Gambling Industry Financial News — Weekly Round-up for November 17, 2017

Online casino industry news

Digital Star Performer In Ladbrokes Coral Update

Australia and Italy digital businesses showing strong growth

Ladbrokes Coral detailed a trading performance in line with expectations in an industry update, Monday.

The update, which covers the period from July 1 to October 29, 2017, showed declines in UK Retail revenues and OTC stakes which were offset by a good performance in digital.

Key performance highlights include:

– Group net revenue up 3 percent compared to a decline of 2 percent in the second quarter (H1 +1 percent)

– Total Digital net revenues were up 12 percent.

– Online sportsbook net revenues increased 18 percent and online gaming net revenues were up 6 percent.

– UK Retail like-for-like (LFL) net revenue declined 1 percent and LFL OTC stakes were down 5 percent (Q2: -9 percent; H1: -8 percent)

– European Retail net revenue grew 17 percent (in constant currency – 12 percent)

Jim Mullen, chief executive officer of the Ladbrokes Coral Group, said:

“The four month period to 29 October represents another period of positive trading performance for the Group as well as solid delivery on the key operational and financial targets for the year including the swift integration of people, operations and platforms.”

Mullen highlighted the strength of its digital offer saying business divisions Ladbrokes Australia and Eurobet Italy continue to post “very” strong revenue growth along with a “pleasing” performance from its UK digital businesses.

Ladbrokes.com.au delivered a 41 percent increase in sports stakes and a 50 percent increase in net revenue. Eurobet.it sports stakes were 35 percent up y-o-y, with sports gross win margins improving strongly from a poor start to the year, helping to drive sports net revenue growth of 36 percent on a constant currency basis.

“The period also saw a significant reduction in the use of affiliate acquisition channels across all UK brands,” Mullen pointed out.

French Online Gambling Market Flourishes In Third Quarter

Poker revenues highest in three years

Third quarter figures released late last week by the French regulator ARJEL paint a positive picture of French online gambling, highlighting:

* Online poker overall revenue up 11 percent at Euro 58 million, with cash game handle up 8 percent at Euro 885 million, and cash game revenue up 5 prcent at Euro 22.1 million ….the best growth in the past six years;

* Cash game active players up 12 percent at 68,000;

* Tournament poker fees up 10 percent at Euro 474 million, with revenue up 14 percent at Euro 35.7 million;

* Tournament active players uyp 9 percent;

* Weekly active poker accounts up 8 percent at 228,000, halting the declines of the past four quarters;

* Sports betting handle up 23 percent y-o-y at Euro 549,000, and revenue up 23 percent at Euro 106 million. Football delivered 60 percent of the action;

* Weekly active player numbers up 26 percent at 301,000;

* Horseracing stakes rose 15 percent at Euro 244 million, with revenue up 10 precent at Euro 60 million – the best since market liberalisation in 2010;

* New racing accounts up 15 percent at Euro 127,000;

* Operators cut bonus costs by 9 percent during the quarter.

The regulator remains bullish on future prospects, encouraged by the online poker pool sharing agreements it has entered into with other European regulated jurisdictions.

OPAP Reports Strong Third Quarter

Boosted by continued VLT rollout, an increase in betting and the reversal of litigation provisions

Gaming giant Greek Organisation of Football Prognostics S.A. (OPAP) has revealed progress in its third quarter 2017 and consolidated financial results for the nine-month period ended September 30, 2017.

Consolidated gross gaming revenues (GGR) grew 4.8 percent to reach Euro 1,045.8 million (9M/2016: Euro 998 million).

OPAP reported a strong third quarter with 11.9 percent growth in GGR boosted by strong betting and VLT contributions.

EBITDA was Euro 223.5 million (9M/2016: Euro 223.8 million).

Consolidated Net Profit was Euro 109 million (9M/2016: Euro 115.1 million) down 5.3 percent, however, Q3/2017 delivered a 64.1 percent rise in net profit to reach Euro 48.1 million (Q3/2016: Euro 29.3 million). Third quarter profit was boosted by reversed litigation provisions of Euro 14.8 million.

“After a solid first half of the year, Q3 marked a return to meaningful growth in both revenues and profitability for OPAP,” Damian Cope, chief executive officer of OPAP commented.

Cope said the company continues to invest heavily in its products, technology and people and has made further progress in its previously communicated eight strategic objectives.

“These results are already demonstrating the early benefits of these investments and are also testament to the hard work and contributions from everyone in the OPAP team, both our employees and our agents.”

On the back of these results, the Board has proposed a distribution of retained earnings amounting to Euro 0.70 per share.

