The deal, for an undisclosed seven-figure sum, will accelerate the introduction of new promotional and social capabilities to Kalamba operators.

Kalamba, which was founded in 2016, will also be better positioned to address region-specific market demands.

RB Capital has a track record of identifying up-and-coming companies within gaming while, for Vereeni, the investment in Kalamba complements the other brands in which Vereeni has holdings, including companies from across igaming, business intelligence, software development, crypto and blockchain verticals.

Tim Heath, founding partner at Vereeni Investments, said: “In less than two years, Kalamba Games has displayed the creativity and expertise required to make a major splash in slots development. By taking a significant equity share, we are confident that Vereeni Investments can help Kalamba Games reach the next level in its development.

“We are also thrilled to have struck this deal alongside RB Capital, which brings an unmatched level of experience across the igaming space.”

Steve Cutler, CEO and co-founder of Kalamba Games, added: “[Co-founder] Alex Cohen and I, as well as the whole team at Kalamba, are very excited that we have joined forces with Vereeni and RB Capital, who bring the financial resources and strategic capital, that match our vision for being a tier one supplier in the casino games industry.

“The investment gives us the ability to scale up the development teams in Krakow, maintain our already aggressive velocity and build the Games Platform coupled with the engagement and retention tools, that the industry still desperately needs.

“We will also be setting up the new head office in Malta, where we will continue to strengthen the business development, marketing and finance teams.”

Julian Buhagiar, co-founder, RB Capital, said: “It is truly a pleasure for us to be working with Steve, Alex and all the team at Kalamba. We’ve been watching them closely for a while now, and in a short time they have built a very compelling games portfolio. It is very exciting to be supporting their efforts to acquire new territories with their disruptive content. We see significant opportunities for growth ahead for Kalamba.”

Based in Malta and founded in 2017 by Coingaming Group CEO Heath, Vereeni has made a series of strategic investments in the igaming industry, including OneTouch, Sherpa, Coolbet, Global Gaming, Hexagon, Skrilla and Singular.

The post Vereeni and RB Capital take Kalamba stake appeared first on CasinoBeats.

CasinoBeats has cast the spotlight on the former of those region’s and has been picking the brains of four industry incumbents to discuss hopes, hype and aspirations.

Insight is provided by Julian Buhagiar, co-founder of RB Capital, Alex Ivshin, Playson CEO, Yuriy Muratov, head of account management and business development at Booongo, and Vladimir Malakchi, chief business development officer at Evoplay Entertainment.

CB: Now that Ukraine is on the verge of embracing legalised gambling, do you expect a flurry of operators and suppliers to enter Europe’s latest regulated market?

JB: Absolutely – in fact it’s already happening. Ukraine has been a lucrative greyish-white market for countless years now, and some of the most disruptive game developers and platform providers are based in Kyiv. Moreover the territory taps into a significant amount of gaming traffic from quite a few wealthy neighbouring states, so this market is widely expected to become hotly contested for operators and suppliers alike.

AI: Ukraine’s offline gambling had a strong audience before it was forbidden in 2009. Despite the difficult political situation, the government is announcing gambling legalisation almost as an advertisement, so offline operators will be more than welcome. 

The online market is even more appealing as it has a bigger audience, yet we predict that it will be harder to obtain a licence due to the process involved and the sector being a novelty to the government bodies. 

“The Ukrainian government has opened a new chapter in our industry’s story”

Most of the operators and suppliers that have their teams located within the CIS region will surely be taking a serious look at this opportunity, and we’ve already seen Parimatch announcing its intention on securing a licence. We expect the competition to be at a similar level to that of any other European market.

YM: While it is very exciting to see our home market on the edge of legalisation, there is still some way to go before we see a rush of companies looking to enter the market.

We’re yet to see the full extent of the framework that will be implemented and while those with close connections to Ukraine will be among the first to enter the newly regulated market, others will take a watching brief and wait until it becomes more of a viable option.

It is vital that the first steps taken are suitable for both the industry and government in order to build a secure foundation for the market.

VM: For more than a decade now, online gambling in Ukraine has been prohibited. Recent events, however, have turned the situation on its head. The law passed on the 14th of July opens a plethora of investment opportunities, as both land-based and online outlets stake their claim to a newly regulated market. 

