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Supreme Ventures keeps growing despite challenges

BY BALFORD HENRY
Senior staff reporter
balfordh@jamaicaobserver.com

Sunday, September 10, 2017

Supreme Ventures Ltd's (SVL) bittersweet relationship with the gaming public is certainly not unique to Jamaica.

Gamblers love the games the company offers them, but they curse the name, along with their bad luck, when they lose.

And it is not surprising. First quarter (2017) revenues released by SVL on March 31 showed that the company earned revenue of $13.3 billion, as against $11.1 billion a year ago. However, SVL ended up with a pre-tax profit of $556.6 million, and profit for the period of $415.9 million against the $275.3 million of a year ago.

According to chairman Paul Hoo, while 2016 was a “memorable year” for the company, it proved a challenging one.

However, he confirmed that “largely due to the continued expert guidance of our board of directors and the effort of a dedicated and committed management team and staff at all levels, SVL managed to perform creditably”.

Hoo added that while Group revenues increased by two per cent in 2016 over the 2015 figure, gross profits declined by seven per cent, mainly due to the Cash Pot liability, which increased by 0.31 per cent.

“We achieved a step in the right direction with the lowering of operating expenses by five per cent. Net profit after tax totalled $1.178 billion – a slight decrease when compared with the 2015 total of $1.184 billion,” he noted.

He said that chief among the highlights was the new lottery system upgrade implemented by its technological partner, International Game Technology (IGT), which took effect on July 31, 2016. The multimillion-US$ upgrade allowed SVL to improve the retailer and agent experience, the regulators' experience and the management of the business from an administrative standpoint. It also facilitated easier integration with third-party entities, and provided a solid foundation for any future build-outs that SVL will do on the system with regard to their games.

Other 2016 highlights included the continued negotiations regarding the divestment of Caymanas Park, which SVL leased from the Government in March, and the launch of Virtual Games and the offering of expanded bet options through the JustBet brand.

But he pointed out that the Group continued its significant tax contribution to the revenue of the Jamaican Government, with Lottery and Gaming taxes, levies to the Betting, Gaming and Lotteries Commission (BGLC), and fees to the Culture, Health, Arts, Sports and Early Childhood Education (CHASE) Fund totalling $4.241 billion – a 3.55 per cent increase over 2015.

SVL's COO Brando Hayden explained to the Jamaica Observer, at a meeting with the press on Thursday at SVL's head office in New Kingston, that not only does the bulk of the revenue go back out to the winners in the lottery games, including “cash pot”, but a significant amount of what is left goes to the government in taxes, or to public agencies like the CHASE Fund, to which SVL is financially obligated under the terms of its gaming licence.

“In this business, when you earn, you have to pay out as well. And we pay out a very significant amount of the revenue we earn. It is a significant amount that goes back to the gaming public,” Hayden stressed.

He said, however, that these payments and contributions are not recognised, although they are such a significant slice of the company's income, and so it may appear to the public that SVL is not doing enough.

The Lottery line of business continues to be the main profit-earning segment for SVL. However, performance has been hindered by low sales and insufficient player interest in new games like PayDay, which disappeared after a few months.

Cash Pot revenues, in particular, were impacted by low payouts, especially in the first six months of 2016. Revenues for the segment declined by three per cent.

SVL also pointed out: “It is important to note that 2015's performance was significantly impacted by the highest Lotto jackpot for the game – $395 million – which was won after 10 months.”

The Sports Betting segment has been experiencing significant revenue growth, driven mainly by the upgrade to the IFLEX platform.

This allows for increased betting options, including live betting, and also facilitated the introduction of virtual sports betting product QuickSports, which was officially launched in April 2016,

In keeping with the company's strategic focus to increase player participation, the minimum JustBet wager was decreased from $50 to $20.

The Acropolis in Barbican continues to be the main focus of the company in terms of Video Lottery Terminal sports (VLTs), which features slot machine-type games.

SVL says it has been concentrating on improving player experience and incentives through the introduction of a player rewards programme for this segment.

There were also improvements made to the Acropolis Lounge, through the addition of new machines in December 2016, as well as changes to the layout of the floor and relocating the entrance to the restaurant.