A couple of weeks ago, the most relevant gaming news in Argentina (and Latin America) was the official statement from the Institute of Lottery and Casinos of the Province of Buenos Aires (IPLyC), the gaming regulator in that territory, on the seven UTEs (Transitory Union of Companies, the term chosen to designate bidders, combining local and foreign firms) selected to operate online gambling in that jurisdiction, the most prominent in Argentina, with more than 17 million inhabitants and a billionaire budget. At first, the announcement was surprising, since the provincial Government itself, headed by Axel Kicillof (Frente de Todos Party), had downplayed this matter, noting that the priority was to combat COVID-19 and take care of the population, as well as solving more urgent economic issues. Even in the last months of 2020, there was no news in this regard from close sources of Omar Galdurralde, president of the IPLyC.
The truth is that the names of the seven chosen UTEs were already defined and approved at the end of 2019 and, by political decision, they were only announced a year later. In effect, on October 2nd, 2019, the Technical Evaluation Commission had issued its Technical Report, assigning the final scores and, thus, defining the seven UTEs, out of a total of 14 that had registered as applicants for licenses (the original number of 17 was reduced to 14 at the time of evaluation). Although this information was made official on December 31st, 2020, after Resolution No. 795 of the IPLyC of December 29th, 2020, with the publication in the Official Bulletin of the Province of Buenos Aires (check these documents: https://www.boletinoficial.gba.gob.ar/secciones/10731/ver#page=142 and https://www.boletinoficial.gba.gob.ar/secciones/10731/ver#page=145), the truth is that Gaming and Media News was the first media in Argentina to announce this decision, in an exclusive article published on December 13th, 2019 (https://g-mnews.com/online-gaming-seven-licensees-for-the-province-of-buenos-aires-would-be-defined/).
THE PROCESS, THE SCORES AND THE REASONS FOR THE SELECTION
The adjudication process had begun in 2018, under the management of Maria Eugenia Vidal (Cambiemos Party) at the head of the Province. Tax Law No. 15.079 (which was approved together with the 2019 Budget) had been approved by the Buenos Aires Legislature in December 2018. It included the legalization of online gambling, and the process for companies to present, register and compete for a license. In March 2019, through Regulatory Decree No. 181, Vidal signed the executive approval to that regulation. The most relevant information said that seven licenses would be granted for a (not renewable) period of 15 years.
Which were the 14 UTEs registered as applicants?
PROPOSAL #1: “TV GLOBAL ENTERPRISES LTD – IMPRESORA INTERNACIONAL DE VALORES S.A.I.C. (UT)”
PROPOSAL #2: “BINGO PILAR S.A. – PPB COUNTERPARTY SERVICES LIMITED (UT)”
PROPOSAL #3: “BIYEMAS S.A.”
PROPOSAL #4: “CASSAVA ENTERPRISES (Gibraltar) LIMITED – BOLDT S.A (UT)”
PROPOSAL #5: “PASTEKO S.A.- HILLSIDE (NEW MEDIA MALTA) PLC”
PROPOSAL #6: “ARGENBINGO S.A. – WILL HILL LIMITED S.A. (UT)”
PROPOSAL #7: “HOTEL CASINO TANDIL S.A. – DYNAMO TYCHE S.A.- PLAYTECH SOFTWARE LIMITED (UT)”
PROPOSAL #8: “EMPRENDIMIENTOS CROWN S.A.- LUCKIA GAMING GROUP S.A. (UT)”
PROPOSAL #9: “BINBAIRES S.A. – INTRALOT INTERNATIONAL LIMITED (UT)”
PROPOSAL #10: “CASINO DE VICTORIA S.A. – BETSSON MALTA HOLDING LIMITED (UT)”
PROPOSAL #11: “BETWAY GROUP LIMITED – BINGO KING S.A. (UT)”
PROPOSAL #12: “IBERARGEN S.A. – CODERE LATAM S.A. (UT)”
PROPOSAL #13: “SISAL ENTERTAINMENT S.p.A.- ARELTOWN S.A.- EL CHALERO S.A. (UT)”
PROPOSAL #14: “ATLANTICA DE JUEGOS S.A. – STARS INTERACTIVE LIMITED (UT)”
What were the main criteria for selecting 7 of those 14 proposals?
