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CVC Capital Partners acquired Italian gaming and payments operator Sisal Group SpA, from private equity firms Apax Partners, Permira and Clessidra Capital Partners, for €1 billion. Milan-based Sisal is the second largest gaming company in the Italian market. “Sportech combined the pools brands by buying Littlewoods Gaming in 2000, Zetters in 2002 and Vernons in 2007,” the BBC said, adding last December that Netplay TV was in talks to buy the business for “up to £100m.” Sportech, formerly known as Rodime PLC, was originally an electronics company specializing in hard disk drives based in Scotland. In 2000, the company changed its name to Sportech PLC, after acquiring Littlewoods Pools from The Littlewoods Organization for £160 million. “It emerged in February that Ian Hogg, the company’s former chief operating officer, was among prospective bidders interested in the pools,” The Times reported, adding that Sportech said last year that it intended to sell its pools operations, which it expected to fetch “about £100 million.” However, in May Sportech rejected the offers stating, “Following recent media articles, the board confirms that it has received an approach for The Football Pools which it has rejected as it did not match our valuation of the division.” “Sportech has established a unique position in the regulated gaming market worldwide, most notably with our licensed gaming businesses in the US. Following a number of years of significant investment in our technology and licensing, we are now in the position to grow our business, dispose of surplus property assets, benefit from regulatory change and deliver increased value to our shareholders,” said Sportech chief executive Ian Penrose on August 24, upon releasing the company’s interim results for the first half of 2016. “We have reached a key stage in our development, as our US business makes progress in both existing and new markets around the world, and our Football Pools business has reached expected stability after a number of years of modernization,” he commented further. The Football Pools has provided customers with the chance to win big cash prizes by playing pool games based on the outcome of football matches for over 90 years. Over 300,000 players currently play Football Pools games every week. The Football Pools is based in the UK, and is the oldest football gaming business in the world. “The Football Pools has paid out over £3.2billion to winners and donated over £1.3 billion to sports, the arts and good causes in its 90 year history,” the company says. The Football Pools strategy is to stabilize then grow revenues through improved customer retention, increases in spend per head from core customers and the recruitment of new players via subscription and online channels. Investment in technology has driven modernization of the business enabling better cross sell opportunities and a lower, more agile operating base. “We have spent many years implementing significant operational and technological change in order to turn around the fortunes of our 93 year old football gaming business. We are pleased therefore that the final important stages in this process were implemented in the first half of the year, such that the business now has strong foundations to move forward,” Penrose said. The “logistically challenging” and “cost intensive paper coupon collector network,” which has been in decline for many years, “was closed,” the company said. “Customers from this network are now transacting with the business on a subscription or digital basis. A new database system is now in operation following a lengthy process to move away from old legacy systems.” Having made significant improvements in technology, the company is now able to extend the distribution of its products digitally through the launch of a “Football Pools App.” “We have also continued to develop new products to drive additional revenues and increase customer engagement. This summer, we have introduced pool games with cash out functionality to (in partnership with Colossus) and a new online Spot the Ball game to replace the traditional Spot the Ball paper coupon offering,” Penrose added. Sportech’s Football Pools results for the first half of 2016 were in line with expectations, with EBITDA of £7.0m equivalent to prior year after excluding the results of the closed collector channel. Revenues of those continuing channels are down by 3%, according to Penrose. Weekly spend per Classic Pools customer has increased by 2% to £3.08 per week. Total new player acquisition in the six month period was 10,000, with 53% being recruited online. Total customer numbers at June 30, 2016 were 220,000 (2015: 234,000), with 63% of its Classic Pools customer base now playing by direct debit. These initiatives were complemented by a continued focus on the cost base, which reduced from previous year. Sportech processes over $13 billion (£8.5 billion) in bets annually, with a presence in over 30 countries and is licensed to operate in over half of the US States. Sportech is headquartered in London and employs over 1000 people globally. Sportech PLC comprises 3 business divisions, Sportech Racing and Digital, Sportech Venues and The Football Pools. The divisional structure is strengthened by an experienced digital gaming team, driving its iGaming initiatives in the US, its ADW (online wagering) operations in Connecticut and its Fantasy Sports initiatives. Both the Racing and Digital (which processes over $11 billion bets annually) and Venues (which operates legal betting exclusively and in perpetuity in Connecticut in venues, online and mobile) divisions are based in the US and Canada, where the company employs 630 people across field operations and four corporate offices. Sportech is licensed by gaming regulators in 28 US States. The group is benefiting from its strategic initiatives to grow its international operations, and “now generates nearly 70% of its revenues overseas,” it said. Sportech has a rich history within the Football and Racing industries in both the UK and the US. The core of its business divisions is based around pari-mutuel, pool or tote betting and its origins in the UK stretch back to 1923, when the first Pools coupon was handed out and 1913 when the world’s first automatic totalisator machine was introduced in Australia. POSITIVE EUROPEAN ONLINE GAMING GROWTH OUTLOOK The online gambling sector offers growth opportunities for European gaming companies in 2016-17 versus traditional brick-and-mortar operations, despite likely pressure from increasing taxes and regulation, says Moody’s Investors Service. In recent years, online gaming markets — like online poker, casino, sports betting, bingo, lottery — have grown rapidly to €36.9 billion in 2014 from approximately €6.6 billion in 2003, and are expected to grow to approximately €42.8 billion by the end of 2018, says Moody’s. The online sector’s fundamentals are expected to remain positive for at least the next two to three years, which will support high single-digit growth rates despite regulatory and tax pressures. Potential legalization of online gambling or further liberalization of the rules that already govern it in some European markets and US states offer growth opportunities for large online gaming operators, which could offset uncertainty in regulatory regimes. Europe, in particular, continues to see the creation of an increasing number of new regimes that permit licensed and regulated betting, notably through interactive platforms, and which is gradually removing the once dominant monopolistic approach favoring the lottery sector, according to the European Gaming & Betting Association (EGBA). The continuing growth of professional sport and associated betting markets on a global scale, as a direct result of consumer demand driven by technological advances, has provided both business sectors with clear fiscal benefits and further strengthened their symbiotic relationship, says the EGBA. This has manifested itself in a range of mutually beneficial commercial ventures through direct sponsorship of sporting events, sportspeople and clubs, along with numerous indirect benefits to both products from media advertising deals around sport (where legislative frameworks permit). The recent wave of M&A is likely to continue as operators look to become bigger and more diversified to offset rising costs and compete more effectively. Operators will also increasingly look to develop technology platforms in-house, such as William Hill’s Project Trafalgar, to limit their reliance on third-party providers and reduce customer acquisition and marketing costs, Moody’s added.]]>