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In this week’s scoop of the Gaming Report we discuss several issues. Starting with the steps that the Nepalese government is taking to improve the legislation related to the gambling industry and to increase foreign investment for the same.
We then move over to report about the agreement struck between Caesars Entertainment, MGM Resorts and the Culinary Workers Union following the expiration the labour agreements of the unionized employees.
Then we have news of a partnership that was formed between DraftKings and Resorts Casino Hotel in Atlantic City and the positive impact it may have on the status of sports betting in the U.S.
Our report also talks about the acquisition of Gram Games by Zynga for $250 Million, which is the most expensive procurement that the latter has made till date. The last two updates deal with two new appointments. Cherry AB had to appoint a new CEO following the arrest of its previous chief executive, whilst the Silver Heritage Group had to appoint a new non-executive chairman after the resignation of its previous chairman.
In order to encourage foreign investment, the Nepal government has announced that it will be drafting and submitting a new casino bill which will also ensure that the country’s existing casinos are in step with the government.
In a statement made to The Kathmandu Post, the tourism ministry spokesman Ghanshyam Upadhyay stated, “We will be submitting a draft to the Cabinet next week for its approval in principle to prepare a Casino Bill 2018. The Law Ministry has given its okay to a preliminary draft. After the Cabinet’s approval, we will begin to draft the bill. The move to introduce the Casino Act is to enhance investment and employment in the industry which is expected to grow quickly.”
While it is expected that the new legislation will increase the flow of foreign capital into the industry, it is believed that the main objective of the law is to bring the current casinos under the government’s control.
Due to the Casino Regulation of 2013 and an interim order issued by the Supreme Court in 2016 that allowed casinos to continue operating despite only paying a portion of what they owe to the government, they have been operating illegally. But with the implementation of the new Casino Act, the casinos will no longer be able to hide behind the regulation of 2013 and the court order of 2016.
At midnight on May 31 the labour agreements between 34 Las Vegas casinos and the 50,000 workers of the Culinary Workers Union Local 226 along with Bartenders Union Local 165 expired. On June 1 the unionized employees had voted that if the casinos failed to establish new contracts by Friday, they would go on a labour strife.
However, early morning on Friday, the Culinary Union stated that they had managed to reach a tentative agreement with Caesars Entertainment who operate nine of the casinos that would have been affected by the strike. Although the details of the agreement have not yet been revealed, but it had been mentioned that the unions had been wanting an annual wage hike of 4% as well as improved workplace safety protections.
On June 3, the Culinary Union announced that a preliminary deal had also been agreed upon with the MGM Resorts, who control 10 casinos in Las Vegas, while the deliberations with the remaining 15 casinos that have been affected are still underway.
DraftKings announced their entry into the sports betting industry on June 1 by partnering with the Atlantic City based hotel-casino Resorts Casino Hotel. Following the verdict of the U.S. Supreme Court in May that allowed the states to legalize gambling within their respective jurisdictions, DraftKings was one of the few companies that tried to capitalize on the promising sports betting market within the country.
The Chief Executive Officer of the fantasy sports provider DraftKings Jason Robins stated, “Everybody knows there’s a big opportunity out there. It’s a new thing, so people are trying to see how they want to go about it, who they want to partner with. Anytime you’ve got a big market about to be created, there’s so much opportunity out there that everyone should benefit, as long as you do it the right way.”
Although DraftKings does not have a gaming license in New Jersey, with state lawmakers working their way to legalizing gambling, that may not remain a distant dream. With several states gearing up to launch sports betting, this deal seems to have been struck just at the right time.
In the costliest purchase made by the social gaming operator Zynga, the company has acquired mobile games developer Gram Games for a staggering amount of $250 Million. Gram Games has development studios in London and Istanbul with around 77 employees. Zynga had agreed to a cash plus a three-year earn-out based on the game developer’s “achievement of profitability goals that align with Zynga’s long-term growth plans.”
Zynga CEO Frank Gibeau said in an interview to GamesBeat, “Their franchises are in good shape, and we are very excited to bring them into the company. They have a unique way of building games through rapid prototyping with small teams.”
The co-founder of Gram Games Kaan Karamanci also stated, “Gram Games helped define the hyper-Casual genre with games like 1010 and Six, and we continued to grow our footprint with Merge Dragons. We look forward to marrying our unique approach to game making with Zynga’s live services expertise to grow our games and continue to delight millions of players around the world.”
Gibeau additionally explained that although $250 Million seemed like a huge expense, it was an ideal move for the company from a growth perspective.
In a shocking turn of events, the CEO of Cherry AB, Anders Holmgren was fired from the Sweden-based online real money gaming company, after he was arrested by the authorities for ‘severe inside trading’.
The Chairman of the Board Morten Klein, in a statement said, “Anders Holmgren has made valuable contributions as CEO of Cherry, but he is unable to perform his duties while facing accusations of severe insider trading. The board of directors has today decided to terminate his employment as CEO. In connection therewith, Anders Holmgren will also leave his assignments as board member in Cherry’s subsidiaries.”
Holmgren had initially purchased SEK 12 Million worth of company stock. The company announced better than expected earnings for the quarter three weeks after Holmgren had made the purchase. The share price experienced an increase of 12% between April 13th to April 16th, which may have increase the worth of the shares acquired by Holmgren by SEK 1.47 Million. However, the incident with Holmgren has not extensively impacted the company’s stock prices.
Holmgren was replaced by Gunner Lind who was previously the chairman of the Cherry Audit Committee.
Following the departure of the non-executive chairman David Green, Australian entrepreneur James Spenceley was immediately appointed as the new non-executive chairman of Silver Heritage Group. The founder of the fourth largest telecommunications company in Australia – Vocus, Spenceley is a well-respected individual and has been described as a “great addition” to the company’s board by the CEO Mike Bolsover.
Furthermore, the company has also notified the Australian stock exchange that the current three non-executive directors have decided to relinquish half of their fees till the end of 2018. With the help of these waivers, along with the reduction in the number of non-executive directors from four to three, the company is expecting to aggregate annualized savings of AU$375,000.
According to the CEO, 2018 was a breakeven year for the company, with its Bhairahawa, Nepal based Tiger Palace casino and resort also possibly breaking even in the third quarter of this year.