Gambling Industry Financial News — Weekly Round-up for December 01, 2017

Online Casino Group Secures Finances

Jackpot Joy plc secures multi-million sterling Senior Secured Term and Revolving Credit Facility

Online gambling group Jackpot Joy plc has secured a GBP 388.5 million Senior Secured Term and Revolving Credit Facility, comprising a GBP 375 million equivalent term loan and a GBP 13.5 million revolving credit facility.

The company says the proceeds of the Term Facility will be used to repay existing first and second lien term loans.

The Term Facility comprises two committed tranches of GBP 250 million and Euro 140 million, which has a maturity of seven years and weighted average interest rate of 4.91 percent above Libor / Euribor, with step downs of an additional 0.75 percent based on future leverage ratios and credit ratings.

The RCF comprises one tranche of GBP 13.5 million and has a maturity of six years and an interest rate of 4.25 percent above Libor, with step downs.

Upon completion of the new facilities (estimated mid-December), the company’s annual cash interest payments will be reduced by approximately a third, or over GBP 9 million in the first year.

Standard & Poor’s and Moody’s are both expected to issue new credit ratings on the company. Standard & Poor’s is expected to maintain its rating at B+, whereas Moody’s is expected to upgrade the Company’s rating to B1.

Keith Laslop, CFO at Jackpot Joy said Monday that the new facilities demonstrate the growth and stability of the company.

“The significant reduction in interest costs, alongside further future rate reductions, allows us to further drive shareholder value through accelerated deleveraging and investment in the long term growth of the business,” he noted.

Tanzania Gambling Industry Set For Growth

Tax collections expected to rise by up to 18 percent as more operators seek licensing

Media outlets in Tanzania claim that the domestic gambling industry is set for growth, with tax collections up 18 percent in financial 2017-18 as the number of operators seeking licenses grows.

The Gaming Board of Tanzania (GBT) has projected fast growth from which the Tanzania Revenue Authority (TRA) could harvest Sh39 billion, up from Sh33.6 billion collected in the last financial year.

James Mbalwe, acting director general at the GBT, told reporters last week that the number of gaming companies had increased from five in the past three years to 26.

“We are optimistic of increased revenues as currently there are four more foreign and local companies that have shown interest in Tanzania. All the processes have already been completed with only a few issues remaining to be ironed out. We’re optimistic that in the next year they will begin their operations”.

Mbalwe said that public interest in sports betting has grown thanks to the advent of online betting, which has brought wagering services closer to players. He revealed that last year revenues from sports betting hit Sh7.8 billion, whilst land casino revenues delivered Sh400 million.

Nevertheless, casino gambling was performing well, he said.

In the lottery vertical the market is currently led by Biko, followed by SportPesa, revenue in this sector last month reached Sh2 billion, Mbalwe revealed.

Investors were showing increased interest in the local industry, Mbalwe claimed, concluding that the GBT has plans to invest Sh824.4 million in technology development to keep pace with operators and the business generally.

Tatts Digitals Performed Well In Fiscal Q1

Digital sales grow, boosting the group’s results

The Australian gambling group Tatts released its fiscal Q1 results this week, noting that significant growth in its digital operations has made a valuable contribution to the group results.

Highlights of the report include:

* Group revenue up 6.8 percent year-on-year at A$ 743.1 million;

* Net profit after tax up 14.8 percent at A$ 67.2 million;

* EBITDA up 9.6 percent at A$ 128.2million;

* Lottery revenue up 8.8 percent, but digital lottery revenue up almost 30 percent year-on-year. There is likely to be less compeition going forward after provincial governments banned Lottoland;

* UBET saw turnover increase 1.8 percent, but digital sales rising 15.8 percent and now account for 29.6 percent of turnover;

* MAX and MAXtech revenue rose 4.7 percent y-o-y;

* Progress on the A$ 11 billion merger with Tabcorp continues

Turkey Gets Tough On Financial Transactions

GVC off-loaded its Turkish interests at the right time, it appears

GVC Holding’s decision to offload its Turkish interests earlier this year (see previous InfoPowa reports) has turned out to be a timely move as news emerged this week that gambling financial transactions are going to be more closely scrutinised and monitored.

