Bingo Bounces Back18th May 2020 10:41 am GMT
Bingo has been the forgotten vertical of online gaming for some time, but it is making a comeback. Gaming Intelligence looks back over the turbulence of the past few years and looks ahead to bingo’s renaissance.
The online bingo industry has undergone a complete transformation during the past two years. During 2018, one of the UK’s most established land-based brands, Gala Bingo, rebranded to become the omnichannel Buzz Bingo. In early 2019, 888 acquired the Costa Bingo brands from JPJ Group for £18m before the latter went on to acquire Gamesys for £490m. Rank acquired Stride for £115.3m. Throughout it all, Tombola has just carried on being Tombola, sitting at the top of the tree as PokerStars does in poker and bet365 does in sports betting.
The bingo networks have had a tricky time. GVC acquired Cozy Games for next to nothing. Microgaming is in the process of closing down its bingo network. 888 paid a record £7.8m fine to the UK Gambling Commission for allowing self-excluded punters to gamble on some of its Dragonfish sites, having excluded themselves on others.
“Bingo was at the epicentre of the UK’s regulatory developments,” says 888 head of commercial development Yaniv Sherman, who is responsible for Dragonfish.
Stride Gaming endured its own horror-show with a UKGC penalty charge of £7.1m, ultimately leading to the sale of the business to Rank Group.
Rank Interactive chief operating officer and Stride co-founder Darren Sims says the sanction itself was not the reason for the sale but that “it was reflective of where the UK was going in terms of regulation and taxation, and scale is key.”
“Since the last change to the point of consumption tax, it is a lot harder to operate a bingo business in the UK,” says Sherman. “Dragonfish is one of the only businesses left standing.”
Stride’s revenue had been falling in the quarters following the regulatory action and prior to the acquisition but has stabilised since Rank acquired the company. Revenue for Rank’s digital operations rose 14 per cent to £65.2m during the first half of the 2020 financial year, as it prepares to migrate the Grosvenor and Mecca brands onto the Stride platform.
“It’s very much heads down and focus on integrating the two business units,” says Sims. “It’s a work in progress. It’s quite a big job.”
Sims and fellow Stride co-founder Eitan Boyd have a long history in the bingo industry, having founded a B2B bingo company called GlobalCom way back in 2002. That company was snapped up by 888 for $32.4m in 2007 and became Dragonfish. The pair then founded a number of B2C sites, which they also sold to 888 for £60m in 2009.
Boyd and Sims continue to be intrinsically linked to 888. In addition to the 14 brands that run on its own platform, Stride runs a portfolio of 150-odd brands on a number of platforms, from Aspire to Jumpman Gaming to Virtue Fusion, but the largest number are on Dragonfish. Sims says this strategy of diversity will continue because different players simply prefer different platforms and you will never convince them to change.
Following the Gambling Commission fine, 888 embarked on a massive overhaul of its compliance and responsible gambling procedures to such an extent that Sherman says he now considers it a competitive advantage. A number of partners were terminated because they were not able to cope with the new regime.
“In a sense, we sanitised the network so the rest of the operators that were compliant and were able to grow could flourish,” says Sherman.
The latest available figures from 888 revealed B2B revenue was down 44 per cent for H1 2019 to just $14.8m, due largely to the Costa Bingo brands’ revenue transferring over to B2C but also due to GVC Holdings finally insourcing Foxy Bingo onto its own platform. 888’s B2C bingo revenue crept up ten per cent to $19m due to the boost from Costa Bingo. It would have slumped three per cent without it. Foxy was a big loss but it was one that had been threatened for quite some time.
There is a limited number of B2B clients that 888 can go after. Most operators do not want to change platform unless they are forced into it and 888 is much more selective in its choice of prospective partners.
“It was very hard in 2018 to explain to everyone why we needed all this documentation. But two years and tens of millions of pounds-worth of fines for other operators has shown there is a certain way to operate. And we err on the conservative side,” continues Sherman. “If you look at our partner ecosystem, some of them adapted well and have enjoyed growth, and some of them did not.”
He highlights Stride’s support for all its changes and its input into product improvements. (“Because those guys are real bingo experts,” says Sherman.) Other operators to flourish include Tau Marketing and Iceland Bingo operator Black Spark Media.
“Our most successful partners are more online and analytical-focussed, much like our B2C business,” says Sherman. “It’s powered by an understanding of all marketing channels – of Google, social and mobile.”
Since the regulatory overhaul, 888 has revamped its entire client framework, dubbing it Snow White. It was live with around half of 888’s brands at the time of going to press.
