News In Brief: October 11-October 15, 2021

October 15, 2021
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Michigan reports record monthly gross revenue for online gambling, abolition of Lithuania's flat tax for lotteries and gambling looms larger, and the European Lotteries boss weighs in on the EU's Digital Services Act.

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Mega Month For Michigan Online Gambling

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Michigan’s online gambling market hit a record monthly gross revenue total of $126.1m in September, although taxable net revenue from online sports betting was essentially zero after deducting $20m in player bonuses.

The state’s 14 online sportsbooks generated adjusted net revenue of barely $17,000 from gross revenue of $23.7m and record total handle of $354.3m in the first month of NFL season, according to figures released on Thursday (October 14) by the Michigan Gaming Control Board.

In contrast, net online casino revenue was $92.3m, as monthly gross internet gaming revenue exceeded $100m for the first time since the Michigan market’s launch in January.

As in Indiana and Iowa, DraftKings and Caesars appeared to give out the most in bonuses of all operators, with the pair reporting negative net online sports-betting revenue of $4.7m and $1.2m, respectively.

DraftKings' net loss came as the company attracted by far the highest handle of any Michigan operator, with total wagering volume of $106.9m well ahead of rivals FanDuel ($82.1m), BetMGM ($81.8m), Barstool ($29.5m), Caesars ($23.9m) and PointsBet ($13.5m).

On a gross revenue basis pre-bonus deductions, BetMGM took the No. 1 spot for September on $8.8m, ahead of FanDuel on $7.2m and DraftKings' $3m.

The Entain-MGM joint venture also remained the runaway market leader in online casino in September, accounting for a 40 percent share of state-wide gross internet gaming revenue of $102.4m. DraftKings and FanDuel each accounted for approximately 15 percent.

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Washington Regulators Target Offshore Sports Betting

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As more tribes begin to offer sports betting on reservation lands in the state of Washington, gaming regulators are increasing their investigations into offshore online sports-betting operators.

Tina Griffin, interim director of the Washington State Gambling Commission (WSGC), said regulators have identified 48 illegal sportsbook websites, with 34 blocking Washington residents but 14 allowing them to open accounts and place wagers.

Griffin told commissioners on Thursday that officials continue to investigate the 14 sites, but she did not discuss the status of those investigations.

“We will continue to monitor those investigations, but [we] will also monitor for websites that allow sports betting outside of the tribal facility and at other locations throughout the state,” Griffin said.

As part of the sports-betting law that became effective on March 25, 2020, lawmakers set aside $6m of general fund revenue solely for investigations into illegal sports betting.

Currently, 17 of the 22 tribes that operate 29 casinos in Washington state plan to offer sports betting. Griffin told commissioners that 13 of the amended state-tribal gaming compacts have been approved by the U.S. Department of the Interior and published in the Federal Register.

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Lithuania Tax Changes Clear Major Hurdle

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Lithuania’s government has approved the Ministry of Finance’s proposed change to the procedure for calculating lotteries and gambling tax that would abolish the flat-rate tax.

The new tax system must still be approved by parliament.

After receiving the government’s approval on Wednesday, finance minister Gintarė Skaistė said the changes are needed to implement a clearer and fairer, one-size-fits-all taxation system.

“In the months of higher turnover, businesses would pay more, in lower months they would pay less. At the same time, the new procedure will increase the transparency of the gambling sector and ensure fairer taxation,” Skaistė said.

If the tax changes are approved, then the new system will be based on net income received by gambling organisers, and is aimed at removing tax inequalities in the sector.

Currently, operators pay a monthly tax of €260 ($302) for operating a Category A slot machine, €130 for a Category B slot machine, and €2,300 for a roulette, card or dice table.

Under the proposed amendments, Category A and B slot machines, as well as table games, would be taxed a fee of 18 percent of the difference between the value of bets it receives and the winnings it pays out to players.

Bingo and sports betting are already subject to an 18 percent gross gaming revenue (GGR) tax, while online gambling would be subject to a lower 13 percent GGR tax.

If approved by parliament, the changes will come into force on July 1, 2022.

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EL Fears Digital Services Act Could Exacerbate Illegal Gambling

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The European Lotteries (EL) has called on the Council of the EU to exclude explicit mention of online gambling and betting services from the Digital Services Act over fears it will exacerbate illegal gambling.

The EL made the comments as discussions on amending the Digital Services Act continued on Thursday (October 14). After more than 20 years, the Digital Services Act provides an opportunity to alter how the internet in the EU will be regulated.

In the current compromise text of the Council, the Digital Services Act would require national laws to comply with EU laws, “including the Charter and the Treaty provisions on the freedom of establishment and to provide services within the Union ... with regard to online gambling and betting services”.

