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William Hill push for regulated Australian gambling market

Dan Spence — Thu, 21 Mar 2013 12:26:13 +0000

Ralph Topping, William Hill’s enigmatic CEO wasn’t afraid to give his opinion on the state of the Australian gambling market, and in particular fears that in-game betting would lead to corruption within sports, when he was interviewed by the Australian Newspaper this week.

Following the successful acquisition of the Australian bookmaker SportingBet for a cool AU$750m, William Hill now find themselves as a key player in the Australian gambling market which is estimated to generate $26 billion in revenues annually.

Australian sport has been rocked to its core recently following accusations of illegal drug taking and corruption. The issue of in-game betting has attracted considerable attention from all sectors. Anti-gambling activists have expressed concern that advertising associated with in-game betting is unduly influencing a younger audience, whilst sports fans have also questioned whether the opportunity to make a quick buck could cause unduly influence sportsman and woman.

The UK sports betting market has seen an explosion of in game betting, principally lead by innovators in this area such as Bet365. However, the general consensus amongst legislators in Australia is that in-game betting and micro-betting should be banned. Ralph Topping disagrees with this approach, and it’s clear he believes proposals of this nature will simply make the matter worse by driving punters offshore and into the hands of unregulated bookmakers.

As for concern over in-play betting and corruption, Topping pulled no punches in giving it to the Aussies straight,

“One of the most uneducated comments that can be made about sport and its integrity in the UK, is that that kind of ‘in-play betting’ would lead to fixings and whatever else.”

Topping was also quick to point out that recent history in Italy and France has shown that regulators can’t stand in the way of internet gambling, a lesson their Australian counterparts should take on board.

Topping and William Hill have made it clear that the Australian market is key to their strategic growth, and the fact that the market is regulated is an important factor that has taken them ‘down under’.

The arrival of William Hill into the Australian market is set to be a colourful one, no doubt driven by Aussie’s love of a gamble, which is reported to be three times that of their more reserved British compatriots. Whether this statistic is a reliable one remains to be debated, but one thing is for certain, William Hill have arrived in Australia, and if the Aussies didn’t know who Ralph Topping was, they certainly do now.

Author: Dan Spence
Source: Online Pokies Club

Aussie online gambling start-up secures $2.5m in funding

Dan Spence — Wed, 20 Mar 2013 09:49:42 +0000

Virtual Gaming World, a Perth based Australian start-up has announced that they have secured $2.5m in funding from Triple C Consulting, a boutique investment firm. The funding is expected to assist with the launch and development of Chumba World, a free to play multiplayer Facebook game that allows social gambling enthusiasts to build virtual casinos for real world income.

The rapidly growing social casino gambling arena is awash with M&A activity, particularly in Europe, where leading traditional bricks and mortar gambling businesses busy attempting to grab a slice of the social gambling sector whilst it is still in its infancy.

The route to funding hasn’t been a smooth one for the team behind the Virtual Gaming World. They were reportedly only recently suspended from the Kickstarter, the crowd funding website that offers a platform for start-ups looking for funding.

The game itself is classified in the MMO (Massively Multiplayer Online) category of social games, and allows players to build their own casinos. They can control every aspect of the casino, including designing and customising their own table games and pokies. In what can only be described as a mix between social gambling and the virtual world, other players will have the ability to join in and play at the casino in an attempt to make virtual money. This virtual money can then be converted into cash, from which Virtual Gaming World take a percentage.

The $2.5m should go a long way in getting Chumba World launch. It’s expected that the funds will be used to secure a much needed online gambling license which will enable it to operate within some of Europe’s regulated online gambling market. Funds are also expected to be used to assist with the marketing of the app on Facebook as well as to develop a mobile version of the Chumba World platform.

Chumba World game is expected to be launched in August 2013.

