Q2 REVIEW
July – Sept 2019
t or he s ep s t le l r el u ia fe r ec en new Sp ed of Sw rce fo
• JULY – SEPTEMBER 2019 • ISSUE 38
G A M I N G
I N T E L L I G E N C E
Q U A R T E R L Y
ALL EYES ON THE UK
UK GAMBLING COMMISSION SETS THE AGENDA
A GAMING INTELLIGENCE PUBLICATION
GVC and William Hill go head to head on RG Advertising Standards Authority cracks the whip Plus Interviews with FOX Bet, GVC Holdings, NetEnt, Sportradar, William Hill and many more
CONTENTS
LEADER Q2 REVIEW
4 Snapshot Top stories, top quotes, top deals and deal of the quarter
6 Thought Leadership Scientific Games, SBTech, Sportradar, BeeFee
15 People New FOX Bet CEO Robin Chhabra gives his first interview; plus new appointments at Buzz Bingo, Global Gaming, GVC and more
Steve Hoare
E D I TO R
A NEW BEGINNING
HE AXE HAS fallen on Global Gaming (see A look at the quarter’s best new games page 4). The Swedish 21 Technology regulator Spelinspektion has acted as the UK Gambling ComAI and RG; plus FanDuel and Sportradar launch streaming mission has threatened to do for 29 Marketing the past few years. The Advertising Standards Agency reveals all; plus all the latest Global Gaming is not some marketing news rogue operator. It claims to have rectified all the issues 35 Lottery Spelinspektion identified Svenska Spel on tricky starts and ad bans; plus news and has called in its from around the world lawyers to appeal the 40 Legal & Regulatory decision. This, howFocus on the UK Gambling Commission; GVC ever, was a sanction and William Hill go head-to-head with responsible waiting to happen. gambling campaigns; plus all the latest legal Neil McArthur, Global Gaming failed developments from around the world Gambling to stop customers from Commission 55 Finance gambling beyond their pre-set limits. It is as basic Special report on Sweden’s re-regulated market; and the GIQ20 Q1 2019 as it comes. And it is as shocking as 888 failing to stop self-excluded 74 And another thing…. customers gambling on its partBoosting diversity ners’ skins – as it did back in 2017, when it received a record fine from the UKGC. One hopes Global Gaming can recover from this shock. It is an innovative operator and is clearly trying to correct its mistakes. The UKGC can be proud of the responsible gambling wave that it has sent through Europe. While the industry has legitimate concerns about some of its methods (see cover feature, page 42), one cannot criticise the regulator for regulating. Too many times in the past – I’m thinking about Full Tilt and
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18 Games
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GIQ Q2 REVIEW
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similar debacles – customers have suffered through inadequate regulating (although in that instance they were saved by PokerStars). This wave of responsibility has spread to advertising. The decision of leading operators in the UK and Sweden to ban their own advertising will likely prove a turning point. It is very easy to call for an end to television advertising (GVC) or all online casino advertising (Svenska Spel) if you are the operator with the largest retail presence in the country. However, a healthy level of scepticism cannot completely denigrate the efforts of GVC and Svenska Spel. It might well have been easy for them to make the first move. GVC prefers digital marketing anyway, but Svenska Spel’s online casino is brand new and it is a fledgling operation in a fiercely competitive market (see interview, page 36). This is the new landscape for operators. It will be more expensive. The golden age of easy money has ended. Unfortunately, some smaller operators will not cope. They will be seen as collateral damage in the cleanup of the industry. Operators will have to get smarter too. Yes, it is a period of upheaval. Yes, it might be painful. But if technology, regulation and smart marketing can de-stigmatise the industry, then we will all be thankful. sah@gamingintelligence.com
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GIQ Q2 2019
Snapshot most popular news stories on GamingIntelligence.com Blow for Gibraltar as bet365 confirms Malta expansion plans Global Gaming loses Swedish licence due to AML failure Raketech’s TVmatchen.nu forced to cancel Djurgården sponsorship JPJ Group agrees £490m deal to acquire Gamesys UKGC issues £4.5m in penalties to four more operators Paddy Power Betfair renamed Flutter Entertainment Rank Group agrees £115.3m deal to acquire Stride Gaming Gamesys to pay £1.2m penalty for social responsibility and AML failure Western Australia moves closer to sale of TAB Novomatic to sell UK gaming terminals business to Inspired
Quote of the Quarter The Sky guys have created a unique model. Nobody else has made the integration of a media company and betting operation work” Robin Chhabra, chief executive officer FOX Bet (page 16)
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Fighting talk THE RISE AND fall of Global Gaming, operator of the ground-breaking Ninja Casino, has been dramatic, even by the standards of the gaming industry. In February, it scooped the Gaming Intelligence award for Casino Operator of the Year on the back of an innovative product that had seen revenue rocket during 2018. At the end of April, it showed chief executive officer Joacim Möller the door and brought in Tobias Fagerlund to steady a ship that all of a sudden looked like it was sinking. The extent of its problems were made clear when the Swedish regulator Spelinspektionen revoked its operating licence for violating some of the most fundamental aspects of the new gaming legislation, which was introduced just six months ago. In an examination of ten high-spending Ninja Casino customers, the regulator found several were allowed to play without a deposit limit, in breach of regulations, with two players losing a combined SEK1.6m in a one-week period and others depositing beyond their pre-set limit. The regulator also found serious and systematic shortcomings in the company’s anti-money laundering processes, risk assessment measures and bonusing processes, and offered lottery bet-
ting games in breach of Swedish regulations. That, one would presume, should be the end of the story. However, Global Gaming’s new CEO Fagerlund has vowed to fight back. The operator issued a statement claiming the problems identified by the regulator had been rectified and the regulator had been kept up to speed throughout the process. He claimed the company was now fully compliant. “The company’s lawyers are of the opinion that Spelinspektionen’s decision lacks support in gaming law and therefore the decision will now be appealed,” said Fagerlund. “That the licence is now revoked lacks legal support and constitutes a disproportionate intervention that causes the company damage.” While the legal battle will prove intriguing, the story here is Spelinspektionen’s ratcheting up of the war on irresponsible gambling. The UK Gambling Commission showed the way back in 2017, when it fined 888 for failing to bar selfexcluded customers. Since then we have been waiting for the licence revocation former UKGC CEO Sarah Harrison always threatened. The surprise is that it is not her successor making this move but the Swedish regulator. Harrison’s legacy lives on beyond the UK’s borders.
THE QUARTER’S DEALS IN 60 SECONDS The £490m acquisition of Gamesys by JPJ Group is an unusual one indeed, coming just four years after JPJ (in its previous guise as Intertain) bought the Jackpotjoy, Starspins and Botemania brands from, you guessed it, Gamesys for a mere £750m. Why sell the company once when you can sell it twice? While the Gamesys founders will be celebrating, JPJ Group’s short-lived existence is no more as Gamesys becomes the group
brand and the Gamesys management takes on the CEO and COO roles. The gaming industry is never shy of a complex deal but this one makes perfect sense for all concerned. Gamesys is expected to emerge all grown-up as a member of the FTSE250. It was all go in the UK bingo scene, as Rank Group agreed a £115.3m deal to acquire Stride Group. Stride is the third-largest operator in the UK bingo-led market, with an 11 per cent market share. It operates more than 150 brands, including Regal Wins Casino, Magical Vegas, Spin and Win,
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The Stars Group teams with FOX Sports for US launch THE STARS GROUP and FOX Corp will launch the new FOX Bet brand on the US market in an attempt to recreate the success of Stars’ Sky Bet operation in the UK. As part of the deal, FOX acquired 4.99 per cent of The Stars Group for around $236m, which will be used to write down debt. The agreement also gives FOX the right to acquire up to 50 per cent of FOX Bet before the tenth anniversary of the agreement. The Stars Group appointed chief corporate development officer Robin Chhabra as chief executive of the new operation (see interview, page 16). FOX Bet will be The Stars Group’s sole sports betting brand in the US market, meaning an end to the company’s Bet Stars brand in North America. The company will utilise its existing market access agreements with Resorts Casino in New Jersey, Mount Airy in Pennsylvania and Eldorado Resorts in 11 other states (Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, Ohio and West Virginia). It then aims to cover the map with similar agreements in other states that regulate sports betting. The Stars Group expects to recruit heavily into its existing offices in Miami, New Jersey
The quarter in numbers FINANCE
-3%
NetEnt Q1 revenue decline
-18%
Global Gaming Q1 revenue decline
-86%
Global Gaming share price drop in the past year M&A
DEAL
OF THE QUARTER
and Austin, as well as its new office with FOX in LA. Such are the similarities between FOX and Sky, that the deal looks like a match made in heaven. FOX brings Stars a national brand and marketing assets that will be the envy of every other operator. The only comparable media companies with a similar reach are ESPN and NBC but the catchiness of the FOX Bet brand is undeniable. Furthermore, the links between Sky and FOX (both previously part of News Corp) mean the FOX executive team knows exactly what it is getting.
£490m
Cost of JPJ Group’s deal to acquire Gamesys
4.99%
Stake in The Stars Group acquired by FOX Corp
£115.3m
Rank Group’s deal to acquire Stride Gaming REGULATORY
14
US states to have legalised sports betting
1 and Kitty Bingo. While UK bingo consolidated significantly, US casinos largely failed with their M&A efforts during Q2. Caesars, William Hill and Eldorado Resorts were engaged in various talks, which failed to reach fruition by the time GIQ went to press, but Caesars did offload its 70 per cent stake in a Johannesburg casino to Peermont for $49m. Meanwhile, Wynn Resorts entered talks with Australia’s Crown Resorts before promptly ending them. Back in the UK, Inspired Entertainment agreed a $120m deal to acquire Novomatic’s GIQ Q2 REVIEW
Gaming Technology Group, which includes Astra Games and Bell-Fruit Group. Beyond the M&A market, Gaming Innovation Group (GiG) won a deal to launch a new online casino for New Zealand’s leading casino operator SkyCity Entertainment Group… when regulations allow it. Meanwhile, Scientific Games completed the initial public offering of its SciPlay social gaming business, and Tabcorp launched a new merged pools offering with an intriguing technology partnership with Nasdaq.
Global Gaming licence revoked by Swedish regulator PEOPLE
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Years with GVC (and Ladbrokes Coral) for Andy Hornby
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Years service for Leander Games co-founders 5
S P O N S O RE D E D I TO RI A L SCIENTIFIC GAMES
Driving lottery growth responsibly with product optimisation Scientific Games’ vice president, lottery marketing strategy, Christopher Allen, helps create strategies, marketing and product plans to drive sustainable and responsible growth across dozens of high-performance lottery product portfolios, from Kazakhstan to the UK
Christopher, can you explain what instant product optimisation is in the lottery industry? Product optimisation is not just about individual products but why those products exist. Fully understanding customers allows lotteries to create awesome games and develop services to get those products into market and on display at retail for players. Instant product optimisation is really quite powerful in terms of not only growing playership, but also from a responsible gaming perspective. We can set new ways of measuring sales and measuring the performance of the product portfolio. It empowers us to define the strategy for the overall portfolio so we can consistently design games to meet player needs, identify gaps to innovate new content and deliver the right portfolio mix for our customers’ sustainable growth.
Are lotteries looking for new ways to optimise product portfolios? The four Ps of marketing – product, price, place and promotion – are as relevant now as they were ten or 15 years ago. They form the solid foundation for lotteries to grow in a more data-driven manner as they compete for players’ gaming entertainment interest and spend. As lottery markets mature and stable foundations are put into place, growth based on the onesize-fits-all product model begins to erode. With that in mind, we created an entirely new framework, starting directly with the players and their motivations – the ‘why’ behind the reason they play. As the leaders in instant lottery products, we have an obligation to continue to learn and push the boundaries of our knowledge.
Is there research to help guide lotteries with product optimisation? A few years ago, we invested in researching global gaming and lottery players with our ONE™ Segmentation study. The first of its kind in the industry, it provides us with deep 6
insights into the motivations of players across the lottery and gaming landscape in the US and Europe. We analysed why players play our games and more broadly, why they’re interested in this type of entertainment. It lets us directly make comparisons between like-minded player segments from one gaming jurisdiction to another. By digging deeper, we can figure out how best to create engaging content that drives growth responsibly. Drawing upon other industries and other fast-moving consumer goods, we can learn from the research and principles they’re applying in their markets. The lottery industry, and the lottery product set, is a very unique category, with its own set of drivers and motivations for play. With this in mind, we created a virtual store environment, a realistic online replication of the shopping experience. Using different product scenarios, we can measure player behaviour and, more importantly, changes to that behaviour. Testing multiple games against each other, we test innovations in product sets and the different positioning of those games against each other. We also use real environments to replicate an entire store and validate the player behaviour we see from the online results. This research helps us to understand how current lottery game content meets the needs of the player segments within our ONE framework. Evaluating how that content interacts within the lottery’s product portfolio enables us to find the optimal mix of games.
How are these new player insights benefitting lotteries? Many of our customers are now starting to leverage our ONE Segmentation framework as part of their day-to-day product portfolio management, because it allows the right product experts to solve the right problems. We work
S P O N S O RE D E D I TO RI A L SCIENTIFIC GAMES
with so many different lotteries in more than 50 countries around the world, and our research allows us to understand the player makeup of each different region. There’s no social demographic skew to our segments. Rather than trying to target a specific group of players based on age, gender, income, etc., lotteries can increase revenues in a responsible manner by offering the best mix of games to grow all of their player segments based on play motivations. Using insights from our ONE study, we’re trying to deliver the best lottery product portfolios with games that complement one another. With great portfolios, lotteries can reach the most players across all player segments to increase the frequency of play in a responsible way, rather than drive just one group of already high-frequency players to play more games.
Why is it important to create a strategy based on player motivations? Because it begins to help us solve a lot of our lottery customers’ current challenges, such as responsible gaming. There’s an underlying concern that the lottery industry is always targeting the same players and those players are spending more and more – and as the prices of games keep going up, you’ve got fewer players spending more at higher prices. Actually, we’re learning that lotteries can generate sustainable and responsible growth with an expanded portfolio with new games that doesn’t exclude their
core players but generates a wider reach. This activates more players and increases participation from infrequent or occasional players. In certain places we’ll try to activate player segments: for example, what we call the ‘Passionate’ group of players in Europe. We’re activating them because they make up 27 per cent of the player base and they’re the second-largest contributor to revenue. But they’re only 80 per cent activated in terms of penetration, whereas our ‘Enthusiasts’ segment might have over 95 per cent penetration. We might offset the reach of Enthusiasts to execute a product mix that could gain a higher and more responsible reach within the Passionate group. With product optimisation and better distribution, we’re changing the onesize-fits-all model to maximise lottery customers’ content across the widest-possible audience and for different types of players.
What does the future hold for lottery product portfolios? It’s important to remain curious about how to grow and innovate. A player-focused marketing function gives us more insight into the complexity and sophistication of true portfolio mix management from a player behaviour perspective. We are advancing how to create the optimal portfolio based on the product ingredients. But there is so much more to uncover. Continuing to evolve our insights on payouts, prize structures and play styles, along with other key determinants of demand will help us further understand how those factors impact player behaviour. Ultimately, this new knowledge will allow us to create the optimal portfolios for lotteries around the world. n © 2019 Scientific Games Corporation. All rights reserved. GIQ Q2 REVIEW
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S P O N S O RE D E D I TO RI A L SBTECH
The power of localisation SBTech chief operating officer Dave Hammond says localisation of a sports betting product has never been more important than in the state-by-state US market A PLAYER IN New Jersey walks into a sportsbook to place a parlay on a kiosk with everything riding on a Yankees victory. He then calls his brother in Tennessee, who is about to spend 50 bucks on his mobile on the Titans winning the Superbowl in 2020, who then messages his best buddy in Vegas, who has decided to follow his heart – again – and back the Golden Knights to go one further and win the Stanley Cup. Localisation has never been more important. In addition to technical, tax and compliance hurdles, operators face the challenge of localising and differentiating across regulated markets. In order to retain existing players and acquire new players across a series of increasingly competitive territories, it is now a prerequisite to offer a fully localised offering. The newly opened US market, which is regulating on a state-by-state basis, is the perfect example of where a localised experience is vital to appeal to both state and sports-specific tastes. Every state has its teams and sports of choice, with fans fiercely loyal to its homegrown heroes, and today’s sports betting technology needs to reflect this. If not, operators can miss the mark and, if so, these audiences will rapidly look to register, deposit and bet elsewhere. When it comes to localisation, many sports betting technology suppliers’ offerings fail to live up to expectations. From the day we started over a decade ago, we have grown our technology capabilities year-over-year to offer our
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partners complete end-to-end country localisaapproaching specific markets, with localisation through back-end services in core platform tion calling for a differentiated and bespoke and front-end operations as well as trading and approach. This is an area at the core of SBTech’s risk strategies within our tools and teams. offering and stands out in the industry. The strength of our localisation features Delivering differentiated trading strategies and functionality has led to SBTech winning a across both localised and multiple territories, host of tier one contracts with the world’s largworking side-by-side with partners to precisely est regulated market iGaming brands and major gauge their needs and measuring every area lottery organisations to run either its entire of their operations, is essential within today’s platform solution and/or its sportsbook. This competitive marketplace. includes the first major contracts post PASPA in We deliver a host of different pricing models New Jersey and Mississippi, the largest US deal and bespoke trading strategies, be it split by to date – selected by the Oregon event, player segmentation, Lottery to provide a full omnior if operators have a brand channel sportsbook solution ambassador(s) or a marketing across online, mobile and an “Configurability partnership with a specific extensive retail presence – and and flexibility team. We can then create bonus recently launching Virgin- when targeting boosts or the best price in the Bet’s new next-generation APImarket using our configurable specific territories driven UK sportsbook. and flexible systems. We may, is of paramount for instance, offer the best price importance” Three key factors but overlay that with different Today, a sportsbook and gam- Dave Hammond, SBTech customer journeys to suit a ing solution must both be fully partner’s specific strategy. compliant and certified, adhering to an operaConfigurability and flexibility when tartor’s regulated market(s) of choice, as well geting specific territories is of paramount as configurable to any local requirements, importance. Our technology allows for maxioffering brands maximum flexibility, speed mum configuration with a huge selection of to market and innovative responsible gaming country-specific layout choices. Using our CMS controls tailored precisely to its players’ needs. tool, operators can create a unique, localised One area which is often overlooked with offering to whatever their requirements are localisation is margin – it is an essential part of across bet slip layouts for specific country best an operator’s business plan and critical when practices, specialist betting markets, bet types, prop bets (largely US), gaming content, payment methods and providers, and local tax application and reporting. The third key area is next-generation APIs. These are being used by several of our customers to build their own front-end client on desktop and mobile, for example, providing brands and their products with an exclusive offering and an immediate edge with their own unique user interface and user experience that can both disrupt the local market and/or increase existing market share. The world may well be more globalised and connected on many levels. However, it is increasingly becoming apparent that a localised approach is the key to regulated market success. n
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S P O N S O RE D E D I TO RI A L SPORTRADAR
Off the bat Sportradar quantitative analyst Donnacha Bolger explains what it takes to build a world-class sports trading model
TO BE ABLE to deliver world-class sports data and trading services, you need a combination of three factors – comprehensive and quality data, with official data partnerships, marketleading mathematical algorithms and models, and expert trading analysts with high-level mathematical, scientific and sports knowledge. Because of Sportradar’s wide-ranging sports coverage and official data partnerships with major sports federations across the world – like Major League Baseball (MLB), for example – it has access to multiple complex metrics for teams and players from each individual play that is made. Being able to obtain this data straight from the source in real-time as it’s happening is crucial. Together with the ISO-Certified Quality Management Systems that Sportradar applies to its data procurement processes, this means that the data is not only reliable but also fast. With a maths degree and a PhD in statistics, Donnacha Bolger is an expert in what he does, like many of Sportradar’s trading team. As a huge fan of baseball, he has a wealth of knowledge in the sport, which he uses in his role as a quantative analyst to build trading operations models specifically for the game. “Having a deep and accurate source of data is a vital foundation to build a top-class model,” says Bolger. “The quantitative analyst team builds models for individual sports using this data, which then perform mathematical calculations to produce market probabilities. Our models are extremely 10
dynamic, and update with real-time data from the field of play, meaning prices offered are always accounting for the latest available information possible. This involves creating additional markets at an extremely granular level to generate even more betting and engagement opportunities for clients. “Some of the market extensions we have created for baseball include looking at the potential outcome of the next individual pitch that is thrown, whether it be a ball, or a strike, or a hit. We then try and go a level further, looking at the potential outcome of the player at bat. For example, will they be out, will they hit a home run or will they hit a single? From this, for every half innings, you have a plethora of new markets to work with, including how many hits will take place, how many home runs and how many total bases for each team.” Bolger and his team constantly monitor and enhance their models on an ongoing basis, using a feedback loop from clients, analysis of betting and sports data, and their own traders to adjust where required and to break markets down even further. “With our latest market extension for baseball, we’ve added between 30 to 40 new markets per game. From a business and client perspective, this is fantastic. As a sport with such a statistical culture, and with games lasting around three hours, baseball provides a fabulous opportunity for operators to engage their customers even further by offering them interesting and entertaining micro-level betting propositions. And we’re leveraging this by diving even further to create even more markets,” says Bolger. Sportradar believes it ’s a lso about feeding the desires of today’s customers. Thanks to adva nces
“Our models are extremely dynamic, meaning prices offered always account for the latest information possible” Donnacha Bolger, Sportradar in technology, sports fans want more ways to get involved with the game, gain a deeper understanding and be able to predict various outcomes. “This is what makes the intricacies around player markets and pitch-by-pitch markets so important. And, with the amount of team and player data available in a game like baseball, we haven’t even cracked the surface in terms of potential market possibilities,” adds Bolger. “Thanks to our official partnership with MLB, we also have access to their Statcast data, which will enable us to develop many opportunities for fans to engage with the sport. The speed of a pitch, spin rate, angle of elevation that a ball is hit at, exit velocity, length of home runs – these are factors that baseball fanatics love. These are the markets that, when utilised in established and newly emerging legalised betting environments – like the US, LatAm and potentially Asia – have the ability to capture punters’ attention and expand interest in the sport as well.” n
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S P O N S O RE D E D I TO RI A L BEEFEE
Introducing BeeFee Games Gaming Intelligence speaks to BF Games’ head of business development, Claudia Melcaru, to find out more about the supplier’s new line of games and its plans for the rest of the year
BEEFEE MIGHT BE an unfamiliar name to many in the gaming industry, but the supplier has been in business for 15 years. It started life as a land-based slots provider, before becoming a land-based operator and manufacturer with experience across several markets worldwide. Five years ago, the company decided to launch its online arm, BF Games, aiming to create an extensive, high-quality portfolio of games that is competitive in the crowded casino slot market. The BF Games portfolio contains a mixture of traditional and innovative titles.
