Gaming Innovation Group Inc. (GiG) signs a Share Purchase Agreement (SPA) with Betsson Group (Betsson) for the divestment of GiG’s B2C assets which include the operator brands Rizk, Guts, Kaboo and Thrills. Betsson will, through this agreement, become a long term partner of GiG, generating revenues to GiG’s Platform Services. On the day of closing, Betsson will pay €31 million, consisting of a €22.3 million cash payment for the acquisition, plus a prepaid platform fee of €8.7 million. GiG will use the proceeds to repay the Company’s SEK300 million 2017 – 2020 bond.
Betsson commits to keep the brands operational on GiG’s platform for a minimum of 30 months. For the first 24 months, Betsson will pay a premium platform fee based on NGR generated. Based on the expected platform fees, the total value of the transaction is estimated at approximately €50 million.
Betsson, listed at Nasdaq Stockholm, is one of the most dominant European companies in online gambling with a long and strong track record of brand building, both organically and via acquisitions. It offers online casino, proprietary sportsbook and other online games in a multi-brand strategy via gaming licences in twelve countries in Europe and Central Asia.
The sale of the B2C vertical is a result of GiG’s strategic review, initiated in November 2019, leading to an evolved strategic direction to reduce complexity and improve efficiency. By divesting the B2C vertical, GiG will free up resources, enabling full dedication on driving and growing its B2B business, securing stable and sustainable earnings and profit margins. GiG sees a large and sustainable addressable market for its platform business as the regulation of the iGaming industry continues and is well positioned with the omni-channel platform offering to capitalise on the continued digital transformation of the worldwide gambling market.
GiG has, as part of the strategic review, taken a decision to make its technical platform sportsbook agnostic, and partner with other sport book providers to offer the best solutions to its customers. Betsson’s sportsbook solution is intended to be integrated on GiG’s platform-offering. Both GiG and Betsson will gain strategic advantage in having the possibility to sell their respective B2B solutions in an environment without conflict of their own B2C brands.
In order to keep the strategic position for its own proprietary sportsbook, GiG will seek joint ventures or other constellations with partners to release the true asset value of the sportsbook and to secure external long term funding. The ambition is to gradually grow with existing and new long term partners, including the fast growing US market. GiG is one of the few B2B providers present with omni-channel online gambling services in multi-state jurisdictions in the US.
Pontus Lindwall, Chief Executive Officer of Betsson AB comments: “We believe this deal offers a good opportunity for Betsson to consolidate, create synergies and apply our core B2C skills and marketing insights to scale these assets to their true potential. The agreement with GiG further strengthens and expands Betsson’s outreach and growth potential for its proprietary sportsbook and payments platforms in the B2B market.
Betsson has significantly invested in the development of its sportsbook and now delivers a powerful offering. A key strategy is to grow our sportsbook with B2B customers and I am excited to collaborate with GiG as a distribution channel. We share the same passion for sports betting and providing a player environment which is unique, entertaining and safe.”
Richard Brown, Chief Executive Officer of GiG says: “I am very excited about this transaction as it provides multiple upsides to GiG. While putting the Company in a financially sustainable position, it gives us the ability to focus on where we see real long term shareholder value. This transaction serves as a strategic focusing of the Company’s efforts towards the B2B segment. Offering both B2C and B2B services had synergies in the past, however, the current conflicting priorities of the two business areas, and increased complexity in the market, have lessened the potential offering on both fronts and our ability to sign new customers.
I am delighted to retain our brands on the platform and in the process, adding Betsson as a partner as we share the same ambition of responsibility for all stakeholders, safe play for the end user, and an entertaining user experience. I am certain that together with their speciality, focus and strong track record on driving B2C growth, it will be a fruitful partnership. Additionally, the planned integration of Betsson’s sportsbook into our platform offering, not only provides cost saving synergies, it also allows us to offer one of the most well-renowned European sportsbooks to our current and future B2B partners. We are excited to support Betsson’s growth of the brands we have built and now look forward to GiG next chapter as a specialist iGaming B2B provider“.
GiG’s full year 2019 revenues were €123.0 million (€29.4m in Q4 2019) with an EBITDA of €14.1 million (€4.8m Q4 2019), assuming B2C as continued operations. The isolated B2C full year 2019 revenues were €79.0 million (€19.0m in Q4 2019) with a full year 2019 EBITDA of €8.1 million (€4.1m in Q4 2019). The divestment of the B2C vertical will lead to a write-down of the remaining book value of the B2C assets and related goodwill, an impairment will be recognised in the fourth quarter 2019.
