Good morning. On today’s agenda:

• Caesars shows the cost of its New York promo blitz.

• FanDuel worth over half of all stakes at Flutter Entertainment in Q1.

• Red Rock Resorts reports seventh successive record margins quarter.

Careful with that axe, Eugene. Click below to subscribe:

Caesars Entertainment Q1

• Revenue up 21%% YoY to $2.3bn, adj. EBITDA down 43.2% YoY to $296m. Excluding digital adj. EBITDA up 60% to $850m. 

• Caesars Digital recorded revenue losses of $53m and EBITDA losses of $554m.

• Regional revenues up 13.5% to $1.36bn,  adj. EBITDA up 18.6% to $459m.

Peak loss: CEO Tom Reeg said New York (and to a lesser extent Louisiana) was worth $400m of the half-a-billion-plus digital losses in Q1. Following the January blitz, the company cut $250m of subsequent mass-media spend.

• Tom Reeg: “We’ve seen no degradation in handle share, other than our planned retrenchment in New York back through as we talked about.”

• “We were more aggressive than we needed to be out of the box in New York and got 37%, 40% plus share as you see us (aim for) 15%-20% share.”

• Reeg said a further $500m of losses for 2022 was “in the right zip code”.

The money cannon: Reeg suggested Caesars’ much-commented on bonus offers had been indiscriminate.

• “In the football season of 2021, every customer, regardless of value, was getting a similar offer.”

• “And so what's going to happen as we move into 2022 football season and beyond is we're going to segment our customer base and we're going to target our promotional spending at our profitable customers.”

No more heroes: With Ohio being the only significant launch on the horizon (Reeg dismissed the chances of Maryland happening this year), he said “nothing heroic” was needed to become profitable. 

• Reeg predicted Caesars would “inflect to EBITDA-positive” territory by the start of the 2023 football season.

Holding up standards: The group‘s OSB platform Liberty is on track to be rolled out in all regulated states by the end of the year and for icasino “it's a function of getting our app up to snuff in terms of game count, that's finally almost complete,” Reeg said.

• “We didn't want to spend marketing dollars to send customers to what in our view was a substandard product, we had a lot more work to do there than we did even in OSB. But we expect to be a formidable competitor there and we're now in position to start that process.”

Viva Las Vegas, redux: On the land-based side, Reeg said Caesars “now feels like what we thought we were buying when we bought Caesars Entertainment. It is really the last eight weeks or so that we are hitting on all cylinders.”

• Reeg noted that occupancy in Las Vegas had climbed from low 70s in January to 91% in March. “We had a record first quarter despite the slow start and the loss of CES in January.”

• He noted the strength had continued into April. Reeg noted there was still “pent-up demand”. Analysts at Macquarie suggested the numbers “underscores the health of Las Vegas” and “demonstrate the stickiness” of gaming spend.

• Jefferies noted that regional margins hit 37% with Reno and Tahoe the standouts.

Budgie smugglers: Deutsche Bank noted Caesars has become “one of the more crowded shorts” lately due to domestic consumer concerns, aggressive margin targets and digital losses.

• Deutsche Bank: “We believe management was pretty straightforward tonight as it pertains to digital losses.”

Comparison: MGM said on Monday that total BetMGM losses in Q1 were $184m.

On social

Wagers.com Earnings+More @earnings_and

@MGMResortsIntl talking to @CaesarsEnt about the Q1 digital losses.

May 4th 2022

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Flutter Entertainment Q1

• Revenue up 6% to £1.57bn.

• US up 45% to 3429 ($575m); UK & Ireland down 8% to £519m

• Australia up 8% to £291m; international down 5% to £327m.

Firing on one cylinder: Flutter said the US accounted for over half of all stakes across the group in Q1 but the revenue picture could have been even better as a deterioration in hold percentages knocked ~$130m off revenues.

The squeeze: CEO Peter Jackson said he believed some of FanDuel’s competitors were “finding the dynamics difficult” in the US.

• “Post-Super Bowl, we believe the marketing activity and generosity levels are stepping back further than we have seen before. We have not stepped back to the same degree.”

• “We’re leaning in as hard as we can.”

