Aristocrat Leisure reported a 53% rise in after tax profits to A$1.45bn (€871.9m) in the 12-month period ending 30 September (FY2023).

The online and land-based gaming supplier reported steady growth across nearly all financial indicators, which the business said was the product of accelerated investment in its strategy.  

Revenue for the period stood at A$6.30bn, a 13% increase from the A$5.57bn recorded by Aristocrat in FY2022.

The company’s EBITDA also increased during the reporting period, rising 13.8% to A$2.11bn.

After normalising the results to account for the impact of acquisitions, Aristocrat said it achieved profit after tax of A$1.45bn. This stands as a 24.4% increase from the same period in 2022.

Aristocrat chief executive Trevor Croker said he was “proud” of the company’s financial results.

“The growth that Aristocrat delivered over the period demonstrates the ongoing resilience, competitiveness and diversification of our portfolio, and sound fundamentals in the markets in which we operate.

At the same time, we have been able to accelerate investment behind our successful growth strategy.

“The benefit of our strategic investments to grow and diversify Aristocrat was particularly evident in the strong 7% revenue and EBITDA growth in constant currency at group level over the year.

“This was underpinned by an exceptional gaming performance which more than offset an extended industry-wide moderation in mobile game demand, again highlighting diversification and scale as fundamental strengths of our business.”

Aristocrat bets on online growth

Going forward, the business said it would continue to invest in “attractive adjacencies and verticals” as it aims to build further resilience in its operating portfolio.

This will include through its “build-and-buy” strategy in online RMG. Since announcing the approach in Q1 2022, the company has sought to invest in its own platform, while at the same time making acquisitions to speed up the process.

The most significant of these deals in 2023 was the business’ $1.2bn purchase of iLottery supplier NeoGames, a deal which is expected to close in H1 2024.

This followed on from an attempted acquisition of Playtech in 2021, which shareholders ultimately rejected.

Previously, the company also purchased B2B supplier Roxor Gaming in a deal that closed in February 2023.

In its FY2023 report, Aristocrat highlighted that its RMG division Anaxi had achieved several milestones since its launch in October 2022.

Those included signing content agreements with businesses representing 80% of the US iGaming market, it said.

Company opts to raise dividend

Following the results, Aristocrat announced it would be increasing its dividend to shareholders to A$0.34 per share, up from A$0.26 in the same period the previous year.

As part of the business’ capital management strategy, it has returned A$811m to shareholders over the past 12 months through dividends and buy backs.

Going forward, Aristocrat predicted continuing profit growth through to September 2024.

The company said this reflected its strong market share, as well as profit and revenue growth in its Aristocrat Gaming division.

However, the business warned it could see a possible moderation in consumer spending in certain key markets.

Aristocrat added it intends to invest in Anaxi as it scales its content portfolio and accesses more markets in both North America and Europe.

MGM Resorts International has hired Daniel Yang as chief customer and innovation officer.

In this newly established role, Yang will lead and advance the company’s global consumer success strategy, with a focus on maximising growth and profitability at the intersection of digital technology and the guest experience.

“Dan is a progressive, strategic thinker with a wealth of industry experience leveraging technology and digital strategies to enhance the guest experience in a truly meaningful and differentiating way,” said MGM Resorts CEO and president Bill Hornbuckle.

“Dan’s leadership will be instrumental as we continue to drive organic growth through sales, marketing, loyalty, and product development. We’re excited to have him as a member of our leadership team.”

Aristocrat tenure

Yang joins MGM Resorts from Aristocrat Leisure where he has served as the company’s chief strategy officer since February 2019, responsible for driving corporate strategy, long-range planning and corporate development.

Prior to that, he held various strategy, general management and operating roles at Viacom, now Paramount.

Yang was also CEO and co-founder of a mobile gaming start-up and a strategy consultant for Booz Allen & Hamilton.

“I’m thrilled to be joining MGM Resorts as the company continues to accelerate its plan to create and deploy high impact digital products and services supporting the customer experience in multiple channels,” said Yang.

“The company and its leaders are driven to position MGM Resorts as the world’s premier gaming entertainment company, and the destination of choice for all their customer segments. I’m excited to partner with my new MGM colleagues to achieve this outcome,” he added.