Tell us about your existing portfolio of games and what we can expect from the titles being launched over the next few months. Our current portfolio has a good mixture of more traditional casino games such as Hot Classic and Lucky Tropics, which are modern takes on the fruit machine, as well as our more advanced new titles Bonnie & Clyde, Aztec Adventure 3D and Magic Hunter that have proven to become very popular. Bonnie & Clyde became our second-highest-performing game just one month after it launched in April, which is a major achievement for our development team. This new line of games will continue to grow, and we will launch some high-quality new games in the near future, with provocative graphics and catchy games features. We focus on having a great variety of titles in terms of graphics, mathematics and themes to ensure we have games that appeal to a wide audience.
How have you found being a fairly new supplier of online casino games in a very crowded market? We have gained some traction over the years with the help of branded successful online casinos in our group, such as EnergyCasino, and are lucky to have our own RGS which makes it easy for operators to integrate our content. We are also partnering with known aggregators to make sure our games reach as wide an audience
globally as possible. Our games are now being offered by premium operators in regulated markets across Europe. But it is a crowded market and, business-wise, picking up new content can be a gamble for operators. However, if that gamble pays off, the reward is generous on both sides as the operator will have a competitive advantage by having new content to offer and the game studio will have its content on the market, available to players.
What jurisdiction do you see most potential in at the moment? Our games are currently very successful in Germany, in Central and Eastern Europe, and picking up good numbers in the Nordics. We create games that are localised to specific markets and over the years we have learned a lot from studying player behaviour and conducting market research. In some markets, players prefer simple graphics and high volatility over complex mathematics, while in some countries it’s the other way around. For example, last year we redesigned ten of our games to launch in Belgium, a very specific market, and happily our games are performing very well there. We always look at the possibility of launching in new markets as well, and are excited about the prospect of going into the US and Latin American markets if the opportunity arises. n
PEOPLE FIVE IN THE NEWS Gaming executives who have been making headlines Hornby exit leads to GVC reshuffle THE DEPARTURE OF GVC Holdings’ co-chief operating officer, Andy Hornby, has led to a management reshuffle that has seen chief marketing officer Adam Lewis (right) appointed managing director of digital and Mark Chambers made managing director of retail. Hornby’s co-chief operating officer Shay Segev will become sole chief operating officer. In addition, managing director of UK digital sports brands Mark Kemp leaves the group later this year to join the Alizeti Group as managing director of Together for the Tote. The reshuffle should further bond GVC’s integration with the Ladbrokes Coral business, which was fundamentally Hornby’s responsibility. With Lewis moving from responsibilty for legacy GVC brands to everything digital, including Ladbrokes Coral, you could say the integration is complete. Kemp played a pivotal role in the upswing in Ladbrokes Coral’s digital fortunes and his progress at the Tote should be watched with interest.
A new face at Buzz Bingo
Intralot management overhaul
UK BINGO OPERATOR Buzz Bingo has appointed former Thomas Cook group marketing director Jamie Queen to the new role of chief commercial officer. Queen will lead marketing communications for the brand, as well as food and beverage operations, gaming and bingo propositions. Bringing brains and fresh ideas from outside the industry reinforces the renewal momentum that was started when Gala Leisure spent £40m rebranding itself as Buzz Bingo. Queen’s task will be making omnichannel work successfully, following the launch of the Playtech-powered online offering at buzzbingo.com.
FOLLOW ING TH E DEPA RT U R E of CEO Antonios Kerastaris, group chairman and founder Sokratis Kokkalis has stepped into the CEO’s office and overhauled senior management. The company’s operations, technology, digital and commercial divisions have all been reorganised, and will report to deputy CEO Nikos Nikolakopoulos. The Sales & Operations division is headed up by Maria Stergiou as chief sales and operations officer. As chief services and delivery officer, Christos Dimitriadis heads up Intralot’s Services & Delivery division, responsible for the integrated solution delivery and technical support of projects worldwide. The Lotteries division will be led by Fotis Konstantellos as chief lotteries officer. Nicklas Zajdel takes on the role of chief digital and sports betting officer. The restructuring aims to improve efficiency after falling revenue in 2018 and into 2019.
GIQ Q2 REVIEW
IN THIS ISSUE 15 News: executives making headlines 16 Interview: Robin Chhabra, FOX Bet
Leander founders depart IT IS ALWAYS the beginning of a new era when founders leave the company they launched. The departure of chief operating officer Ramiro Atucha and chief technology officer Marcelo Blanco from Leander is no different. The pair have prepared the ground neatly for their departure. Atucha recruited chief executive officer Steven Matsell to replace him nearly seven years ago and the company has progressed a long way during that time. Leander recently opened a European headquarters in Malta under new recruit Karl Grech, and will focus its attentions on Europe and Latin America. The departure seems amicable and the timing seems spot on. With a slight rebalancing of attention towards Europe, the Argentine founders are free to follow their entrepreneurial instincts with a new gamingrelated business to be launched before the end of the year.
Global Gaming’s new CEO Ninja Casino operator Global Gaming started Q2 2019 by saying goodbye to chief executive Joacim Möller, with board memberTobias Fagerlund called in to serve as acting CEO. He may be wishing he had not taken the board’s call, however, as by the end of the quarter the company had lost its Swedish operating licence for failures that occurred under the previous leadership. Möller left the business in April, shortly after it announced the withdrawal of its proposed dividend in the face of slowing revenue growth. Fagerlund now has bigger issues to contend with, as Sweden accounted for the majority of Global Gaming’s revenue of SEK915.9m last year. Swedish regulator Spelinspektionen revoked the operating licence of SafeNet, a subsidiary of Global Gaming 555, after finding “serious deficiencies in the company’s operations, including gaming responsibility and antimoney laundering measures”. The company is the first operator to have its Swedish licence revoked, 168 days after the licensed market opened. Over to you, Tobias.
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P EO P L E FOX BET
FOX Bet pushes Sky Bet as model for US market The Stars Group named chief corporate development officer Robin Chhabra as the chief executive officer of its newly-formed FOX Bet business. Here, he explains the vision for FOX Bet to Steve Hoare THE STARS GROUP is looking to copy the model of the recently acquired Sky Bet and its success in the UK, and translate that to the US market with FOX Bet, a partnership with US media company FOX Sports. As part of the deal, Fox Corp has agreed to take a 4.99 per cent stake in The Stars Group but FOX Bet starts as a commercial arrangement, solely owned by The Stars Group. FOX has an option to become a 50-50 equity partner in FOX Bet at any stage during the next ten years of the 25-year agreement. Robin Chhabra has been appointed CEO of FOX Bet and will move to the company’s new Los Angeles office, which will be co-located with FOX Corp, or its established New Jersey office. In his first interview as FOX Bet CEO, Chhabra told Gaming Intelligence that FOX Bet would be The Stars Group’s sole sports betting brand in the US market. This means that the company’s existing BetStars brand, launched in New Jersey, will be rebranded as FOX Bet. The company will utilise its existing market access agreements with Resorts Casino in New Jersey, Mount Airey in Pennsylvania and Eldorado Resorts in 11 other states (Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, Ohio and West Virginia). “We are pretty sure we will be able to cover the map with agreements,” said Chhabra. “We are in advanced discussions with other access part16
ners and this partnership should make us very attractive to them.”
The William Hill connection Chhabra’s new team will be made up from talent across The Stars Group business, including the recently recruited Matthew Gerard, who joined Stars from William Hill in May. The capture of Gerard from one of Stars’ chief rivals is quite a coup. Gerard has worked at William Hill for six years – most recently as managing director of the UK bookmaker’s fledgling US digital operation. Gerard and Chhabra are joined by another former colleague in the shape of Andy Clarkson, the co-founder of digital marketing company Grand Parade, which was acquired by William Hill while Chhabra was its business development chief in 2016. Chhabra joined The Stars Group from William Hill in 2017. His sevenyear spell at Hills coincided with an upturn in the bookmaker’s fortunes that saw it overtake Ladbrokes and become the UK’s number one betting brand. A key factor in that was the M&A, strategy development and business improvement carried out by Chhabra’s team. Chhabra stepped into his role as group director of strategy and development just as the William Hill Online joint venture with Playtech was bedding in, but he was involved in the deal from the start, as a consultant, before joining the operator full-time.
It was not all plain sailing. In 2009 Playtech was forced to issue a profit warning due to integration problems with the UK bookie. But ultimately, the joint venture was an overwhelming success and became the blueprint for Playtech’s deals with Ladbrokes and Gala Coral that followed. Chhabra’s fingerprints were all over a string of acquisitions as Hills looked beyond its home market and towards greater global coverage. Perhaps his greatest successes were the combined acquisitions of American Wagering Inc, Brandywine Bookmaking and Cal Neva for a combined total of $49m in 2012. The three acquisitions provided the infrastructure underpinning Hills’ entire US strategy.
Looking to the Sky Since joining The Stars Group, Chhabra has been a key figure in shaping the company through a string of acquisitions, starting with the twin deals that took The Stars Group into Australia, and culminating in the US$4.7bn acquisition of Sky Betting & Gaming in July 2018. Chhabra says that Stars always had one eye on the US market during the discussions that led to the acquisition of Sky Bet. The repeal of the Professional and Amateur Sports Protection Act was some way off but its repeal was looking more and more likely as Stars did its due diligence on Sky. “Sky gave us a unique way of capturing US market share. The Sky guys
P EO P L E FOX BET
“We have had engagement from the top down at every stage of this process. This is not a side venture for FOX” Robin Chhabra, FOX Bet
Eric Shanks, CEO, FOX Sports
Robin Chhabra
have created a unique model. Nobody else has made the integration of a media company and betting operation work,” says Chhabra. “The ecosystem, which we know well in the UK, this blend of realmoney and free-to-play games, integrations into the TV shows, integrations into the digital assets and the use of talent. There are some unique capabilities there, which we thought could be leveraged across the world but initially in the US,” he says. Stars has engaged in a number of discussions with large US media companies but the team at FOX Sports, led by CEO and executive producer Eric Shanks, was familiar with the Sky Bet operation. While Sky and FOX are now separate companies, they “understood the power of the model”, according to Chhabra. “We have had engagement from the top down at every stage of this process. This is not a side venture for FOX. Following the disposal of certain assets to Disney, they are very focused on sport and news, and are looking to recreate another media giant,” said Chhabra. FOX Corp co-chair Lachlan Murdoch is understood to have been involved in discussions and Shanks brought a team over to Leeds to see the Sky Betting & Gaming team in action. “The deal took a lot of time to do,” says Chhabra, “and part of the reason is because we wanted to create the same architecture that underpins Sky Bet.”
This is about making sure that FOX Bet has strong ties to FOX Sports. You will see a lot of FOX talent acting as brand ambassadors for FOX Bet and with exclusive marketing rights you can expect to see FOX Bet odds creeping into FOX Sports digital and television coverage. “It needs to be sport first, betting second,” explains Chhabra. “Sports fans love stats and betting odds can be a part of the commentary. It won’t feel like an advert and we will get more conversion as a result.” Sky Betting & Gaming managing director Ted Moss has been heavily involved in the deal. His background – taking in stints at Sky and Sky Sports as well as his role as CEO Richard Flint’s right-hand man at Sky Bet – has been crucial. “This will not work if it is just a badging exercise,” says Chhabra. “We will leverage the people and technology that exist in the business today but we will also be recruiting.” The Stars Group expects to recruit heavily into its existing offices in Miami, New Jersey and Austin, as well as its new office with FOX in LA. Chhabra has not decided on his new home yet. He says the ‘nerve centre’ of the operation will be Los Angeles but that he expects to spend a lot of time shuttling between offices. “It’s likely that a Boeing 747 will be my office for the foreseeable future,” quips Chhabra, “unless I can convince management to buy me a private jet.” n 17
GAMES NEW RELEASES Q2 GIQ casts its eye over the quarter’s brightest new games
BIG TIME GAMING RELEASES OPAL FRUITS
ZYNGA HEADS TO WESTEROS WITH NEW SOCIAL CASINO TITLE Based on the recently concluded Game of Thrones television series from HBO, Zynga’s latest social casino title transports players to the realm of Westeros and features action and dialogue from characters including Cersei, Jaime, Tyrion Lannister and House Stark members, Sansa, Arya and Jon Snow. Game of Thrones Slots Casino also features mechanics such as progressive jackpots and
SG DIGITAL LAUNCHES LUCKY LANES… SG Digital’s Lucky Lanes game provides a new slot experience that turns tradition on its head. Instead of classic reel arrays and symbols, the 3x3 reelset comprises three lanes of cars that progress along a busy highway. The 3D motorway experience offers ten free games, cash prizes up to 1000x and stacked wilds. Lucky Lanes supports Scientific Games’ new Mega Drop Jackpots, a multi-level jackpot system that is accessible at any stake level, providing a chance to win one of three progressive jackpots in a shorter period of time. Mega Drop encourages more active players than a traditional jackpot system, with individual jackpot drops that immediately start over once they hit. 18
bursting wilds, and has launched globally on the App Store and Google Play, with versions for Facebook and the Amazon Appstore to follow. “The visual and audio design of the game truly evokes marquee moments from the series, and with our house-themed social features, players can band together to chase the throne themselves,” says Zynga president of publishing Bernard Kim. “Westeros lives on.”
… AND LATEST MEGAWAYS TITLE Raging Rhino Megaways takes a player favourite and introduces a modern twist. The slot is the latest to include Big Time Gaming’s Megaways game mechanic, with players able to enjoy up to 117,649 ways to win, with unlimited multipliers and up to five wild multipliers. Raging Rhino Megaways reinvigorates a classic game theme with one of the industry’s hottest features and high volatility, making it a powerful draw for experienced players. It is the second game to be released by SG Digital using t h e M e g aw ay s mechanic, following the launch of Medusa Megaways in April.
The latest slot from Big Time Gaming takes players to the centre of the universe. In Opal Fruits, gravity rotates all of the player’s fruit around the reels, with pears, plums, melons and purple grapes. The triple reaction mechanic enables spins and reactions in three directions, with two opposite directional horizontal reels, as well as six reels that spin down the centre of the reel grid. The game initially went live via the SG Digital platform, followed by a wider rollout through the Relax Gaming and Microgaming platforms. “We have achieved a new level of player retention with Opal Fruits,” says Big Time Gaming CEO Nik Robinson. “Triple Reaction brings a new fun factor, doubling down on what we have achieved with our monster hits, Bonanza, Extra Chilli and Who Wants to be a Millionaire?”
BLUEPRINT LAUNCHES BEAVIS AND BUTT-HEAD SLOT Blueprint Gaming has launched its latest branded title with the release of Beavis and Butt-Head. Based on the popular adult animated MTV series by Mike Judge, the slot features classic moments and scenes from the TV show and film, with gameplay packed full of modifiers and bonus rounds. “Beavis and Butt-Head is one of the most iconic creations from the 1990s and we’re sure our latest slot will appeal to fans of the show, with the gameplay bringing to life their infamous antics,” says Blueprint director of marketing and relationships Jo Purvis. “It’s one of our most engaging titles yet, with a multitude of modifiers and bonus features. We look forward to inviting players to join the disruptive dudes in a quest to win big prizes.”
G A M ES
Q2 RELEASES
RED TIGER LAUNCHES REEL KING MEGA
RELAX INTO SUMMER WITH IGNITE THE NIGHT
EVOLUTION ROLLS OUT DEAL OR NO DEAL LIVE
Red Tiger released the first in a series of new online slots repurposed from the land-based industry under license from Novomatic’s UK subsidiaries Astra Games and Bell Fruit Group. With all of the new slots strengthened by the addition of Red Tiger’s Daily Jackpots, Smart Spins and Tournaments applications, the first game rolled out under the licensing agreement is Astra’s Reel King Mega. “The Novomatic group of companies have really paved the way for our industry and there are so many copies of their legendary games in the market,” says Red Tiger CEO Gavin Hamilton. “We’re pleased to be working closely with them to provide some of the very best games of the last few decades, as they were originally intended, with the benefit of our uniquely powerful marketing tools.”
Relax Gaming launched a new summer-themed slot, a 5x3 game that takes place in a tropical paradise. Ignite the Night features fire multipliers, which sees a random high value symbol in every main game spin award a 5x multiplier, with the potential to increase up to 50x bet on a winning spin. “In building our in-house games, we’ve been determined to show a diversity of themes backed by unique mechanics,” says Relax Gaming chief product officer Simon Hammon. “Ignite the Night is an enticing addition to our portfolio, offering the perfect cocktail of relaxation and excitement, set against a delightful Caribbean backdrop. The feature rounds exhibit all of our usual flair for engaging, colourful gameplay, as we continue to show diversity within the Relax proprietary portfolio.”
Evolution Gaming launched a new Deal Or No Deal Live game in partnership with Endemol Shine Gaming, the latest in the supplier’s growing range of game show-style games. Based on the hit TV show, Deal or No Deal Live is a multilayered game which combines the suspense of the main game show with RNG-based qualifying, and prize top-up rounds, featuring slots-style random multipliers. “Players’ tastes are changing and they are increasingly telling us they love these game show-style games. This game hits the sweet spot since it is the ultimate game show that you can play along with on your phone,” says Evolution chief product officer Todd Haushalter. “We worked really hard to preserve all the drama of the TV show and early signs are that players agree we have done just that.”
