Download - EY - UK Betting and Gaming Update Q2 2016

UK betting and gaming update

Hospitality and leisure

April - June 2016

UK betting and gaming update is produced and distributed by EY quarterly. It is a digest of current news articles about the UK betting and gaming industry. We hope you find it both interesting and informative and we would welcome your feedback. If you would like any further information or would like to be included on our mailing list please let us know. Please contact: Cameron Cartmell Partner, Ernst & Young LLP (UK) EMEIA Hospitality & Leisure Leader Hospitality & Leisure +44 20 7951 5942 [email protected]

Grant Humphrey Assistant Director, Ernst & Young LLP (UK) Hospitality & Leisure +44 1582 643182 [email protected]

Betting and gaming update – April − June 2016 EY 1

Q2 2016

Listed betting and gaming company share price information

Company

Market cap

(24 Jun 16)

Share price

(24 Jun 16)

Share price

(24 Mar 16)

Change in price

12-month high

12-month high date

12-month

low

12-month low date

32Red (AIM Listed) £108m £1.31 £1.51 -13% £1.81 01-Mar-16 £0.59 24-Aug-15

888 Holdings £747m £2.08 £1.99 5% £2.37 03-Jun-16 £1.49 02-Jul-15

GVC Holdings £1,651m £5.65 £5.01 13% £6.18 03-Jun-16 £3.68 20-Oct-15

IG Group Holdings £2,944m £8.05 £8.12 -1% £8.40 23-Jun-16 £6.79 24-Aug-15

Ladbrokes £1,683m £1.22 £1.17 4% £1.38 25-Jun-15- £0.93 29-Sep-15

Paddy Power Betfair £7,331m £87.25 £92.98 -6% £110.13 29-Feb-16 £55.47 24-Aug-15

Playtech £2,575m £7.98 £8.53 -6% £9.36 24-Jul-15 £7.03 11-Feb-16

Rank Group £847m £2.17 £2.54 -15% £2.97 08-Jan-16 £2.08 24-Jun-16

Sportech £118m £0.57 £0.61 -7% £0.80 24-May-16 £0.50 02-Mar-16

William Hill £2,400m £2.76 £3.30 -16% £4.13 25-Jun-15 £2.35 24-Jun-16

Source: ThomsonOne.com and other additional EY research. Share price information is presented for the largest 10 listed UK betting and gaming companies by market capitalisation. The companies that constitute the largest 10 are refreshed every six months or when other major changes occur. Disclaimer: The currency referenced in the chart was left as stated in the original source material

Betting and gaming index

The EY betting and gaming (B&G) has outperformed the FTSE Travel & Leisure Index in the last 12 months, primarily due to both positive growth in B&G company annual revenues, impacted by a shift towards new innovative online customer focused platforms and consolidation in the market. The key topic dominating Q2 2016 was the impact of Brexit across markets globally. Volatility of stock prices ensued, with the FTSE100 below 6,000, GBP/USD down 1%, German 10-year yields turning negative for the first time ever and European shares slumping to a three-month low in the week running up to the vote. Such economic uncertainty and the resulting ‘Leave’ vote has contributed to the gradual and subsequently sharp decline in both the B&G and FTSE Indexes alike, illustrated by negative B&G share price movements in Q2, albeit with a recovery in early July 2016. The betting and gaming index is a snapshot of the performance of the industry compared with the market as a whole. The index is a quick and simple guide: for example, it does not include private companies and small or medium-sized companies. However, we hope that it proves a useful guide to the recent events and emerging trends.

Source: Thomson ONE Banker and other additional EY research. Index price data is as of the end of the last trading day of every week. Index prices are rebased to chart comparative performance of the indices over the last six months.


Overview

The most recent share price information of the largest 10 UK B&G companies saw a gradual decrease in value over the second quarter. Share price performance was almost solely driven by increasing uncertainty, as a decision on the UK’s membership with the EU drew close, with the increased market volatility resulting in traders to become more frugal.