Author: Dan Spence

Crown Casino in $32m Ocean’s 11 Style Sting

Dan Spence — Mon, 18 Mar 2013 10:38:34 +0000

Melbourne’s Crown Casino has again hit the news across the globe following an alleged Ocean’s 11 style scam that saw the casino defrauded of $32m. According to reports in the Aussie press, the scam involved a foreign high roller, a VIP casino employee and unauthorised access to the casinos real time video monitoring system.

Exactly how the scam worked remains a bit of a mystery as Crown are remaining tight lipped over the affair. In fact, it appears that no formal complaint has been made by Crown to the Victorian State Police over the matter.

It’s believed that the scam involved a third party illegally gaining access into Crown’s video security system, which is used to monitor croupiers and players. Information from these videos was somehow relayed to the gambler involved in the scam, who then acted on the information to beat the house edge to the tune of $32m.

Crown have stated that they hope to recoup most of the $32m, which may go some way in explaining why the police were not involved. Security specialist that operate within the world’s casinos have been quick to state that involving the police in a matter such as this may well mean the casino will have to disclose information about its security operations, something they would be keen to avert.

It looks like the forign gambler in question will have to resort to playing pokies online as they have been banned from the establishment and a VIP casino employee has been dismissed.

Fraud of this nature remains uncommon within Australia. The last time Crown suffered adverse publicity was in July 1998, when a baccarat dealer was jailed for defrauding the casino in a scam that involved the croupier deliberately shuffling cards in a way that they could be read by a gambler in on the scam.

Author: Dan Spence

Sportingbet a William Hill Branded Company?

Dan Spence — Thu, 14 Mar 2013 14:52:29 +0000

William Hill have been busy these last couple of months. Not only have they posted record profits across the William Hill brands, but they have also been busy in the M&A market.

In December it was announced that they had agreed a £485m purchase price for Sportingbet, a key strategic move that is central to the William Hill’s international expansion plans, for which the Australian market is a key component.

The deal itself is expected to be completed by March 19th, and the good news for those involved is that it has been successful in negotiating the legal and regulatory hurdles that are required when a foreign business invests in an Australian owned company. A fall at any of these hurdles would at the very least have delayed the completion of the acquisition, and at the very worst may well have put the deal in jeopardy.

However, despite this a key question about the deal remains unanswered. Will the Sportingbet brand, (a brand that is highly recognised within the Australian market), cease to exist when the deal is completed?

Ralph Topping, William Hill’s CEO was non-committal a couple of weeks ago when quizzed on the subject in a Q&A session that accompanied the presentation of William Hill’s financial results to the market.

Whilst stating that Sportingbet was a very strong brand in the Australian market, he was quick to acknowledge that there was no shortage of expert marketing opinion amongst the team within William Hill’s HQ, all of whom had an opinion of some form as to what should be done from a branding perspective, and all of whom were keen for that opinion to be heard.

However, it’s clear from Topping’s comments during the Q&A session that no immediate rebranding is going to take place once the acquisition goes through. That doesn’t mean the Sportingbet brand will stay as it is in the medium to long term as Topping has asked his senior management team to commission some research on Aussie punters to see what they think of it all.

As it stands the public face of Sportingbet is likely to stay as it is, at least for a while anyway.

Author: Dan Spence
Source: Online Pokies Club

Why did William Hill buyout Playtech from the WHO Joint Venture?

Dan Spence — Wed, 13 Mar 2013 11:39:10 +0000

The dust has finally settled following the announcement to the market of William Hill’s decision to buyout Playtech from the William Hill Online (WHO) JV. The buyout, and the subsequent rights issue that was required to finance the deal have seen a good amount of press in the last week, both within the main financial business pages as well as via the usual array of online gambling press resources.

The timing of the deal and the announcement coincided rather nicely with the presentation of William Hills Plc financial results for the year ending 31st December 2012. As is usual practice, Ralph Topping, Hill’s legendary CEO and Neil Cooper, the Group FD, presented the results to the analysts that cover the leisure sector.

Within the presentation, (the webcast is still available on their investor’s site) Topping discussed the buy out of WHO in some detail.

