Good morning. On today’s agenda:

• Betr throws down a sports-betting generational gauntlet.

• Analysts say Texas could provide an opportunity for PlayAGS.

• There is more analyst reaction to DraftKings Q2s last week.

The kids are alright.

Betr fundraise

• The B2C micro-betting brand takes to social media to say it is “going to take over this whole fucking industry”.

New sheriff: The new B2C sports media and micro-betting-focused Betr took to social media yesterday to announce a $50m funding round and to say they were going to “disrupt legacy gambling and legacy media”.

• Simplicity: The company has been co-founded by Joey Levy, who is also the co-founder of micro-betting B2B supplier Simplebet.

• Dave who? Jake Paul has 70 million social media followers and will front a new show to be called ‘BS w/ Jake Paul’.

• Genzzz: The press release said Paul was the “most disruptive athlete-influencer in sports and one of the most famous Gen-Z personalities in the world”.

Microdosing: In a Medium post, Joey Levy said he launched Simplebet to “simplify” sports-betting, either via direct-to-consumer or via B2B.

• Meme this: He added that he wanted to be the “Robinhood to the betting industry’s etrade” and “convert the casual fan into a sports bettor and ultimately enhance the public’s consumption of sports”.

• “We started operating with conviction that micro-betting may ultimately be the predominant way people would bet on US sports.” 

Somebody tell Denise: Levy said he realized why “no company had built the technical infrastructure to enable micro-betting at scale” for US sports was because “soccer drove the global regulated sports betting market, and what moments are there to bet on during a soccer match?”

What does this mean for Simplebet? Levy noted that while companies like DraftKings - a Simplebet client - “have pushed the envelope” by launching micro-betting, they are “presenting micro-betting as a feature within a supermarket of legacy sports betting products vs as the core experience.”

Joey Levy: “If we are to believe that micro-betting will be the predominant way people bet on sports in the U.S., then someone should launch the world’s first micro-betting focused app. This is why we are starting Betr.”

The disruptors: Not content with disrupting one sector, Levy goes on to say that “given the convergence of sports betting and sports media and how the latter is just as antiquated as the former”, Betr is also launching a media company led by Paul who is “the world’s most disruptive athlete-influencer”.

On the team: Joining Betr is Alex Ursa, head of product, who comes from FanDuel and head of media Mike Denevi who was previously at Bleacher Report.

On the capital table: The fundraise was led by Florida Funders which led a previous $30m round earlier this year.

• If the number of backers willing to put money into a startup is any guide, then Betr has it made. E+M counted 31 “and more” investors including 8vc, Aliya Capital Partners, Fuel Venture Capital, FinSight Ventures, Simplebet and Stronach Group.

Go social: Notably, the press release said Betr is on TikTok, YouTube, Instagram, and Twitter, and on LinkedIn and at betr.app.

On social

Chris Grove @OPReport

1/ It's interesting to watch U.S. sports betting nomenclature evolve in real time. For the first few years of regulated betting, we saw a mishmosh of "live," "in game," "play-by-play" and "in play" used to describe real-time wagering ...

August 8th 2022

4 Retweets14 Likes

Also on social

Ben Keith @BenStarSports

@OPReport @joeyslevy @betr I don't understand what you are saying

August 8th 2022

3 Likes

And…

Neil Roarty @neilroarty

My marketing strategy for every US betting brand is now useless. Credit here to @betr who can only fuck it up from here.

betr @betr

Our guy @JakePaul turned down $40M for this. 😈 https://t.co/ASZIgdgPoz

August 8th 2022

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For more information visit: spotlightsportsgroup.com   

PlayAGS Q2 

• Revenues up 15.2% to $70.4m and adj. EBITDA up 6.3% to $34.1m, 

• Net income of $1.5m, first net profit since Q419

80-20 rule: With domestic daily revenue per EGM up 6% QoQ for the fifth consecutive quarter, CEO David Lopez said the company’s goal when it comes to premium-mass market ratios is to be “at 80-20% of our base”. 

Goal hanger: The group was continuing with its “fleet optimization efforts”, that is replacing legacy stock with new models. Lopez said there had been “a slight acceleration for premium units going into Q3” and made the point that some of its “closest competitors (are at) about 40% on that figure”. 

• Small victories: While not quite setting a target, he said those types of aims were “achievable in our industry for smaller gaming suppliers.”

