched and the addition of the three huge cash pots is set to make it even more appealing.” 18


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SKYWIND GROUP RELEASES RESPIN KING

PARIPLAY HEADS TO THE WILD WEST

GREENTUBE LAUNCHES LATEST DIAMOND LINK GAME

Skywind expanded its game portfolio with the launch of Respin King, a 4x5 medium volatility slot that takes players on a royal adventure to land as many crowns as they can. The action starts when players land two or more crowns as the respins begin locking in every crown for bigger wins. Landing five or more sees the royal progressive jackpots come into play. Players need nine or more crowns to win the jackpot. “With Respin King we have kept things easy to follow and given the game a light-hearted and bright feel that make it a joy to play on mobile as well as in the comfort of your own castle,” said Skywind Group vice president of operations and content Uri Cohen.

Pariplay’s latest slot release is a new Westernthemed game, Stallion Fortunes. Taking players to the Wild West to round up wild stallions and earn golden rewards, Stallion Fortunes is a 5-reel, 3-row slot with reels filled with cowboys, horses and gold, among other things. The game includes four in-game jackpots, while the Coin Collect feature can occur at any time and free spins can lead to even more payouts. “We are excited about this game as it’s packed full of fantastic features,” said Pariplay commercial director Richard Mintz. “The sense of anticipation we have created in the game while players wait for the combo of coins and treasure chests to hit the reels is our best yet.”

Greentube released the third title in its popular Diamond Link series with the launch of Diamond Link: Mighty Sevens. The latest addition to its Home of Games portfolio is a 5-reel, 25 win-line fruit-themed slot, which has been combined with the Diamond Link feature. The game is packed with lucky seven symbols, which can cover the whole screen with any spin and grant an immediate win of 750 times the player’s stake. Hidden among the fruit symbols are the diamond symbols. Collecting six of these triggers the Diamond Link, presenting players with the chance to win the Mini, Minor, Major or Grand jackpot. The slot also has a Win Spins feature offering seven spins with respins if there are no wins.

PLAYTECH HEADS TO ANCIENT EGYPT WITH BOOK OF KINGS Playtech’s Rarestone Gaming studio is taking players into the Pharaoh’s tomb in Book of Kings, a 3x5 slot offering 10 lines of high-volatility fun with gold-filled treasure rooms waiting to be discovered. Three Scattered Books award 10 free games where a random special symbol expands to fill the reel and pays in any position on all lines. “With Book of Kings, we’ve taken a classic game mechanic and given it a new twist with a high-volatility free games feature,” said James Stewart, head of game development at Rarestone Gaming. “The 10-line format makes the game easy to grasp, but there’s big win potential here, which is sure to keep players coming back.”

GIQ Q2 REVIEW

RELAX GAMING DEBUTS MARCHING LEGIONS

RED TIGER RELEASES ZEUS LIGHTNING POWER REELS

The latest big release from Relax Gaming is the 5x3 slot Marching Legions. In the game, each time a full stack of legionaries appears, they brandish their swords and charge across the reels, triggering Respins in their wake. With the help of the Nudge feature, Marching Stacks are plentiful, each one gets recorded in the Collection Meter, and a total of five lead to new territories in free spins. In free spins, there is another Collection Meter that records all special symbols; every three trigger a new wave of free spins awarding more troops of Marching Stacks.

Red Tiger’s big release in Q2 is Zeus Lightning Power Reels, taking players to the Olympic temple where wins of over 4,500x may be bestowed. In the 7x6 slot with 30 win lines, the goal is to land a Zeus 1x3 super symbol. Zeus then summons lightning, expanding the same random symbol on a random number of reels, potentially filling the entire slot. The expanded symbol type pays when matching symbols are anywhere on the same win line, even in non-adjacent positions. Free Spins add to the excitement of this epic adventure.

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G A M ES

BIG TIME GAMING

Big Time unveils Megaclusters Big Time Gaming chief executive officer Nik Robinson has built a reputation as the most innovative creative mind working in casino gaming. The company released its new Star Clusters game in June, with a new mechanic dubbed Megaclusters What was the motivation for creating a new mechanic? Is the market becoming saturated with Megaways games? The motivation to deliver something fresh to players is key; something that will surprise, entertain and generally drop jaws. I’m always thinking about what’s next and actually feel I’ve been a little slow on the uptake of late. Megaways is now five years old, which now you’ve mentioned it, makes me feel as if complacency has fully sunk in. We got very stuck into innovating Megaways iteratively, pushing the format in many different directions from its debut with Dragon Born. On one hand, we went out on a limb with the progressive base game feature of King Maker and, on the other hand, threw the brand into the deep end with the backing of big brands like Monopoly and Who Wants to Be a Millionaire? By the end of 2020, if all goes to plan, Big Time Gaming and its licensees will have over 200 Megaways titles from over 50 providers. Megaways is an incredible genre, interest keeps on growing and the brand is getting bigger in terms of recognition – a Megaways tab is now a common addition to all major casinos. In short, the saturation of Megaways is not viewed as a problem, it’s taken five years to

“By the end of 2020, if all goes to plan, Big Time Gaming and its licensees will have over 200 Megaways titles from over 50 providers” Nik Robinson, Big Time Gaming 20

get here and might have some way to go still. And at the end of the year we have a massive announcement on the Megaways front. Let’s just say the biggest brand in slot machine history is about to get the Megaways treatment.

What made you think of a grid slot with reactive wins and a splitting mechanic as the next innovation? Was it inspired by Chain Reactors, which was such a success for your first company NT Media? Chain Reactors was actually the world’s first real-money cluster pays grid game to hit the market. I built that over 17 years ago and while the Flash held up, and until HTML5 eventually sealed its fate, it remained very successful throughout the noughties. Many providers have taken up the gauntlet and added lots of interesting features to make grid games the player staple they are today. Thinking back, I remember a good friend, Robert Skog, the head of sales at Play’n GO in their start-up days, come running up to me at a conference. He showed me Troll Hunter and said: “We’ve ripped you off a little bit but I’m sure you won’t mind because you’ve sold the business.” (I’d just sold NT Media to News Corp). Virtue Fusion (sold to Playtech) had already taken up the mantle with Bouncy Balls, which, without any action from News Corp at the time, set a precedent for real-money grid games becoming public domain. So coming back to the genre all these years later I wanted an angle to make it feel like it could stand up in the 2020s. Megaclusters in its early iterations was way too complex and ahead of itself; we wanted to make it a genredefining hybrid – a slot and a cluster game at the same time.

The symbols are tiny viewed on mobile. Was this game created for desktop/ tablet… and will there be a mobile version? Mobiles these days have incredible resolution and that has enabled us to fit a whopping 256 Megaclusters on the screen at the same time. Yes, they’re small, but they are crystal clear on the screen. We won’t be stopping there either as our filed patent goes from 2x2 to exponential. We’re working back from a high level of mathematical complexity, so we will inevitably go even smaller.

How does the player experience differ from Megaways? Megaways has always had an issue with being a little too overwhelming. Recalling a meeting in Vegas G2E 2016, revealing a Megaways game to a client from a certain company’s marketing department, they had a few spins and said: “There is no way on earth that’s going to catch on, it’s way too complicated!” That game was Bonanza and I guess the rest is history, but that is still an important message, as the customer is usually always right. Right? So with that in mind, Star Clusters’ gameplay is super simplistic. It holds the player’s hand from spin to spin, so the complexities are easily understood. From the first win, the pl ayer k nows where they are a n d wh e r e the format can inevitably take them.


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BIG TIME GAMING

GIQ Q2 REVIEW

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What do both mechanics have in common and what sets them apart? They are both packed with fun; players need to have fun, they need to be entertained and they need bang for their buck. Once the penny drops with Megaways, players see the potential of getting massively stacked adjacent symbols with the addition of up-rising multipliers. When the potential is realised, the Megaways format will always deliver the motherload. Star Clusters presents the opposite at first, with a 4x4 grid it seems like the game has no potential. When the first win happens and the symbols divide, the game then opens up and the Wild modifiers can take the pay potential to dizzying new heights. One thing we have concentrated on with Star Clusters is the overall vibe. The music is four-to-the-floor simplistic techno. However, the tones are put together on a Moog Modular synth, adding complexity to the beat, marrying with the simple/complex nature of the game. At the same time, we have built a light synth modulator into our code base that is triggered by the beats as they ebb and flow. Everything is driven by the spins, and when a win occurs the beat is mixed with overlays to heighten the sense of anticipation. The entire game explodes with light and colour to celebrate each win, as the player hits clusters on their way to trigger the feature. The feature then takes the game to a whole new level of game play sophistication.

Do you expect the game to be played by the same audience with the same results? Same average bet, session time, same average number of sessions per player? I think we will see slot fans and cluster pay fans merge together with this slot; it’s genre-defining in the fact that it’s truly hybrid. It spins in like a slot and then divides on cluster reactions. The new symbols spin into the gameboard like a slot but once all the bigger symbols are exhausted it becomes a tumbling symbol game.

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There is something for everyone, and not in a way that’s been over-processed or over-thought. It’s simplistic, elegant complexity at its finest.

Will you be licensing Megaclusters in the same way you licensed Megaways? Yes, we already have a number of key licensees under agreement.

Did you have any specific markets in mind when you were designing Star Clusters? I think we have proved with Megaways that ‘new’ has no borders; at the end of last year Megaways crossed the pond to become the most popular slot genre in New Jersey, beating the best-performing old-school mechanics by a magnitude of three in KPIs. Cluster games are not everyone’s cup of tea and have their popular jurisdictions. For example, Sweden has two grid games in the Top 30. The UK, on the other hand, has no grid games in the Top 30. So it does seem that grid games are more popular by jurisdictional locale – but I am hoping with something that leans into slots and has a different feel to standard grid games that we can break the jurisdictional divide, as we have with Megaways.

You mentioned another Megaclusters game due in December. What differences will that have? Do you have more games to release before then? Our next release takes the format in a slightly more complex direction and the theme is bang on, but I’ll save that for another time. The scope is most certainly 2021 for licensees, as they will want to take time to build something that will resonate with players.

Why jewels? A lot of our games feature jewels, including Extra Chilli, Millionaire, King Maker, Dragon Born and Bonanza. This is the first game since Dragon Born that has not featured our 9-A Royals. It’s funny, as a lot of reviewers when they score for graphics or have ‘pros and cons’ in our game reviews, they say, “Oooh they’re lazy just using Royals,” but in actual fact, every one of our Royals on every game is a unique design piece. In Donuts they represent fizzy soda, in King Maker stained glass, Extra Chilli has the gold that was stolen from the Bonanza mine, etc. We could not use the Royal

“The great thing about the industry now is that developers are taking innovation really seriously” Nik Robinson, Big Time Gaming

collection in this game, not because of size but because of the volume of symbols required. We still kept our purples as the top pay.

Tell us about the music. What inspired you? How important is music in slots and clusters games? I have a hand in all the sounds and music in our games, love it or hate it! I think it’s hugely important to get the vibe right. If you miss the mark then everything, even impeccable maths, can fall by the wayside. I don’t stick to a formula, I usually start working on the sound when the initial beta comes together. With licences like Danger I can take cues from the music, but in essence, it’s always a blank canvas with a splattering of BTG factory sounds, such as our feature bell and our 8-bit, big-win extravaganzas, that no one wants to hear but always love it when they do! I used a Moog on Star Clusters, which stands to reason, as any knob you twist can take you into an entirely new spectrum of sound – again, that too had to be tamed in its complexity. I’m really happy with how it turned out. The music in this case is really key to the flow of the game.

Similarly, how important is the design around the game to entrancing a player? Star Clusters looks simple and that’s the point. However, under the bonnet is a range of interesting lighting effects that pulse and modulate to the groove of the game, the high hats, and bass drum affects the background in a variety of ways, and the re-trigger dial has subtly beatcontrolled lighting built-in. The speed and pace of the game also accelerate as wins get bigger.

What game, mechanic or feature by another studio have you looked at and thought ‘I wish I’d thought of that’? The great thing about the industry now is that developers are taking innovation really seriously. Many providers are doing great things at the moment. One that stands out is Elk Studio’s latest engine that they’re using for IO and Cygnus – it’s a novel approach to the grid game format, using a gravity-based system. There’s no summit to innovation, you just have to keep climbing the mountain! n


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G A M ES

VIRTUAL SPORTS

VIRTUALS

KICK

OFF In 2007, virtual horse racing replaced the real thing due to the UK’s foot and mouth disease outbreak. Nineteen years later, Covid-19 is giving virtual sports another boost, writes Steve Hoare. Could the innovation forced on it by disaster herald a new beginning?

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VIRTUAL SPORTS REVENUE at market leader Inspired Entertainment is up over 100 per cent on what it was before Covid-19 hit. Kiron Interactive estimates online revenue growth of between 200 and 250 per cent. At Sportradar, the equivalent figure is 300 per cent, while at Playtech, coming from a lower base figure, it is understood to be around 400 per cent. It is worth putting these figures in context, says Sportradar managing director of betting and gaming Warren Murphy. He reminds us of three pivotal days – 13, 14 and 15 March, when one by one, almost every sporting event was cancelled or postponed. “In that period, we lost 97 per cent of our content,” says Murphy. “Normal traditional sports coverage just disappeared. Retail disappeared. It is easy to forget how severe it was for the industry.”

Kiron co-CEO Steven Spartinos points out that 70 per cent of his business comes from retail outlets. He is extremely grateful for the surge of demand from online operators. Existing customers of Inspired, Kiron and Sportradar immediately asked how they could increase their virtual sports portfolio, and new customers, who have previously been too busy with their core business to integrate virtuals, have been demanding virtuals to fill the gap left by real sports. “I have never seen anything quite like this demand from new customers,” says chief commercial officer Steve Rogers, who has worked at Inspired for over 20 years. Virtual sports is helping to fill a gap vacated by real sports, much as it did back in 2007, when UK horse racing was halted due to the foot and mouth outbreak. This time, however, it is not


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to find out whether it’s new players or existing players playing more. We don’t have the data yet but I guess it is a mix.” While virtual sports might fill the time for regular punters, until now they might not have appealed to the general public. However, both Inspired and Sportradar have moved quickly to release innovative new products that have grabbed the public attention.

The new Grand National

just horse racing that has closed down – it is everything. Suppliers remain as wary of negative press around the growth in revenue as operators. However, virtual sports is arguably a safer product than others. Spartinos says it is viewed by regulators as a soft product. It tends to be a low-stakes product. It is also a scheduled product, so the betting events come at a much slower rate than on-demand products such as slots or roulette. This is one of the reasons why lotteries are attracted to it. There is a hint here of the potential for virtual gaming to become a socially responsible mainstream product, but we will return to that later. “The level of adoption has surprised us,” continues Rogers. “We are trying GIQ Q2 REVIEW

Inspired’s virtual Grand National is actually in its fourth year but it has never had so much coverage. In 2016, Inspired approached the Jockey Club, which owns Aintree Racecourse, with a view to creating a virtual Grand National. “It’s unique,” says Rogers. “It has 40 runners and it has fallers and it’s a very long race. It’s quite different to what our standard virtual horse race looks like.” Filming at Aintree Racecourse took place throughout 2016 as Inspired created a virtual Aintree. It developed its horse algorithms, because the Grand National horses could not sprint for 10 minutes like in other races, and some fall. They might obstruct other horses or damage fences. All these events needed to be

taken into consideration. It also differed from other virtual races in being based on the odds but with an RNG-based element thrown in, to account for the random elements of a race. It took about a year to build and was first televised in the buildup to the real race in 2017. It was also staged in 2018 and 2019 – again being broadcast on national television. “It was not a betting product during these years – it was just a piece of light entertainment,” explains Rogers. Up until a few weeks before the 2020 race, that was the plan again. But on 16 March, when the race was cancelled, Inspired was asked about running a virtual race in place of the real one on 4 April, the day the race was scheduled to take place. Inspired consulted the Jockey Club, the Gambling Commission and the Betting and Gaming Council to find out how it could be turned into a proper certified RNG-derived betting event and show it on ITV1 at 5.15pm on 4 April. “It was a crazy three weeks where we pulled this thing off,” says Rogers. It was not live television, so a select few knew the result on the Thursday before the Saturday screening. All the technicians working on it were all locked down with nondisclosure agreements and the fact that the outcome was predetermined was displayed clearly on bookmakers’ websites – much as it would be for betting on the outcome of other recorded television shows such as Strictly Come Dancing or The Great British Bake Off. The end product was watched by 4.8 million viewers and raised £2.6m, which was donated to NHS Charities Together – a charity for the UK’s National Health Service. 25


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VIRTUAL SPORTS

“We have shown with the Grand National that if you build the theatre and the marketing, and you have the brand attachment then you can create something different,” says Rogers. “To raise £2.6m for charity for a 10-minute cartoon race shows the power of what you can do if you put all the aspects together.” Rogers says the phone has been pretty hot since the event, as racetracks and sports bodies ask whether they can have a virtual event to replace the postponed one. Inspired are reprising the concept for this summer’s postponed UEFA Euro 2020 football tournament, which was promoted heavily throughout May. Kiron is also preparing a virtual Euro 2020. “The concept is there to create a virtual summer of sport,” says Rogers. “That’s the plan.”

