Gambling Industry Acquisitions and Financial News — Weekly Round-up for March 30, 2018

Strong H1-2017/18 Results From Sky Betting And Gaming

47 percent leap in half year revenue ​after attracting 300,000 new customers

UK-based Sky Betting and Gaming has reported a successful H1-2017/18 covering the first half of 2017 to end December, highlighting:

  • 47 percent rise in half year revenue to GBP 339 million;
  • Digital operations at SkyBet a star performer, increasing revenue by 58 percent to GBP 210 million;
  • Sky Gaming revenue ​rose​ 31​ percent​ to GBP 117 million;
  • Earnings nearly doubled from GBP 62 million to GBP 118 million after total customer​ number​s ​rose 19​ percent​ to 2 m​illion​ ​from ​1.7​ ​m​illion;
  • 300,000 new registered punters in the period;
  • 29 percent increase in betting stakes;
  • The group created 230 net jobs​, mainly at its Yorkshire base, bringing company overall headcount to 1,350 people.
  • Launch of the company’s second​ ​international business Sky Bet Deutschland for German sports betting customers​;
  • Best yet Cheltenham racing performance saw the company handle bet volumes peaking at just over 300 bets per second;
  • Independent data from Kantar Worldpanel showed Sky Bet extended its lead as the UK’s most popular online betting brand, measured by the amount of regular users of its website.

CEO Richard Flint said that the growth in customer numbers reflects an ongoing trend from retail to online.

“People are doing more online rather than in shops. We are a very strong tech business and the Sky brand has helped us,” he added, noting that the firm continued to perform “very well” in the first half of 2017/18.

The company reported that it has improved its range of markets, products and offers, with more betting​ ​options and over 20 exclusive new games launched on ​its​ gaming brands. ​Investment in data science ​is​ delivering greater ​customer ​personalisation, with the​ ​home page tailored towards the individual, and recommended games and bet options ​are ​delivering​ ​relevant and appealing content.

​Flint said the group has launch​ed​ a fully integrated safer gambling campaign and increase​d​​ investment in research, data analysis and capability to​ ​provide a safe and responsible gambling environment for customers.

Gaming Realms Offloads Affiliate Business To 1st Leads Ltd

Bingoport and freebingohunter sold for GBP 2.4 million

Gaming Realms plc has sold its affiliate portals, bingoport and freebingohunter, for a total consideration of GBP 2.4 million to 1ST Leads Ltd in line with its strategy to focus resources on its real money gaming and content development businesses.

1ST Leads paid GBP 2 million on closing, and a maximum of GBP 400,000 will be payable on December 31 2018, subject to the achievement of performance targets.

In related news, a trading update revealed the delivery of a maiden full year EBITDA of GBP 0.7 million despite significant headwinds which included increased point of consumption tax and additional legislation concerning responsible gambling, the company said.

Other highlights over the full year 2017 period include:

  • Growth in real money gaming revenue of 5.5 percent.
  • A 17 percent reduction in marketing spend and an increased operational focus on responsible gambling.
  • The launch of Slingo Arcade helped to partially offset a 13 percent overall decline in social revenue.
  • Completion of the $4.5 million payment of final tranche relating to the Blastworks acquisition.

Gaming Realms said it had had a strong start to 2018 with a slew of deals with 888 Holdings and Golden Nugget Casino, Ladbrokes Coral, Gaming Innovation Group, Leander Games and the Health Lottery with real money gaming player value increasing 24 percent during the first two months of 2018.

The Company still expects overall EBITDA growth in 2018 but acknowledges that the sale of Bingoport will reduce EBITDA in the short term.

“2017 was a year of significant developments, with the Company delivering maiden positive EBITDA and successfully focusing resources towards real money gaming and licensing our Slingo Originals content to improve margins,” Patrick Southon, CEO, said. “The disposal of the affiliate portals marks the completion of this transition, and with further licensing opportunities to follow, we believe that the Company is in line for improved bottom line growth in 2018.”

Cherry Updates Industry On Game Lounge Acquisition

Consideration agreed on further 44 percent share in affiliate company

Cherry AB has announced the finalisation of its acquisition of a further 44 percent of Game Lounge – announced late December 2017.