“Along with all the improved performance tools you would expect with new technology, we have also built in compliance features that will allow us a more efficient rollout of each new feature we need to implement. It is a big step towards being a compliant bingo business in 2020,” says Sherman.
While Stride, Tau and Black Spark have flourished, others have fallen by the wayside. Black Spark was established via the acquisition of sites from Gaming Realms in 2016. Like Stride, Gaming Realms was established by two of the bingo industry’s most experienced entrepreneurs – Patrick Southon and Simon Collins, who also founded Foxy Bingo many years before.
Unlike Stride, Gaming Realms chose to focus on its Slingo B2B business and it sold its B2C brands (to Oslo-listed River iGaming), citing the higher costs of UK regulation and taxation. Southon and Collins have now left the business, with the latter going on to helm News UK’s online gaming efforts.
News UK’s Sun Bingo is the sixth biggest bingo operation in the UK, according to Which Bingo. Way back in 2015, it took the decision to migrate from Gamesys to Playtech. Launched in 2005, Sun Bingo grew into one of the UK’s largest and most popular bingo websites. It was originally powered by operator Tombola, which was dropped in favour of Gamesys in 2008.
After a year in which revenue increased by 43 per cent to €33.7m in 2018, Sun owner News UK agreed a 15-year extension to its deal with Playtech. However, the business recorded a loss during 2018 of €20.1m, an improvement on the €28.8m loss recorded in 2017. The latest available figures from Playtech are encouraging, with revenue up 19 per cent from €33.7m to €40m during the 2019 financial year. The addition of some Sun Vegas products has given it a broader games offering.
If, to some extent, Sun is still regrouping after the migration from Gamesys to Playtech, other Playtech customers are motoring onwards following similar upheavals.
Gala Leisure began to rebrand its bingo operation in May following the sale of Ladbrokes Coral’s retail bingo clubs to Caledonia Investments in December 2015. GVC retained the Gala Bingo brand for online, and in late 2018, Gala Leisure launched its new omnichannel offering Buzz Bingo, powered by Playtech.
At the time of launch, digital director Stevie Shaves informed us: “We spent over a year ensuring our online offering is exactly what players want. We’ve captured the in-club feeling of being among friends and delivered it online.
“When players log in to Buzzbingo.com, they see where their ‘Buzz Buddies’ are playing and can join their game in seconds. This seamless process truly encompasses what we are all about as a brand.”
It is not a dissimilar approach to that followed by market leaders Tombola and by Gamesys on its bingo sites. Community matters in bingo and it takes some skill to foster one.
“Last year there was a lot of change,” says Playtech managing director for bingo Angus Nisbet. “This year, bingo seems to be coming out of that slightly confused time, and everyone is looking at it in a different light.”
He says that sports betting operators, which have shunned bingo in recent years, are starting to talk to Playtech about how it can dedicate development to bingo. With UK politicians ramping up the rhetoric about a £2 stake limit on slots, bingo’s 25-35 per cent margin starts to look a whole lot more interesting.
“People are accepting that they have to leverage existing players through whatever products they have but also to target a different demographic,” continues Nisbet.
The online gaming world has changed hugely during the past five years and regulatory compliance and safer gambling is now front and centre – both of which play to bingo’s strengths.
As Sims at Rank says, bingo is no longer a domain for smaller operators. Compliance is a big expensive part of that, but not the only factor. Microgaming followed the closure of its poker network with the termination of its bingo network at the beginning of 2020 – a sure sign that the smaller operators on its network were struggling to cope.
According to WhichBingo, the number of bingo sites operating in the UK market plummeted from 395 at the end of 2018 to 264 at the end of 2019.
“Bingo is an expensive product vertical,” says Nisbet. “It is pari mutuel. You need that community aspect. You need chat moderation. And you have to constantly evolve.”
Nisbet believes Playtech has driven that process. He has seen it from the other side, when working for Gala. “We initiated the development points model that allowed us to use Playtech resources to drive our development roadmap.”
Each operator has its own dedicated resource within the Playtech bingo team and each of its operators have used that to creatively develop their products.
Many have focussed on popular television show brands. Gala has Coronation Street, Emmerdale and The Chase. Rank’s Mecca Bingo has launched X-Factor Bingo and Britain’s Got Talent Bingo. Buzz Bingo has The Voice Bingo and Deal or No Deal Bingo. Sky has also innovated with the introduction of its Tipping Point feature.
