European Gaming News

LeoVegas AB: First quarter: 1 January-31 March 2018

Published

7 years ago

May 2, 2018

LeoVegas AB: First quarter: 1 January-31 March 2018 Reading Time: 8 minutes

” Yet another record quarter with greater transparency, acquisitions performing as planned, and new and clear financial targets” – Gustaf Hagman, CEO and co-founder

First quarter: 1 January-31 March 2018

Revenue increased by 76% to EUR 77.4 m (43.9).
Organic growth was 40%.
Organic growth excluding markets closed in 2017 was 61%.
EBITDA was EUR 9.5 m (6.0), corresponding to an EBITDA margin of 12.3% (13.7%).
Adjusted EBITDA totalled EUR 9.0 m (6.2), corresponding to an adjusted EBITDA margin of 11.6% (14.0%).
The number of depositing customers was 302,014 (172,338), an increase of 75%. The number of new depositing customers was 146,063 (75,017), an increase of 95%.
The number of returning depositing customers was 155,951 (97,321), an increase of 60%.
Gross Gaming Revenue from sports betting and live casino were 6.5% and 15.3%, respectively, of total GGR.
Net Gaming Revenue from Royal Panda and Rocket X accounted for 14.3% and 5.2%, respectively, of total NGR.
NGR from regulated markets was 35.4% (18.3%) of total.
Operating profit (EBIT) was EUR 3.8 m (5.5).
Adjusted EBIT was EUR 7.9 m (5.7), corresponding to an adjusted EBIT margin of 10.2% (12.9%).
Earnings per share before and after dilution were EUR 0.02 (0.05).
Adjusted earnings per share were EUR 0.07 (0.05).

Events during the quarter

LeoVegas acquired 51% of the shares in the company behind the streaming network CasinoGrounds.com for SEK 30 m (EUR 3.1 m), with a potential, maximum earn-out payment of SEK 15 m (EUR 1.5 m). LeoVegas completed the acquisition on 1 January 2018. See page 11 for further information.
LeoVegas acquired assets for GBP 65 m (EUR 73.6 m) from Intellectual Property & Software Limited along with related assets from another two companies that operate several brands including 21.co.uk, slotboss.com, Bet UK and UK Casino, which are now jointly referred to as “Rocket X”. LeoVegas completed the acquisition on 1 March 2018. See page 10 for further information.
LeoVegas acquired World of Sportsbetting for EUR 2.6 m, which holds a sports betting licence and a casino licence in the German state of Schleswig-Holstein, and an approved application for a sports betting licence through the state of Hessen.
LeoVegas carried out a change in listing to Nasdaq Stockholm on 5 February.
LeoVegas is updating the amortisation rate for intangible assets related to the acquisition of customer databases in Royal Panda. The rate of amortisation of customer relationships in Royal Panda is being changed to harmonise it with the Group’s other acquisitions, and to better represent the usage period.
LeoVegas has made a provision of EUR 0.5 m for fines from the UK Gambling Commission (UKGC) for alleged marketing violations in 2016. See page 9 for further information.

Events after the end of the quarter

New financial targets for the full year 2020 were communicated on 19 April. The new targets are to reach at least EUR 600 m in revenue and EBITDA of at least EUR 100 m. See page 9 for further information.
Net Gaming Revenue (NGR) in April amounted to EUR 29.3 m (16.5), representing growth of 77%.
In Norway it has been learned that new legislation is expected to pass during the year which aims to prevent Norwegian residents from accessing foreign gaming sites. Details on the proposed legislation have not yet emerged. Revenue from Norway accounted for 4.6% of the Group’s total during March.
LeoVegas published its annual report for 2018 at www.leovegasgroup.com.

Comment from Gustaf Hagman – Group CEO and co-founder

High pace into the new year

“We got off to a flying start to the year with the acquisition of Rocket X, which has a strong footprint in the UK market with a local multibrand strategy and the market’s most effective customer acquisition model. We followed this up with the acquisition of gambling licences in Germany, which will enable better local payment solutions and allow us to market sports betting throughout Germany.

In the autumn of 2017 we set the goal of changing our listing to Nasdaq’s Main Market, and in early February we could once again ring the stock exchange’s bell. The first day for trading on Nasdaq Stockholm was 5 February 2018, where we immediately moved into the Large Cap list.

