TORONTO, May, 2018 – The Stars Group Inc. (NASDAQ: TSG; TSX: TSGI) reported its financial results for the first quarter ended March 31, 2018 and provided certain additional highlights and updates. Unless otherwise noted, all dollar ($) amounts are in U.S. dollars.
“The Stars Group’s strong first quarter results continued our organic growth trajectory,” stated Rafi Ashkenazi, The Stars Group’s Chief Executive Officer. “We are pleased with the performance of each of our verticals, poker, casino and sportsbook, which are benefiting not only from the continued success of Stars Rewards, but also from our strategy of focusing on the customer and continued improvements to our product offerings.”
“Moving forward, the exceptional foundation of our existing business will be complemented by our acquisitions of CrownBet and William Hill Australia, and expected completion of the Sky Betting & Gaming acquisition. These acquisitions will help diversify our revenue base, increase our exposure to regulated markets, and transform our combined sportsbook into a second customer acquisition channel. These new additions will accelerate not only the organic growth we are seeing in our existing business, but also our progress towards realizing our vision of becoming the world’s favorite iGaming destination.”
First Quarter 2018 and Subsequent Financial Highlights
Revenues – Revenues for the quarter increased approximately 23.8% year-over-year. Excluding the impact of year-over-year changes in foreign exchange rates, revenues for the quarter would have increased by approximately 12.4%. Real-money online poker revenues and real-money online casino and sportsbook combined revenues represented approximately 62.6% and 34.2% of revenues for the quarter, respectively.
Poker Revenues – Real-money online poker revenues for the quarter were $245.9 million, or an increase of approximately 12.4% year-over-year. Excluding the impact of year-over-year changes in foreign exchange rates, real-money online poker revenues would have increased by approximately 2.3% for the quarter. The increase in poker revenue was primarily driven by the positive impact of the Stars Rewards loyalty program, foreign exchange fluctuations, and the introduction of shared poker liquidity in France and Spain, as offset by, among other things, the cessation of operations or difficult operating conditions in certain markets including Australia and Colombia.
Casino & Sportsbook Revenues – Real-money online casino and sportsbook combined revenues for the quarter were $134.5 million, or an increase of approximately 55.0% year-over-year. During the three months ended March 31, 2018, 20.7% of the combined casino and sportsbook revenues related to sportsbook revenues. Excluding the impact of year-over-year changes in foreign exchange rates, real-money online casino and sportsbook combined revenues would have increased by approximately 39.3% for the quarter. The increase in casino and sportsbook combined revenue was primarily driven by continued improvements in The Stars Group’s casino and sportsbook product offerings, positive impacts of foreign exchange fluctuations, and the addition of revenue related to the acquisition of a majority of the equity interests in CrownBet.
Debt and Cash – Total long-term debt outstanding at the end of the quarter was $2.45 billion with a weighted average interest rate of 5.1%. As previously disclosed, on April 6, 2018, The Stars Group successfully increased the size, repriced at lower interest rates and extended the maturity on its U.S. dollar and Euro denominated first lien term loans and revolving credit facility, amended and restated the applicable credit agreement, and fully repaid the remaining $95 million outstanding on its second lien term loan. The Stars Group ended the first quarter of 2018 with approximately $257 million in operational cash on its balance sheet.
First Quarter 2018 and Subsequent Operational Highlights
Quarterly Real-Money Active Uniques (QAUs) – Total QAUs were approximately 2.24 million, a decrease of approximately 4.6% year-over-year primarily led by The Stars Group’s strategy of focusing on positive return customer relationship management initiatives to attract high-value, net-depositing customers (primarily recreational players) and the cessation of operations or difficult operating conditions in certain markets including Australia and Colombia. Approximately 2.09 million of such QAUs played online poker during the quarter, a decrease of approximately 5.5% year-over-year, while The Stars Group’s online casino offerings had approximately 621,800 QAUs, a decrease of 2.4% year-over-year, which The Stars Group continues to estimate as one of the largest active casino player bases among its competitors. The Stars Group’s emerging online sportsbook offerings had approximately 335,800 QAUs, a 16.3% increase year-over-year.
