Gambling Industry Acquisitions and Financial News — Weekly Round-up for January 26, 2018

Mediaxl Buys Finnish Affiliate Websites For Euro 15 Million

More consolidation in the affiliate sector

The Finnish affiliate marketing network Good Game Limited has sold several of its successful operational websites to XLMedia in a deal that could total Euro 15 million.

The sites include Nettikasinot.com and Netticasinot.com and the agreement is expected to close before the end of Q1-2018, a company statement advised Friday.

The agreement covers content management systems, social network accounts, related intellectual property and affiliate accounts.

The sites that are the subject of the XLMedia deal delivered Euro 1.66 million in revenue on a 75 percent EBITDA margin last year, the statement revealed, advising that the consideration will be paid Euro 7 million in cash, with a further Euro 8 million subject to the sites achieving performance targets.

Good Game is currently developing a new affiliate concept titled Bojoko.com in which operators can generate and control their own content, a format that Good Game says has proved successful in travel companies like Tripadvisor and AirBnB.

Commenting on the sale of some of its websites to XLM, Good Game CEO Toni Halonen said: “This is a major deal for Good Game, allowing us to raise significant capital and focus on our newly-launched bojoko.com brand”.

Fortuna Posts An Optimistic Trading Update

Management expects to meet full year 2017 targets

Eastern European online and land gambling group Fortuna Entertainment has issued a trading update declaring management’s confidence that the group will meet its FY2017 targets following a buoyant final quarter.

Management expects to achieve group revenue of Euro 1.9 billion, and has raised its FY EBITDA growth estimate to between 135 and 155 percent, well above the 80 to 95 percent expected in FY 2016.

The trading update notes group capital expenditure of between Euro 11 to 14 million will be part of the FY 2017 accounts.

InfoPowa readers may recall that earlier this year Fortuna’s major shareholder, investment fund Fortbet, announced its intention to acquire the remaining shares in the gambling group with a view to delisting the company from the Prague and Warsaw exchanges in order to make it more competitive.

Online Social Casino Provider Plans I.P.O.

PlayAGS has filed proposed terms for its $174 million U.S. public offering

Las Vegas-based online social casino and electronic games provider PlayAGS has filed plans for a $174 million IPO, according a report on the publication SeekingAlpha this week.

Founded in 2005, the company has grown into a significant B2B and B2C provider with 550 employees focussed mainly on the North American market but with activity in Australia, Israel and Mexico.

In late 2013, 97 percent of the company was acquired by private equity firm Apollo Management, which appointed experienced manager David Lopez as CEO the following year.

Lopez was previously president of Global Cash Access (2012-2014) and COO of Shuffle Master (1998-2011.)

Details in the filing regarding the company’s social casino offering reveal that the product attracts over 38,000 active daily users and has achieved almost 4 million mobile app installs.

Topbetta Pleased With Second Quarter Results

Exceeds forecast

Australian listed betting operator TopBetta Holdings has reported a 95 percent increase in total revenues for the second quarter driven by a record increase in active customers and a strong performance from its Alderney-based The Global Tote business.

Key performance indicators for the three-month period ending December 31, 2017 include:

– 52 percent increase in wagering and tournament turnover over September 2017 to reach A$82.91 million.

– Total revenues up 95 percent over the previous quarter to A$6.92 million (Q1/2017: $3.34 million).

– Active Unique Clients increased 30 percent from the previous quarter to reach 14,223.

– Generated race field fees of A$1.59 million (Q1/2017: $0.94 million) for Australian racing bodies

“The two major drivers of increased turnover have been pleasing growth of the Company’s wholly-owned Alderney-based subsidiary, The Global Tote Ltd, through its pooled betting platform, and a solid quarterly period for the Australian retail platform (topbetta.com.au),” the TopBetta Board said.

GAN Issues Trading Update

In H2 this supplier signed up the new owners of Atlantic City’s TEN Revel (now rebranded Ocean Resort Casino)

Regulated and Simulated Gaming provider GAN has posted a trading update covering H2-2017 and FY-2017, reporting that the company performed in line with market expectations for the year ended December 31, 2017.

The company’s products were launched at several new clients, including the Overseas Internet Casino. During the period, strict control was maintained over costs, generating positive EBITDA.

The company said that the outlook for 2018 remains positive due to continued growth in real money Regulated Gaming and Simulated Gaming.

In Italy, growth in Net Revenue experienced during H1 has continued into H2 where GAN has benefitted from the seasonally strong Q4 period.