Shareholders of iLottery and iGaming solutions provider NeoGames have approved the proposed acquisition of the company by Aristocrat Leisure.

This shareholder approval is the first of two approvals required for the acquisition to complete. The all-cash transaction was agreed by both parties in May.

The deal values NeoGames at $1.2bn, with shares being purchased at a price of $29.50 each, signifying a 104% premium over the company’s three-month volume weighted average stock price.

During a shareholder meeting, approximately 86% of NeoGames’ outstanding shares were actively voted on, with over 99% of votes cast in favour of the proposal.

Closing conditions

The deal is still subject to certain conditions, including the receipt of all required gaming, antitrust, and foreign investment regulatory approvals.

Additionally, at least 66.7% of NeoGames’ shareholders need to approve the merger at the second shareholder meeting.

The first approval represents one of the substantial milestones towards completing the transaction and both companies said they “are continuing to work together to progress the remaining steps”.

Aristocrat and NeoGames expect the acquisition to be finalised during H1 2024.

Share performance

As a result of the merger, NeoGames experienced a remarkable surge in its share price during the month of May, gaining an impressive 108.2%.

Over the past six months, NeoGames shares are up 140%. Aristocrat shares have also performed well, gaining 15.8% during the same period.

These positive stock performances reflect investors’ confidence in the potential of the proposed acquisition and the strategic value it holds for both companies.

For land-based casino supplier Aristocrat, the deal is designed to give it significant scale in the online RNG industry.

iGaming and iLottery solutions provider NeoGames has appointed Motti Gil as CFO, effective as of 1 August 2023.

Subject to regulatory approvals, Gil will succeed Raviv Adler, who is set to step down at the end of July to pursue another opportunity.

In the interim, NeoGames said Gil and Adler will be working closely together to ensure a seamless transition.

Gil brings a wealth of experience to his new role as CFO, with over 20 years of global financial and operational expertise, the firm added.

He has served as CFO of Aspire Global since 2016, including during its time as a publicly listed company prior to its acquisition by NeoGames.

Previously, Gil held various finance executive and controller positions in private and publicly listed companies, including seven years as CFO of GoNet Systems, a wireless technology company.

“Motti Gil has been with the company for seven years with much of that time spent as the CFO of the publicly listed Aspire Global Group prior to the merger last year,” said NeoGames CEO Moti Malul.

“He has continually demonstrated exceptional financial acumen and leadership skills throughout his tenure.

“He remains instrumental in overseeing critical financial operations and has strong relationships with key stakeholders. Motti is the ideal candidate to step into this role at this time,” Malul added.

A period of transition

Malul also acknowledged Adler’s impact on NeoGames’ success.

“His unwavering dedication, strategic insights and exceptional leadership have been instrumental in shaping our company and in delivering value for our shareholders.

“We are genuinely thrilled for Raviv as he embarks upon a new opportunity, and wish him all the best in his future endeavours,” he said.

These recent developments indicate a period of transition for NeoGames, as it prepares for its acquisition by Australian gaming giant Aristocrat Leisure.

Last month, Aristocrat announced it would acquire NeoGames in a $1.2bn deal.

NeoGames’ current management team, including CEO Malul, president and head of gaming Tsachi Maimon, and COO Rinat Belfer, have all agreed to remain with the company under Aristocrat ownership.

Suppliers took the lead in May’s stock market sweep, with NeoGames, Genius Sports and Kambi Group emerging as standout performers.

In contrast, operators and affiliates mostly experienced a period of stagnation or even registered losses as highlighted in our report on May’s biggest losers in the stock market

NeoGames

NeoGames experienced a remarkable surge in its share price during the month of May, gaining an impressive 108.2% and making it one of the biggest winners among gambling stocks.

The most significant leap occurred on 12 May when NeoGames’ share price skyrocketed by 112%, surging from $12.84 to $27.17. This notable increase contributed significantly to the overall monthly gain.

The surge in NeoGames’ stock can be attributed to the company’s announcement that it would be acquired by Aristocrat Leisure.

The deal was priced at $29.50 per share, valuing the company at approximately $1.2bn.

