One thing that struck us this week was that the questions being asked by analysts about the chances of the California electorate saying yes to the online sports-betting proposition in November were being directed at the wrong people. Obviously, the operators are going to say they are hopeful. But as was made plain yesterday at the iGaming Next event in New York, it is the tribes that hold all the cards right now. Operators can update their TAM estimates all they want; but take the optimistic noises with a mountain of salt.

So, California dreamin’ indeed. 

iGaming Next New York day one

Tooth and nail: Richard Schuetz says the Californian tribes will go to the mat to stop the commercial operators’ ballot measure getting the votes it needs in November.

• Scorched earth: "Do not underestimate the tribes' ability to run media campaigns.”

Further reading: Steve Ruddock at Wagers.com on why the news about the withdrawal of the tribal mobile sports-betting bill is hugely significant. “Its withdrawal will only help the retail initiative supported by tribes.” 

Deep in the heart of Texas: Schuetz was similarly downbeat on the prospects in one of the other big four. "I don't have much faith anything is going to happen in Texas."

No rush: Canadian Gaming Association CEO Paul Burns said Ontario regulators are working on public reports for online sports-betting and iGaming revenue figures. He predicts the reports would come out quarterly, but it's “too early to know”.

Gotta dance: Bloomberg LP analyst Brian Egger says about ESPN. "I'm sure there's an opportunity out there" but a "lot of the dance partners are taken". “They're trying to figure out the puzzle pieces,” he added.

• Buyer’s market: Chad Beynon, analyst at Macquarie, says Rush Street Interactive, GAN and Kambi are the juiciest takeover targets.

Stick to what you know: Asked whether sports teams might look at cutting out the middleman and move to operate sports-betting themselves, Ron Skotarczak, chief of sales and marketing, Madison Square Garden Entertainment - the company behind the Kicks and the Rangers - said they “looked at it”.

• “I think what it came down to is, we do certain things well; we know how to own and operate sports. We don’t know how to run gaming and sports betting companies. We tend to stick with what we do really well.”

On social

Richard Schuetz @Schuetzinc

If one looks at the Mt. Everest-like plot of DraftKings capitalized value against time, it really staggers the imagination to realize the incredible mythology that needed to be created to generate such a chart. @iGamingNEXT

May 12th 2022

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BetMGM analyst reaction

Puts and takes: With BetMGM increasing its TAM estimates to $37bn to include California, the team at Jefferies noted that current “momentum remains strong, driven by the addition of 11 state activations”, although a California “opening would likely delay the FY23E profitability target”. 

Affirmation: Deutsche Bank said BetMGM reaffirmed 2022 forecasts of ~$1.3bn revenues and adjusted EBITDA losses of ~$430m. 

• However for DB “the continued reliance on GGR and TAM, as the basis for longer term projections, will remain challenging for investors, given the current equity market environment.” 

• GGR and TAM were less relevant metrics, DB said, “given the nature and intensity of promotions, most notable in OSB, which essentially allow for GGR to be an operator manufactured result.”

Differentiator: Wells Fargo said BetMGM’s omni-channel offering is a differentiator in comparison to its digital-centric peers. 

• “Omni-channel integration with MGM is still in the early stages, but has already been a key driver of BetMGM’s success at ~20% total Q1 share, with ~29% iGaming and ~13% sports betting.” 

Leverage: Wells Fargo said that what was striking was that CPAs for MGM-sourced customers was just 29% as high as a non-sourced customer while predicted NGR is 190% that of a non-MGM sourced customer. 

• “Similarly, marketing ROI is 6.5x higher for MGM-sourced players (on-site/other direct sources), and within six months of attending an in-person event at an MGM property, player NGR increased 24%.”

Implications: Jefferies noted that investors in parent company Entain were yet to truly understand the value being created by BetMGM. 

• “We argue that Entain remains attractive and the valuation has fallen too far, with zero implied value for the BetMGM JV.”

Earnings in brief 

• Codere Online said Q1 revenues rose 20% to €23.9m. Spain was up 1% in NGR at €13.2m, Mexico rose 56% to €10m and Columbia was up 81% to €1.5m. Oscar Iglesias, CFO said the company expects revenue growth to accelerate over the next few quarters with a “significant uplift in second half results”.

• Nuvei Q1 revenues were up 43% to $214.5m, adjusted EBITDA increased 40% to $91.6m and volumes were up 42% to $29.2bn. Operating cash flow increased 23% to $65.7m. EMEA and APAC regions saw the biggest revenue increases at 73% and 64%, while North America and LATAM revenues grew 13% and 25% respectively.

• Mohegan Gaming Q2 revenues increased 46.5% to $358.4m, adjusted EBITDA was up 7.5% to $86.7m. The company said visitation levels to its properties had been impacted by Omicron at the start of the year but it had managed to increase EBITDA margins by 2ppts higher than pre-COVID levels to 24.2%.