• “Right now we’re at 12%, others are above 40%. So we think we have some runway.”  

Consistent supply: Lead times and supply chain logistics were steady at four to six weeks and this would help the focus on premium placements, CFO Kimo Akiona noted. 

• Consistency: “Assuming stable macro, the ongoing momentum in premium and higher yielding placements that we’ve already made will help us land at RPD for Q22 that will be at or maybe even slightly above Q321.” 

Analyst reaction: Jefferies noted that the recent Supreme Court decision on regulating bingo machines in Texas “should provide a meaningful opportunity” for the company.

• Deep in the heart: Macquarie noted that AGS announced an opportunity in Texas with one of their most important clients, which we believe could lead to several hundred basis points of growth.

DraftKings analyst reaction

• Analyst reaction to last week’s earnings continues to be positive as the sharer price continues its rebound.

Surplus to requirements: The team at CBRE suggest that with “most competitors watching their checkbooks”, DraftKings has been able to maintain momentum on the revenue side while “optimizing” it marketing to reduce cash burn,

• The big question: However, whether DraftKings; liquidity will last until profitability is reached is the defining issue even as the share price performance suggests investors are less concerned that was previously the case.

• The race: The CBRE team suggest DratKings will exit the year with $1bn of cash and will end FY23 with ~$500m of surplus.

• The end game: Assuming the company needed $250m of cash on hand for operational deployment, and “coupled with” management’s view on having sufficient capital, they suggest it implies profitability and free cash flow breakeven early in 2024.

Moving target: Jefferies, meanwhile, suggested the narrative around DraftKings has shifted “in a good way” and noted the “growing acceptance” of the management’s insistence on not needing to raise capital and also the the shift in the market’s tolerance for accepting risk. 

Cali cost of entry: One area of focus is the ballot race in California and the team at Credit Suisse noted that while it is a “significant opportunity”, it does come with a hefty price of admission with an estimated external marketing spend of between $250m-$300m. 

• “It’s unclear if street estimates assume California in forward estimates (we do not),” they added. 

Exuberant me: Roth’s analysts said H2 would be the “litmus test” for the OSB operators to determine whether the industry's recent marketing rationalization is “structural vs seasonal”.

• “If the big-three simultaneously return marketing/promo intensity to 2H21 levels, this could reaccelerate CPAs for the entire group, leading to greater-than-expected EBITDA losses.”

👀 DraftKings one-month share price performance

Analysts in brief

Sportradar: Ahead of earnings next week, the team at Jefferies have revised estimates down slightly, suggesting revenue will come in at $170m vs. $172.4m previously while adj. EBITDA will be $30.8m vs. $35.5m. 

• The company said the vagaries of the sporting calendar in H1 was the cause of the revisions.

• “Nonetheless, we believe SRAD continues to have a productive position in the value chain, both in the nascent US market and the more mature global markets,” they added.

Datalines

Ohio: July GGR came in at $206.7m, down 2.1% YoY and 27.4% above Jul19. Penn’s four Ohio properties generated $70.5m in GGR, down 4.5% YoY and up 25% vs. Jul19.  

Illinois: Land-based GGR in July of $122.9m was up 2.3% to $122.9m and 6.1% above Jul19.. On a same-store basis (excluding Hard Rock Casino Rockford, which opened in Nov21), GGR totaled $117.9m, implying a 1.9% decrease YoY and 1.8% above Jul19.

Newslines

Evolution the acquisition of Nolimit City for a consideration in cash of €200m upfront. With earnouts, the final price tag could reach €340m.

Greek to me: Sports-betting supplier Pinnacle Solution has agreed a data partnership with decentralized betting ecosystem Azuro to provide sports and esports prices, with the feed available to front-end operators connected to Azuro’s blockchain protocol.

Novibet has signed a multi-year market access contract with Caesars Entertainment to operate in New Jersey. The company also secured market access in Mexico through a contract with Big Bola Casinos.

What we’re reading

Dog bowl: Underdog Fantasy satisfies the appetite for safer gambling.

Calendar

• Aug 9: Light & Wonder, Red Rock Resorts, Wynn Resorts

• Aug 10: NeoGames, Accel Entertainment

• Aug 11: Entain, LeoVegas, Acroud, Super Group, Endeavor

• Aug 12: Flutter, 888

Contact us

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com