NETENT UNVEILS NARCOS BRANDED SLOT NetEnt released its new Narcos slot game, developed in partnership with French film studio Gaumont. Based on the worldwide TV hit series and recreating the story of notorious gangster El Patrón, Narcos is a five-reel, three-row slot with 243 bet ways. Featuring a battle between the police, DEA and drug lords as its backdrop, Narcos comes with free spins, a random driveby feature which transforms some of the high value symbols into wild symbols, and a locked-
up feature, which is triggered by three locked-up symbols landing on the same row. “Since we first announced the deal with Gaumont to bring Narcos to the reels, the anticipation among players and our operator partners has been huge,” says NetEnt director of games Bryan Upton. “We are confident that the game will more than live up to its lofty expectations and add an exciting new option to our unbeatable branded catalogue.”
QUICKSPIN DEBUTS FIRST JACKPOT SLOT Playtech-owned Quickspin released its first ever jackpot game with the launch of Dragon Chase. The Asian-themed game is a 3x5 reel, 20 betline slot which features traditional Asian symbols and a fiery dragon that ‘breathes’ wilds on to the reels. Quickspin’s seventh release of the year also includes a free spins bonus and a Dragon Pearl respin feature with four jackpots. “This is both an entertaining Quickspin game and a jackpot game, with the added thrill of being able to win big,” says Quickspin chief product officer Erik Gullstrand. “We’re also proud to have been able to create two different versions of this game, so operators can choose which jackpot they want, depending on their size, budget and target demographic.” 19
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TECHNOLOGY 5 BIG LAUNCHES
Five of the quarter’s major product launches and what they mean PlaySugarHouse launches first online sportsbook in Pennsylvania
…and launches live tennis streaming in New Jersey
RUSH STREET INTERACTIVE’S Sugar House Casino, soon to be renamed Rivers Casino, became the first operator to launch an online and mobile sportsbook in Pennsylvania.
MEANWHILE, IN NEW Jersey, PlaySugarHouse.com became the first operator to launch IMG Arena’s live streaming service for tennis.
What’s the big idea? PlaySugarHouse.com officially began accepting online and mobile wagers following a successful three-day operational test period and approval from the Pennsylvania Gaming Control Board. Powered by technology provider Kambi, it follows the launch of SugarHouse’s retail sportsbook in December. PlaySugarHouse.com has been active in New Jersey since 2016 and launched an online sportsbook there last September. Due to differing regulations in the two adjacent jurisdictions, New Jersey players already registered with the site in the Garden State will have to create a new Pennsylvania account to wager in the commonwealth.
What’s the big idea? Bringing its streaming product to the US for the first time, IMG Arena’s service went live with PlaySugarHouse.com, allowing New Jersey players the chance to watch and bet on live tennis events, including the Roland-Garros French Open and the US ATP Masters 1000 Miami Open, Cincinnati and Indian Wells tournaments. IMG Arena’s streaming portfolio is also expected to go live in Pennsylvania on PlaySugarHouse’s sportsbook platform. “Bringing our official streaming product to the US is an important step,” says IMG Arena managing director Freddie Longe. “In the more mature European market, one of the major complaints by fans is a lack of live streaming availability, and that it is a key factor in setting a tier one operator apart as markets develop.”
Gamesys launches Virgin Bet in the UK Gamesys partnered sports betting technology provider SBTech to launch its first UK sportsbook at the beginning of June. What’s the big idea? Gamesys recently agreed a new long-term trademark licence to use the Virgin brand for its first UK sportsbook, Virgin Bet, having worked with the Virgin Group since 2013 following the launch of Virgin Games and later Virgin Casino in New Jersey through a partnership with the Tropicana. The new sportsbook is powered by SBTech and has been created in partnership with Gamesys’
GIQ Q2 REVIEW
development teams. Virgin Bet is not part of JPJ Group’s proposed £490m acquisition of Gamesys, although Virgin Games and Virgin Casino are. “We’re excited to launch Virgin Bet into the world’s most competitive sportsbook market,” says Gamesys Gibraltar marketing director Simon Mizzi. “We believe the Virgin brand has the ability to help change the industry for the better and we look forward to giving our customers the experience we feel they deserve.”
IN THIS ISSUE 21 News: tech product launches 22 Feature: AI and RG 24 Interview: Sportradar and FanDuel launch live streaming in US
Blueprint introduces new marketing tools for its slots SLOT SPECIALIST BLUEPRINT Gaming has developed a new range of marketing and promotional tools to be introduced across its portfolio.
What’s the big idea? Marketing tools have become an increasingly important part of a supplier’s armour to support operators’ promotional activities and bring new gaming experiences for players. Following extensive customer and consumer research, Blueprint’s new tools complement its existing Free Spins and Win Spins features and include; Award Game, which is closely linked to Blueprint’s popular Jackpot King series of games; a new leaderboard feature with a twist; as well as an in-game messaging tool and a series of game lobbies to allow improved mobile player journeys. “These new tools are a key focus for us this year,” says managing director Matt Cole. “We’ve worked closely with numerous top-tier operators to gain feedback on their desired promotional activities and how best we can support them.”
Kindred launches Unibet brand in New Jersey KINDRED GROUP HAS brought its Unibet brand to the United States for the first time after launching its online casino in New Jersey.
What’s the big idea? After securing licence approval from the state’s Division of Gaming Enforcement last year, Unibet went live in New Jersey in May through its partnership with Hard Rock Hotel & Casino Atlantic City. The online casino is powered by SG Digital’s Open Platform System and Open Gaming System, and will be followed by an online sportsbook using Kambi’s sportsbook technology. Next up, Kindred will launch Unibet in Pennsylvania where the operator already has a strategic partnership with Mohegan Sun Pocono. “We have been preparing for this for a long time and we are excited to take another step into what will most likely become the largest betting market in the world,” says Kindred US senior vice president Manuel Stan. 21
T EC H N O LO GY
ARTIFICIAL INTELLIGENCE
Can AI stop problem gambling? Artificial intelligence is one of the most potent tools available. Among its many possible uses is the promotion of responsible gaming, writes Jon Harwood THE ROLE OF AI, machine learning and data is high on the technology industry’s agenda but the issue that is possibly highest on the gambling industry’s agenda is responsible gambling – at least it is for the media and politicians who take any notice of the industry. So where does the industry stand on the use of AI as a tool to enhance responsible gaming, and does it clash with the need to run a profitable operation? There is little doubt that using AI to analyse betting patterns can identify problem players or those with the potential to develop a problem. Earlier this year, Mr Green’s chief operating officer Antoine Bonello played devil’s advocate in a debate at ICE Totally Gaming, where he supported the notion that AI could one day lead to automation of RG practices. He said it is impossible to monitor the company’s 12 million customers manually, and pointed out that technology is already used to communicate with customers. In 2017, Mr Green launched its Green Gaming tool, which is now mandatory for UK 22
users. It combines the results from self-tests and gameplay data to provide the player with a detailed risk analysis of their behaviour. This helped Mr Green establish that 12 per cent of players show high-risk behaviour. “Depending on where the player is indicating increased risk, the message is tailored to be as relevant for the individual as possible,” explains Bonello. “If a player is classified as high-risk, all direct sales communication is stopped automatically and replaced with messages of how to help change the player to less risky behaviour. It keeps the player informed about gameplay behaviour and advises on possible solutions, should the gameplay become excessive.” The tools used by Mr Green were, in part, developed by Sustainable Interaction, a Swedish company founded 20 years ago to focus on the treatment and prevention of problem gaming. It has worked with governments, regulators and betting companies around the world. Product development manager Christofer Hagstedt says that an element of self-
assessment is key and the company’s GamTest questionnaire is a vital first step. The test analyses the player’s gambling habits based on the time and money spent on gambling and the negative consequences of it. The test also gives an insight into the player’s motivation to change. “AI can predict outcomes based on patterns and data – but you need a sustainable model that you can predict against,” he explains. These models and the ability to monitor millions of players come into their own during events like the World Cup, says Hagstedt. “At that time, a lot of players, who don’t usually play, need to be monitored. And when people change their behaviour, even for a short time, the risks increase significantly. So there are more players, more risk and they all require some level of attention. “At that point we can contact them to say that we see can their gambling has increased, and it’s not a problem but we’d encourage them to do a self-assessment test or set limits.”
T EC H N O LO GY
ARTIFICIAL INTELLIGENCE
Analysing data The amount of data that can be gleaned from a player is huge, but opinion on just how useful it is remains divided. Back at the ICE VOX debate in February, Daniel Reilly, responsible gaming manager of Rank Group, argued that simple transactional data was not always enough to identify risk and sustainability. He argued that only when innovations like biometrics are introduced will it be possible to understand the player’s emotions when betting – and whether they are frustrated or angry while betting. Hagstedt agrees to an extent. “The more data we have, the more detailed the analysis can be. However, there needs to be some significance in the data. Not all data gives you insight, and that is one of the challenges for AI,” he says. What’s more, tracking a player’s overall play on different platforms – different online sites and retail outlets – can be tricky. “If, for example, all you have is a gambler’s sports betting data on one site, you don’t have the full GIQ Q2 REVIEW
picture,” says Hagstedt. “The bulk of play is monitor the performance of your CSR team in often unknown to the operators.” handling problem players. But Leigh Nissim, former IGT and Scientific There is also fear around the use of AI and Games executive and the founder of Future data to tackle problem gambling, acknowledges Anthem, a new company focused on the develHagstedt of Sustainable Interaction. Operators opment of AI-based interventions in the gamworry about false positives – they put a lot of ing industry, believes all data has a use. effort into attracting fickle customers and don’t “There are pockets of data that are not yet want to scare them away. But, as Mr Green’s being picked up on and there are different ways experience shows, acting on data can have the of looking at the data from any gaming transopposite effect, and AI is the ideal way to flag up action – and those different angles of analysis a need for human intervention. can be used to increase line of sight,” he says. High-risk players identified by the Green “The amount of available data that we can use Gaming tool were contacted by the company to predict patterns is only going to increase. and 90 per cent of them said they appreciated “The costs will also come down over time, Mr Green reaching out to offer support. Indeed, so we will have more data and be able to prosince the tool was introduced, customer satiscess it more cheaply. These are positive headfaction has increased from 80 to 86 per cent. winds that will help AI to become an even more In Norway, operator Norsk Tipping called important tool for the gaming industry.” the players who were losing the most money This appears to be borne out by the way to inform them of that and to talk about their AI has developed. Andreas Hartmann, of AI habits. Afterwards, the players were asked to specialists VAIX, is something of a veteran in assess the call. The majority ranked the call the field, with 18 years’ experias very helpful. The results ence in gaming, fintech and established that players search. Working at PartyPoker almost always massively in the 2000s he helped devise underestimate their gamone of the first player classibling. They were asked what fication systems, but the data they would like to do. used today is very different, he “They want help to keep says. “The definition of AI has their gambling at a healthy changed – nowadays we are level, because they enjoy it and talking about deep learning and want to be able to continue to machine learning.” enjoy it,” says Hagstedt. “PlayBut Hartmann does not ers who are fed with accurate believe the gaming industry is and up-to-date information at the forefront of AI research. about their gambling can get Ecommerce sites and comit back to a sustainable level.” panies like Spotify are really He also references recent “Depending on pushing the boundaries, he research from Kindred Group says. And the reason is sim- where the player is that shows players who are ple. The gaming industry has indicating risk, the communicated with remain better margins, whereas in message is tailored customers for longer. ecommerce every penny counts. to be as relevant This suggests an overlap “In an industry with com- for the individual between AI as a driver of mercial pressure, you use anyresponsible gambling and a as possible” thing to get ahead,” he says. tool for revenue growth. As “If you are in an industry that Antoine Bonello, Mr Green Hartmann of VAIX points out: is making enough money then “You have a marketing and there is not that same pressure.” CRM team whose job it is to extract maximum value, elsewhere you have a team that is worWhat to do with data ried about RG – and in 90 per cent of companies How companies use the information they have they are set against each other.” is another key question. It doesn’t need to be that way, he says. “A transaction is the truth,” says Hart“All the data points provide a fingerprint for mann. But he counsels against the use of data the user, which shows the potential risk and for the sake of it. AI can be used to solve a probrevenue sustainability.” These insights can be lem, whether it is to identify problem gamblers, used to devise a long-term predictive model – or, if you already have good systems in place which can assess revenue and also promote for that, drive messages to them, or even to responsible gaming. n 23
T EC H N O LO GY SPORTRADAR
Live streaming in the
FanDuel is the first operator to broadcast live sport in its app. Neale Deeley, VP of US gaming with FanDuel’s supplier Sportradar, explains how live streaming has become key to any successful sportsbook IT’S BEEN JUST over a year since the Supreme Court overturned PASPA and legitimised sports betting in the US. By mid-June of this year, there were 14 states that had legalised sports betting following New Hampshire’s recent legislative approval, although only a handful allow online and mobile play. New Jersey was one of the first states to launch sports betting last June – just weeks after PASPA was overturned – with DraftKings the first to go online last August, followed by PlayMGM, SugarHouse Casino, FanDuel and William Hill later that month. There are now 14 operators with an online sportsbook in the state, all of whom have been investing in their platform and technology to bring the product to a level that they think is suitable for the growing market. The next phase for operators is to improve the betting experience for customers, particularly to boost their in-play offering. Operators can do this by providing a comprehensive range of odds on a variety of international and local sports events, which then makes betting available 24 hours a day, seven days a week. Essential to this is live streaming, which has become a key part of any successful sportsbook in other regulated betting markets around the world, particularly in 24
Europe. The likes of Kindred Group now provide bets on 50,000 events per quarter, of which around 30,000 will be live streamed on desktop or mobile. In its annual report, the world’s leading operator, bet365, attributed a significant amount of its 25 per cent revenue growth to increased live streaming content, including eSports for the first time, with the number of live sporting events streamed during the year growing to around 160,000.
FanDuel first to stream “If you take a side-step back and take a look at how the post-PASPA US market has come about, it’s been one of those things we’ve all been waiting for forever and all of a sudden,
“It’s more a question of when, not if, for a lot of people. And it just so happens that FanDuel was in a position to do it quicker than others” Neale Deeley, Sportradar
its happened very quickly,” explains Sportradar vice president of US gaming, Neale Deeley. “Most operators have been busy working through their tech platform and their capabilities to deliver more and more of what they consider to be a market-winning sportsbook in the US. So, there is a lot of investment going in, and roadmaps have been written, of which live streaming will be a key component. A lot of work has taken place. This is part of a portfolio of services that operators want to bring to market.” At the end of April, Flutter Entertainment’s FanDuel became the first operator in New Jersey to officially launch live streaming on its sports betting app. This has been enabled through Sportradar’s Live Channel Online service, following a successful trial earlier this year with the live streami n g of m ajor tennis events. FanDuel is the first of Sportradar’s partners to do this,
with others set to follow. Rush Street Interactive’s PlaySugarHouse.com is the only other operator to have live streaming for its players, but has taken a slightly different route by incorporating IMG Arena’s live streaming tennis service for its players in New Jersey. “It’s more a question of when, not if, for a lot of people,” says Deeley. “And it just so happens that FanDuel was in a position to do it quicker than others. We did a trial with them at the beginning of the year with some audiovisual (AV). The numbers were encouraging, and FanDuel was pleased with the return on investment that was being seen, so we moved forward with an agreement to roll out a lot more content. “It’s early days but it’s proving to be successful. It’s proving to drive all the things that AV drives in other parts of the world around engagement. On that basis, it’s the core part of any betting portfolio going forward.”
But where is the baseball? Through Sportradar, FanDuel currently provides live streaming of various professional sports, including tennis from around the world and European football such as Germany’s Bundesliga. Unfortunately for FanDuel and others, the major US sports will not be available. “This is one place where the US market has some nuances. The betting landscape in the US GIQ Q2 REVIEW
is dominated by US sports played in the US,” says Deeley. “And the media rights for those events to display the AV inside a betting app, is not available.” As it currently stands, the live streaming rights to major sports, such as MLB, the NFL and the NBA, are not available for US online betting operators. When their initial broadcast deals were signed, the contracts did not include live streaming rights for betting, as sports betting wasn’t then part of the US landscape. They are, however, available for international betting operators outside of the US. Sportradar signed an exclusive multi-year distribution deal earlier this year with MLB, giving the supplier the rights for official MLB real-time game statistics, as collected at every ballpark via the league’s proprietary technology and stat operators. Across international markets, Sportradar also holds exclusive rights to distribute live AV game feeds to operators outside the US, in territories where sports betting is legal. “There are streaming rights internationally, but in the US these rights are not available,” explains Deeley. “It’s not a right that can be purchased and distributed, it’s just not on the table.” Deeley says this is not such a problem, as US customers have relatively easy access to all the US sports content they can consume through other channels, from local TV broadcast to over-the-top (OTT) channels. As the sports betting landscape continues to unfold
in the US, Sportradar’s primary focus is on providing US sports played overseas and second-tier sports for the likes of FanDuel and others in New Jersey, and soon to its customers in Pennsylvania’s regulated betting market, where operators are about to go online. “There is a lot of engagement value in US sports from overseas markets, and secondtier sports in the US, where the consumer potentially can’t access broadcasts or it fits a timeslot where there’s no domestic content,” says Deeley. “And that will stimulate additional demand; that’s what’s been proven across the world in other jurisdictions. “Tennis is a popular sport for betting worldwide, as we know. Soccer is a sport that is growing in popularity in the US, and has a solid base, and Bundesliga is well known here. You can get good traction and there is an awareness in the consumers of those sports. “Of course, we’re talking to operators about this, a lot of the European guys who have moved over to the US are customers of ours in other markets,” continues Deeley. “They know the value of it, and they are keen to get it deployed.” Licensed US operators are beginning to take their online sportsbooks to the next level, and while this won’t include live streaming of the major US sports any time soon, operators will soon feel the power of streaming on revenues. n 25
INTRODUCING
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MARKETING THREE BIG STORIES This quarter’s biggest marketing news UK ban on sports betting ads GVC HOLDINGS HAS called for a ban on sports betting advertising in the UK, deciding that the whistle-to-whistle advertising blackout it signed up to in November last year did not go far enough. The whistle-to-whistle ban, signed up to by all members of the Industry Group for Responsible Gambling, prohibits advertising from five minutes before a match until five minutes after the game (and includes half-time and other breaks in play). Despite lobbying to introduce this restriction, GVC has now decided it does not go far enough and has therefore called on its industry peers to join in helping to “revolutionise the marketing of gambling brands”. “I call on industry peers to help us bring about an end to broadcast advertising which promotes sports betting in the UK, no matter the time of day,” said GVC chief executive Kenneth Alexander. GVC’s proposal includes an exemption for horse racing and ads promoting responsible gambling, although these would be limited to one advertisement per commercial break. In addition to its ad ban proposal, GVC also announced further initiatives under its ‘Chang-
ing for the Bettor’ safer gambling campaign (see feature, page 50). These include a commitment by the company to end all football shirt sponsorship deals with UK teams and end perimeter board advertising at football grounds, in order to allow sports fans to watch their favourite teams without seeing any incentives to bet. Some argue GVC has such a high brand exposure from its Ladbrokes and Coral shops that it can afford to call for an advertising ban. GVC also has a tradition of favouring online advertising, and bwin, which GVC acquired in 2017, called an end to its shirt sponsorship programme in 2013. The company will continue its sponsorship of the Scottish Football League.