Aside from the referendum, the general performance of the majority of firms in the B&G industry has been positive in Q2, with a number of operators recovering from the worst Cheltenham Festival (financially) in history in March by benefitting from a good Grand National and the initial stages of the European Championships.

In our Q2 B&G updated, we focus on key changes to taxation that may have an implication on the B&G industry, both due to Brexit and other key factors.

B&G: key changes in taxation

The historic vote for Britain to leave the EU stole the majority of the Q2 headlines; however, there were also a number of additional taxation developments that companies within the B&G industry should be aware of. Following the UK’s exit from the EU, the UK will no longer be subject to the EU VAT Directive, which may lead to changes in the UK VAT regime and create some frictional costs of complying with EU VAT rules going forward. Furthermore, the potential for more scrutiny on the border between Spain and Gibraltar post Brexit may also impact businesses based in Gibraltar who have employees living in Spain (currently approximately half of the 3,000 individuals employed in betting and gaming activity in Gibraltar reside in Spain).

The Upper Tribunal released its decision on 2 June 2016 in the appeal by London Clubs Management Ltd. This appeal raised the question of the liability to gaming duty in respect of the playing as stakes in casino games of free bet vouchers or “non-negotiable” chips (collectively referred to as “non-negs”) which were provided by the taxpayer free of charge to selected customers as a promotional tool to encourage them to visit its casinos and play casino games.

The Upper Tribunal found in favour of the taxpayer and consequently agreed that the chips and vouchers provided free of charge to players and used for gaming had no value and no liability to gaming duty arose in respect of them.

HMRC has published a consultation document seeking views on proposals to reform the VAT avoidance disclosure regime (VADR). Specifically, the consultation seeks views on proposals to move the primary obligation to disclose VAT avoidance schemes from users to scheme promoters, and considers the extent to which the other requirements of the Definition of disclosure of tax avoidance schemes (DOTAS) regime should be carried across to a revised VAT Avoidance Disclosure Regime (VADR). It also seeks views on proposals to extend the scope of the VADR, which presently deals only with VAT, to include other indirect taxes, in particular, gambling duties and insurance premium tax.

Operators wishing to discuss their position in more detail can contact Sunil Parmar (EY, Director, Indirect Tax, +44 207 951 5469, [email protected]).


Company and industry news The theme illustrated by many, in the most recent trading updates referred to the continued investment and development of companies’ respective online gaming businesses. Emerging gaming platforms have been the driving force for industry growth, along with market consolidation, which has seen revenues grow year-on-year.

Following news of the vote to leave the EU on 23 June, it is not yet clear as to the definitive impact that an independent Britain will have on the B&G sector. Analysts have suggested that B&G companies may opt for further consolidation, to mitigate or soften the potential impact triggering Article 50 may have.

Financial results and trading updates

► 32Red’s announced results for the year ended 31 December 2015, achieving record revenue performance in 2015. The strong performance was driven by a combination of accelerated organic growth in their core business (+35% on 2014) and a contribution from the Roxy Palace business that was acquired on 14 July 2015. Ed Ware, Chief Executive, commented. “We are confident that 2016 will be another year of strong organic revenue growth as we continue to increase marketing investment in both 32Red and Roxy Palace brands. The online gaming industry continues to grow, driven by mobile devices and regulation… We continue to evaluate potential acquisitions that may complement our strong organic growth”1.

► 888 Holdings’ last communicated financial results were for the year ended 31 December 2015. 888 Holdings achieved like for like (LFL) B2C revenue growth of 14% to $444.2m (from $390.8m in 2014), with LFL Casino revenue up 18% to $261.4m and strong sport growth of 74%. The company’s mobile first’ strategy continued to reap rewards and revenue from mobile devices in the UK rose to represent 47% of UK B2C revenue (2014: 33%). Brian Mattingley, Chairman, commented, “888’s success is built on its technological strength in combination with the efficient utilisation of this technology, directed by extensive data analytics. 888’s business analytics aims to maximize customer recruitment, increase customer lifetime value and minimize the cost per customer acquisition”.2