Infinite possibilities While Inspired plots its summer of sport, Sportradar is already playing out the football season with its brand new simulated reality product. “You would never normally get to do this product but we launched it in just 10 days,” says Murphy. “The only way we could do that was by downing tools on almost everything else and putting 26 people on this around the clock.” It was launched with the English Premier League, Spain’s La Liga and Germany’s Bundesliga. They are played out as live – albeit without graphics – at the time that the original games were scheduled for. The French, Greek, Turkish and Italian leagues have since been added – as has the UEFA Champions League. The first games were covered by 250 bookmakers, and punters seem to like it. According to Murphy, each game attracts the same number of bets as a regular game. That is not to say that it is bringing in the same revenue, but it performs as well. For some operators it has generated as much as 10 per cent of their turnover. “We have infinitely more data than almost any other company on sport worldwide – certainly for betting,” says Murphy. “We use our AI to mine into that and recreate the games with relevance to form, the strengths of the teams and to match flow to create a realistic match scenario.” I point out the unusual number of freak results in the first week’s games, but accept Murphy’s explanation that strange things happen. Liverpool fans will be pleased to know that after stumbling with a 2-1 defeat at Manchester City and a draw with local rivals Everton, their team wrapped up the simulated Premier League title with a 2-1 win over Aston Villa with eight games left to play. The simulated reality product has since been rolled out for cricket’s Indian Premier League (IPL). 26

The potential for this type of product tain bits of engagement are missing?” is almost infinite, with fantasy match-ups “Out of all the chaos there will be pockets between great teams of the past or a tenof opportunity,” concludes Murphy. “Our businis match between Roger Federer and John ness is betting and media. We supply a lot of McEnroe a real possibility. The style and skills global entities with their sports data and the of the players can be recreated engagement for their broadusing CGI, so you could watch cast channels. They are all the game. going to have a pressing need Inspired are pioneering this [to generate income]. It will crewith its V-Play NFLA Legends ate opportunity.” Football product, which will be Spartinos at Kiron believes released on bet365’s New Jersey that online operators had been site and its .com site shortly. slow to embrace the potential NFL Alumni (NFLA) raises of virtual sports prior to lockmoney for former American down. In some African retail Steven Spartinos, Kiron Football players, whose careers markets, virtual sports account might have been ended premafor almost 85 per cent of sports turely by injury, or who might betting revenue. The difficulty not have prepared themselves in securing broadcasting rights financially for life after football. for real sports – and the expense The game features 11 teams of them – makes virtuals a costof NFL legends battling it out. effective solution. For emerging So, for example, Philadelphia markets, 40-50 per cent is a more Legends might play Pittsburgh normal figure. But even in Italy, Legends. virtuals account for 20 per cent I n spi r e d fol lowe d t h i s of sports betting. up with a virtual Kentucky “It is a product that has been Derby featuring 13 previous overlooked by online operators. winners of the Triple Crown, Most sportsbook managers broadcast on NBC on 2 May, have ticked the virtuals box “Out of all the when the real race was supposed without promoting the product chaos there will to be run. Fans were be able to effectively,” says Spartinos. be pockets of place bets on Churchill Downs’ That has all changed with opportunity” KentuckyDerby.com website, Covid-19. The question is with all proceeds going to Covidwhether they will continue to Warren Murphy, 19 emergency relief efforts. do so with football leagues in Sportradar Again, we are reminded of Germany, the UK and Spain the industry’s ability to do good returning to action. Some things at a time when it desperately needs to might not, but there is also the potential for remind people of that. And the fact that national virtual sports to appeal to numerous crossover television stations such as NBC in the US and markets – the slots or lottery player who likes ITV in the UK are eager to broadcast these sport, for example; or gamers, who think the events shows the potential mainstream reach graphics are cool. of these products. “Your average gamer is not likely to be With the virtual Euro 2020 in mind, Rogattracted to a sportsbook that looks like an ers has doubts whether people would watch Excel spreadsheet. We have had to think care90 minutes of virtual sports, but a daily Match fully about presentation and we try to avoid of the Day-style highlights package could be a sports betting jargon – ‘first three’ instead of possibility. While the economic impact and ‘tricast’, for example – which is like a foreign political fallout from the Covid-19 crisis is hard language to most people,” continues Spartinos. to predict, the potential for these products “The virtual Grand National and Kentucky is tantalising. Derby have pushed the product to new audi“How long will it take before fans can go ences but the underlying message is that virtuback into stadiums?” asks Murphy. “What als are becoming more lifelike. The underlying will the television experience be like without product has embraced realism.” crowds? Sport without crowds is not the same. Whether online operators will truly The fans create atmosphere and encourage embrace virtual sports when real sports return engagement. What digital innovations will is the six million dollar question. If they do not, come in to increase engagement, because certhey might miss an excellent opportunity. n


TECHNOLOGY FIVE LAUNCHES Who launched what for whom and why?

UK media group Reach (formerly Trinity Mirror) relaunched its Mirror Bingo site in partnership with Guernsey-based platform developer Jumpman Gaming.

What’s the big idea? as over 600 slot games. The launch follows the recent resuscitation of Reach’s Star Wins and Express Wins iGaming brands, which have been shuttered since 2018. “Jumpman is a young, agile and very successful business in the gaming market, and its approach to player experience, enjoyment and loyalty really impressed

Playtech’s US debut with bet365 Playtech took its first steps in the US market after securing licence approval from the New Jersey Division of Gaming Enforcement (DGE) to power bet365’s online casino.

us,” said Reach head of betting and gaming Mark O’Donnell. “We’re delighted to launch Mirror Bingo with them, and also bring back old favourites Star Wins and Express Wins. Just like the media brands, each has a distinct style and audience, which means we can welcome players of different ages and interests.”

BetConstruct unveils social casino for Oklahoma Tribe BetConstruct launched its first social casino platform in the US for the Iowa Tribe of Oklahoma.

What’s the big idea?

What’s the big idea?

Playtech finally made its US debut by entering the regulated New Jersey iGaming market in partnership with bet365 and Hard Rock Atlantic City, with additional New Jersey clients to come. It is initially launching its online casino product in the state and over time will increase products on offer to include sports, platform and live casino. Playtech is also submitting further licence applications in other US states. “This is a major milestone for Playtech,” said chief executive Mor Weizer. “We are delighted to have met the requirements of the DGE and to be launching in New Jersey with our partner bet365. We see significant demand for the full breadth of our product offering.”

The landmark launch of the BetConstructpowered social casino app follows an integration with the loyalty programmes of the Iowa Tribe’s two land-based casinos in Oklahoma, Cimarron Casino in Perkins and Ioway Casino in Chandler, as well as its Travel Plaza venue which offers slots gaming. The app allows customers to become familiar with casino games offered in the Tribe’s land-based venues, while also enhancing the casinos’ relationships with customers through rewards and direct marketing tools. BetConstruct has also secured the opportunity to supply its sports betting platform to GreySnow Group, operated by the Iowa Tribe of Oklahoma, when regulations allow.

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FanDuel launches casino app in PA FanDuel Group has launched a new standalone mobile casino app in Pennsylvania’s regulated iGaming market

What’s the big idea?

Jumpman Gaming powers Mirror Bingo relaunch

Mirror Bingo has been in operation since 2008 via the Cashcade and Playtech platforms, and becomes the third of Reach’s media brands to launch on Jumpman Gaming’s platform. The new Mirror Bingo site gives players access to 90, 80 and 75-ball bingo games throughout the day, with jackpots of up to £1m, as well

IN THIS ISSUE 28 FanDuel, DraftKings, Playtech and more

Having initially been offered within the FanDuel Sportsbook app through its partnership with Boyd Gaming’s Valley Forge Casino, the operator has launched a standalone mobile casino app featuring a range of blackjack, roulette and video poker games, alongside titles from third-party providers including NetEnt and IGT. “We’ve seen great engagement and interest with our FanDuel Casino product among sportsbook customers to date and we view this product evolution as a next step to provide a full-service gaming experience to our Pennsylvania customers,” said FanDuel Group general manager of casino Jesse Chemtob.

DraftKings taps Sportradar for mobile live streams DraftKings expanded its partnership with Sportradar to include live streamed sports games within its mobile app.

What’s the big idea? Sportradar provides DraftKings with access to a host of official sports data feeds, including NFL, MLB and NBA feeds, for use across its sports betting and daily fantasy sports products. This new deal allows DraftKings Sportsbook customers to live stream games on mobile across all jurisdictions except Iowa, as long as they have funds in their account. At launch, the service included Korean Baseball and the German Bundesliga, with the service expanded as additional sports leagues resume, with most major sports having been suspended due to Covid-19. “With a focus on innovation, we are excited to further enhance our product offerings to include a convenient, state-of-the-art experience through live entertainment,” said DraftKings chief business officer Ezra Kucharz. “At this difficult time for sports fans across the nation, we have extended our partnership with Sportradar to bring customers the best inapp experience from the safety and comfort of their homes, and closer to the games and players they love.”


iLottery Now is the Time to Stay Connected Today more than ever, it’s vital to be where your players are, wherever they are. Scientific Games’ portfolio of iLottery products lets your players stay connected to each other and to the games they love.

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MARKETING FIVE BIG STORIES This quarter’s biggest marketing news Betsafe prepares for Kenya launch Betsson’s Betsafe brand prepared for its launch in Kenya with two new sponsorship deals with leading Kenyan Premier League football clubs. Bet High Kenya, which operates the Betsafe brand locally, has partnered Gor Mahia and AFC Leopards, replacing SportPesa as their sponsor, though the conclusion of the current 2019/20 season has been thrown into doubt by Covid-19, with Gor Mahia leading the table with less than 10 games to go. “We will be launching in the Kenyan market very soon and our top priority is to support Kenyan football,” said Tom Bwana, public relations and partner manager at Bet High. “Being a responsible gaming provider since the very beginning, we aim to bring more engagement and excitement together with Gor Mahia and AFC Leopards in the near future.”

Netherlands bans gambling ads before 9pm Gambling advertising in the Netherlands will be further restricted under new rules adopted in June by lawmakers. Advertising for licensed lotteries and games of chance in the Netherlands is currently prohibited on radio and television between the hours of 6am and 7pm, but will change according to product type. This will allow ads for lottery draws to continue to be broadcast in the existing time slot, while ads for instant lotteries, horse racing and sports betting, and casino gaming (including amusement arcades) will only be allowed between 9pm and 6am. The amendment brings advertising regulations for what are deemed higher-risk gambling products in line with those for alcoholic beverages.

ATG escapes Swedish fine ATG escaped with a warning and suspended financial penalty after the Swedish operator was found to have sent marketing communications to gamblers last year who had self-excluded using the national Spelpaus system. The operator also failed to include a warning about the minimum age for gambling participation on at least four occasions in late 2019 and early this year. The Swedish consumer agency set a fine of SEK4.5m on the operator, SEK3.0m for the breach related to opted-out consumers and SEK1.5m related to minimum age signposting. However, both fines are suspended and will only become payable if ATG repeats either of them.

Norway protects monopoly with ad restrictions The Norwegian government took further steps to try and protect the country’s gambling monopoly with new restrictions on gambling advertising by offshore operators, giving the Norwegian Media Authority the power to combat unlicensed online gaming operators, both on TV and the internet. The authority will be able to stop unlicensed gambling advertising from being broadcast into Norway by foreign satellite TV channels and impose a requirement on telecoms providers to display an illegal gambling warning message to Norwegian consumers who attempt to access offshore websites. Under Norwegian law, most forms of gambling are offered by monopoly operator Norsk Tipping, with the exception of horse race betting, which is a monopoly held by Rikstoto. 30

IN THIS ISSUE 30 Betsafe, ATG, the NFL and more 32 The future of conferences

NFL’s Broncos names first sports betting partners The NFL’s Denver Broncos agreed new sports betting partnerships with Flutter Entertainment’s FanDuel and Betfred. FanDuel will be able to use official Broncos marks and logos for use across its online sports betting and daily fantasy sports offering in Colorado, with the operator also benefitting from in-stadium signage and radio and TV advertising to promote its sports betting offering directly to fans. Ahead of its retail sportsbook debut at Saratoga Casino in Black Hawk, Betfred will open a sports betting lounge outside the Broncos’ Empower Field at Mile High stadium, and also gain access to in-stadium signage and other marketing opportunities.


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MARKETING CONFERENCES

The future of

conferences

There is little doubt that business development chiefs want conferences to come back. But do they want them back with all the restrictions that will come with a hasty return? And do they want so many? ON 10 MARCH, SBC Events optimistically postponed its CasinoBeats Malta event until June. It also postponed Betting on Sports America to the more realistic date of December 2020. A month later it accepted the inevitable and made CasinoBeats an online event. On 24 March, the day after Prime Minister Boris Johnson announced the UK’s lockdown, Clarion Gaming postponed ICE North America. It was due to take place in May but is now scheduled for 2021. Just three days later, SBC announced it would hold a Digital Summit across five days from 27 April – 1 May. Clarion soon followed suit with the announcement of a free digital version of ICE North America, as organisers hurried to offer participants an alternative to cancelled events. Since then, SiGMA Group rescheduled its Asia events SiGMA Manila and AIBC Manila to 2021. ICE Asia was postponed until 2021. The Indian Gaming event was postponed until further notice. The IAGA International Gaming Summit, G2E Asia, ASEAN Gaming Summit, East Coast Gaming Conference, the OIGA Conference and Trade Show all cancelled or postponed. Throughout all this, the big question was whether G2E would take place in Las Vegas in October. Along with ICE Totally Gaming in February (and to a lesser extent G2E Asia in Macau) it is one of the year’s flagship events. If you are only going to attend one, depending on your geographic focus, it would be one of these. G2E is organised by the American Gaming Association and Reed Exhibitions. The event seemed so far away they were understandably reluctant to cancel it. However, as lockdown continued into its third month it became harder and harder to envisage a scenario where the industry could meet safely and within guidelines. Las Vegas casinos reopened in June, but the organisers were still reluctant to commit to a physical event. So many questions remain unanswered. Would people travel 32

to the event from the US or from overseas? Would executives be too busy trying to save their businesses? Konami took the decision in May to withdraw from all trade shows until the end of the financial year and focus investment on its employees. Many will be feeling similarly, even if they will not say so publicly. One marketing exec confided that he hadn’t even thought about G2E, let alone ICE. Plans would normally be sorted for both by this time of year. The only thing that the organisers of ICE and G2E were willing to admit was that neither event would look the same as normal. What else could they say? Their businesses are in danger as much as any of their exhibitors.

Events go digital In the meantime, the digital events started to take place. On the surface, the numbers are impressive. The digital version of ICE North America is said to have attracted over 4,000 registrations from 558 companies, based in 85 countries around the world, and recorded over 7,000 visits to the site. The SBC Digital Summit in April claimed over 10,000 delegates. But were contacts made and were they meaningful? Among the handful of attendees Gaming Intelligence surveyed there was respect for how quickly SBC got their event up and running. One attendee says he made a few leads but not the suitcasefull he would normally at a real-life conference. Business development chiefs have had a busy lockdown as operators focus intently on their online operations, but there are drawbacks to doing everything on Zoom. “I believe in face-to-face contact, when you’re establishing a relationship,” says Continent 8 managing director Americas Nick Nally. “Once established, it’s easier to do a Zoom.”


MARKETING CONFERENCES

and how they deal with trade shows, but the “My area of business is new business,” says industry is changing. Red Tiger Gaming commercial director Chris The emergence of games aggregators means Looney. “The best business comes from the suppliers can get to know their customers betbest relationships, immersing yourself in the ter if they are closely aligned with the aggreoperator’s business.” gators. For an aggregator like Relax it might He cites a deal done with Swiss Casinos. make sense to bring all their supplier partners He met the team that were going to launch the together on one stand. Microgaming and Playland-based casino group’s online operation, but tech have done something similar – although it was not until visiting the land-based casinos they own the studios that they show off on their and getting to know the core business that a stands; they are not just partners. deal could be struck. “We haven’t typically done deals at trade “I don’t think you can replicate that relashows. At this stage of our growth it’s more tionship through Skype or Zoom,” says Loonabout enhancing the throughput of licensed ey. Looney and Nally both admit it is hard to content to known partners,” says Johnson. measure return on investment from trade “We are very active all year round – visiting shows. Looney describes it as “the unanswerour operators in Malta, Gibraltar and the US able question”. But suppliers will be looking largely, so our partners see us regularly and we in closer detail at the numbers – and particuaren’t reliant on trade shows.” larly the number of shows they visit and the He goes on to say that certain shows do offer number of employees they send. value. For example, the Latin A medium-sized stand at American or Tribal Gaming ICE would cost around £300,000, contacts made at G2E would be and then you have to consider “Every year I very difficult for a European other costs such as connectivity, have a hard time supplier to access from home. plus transporting and accomKollind says that ICE has modating 50 or 60 staff. That understanding why always been a tremendous will cost another £100,000. For we need to go to success and echoes Johnson’s the bigger suppliers it will be a all the events. It’s thoughts on G2E, but the £1m+. At a time when staff are the same people future of others must come into being furloughed or let go, that attending” question. becomes harder to justify – as Lars Kollind, Playson Konami recognises. Future plans “Covid-19 will change the Everyone welcomes a break from travelling. way we think about shows and the way shows Not only is it good for the planet, it has given are done. Sometimes it feels like there is a show everybody a chance to reflect, analyse and every other week. It is an important channel prioritise. And there are a lot of people doing for us. It’s still a good platform to launch prodtheir sums. ucts but do we need to go to so many?” asks “We had already taken a group decision not another seasoned marketing professional. to exhibit at every show this year,” says Looney. “It is over-saturated,” says Playson busi“We will have to look at the whole picture. Do ness development manager Lars Kollind. we do it the same way? I’m not sure.” “Every year I look at the iGaming calendar The event organisers try and reassure us and have a hard time understanding why we that although conferences will not be the same need to go to all the events. It’s the same people as previous years, every precaution is being attending.” taken to protect attendees. From hand saniSuccessful emerging suppliers such as Big tisers to a careful re-evaluation of layouts to Time Gaming and Relax Gaming have thus far allow for physical distancing and the provision refrained from spending anything of personal protective equipment. But how do on splashy stands but that might you greet somebody at your stand if your smile change as they grow bigger. is hidden by a mask and you are too scared to Suppliers at an earlier stage shake their hand? in their development are even If Covid-19 flips the world into recession it more loathe to spend money on will affect every business, and gambling indussmart stands. ReelPlay chief try conferences will be no different. There commercial officer David Johnwill be casualties. But for now the question son enjoyed a long career at remains: will G2E and ICE take place? Neither Cryptologic and NextGen/NYX Reed/AGA nor Clarion is willing to answer before launching ReelPlay. He that question just yet. n has seen how companies grow GIQ Q2 REVIEW

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LOTTERY FIVE BIG STORIES The five biggest news stories from across the lottery world Lottoland launches UK charity lotto LOTTOLAND LAUNCHED ITS first charity-focused lotto in the UK, with 20 pence of every pound donated to four charities – The British Red Cross, Hospice UK, Keep Britain Tidy and The Marine Conservation Society. The WinWin Charity Lotto costs £1 and offers a fixed jackpot of £250,000 for every draw. It is based on the popular French Lotto format, with draws taking place every Monday, Wednesday and Saturday. Five balls will be drawn out of a total of 49, with 10 bonus balls up for grabs. “We are delighted to be able to launch our charity lotto betting game here in the UK and are delighted to have these four fantastic charities on board, all of whom support amazing causes,” said Lottoland CEO Nigel Birrell. “The whole team at Lottoland are excited to see the launch of the Win-Win Charity Lotto. It’s something we’ve been working on for some time and absolutely feels like the right step for the business.”