IN THIS ISSUE 29 News: the quarter’s biggest stories 30 Interview: UK Advertising Standards Authority
Spanish Ombudsman calls for ban on gambling advertising THE SPANISH OMBUDSMAN has recommended that the government explores a total prohibition of gambling advertising across the country. The Ombudsman has asked the government to study, in collaboration with the country’s autonomous communities, a complete prohibition of advertising related to betting and gaming across media such as radio, television and internet, except games offered by Spanish lottery operator Organización Nacional de Ciegos Españoles (ONCE). The Ombudsman said it had received complaints from citizens relating to the “constant and continuous” publicity on television and online media from betting operators, and believes that responsible gambling policies aimed at strengthening the protection of the most vulnerable to addiction should be reinforced. According to the Ombudsman, gambling advertising should be considered alongside products such as tobacco or addictive substances, with gambling addiction considered a public health issue that requires a regulatory framework. If a complete prohibition is not adopted, the Ombudsman has requested that TV advertising slots for gambling should at least be reduced, so as not to interfere with children’s schedules and should not include public figures in any advertising. The Ombudsman advocates establishing new regulations, reviewing the types of infringement and tightening sanctions, as well as undertaking a review of current licences, including those for operating gambling venues.
Svenska Spel terminates online casino advertising SWEDISH GAMING OPERATOR Svenska Spel has decided to stop its online casino advertising for the rest of the year. Following internal discussions about how best to protect its customers, Svenska Spel decided to cease advertising across all media channels for its online casino for the rest of 2019. “Svenska Spel has constantly driven the line that all games in the licensed market should be risk-classed and that harder rules should apply to the more risky games, both in terms of design and marketing,” said Svenska Spel CEO Patrik Hofbauer. “With the advertising stop for online casino, we are now taking the full step.” Hofbauer said that no form of gambling is without risk for those with gambling problems, but claimed the difference between games is GIQ Q2 REVIEW
huge. “If you look at the Public Health Authority’s new survey, you see online casino is in a class of its own,” he explained. “Thirty per cent of online casino players have problems managing gambling. This compares with, for example, three per cent of those who play triss or the lotto online. “Stödlinjen’s [the country’s support line] annual report for 2018 confirms this picture. Over 60 per cent of callers indicate online casino as the main problem. No other form of gambling comes close. The closest is sports betting at 15 per cent of callers. “These are facts that we discussed at Svenska Spel last week and that made us put our foot down,” said Hofbauer. “Our online casino advertising already had a restrictive design, but
now we choose to completely stop advertising for the rest of the year.” “In the long term, this is the only sustainable option,” he concluded. “It is also the only way to improve the industry’s reputation. We would like more gaming companies to join the advertising stop for online casino. It would show that the gaming industry is taking consumer protection seriously.” The decision by Svenska Spel is in response to claims that there has been too much gambling advertising since the re-regulation of the Swedish market on 1 January of this year. This has already seen the country’s two industry associations commit to new advertising guidelines. l For more on this, see interview with Svenska Spel’s Fredrik Wastenson (page 36) 29
MARKETING
ADVERTISING STANDARDS AUTHORITY
Ad brakes After a string of fines and rebukes from the UK Advertising Standards Authority (ASA), Jon Harwood speaks to the regulator to find out where it draws the line THE WAY GAMBLING companies market themselves has become a hot political issue over the past year, with the spotlight on a range of issues from sports sponsorship to TV advertising and the promotion of responsible gaming. Last year, gambling charity GambleAware reported that operators had spent £1.5bn on marketing in the three years since 2014 – an increase of 56 per cent since 2014. The vast majority of that – 80 per cent – was spent on online advertising. But TV ads remain ubiquitous, particularly around live events, and last season, nine of the 20 teams in the Premier League were sponsored by gambling companies. But the rules are tightening. In April this year the Advertising Standards Authority (ASA) and Committee of Advertising Practice (CAP) introduced new guidance for gambling ads, with an increased focus on protecting children and young people. And in May the ASA ruled against four separate gambling ads, three online and one on TV. In August, in time for the new football season, the fifth iteration of the Industry Group for Responsible Gambling (IGRG) advertising code comes into force, including a ‘whistle-towhistle’ ban on ads during live televised sports (including streaming) and a toughening up of watershed regulations. Meanwhile, GVC, the owner of Ladbrokes and Coral has called for an outright ban on broadcast advertising around sports events and has “committed to unilaterally ending all football shirt sponsorship deals with UK teams and banning perimeter board advertising at football grounds”. And all this is taking place in an increasingly competitive market. So as marketing budgets rise and operators look for new ways to promote themselves, while coming under ever increasing scrutiny from regulators and the media, where does the industry stand? May’s ASA rulings highlight the minefield marketers face. They found against a Paddy Power TV ad featuring Rhodri Giggs that was deemed to imply “gambling was a way to 30
achieve financial security and improved selfimage”; a William Hill ad on dating app Tinder that “linked gambling with sexual success”; a Monopoly Casino online ad that was judged to appeal to children; and, intriguingly, a tweet from Tottenham Hotspur that included a link to William Hill.
Explaining that tweet The message – listing the team line-up for a match against Borussia Dortmund and directing fans to William Hill for the latest odds – fell foul of the ASA under rules that prohibit anyone under 25 “playing a significant role in marketing communications”, because the starting XI included young players Davinson Sanchez and Harry Winks. ASA spokesman Matt Wilson tells Gaming Intelligence: “We understand that people in the sector believe it was harsh, and it is a tough ruling on the advertiser. But it underlines just how strict the rules are. They are also very clear – people under 25 or who appear under 25 cannot be featured playing a major role in adverts. The ASA understands why people may react but there is a direct prohibition.” For their part, William Hill have accepted the ruling. While pointing out that the tweet came from Spurs and was part of an affiliate marketing campaign, communications director Ciaran O’Brien admits: “We should have caught it earlier.” Addressing the ASA’s scrutiny of gambling ads, Wilson says: “It’s right to say it’s an area that is high on our agenda. We have to reflect the prevailing concerns of society. I wouldn’t say there has been a change, it’s more that we are alive to the concerns and have a watching brief, particularly online.” The new emphasis on protecting young people has involved the creation of a ‘child avatar’, to mimic the behaviour of a minor online and catch any gambling ads that might come their way. “It’s a new weapon in our armoury,” says Wilson. “Of the 43 operators who advertise online, only five of them were found to be
serving ads on child sites. That means the vast majority were not. “It’s not that we have a problem with the gambling sites, it’s just that child protection sits at the heart of what we are doing. As a regulator, it’s at the forefront of our work – it’s more about that than gambling sites themselves. But our standards are a clear signal of where we expect the industry to be. It is one of those sectors, like alcohol and HFSS foods [high in fat, salt or sugar] that will always be under scrutiny. “No one is whiter than white, and that leads to rulings which get publicity but that in turn promotes best practice. We have not seen evidence of operators trying to circumvent the rules or act in a dangerous manner and it’s probably not a good idea for anyone to do that if they want a long shelf life – it’s not in their best interests.”
Working with industry While the ASA and CAP police gambling ads from the outside, there are also organisations within the industry monitoring the situation, and Wilson says that his body works hand in hand with the Gambling Commission and the Industry Group for Responsible Gambling (IGRG). “Our relationship with those organisations is very joined-up and positive,” he says. “It is helpful not just in terms of policy but also enforcement.” The new IGRG regulations which come into force ahead of the new football season increase restrictions on gambling ads still further. The biggest headline is the ‘whistleto-whistle’ ban on broadcast ads around live sports events before the 9pm watershed (except horse and greyhound racing).
MARKETING MEGAWAYS
“We understand that people in the sector believe it was harsh, and it is a tough ruling on the advertiser. But it underlines just how strict the rules are” Matt Willson, ASA, on Tottenham Hotspur’s tweet (left)
Wes Himes, chief executive of the Remote Gambling Association, one of the five members of the IGRG, says the upcoming changes are a “clear demonstration of the commitment to address concerns about gambling advertising”. He adds: “The ban was developed collectively and agreed by the gambling industry under the umbrella of the IGRG. While the principal rules governing gambling will remain with CAP and the Broadcast Committee of Advertising Practice (BCAP), the ‘whistle to whistle’ ban and IGRG code will supplement those rules. “While the ban is voluntary, all major gambling operators have publicly stated their commitment to it and will be judged by their actions.” This kind of initiative shows the industry’s commitment to responsible advertising. The ASA describes itself as “neutral” on the matter. “It’s within the gift of industry to impose further restrictions on itself. It’s not something that is required under our current rules and we won’t therefore be policing it.” So in this climate, how are marketing teams responding? O’Brien at William Hill says: “Advertising is an evolving space – we have had a number of ASA rulings recently and as a result have revisited our training and processes to strengthen our compliance in that area. In terms of brand we are looking at a more brand-led approach – as evidenced by our recent Anthony Joshua advertising, which isn’t concentrated around live sport.” So, despite the rash of rulings and stricter guidelines, it seems we are still a long way away from facing the kind of marketing restrictions seen in other countries, and the attitude of the gaming companies is proving helpful. As Richard Flint, then chief executive of Sky Betting & Gaming, said last year: “Being able to advertise our products helps create a more vibrant and competitive market for the five million people that enjoy betting on the football or otherwise gambling online, and who do so safely and without harm. This advertising helps keep sport on TV, particularly horse racing, and helps keep football clubs afloat.” n 31
LOTTERY FIVE BIG STORIES From Kenya to Virginia; news from the lottery world
Tenlot acquires Kenya charity lottery Tenlot Group has acquired an 85 per cent stake in Kenya Charity Sweepstake (KSC), the country’s oldest public lottery, which was established in 1966 to help alleviate poverty and provide financial support for social causes. The acquisition will enable the lottery to accelerate its social mission through the deployment of a new omni-channel gaming platform and a significant expansion of its retail presence. Tenlot will focus its attention on the fast-growing mobile sector, with Kenyans now processing more than 1.7 billion mobile wallet transactions a year – accounting for more than 50 per cent of Kenya’s GDP. “We see tremendous potential in Kenya,” says Tenlot chief executive Yossi Abadi. “Electronic money transfers are as common as sending a text message in most countries. We will leverage this vehicle, while adding innovations to lotteries and gaming, and expect that Kenya will quickly emerge as a showcase for other global markets.”
IN THIS ISSUE 35 News: lottery round up 36 Interview: Svenska Spel
Scientific Games renews TV game show rights SCIENTIFIC GAMES HAS renewed its deal with TV production company Fremantle for the exclusive rights to use three TV game show brands in its lottery games. SG has already created and launched more than 100 different lottery games featuring the Price is Right, Family Feud and Press Your Luck over the years, with more branded games to be rolled out up until 2022, but only for lotteries in the United States and Canada. “Our innovation teams are already at work creating new lottery games themed to these three Fremantle hit TV game shows,” said SG EVP of lottery licensing Kyle Rogers. “Our goal is to offer the best portfolio of entertaining licensed properties to lotteries around the world and their players.”
‘‘Our goal is to offer the best portfolio of entertaining licensed properties to lotteries around the world” Kyle Rogers, Scientific Games
Virginia Lottery goes mobile
Intralot renews Moroccan cooperation…
…and enters Canada for the first time
INTRALOT SIGNED A new long-term deal to continue providing services to Moroccan state-owned sports lottery operator La Marocaine Des Jeux et des Sports (MDJS). Following a competitive procurement process, Intralot Maroc was granted an initial eight-year contract, which begins on 1 January 2020, and can be extended by a further two years. Intralot has worked with the MDJS since 2010 and will continue with the overall management and operation of lottery, sports betting and instant games across the operator’s retail, internet and mobile channels. It has been a successful partnership, with sales increasing 17.5 per cent during 2017 and 23.8 per cent in 2018, according to figures from the World Lottery Association.
IN A BUSY quarter, Intralot also entered the Canadian market for the first time through a deal with the British Columbia Lottery Corporation (BCLC), which is in the process of revamping its lottery terminals and systems. An initial five-year contract, which can be extended by six further years, will see Intralot’s Lotos X platform power a new lottery central system for BCLC. It follows a public procurement process for new lottery terminals and software back in 2017, with BCLC agreeing a deal with Novomatic Lottery Solutions (NLS). BCLC and NLS mutually agreed to pass the contract to Intralot, which was already working on the project as a provider of terminal hardware. In January, Intralot won a further bid for gaming engine services, another component of the project.
GIQ Q2 REVIEW
IN THE US, the Virginia Lottery rolled out a new app allowing customers to purchase draw tickets and play an exclusive range of new eGames. Following a pilot programme across 33 lottery locations in the state, the IGT-powered MobilePlay app allows players to fund their lottery account and select numbers for games such as Mega Millions, Pick 3 and Cash 4 Life, generating a digital playslip that can be fulfilled when the player is within Bluetooth range of any Virginia Lottery kiosk or retailer. New eGames are available through the app when connected to a lottery retailer, circumventing the state’s prohibition of online lottery sales. 35
LOT T E RY SVENSKA SPEL
handicapping Svenska Spel has chosen to stop advertising its online casino but Sports & Casino CEO Fredrik Wastenson remains positive despite a tricky start for his new division
THE OPENING OF the re-regulated Swedish market has been much tougher than almost anyone predicted (see financial analysis, page 54) but few thought it would be quite this tough for former monopoly Svenska Spel. Fredrik Wastenson calls me following a dash from the Svenska Spel annual general meeting. The chief executive officer of Svenska Spel Sport & Casino was not required to make a presentation but group CEO Patrik Hofbauer had to report a six per cent fall in revenue at the end of Q1. “It has been tough for us. When we started on day one, on 1 January, we did not have any customers and did not have any money on any account,” says Wastenson. The Sport & Casino business was launched following the division of the former monopoly into lottery and non-lottery businesses, to comply with the conditions of the newly liberalised gambling market. It launched on a brand new platform and the company was forced to reacquire its own customers. “It has been a challenge,” admits Wastenson with the beginnings of a laugh. “We are still not in line with expectations in terms of recruiting those customers back.” Its customer base is 15 per cent smaller than was expected at this stage. That said, Sport & Casino revenue is up four per cent on the 36
previous year. Online revenue for the whole group, which includes lottery sales, is up 14 per cent but the company will not reveal the revenue derived from the digital operation of the Sport & Casino division. Wastenson’s division is operating an online casino for the first time and it has not been easy to convince customers that it is a more attractive option than the legions of privatelyowned competitors. Wastenson says the entrance of ATG, the former horse racing monopoly, into sports betting has also had an impact on revenue. He also notes that the national self-exclusion register has resulted in 32,000 players leaving the gambling market. “Among those players, there are, of course, some heavy gamblers,” says Wastenson.
The ad ban Others may have signed up to the national register in order to avoid the barrage of email marketing that has accompanied the launch of the new market. Of course, those people have not been able to escape the TV advertising that has invaded their screens. The fight for market share has taken the public by surprise – many would have been unaware of new market conditions. “Also, it is not the most intelligent advertising. A lot of it is men screaming about bonuses
over and over again,” laughs Wastenson. This has led to a media backlash against the gambling industry, so the government asked the industry to come up with some measures to limit advertising. The industry organisations BOS (for private operators) and Sper (for governmentowned operators) agreed new guidelines but concerns over acting as a cartel stopped them from agreeing on specific limits. This was not enough for the government, which has launched an investigation into a range of options to limit gambling advertising, including the consequences of a partial or total ban. Svenska Spel’s response was to end all advertising for its newly-launched online casino. “Our opinion was that we should have some sort of reclassification based on the risk level of gambling. iCasino we know has the highest level of risk. Scratch tickets are less risky. We proposed that different products should have different rules.” In his statement announcing the selfimposed ban, Hofbauer highlighted the Public Health Authority’s report, which found that 30 per cent of online casino players have problems managing their gambling. This compares with, for example, three per cent for those who play the lotto online.
LOT T E RY SVENSKA SPEL
It should be noted that these surveys can be misleading. The tick box that says “I have problems managing my gambling” can mean all sorts of different things to different players and does not necessarily mean that a player’s gambling is harmful. Hofbauer acknowledged: “There seems to be no general link between game advertising and gaming problems. The public health authority’s recent statistics show that fewer people experience problems with their gambling now than three years ago, despite increased advertising volume. “The general gambling problems do not only increase because the advertisements do so. But at the same time, several surveys indicate that those who already have a problem with gambling are triggered by advertisements.”
“We had planned to continue marketing but when the minister asked the market to act, we thought this was a sound way to respond” Fredrik Wastenson, Sports & Casino, Svenska Spel
GIQ Q2 REVIEW
Moving forward Of course, none of this helps Wastenson in his attempts to build a new business.“We at least got the opportunity to tell people that we have an online casino business but now we have closed all advertising. It makes it a little trickier to compete but hopefully it will also be good for us in the long-term,” Wastenson continues. Hofbauer expresses this eloquently: “If you are serious about taking responsibility, then you should address the problems where the problems exist, even if it strikes the revenue in the short term. In the long term, this is the only sustainable option. It is also only when we can improve the industry’s reputation.” The former monopoly, launched in 1997, is assuming market leadership. With its brand emblazoned on streets up and down Sweden, Svenska Spel has an advantage over many of its competitors. Wastenson is happy to acknowledge this fact but the former monopoly still needs to adapt to the new market conditions. “We knew we would have a very low share of voice in the market,” says Wastenson. “We had planned to continue marketing but when the minister asked the market to act, we thought this was a sound way to respond.” So, the new operation will continue with one hand tied behind its back but Wastenson is far from downbeat.
The team will continue to market its sports betting products. There is less public outrage about sports betting advertising. Their screens are dominated by online casino advertising – even around sporting events. And surveys suggest sports betting is far less problematic than casino games. Away from the advertising debate, the company continues to widen its online offering, adding new games from new suppliers, and it has upgraded its CRM platform so it can be more relevant and more personalised in its communications with customers. Svenska Spel is also upgrading its social sports games. These see people set up groups and invite their friends to join – much like you might set up a fantasy football league at work. This works particularly well with pool games such as Svenska Spel’s Soccer 13, in which you predict the results of 13 games. “People like to play with their friends, they might think they have a better chance of winning than if they played by themselves, and they also have a higher stake.” Svenska Spel’s private sector competitors have long craved an even playing field. The government might impose an even playing field in the future, but for now, Wastenson is content to battle on with the pitch tilted slightly to his own disadvantage. n 37
L EG A L
WORLD REGULATION
World regulatory update GIQ rounds up the major global legal developments from Q2 2019 Argentina Buenos Aires became the first province in Argentina to regulate online gambling, with legislation passing into law at the start of April. The legislation covers online sports betting, casino games, poker and horse race betting, with up to seven licences available to operators. Regulations will be overseen by the Buenos Aires Provincial Institute of Lottery and Casinos, and include measures to eradicate illegal gambling in the province, prevent gambling fraud and money laundering, and protect problem gamblers. A number of leading operators have already expressed an interest in securing a licence, including The Stars Group, William Hill and Paddy Power Betfair, who have all joined with local partners in an effort to secure a licence. The formal opening of applications takes place at the end of June.
Australia The Tasmanian government announced it will introduce a point of consumption tax on betting operators from 1 January 2020. Treasurer Peter Gutwein said that the new tax would apply to the net wagering revenue on Tasmanian racing, bringing the state in line with other Australian states. “All other states have introduced a point of consumption tax on wagering and we will likewise introduce one from 1 January 2020 at a rate of up to 15 per cent, after consultation with 40
stakeholders, on the net wagering revenue of betting companies,� Gutwein said in his 2019/20 budget speech. Meanwhile, both Victoria and South Australia implemented tough new rules governing online betting. In Victoria, this includes the introduction of betting account deposit limits, restrictions on direct marketing, and a ban on perks that encourage consumers to continue betting. In South Australia, interactive betting providers are no longer allowed to send direct marketing promotions to customers in the state unless the customer has given prior consent.
Germany The government of Schleswig-Holstein says that a majority of German states now accept the need to regulate online casino gaming, with new national rules expected to come into force in 2021. In the meantime, existing state licences will be reactivated. Schleswig-Holstein is currently the only German state to license and regulate online casino games, having diverged from Germany’s other 15 states in 2011. All other states only allow online sports betting. Meanwhile, the state of Lower Saxony has turned its attention to payment processors in an effort to eradicate online casino gaming. The Ministry of Interior and Sports is requiring payment processors to adopt their own policies to prevent transactions with illegal gambling operators, or else face exclusion from the market. With
the major processors all serving a diverse range of sectors, the ministry hopes they will abandon unlicensed operators to protect their businesses.