In New Jersey, GAN’s business continues to enjoy favourable market conditions and performed strongly in 2017. In H2 2017, GAN signed a multi-year agreement with AC Ocean Walk LLC which will be GAN’s second client for real money Regulated Gaming in New Jersey.

AC Ocean Walk LLC is the newly-announced owner-operator of Ocean Resort Casino (formerly TEN – Revel) for the launch of a real money Regulated Gaming online experience offering Internet casino gaming together with Internet sports betting integrated with the on-property rewards program. This new Internet gaming destination is currently expected to launch in H1 2018 and will contribute materially to GAN’s revenue and earnings in H2 2018.

In Europe, the identity of GAN’s client for the Overseas Internet Casino can now be confirmed as the major Native American US casino operator Chickasaw Nation. The Overseas Internet Casino launched for the Chickasaw Nation was delivered in H2 2017 and is now available in regulated European markets at www.WinStar.com.

In Pennsylvania, regulation of real money Internet gaming occurred on October 30, 2017. GAN has served Simulated Gaming to Pennsylvania’s market-leading land-based US casino Parx Casino with GAN’s GameSTACK enterprise gaming software platform installed on-property at Parx Casino since 2015 and is currently preparing to deliver real money Regulated Gaming upon commencement of the Pennsylvanian Internet gaming market anticipated later in 2018.

Simulated Gaming

GAN’s US-facing Simulated Gaming business continued to benefit from the launch of several new US casino operator clients in 2017 including Ocean Resort Casino, Chickasaw Nation’s WinStar World Casino, MGM’s The Borgata, Oneida Nation’s TurningStone and Station Casinos.

As on December 31, 2017 GAN operated Simulated Gaming for 12 major US casinos coast-to-coast (December 31, 2016: 8) together representing in excess of $8 billion in annual land-based gaming revenues as well as for a consortium of land-based gaming venues in Queensland, Australia identified as ‘Club8Casino’.

With respect to online sports betting in the US, GAN welcomes any potential repeal of the Professional and Amateur Sports Protection Act 1992 (“PASPA”) by the US Supreme Court and has taken preparatory steps to deliver a managed sports betting solution to its US clients via GAN’s GameSTACK enterprise gaming software platform in partnership with European B2B sports betting system and services provider SBTECH

Dermot Smurfit, CEO of GAN commented on the 2017 period:

“The company generated positive clean EBITDA1 in H1 2017 following a substantial multi-year period of investment focused on the US land-based casino Industry. This favourable EBITDA trend has continued throughout H2 and we have delivered on the market’s expectations to generate positive EBITDA for the full calendar year 2017.”

Retail Business Boosts Topbetta Revenues

Q4-2017 delivers a 400 percent to overall revenues, mainly from retail sources

Australian betting group TopBetta has reported a more than 400 percent year-on-year rise in revenues to almost A$7 million in Q4-2017, attributed largely to increased retail business.

On a sequential quarter basis revenues in Q4 surged higher by 95 percent on Q3-2014, with active players up by 30 percent y-o-y to over 14,230.

One of the star performers in the quarter was The Global Tote, which enjoyed buoyant Australian retail betting following last month’s pools distribution agreement with the UK Totepool, accessing more than 10,000 UK and European betting shops and other major international betting websites, such as Betfred, Betfair, Skybet and Paddy Power, and making bets by British punters on Australian races possible.

The company also cemented agreements with WatchandWager.com in the US that permit Americans to lay bets on Australian horse and track racing events.

Todd Buckingham, the chief executive at TopBetta, said the Q4 results had exceeded management expectations, and generated valuable revenue for the Australian racing industry.

Scientific Games Issues Q4 And FY 2017 Trading Update

Quarterly and FY revenue expected to rise

The major gambling supply and games provider Scientific Games Corporation has posted a trading update covering the fourth quarter and full year ended December 31, 2017.

The company says it expects consolidated revenue to increase approximately 9 percent to a range of approximately $820-to-$825 million for the three month period ended December 31, 2017, and full year 2017 revenue to grow approximately 7 percent and be in a range of approximately $3,081-to-$3,086 million compared to $752 million and $2,883 million for the fourth quarter and full year 2016, respectively.

Net loss for the fourth quarter 2017 will be in a range of approximately $40-to-$50 million, inclusive of a projected $28 million of restructuring and other charges, which primarily includes M&A costs associated with the NYX Gaming Group transaction that was completed on January 5, 2018.