This price represents a premium of over 100% compared to NeoGames’ previous market value.

Despite the positive news, NeoGames’ stock currently trades below the proposed acquisition price of $29.50 per share.

This disparity stems from uncertainties surrounding the deal’s completion and timeline.

The acquisition must secure regulatory approvals and meet other contingencies, including the approval of NeoGames’ shareholders.

Management estimates that it could take up to a year before all conditions are met.

Nevertheless, it appears highly likely that NeoGames will soon become part of a larger entertainment conglomerate.

In such a scenario, shareholders’ stock will be automatically converted into cash at the agreed-upon price of just under $30 per share.

This potential acquisition presents a significant opportunity for investors to cash in on their investments in NeoGames.

Aristocrat impact

Intriguingly, while NeoGames’ share price experienced a substantial surge in May, the performance of the acquiring company, Aristocrat, remained relatively stagnant.

Despite witnessing a temporary increase upon the announcement of the acquisition deal, Aristocrat’s stock failed to sustain its momentum and eventually lost ground in the subsequent days.

The lackluster performance of Aristocrat’s stock highlights the market’s mixed sentiments and indicates that investors may have had reservations or concerns regarding the acquisition and its potential impact on the company’s overall growth strategy.

As the acquisition process unfolds, it remains to be seen whether Aristocrat can leverage the synergies gained from integrating NeoGames into its portfolio effectively.

Market observers will closely monitor Aristocrat’s future performance and assess whether the acquisition ultimately yields the desired outcomes for the company.

Genius Sports

Elsewhere, Genius Sports experienced an impressive gain of nearly 55% in the stock market during the month of May.

Over the past 12 months, Genius Sports had left investors disappointed as its stock plummeted by approximately 75%.

However, the company showcased a promising turnaround in its latest quarterly results, surpassing its previously issued earnings guidance and subsequently adjusting its full-year revenue and adjusted EBITDA expectations.

Notably, Genius Sports now expects its revenue for the entirety of 2023 to be approximately $8m higher than initially projected, reaching $400m.

This upward revision indicates the company’s growing confidence in its ability to generate revenue and points towards a positive trajectory for its financial performance.

Furthermore, Genius Sports anticipates achieving positive free cash flow in the second half of the year, a significant milestone that investors in this rapidly expanding industry eagerly anticipate as a step toward profitability.

The positive market response reflects investors’ growing confidence in Genius Sports’ potential to deliver strong financial results and solidify its position as a key player in the sports data and technology sector.

As a result of these recent positive developments, Genius Sports’ shares have demonstrated a notable year-to-date increase of 60%, indicating a renewed investor interest and optimism in the company’s future prospects.

As the year progresses, market observers will closely monitor Genius Sports’ ability to sustain its upward trajectory and achieve the anticipated milestones.

The company’s focus on revenue growth, improved financial performance, and the potential for positive cash flow in the near future positions it well to regain investor confidence and deliver long-term value.

Kambi Group

Kambi experienced a substantial surge in its share price, gaining approximately 18% during the observed period.

Starting at SEK182.70 on 2 May, the positive momentum was fuelled by the successful repayment of a €7.5m convertible bond to Kindred Group.

The bond was initially issued to Kambi in 2014 during its spin-off from Kindred, marking an important step in the company’s journey towards strategic independence.

Investors have warmly welcomed this news, recognising the increased appeal of Kambi as an acquisition target now that it operates more autonomously from its client operator.

The positive sentiment surrounding the repayment translated into a notable surge in Kambi’s share price, with an increase of over 8% observed during early trading on May 3, driving the shares to SEK198.

By 30 May, the shares had further climbed to SEK216.40.

Despite the recent gains, it is worth noting that Kambi’s current share price remains considerably below its all-time high of over SEK525, reached in April 2021.

However, the successful repayment of the convertible bond demonstrates Kambi’s commitment to financial stability and solidifies its position as a robust player in the market.

The strategic independence gained by Kambi following the bond repayment is expected to enhance its appeal and draw attention from potential investors and acquirers.

The market will closely monitor Kambi’s performance moving forward.

Australian gaming giant Aristocrat Leisure has agreed to acquire iLottery and iGaming solutions provider NeoGames in an all-cash transaction.