We are continuing our hard work and are accelerating into 2018 on the momentum we built up last year.”

First quarter

Our revenue during the first quarter amounted to EUR 77.4 m (43.9), representing growth of 76%. Our organic growth was 40%. Organic growth excluding markets that we closed in 2017 was 61%. EBITDA adjusted for items affecting comparability was EUR 9.0 m (6.2), corresponding to an adjusted EBITDA margin of 11.6% (14.0%).

KPIs and transparency

Transparency is important for LeoVegas. We have therefore decided to disclose additional Key Performance Indicators as a way to increase transparency and understanding for us as a group.

We have opted now for the first time to break down our revenue for the Sports book and Live Casino. Sport accounts for 6.5% of Gross Gaming Revenue (GGR), and Live Casino for 15.3%. We show these KPIs based on GGR due to calculations of bonuses, but the figure is basically identical to Net Gaming Revenue (NGR).

We have also opted to separately report on LeoVentures. LeoVentures today has an adjusted EBITDA of EUR -0.3 m, which is due to the fact that several of its companies are in the investment phase.

LeoSafePlay

Responsible gaming is one of LeoVegas’ foundations since the start of 2011. Over the past year, LeoVegas has made a push in Responsible Gaming, which has resulted in more staff and improved tools based, among other things, on machine learning combined with the launch of the site www.LeoSafePlay.com. LeoSafePlay is a portal dedicated to identifying and managing unhealthy gaming behavior.

LeoSafePlay offers self-assessment tests, information for families and a free tool (GamBan) to block one’s own access to all gaming sites.

With upcoming regulations in Europe, including in Sweden, there are a number of regulations on responsible gaming, and we at LeoVegas embrace these as an important part of sustainable gaming, and also as a long-term sustainable business. The fact that gaming companies take responsibility and work with responsible gaming is good for the industry, and LeoVegas has a stated ambition and strategy to be at the forefront. A proof of this is the launch of a new self-exclusion function in the UK, where customers now automatically will be excluded from all our brands when they exclude from one of them. Later in the year we will be able to customize offers and bonuses based on a customer’s risk level.

Acquisitions

Rocket X

The integration work is moving forward very well. We have quickly been able to work together on a number of matters and are identifying synergies in our knowledge-sharing and ways of working.

In connection with the acquisition’s closing, Rocket X was put on the same gambling licence as LeoVegas. This was an extensive process, and already there we saw proof that we work very well and effectively together between the teams. I think this is why it feels like Rocket X has been part of the Group for a longer time than just a few months.

During the quarter Rocket X contributed revenue for only one month. For the first quarter this entailed EUR 4.0 m in revenue and EBITDA of EUR 0.9 m, for an EBITDA margin of 22.5%.

Royal Panda

The work with Royal Panda is also progressing well and is on track. The period for payment of the earn-out expires in December 2018, and we see a great willingness for cooperation and interaction between the various teams.

During the first quarter Royal Panda was fully consolidated and contributed EUR 10.9 m in revenue, with an EBITDA margin of 7.8%. The low margin for Royal Panda is attributable to substantial marketing costs in February and March, which drove large gains in the number of new depositing customers and also NGR.

Company culture and kickoff

LeoVegas’ company culture is a major reason why we today are Sweden’s leading GameTech company. It is therefore imperative to promote this culture within the Group. We are sensitive to the fact that acquisitions require resources, time and commitment. It is for this reason that we invested further in our work with the company culture and gathered our entire Group of more than 700 people to a kickoff event. It was extremely successful and exceeded our high expectations, and we are already seeing positive effects from the event.

Markets

Sweden

Sweden had yet another record quarter for new and returning customers. This shows that we have a strong and loyal customer base in one of our core markets. What we can see, however, is that the value per customer has gone down slightly, which is explained in part by a higher share of sport customers and an unfavourable gaming margin for casino.