The Trend news agency reports that the Turkish Banking Supervision Body has confirmed that restrictions on money transfers, along with cash withdrawals from ATMs, are to be more closely monitored, with individual bank accounts that show daily maximum allowed withdrawals placed under special monitoring.

Trend reports that the restrictions are elements in combatting financial fraud and illegal gambling, with the banking supervisor claiming that around 5 million Turks participate in illegal online gambling, using ATM transactions.

InfoPowa readers will recall that earlier this year a special task force in the Prosecutor General’s Office was formed to monitor online gambling websites and enforce Turkish laws against operators.

Since then police and task force officials have been active, conducting numerous raids involving thousands of officers across the nation.

Aristocrat Reports Acquisition Of Big Fish Games From Churchill Downs

$990 million purchase makes Aristocrat the second largest social casino publisher

Australian gambling supplier Aristocrat reports that it has acquired social casino company Big Fish Gaming from Churchill Downs for US$990 million, making it the second largest social casino publisher by revenue in the sector.

Trevor Croker, Aristocrat’s chief executive officer, said: “The strategic and financial benefits from the acquisition are highly compelling. The acquisition of Big Fish will immediately provide scale across our entire digital platform, following the recent acquisition of Plarium, which expanded our Digital business into the fast growing social gaming market.

“We are excited to work with the Big Fish team to take advantage of the opportunities this combination will create, and look forward to welcoming them to the Aristocrat family”

Aristocrat puts the size of the social casino market at $US4.3 billion. By 2020, that is tipped to rise to $US6 billion. The mobile gaming market is expected to grow even faster, rising from $US46 billion in 2017 to $US65 billion in 2020.

Digital gaming revenue at the company will go from $383 million before the Plarium deal to $1.3 billion post the Big Fish acquisition, or 38 per cent of total group revenue.

Aristocrat also released its FY 2017 financials Thursday, claiming strong performance in its global portfolio, especially in the Americas, as well as its digital and international CIII segments, boosting profit and revenue.

Net profit after tax was up 36 percent year-on-year at A$543 million, from revenue up 15.3 percent at A$2.5 billion, and EBITDA up 24.2 percent at A$1 billion.

Net debt rose from $664 million to $2.7 billion, although its net debt to EBITDA ratio sits at 2.2 times

The company said that it anticipates continued growth in the 2018 fiscal year, with further progress in its North America’s business, maintenance of strong growth in the Digital business, growth in class II gaming operations, and growth in earnings from its Plarium business.

Croker said that success has been achieved despite mostly flat markets and increasing competitive pressure, underpinned by industry leading content, hardware and technology, coupled with effective execution.

“Further growth in our core recurring revenue segments of gaming operations and digital social casino was particularly pleasing, with 52 percent of group revenues deriving from recurring sources during the year as well as growth in outright sales over the period,” Croker said.

“This represents further progress in ensuring Aristocrat delivers sustainable returns and cash flow over time, consistent with our strategy and shareholders’ interests.”

Stars Group Sells Its Entire Shareholding In Jackpot Joy Plc

Stars Interactive sells 5.6 million shares at 802 pence per share

The Stars Group subsidiary Stars Interactive Holdings has sold off its entire shareholding in online gambling group Jackpot Joy plc, according to reports in the UK investment press.

The reports advise that Stars originally planned to offload around half of its shareholding (2.8 million shares) but has now sold its entire 5.6 million shareholding – a 7.5 percent stake in Jackpot Joy – at 802 pence a share following strong investor demand.

Stars made a cool GBP 45 million from the sell-off, but has not publicly commented on its reason for off-loading the stock.

The sale was the second major shares deal from Stars this week; earlier it sold its just over 7 million shares in NYX Gaming to Scientific Games for an estimated $40 million (see previous InfoPowa report).

The share sale will net The Stars Group gross proceeds of £45m and is their second share sale in a week following its decision to sell 7,021,352 shares and preference warrants in fellow gaming company NYX Gaming Group for an estimated $40m.