Over the last 25 years, Israel has been a home of thousands of jobs for gambling and gaming developers, publishers and operators. For some people, this could sound a bit strange, considering the country’s Government very strict rules when it comes to betting.
Israel has been going through a series of law enforcements about this industry. The Israeli Penal Law 5737 – 1977 (a set of local gambling laws) has only legalized the national lottery, sports betting, and horse racing gambling. The national lottery in Israel has been operating since 2006 with five lotto games. On the side of sports betting, the Israeli Government has set aside a board (the Commission for Sports Gambling) that oversees this activity. This board is responsible for providing sports betting matches on its website daily. The featured sports are basketball and soccer.
However, online gambling has never been recognized in the land. Most sites in the country have been shut down. Actually, authorities went further and ordered the closure of websites that were giving gamblers access to external websites. Besides this, land-based casinos are also prohibited in the territory. The only way to play traditional casino games such as blackjack, slots, roulette, baccarat, and craps in Israel is to visit the cruise ship casinos that dock at Israel’s port cities.
GAMBLING AS ECONOMY GROWTH DRIVER
Of course, all if this becomes even more ironic when noticing some of the top companies in the online gambling industry has their headquarters in Israel. In fact, this 9 million people nation has a very significant share of the USD 75 billion generated by the iGaming sector globally. Israel as a country and Israelis as citizens have created large operators and software providers, such as Playtech, 888 Holdings, PokerStars, NeoGames, Aspire Global, LVision, and LSports, among other firms. There are also groups, like Codere Online, that set up offices in the country (in this case, in Tel Aviv) to use the capacity and creativity of Israeli developers in their online gaming products.
The gambling industry has become one of the great growth drivers for Israeli’s economy. It is not only about software development, but also in terms of creating marketing tools that are primarily technological (from client acquisition to managing customer relations). The local online gambling companies are of three main types: casinos; technology firms; and affiliates. In this article, G&M News will explain how business started and which are the main brands behind the success of the country (and its visionary executives) as an iGaming powerhouse.
PLAYTECH
Teddy Sagi is a 50-year-old Cypriot-Israeli billionaire businessman. He is also the founder of the globally renowned online casino software vendor Playtech, established in Tel Aviv, Israel, in 1999. Since then, the company has grown to become one of the largest iGaming companies in the casino industry, and one of the first Israeli groups to feature in the London Stock Exchange market (in 2012), with a net worth of more than USD 3.6 billion.
Playtech’s portfolio includes not just online slots, but also table games, video poker, scratch cards and specialty games, jackpot games, and live dealer casino games, available for play from desktops, laptops, smartphones, and tablets. In September 2021, the company presented its H1 2021 results, reporting revenue of USD 535.9 million for the six months ended June 30th 2021, a decline of 4% from the prior-year period. However, adjusted EBITDA grew 13% to USD 168.64 million, while adjusted post-tax profit rose 1460% to USD 74.2 million. The provider showed a very strong online performance in the B2B gambling segment, with continued expansion in the U.S. and Latin American markets.
Recently, Playtech has had a series of takeover approaches: in October 2021, international gaming manufacturer Aristocrat Leisure offered USD 3.7 billion for the operation. Besides, there are other interested groups, such as JKO Play Ltd (its bid will be announced on January 26th), and Gopher Investments (it first offered USD 4.07 billion, but then retired of the acquisition race). Playtech’s shareholders haven’t made up their minds yet, so they will meet on February 2nd to consider either Aristocrat’s or JKO’s proposal.
888 HOLDINGS
Current Gibraltar-based company, which was valued at USD 951 million when it floated in 2005 in London, was originally conceived in Israel after Aaron Shaked, a dentist, visited Monte Carlo for a conference and saw the potential for creating a virtual casino online. With little knowledge of gambling, Aaron and his brother Avi visited a by-then authorized Israeli casino in Eilat, on the south coast, with notebooks in hand, and mortgaged their homes to launch the company in 1997 in Tel Aviv with Shay and Ron Ben-Yitzhak. Shay, a software engineer who served as the company’s chief technical officer until 2006, programmed the original games on the website. When the company floated, the Shaked brothers pocketed almost USD 204 million.
