Gambling Industry Acquisitions, Mergers and Financial News — Weekly Round-up for December 21, 2018

By Brian Cullingworth, Last updated Dec 21, 2018

MGA Publishes Gaming Industry Performance Report

Covering January to June 2018 period

The Malta Gaming Authority (MGA) published its interim performance report Monday covering the January to June 2018 period.

Performance stats for the remote gaming industry identified during the reporting period include:

A total of 121 remote gaming license applications, with 62 awarded, an increase of 18.5 percent.

The termination of nine licenses on operator request, while five licenses were cancelled due to regulatory breaches and one suspended by the MGA’s Enforcement Unit.

A 21.9 percent increase in total active customer accounts year-over-year.

The largest age demographic was the 25-34 year group accounting for 38.2 percent of all remote gaming players. The 35-54 age group accounted for 32.7 percent of the group.

The majority of MGA licensed remote gaming players were male accounting for 76.5 percent of the total.

56 percent of total gross gaming revenues were generated through gaming under the Class 1 license group, up 2 percent.

77 percent of GGR was generated through slot games, 18.5 percent through table games and 4.6 percent through ‘other’ games.

The majority of gross gaming revenue generated by Class 2 and Class 2 on 4 licenses was up 5 percent and led by football bets (76.7 percent), followed by tennis and basketball respectively.

Total gaming tax payable by the remote gaming operators amounted to just over Euro 13.6 million, a 1.9 percent increase year-over-year.

In related news, the MGA recently released the results of its Inquiry on the Consumption of Gambling and Gaming Services Consumption by Maltese Residents in 2017.

Playags Agrees Acquisition Of Integrity Gaming

For US$ 49 million consideration

Gaming supplier PlayAGS, Inc. announced reaching a definitive agreement to acquire all issued and outstanding common shares of Integrity Gaming Corp., for a cash payment of CA$0.46 per share or a total transaction value of US$49 million, which includes repaying US$36 million of Integrity’s outstanding debt.

The transaction is expected to close in the first half of 2019, subject to approval by Integrity’s shareholders, receipt of applicable regulatory, court and third-party approvals, and other customary closing conditions.

Andrew Burke, Senior Vice President of Slot Products for AGS:

“AGS’ roots are in Oklahoma, and we are excited to invest further in a market we are so passionate about and where we already have strong sales and customer support networks. We look forward to working in partnership with the Integrity team to provide Integrity’s customers with an exceptional service and support experience and a continued focus on driving optimal game performance.”

Integrity Interim Chief Executive Officer Robert Miodunski:

“We strongly believe this is a good transaction for our company and that our customers will benefit from AGS’ deep roots in Oklahoma and its proven ability to successfully manage a large footprint of leased games to drive strong performance for gaming operators. We look forward to working closely with the AGS team to ensure a smooth transition and continuity of service and support for our customers. I am proud of the Integrity team and the success we have achieved over our more than 20 years.”

Integrity owns slot machines manufactured by various slot suppliers, including AGS, in approximately 30 tribal casinos in Oklahoma and Texas and also offers direct sales of other gaming products and supplies.

Cherry AB Receives $1 Billion Takeover Offer

Company to be taken private

Cherry AB’s Independent Bid Committee (IBC) said in an industry update Tuesday that it recommends shareholders accept a public offer from the European Entertainment Intressenter Bid Co AB of SEK87 per series A and B share which based on all shares of series A and B in Cherry, corresponds to approximately SEK 9,193 million ($1,016,965,512 or GBP 802,273,110). The share offer represents a 20 percent premium on the closing price of Series B shares on December 17, 2018.

The IBC also noted that the Offer corresponds to a premium of 28.0 percent compared to the volume-weighted average share price of Cherry’s series B shares on Nasdaq Stockholm during the last 90 trading days and 59.6 percent compared to the closing price on 15 October 2018, the day before the Board of Directors received the letter by which the Consortium presented its non-binding bid.

EE Intressenter is a company jointly controlled by a consortium consisting of Bridgepoint Advisers Limited acting as managers for and on behalf of the limited partnerships comprising the Bridgepoint Europe VI Fund, Prunus Avium Ltd, Klein Group AS, Audere Est Facere AS, Pontus Lindwall, Berkay Reyhan and Can Yilanlioglu (Consortium).

The acceptance period for the Offer is expected to commence around 20 December 2018 and expire around 23 January 2019, subject to any extensions.

Completion of the Offer is conditional upon customary terms, including the Offer being accepted to such extent that the consortium becomes the owner of more than 90 percent of the total number of outstanding shares in Cherry.

Members of the Consortium currently own in aggregate 50,100,368 shares, corresponding to approximately 47.4 percent of the total number of shares and 37.9 percent of the total number of votes in the Company.