Topping was rather complimentary about the JV, stating quiet clearly that it has been a success, and complimenting Playtech’s senior management. Whilst the deal has undoubtedly hit the mark for both parties from a financial perspective, it certainly hasn’t been smooth sailing, and we weren’t quiet sure if Topping was being a little tongue in check over his complimentary comments to Playtech’s management team. Mike ODonnell, over at Calvinayre.com sums up the issues at WHO rather nicely offer the last couple of years in his article “William Hill Online : An Unhappy Marriage”.

The key message given to the market was that the motives behind the buyout were to gain complete “strategic and operational responsibility” for the future of William Hill’s online business.

Four reasons for justifying the buyout were given:

1. Capex
Under the terms of the JV, William Hill were restricted from spending more than £20m a year on capex. Topping argued that this was restrictive, and given that the online sector is a rapidly growing business they did not want to be hampered by capex restrictions imposed by the JV terms.

2. Acquisitions
Topping was clear that the terms of the JV made it difficult to pursue acquisition opportunities. By having complete control of WHO they will now be in a position to pursue acquisitions as and when they come up.

3. International expansion
Given the recent deal with Australia’s SportingBet and the potential opportunities in the US market, Topping believed that the operational restrictions imposed by the existing JV deal would not allow WHO to support these new acquisitions and exploit the international opportunities in these markets. By getting complete operational control of the WHO division he believes they are better placed to support and develop a multinational strategy for international expansion.

4. Minority dividend
By buying out Playtech now rather than in a couple of years time, William Hill will not have to pay out any further minority dividends to Playtech.

Overall, the case presented by Topping looks convincing, and major shareholders have certainly bought into the deal and the rights issue. It’s clear from his presentation that that Australia is their next big target in terms of international expansion. It probably needs to be, as it’s apparent from William Hill’s KPI’s that the WHO business is rather UK centric, with 75% of their online customer base residing in the UK.

Given the competition in what can only be described as a saturated UK market, as well as the threat that is going to be coming from Ladbrokes following their own 5 year agreement with Playtech, it will be interesting to see if WHO can continue to post such impressive numbers in the next 12 months for their online division.

Author: Dan Spence
Source: Online Pokies Club

Ladbrokes and Playtech deal

Dan Spence — Tue, 12 Mar 2013 09:25:58 +0000

Surprising news was released to the gaming industry yesterday when an announcement was made to the stock market concerning an agreement between Ladbrokes and Playtech. In a move that has taken many insiders by surprise, Ladbrokes are essentially betting their entire digital strategy for the next 5 years on a tie in with Playtech. Here we take a look at the deal and give our view on it.

The deal will see the establishment of a new digital marketing division in Israel, formed from 40 marketing staff from Playtech, with additional senior management coming from another Israeli firm that is aligned with Playtech called the Nation Traffic Services Limited. A new company will be formed to house these employees, aptly named ‘Ladbrokes Israel’, and this will essentially have complete day to day operational control of the digital arm of the Ladbrokes business. Where this leaves Ladbroke’s digital team in the UK and Gibraltar remains unclear at this stage, but given the nature of the deal and the way it has been incentivised its apparent where control will lie. Ladbrokes employees in the digital division will no doubt be reading between the lines.

The deal also incorporates a large long term software agreement between Ladbrokes and Playtech, which will ultimately in time see Playtech completely supplying the entire digital gaming portfolio for Ladbrokes. This will incorporate both the front and back ends.

What is clear is that Ladbroke’s digital division has not been pulling its weight for some time now. Something needed to be done, and Playtech certainly have a track record of success when it comes to these deals, particularly with William Hill. However, whilst the deal was successful in hindsight, it wasn’t without its controversies or much reported management issues, that at one stage saw Ralph Topping, William Hill’s CEO having to fly out to Israel in an attempt to resolve and sort out the issues.