Gigi Levy, who was chief executive of 888 between 2007 and 2011, said when online gambling began to emerge in the late 1990s, Israeli businessmen capitalized on the chance to make their name in a sector where others were concerned about regulatory uncertainty. “When things are still fuzzy and unclear, you may find people from other countries less keen on taking risks, while Israelis move quickly. In the case of online gambling, no one knew what was right and wrong, and it required a lot of technical capabilities. It basically meant that the Israelis became leaders,” he commented.
An online gambling giant, 888.com started expanding after acquiring licenses in the UK, Ireland, Gibraltar and Malta. The firm is one of the trailblazers in the gaming industry, receiving more than 50 international awards over the years for its high intelligence and innovation in the sector. It has released various renowned casino brands, like 888Casino, 888Poker, 888Sport and the 888Ladies in bingo, among others.
POKERSTARS
There are also many Israeli industrialists who have aided the industry to grow. Among those entrepreneurs is Isai Scheinberg. Born in Israel in 1946, he earned both his bachelor’s and master’s in mathematics from the Moscow State University in Russia. Before he entered the workforce, he was drafted into the Israeli Defense Force, where he served for 3 years. It was during his time serving in the military that he first learned how to play poker, and quickly became an excellent strategist. He was known for his aggressive style of play and his willingness to take risks.
Once he left the Israeli Defense Force, he accepted a job as a programmer at IBM’s office in Israel. He was so successful at his job that they sent him to their offices in Canada to train the programmers over there. He still made time to play poker on a regular basis. Years after that, in 1996, he finally decided to enter the World Series of Poker main event, and managed to take 25th place. While he didn’t perform as well as he was hoping to, this experience did persuade him to consider making a career change. Once he got home from the WSOP, he decided to start working on his very own poker site. He quickly realized this was a project he was not going to be able to accomplish on his own, so he started recruiting his team. He invited some of his co-workers from IBM to join him. He also got connected with a man named Terrance Chan through an online poker forum; his in-depth poker knowledge made him a perfect asset to the team. His last recruit was his son, Mark, who would eventually become the company’s CEO. PokerStars was launched in 2001.
Scheinberg made a bold decision in 2005 to relocate the company’s headquarters to the Isle of Man because they wouldn’t charge him any corporate taxes over there. It was also the year that Scheinberg added a blog to the PokerStars site, making them the first online poker site to have one. He sold his stake in PokerStars to Montreal-based gaming software supplier Amaya Gaming in 2014 for USD 4.9 billion. “I am incredibly proud of the business my father and I have built over the years,” Mark said at the time of the sale.
WILLIAM HILL
William Hill is a UK land-based gaming firm (founded in London in 1934) that operated in Tel Aviv, Israel, for several years with 250+ employees until it shut down and relocated to the UK in 2017 due to high operating expenses. One of the biggest global betting houses (it has +2,000 betting shops around England), in 2008, it created a big splash by entering the iGaming market in partnership with Playtech. This association turned out to be a big success to the company.
Most of its operational activities in Israel were marketing-driven. The strategy was devised by the parent company in Britain and executed in Israel. The results were mind-boggling: 1 million plus customers a year. During its operations in Israel, William Hill took advantage of the technological abilities and marketing creativity of the Israelis for identifying new business opportunities. Finally, William Hill bought out the 29% share that Playtech had in the organization for approximately USD 624 million. It also invested in the Israeli startup NeoGames.
NEOGAMES + ASPIRE GLOBAL
Founded in 2005 by Israel born Barak Matalon, NeoGames is a global provider of iLottery solutions for national and state-regulated lotteries. With over 15 years of industry experience, the company has led the iLottery market by developing a complete omnichannel suite of first-class technology solutions with comprehensive platforms, an innovative games portfolio, and an unmatched set of services that support its clients. Based in Luxembourg, with over 350 employees and offices in Tel Aviv and Yafo, Israel, NeoGames is a member of the World Lottery Association (WLA), and was certified and approved by U.S. and Europe regulators and regional lottery associations.
A technology-driven innovator, Moti Malul has been NeoGames’ CEO since 2008. On the last week, this company announced its intention to buy another Israeli firm, Aspire Global, a relevant B2B iGaming technology solutions provider to online sports betting and casino operators, for USD 480 million. According to Malul: “We are thrilled to announce this highly strategic transaction. Our objective in combining our two companies is to create a leading global provider in interactive content, proprietary technology and operations across all elements of iLottery, online sports betting and iGaming verticals. By integrating our platform and scalable position within the rapidly expanding global iLottery market, with Aspire Global’s proprietary sports betting platform, BtoBet (acquired in 2020 for USD 22 million); its iGaming content and aggregation platform, Pariplay (bought in 2019 for USD 15 million); and its proprietary content and turn-key B2B Gaming solutions, NeoGames will be positioned to significantly increase our addressable market opportunities.”