Netherlands The Netherlands gambling regulator Kansspelautoriteit (KSA) expects to begin licensing online operators after 1 July 2020, with the market set to open on 1 January 2021. The authority will be in a position to begin drafting licence conditions as soon as the Ministry of Justice and Security has drafted the secondary legislation to the Remote Gambling Act. The regulator had originally been expected to begin the licensing process this July. The intense work to develop the online regulations has seen the Netherlands government shelf its casino modernisation bill, under which the state-owned Holland Casino would have been privatised.
Norway The government of Norway adopted new regulations on the processing of financial transactions between Norwegian consumers and offshore, unlicensed online gambling operators. The new regulations, which were first proposed in April 2018 and submitted for European Commission approval in June, are designed to strengthen the 2010 ban on payment transactions with unlicensed operators. They clarify that the unlicensed gambling payments ban applies to all 42
L EG A L
WORLD REGULATION
The government of SchleswigHolstein says a majority of German states now accept the need to regulate online casino gaming, with new national rules expected to come into force in 2021
entities, including companies that carry out payment transactions on behalf of unlicensed gaming operators. They also allow the regulator to ban transactions with named operators or intermediaries, as opposed to the current method of banning payments to specific account numbers. “The purpose of the change is to streamline the existing ban on payments to gambling providers who do not hold Norwegian authorisation,” said minister of culture and gender equality, Trine Skei Grande.
Sweden Sweden’s gambling regulator Spelinspektionen had a busy quarter, handing down a number of fines to operators, revoking a licence, while also investigating alleged rule breaches related to the offering of bets on a Swedish top-division football game, which featured players under the age of 18. In May, Spelinspektionen issued penalty fees totalling SEK14m (€1.3m) to operators Betway and Mandalorian Technologies for violating regulations regarding bonus offers to customers. The regulator said that the operators had offered their customers bonuses on repeated occasions, which it considered to be a “serious” violation of the country’s regulations. And in June, the regulator dished out fines to Genesis Global for offering recurring bonuses on deposit, and AG Communications, a division of Aspire Global, for failing to remove from its site bonus offers that it had previously offered to VIP and loyGIQ Q2 REVIEW
alty programme customers in Sweden. It really brought the hammer down in mid-June with the revocation of Ninja Casino’s licence (see page 4). Spelinspektionen also cautioned several operators who offered bets on the Allsvenska football match in April between AIK and IFK Gothenburg, including specific bets on individual football players, who were under 18. It reiterated that offering bets on players under the age of 18 is prohibited and considered a serious violation of the country’s gaming laws.
United States Legislatures across the US have been readying their sports betting plans, culminating in a number of newly legalised states. Montana Governor Steve Bullock approved legislation authorising the state lottery to offer sports betting at licensed retail locations and online. He was followed by Iowa Governor Kim Reynolds, who signed her state’s sports betting bill in May, enabling Iowalicensed gaming facilities and pari-mutuel racetracks to offer in-person and remote sports betting, subject to additional licensure. The adopted legislation also requires fantasy sports operators to be licensed in Iowa. Indiana Governor Eric Holcomb signed legislation authorising state-licensed gaming facilities to offer in-person and mobile sports betting to players over the age of 21, with sports betting licensing beginning 1 July. The legislation also expands gambling in the state by allowing table
games at racinos from January 2020, and offers the possibility of a new land-based casino in Vigo County. The graduated wagering tax at racinos and riverboats will also be lowered. Tennessee Governor Bill Lee was less bullish when he allowed recently approved legislation to pass into law without his signature, establishing the United States’ first online-only sports betting market. Tennessee offers an unlimited number of sports betting licences, with the activity regulated by the Tennessee Education Lottery. The legislation is also the first in the US to mandate the use of official league data for settling in-play bets. Legislation signed into law by Colorado Governor Jared Polis decriminalises sports betting from 1 May 2020, subject to voters approving a sports betting tax at the November 2019 general election. Sports betting will be regulated by the Colorado Gaming Control Commission, with two-year licences reserved for the existing casinos in Central City, Black Hawk and Cripple Creek, which may then contract with external partners for online sportsbook operations. New Hampshire will likely be next, as its sports betting bill was pending the approval of Governor Chris Sununu as GIQ went to press. The sports betting act would authorise up to ten retail sports betting locations and five mobile operations. Operators would be selected to act as agents of the New Hampshire Lottery Commission through a procurement process. n 41
L EG A L
UK GAMBLING COMMISSION
Strange relationship IT HAS BEEN a tumultuous few years for the UK gambling industry. First came the 2014 Gambling (Licensing and Advertising) Act. Then in 2015, Sarah Harrison took the reins at the Gambling Commission and embarked on a personal mission to reform the industry and its worst excesses. A slew of consultations, pronouncements, changes and fines followed. In the background media and politicians wailed about the “crack cocaine of gambling”, otherwise known as fixed-odds betting terminals or FOBTs. The cacophony around FOBTs reached a climax in May 2018, when the maximum stake on the machines was cut from £100 to £2. After a minor furore over the date of implementation – and the resignation of a government minister over the matter – the new stake went into effect on 1 April this year. With new chief executive officer Neil McArthur relatively fresh to the job – having taken over from Harrison in February – it is a good time to reflect on the upheaval of the past few years. Many of the industry’s chief executives, lawyers and compliance personnel have been left reeling from the whirlwind of reform that has engulfed the UK industry. Some have left it. While most recognise the Gambling Commission’s good intentions and realise that it was about time the industry grew up, others are dismayed about what they see as the politicisation of the regulator. In this article, Gaming Intelligence seeks the views of as many of the UK’s GIQ Q2 REVIEW
The Gambling Commission has blazed a trail with its relentless reform of the gambling sector in the UK but it has left operators reeling. Steve Hoare asks if the two sides can get along better leading operators as possible and presents them to the Gambling Commission with the intention of opening up an honest dialogue without fear of retribution.
All those fines “The industry deserves a lot of the hassle,” says an industry lawyer. “We are immature, particularly in the remote industry. Occasionally we behave like a spoiled brat. But we are growing up and we are trying to be grown-up. But, as with a child, do you beat the child until he behaves or do you encourage him? Could we
have a more balanced approach that encourages collaboration rather than a constant seeking of settlements?” During the past two years, 21 operators have been penalised and rebuked, culminating in the recent removal of MaxEnt Ltd’s licence. The UK’s operators have handed over £40,694,972 in penalties and settlements. 888 paid out the highest amount, with a £7.8m settlement in August 2017. The £80,000 paid by Stan James Online two months later was the smallest amount. Few operators have escaped the wrath of the regulator, with the likes of bwin, William Hill, SkyBet, LeoVegas, Rank, Paddy Power Betfair and Casumo all failing to measure up to its standards. The former chief executive officer of one listed company tells us: “Any operator not showing signs of weakness in the UK is an operator that will have so many holes in their system that when the UKGC does an investigation it will be horrendous. There is no way an operator can be so smart in changing their policies that it is not reflected in their numbers.” This might have been this operator’s way of having a dig at the likes of GVC or The Stars Group – the two most obviously healthy companies that have thus far escaped the regulator’s whipping hand. But it is not an uncommon view. And it is difficult to see how all this tallies with the UK government’s Regulators’ Code, which states that regulators need to “understand and minimise negative economic impacts of their regulatory activities”. 43
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Not so, says a Commission spokesperson: “Nothing in the Regulator’s Code requires compliance to be cost-free, nor detracts from our duties to uphold the licensing objectives as set out in legislation.” We had hoped to sit down with McArthur and have a sensible and frank conversation about the Commission’s relationship with the industry. While most industry participants accept that the Commission has a job to do, there is also a great deal of frustration around some of its actions – and in some cases bitterness. These, we felt, would be better expressed in a conversation than in a Q&A with a spokesperson. If McArthur was not available, perhaps head of stakeholder engagement Daniel Bliss would talk about how both sides of the industry – operator and regulator – can get along better, and how both sides can understand each other’s predicament better. Bliss was civil but nobody at the Commission wanted to actually talk about these issues. The job of answering our questions fell to communications manager Ben Glass, who did a good job pooling the thoughts of a number of specialists from throughout the 300-person organisation. That inevitably leaves the Commission’s groupthink responses a bit stilted, but at least they have engaged. It is a modus operandi that fits with the industry’s perception of the regulator’s communications. “They do engage with you,” is a phrase I hear over and over again. However, it is always followed by a “but…” While former CEO Sarah Harrison was respected and liked, and sometimes feared, it is felt that she tried to rule with an iron fist rather than through collaboration. Perhaps that is what was needed during that phase of the industry’s evolution. Anything less might have left the public seething, such was the poisonous nature of media and political debate at the time. McArthur’s more moderate tone has been welcomed, as have the efforts of Bliss, executive director Tim Miller and new head of the insights team Ben Haden. “Neil has impressed senior management,” says a public affairs director. “He has genuinely engaged with operators and has visited us and others to better understand how we work. It is something they should be doing more of. As a regulator, it is easy to hide in the office and regulate from behind a closed door.” While the Commission’s staff impress on a one-to-one level, there is a frustration that this willingness to collaborate is not reflected in public pronouncements, which are often vague and/or aggressive. 44
“The licence conditions and codes of practice clearly define the outcomes licensees must achieve to safeguard their customers” Gambling commission spokesperson For example, several sources suggest their companies are prepared to put more money into the funding of research and treatment but are left unclear where or how it should be invested. While Commission chairman William Moyes demands a statutory levy and £70m “at least” – a figure most believe could quite easily be achieved – there is little clarity over how it should be used. This lack of clarity extends to many aspects of regulation. “They expect you to do things but do not explicitly say what those things are,” is a phrase heard again and again from operators. The Regulators’ Code states: “Regulators should clearly explain what the non-compliant item or activity is, the advice being given, actions required or decisions taken, and the reasons for these.” “It is difficult to comment in the absence of a specific example,” responds the Commission. “However, we see the benefits of having an outcomes-based approach, which means regulation is adaptable to a fast-changing industry, does not result in a tick-box approach to compliance and ensures licensees take responsibility for ensuring their operations are fair, safe and crime-free.” The Commission’s reiteration of its “outcomes-based approach” is nothing if not consistent. One regulatory chief saw it coming. He recalls the phrase being wheeled out in 2017, when the Commission demanded a new reality check (RTS 13) to be flashed up to customers to indicate the time they have been playing since a session began. The source points out this is no easy task. If you have a sportsbook and wallet from OpenBet, a casino from Playtech and games from 200 different providers, integrating a timer is a complex operation. In this instance the outcome the Commission wanted was the timer but operators were left guessing as to what the Commission meant when it said the timer started at the beginning of a session. “When is the timer supposed to start ticking?” asks the executive. “When does a ‘session’ start? When the client is downloaded? When
the customer logs in? When the customer first places a bet or when the wheel starts spinning?” “A gaming session is the playing of any of the applicable activities (e.g. bingo or casino games) and commences when a player starts playing a game for real money,” it says in the Remote Gambling and Software Technical Standards. “When you peel the onion, it gets a lot more difficult. It took a huge amount of effort to implement that,” says the source. “The licence conditions and codes of practice clearly define the outcomes licensees must achieve to safeguard their customers,” continues the Commission spokesperson. “We do provide licensees with explanation when we see that these standards have not been met, and we will state what corrective action is required. But often it will be counter-productive to prescribe a one-size-fits-all simplistic action, where this might not actually achieve the outcome needed, or fit the licensee’s own business. We are focused on identifying and helping licensees to achieve the outcomes needed to continually improve the gambling industry.” It sounds fair enough when it is written down. One size does not fit all, but the huge amount of frustration around this approach suggests that a little bit more thought and guidance could be applied.
Demanding deadlines There is an overwhelming feeling that arbitrary and very tight deadlines are imposed on the industry when changes are introduced. The recent example of age verification being the most obvious example. Could the Commission consult with the industry before imposing these deadlines? “We always seek to ensure licensees are fully aware of changes being explored and ultimately implemented by the Commission,” says the Commission’s spokesperson. The Commission first outlined its views on potential changes to age verification requirements when it published a review of online gambling in March 2018. Following that, it published specific proposals as part of a threemonth public consultation between September and November 2018. After that it published its response to the consultation in February 2019, which detailed the new requirements. Following the announcement, it only gave licensees three months to make the necessary changes. “It was a very short window to implement the requirements but it was a vast change to make a deadline that was seemingly plucked out of the air,” says an executive. “Furthermore, it was not just applied to new customers but had
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to be backdated and there was a lot of time and effort spent on educating customers, who might have played with us for 20 years, on why we were asking for proof of their age.” But the Commission believes: “The timeframes demonstrate our open and transparent approach to making regulatory changes and the ample opportunity given to licensees to contribute to the process, prepare for and ultimately put in place the changes required.” The Commission’s spokesperson contends that operators were asked explicit questions concerning both the costs and required lead-in times for implementation of the age verification proposals. But this process, fresh in people’s minds, was highlighted by almost every single operator as an example of the Commission at its worst. There is little or no correlation between the Commission’s perception of the process and the industry’s perception of the events.
Handling the flood If communications between industry and regulator have become strained, it is perhaps no surprise given the sheer number of consultations, proposals and changes during the past few years. Everyone we spoke to suggested that there is little empathy for operators and suppliers struggling to respond and implement so many consultations and/or changes to, for example, the social responsibility code; remote technical standards; ID verification; affordability; autoplay changes; time-out changes; a popup reality check; credit card use; ADR, blocking software and the national responsible gambling strategy. If an operator or supplier is big it has a lot of moving pieces to adapt, if it is small it does not have the resources to deal with all these in such a short period of time. The Regulators’ Code states: “Before changing policies, practices
or service standards, regulators should consider the impact on business and engage with business representatives.” Could the Commission do more to ease the load on the industry? Its response is a disappointing regurgitation of its consultation process and a reminder the statutory minimum for changes to licence conditions is three months. Which would appear to confirm the industry’s point that three months is a tough ask. Amongst the spiel the Commission claims: “The planning and sequencing of consultations seeks to balance the capacity of licensees to engage with the process and implement outputs…” So there is, at least, some consideration given to licensees capacity to absorb this momentous amount of work. Clearly not enough, according to the licensees themselves.
What is a regulator? At the November 2017 Raising Standards conference, former CEO Harrison noted that “there has been some progress across the market that should rightly be acknowledged”. That progress has continued. Over the intervening year-and-a-half, we have seen GVC launch its Change for the Bettor strategy, William Hill unveiled its Nobody Harmed campaign. Since its record fine in August of that year, 888 has completely overhauled its compliance and responsible gambling functions to such a degree that it is demonstrably a far better and fairer operator than it was in the past. “We do a lot and we do a lot more than people realise,” says the responsible gambling director at one operator. “We have to educate people and it would be helpful if the Commission acknowledged our successes as well as our failures.” One observer goes even further, claiming that the gambling industry does more to protect its customers than any other industry, bar the automotive sector. In such a hostile media environment, would it not be helpful
for everybody if the Gambling Commission also shared the industry’s good news? “Where we see the industry making effective progress on issues, we have recognised this and encouraged greater collaboration and the sharing of good practice to ensure all consumers can benefit,” says the Commission. “To be clear, however, it is the Commission’s role to regulate the industry in accordance with our statutory duties, not to promote it.” The response leaves little doubt that there will be no change on this front. It is a point McArthur has made before. At the 2018 Raising the Standards conference, he said: “It’s important to remember that it is not my role to be your friend. It is not my job to promote the gambling industry. My job is to permit gambling if it’s fair and safe. I work in the best interests of consumers.” There is a fine line between sharing best practice and promoting the industry, but neither is it helpful – to operator, regulator or consumer – when an industry is demonised. This is where the industry feels the regulator could step in and help. “The media coverage of the industry reflects a growing concern about the potential harms of gambling,” responds the Commission. “Media exposure also helps us to create conversation about the actions we are taking through our regulatory approach and push the steps we are taking to make the industry safer.” On this issue and several others, there seems to be a fundamental disconnect between the industry’s perception of what a regulator should be and the regulator’s definition of what it is.
The cost of regulation “The bar has been set too low by operators in relation to treating customers fairly,” said former CEO Harrison in 2017. “The customer experience has not been what it should be, and change is now coming. Fairness is key, transparency is essential, and unreasonable behaviour will not be accepted, by us,
“It is not my job to promote the gambling industry. My job is to permit gambling if it’s fair and safe. I work in the best interests of consumers” Neil McArthur, Gambling Commission
45
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by our partner organisations and certainly not by the consumer.” While progress is being made, there is little doubt that it is not being made across the board. One does not need to look far to find smallprint terms and conditions that nullify splashy bonus offers. Outrageously, customers can still struggle to get their hands on their own money. The recent furore around Paddy Power Betfair and Betfred’s apparent attempts to circumvent the FOBT stake cut are a case in point. On the same day that the stake cut was implemented, the two operators were found to have launched new roulette-style high-stake games, prompting the UKGC to issue a warning and order the products to be pulled from the market. One industry lawyer complains that the games were legal and the Commission’s reaction was a knee-jerk response that merely fanned the media’s hostile flames. However, most neutral observers would probably conclude that the operators were quite frankly – excuse the reversion to colloquialism – taking the piss. At the Raising the Standards conference, McArthur talked about dealing “firmly but fairly with anyone that tries to compete by bending the rules”, or breaking them, of course. He also said that the Commission would take a precautionary approach where there is a lack of conclusive evidence. It is not unreasonable to include the roulette games in the “bending the rules” category and to claim they merit a precautionary response. If the industry is to survive and prosper, it needs to be held to a higher standard than other industries. Simply because it can be a health risk. That is not to say that junk food, video games and other sectors should not also be held to account, but that is not this industry’s concern. Industry executives are keen to promote the idea of gambling as “just another form of entertainment”. CEOs like to compare their companies to Amazon or Netflix but to gain the sort of trust that those brands enjoy, it will need to cut the sharp practices, stop looking for loopholes and completely detoxify its image. Most larger operators have taken that message on board but it’s not unfair for the Commission to seek “higher standards than ever before, that increase year on year,” in Harrison’s words. While the style might be less combative, there has been little change in strategy from Harrison to McArthur. The Advisory Board for Safer Gambling (formerly The Responsible Gambling Strategy Board) is seen as setting the agenda. Much to the industry’s chagrin, the board comprises social researchers, psycholo46
gists, economists and public health experts but has no industry representation since former OpenBet and Inspired director Russell Hoyle stepped down in 2018. Anna van der Gaag took over as chair earlier this year and is currently taking a fresh look at the composition of the board and the way it draws on expertise from different areas – including the industry.