As one of Ukraine’s foremost providers, Evoplay Entertainment looks forward to sharing its groundbreaking content with our native audience. The Ukrainian government has opened a new chapter in our industry’s story, and we are excited to be a part of it.

CB: Given most forms of gambling have been illegal since 2009, how big of an appetite will there be for online casino from the public?

AI: The appetite from the gambling audience which was active 11 years ago is still there and they’re very much looking for an opportunity to play. Sports betting was partly allowed, including online, and so with recent lockdown measures and the absence of live sport, some will have switched their attention to slot games. 

As the market has been illegal for so many years, it’s hard to calculate the exact number of active players. But think of it this way – if the income was so bad, why would the government decide to legalise it hoping to bring more investment and income to the budget?  

“Advent of regulation is going to allow Ukrainian bettors to enjoy the full spectrum of what our industry has to offer”

YM: We know there is an appetite for online casino across Ukraine, it is just about putting players in a position where they are protected and can enjoy online slots in a safe environment.  If you take a look at neighbouring Poland, where the online market is estimated to be worth over €1bn, there’s no reason why Ukraine cannot match those levels, especially given that its population is slightly higher.

VM: Since 2009, state lotteries have been the only variety of gambling legally permitted in Ukraine. This has created a market of players who are hungry for innovative new content that can provide the kind of immersive gaming experience that European audiences demand. 

The advent of regulation is going to allow Ukrainian bettors to enjoy the full spectrum of what our industry has to offer, from land-based slot machines to the latest cutting-edge online games. Most importantly, they will now be protected by the responsible gaming safeguards that you get in a regulated market – which of course we are strong supporters of.

JB: The Verkhovna Rada approved bill will be especially welcomed by players, and not only from Ukraine. A lot of players in this market come from periphery states that enjoy ‘fluid’ IP segregation, but are especially more versed in VPNs and crypto payments. Suitably paired with unique compelling Russian-language content (hetalia / night watch slots anyone?) the public will be drawn to this market in droves. The question is not how big, but when.

CB: Finally, do you expect any of the region’s unregulated markets to follow Ukraine’s lead, and begin the process of regulation? 

VM: From my view, European countries that have chosen to legalise gambling have seen a very positive return. The myriad benefits include enhanced player protection, greater transparency and a boost to the local economy. Experts in Ukraine anticipate an influx of up to 9 billion UAH in the first year of legalisation, so we’re talking serious numbers.

“…If a jurisdiction’s regulated framework is viewed as a success, neighbouring countries will look to follow suit”

As a European company at heart, we also hope to see additional markets follow the path beaten by Ukraine and other newly regulated territories in the CEE region. If we take a look at the historical numbers,2008 was the last full year in which gambling was fully legal in the country. Statistics from that period show a market worth around $1.4bn, so when it comes to our native jurisdiction’s commercial prospects 12 years on, the sky really is the limit.

YM: As we have seen in regions across the globe, if a jurisdiction’s regulated framework is viewed as a success, neighbouring countries will look to follow suit. In parts of Europe we see nations such as Romania, which introduced a strong regulatory online framework back in 2016, continue to thrive and grow, and that’s attractive for other governments looking to generate further funds through taxes.

Obviously, the political situation differs across every country but there’s a possibility that more nations will look to embraced legalised gambling is some way in the coming years.

JB: Not initially, and unlikely to happen anytime this year either. It’s still too early to gauge whether the licence fees in Ukraine have been properly set, and for a market to stabilise, a few early-movers need to pitch their tent first and start selling their wares. 

That said, the future for this region does look promising. Parimatch’s lobbying efforts have been suitably rewarded, and will likely trigger a regulation effort across the eastern part of this bloc. Provided regulation is sensible (unlike what we have seen in Northern Europe for example) this should usher in a new chapter of adequately funded gambling tax through licensing, which is no bad thing for the industry as a whole.

AI: That’s hard to say right now. While we all want to operate in regulated markets to provide a safe and secure environment for players, it really depends on political movements. However, there’s still hope for the whole continent to become regulated within the next five to seven years. There are plenty of robust frameworks in existence that neighbouring countries can look to follow and make regulation more unified across the board.