“Win-Win Charity Lotto is something we’ve been working on for some time and feels like the right step for the business” Nigel Birrell, Lottoland

NeoPollard wins Alberta iGaming platform deal

IWG to adapt NetEnt games and expands in US

NEOPOLLARD INTERACTIVE ENTERED into a long-term agreement to develop a new online gaming platform for the Canadian province of Alberta. Available to Albertans over the age of 18 and located within the province’s borders, the platform will feature a suite of online casino-style games, live table games and a full sportsbook, alongside poker, bingo and lottery games. It will be integrated with the Alberta Gaming, Liquor and Cannabis Commission’s GameSense responsible gambling programme. “NeoPollard Interactive is honoured to be entrusted by AGLC to power its online gambling solution using our market-proven technology, services and games,” said NeoPollard Interactive general manager Liz Siver. “We are confident our partnership with AGLC will help generate revenues to benefit Albertans.”

IWG ENTERED A new collaboration with NetEnt to develop new games for the instantwin lottery market adapted from NetEnt’s slot portfolio. The first games are expected to be launched in Q3, and will be made available across IWG’s network of 21 WLA and NASPL lotteries around the world, as well as through NetEnt’s Progressive Play RGS platform. Meanwhile, IWG continues to expand its presence Stateside, launching its games with the Kentucky Lottery, and also securing new supply deals with the New Hampshire Lottery and Virginia Lottery, both through an integration with NeoPollard Interactive’s platform. IWG currently provides its online content to six US state lotteries following previous launches with the Georgia Lottery, Michigan Lottery and Pennsylvania Lottery.

GIQ Q2 REVIEW

IN THIS ISSUE 35 Lottoland, IWG, Neopollard and more 36 PA Lottery exclusive interview 38 SAZKA Group CEO interview

Virginia Lottery goes online… The Virginia Lottery has become the latest US state lottery to go online through a new NeoPollard Interactivepowered iLottery platform. The platform allows lottery players to purchase Mega Millions, Powerball and Cash4Life games online for the first time, as well as a range of online instant-win games. The lottery will release new instantwin games each month and also plans to bring other draw games online in the coming year. Virginia has had an IGT-powered MobilePlay app since 2016, allowing players to purchase subscriptions and manage their accounts via valottery.com. The app was developed to use a Bluetooth signal to place wagers via mobile device at a Virginia Lottery retailer, with work currently underway to update the app to support buying lottery tickets online.

… while DC Lottery brings forward iLottery launch The District of Columbia Office of Lottery and Gaming (DC Lottery) brought forward the launch date of its new iLottery platform in an effort to replace some of the lost revenue from sports betting and the slowdown of sales at retail locations. Citing the impact of Covid-19, the DC Lottery said that more people were staying home, causing a decrease in foot traffic at licensed retail locations, with a subsequent impact on lottery sales. As a result it has brought forward the launch of its Intralot-powered iLottery platform to October, having initially planned to go live towards the end of Q2 2021. The new website and mobile app will feature the lottery’s existing portfolio of draw games, as well as online instant win games, and is expected to generate around four to five per cent of total annual sales. The DC Lottery also expects to launch its GambetDC retail sports betting offering during the first half of 2021, after launching its online sportsbook at the end of May, despite a limited number of events on which to wager.

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LOT T E RY

PENNSYLVANIA LOTTERY

Building a billion-dollar Two years on from its launch, Pennsylvania Lottery executive director Drew Svitko explains how the state’s iLottery programme has been a beacon of light during the Covid-19 crisis. Interview with Kio Dawson IF YOU’RE LOOKING for a good news story, then look no further than the Pennsylvania Lottery. Amidst one of the worst global economic crises in recent times, it has reaped the rewards of a well-honed strategy that has seen the state lottery embrace technology and thrive in the iLottery space where only a handful of Stateside lotteries have ventured. It was just over two years ago that the PA Lottery went live with its eagerly-anticipated Scientific Games-powered iLottery platform. The hype was justified from the start. Shortly before the programme’s two-year anniversary in May 2020, total sales from digital lottery games crossed the $1bn mark. These are unprecedented numbers. Other state lotteries take note: it took them just over five months to get up and running. “Ours is a story that’s good for the industry to hear,” says executive director Drew Svitko, a Gaming Intelligence HOT 50 winner this year. “iLottery has been really great for us, especially during this time. It has definitely exceeded expectations. We’ve gone from zero to $1bn in play in less than two years and that’s impressive. I don’t mean that this is just impressive for us, it is impressive that the whole system worked and the players responded. And it has put us in a great position for the new post-Covid world.” Like every other retail business however, the devastation caused by the coronavirus pandemic has had an impact on PA Lottery sales, with retail sales down by around 25 per cent at the height of the crisis since mitigation began in March through early May. It helps, though, when you have an already successful online platform to fall back on.

Building infrastructure Prior to the implementation of Pennsylvania’s Covid-19 mitigation efforts, iLottery sales were averaging around the $12m a week mark. Within three months, that had risen to a weekly average of just over $20m, including a record $4.2m in one day. At this rate, it won’t be long until the iLottery platform hits $1bn a year in digital sales. 36

“It’s an area of growth for us and for the industry,” Svitko says. “It means that we’re meeting players where they are, which is online, and where they are spending money. But that said, we still care deeply about our retail partners because they still generate the majority of our sales. Retail is critical for us and we see our iLottery programme as a complement to that.” Svitko believes that the iLottery programme is ahead of where it was projected to be, possibly by more than six months. “We’ve been really pleased with how it has gone,” he says proudly. “Our good cause is supporting older Pennsylvanians, so this has absolutely helped us to continue to generate money for those programmes – at a time when retail was hurting during the Covid-19 crisis.” With the Virginia Lottery becoming the latest to move online in July, there are now 14 US state lotteries that have gone digital. Of these, only eight can offer online scratch card games (or eInstants), which are the most popular form of online lottery game sold in the UK and across Europe. “We believe in helping other lotteries, just like other lotteries helped us,” says Svitko. “The Michigan Lottery was the first US lottery to have a lot of success offering eInstant games and we really modelled our programme on the Michigan Lottery, and they were a tremendous help to us. If we can help other lotteries be a success anywhere in the world, we want to do that. If it’s good for one lottery, it’s good for the industry.” eInstant games account for the bulk of iLottery sales in Pennsylvania, as scratch card games do in the brick and mortar retail space. Across both of these channels, it is the statethemed games such as Pennsylvania Keystone Cash that have proved to be the most popular, with licensed branded games such as James Bond 007 also selling well.

“If we can help other lotteries be a success anywhere in the world, we want to do that. If it’s good for one lottery, it’s good for the industry” Drew Svitko, Pennsylvania Lottery


LOT T E RY

PENNSYLVANIA LOTTERY

iLottery business “Instant games are where the growth is, and it’s the same in the digital world,” says Svitko. “We added Powerball and Mega Million sales online in January and those are a great addition. We’re not selling nearly as much as we are with the eInstants, but those draw games continue to be popular and we are working to add more of our draw games in the near future to the online platform.” Incredibly, the lottery’s retail partners achieved the third best week of sales in the Lottery’s 49-year history at the beginning of June, after lockdown restrictions were eased in the state – higher than popular holiday week periods, including Christmas.

Cross-fertilisation To Svitko, these results show how the lottery has successfully integrated the digital and retail businesses by using promotions to drive online players into stores, and vice versa. An exam-

p l e m i g h t b e s o m e o n e p l ay i n g a n eInstant game online, the lottery sends a coupon at the end of the session that encourages players to buy the retail version of the game at a discount. There are also funding mechanisms for the iLottery that can be bought at retail and give players a better deal. “That’s been really successful for us,” explains Svitko. “We get coupon redemption rates of 25 to 30 per cent for that kind of coupon, and that high redemption rate has been a success for us and good for the retailers as well.” The PA Lottery is proving that a crossplatform collaboration between retailers and iLottery doesn’t just work, it thrives. It is the perfect showcase to debunk the beliefs of those who claim that taking lotteries online will cannibalise retail sales. “It’s actually the opposite,” argues Svitko. “We have data that proves that iLottery is helping retail, because of those bounceback coupons. We are giving retailers a reason to sell, and we’re giving players a reason to walk into stores to buy that voucher, so it’s really a win-win situation. That’s

certainly something that’s been a big part of our plan and will continue to be. “We have almost 10,000 retailers, and the average retailer is doing close to $5,000 a week, so I don’t think iLottery will ever overtake retail. But that’s OK. That’s not the goal. The goal is to have a product portfolio and a system that drives as many people to our product as we can. We want to be convenient, relevant, ubiquitous and modern. The most responsible thing we can do is to generate our incremental sales from a new audience. It’s sustainable, it’s good government and it’s good business practice to expand our audience.” As the world adapts to the post-lockdown landscape, Svitko remains confident that iLottery sales will continue to grow, albeit at a lower rate than recently. “It’s hard to say. We don’t really know what the future holds but I wouldn’t expect it to be the same, I would expect it to soften a little bit,” says Svitko. “We signed up a lot of new registered players and that is going to result in continued growth. It really depends on what the economy looks like. That means the global economy, and how retail in general looks like in the coming months.” In other words, the PA Lottery has done all it can to be well positioned for the future, whatever that entails. It has the tools, the expertise and the partners, and is in the best place it can be to ensure that the lottery continues to responsibly generate money for older Pennsylvanians. n

Pennsylvanian iLottery offerings for desktop, tablet and mobile GIQ Q2 REVIEW

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A digital future for SAZKA Group SAZKA Group CEO Robert Chvatal explains how Covid-19 has acted as a catalyst for the company’s accelerated online growth THERE REMAINS CONSIDERABLE uncertainty regarding the Covid-19 pandemic and the economic recovery in Europe, but changes in consumer behaviour have allowed SAZKA Group to develop its product offering and increase its customer base faster than would have otherwise been the case. While first quarter gross gaming revenue (GGR) declined by 11 per cent to €405m as the coronavirus negatively impacted retail sales in Italy, Austria and Greece, the company’s online channels performed well across all geographies, with record active user and customer acquisition numbers. In the Czech Republic, active online players were up by 73 per cent year-on-year in April, while new player registrations soared 144 per cent. This has pushed results from the online channel to around 30 per cent of total GGR since the beginning of the year, reaching as high as 40 per cent in recent weeks. In Greece, active players were up 30 per cent between April and May, while the win2day.at platform in Austria experienced “very strong” online growth, supported by targeted marketing. “Our group has not been impacted exactly in the same fashion across all five geographies that we operate in, simply because in the Czech 38

Republic and in Austria our retail network was not forced to be shut down completely, whereas in Greece and in Italy, retail businesses could not sell lottery products,” says Chvatal. “The more important question is how much we can come back to normal business. With the reopening of agents in Greece, we have seen a robust comeback of the business that is not fully up to pre-Covid levels, but we are close to it.”

Acquisitions and new products With OPAP’s land-based portfolio of lottery, sports betting and VLT products completely shut down during the Greek lockdown, for the first time in history the company was lossmaking. The restrictions on its physical network however provided a step-change in its growing online platform, driven by the launch of online


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How Covid-19 impacted SAZKA Group’s operations CZECH REPUBLIC The government implemented restrictions on movement on 16 March. SAZKA’s retail points of sale network for lottery products continued to be resilient during the period before the removal of restrictions, which began on 20 April. In earlier weeks, 70 per cent of SAZKA’s retail network were still able to provide its products to customers.

GREECE Having been shuttered since 14 March, OPAP stores reopened on 11 May, while its PLAY gaming halls reopened on 8 June. Activities were subject to certain restrictions, including social distancing and a prohibition on chairs. Some of these restrictions have subsequently been relaxed, including the removal of the prohibition on chairs from 6 June. OPAP also expanded its game portfolio with virtual sports launched in March and online casino in April.

AUSTRIA In coordination with authorities, Casinos Austria decided to close all its casinos in Austria, while its subsidiary Austrian Lotteries decided to close all its gaming halls on 13 March. The casinos and most of the gaming halls were reopened on 29 May, subject to certain social distancing restrictions. Most of Casino Austria International casinos across Europe have also reopened.

ITALY The Agenzia Dogane Monopoli (ADM) suspended sales of LOTTOITALIA’s 10e Lotto, Millionday and Lotto games through its retail network from 31 March. Sales of the 10eLotto and Millionday games restarted on 27 April, and Lotto game sales resumed on 4 May. The monitors in points of sales on which 10eLotto results are displayed were allowed to be turned back on from 28 May.

“That’s great news for us and a sign of virtual sports in March, online casino games hope for other markets,” says Chvatal. “This in April (including live dealer games) and the effort that’s been there since 2016, when online introduction of a new draw for Joker, the jackregulations came into force, is continuing to pot lottery product. bring rewards.” “There was really a sluggish ramp-up in While SAZKA Group owns a number of Greece when it came to online, but all of a sudlottery brands which are well known in each den there was a strong catalyst, and in a few market, Chvatal is trying to position the weeks we were able to open up our digital entercompany more as a digital gaming entertainment hub in Greece,” explains Chvatal. tainment company, rather than just a tradi“The initial weeks have been very encouragtional lottery which relies on tobacconists, ing, with active users on a monthly basis reachsupermarkets, petrol stations and other retail ing 120,000 in Greece, having been around the points of sale. 10,000-20,000 mark prior to Covid-19. “The lottery brand allows you to have “This new situation has allowed us to kickthe credibility and trust among people, and start our online offering, and I think this will you should not misuse that trust by being stay. While, for example, Joker online was previtoo aggressive, so we are trying to do more ously around two to three per cent of revenue, in the casual space,” he explains. “We prefer all of a sudden it’s now up to a 10 per cent share to have quite a vast customer base betting of this game’s revenue. It is not at the same levels small amounts, rather than as in Austria or Czech Repubrelying on a few high rolllic, but it’s a start.” ers. That’s the position that This online growth will be “We prefer to have SAZKA Group’s companies supported by OPAP’s recent all have. That is something acquisition of a 51 per cent stake a vast customer in Greek and Cypriot operator base betting small that we believe in that is a Stoiximan, with OPAP set to amounts, rather calling card for all the people increase its shareholding to 85 than relying on involved in the business, the per cent subject to regulatory a few high rollers” regulator and the consumer, approvals. Stoiximan posted as well as shareholders. Robert Chvatal, SAZKA a 63 per cent increase in GGR “My background is in telduring Q1, and during the Covid-19 situation ecommunications, which is becoming more continued its strong performance. like utilities, and gaming if anything is mov“OPAP as a brand, which is a synonym ing in the opposite direction. It’s changing so for gaming in Greece, is able to show that it fast – you have to come up with new games is very serious to cement its position in the while the whole ecosystem is changing and the Greek market by purchasing a majority stake preference of consumers is changing. In TelCo in Stoiximan, which is the online sportsbook you just have your smartphone and you expect market leader,” says Chvatal. “These guys have that it works.We are able to offer new employa startup mentality which has built up quite a ees such a fascinating space to work and our formidable presence and market position in customers so many exciting new products.” Greece. We share with them the belief that this SAZKA Group remains interested in the is a growing piece of the gaming market. next licence to operate the UK National Lot“OPAP and Stoiximan will be able ramp up tery, although the competitive bidding process its strategy in the online sportsbook and casino has been delayed due to disruptions caused space by having both Pame Stoixima, which is by the pandemic, including the UK’s current OPAP’s original brand, and Stoiximan, which is two-week quarantine for anyone entering the the new brand. We think this is good news both country. for consumers as well as for investors in OPAP.” “It’s not exactly the most convenient environment to do business now,” adds Chvatal. “This is unfortunate. We are aware of the Reinventing lottery fact that the UK Gambling Commission has While Chvatal expects full-year results for rescheduled the whole timeline by three OPAP and Casinos Austria to be impacted months and we still believe that SAZKA Group by Covid-19, its Czech business has been less can be a very relevant challenger in the bid. impacted as it was able to shift customers from “Anybody outside the UK will find it retail to online and attract new online customextremely difficult now but it does not deter us ers. In addition, at least 70 per cent of the counfrom trying. We will wait for the final invitatry’s point of sales network remained operation to apply. From there, we will see whether tional throughout the period, with recent sales we will put up a very competitive bid.” n close to or above pre-Covid levels. 39


ON THE FOLLOWING PAGES 42 Are Covid-19 rules here to stay? 46 Has Germany nailed the regulatory conundrum? 50 Ghost games highlight integrity risk 55 Netherlands postpones new regime 56 Ukraine ready for regulation 58 DoJ draws battle lines over Wire Act

LEGAL

Regulation: With most countries experiencing some form of lockdown, regulators have had an eagle eye on the industry. In addition, new regulatory regimes are coming soon in Germany, the Netherlands, Ukraine and the US. Here, we give a snapshot of the latest regulatory developments before going in depth on some of the biggest issues facing the industry over the page Australia Australian independent MP Andrew Wilkie proposed a ban on social casinos in the latest attempt by the anti-gambling campaigner to restrict Australian consumers’ access to gambling services. The Interactive Gambling Amendment (Banning Social Casinos and Other Measures) Bill 2020 was introduced in June and seeks to amend the country’s Interactive Gambling Act 2001 to make it illegal to offer social casino services to Australians. The bill would also give the Australian Communications and Media Authority (ACMA) the power to apply for Federal Court injunctions requiring internet service providers to block domains that are providing prohibited interactive gambling services or social casino services in Australia. Since the ACMA made its first blocking request with ISPs last November, 35 illegal gambling sites have now been blocked. In addition, more than 100 illegal services have pulled out of the Australian market since the ACMA started enforcing new illegal offshore gambling rules in 2017.