• In New York, he noted that the “penetration” of the DFS customer database had been “much faster”

Same-same: Looking at the hit to hold percentages, CFO Jonathan Hill said part of this was down to the popularity of FanDuel’s same-game parlay product. “That was a good thing,” he added. “We are certainly seeing the penetration rate be really strong in terms of the parlay product.”

• “What we’ve seen in other markets is positive developments in parlay products and US punters seem to really love it,” Hill added.

Never mind the ballots: As per below (see below), the FanDuel and DraftKings sponsored ballot in California has garnered enough signatures to be on November’s ballot. 

• Jackson admitted that further progress was “not straightforward” but he noted that as opposed to the tribal initiative for retail-only betting, the FanDuel/DraftKings ballot was the “only ballot” that would bring in hundreds of millions of tax revenues.

• “It’s not impossible that our ballot could be passed and the tribal ballot could be passed. We are doing everything we can to ensure ours will be successful.”

Date for the diary? Jackson said that if passed - a big if - sports betting in California might launch in time for the 2023 football season.

Misfiring on the other: A less rosy picture was painted for the UK & Ireland where online revenue was down 20% or 26% excluding the recent Tombola acquisition.

• £30m of that was down to the continued introduction of safer gambling measures while lower hold and a return to more normal post-Covid conditions also played a part.

• Jackson said the company hoped to “see some clarity on the outlook for regulatory change” later this month.

• UK retail was fully open for the quarter and produced £65m of revenue.

International rescue: Noting that international had been hit by the problems in Germany and the exit from the Netherlands, Hill said the comps for the segment would get better in Q3 and Q4.

Red Rock Resorts Q1

• Revenue up 14% to $401.6m, adj. EBITDA up 14% to $178.7m.

Seventh heaven: On a brief call celebrating the seventh successive quarter of record margins, CFO Stephen Cootey noted the “significant transformation” of the business that has taken place over the past two years.

• Low blow: Asked about the effect of macro conditions, CEO and chairman Frank Fertitta did note that “there is no doubt” that inflation is having an effect on the lower-end segments in the database. Deutsche Bank believes that segment to be worth <10% of the Red Rock database.

• But Cootey added that this was “more than offset” by growth among the younger demographic cohorts.

• But DB warned the comments would “add investor sensitivity” towards regional gaming.

Spit and polish: On group business, Cootey noted the company was seeing “green shoots” while the return of bigger events had “helped restore that luster to Las Vegas”.

• On a similar demographic note, Fertitta was keen to point to how much the local market has changed with the influx of people moving to Las Vegas from California. “It’s a different customer profile than it was 10 years ago,” he added.

Aspire Global Q1

• Revenues up 31.7% to €46.3m, EBITDA up 18.7 % to €8.2m.

Dutch journey: CEO Tsachi Maimon said Aspire Global had succeeded in generating two-quarters of sequential growth despite a complete shutdown of all Netherlands activities since Oct21. 

US time: In North America Aspire Global’s Pariplay gaming platform was certified for Ontario and obtained a provisional license in Michigan. 

• In terms of signing new clients there, Maimon said the group was a “new player” and discussions were taking longer “than what we’re used to in Europe”. 

• However, if the NeoGames acquisition finalizes (completion date is 14 June) “we believe it will open and shorten time to market for us into the US”.

Ontario AGCO fines

Bonus abuse: BetMGM Canada and PointsBet Canada have each been issued fines by the AGCO for failures to comply with regulations regarding promotions and marketing.

• BetMGM was fined C$48,000 for three separate tweets that ran in early April, according to the AGCO. One tweet advertised a ‘$240k Launch Party’. 

• PointsBet was alleged to have broken the same regulations with posters in GO stations and on GO trains that included an inducement to play for free.

So sorry: Scott Vanderwei, CEO, PointsBet Canada: “On behalf of PointsBet Canada, I personally apologize for our error made in the interpretation of the standards set forth by the Alcohol and Gaming Commission of Ontario (AGCO) leading to this outcome.”

Everi acquisition

Intuitive: Gaming to fintech provider Everi has acquired Intuicode Gaming Corporation, a privately owned game development and engineering firm focused on Historical Horse Racing games, for a total consideration of between $22m-$27m.