With the divestment of the B2C vertical, full year 2020 revenues are expected in the range of €70 – 75 million, with an EBITDA expected in the range of €14 – 17 million, including, for comparison, B2C as continued operations until completion of the transaction.
Expected completion of the transaction is mid April 2020, giving time for the compulsory regulatory approvals from merger control and gaming authorities. GiG is in dialogue with its largest bondholders and will seek consent from its bondholders to extend the repayment of the 2017 – 2020 bond from the maturity date in March 2020 until 22 April 2020. Written resolutions for the two bonds will commence shortly, and GiG has received voting undertakings from investors representing around 53% of the outstanding volume in the 2017 – 2020 bond, and around 46% of the outstanding volume in the 2019 – 2022 bond. As compensation for the extension of repayment date in the 2017- 2020 bond, bondholders in said bond will receive a consent fee of 0.35% of the nominal amount.
GiG invites all interested parties to a press conference with Q&A today, 14 February, at 08:30 CET. Questions can be addressed both in the call and via the web. Please find dial-in details and weblink below.
Weblink (an on-demand version will be available approx. 30 minutes after the call using the same link):
Participants dial in numbers:
SE: +46 856642651
NO: +47 23500243
UK: +44 3333000804
DK: +45 35445577
IT: +39 0236013821
Participants Pin code: 84408716#
Stella EOC acts as financial adviser to GiG in connection with the transaction.
Booming Games’ Art and Dev Team Begins Work on Ronaldinho Games
Booming Games has announced a “landmark partnership” for the company, with 2002 World Cup winner, Ronaldinho. As part of this deal, gaming content from Booming Games will feature Ronaldinho, with the company set to launch a series of games, with the initial offering set for early next year.
“After announcing Booming Games’s collaboration with football icon Ronaldinho Gaúcho, our dedicated team is now diligently crafting premium slot content that encapsulates the essence of Ronaldinho’s illustrious career,” the Company said.
“As we embark on this transformative journey, our Art and Development Team works tirelessly to ensure a seamless fusion of Ronaldinho’s legacy with cutting-edge gaming innovation. We’re committed to delivering an unparalleled gaming experience that resonates with global audiences.
“Our marketing strategy is strategically amplifying the impact of this collaboration. We aim to leverage Ronaldinho’s worldwide influence through targeted campaigns across diverse channels to build anticipation and excitement leading up to the official game launch.
“This strategic convergence of sports and gaming positions Booming Games at the forefront of a cultural shift. Stay tuned for updates as we usher in a new era of gaming excellence with Ronaldinho Gaúcho.”
ANJ Publishes a Study to Evaluate the Illegal Online Gambling in France and Gain a Better Understanding of Consumer Practices
In order to combat illegal online gambling more effectively, the ANJ (Autorité Nationale des Jeux) has commissioned Pricewaterhouse Coopers (PwC) to carry out a study into what is available in France and consumer habits.
The study estimates that the gross gaming revenue (GGR) generated by illegal gambling is between €748 million and €1.5 billion, or between 5% and 11% of the overall gambling market. The scale and risks associated with illegal gambling justify even more vigorous action to combat it, in addition to that already being taken by the ANJ.
More specifically, the purpose of the study was:
- To measure, over the period from January to March 2023, via a quantitative analysis, the illegal online gambling available in France (illegal websites and mobile applications);
- To gain a better understanding of the consumption associated with this illegal offer, through a qualitative study carried out on a web panel of more than 11,000 people.
The illegal offer considered in the study is that which presents the following three characteristics:
- A gambling offer made to the public combining financial sacrifice, hope of winning and a share of chance ;
- A gambling offer accessible on French territory, via an internet connection giving a French IP (without using a VPN or a proxy);
- An absence of authorisation granted to the operator of the website or mobile application to offer its online gambling games.
In France, only the 18 operators licensed by the ANJ and FDJ legally offer online gambling.
Illegal gambling dominated by online casino games and slot machines and fuelled by the most vulnerable players
The gross gaming revenue (GGR) generated by illegal online gambling in France is estimated at between €748m and €1.5bn, or between 5% and 11% of the overall gambling market. As a reminder, the overall legal gambling market in France represented nearly €13bn in 2022, including €2.96bn for online gambling (sports and horse betting and poker).
Online casino games (such as roulette, dice games, craps, blackjack and baccarat) and slot machines are estimated to account for 50% of illegal online gambling Internet traffic.
The study, carried out between January and March 2023, identified 510 illegal websites generating traffic on French soil. Of these, 21 alone were estimated to generate 60% of illegal gambling traffic.
50% of the illegal gambling websites whose operators have been identified are owned by companies registered in Curaçao.
79% of the PBJ generated by the illegal online gambling market comes from high-risk gamblers.
