Online Bingo Helps In Keeping Betting And Gaming Majors Revenues Afloat

Despite the continued deterioration of market conditions, some of the top betting and gaming companies have posted strong performances in 2008. Even for the first few weeks of this year, the trading has been quite encouraging.

A striking feature in these results has been the performance of eGaming divisions of these companies and specifically online bingo has delivered for companies like Ladbrokes and William Hill. For instance, in case of Ladbrokes, its eGaming net gaming revenue increased by 20 percent to £172.2 million in 2008. Ladbrokes started preparing for its eGaming strategy last year as it marked an enhanced investment into new customer acquisition to drive profit growth. The main initiatives included: television advertising for Ladbrokesbingo.com and Ladbrokescasino.com in the UK; tailoring regional content to more effectively satisfy the customer base (for example in the Nordics) and content innovation (for example increased opportunities for betting-in-play). On the back of these initiatives, the company has seen net gaming revenue increase by 20 percent over the year, with new customer sign-ups growing by 21.5 percent to 373,000 and the number of unique active players using Ladbrokes.com also increasing by 20.8 percent to 726,000. Advertising and promotional costs were up £15.9 million to 20.9 percent of net revenue. As far as bingo is concerned, supported by its `Go Bingo!’ TV advertising campaign in the UK, the company saw growth in bingo with overall games net revenue of £28.4 million, a 65.1 percent increase compared to 2007, active customers up 38.5 percent to 205,000 and yield improving 19.8 percent to £139. In the second half of the year, significant product developments in Bingo included new mini games, an enhanced lobby and website as well as linked jackpots and `Laddies Lucky Loft’, a room exclusive to Ladbrokes customers that rewards players who come within one number of winning the full house prize. According to Ladbrokes’ chief executive Christopher Bell, the group currently stands out for its strong cash generation, debt & tax position, and the focus is purely on organic growth. Similarly, William Hill is confident about prospects for both retail and online. In fact, it considers that online business is off to a robust start this year. The group firmly believes that once integrated, William Hill Online will be able to apply the skills of the specialised online marketing and customer management teams it acquired to all customers in the business and to cross-sell more effectively the full range of sports betting and gaming products that the group offers. The online channel is already William Hill’s preferred approach for targeting betting and gaming customers internationally as “it is the most cost-effective mechanism for reaching large, geographically diverse customer bases”, stated the group recently. In terms of performance, William Hill Interactive achieved positive growth last year, delivering an 11 percent increase in net revenue to £125.1m (13 percent on a 52-week basis) and pre-exceptional operating profit of £54.6m, up seven percent (10 percent on a 52-week basis). It grew the number of active accounts (i.e., customers who placed a bet within the previous 12 months) by 18 percent from 432,000 at the start of the year to 510,000 at 30 December 2008. Net revenues from gaming increased by 13 percent to £83.1m (16 percent on a 52-week basis), led by a particularly strong performance in bingo and skill games, which increased by 169 percent during the year. Despite improvements, the group acknowledged that there remained areas of weakness in its online business and these included the affiliate management system and online marketing. “The business had lacked continuous investment in previous years and we recognised that, while we could build these capabilities organically over a period of time, it was preferable to put them in place faster so that we could capitalise more quickly on the continuing growth in the online betting and gaming market,” stated William Hill. Going forward, the strategy for growing this business is focused around marketing, geographical reach and product development. The group intends to: retain customers for a longer period by applying specialised online marketing and customer management skills and by cross-selling the full range of sports betting and gaming products; exploit the improved Sportsbook, poker and casino offerings; and acquire new customers in the UK and Europe and, over time, expand customer base in other key countries. During the first quarter of 2009, the group had plans for putting in place the systems that will enable it to connect to the 70,000-strong affiliate network and to apply its marketing capability to all William Hill Online websites. Among others, casino operator 32Red admits that 32Red Bingo is helping it to grow its customer base. “Our brand continues to be attractive to our target audiences and early interest in our mobile casino and 32RedBingo.com are encouraging,” it stated recently. 32Red managed to increase its yield per active player, which at £537 (2007: £474), according to the group, is one of the highest reported yield per player performances in the gaming industry. Cost per acquisition (CPA) reduced to £119 (2007: £137) per new casino player. Specifically on 32Red Bingo, which was launched in the early part of 2008 and, it said whilst the group still has several areas of this business to develop, performance has been relatively “pleasing” (revenues at £0.2m in 2008). The group has identified that key to bingo revenues will be the continued development in the offering of casino games in its bingo environment. This allied with further TV advertising in the UK and the launch of new initiatives will deliver further new income for 32Red in 2009. For a group like Paddy Power, it has stated that online channel continues to grow in importance and is expected to be the main engine of Paddy Power’s profitability in 2009. Last year, online operating profit increased by €11m or 48 percent in constant currency to €43m. Operating margins were also increased with operating profit as a percentage of gross win up from 34 percent to 41 percent notwithstanding increased value for customers and investment in its products and newer businesses. Specifically on online bingo, it mentioned: “We continue to focus on refining our proposition to best fit this large potential new customer base for Paddy Power. Comprehensive input from customer focus groups in 2008 informed, amongst other things, a significant redesign of our bingo site which has got a positive reaction from customers.” 4th Annual Online Bingo Summit Bulletbusiness will conduct the fourth edition of Annual Online Bingo Summit on 16-17 June in London this year. For more information, click here: http://www.bulletbusiness.com/bingo/ Or Contact: Ravi Virpal on +44 (0)20 7375 7162 by email ravi@bulletbusiness.com