Good morning. On the agenda today:

• Analysts suggest NFL will be among the catalysts for OSB-related stocks.

• The same team also suggests that growth trends for Las Vegas are set to continue into the fall.

• Our startup focus for this week is Legacy Fantasy Sports.

Constant surprises.

Online analyst update

• Macquarie have updated Q4 OSB forecasts ahead of kick-off.

Jack, he’s gonna be a football star: Analysts at Macquarie suggest the rally in US gaming stocks - up 27% in the past month vs. 12% for the S&P 500 - has further to run as the sector heads into football season. “We see more upside with multiple other catalysts on deck,” they added.

• Third and inches: This includes the charge towards profitability being led by FanDuel. 

• Happy days: The Macquarie team noted that most earnings announcements surprised on the upside with either lower adj. EBITDA losses or in FanDuel’s case a Q2 EBITDA profit.

• “We believe this helps investors believe in companies’ path to profitability estimates and more importantly path to 20%-plus margins,” they added.

The special one: Macquarie noted that the consensus among operators is that Ontario has turned out to be very different from analogous US state launches due to the presence of previously gray market operators. “Investors should expect lower market shares relative to the US” with the exception of the Penn-owned theScoreBet.

‘The regulatory event of the year’ Macquarie noted that with upcoming launches in Maryland, Kansas and Ohio, sports-betting exposure runs to 57% of the population while California - if either proposition passed - would add a further 12%.

Further reading: Biden administration argues in favor of Seminole sports-betting agreement.

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The shares week

Running out of puff: The leading online-related stocks saw some profit-taking after the recent rally with DraftKings and Rush Street down nearly 11% and over 13.5% respectively. Continued worries over the direction of the US economy were the cause of the wider investor nervousness.

To insanity and beyond: Notably, last week saw the return of the meme stock as Bed, Bath and Beyond became the subject of the Reddit crowd. 

• Rise and fall: The share surged 400% between mid-July and early August before losing half their value late last week after activist investor Ryan Cohen’s RC Venture’s offloaded its entire neart 12% holding.

• Further reading: How a 20-year-old college student made $110m from trading BB&B.

Land-based gaming update

• Visitation trends remain positive for Las Vegas heading into the fall.

Occupy: Back with Macquarie, the team suggested that despite fears about peak Las Vegas demand, the short- to medium-term picture for demand remains strong. Citing their monthly survey, they suggest there was continued strength in searches for August and September while in the recent earnings calls, all the major operators reported occupancy at 90%+.

• Shifting sands: Still, they think a more nuanced picture will emerge for actual Strip gaming revenues with the likelihood of GGR with a “trade out” from gaming customer spend to more leisure customer spend.

• All the twos: Still, the team forecast Q3 Strip GGR to come in at $2.2bn, up 6% YoY and Q4 also $2.2bn, up 5% YoY.

Key quote: “Overall, we think LV casinos are also better prepared to handle a downturn than prior cycles with leaner cost structures and an overall market that has seen little new supply in the past decade.”

Further reading: Could the Strip soon be lengthening?

Bally analyst update

• Wells Fargo resume coverage of Bally Corporation with an Equal Weight rating.

What’s going on: Bally has “broadly stable” land-based and international online businesses, but the team at Wells Fargo suggest the long-term prospects for the North American online arm remain “challenging”. They also have worries over the elevated leverage and uncertainty of the $1.7bn Chicago casino and the Las Vegas Tropicana overhaul.

• Trade-off: With North America online, WF suggest Bally is likely to “remain prudent” on marketing and promo spend but the cost will come in limited market share gains.

• Into your arms: Still, they believe Bally has “more actively embraced igaming” which makes sense due to the omni-channel opportunity.

MSGS Q2 call

• Madison Square Gardens Sports CEO sees fan engagement potential in micro bets.

Sowing the seeds of love: On the company’s Q2 earnings call, CEO of the owner of the NBA’s Knicks and the NHL’s Rangers Andy Lustgarten said he was excited about what micro-betting might mean for consumer engagement. 

• Pointing to the example of in-play betting on tennis with “so many points for people to bet”, he said the market was “going to see that here both in the NBA and the NHL” along with other sports.

• “As the technology moves along, we'll see more of those types of actions which will drive even further engagement,” Lustgarten added.

