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The News Stories that Gripped the Gambling Universe in 2018 (Part 2)

We are days away from bidding farewell to a transformative year for the gambling industry. The Steve Wynn sexual harassment scandal shook Las Vegas and the global casino scene in a way few other events have done that.

A federal ban on sports gambling in the United States was finally lifted, causing hot streak of events that are poised to change the field for good. In Europe, the United Kingdom implemented new regulations aimed at toughening the grip on the rapidly growing online gambling industry.

In Japan, lawmakers were busy to finally complete a lengthy casino legalization process that will open the door to what could be the world’s next massive gambling market. And last but not least, the ever-changing landscape prompted several big merger and acquisition deals that created gambling powerhouses that now aim to conquer the world.

Here is part two of our series about this year’s hottest stories.

Continues

Japan Finally Closes Out Casino Legalization Process

Japan and the legalization of casino gambling in the country has been a hot topic for the past decade. The Japanese government finally completed the two-stage process of making casinos legal this past July with the passage of the Integrated Resort Implementation Bill. The bill gained the necessary approval in the Diet (the country’s government) a year and a half after the Integrated Resort Promotion Bill was approved by lawmakers.

While the IR Promotion Bill legalized casino gambling in the country, the passage of the second legislative piece was an equally important step as the IR Implementation Bill contained the rules and principles under which casinos would be operated.

The provision of responsible gambling was a key issue while discussions concerning the second bill were taking place. Japan already has a gambling problem, heavily fueled by the locally popular pachinko machines. According to a government-commissioned report, around 3.2 million Japanese nationals have suffered from gambling addiction at some point in their lives.

Japanese lawmakers wanted to make sure that the legalization of casinos would not intensify that existing problem. They looked at how Singapore crafted its casino law more than a decade ago as a template for Japan’s gambling regulations. Under the IR Implementation Bill, up to three casino licenses will be issued. The gambling facilities will have to be part of larger integrated resorts and to occupy no more than 3% of the resorts’ total floor area.

To protect Japanese nationals, the bill placed a cap on the number of visits they will be allowed. Residents of the country will thus be able to visit local casinos no more than three times per month and to pay an entry fee of JPY6,000 in order to be admitted to the casino floor.

Despite the above limits, a number of major gambling and hospitality companies have expressed interest in Japan’s casino market, which according to analysts could be worth between $10 billion and $25 billion.

Asian giants Genting Group and Melco Resorts & Entertainment as well as their American counterparts MGM Resorts International, Las Vegas Sands, Hard Rock International, and Wynn Resorts have all met with Japanese lawmakers and have pitched ambitious plans for the development of casino resorts in attractive destinations around the country.

Reports emerged this fall that US President Donald Trump had lobbied Japanese Prime Minister Shinzo Abe to award one of the gaming licenses to Las Vegas Sands. The company is managed by businessman Sheldon Adelson, who happens to be one of the most generous donors of the Republican Party.

Even though the Japanese government has completed the casino legalization process, the actual opening of the gambling venues is still years away. The country now has to determine the three locations where the properties will be developed and to select the preferred three bidders for gaming licenses. This is likely to happen by the end of 2019.

Many consider Osaka among of the favorites for the future home to one of Japan’s first casino resorts. The city recently won the race to host World Expo 2025 and many believe this could further boost its chance to win the casino race, as well. Las Vegas Sands and Melco Resorts & Entertainment have previously said that Osaka would, too, be their choice for home of their resorts, if they win a license.

Heavy Merger and Acquisition Activity in 2018

It was a busy year on the merger and acquisition front. Companies were looking to grow their geographical presence and adapt to the ever-changing industry environment, growing competition, and regulatory pressure. And consolidation has over the years proved a popular means for achieving all of the above.

Canada’s The Stars Group spent quite some coin this year, adding to its already impressive portfolio not one but several online gambling brands. In February, the owner of online poker room PokerStars snapped up an 80% stake in Australian online betting operator CrownBet, which was later on rebranded as BetEasy. The group paid $315 million in cash and newly issued common shares to enter Australia’s lucrative online sports gambling market.

It is also important to note that CrownBet was actually selected as the winning bidder for William Hill’s struggling Australian business, which effectively made The Stars Group the owner of that operation, as well.

In April, news broke that the Canadian gambling giant has agreed to acquire Sky Betting & Gaming for $4.7 billion, a move that has created the world’s largest publicly traded online gambling company and has secured each of the participants in the deal with expanded footprint across multiple key jurisdictions.

The deal is expected to create cost synergies of $70 million a year and to help SkyBet cement itself in new markets. Prior to The Stars Group acquisition of the British bookmaker, it only operated in the UK, Italy, and Germany. On the other hand, the Canadian group is looking to leverage SkyBet’s huge customer base in the UK and experience in the provision of sports betting services.

After the successful takeover and integration of bwin.party, GVC Holdings completed a second major acquisition deal in as many years. This past spring, the company added British bookmaker Ladbrokes Coral and its retail and online businesses to its portfolio in a £3-plus-billion deal. The combined entity is expected to generate cost synergies of around £100 million over a three-year period.

The deal between GVC and Ladbrokes Coral was announced in December 2017. Back then, the UK Government was yet to announce its decision whether it would crack down on the highly controversial fixed-odds betting terminals and what the scope of a potential clampdown would be.

As it became clear that the maximum stake on FOBTs would be cut to just £2 from £100, Ladbrokes Coral agreeing to GVC’s proposal for a tie-up seems the most logical step for a company that leads the UK retail gambling market. GVC has established itself as one of the major players in the online gambling space and this will certainly help Ladbrokes Coral focus more of its attention on its online business to offset the losses it will suffer from the pending crackdown.

William Hill, another British bookmaker that will be hit extremely hard by the looming maximum FOBT stake reduction, has too sought a suitable online partner to assist its transition to a more digitally-oriented future. In October, the company announced that it has made a cash offer to acquire Malta-based online gaming and betting company Mr Green & co AB for SEK2.8 billion (approximately £242 million). The deal is expected to be finalized in January 2019.

William Hill said that the Mr Green takeover would strengthen its digital business, improve its revenue mix and reduce its exposure to the UK gambling market. The transaction will also secure the British bookmaker with a Maltese office in the post-Brexit era.

This completes our two-part series about this year’s hottest gambling topics. All of the stories are poised to develop further in 2019 and this certainly means that another eventful year for an industry that never sleeps is upon us.

The team of Casino News Daily wishes all its readers a healthy, happy, and adventurous New Year!

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