► Gala Coral announced its results for the twenty eight week period ending 09 April 2016, reporting 9% increase in net revenue over the previous year to £271.6m. EBITDA stood at £62.2m (16% higher than the previous comparable period). Carl Leaver, Chief Executive, commented, “EBITDA growth of 16% in the first half of the year represents a very satisfactory performance for the Group. After adjusting for incremental regulatory costs, EBITDA was 43% ahead. Sportsbook margins benefitted from improved football results in both the UK and Italy, and a good Grand National result helped offset losses from the worst Cheltenham for the industry since 2003. During the second quarter we also re-launched the Coral.co.uk mobile app on a proprietary platform. The transition went extremely well and the new platform provides greater flexibility to develop the product offering.”3

► GVC Holdings announced its full year results for the year ended 31 December 2015. The Net gaming revenue was up by 10% as compared to 2014. The clean EBITDA was up by 10% to a record €54.1m. First quarter 2016 experienced group net gaming revenue of €167.7m following the acquisition of Bwin.party. Kenneth Alexander, Chief Executive of GVC, commented, "GVC has had a momentous year. Not only has the Company seen a fifth consecutive year of revenue and clean EBITDA growth but the completion of the Bwin.party acquisition in early 2016 affords us an opportunity to take the Group to the next level.”4

1 32Red Plc 2015 Annual Report, 32Red Plc website, http://www.32redplc.com/~/media/Files/T/Thirty-Two-Red/documents/reports-and-presentations/2015/annual-report-2015.pdf 2 888 Holdings 2015 Annual Report, 888 Holdings website, http://html.investis.com/8/888Holdings/pdf/2015-annual-report-v3.pdf 3 “Continued strong momentum with EBITDA growth of 16%,” Gala Coral website, http://www.galacoral.co.uk/~/media/Files/G/Gala-Coral/reports-and-presentations/quarterly-report/financial-results-q2-fy16.pdf, accessed 22 June 2016 4 “2016 Trading Update,” GVC website, http://www.gvc-plc.com/archive/results/prelims_2015.pdf, accessed 20 June2016


► International Game Technology (IGT) announced interim results for the first quarter ending 31 March 2016. Total consolidated revenue was up by 51% and reached $1,282m reflecting GTech’s acquisition of legacy IGT in April 2015. Marco Sala, Chief Executive, commented, “Continuing growth across all regions, especially North America and Italy, propelled our lottery revenues. Gaming revenues were resilient despite challenging market conditions in North America, our largest gaming market. We remain focused on reenergizing gaming operations and strengthening our global leadership in lotteries. We were successful in securing the Italian Lotto concession, one of our largest contracts and a cornerstone of our Italian operations.”5

► Ladbrokes announced the results for the quarter ending 31 March 2016, reporting 10.6% increase in revenue over the previous year. Jim Mullen, Chief Executive, commented, “Since July 2015 we have been successfully implementing our strategic plan and the encouraging customer metrics we saw at the end of the year have continued during the first quarter of 2016. While results have generally been favourable, Cheltenham proved to be the worst in living memory which took some of the shine off the period. While we see plenty of evidence to support that our plan is working, our focus remains on delivering against our strategy and our 2017 targets.”6

► Paddy Power Betfair published a trading update for the three month period ended 31 March 2016; with a comparable Q1 2015 period prepared on the basis as if Paddy Power and Betfair had always been merged. Revenues were up 15% to £339m, in particular Online revenue grew 17% to £195m, Australia revenue grew 25% £58m, US revenue grew 22% to £20m and retail revenue was up 5% to £67m. Paddy Power Betfair reported an increase in EBITDA of 27% to £59m. Breon Corcoran, Chief Executive, commented, “The good start to the financial year is a credit to our colleagues, particularly at a time when we are bringing together two businesses. Our marketing, technology and operations performed well throughout the key spring racing period…and post-merger integration is on-track”.7

