Jun 14: Entain goes Dutch with BetCity buyout

Entain buys BetCity, PointsBet Australia bid, Penn insider trading +More

Wagers.com Earnings+More

Jun 14

Good morning. On today’s agenda:

Entain makes a splash in the Netherlands with BetCity acquisition.
US betting and gaming stocks hit as S&P enters bear market territory.
PointsBet knocks back News Corp-led bid for its Australian business.

In the city. Click here:

Entain BetCity acquisition

BetEnt bought from Sports Entertainment media for up to €550m.

Bright lights, big city: Having exited the Netherlands when the market regulated last October, Entain has bought its way back in via a €300m cash upfront deal with a two-year earnout that could take the buyout price up to €550m. The deal will be paid from Entain’s existing cash and bank facilities and will complete in H2.

Data from the Dutch gambling authority suggests BetCity achieved 20% market share in Q421. Analysts at Regulus estimate this was worth ~€30m in Q1. “This is remarkable from a standing start,” they added.
Got to earn it: Up to €50m of the earnout is deliverable on completion of a successful transition to the Entain platform.
Note: BetCity currently operates on the Kambi platform.

The wait goes on: Entain said BetCity would be complementary to its Bwin and Party brands which are both yet to receive licenses from the Dutch authorities. Entain said the licenses would now be in the “latter part” of 2023 as the KSA has recently requested additional documentation.

Dutch bun fight: A question for Entain/Big City is how much of that 20% it will hold on to now that Kindred’s Unibet has recently relaunched having been granted a license on June 7. Fellow market absentee Betsson is also awaiting news on its license application.

Quick buck: Noting BetCity has only been in existence since October, Regulus said the sale was “one of the most rapid returns on effort seen in the sector” and demonstrates the disruption caused by the October grey market shutdown.

Holding on “The extent to which BetCity can hang on to its market size and share as the Netherlands market evolves remains to be seen, with a platform migration adding risk.”

**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

Markets update

Pursued by a bear: As the S&P officially entered bear market territory yesterday, the gaming sector suffered further share price falls on fears over US inflation and the economy.

A sea of red: Worst off was DraftKings which shipped nearly 16% on the day. Caesars fell by nearly 13%, Penn National was down by 12%, MGM was down 10% and Las Vegas Sands was off by nearly 9%.

Penn insider trading

Book ‘em: A former Penn National software engineer has been charged with insider trading by the SEC in relation to trading around the news of the acquisition of the Score.

David Roda allegedly gave confidential information about the company's interest in acquiring the Score and purchased options on Score Media in the weeks and days leading up to the announcement of the acquisition. Additionally, Roda tipped a friend who is also charged.

SkyCity guidance update

New Zealand casino group SkyCity has updated its FY22 EBITDA guidance to NZ$135-$140m (US$85m-$90m).
Net profits after tax (NPAT) will range from NZ$3.5m-$7m (US$2m-$4.3m).

Local strength: The company said trading its local gaming businesses had been “stronger than expected” following the relaxation of COVID-19 operating restrictions. It will publish its FY results on 30 June.

Digital hopes: SkyCity is also active in the digital space, it invested €25m in Gaming Innovation Group in return for an 11% stake and to finance the acquisition of betting-solutions provider Sportnco.

Brazil betting regulations in doubt

World Cup doubt: The launch of regulated sports-betting in Brazil in time for the Qatar World Cup in November has been thrown into doubt after President Jair Bolsonaro’s refusal to approve the new betting regulations until after the general elections in October.

May day: Brazil’s Ministry of the Economy put forward the sports-betting decree to Bolsonaro’s office in early May, with stakeholders hoping to see the governing Liberal Party sign off on the new law by the end of the month. A licensing program would have then started to issue operator permits in time for the World Cup.

Presidential face-off: According to Brazilian media, Bolsonaro has been advised to delay signing off on the regulations to secure the evangelical vote in Congress. The country’s general elections are set for 2 October, Bolsonaro is set to face former President and leader of the Workers’ Party Luiz Inácio ‘Lula’ da Silva.

Newslines

GAN has extended its share buyback program and can repurchase up to $5m worth of its ordinary shares. The program, which expires on Nov 30, will be carried out with cash from operations and on the balance sheet.

Bragg Gaming has appointed Yaniv Sherman as its new CEO. The group dispensed with previous CEO Richard Carter in November and up to now was led by interim CEO Paul Godfrey. Sherman was previously SVP and head of US operations with 888.