Gambling Industry Acquisitions, Mergers and Financial News — Weekly Round-up for February 8, 2019

By Brian Cullingworth, Last updated Feb 8, 2019

Paddy Power Betfair Acquires Majority Stake In Adjarabet

51 percent of Georgian online market leader for GBP 101 million consideration

Paddy Power Betfair plc has acquired a 51 percent majority stake in leading online Georgian operator Adjarabet for a GBP 101 million consideration.

Adjarabet is licensed to offer a full suite of online betting and gaming products in Georgia including casino, sports, poker and peer-to-peer games. It is the market leader with an estimated 40 percent share of total online revenues.

In 2018, Adjarabet generated revenues of GEL 215 million (GBP 64 million) and EBITDA of GEL 68 million (GBP 20 milliion).

A mechanism has also been agreed, consisting of call and put options, which enables the Group to acquire the remaining 49 percent after three years at a valuation equivalent to 7 times 2021 EBITDA.

Peter Jackson, Chief Executive, commented:

“This bolt-on acquisition is in line with our strategy of establishing podium positions in attractive online markets.

“Adjarabet’s leading brand presence and strong management team has established it as the clear number 1 in the fast-growing, regulated online Georgian market.

“Together with our Group’s technology and sports capabilities, we are confident that Adjarabet will be strongly positioned to continue to build on this success”.

Sportech’s LOT.TO Acquisition Completed

Turnkey lottery and ilottery solutions provider

Sportech has announced the completion of its LOT.TO Systems acquisition.

LOT.TO Systems is a UK-based, B2B lottery games and lottery software technology business providing Sportech with a digital gaming platform, iLottery, and a specialist team focused on digital gaming technologies.

The acquisition provides Sportech with growth opportunities through broadening the suite of gaming services offered by the group.

Whilst its proprietary Rapid Lotto and lotto betting verticals online have been its core consumer products, LOT.TO’s iLottery platform has the capability to operate in any gambling vertical – including self-service POS terminals, online and mobile interfaces.

Richard McGuire, executive chairman of Sportech, said: “This acquisition will enhance the digital capabilities across all Group business lines. In addition, it will accelerate a strategy to further develop those growth opportunities, consolidate our sports betting capability, enhance our existing Lottery product capabilities and support the digital development of our global pari-mutuel capabilities in an efficient and effective manner.”

Sportech paid a consideration of the issuance of two million new Sportech ordinary shares of 20p each to the vendors which are subject to a three-year lock-up arrangement.

Executive chairman of Sportech, Richard McGuire, as one of the vendors with a five percent holding of the issued share capital of LOT.TO, will receive 100,000 Consideration Shares upon Admission of the shares on the London Stock Exchange’s main market for listed securities.

Newgioco Completes Virtual Generation Acquisition

For $4.5 million consideration

Toronto-headquartered gaming technology firm, Newgioco Group Inc., completed the acquisition of virtual gaming software developer, Virtual Generation Limited for an approximate consideration of $4.5 million in a combination of cash and stock.

Newgioco plans to utilize the VG platform for racing, keno, American Roulette and other casino games, within its ELYS platform. Simultaneously, Newgioco plans to introduce the VG product line into the regulated Italian market, utilizing Newgioco’s existing Italian ADM platform certification.

“We are intimately knowledgeable about the power of the assets we have purchased as VG’s platform has been operating on our ELYS platform for some time,” Michele Ciavarella, chief executive officer of Newgioco, said.

“We are eager to pursue and engage with customers on a number of near-term opportunities, including the tribal gaming market in the U.S. We expect this acquisition to be immediately accretive to our first quarter 2019 financial results.”

VG’s software is a random number generator (RNG) certified by Gaming Laboratories International (GLI) and includes a growing portfolio of products including horse racing and greyhound racing, league play football (soccer), keno and American roulette.

VG currently operates in Italy, Albania, Turkey, Mexico, Peru, Paraguay, Nicaragua, Honduras, Colombia, Dominican Republic, Nigeria and Uganda.

DGOJ Reports Fourth Quarter Market Performance

Market growth slows

Spain’s gambling regulator Dirección General de Ordenación del Juego released fourth quarter 2018 results Monday for the three months ending December 31, 2019.

Key performance indicators included:

Gross Gaming Revenue (GGR) was Euro 189.5 million representing a 4.21 percent increase compared to the previous quarter and an increase with respect to the same quarter of 2017 of 10.74 percent.

Sports wagering accounted for 52.74 percent of total market GGR to reach Euro 99.93 million, up 2.33 percent Quarter on Quarter (QoQ) but a decline of -2.10 percent year-on-year (YoY).

The variation is mainly due to sports betting of live counterparts that grew 13.13 percent and conventional bets that decreased -5.31 percent compared to the previous quarter, the DGOJ said.

