Gambling Industry Acquisitions and Financial News — Weekly Round-up for June 8, 2018

LatAm Currency Fluctuation Hammers Cirsa

Spanish gambling group nevertheless reports good progress on expansion projects

Despite a Euro 14 million hit to its corporate performance due to Latin American currency fluctuations, Spanish gambling group Grupo Cirsa reported good progress on its Spanish and LatAm expansion projects in a trading update Thursday.

InfoPowa readers will recall that the group was recently acquired for Euro 2 billion by the US-based private equity firm Blackstone Capital

The group reported combined revenues of Euro 4.17 billion and corporate EBIT of Euro 41 million – largely flat compared with FY 2017 EBIT of Euro 42 million.

Management also reported an active cash balance of Euro 180 million and available credit of Euro 75 million, and said that despite the negative impact of the LatAm currency declines Cirsa will continue to drive organic growth in the region, focusing on growing table and slots across its land casino assets in Panama, Colombia, Peru, Dominica and Costa Rica.

Online Is Austria’s Fastest Growing Gambling Vertical

11 percent revenue growth delivered mainly by foreign sites

The Austrian consulting firm Kreutzer, Fischer and Partner presented some interesting financial numbers during an interview with the publication Nachtrichten this week, showing that despite the monopolistic nature of the online gambling market in Austria, technically illegal foreign operators actually delivered 65 percent of the revenues in the online vertical and 85 percent of online growth.

The Austrian government has a reportedly 30 percent stake in Austrian’s only officially approved and licensed online casino, Win2Day, and has not widened licensing beyond that, although it still demands around 40 percent of Austrian revenue achieved by foreign operators, and last year raised Euro 155 million from this source.

Revenue from the overall gambling market in Austria grew 4 percent year-on-year in 2017 to Euro 1.675 billion.

Online revenues showed the greatest growth rate last year at 11 percent y-o-y, reaching Euro 283 million, compared with land casino, slots and sports betting which contributed Euro 716 million (2016: Euro 700 million), and offline-online lottery revenue of Euro 676 million – up Euro 20 million on the 2016 number.

The Austrian government has made no secret of its plans to curtail the activities of foreign operators; late last year the Interior Ministry unveiled plans to pressure ISPs into blocking unlicensed operators despite the fact that the government has so far declined to provide such licensing. Earlier this year the Finance Ministry published but then withdrew draft legislation to tighten gambling regulatory provisions.

Spanish Market Double Digit Growth

An interesting first quarter 2018, especially for Poker

In the latest online gambling figures released by Spain’s Dirección General de Ordenación del Juego (DGOJ), the market continued to perform in the first quarter 2018 delivering double digit revenue growth year-on-year amounting to Euro 163 million, up 28.85 percent.

Slower growth in online sportsbetting still delivered a 15.89 percent increase year-on-year while online bingo grew 29.87 percent and online casino 51.02 percent.

The poker vertical was on the upswing reversing previous trends with an annual variation rate of 41.59 percent. Other anomalies in the vertical included positive growth for the first time in cash games of 29.95 percent while tournament games yielded growth of 50.23 percent.

Marketing spend grew 35.79 percent to reach Euro 76.26 million of which Euro 25.39 million was attributed to promotions and Euro 41.45 million to advertising.

Active users, in terms of monthly average, also grew 24.4 percent y-o-y and new users increased to 267,856 – growth of 27.97 percent.

Gaming Realms Achieves Profitability In 2017

Revenue decline offset by cost reductions in social publishing and overall marketing

Mobile real money and social games provider Gaming Realms plc has delivered a maiden full year adjusted EBITDA of GBP 0.8 million turning its fortunes around from a GBP 2 million EBITDA loss in 2016.

A 7 percent decline in total revenue, attributed to the disposal of white label operations and agency business, was offset by significant cost reductions in social publishing and overall marketing.

Other key performance indicators for the 12 months ending December 31, 2017 include:

  • A 113 percent increase in real money gaming EBITDA to reach GBP 2.7 million (2016: GBP 1.3 million).
  • Social publishing EBITDA loss reduced 97 percent to GBP 0.1 million (2016: GBP 1.8 million loss)
  • Total Revenue down 7 percent to GBP 31.6 million (2016: GBP 34.0 million)
  • Revenue excluding disposed non-core assets down by 1 percent.
  • RMG revenue increased by 5 percent to reach GBP 22.7 million (2016: GBP 21.5 million)
  • Social publishing revenue decreased 13 percent to GBP 6.9 million (2016: GBP 7.9 million), with 45 percent reduction in marketing as well as a reduction in headcount of 19.
  • Licensing revenue was GBP 0.8 million (2016: GBP 0.8 million).

Patrick Southon, CEO of Gaming Realms said:

“Achieving profitability marks a major milestone for Gaming Realms. We have continued to deliver on our strategy of developing and distributing our unique Slingo branded range of games, both direct to customers via our in-house gaming and social platforms, and increasingly via licensing our games to third party operators.”

“The focus on content licensing has shown excellent early success and will provide Gaming Realms with longer term, consistent higher margin revenues.

“The recent agreements signed with major gaming and media companies illustrates the creativity of our content, and we look forward to further progress and growth in 2018.”

Business in 2018 has seen four new licensing agreements signed with 888 Holdings, Golden Nugget Casino, Leander Games and Gaming Innovation Group as well as agreeing a partnership launch with the Health Lottery for real money gaming.

Playtech Sells Off GVC Shares

Proceeds of sale of 19.6 million shares will be used for general corporate purposes, including debt reduction and M&A moves

Online gambling group Playtech plc no longer holds ordinary shares in the GVC Holdings online and land gambling group following its sale of 19.6 million GVC shares (about 3.4 percent of the total) which it received as a result of its previous holding Ladbrokes Coral, acquired earlier this year by GVC.

In a stock exchange advisory Playtech plc noted:

“Playtech plc has held a stake of approximately 3.4 percent of GVC Holdings plc’s issued share capital which it received as a result of its previous holding in Ladbrokes Coral Group plc (previously Ladbrokes plc).

“Following a placing conducted through Goodbody, UBS Limited and Shore Capital, Playtech has sold its entire holding of c.19.6 million ordinary shares in GVC at a price of 1010 pence per ordinary share. The Placing is expected to settle on a T+2 basis, on 11 June 2018.

“Following completion of the Placing, Playtech will no longer hold any interest in GVC’s ordinary shares.

“The proceeds from the Placing will be used for general corporate purposes which may include M&A or to reduce the amount of debt to be raised as part of the acquisition of Snaitech.”