Outside the UK
Playtech licensees dominate the market to such an extent that they operate five of the UK’s top 10 brands (Mecca, William Hill, Sky, Sun and Paddy Power), according to Which Bingo. It was much more.
The consolidation of the market was accelerated by the late-2017 acquisition of Cozy Games by GVC Holdings. It was a sign of Cozy’s weakness that it was a small enough acquisition to be deemed non-price sensitive and unnecessary to announce to the stock market.
So, while the scale of its cutbacks were huge, they should not have been surprising. GVC closed 95 per cent of Cozy’s bingo brands – some 87 sites. GVC now operates 18 sites. The big ones have been migrated to the Cozy platform. Coral Bingo, Ladbrokes Bingo and Gala Bingo have all migrated from Playtech, while Foxy has left Dragonfish. The migration has done Foxy no harm at all, with net gaming revenue up 21 per cent after the migration.
Because of the client migrations, Playtech’s B2B bingo revenue was down 11 per cent to €23.3m during 2019, but the supplier signed welcome contract extensions with Rank and Sky. While clients are spreading their wings with product innovation, the consolidated market is limited.
“My challenge is how to make bingo work outside the UK,” says Nisbet. “Not many people are making bingo work beyond the UK.”
Tombola has a big presence in mainland Europe – in Denmark, Spain, Italy and Sweden. Kindred Group pulled its Maria Bingo brand in favour of Maria Casino and pulled out of the UK after it acquired 32Red, but Maria Casino endures in Sweden, Norway, Finland, Denmark and Estonia with a bingo tab.
Spain has a strong retail bingo culture but its online market is small. Rank, for example, has nine Enracha clubs, which generate annual revenue of around £35m. It acquired the YoBingo.es site in 2018 for an initial €21m (rising to €52m depending on performance). It described its flatlining H1 2019 NGR of £6.3m as “disappointing” but remained “confident” about its future prospects.
Gamesys is more upbeat about Spain, where its Botemania brand claims 14 per cent of the bingo and casino slots market, according to the Gamesys annual report, and brings in revenue of around £25m. During 2020, it plans to launch another brand into the Spanish market.
Until recently, operators have been deterred by the lack of slots in Spain but since they were legitimised it allows operators to pursue a model they are more comfortable with. Playtech is looking at revisiting the market in 2020. 888 has been relatively successful in the Spanish online poker and casino market but has yet to launch bingo there. Sherman is cautious about a market that at present only amounts to tens of millions of Euros and less than a handful of operators.
Italy has a different regulatory regime again, with all numbers having to go through the regulator AAMS before a game is finished. This makes for a complex operation but Playtech launched an expanded bingo platform in March 2019 with the Sisal, SNAI and William Hill brands.
If Italy, Spain and the UK come with complex regulatory restrictions, the US will be no different, but it is a market that intrigues Sherman at 888.
As head of commercial development for the entire group, Sherman has been permanently based in the US since 2018, exploring the opportunities offered by the repeal of the Professional and Amateur Sports Protection Act (PASPA) that year.
He describes a family weekend away hiking at the Delaware Water Gap, a national recreational area in the Appalachian Mountains bordering New Jersey and Pennsylvania. The family had booked into a motel nearby and after checking in, Sherman heard a commotion outside. He ventured out to see what all the fuss was about and discovered a bingo evening in full swing.
“Naturally, I sat down and bought a few tickets,” says the 888 exec. “It was a bit odd. It is not like the bingo halls in the UK, which anchored the UK bingo experience and is like a female oriented casino. Bingo is considered to be a charitable activity, so it is an ad hoc event.”
There are bingo halls in Native American reservations but bingo is not a regulated gaming activity in the US. It is normally held in town and church halls, where there are no gaming machines bringing in additional revenue.
“There is potential – especially for the Native American tribes – but sport trumps everything right now. You would need to approach it very carefully but I think the people I met in that bingo room would definitely play online,” says Sherman.
In 2015, Gamesys launched a 90-ball bingo game on its New Jersey site VirginCasino. com, the iGaming site it operates through a partnership with Tropicana Entertainment. The site is doing OK – fifth in the local market but growing by 20 per cent during 2019. However, this is mainly driven by slots. Gamesys has yet to ramp up its bingo marketing. But five years on from launch, it’s still there. But even if Sherman is right, the US bingo opportunity could be another five years away and, for once, New Jersey’s casinos might not be its biggest beneficiaries
This article first appeared in the Apr-Jun 2020 issue of GIQ magazine.
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