In addition, irrevocable undertakings to accept the Offer, subject to certain conditions, have been received from shareholders representing in total 12,298,332 shares, corresponding to approximately 11.6 percent of the total number of shares and 28.5 percent of the total number of votes in Cherry.

In total, therefore, the Consortium owns shares, or have secured commitments to accept the Offer, corresponding to 59.1 per cent of the capital and 66.5 per cent of the votes.

Chairman of the Cherry AB Board, Morten Klein, is part of the bidding Consortium.

Noting the upcoming regulation of the Swedish gambling market, the IBC highlighted increased consolidation between market players, such as William Hill’s bid on MRG at the end of October (see previous InfoPowa reports).

The consortium said in a separate press statement that it believes Cherry will be able to maximise value by focusing on driving the performance of the individual business units rather than managing the combined entity as a publicly listed company.

In addition, the consortium noted it places great value on Cherry’s management and employees and expect that the Offer will support continued growth and create long-term positive effects for Cherry and its employees, customers and other stakeholders impacted by the operations of Cherry.

Vereeni Acquires 20 Percent Stake In Singular

Major investment will drive expansion

Venture capital fund Vereeni Investments has acquired a 20 percent stake in igaming firm Singular for an initial consideration of Euro 5 million and the option to increase its stake based on performance in 13 months time.

Dubbed a “major investment deal”, the deal forms part of Vereeni’s recently launched Euro 100 million technology fund ‘Level Up’ which targets promising early stage ventures.

“The partnership has the potential to further expand Singular’s presence, not only geographically , but also in new industry directions,” Darko Gacov, chairman of the board of directors at Singular said.

“As a result of this partnership we are already looking at three major new clients in different regions that will be powered by Singular’s technology”.

Timothy John Heath, founding partner at Vereeni Investments, said: “Their approach to continual business development and commitment to being innovators within their field makes them a perfect fit for our diverse investment ecosystem.”

Singular has offices in London, Valetta, Tbilisi, Skopje and is planning two new locations in San Francisco and Kiev.

888 Holdings Upward Momentum Continues

Delivers upbeat trading update

In a trading update published Wednesday, 888 Holdings PLC (888) said the second half of the financial year has seen further progress against the Group’s strategic objectives leading the Board to remain confident in achieving full year expectations.

The company reported continued momentum in Sport, Casino and across regulated European markets which was supported by the rollout of Orbit, 888’s new Casino platform. 888 keenly anticipates the upcoming launch of its new Poker 8 platform expected to be rolled-out in the coming weeks.

A strong performance in the first half of 2018 in the UK market has continued into the second half delivering positive trends in revenue, a press statement reads.

In the US, the Group has continued to strengthen its position including launching 888sport in New Jersey in September. This marked the first time that 888 offered sports betting in the United States and paves the way for the Group to launch 888sport in additional viable US states as future regulation allows.

In December 888 announced the acquisition of the remaining 53% interest in the All American Poker Network (“AAPN”), a joint venture established in 2013, for US $28 million. The Board believes this acquisition to be an important strategic milestone for 888 that will facilitate the Group’s future growth strategy in the US.

Itai Frieberger, Chief Executive Officer of 888:

“Underpinned by the strength of the Group’s technology as well as our fantastic team and diversification across products and regulated markets, the Board remains excited by 888’s long-term growth prospects.”

GVC Shares Hit Following Allegations Against Ladbrokes

Hush-money payment to theft victims of problem gambler a serious allegation

Investor publications in the UK have been reporting that GVC Holdings share prices have been impacted by allegations that subsidiary Ladbrokes offered a “hush money” payment to a problem gambler’s employer to avoid the issue being reported to the UK regulator.

The issue surfaced after a report in the Guardian newspaper that alleged that Ladbrokes had agreed to pay the victims of the problem gambler GBP 1 million in return for a pledge to not inform the industry regulator

According to The Guardian report Monday, which claimed sight of a settlement document, Ladbrokes had agreed to pay the victims from whom the problem gambler had stolen the money – clients of a Dubai-based property business – which the problem gambler spent on gambling.

The gambler admitted to having stolen the funds, with Ladbrokes agreeing to pay the money to five of the victims who accused the bookmaker of accepting stolen funds.

The Guardian said it had seen the settlement agreement which had included a demand by Ladbrokes that the victims “agree not to bring any complaint or make any report to any regulator in relation to the claim” in order to receive the money.

The paper also revealed that it had been passed text messages and photos that revealed the company had offered the gambling addict generous incentives, including free tickets to Arsenal games, the company box at the Royal Ascot, and return flights from Dubai.

However, the issue was exposed when the problem gambler reported it to the UK Gambling Commission, breaking the terms of the settlement. An area of particular concern is text messages exchanged between the gambler and an account manager assigned to him, which apparently raise doubts around the company’s compliance with regulations designed to prevent problem gambling and money laundering.

The UK Gambling Commission has confirmed that it is investigating the case to “ascertain the full circumstances” behind the allegations.

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