Quarterly Net Yield (QNY) – Total QNY was $165, an increase of 26.7% year-over-year, and QNY excluding the impact of year-over-year changes in foreign exchange rates was $155, an increase of 18.7% year-over-year. QNY is a non-IFRS measure.
Net Deposits – Net Deposits were $353.4 million in the first quarter, an increase of 25.9% year-over-year. Net Deposits are closely correlated to The Stars Group’s reported net gaming revenue as some or all of the deposits eventually become revenue. The Stars Group believes that the increase in Net Deposits was primarily driven by the implementation of the Stars Rewards loyalty program and continued focus on high-value customers (primarily recreational players), positive impacts from foreign exchange fluctuations and continued development of the casino and sportsbook product offerings.
Customer Registrations – Customer Registrations increased by 2.3 million during the quarter.
CrownBet and William Hill Australia – On February 27, 2018, The Stars Group acquired a 62% equity interest in CrownBet Holdings Pty Limited, an Australian-based online sportsbook, from Crown Resorts Limited and then on April 24, 2018, The Stars Group increased its equity interest in CrownBet to 80%, and CrownBet completed the acquisition of William Hill Australia Holdings Pty Ltd. The aggregate purchase price for these transactions was $435 million (inclusive of $117.7 million to acquire the 62% equity interest in CrownBet), which was paid in a combination of cash and the issuance of approximately 3.1 million newly-issued common shares of The Stars Group.
Sky Betting & Gaming – On April 21, 2018, The Stars Group announced that it had entered into an agreement to acquire Sky Betting & Gaming, one of the United Kingdom’s leading online sportsbooks and gaming providers. The aggregate purchase price was $4.7 billion, of which $3.6 billion will be payable in cash and the remainder will be payable through the issuance of approximately 37.9 million newly-issued common shares. Completion of the transaction is conditional upon obtaining customary approvals from the Toronto Stock Exchange, Nasdaq, and certain gaming and other regulatory authorities, in addition to the completion of other customary closing conditions. To finance the cash portion of the purchase price for the transaction, The Stars Group obtained fully committed debt financing of $6.9 billion, including $5.1 billion of first lien term loans, $1.4 billion of senior unsecured notes and a $400 million revolving credit facility. The funded proceeds of $6.5 billion will be used for the cash portion of the transaction consideration, refinancing The Stars Group’s existing first lien term loans and repaying Sky Betting & Gaming’s outstanding debt.
2018 Full Year Guidance
Full Year Guidance – The Stars Group intends to provide revised 2018 full year financial guidance to include its acquisitions of Crown Bet, William Hill Australia and Sky Betting & Gaming when it releases its financial results for the second quarter in August. The Stars Group continues to be satisfied with the performance of its existing operations and as of the date hereof continues to expect the following 2018 full year financial guidance ranges:
Revenues of between $1,390 and $1,470 million;
Adjusted EBITDA of between $625 and $650 million;
Adjusted Net Earnings of between $487 and $512 million; and
Adjusted Net Earnings per Diluted Share of between $2.33 and $2.47.
These unaudited expected results reflect The Stars Group’s existing business, excluding CrownBet, William Hill Australia and Sky Betting & Gaming. These expectations also reflect management’s view of current and future market and business conditions, including assumptions of (i) potential negative operating conditions in Russia expected to begin in late-May 2018, (ii) no other material regulatory events, and (iii) no material foreign currency exchange rate fluctuations, particularly against the Euro. Such guidance is also based on a Euro to U.S. dollar exchange rate of 1.20 to 1.00, Diluted Shares of between 207,000,000 and 209,000,000 for the high and low ends of the Adjusted Net Earnings per Diluted Share range, respectively, and certain accounting assumptions.
