Under pressure: affiliates feel the heat
Listed and private affiliates under pressure, France politics, RH vs DNKG...
Good morning, on Gaming & Co today:
The affiliate sector is undergoing major changes as Google’s update upends SEO workings of both regulated and unregulated companies.
France politics update: talks to form new government continue as Macron is called on to look left for potential PMs
KPI comparators: Regulus compares DraftKings and Robinhood numbers as trading giant mulls OSB entry
Allwyn results, Brazil’s sin tax, news shorts
Subscribe to Gaming&Co!
Affiliates feel backlash from Google’s parasite SEO updates
Pressure rising across the board for iGaming affiliates
Fear and loathing among affiliates: The impact of Google’s site reputation abuse, aka its crackdown on ‘parasite SEO’, continues to be felt as the policy heaps more pain on affiliates and some major publishing brands. Recall that as a result of the update affiliate giant Better Collective has instigated rounds of layoffs and seen its stock price sink like a stone, although not all listed affiliates have been as badly hit as BC (see visual below).
“Parasite SEO” or “site reputation abuse” is a tactic that exploits high-authority brands and websites to publish what Google considers to be unrelated or low-quality content and diminishes the user’s experience. The search giant’s renewed focus on the issue following its discovery of articles on Sports Illustrated and USA Today that, it says, skirted its policies.
iGaming affiliates were some of the first in the line of fire after the update came out in May, the likes of Gambling.com and BC have content partnerships with UK newspapers The Independent and the Telegraph and with US publishers such as Globe Media and Gannett Publishing.
Feeling the heat: Affiliates that haven’t gone down the content partnership route are benefiting from the situation as their rankings go up, but those that based much of their traffic acquisition strategies on such deals have been forced to take drastic action.
XL Media recently sold off its US assets to Sportradar; Catena Media cut 10% of its workforce, reported a $40m write-down and closed numerous US sites; while BC’s stock price has sunk more than 50% YTD and it downgraded its FY24 forecast.
Impact across the board
Non-listed affiliates have not fared much better, with Finixio losing huge amounts of traffic due to the Google crackdown. The UK-based company has shot to prominence in recent years with a series of acquisitions of high-authority sites to exploit their SEO potential for online gambling and crypto betting sites.
“They leave the site structure and most of the original content up, and simply add new material that’s not relevant to the site’s original purpose,” wrote Magenti Media owner Timothy Malmros in a blog post on the company.
Citing Finixio’s acquisition of heritage tech site Techopedia, Malmros said the group used the site’s reputation to promote online gambling and crypto sites.
Google’s site reputation abuse has also had a broad impact across other consumer verticals such as travel, finance or electronics. Some affiliates are relieved they steered clear of third-party content deals. One told Gaming&Co that the Google update fallout is “shining an uncomfortable light” on those partnerships.
Founded in 2005, Play’n GO is a global leader in casino entertainment, known for iconic games like Book of Dead and Reactoonz. A pioneer in mobile gaming, the company delivers 350+ premium titles across 30+ regulated jurisdictions. Committed to a fun, responsible iGaming industry, Play’n GO collaborates with operator partners, regulators, and researchers to provide the world’s greatest casino gaming experience. Having expanded into music via its Play’n GO Music brand, Play’n GO is also a proud partner of MoneyGram Haas F1 Team. For more, visit www.playngo.com.
France waits on Macron to form new government
Gambling industry continues to wait as government talks continue
Ts&Cs: France President Emmanuel Macron’s talks with the country’s main political parties is ongoing, although an agreement is unlikely to happen soon as representatives of the leftwing Nouveau Front Populaire, the largest political bloc in the Assemblée, outline their conditions on issues like retirement reform, immigration and social services.
No 49.3: The Socialist party has ruled out use of the article 49.3 that can force through government reforms, but also led to Michel Barnier's government being brought down last week. As France’s historical parties of government, both the socialists and centre-right Les Républicains are jostling for position.
François Bayrou, President of the centrist MoDem party, has also been mentioned as a potential successor to Barnier, but the socialists have issued a categorical no to that option.
No rollover: As mentioned in G&C last week, the tax rises planned on online operators as part of the original 2025 budget will, for now, not be enacted. The 2024 Budget will be presented to MPs for approval later today and will be adopted by default through a special legal mechanism to ensure public services and state organisations keep running.