Full year 2017 net loss is expected to be in a range of approximately $238-to-$248 million.

Fourth quarter 2016 net loss was $111 million and full year 2016 net loss was $354 million.

Fourth quarter 2017 Attributable EBITDA is expected to be approximately $320-to-$325 million with full year 2017 AEBITDA of approximately $1,220-to-$1,225 million. Fourth quarter 2016 AEBITDA was $294 million and full year 2016 AEBITDA was $1,104 million.

“Our preliminary results for the fourth quarter 2017 reflect our focus on generating top-line growth and ongoing improvements across our gaming, lottery and interactive operations,” said Kevin Sheehan, CEO and President of Scientific Games.

Scientific Games notes that it is sharing the preliminary financials with prospective lenders as it seeks a potential refinancing deal to take advantage of favourable market conditions.

Such a deal would refinance approximately $1,400 million of SG’s outstanding 7 percent senior secured notes due 2022 and approximately $185 million of borrowings under its revolving credit facility with a combination of new senior secured term loans and new senior secured notes, as well as approximately $300 million of new senior unsecured notes.

Nasty Greek Tax Surprise For GVC Holdings

Online betting group makes provision for disputed Euro 200 million tax bill

GVC Holdings plc, currently involved in the GBP 4 billion acquisition of Ladbrokes Coral, was temporarily distracted Thursday when the Greek taxman demanded Euro 186..77 million in 2010-2011 taxes it claims are due on the Greek operations of Sportingbet, now a GVC subsidiary (but not back then – GVC acquired the company in 2013).

In a stock exchange advisory, GVC said that it had taken expert legal advice and believes it has strong grounds to appeal the assessment and intends to do so. Unfortunately, it appears that there are no settlement mechanisms in the Greek tax system, which means the issue will have to be decided by the courts, which could take some time.

In the interim, GVC is taking the precaution of setting aside Euro 200 million as a contingency, and will seek to reach an accommodation with the Greek tax authorities through which it will pay an agreed monthly amount on the understanding that it not an admission of liability, and that it will be refunded in the event of a positive legal outcome.

Such an arrangement would enable Sportingbet to continue trading in Greece whilst the issue is resolved.

The GVC advisory notes that the Greek tax claim is “substantially higher by multiples of the total Greek revenue generated by the subsidiary.”

“This is a spurious and opportunistic claim made on the background of a Greek government desperate to pay its debts to the IMF,” a person close to the company’s leadership told the FT, adding the Greek tax claim will have no impact on completing the Ladbrokes Coral takeover.

A Ladbrokes spokesman said: “We performed tax and regulatory due diligence on GVC’s international operations, including use of third party advice. We remain confident in the views we formed at the time of the deal.”

The GVC board of directors strongly disputes the basis of the Assessment calculation, believing the assessed quantum to be widely exaggerated, the advisory notes, adding that the directors are confident in the grounds of appeal.

Sales Up At French Gambling Giant Francaise Des Jeux

FY sales in 2017 rose 5.7 percent to Euro 15.1 billion as the prospect of privatisation looms

Just weeks ahead of a report on its privatisation, French online and land gambling giant Française des Jeux (FDJ) has posted FY 2017 statistics showing that sales rose 5.7 percent year-on-year to Euro 15.1 billion.

Last year’s strong sales performance follows a 3.6 percent rise in sales in 2016 by FDJ, Europe’s second-biggest lottery after Italy’s Lottomatica, a Reuters news agency report noted Thursday.

“This confirms the capacity of FDJ to generate dynamic growth over several years,” CEO Stephane Pallez told Reuters.

Francaise des Jeux reported a 2016 net profit of Euro 145.8 million; the group has not yet released the comparable figure for 2017.

FDJ is 72 percent state-owned and sources have said it is likely to be among the first companies to kick launch a wave of French privatisations.

BNP Paribas bank and law firm Weil, Gotshal & Manges LLP, mandated by France’s state holding company APE to prepare the privatisation of FDJ, will hand in a report on the operation by mid-February, two sources familiar with the situation told Reuters.

“It is clear that the state is the shareholder and will thus decide on the matter. We are expecting the state to take decisions within its own timetable,” Pallez added.

The French finance ministry has announced plans to sell Euro 10 billion worth of stakes in state-owned companies to raise money for a new fund to finance innovation, an election pledge of President Emmanuel Macron.