Norway

Norway has historically and periodically blocked payment solutions that are linked to gaming sites. Now there is also a proposal to introduce additional barriers to using game sites. There are still no details when and how this will be introduced. Norway currently has no local licensing system, and instead of banning, I hope Norway will move towards a local regulation similar to the developments we see in Sweden. The Group’s revenues from Norway were 4.6% in March. Regardless of the outcome, development in Norway does not affect LeoVegas’ financial targets. LeoVegas has long been very clear in welcoming gaming market regulation and the Group’s strategy is to expand in regulated markets and markets that are developing against regulation.

Italy

It was roughly one year ago that we acquired Winga.it and its gambling licence for the Italian market. During the autumn of last year we switched out the Winga brand to LeoVegas. The next step in our expansion for LeoVegas is to migrate the technical platform in Italy to our proprietary platform, Rhino. This will take place during the second quarter, at which time we will be able to fully offer our award-winning mobile gaming experience. This, combined with a strengthening of our commercial team in Milan, gives us favourable conditions to invest on a large scale in Italy.

Canada

Canada is a market of great interest and is showing strong growth for LeoVegas. During the quarter we began using our ambassador, hockey legend Mats Sundin, in our market communication in Canada.

Following our recent acquisitions, the UK is our largest market measured by revenue and accounted for 25.6% of NGR during the first quarter. The effectiveness of our marketing in the UK was also the best ever during the quarter.

LeoVegas has high ambitions for compliance with laws and regulations and we have continuously improved our procedures and processes. We have had discussions with the UK Gambling Commission, UKGC, on suspected cases of breaches of the British gaming rules. A clear majority of cases are attributable to affiliate marketing. Our assessment is that the UKGC will issue fines for these violations and we have made a provision for the full amount.

We have also improved our routines, which has led us to close off non-compliant affiliates. This means that I feel great assurance in the work we do, both in the short and long term, but also in the face of continued expansion into new regulated markets. It’s good that UKGC puts increased demands on us in the gaming industry. It is an advantage for serious actors who both have the will and ambition to work in a regulated market.

New financial targets for 2020

In 2015 we set a target to reach EUR 300 m in revenue by 2018. Our new revenue target represents a doubling to EUR 600 m by 2020, not including any major acquisitions. Parallel with this we are aiming for EBITDA of at least EUR 100 m, which implies adjusted earnings per share of at least SEK 8 by 2020.

The new targets confirm our continued focus on strong growth combined with a sound view of profitability. The targets create transparency about where we are headed, both internally and externally.

LeoVegas’ long-term dividend policy remains intact, which is to distribute at least 50% of profit, and the proposal to the Annual General Meeting on 29 May is to pay a dividend of SEK 1.20 per share.

Comments on the second quarter

April has begun strong with Net Gaming Revenue (NGR) of 29.3 MEUR (16.5), corresponding to a growth rate of 77 percent. Marketing in relation to revenue for the Group in the second quarter of 2018 will be higher than the average for 2017, which was 42.3%. Due to the marketing opportunities surrounding the World Cup, the total amount of marketing is more difficult than usual to anticipate in advance. LeoVegas will act opportunistically with marketing on the opportunities we see.

I am looking forward to the second quarter, in which Rocket X will be included for the entire quarter and an exciting summer of sport will get under way with the World Cup in June followed by the Swedish Open tennis tournament in Båstad, for which we are now a Principal Partner.

This information is information that LeoVegas AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation 596/2014. The information was submitted for publication, through the agency of the contact person set out below, at 2nd of May 2018 CET on 08:00.

Source: European Gaming News

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Prague Gaming & TECH Summit 2025 (25-26 March)

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European Gaming News

Could the Gambling Commission ban wagering requirements?

Published

2 years ago

September 13, 2022

George Miller

Wagering requirements; whether you love them or hate them, with the Gambling Review well underway, there’s never been a better time to debate if they still have a place in modern gambling and whether the upcoming review will ban them once and for all. But first, let’s look at their development and why they are a contentious issue in the industry.

What are wagering requirements?

Wagering requirements are a common term and condition attached to a bonus that prevents players from taking a promotion and withdrawing it immediately. They are applied differently by each gambling brand. Some, like PlayOJO, Paddy Power, MrQ and Betfair, have revolutionised the casino scene by offering no wagering bonuses. In contrast, others take the predatory route and list bonuses with up to 100x requirements (the average is around 30x).