Richard Glynn, Ladbrokes CEO has certainly grabbed the bull by the horns. Ladbrokes and William Hill rivalries run deep, and whilst Glynn will be accused of simply copying his rival from within certain fractions within the Ladbrokes empire, the move does make sense to shareholders, and ultimately this is who Glynn answers to.

Dominic Walsh, a Time business reporter summed up the deal on twitter rather aptly,

“Brave punt by Richard Glynn. Having seen Ralph Topping escape Teddy’s clutches with his balls intact, LAD ceo has now put his own on line”

Playtech certainly offer expertise in the digital marketing arena. Much is being made in the PR surrounding the deal of their expertise in CRM, and their ability to retain players and increase the life time value of a player. Little has been mentioned about their affiliate network and their ability to drive gaming traffic to the Ladbroke’s site. We expect that once the ball gets rolling, Playtech’s team of experienced and savvy marketers, no doubt highly incentivised will quickly and efficiently build value by bringing new traffic to the Ladbrokes digital arm. These guys have been at the cutting edge of digital egaming for some time and know what they are doing.

Where this leaves shareholders in both companies remains to be seen. On the announcement of the new deal, shares in both companies unsurprisingly rose. Long term this looks like an absolute coup for Playtech, and represents a fantastic deal for them and their shareholders. We expect the deal to give the shot in the arm that Ladbroke’s digital division needs, but based on past history, expect there to be a fair number of operational and management bumps along the way, which will require Glynn to sort out. Ultimately though, this deal represents a temporary reprieve for Ladbrokes.

However, as William Hill have found out, at some stage they will need to bite the bullet and build a successful digital division of their own. This deal will help them along the way. Sure in 5 years we expect to see Ladbrokes in a far better position than they are now, but we still feel they will be chasing the tail of their more nimble rivals once the deal expires come 2017.

On a footnote, on behalf of the financial analysts that cover the UK’s gaming industry, we would like to say that expected a little more from Ladbroke’s Chief Financial Officer, Ian Bull, in his briefing to the market on the above mentioned deal, and in particular the Q&A session with analysts from the corporate finance houses. Ian – I’ll say what most of the analysts can’t say to you. In future please answer their questions. You sounded very much like a politician. Many of these questions were straight forward and non-technical and deserved a more appropriate response. Please take note for the future.

Author: Dan Spence

Crown Casino Sydney

Dan Spence — Mon, 11 Mar 2013 10:40:57 +0000

A hot topic within the Australia’s casino industry is the ongoing saga concerning Crown’s proposed casino development at Barangaroo. The latest on the saga has seen Packer’s Crown Group seek regulatory approval to increase it’s shareholding in rival casino operator, Echo Entertainment.

Echo Entertainment, who own and run Sydney’s Star Casino, has a monopoly on the Sydney casino market until 2019. Their main rival in the Australian casino market is Crown, who is keen to break into the Sydney market. Crown currently have a proposed development in Sydney’s Barangaroo district going through the various stages of planning approval.

The whole issue of planning, regulation and licenses appears to be a complex issue. The latest twist in the sage is twofold.

Firstly, Crown who currently have a 10% stake in Echo Entertainment have sought regulatory approval to increase this to 25%. It’s clear that such a move would give Crown an even greater say in the running of one of its main rivals, as well as them some visibility in 2019 when Echo’s monopoly license expires.

Secondly, and rather interestingly, the NSW Premier went on record last week stating that plans suggest that Crown’s Barangaroo complex will cater solely to high rollers and will be a VIP venue by invitation only. As such it would not be operating as a normal casino, and it would have no pokies, and would not require a traditional casino license.

Whilst the lobbying, negotiations, planning and regulatory due process are likely to continue for some while to come, news is that Crown have signed an agreement with Build Land Lease Limited to build the Barangaroo complex.

The high roller and VIP market has certainly been a key factor to Crowns success in recent years. According to their financial results, $797m was generated by high rollers in 2011/12, up from $583m in the prior year. Sydney would certainly appeal to the foreign high roller market that Crown is catering for.