EL secretary-general Arjan van 't Veer said that the explicit mention of gambling in the “context of freedom of establishment and freedom to provide services within the EU” is “misplaced” and must be “deleted”.

Van 't Veer said it fails to acknowledge the relevant case-law of the Court of Justice of the European Union and “the very nuanced approach to the gambling sector due to its peculiar nature”.

“The Court clearly confirmed on several occasions that restrictions in the gambling sector are justified for reasons of public order, public security, public health, as well as for the overriding reasons in the public interest, such as consumer protection, combating fraud, crime or squandering of money,” he said.

The head of the EL said he fears that if the explicit mention of gambling and betting makes it to the final text of the Digital Services Act and fails to acknowledge these concerns, then there could be an increase in illegal gambling activity, threatening consumer protections in the EU.

The legislative proposal was introduced by the European Commission in December 2020.

Discussion of the changes is ongoing in the European Council and in the European Parliament, both of which have yet to reach positions on the European Commission’s proposal.

Until they reach final positions, the legislative text cannot be finalised. The EL predicts this is unlikely to happen by the end of 2021 due to disagreements among legislators.

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Sisal To Launch Milan IPO

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Italian gaming group Sisal said on Tuesday that it filed for an initial public offering (IPO) on the Milan Stock Exchange.

Sisal, which was bought by CVC Capital Partners in 2016, said the IPO would consist of shares sold by the private equity firm. The company said it plans to list on the Milan Stock Exchange in the first quarter of next year.

Sisal reported a 26 percent year-on-year rise in first-half revenue to €263.6m ($306m), as online gaming more than offset a decline in retail activity impacted by numerous lockdowns. First-half core profit rose nearly 50 percent to €99.5m.

CVC, which will sell part of its shares in the listing, eyes a valuation equal to 11 to 12 times the group’s core earnings, which could value Sisal at around €2.2bn, according to financial sources.

Sisal, which gets most of its revenues from Italy, has expanded abroad, obtaining concessions for retail and online lotteries and gaming in Turkey, Morocco and Spain.

The group is also in the race to run the UK National Lottery.

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After Lost Decade, Jamaica Reopens Casino Applications

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More than ten years after first passing legislation to allow resort-casinos, Jamaica’s government has reopened bidding for a pair of licenses in the western part of the island that includes Montego Bay.

The Ministry of Finance and Public Security last week opened a process that will allow companies to apply to obtain an “approved integrated-resort development” designation. Once that status is granted, developers can apply for a casino license from the Jamaica Casino Gaming Commission.

Applications for resort developments in either Hanover and Westmoreland or St. James parishes are due by February 10, 2022.

Jamaica’s 2010 Casino Gaming Act authorized up to three casino licenses as part of newly constructed hotel-resort complexes, but none of the licenses has been awarded yet.

The new application process comes after Jamaica’s parliament enacted amendments in July to lower the minimum number of hotel rooms required for a casino license from 2,000 to 1,000.

Resorts already under construction are also now eligible to apply for a casino designation, with successful bidders required to commit at least $500m in capital investment and fully open their resorts within three years of opening a gaming facility.

Announcing the new application process, finance minister Nigel Clarke said the amendments to Jamaica’s casino law were “meant to enhance the regime and to strengthen its appeal to potential investors and by so doing to attract and increase foreign direct investment to Jamaica”.

Gaming arcades, lotteries and betting on horse races and other sports are legal in Jamaica and subject to regulation by the island’s Betting, Gaming and Lotteries Commission.

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UK Prohibits Ads Offering ‘Unlimited’ Gambling

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A series of website and Facebook posts by Napoleons Casinos has been banned by the UK advertising watchdog for suggesting that consumers can gamble without limits or restrictions.

One advertisement banned by the Advertising Standards Authority (ASA) appeared on the Napoleons website home page on August 16, declaring: “Enjoy unlimited gambling in all of our Napoleons Casinos”.

Another post on Napoleons’ Facebook page on the same day stated “Napoleons Casino & Restaurant … Unlimited Gaming Entry into Prize Draws Access to all our UK Branches”.

The website's FAQ page also stated: “If you produce appropriate ID you will have access to unrestricted gambling.”

A complaint received by the ASA said the claims “unlimited gambling” and “unlimited gaming” are socially irresponsible.

Separately, the ASA found the expression “unrestricted gambling” to be inappropriate.

The A&S Leisure Group Ltd, which operates Napoleons Casinos, said it “some time ago” changed the wording “unlimited gambling” to “unrestricted gambling” in all advertising.