The deal values NeoGames at approximately $1.2bn, with shares purchased at a price of $29.50 each.

This represents a 104% premium over the company’s three-month volume weighted average stock price.

ASX-listed Aristocrat has been exploring opportunities to enter the rapidly growing RMG space following the collapse of its attempt to acquire industry giant Playtech.

The company subsequently established its dedicated RMG gaming division called Anaxi.

Nasdaq-listed NeoGames provides end-to-end solutions for regulated lotteries and gaming operators. It flexed its own M&A muscles last year with the purchase of Aspire Global.

Their suite of services includes iLottery, iGaming, and online sports betting, with four complementary business units: NeoGames, AspireCore, Pariplay, and BtoBet.

Strategic rationale

“Bringing together NeoGames and our growing Anaxi business will position Aristocrat with global scale and capability in the growing online RMG industry,” said Aristocrat CEO and managing director Trevor Croker.

“We see great opportunities in the combination of our complementary businesses, with clear revenue and growth potential that comes with a complete and seamless online RMG solution.

“This proposed acquisition builds on the strength and resilience of our business, expands market opportunities and adds capabilities to unlock our full potential,” he added.

Aristocrat said the acquisition will provide significant international growth opportunities across the online RMG industry, particularly in the large North America segment.

Moreover, the entry into the highly regulated iLottery market is expected to facilitate further penetration across other online RMG verticals.

Finally, Aristocrat anticipates that the acquisition will deliver attractive financial returns and growth, with the acquisition being EPSA accretive from the first full year of Aristocrat ownership (FY25).

During an investor presentation, Croker emphasised the importance of NeoGames’ “solid technology stack” as a key factor behind the acquisition.

“It’s got a proven PAM that is now used in a number of markets in Europe and offers the ability to then leverage that PAM into the North American market as well,” he added.

Croker further disclosed that discussions between Aristocrat and NeoGames had been ongoing for the past year.

“It was about understanding them as people, understanding their business, understanding the markets, understanding their technology, and really getting to the core of what drives their organisation as a whole,” he explained.

Key executives to stay on

Meanwhile, NeoGames CEO Moti Malul commented: “I am tremendously proud of our entire team at NeoGames, as together we have established our leadership position, driving our success across iLottery, iGaming, and online sports betting.

“We are delighted that the team at Aristocrat recognises the significance of what we have built, and the strategic opportunity to combine our complementary businesses. We firmly believe that this transaction represents a great outcome for all of NeoGames’ shareholders, customers and employees.”

Members of NeoGames’ management team, including CEO Malul, president and head of gaming Tsachi Maimon and COO Rinat Belfer, have agreed to stay with NeoGames under Aristocrat ownership.

Terms of the agreement

Under the terms of the agreement, NeoGames has agreed to transfer its statutory seat, registered office and seat of central administration from Luxembourg to the Cayman Islands.

Moreover, a wholly owned subsidiary of Aristocrat will merge with and into NeoGames, with NeoGames being the surviving company and a wholly owned subsidiary of Aristocrat. NeoGames will become a privately-held company and no longer be listed on any public market.

The transaction is to be completed within 12 months, and is subject to, among other things, NeoGames’ shareholder approval and certain regulatory approvals.

However, NeoGames’ board of directors unanimously approved the agreement and has recommended the transaction, while shareholders representing 61% of NeoGames’ outstanding shares have also already agreed to vote in favour.

Aristocrat requires 66.7% of NeoGames’ shareholders’ approval to proceed with the transaction and initiate the regulatory approval process.

Australian game supplier Aristocrat Leisure has promoted Sally Denby to CFO, effective immediately but subject to regulatory approval.

Denby, who was appointed deputy CFO in February after serving seven years in senior finance leadership roles, has previously led finance teams at Nine MSN and GE Capital, the latter across both Australian and European business units.

Aristocrat CEO and managing director Trevor Croker commented: “Over her successful career at Aristocrat, Sally has proven to be an outstanding enterprise leader and a trusted finance partner.

“Sally’s cultural impact, deep engagement with our operating businesses and understanding of our obligations as an ASX listed company further add to her credentials.