Canada Efforts to legalise single-event sports betting in Canada are beginning to gain traction after the major North American sports leagues reversed track to support the move. The Canadian Gaming Association has long called for single-event sports 40

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betting to be legalised and lawmakers have previously progressed legislation through the House of Commons, which ultimately failed to pass the Senate. This was due in part to opposition from some North American sports leagues, who previously argued that single-event betting would cause irreparable harm to their games. Those leagues have now written to the Canadian government, warning that maintaining the prohibition on single-event sports betting poses a risk to consumers and the integrity of sports. The letter by the National Basketball Association (NBA), National Hockey League (NHL), Major League Baseball (MLB), Major League Soccer (MLS) and Canadian Football League (CFL) states that sports betting gives fans another exciting way to engage with the sports they love, and urges prompt action to “make this a reality”.

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to hold two special draws each year for the next two years. The bingo regulations allow bingo cards to be sold in retail locations and draws conducted online, while operators can also offer live casino games from casinos or studios located within Colombia or overseas, subject to the certification of games by an approved testing house.

Colombia Colombian regulator Coljuegos approved changes to regulations to allow licensed operators to add instant-win games, online bingo and live casino games to their customer-facing offerings. The addition of the new products to the regulated gambling market aims to help the gaming industry recover from the impact of Covid-19, while boosting funds for the country’s healthcare system. The regulations allow instant-win games to be sold online and in retail by both lottery and gaming operators, who will also be allowed

France France’s new gambling regulator L’Autorité Nationale des Jeux (ANJ) officially took over from ARJEL in June with a significantly expanded regulatory scope and enhanced powers. Led by president Isabelle Falque-Pierrotin, ANJ was established last year under amended gambling legislation to enable the regulator to supervise all segments of the French gambling and betting market, including online, at points of sales and at racecourses. At its first meeting in 40


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June, the ANJ set out its objectives, which include the prevention of excessive or pathological gambling and protecting minors; ensuring the integrity, reliability and transparency of gaming; preventing fraudulent and criminal activities, as well as money laundering and financing of terrorism; and ensuring the balanced, fair development of various types of games, in order to avoid any economic destabilisation.

Norway Facebook removed 36 pages belonging to six iGaming operators accused of targeting Norwegian consumers without a local licence. The social media giant removed the pages belonging to Coolbet, ComeOn, Guts, Norgesautomaten, Vera&John and Pokio, after being notified by Norwegian regulator LotteritilGIQ Q2 REVIEW

synet that the pages promoted unlicensed gambling, in breach of Norwegian law and Facebook’s own regulations, which require advertisers to hold an appropriate licence. The regulator is also increasing its enforcement action against unlicensed advertisers next year using new powers under the country’s amended broadcasting act, which comes into force on 1 January 2021. Meanwhile, Kindred Group lost its appeal against the regulator’s decision to force the operator’s four brands from the market. Lotteritilsynet issued the withdrawal order last year against Kindred subsidiary Trannel International, which operates the Unibet, Maria Casino, Storspiller and Bingo sites, for targeting Norwegian consumers from Malta without a local licence. The Lottery Board concluded that the decision was valid, and that since Trannel International did not have a licence from the Norwegian government to offer or market its games in Norway, it must withdraw.

The Gambling Commission opened a public consultation on changes to the way operators treat high-value customers (HVCs), aiming to address two issues relating to their engagement with gambling products through spend or frequency, and the disproportionate value of HVCs to licensed operators. The launch of the consultation follows collaboration between the industry and regulator, and has seen an industry working group led by GVC Holdings and the Betting and Gaming Council develop a draft voluntary code for HVC. This requires operators to undertake full customer assessments before offering any HVC incentives. It also requires licensees to maintain full audit trails relating to their HVC reward programmes and prohibits them from linking HVC team remunerations to an individual’s loss or spend, with players under the age of 24 ineligible for participation.

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s the Covid-19 pandemic forced governments around the world to shut down their economies, the gaming industry found itself in a difficult situation. Wit h casi nos, arcades, kiosks and high street betting shops forced to close and all sport cancelled, staff were furloughed and customers were locked out with nothing to bet on. But there was little sympathy for operators because, home and abroad, the online industry was cast as a malevolent beneficiary of the crisis – preying on those stranded indoors, who campaigners feared would be sucked into online gambling. The worry was, as analyst Jonas Amnesten from RedEye puts it, that “a more isolated society would increase problem gambling”. Headlines focused on the harm that gambling would do during lockdown, rather than the impact the pandemic was having on the industry. As David Clifton, co-founder of the Clifton Davies Consultancy, specialists in gambling law and regulation, points out: “Predictions of a rapid increase in both the numbers of people gambling and in problem gambling rates have not been realised.” But, he adds: “That has not stopped the industry’s opponents from demanding more restrictive regulation.” Indeed the crisis ushered in strict new guidelines for gambling firms in the UK and across Europe, the effects of which will be felt for years to come. Yet many have been selfimposed – and while it seems the coronavirus will have a long-lasting impact on the industry, particularly in relation to how it markets itself and communicates with customers, it has also given operators the chance to show that they mean business when it comes to social responsibility. And there could even be other, unexpected, benefits.

The reaction The crisis unfolded against a backdrop of increased scrutiny by the media and regulators – and in many countries there was swift action to stop the perceived threat. Latvia even went as far as suspending the licences of all gambling operators for two months, essentially shutting down the industry. Elsewhere regulators moved to stem player losses. Belgian regulators announced a deposit limit of around £450 a week on locally licensed sites, while Finland introduced daily and monthly loss limits for online games run by state operator Veikkaus. The biggest headlines were generated by Sweden, which proposed strict new regulations, with a £400-a-week deposit limit, curbing bonuses to less than £10 and imposing time restrictions for players, causing consternation among operators – and raising questions about the motivation behind the measures. For others the focus was more on marketing. In Spain there were emergency restrictions on advertising “to prevent bookmakers from doing business with people’s concern and anxiety”. Regulators made it very clear that the industry was being watched like never before. The Malta Gaming Authority told operators that any advertising that contained “direct or indirect reference to Covid-19, or any related circumstance, would be considered to amount to a breach” of the MGA’s Commercial Communications Regulations. Even in unregulated markets there was a reaction. For example, the Netherlands, which will begin issuing iGaming licences from next year, warned that any operators found to be taking advantage of the crisis would have their cards marked. Any operator promoting what it called “a corona-free offering” would be in its sights, it said, warning: “Parties that use this type of practice can be assured that this will weigh

heavily in a possible application for an online gambling licence.” In Britain, the UK Gambling Commission was quick out of the blocks. Even before lockdown was officially imposed at the end of March, chief executive Neil McArthur had warned licensees to be “very mindful” of the risks. And he made it “absolutely clear” that consumer protection, responsible marketing and compliance were now critical, stating that the UKGC would “step in immediately” at the first sign of “irresponsible behaviour”.

Industry responds But the industry has been far from irresponsible. In March, as the continent went into lockdown, the European Gaming and Betting Association (EGBA) ordered operators to be “socially responsible” and laid out guidelines for advertising and customer care during the crisis to encourage safer gambling. In April it published the first pan-European Code of Conduct on responsible advertising for online gambling which, it says, sets out “long-term standards for gambling advertising content in Europe and complements EGBA’s more immediate efforts to promote responsible gambling advertising during the coronavirus”. In many countries the new industry guidelines were stricter than those imposed by the state.

The UK pulls all ads The UK betting industry, which has become used to strong words from regulators, also took steps. The recently formed Betting and Gaming Council (BGC) says it “acted swiftly to protect the minority who are vulnerable or at risk” during the crisis. Writing on the PoliticsHome website, chief executive Michael Dugher said: “From day one, members of the BGC substantially

Are Covid-19 rules  Concerns about locked-down players playing too much have forced regulators to issue emergency regulations, but will the regulations endure after lockdown ends? Jon Harwood reports 42

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it has seized the initiative and taken the chance increased safer gambling messages across to prove its maturity. all our platforms and introduced a 10-pledge “Much of what’s been done was volunteered action plan. This sets out a series of measures by the industry. As a whole, the industry undersuch as heightened monitoring of accounts, stands that much of this is permanent – it’s part identifying changes to patterns of play and of the social compact,” he says. spend, as well as increasing interventions to “The regulators in the UK have been saying restrict or block accounts where the customer that the operators have to do better, but without might be at risk.” much clarity. Meanwhile the operators have Its members also pulled all TV and radio been saying, ‘Tell us what to do and we’ll do it.’ ads for six weeks and longer-term measures But in this situation, it has been down to the were introduced. operators to decide what is appropriate.” “Going forward, our members have agreed Lawyer Clifton believes the industry that at least 20 per cent of their TV and radio deserves much more credit than it has got for its advertising will be safer gambling messages,” response, but notes: “A story of personal traga BGC spokesman says. “As well as a ban on edy arising from gambling related harm will gambling with credit cards, we have introalways stand a better chance duced strict new age and ID of making the headlines verification checks and are than a story about higher providing additional fund“A story of personal self-regulatory standards of ing for research, education tragedy arising the type that BGC members and treatment.” from gambling will have been promoting.” It added that it was eager always stand a better to engage with the government over the long-awaited chance of making the ‘Not enough’ review of the Gambling headlines than a story In some parts of Europe pledges by operators to Act. about higher selfGVC, Britain’s bigregulatory standards” reduce marketing efforts have “not been enough for the gest bookmaker, notes David Clifton, Clifton Davies authorities”, notes analyst that the UKGC has Consultancy Jonas Amnesten of Redeye. fai led to f ind eviSweden’s reaction stands out. dence of increased Although it has been liberal in how it reacted to problem gambling during lockdown, the pandemic, refusing to impose a nationwide but still says it “strongly endorsed its lockdown, the iGaming industry has come in for additional guidance to the industry, special treatment. focusing on protecting customers”. That is despite the fact that, as Amnesten Its spokesperson also points out that rathpoints out, “online penetration was high er than exploiting the situation “our people in Sweden already before the coronavirus, have been working tirelessly to help the local and society has been open and operational communities in which GVC operates”. It has [so]… online gambling has not been substandonated food, sponsored medical equipment, tially boosted.” organised charity poker tournaments and conIndeed, in mid-May – before the restrictributed financially to charities. It is not alone. tions came into effect – the country’s regulator, The UK industry’s response has impressed Spelinspektionen, noted that online gambling Charles Gillespie, founder and chief executive was actually declining. of the affiliate Gambling.com Group, who says

here to stay? GIQ Q4 REVIEW

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Covid-19 lockdown stats

Anti-gambling campaigners and politicians claim that lockdown will increase problem gambling, but do the stats back that up?

292% Increase in time spent on adult websites

179%

Increase in traffic on gaming platform Twitch

51%

Increase in use of streaming sites

50%

Increase in number of online gaming sessions lasting more than one hour

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Amid the scramble to protect players, Charles Gillespie of Gambling.com Group points out a fundamental and easily overlooked truth: “Gambling is down. People have lost less money to gambling during the pandemic – that is indisputable.” With shops shut and no sport to bet on that makes sense – but the predicted surge in online gambling has also failed to materialise. A UK study by online research company Gener8 found that on the day that the UK lockdown was announced there was a 292 per cent increase in the time spent on adult websites. Gaming platform Twitch had 179 per cent more traffic than usual two weeks into lockdown, while online video gaming sites saw an increase of 98 per cent when lockdown began. Streaming sites also have seen an increase of 51 per cent. By contrast, the amount of time spent on gambling websites was down 69 per cent, it found. Only travel sites fared worse. The UKGC has understandably been monitoring the situation under lockdown and reported that the number of “active” UK gambling accounts actually fell in April, mainly because of the lack of football and horse racing to bet on. But in its June update on the impact of Covid-19, the UKGC admitted: “The lockdown period does not appear to have attracted many new consumers to gambling.” Its polling found that in the first four weeks of lockdown only 0.2 per cent of adults took up gambling, while two per cent stopped.

However, the concern among anti-gambling campaigners was that established players would increase their play – and here the picture gets more complex. For example, the UKGC found that a majority of players who had participated in three or more gambling activities over a four-week period claimed to be spending more time or money on one or more of those activities. Session length was held up as another metric. While the average length of a gambling session was 22 minutes in April 2020 compared to 26 minutes in March 2019, the number of sessions lasting more than an hour was up by around 50 per cent. So, while it is important to be vigilant, the data suggests there has been no clear surge in online gaming.

And restrictions on how the Swedish industry is allowed to sell itself could backfire. Henrik Tjärnström, chief executive of Kindred Group, called the government proposals “an open invitation to illegal gambling sites”. Long-term, a lot rests on whether that turns out to be the case, says Amnesten, who says there is a “clear risk that the authorities will try to maintain these new restrictions if they see that they work and do not lower the channelisation”. However, there was encouraging news from Spain, where emergency restrictions on advertising were rescinded in early June as the country emerged from lockdown, allowing operators to continue with their marketing efforts – albeit overseen by the new EGBA guidance. And in Latvia, the suspension of all gambling licences has been lifted after two months, proving that even the harshest of measures can be reversed. What is undeniable is that the pandemic has added impetus and urgency to efforts to promote responsible gaming. The timing may be a coincidence but it’s illustrative that France’s new beefed-up gambling regulator, the ANJ, which has the authority to instruct an operator to withdraw advertising, came into being in June just as the crisis began to ease. “I believe the ground has been shifting for some time now on what is and is not acceptable,” says Clifton. “A direct consequence of that can be seen in gambling operators collaborating with quite evident improvements in regulatory standards arising from that.” But he adds: “The Covid-19 crisis has played into the hands of the industry’s opponents who

Are channelisation fears justified? Sweden leads the way in ushering punters towards the black market, but others might follow

Charles Gillespie, Gambling.com

For many, the biggest risk from Covid-19 related action concerns channelisation – the degree to which consumers gamble with operators licensed within their jurisdiction. In Sweden, and elsewhere, critics have claimed measures designed to safeguard players will simply prompt them to head to the black market – and it is already estimated in the Swedish

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have been able to dismiss statistical evidence of no increased rates of problem gambling with the argument that only fundamental reform of gambling legislation will bring about the changes that operators are not prepared to self-impose.” That sentiment was echoed by BGC chief executive Dugher, who says: “I expect prohibitionists to keep shifting the goalposts and to keep using Covid as their opportunity to kick the industry. But thanks to the action we have taken, standards are actually on the up and fears have proven unfounded.”

“I expect prohibitionists to keep shifting the goalposts and to keep using Covid as their opportunity to kick the industry” Michael Dugher, BGC

Unexpected benefits There have been some unexpected push-backs against the regulators. In Italy, for example, Serie A football clubs pleaded with the government to relax a blanket ban on gambling ads and sponsorship imposed in 2018 as struggling clubs, forced to play behind closed doors, tried to claw back the estimated £90m a year the ban will cost them. And one country where the virus could have a big long-term impact is the US – where many states have been reluctant to embrace iGaming, while at the same time relying on gambling for tax revenue. Gillespie of Gambling.com Group notes: “States that have regulated online gaming are giving themselves a pat on the back.” In places like Pennsylvania and New Jersey iGaming revenue soared during April and May. Overall revenues were still down, but the online take at least cushioned the blow. States that do not allow iGaming may now be casting envious glances in their

online casino market the channelisation rate could be as low as 72 per cent. David Clifton of Clifton Davies says: “Concerns about channelisation are entirely justified. Recent independent research has shown that statistics used by the Swedish regulator, and relied upon by the Swedish government, have considerably underestimated the rate at which licensed operators are exposed to very significant competition from unlicensed providers. “If the Gambling Related Harm All Party Parliamentary Group has its way in the UK, its clear aim to provide further protection to problem gamblers is likely to backfire, with greater numbers resorting to black market operators. That is a message that the industry has to drive home forcibly in the coming months.”

GIQ Q2 REVIEW

direction and realising that online gambling does, after all, have a role to play. And that could also have an impact on the way sports betting is rolled out in those states yet to legalise it. Gillespie concludes: “The states that don’t have iGaming have seen their tax take vanish. It’s zero. Who would have thought it would take a global pandemic to bring US state regulators into the modern world.” n

In Sweden, it was not just the industry but also the regulator Spelinspektionen expressing concerns about the the proposals announced by health and social affairs minister Ardalan Shekarabi. Following the outcry, restrictions were amended to cover only online casino games and slots, with horse racing and sports betting exempted. The date of implementation was also put back until July, but the measures are expected to remain in place until the end of the year. Swedish trade association BOS was quick to claim the revised controls were still flawed, and skewed in favour of the government. “It is obvious that the government’s measures are not intended to improve consumer protection, but instead to provide competitive advantages to the gaming

Henrik Tjarnstrom, Kindred

companies in which the government has interests,” it claims. The timing also raises the question of whether the measures are coronavirusspecific at all. “They have got it completely wrong,” says Charles Gillespie of Gambling.com Group. “It’s a case study in how not to do things – a car crash.” He says the industry in Sweden is being used as a “political football” and adds: “There doesn’t seem to have been any meaningful analysis of what they are trying to achieve – it’s just going to drive everyone to the black market. “They won’t even have a majority of the market to regulate. You can’t regulate gaming if you can’t control it. You can’t completely alienate the consumer and the industry.

