Jun 10: Weekend Edition #50

New York/New Jersey analysis, MGM Gold Strike sale, Illinois data, Allwyn analyst update, Huddle startup funding news, Betting on Sports Europe recap +More

Jun 10

Good morning. A Wells Fargo note this week on Bally pointed out that its UK-facing operations within Gamesys were facing a possible £2 stake limit on slots, affordability measures and advertising bans. Not so long ago, this would have been viewed as an apocalyptic triple-whammy. Now it’s an aside in a note which foregrounds opco/propco and regional gaming deliberations. The UK may not be central to Bally but the effects of whatever measures are (finally) introduced will be far-reaching.

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New York/New Jersey analysis

Dawg eat dawg: The team at Wells Fargo suggest the true effect of “meaningful cannibalization” of the New Jersey market from the opening of New York has been masked to date by excessive promotions in New Jersey.

Looking into the data from before and after NY launching, the team suggest that only when the New Jersey promotional environment “moderates” will the market have a “better sense of the true impact” of legalized OSB across the Hudson.
Recall, revenue from New York residents was thought to be worth up to 20% of New Jersey GGR pre-New York launch.

Extreme sports: But comparing the last four months of New Jersey handle/GGR data preceding New York’s launch and the subsequent four months, they point out that either New Jersey players had enjoyed “extreme good luck” (Wells Fargo’s emphasis) or the GGR was depressed by odds boost and/or an uptick in free play.

The data shows that in the preceding four months, NJ GGR rose 54% to $340m but in the four months from Jan22-Apr22 GGR fell 15% to $208m.

“We do not get promotion detail for New Jersey, but we are increasingly hard-pressed to believe there has not been any meaningful cannibalization,” they add.

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MGM sells Gold Strike

Strike out: MGM Resorts is selling the operations of the Gold Strike Casino in Tunica, Mississippi to Cherokee Nation Entertainment Gaming for $450m in cash. The acquisition will close in H123. The owner of the property VICI will enter into a separate lease agreement with the tribe.

For the year to Dec21, Gold Strike reported net income of $81.1m and adj. Property EBITDAR of $115m.
The purchase price represents a multiple of 11 times 2019 adj. EBITDA.

Beau selector: MGM CEO Bill Hornbuckle said that while Gold Strike was a “wonderful property with a bright future ahead”, MGM had decided that strategically it should “narrow” its focus in Mississippi to its Beau Rivage property.

Dollars and sense: Wells Fargo said that given recent operator commentary on Mississippi and “broad concerns about the low-end consumer”, the transaction “makes sense for MGM”.

Datalines - Illinois

Into the shoulder season: Sports-betting handle, including retail, rose 56.2% YoY to $839m though that was down 14% MoM. GGR was up 61.6% YoY to $70.5m and also up 16% MoM due to an improvement in hold. Mobile was worth 98% of GGR.

The leaders: By handle, FanDuel led the way with 35.3% followed by DraftKings (26.4%) and BetRivers (11.7% while by GGR FanDuel was further in the lead with 49.7% with DraftKings on 21.4% and BetRivers on 9.1%.
In its first two months, BetMGM handle share has gone from 4.7% to 6.3%.

Allwyn analyst update

Nice to see you: Ahead of its proposed Q3 float via a SPAC merger Allwyn held a getting-to-know-you session with analysts this week and gave a positive outlook on the recession resilience of the lottery sector.

Analysts at Truist said the company suggested that digital lottery takeup would “fuel the next leg of growth” with increasing online penetration in the US.
Sizing USA: The analysts reported that Allwyn sizes the US lottery market at $109bn with $6bn of that being ilottery. Only 10 states currently have ilottery, but Allwyn believes more will open in the coming years and it hopes to play a part, potentially through B2G operations.

A safe European home: As it stands, Allwyn is the #1 lottery operator in Austria, Czech Republic, Greece and Italy (in partnership with IGT) and is the selected preferred applicant to run the UK National Lottery (though this is still contested by Camelot).

Truist noted that Allwyn saw €19bn worth of wagers across its four markets in 2021 and estimates the UK will see €11bn in 2022E.

Bally analyst update

OpCo/PropCo options: After meeting with management, the team at Wells Fargo suggest Bally views the transaction environment for a potential sale and leaseback of at least some of its properties to be “highly attractive”.

Go big, go early: They added that they believe a “key consideration” is how many assets they sell-leaseback now vs. doing multiple transactions over the coming years.
“Our sense is they’re inclined to go bigger/sooner vs. smaller/more elongated in terms of transactions,” the team added.

Regional stable: Bally is seeing “some sign of softness” in lower-income geographies (i.e. Mississippi) and “erring on the side of caution”, the company is “preparing for a H2 pullback,” reducing costs “where it can”.