“Looking ahead, we have a particularly busy few months ahead with a number of important milestones for both our technology migrations and product rollouts, but remain confident that we will deliver on our objectives for FY17 and beyond,” Cope concluded.

In related news, OPAP’s licence was extended for a further eight years by the Greek Parliament this week. That same law reduces the number of permitted VLT’s from 35,000 to 25,000 within the next two years, a development OPAP says has no material effect on the business.

Jackpotjoy Plc Pleased With Third Quarter Results

Driven by Jackpotjoy and Vera&John segments

Online bingo operator JackpotJoy Group reported on its third quarter and consolidated nine-month 2017 fiscal period Tuesday showing positive momentum and a good financial performance.

Gaming revenues rose 14 percent in the third quarter, and in consolidated nine-month results reached GBP 222 million (9M/2016: GBP 194 million). Third quarter results were driven by a 12 percent growth in the Jackpotjoy segment and 28 percent growth from Vera&John.

Adjusted EBITDA for the nine month period increased 11 percent year-on-year to reach . Adjusted net income decreased 4 percent year-on-year, impacted by interest related fees on other company debts.

Average active customers grew to 251,186, a 13 percent increase y-o-y, while average real-money gaming revenue per month grew to GBP 22.6 million, up 16 percent y-o-y.

The Jackpotjoy segment in the nine-months to September 30, 2017 has generated consolidated total revenue of GBP 155 million. Third quarter revenue growth of 12 percent was reported on the back of a strong performance from its Starspin and Botemania brands. Adjusted EBITDA growth was 3 percent. Jackpotjoy comprises 69 percent of total Group revenues.

Vera&John has delivered GBP 51.5 million in consolidated 9M revenue and now comprises 24 percent of total group revenue.

Mandalay Media, comprising 7 percent of Group revenue, saw a revenue decline of 8 percent in the third quarter reaching GBP 15.3 million and an adjusted EBITDA increase of 36 percent attributed to lower marketing spend.

Despite strong momentum, the company expects an impact on profitability from Q4 onwards due to the introduction of the UK point of consumption (POC) tax on bonuses. “Management, however, remains confident in meeting the upper end of market expectations for FY17,” the update reads.

New Acquisitions Ameliorate 500.com Losses

But Asian lottery company still posts $10.9 million in third quarter losses

Three recent acquisitions helped to lower the impact of losses at Chinese online lottery firm 500.com in the third quarter, its latest results show.

The company continues to struggle following the imposition of a “temporary” online lottery suspension by the Chinese government over two years ago (see previous InfoPowa reports).

500.com posted a Q3-2017 net loss of RMB 72.2 million ($10.9 million) following quarterly net revenues of RMB43.2 million ($5.5 million), up from RMB19.3 million in the second quarter and nothing at all in Q3-2016.

Recent acquisitions by the company helped soften the impact of a tough quarter, including 500.com’s 93 percent stake in Nordic-facing online lottery company Multilotto acquired earlier this year for Euro 49.8 million (see previous InfoPowa report).

Multilotto contributed 52 percent of overall revenues, and holds out the promise of continued and increasing improvement in the fourth quarter.

Other acquisitions include a 40 percent interest in Chinese retail lottery operator Loto Interactive Ltd, and an online social poker enterprise.

Expenses rose in the quarter due to the integration costs of the new acquisitions, but the company has a comfortable cash buffer of $91.5 million still in its coffers.

Sportech Completes GBP 54 Million Capital Reduction Plan

Shareholders to receive 29 pence a share

Online gambling firm Sportech plc announced in a stock exchange advisory Thursday that it has completed its capital reduction plan as approved by shareholders on 24 May 2017, and declares a distribution of 29 pence per share in cash amounting to, in aggregate, GBP 53,828,131.

The distribution to shareholders follows the successful sale of The Football Pools business, completed in June 2017 (see previous InfoPowa report) and the subsequent approval of the company’s application to reduce its capital by approximately GBP 55.7 million by the Edinburgh, Court of Session this week.

Shareholders on the register on Friday 24 November 2017 will benefit, with payment scheduled for Monday 18 December 2017. The shares will be marked ex-dividend on Thursday 23 November 2017.

Richard McGuire, non-executive chairman of Sportech, said in the advisory:

“We previously announced that the company would be making a significant distribution to its shareholders and I am pleased to formally announce that we will be distributing almost GBP 54 million to shareholders in December.

“This follows the GBP 21 million returned in March this year via a share buyback, taking total shareholder distributions to GBP 75 million in 2017, further illustrating the turnaround in the company’s financial position over the last twelve months. The Board are also continuing with the formal sale process as outlined earlier this month and we will update shareholders further at the appropriate time.”