Financial Statements, Management’s Discussion and Analysis and Additional Information
The Stars Group’s unaudited interim condensed consolidated financial statements for the three months ended March 31, 2018 (the “Q1 2018 Financial Statements”), management’s discussion and analysis thereon (the “Q1 2018 MD&A”), as well as additional information relating to The Stars Group and its business, can be found on SEDAR at http://www.sedar.com, Edgar at http://www.sec.gov and The Stars Group’s website at http://www.starsgroup.com.
In addition to press releases, securities filings and public conference calls and webcasts, The Stars Group intends to use its investor relations page on its website as a means of disclosing material information to its investors and others and for complying with its disclosure obligations under applicable securities laws. Accordingly, investors and others should monitor the website in addition to following The Stars Group’s press releases, securities filings and public conference calls and webcasts. This list may be updated from time to time.
About The Stars Group
The Stars Group is a leading provider of technology-based product offerings in the global gaming and interactive entertainment industries. The Stars Group directly or indirectly, including through its Stars Interactive Group division, owns gaming and related consumer businesses and brands, such as PokerStars, PokerStars Casino, BetStars, Full Tilt, and the PokerStars Players No Limit Hold’em Championship, European Poker Tour, PokerStars Caribbean Adventure, Latin American Poker Tour, Asia Pacific Poker Tour, PokerStars Festival and PokerStars MEGASTACK live poker tour and event brands. These brands together have millions of registered customers globally and collectively form the largest poker business in the world, comprising online poker games and tournaments, sponsored live poker competitions, marketing arrangements for branded poker rooms in popular casinos in major cities around the world, and poker programming and content created for television and online audiences. The Stars Group, through certain of these and other brands, also offers non-poker gaming product offerings, including casino and sportsbook. The Stars Group, through certain of its subsidiaries, is licensed or approved to offer, or offers under third party licenses or approvals, its product offerings in various jurisdictions throughout the world, including in Europe, both within and outside of the European Union, Australia, the Americas and elsewhere. In particular, as of the date hereof, The Stars Group holdings gaming licenses or related operating approvals in 18 jurisdictions, and PokerStars, the world’s most licensed online gaming brand, holds gaming licenses or related operating approvals in 17 of those jurisdictions.
PointsBet Appoints Daniel Lucas as Group Chief Technology Officer
PointsBet Holdings Limited announced the appointment of Daniel Lucas as Group Chief Technology Officer (CTO), effective 1 September 2024. Daniel will replace current Group CTO, US-based Jerry Bowskill, who will step down following completion of the sale of the US Business to Fanatics Betting and Gaming.
Daniel is serving out his current role as Global Director of Trading Technology at Flutter Entertainment Plc, leading the global trading technology operation and service across the Flutter Group (including Fanduel, Sportsbet, Paddypower, Betfair, Pokerstars and Skybet). Currently based in the UK, Daniel will relocate to Melbourne to take up his new role.
Prior to his global role at Flutter, Daniel held several senior positions at Sportsbet based in Melbourne, including Head of Data Solutions and Head of Trading Technology, which followed roles in the investment banking sector in London.
Daniel holds a Bachelor of Science (First Class Honours) and a Master of Business Systems from Monash University.
Sam Swanell, Chief Executive Officer of the PointsBet Group, said: “We are very pleased that a Senior Executive of Dan’s quality and experience is joining PointsBet. Dan’s understanding of complex platform and trading operations, in particular algorithmic trading, risk and advanced analytics together with his strong people leadership skills, are valuable assets to PointsBet’s Australian and Canadian operations, as we continue to invest in our market leading live betting and multi capability through Odds Factory.”
“I am super excited about the opportunity to join a technology and product led company like PointsBet. They continue to invest in their platforms and there are exciting growth opportunities ahead,” Daniel Lucas said.