Gambling Commission sanctions: 2017 to present Date
Operator
Amount
Aug 2017
888 Holdings
£7.8m
Oct 2017
Stan James Online
£800,000
Nov 2017
Gala Interactive
£2.3m
Dec 2017
Broadway Gaming
£100,000
Leading the way
Dec 2017
ElectraWorks
£350,000
McArthur has worked at the Commission since 2006 but used his speech at the Raising Standards conference to distance himself from his old boss and predecessor Harrison. He started by saying he would not be referring to “tipping points or last chance saloons or existential threats”. Harrison had famously warned that we are at a tipping point and threatened anyone not sharing her commitment to consumer protection with licence removal. McArthur went on to say that he sees an “opportunity for a change of emphasis in relationships between the Commission and those we regulate”. It is still very early days for his spell in charge. It might take a while for this change of emphasis to become apparent. In the meantime, it is worth pointing out that other regulators look at the UK in admiration. They recognise that it takes a certain amount of bravery and a lot of hard work to build a case. Fellow regulators follow the news coming out of the Commission closely. Birgitte Sand, director general of the Danish Gambling Authority, tells us: “The industry is at the same time maturing and DGA, much like I believe other regulators do, follows that development and regulative reactions to that development.” As the industry matures, it is likely we will see more sanctions – not just in the UK but across Europe. The genesis of this article was the huge number of complaints heard about the Gambling Commission and its actions. It has become clear that some of the disgruntlement stems from the industry’s misconception of what the regulator is. The industry would like
Feb 2018
William Hill
£6.2m
It is worth pointing out that other regulators look at the UK in admiration. They recognise that it takes a certain amount of bravery and a lot of hard work to build a case
Mar 2018
SkyBet
£1m
April 2018
TabCorp
£84,000
May 2018
LeoVegas
£600,000
June 2018
32Red
£2m
Oct 2018
Rank
£500,000
Oct 2018
Paddy Power Betfair
£2.2m
Nov 2018
C2 Holdings
Surrenders licence
Nov 2018
Videoslots
£1m
Nov 2018
Casumo
£5.85m
Nov 2018
Daub
£7.1m
June 2019
BestBet
£230,972
June 2019
MT SecureTrade
£700,000
June 2019
Betit
£1.4m
June 2019
InTouch
£2.2m
July 2019
MaxEnt
Licence revoked
July 2019
Gamesys
£1.2m
the regulator to work for it more actively, while the regulator’s responsibility is to consumers and to the government. Then there is the issue of communications. Trude Felde, the Norwegian Gaming Association senior adviser and president of the International Association of Gaming Regulators, says: “There are different trends with how regulators relate to operators. In Norway, we talk to our operators to solve problems before we end up in court or arguments – but we only have two operators. It might be harder when you have many licensed operators.” She acknowledges that “a raised temperature” might just be the natural consequence of having a large number of competitors. However, a lot of frustration can simply be attributed to the difficulty of adapting to a changed environment. “There are a lot of new regulations and new licensing regimes throughout Europe,” says Sand. “That, of course, may create a complicated landscape for operators operating in different jurisdictions.” And that, of course, comes at a cost. n
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The great RG battle GVC Holdings and William Hill go head to head with new responsible gambling campaigns aiming to make a bold grab for market leadership, writes Macarena Rodicio
“We have wanted to develop a multi-faceted strategy with initiatives that address all areas of problematic behaviour” Grainne Hurst, GVC 48
THERE WAS A time when responsible gambling was considered little more than a box ticking exercise, but a hostile political landscape and intense public scrutiny has forced operators to re-evaluate. For those looking to build long-term, sustainable businesses, particularly in highly regulated European markets such as the UK, responsible gaming can no longer be an afterthought. Instead, it has assumed a position at the centre of growth strategies, and is impacting just about every aspect of an operation, from marketing to product development. Two of the UK’s largest operators – GVC and William Hill – have over the last 12 months unveiled new, overarching campaigns which aim to redefine the responsible gambling field. Most major operators have made huge strides in this area but the big two retail presences have made splashier announcements than any, looking to responsible gambling for competitive advantage. In January, GVC announced the launch of its ‘Changing for the Bettor’ safer gambling campaign, which was accompanied by the resuscitation of a relationship with the Harvard Medical School, which goes back some 12 years to projects carried out by bwin in more innocent times. The new research project sees GVC pledge $5m to Harvard’s Division on Addiction over the next five years. GVC actively sought the support of the UK’s Minister for Sport and Civil Society Mims Davies MP and was delighted when she highlighted the “important contribution” the campaign would make in tackling problem gambling, while underlining the “key role” gambling operators have in protecting people from harm and identifying potentially risky betting behaviour. Furthermore, Labour Party deputy leader Tom Watson, the most vociferous anti-gambling campaigner in the country, even went out of his way to text a supportive tweet of GVC’s commitment to better treatment. Meanwhile, last summer William Hill CEO Philip Bowcock launched the operator’s ‘Nobody Harmed’ programme, which promised to “recognise the hidden side of gambling and get much better at helping our customers stay safe, in shops and online, in the UK and around the world.” Bowcock conceded that Hills had not been doing enough to tackle the problem. “We have
not taken seriously enough the challenge of problem gambling. For too long, we’ve talked about individual responsibility and small proportions of adults who experience problems,” he said. “Every type of gambling product has the potential to cause harm to our customers. That is something we have to recognise and that harm is something we need to face.” The penny has finally dropped. One can and should be cynical about these announcements but the very fact they are being made represents massive progress. Both parties are recovering from the scars inflicted by the political campaigns waged and lost over their fixed-odds betting terminals (FOBTs). Both will hope the end of the FOBT saga represents the end of an era, and these new approaches show they are ready to embrace change.
Making a change Both ‘Changing for the Bettor’ and ‘Nobody Harmed’ build upon previous responsible gambling programmes, but differ from their predecessors in both scale and approach. “It’s an issue we have been looking at as a group for some time,” Grainne Hurst, GVC’s director of responsible gambling, tells Gaming Intelligence. “We were clear we needed to take an approach that was both more proactive and more holistic. There is no one single silver bullet for minimising gambling-related harm, therefore we have wanted to develop a multi-faceted strategy with initiatives that address all areas of problematic behaviour. “We were also clear that collaboration is key to address the problem – effective action requires that we work in partnership with academics, charities, the regulator, government, customers and shareholders to get to the heart of this problem,” Hurst adds. For Hills, it was a similar story, heeding Bowcock’s admission that not enough had been done previously to take new efforts to “the next level”. “We already have lots of protections in place through our previous safer gambling activities, but now we’re taking that to the next level and doing even more as part of our long-term ‘Nobody Harmed’ ambition,” says Lyndsay Wright, director of strategy and sustainability at William Hill. “We’re doing this because while millions of people enjoy gambling and it is a fun part of their leisure time, too many people – some 430,000 – are experiencing issues
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Anthony Joshua leads William Hill’s ad campaign
with their gambling. We don’t want them to be harmed by their gambling experience – that is why we launched it in the first place, and it’s why we continue to be committed to it today.”
Multi-faceted approach A common criticism of previous responsible gambling campaigns has been that they have failed to impact the business areas where they are most needed. Disjointed campaigns have tended to keep those responsible for implementing protection measures far away from marketing and product development teams. GVC and William Hill are remedying this with holistic strategies that look to place responsible gambling at the heart of their respective businesses. For Hills, this takes the form of a fourpronged strategy which incorporates the design and marketing of its products; the identification of at-risk customers; the strengthening of support systems; and the empowerment of online and retail staff to intervene when they see signs of problem gambling. GVC’s ‘Changing for the Bettor’ programme outlines seven key areas of focus: a better understanding of the problem and GIQ Q2 REVIEW
best solutions; educating key stakeholders; promoting responsible attitudes; empowering customers; funding treatment; championing responsible product design; and driving cultural change within the business.
People and technology To successfully implement these ambitious programmes, there must first be a change of company culture. Both William Hill and GVC have invested heavily in building out new teams tasked with overseeing and actioning stronger responsible gambling measures. At William Hill, Dan Whitlam assumes responsibility for retail and Ralph Lichmannegger for online as heads of safer gambling. “They’re here to make sure we’re joining up our efforts to look after our customers, and will be working closely with our compliance, product and data teams to find smarter ways to empower all customers to stay in control, to identify customers at risk – and then to intervene in the most effective way. And my role is to drive the agenda forward across the business,” says Wright. “We’re also pushing hard to create a culture that’s more responsive to the challenge of gam-
bling-related harm. That’s why we’re empowering all our colleagues to make a difference in their own business area: embedding safer gambling in every part of colleague training, and setting KPIs for our online business to get more customers using tools to help them stay in control,” she adds. At GVC, the responsible gambling team has grown by more than 200 per cent since 2017, with more than 60 employees now dedicated to responsible gambling monitoring and interactions with customers, alongside compliance, strategy, technical, marketing and operational staff with a particular focus on the area. “Safer gambling is a non-negotiable part of the way we do business,” says Hurst. New technology is also being leveraged to better identify those at risk.As part of GVC’s ‘Changing for the Bettor’ campaign, the operator is rolling out its ‘markers of harm’ algorithm to all UK-facing parts of the business, as well as developing more responsible product design principles. And at William Hill, Wright says technology and data will be used across the business to prevent those most at risk from problem gambling. “We’re driving change throughout our day-to49
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day business operations – using technology to get smarter at identifying people at risk, launching a second-generation algorithm that can spot risky play earlier, piloting new facial recognition technology to enhance self-exclusion measures in shops, and revamping our data systems to enable faster and better use of data to prevent harm,” she says.
Responsible marketing Of course, the area where responsible gambling policy has arguably the most noticeable impact is marketing. Several operators in the UK have placed safer gambling closer to the centre of advertising campaigns, including a Sky Bet short which landed last year, with Sky Sports’ Gillette Soccer Saturday’s cast highlighting the operator’s responsible gambling tools. Hurst at GVC notes that the operator has decided to stop sponsoring football shirts and perimeter boards at football grounds across the UK, instead using the space to push responsible gambling messages as well as to promote charitable partnerships. Hurst estimates the decision will cost around £2m in brand advertising spend. At Hills, Wright says that the operator is “determined to use the power and reach of our marketing” for the greater good. “We’re committed to the whistle-to-whistle pre-watershed TV advertising ban. And we’ve been using our brand ambassadors to promote safer play – helping customers balance the buzz of betting with staying in control. The Anthony Joshua campaign is a good example – encouraging customers to think about what it means to stay in control, even in the heat of the moment,” she says. GVC has gone one step further than the slightly odd whistle-to-whistle ban. With most advertising occurring pre-game, a whistleto-whistle ban seems almost pointless. GVC has upped the stakes by stating that it will not advertise on television around sports matches. Looked at cynically, this can be seen as a continuation of GVC and bwin’s previously stated preference for online marketing. However, it is also a necessary reaction to the public’s distaste for the betting industry’s saturation of live sport on TV.
The next step While much of the two campaigns understandably focus on practical steps, there is of course a bigger issue at hand. Both William Hill and GVC have also made significant contributions to exploring in more depth the fundamental questions around gambling addiction. 50
Philip Bowcock, William Hill
“It’s clear that collaborative partnerships are critical to our success,” says Wright at William Hill. “Last autumn we brought together over 100 leading stakeholders, including gambling operators, policymakers, industry bodies and responsible gambling campaigners at an interactive event – which aimed to unearth fresh insights into the challenges, new ideas for solutions, and aspirations for the future. “It was all focused on exploring how we can collaborate effectively on this shared agenda. We’ve published those insights on our corporate website for anyone to access, as well as taking them forward proactively in our own business.” A centrepiece of GVC’s campaign is the $5m commitment for research on the topic, in partnership with Harvard Medical School. “The
“We have a responsibility to tackle harm from gambling. Society expects it, and our customers need it” Lyndsay Wright, William Hill
academics at Harvard will look into the causes and consequences of problem gambling for us, as well as variations between regulated and unregulated markets,” says Hurst. “One key difference to previous research projects – and a first for the industry – is that we will be open sourcing our anonymised player data to Harvard, for them to analyse our existing systems for spotting problematic play, and suggest any improvements where necessary. This data will also be posted on the Harvard ‘transparency hub’ for other independent academics to assess.” It is ambitious thinking that also highlights a sea change in the way operators are treating the issue. The example set by GVC and William Hill – as well as others – shows that responsible gambling is now becoming a point of competition and differentiation for the biggest players in the UK, in much the same way as pricing, branding or product. “Our aim is to be the market leader in safer gambling, and challenge ourselves and the industry to continue to adapt our processes and policies in this area,” says Hurst of GVC. “Our approach cannot be static, but needs to react to new opportunities and challenges. We think the use of technology is key to driving change in this area and it is an area we are looking forward to exploring further over the coming months.” William Hill and the brands that make up the GVC portfolio are some of the most successful businesses in the industry, and they understand that to continue that success into the next decade, they must develop a sustainable business with responsible gambling at its core. “As one of the largest bookmakers in the UK, we have a responsibility to tackle harm from gambling,” says Wright at William Hill. “Society expects it, and our customers need it – so it’s clear that a sustainable future for William Hill depends on getting it right.” n
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F I NA NC E FOCUS ON SWEDEN
Swedish regulations hit Amid all the euphoria and excitement of Sweden opening up its online betting and gaming market at the start of the year, it wasn’t quite the start that operators expected, writes Kio Dawson Q1 2019 Swedish market figures
Top 20 companies in Q1 (SEK) COMPANY
Jan 19
Feb 19
Mar 19
Q1 2019
ATG
347.8m
318.8m
401.0m
1,067.6m
Svenska Spel
188.4m
196.9m
191.6m
576.9m
Kindred Group*
133.5m
113.8m
102.1m
349.4m
Cherry
81.9m
82.0m
77.0m
240.9m
bet365
52.7m
80.8m
49.8m
183.3m
LeoVegas
46.7m
56.1m
61.8m
163.5m
Global Gaming
44.4m
33.4m
33.8m
111.5m
Hero Gaming
43.4m
36.7m
29.5m
109.6m
Betsson
23.4m
44.2m
32.2m
99.8m
Mandalorian Technologies
22.6m
25.4m
35.3m
83.3m
Gaming Innovation Group
28.0m
17.2m
14.2m
59.4m
William Hill
19.6m
14.2m
19.2m
53.0m
The Stars Group
16.1m
22.4m
11.4m
49.8m
JPJ Group
10.2m
11.7m
15.4m
37.3m
Casumo
11.7m
11.7m
12.6m
36.0m
Videoslots
7.8m
11.9m
13.1m
32.8m
Bethard
8.4m
9.6m
10.7m
28.6m
SuprPlay
5.6m
8.8m
7.8m
22.2m
Flutter Entertainment
6.6m
9.6m
5.8m
22.0m
Viral Interactive
6.9m
5.8m
7.9m
20.6m
Q1 2019
Top 10 listed companies in Q1 (SEK) COMPANY Kindred Group* Cherry (delisted on 7 May)
Jan 19
Feb 19
Mar 19
133.5m
113.8m
102.1m
349.4m
81.9m
82.0m
77.0m
240.9m
LeoVegas
46.7m
56.1m
61.8m
164.6m
Global Gaming
44.4m
33.4m
33.8m
111.6m
Betsson
23.4m
44.2m
32.2m
99.8m
Gaming Innovation Group
28.0m
17.2m
14.2m
59.4m
William Hill
19.6m
14.2m
19.2m
53.0m
JPJ Group
10.2m
11.7m
15.4m
37.3m
Flutter Entertainment
6.6m
9.6m
5.8m
22.0m
GVC Holdings
2.9m
4.2m
4.8m
11.9m
All figures provided by Redeye. Since the tax paid in Sweden is publicly available information, Redeye publishes data each month and calculates the net gaming revenue (NGR) for all licence holders
54
AN 18 PER cent betting duty, combined with increased bonus and marketing costs, was always going to put some short-term margin pressure on operators’ revenue and profit. The new regulations may have created an open and highly competitive market, but it also created a substantially smaller one. The introduction of the Spelpaus selfexclusion system, as well as changes to deposit and withdrawal limits, all had a big impact on operators’ results, while new rules for online slot games and bonussing meant that the average player value remained below the historical level during the entire quarter. In total, licensed online betting and gaming operators generated net gaming revenue (NGR) of approximately SEK2.5bn during the first quarter of 2019, with publicly listed companies accounting for about two-thirds of the total. The leading publicly-listed operator in the market, Kindred Group, saw revenue from the Nordic region decline by 16 per cent year-onyear, with the Swedish market opening negatively impacting group EBITDA by £18.9m. This comprised a £6.6m increase in bonus expenditure, a £3.8m increase in marketing investments, as well as higher betting duties of £5.2m. “While these are significant numbers, we always expected the opening of the market to result in an initial margin pressure. However, we are confident that we have a solid base to build from and are expecting continuous improvements from here,” said chief executive Henrik Tjärnström. For Ninja Casino operator Global Gaming – which generates the majority of its revenue in Sweden and had enjoyed spectacular growth over the past few years – the first quarter was a disaster. Hit by technical issues as well as the new regulations, total Q1 revenue fell by 18 per cent, with the company swinging to a loss of SEK41.5m for the quarter. Combined with a 70 per cent decline in the company’s share price in the past year, the poor performance led to CEO Joacim Möller stepping down in May. “This is, of course, disappointing for all of us,” said Global Gaming interim CEO Tobias
F I NA NC E FOCUS ON SWEDEN
operators hard in Q1 Fagerlund. “The market developed in a way and at a pace that was not easy for operators to predict, affecting all operators in the Swedish market. As the bulk of Global Gaming’s revenue is in the Swedish market, the impact of the new regulation has been even more tangible.” Another Stockholm-listed operator, LeoVegas, said it was “generally satisfied” with its performance, although Swedish revenue was down by 16 per cent compared to the previous year. “As is always the case when a market becomes regulated, it will take some time for the industry and customers to adapt, and thereafter we expect a more stable and predictable market,” said LeoVegas CEO Gustaf Hagman. Betsson CEO Pontus Lindwall added that it had been a “challenging start” but that it was too early to draw any long-term conclusions. “Betsson still sees Sweden as an important market long-term, however we now also see the advantage of having a geographical spread that enables scalability,” he said. For Gaming Innovation Group (GiG), Sweden accounted for 11 per cent of total B2C revenue (€20.2m) in the quarter, down from a 29 per
GIQ Q2 REVIEW
cent share in Q1 2018. “This was the first time the company experienced a re-regulation of a major market and the quarter has been full of valuable insights and key learnings,” said GiG CEO Robin Reed. “These have in turn been used to evolve our strategy.” According to Swedish equity research firm Redeye, the market contracted by around 30 per cent in January, although results improved by the second half of the quarter. “The first months have been eventful for the iGaming market in Sweden,” explains Redeye analyst Kristoffer Lindström. “Operators have been hit by both the smaller market due to the new regulatory requirements and also the fact that the ‘old’ monopoly actors are gaining market share.” With marketing spending accelerating during Q1 compared to last year, Lindström says that there has been a ‘land-grab’ mentality by operators. “The increased marketing was expected,” he says. “Size and scale are one of the biggest advantages you can have within iGaming. It makes sense that the larger players continue to starve out the small ones with aggressive marketing.” For the bigger operators which are also active in other markets, Lindström believes they will be able to soak up their losses in Sweden for now and look to gain market share in the future when there will likely be fewer active companies in the market. Following claims there was too much gambling advertising in the market, Svenska Spel announced in April that it would suspend online casino advertising for the rest of the year (see feature, page 36), while the country’s two local industry associa-
“The market developed in a way and at a pace that was not easy for operators to predict, affecting all operators in the Swedish market” Tobias Fagerlund, Global Gaming
F I NA NC E FOCUS ON SWEDEN
tions committed to implementing a new code on responsible marketing. There remains a risk, however, that the government will push for severe restrictions or even a ban on gambling advertising in Sweden, when the result of its investigation is released by 31 October 2020. “Looking ahead, we believe that the landgrab mentality will continue, and small players will have a hard time competing with the financial muscle of the largest ones,” says Lindström. “We believe that the consolidation will now accelerate as the first dust has settled, it would not be surprising to see acquisitions from international iGaming operators of small to medium-sized Swedish operators. “We also expect to see some changes in the regulation in the next few years as the outcome of the existing regulation is reviewed,” concludes Lindström. Ahead of the opening of the Swedish online betting and gaming market, the major concern for newly licensed operators centred on whether state-owned operators ATG and Svenska Spel would have an unfair advantage in the new market through their established retail presence across the country. This proved accurate, although not many would have foreseen ATG as the market leader in Q1, following the launch of its new sports betting and casino products. With NGR of SEK1,068m, ATG’s share of the market was 31 per cent. Combined with Svenska Spel Sport & Casino’s SEK577m, the two state-owned operators accounted for nearly half of the total online betting and gaming market. Kindred was the next biggest operator with SEK349m*, ahead of Cherry’s SEK240.9m, bet365’s SEK183m, and LeoVegas’ SEK164m. Somewhat surprisingly, Global Gaming (SEK112m) and Hero Gaming (SEK110m) both outperformed Betsson (SEK100m), while Mandalorian Technologies generated SEK83m in revenue. Gaming Innovation Group generated NGR of SEK59m from B2C and B2B operations, William Hill earned SEK53m through Mr Green and Evoke Gaming, while The Stars Group accounted for a further SEK50m. Operators’ results are expected to improve as the year progresses. According to Redeye, most of the publicly-listed companies recorded growth in April compared to March, with the market stabilising overall as operators adapt to the new environment. n *Kindred calculates the taxable income different from other licence holders, as the operator currently does not deduct the related bonus costs fully. 56
FOUR KEY CHANGES Redeye analysts Kristoffer Lindström and Jonas Amnesten run the rule over the big changes in Sweden’s re-regulated market since 1 January 2019. lS pelpaus is working. Spelpaus is a function for a central registration, where players state that they do not want any type of contact with gambling companies or directed advertising. The self-exclusion can be time-limited or until further notice. So far, 35 000+ players have signed up for Spelpaus. The self-exclusion will lead to a smaller market. We believe this is a positive development for the industry as a whole in the long-term, but will certainly be felt in the short- to mid-term. lT hree-second rule for slots and new bonus rules. There is a new three-second rule for online slots, which means that there must be a three-second window before the players can make a new spin. This might sound minor, but it affects the volume played in short sessions and the overall turnover of the market. The rule for bonus stipulates that only one bonus per customer and gambling licence can be given. This created a significant surge in bonus cost during the first month post regulation. The new bonus rule also effects how operators do marketing.