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Has Germany finally found The false starts continue to plague its progress, but Germany has a new State Treaty. Germany’s lawyers predict its final form. By Scott Longley CERTAINTY OVER THE German regulatory regime has been a long time coming. Like a cargo barge making its stately progress down the length of the Rhine, the fourth German State Treaty on Gambling is steadily moving towards its final destination, with its latest port of call being the European Commission in Brussels. The notification procedure in mid-May was not the end of the line; the Treaty must still go through the final ratification process by Germany’s 16 states. But it does mark what might be seen as the point of no return. Thomas Dünchheim, partner at Hogan Lovells in Düsseldorf, points out that the appetite of the European Commission to flex its muscles over gambling affairs has diminished, following the announcement in December 2017 to limit the level of monitoring of regulations in member states. “It is likely that the EU Commission will limit itself to a very general commenting,” he said. “In this respect, the EU Commission will certainly focus on the legalisation of nationwide online casino games introduced by the draft Treaty.” Christoph Engelmann,

counsel with DLA Piper in Hamburg, agrees, suggesting that even if the Commission or a member state such as Malta is critical of the Treaty as proposed, he would not expect more than a few “clarifications or editorial amendments” to be made. “How the regulatory regime will loo k has already been decided and this will not change substantially,” he adds. Moreover, the German authorities also have form when it comes to ignoring Commission critiques. “Even if the European Commission does raise objections in a reasoned opinion (as expected), it is not very likely that the German states will make any material changes,” says Martin Arendts, attorney at law with Arendts Anwälte. “If you look at the Interstate Treaties 2008 and 2012, Germany did not care about the objections voiced by the European Commission. Infringement procedures were initiated, but led to nothing.”

A new way forward The Treaty as proposed in January, which now looks almost certain to come into force in July 2021, was largely as expected with regards to its provisions around deposit limits and in-play betting restrictions, although it did contain some surprises, particularly with regard to the licensing of online gaming. But areas of contention remain. While

the regulation of gaming has been welcomed by the German Sports Betting Association (DSWV), which includes bet365, Tipico and bet-at-home among its members, it appears unnecessarily convoluted. The rules around simultaneous play and the cool-down period necessary when switching from one product to another are burdensome. “All these regulations will make it difficult for licensed operators to come up with a competitive offer versus black market operators,” says Frank Hesse, gaming and marketing consultant and managing director at sports marketing agency Sportcampo in Munich. As with the restrictions on marketing, the dual licensing structure for table games and slots appears to be designed to appease incumbent gaming interests. “The German casinos have pointed out several times that online casinos without a German licence, for example, are illegal – and also the advertising for them,” says Otto Wulferding, chief executive of the German Gaming Association (DSvb). “For this reason, German casinos have long been demanding that applicable law be enforced and apply to all providers. The new law is the necessary basis for adequate, overdue regulation of digital providers, too. It can ensure more fairness in the market and create more legal

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an adequate State Treaty? security for players.” More worrisome for the online sector, perhaps, are the issues surrounding the Treaty’s provisions on the collection of data. The new gambling authority to be established in Lower Saxony has been tasked with establishing a system of cross-operator oversight to monitor deposit activity and prevent the monthly limit of €1,000 being breached, as well as preventing players playing on two sites simultaneously. Such systems appear to work directly in contravention of data protection statutes, including GDPR, and they have been criticised on that basis within Germany. “On a national level, the draft Treaty has been massively criticised by German data protection experts and associations,” says Düenchheim from Hogan Lovells. “Therefore, the possibility of the EU Commission commenting on data protection aspects certainly remains. It will be interesting to see how the EU Commission evaluates data protection in context of gambler protection and prevention of gambling addiction.” According to Engelmann at DLA Piper there have already been changes made to the data provisions within the Treaty, and he expects that should operators feel it necessary to challenge anything further in court, the data protection aspects “might play a role.” Data protection issues aside, it is doubtful that the technology for such a system (monitoring play across websites,

ensuring a monthly limit is not breached, and preventing players playing on two websites simultaneously) has been invented yet. “I can imagine that the technical effort required to implement the massive monitoring system, which in my opinion is also largely unnecessary, will neither be feasible nor affordable in the long term,” says Joerg Hofmann, attorney at law with Melchers.

Temporary sheriff’s badge-holder There may well be troubles ahead for the new regulator but in the here and now its political masters are already under fire for their recent interventions with regard to payment providers. Attempts to cut off the flow of money to online operators by issuing prohibition orders against, to date, two unnamed international payments firms have raised the ire of many. This includes the minister for the interior in Hesse, Peter Beuth, who, it was reported in the Frankfurter Allgemeine in early June, suggested it was difficult to understand why a provider should be forced to end

their gaming offering now when it will be able to offer the same product legally as of July 2021. After an initial cease-and-desist order emanated from Lower Saxony last summer, the European Gaming and Betting Association (EGBA) said attempts to “create artificial walls” around online were “detrimental to player protection”. Martin Lycka, head of regulatory affairs at GVC Holdings, suggests that Lower Saxony is not only acting in breach of EU law but is also risking the compromise reached by the 16 states over the new Treaty. “(Lower Saxony’s) actions encourage German customers to gamble with operators that have no interest in being licensed in Germany and can seriously prejudice the channelisation rates under the 2021 regulation,” he says. T he move against payment providers also appears to put to bed the rumours circu lating within the market that suggested the various

“The new law is necessary for adequate, overdue regulation of digital providers. It can ensure fairness in the market and create legal security for players” Otto Wulferding, German Gaming Association


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gambling regulatory authorities had agreed to Processing glitch be, as Düenchheim suggests, “less consistent in A more immediate cause for concern came with enforcing the ban on online casinos”. the news in April that the administrative court The rumoured laxity on enforcement was, of Darmstadt in Hesse, which currently has says Düenchheim, a response to the current responsibility for licensing, called a halt to the Covid-19 crisis and the problems being encounlicensing process on the basis that it was “nontered by the established sports betting operatransparent and discriminatory”. tors. “Online casino games were their only The court said the involvement in the source of income in times of lockdown followlicensing process of a group of 16 state regulaing the closure of all sports betting agencies tors known as the Glücksspielkollegium had (betting shops) and the cancellation of nearly not been set out in a transparent manner, even all sports events on which bets are usually though the Darmstadt regional council, as the placed,” he adds authority for licensing, was bound by the deciLuka Andric, managing director at DSWV, sions taken by the Glücksspielkollegium. suggests the net effect of the criHofmann suggests this potensis will have been to leave a “huge tial ruling could yet impact the dent in profits” for both online new Treaty. “If the Higher and retail. Indeed, in May, NovoAdministrative Court of Hesse matic-owned Admiral, which finds certain Treaty provisions runs 17 betting shops in Germato be illegal, and this concerns ny, said it was exiting the market provisions which still remain due in part to the exacerbation part of German gambling reguof existing problems caused by lation under the Treaty 2021, the shops closure. More pointthis would then call for action,” edly, perhaps, the statement he says. from Admiral suggested that the Yet, even if the court in Hesse “lack of legal certainty” on the Frank Hesse, Sportcampo throws a significant spoke in the Treaty was the primary cause of wheel, it is unlikely to impede the closure. progress to any great extent, suggest the lawDespite the fact that the closure of landyers. Arendts points out that the Covid-19 crisis based gaming venues, as Hofmann says, “clearmight mean the EC notification process will be ly indicates the need for a legal and competitive delayed from August this year to September, scope of gambling offers on the internet,” it with reasoned statements likely from at least doesn’t change the legal backdrop. “Due to the one member state. That still leaves the rest of many different opinions that come together in this year and early 2021 for the parliaments of a federalist state, a single stance on these issues each German state to ratify. can hardly be expected at present,” he says. “We believe the Commission could raise “The intention to impose the highest possible points on coherence, data protection issues restrictions still seems to prevail.” and competition issues,” comments Andric Or, as Düenchheim says, it “remains to be from the SVW. “Having said that, the German seen whether the recent upheavals… affect states have time to react to any criticism raised future gambling legislation”. by the EU and amend the Treaty accordingly.” 48

“Due to it being a compromise of all the federal states, the interstate Treaty is full of mindless restrictions, pointless contradictions and legal uncertainties” Jörg Hofmann, Melchers

But whether such amendments are destined to be conducive to a steady state next year is open to question. In part, this is due to the politics of how the Treaty came about, says Hofmann. “Due to it being a compromise of all the federal states, the interstate Treaty is full of mindless restrictions, pointless contradictions and legal uncertainties that stand in the way of achieving the objectives of regulation, especially the protection of players,” he says. “For a regulation that is legally certain and in line with demand, it will need a few more interstate Treaties.” Düenchheim suggests it is “unlikely calm will return” after the Treaty comes into force. “Even though the gaming market will then be almost completely open, there will still be legal disputes,” he suggests. “This is due to the fact that hardly any other area of law is as volatile and ideologically shaped as gaming law. From my point of view as a lawyer, this is probably what attracted me to advising in gambling law.” As Engelmann points out, the regulatory regime will continue to evolve after it comes into force. A review is already built into the timetable. The Treaty is slated to be evaluated by the gambling supervisory authorities who will produce an interim report by the end of 2023. “And as before, operators will likely challenge some of the requirements of the Treaty in court, which may also impact the future gambling regulation in Germany,” Engelmann adds. n 48


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Key features of the new Treaty The Fourth Treaty on Gambling or Glücksspielstaatsvertrag (GlüStV) that is now being scrutinised by the European Commission in Brussels differs in significant ways to the ones that have gone before it. According the introduction to the submission: “The draft further develops the content of gaming regulations in Germany, whereby the previous objectives of the State Treaty on Gaming remain unchanged, while at the same time enabling private providers, under strict conditions, to offer certain other online games of chance that were previously prohibited in Germany in order to offer players a legal, safe alternative to the games offered on the black market.” The changes contained within the new Treaty concern issues around online gaming, in-play betting, deposit limits and marketing, and advertising, as well as the establishment of a new regulatory body to be based in Lower Saxony. New gaming and betting regulations For slots and poker licences there will be unlimited licences offered, as is already the case with sports betting. For table games, licences will be offered by each Länder, according to the number of existing land-based casino licensees in each state. For each licence there are strict player protection conditions. Among these is the €1,000 a month deposit limit applicable across all providers. The new regulatory body has been tasked with coming up with the systems and technology to monitor deposits across all licensees. The Treaty states that in order to verify compliance with the limit, payments made by players to providers are to be recorded in a central authority file until the end of that calendar month. Players will only be able to play on one site at a time, even if that is provided by the same licensee. The Treaty states that in order to prevent simultaneous games of chance, and thus the possible circumvention of regulatory requirements, players should only be able to actively play if the provider has previously actively switched the player to another central authority file. For slots, €1 maximum bets will be in place and spin speed limits of five seconds are also a feature of the Treaty. It will be forbidden to play more than one slot at a time. Though auto-play is allowable, the player will have to set a loss limit at which point the automatic play will end. As per the previous Treaty amendments, sports betting licences are now unlimited. When it comes to restrictions on type of event, the

GIQ Q2 REVIEW

rules will allow for live betting only on final results and next score. Bets on the final score will only be allowed on low-scoring games such as football. The new regulatory body The newly-minted Joint Gaming Authority to be established in Lower Saxony will be tasked with monitoring the market and providing research related to gambling, including the commissioning of studies into gaming. A main objective of the regulation, according to the submission to the EC, is to ensure that action is taken to strengthen the legal sector in relation to unlicensed operators. The statement concluded: “In order to better achieve the objectives of the State Treaty, it is necessary to moderately expand the content of the permitted offer in terms of its content. Therefore, in future and under strict contentrelated conditions, it should be possible to offer other forms of games on the internet.” It added that Commission recommendations with regard to the principles for the protection of consumers and players of online gambling services and for the prevention of minors from gambling online had been taken into account. Marketing restrictions in the new Treaty Among the most contentious provisions contained within the Fourth Treaty on Gambling are those that deal with issues around the marketing and advertising of gambling. The proposals for an effective ban on most forms of gambling affiliate activity have been widely criticised as being unhelpful to the formation of a workable regulated market. It is argued that it will create an incentive for a continued black market. Ad breaks The provisions with regard to advertising are well understood and, in the context of the restrictive measures being introduced elsewhere in Europe, are perhaps no surprise. The new rules on gambling advertising on television, for instance, will see the introduction of a watershed between the hours of 6am-9pm, while a ban will be introduced on gambling ads directly before or during sporting events. . Nevertheless, Frank Hesse, gaming and marketing consultant and managing director at sports agency Sportcampo in Munich, says these changes will alter the German gambling advertising landscape.“(The new restrictions) will change the advertising landscape currently dominated by stand-alone casino operators who

advertise 24/7 on TV channels based on their Schleswig-Holstein casino licences and/or by promoting free-to-play casino labels,” he says. Jörg Hofmann from Melchers says the discussion on gambling advertising in Germany in the wake of the Covid-19 pandemic is now shifting to the content of the advertising of games of chance. “Aspects of fighting gambling addiction are dominant in these discussions,” he adds. Affiliate concerns But it was the proposals around affiliate marketing that proved to be the true surprise in the draft Treaty. “Under the provisions of the draft, affiliates and links of affiliates would be outlawed,” says Martin Arendts from Arendts Anwälte. The effective ban on monetary compensation for gambling affiliates has the potential to force affiliates underground and, as a position paper issued by the Malta-based (but largely Germanfacing) affiliate KaFe Rocks argued, “only serves to create a poor online gambling environment, and less protection, for the everyday German player.” Inevitably, the analysis goes on to suggest, the restricted information flows will favour the larger operators with an existing brand footprint. “Without information about the small-to-medium sized operators, combined with huge spend from the biggest operators via the still-legal channels, we find ourselves in a situation where only these biggest operators will survive the German market,” the KaFe paper added. “Arguably the biggest threat to the consumer will be a massive reduction in player protection, especially if consumers search out sites operating in the black market.” “I can’t believe such a ban on affiliate business models is in line with European law, so I believe we will see litigation against this,” says Hesse.“Affiliates play an important role to channelise the demand for gambling products to licensed operators. From that perspective, such a ban makes no sense when channelisation is the main goal of the whole regulation,” he adds. “I imagine affiliates and operators will come up with alternative performance-based business models that will allow them to do business.” Sources suggest that representations have been made to the authorities on the affiliate issue by the German Association for Telecommunications and Media (DVTM). However, the source added, there has been no movement on the issue and the argument regarding the encouragement of a continued black market has not gained any traction.

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A question of

INTEGRITY

During the Covid-19 lockdown, online sportsbooks became dominated by football fixtures from leagues that would not normally expect much coverage. Steve Hoare looks at the risks in taking bets on these games


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THE BELARUS RESERVE League, the Tajikistan Youth League, the Turkmenistan Yokary League, the Faroe Islands League, and the Nicaragua Premier Division continued to play, while the major leagues of England, France, Germany, Italy and Spain closed down. Sportsbook operators in regulated markets, desperate for something for punters to bet on, were happy to take bets on these leagues. Meanwhile, niche sports such as table tennis emerged as popular betting products, while entrepreneurs started to organise private sporting tournaments to bet on. For an industry craving political acceptance, this slew of obscure content looked risky at best, careless at worst. The bookmaking industry might have lost 90 per cent of its content overnight, but other industries (bars, restaurants, shops, theatres etc) had lost 100 per cent of their income. There was little likelihood of public sympathy. The industry was scrambling around for content – any content – to amuse its core customers and bring in some revenue. There would be little here for the ‘recreational players’ that many operators have been seeking to attract. After all, who wants to bet on a game in a league they know nothing about? The answer, of course, is the core customer, the hardcore gambler. Whatever you want to call him (or her), this was the customer that would keep sportsbooks afloat, if they were to stay afloat. The flood of new content was so effectively rolled out that Sportradar could boast of an 11 per cent increase in the number of betting options it was offering, compared with the same period last year. Its live odds coverage was up 30 per cent, and live data up 20 per cent.