However, the operator said some instances were missed, as in the current ads, which have since been amended.

Napoleons Casinos told the ASA it would make no reference to “unlimited” or “unrestricted” gambling in current and future promotions.

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Online Gambling Soft-Launches In Connecticut

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Online sports betting and online casino games went live in Connecticut on Tuesday as part of a seven-day “soft launch” of products permitted under a state law enacted in May and under amended compacts with the Mohegan and Mashantucket Pequot tribes.

The soft launch allows Rush Street Interactive’s PlaySugarHouse, DraftKings and Flutter’s FanDuel platforms to accept online sports bets on behalf of their respective partners the Connecticut Lottery Corporation, the Mashantucket Pequot’s Foxwoods and Mohegan Sun.

Foxwoods and Mohegan Sun may also offer online casino games, but not live-dealer games or poker.

The initial launch period is limited to 750 customers per operator, with wagering available for no more than eight hours on Tuesday and Wednesday or 12 hours from noon until midnight on Thursday and Friday of this week, before 24-hour online gambling can commence this weekend.

“As long as no issues arise, we have told the licensees they may move forward with the seven-day soft launch required in the regulations. Once the soft launch is complete, online gaming will open statewide,” said Michelle Seagull, commissioner of the Connecticut Department of Consumer Protection, in a statement.

Mohegan Sun and Foxwoods launched physical sportsbook operations in their tribal casinos earlier this month.

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Review Clears Victoria Regulator Of Misconduct, Crown 'Control'

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An external review commissioned by Victoria state’s gambling regulator has cleared it of negligence and possible wrongdoing alleged in a television report.

The review, led by senior barrister Ian Freckelton, found that evidence did not support the most serious accusations by former staff of the Victorian Commission for Gambling and Liquor Regulation (VCGLR) aired in a Four Corners programme in July.

The 148-page report found that criticism of the VCGLR’s early, post-merger operations until 2015 were legitimate, but that the VCGLR improved its practices and measures in monitoring the Crown Melbourne casino and its parent company Crown Resorts.

“None of the allegations found proved in this report involved wrongdoing, including corruption, unlawfulness, a failure by the VCGLR to comply with applicable laws/regulations, or were motivated by improper purposes … on the part of officers or employees of the VCGLR,” it said.

The review said that, unlike in Four Corners’ portrayal, the VCGLR responded properly to evidence of money laundering and other non-compliant activity at the casino, and that VCGLR managers did not block their inspectors from probing money laundering.

“There is no credible evidence that Crown Casino exercised undue influence and/or control over the activities of the VCGLR inspectors at the Casino,” it said.

However, among ten recommendations for structural reform, the review noted that VCGLR measures are inadequate regarding junket probity, and that junkets should be “legislatively abolished”.

Prior to the review's findings, the VCGLR had been set to be dismantled after the Victoria state government conceded the VCGLR is a “failed experiment” and should be replaced by a dedicated gambling regulator.

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Sweden Bans Curaçao-Based Gambling Operator

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The Swedish Gambling Authority (Spelinspektionen) said it has ordered a Curaçao-based gambling operator to withdraw from Sweden because it is soliciting Swedish residents without a licence.

Indigo Soft, operating under the Cashalot.bet brand, improperly operates a website in Swedish and its affiliates offer services in Swedish without a licence, the regulator said.

The Willemstad-based company has not responded to its request for comment, the gambling authority said.

The regulator has banned 22 operators since gambling licensing started at the beginning of 2019.

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BOS Backs Calls For Tougher Swedish Rules

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The trade group for Sweden’s private online gambling companies, BOS, has backed the findings of the Gunnar Larsson report.

The report, commissioned by the Swedish government, returned recommendations last week on how Swedish Gambling Authority and government ministers could adopt better rules to shut out black market operators and fight match-fixing.

“BOS believes it is good that tougher action is taken against unlicensed companies. That was the reason why a new licensing system was introduced. If the system is slowly eroded, we are all losers, but mostly the Swedish players,” a spokesperson for the trade group said.

The report proposed amending Swedish law so that it became illegal to take any money from Swedish gamblers. Currently, it is only illegal for unlicensed operators to directly target the market.

The BOS spokesperson added: “With regard to the proposals to prevent match-fixing, we completely agree with the investigator that stronger measures are needed to counteract cheating.

"A lot is already being done, but we are in every way open to contributing our knowledge and measures for clean play. Now it remains to be seen whether these proposals will have the effect we all want.”

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Michigan reports record monthly gross revenue for online gambling, abolition of Lithuania's flat tax for lotteries and gambling looms larger, and the European Lotteries boss weighs in on the EU's Digital Services Act.

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