May 12: BetMGM: California ‘could be worth up to $3bn’
May 12: BetMGM: California ‘could be worth up to $3bn’BetMGM investor day, Genius Sports Q1, Betclic SPAC news, NeoGames Q1 +MoreHello. On today’s agenda:
Heavy weather. Click below: BetMGM investor day
The tempest: CEO Adam Greenblatt said that despite the recent market “turbulence” around equities, the prospects for online sports-betting and igaming “remained healthy”.
All the devils are here: Asked about the estimated TAM in California, Greenblatt said it would be between $2.5bn-$3bn. Noting the proximity of California to MGM's “heartland” in Las Vegas, he noted that BetMGM would benefit from structural advantages in establishing itself in the state. What’s past is prologue: Super Bowl handle up was 39% YoY while first-time depositors rose 93%. March Madness up saw revenue up 59% YoY with FTDs up 137%. The isle is full of noises: Gary Deutsche, CFO, said BetMGM has taken the decision to pull back from an “irrational” New York market with marketing spend diverted to markets with better ROI. “The specific problem in NY is the high rate of tax applied to real revenue and phantom revenue,” he said, noting that the effective tax rate is well over 100%.
Candy girl: Greenblatt also offered some “data candy” about Ontario. “Yesterday, between our sports-betting and our gaming business we did almost 2 million transactions. I think that is a good number from a standing start.” Mad men: Talking about the expansion over the last year from 12 to 23 states, Greenblatt said BetMGM was now seeing the scale benefits of being a national advertiser.
Gaming leader: Greenblatt was keen to stress BetMGM remains the number one by market share in igaming in the US but said he does not expect any further igaming launches this year. Chief product officer Jarrod Schwarz said the company differentiate in five ways:
Bank of mum and dad: Pointing to the benefits that come from the parent shareholders MGM and Entain, Deutsch said BetMGM has structural cost advantages that helped towards a benefit of around 6-7 percentage points of EBITDA margin. Greenblatt said there were further benefits in terms of tech worth another 7%-12% of margin that “we do not pay”.
**Sponsor's message: Spotlight Sports Group (owned by Exponent Private Equity) is a leading technology, content and media business specialising in sports betting. Its industry-leading Superfeed is used by the biggest betting brands in the world including bet365, Flutter and Entain. The content engine powers on-site engagement by delivering impartial expert betting insight for 20 sports in 70 languages. For more information visit: spotlightsportsgroup.com iGaming NEXT day 1When the going gets weird: In the opening presentation at the iGaming Next investor day in New York, Chris Grove from Accies and American Affiliate (WE+M’s parent company) gave an overview of where he believed the sector stood at a moment and suggested three key factors would impact future M&A.
It means the M&A market “might get very weird”.
Awks: “Ultimately we will see awkward transactions,” he added. While M&A has been a “constant theme” in the sector, the upcoming deals will see a “number of strange bedfellows” Genius Sports Q1
Media play: Genius Sports’ media unit was the standout performer in Q1 with revenues up 150% to $24.1m, driven by organic acquisition of new customers from its programmatic advertising services.
Guiding matters: Genius reaffirmed FY22 guidance of $340m and said gross margins will benefit from the reduction in the NFL warrant payments, which were $22m in Q1 and would drop to $6m in Q2.
Contract inflation: Its betting tech division saw revenues increase 27.6% to $49.7m thanks to price increases on contract renewals, while revenue for its sports tech unit revenue more than doubled to $12.1m, driven by Second Spectrum and other acquisitions. Betclic in €7.2bn listing
Flying: Pegasus Entrepreneurs is backed by the European asset management company Tikehau Capital and investment firm Financière Agache and existing shareholders include the French media conglomerate Vivendi. FL Entertainment is backed by Bernard Arnault, chairman of luxury conglomerate LVMH and Vincent Bolloré, who has stakes in video games producer Ubisoft and the Havas advertising group.
Backgrounder: Banijay says it is the largest TV production company in the world with control of more than 120 content producers worldwide. Some of its most well-known shows include Peaky Blinders and Big Brother. It is led by Stéphane Courbit, who created the group in 2008 and merged with Zodiak Media in 2016 before acquiring Endemol Shine Group in 2020. Betting on online: In 2007 it acquired a 50% stake in Betclic for around €35m with Monaco’s Société des Bains de Mer holding the remaining 50%.
Analyst quick take: Paul Leyland at Regulus Partners said Betclic “has chosen a good time to SPAC”, because “French and Portuguese markets have shown very strong adoption growth during Covid”.
Earnings in brief
Caesars Entertainment analyst noteOccupy Vegas: Further to meeting Caesars Entertainment CEO Tom Reeg and SVP for investor relations Brian Agnew, the team at Wells Fargo said there has been no sign of consumer slowdown in Las Vegas.
Suspicious minds: On digital Wells Fargo said opinions were split and investors have become increasingly divided.
Ebb and flow: Caesars’ balance sheet and cash flow were key areas of focus, the analysts said. Group management said it could see “a path to reduce interest expense by up to $300m in 2023” and bring it down to ~$500m”.
DatalinesIndiana Apr22: Gaming revenue was up 9.4% to $244m. April had 10 weekend days, compared to nine in 2021 and eight in 2019. Sports betting handle rose 52% to $360m, revenue was up 42.7% to $28.6m, sports betting margins were 8%. AGA Q1 revenues: The AGA's latest revenue tracker for Q122 showed that sports wagering handle was up 102.3% to $26.34bn and revenues grew 64.6% to reach a record $1.58bn. Online casino revenues were up 53.9% to a record $1.21bn beginning total sports betting and icasino revenues to $2.79bn. This made up 19.5% of all US gambling revenues and was up from 18.4% in Q4 and +15.7% YoY.
NewslinesInside The Pocket, the free-to-play (F2P) aggregation platform, has appointed Ruairi Boyle to the new role of chief commercial officer. What we’re readingCrypto craters. On social‘The Scousetrap’ Day Three of Wagatha Christie aka The Scousetrap (h/t @rowancope). More questions for Rebekah Vardy, this time on how it came to pass that she dragged a load of wags out of a restaurant where they encountered a pap who was meant to be hiding in the bushes. Calendar
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