Good morning. On today’s agenda:

• Sportradar and Genius Sports reach an agreement in English soccer dispute.

• The highlights from day one at G2E.

• Macau’s Golden Week data proves to be disappointing.

That's like any old playing card.

Sportradar and Genius settle

The dispute over English and Scottish soccer data has been resolved with Sportradar given a sub-license.

Peace breaks out: The legal fight between sports data providers Sportradar and Genius Sports over the latter’s exclusive deal with the rights owner of English and Scottish soccer data has been concluded with Sportradar now granted a sub-license to offer a secondary feed.

• The legal action reached the Competition Appeal Tribunal in the UK last week. Its origins relate to Genius’ 2019 deal with the Football DataCo where it gained an exclusive licensing deal.

• Following opening arguments last week the firms have reached a settlement that will see Sportradar refrain from unauthorized in-stadia scouting. In return, it has now been granted a sub-license for a delayed official feed for the remainder of the Genius deal, which runs until 2024. 

• The remaining terms of the settlement are confidential.

• The settlement ends a long-running dispute in sports data and brings with it security of supply for operators.

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G2E Day 1

“It feels just like 2019,” according to the organizers, but macro conversations dominate as G2E gets underway in Las Vegas.

Catch the wave: On an opening panel looking at whether the current sports-betting model in the US was sustainable, Andrew Fabian, tech and gaming investment banking at Citi, said the answer was a qualified ‘yes’ but that a “second wave of operators” might be the ones to forge a clearer path to profitability.

• Fabian said Citi is working with Fanatics, which is reportedly soon to launch with sports-betting. “They have profitable businesses elsewhere,” he said. 

• “Now they are coming into sports betting, with a big user base and the right relationships with the leagues.”

• He noted it was “interesting” that Penn had added the word entertainment to its name.

• “You need to think about how the users can be entertained throughout their user journey. It shouldn’t just be about getting them in for the next bet.”

• Speaking about the recent news surrounding DraftKings and ESPN, he said any deal should be more ambitious than simply being a super-affiliate relationship.

• “They should go the full distance,” he suggested. Either DraftKings and ESPN merge, or “there is a strategic element to it where you can see a significant investment”.

• Fabian cautioned against operators simply “waiting” for more states to opt for iCasino in order to move more quickly towards greater profitability. “People can’t just sit back and hope that more states will legalize.” 

On deck: Talking on a panel looking at the investment backdrop, Lloyd Danzig from Sharp Alpha Advisors noted that when it came to potential red flags for getting involved, “now, more than ever, you want to see people responding to the macro environment”.

• On the same panel, Claire McLaughlin, investor at TLI Bedrock, said her mandate “didn’t change” despite the worsening backdrop and that she was still looking for “hyper-growth areas” to invest in.

• Moderating, Chris Grove from Acies Investments said there were “two schools of thought” on how the bleaker economic situation would affect M&A. 

• “Either people will sit on the sidelines until the macro changes; or, when someone moves, there will be an explosion of deals.”

What’s that coming over the hill? On a gaming outlook panel, Andrew Zarnett, managing director at Jefferies, noted that there was little doubt there would be a recession in the US next summer. “Stock market falls always predate the economy and this time I don’t think is any different.” 

• “The real question is how deep and how long, and the big unanswered question is inflation,” he added.

Heard on the floor

New shop: Sources suggest that Davis Catlin and David Williams, who previously led digital investments for Las Vegas Sands, have left the organization to launch their own investment firm focused on the space called Discerning Capital.

Penn growth projects 

Penn Entertainment will work with the GLP REIT on $850m-worth of new projects.

Back to the land: The new plans will see Penn relocate its riverboat casinos in Aurora and Joliet, Illinois, to new land-based facilities, build a new hotel at the Hollywood Columbus resort in Ohio and a second hotel at the M Resort in Henderson, Nevada.

• Financial arrangements include Penn forming a new master lease with Gaming and Leisure Properties to fund up to $575m of the total budget of ~$850m.

• Deutsche Bank said GLP will contribute $225m at a 7.75% cap rate related to the Hollywood Aurora project, with an option to finance an additional $350m.  

• The new lease will go into effect on Jan 1 and will include seven Penn casinos. 

No rental impact: The new arrangement will also benefit GLP as it reduces percentage rent from ~14% of its cash rent revenue to around 5%, an element of the leases that often causes quarterly volatility for the group, said DB. Wells Fargo suggested the deal represented a positive given the GLP involvement.