The esports explosion Virtual sports got creative with products such as Inspired Entertainment’s virtual Grand National, and Sportradar recreated the rest of the football season. There is potential here for virtual sports to emerge from its role as an emergency stop-gap and into an attractive product in its own right (see page 24) but as an RNG product there are no questions over its integrity. Esports is a more gritty question. Esports that resembled real sports (such as FIFA20 and NBA 2K) emerged as betting options, despite zero official integrity overview. While esports such as Counter-Strike and League of Legends have established tournaments and organisational institutions, the sporty esports had none. “This brand of new products have no integrity at all,” says Commissioner Ian Smith of the GIQ Q2 REVIEW

Esports Integrity Commission (ESIC). “The big sportsbooks are under massive The sporty eSports held no interest to the pressure to offer their customers markets,” traditional esports crowd, but were attractive continues Smith. “They are putting up crap. I to gamblers with no interest in table tennis or wouldn’t do it but I understand why these comfootball from Tajikistan. Smith enthuses about panies are doing it. If you do not offer these marthe new audiences and new operators getting kets, they will go somewhere else.” involved in esports, but laments the short cuts “The data suppliers cannot guarantee the taken to grab a piece of “the only show in town”. integrity of these events. They will monitor And it has raised other more serious concerns. for integrity breaches. Nobody can guarantee “All the guys we don’t want involved in there is integrity in the game but you can put esports are starting to look very seriously systems in place that should indicate if someat esports,” says Smith. “We have seen FIFA thing is wrong.” players receive approaches to throw matches. Sportradar might be providing smaller We have seen them threatened. We have seen markets to 20 tier-one bookmakers. If there them offered large amounts of is suspicious activity it will money to spot-fix and matchbe spotted and dealt with in fix.” real time. The problem comes “We have seen FIFA The number of suspicious from the next 100 bookmakplayers receive activity alerts that Smith ers who are not buying the approaches to throw data but run a third of a secreceives went up about 50 per cent during the first two matches. We have ond behind the big bookies seen them offered months of lockdown. and mirror their odds. They The other category of large amounts of are the match-fixers’ prey. esports that bookmakers money to spot-fix “Sportradar is not phonhave started to feature are and match-fix” ing them up when somecelebrity esports challenges, thing goes wrong. SportraIan Smith, ESIC where, for example, a profesdar might have closed all sional football player plays their markets, told all their another at FIFA. While these have the potential customers to void a particular match but all to attract a wider audience in the long-term, at these other bookmakers don’t know that,” says the moment they are just novelty bets. Smith. “They will plough on, all the crooked “I have no problem with that because the bettors will pile in on the action and it is left liquidity in those markets is never going to be to people like me to sweep up the mess. This worth it,” says Smith. “You are never going to is the world we’re living in. There is an awful be able to fix a game between two Premiership lot of low level activity; people jumping on the footballers because how much are you going to esports bandwagon and new operators popping pay them?” up every day.” It is not just sports simulation games that are attracting bettors. Games such as Clash The spectre of ghost games Royale, Brawl Stars, Rocket League and Kings Esports, then, is flourishing but turning into of Glory are attracting betting action, when a Wild West. But what about the more obscure previously they were of little interest to bettors. leagues still playing live sport? However, the two most popular betting Genius Group, Sportradar and Stats Pergames Counter-Strike and Dota still account form say they do not cover under-18s matches, for around 60 per cent of global betting turnobut somebody is supplying bet365 with data ver, and around 70 per cent of all suspicious for the Iceland under-19s. We don’t need to betting alerts. While alerts on Counter-Strike pick on bet365 here. Stats Perform also has have plateaued and might even be in decline, a blanket policy on no reserve leagues, but Dota is a real problem. Ladbrokes is offering the odds on the Bela“The thing I lose sleep over is these neverrus Reserve League and the Turkmenistan before-heard-of Dota tournaments being run Reserve League. William Hill also covers the up by a couple of guys with a laptop out of Belarus Reserves, plus the Vietnamese underMinsk, who I can’t find any information on, 19s among others, as does Sky Bet. who I can’t get any contact details for, who run “When you have athletes that are not as a five grand tournament with teams you’ve well paid as in other countries, it raises risks. never heard of filled with 200 guys who they There are plenty of competitions out there takmet a week ago online. There’s a fix in the first ing place that we are not offering because we knockout round and I get alert, but how do I are not comfortable with them,” says a source contact the organiser?” at another provider. 51


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Others will be. Sportradar, for example, is comfortable with some reserve leagues and semi-professional games. They might carry a slightly elevated risk (because of the low salaries of the participants) but for the most part, the competitions highlighted above are officially sanctioned by their national governing bodies. “We follow the data. Reserve leagues and lower divisions are not inherently going to be fixed. Well under one per cent of games are fixed,” says Mace. At least one of the big three data suppliers would not touch the Nicaragua league because the data suggested it was risky. But the real problems arise with games outside of the officially recognised leagues. And this is where Genius Sports came unstuck with the so-called ghost games it covered in Ukraine. The Ukraine Football Association had raised the alarm prior to the games. It warned about the risk of match-fixing and asked data suppliers not to cover the country’s games unless they had a commercial rights deal with the FA. Genius claims it has audio and visual evidence that the games took place and has handed this evidence to the Ukraine FA but it would not share this evidence with Gaming Intelligence. It claims it was defrauded by an organised crime group, which led it to believe that these games were part of an official tournament of pre-season friendlies. However, the Ukraine FA continues to claim the games did not take place. Genius claims this is a misinterpretation of the FA’s meaning. Its spokesperson claims the FA is saying the games were not official, therefore they did not take place, NOT that a game of football between two sides did not take place. The issue of whether the games did or did not take place is, perhaps, missing the point. Genius is not alone in being caught out by the fake game fraudsters. Stats Perform had its own brush with ghost games six years ago, when SBOBET paid out for FC Slutsk’s 2-1 ‘friendly win’ against fellow Belarus side Shakhter Soligorsk, despite the fact the match didn’t actually take place. That game caused Stats Perform to overhaul its procedures and up its game to make sure it would not be duped again. Data collectors are trained more rigorously. They were made proprietary PDAs with GPS and audio recording capability. Scouts are monitored and any increase in error rates leads to re-training. It is also a mandatory contractual obligation that scouts work exclusively for Stats Perform. Such attention to detail makes the company’s Running Ball product more expensive than some others but also makes it more reliable. 52

The Ukraine games will have a similar effect on Genius Sports. It subsequently dropped several games from its coverage. While it uses a network of freelance scouts, it has country and regional managers, who supervise the freelancers. The big three data suppliers work in subtly different ways but all claim to adhere to the highest of standards. The Ukraine games highlight the need to stay ever vigilant, especially when it comes to friendlies and unofficial tournaments. “Friendlies are unregulated. Anything can happen. You can have a bunch of ringers,” says one source. “I have heard stories of second division teams being flown to another country with all expenses paid. The only thing that is happening there is a match being fixed.” Another describes friendlies as a “Wild West” with no governance. However, that does not mean they will not be covered if the right measures are in place. “There are magnified risks at this time, especially when we’re looking at stuff in the betting market which wouldn’t ordinarily be there. There are a lot of exhibition or friendly tournaments or tournaments being played remotely,” says Mace at Sportradar. With the advent of darts games being played over Skype during lockdown and tennis matches being played on private courts, the risks go up. “As long as the right measures are in place, and anything that is identified is followed up, and all the participants are bound by an integrity policy, then it is no different to normal sport. The risks should not be overexaggerated because the data does not show they are so much higher at risk,” says Mace. Clockwise from bottom: Clash Royale and Rocket League esports; football in Belarus during the covid-19 lockdown


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Tricky tennis matches Tennis has come under fire in recent years for being, according to the BBC, “riddled with corruption”. You will not find many integrity professionals disagreeing with that description. The lower levels of professional tennis are thought to be heavily influenced by organised crime. The root of the problem is the difficulty that those ranked under 100 have making a living out of the game. A situation might arise whereby player A agrees with player B that A will lose the first set, B will lose the second and then they will play for real in the third set. They will let that information be known to their contacts in organised crime and get paid for that GIQ Q2 REVIEW

An increase in suspicious activity alerts information. It is incredibly hard for bookmak(and other intelligence) and a concern about ers’ algorithms to detect. these events becoming a ‘Wild West’ caused the In the last few weeks before the suspenTIU to write to the International Betting Integsion in professional tennis, when a suspension rity Association (IBIA) asking its members to began to look inevitable, there was a sharp “exercise enhanced due diligence”. increase in the number of match alerts made by “When deciding whether to offer betting on bookmakers to the Tennis Integrity Unit (TIU). matches or competitions, we The suspicion amongst integurge great caution in offerrity professionals was that ing betting on those with no corrupters wanted to make “We urge great umpires and/or whose integsome cash to tide them over caution in offering rity risk management plans during the fallow months. betting on those with cannot be ascertained,” wrote While the professional TIU chair Jennie Price. “We tours were suspended, it no umpires and/ would include events that are turned out that tennis would or whose integrity promoted as purely ‘Exhibinot be completely closed down risk management tion’ matches (i.e. not intended for long. Professionals started plans cannot be to be competitive events) in to play on private courts in ascertained” the same risk category.” unsanctioned games organJennie Price, TIU She also forwarded her ised by tennis academies, request to the leading data coaches or clubs. The only suppliers. The TIU has been leading discuscriteria for qualification is whether you could sions with betting operators and data suppliphysically get to the game. This tends to lead to ers about regulating data. It is a call that has players with hugely differing rankings lining been wholly embraced by Stats Perform, and up against each other. to differing degrees by Sportradar and Genius Organisers have recouped costs and raised Group. The discussions about what format prize money by selling the data rights (and these would take and what shape a regulator some broadcast rights) to companies such as would take are sure to be heated. Sportradar, IMG and Stats Perform. “This is unprecedented,” concludes Mace at National events are also emerging as counSportradar. “And it has been fascinating for us tries come out of lockdown. These should be to look at how things develop. This will change more official than some of the games being the landscape of sports integrity and matchplayed in a dacha in the former Soviet Union. fixing. We will not go back to normal in a couple (One dubbed itself the ‘Avis Cup’, as opposed of months. There are things out there in the marto the official Davis Cup.) Some long-defunct ket that will stick. There will be a lot of financial national tournaments are being resuscitated hardship among teams and leagues, and this is years after the dominance of the pro tours what the fixers will be looking to prey on.” n caused them to be shut down. 53


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Nether nether land The Netherlands has delayed the opening of its regulated market twice. What can we expect when the market eventually opens?

THE NETHERLANDS WAS due to open its regulated online gaming market on 1 January 2021, then it was pushed back to 1 July 2021. Now, the Dutch parliament has given regulators the option of delaying it even longer to give all parties time to “overcome the shock of the Covid-19 crisis”. It also passed a separate motion to extend the recently adopted cooling-off period for unlicensed providers, in line with the delayed market opening. Land-based casinos will be pleased with the motion to reconsider a plan to impose player registration obligations on casinos and gaming halls, and to further investigate “the usefulness, necessity and proportionality of such an obligation”. Other approved motions include a call for greater cooperation at European level to combat illegal online gambling, and for the country’s gambling addiction prevention programme to be administered by the Ministry of Health, Welfare and Sport instead of the Ministry of Justice and Security. Lawmakers rejected a motion to reduce the term of online gaming licences from five to three years, while a motion to make representatives of online gaming companies responsible for delivering addiction prevention policies was withdrawn prior to a vote.

New monitoring systems The latest legislative moves follow the submission of draft legislation to the European Commission, setting out the technical requirements for connecting online gambling systems to the new Control Data Bank (CDB) that will be used by authorities for monitoring and verification purposes. T he Netherlands ta x authority and gambling regulator Kansspelautoriteit each have differing access rights to the CDB under the new Gaming Act, prompting two submissions for European Commission (EC) approval. GIQ Q2 REVIEW

The first from Kansspelautoriteit sets out the technical requirements and data models for establishing and maintaining a connection to the CDB, while the submission from the Ministry of Finance sets out its requirements in terms of access to gambling participation data by product, in order to verify operator tax returns.

Who can apply? The guidelines for applying for a licence have been made much clearer. A licence will only be granted after operators pay a non-refundable application fee of €45,000. All applications must be submitted in the Dutch language and in a searchable PDF format. Two types of licence are available for online casino gaming, one for house-banked games and one for peer-to-peer, as well as two types of online betting licence, one for sports betting and one for horse racing. Licences will only be issued to “responsible and reliable” operators, who will be rated according to their historical operations, with particular checks on criminal or administrative

sanctions or failure to pay taxes. The reliability test extends beyond the applicant company to its direct stakeholders, directors and senior management, and covers the previous eight years. Operators who have illegally served the Netherlands market during the preceding two years will be ineligible for licensure. Applicants must also demonstrate expertise in online gambling operations, including knowledge of relevant laws and regulations, addiction prevention, consumer protection and financial regulations. These must be documented to show how the operator will comply with addiction prevention requirements, identity verification, self-exclusion, consumer protection, match-fixing, money laundering and ensuring the integrity of its own games. New advertising constraints have also been introduced that only allow radio and TV advertising for instant lotteries, horse race and sports betting, and casino gaming (including amusement arcades) to be broadcast between 9pm and 6am. Previously the watershed was 7pm. Lottery draws are given an exemption and can be broadcast at the regular time. n

Licences will only be issued to “responsible and reliable” operators, who will be rated according to their historical operations. This test extends to direct stakeholders, directors and management

55


L EG A L GERMANY

COMES IN FROM THE COLD Ukraine is set to become Europe’s next regulated market. The managing partner of Ukrainian law firm Eterna Law, Andrey Astapov, outlines his country’s road to legalisation IT IS COMMONLY known that almost all gambling has been prohibited in Ukraine since 2009, except for lotteries operating under the applicable Act of 2012. There are currently three licensed operators in the market who organise and conduct lotteries. The consequence of the regulation was that gaming machine venues, both online and offline, used to operate, in fact, as lottery distributors until December 2019. Lottery organisers’ licences were therefore used to do business, meaning the gambling market continued to exist, albeit in a quasi-legal fashion. The drafting process for the new bill was launched after Volodymyr Zelensky – whose campaign promises included a legalisation of gambling in the country – won the presidential election. The bill was sent to parliament for consideration and a first-reading vote went ahead in December 2019. The bill, however, failed and was sent to parliament’s committees for revision. The reason for the outcome was that certain interested market players had blocked 56

the bill on its way to enactment, according to the authorities. The government consequently responded by waging a large-scale campaign against illegal gambling organisers which, among other things, included: ●● legislative amendments banning retail gaming machine venues (which, as already mentioned, had used licences for lottery organisers); and ●● law enforcement closing all retail gaming machine venues. In addition, sanctions were imposed on the online sector: ●● criminal cases were lodged against online operators (and the investigations are still pending); and ●● judgments were made to block a fairly large number of online operations (online poker, online casinos and betting websites). This resulted in greater legal restrictions, and the organisers of gambling activities, other than lotteries, effectively ceased all operations in Ukraine. Given this state of affairs, it is safe to say there is a pressing need

Ukraine president Volodymyr Zelensky

for gambling legislation that allows the market to reactivate in a legal manner.

Obstacles to legalisation Drafting and approving the bill has been a fairly difficult process. This is primarily due to certain lobbying groups within parliament. Some groups were essentially against the bill and insisted that Ukraine should maintain the gambling ban. Others were lobbying for individual amendments to the bill because of their involvement in certain business activities. Certainly, those processes effectively hindered the progress of the bill. The president, backed by most members of parliament, took a clear, contrasting position that it is necessary to adopt the bill and legalise gambling because this would allow the market to ‘come out of the shadows’ and become controlled and regulated, which would, in turn, lead to extra government revenues. As regards the latter point, it should be noted that the State Budget Bill includes US$149m of gambling revenue, demonstrating the government’s resolve to pass the bill.

The bill’s current status The gambling legalisation bill has been approved by the parliamentary committee


L EG A L UKRAINE

and is expected to undergo the second reading stage in parliament. The latest draft seems well balanced, addressing the issues of various gambling activities. The bill was scheduled for a vote in June 2020 and was postponed several times, but should be voted on in the near future. Then it will take some time for the president to sign the instrument into law. It should be noted that after the Act comes into force the government will still have to prepare a number of regulations concerning licensing terms, regulator rules and the like, which will emerge in secondary gambling legislation. It will also take some time to set up a regulator to issue licences and effectively regulate the market. Licences will presumably be available by the end of the year, with new market entrants expected to launch in 2021.

Key legal provisions The bill contains a number of novelties that are not commonly accepted practices. Among the novelties introduced into the bill’s latest version, the following are worthy of mention:

Casinos Casinos are expected to be located only on the premises of hotels, out-of-town entertainment complexes and special gambling regions. The regions will be determined by the government separately. The bill, as currently drafted, does not provide for any privileges or special conditions for such gambling regions. Every hotel to host a casino will be subject to a number of requirements. First, it has to be a five-star hotel. Further, a hotel must have a room capacity of at least 150, if based in Kyiv, or at least 100, if based in other regions. In addition to an ‘ordinary’ casino licence, a so-called ‘investment licence’ will also be available. This is aimed at attracting a large stream of foreign investments for the gambling sector. These are expected to be of two types: ●● Hotel-construction investment licence The hotels that will be built under such licences will be subject to the above requirements which apply to existing hotels. But such a licence offers an indisputable benefit in the form of an automatic, ten-year free-ofcharge casino licence. ●● Investment project licence This is a special one because it will allow a casino to be situated inside hotels, out-oftown entertainment complexes and special gambling regions, but also in stand-alone premises. To obtain such a licence, an operator will have to submit their project to the GIQ Q2 REVIEW

government for consideration. If approved, the operator will be issued a 10-year free-ofcharge licence.

Casino licences The bill sets out that licence fees will be US$2m for Kyiv-based casinos and US$1m for casinos located in other regions.

software development and capacity deployment may take time. Importantly, licence fees for certain activities, such as betting, online casinos and gaming machines, will be paid threefold during the transitional period until the electronic monitoring system is fully launched.

Conclusions

To conclude, I’d like to discuss further steps on the way to the full-scale launch of Online casinos must obtain separate licences. Ukraine’s gambling market and estimated The fee will be US$230,000 per year. time frames. The first step will be to adopt the bill. The Betting points, gaming machine bill was to be voted on at the end of June 2020 venues and online poker but was postponed several times. If the bill is The bill permits betting points and gaming adopted, it will be sent to the president for sigmachine venues to operate on the premises nature. It is expected to be signed promptly as of three, four or five-star hotels, but their the head of the nation supports the bill. minimum floor area will have to be at least 50 Further, it is important to bear in mind that square metres (for a betting point) or 300 square another significant bill should be enacted to metres (for a gaming machine venue). A gamimpose gambling tax rates. The rates and types ing machine venue will also have to satisfy of tax are still under discussion. However, the an additional requirement bill, now due for a first readof having at least 50 gaming ing, imposes different GGR machines. tax rates that will vary up The amount of The bill suggests that to 15 per cent, depending on information to be there will be two types of gambling activities. In parprovided to the betting licence – online and ticular, bookmakers, online offline. The annual licence regulator will be casinos and gaming machine fee for both will be US$1m per substantial. That venues will pay five per cent, year. In addition, US$6,000 is why software 10 per cent and 12.5 per cent will also be payable per bet- development and of their GGR, respectively. ting point each year. capacity deployment The enactment of the bill will T he a n nu a l g a m i n g therefore give a clear undermay take time machine licence fee will be standing of the tax burden on US$250,000 for those who gambling operators. will use no more than 250 machines. The bill The next step (after the act is adopted) is also provides for a separate US$100 licence to setting up the regulator, which will act be issued for each gaming machine. The annual as a body authorised to prepare and approve online poker licence fee will be US$150,000. all necessary subordinate legislation: licence terms, inspection regulations, and monitoring Requirements for a licensed comsystem technical regulations. The government pany will, in turn, have to prepare and approve a The applicant must be registered and act under regulation for the authorised body. Given the the laws of Ukraine. It cannot be a bank, finanfact that subordinate legislation will be drafted cial institution, or a non-profit organisation. under, and will have to be in line with, the law and will be technical documents in nature, State Monitoring System their adoption is not expected to bring any The bill states that a State Monitoring System material changes. will be created with broad powers vested in it. The adoption of the subordinate legislation The regulator is expected to run an electronic is crucial because it will be impossible for the monitoring system to which all gaming equipmarket to begin operation at full scale or for ment, gaming machines and operators’ monilicences to be issued without such legislation in toring systems are supposed to be connected. place. The implementation of this step is expectThe system will be complex, given that operaed to take two to three months in a best-case tors will be legally required to transmit inforscenario. The licensing process is expected to mation on bets, wins and GGR in real time. be launched in Q3 and Q4 2020. n The amount of information to be provided *All monetary figures have been converted to to the regulator will be substantial. That is why US dollars from Ukrainian hryvnia.

