Good morning. Today’s agenda includes:

• The Las Vegas Strip posts consensus-breaking figures for September.

• The rollcall of UK gambling ministers since 2001.

• Red Rock says it can weather any upcoming storm.

• Churchill Downs looks forward to more pari-mutuel B2B deals.

• Sector watch looks at the recent news from the fan token providers.

I love the sound of breaking glass.

Strip defies recession talk

Strip revenues of $693m in September were up 8.2% YoY, far above some analyst estimates and 18.9% above the levels achieved in September 2019.

Boom town: Strip slot GGR up 15.3% YoY was the main driver as Las Vegas continued its strong – almost gravity-defying – run in 2022. YTD Strip revenues are up 22.8% to $6.1bn, helping Nevadas to 12.8% YTD improvement to $11bn. Macquarie estimated visitation rose 9%.

• Total Nevada GGR for September rose 4.3% to $1.2bn, the 18th straight month of $1bn+ GGR.

• Q3 Strip GGR was up 3.2% YoY, with July being the only month this year when YoY GGR was negative at -2.4%.

• One for the history books: Analysts at JMP noted this was the “best September in history” helped by a “consistent consumer who has seen little impact from macro conditions”.

• You gotta be there: They add that a shift in consumer spending “from goods to experiences” is helping drive incremental demand.

• Look ahead: Truist said the figures provided a “strong readthrough” for Caesars and MGM Resorts which both report next week.

🔥Las Vegas Strip GGR in the year-to-date

Sports-betting pointer

Hold my hand: Deutsche Bank analysts believe they have spotted a nugget of detail on sports betting that may have resonance in other markets. Pointing to the high hold rates reported in September to date across various states, they suggest some have been attributing this higher rate of hold to a lack of promo spend.

• Nevada hold in September was also high, though, at 9.3% compared to average hold this year of 4.3%.

• Given promotions are not a meaningful driver of Nevada sportsbooks, it implies the high hold comes down to the luck factor as opposed to any “fundamental change” in promo activity.

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UK gambling ministers

With the news that Damian Collins has been replaced as the UK’s minister for gambling, it means the UK sector has had to get to know 15 ministers in 21 years.

Ins and outs: We are indebted to Dan Waugh from Regulus Partner who has put together the graphic below showing the turnover among gambling ministers since 2001. Since Tracey Crouch resigned in November 2018 there have been seven ministers.

• Rumors on the next (victim) minister is Paul Scully.

No shocks at Red Rock 

Q3 revenue was flat YoY at $414.4m while adj. EBITDA fell 1.4% at $181.9m

Despite numerous questions from the analysts on the call about signs of economic distress, the management team at Red Rock remained resolute, suggesting in the words of CEO and chairman Frank Fertitta that the company “hasn't seen anything” to change its outlook.

• “We’ve been living through inflation for the last several quarters and the performance has been fairly consistent even given the headwinds,” Fertitta added.

• “We’re prepared to weather a storm if any were to come,” added CFO Stephen Cootey. 

• Jefferies said the earnings “demonstrate the robust fundamentals” of the Locals market.

• Cootey also noted Red Rock was seeing a spillover effect from the booming Strip. “we are about to surpass the pace we were at pre-Covid in terms of sales and bookings,” he added.

If you build it: Longer term, the company noted it had~630 acres of land across the Las Vegas valley and has identified parcels of land for sale which, as JMP noted, the cash from which would provide a “liquidity runway” for future growth projects.

• With the Durango project set to be completed by the Fall of 2023, Cootey noted that growth was “staring us in the face”.

Churchill Downs sticks to its guns

The management team was encouraged by its first foray into B2B provision with the FanDuel deal

Horsing around: Following its deal to supply horseracing content to FanDuel, Carstanjen said the group’s early forays into B2B activities were highly encouraging and it was flexible in what it could offer. “No two deals will look the same,” he added.

• Carstanjen said FanDuel will be integrating the content immediately “unlike other operators who won’t be ready as quickly.” 

• B2B was an opportunity to reach many more casual bettors “in a much bigger sandbox than we’re used to.” 

• Carstanjen noted that cannibalization was unlikely because the brand “is mainly driven by serious players”.  

Jefferies said Churchill Downs’ “fundamental performance and growth pipeline remain on track”.

Analyst takes 

Evolution: the team at Regulus Partners said the Q3 numbers displayed the “usual pattern” of live casino substantially outpacing RNG but that this was down to geography rather than the product with Asia providing substantially all the live casino growth, up 67%. This Asia growth “may still raise question marks in stricter regulated markets” and the inherent risk will dominate the company’s outlook.  

Sector watch – fan tokens

Fertile ground: Socios’s first venture into boxing was cut short after the fight between Conor Benn and Chris Eubank Jr was canceled due to an "adverse analytical finding for trace amounts of a fertility drug" in Benn’s sample. 

• The fight had been scheduled for early October, but boxing fans will now have to wait to see the fighters reprise their fathers’ epic encounters of the early 1990s.

Lower tier: Meanwhile, the Ethereum-backed collectable, NFT and fan token unicorn Sorare has announced new partnerships with lower-division football clubs across Europe. 

Betting row: Sorare, which last year raised €680m and has a market value of €4.3bn, has also found itself at the center of a row between brand ambassador Kylian Mbappé and French sportsbooks. 

• Mbappé recap: Back in March the striker refused to take part in a number of promotional photoshoots with the French national team sponsors, which counts Betclic as its official betting partner. 

• The mood was not helped by the sportsbook Winamax, which posted an offensive tweet about Mbappé’s father.  

• Betclic CEO Nicolas Béraud recently commented that Mbappé should not generalize just because of one bad experience with another operator. 

Sorare investment: The controversy has somewhat abated, but Mbappé’s partnership with Sorare has come under scrutiny because he is also an investor in the firm. French gambling regulator ANJ met with Sorare in August and is assessing whether Sorare’s business model is akin to gambling.  

REITS review

VICI and GLP reported overnight. VII said revenues rose 100% YoY to $751.5m primarily due to the merger with MGM Growth Properties. GLP, meanwhile, saw revenue rise 11% to $333.8m. Note: Both companies will conduct their calls with analysts later today.

Newslines

Caesars Sportsbook is now live in Ohio and available to download ahead of the market debut on Jan 1.

French regulator ANJ has called on operators to clarify their terms and conditions in bonus offers ahead of the World Cup and for welcome bonuses to capped at €100.

Low6 and Rivalry will partner to design and launch a free-to-play Pick’em game for the upcoming 2022 League of Legends World Championships and The International 11 eSports events.

ESA Gaming has launched its iCasino products on 888Africa’s platform 888bet.

Las Vegas-based retail sportsbook Superbook has gone live with its Iowa OSB offering. 

What we’re reading

“There is no character in the entire canon of world literature and drama more useful for explaining markets than Wile E. Coyote,” writes John Authers for Bloomberg.

What we’re writing

The NFL is no longer a must-have. Scott Longley for EGR.

Off social

Musk begins Twitter overlordship with mass firings.

Calendar

• Oct 28: VICI, GLP calls

• Nov 1: Caesars

• Nov 2: MGM Resorts, Rish Street Interactive

• Nov 3: Penn Entertainment, Golden Entertainment, Bally’s Corporation

• Nov 4: DraftKings

Contact

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com