• The team at Roth Capital said investors would question the timing of the deal, however, given that it comes amid the uncertain macro environment. 

• “While Penn is generating enough free cash flow to fill the ~$225m-$575m funding gap, investors are also penalizing stocks like Caesars and Bally where large CapEx cycles have limited capacity to pay-down debt and/or buy-back stock.”

Golden Week disappoints 

Ongoing lockdowns and discouraging travel advice have hit a key visitation period.

No trickle down: Despite Macau’s visitation levels rebounding from its lows last year, that didn’t translate into strong revenues, according to the analysts at Jefferies, who said the doubling of revenue was “not the strong rebound” expected in Golden Week.

• “Hesitant Chinese visitors continue to be concerned by China's rapid lockdown policy from new local infections, with the start of group tours (and more importantly eVisa) still awaiting an exact date of resumption,” they added.

• Just 19: Visitor numbers were 19x higher YoY during the 7-day holiday (1-7 Oct) at 182k, but that total was only 19% of 2019’s pre-COVID Golden Week, which was 139k per day.

Uncertain timing: Yesterday E+M reported that China would reinstate package tours and eVisas under the Individual Visit Scheme (IVS), but Jefferies said timing remained uncertain. 

• Along with timing issues, whether package tours and eVisa were resuming “at the same time or separately” was the other important issue.  

• “eVisa are more important given history suggests that IVS players are among the highest value players in Macau, while package tours are focused on shopping and eating,” added Jefferies.

Gaming’s generational change

The advent of sports-betting and iCasino is driving engagement with a new generation of gaming consumers.

Generations: Citing a proprietary survey of 1,300 respondents, the team at Jefferies said it suggested younger cohorts of gaming consumers are more responsive to social media engagement and sports-betting makes them more likely to visit a casino.

• Among the key takeaways, the survey found that free play is less than half as likely to engender loyalty from younger cohorts (18-25) as it is from older groups (58-75). 

• Jefferies noted the reach of digital brands could be greater than the larger land-based brands, despite the early stage of digital, which adds to the urgency of digital strategies.

Fundraising news

ALT Data: The San Diego-based provider of alternative sports data has announced a strategic investment from Roger Ehrenberg, founding partner of Eberg Capital and IA Sports Ventures. The amount raised was not disclosed. 

• IA Sports Ventures invests in sports franchises, sports marketplaces and gaming, including the Miami Marlins, WAGMI United, Betr, Simplebet, Smarkets and WagerWire.

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Datalines

Kansas: Sportsbooks recorded GGR of $1.3m during their first month of activity in the state. Barstool Sportsbook generated $762.3k in GGR, FanDuel recorded $207.7k, while the remaining $326k was split between BetMGM, Caesars Sportsbook and PointsBet.

New Hampshire: Casino GGR for September was up 8.3% to $4.6m, while HRM revenues were down 9.7% to $2.4m. DraftKings-operated sports-betting GGR on behalf of the New Hampshire Lottery was up 163.4% YoY but down $285k MoM to $4.2m, while handle rose 19.4% to $43.3m.

Newslines

Games providers GameCo and Green Jade Games have merged to create Green Jade Group.

Virtual sports league provider SimWin Sports has announced a strategic partnership with Tekkorp Capital to advance its fantasy and sports-betting strategy ahead of the company’s debut season. 

Light & Wonder have confirmed Matt Wilson as the new permanent CEO. Wilson had been interim CEO since August following the departure of Barry Cottle.

Gary Fritz has been appointed head of MGM Resorts Interactive having previously been head of gaming for IAC and led MGM’s acquisition of LeoVegas.

On social

Doing the right thing.

Joey Levy @joeyslevy

Today I announced at G2E that @betr will be the first sports betting operator in the U.S. to ban credit card depositing to fund user accounts. I also announced that we will be the first operator to enforce deposit limits for users that are 21-25 years old. 1/3

Sam McQuillan @sam_mcquill

@betr will be the first sports betting operator to ban use of credit cards, CEO Joey Levy says.

8:39 PM ∙ Oct 10, 2022

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Calendar

• Oct 11-13: E+M@G2E

• Oct 13: Entain Q3

• Oct 18: E+M Deal Talk

Contact us

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com