The company said the consideration agreed for the further share in the affiliate company had been set at SEK 189,292,750, of which approximately SEK 94,646,375 is intended to be paid in cash.

The purchase price for the additional 44 percent is based on a multiple of 4.5 times 2017 EBIT earnings pertaining to affiliated operations and six times 2017 EBIT for the white label business.

Cherry AB (publ)’s wholly owned subsidiary Cherry Malta Ltd acquired 51 percent of the shares in Game Lounge Ltd in January 2015 (see previous InfoPowa reports).

Five percent of Game Lounge shares will remain with co-founders Jonas Cederholm and Fredrik Langeland who will stay on as the company’s CEO and head of sales respectively.

LeoVegas Completes World Of Sportsbetting Acquisition

Positioned, “under best possible conditions,” for expansion in Germany

Mobile gaming company LeoVegas has completed the acquisition of World of Sportsbetting Ltd (Malta) for a cash consideration of Euro 2.6 million.

World of Sportsbetting Ltd (Malta), holds a sports betting licence and a casino licence in the German State of Schleswig-Holstein as well as an approved application for a sports betting licence in Hesse enabling the operator “the best possible conditions to further accelerate in Germany”.

GIG Acquires Nordbet

And gains Schleswig-Holstein betting license

Gaming Innovation Group Inc. (GIG) has entered into a formal acquisition agreement for Nordbet, an inactive company with no assets except for a Schleswig-Holstein sportsbetting license, for a Euro 500,000 consideration.

The acquisition of Nordbet strengthens GIG’s access to the German market through the Schleswig-Holstein sportsbetting license which enables the company to integrate with the larger payment providers making its sports and casino offering more available to German end-users.

The sports betting licence will be valid until February 2019, with potential for extension following this period, the company said.

“We have high ambitions for our sports betting offering,” GIG CEO, Robin Reed, said. “These are being accelerated by the launch of three new B2B products for sports betting in H1 2018.

“Combining these sports betting services with preferred payment providers, makes GIG’s sports offering in Germany very competitive ahead of the FIFA World Cup in June 2018.”

GAN Reports A Better Year

Pretax losses narrow as US business improves

Software-as-a-service provider GAN has posted its FY 2017 results, reporting rising revenues and smaller losses and flagging the following highlights:

  • US business supplying GAN simulated gaming software to American land casinos better with five new US casino clients, and two US casino clients for real money regulated gaming in New Jersey. The company also signed up an unidentified European company;
  • Losses came in at GBP 4.2 million (FY 2016: GBP 5.2 million);
  • Gross income rose 30 percent year-on-year at GBP 41.1 million;
  • Net revenue was uip 17 percent y-o-y at GBP 9.1 million;
  • EBITDA was GBP 500,000 positive (FY 2016: loss of GBP 900,000);
  • Expenses and costs rose from GBP 7.4 million in 2016 to GBP 8 million this year, due primarily to increased royalties to games content providers in Europe for real money gaming and in the US for Simulated Gaming;
  • Admin expenses fell GBP 100,000 to GBP 5.5 million despite a GBP 200,000 foreign exchange loss;

CEO Dermot Smurfit reported:

“2017 saw GAN deliver its first full year of positive EBITDA since 2013 following a lengthy investment cycle to position GAN as a market leader in the US casino Industry delivering Internet gaming solutions for real money Regulated Gaming and Simulated Gaming which is deployed in advance of regulation. GAN’s performance to date in 2018 is in line with our expectations.

“During the year, the firm launched simulated gaming for five new US casino clients, and signed up two US casino clients for real money regulated gaming in New Jersey and European markets, respectively.
“October also saw legislation introduced in Pennsylvania that would allow residents to play real money Internet casino games, starting from the second half of 2018.

“We are increasingly confident in the long-term prospects for intra-State real-money gaming in the US and believe Pennsylvania may now serve as a catalyst for other US States to regulate Internet gaming and, in the event the US Supreme Court ruling lifts the long-standing Federal ban, the incremental opportunity of Internet sports betting,” Smurfit said.