So far, 35 000+ players have signed up for Spelpaus. The self-exclusion will lead to a smaller market Kristoffer Lindström
lD eposit and withdrawal limits. The deposit limits are a new function for customers, and we get the feeling it will take some time before players understand the dynamics fully. A lot of customers use the popular Pay N Play concept, with fast deposits and withdrawals, which leads to a high deposit turnover. If the limit is hit, customers can choose to increase the limit, but there is a three-day delay before that change comes into effect. We believe the new deposit system will influence the player value during the first few quarters, but the impact will decrease over time as players get used to the way it works. l Svenska Spel and ATG are gaining traction. It is evident that Svenska Spel Sport and Casino and ATG have gained market share. During Q1, ATG had almost five per cent of the total market from its new sports betting and casino offering. Some of the providers we have talked to indicate significant volumes from Svenska Spel’s casino site. As Svenska Spel’s online casino now offers the same games as the other operators, it looks like at least some of those players will choose to play on Svenska Spel’s site, which will obviously hurt the customer intake and volumes for the other operators. The state-owned operator has also been relatively aggressive with marketing campaigns (before terminating all online casino advertising in April). Jonas Amnesten
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F I NA NC E NETENT
NetEnt’s woes reflect Sweden’s teething troubles NetEnt chief executive officer Therese Hillman reflects on a tough opening year and surveys the scene at home, in Asia and in the US
“In order to meet the competition, we need to scale up. We need to be faster, we need to be more efficient in everything we do, and we need to get more games out” Therese Hillman, NetEnt
THERESE HILLMAN HAS just celebrated her first year in the chief executive’s office following her appointment last May. It has not been an easy year. With virtually her first announcement as CEO, she was cutting jobs. Her latest announcement highlighted a three per cent drop in revenue and an 18 per cent drop in profit in the supplier’s Q1 results. The biggest problem, according to Hillman, is the country’s home market of Sweden. In the run-up to the opening of the re-regulated market on 1 January, NetEnt was celebrating deals with the state’s gambling companies Svenska Spel and AB Trav och Galopp (ATG). However, these deals have not had the positive impact many expected. Hillman says the new regulations for responsible gambling are working too efficiently. Players are self-excluding and they are setting bet limits, which is affecting average revenue per player. What’s more, operators cannot offer more than one welcome bonus, and free spins are banned. “It is very early to see how it will develop over time but it is certainly challenging,” says Hillman. “There has also been lots of negative media coverage, which is not beneficial for us.” Media debate has been sparked by the television advertising blitz that operators have used in an attempt to grab market share since the beginning of January. It has been largely selfdefeating – failing to raise revenue and enraging media and politicians alike. “If you read the financial reports of the listed companies, then the marketing spend hasn’t paid off,” admits Hillman, “but it is also about the market position of your brand. Boosting the strength of your brand is important in the long-term.”
Svenska Spel has responded by stopping all advertising of its new online casino. CEO Patrik Hofbauer can only have added fuel to the media fire by quoting the Public Health Authority’s claim that 30 per cent of online casino players have problems managing their gambling. Survey respondents ticking the box agreeing they have “problems managing their gambling” does not necessarily mean they are problem gamblers but that does not tend to matter to a voracious media or an attentionseeking politician. “I think we will see a more normalised market over time,” says Hillman, “but it will take time to recover.”
Asia beckons While it does so, Hillman will seek to boost revenue elsewhere. Hillman’s most eye-catching statement to date was a vow to explore the Asian market. She has little to offer in the way of a progress report, although she claims it is developing “according to plan”. The company has signed an agreement with a specialist reseller of games to Asia, Flow Gaming. It is not an exclusive agreement and the company is looking for other partnerships in the region. Hillman says there was a team at G2E Asia in Macao last week, and the company released an Asian-themed game – Twin Happiness – in April. There have been suggestions that NetEnt’s games are too expensive for the competitive Asian market but Hillman counters the argument by saying that if the players want to play their games then the operators will have to have them. “From what we see, the Asian players like our games,” claims Hillman. “We have 59
F I NA NC E NETENT
that we will come back. Everyone wants to be on a winning team. We laid people off, which is always sad, because you have a heart. It was not an easy decision but it was necessary. Many of these are good people and in Sweden, at the moment, they will get jobs, which helps a little bit.” “If you are a member of the games team at NetEnt you know your games will be played in all these markets by all these players with all these operators. That’s what matters. It’s up to us to create the environment and culture they want to stick with.”
Challenging Evolution to be competitive, of course, but the players have some power. I don’t think we are the only company offering games at our price level.” But progress is slow. On the other side of the Pacific the company has a profitable operation in New Jersey but has yet to get off the ground in Pennsylvania, where regulators stalled a Q1 launch after being spooked by the Department of Justice’s new interpretation of the Wire Act. NetEnt was ready to go at the beginning of the year but needed to modify its approach after Pennsylvania’s regulators concluded that all servers and hardware need to be based in the state rather than neighbouring New Jersey. The new launch date is 15 July, and while Hillman admits that the 54 per cent tax rate on slots is challenging, she is quietly confident the company can make a success of a market where it has deals with several licensed operators, including Parx Casino and Penn National Gaming.
Creating a winning team When we talk in late May, Hillman is less buoyant than when we previously met at ICE Totally Gaming in London in February. Clearly, the Swedish market has not panned out as she – or anyone else – expected. And while her first year in charge has been something of a baptism of fire, she maintains that there are reasons to be cheerful. “The organisation and structure of the company was built for very high growth during a short period of time,” reflects Hillman. During that phase, NetEnt added a lot of people to build a corporate infrastructure capable of supporting a great influx of staff – new employees need recruiting, training and integrating. “The demand for more staff creates a lot of work,” says Hillman, NetEnt’s former CFO. “Now we are at a stage where we need to scale the company. We need to be much more efficient. What we need now is production capacity, rather than corporate functions.” 60
She says that NetEnt used to have a very high share of operators’ wallets but operators have evolved. Where once NetEnt might have been one of five slots suppliers, it is now one of 75 or more. “Even if we keep a high share of wallet, this is the new market. Before, they released one game a week and now it is two or three per day,” continues Hillman. “In order to meet the competition, we need to scale up. We need to be faster, we need to be more efficient in everything we do, and we need to get more games out.” Operators have also got smarter, opting to localise their content for specific markets. NetEnt used to release games everywhere and these were generally appreciated by players, no matter what their nationality. During 2018, NetEnt released 21 games. Hillman aims to boost this by as much as twothirds, with 30 to 35 games planned for 2019. “This is another challenge,” she accepts. “The quality needs to be part of everything we do but we need to add speed to it. I am convinced we can produce many more games with the same capacity.” “It is about getting more structure and not accepting old truths about how long it takes to develop a game. People procrastinate. Everybody does. When you have a tight deadline you come up with the same thing but earlier. All of us need to stretch ourselves a little bit.”
Tough decisions Hillman is not the only CEO struggling with this new reality but few have had to cut 55 jobs just months after taking the reins. Hillman accepts that the combination of redundancies and a demand to work harder and faster might not make her the most popular boss but she says there is a good spirit in the company. “We have made some tough decisions recently. But if we capitalise on what we have and make it better then I think everyone sees
NetEnt has always made good slots. It has made some of the most popular slots of the online era. The one area it has always struggled with is live casino. Hillman acknowledges the strength of “a clear market leader” – presumably Evolution Gaming – but insists that in any healthy market there is demand for more suppliers. She believes NetEnt can be one of them. Playtech will believe likewise and has invested considerable resources in its live casino product. Hillman is undeterred. “We have the distribution. We have all the customers. We have a studio. We need to work with all the details,” she says. She believes the live casino product has been OK but is different to what players are used to. She compares it to the difference between Samsung and Apple. Players are used to playing on what they see as standard but that does not mean another quality product cannot thrive. One of her first acts as CEO was to split the company, so the live dealer team can focus on doing what they do without distraction from the rest of the business. “If you have shared resources then everyone will focus on what is 90 per cent of your business,” says Hillman. “If you have dedicated resources working only with that product ,with a clear goal and a clear plan, that’s how you can run faster.” This, it seems, is the new reality. “It’s tough out there,” acknowledges Hillman, “but we are getting everything together now and we are focusing on the right things.” The competition is fierce. Slots suppliers are having to work smarter. Gamification innovations are the route most have taken to find a USP. NetEnt is no stranger to innovation but, for now, Hillman’s strategy is to work faster and harder, while maintaining a laser focus on quality. It is a tough gig but she will not shirk it. n
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FINANCE
The GIQ Q1 2019 AFTER A STELLAR year which saw the company undergo a successful IPO in Stockholm and continue its expansion through a raft of acquisitions, Better Collective leads the way in the GIQ20 chart for Q1 2019, as revenue nearly doubled. The Danish iGaming affiliate took top spot from Aspire Global – another company which has seemingly come out of nowhere in recent years – while Evolution Gaming completed a Stockholm-listed trio at the top of the chart. The tightening of regulations in the UK and the re-regulation of the Swedish gaming market had a bigger impact on the leading operators and suppliers than expected (detailed analysis, page 54). While the likes of Kindred, Betsson and LeoVegas were at least able to post decent revenue growth due to their increased presence in other markets, Global Gaming’s revenue slumped 18 per cent, with the Ninja Casino operator slipping out of the GIQ20, having topped the chart in the corresponding period last year. Similarly, NetEnt misses out after suffering its first year-on-year revenue decline since it was spun off from Cherry in 2007 (detailed analysis, page 58). The company had previously featured in every single one of our GIQ20 lists of fastest-growing companies. Meanwhile, there were some notable performances in Q1 from The Stars Group, Kambi and Zynga. Flutter Entertainment (formerly Paddy Power Betfair) outperformed rivals William Hill and GVC Holdings in terms of overall revenue growth, while there was also doubledigit growth for the likes of Churchill Downs Inc, bet-at-home.com, JPJ Group and AGS. n GIQ Q2 REVIEW
IN THIS ISSUE 64 GIQ20 Q1 2019 results and analysis
The GIQ20 Q1 2019 revenue COMPANY
Q1 2019
Q1 2018
CHANGE
1
BETTER COLLECTIVE
€14.9m
€7.6m
97%
2
ASPIRE GLOBAL
€32.4m
€18.0m
81%
3
EVOLUTION GAMING
€79.3m
€51.6m
54%
4
THE STARS GROUP
$580.4m
$392.9m
48%
5
CHURCHILL DOWNS INCORPORATED
$265.4m
$189.3m
40%
6
KAMBI GROUP
€21.0m
€16.4m
28%
7
ZYNGA
$265.4m
$208.2m
27%
8
BET-AT-HOME.COM
€31.1m
€26.2m
19%
9
FLUTTER ENTERTAINMENT
£478m
£408m
17%
10
JPJ GROUP
£83.3m
£74.0m
13%
11
AGS
$73.0m
$64.9m
13%
12
LEOVEGAS
€86.3m
€77.4m
12%
13
BETSSON
SEK1,330.6m
SEK1,210.0m
10%
14
CATENA MEDIA
€26.1m
€23.9m
9%
15
GVC HOLDINGS
N/A
N/A
8%
16
KINDRED GROUP
£224.4m
£207.8m
8%
17
SCIENTIFIC GAMES
$837m
$812m
3%
18
WILLIAM HILL
(17 WEEKS TO 30 APR)
N/A
N/A
2%
19
888 HOLDINGS
N/A
N/A
2%
20
THE RANK GROUP
N/A
N/A
0%
(PADDY POWER BETFAIR)
(20 WEEKS TO 18 MAY)
63
F I NA NC E GIQ20 Q1 2019
Better Collective takes top spot as M&A strategy pays off Better Collective and Aspire Global saw the biggest revenue growth during the first quarter as some notable operators and suppliers miss out on the GIQ20 chart altogether, writes Kio Dawson
64
BETTER COLLECTIVE 97% Net revenue (€)
TOTAL
Q1 2019
Q1 2018
Change
14.9m
7.6m
97%
Stockholm-listed Better Collective topped the GIQ20 chart for the first time following its recent emergence as one of the leading publiclylisted iGaming affiliates. The Danish company has been around since 2004, but its IPO last June and recent aggressive M&A strategy has catapulted the affiliate into the big league. Revenue in Q1 increased by 97 per cent to €14.9m, buoyed by recent acquisitions and organic growth of 41 per cent, with new depos-
iting customers (NDCs) climbing 147 per cent to over 116,000. “I am pleased to report that growth in Q1 was strong compared to the same quarter last year,” said co-founder and CEO Jesper Søgaard. “We now see the effect of the strong NDC intake throughout 2018, which even accelerated further to record levels in the first quarter of 2019.” Following its acquisition of Swedish affiliate Ribacka Group for €30m at the tail end of last year, Better Collective expanded its presence stateside in May, acquiring a majority stake in Tennessee-based sports betting and fantasy sports affiliate RotoGrinders for $21m. Better Collective’s expanding US division is expected to now deliver annual revenue of at least $10m this year.
FINANCE
GIQ20 Q1 2019
EVOLUTION GAMING GROUP 54% Net revenue (€)
TOTAL
ASPIRE GLOBAL 81% Net revenue (€) Q1 2019
Q1 2018
Change
B2B
21.3m
10.9m
95%
B2C
13.2m
8.3m
59%
Elimination
(2.1m)
(1.3m)
62%
TOTAL
32.4m
18.0m
81%
Stockholm-listed operator and B2B provider Aspire Global continues to see impressive growth from its B2B operations, which nearly doubled revenue to €21.3m in the first quarter. Six new B2B brands were launched in Q1, while six brands were shut down as the company streamlined its portfolio and closed operations in Belgium and Italy. Aspire’s B2C division also performed well and recorded revenue growth of 59 per cent to €13.7m, which the company attributed to marketing optimisation and efficient CRM, as well as the growing contribution from sports betting, which launched last year. Overall, Aspire posted an 81 per cent increase in revenue to €32.4m for the quarter, with net income soaring 122 per cent to €4.1m. “I am happy to see that we managed to maintain our growth momentum in the first quarter, quite contrary to our seasonal pattern and despite market head-wind,” said chief executive Tsachi Maimon.
“We now see the effect of the strong NDC intake throughout 2018, which accelerated further in the first quarter of 2019” Jesper Søgaard, Better Collective
Q1 2019
Q1 2018
Change
79.3m
51.6m
54%
There was a strong performance too from Evolution Gaming as revenue increased by 54 per cent to €79.3m, driving a 73 per cent increase in profit to €28.6m. The Stockholm-listed live casino specialist benefited from the launch of several new customers in Q1, including DraftKings in the US, Loto-Québec in Canada, and Svenska Spel and ATG in Sweden. The UK remains the supplier’s biggest individual market, generating 13 per cent of gross gaming revenue (GGR) during the period, though this was down from 17 per cent a year ago, with the Nordics accounting for nine per cent. “Throughout last year, we expanded studio space as well as customer environments and the number of tables in line with the increasing demand from our customers. We can now see how all of this pays off,” said chief executive Martin Carlesund. “It is our assessment that live casino as a product vertical will continue to take market share in 2019 and why we consequently will continue to invest based on our customers’ demands in our studios going forward.”
THE STARS GROUP 48% Net revenue (US$) Q1 2019
Q1 2018
Change
Poker
217.4m
245.9m
-12%
Gaming
189.2m
106.7m
77%
Betting
155.7m
27.8m
460%
Other TOTAL
18.1m
12.5m
45%
580.4m
392.9m
48%
Toronto-listed The Stars Group (TSG) posted a 48 per cent increase in revenue to $580.4m for the first quarter, including $230.2m from newly acquired businesses Sky Betting & Gaming (SBG) and BetEasy. Revenue from International, comprising TSG’s existing business prior to the acquisitions, fell by 11 per cent to $340.6m, while UK revenue (consisting of the SBG business) contributed $179.1m and Australia a further $62.2m in revenue. Across all segments, poker represented 36 per cent of Q1 revenue at $217.4m, with gaming contributing $189.2m and betting $155.7m. 65
F I NA NC E GIQ20 Q1 2019
“During the quarter, we delivered on key components of our 2019 objectives,” said chief executive Rafi Ashkenazi. “As we continue to lay the foundations to deliver sustainable longterm growth across the group, we are also now focused on positioning our new FOX Bet brand as a market leader in the US.”
CHURCHILL DOWNS 40% Net revenue (US$) Q1 2019
Q1 2018
Change
Churchill Downs
21.0m
2.0m
950%
Online wagering
63.1m
63.2m
0%
168.8m
111.5m
51%
12.5m
12.6m
0%
Gaming Other TOTAL
265.4m
189.3m
40%
Recent acquisitions also contributed to a 40 per cent increase in revenue for New York-listed gaming and racetrack operator Churchill Downs Inc. Growth was driven by an 830 per cent increase in revenue from the Churchill Downs racing segment to $21.4m, following the opening of Derby City Gaming last September – the first historical racing machine facility in Louisville, Kentucky. Gaming revenue increased 51 per cent to $168.8m, benefiting from the acquisition of Presque Isle in Pennsylvania, an increased stake in Ocean Downs in Maryland, as well as the opening of two retail BetAmerica sportsbooks in Mississippi. The company’s Online Wagering segment saw revenue fall marginally to $63.1m, primarily due to lower revenue from TwinSpires, with the company’s fledgling US online sports betting and iGaming business contributing just $0.1m.
KAMBI GROUP
“Following a hugely successful 2018, I’m pleased to report 2019 kicked off in a similarly positive fashion for Kambi,” said chief executive Kristian Nylén. “In addition to growing our existing customers, expansion in the nascent US market continues to be one of Kambi’s main strategic priorities. As expected, the regulation of sports betting state-by-state has been a slow process but one which may pick up in the coming months, as states push for legislation ahead of the start of the next NFL season in September.”
ZYNGA 27% Net revenue (US$)
Online games Advertising and other TOTAL
Q1 2019
Q1 2018
Change
200.2m
176.9m
13%
65.2m
71.8m
-9%
265.4m
248.7m
27%
New York-listed social gaming operator Zynga enjoyed strong growth during Q1 as revenue grew 27 per cent to $265.4m, driven by the company’s Merge Dragons! and Empires & Puzzles games, as well as strong contributions from CSR2, Words With Friends and Hit It Rich! Slots. Mobile revenue grew 35 per cent yearon-year to a record $246m, and now represents 93 per cent of Zynga’s total revenue. There was a less positive performance from Zynga Poker, which is recovering from platform changes and adjustments to its in-game economy that began in mid-2018. Mobile revenue declined by 17 per cent year-on-year, while mobile revenue from the company’s Social Slots portfolio fell three per cent, despite growth of 13 per cent from Hit It Rich! Slots. Overall, average mobile daily active users (DAUs) fell by two per cent to 22 million, with average mobile monthly active users (MAUs) down 12 per cent to 72 million.
