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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.
Source: European Gaming News
Could UK Government Policy Threaten Online Betting Promos?
Most observers would agree that the UK political class is pursuing a dialogue on the very nature of the gambling industry. The headline issue is, of course, fixed-odds betting terminals (FOBT’s), which have been the focus of a huge campaign. This week the UK Chancellor, Phillip Hammond, announced that the maximum stake in these gaming machines will be cut dramatically starting in October 2019. The move has cross-party support, and even the gambling industry has been vocally supportive, knowing that it at least makes sense from a PR perspective to seem concerned about the issue.
However, FOBT’s are not the only issue being discussed about the industry in the UK, with some changes perhaps having a big impact on punters. Advertising has come under scrutiny recently, with an almost saturated feel to the volume of sports betting adverts played on television during events like Premier League games. Sky, the UK’s dominant figure in sports broadcasting, has agreed to ‘regulate itself’ and limit the number of betting adverts beginning at the start of the 2019 Premier League season.
The move by Sky, while seemingly commendable as they will lose out on a chunk of the estimated £460 million gambling companies spend on advertising in the UK, is also indicative of the fact that the landscape is changing. The Labour Party, in particular, has signalled that they will try to put curbs on many aspects of the industry should they win the next election. For example, Labour deputy leader, Tom Watson, has called for a ban on funding accounts with credit cards and any advertising during live sports events.
However, one area that will be keenly watched by casino players and bettors is that of promotions. Incentives like free bets, price boosts, reload bonuses and the rest are the “carrot” that usually acts as a tipping point to encourage a player to join a new site, but they are certainly not the only reason why people bet. If a Government decides that promotions force people to bet, rather than supplement a decision that has already been made, could they too be in the firing line as the UK authorities try to further regulate the industry?
Free bets offers popular with punters
One would argue that would come to the detriment of the customer, rather than the industry. Consider how a punter might want to bet with William Hill on Real Madrid at 12/1 to win the Champions League, or the Boston Celtics at 7/1 with Bet365 to win the NBA Championships; they could check a list of free bet no deposit 2018 offers and potentially make their bet for free. Is it fair to take away those incentives from the customer?
There is a fine line between the idea of a promotion and the “bet now!” command that is being looked at by the Advertising Standards Agency, but it’s hard to know where that line will be drawn in the future. Punters would be irate to learn that they can’t, for example, go to a bookie and find an incentive like a price boost on the current odds of 12/1 for Chelsea to win the Premier League.
In the end though, money usually settles these matters. While the UK Government has made moves on FOBTs, it was slow-acting because bookmaker shops were keen to point out that those betting terminals equate to jobs. 2017/18 was estimated to have raised £2.8 billion in gaming tax receipts for the UK Exchequer. The Government will be loath to jeopardise that income. The point is: if the bookies can make their case, those promos will be here to stay.
Pragmatic Play roars to life with 5 lions
New release sees ancient spirits guarding amazing riches
15 June 2018: Pragmatic Play, the multi-award-winning games provider, has announced the launch of 5 Lions, a 3×5 video slot steeped in myth and legend.
Chinese iconography lights up the reels of 5 Lions, with turtles, phoenixes and dragons appearing covered in glittering gemstones.
The mystical lions of the game’s title act as the wild symbols, granting the player a random multiplier of up to 40x and springing to life when they appear in any winning line.
Melissa Summerfield, Chief Commercial Officer at Pragmatic Play, said: “Our suite of high quality games continues to go from strength to strength, and 5 Lions is a great addition that we are proud to introduce to our partners and players.
“The game’s mystical air is complemented by an engaging and visually satisfying array of bonus content, and it certainly has the potential to keep players coming back.”
Three gilded yin-yang symbols unlock 5 Lions unique free spins feature, expanding the three central reels to four symbols in height and boosting the potential ways to win from 243 to 576.
Players then have the opportunity to choose between seven lions, offering a wide selection of different multiplier ranges. These options range from six free spins with a range of high multipliers (15x, 30x, or 40x) to 25 free spins with a range of lower multipliers (2x, 3x, or 5x).
Pragmatic Play’s portfolio contains more than 80 proven HTML5 video slots, including Wolf Gold, Chilli Heat and The Champions. These titles are now live with a growing list of leading casino brands, including Mr Green, Betsson and LeoVegas.
For more information on this release or to arrange an interview please contact Tom Lewis at Square in the Air on 020 3586 8257 or firstname.lastname@example.org
About Pragmatic Play
Pragmatic Play is one of the fastest growing providers of slots games in the online gaming industry. It has proven expertise in creating mobile and desktop content that engages modern players. Its expanding portfolio features more than 80 proven HTML5 titles, which support 26 languages and all major currencies, and are built on unique in-house designs.
The provider’s games are attuned to the needs of players and operators in regulated markets all over the world and are now a fixture on many of the leading casino brands.
For more information please visit http://pragmaticplay.com/
Source: European Gaming News
21Bet upgrades Sportsbook with Digitain
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June 15th, 2018 – Digitain the multi-channel casino and sports betting platform provider confirmed that Malta-licensed 21Bet had been successfully migrated to Digitain’s fully managed sportsbook solution.
21Bet is operated by Aureate Gaming Solutions Ltd and is also the official shirt sponsors of Waterford FC. Under the agreement, Digitain provided its API technology for 21Bet’s online operations including a new improved version of their sportsbook, with features that include cash out, edit my bet, and express bonus and the latest promotional tools for player marketing acquisition and retention.
Digitain CEO, Suren Khachatryan, said: “21Bet is a growing brand in Europe and we are delighted to be their technology partner of choice. Digitain’s frictionless API integration along with our fully managed Sportsbook will deliver 21Bet with enhanced user experience and over 30,000 real live monthly events and full coverage of the most popular sports in Pre-match and Live Betting, and cash out options. 21Bet will also have access to the latest World Cup content zone, including team news, standings, and head-2-head to further engage players throughout this year’s largest betting tournament.”
James Hudson CEO at 21bet, said: “Our company’s vision is to have the optimal strategic partnership with our technology providers. Digitain has a proven international and European market expertise, and their technology allows our brand to be agile and flexible, and in control of our roadmap to adapt to ever-changing market conditions and player preferences. The Digitain team are a delight to work with and they made the migration to our new sportsbook as smooth as silk! ”
Digitain has more than 1,000 employees, 35+ global partners, and more than 400 betting shops worldwide.
The multi-channel Digitain Gaming Platform allows for a frictionless turnkey or white-label solution for both land-based and online operators via our API’s to integrate a sportsbook, casino, live dealer, and virtual sports modules. The stack also includes an extensive payment gateway, bonus engine, CRM system, and dedicated customer support 24/7.
The sportsbook product covers 30,000 live events each month, across 65 sports taking in 7,500 leagues, and more than 3,000 betting markets, while our casino solution has 3,000+ games from the likes of NetEnt, Microgaming, and Playson and many more.
Source: European Gaming News
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