Welcome to our very first weekly newsletter. From now on, we will update you with the latest news in the online gambling industry on a weekly basis.
Nektan landed two partnerships
Our casino operator Nektan PLC landed two partnerships in the past week. The first being ReelFeel Gaming. The goal is to flourish Nektan’s in-house portfolio. ReelFeel Gaming agreed to create 10 new Nektan-branded HTML5 games, which will be rolled out throughout 2019. ReelFeel will be in charge of the front-end, including illustrations, features and game assets, while Nektan will utilize its games engine management skills to the fullest.The second being Dench eGaming Solutions, which specializes in providing a turnkey gaming platform, white label services and real-time marketing automation solutions for the IGaming industry. With this partnership, we can expect a proliferation of bonus and game offerings.
Scientific Games starts SciPlay IPO
One of our gaming providers Scientific Games (NASDAQ: SGMS) has launched the initial public offering of its social gaming business Sciplay. The supplier is offering 22 million shares of Class A common stock on the NASDAQ Global Select Market under “SCPL”, expecting to trade between $14 and $16 per share. Sciplay also plans to grant the underwriter a 30-day-option to purchase an additional 33 million shares. Scientific Games also launched OpenSports last week, a sports betting technology suite which offers a redesigned sports book solution. “The game has changed. We’ve changed. We’re here to set the new standard by which this industry operates” said Keith O’Loughlin, SVP Sportsbook for SG Digital.We are impressed by how much Scientific Games has achieved over the past week! Future looks bright.
Country-level market news
Latvians are prohibited from gambling on the websites of international online gambling operators without a license in Latvia
The new rules passed by the Latvian parliament impose a fine of up to € 350 per incident on Latvian citizens who used the services of unlicensed gambling casinos. Players who avoid taxes for winnings are reported to be fined 23% of any amount of winnings over €3,000.For internet providers, there is a €20 thousand penalty if failing to disclose cases of illegal online gambling. There are more than 1500 gaming domains on the blacklist now. It is believed that still two thirds of illegal domains have not been blacklisted yet by the Internet providers.
Online casinos’ earnings suffered from Swedish regulation in Q1
Due to the re-regulation of the Swedish market, online casinos see earnings drop despite of increased revenue. Unibet operator Kindred Group has reported an 8% increase of revenue in Q1, while a 3.8% decline in gross profit. The main cause was the rise of cost of sales. Kindred spent £5.2m in relation to its newly-regulated Swedish activities. Marketing spending also rocketed, up 29.2% to £53.6m, due in part to significant expenditure on bonus in Sweden. EBITDA amounted to £30.6m, down 35.3% from Q1 2018. Kindred admitted that it had taken an £18.9m hit from its Swedish launch.
However, none of this is unexpected. “As anticipated for several years, the re-regulation of the Swedish market resulted in significant short-term margin pressure, particularly in the first quarter.” Said Henrik Tjärnström, Kindred’s CEO. The efforts spent in relation to responsible gambling in Sweden did pay off in terms of active customers and sports betting turnover. The earnings are expected to bounce back in Q2.
Game provider giant NetEnt also suffered fall in both revenue (down 3% to SEK 418m) and profit (down 6% to SEK120M) for Q1 in the Swedish market. CEO Therese Hillman blamed the slowdown on the fewer number of players and lower average revenue per user in Sweden.
Following the re-regulation of the Swedish market, the Dutch market is doomed to be re-regulated in 2020. Online casinos can expect significant margin pressure given the patterns in Swedish market.