“Jerry Bowskill has made an outstanding contribution to PointsBet over his tenure leading our global technology organisation. He has been an integral part of the group executive leadership team, and his experience and expertise has proven invaluable as we have planned for and executed the transition of our United States business to Fanatics. I would like to thank Jerry for all he has done for PointsBet and wish him all the best in his future endeavours,” Sam Swanell said.
Supercars Partners with Dabble
Supercars has entered into a partnership with Dabble, an Australian betting operator with a social-first sports betting app. Dabble will become the Official and Exclusive Wagering Partner of the Repco Supercars Championship.
The new partnership solidifies Dabble’s commitment to the sports betting landscape, offering a unique platform that combines the thrill of sports wagering with social interaction.
Jamie Black, General Manager of Commercial at Supercars, said: “We are thrilled to welcome Dabble to the Supercars family as our Official and Exclusive Sports Wagering Partner.
“Dabble’s innovative approach to sports betting aligns perfectly with our vision of engaging fans and creating memorable experiences.
“Together, we look forward to delivering exciting content and enhancing the fan experience across what promises to be a thrilling 2024 championship.”
Dabble allows users to view and copy bets made by friends, ex-athletes and other users, and the “Banter” chat feature allows the community to engage on a particular sport or event in real-time.
Tom Rundle, CEO of Dabble, said: “Joining forces with Supercars represents an incredible opportunity for Dabble to connect with a passionate fanbase and further establish ourselves as a leading player in the sports wagering industry.
“We’re excited to introduce Supercars fans to the Dabble community and provide them with a unique and immersive betting experience.
“Along with industry-leading social capabilities, Dabble prides itself on its fast withdrawals feature and being one of the fastest apps on the sports betting market. It is only natural for us to partner with the fastest sport in Australia, making the perfect match for the adrenaline-fueled world of Supercars.”
The Supercars and Dabble partnership has already kicked off, with markets now open for the Thrifty Bathurst 500.
Star Entertainment Announces Jobs Guarantee & Cashless Gaming Trial Agreements in NSW
The Star Entertainment Group Limited (The Star) announced that it has entered into binding documentation to give effect to the previously announced aspects of the arrangements agreed in principle with the NSW Treasurer, The Honourable Daniel Mookhey MLC, in connection with the revised duty arrangements in NSW, namely a jobs commitment and the cashless and carded play trial in respect of The Star Sydney casino.
NSW Jobs Guarantee
Consistent with the in-principle agreement first announced on 11 August 2023, The Star has entered into a Jobs Guarantee Agreement with the State of NSW and the United Workers Union whereby The Star has agreed to maintain a minimum headcount, and certain ratios of full-time, part-time and casual employees, in respect of The Star Sydney casino until 30 June 2030. The jobs commitment is subject to certain permitted adjustments in certain circumstances (including for force majeure and material adverse change events) following consultation with the NSW government and the United Workers Union.
Following amendments to the Casino Control Act 1992 (NSW) in December 2023, certain penalties can apply to The Star for failing to comply with the jobs commitment. A copy of the Jobs Guarantee Agreement must be tabled in NSW Parliament within 10 business days following entry into the agreement.
Cashless and Carded Play Trial
The Star has also entered into documentation to give effect to a formal trial of cashless and carded play at The Star Sydney casino.
The trial is a precursor to reforms to the NSW regulatory framework which will see cashless gaming and carded play introduced to NSW casinos from August 2024.
Subject to the receipt of final regulatory approvals, the trial will apply to 51 poker machines and 8 table games within the “Sovereign Room” at The Star Sydney casino until the regulatory framework comes into effect.
The Star’s Group CEO and Managing Director, Robbie Cooke, said: “The Star appreciates the constructive engagement with the current NSW Government that has led to finalisation of an agreement that provides employment certainty for our dedicated and hard-working team members in Sydney. As we continue to focus on earning back the trust of the community and implementing the reforms required to restore The Star to suitability, we are also committed to the continuation of our role as a valuable contributor to the NSW economy.”
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