“In particular, as deputy chief financial officer, Sally has worked effectively with myself and our leaders in supporting the execution of our growth strategy and ensuring seamless continuity post the departure of our previous CFO in April,” he added.

Aristocrat CEO Trevor Croker: “As deputy chief financial officer, Sally has worked effectively with myself and our leaders in supporting the execution of our growth strategy and ensuring seamless continuity post the departure of our previous CFO in April.”

Aristocrat’s previous finance chief Julie Cameron-Doe left the business in April to join US operator Wynn Resorts as CFO, after more than eight years with the Australian provider.

“A comprehensive global search identified Sally as the best candidate to step into the role, at this exciting time in Aristocrat’s growth journey,” Croker said.

“I congratulate Sally on her appointment and look forward to her ongoing contribution to Aristocrat,” Croker concluded.

In October, Aristocrat revealed a new brand for its real money gaming (RMG) segment, Anaxi.

The firm decided to create a dedicated online RMG business in February this year, in the wake of the collapse of its attempted acquisition of industry giant Playtech.

Ex-Paddy Power pros put pressure for reform on investors

The Financial Times ran a feature earlier this week on Stop Gambling Harm, an industry lobbying group set up by Paddy Power founder Stewart Kenny, the operator’s first institutional investor Ian Armitage and Fintan Drury, who served as a consultant to the business in its start-up phase before spending six years as its non-executive chairman.

According to the FT, the lobbying group has its sights set firmly on institutional investors and legislators, where it aims to apply pressure aimed at generating significant change in the industry with a focus on responsible gambling legislation.

Stop Gambling Harm’s website lists its key objectives as the establishment of more restrictive gambling controls for customers aged under 25, the introduction of mandatory deposit limits, a complete ban on VIP schemes and free bets, mandatory separation of sports betting and online casino accounts to prevent cross-selling of products, the introduction of a £2 stake limit for online slots and rigorous controls on gambling advertising around sport.

“Legislators have shown themselves to be slow,” Drury was quoted as saying in the piece. “It’s the institutional owners who have the power.” 

The piece suggests the group tried, and failed, to tighten industry restrictions from the inside while working with Paddy Power, and has decided that a more effective route will be to pressure investors directly.

Market expansion brings RG to the fore in US

Forbes cast its eye stateside on Wednesday to pose the sort of questions we’re not yet accustomed to hearing with regards to the US online gambling market.

Rather than tie itself in knots over how and when online gaming businesses in the Land of the Free will eventually turn to profit, the mag posed a bigger question — about what the negative effects of the rapid expansion of sports betting and iGaming might be, for both individuals and society.

“Turn on your local sports radio station, segue over to ESPN or hop on an internet discussion forum and you’ll find these mediums are now saturated with sports gambling information,” author Zack Jones opined.

It’s a familiar discussion to many of us in Europe, where concerns around the advertising and marketing of online gambling have been at the forefront of the conversation for several years now.

Following rapid three-year growth, Jones suggested: “The country’s aggregate gambling revenue will hit an incredible $44bn in ’22. This figure nearly equates to that of the cumulative total of music, books and movies.”

And while most within the gaming world consider it to be on a par with the aforementioned products — that is, just good old-fashioned entertainment — Jones wrote: “The widespread legalisation of sports gambling will undoubtedly create hundreds of thousands or even millions of gambling addicts, many of whom lose their homes, vehicles, families and dignity.”

On the other hand, he was keen to point out the positive impact gaming can have upon a society. “Gambling directly benefits the state coffers, providing essential revenue used to advance the greater good. 

“Federal taxes are paid on sports gambling winnings, meaning the industry ultimately serves as a driver of nationwide utilitarianism. This social benefit greatly outweighs the social cost of the rapidly rising industry, serving as a rising economic tide with the potential to lift all boats,” Jones concluded.

Buffalo beef for Bigwinboard

Online casino affiliate Bigwinboard found itself in the middle of an ongoing beef this week, after it was hit with a trademark abuse complaint from Australian slots specialist Aristocrat.

The affiliate published its side of the story on Wednesday, with a somewhat bemused ‘what’s-this-got-to-do-with-us?’ tone.