► Playtech announced its full year results for the year ended 31 December 2015, reporting a strong financial performance for the year with revenue and adjusted EBITDA up 38% and 22% respectively. Ron Hoffman, CFO, commented, “Playtech had a busy year in 2015, with a combination of organic growth, new business wins, bolt-on acquisitions and entrance into a new complementary vertical in financial trading space”.8

► The Rank Group announced its results for 19 weeks ended 08 May 2016. Gross revenue decreased by 3% as compared to the same period previous year. Henry Birch, the chief executive, commented, “I am pleased with the Group’s performance during this 19-week period. We have seen continued like-for-like revenue growth across all of our brands and the performance in our Grosvenor digital business has been particularly encouraging. During the period we launched our new digital platform which was delivered both on time and on budget. This is an important development for the Group and we look forward to the benefits that the increased functionality will bring.”9

► William Hill announced its results for 17 weeks ending 26 April 2016. Group net revenue decreased by 3% in during the period. James Henderson, Chief Executive Officer of William Hill, commented, “ It has been a tough start to the year in Online, which is being impacted by both regulatory change and a gross win margin below normalised levels for the period due to a disappointing Cheltenham festival and unfavourable European football results. Trends in recent weeks remain in line with the guidance we gave in March. In Retail, it is pleasing to see gaming growth improve again and we are on track with

5 “INTERNATIONAL GAME TECHNOLOGY PLC REPORTS FIRST QUARTER 2016 RESULTS,” IGT Group website, http://phx.corporate-ir.net/phoenix.zhtml?c=119000&p=quarterlyEarnings , accessed 22 June 2016 6 “Ladbrokes plc (LSE:LAD) announces its trading update for the three months ended 31 March 2016,” Ladbrokes website, http://www.ladbrokesplc.com/~/media/Files/L/Ladbrokes-V2/Press-releases/q1-2016-trading-update-v2.pdf, accessed 22 June 2016 7 Paddy Power Betfair Q1 Trading Update, Paddy Power Betfair website, https://www.paddypowerbetfair.com/~/media/Files/P/Paddy-Power-Betfair/documents/trading-update-2016.pd, accessed 08 July 2016 8 Playtech Annual Report 2015, Playtech website, http://playtech-ir.production.investis.com/~/media/Files/P/Playtech-IR/results-reports-webcasts/2016/2015-report-and-accounts-v2.pdf 9 “Interim Management Statement for the 19 weeks to 8 May 2016,” The Rank Group website, http://www.rank.com/content/dam/rank-group/corporate/documents/Results_Reports_Presentations/2016/IMS%20May%202016%20-%20FINAL%20-%202016-05-12.pdf, accessed 21 June 2016


the roll-out of our self-service betting terminal before the Euros, allowing us to bring the best of Online to our shops ahead of a big summer of sport.”10

10 “WILLIAM HILL PLC TRADING STATEMENT,” William Hill Plc website, http://files.williamhillplc.com/media/4160/wmh-trading-statement 110516.pdf, accessed 20 June 2016


Analysts’ views

► Jefferies downgraded William Hill’s 2016 and 2017 EPS by 2%, reflecting weaker online forecasts and share buybacks. Jefferies states that only part of the betting firm’s online under-performance can be attributed to weaker gross win margins and self-exclusions, with underlying trading in key markets continuing to disappoint. William Hill has been given an underperform rating and its target price has been cut to 280p from 380p.11 It is also worth a mention that William Hill issued a profit warning on 23 March 2016.

► Sportech PLC shares rose 20.6% to 76p after the betting firm said the Court of Appeal judges have ruled in favour of Sportech in its appeal case relating to a £97m tax repayment claim over the "Spot the Ball" game.12

► On 20 April 2016, Credit Suisse initiated coverage of Paddy Power Betfair with an underperform recommendation and a target price of 9525p. The bank says the benefits of Paddy Power's merger with Betfair have been exaggerated by the market; adding the cost synergies alone are not a good justification for M&A in a growth market like betting. Credit Suisse says the merged company's share price rise can't be rationalised.13