According to article 7 of Decree No. 181 mentioned above: “From the analysis made by the Technical Evaluation Commission, a comparative table will emerge that will clearly establish the score awarded to each proposal, which may be accompanied by the observations that the Commission considers necessary to be settled. That score will derive from the scale established by the Enforcement Authority for each point to be evaluated in the Bases and Conditions approved during the call, being able to take into account, among others, the criteria indicated below, with a merely expository and not limiting order”:
1) Experience of the applicant in game development under the online modality; 2) Number of licenses that the applicant has at the moment of registration; 3) Technical solvency (personnel, systems, facilities); 4) Economic and financial solvency (accounting and financial statements, evolution of income from gaming development under the online modality obtained by the applicant in the last three years); 5) Financing of the proposed investment; 6) Virtues of the iGaming Platform; 7) Diversity of certifications granted by recognized laboratories; 8) Contingency plan for service interruption; 9) Fair play; 10) Data security; 11) Number of active users; 12) System of customer support and reception of complaints; 13) Amount of pre-match bets; 14) Number of live events; 15) Diversity of sports; 16) Number of sports; 17) Number of global leagues; 18) Business Proposal for Social Responsibility regarding responsible gaming; 19) Fraud prevention manual; and 20) Action Plan.
Who did the Technical Evaluation Commission choose on October 2nd, 2019, and what scores did it assign to them?
1) PROPOSAL #6: “ARGENBINGO S.A. – WILL HILL LIMITED S.A. ARGENTINA BRANCH (UT)”: 54.5 points
2) PROPOSAL #5: “HILLSIDE (NEW MEDIA MALTA) PLC – PASTEKO S.A. (UT)”: 42 points
3) PROPOSAL #2: “BINGO PILAR S.A. – PPB COUNTERPARTY SERVICES LIMITED SUCURSAL ARGENTINA (UT)”: 39.25 points
4) PROPOSAL #7: “HOTEL CASINO TANDIL S.A. – DYNAMO TYCHE S.A. – PLAYTECH SOFTWARE LIMITED (UT)”: 39 points
5) PROPOSAL #4: “CASSAVA ENTERPRISES (Gibraltar) LIMITED – BOLDT S.A (UT)”: 35.5 points
6) PROPOSAL #14: “ATLANTICA DE JUEGOS S.A. – STARS INTERACTIVE LIMITED (UT)”: 34.5 points
7) PROPOSAL #9 “BINBAIRES S.A. – INTRALOT INTERNATIONAL LIMITED (UT)”: 30 points
8) PROPOSAL #10 “CASINO DE VICTORIA S.A. – BETSSON MALTA HOLDING LIMITED (UT)”: 27.25 points
9) PROPOSAL #13: “SISAL ENTERTAINMENT S.P.A- ARELTOWN S.A.- EL CHALERO S.A. (UT)”: 23 points
10) PROPOSAL #11: “BETWAY GROUP LIMITED – BINGO KING S.A. (UT)”: 21.5 points
11) PROPOSAL #12: “IBERARGEN S.A. – CODERE LATAM S.A. (UT)”: 21.25 points
12) PROPOSAL #8: “EMPRENDIMIENTOS CROWN S.A.- LUCKIA GAMING GROUP S.A. (UT)”: 13 points
13) PROPOSAL #1: “TV GLOBAL ENTERPRISES LTD – IMPRESORA INTERNACIONAL DE VALORES S.A.I.C. (UT)”: 11 points
14) PROPOSAL #3: “BIYEMAS S.A.”: 7.5 points
In the subsequent process, why Bingo Pilar was discharged and Casino Victoria was chosen in its place?
The reason for this decision was only clarified in the Official Bulletin statement of December 31st, 2020. According to this document, after having been chosen as one of the seven licensees, months later, on May 22nd, 2020, the company “PPB Counterparty Services Limited Sucursal Argentina” (Paddy Power Betfair, which, internationally, is part of the British holding company Flutter Entertainment), declined its participation in the UTE with Bingo Pilar S.A. (from the Oasis Entertainment Group, owned by Ricardo Glassman and with Alejandro Gravier as main shareholder). In this sense, Flutter Entertainment (created by the merger of Paddy Power and Betfair, and the subsequent acquisition of The Stars Group) favored Proposal #14 (UTE of Stars Interactive Limited with Atlántica de Juegos S.A., which responds to the gaming entrepreneur Daniel Angelici). The point is that Bingo Pilar did not want to give up the license it had already obtained, despite the fact that it lacked an international partner. However, the Commission pointed out the following: “That, in accordance with this, and by virtue of preserving the rights of the other applicants, it was essential to adapt the decision, analyzing it without the qualification that was duly granted to the aforementioned UT, which is why, inevitably, the applicant “CASINO DE VICTORIA S.A. – BETSSON MALTA HOLDING LIMITED (UT)” is promoted. This UT had the highest score followed by the one who was in seventh place.” Likewise, it clarified that PPB Counterparty Services Limited Sucursal Argentina appeared as the legal representative of the partnership with Bingo Pilar. With the company withdraw, the Commission, together with the Legal Directorate of the IPLyC, determined the dissolution of that UT and the selection of the proposal that had been in eighth place, the UT between Casino de Victoria, Entre Rios (property of businessman Daniel Mautone) and the Betsson Group (from the Swedish firm Betsson AB).