• Pollard Banknote revenues were flat at CA$113.9m, adjusted EBITDA was CA$19m. The group said YoY revenues were impacted by the Canada Emergency Wage Subsidy and a unique iLottery double jackpot in 2021. The group will pay a dividend of four cents per share on July 15.

NeoGames analyst call

iLottery hopes: CEO Moti Malul said NGMS was currently offering iLottery products in ~10 states and was targeting another 35 states with the product. The group was looking at other major markets such as Brazil and its 26 region states. 

• But, Malul commented: “Like the US it has a lot of internal scaling if you aggregate wins of a couple of states in them, and so we're trying to look for the markets which have a more attractive profile. And fortunately, we see that some of these are opening up around the world.”

Hunger games: “Our appetite hasn't stopped,” said Malul. “We are looking at opportunities at three or four verticals and one of them was gaming. 

• “The Aspire transaction has not been completed, so we have not yet had the chance to strategically see how to blend the prioritization of potential transactions.”

Analyst take: Jefferies said they continue to believe NeoGames is “uniquely positioned in a space with inherent stability and higher barriers to entry, which provide for profitability today”.

Startup funding news  

Lay up: Video engagement operating system (VEOS) startup StreamLayer has announced that Las Vegas Sands is now one of its investors (amount undisclosed). 

• The company produces personalized video packages for rights holders such as media groups, sports teams and leagues to enhance sports fans’ engagement levels. 

• CEO John Ganschow on LVS investing in StreamLayer: “At a time when the global streaming industry is seeking solutions to attract, retain and monetize their audiences in the face of spiraling content costs, the strategic investment from Sands will allow us to accelerate our development efforts and capitalize on this growing demand.”

• LVS recently announced an undisclosed "strategic investment" in the match-fixing analytics firm US Integrity as part of its strategy to invest in the B2B segment. 

Sector watch - payments 

Clear and present: Nuvei has partnered with Fifth Third Bank and The Clearing House to launch real-time deposits in the US through its real-time payments (RTP) network. Real-time deposits move from a player’s bank account to a merchant’s account by using the request for payment feature on the RTP network from The Clearing House and are then transferred in real-time. 

• This is unlike traditional deposits across the ACH Network payment system “which can take days to settle”, the group said. 

• Nuvei added that real-time deposits are extremely advantageous for sports betting customers. 

• “As in-play betting occurs in real-time during live sporting events, players need to fund their gaming account instantly and safely. Merchants can now benefit from both real-time deposits and instant withdrawals through the RTP network,” the group said.

Play it safe: The Paysafe and Playtech payments partnership the two companies run in the US has been extended to European markets and will see Playtech offer Paysafe’s payment solutions to operators through a single API. The companies have deployed the integration with operators betPARX in Pennsylvania and New Jersey and Play Gun Lake in Michigan.

• The integration will enable operators to access Paysafe’s payment solutions and help “maximize consumer choice by providing players with all the ways they want to pay when betting online”, the group said.

Cashless wonders: Gaming-to-fintech provider Everi said its cashless QuikTicket and CashClub Wallet solutions generated nearly $350m (~3% ) of the $10bn worth of transactions it processed during Q1. 

• The group said that in casinos that had “at least one of our cashless options for more than a year, cashless volumes are running at ~8% of the total funds delivered to the casino floor”. Its CashClub Wallet is now live in 19 casinos in six jurisdictions. 

CFO Mark Labay on cashless payment adoption rates: “We've seen an increase in total transaction dollars delivered to those individual patrons after they switched to the cashless wallet. As we expected, the amount of the average transaction size was smaller for a cashless transaction, but it would appear that the convenience factor is driving a 39% increase in the average number of transactions performed.”

Datalines  

Indiana Apr22: Sports betting handle was up 52.3% to $360m, GGR was up 42.7% to $28.6m. Casino revenues were up 6.1% to $215.3m. 

Regulatory roundup

Sport-betting regulation in Missouri will not be happening this year. The inclusion of video lottery terminals in the prospective sports-betting regulations sank the bill. Kansas Governor Laura Kelly has signed her state's sports betting bill into law, legalizing mobile and retail sportsbooks in the process. Kansas is the second state after Maine to legalize sports betting in 2022 and hopes to have the first legal sportsbooks up and running by the fall.

Newslines 

Superfast: Super Group, the parent company of Betway, has appointed Natara Holloway and Jonathan Jossel to its board of directors with immediate effect.

MLB in NFT deal: The MLB has named NFT collectibles startup Sorare as an official NFT gaming partner. The partnership will see the launch of an NFT-based fantasy baseball game during the 2022 MLB season.

What we’re reading 

Unstable coin: Terra in trouble.

Hype fuelled: Venture capital invests in NFTs.

On social 

Everything’s OK…

Elon Musk @elonmusk

Even though I think a less divisive candidate would be better in 2024, I still think Trump should be restored to Twitter

May 12th 2022

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Calendar

• May 16: GAN Q1s

• May 17: Light and Wonder investor day

• May 18: Catena Media, Better Collective, Sportradar Q1

• May 19: Acroud

Contact us

• Scott Longley scott@clearconcisemedia.com

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