The post CasinoBeats countrywatch: Spotlight on Ukraine appeared first on CasinoBeats.

Looking ahead to the new year, we asked five key industry stakeholders who have been involved with the M&A process in recent times for their view on whether we can expect more deals to be concluded in 2020 and beyond. 

Recently there’s been an increase of M&A activity within the B2B sector. What’s driving this shift in trend?

Therese Hillman, CEO of NetEnt Group: The increase in M&A activity largely reflects the maturity of the market. The B2B sector has for the most part experienced steady growth in recent years, remaining an attractive proposition to outside investors. The strive for geographical expansion, increasing market shares and access to talent has also influenced the number of deals between existing providers. Being able to pool together resources and increase output can provide major strategic advantages in today’s competitive landscape.  

Julian Buhagiar, co-founder of RB Capital: This trend has been gradually building up for some time. Thriving B2B businesses inherently have a better distributed risk profile and are less dependent on single brands and/or territories. Whilst good B2C brands will fetch higher relative valuations, with recent (and still ongoing) turbulence in the Nordic markets, B2B acquisitions are safer, and will appeal to buyers looking for a more stable return.

Huw Thomas, chief strategy and marketing officer at SG Digital: M&A is a natural part of the economy and a signal that some of the industry’s largest markets are beginning to rapidly grow and mature. The major market forces shaping our industry are clearly regulation, responsible gaming, player protection and cut-through player entertainment experiences. Most M&A transactions fit in to one of these buckets.

Market regulation shines a spotlight on M&A for market-access and market-share. Responsible gaming regulation requires investment and clearly, economies of scale are a significant advantage. And finally horizontal or vertical M&A integration is a key focus in that end-to-end player experience.

Our acquisition of Don Best, a leading managed trading supplier of real-time betting data and pricing for North American sporting events, is a good example of this. A powerful local hero in the newly regulated US sports betting space that is being transformed into a global content, pricing and risk management service with our OpenSports stack.   

Matt Cole, managing director of Blueprint Gaming: It’s really down to the lead company’s requirements that drive the decision process, matching their ambitions to enable further business growth or diversify their product portfolio.

There are a number of different factors which can form the reasoning behind an acquisition, such as looking to bolster the lead-companies range of services, bringing further development in-house, giving them access to new territories and jurisdictions, as well as securing the talent and experience for certain market sectors. 

Dominic Mansour, CEO of Bragg Gaming: Regulation, taxes and the resulting need for efficiency drove the initial thrust primarily with the B2C guys, but the same is true within the B2B sector who tend to be just as affected as the B2C through these changes in the sector. What does that mean in plain English?

Cost of doing business went up through taxes and the need to [ensure] regulatory compliance. How to mitigate this is through M&A which creates synergistic opportunities and naturally becomes the logical next step. Furthermore, we’re all searching for growth and whether or not it is there organically, acquisition remains a logical way to accelerate. 

What are the main benefits for those looking to acquire a business? Improved product offering, new talent?

JB: Acquisitions are all highly strategic and depend on the buyer’s specific requirements at that particular transaction. The benefits can contain anything from human capital to IP, brand to territory, competitive mitigation to share price support.

DM: I’d separate it into three broad categories: 1, geographic expansion, whereby the need to enter new markets, diversify revenues or accelerate growth in a market currently untapped is critical, 2,  complementary product offering; does your tech miss something which would be quicker and more efficient to buy than build, especially given the ongoing challenge of understanding the opportunity cost of technical development, and 3, competitive; this gives the double synergy benefit – cost savings where there is duplication and cross sell opportunities where there is not.

TH: An expanded and improved product offering is a significant advantage, together with access to a greater talent pool, but it also provides a hotbed for collaboration and innovation. For example NetEnt’s acquisition of RedTiger will unlock major opportunities in terms of growing our combined international footprint and distributional reach.

There are many complementary aspects between our portfolios, and with our combined capabilities, experience and ideas creating exceptional value to both operators and players, the deal will provide significant revenue synergies across our core markets and in emerging regions.   