11 “Jefferies Cuts William Hill on Regulatory Environment -- Market Talk,” Dow Jones Institutional News, 31 March 2016, via Factiva © 2016 Dow Jones & Company, Inc 12 “UK Market Talk Roundup: Brokers Comments,” Dow Jones Institutional News, 04 May 2016, via Factiva © 2016 Dow Jones & Company, Inc. 13 “commodities-credit-suisse-skeptical-on-paddy-power-betfairs-post-merger-rise-market-talk”, Commodities Report website, commodities-credit-suisse-skeptical-on-paddy-power-betfairs-post-merger-rise-market-talk” http://commodities-report.com/commodities-credit-suisse-skeptical-on-paddy-power-betfairs-post-merger-rise-market-talk.html


Strategic news

Contracts and agreements

► Rank Group has signed a customer agreement with NetEnt, a Swedish casino games developer. Under the terms of the agreement NetEnt will provide its online casino games to the Grosvenor Casinos and Mecca brands to Rank. According to NetEnt Malta Managing Director and Chief of European market operations Enrico Bradamante, “I am delighted to enter into this partnership that will further drive growth for us in the important UK market.”14

► Betfred entered a 10-year agreement with GVC Holdings in May 2016. According to the agreement, GVC will serve as Betfred’s technical platform. Betfred selected GVC after an extensive review, and stated that the new platform will enable it to speed up its international expansion plans. GVC's proprietary platform, which it acquired from bwin.party, provides a single player account, allowing users to play across different verticals and multiple channels using a single wallet, while its data-driven back-end will allow Betfred to segment players and personalize its offering. As for GVC, the opportunity was an “exciting and important B2B partnership” with one of the major players in the UK market.15

► William Hill has signed a new agreement to be the title sponsors of the IBF world heavyweight champion’s next three fight nights through its association with British professional boxer Anthony Joshua. The new agreement was signed with Matchroom Sport. According to the deal, William Hill’s brands will appear in the ring, and across media notices, backdrops and promotional material.16

► 888 Sport is being considered as one of the possible successors of Aviva as the main club sponsor in Norwich city. The bookmaker features among companies who have held talks over a potential commercial tie-up. However, no deal has yet been concluded to

14 “NetEnt agrees new supply deal with Rank Group brands,” Gaming Intelligence, 21 June 2016, via Factiva. 15 “GVC signs sportsbook and gaming platform licensing deal with Betfred,” Gaming Intelligence, 23 May 2016, via Factiva. 16 “William Hill continues boxing sponsorship with world champion Joshua,” Gaming Intelligence, 21 June 2016, via Factiva.

replace the insurance giant. Norwich City already have a tie up with bookmaker Coral, who became the Canaries’ official betting partner and sponsors of the Barclay Stand in 2015.17

► Ladbrokes will become the new title sponsor of the PDC's World Series of Darts Finals, which takes place later in 2016 in Glasgow, Scotland, following events in Dubai, Auckland, Shanghai, Tokyo, Sydney and Perth. Ladbrokes will also sponsor the title of the Sydney Darts Masters in August.

► 32Red agreed to a long-term contract extension on 1 June 2016 with Kambi Group, to deliver 32Red’s Sportsbook services. 32Red is planning to invest more in marketing its Sportsbook and Kambi Group see a lot of potential in continuing to contribute to the joint collaboration.

Market consolidation

► Ladbrokes and Gala Coral agreed to sell several of their shops so that they get the approval of Britain's Competition and Markets Authority (CMA) for their planned £2.3b merger. Earlier, the CMA wanted Ladbrokes and Coral to sell between 350 and 400 betting shops, since their proposed tie-up could result in a substantial loss of competition in 659 areas. According to documents published by the regulator recently, the two companies have accepted that "the divestment remedy proposed by the CMA is the only effective and proportionate remedy."18

► Ladbrokes successfully countered a challenge from Dermot Desmond, one of its own investors, to its £2b merger with Gala Coral. Dermot, the Irish billionaire spoke out against the tie-up last year, and wanted Ladbrokes to call for more information. The Takeover appeals board rejected his call.19

17 “888 Sport in the running to become Norwich City’s main sponsor,” Evening News (Norwich), 8 June 2016, via Factiva, © 2016 Archant Regional Limited. 18 “Ladbrokes, Coral agree on shops sale to get CMA approval for merger,” SeeNews France, 20 June 2016, via Factiva. 19 “Ladbrokes beats off Gala Coral merger deal threat,” The Daily Telegraph, 16 June 2016, via Factiva.