Online casino

57


L EG A L

DOJ VS THE WIRE ACT

Will the DoJ stop The New Hampshire and NeoPollard legal battle with the Department of Justice will send reverberations across the industry, writes Behnam Dayanim of Paul Hastings. They will be felt by lotteries, online gaming operators and the DoJ itself CAN A GOVERNMENT prosecutor publicly announce a new interpretation of a longstanding criminal law in an effort to force an entire industry to adhere to that new interpretation? And can he do it while avoiding judicial scrutiny, unless one of those parties somehow musters the temerity to risk prison by challenging him? Well, that seems to be the US Justice Department (DoJ) position when it comes to the Wire Act and the lawsuit launched by the State of New Hampshire and NeoPollard, one of the vendors with whom the Granite State has contracted to implement its online lottery. The federal district court in New Hampshire rejected the Department’s position and similarly rejected its interpretation of the statute. The US Court of Appeals for the First Circuit heard arguments on the DoJ’s appeal on 18 June. A decision is expected within the next few months.

What is the case about? The Wire Act of 1961, 18 U.S.C. § 1084, prohibits the transmission in interstate commerce of bets or wagers on sporting events or contests, as well as of information assisting in the placing of bets and wagers. After years of indecision and vacillation, in 2011 the DoJ’s Office of Legal Counsel (OLC) opined that the statute only covered sports betting. That became the official position of the Department, which led to the adoption in several states of legislation or regulation permitting online casino, poker and lottery games. The change in the White House in 2016 brought a change of position, with the OLC retracting its 2011 opinion and replacing it in 2018 with a new opinion stating precisely the opposite: that the Wire Act extends to all forms of gambling. The implications of the opinion are immense: taken at face value, it renders all 58

interstate online gambling unlawful, including online poker conducted between states pursuant to state agreements permitting that activity; state online lotteries (which rely on an out-of-state server and related support provided by private vendors); and even wellestablished retail games such as Powerball and Mega Millions, which rely on interstate transmissions. New Hampshire is one state that operates online lottery games, and the state’s lottery commission and one of its vendors, NeoPolllard Interactive, brought suit challenging the opinion. The district court in June 2019 sided with the state and NeoPollard, holding that the Wire Act only covers sports betting. The DoJ appealed.

What are the parties’ arguments, and what’s next? In brief, the Department’s position boils down to two main points. Firstly, it argues that there is no actual case or controversy because the lottery and its vendor cannot show a credible fear of prosecution. The Department has argued that, because it has not moved to indict or directly threatened to indict the New Hampshire Lottery Commission or NeoPollard, they cannot meet the threshold required for suit. Moreover, in April 2019, well after the suit was initiated, the Department issued a memorandum indicating that it had reached no conclusion as to whether the Wire Act applied GIQ Q4 REVIEW


L EG A L

DOJ VS THE WIRE ACT

online gaming? to lotteries under the reasoning of that OLC opinion. US courts cannot give ‘advisory’ opinions – they may decide only actual cases and controversies. Hence, the DoJ April 2019 memorandum was viewed by many as an attempt to avoid judicial scrutiny of its position. The district court and the plaintiffs reject the DoJ’s position, noting that the 2018 OLC opinion itself discusses lotteries and draws no distinction between lottery wagers and any other form of gambling activity. The Department’s second argument is that the district court was wrong in limiting the statute to sports betting, rather than accepting the DoJ position that it applies to all forms of gambling (except possibly lotteries). The debate over the appropriate construction of the statute is too complex and torturous to detail here. In short, the plaintiffs point to the fact that the statute uses the words “bets or wagers on any sporting event or contest,” and the DoJ emphasises that the act only uses that phrase in one part of the paragraph in question, while in successive references in that same paragraph it simply says “bets or wagers”. In the 18 June 2020 argument before the First Circuit panel, almost no attention was afforded to that second question, with the discussion instead overwhelmingly focusing on the DoJ’s argument that the challenge was not ripe for adjudication. While attempting to divine judges’ thinking based on their questions to the parties is notoriously unreliable, the judges did appear sceptical of the Department’s position. They noted, among other things, the unequivocal language in the 2018 OLC opinion and the dire consequences for lottery officials and their vendors if the DoJ was subsequently to announce that the statute does, in fact, apply to them, as the OLC opinion intimates. One judge pointed to the hundreds of millions of dollars at stake in state lotteries nationwide. The judge questioned DoJ’s position on the basis that it would seem to require states either to terminate or modify those lottery operations at great expense or to risk GIQ Q2 REVIEW

indictment without any ability to challenge the DoJ interpretation until and unless an indictment is issued or the Department decides (voluntarily) to issue another public statement, potentially on short notice, announcing that it does view lotteries as covered by the law. The few questions directed to the substance of the statute did point to one possibility, however – that, in rejecting the DoJ appeal, the court nonetheless might issue a much narrower opinion than the district court did, holding simply that the Wire Act does not apply to statesponsored lotteries, without resolving the broader sports/non-sports dichotomy. Should that happen, the lotteries would prevail. However, the broader (non-lottery)

The DoJ attempts to browbeat an entire industry by upending settled expectations while escaping judicial oversight, simply through the implicit threat of prosecution, without ever actually initiating one online gaming industry may be left at square one: faced with the options of mounting a new challenge, with a poker or casino operator (and possibly a state regulatory agency) as plaintiff, continuing with business as usual to test whether the DoJ moves to enforce its position through an indictment or similar action, or waiting to see if the November election brings a new administration that perhaps may be inclined to restore the status quo to the pre2018 position. In that event, at least one lesson for the Department that extends beyond gaming is that it cannot attempt to browbeat an entire industry by upending settled expectations while escaping judicial oversight, simply through the implicit threat of prosecution, without ever actually initiating one. For those reasons among others, the First Circuit’s decision is highly anticipated. n Behnam Dayanim is a partner at the international law firm Paul Hastings LLP, where he chairs the firm’s Advertising & Gaming practice. 59


FINANCE

The GIQ Q1 2020 THE IMPACT OF the Covid-19 pandemic caused significant revenue damage to operators and suppliers during the first quarter of 2020. Lockdowns across the world closed the retail sector, while the lack of sporting events hurt land-based and online sportsbooks. While the coronavirus effect only really came into force in mid-March, it was still enough to dent Q1 revenue, particularly Stateside, although some weathered the storm better than others. For the first time, the GIQ20 chart of the fastgrowing publicly-listed companies included three companies with revenue declines… just to fill up the numbers. Unfortunately, things are likely to get a lot worse in Q2. For some, the first quarter highlighted the opportunities for growth still available despite the chaos. Pointsbet came out on top of the chart after becoming a breakout star of the burgeoning US sports betting market. With a background in horse racing, the Australian operator has struck some canny deals to make its move into the US and is one of the leading online brands in the market now. Not bad for a company that was only founded five years ago. Elsewhere, there were strong performances from Inspired Entertainment, Zynga and Evolution Gaming, while DraftKings features for the first time. Online-only companies such as Gamesys Group, Kindred Group and Betsson fared better than most, while Flutter Entertainment also performed well, ahead of its merger with The Stars Group. GIQ Q2 REVIEW

The GIQ20 fastest growing listed gaming companies COMPANY

Q1 2020

Q1 2019

CHANGE

AUD$18.8m

AUD$7.6m

147%

1

Pointsbet

2

Inspired Entertainment

$52.3m

$33.7m

55%

3

Zynga

$404m

$265m

52%

4

Evolution Gaming

€115.1m

€79.3m

45%

5

Kambi Group

€27.9m

€21.0m

33%

6

DraftKings

$88.5m

$68.1m

30%

7

NetEnt

SEK517.5m

SEK418.1m

24%

8

Gamesys Group

£155.3m

£130.5m

19%

9

Flutter Entertainment

£547m

£478m

16%

10

Kindred Group

£249.7m

£224.4m

11%

11

Betsson

SEK1,417.5m

SEK1,330.6m

7%

12

Pollard Banknote

CAD$102.2m

CAD$97.5m

5%

13

Rank Group

n/a

n/a

5%

14

LeoVegas

€89.4m

€86.3m

4%

15

Aspire Global

€33.7m

€33.2m

2%

16

GVC Holdings

n/a

n/a

1%

17

SciPlay Corporation

$118.3m

$118.4m

0%

18

La Française des Jeux (FDJ)

€511.2m

€515.7m

-1%

19

Gaming Innovation Group

€31.1m

€32.4m

-4%

20

Churchill Downs Incorporated

$252.9m

$265.4m

-5%

61


F I NA NC E GIQ20 Q1 2020

POINTSBET SIDESTEPS COVID-19 CHAOS Australian sports betting operator records the biggest revenue growth in Q1 as its US focus bears fruit, but others struggle as Covid-19 hits figures, writes Kio Dawson

62


FINANCE

GIQ20 Q1 2020

POINTSBET HOLDINGS 147% Net revenue (AUD$) Q1 2020 Australia US TOTAL

Q1 2019

Change

15.5m

8.2m

90%

3.3m

(0.5m)

n/a

18.8m

7.6m

147%

Sydney-listed sports betting operator Pointsbet Holdings came out on top of the GIQ20 chart during the first quarter of 2020, following strong growth in its home market of Australia and increasing contributions from the US. Turnover nearly doubled to AUD$268.7m in its financial third quarter, generating revenue of $18.8m, an increase of 147 per cent year-on-year. Pointsbet benefited from Australian horse racing largely being unaffected by the impact of Covid-19, and a new media partnership for Channel Seven’s racing coverage. The US contributed revenue of $3.3m during the quarter, with the operator launching its third digital sportsbook in the US in Indiana in March. One of the breakout stars of the new US sports betting landscape, Pointsbet now has market access to 12 states, and is currently developing an in-house online casino product for launch before the end of this year.

INSPIRED ENTERTAINMENT

growth, increased profitability across our businesses and better-than-expected initial results from our transformative acquisition which we realised in the fourth quarter of 2019,” said executive chairman Lorne Weil. “However, the Covid-19 global pandemic resulted in the temporary closure of the land-based retail businesses of our customers, with continuation of many of the associated expenses, which had a material negative impact on our first quarter results.”

55%

ZYNGA

Net revenue (US$)

52% Q1 2020

Q1 2019

Change

Server based gaming

16.7m

23.7m

-30%

Virtual sports

9.0m

10.0m

-10%

Net revenue (US$)

Online games

27.4m

n/a

n/a

Intercompany eliminations

Advertising and other

(0.8m)

n/a

n/a

TOTAL

TOTAL

52.3m

33.7m

55%

Acquired entities

Despite the disruption caused by Covid-19, New York-listed Inspired Entertainment reported a 55 per cent increase in revenue to $52.3m in Q1 2020, with growth driven primarily by the newly acquired Novomatic Gaming Technology business, which contributed revenue of $27.4m during the quarter. This was offset by the lag in sales and temporary suspension of the company’s land-based business due to the pandemic, and a decrease in revenue in the UK licensed betting office (LBO) market caused by the reduction in maximum B2 stakes to £2. “The year got off to a strong start, building on the momentum from outstanding organic GIQ Q2 REVIEW

Q1 2020

Q1 2019

Change

344.5m

200.2m

72%

59.4m

65.2m

-9%

403.8m

265.4m

52%

New York-listed Zynga raised its full year revenue guidance to $1.65bn after recording its best first quarter performance in its history during Q1 2020. With bookings climbing 18 per cent to $425m, this helped drive a 52 per cent increase in revenue to a record $404m, driven by growth in its live services portfolio and higher levels of engagement from current, lapsed and new players. Alongside strong performances from the CSR2, Empires & Puzzles and Words With Friends franchises, Zynga’s Social Slots portfolio delivered record revenue across its titles, in particular the Hit It

“The Covid-19 pandemic resulted in the temporary closure of the land-based businesses of our customers, which had a negative impact on our first quarter results” Lorne Weil, Inspired Entertainment


F I NA NC E GIQ20 Q1 2020

Rich! Slots, Wizard of Oz Slots and Game of Thrones Slots Casino titles. There was also growth from Zynga Poker, driven by a variety of new themed events such as Pot O’Gold for St Patrick’s Day and the introduction of a quick chat feature as more people sheltered at home during lockdown.

EVOLUTION GAMING GROUP

temporarily closed for limited periods. “During these periods, a large share of the traffic has been managed by the company’s other studios,” said CEO Martin Carlesund. “To be a global company with sites across multiple territories has been an important factor during these times. With that said, our studios in Latvia and Malta are important hubs from which several of our most popular titles are broadcasted.”

45% Net revenue (€)

TOTAL

KAMBI GROUP Q1 2020

Q1 2019

Change

115.1m

79.3m

45%

Stockholm-listed Evolution Gaming delivered another strong set of results in the first quarter as revenue increased by 45 per cent to €115.1m and profit for the period nearly doubled to €54.2m. Despite the spread of Covid-19, the live casino specialist’s operations were able to continue without any large negative effects during Q1, although in several studios Evolution operated wit h fewer tables compared to normal, while studios in Georgia and Spain were

33% Net revenue (€)

TOTAL

Q1 2020

Q1 2019

Change

27.9m

21.0m

33%

Stockholm-listed Kambi posted a 33 per cent revenue rise for the first quarter period, despite a 70 per cent fall in trading in the final weeks of the quarter due to the cancellation of sports in mid-March. The year-on-year growth was driven by betting on football and high operator trading margin in the English and Spanish leagues, while basketball and American football betting also saw strong growth, with turnover for February’s Super Bowl tripling that of the 2018 FIFA World Cup final, making it Kambi’s largest ever turnover event. Kambi


DRAFTKINGS 30% Net revenue ($)

TOTAL

Q1 2020

Q1 2019

Change

88.5m

68.1m

30%

In its debut in the GIQ20 chart, newlylisted DraftKings recorded a 30 per cent increase in revenue to $88.5m for the first quarter of 2020 after completing its business combination with SBTech and Diamond Eagle Acquisition Corp in April. Growth was driven by the launch of DraftKings’ online sportsbook in Indiana, New Hampshire, Pennsylvania, West Virginia and Iowa, coupled with continued growth in customer engagement through February, before the Covid-19 outbreak. Overall, average monthly unique players (MUPs) were up 16 per cent year-on-year to 720,000 in Q1, with average revenue per MUP climbing 11 per cent to $41m. “We are uniquely positioned at the intersection of digital sports entertainment and gaming in a growing industry,” said co-founder, CEO and chairman Jason Robins. “DraftKings recorded standalone Q1 year-over-year revenue growth of 30 per cent despite the effects of Covid-19. The engagement we continue to see from our customers validates the connection they have with our content, their passion for our products and their loyalty to our brand.”

launched in three new US states during the first quarter of 2020 (Mississippi, Illinois and Michigan), taking its total coverage to 10 states, including a burgeoning retail sports betting business which now comprises 30 properties and over 500 betting kiosks across the US.

NETENT

Therese Hillman, NetEnt

24% Net revenue (SEK)

TOTAL

“A strong product pipeline, new regulated market entries and live casino opportunity puts us in a good position to continue delivering growth in 2020”

Q1 2020

Q1 2019

Change

517.5m

418.1m

24%

Stockholm-listed NetEnt benefited from a strong performance from its Red Tiger games development business, helping Q1 revenue increase 24 per cent to SEK518m. On a proforma basis (including Red Tiger in the prior year period), revenue was up by 12 per cent, with growth in the US and the UK offsetting declines in Sweden and Norway. The developer released 12 new slot games in Q1, six from NetEnt and six from Red Tiger, of which Piggy Riches Megaways was the most successful. “To further strengthen competitiveness and increase efficiency, we initiated a full integration with Red Tiger during the quarter,” said CEO Therese Hillman. “Red Tiger keeps performing above our expectations GIQ Q2 REVIEW

65


FINANCE GIQ20 Q1 2020

GAMESYS GROUP 19% Net revenue (£)

TOTAL

Q1 2020

Q1 2019

Change

155.3m

130.5m

19%

with its award-winning games and the expansion to new markets continues. Combined with a strong product pipeline, new regulated market entries and the live casino opportunity for NetEnt, this puts us in a good position to continue delivering profitable growth in 2020.”

FLUTTER ENTERTAINMENT 16% Net revenue (£)

Sports

Q1 2020

Q1 2019

Change

407m

366m

13%

Gaming

140m

113m

25%

TOTAL

547m

478m

16%

Prior to the completion of its merger with The Stars Group in May, London-listed Flutter Entertainment reported a 16 per cent increase in first quarter revenue to £547m, having been on course to report a 29 per cent rise prior to the disruption of sporting events in the final two weeks of March. Flutter’s operations in Australia and the US recorded the strongest growth as revenue climbed by 21 per cent and 51 per cent respectively in local currency, while its PPB online segment grew revenue by nine per cent, offsetting an eight per cent decline in PPB retail. 66

There was a strong performance from London-listed Gamesys Group, which recorded a 19 per cent increase in revenue to £155.3m during Q1 2020. Continuing the trends seen during the final quarter of last year, the online bingo-led operator benefited from strong growth in Asia, a solid performance in the UK, continued progress in Spain and Germany, and double-digit growth in the US. This was partially offset by a decline in Sweden.