Casino contributed 34.19 percent to total GGR amounting to Euro 64.77 million, up 6.32 percent QoQ and 32.59 percent YoY. Revenue from slots grew 42.2 percent YoY to reach Euro 36.4 million, roulette 15.6 percent to Euro 8.7 million, live roulette delivered 35.4 percent growth to Euro 12.9 million and blackjack increased 8.7 percent to reach Euro 6.7 million.

Poker represented 11.13 percent of the market reaching Euro 21.08 million, up 6.4 percent QoQ and 36.54 percent YoY. The growth is attributed to a good performance in cash poker and the shared liquidity arrangement with other jurisdictions. Cash games were Euro 8 million, up 27.4 percent and Tournaments amounted to Euro 13 million, up 43 percent.

Marketing spend increased 25.11 percent QoQ and 46.58 percent YoY to reach Euro 95.11 million.

Euro 9.67 million was attributed to affiliate expenses; Euro 3.48 million to sponsorship; Euro 32.15 million to promotions and Euro 49.81 million to advertising. Compared to the previous quarter, marketing expenses increased by 25.11 percent, mainly due to an increase of 36.58 percent in advertising.

The monthly average of active users is 858,285, implying a growth of 25.49 percent QoQ. The monthly average of new registrations was 256,070, an annual increase of 27.61 percent.

Of the 52 licensed operators, thirty held betting licenses, 36 – Casino, eight – Poker, 4 – Bingo and one for Contests.

William Hill Controls 98.5 Percent Of MRG

Last day of trading on Nasdaq Stockholm is 15 February 2019

William Hill has taken ownership of another 6.5 percent of MRG shares since January 21, 2019 bringing its total holding to 98.5 percent.

The company said it has initiated compulsory acquisition of the remaining shares in MRG, the last day of trading on Nasdaq Stockholm being 15 February 2019.

Greece Online Market Booms

With 30 percent rise in profits during 2018

In its first year of reporting, online streaked ahead of the land-based gambling sector in the Greek market recording Euro 356 million in gross profits for the first eleven months of 2018 compared to Euro 222.82 million in the terrestrial market.

According to mononews.gr, the fifteen operators active in the online sector recorded Euro 124.5 million in revenue in the months up to November 2018, while contributing Euro 70 million in taxes to the State Treasury.

In total, Government tax revenues for both the online and terrestrial casinos sector for the first eleven months 2018 was around Euro 180 million, surpassing 2017’s Euro 179.48 million.

Active online firms have been operating under temporary licenses since 2011, with a formal framework and new internet gambling law seemingly not on the horizon in the short or medium term despite Greek Finance Minister Euclid Tsakalotos’ best efforts.

Stride Gaming Broadly In Line With Expectations

Despite challenging conditions

Stride Gaming’s non-executive chairman, Nigel Payne, will brief on the company’s performance at its upcoming annual general meeting.

Payne said company trading was broadly in line with Board expectations despite challenging conditions.

“The Board remains confident in Stride’s ability to manage ongoing fiscal and regulatory market pressures and leverage its unique infrastructure to capitalise on significant growth opportunities in the dynamic UK market.

“The Group has a clear focus on winning and retaining mass market, recreational customers onto its bingo and casino sites.

“Cost control and efficiencies remain a core focus area for the Group. Stride continues to leverage its infrastructure and proprietary technology to migrate more customers onto the Group’s higher margin proprietary platform and drive cost synergies across the business.

“The Board believes the Group will continue to be highly cash generative and the Board remains committed to its revised dividend policy to distribute at least 50% of Adjusted net earnings in dividends.”

The Board has proposed a special dividend of approximately 8.0p per share relating to the earn-out of the QSB Gaming transaction, which is expected to complete by the end of May, with the dividend being paid in June 2019.

Blueprint Gaming Acquires Project

Retail developer’s titles to be adapted to online

Gauselmann Group subsidiary Blueprint Gaming has acquired retail slot developer Project for an undisclosed consideration.

Project’s content is set to be adapted for the online market as well as being integrated into Blueprint Gaming’s machine offering. Popular titles include Mega BarsTM and Find the Lady PokerTM.

Project’s management team will continue to lead the day-to-day activities at its south London studio, while the design and development departments from both companies will form a collaborative relationship with the intention of bringing further game innovation to the online and retail sectors.

Sascha Blodau, Gauselmann Group’s UK General Manager:

“Project has a strong reputation within the UK retail space and we’re thrilled to welcome them to the Blueprint Gaming family. The enlarged group will continue to be led by Blueprint Gaming Managing Director Matt Cole and we look forward to working closely with the whole Project team.”

Tony Boulton, Managing Director of Project:

“We have a great team of people and we will benefit from the scale, support and added distribution of the Gauselmann group. This opportunity will enable us to grow and to introduce our proven games to an online audience.”

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