Typical profile of illegal gamblers
Around 3 million people are estimated to have played illegal games at least once a month in 2023.
1 out of 2 illegal gamblers say they are unaware of the illegal nature of the offer they are playing on.
Illegal gamblers prefer online casino games other than slot machines (54%).
Illegal gamblers’ main reasons for playing on these unauthorised gambling sites are: the absence of wagering limits or identity checks, the expectation of higher winnings and the greater range of games on offer.
Illegal gamblers say that they first became aware of these sites through: online searches on search engines (19%), online advertising (18%) and social networks (18%).
35% of illegal gamers would use a VPN to play on these sites.
The need to diversify actions against illegal supply
Since March 2022, the ANJ has had the power to administratively block and delist illegal websites. Administrative blocking orders are now faster and less costly. Since then, the ANJ has issued 300 administrative blocking orders covering 1230 blocked URLs. In a year and a half, thanks to the introduction of this procedure, the ANJ has managed to block almost as many Urls as in 12 years of judicial blocking proceedings.
Although the law does not currently provide the ANJ with any other specific means of combating illegal offers, the ANJ intends to take a number of actions in the near future:
- Making targeted reports to the judicial authorities so that criminal proceedings can be brought against those registered in Curaçao or Cyprus who operate these sites, which currently operate with complete impunity and which the ANJ itself is unable to punish;
- Take action to warn publishers of illegal games software and companies that provide hosting solutions for illegal sites;
- Take action against payment service providers that enable financial flows between illegal operators and players;
- Deepen the exchange of information and best practices with its European counterparts within the framework of the GREF (Gambling Regulators’ European Forum);
- Increase public awareness of the dangers of illegal supply.
Reminder of the risks associated with illegal gambling
- Playing on an illegal site entails a number of risks for the player:
- Winnings are rarely paid out: no legal action is taken against the illegal operator;
- Minors are not protected: most of the time, there is no check on whether the player has reached the age of majority;
- There are no legal measures to protect players: self-limitation of bets, deposits and playing time, voluntary prohibition and self-exclusion from gambling, identification and support in the event of excessive or pathological gambling;
- Risks of identity theft and theft of bank details;
- Risks of fuelling money laundering and terrorist financing.
Aspire Global Facing Pair of Legal Battles
Prominent online gaming software and platform provider Aspire Global has been named as the defendant in a pair of court cases that could potentially result in it being ordered to pay compensation totaling up to €101 million ($109 million).
In the first complaint, Aspire Global is being sued in the United Kingdom by the founders of sports betting software, solutions and services provider BtoBet, Alessandro Fried and Igor Lestar, for €36 million ($39 million). This pair inked a deal in 2020 to sell their company to the Malta-based defendant in exchange for an upfront payment of some €20 million ($21.6 million) as well as an earn-out consideration tied to future earnings before tax.
However, Fried and Lestar through their Sousa Enterprises Limited and Eltsar Limited entities are alleging Aspire Global, which was last year acquired by NeoGames as part of a deal worth some €402.3 million ($423.5 million), violated the terms of this share purchase agreement by spending too little and not charging enough so as to deliberately decrease revenues and the subsequent earn-out sum.
The complex case with its many intricacies is not expected to go to trial before 2025 but could well result in Aspire Global being ordered to pay more than the €36 million headline figure. The financial implications are even more concerning as the defendant’s NeoGames parent is currently in the process of being acquired by Aristocrat in an arrangement valued at north of €1 billion.
In the United States and Aspire Global has also been separately named as the offender in an action brought by Ebet Incorporated, which is the operator of the Karamba, Griffon Casino, Hopa, Generation VIP, Scratch2Cash, Gogawi, Dansk 777 and Bet Target iGaming brands. This Nevada action is seeking some €65 million ($70 million) embracing compensatory damages, punitive fines and other financial penalties to be proven at trial and moreover names AG Communications and other affiliated entities as defendants.
Ebet Incorporated acquired specific business-to-consumer (B2C) assets and associated websites from Aspire Global in 2021 and simultaneously entered into a ‘white-label’ operator agreement embracing collaborative efforts on the future running of the purchased assets. The plaintiff is claiming the defendants breached these deals by manipulating their books to falsify and overstate active player data and exaggerate the health of the acquired properties.
As if this wasn’t bad enough, Aspire Global is furthermore being accused by Ebet Incorporated of violating the terms of the agreements by materially failing to maintain necessary operations in Germany, falsifying records and violating industry regulations. The allegations could potentially shape the future trajectories of these companies as they also run to reputational harm, fraud, breach of contract and other unnamed violations due to be proven during the course of the trial.
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