HT: No single M&A transaction has the same set of benefits. But succinctly, I would say that the benefit has to ultimately be a more engaging player experience that leads to value for customers and increasing share-holder value. It could be M&A for a new product that can be integrated into existing services.

It could be local market access by acquiring one of the leading suppliers of local content and technology. But ultimately, it has to add incremental value over the long term. It’s about being able to offer a benefit to your customers at a price, quality or speed that your competitors cannot.

MC: The benefits will differ depending on the decision to push through an acquisition. In Blueprint Gaming’s case, securing the most talented and experienced personnel in certain market sectors has been the key driver behind our recent M&A activity in the UK market.

Games Warehouse provided us with immediate growth in software and artwork capabilities, something that would have proved a lengthy process going through the traditional recruitment route. Likewise, the acquisitions of Project and Livewire gave instant expertise and resources for our land-based market game development division, bringing industry veterans and exciting new, pre-trained creative minds into the fold.

Overall, Blueprint’s strategy has revolved around the capacity and development of the company’s products, rather than stretching into new territories or becoming exclusive patrons through mergers.

Looking ahead to 2020, do you expect more M&A deals in the B2B space to take place? Will they be on the same scale as the NetEnt/Red Tiger deal?

DM: Good question, impossible to answer! We don’t see it ending in the near term, the industry growth hasn’t slowed, new markets are constantly opening up and technology continues to evolve rapidly. For the publicly listed, continuing growth trajectory remains critical.

MC: It’s very much a trend we expect will continue. From a game supplier’s viewpoint, the online market especially is becoming increasingly challenging for smaller companies and start-ups. Their aim will be very much focused on getting a foothold, gaining attention and then looking for the larger powerhouse mergers to enable them to develop under stable and secure conditions.

The independent game developers are a dying breed, with the massive start-up costs being one of the biggest hindrances to any ambitious developer, so merger is the only viable option for survival in such a saturated market. Online operators are always looking for the next big thing which will differentiate their offering.

One way of doing this is by blocking competitors from obtaining the same content as they have, which is why good exclusive content is a real marketing asset. So, merging with the best development houses and bringing their products in-house is a simple win for any operator.

JB: At present there are a lot of B2B acquisitions in the sub-£20m space. This is expected to increase over the next three years, as larger players seek to diversify their brand portfolio with a blend of own and white labels, whilst the medium to large (£20-100m, £100m+) deals are rarer as the middle segment is gradually becoming sparsely occupied due to acquisitions by the upper floor.

In the short term; expect more lower-value acquisitions punctuated by the occasional larger middle segment purchases. In the medium term due to absence in the £20-100m range, the larger players will start eating each other; as we have seen in the operator space.

HT: Regulation, responsible gaming and cut-through player experiences are here to stay, and M&A in 2020 will be shaped by this. The winners will be the ones who are able to deliver competitive advantage in all three areas. Whether we see deals on the same scale as NetEnt/Red Tiger will ultimately be determined by the value the acquirers place on plugging gaps in their proposition, reach or quality of execution.

The wonderful thing in our industry is that the opportunity to create powerful and responsible entertainment experiences gets greater and greater, week on week. It’s what keeps our strategy, product and marketing experts on their toes and long may that last.

TH: One hundred percent – there has been an explosion of suppliers in the online sector all vying for a position at the top of the market. With such increase in competition, a boom in transactions is almost inevitable. Considering additional factors such as regulatory shifts and evolving player trends, it is unlikely the pace of M&A activity will slow down anytime soon, as suppliers are looking to combine forces in order to tackle potential challenges on the horizon.

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News broke this morning that Evolution Gaming are poised to acquire NetEnt with a bid made to buy the firm which is subsequently being considered by the latter’s shareholders.

Under the terms of the deal, Evolution has offered 0.1306 shares for each share in NetEnt, valuing each at SEK 79.93 and all shares in the firm to approximately SEK 19.6bn.

Commenting on the proposed acquisition, Buhagiar continued: “NetEnt has a strong US track record and also – alongside their most recent Red Tiger acquisition – some of the best performing slot products in the industry.

“This is of strategic importance for two key reasons. The first is that there is sufficient complementary revenue across both businesses, meaning there is a compelling cross-sell opportunity. 