By the numbers: Robinhood vs. DraftKings
Robinhood may not enter OSB at all, but comparing numbers with DraftKings is instructive
Useful comparison: News that Robinhood is “keenly looking” at entering the online sports betting space has got industry observers all aflutter (geddit). Some dismissed it as yet another industry rumour, while some observers are more openminded about the possibility of the trading giant competing with the likes of FanDuel and DraftKings in the US.
Whether Robinhood enters the sector will be speculated over for some time, but as it compared corporate data between the trading platform and DraftKings, Regulus Partners pulled up some interesting metrics:
Robinhood achieved FY24 revenues of $2.6bn, attracted 24.4m customers and $43bn in deposits and spent around $750m on tech, but “only c$250m in marketing, $860m on opex and transaction fees, and pays no material tax other than ordinary business taxes”.
“It can therefore generate well over $1bn in adj. cash flow with adj. EBITDA margins of over 40%,” noted Regulus.
DraftKings, meanwhile, “has a similar US-centric footprint and category market share” to Robinhood, but would require “$8bn of revenue to generate a similar volume of adj. cash flow” vs. the $6.5bn and $850m adj. EBITDA it has forecast for 2025.
Squeezing players: Hinting at Robinhood’s potential to develop player revenues, Regulus pointed out that “DraftKings’ ARPU is nearly 6x the size of Robinhood's at c.$600 vs. c.$100”, while DraftKings “will require c.$26-30bn in deposits to achieve its 2025 guidance, or half the current deposits of Robinhood”.
DraftKings also spends “around 5x more on marketing and tech and has a c.20% gambling tax footprint that is nil for Robin Hood”, added Regulus.
The Conexus Group is dedicated to driving growth and success across the global iGaming industry, including helping land-based and retail casinos transition online. Our key brands — Pentasia, Partis, iGaming Academy, and Incline — deliver specialised human capital solutions, M&A advisory, strategic consulting, training and managed services.
Conexus builds long-term relationships and provides deep sector knowledge, including expertise in the French market, to solve complex challenges. By orchestrating these services under one group, Conexus offers clients a streamlined partnership for enhanced performance and sustainable success.
Contact us for more information.
Allwyn suffers from UK switchover while Austria and Greece thrive
UK drag: The UK was a drag on revenue and profitability for leading lottery and gaming operator Allwyn International as Austria and Greece were the strongest drivers of growth during Q3.
The central European operator, which took over the running of the UK National Lottery from Camelot in February this year, is predicting “good profitability in the medium-term,” but further tailwinds while it transfers the lottery to a new technology stack.
“The switchover [from Camelot] was a vast project to execute but it was uneventful,” CEO Robert Chvatal told investors.
Major migration: Chvatal said he was “long-term optimistic” about the UK but pointed out that next year’s transfer to a new technology stack “is the biggest transition in the history of the lottery industry”.
The operator, which owns a 27% stake in Latin America’s leading iGaming operator and Betano parent group Kaizen Gaming, also expects a short-term impact on its finances from the launch of Brazil’s regulated market in January.
By the numbers: Total revenue was up 7% YoY to €2.1bn, while consolidated adj. EBITDA grew 12% to €411m. Excluding the UK and North America, revenue was up 13% and EBITDA 21%.
News shorts
Brazilian Senate set to vote on sin tax: A report in the Brazilian Senate has classified sports betting, online games and fantasy sports as “targeted goods and services deemed harmful to health or that generate negative externalities - such as alcoholic beverages, cigarettes, and fossil fuels”. The writer of the report, Senator Eduardo Braga, wants the new sector to be taxed accordingly, writes SBC News.
Spain reports strong Q3 with GGR up 14% YoY to €348m. Online casino accounted for 54% of GGR and sports betting accounted for 39% of the total.
Wheel turn: IGT’s flagship casino product the Wheel of Fortune is subject to a class action lawsuit that was filed last week. The suit alleges that the game is rigged and defrauds casino players and includes MGM Resorts, Bally’s Corp, Penn Entertainment, Red Rock Resorts and Boyd Gaming for having the game in their casinos.
Senators demand DraftKings and FanDuel antitrust action
Two US Senators have requested that the US Federal Trade Commission and Justice Department investigate DraftKings and FanDuel for suppressing competition and adopting anti-trust tactics, Reuters reported.
Mike Lee and Peter Welch have claimed the US market leaders have worked together to pressure businesses into not working with rival operators since they attempted to merge in 2016.
Contact
Get in touch with Jake Pollard to find out more about Gaming and Co: jake@gamingandco.info