Leveraging AC: Bally is planning a Bally Bet 2.0 launch in New York in ~four weeks. They noted that 40% of the Bally Atlantic City database is New York-based. It is also hoping to launch in Ontario in July or August with betting and gaming on a single app. Bally “does not plan high levels of promo spend.

Bally balls: Wells Fargo concludes that the company “has a lot of balls in the air”.

Startup funding news

Hut! Las Vegas Sands has completed a strategic investment in Huddle Tech, the newly-formed company that has emerged as a result of the merger between Huddle Gaming and Deck Prism Sports. The investment amount was undisclosed.

Huddle Tech provides trading, risk management services and in-play odds to US sportsbooks and as a result of the merger has seen its staff numbers grow to 80.

CEO Francesco Borgosano said: “Our long-term vision remains the same – we believe that there is no technology out there that will be better constructed to meet the needs of the modern operator. Operators need product differentiation, innovation, and operational efficiency, and that’s what Huddle brings.

Ed Miller, VP of Innovation, added: “This move enables us to see through our vision to change the way the global sports betting industry does its odds-making and managed trading.”

Further reading: Huddle Tech will be the WE+M Startup Focus this Monday.

SBC Betting on Sports Europe recap

Strength in unity: Asked whether US regulated operators would continue to push for action against offshore operators, Andrew Winchell, head of government affairs at FanDuel, said industry bodies will continue doing so.

“But until the DoJ goes after offshore operators that market to US players, there is only so much stakeholders can do,” he added.

Positive message: Charles Cohen, CEO and founder of the Department of Trust, was keen to stress how he believed the UK industry was failing in its own communications strategy.

“Talking up the risk of offshore operators is the wrong way to approach the topic (of players going to unregulated sites),” Cohen said.
“It should have a positive message, 15 million people gamble every month (ex-lottery), the industry shouldn’t be coming up with dramatic messages about black markets.”

Horsing around: William Woodhams, CEO of UK bookie Fitzdares, gave forthright views on the state of UK horse racing.

“The UK bookmaking industry pays £300-400m to data providers, maybe they could put some of it back into marketing horse racing.”
“The NFL pays two ex-pros £500K a year to live in the UK and talk about the NFL. They want to drive up NFL viewers and fan numbers in the UK and host games at the Tottenham stadium. There’s something in that, those kinds of investments should be talked about (in UK horse racing).”

Core focus: David McDowell, CEO of betting-solutions provider FSB Tech, said operators and suppliers should focus on their core functions: “There is lots to unpack in the M&A vs. in-house debate, but I would always ask operators what they want to focus on and have control over.”

“They want to differentiate and that comes through branding, for control it could be about trading on the biggest sports, UX and onboarding; but not something like payment solutions.”

Sturm und drang: “It’s been so bad, it can only get better,” Joerg Hoffman, senior partner at Melchers law firm, tried to stay positive as he opened the discussion on Germany's regulation of OSB and icasino.

However, Mathias Dahms, CEO of the country's sports betting association DSWV, said the first few months of the new regime were “a big step forward”.
“While there is much unhappiness at the regulations, it’s a compromise for all the Lander and now we are in a transition phase.”

Newslines

Blackstone has passed its suitability test with the New South Wales and Victoria gaming regulators and is now on track to complete its $6.3bn acquisition of Crown Resorts. Recall, Crown has previously been found to be unsuitable by both state authorities. Blackstone now awaits regulatory approval in Western Australia, where Crown operates the Crown Perth property.

DraftKings will debut four new podcasts through its content distribution contract with Meadowlark Media including hockey podcast Too Many Men and college football show Shutdown Fullcast. Meadowlark is a sports-focused media company founded by ex-ESPN exec John Skipper and social media personality Dan Le Batard.

Quickspin co-founder and CEO Daniel Lindberg is leaving the company and will be succeeded by current COO Panagiotis Chryssovitsanos.

Raw iGaming is acquiring online slots developer Sapphire Gaming for an undisclosed amount. It is Raw’s second acquisition within the space of three months after it acquired Leander Games in April.

Metropolitan Gaming has announced that one of its wholly-owned subsidiaries has completed the purchase of the troubled Park Lane Club London through an asset sale conducted by the administrators of Silverbond Enterprises.

What we’re reading

Crewcut! Recalling when Down Beat magazine tried to change the name of jazz.

Make mine a double: The Parleh Media reports on both Canadian industry conferences that took place in Toronto this week.

Canada's sports betting industry newsletter

A Wednesday summary of the summits

On this Thursday morning, as we bid adieu to SiGMA’s inaugural Americas Summit and we scramble to get over to the Metro Toronto Convention Centre for the final day of the Canadian Gaming Summit (where’s a caffeine IV when you need it?), we present The Parleh newsletter, rapid-fire edition with some news, notes and quotes from yesterday…