• An initial payment of $12.5m will be paid upfront with the remainder coming in two performance-based tranches over the next two years. It is an all-cash deal.

• Intuicode generated $10m+ of revenue in 2021.

Earnings in brief

• Acroud: The affiliate and affiliate services provider has issued updated forecasts for this year, saying EBITDA will be between €8m-€10m. It has also set out new targets for 2023-2025 of organic EBITDA growth of 20%.

• Playgon: The live-dealer technology provider achieved first-time revenues of $159.7k for the FY21 and racked up losses of $14.9m. During the year the company raised $10.5m through a placing. In January, the company signed a multi-jurisdictional software licensing and distribution agreement with Relax Gaming (owned by Kindred). It now has 35 operators live on its VegasLounge offering.

• SJM: Revenue rose slightly to $2.54bn while EBITDA losses expanded to $474m as Macau operators continued to battle against continued Covid restrictions. SJM said occupancy and RevPAR remained far below pre-COVID levels at all properties. The company extended the maturity of its $3.3bn credit facilities to February next year.

Datalines

Arizona Feb22: DraftKings led in February with GGR of $9.8m followed by BetMGM on $8.6m, Caesars with $2.3m and FanDuel on $2.1m. By handle, FanDuel was in the lead with $145.2m followed by DraftKings ($131.7m), BetMGM ($99.8m) and Caesars ($79m). Total handle was down 13% MoM to $491.6m. Handle fo $24.4, was down 39.7%.

Virginia Mar22: Sports-betting revenue was up 3.5% to $14.3m on handle that rose 28% to $44.6m. Historical horse racing machines saw total revenues climb 44% to $30.2m.

Italy Feb22: Online casino dropped 22.3% MoM but was up 3.3% YoY to €147.7m. PokerStars led in share of revenue at 8.7% but Sisal, recently acquired by PokerStars’ parent company Flutter, was just behind with 8.6%. Online and retail sports-betting revenue was down 3% MoM but up 10.3% YoY to €204.7m. OSB revenues were down 5.2% to €122.1m, the lowest figure since Oct21.

Denmark Mar22: Online and land-based gaming GGR was up 29.6% YoY but -2.3% MoM to DK525m (€70.5m). Online casino revenues rose 5.6% MoM and down 7.2% YoY to DKK226m. Sports betting dropped 15.7% MoM and -3.7% YoY to DK155m.

Newslines

Aiiight: Odds On Compliance has launched its PlaybookAI offering which adds an artificial intelligence-driven search engine and intuitive search function to the company’s existing US regulatory data and technology platform Playbook.

Derby day: Spotlight Sports will provide horseracing content to Playmaker’s Yardbarker media platform, including coverage this coming weekend of the Kentucky Derby.

Windy win: Bally is reported to have won the race to grab Chicago’s sole casino license. The company proposes a $1.74bn property and has offered an upfront $25m fee, beating off competition from Hard Rock International and Rush Street Gaming. 

Esports Entertainment has appointed Jan Jones Blackhurst to the company's board.

Brazil regulations: Draft proposals for the Brazilian sports-betting regulations have been released. There will be no limit on the number of operators and licenses will cost $4.5m. Licenses will be valid for five years. President Jair Bolsonaro has until May 10 to sign it. 

Waterfall: Kambi will provide its online and mobile sports betting technology to Mohegan Gaming & Entertainment to take its PlayFallsview sportsbook brand online in Ontario. 

What we’re reading

Wing and a prayer: Elon Musk might charge commercial companies “a small fee” to use Twitter, but also doesn’t have a business plan.

Bitter fruit: Crypto and NFT Sportemon company goes bust.

On social

Dan McCrum @FD

It was nuts, and this is the crash

Kurt Grela @kurtgrela

The sale of nonfungible tokens, or NFTs, fell to a daily average of about 19,000 this week, a 92% decline from a peak of about 225,000 in September, according to the data website NonFungible https://t.co/yiQiCttWd7

May 4th 2022

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Calendar

• May 4: RSI Q1

• May 5: Bally Corp, Penn National Gaming, VICI Properties, AGS Q1

• May 6: DraftKings Q1

Contact us

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com