► BoyleSports expressed its interest to buy the shops that Coral and Ladbrokes will have to sell to go ahead with their merger. It has informed the CMA that it is in a “unique position” to improve the betting-shop landscape in Britain. In a letter to the CMA BoyleSports said it was “potentially interested” in acquiring the shops and stated that Coral and Ladbrokes should be required to seek a single purchaser. It added, “Anything lower would be incapable of achieving the economies of scale necessary from a brand, trading and operations management perspective to be considered a ‘national’ challenger.”20

► mybet Holding (a German gaming operator), planned to sell off its entire stake in pferdewetten.de AG, the Malta-licensed horse racing betting business. mybet’s 52.2% stake in pferdewetten.de AG will be sold to individual investors. The total purchase price for the holding will be disclosed after the closing of the transaction. The fees for the individual transactions are yet to be finalized. Since mybet’s pferdewetten.de shares are used as collateral for the collateralized convertible bond issued by the operator, it will deposit the necessary sum for the collateralization of the bond in cash in exchange for the shares. The sale of this stake triggers a mandatory tender offer, as defined in the terms of the convertible bond, secured in 2015 and maturing in 2020.21

► Aspers, a British casino chain, expressed its interest to "consider opportunities in Ireland" if the proposed new gambling legislation there suits its business model. The company, which operates four casinos in Britain, has written to the justice department several times over the past three years seeking to influence the direction of the Gambling Control Bill in Ireland.22

► The funds managed by Vitruvian Partners agreed to sell 100% of the issued and outstanding shares of OpenBet to NYX

20 “BoyleSports pitch their case for buying merger shops,” The Racing Post, 11 June 2016, via Factiva, © 2016 CenturyComm Limited 21 “mybet to sell off stake in German horse racing betting operator,” Gaming Intelligence, 8 June 2016, via Factiva. 22 “British casino hedges its bets on gambling bill,” The Sunday Times, 15 May 2016, via Factiva, © 2016 Times Newspapers Limited 2016.

Digital Gaming (OB SPV) Limited (NYXDG) for £270 million in cash. This includes OpenBet’s £95.4 million existing third-party debt. As a part of the transaction, William Hill plc and Sky Bet have made a preferred equity investment of £80 million and £20 million respectively, through convertible preference shares to partially fund the transaction. Further to William Hill’s preferred equity investment, William Hill has engaged NYX and OpenBet in a development program to further modernize OpenBet’s technology.23

Financial

► William Hill sold £350m of unsecured bonds in a sterling high yield market increasingly convinced that the June referendum will support the UK’s EU membership. William Hill also held a three-day roadshow for £300m of seven-year senior unsecured bonds, with Ba1/BB+ ratings at the top of the speculative investment grades. Furthermore, it printed £350m at par to yield with a 4.875% coupon, 12.5bp tighter than the 5% initial price talk. The spread over the 2.25% 2023 Gilt was 363.6bp.24

IT and online

► International Game Technology (IGT) launched its comprehensive casino management systems solution, Universal Game Adaptor (UGA). The system can be used for deployment in casinos throughout Mississippi to enhance floor-wide operations and player engagement. By deploying UGA, operators can significantly enhance their guests' experiences by featuring customized promotions and incentives across all EGMs, floor-wide, regardless of the game manufacturer.25

► William Hill is looking to expand their online operation internationally as part of their efforts to turn around the decline in the division. Chief Executive James Henderson admitted online performance had been disappointing when the company gave a