Aspire Global’s online sports betting and iGaming operating capabilities with experience and a strong customer base outside of the U.S. is expected to help NeoGames establish itself in the sports betting and iGaming verticals in emerging high-growth regions, such as Latin America and Africa. At the same time, NeoGames’ positioning in the U.S. as a key gaming provider, with proprietary technology that is deployed and operational across more than a dozen markets and includes lottery and gaming platforms, could further facilitate and accelerate Aspire Global’s entry into the growing U.S. market. Having worked together successfully in the past, NeoGames’ and Aspire Global’s management teams benefit from a strong cultural fit focusing on innovation and applying a customer-centric approach to their respective markets and products. The combined company is expected to be led by Malul, who will continue as CEO, and Raviv Adler, CFO. Tsachi Maimon, CEO at Aspire Global, will join NeoGames as President and lead the newly formed iGaming division. The current Board of Directors of NeoGames will remain in place with no changes.
LSPORTS + LVISION
LSports was founded in 2012 by Ido and Dotan Lazar. Its headquarters are in Ashkelon and Ramat Gan, Israel. The company provides real-time worldwide sports data sourced by innovative API technology. Dedicated to supplying highly effective control tools and data analysis covering dozens of sports around the world, LSports presents game-changing solutions to the sports betting industry. The firm really offers a new take on sports trading with its unique automated sportsbook trading management product (STM), along with various bet stimulation products proven at enhancing the bookmakers’ user engagement and revenues.
Years later, in 2018, Lazar brothers also launched LVision with the goal to create high-end, advanced solutions to support the sports betting industry. Also with headquarters in Ashkelon, the company collects and generates unique sports data by working with advanced CV, ML and AI algorithms, aimed to increase user engagement and turnover. In fact, LVision is the one of the world’s first companies to utilize sophisticated computer vision and AI algorithms, analyzing sports streaming and historical data, producing real-time visualization and insights.
Some of LVision’s key products are BetBooster (AI-based insights for sports betting, covering 15 sports and 100+ betting markets to boost turnover and punters engagement); Tennis Betting Simulator (ML & AI solution to never-ending tennis revenues, it creates identical replays of original tennis matches using over one million historical match data), and Betting & Animation Widget (high-quality visualizations with fully integrated bet slips, showing real-time odds, betting tips, and statistics).
OTHER ONLINE GAMING COMPANIES
As an absolute and powerful developer of gaming software, there are many other companies that Israel has shaped in the last ten years. Co-founded in 2014 by Lior Shvartz and Omer Henya, Spinomenal is one of the fastest-growing iGaming suppliers, with more than 180 HTML5 game releases so far. Since its origins, more than 2.5 million players have enjoyed Spinomenal’s wonderful cross-platform games in social casino sites. The company has developed over 64 unique slot games and a complete API suite that has been implemented by several operators for real-money. With headquarters in Tel Aviv and a registered office in Malta, Spinomenal strives to provide friendly, reliable, and engaging experiences for its users.
Certified in territories such as Lithuania, Sweden, Portugal, South Africa, Belarus, Bosnia, Colombia, Croatia, Georgia, Serbia, Malta, Estonia, Isle Of Man, Spain and Netherlands, Spinomenal’s solutions include Casino Manager, Fast Marketing and Social Deep Integration tools, Blockchain Honesty Control, Point of Sale systems, Virtual Lottery Terminals and its Game Aggregation Platform (SAP).
In the mobile and cloud gaming segments, Israeli companies have tackled every corner of the industry with innovative and technologically advanced products. Some firms to mention are Playtika (a social and mobile video game publisher, first acquired in 2011 by online mobile and social game developer Caesars Interactive Entertainment, and then, in 2016, by a Chinese consortium of companies led by Giant Interactive for USD 4.4 billion); Plarium (a web platform for creating mobile and social experiences for hardcore gamers worldwide, bought in 2017 by Aristocrat for USD 500 million); TabTale (a worldwide mobile casual games leader and innovator); Overwolf (a user-generated content platform that builds and develops gaming apps for gamers and creators); Moon Active (a game development company focused on iOS, Android and Facebook games), and so many other apps and startups.