Swedish gambling company Betsson announced last Thursday that it has acquired Lithuanian gaming firm Lošimų strateginė grupė, UAB, which trades by the better known name, TonyBet. TonyBet is mainly a sportsbook, operating both online and through 20 physical sports betting shops in the country, though it does have a small online poker room, as well.
Despite being a minor poker room, TonyBet drew the attention of the industry in March when it introduced a new performance-based rakeback system. Normally, everyone on a site who gets rakeback (sometimes that’s all of the players and sometimes that’s only those who signed up through a rakeback affiliate) gets the same rate (again, normally – not always) and one’s total rakeback income is dependent on volume and stakes. The high stakes grinders play tons of large pots, generate loads of rake, and naturally get massive rakeback. Microstakes casual players receive insignificant amounts of rakeback.
What TonyBet did with its new system is vary a player’s rakeback percentage based on how much that player wins or loses. It is still also dependent on volume as a factor in the total rakeback amount, but now those who lose more receive a higher rate. The base rate is 25 percent rakeback, but those who lose an average of €100 per day get that boosted all the way up to 80 percent for their weekly rakeback payment. People who lose less than €100 per day and also win less than €100 receive 50 percent rakeback.
“This acquisition is a good strategic fit for Betsson Group as Betsson’s ambition is to increase revenue from locally regulated markets,” said Betsson CEO and President Ulrik Bengtsson. “We have now consolidated our presence in the Baltic region by ensuring local licenses in all three markets, and continue to pursue growth across Europe, organically and through acquisition.”
According to the press release announcing the acquisition, the initial purchase price Betsson is paying for TonyBet is €4 million. That number could go up by 50 percent if certain milestones are achieved. That extra €2 million, if earned, would be paid out next year.
While TonyBet made positive (or at the very least neutral) news with its rakeback innovation this year, Betsson received some unwanted attention late last year. In November 2015, Betsson’s affiliate manager, Christiaan Alexander Van Dalen, was arrested on charges of fraud, money laundering, and “computer-related” offenses stemming from his alleged theft of money from the company and possibly affiliates.
Authorities said that Van Dalen faked affiliate tags of high revenue players in order to personally profit from their play. When a player signs up for a gaming account through an affiliate, that affiliate gets credit for the account via a tag in a link leading the player to the site or through a bonus code. From then on, that affiliate gets a portion of the player’s rake (or a flat fee, depending on the agreement). Van Dalen allegedly removed the real affiliate information from accounts and substituted affiliate tags for him and his wife. As a result, he allegedly profited €153,000, money that either should have stayed with Betsson or gone to the real affiliates.