“The second, and perhaps more profound impact, is that there is now a significantly stronger leverage position against new and existing operators, which in turn places demand on operators to source more disruptive game content to diversify their brand.

“What’s most surprising is the actual valuation, which comes at a 43 per cent premium over the most recent closing share price. This is one of the strongest indicators of a ’bear hug’; in investor terms making an offer at a much higher share price than current valuation, with the objective of minimising any shareholder objections and rapidly moving to consolidate the deal.

“What this significant acquisition means for the US market – and existing operators worldwide – will fully be realised over the coming years as Evolution looks to make good on its promise to save €30m in annual costs. 

“It also could mean a shift away from live casinos to focus on consolidating slots, which could prove challenging at a time of (arguably excessive) market regulation on highly profitable slot games.”

The offered consideration per share represents a premium of 43 per cent compared to the closing price of the NetEnt share of series B on Nasdaq Stockholm on June 23, 2020.

Evolution has stated that it will not increase the offer, with an acceptance period to commence on August 17, 2020 and expire on or around October 26, 2020.

Completion is subject to customary conditions, including regulatory clearances being obtained and the offer being accepted to such extent that Evolution Gaming becomes the owner of shares representing more than 90 per cent of the total number of outstanding shares.

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The investment is expected to offer additional capital for Green Jade, but will also incorporate Green Jade into Vereeni’s network of gaming companies, supporting the supplier’s ongoing growth strategy.

Timothy John Heath, founder and CEO of Vereeni Investments, said: “Vereeni loves nothing more than investing in high-growth, high-potential gaming companies, and Green Jade really ticks all the boxes.

“Green Jade is led by experienced management that has the confidence, ability and creativity to push boundaries in our industry.

“We can already see from Green Jade’s content that this is a special team, and we are certain that the extra support we can provide will help them take things to the next level.”

Green Jade joins Global Gaming, OneTouch and Kalamba Games as a beneficiary of Vereeni’s €100 million ‘Level Up’ tech fund, which seeks to support early-stage ventures spanning the fields of fintech, online gaming, business intelligence, insuretech and blockchain verticals.

Julian Buhagiar, co-founder of RB Capital, said: “Working with Jesper, Ben and all the team at Green Jade is a truly exciting opportunity. The team is backed by some of the best investors in the business, and in just a few months they have built some of the best engaging IP in this industry.

“It’s a pleasure to be involved in such a unique business, and we are very confident about the long-term prospects for Green Jade.”

Benedict McDonagh, managing director of Green Jade Games, added: “As a relatively young company in this space, the only way we can succeed is by creating the type of game-changing casino content that operators simply cannot do without.

“We have accepted this investment from Vereeni and RB because it not only allows us to scale our growth, but also provides access to an unparalleled network of igaming expertise. We are absolutely delighted to be opening the next chapter in the Green Jade story alongside our investors.”

The post Vereeni and RB Capital acquire stake in Green Jade appeared first on CasinoBeats.

RB Capital, the specialist gaming industry brokerage, said the government’s plans will “spark a second wave of large-scale mergers and acquisitions”.

Julian Buhagiar, co-founder of RB Capital, called the rate rise announcement “inevitable but disruptive” as Chancellor Philip Hammond seeks to cover the shortfall in tax income from the decrease in FOBT stakes to £2.

“The rise was not unexpected but this doesn’t take away from the further pain many UK-facing operators are going to have to prepare for,” said Buhagiar.

“In addition to the fall-out from changes in Brexit-related legislation, this industry is constantly adapting to wave after wave of regulatory changes and, because of today’s announcement, some operators will feel like throwing in the towel.

“We’ve already seen a spate of mega deals with the likes of GVC and the Stars Group completing major M&A transactions. Today’s rate rise will only mean one thing: that life will get tougher for smaller operators and they will either be forced to downsize UK operations, shift market focus elsewhere or sell to the highest bidder.

“We fully expect this Budget decision to be a catalyst for increased M&A which will start as early as the first quarter of next year, and for already dominant brands to further strengthen their positions by capitalising early on these buy-side opportunities.”

RB Capital’s views echo those of analyst James Myles, of Eta Delta, who called the rise “terrible news” for smaller operators.

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