“The group performed very well in the period prior to the disruption to sporting events in mid-March,” said CEO Peter Jackson. “We delivered strong customer growth across each of our brands and benefitted from favourable sports results across our sportsbooks. Following the widespread cancellation of sporting events, group revenues have been more resilient than we initially expected, helped by the continuation of horse racing in Australia and the US. Gaming continues to perform well across the group.”

“During these unprecedented times our main priority is the health and wellbeing of employees and players, and I am incredibly proud of the steps we have taken as a group to ensure that we are best-placed to do this,” said CEO Lee Fenton. “Our business purpose of “crafting entertainment with care” has never been more relevant and we remain committed to providing a fun, safe and entertaining environment for our global customer base to enjoy.”

KINDRED GROUP 11% Net revenue (£) Q1 2020

Q1 2019

Change

Sports betting

122.5m

106.5m

15%

Casino and games

112.9m

106.7m

6%

Poker

7.5m

5.7m

32%

Other

6.8m

5.5m

24%

249.7m

224.4m

11%

TOTAL

Stockholm-listed Kindred Group saw revenue increase by 11 per cent to £249.7m during Q1 2020, with growth across all product verticals. Sports betting revenue increased by 15 per cent to £122.5m, with live betting representing 42 per cent of the total, while revenue from casino and games rose six per cent to £112.9m. Poker revenue was up 32 per cent to £7.5m, while other revenue climbed 24 per cent to £6.8m. In the final two weeks of the quarter, revenue was down 10 per cent year-on-year, although lower sportsbook turnover was partially compensated by growth in other products. “Our focus now is to optimise the business to meet the challenges of Covid-19,” said CEO Henrik Tjärnström. “In the short-term, we con-


FINANCE

GIQ20 Q1 2020

tinue to deliver a high-quality service to our customers, while protecting our employees and ensuring business continuity and regulatory compliance.”

BETSSON 7% Net revenue (SEK)

Casino Sportsbook Other TOTAL

Q1 2020

Q1 2019

Change

1,014.2m

1,012.8m

0.1%

384.9m

297.8m

29%

18.5m

20.0m

-8%

1,417.5m

1,330.6m

7%

Operationally, it was a busy first quarter for Stockholm-listed Betsson as the company signed up iBet as its first sportsbook customer, acquired a number of B2C casino brands from Gaming Innovation Group and launched its new Jalla Casino brand. Financially, the operator posted solid growth in Q1 as revenue climbed seven per cent to SEK1.42bn. Online casino revenue remained in line with the previous year at SEK1.01bn, while sportsbook revenue climbed by 29 per cent to SEK384.9m, offsetting an eight per cent decline in other revenue to SEK18.5m. “We had a strong first quar ter in al l areas and I look forward to the future with con f idence,” said chief executive Pontus Lindwall. “We reached a milestone in signing our first pure sportsbook customer, we have made a value accretive acquisition and we have launched a new casino product.”

RANK GROUP 5% Net revenue (£) Q1 2020

Q1 2019

Change

Digital

n/a

n/a

21%

Grosvenor venues

n/a

n/a

-5%

Mecca venues

n/a

n/a

-17%

International venues

n/a

n/a

-12%

Stride

n/a

n/a

3%

TOTAL

n/a

n/a

5%

GIQ Q2 REVIEW

London-listed Rank Group had a solid first quarter as digital growth offset falling retail revenue during the Covid-19 shutdown. Revenue was up five per cent year-on-year with the digital business growing by 21 per cent and the company’s venues business all contracting. Grosvenor venues revenue fell by five per cent in the period, Mecca venues fell by 17 per cent, and international venues fell by 12 per cent. The recently acquired Stride Gaming business grew revenue by three per cent. Rank’s digital revenue growth increased further since the closure of retail venues, with the operator also stepping up its responsible gambling focus during this period of isolation for many players, including the introduction of lower deposit level triggers for safer gambling interactions, encouraging players to set deposit limits and stopping all social media advertising.

POLLARD BANKNOTE 5% Net revenue (CAD$)

LEOVEGAS 4%

TOTAL

Net revenue (€)

TOTAL

Q1 2020

Q1 2019

Change

89.4m

86.3m

4%

Stockholm-listed LeoVegas reported a four per cent increase in revenue to €89.4m for the first quarter, benefiting from growth of 10 per cent in the Nordic region following positive developments in Sweden. In the rest of Europe, revenue decreased by three per cent, while revenue from the rest of the world grew 12 per cent. Overall, revenue from locally regulated markets represented 53 per cent of LeoVegas’ Q1 total, up from a 50 per cent share a year ago. “We have a solid performance, with profitable growth in most of our markets,” said president and CEO Gustaf Hagman. “Above all, we are proud that we succeeded at attracting a record-large depositing customer base during the quarter, with sequential growth of 11 per cent versus Q4. We are now beginning to see a clear effect of the measures we have taken in the UK, and the remaining brands grew in total compared with both the same period a year ago and with the fourth quarter. With all brands now operating on the same platform, we have created a good position to grow in the UK.”

Q1 2020

Q1 2019

Change

102.2m

97.5m

5%

Toronto-listed Pollard Banknote saw revenue grow by five per cent to CAD$102.2m during Q1 2020, buoyed by higher sales of instant ticket products and services, as well as increased iLottery revenue. This offset a decline in charitable gaming revenue, including results from Diamond Game and Oasis gaming machines, which were shutdown in mid-March due to Covid-19. “While Q1 was on pace for a very strong quarter in January and February in all product lines, the Covid-19 virus influx beginning mid-March did negatively impact our results,” said co-CEO John Pollard. “Our iLottery operations saw increased revenue towards the end of March and this trend has continued through April. While still relatively small in overall absolute financial terms, this growing trend is a positive reflection of the importance for lotteries to provide multiple distribution channels for their lottery products.”

“Our iLottery operations saw increased revenue towards the end of March and this trend has continued through April” John Pollard, Pollard Banknote

67


FINANCE GIQ20 Q1 2020

ASPIRE GLOBAL 2% Net revenue (€) Q1 2020

Q1 2019

19.6m

19.5m

1%

3.1m

n/a

n/a

B2B core B2B games

Change

B2C

11.0m

13.8m

-20%

TOTAL

33.7m

33.2m

2%

Stockholm-listed Aspire Global posted a marginal increase in first quarter revenue to €33.7m, buoyed by its recently acquired Pariplay business. This helped B2B revenue climb 16 per cent to €22.7m, offsetting a 20 per cent fall in B2C revenue to €11.0m. While revenue from the Nordics fell by 39 per cent, the company saw growth in the UK and Ireland of 26 per cent, with revenue from the rest of Europe up seven per cent and the rest of world up 78 per cent. “During the quarter we have successfully continued the execution of our growth strategy and we have managed to settle a number of new deals and expand our platform and games to new markets, partners and clients,” said CEO Tsachi Maimon. “We signed two new major deals for our game offering and the games were launched in two new European markets; Portugal and Romania. In addition, six proprietary games were launched in the quarter and a French version of the platform was finalised, targeting selected francophone markets.”

GVC HOLDINGS

said CEO Kenneth Alexander. “However, while our global and product diversification is standing us in good stead during the current uncertainty, the Covid-19 pandemic is posing an unprecedented challenge to our business and our industry.”

SCIPLAY CORPORATION 0% Net revenue ($)

TOTAL

Q1 2020

Q1 2019

Change

$118.3m

$118.4m

0%

New York-listed SciPlay saw net income for Q1 2020 more than double to $31.1m, despite revenue for the social casino operator falling by a marginal 0.1 per cent to $118.3m. Within this, mobile revenue climbed four per cent to $101.2m, reflecting the continued popularity of Sciplay’s core Jackpot Party Casino and Monopoly Slots games. Average daily active users (DAUs) fell by 0.1 per cent to 2.6m, while average monthly active users were down 0.9 per cent to 7.5m. Average revenue per DAU rose to $0.49, an increase of two per cent versus a year ago. “The first quarter represented another solid performance for us, and we saw particular strength late in the quarter as a result of the stay-at-home measures across much of the United States,” said CEO Josh Wilson. “We have seen this momentum continue, and delivered record monthly revenue in April.”

1%

LA FRANÇAISE DES JEUX (FDJ)

Net revenue (£)

-1% Q1 2020

Q1 2019

Change

Online

n/a

n/a

16%

UK retail

n/a

n/a

-19%

European retail

n/a

n/a

-3%

TOTAL

n/a

n/a

1%

London-listed GVC Holdings saw revenue grow by one per cent during the first quarter, with a 16 per cent increase in online revenue offsetting a 19 per cent decline in UK retail revenue and a three per cent decline in European retail revenue. Having previously estimated that retail closures and sporting cancellations due to Covid-19 would lead to a £100m monthly reduction in EBITDA, GVC expects to report a lower-than-anticipated impact on EBITDA as a result of mitigating actions taken in the final weeks of March. “As our Q1 trading numbers once again demonstrate, GVC is a business that, in normal times, delivers an outstanding performance,” 68

Net revenue (€)

TOTAL

up a substantial cost-savings plan to limit the impact on the company’s results while preserving its ability to resume all of its activities as soon as possible. At the same time, we are continuing to take practical initiatives in support of our stakeholders, and above all our retailers.”

GAMING INNOVATION GROUP -4% Net revenue (€) Q1 2020

Q1 2019

B2C

20.0m

20.2m

-1%

B2B

12.7m

14.2m

-11%

Eliminations

(1.6m)

(1.9m)

n/a

31.1m

32.4m

-4%

TOTAL Q1 2020

Q1 2019

Change

511.2m

515.7m

-1%

Paris-listed FDJ recorded a one per cent drop in revenue to €511.2m for the first quarter, as the lockdown in France had a significant negative impact on its results. Total stakes fell by five per cent to €4.1bn, with good momentum enjoyed since the start of the year held back by the spread of Covid-19 in March. Lottery stakes were down 1.5 per cent to €3.3bn, while instant games stakes were down one per cent to €2.0bn, and sports betting stakes decreased by 18 per cent to €766.5m. Overall, retail point-of-sale stakes were down six per cent to €3.8bn in Q1, with online stakes climbing 16 per cent to €0.3bn. “The exceptional situation is already having very significant effects on the company’s activity,” said chairwoman and CEO Stéphane Pallez. “That is why we have decided to draw

Change

Oslo-listed Gaming Innovation Group (GiG) reported a four per cent decline in revenue to €31.1m for the first quarter of 2020, as the company transitioned towards becoming a fully focused B2B provider. Revenue from the company’s B2C segment contributed €20.0m during the quarter, prior to the sale of the business to Betsson in April for €33m, while revenue from B2B fell by 11 per cent to €12.7m. This comprised media services revenue of €8.2m, platform services of €4.3m, and sports betting revenue of €0.2m. “The first quarter of 2020 has been a transformational one for GiG,” said CEO Richard Brown. “A first priority over the last quarters for the company was to address the balance sheet. I am also happy to see us return to topline growth as a group for the first time in five quarters, and that many of the actions we have taken


FINANCE

GIQ20 Q1 2020

GOING DOWN IN Q1 2021

in Q4 and Q1 will enable further cost savings, optimisation of the organisation and performance that will be a leaver to improved earnings in the second part of the year.”

CHURCHILL DOWNS INC -5% Net revenue (US$) Q1 2020

Q1 2019

Change

Churchill Downs

23.8m

21.4m

11%

Online wagering

67.7m

63.4m

7%

149.1m

170.1m

-12%

14.5m

12.5m

16%

252.9m

265.4m

-5%

Gaming Other TOTAL

New York-listed Churchill Downs reported a five per cent decline in revenue to $252.9m during Q1 2020, with its land-based operations significantly impacted by the pandemic. Revenue from online wagering grew by seven per cent to $67.7m following growth at TwinSpires, while Churchill Downs revenue increased by 11 per cent to $23.8m, buoyed by results from Derby City Gaming prior to its temporary closure in March. Gaming revenue fell 12 per cent to $149.1m as a result of the closure of all gaming properties, while other revenue contributed $14.5m “During this unprecedented pandemic, we remain focused on the health and safety of our team members, customers and communities,” said CEO Bill Carstanjen. “We look forward to the 146th Kentucky Derby on 5 September which will be a special day for all of us as we celebrate together once again this iconic event after such a difficult period for our country.” GIQ Q2 REVIEW

With the Covid-19 pandemic leading to the closure of land-based casinos and other retail gaming and lottery venues across the world, a record number of companies saw revenues slide, with US-facing operators and suppliers hit the hardest. On the supplier side, Scientific Games saw revenue decline by 13 per cent to $725m as revenue from its core gaming division decreased by 25 per cent, while revenue from International Game Technology fell by 18 per cent to $940.2m as widespread mobility restrictions hindered revenue generation. Revenue from AGS declined by 26 per cent to $54.3m, while Intralot’s first quarter revenue decreased by 47 per cent to €192.7m, despite increased revenue from North America. On the operator side, Penn National Gaming revenue fell by 13 per cent to $1.12bn as casinos were shuttered in mid-March,

while Caesars Entertainment revenue dropped by 14 per cent to $1.83bn and revenue from Boyd Gaming declined by 18 per cent to $680.5m. Eldorado Resorts’ Q1 revenue fell by 26 per cent to $473.1m, while revenue from MGM Resorts International slid 29 per cent to $2.25bn. It wasn’t just US-facing companies that suffered, with Q1 revenue from betat-home.com down 18 per cent to €25.5m as global sporting events were halted in mid-March. OPAP revenue fell 19 per cent to €217.4m, while revenue from Codere declined by 21 per cent to €278.5m, despite both companies seeing increased contributions from their online businesses. Revenue from William Hill declined by 27 per cent, while Global Gaming’s revenue fell 64 per cent year-on-year to SEK57.8m.

Net revenue Company

Q1 2020

Q1 2019

% Change

$725m

$837m

-13%

Penn National Gaming

$1,116.1m

$1,282.6m

-13%

Caesars Entertainment

$1,828m

$2,115m

-14%

IGT

$940.2m

$1,144.9m

-18%

€25.5m

€31.1m

-18%

$680.5m

$827.3m

-18%

OPAP

€217.4m

€266.8m

-19%

Codere

€278.5m

€354.1m

-21%

AGS

$54.3m

$73.0m

-26%

Eldorado Resorts

-26%

Scientific Games

bet-at-home.com Boyd Gaming

$473.1m

$635.8m

William Hill (until 28 April)

n/a

n/a

-27%

MGM Resorts International

$2,252.8m

$3,176.9m

-29%

€192.7m

€102.0m

-47%

€19.0m

€36.5m

-48%

SEK57.8m

SEK162.1m

-64%

Intralot Zeal Network Global Gaming 555

69


C O LU M N AND ANOTHER THING...

Reputation matters A

Steve Hoare

The gambling industry has been losing the war of words for a long time, but that could be about to change, says Steve Hoare

“Those who are implacably opposed to gambling are seeking to damage the industry through onerous regulation” Kenneth Alexander, GVC 70

s the UK rumbles along the path towards a new Gambling Act, the House of Lords’ repor t tit led Gambling Harm – Time for Action represents the most thorough review yet and provides a mostly reasonable set of recommendations for the government to assess. While the report makes the introduction of stake limits seem inevitable, it makes the point of not lowering them to such an extent that it drives players to the black market. It also recommends action against black market operators – a move that would be greatly welcomed by the regulated industry. There would be few who would disagree that licensing of affiliates is overdue. The top tier of the industry has already embraced many of the recommended restrictions on advertising around sporting events. It will be interesting to see how football clubs react to the call for a complete ban on betting advertising on shirts and in and around stadia. However, the report also noted the lack of evidence around links between advertising and problem gambling. Research could be key to tackling many of the issues around gambling, but the problem politicians have with research is that it is expensive, it can look like a delaying tactic and it makes the government look like it is not taking action. However, GVC Holdings released some interesting research of its own to coincide with the publication of the House of Lords report. The survey was mainly de si g ne d to show popular support for the industry among the general public, but the most interesting point was that only eight per cent of non-gamblers were “definitely aware” of industry responsible gambling measures. GVC chief executive officer Kenneth Alexander commented: “I am however concerned by the findings of our own research which highlights the lack

of awareness among the general public of the numerous and sophisticated tools GVC and the industry have introduced to put control where it belongs: in the hands of our customers. We have to do a better job of communicating that, because those who are implacably opposed to gambling as a matter of principle are actively seeking to damage the industry through onerous regulation, which will ultimately drive customers into the hands of the unregulated black market.” In an exclusive interview with Gaming Intelligence, Betting and Gaming Council CEO Michael Dugher told us: “Technology is our friend and technology will be part of the answer.” The industry has made much progress with pop-ups, emails, phone calls, deposit limits and accounts closed down due to the signs of problem gambling. Furthermore, technology should make age verification completely watertight. Technology cannot eradicate addiction – and the technology in this area is a work in progress – but it can make gambling as safe as it is possible to be. However, if the wider non-gambling public is not aware of this, it will continue to view the industry as a shark preying on the weakness of ordinary people. GVC set up an internal group earlier this year dubbed Project Spartan to study the reputation of the industry and find ways that GVC can help rehabilitate it. This will include highlighting ways the industry contributes to society in the shape of taxes, employment or partnerships with sport. But the main focus is on how it can develop its Changing for the Bettor campaign for Changing for the Bettor 2. It will include all sorts of responsible gambling measures, but chief among them will be how those measures are communicated better. There is some recognition internally that this will need a full-on advertising campaign across every channel available. This would be real progress. If others follow suit then perhaps the reputation of the industry, which is clearly languishing at an all-time low, really can be resuscitated. People often claim it is impossible for the gambling industry to become as socially acceptable as other forms of entertainment but this could be a massive step in the right direction. n


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