Welcome to the weekend after G2E. On the agenda today:

• Las Vegas Sands concession is in peril over Macau lawsuit.

• Analysts take a look at the supplier landscape at G2E.

• Entain and Flutter are the talk of analysts’ takes.

• Payments is the subject of this week’s sector watch.

Send me a postcard when you get to where you're going.

Sands’ Macau jeopardy

A letter from a firm that claims it helped Sands Macau gain a license 20 years ago in Macau could bring the house down on its renewal bid.

What would Sheldon have said? According to a report in GGRAsia, an outfit called Asian American Entertainment, which is involved in a legal action against Las Vegas Sands’ subsidiary Sands China, has sent a letter to the Macau authorities alleging that the company cannot receive a new concession until it resolves an $11.9bn damages claim.

• In April, the Court of First Instance in Macau found that the plaintiff had engaged in ‘bad faith’ litigation. However, Asian American is still appealing.

• The letter claims that should Sands China lose the case, then its Venetian Macau property would be forced to declare bankruptcy.

• “If Venetian Macau becomes bankrupt it will be an extraordinary embarrassment” for Macau, the letter deadpans.

• It also claims Venetian Macau should be forced to provide a bank guarantee for the full $11.9bn.

• The Las Vegas Sands share price recovered its poise after an initial drop in early trading on Thursday.

😷 Las Vegas Sands’ share price performance on Thursday

Source: Google Finance

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G2E supplier wrap

The supply side was optimistic in meetings at G2E this week, suggesting they are yet to see a consumer downturn.

Sunny side up: The analysts at Deutsche Bank held meetings with IGT, Light & Wonder, AGS and others, and said the overall feeling was that there had been no degradation in play in recent months. They pointed to the 2.3% YoY growth in major regional markets and the 2.9% growth seen in the same states in August.

• Seller expectations in terms of M&A have failed to move in line with market sentiment and remain elevated.

• Suppliers were viewing a strong pipeline of cashless opportunities (see sector watch below) with adoption easier at newer properties.

• iCasino game development remains an area of aggressive growth. Manufacturers are working on omnichannel in the expectation of land-based and online titles being linked.

• Near term, iCasino hopes for further regulation focus on Ohio, Illinois, Indiana and Iowa. However, the analyst noted that the latter three were also big hopes this time last year and none came to fruition.

Analysts’ takes 

Flutter: Wells Fargo noted the NFL remains the key driver of customer acquisition, but the NBA is “FanDuel's biggest volume driver”, reflecting the success of its NBA partnership with Turner Sports. The team noted that smaller market players may exit the market, while new entrants will have to meaningfully invest to gain scale.

• “In other words, it will be costly for late entrants to acquire customers, especially high LTV ones.”

Entain: The team at Jefferies have materialy updated their interest costs for the FY23, leading to their EPS estimate being cut by 15%. Guidance for FY22 remains unchanged.

• 👀 The team noted there is a ~50% spread between the current Entain share price and the MGM offer terms back in September last year.

Earnings in brief

Esports Entertainment: Fiscal year Q4 revenue rose 33% YoY to $11.7m but was down 25% QoQ, while adj. EBITDA losses hit $6.5m – an 18% deterioration and a small improvement on the $7.3m loss in Q3. Over the period, the company sold its Helix esport property and signed a letter of intent for the sale of its Spanish-facing iCasino operations.

• Hey, Mr Postman: The company has received a letter from Nasdaq with regard to non-compliance with minimum pricing rules. EE intends to appeal.

• It added that cost-saving measures meant it has reduced cash burn. Available cash stands at $2.5m and $35m of outstanding convertible headroom.

Sector watch – Payments

Moves afoot: The move towards cashless casino floors continues to gather pace. IGT launched its resort wallet and IGTPay cashless payment system at Station Casinos' six Las Vegas properties.

• Setting sights: Last week, Sightline Payments and Acres Manufacturing announced a $300m investment project to implement cashless gaming at 250,000 slot machines across the US.  

• “Cashless isn’t the wave of the future, because cashless is already here,” CEO John Acres said of the news.

Every cloud: Gaming-to-fintech supplier Everi’s acquisition of the mobile commerce platform provider Venuetize for $18m extends the company’s reach beyond purely gaming.

• It enhances Everi’s strategy of building customer engagement capabilities in payments and loyalty value capture and transfer, Jefferies said. 

• This should create opportunities for Everi because its position in the gaming sector “is based on the ability to transfer money”.

On a charge: GeoComply will implement its automated chargeback solution with Resorts Digital. The GeoComply Chargeback Integrator (GCI) handles transaction disputes by automatically producing a report that determines the device and location of the bet.

• PayNearMe, which recently launched in Kansas and with SaharaBets in Arizona, said it had more than doubled revenue in digital payments in the past 18 months. 

What we’re watching: The Netflix documentary charting how FT journalist Dan McCrum uncovered the Wirecard scandal, one of the largest corporate fraud cases in Germany. 

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Datalines 

New York: Monthly GGR was up 40% to $143.3m in September on a handle that bounced back to $1.2bn following the return of the NFL. For the week ending Oct 10, GGR was down 40% WoW to $17.8m on handle up 7% WoW to $322.4m. 

• Leaders by GGR: For September, FanDuel led with 45.8% market share followed by DraftKings (31.3%), Caesars (13%) and BetMGM (6%). 

Ontario Q2: OSB and iCasino GGR was up 64.8% QoQ to CA$267m, while handle was up 48% QoQ to CA$6bn. Active player accounts were up 28% to 628k and monthly spend per active player was up 26% to CA$142. 

• PressEnter Europe has become the 25th operator to be licensed by iGaming Ontario, its NitroCasino will be the 43rd regulated website to operate in the province. 

Newslines

In the mobile gaming space, PlayStudios has bought app developer Brainium for $70m upfront and an unspecified performance-based contingent consideration.

French regulator the Autorité Nationale des Jeux has reactivated its ‘Evalujeu’ website that allows players to self-evaluate their gambling habits in order to identify any potential addiction or problem gambling issues.

Tipico has obtained a license to operate its online slots offerings in Germany. The group joins Gauselmann, Rootz and others as the 10th operator to be licensed to offer the product. 

The German gambling regulator Glücksspielbehörde (GGL) has told the country’s ISPs to block online lottery operator Lottoland’s access to the market or face financial penalties. Lottoland for its part accused GGL of protecting state lotteries and said its activities are legal under European law. 

Esports data provider Oddin.gg will provide exclusive data services for the upcoming Czech CS:GO national championships.

What we’re reading

Wrex and effect: HuddleUp on Hollywood’s English football (well, Welsh) fifth-tier buy.

On social

In Liz we Truss

Kate McCann @KateEMcCann

Truss supporter (!) post-22 tonight: "I mean, she's cardboard isn't she ... we have to accept that". Me: "But that's not going to win you an election, is it?" - "Of course not, we're going to lose. Nothing makes any difference now, we're fucked".

6:43 PM ∙ Oct 12, 2022

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10,719Likes1,912Retweets

Calendar

• Oct 18: E+M Deal Talk, 888 Q3

• Oct 20: E+M Podcast

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• Scott Longley scott@clearconcisemedia.com

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