Following the unanimous recommended approval on Wednesday, May 17, by the Gaming Control Board for NeoGames’ complex licensing application during a special meeting, Israel-based company will receive final licensing approval from the Nevada Gaming Commission today, May 18.
Smoothing the regulatory process:
With regard to said recommended approval, the Board proposed a license for the company to work as a manufacturer and distributor in Nevada. In addition, it officially signed the licensing of corporate entities and the individual employees of the firm. The license hearing, aka the special meeting mentioned above, was held three days after Aristocrat Leisure revealed it was buying NeoGames for around $1 billion. In this regard, Aristocrat officials said: “The takeover would give the company an entry into the ilottery market and pave the way for further penetration in online-gaming verticals.” On that note, NeoGames CEO Mordechay Malool told the Board on Wednesday that “the enterprise value of the deal is $1.2 billion when factoring in debt, while the equity value is $1 billion. Aristocrat and we have sent a message to the market that the deal will close in about 12 months, because of the large number of jurisdictions we hold licenses in and gaming regulators need to give their opinion on the deal in Europe and 20 jurisdictions in the U.S. and two in Canada. We hope the process won’t take that long, but we gave ourselves enough runway to complete it.”
Furthermore, Aristocrat’s purchase will help smooth this regulatory process. In this regard, Malool added: “NeoGames was founded in 2014 and is a spinoff from Aspire Global, a business-to-business gaming company operating in Europe. We launched our first U.S. customer in 2014 with the Michigan lottery and now have five North American customers: New Hampshire, Virginia, North Carolina, and the Canadian province of Alberta. NeoGames has 1,100 employees in eight main locations around the world. Half of our management team resides in Israel and most of the other half is in Europe. We have customers in Europe, Africa, North America, and Latin America and work in 50 regulated jurisdictions.” George Assad, a Board member, added: “It’s exciting for Nevada to have such exposure to international and global companies.”
Worrying questions were raised during the hearing, although Board member Brittnie Watkins asked about regulatory breaches in Belgium, Sweden, and the UK. In this regard, the company said: “A license by its Aspire Global has been surrendered in Sweden, given that the structure of the regulations and marketing activities didn’t make any sense commercially to hold one.” Malool added: “In the UK, Aspire Global was fined for due diligence of business partners, but that has since been restructured to meet concerns raised by authorities.”
The constant change of owners of the company fueled its prosperity:
In 2015, nearly a year after the founding of NeoGames, William Hill became an investor and bought 30% with an injection of $25 million. In this regard, Malool said: “They were only a shareholder and a very good shareholder. They were looking for technology to boost their proprietary sports-betting solution connected to our player-account management. We were very honored they selected us as their technology partner and signed a deal with us. Since then, we’ve been supporting them to the best of our ability for what they call the Liberty solution that they deploy across 20 states already and Ontario in Canada.” What’s more, when Caesars Entertainment bought William Hill, it maintained the technology contract with NeoGames and kept their stock, but later relinquished its ownership. In addition, in March, NeoGames signed a three-year contract extension with Caesars with one-year options, according to Malool.
Guidance provided to the market for 2023 profit for NeoGames was $235 million to $255 million. The sports wagering section accounts for about 10%, while the ilottery is the dominant income.
Additionally, NeoGames has a pending Indiana license application scheduled for June and currently holds a provisional license for the state.
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