In fact, figures recently released show Crown’s fleet of private jets have been clocking up some air miles over the last 3 years. Crown operate 3 luxury Gulfstream IV jets, have been flying on average 23 flights a month, and it’s apparent from flight data, that these planes have been busy flying to and from Asia, no doubt ferrying high rollers to and from Australian casinos.

As it stands, Sydney won’t have 2 casinos come 2019, but rather 1 casino and 1 by invitation VIP venue. Something makes us think we haven’t heard the end of this story.

Author: Dan Spence

WMS announce deal with Rank

Dan Spence — Fri, 08 Mar 2013 17:33:49 +0000

WMS have announced a multi-year online content licensing agreement to supply their library of online pokies, including leading titles ‘The Wizard if Oz’, ‘Zeus’, ‘Reel ‘Em In’ and ‘Jackpot Party’ to Rank PLC.

The games are expected to go live on both Meccabingo.com and Grosvenorcasinos.com, two of Rank’s leading sites, at some stage in the second half of 2013. The agreement represents another significant achievement for WMS’s digital division who will now be faced with assisting Rank’s technical team with the integration of their games onto Rank’s two branded websites which currently operate on OpenBet’s Remote Gaming Interface.

Commenting on the announcement, Orrin J Edidin, President of WMS Industries Inc said,

“The alliance with The Rank Group Plc is another endorsement of WMS’ online gaming capabilities.”

Headquartered in the UK and listed on the London Stock Exchange, the Rank Group’s origins are firmly in the field of motion pictures. However, for some time they have had a significant presence in the land based casino and bingo sector, and the agreement to offer some of WMS’ best pokies is certainly a win-win for all parties, particularly for Rank’s online division.

The agreement also marks another significant step for traditional poker machine manufacturers into the online marketplace. Until recently, for one reason or another, most have been slow to realise the potential of the online gambling market. The move into the online market offers players the chance to play their favourite land based casino pokie games in an online environment. With their back catalogue of popular games, we expect to see more agreements from the like of WMS in the near future.

Author: Dan Spence

Clubs NSW Question Pre-Commitment Costs

Dan Spence — Thu, 07 Mar 2013 09:55:49 +0000

A big talking point in Australia at the moment is the legislation surrounding the pre-commitment technology that allows players to preset how much they are prepared to loose on a pokies prior to playing them. The legislation is seen as a move towards more responsible gambling, and has attracted fierce criticism from Australia’s pro-gambling lobby.

The latest debate is centering on the proposed cost of implementing the solution. Each poker machine will need to be modified to enable pre-commitment technology to be implemented. The government’s Problem Gambling Task Force has estimated an implementation cost of $2,000 per machine.

It’s apparent that the costs of implementing the technology will fall upon the individual Clubs and venues that own and operate the poker machines. Time is on their side. Clubs with 21 or more machines will have until 2018 to implement the pre-commitment technology, whilst smaller venues will have even longer.

However, it’s not the proposed implementation timescales that the Clubs are questioning. By providing at least 5 years notice, Clubs have ample opportunity to plan how they will fund this investment. Rather, the key issue of debate appears to be focussing on the actual costs of implementing the technology.

The $2,000 per machine figure quoted by the government is being fiercely contested. Clubs Australia have indicated that they expect the actual costs to be closer to $5,000 for machines between 1 and 3 years in age, rising to $9,000 for machines between 3 and 5 years. They go on to say that machines over 5 years will need to be replaced altogether at a cost of $25,000 per machine.

How these figures can be so far apart is an issue that needs to be addressed. The good news for Clubs is that it is now apparent that the government team behind the legislation is opening up dialogue directly with the Clubs concerned. The first discussions across Australia are today to take place between Clubs in Armidale and New England and government representatives. Key to the discussions will be how the government has arrived at the $2,000 per machine valuation.

Author: Dan Spence