Indeed, the disagreement itself is not between Aristocrat and the affiliate, but between Aristocrat and Pragmatic Play.

In a bizarre twist, the Australian developer filed the complaint and told Bigwinboard that Pragmatic’s Buffalo King and Buffalo King Megaways closely resembled some of its own products — namely Buffalo Chief, Buffalo Stampede, and Buffalo Princess.

According to an email from the supplier, Aristocrat believes it owns the trademark right to “three buffalo characters running and the middle buffalo is looking directly forward”. 

Moreover, it claims that “this middle buffalo design is also nearly identical to the buffalo character used by Pragmatic Play in its Buffalo King games.”

“All things considered,” Bigwinboard said, “we do have to admit that the star of Aristocrat’s and Pragmatic Play’s slots do look like buffaloes, and they are looking directly forward, so we’ll have to leave it up to the courts to decide this one. 

“Woe betide anyone else who uses a forward-looking buffalo to front their game. Oh wait, we’ve pretty much got a veritable stampede of them already,” the site concluded.

With the kind of comic timing that can’t be taught, Push Gaming yesterday revealed its new Bison Battle slot, which left us furiously googling the difference between buffaloes and bison. They do look remarkably similar – just don’t tell Aristocrat!

JKO Play has been granted an extension to meet the put-up-or-shut-up deadline and make a clear intention regarding its possible acquisition of Playtech.

Previously, the deadline by which JKO was required to make a firm offer to acquire the business, or declare that it did not intend to make an offer, was set for today (5 January).

JKO must decide whether to go head-to-head with Australian gambling tech giant Aristocrat Leisure, which had its 680p per share offer for Playtech recommended by the supplier’s board on 18 October.

Playtech has now adjourned the shareholder meeting to approve the Aristocrat offer, which was originally scheduled for 12 January, to the 2 February, as it awaits a solid counter offer from JKO. 

UK Takeover Panel rules state that JKO will now have until 26 January, seven days prior to the scheduled shareholder meetings, to make its intentions crystal clear.

JKO, which is led by Formula 1 team owner Eddie Jordan and Keith O’Loughlin, former SVP of sportsbook and platform for SG Digital, suggested it might make an offer for Playtech in November, when it approached the business to request access to certain due diligence information in order to assess acquisition terms.

The newly-formed business began exploring the possibility of a deal for Playtech despite the London-listed supplier having already agreed to the terms of Aristocrat’s £2.7bn bid.

In a statement released today, Aristocrat reaffirmed its intention to acquire Playtech despite the delay. It said: “The recommended acquisition provides attractive value in cash and enhanced regulatory and financial certainty for Playtech shareholders.

Acknowledging a potential rival bid from JKO, it continued: “Aristocrat further notes that any other potential bidders have already had a substantial amount of time to make an alternative proposal for Playtech. The decision to further delay the relevant shareholder meetings extends the period of uncertainty for all Playtech stakeholders.”

The shareholder meeting delay could potentially see changes to the terms of Aristocrat’s offer, including an increase in price.

At the time of writing, Playtech’s share price is ahead of the 680p per share offered by Aristocrat. It sits at around 727p per share, although it was initially buoyed by the original Aristocrat offer. 

Sky News reported in December that Jordan-led JKO was preparing an offer of around 750p per share, which the Playtech board would have to seriously consider.

Shareholders will be hoping for further clarity over the future of Playtech’s Latam-facing subsidiary Caliente before the JKO offer deadline expires.

According to Sky, Caliente Interactive, an online gambling business predominantly operating in Mexico, is in advanced talks over a near $2.5bn merger with New York-listed SPAC Tekkorp Digital.

The SPAC deal is significant because Playtech owns 49% of Caliente Interactive through a joint venture.

Peel Hunt analyst Ivor Jones said: “Playtech shareholders will want to see the potential value of its stake in Caliplay reflected in any offer price.

“This could be achieved by the offeror (JKO, Aristocrat or another) including a contingent value right in the structure as was suggested in the Sky News article.

“If JKO has demonstrated sufficient seriousness of intent to justify delaying the shareholder meetings, we believe that the probability of an offer at higher than 680p per share has increased,” he added.