The requirement is the amount a player must wager at the casino before any winnings made with a bonus are valid for withdrawal. In the case of a £100 bonus, a 30x requirement would mean a player must wager a total of 100×30=£3,000 before they could withdraw any winnings. Most players would easily decimate their winnings before fulfilling the condition and, as most bonuses expire within 7-14 days, may well be forced to play for periods, or at times, they otherwise might not.

Why do wagering requirements exist?

In the early days of online casinos, bonus hunting among players became widely popular. It led to forums where players shared information on where and how to profit from the best welcome bonuses, earning money from the available offers available and never playing at a site again.

As casinos began to notice players taking bonuses and withdrawing without using them fairly, they combatted the practice with wagering requirements and other terms, such as the ability to withdraw a bonus and any winnings made if an account was suspect of this activity.

However, with no limits or official licensing rules to regulate wagering requirements at that time, things soon got out of hand as operators set high limits that were and still are unattainable to most players. Additionally, in many cases, the terms and conditions were not clearly displayed or explained, leading to the confiscation of bonuses and winnings without players understanding how or why they’d fallen foul of the casino’s rules.

Wagering requirements under fire with UKGC

By 2014, and following a flood of player complaints, the Gambling Commission weighed in, creating the Gambling (Licensing and Advertising) Act which prescribed operators were to advertise their bonus terms and conditions clearly and explain them to players. This led to some reducing their requirements to more feasible levels. However, not all operators followed suit, hence why we’re still discussing wagering requirements today.

More recently, in February 2022, the UKGC set its sights on reforming wagering requirements again, issuing new guidance regarding fair and transparent terms and practices, which acknowledged that wagering requirements could lead to excessive play, not in line with social responsibility rules for operators.

The new guidance rules cited that licensees used potentially unfair terms, with examples including:

“terms that allow licensees to confiscate customers’ un-staked deposits
terms regarding treatment of customers’ funds where a licensee believes there has been illegal, irregular or fraudulent play
promotions for online games that have terms entitling a licensee to void real money winnings if a customer inadvertently breaks staking rules
terms that unfairly permit licensees to reduce potential winnings on open bets.”

It also stated that the Commission was aware of:

“terms and conditions that are difficult to understand
welcome bonus offers and wagering requirements which may encourage excessive play.”

While the guidance did not contain rules for abolishing or limiting wagering requirements, they instructed licensees to review their terms and conditions to ensure they fit consumer protection laws and that; “The LCCP requires rewards and bonuses to be constructed in a way that is socially responsible. Although it is common practice to attach terms and conditions to bonus offers, the Commission does not expect conditions, such as wagering requirements, to encourage excessive play.”

Will wagering requirements be banned?

With the Gambling Review white paper currently overdue and keenly expected by all industry stakeholders, many wonder if it will cover wagering requirements or, more specifically, exclude them from casino practice. The Gambling Review aims to update the 2005 Gambling Act, fit for the modern age, and wagering requirements would undoubtedly slot into the remit of what’s being discussed, which includes greater player protections and affordability checks.

While it’s clear that some big-name operators and affiliates like No Wagering are pioneering the way in bringing zero wagering bonuses to players, many sites have not followed suit. This is despite clear evidence that players favour fairer bonuses (PlayOJO is one of 39 brands operated by the same parent company, it is the only one with zero requirements, and it’s the most successful of all, according to the company).

Realistically, we’re not sure that the new gambling regulations will ban wagering requirements completely (as we covered earlier, they do exist for a reason), but it certainly wouldn’t be beyond the imagination for there to be a maximum cap applied in the view that excessive requirements equate to excessive play.

What’s next for operators and bonuses if wagering requirements are banned?

Bonuses are one of the most important factors for players in picking between casino sites, and they make players feel lucky to score something for free straight off the bat (even if the wagering requirements mean this is not really the case).

If wagering requirements are banned, operators unwilling to offer bonuses without wagering requirements will have to return to the drawing board and reimagine rewards, especially welcome offers. Alternatively, they could begin competing based on other USPs, such as focusing more on the casino product to pull in the punters by offering unique games, making space for indie developers, having instant withdrawals, or gamified loyalty benefits and better loyalty clubs.