23 “OpenBet acquired by NYX Digital Gaming,” MarketLine, Financial Deals Tracker, 20 May 2016, via Factiva, © 2016 MarketLine - an Informa plc business. 24 “William Hill increases sterling bond with small ‘Brexit premium’,” GlobalCapital, 20 May 2016, via Factiva, © 2016 Euromoney Institutional Investor plc. 25 “IGT Expands Systems Solutions Offering in Mississippi,” The Racing Post, 21 June 2016, via Factiva, © 2016 CenturyComm Limited.


trading update last week that showed net revenue was down by 11%. Crispin Nieboer was last week confirmed as the bookmaker's online Managing Director, with international expansion mentioned as one of his three priorities, along with product enhancements and customer acquisition and yield. Henderson said, “In order to expand our international footprint we are looking to open or re-open in certain markets and are now rolling out more language versions of our site.” Germany and Greece were mentioned as two potential markets for re-entry. William Hills closed its German sportsbook four years ago due to regulatory concerns. However, last year they joined the German Sports Betting Association (DSWV). It withdrew from Greece in 2012.26

Management moves

► EG solutions, the back office optimization software company, appointed Nigel Payne to the Board as Non-Executive Chairman, with immediate effect. Nigel has more than 30 years of experience as a director of both publicly listed and private companies. He has extensive expertise with listed companies.27

► Sun Bets, the new gambling joint venture between Australian betting giant Tabcorp and the publisher of the Sun newspaper, has appointed Jamie Hart, former William Hill Head of innovation as their Executive Director. Hart, who was director of innovation and customer experience at William Hill before leaving in March, will report to Tabcorp's Chief Operating Officer of Wagering and Media, Craig Nugent.28

► Christopher Bell was appointed Independent Director of Rank Group on 1 June 2015. The shares were up from £2.02 to £2.49 and the total annualized return to shareholders since his appointment is 26.1%.29

► Bernard Saundry will resign as Chief Executive of Racing Victoria at the end of

26 “William Hill eye online international expansion,” The Racing Post, 17 May 2016, via Factiva, © 2016 CenturyComm Limited. 27 “Paddy Power Betfair plc Directorate Change,” Regulatory News Service, 23 March 2016, via Factiva. 28 “Former Hills man Hart joins Sun Bets,” The Racing Post, 12 June 2016, via Factiva, © 2016 CenturyComm Limited. 29 “Christopher Bell starts second year as Rank Group Independent Director 01 June 2016,” People in Business, 1 June 2016, via Factiva, © 2016. News Bites Pty Ltd.

the year. Saundry, who has been with Racing Victoria for 14 years, was promoted to Chief Executive in 2012. He will continue in the role until December, giving the organization time to find his successor. During his tenure, Saundry improved the financials of the organization. He also led a new media strategy, which featured a free-to-air channel for horseracing in Victoria being established.30

► Goals Soccer Centres appointed, Mark Jones, the head of Grosvenor Casinos as its new Chief Executive. He will come on board from July. He will replace Goals founder Keith Rogers. A hunt for his successor was on, since the start of this year. Mr Rogers, stepped down as Chief Executive so that he could move to the US to oversee the expansion of the Goals model there. It currently runs one site in Los Angeles but plans to add several more centres in the next few years. Mark Jones was appointed the Managing director of Grosvenor Casinos in October 2014, prior to which he was leading Rank Group’s bingo division. Mr Jones is also chairman of the National Casino Forum, a trade body, and was previously the Chairman at the Bingo Association.31

► London-listed gaming technology provider, Nektan, has appointed International Game Technology's Leigh Nissim as its new permanent Chief Executive, replacing Gary Shaw who has been serving as interim CEO since the departure of David Gosen in January. Nissim joins Nektan from IGT, where he has served as commercial director for the supplier's interactive business since 2012, overseeing key European and North American markets. He has more than 11 years' experience, holding high profile roles including Commercial Director and UK Managing Director of SwiftStake Technologies, Commercial Director of GTECH G2, Managing Director of St. Minver, and Chief Operating Officer for Vitesse Media. Nissim will come on board in late July. Gary Shaw, the interim CEO, will take on a

