Good morning. On the agenda today:

• Catena Media says it is seeing the early signs of recessionary impact on consumers in Europe.

• Rank says trading continues to be “challenging”.

• Analysts say investors are gaining faith in the US OSB profitability story.

White winter hymnal.

Catena Media Q2

• Revenue down 5% to €28.9m and adj. EBITDA fell by 40% to €9.1m.

• North America revenue up 21% to €14.9m; casino down 18%, sports up 31%.

Paradigm a dozen: As previously announced, a strategic review initiated in May was extended in August to look at the entire European business, notably its AskGamblers and financial trading assets which the company said had received ”strong interest”. 

• Out of line: On the call CEO Michael Daly said the group’s European investment thesis at the start of year was “not in line with current macroeconomic factors”. 

• Langsam: Despite recently signing agreements with newly-licensed casino operators in Germany, the country “will not improve with any pace”, he said.

• The UK outlook was also unclear and this had “led to a paradigm shift” and a review of its European activities. 

Safety first: Asked why Catena Media appeared to be more affected by macroeconomics than its contemporaries, CEO Michael Daly said the group was being “prudent and cautious, planning for the worst to take the best”. 

• Prepare for the worst: He added that the group has to consider that “the macroeconomics could get worse”.

• “European players are feeling the macro impact more” than those in the US and “because we operate mainly on revenue share that will impact us.” 

• “It might open up M&A opportunities, but that’s where we are”. 

Unexpected items in the bagging areas: Lower than expected revenues in Ontario and delayed US state launches are “likely to delay attainment” of the 12-month $100m revenue goal in North America to H123. The company said Ontario was “uninspiring” due to “unexpectedly strict marketing restrictions”.

Model behavior: CPA was still the favored business model for affiliates in North America, but Daly said revenue share would keep developing going forward and he was seeing “operators coming to the table with serious discussions”.  

• Mid-game mindset: Catena took over the betting content partnership with NJ.com publisher Avance Local from Better Collective during Q2.

• Reluctant partner: Daly said previously the group was “reluctant to sign publishing partnerships as it risked cannibalizing revenues in states where it had strong organic products”.

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Rank FY

• Net gaming revenues up 98% to £644m, underlying operating profit of £40.4m compared to 2021 loss of £82.4m.

• Venues NGR up 209% to £460.7m, digital NGR up 4% to £183.3m.

• Current trading sees NGR running 3% ahead YoY with digital up 12% and venues down 1%.

Heavy weather: The company pointed out its operating profit performance was in line with its updated guidance from June with the H2 performance adversely impacted by difficult trading conditions in its casino business, particularly in London where Rank operates nine casinos. 

• Doldrums: Asked whether the casino business was seeing any consumer weakness, CEO John O’Reilly said the company was “not seeing it yet”.

• Hang tough: “But there is no doubt the autumn will be tough for consumers,” he added.

• Fly me to the moon: The good news from current trading was the rise of international visitors in London. Although O’Reilly cautioned it was only seven weeks, he noted that Grosvenor visitation was up 34%.

White paper, white heat: Talking about the leaked details of the UK government’s gambling White Paper, O’Reilly said the company was happy with the potential for harmonization between 1968 and 2005 Act casinos but said he was disappointed the publication looks likely to be delayed to either late autumn or even next year.

• Holding the line: He noted the online measures would “hopefully draw a new line in the sand”.

Keep on moving: With Rank’s online business, the company is in the final stages of completing the migration of its brands to its new in-house platform with Grosvenor being the last brand to move by the end of the current quarter. 

• With Grosvenor online, he said that omni-channel customers were the “sweet spot” with customers “clearly much cheaper to recruit and much more valuable”.

Sportradar analyst reaction

• Deutsche Bank has raised its target price for Sportradar as the shares respond positively to yesterday’s earnings.

Looking up: The prospects of reaching profitability in the US ahead of schedule, a $200m pay down of debt, the growing importance of in-play and the strong growth in the ad:s business were among the positives for the team at Deutsche Bank from Sportradar’s Q2 earnings.

• In-play share: They pointed to management's comments about achieving ~70% market share for in-play betting in the US, with increasing popularity leading to higher margins.

• In the RoW betting segment, Deutsche Bank noted the strength in the managed trading services (MTS) segment, up 65%, and live odds, up 9%.

👀Sportradar share price, Aug 17 

US online analyst update

• The team at Roth believe the recent run-up in shares demonstrates investor faith in OSB and iCasino profitability.

Soon come: The team at Roth suggest investors are now “buying into the narrative” of sports-betting profitability and while they believe the current marketing lull will soon pass they believe the intensity of promotions and advertising will be less than was experienced in the same period last year.

• OSB and igaming-related stocks have “traditionally” - in their short history - traded well between midsummer and the start of the NFL.

• Soft touch: Meanwhile, the big spenders in the sector such as DraftKings could benefit from a wider softness in ad spend.

• Roth added that the “profitability narrative” is building after optimistic commentary from Flutter, Penn and DraftKings.

🏖️The boys of summer: US OSB and iGaming stocks in the past month

Fundraise

Oddin.gg, an esports-betting odds and risk management provider, has successfully concluded a $4.5m Series A funding round. The fundraise was led by existing investors Velo Partners and Genting Ventures.

Datalines

Pennsylvania: Sports-betting GGR in July rose 20.9% YoY to $33.2m while NGR (ex-promos) rose 28.1% YoY to $25.4m. Handle was up 10.5% YoY to $336.5m.

• Leaders by handle: FanDuel was in front with 40.1% followed by DraftKings (24.3%), BetMGM (13.5%) and Barstool (6.4%).

• Marketing efficiency: FanDuel’s promo spend share was 36.3% compared to DraftKings’ at 9.2%, BetMGM on 31.9% and Barstool with 6.3%. In total, promo spend came in at 25.65 of GGR.

• iCasino GGR was $98.6m, up 11%b YoY and down 4.2% MoM. Deutsche Bank estimate BetRivers led the way with 25.1%.

Newslines

Penn Entertainment has confirmed its intention to take up the option to buy the remaining 74% of Barstool Sports that it didn't already own and make the company a wholly-owned subsidiary. The buyout will be completed in February.

Neverending story: According to reports, Maryland’s online sports-betting market could open in February, in time for the Super Bowl. But it remains only a possibility, according to an official from the Maryland Lottery and Gaming Control Agency.

B-More: Separately, the Orioles announced a partnership with the Nevada-based SuperBook Sports for a retail operation to be established at Oriole Park in Camden Yards in Baltimore. The operation is expected to be completed next year..

What we’re writing

The Pinchpoint

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Welcome to a special summer edition of Pinchpoint, the go-to source for news and analysis from the world of safer gambling, affordability and operational compliance. We lead with the news today of Entain’s record fine from the UK Gambling Commission for a series of social responsibility and AML failures…

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What we’re reading

Mechanical failure: “Reading this book reminded me of watching a cat lick a dog’s eye goo.”

Calendar

• Aug 23: Better Collective

• Aug 24: Sky City

• Aug 25: Rivalry

Contact us

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com