28% Net revenue (€)
TOTAL
BET-AT-HOME.COM Q1 2019
Q1 2018
Change
21.0m
16.4m
28%
The Stockholm-listed sports betting supplier reported a 28 per cent increase in revenue to €21m for the first quarter, benefiting from growth in the re-regulated Swedish market and its expansion across the US. During Q1, Kambi set a new turnover record for a single sporting event during February’s Super Bowl, eclipsing the previous record set during the 2018 FIFA World Cup final last July. 66
19% Net revenue (€) Q1 2019
Q1 2018
Change
Sports betting
12.1m
10.8m
12%
Online gaming
19.0m
15.4m
23%
TOTAL
31.1m
26.2m
19%
Frankfurt-listed bet-at-home.com warned that it expects full-year gross betting and gaming revenue to decline in 2019, despite recording
Mobile revenue grew 35 per cent year-on-year to a record $246m, and now represents 93 per cent of Zynga’s total revenue
ESPAÑOL
fifififififiEfififititifififitifi
F I NA NC E GIQ20 Q1 2019
Alea’s SlotMillion
JPJ’s Vera&John
AGS 14% Net revenue (US$) Q1 2019
Q1 2018
Change
69.7m
61.3m
14%
Table products
2.2m
1.7m
29%
Interactive
1.2m
1.9m
-36%
73.0m
64.9m
13%
Electronic gaming machines
TOTAL
New York-listed AGS remains largely dependent on its land-based electronic gaming machines (EGMs) segment, but the supplier has ramped up its iGaming business following last June’s purchase of Gameiom Technologies. Although a continued decline in AGS’ social gaming products pushed Interactive revenue down 36 per cent to
$1.2m during Q1, this was partially offset by increased revenue from real-money iGaming of $0.3m, following the release of games including Golden Wins, Jade Wins and Longhorn Jackpots. The supplier is now targeting expansion in Malta after launching its first games in the jurisdiction in May with Alea’s SlotsMillion. “With numerous levers to build momentum – including strategic investments in R&D to continue building a strong, diversified and expanded product portfolio, as well as many new and underpenetrated domestic and international markets – AGS is well-positioned for continued long-term, meaningful growth,” said chief executive David Lopez.
solid growth during the first quarter of 2019. Total betting and gaming volume increased by 13 per cent to €827.3m, generating gross revenue of €37.2m, up 12 per cent year-on-year. With higher betting fees and gambling levies, as well as the negative affected by VAT on electronic services, the operator posted net revenue of €31.1m for the quarter. This comprised a 12 per cent increase in sports betting revenue to €12.1m and a 23 per cent increase in online gaming revenue to €19m. Assuming an unchanged regulatory and tax environment, bet-at-home expects gross revenue of between €130m and €143m in 2019. At the lower forecast, this would be a decline of nine per cent compared to last year’s €143.4m total, with the decline attributed to legal uncertainties in Switzerland following the introduction of new gambling regulations. 68
FLUTTER ENTERTAINMENT (PREVIOUSLY PADDY POWER BETFAIR) 17% Net revenue (£) Q1 2019
Q1 2018
Change
228m
n/a
4%
Australia
96m
n/a
20%
US
78m
n/a
47%
Online
Retail
77m
n/a
-2%
TOTAL
478m
408m
17%
London-listed Flutter Entertainment, the new name for Paddy Power Betfair, enjoyed impressive performances from its Australian and US businesses which helped drive a 17 per cent increase in first quarter revenue to £478m. Across all businesses, sports betting revenue was up 15 per cent to £366m following growth from the Sportsbet and FanDuel brands, while gaming revenue rose 26 per cent to £113m, primarily due to growth in Europe and the US, as well as the acquisition of Georgia’s Adjarabet at the beginning of February. “Q1 was a good quarter for the group, with revenues up 17 per cent, notwithstanding customer-friendly sports results in the UK,”
“Q1 was a good quarter for the group, with revenues up 17 per cent, notwithstanding customer-friendly sports results in the UK” Peter Jackson, Flutter Entertainment
FINANCE
GIQ20 Q1 2019
JPJ GROUP 13% Net revenue (£)
Jackpotjoy
Q1 2019
Q1 2018
Change
49.1m
52.8m
-7%
Vera&John
34.2m
21.2m
61%
TOTAL
83.3m
74.0m
13%
London-listed JPJ Group continued to struggle in its core UK market but still posted a 13 per cent increase in revenue to £83.3m in Q1. Revenue from the online bingo-led operator’s Jackpotjoy segment fell by seven per cent to £49.1m, negatively impacted by a decline in revenue from Jackpotjoy UK and the “intense
said chief executive Peter Jackson. “Underlying momentum remains good for Paddy Power, with 22 per cent growth in average daily actives. For Betfair, we continue to make good progress on the technology development work to enhance our global customer propositions, which will enable us to accelerate international growth.”
BETSSON 10% Net revenue (SEK)
Casino Sportsbook
LEOVEGAS
Other
12%
TOTAL
Net revenue (€)
TOTAL
Q1 2019
Q1 2018
Change
86.3m
77.4m
12%
Stockholm-listed LeoVegas was another operator to feel the effects of regulatory changes in the UK and Sweden. Overall revenue rose 12 per cent to €86.3m in the quarter, including organic growth of four per cent, driven by the Finnish, Danish and Italian markets. Excluding the UK however, organic growth would have risen to 19 per cent. Revenue in Sweden fell by 16 per cent, due to the “short-term effects” of the market’s re-regulation in January. Despite this, depositing customers rose 23 per cent year-on-year to 370,014, with new depositing customers climbing 19 per cent to 173,346. “During the first quarter, we once again delivered sequential growth and posted record performance on a number of key performance indicators,” said CEO Gustaf Hagman. “This, combined with the fact that our customer base is growing in a sound and sustainable way, has given us a good start to 2019.” GIQ Q2 REVIEW
Q1 2019
Q1 2018
Change
1,012.8m
922.8m
10%
297.8m
263.5m
13%
20.0m
23.6m
-15%
1,330.6m
1,210.0m
10%
It was a solid quarter for Betsson as the Stockholm-listed operator posted a ten per cent increase in revenue to SEK1.33bn, despite revenue being negatively impacted by the new Swedish regulations. Casino represented more than three-quarters of Betsson’s Q1 revenue, with SEK1.01bn, up ten per cent year-on-year, while sportsbook revenue increased by 13 per cent to SEK297.8m, offsetting a 15 per cent decline in revenue from other products. Despite the Swedish impact, the
competitive environment” in Sweden. This was more than offset by growth of 62 per cent from Vera&John to £34.2m. Intriguingly, JPJ also revealed that Japan accounted for 25 per cent of total Q1 revenue, with the UK’s contribution falling from 60 per cent to 49 per cent in Q1. “I’m pleased to report that the group has delivered another good quarter of growth,” said executive chairman Neil Goulden. “We successfully completed the sale of our Mandalay business to 888 Holdings in March 2019 for £18m, which will allow us to focus on driving progress in our market-leading brands in the UK.”
Nordics remain Betsson’s largest geographical region, with revenue increasing two per cent to SEK580.6m. “Betsson continued to show revenue growth and solid results, while at the same time facing challenges in Sweden and the Netherlands,” said president and CEO Pontus Lindwall. “The adoption of the Remote Gambling Bill in the Netherlands in February was a positive milestone. It is a step forward for the Dutch market and consumers, as well as a positive development towards locally regulated revenues for Betsson.”
“The adoption of the Remote Gambling Bill in the Netherlands in February was a positive milestone” Pontus Lindwall, Betsson
Betsson
69
FINANCE GIQ20 Q1 2019
“We are continuing our long-term transformation, based on the strategies of organic growth, fewer but larger brands and increased cost control” Per Hellberg, Catena Media
CATENA MEDIA
GVC HOLDINGS
9%
8%
Net revenue (€)
Net revenue (£) Q1 2019
Search
Q1 2018
Q1 2019
Q1 2018
Change
Online
n/a
n/a
17%
UK retail
n/a
n/a
0% 2%
Change
21.7m
20.4m
6%
Paid
1.0m
n/a
n/a
European retail
n/a
n/a
Subscription
3.5m
3.4m
3%
Other
n/a
n/a
1%
26.1m
23.9m
9%
TOTAL
n/a
n/a
8%
TOTAL
Catena Media’s Q1 revenue came in below expectations, as the Stockholm-listed digital marketing specialist struggled as new regulations impacted operators in Sweden. Revenue was down nine per cent to €26.1m, with new depositing customers (NDCs) down seven per cent year-on-year to 124,007. “Everything we are doing is now converging in the right direction,” said chief executive Per Hellberg. “We are continuing our longterm transformation, based on the strategies of organic growth, fewer but larger brands and increased cost control. During the first quarter, which also tends to start a bit slower due to seasonal effects, we saw that regulations impacted operators negatively, and us in turn, leading to a quarter where our revenues came in below our expectations. We are agilely adapting to changing conditions and expect to see positive developments from the second quarter onwards.” 70
London-listed GVC Holdings posted an eight per cent increase in revenue in Q1, buoyed by a continued strong performance online. Revenue from online grew 17 p er c ent compared to the same period last year, with sports betting revenue up 16 per cent and gaming revenue climbing 20 per cent. Revenue from the Ladbrokes Coral UK retail business remained unchanged versus the previous year, with revenue from European Retail, comprised of Eurobet in Italy and Ladbrokes in Belgium, climbing two per cent. Chief executive Kenneth Alexander said that the trading update reflected a continuation of the strong trends reported earlier in the year and represented an “excellent” start to the year.
FINANCE
GIQ20 Q1 2019
32Red
“We continue to see good volume growth across all major online brands and territories, and we remain very confident of achieving our target of double-digit online NGR growth,” he said.
KINDRED GROUP
highs in active customers and sports betting turnover,” said chief executive Henrik Tjärnström. “As anticipated for several years, the re-regulation of the Swedish market resulted in significant short-term margin pressure, particularly in the first quarter.”
8%
SCIENTIFIC GAMES
Net revenue (£)
3% Q1 2019
Q1 2018
Change
Sports betting
106.5m
94.7m
12%
Casino and games
106.7m
103.2m
3%
Poker
5.7m
4.6m
24%
Other
5.5m
5.3m
4%
224.4m
207.8m
8%
TOTAL
Stockholm-listed Kindred Group grew first quarter revenue by eight per cent to £224.4m, although the new regulations in its home Swedish market contributed to a 50 per cent decline in profit for the period to £15.1m. Revenue growth, though, was achieved across all products, with sports betting revenue up 12.5 per cent to £106.5m, casino and games revenue up three per cent to £106.7m, and poker revenue climbing 24 per cent to £5.7m. The Swedish market contributed revenue of SEK207.4m (approx. £16.5m) to the Q1 total. “During the quarter we have had strong levels of activity across all markets and all-time GIQ Q2 REVIEW
Net revenue (US$) Q1 2019
Q1 2018
Change
Gaming
422m
443m
-5%
Lottery
227m
202m
12%
Social gaming
118m
97m
22%
Digital
70m
70m
n/a
TOTAL
837m
812m
3%
Strong growth from its lottery and newly spunoff SciPlay social gaming businesses helped New York-listed Scientific Games post a three per cent increase in revenue to $837m in Q1 – the company’s 14th consecutive quarter of yearon-year growth. Gaming revenue fell by five per cent to $422m, with lottery revenue climbing 12 per cent to $227m and social revenue up 22 per cent to $118m. Digital contributed a further $70m in revenue during the quarter, comprising sports and platform revenue of $30m and gaming and other revenue of $40m.
“We are focused on effectively operating our businesses, reducing costs and building upon the strong foundation for profitable growth that we see today” Barry Cottle, Scientific Games
71
FINANCE GIQ20 Q1 2019
WILLIAM HILL 2% William Hill has partnered Vegas Golden Knights
Net revenue (£) Q1 2019
Q1 2018
Change
Online
n/a
n/a
8%
Retail
n/a
n/a
-7%
US
n/a
n/a
48%
TOTAL
n/a
n/a
2%
The first contributions from newly acquired Nordic-facing operator Mr Green helped William Hill’s Online division record growth of eight per cent for the 17-week period ended 30 April, with a 28 per cent increase in gaming revenue offsetting an 11 per cent decline in sportsbook. As expected, retail was impacted by the implementation of the new £2 stake limit on B2 gaming machines in April, which pushed revenue down seven per cent, while William Hill’s expansion stateside gathered pace with revenue up 48 per cent year-on-year. Overall, William Hill’s total revenue for the period increased two per cent. “Just one year on since PASPA was overturned, William Hill has doubled the sports wagering it handles in the US, seen record performances at the Super Bowl and March Madness, is live in all seven states to have allowed sports betting and expects to enter further states soon, with Indiana and Iowa the most recent states to pass bills to legalise sports betting,” said chief executive Philip Bowcock.
72
“We are incredibly proud that we have continued to build on our momentum and are looking forward to the year ahead,” said president and CEO Barry Cottle. “We are focused on effectively operating our businesses, reducing costs and building upon the strong foundation for profitable growth that we see today.”
“While poker has remained challenging, we were pleased to see an improving revenue trend in Q1 2019 against Q4 2018” Itai Pazner, 888 Holdings
888 HOLDINGS 2% Net revenue (£)
TOTAL
Q1 2019
Q1 2018
Change
n/a
n/a
2%
London-listed 888 Holdings reported a two per cent increase in revenue for the 20-week period ended 18 May, with increased marketing investment and the release of 888’s Orbit casino platform driving a 20 per cent rise in first time depositors. At constant currency and after adjusting for the migration of Cashcade Bingo, as well as the acquisitions of Costa Bingo and the All American Poker Network (AAPN), revenue was up six per cent. 888’s sports betting offering recorded the biggest growth in Q1 with revenue up 29 per cent, outperforming the operator’s core casino segment, which could only grow by 13 per cent. Bingo revenue remained flat versus last year, while poker revenue fell 28 per cent.
888’s Costa Bingo
FINANCE
GIQ20 Q1 2019
Going Down in Q1 2019 Itai Pazner, 888
“888 has enjoyed a solid start to the year with strong momentum in casino and sport across a number of the group’s major regulated markets,” said 888 chief executive Itai Pazner. “While poker has remained challenging, we were pleased to see an improving revenue trend in Q1 2019 against Q4 2018.”
RANK GROUP 0% Net revenue (£) Q1 2019
Q1 2018
Change
Grosvenor venues
n/a
n/a
0%
Mecca venues
n/a
n/a
-1%
Digital
n/a
n/a
2%
International venues
n/a
n/a
0%
TOTAL
n/a
n/a
0%
London-listed Rank Group struggled for growth during Q1 (the company’s financial third quarter) as revenue remained flat compared to a year ago. Digital was the only division to record growth, up two per cent year-on-year, with revenue from Mecca venues down one per cent and Grosvenor venues and international venues seeing flat revenue. The digital division is expected to be significantly revamped after Rank made a £115.3m offer in late May to acquire rival Stride Gaming. Rank said that the acquisition will accelerate its transformation and create one of the UK’s leading iGaming businesses, with a strong proprietary technology platform and annual digital revenue of around £185m. GIQ Q2 REVIEW
NetEnt saw Q1 revenue decline by three per cent to SEK418.1m as results were impacted by lower volumes in Sweden following the introduction of new regulations. Nordic countries accounted for almost the entire decline, with new gaming taxes in Sweden lowering revenue by around two per cent (more on NetEnt’s revival plans on page 58]. International Game Technology (IGT) posted a five per cent drop in revenue to $1,144.9m, with the North America Gaming & Interactive, International and Italy segments all declining amid stable revenue from the North American Lottery segment. Zeal Network finally completed its acquisition of German online lottery provider Lotto24 in May but struggled during the first quarter as revenue fell six per cent to €36.5m. This followed the closure of its Lotto Network and Spanish-facing brand Ventura24, with results also impacted by a lower number of large jackpots. For the first time Codere reported its online division as a standalone business
unit, with revenue increasing 69 per cent to €14.9m in Q1, driven by growth in Spain and to a lesser extent in Mexico. This wasn’t enough, however, to prevent a seven per cent decline in Codere’s overall revenue to €357.7m, due to economic decline in its key market of Argentina. Revenue from Inspired Entertainment fell by ten per cent to $33.7m, as an increase in virtual sports revenue failed to offset a bigger decline in its server-based gaming business. Gaming Innovation Group saw revenue drop 13 per cent to €32.4m, with Sweden again impacting both B2C and B2B revenue, and results further impacted by the loss of an unnamed major B2B customer. Global Gaming suffered the most from the Swedish market changes as Q1 revenue declined 18 per cent to SEK162.1m. The Ninja Casino operator’s struggles and poor recent share price performance led to the departure of CEO Joacim Möller, who was replaced on an interim basis by Tobias Fagerlund in late April. Net revenue Q1 2019 NetEnt IGT
Q1 2018 Change
SEK418.1m SEK430.1m $1,144.9m
-3%
$1,207.0m
-5%
Zeal Network
€36.5m
€38.7m
-6%
Codere
€357.7m
€383.3m
-7%
Inspired Entertainment
$33.7m
$37.5m
-10%
Gaming Innovation Group
€32.4m
€37.3m
-13%
SEK162.1m SEK198.6m
-18%
Global Gaming 555
C O LU M N AND ANOTHER THING...
Growing pains OPINION
Steve Hoare
From responsible gambling to advertising standards and diversity, the industry is maturing but it is not easy
T
he theme that runs through this issue is responsibility. It is an inevitable consequence of growing up. The interactive gaming industry has entered its adolescence and it is a time of growing pains and great change. As can be read in our cover feature (page 42), that can cause a lot of frustration. However, the industry will get over it. As most teenagers do. Anyone who attended a big industry conference ten years ago will be familiar with how much the industry has changed already. This is reflected in the demographics of the delegates as much as the latter day absence of scantily clad models. The mere existence of the All-In Diversity Project is proof enough of the changing face of the industry. Ten years ago, such a project would have been laughable. The fact that so many gaming industry operators and suppliers have signed up to support All-In is another sign that the industry is willing to embrace change. The project launched its All-In Index late last year and is in the process of putting together a new survey, with the results to be published in Q1 2020. The results of the initial Index of 25 companies, covering 117,231 employees, reveal an industry that is perhaps more diverse than one would have realised. Women account for 46.5 per cent of the workforce. The percentage of female employees is highest in human resources (75 per cent) and finance (61 per cent) and lowest in risk management, including trading (18 per cent), and a variety of tech roles (21 per cent). However, the tech figure is slightly higher than the US (19 per cent) and UK (17 per cent) averages across all industries. The survey, it should be noted, covered companies throughout the world, although more than half were from Western Europe. The founder of the WorkingMums jobs board and recruit-
ment agency, Gillian Nissim, has been encouraged by working with companies such as Sky Betting & Gaming and GVC Holdings, which are committed to increasing female representation in their ranks. “While our jobs board tends towards volume roles, such as bingo hosts or customer service roles, there are companies such as GVC which really want to get more women into tech roles,” says Nissim. She says WorkingMums has worked a great deal with the construction industry, which is hugely male-dominated, but by encouraging female role models and challenging public perceptions of your brand, this can change. “It is about looking at how you promote your company culture to a more female audience,” says Nissim. While the emergence of female CEOs such as NetEnt’s Therese Hillman and Nektan’s Lucy Buckley (pictured left) is encouraging, they are in a minority. All-In found that only 17 per cent of gaming industry CEOs are female, while 22 per cent of C-suite positions are occupied by women. A look at company boards reveals 28 per cent of non-executive director positions are filled by women, which compares favourably to the US average of 18 per cent and the UK average of 26 per cent. However, it lags way behind the 40 per cent that is demanded by law in countries such as Norway and France. Italy and Belgium have requirements demanding 33 per cent. As with the responsible gambling requirements being thrust upon the industry, these laws will only make companies perform better. There is ample proof that more diverse boards produce more economically powerful companies. Many would argue that diversity and responsibility are matters of political and moral correctness but they are also motors of strong financial performance. For anyone struggling with compliance issues, that is a point worth remembering. n
Only 17 per cent of gaming industry CEOs are female
Nektan CEO, Lucy Buckley
Game Changing?
BigTime! www.bigtimegaming.com