• He noted he could see further growth in New York if the tax rate were adjusted.

Allwyn SPAC news 

SPAC approval: Allwyn’s reverse merger with the Cohn Robbins Holdings Corp SPAC has moved one step closer following the approval of its registration document by the SEC. 

• The transaction has been recommended by CRHC management, shareholders are set to vote on it during the company’s EGM on Sept 7. 

• The transaction will value Allwyn at $9.3bn and is expected to trade on the NYSE under ALWN. 

Capital diversity: At the time of Allwyn’s Q1 results CEO Robert Chvatal said the “listing will allow us to diversify our sources of capital”.

Startup Focus - Legacy Fantasy Sports

Who, what, where and when: Legacy Fantasy Sports is a F2P, year-round fantasy sports app/platform that allows users to build rosters with both players from today and legends of the past. The Detroit, Michigan-based company was co-founded by attorney Grady Toombs, former Garden Fresh Gourmet CEO and attorney John Latella and former Detroit Lions great Herman Moore.

Funding backgrounder: Legacy Fantasy Sports has raised just over $2.5M in a seed funding round led by co-owner of the Cleveland Cavaliers Gary Gilbert. It hopes to engage in a Series A funding round in the Fall of this year.

So what's new? NFL, MLB and NBA games are available now for live free play. Additional sports including soccer, cricket and hockey will be available on the platform in the Fall of 2022. Other innovations will include a full social platform and the ability to enter contests and start collecting reward points which will be redeemable for merchandise, prizes, gift cards and much more.

The longer pitch: Toombs suggests the market is saturated with sports-betting and gambling sites with no one focusing on non-gambling fantasy sport, until now.

• “Because the platform is non-sports betting/gambling, users of all ages including kids can sign up and play,” he says.

The patent-pending tech allows users to play year-round regardless of whether there is live sport taking place. “Because there is no off-season on the Legacy Fantasy Sports platform, everyone can play whenever and wherever they want anytime and with their favorite players of all time,” adds Toombs.

All points east: Toombs says there is an intriguing market in India. “With over 100m people playing fantasy Cricket in India we view India as the market that we will be able to gain the most traction in and acquire the largest user base quickly,” he says. Europe also appeals as well as, naturally, the US.

• “With over 65m people playing fantasy sports annually in North America we view this as natural for building a user base that won’t be restricted by gaming regulations,” he says.

The takeaway: Toombs says the app could provide “tremendous value” as a low-cost acquisition tool for sports-betting operators with a concept that could be both B2B and B2C.

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The week ahead

The affiliate sector will once again be in the spotlight on Tuesday when Better Collective reports. Analysts at Redeye said at the start of August they expected the earnings to display the typical seasonal slowdown with revenue set to fall 16.4% QoQ to an estimated €56.4m. However, this still represents 41% growth YoY. 

• Later in the week on Thursday, esports-betting operator Rivalry also reports its Q2 earnings. In a recent company presentation the company said it had seen 20% average monthly growth over the last 12 months.

Return of the pod: After a summer break the Earnings+More podcast will return this coming Thursday. 

Datalines

New York: Weekly GGR rose slightly in the week to Aug 14 to $21.1m on a handle of $197m. FanDuel maintained leadership with 49.7% share of GGR followed by DraftKings (23.4%) and Caesars (12.5%).

Newslines

MGM Resorts has received regulatory clearance to proceed with its $607m acquisition of LeoVegas.

Acroud, the affiliate and affiliate platform provider, has issued SEK225m of secured bonds. Meanwhile, Betsson has also issued €10m in senior unsecured bonds due 2025 under its existing framework.

Betr hire: The micro-betting startup Betr has hired Miami Marlins general counsel Ashwin Krishnan as head of legal.

Low6 has signed a partnership with Sportsbet.io in readiness for the FIFA World Cup.

WSC Sports will create and distribute real-time video highlights of all first and second division La Liga matches during the forthcoming football season.

What we’re reading

Scratch and sniff: Donald Trump and the sweepstakes scammers.

What we’re listening to

Flow rider: The All-In podcast discusses Adam Neumann’s second act.

Calendar

• Aug 23: Better Collective

• Aug 24: Sky City

• Aug 25: Rivalry

Contact us

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com