30 “Racing Victoria chief executive to step down,” The Racing Post, 28 May 2016, via Factiva, © 2016 CenturyComm Limited. 31 “Casino boss to take charge at Goals,” thetimes.co.uk, 27 May 2016, via Factiva, © 2016 Times Newspapers Limited.


different executive role as Director of strategy.32

► 888 Holdings appointed Ron McMillan as Senior Independent Director with immediate effect. Ron has been a Non-Executive Director of the company and Chairman of its Audit Committee since 15 May 2014. Prior to joining the company's Board of Directors, Ron was the Global Finance Partner of PricewaterhouseCoopers, Northern Regional Chairman of PricewaterhouseCoopers in the UK, and Deputy Chairman of, and Head of Assurance for, PricewaterhouseCoopers in the Middle East, in addition to serving as audit engagement leader for a number of major listed companies.33

► Richard Moross expressed his interest to step down from the Ladbrokes Board at the AGM. He did not seek re-election as a Director at the Annual General Meeting and Resolution 10, set out in the Notice of the Annual General Meeting, will not now be put to the shareholders for approval. Mr. Moross joined the Board in 2012 and has decided to step down so that he can devote more time to his other commercial interests.

► GVC Holdings appointed Liron Snir to its newly created role of Chief Product Officer. Snir joins GVC from Playtech, where he was Vice President of product and strategy. He had previously spent six years with 888. The appointment follows that of his former Playtech colleague Shay Segev as GVC's Chief Operating Officer. Chief executive Kenny Alexander described Snir as “one of the leading professionals in the industry”. He added, “This appointment reflects our commitment to delivering best-of-breed products and services. It is testament to the merits of the GVC and bwin.party merger that the enlarged company can attract and retain such talent and we continue to seek further key appointments.”34

Regulatory news

► On 23 June 2016, the UK voted to leave the EU in what marked a historic day for Britain. Definitive implications and how the ‘leave’

32 “Nektan appoints IGT's Leigh Nissim as new chief executive,” Gaming Intelligence, 18 May 2016, via Factiva. 33 “888 Holdings plc Appointment of Senior Independent Director,” Regulatory News Service, 9 May 2016, via Factiva. 34 “VVGVC Holdings addition; in brief,” The Racing Post, 29 March 2016, via Factiva, © 2016 CenturyComm Limited.

vote could affect the Betting and Gaming sector are yet to be determined, as the intricate mechanics of triggering Article 50 are debated.

► A new legislative bill is proposed in the US to legalize fantasy sport. If the bill is passed, it will protect the operation of fantasy sports companies. The bill is now with the Governor of New York, Andrew Cuomo, who has ten days to sign it into law or veto it. It follows six other legislative bodies — Colorado, Indiana, Mississippi, Missouri, Tennessee and Virginia — which have introduced legislation to pass a bill relating to daily fantasy sports this year, however New York is seen to be one of the industry’s biggest markets.35

► Sportech reported that the Court of Appeal has refused Her Majesty's Revenue & Customs (HMRC) permission to appeal to the Supreme Court against the Court of Appeal's unanimous judgment in favor of Sportech. HMRC now has the option of applying directly to the Supreme Court for permission to appeal against the decision of the Court of Appeal and had to do so by 17June 2016.36

► The UK's Competition and Markets Authority has referred the proposed merger of Ladbrokes and Coral for an in-depth phase-two investigation following a request for it to be fast-tracked by the two bookmakers. A decision is due by June 2016.37

35 “US bid for law change raises hope for fantasy sports giant,” The Herald, 20 June 2016, via Factiva, © 2016, Herald & Times Group. 36 “Sportech PLC Court of Appeal refuses permission to appeal,” Regulatory News Service, 24 May 2016, via Factiva. 37 “Power and Betfair get go-ahead,” The Racing Post, 16 January 2016, via Factiva, © 2016 CenturyComm Limited.

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Download - EY - UK Betting and Gaming Update Q2 2016

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