Moreover, it would present a fantastic opportunity for remote operators to move away from the tired system of matched deposit bonuses towards more exciting and fresher ideas like promo wheel spins, mystery gifts on first deposits, prize draws and so on. With brands including PlayOJO, Paddy Power, MrQ and Betfair already doing this, operators do not lack a blueprint to success, just the gumption to embrace a new model.

Bulgaria

Betway Bulgaria officially launches, offers live and bet-builder options

Published

3 years ago

March 22, 2022

George Miller

Another company has officially launched its activities in the growing niche of online betting in Bulgaria. But here we are not just talking about another operator licensed by national institutions, but about a leading brand worldwide. Betway is one of the largest bookmakers in Europe and globally, and the fact that it already offers its services in Bulgaria speaks positively about the development of the gambling business in the country.

Indications of an increase in the size of the industry appeared last year, when several operators received a permit to operate under Bulgarian jurisdiction. It is unlikely that this process will end with the official launch of betway bulgaria, rather the brand entering the country can be perceived by international operators as a positive assessment of the market in Bulgaria. What can we find at Betway besides the obvious – increased competition and of course more choice for consumers?

What do we find in the sports section?

Sports betting – this is the leading sector of the company, which started operations in 2006. The brand is associated with a number of teams in Europe such as Tottenham, Atletico Madrid, Leicester, Alaves, Belenenses, Werder, etc. Of course, the top championships in Europe are present in the latest betting platform, but that’s not all. Betway offers the opportunity to make predictions at less popular UEFA championships. The fans of the Bulgarian championship have options too. All matches of the First League are present in the bookmaker’s menu, and are offered with dozens of choices for each of them.

Real-time bets and long-term combinations

Live bets are a big thrill for many players. This option is present at Betway, and this also applies to the mobile version, of course. It is not difficult to detect current events – they come first when loading the platform. And with them the bookmaker really comes up with interesting offers, some of which are rare on the Bulgarian market. The outcome of the bets become clear in literally seconds if the next goal market or one of the performance options is selected.

In addition, the company accepts predictions with a much longer horizon. It is now standard to bet on who will be the champion in England, Spain, Italy or Germany. However, there are also specific markets and selections for certain teams – will Barcelona take the trophy this season, will Liverpool reach the final in at least one of the tournaments in which it participates, etc. And if users don’t find what they’re looking for in these offers, they can always turn to the betting menu. The bet-builder is still limited to one match, from which we can choose two or more selections until the desired odds are formed. This is the most appropriate way to optimize the bet according to personal preferences and therefore it is increasingly preferred by the players.

Betway’s first steps on the Bulgarian market are impressive. And this is just the beginning, we can expect even more in the near future.

European Gaming News

EveryMatrix inks RGS Matrix agreement with Wild Boars

Published

4 years ago

August 25, 2020

Zoltan "Hawkie" Tundik

EveryMatrix announces the second RGS Matrix partnership with Wild Boars, newly launched gaming studio that aims to bring creative storytelling and a fresh feel to the gaming industry.

Launched in 2019 as EveryMatrix sixth standalone solution, RGS Matrix enables gaming development teams to distribute, manage, and report upon a proprietary game product portfolio.

This ‘out of the box’ remote gaming server was built on an open architecture and caters for outstanding player experience, consistent deployment, and quicker content integration.

Mathias Larsson, Managing Director of RGS Matrix, says: “This is our second RGS Matrix agreement and it brings me a lot of joy to know that our solution starts gaining momentum in the market. Our remote gaming server aims to help the new generation of game builders by providing all the means to create, design, distribute and manage games.

“The team of Wild Boars is experienced, skilled and highly creative. I am looking forward to seeing their games live and appreciated by players in many countries.”

Oleksandr Yermolaiev, Managing Director of Wild Boars, comments: “We truly believe that choosing a right partner is crucial for success. For us, RGS Matrix and its remarkable team is just that partner. We are excited to use EveryMatrix solution, focus on what we do best and bring our innovative games to a wide range of operators, territories and players. RGS Matrix is dashing ahead and we are happy to join the ride.”

RGS Matrix powers slots and table games, and is currently certified for Malta, Latvia, Lithuania, Estonia, Sweden, Spain, Denmark, Romania, and Colombia, with many jurisdictions to come in the upcoming years.