WHO IS WHO: THE 7 LICENSEES
It is important to check in detail which are these companies selected to operate iGaming and sports betting in the Province of Buenos Aires. In terms of resources, it is clear that the international representative of each UTE will make 75% of the investment and the local part, 25%.
-First, there are Argenbingo and Will Hill. Argenbingo is owned by Nazareno Lacquanti, in charge of Bingo Moreno. Will Hill is the British bookmaker William Hill, which was acquired last September by the North American operator Caesars Entertainment for US$3.7 billion.
-The second position was for Pasteko S.A. (from Gustavo Ranucci, partner of Gaston Steffany, responsible for Bingo Begui, in the town of Berazategui) and for Hillside (New Media Malta), operator of the world-renowned betting website Bet365.
-In the third spot, there were Bingo Pilar + PPB, which were left out after the departure of PPB from the UTE, as just explained before.
-In fourth place, are Hotel Casino Tandil and the Israeli online gaming giant Playtech.
-The fifth place includes Cassava Enterprises, a subsidiary of the powerful 888 Holdings, based in Gibraltar, and the also strong (in Argentina) Grupo Boldt, owned by businessman Antonio Tabanelli.
-The sixth license was for Atlantica de Juegos (Daniel Angelici) and Stars Interactive Limited (Flutter Entertainment, based in Ireland).
-The seventh operator will be Binbaires, the company of businessmen Cristobal Lopez, Federico Achaval and Ricardo Benedicto, which is associated with the Greek Intralot International.
-Finally, as we indicated, instead of Bingo Pilar, the license was granted to the eighth applicant, Casino de Victoria (Daniel Mautone) and the Swedish group Betsson.
GOVERNMENT URGENCIES AND NEXT STEPS
Many will wonder why Buenos Aires Province Government has finally decided now to move forward with this issue that was frozen for so long on Governor Kicillof’s list of interests and priorities. Most reasons are related to tremendous impact of the pandemic on the coffers of the Province. To this we can add the pressure of the mayors of the Buenos Aires Province suburban territories on Kicillof. Is has to be noted that most of the bingo halls are located in that area, and their managers have strong relationships with the mayors. The closure of the bingo halls for several months due to COVID-19 caused serious revenue losses that, in part, will be mitigated with the opening and start of online gaming operations. Despite the opposition from Kicillof and the silence of several months from Galdurralde and the IPLyC, it was evident that, in this context, both private companies and the State need resources that iGaming and sports betting would generate in the Buenos Aires territory. Besides, at the end of the last year, Kicillof was also relieved by the approval of the Provincial Budget for 2021. According to some assessments, over total annual gross iGaming revenue of US$600 million, the Province would receive US$90 million in concept of Gross Income, and US$60 million per canon that would directly enter to the IPLyC.
What comes next for the seven licensees? In the first place, they’ll have to pay a one-time fixed charge of $65 million (US$765,000, at the current official exchange rate of AR$85 = US$1). The money will be paid in three stages: 1) 40% when starting operations; 2) another 40% after the first year of operation and 3) the remaining 20% after the second year. In addition, there is an established guarantee of $130 million (US$ 1.53 million). Another important issue will be to define a responsible gaming program for iGaming. Operators must enable a system that allows players to set deposit limits, and also to request their temporary or permanent exclusion, or even a time restriction. Data privacy of each and every one of the registered players on the web platforms must also be ensured. With regard to online betting advertising, the Enforcement Authority (IPLyC) will control that the promotion of good gaming practices is executed, and will seek to ensure compliance with the following points: a) Advertising, promotion or sponsorship is not directed to minors; b) Minors do not participate; c) It is not abusive, deceptive or unfair; d) It does not alter the dynamics of gaming; e) It does not lead to confusion regarding the nature of gaming; f) Advertising or promotion to the player through credits or bonuses -exempt from profits and taxes- do not exceed the limits established by the Enforcement Authority; g) It respects the requirements established in articles 10, 11 and 12 of Law No. 15.131 that establishes the regulation and assistance of compulsive, problematic or pathological gambling; h) It respects any other point that the Enforcement Authority defines in due course.
To conclude this article, with over a year of delay, the Province of Buenos Aires will have online gambling, which it would even be launched before LOTBA, the Lottery of the City of Buenos Aires. In fact, LOTBA representatives recently reported that the iGaming activity will begin in the first quarter of this year. Of course, bettors will be the main winners of this complex process, with more options to bet in a safe, legal and responsible environment.