Wednesday, May 22, 2019

All is not well in the land-based casino industry in the UK. Whilst the casino industries in other European countries have enjoyed some growth, albeit modest, UK operators are seeing double-digit declines in revenues.

Apart from the few casinos operating with 2005 Act licences, UK casinos make the lion’s share of their revenues from table games. The details are interesting.

Prior to the 2005 Act, the approximately 120 casinos in the UK were allowed to operate a maximum of 20 gaming machines. The 2005 Act didn’t change that, and the 1968 Act casinos are still quite dependent on table games for revenues. The 2005 Act did allow for 16 new casinos, in two categories; Small and Large – or, in my view, “very, very small” and “not so large.”

The cost of a trip to Las Vegas has been increasing almost exponentially for many years, with both highly visible changes (new resort fees, new parking charges) and more subtle increments (lower slot payout percentages, higher drink prices) contributing to the savage attack on the Strip visitor’s wallet.

It’s also fair to say that it would be difficult to point to areas where service levels have increased apace. While the resort experience is still a very high-quality one, overall, the queues for check in and general impossibility to find a waitress on most megaresort gaming floors make clear that cost cutting is at the heart of most business plans.

The Euro News Revue
by Hannah Gannagé-Stewart and Andrew Tottenham
iGaming Business - 17 May 2019
The Macolin Convention against corruption in sports betting will come into force in September, despite facing ongoing opposition by some members states, notably Malta. The island, which can attribute more than 12% of its GDP to gambling, argues that defining illegal activity as “any sports betting activity whose type or operator is not allowed under the applicable law of the jurisdiction where the consumer is located” threatens the legitimacy of licenses granted by the Malta Gaming Authority. It’s a thorny issue that’s set to tap into wider debates around legal sovereignty and how best to govern internet commerce internationally. (HGS)
SBC News - 17 May 2019
Having received a reprieve from the UK’s Department for Digital, Culture, Media and Sport from its death sentence earlier this year, the Horserace Betting Levy Board has fallen £11m short of its projected £89m income for 2018/19 – a £17m drop on the previous year. It marks the culmination of a turbulent few years for the Levy Board, which prepared its 2018/19 business plan expecting it to be its last. A less-profitable than anticipated February and March has been blamed for the shortfall, which leaves the board’s reserves at £40m, instead of the £50m they should have been at the end of the financial year. (HGS)
SBC News - 17 May 2019
The Danish regulator Spillemyndigheden has enhanced its recent consumer protection work with a new whistleblower scheme to encourage reporting of suspected violations of anti-money laundering (AML) regulations. SBC reports that the new scheme will enable employees of gambling firms to report concerns via an encrypted, anonymous contact form. The onus on anti-money laundering initiatives has ramped up considerably across Europe since the EU published its 5th anti-money laundering directive in July 2018, and the pressure is likely to remain high on all regulators tasked with supervising AML prevention in high-risk industries.  (HGS)
Dutch News - 17 May 2019
The Dutch Government has pulled the privatisation of Holland Casino, citing the lack of support for the bill in the Senate. The bill, which was first mooted in 2011, proposed that Holland Casino’s 14 casinos get broken up into two groups, one of 10 and one of 4 casinos, plus making up to two more licences available. The rationale was that the group of ten would represent one casino in each region of the county, so no company would have two casinos in any region, which could have caused monopoly concerns.

The privatisation represented an expansion opportunity for casino operators, who are currently starved of new assets to acquire. At the moment, Europe appears to be a marketplace where private equity groups trade casino assets and there is precious little fresh blood.

I do find it strange that one of the reasons that support in the Senate fell through was the concern that Holland Casino in private hands may have “encouraged gambling”, and yet the legalisation of online gambling continues. Go figure! (AT)
iNTERGAME - 16 May 2019
Gambling reform in Spain was on the cards even before the Socialist Workers’ Party’s victory at the end of last month, but the wheels now seem to be set in motion. As InterGame reports, the provinces of Galicia and Castilla-La Mancha plan to freeze entry to the market beyond existing licensees, with tougher gambling laws also expected down the line. The Spanish reforms continue a trend towards tougher operating conditions across Europe. The heyday of liberalisation appears to be well and truly behind us, with markets like Sweden opening up under comparatively strict conditions. (HGS)
iGaming Business - 16 May 2019
The Swedish regulator is keeping up the pressure on operators in the newly liberalised market. Last week iGaming Business detailed two six-figure fines for failure to comply with bonusing rules. Betway incurred a SEK5m (£521,224) penalty, while Mandalorian Technologies was fined SEK9m ($931,716). The enforcement actions followed a written warning to all licensees in February. It also comes after operators were fined for a failure to comply with the country’s self-exclusion laws, earlier this year. Some may question whether six figures is much more than a slap on the wrist for businesses of this scale, but Spelinspektionen is at least practising what it preached. (HGS)
SBC News - 16 May 2019
Polish sports bettors will soon have twelve online sportsbooks at which to place a bet, with Poland’s Ministry of Finance having approved a local company, BetFan, to add to the existing eleven others. Despite the very high tax, 12% of betting turnover (not revenue!!), BetFan believes it can become one of the top five sportsbooks operating in the country. The company plans to use a diversity of betting opportunities and technology to achieve that goal. But given the high tax rate, it is hard to see how BetFan can be competitive against illegal foreign competition that pays little or no tax and that can run their book with a total margin of less than 10%.  (AT)
iNTERGAME - 17 May 2019
Caesars UK have finally offloaded Emerald Casino in South Africa, to Peermont Hotels, Casino and Resorts. The Emerald Casino was underinvested for many years and has suffered as a consequence. Emerald became part of Caesars Entertainment’s portfolio of international properties when they acquired London Clubs in 2006. Caesars UK (formerly London Clubs) was supposed to have been a platform for international expansion, but the Apollo/TPG buyout and the financial crisis put a stop to that strategy. Since then, Caesars UK has been an orphan in the wider company, providing cash flow to service debt but not being large enough for anyone really to pay attention to its potential.

Caesars Entertainment is up for sale. Time will tell whether the new owner, whoever that may be, sees the potential of Caesars UK or wants to offload that company to focus on sorting out the North American business. (AT)
This report is edited by Andrew Tottenham and Justin Martin
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