Good morning. On a busy agenda today:

• Flutter CEO “delighted” with the arbitration ruling, but cautions on FanDuel IPO timing.

• Gaming Innovation Group‘s affiliate business continues “exceptional” growth.

• IGT talks of Powerball boost but warns of ‘post-jackpot fatigue’.

• Full House Resorts looks ahead to Temporary opening.

• A slew of earnings from AGS, Everi, Accel, AGTech and the casual games operators.

• And (kind of) breaking: Prop 27 projected not to pass in California.

Sunflower.

Flutter flying

CEO says Flutter is “delighted” with FanDuel arbitration decision, as the company unveils a 31% (22% cc) rise in Q3 revenues driven by 82% leap in US.

Keep on running: Chief executive Peter Jackson said it was important Flutter “continues to push hard” in the US after revenues for FanDuel rose 82% in the quarter to £598m, with sportsbook revenue up 150% and iCasino up 36%. 

• He said the arbitration decision last week vindicated Flutter’s position on the FanDuel valuation and noted that FOX now faced “onerous licensing“ in 16 states if it wished to take up the option on the 18.6% FanDuel stake.

• He noted, though, that a FanDuel IPO was unlikely under current market conditions but also “at no point has FOX been able to block any potential FanDuel IPO”.

• Flutter also upgraded its FanDuel forecasts, with revenues for 2022 expected at between $2.95bn-$3.2bn (up $100m at mid-point), while adj. EBITDA losses remained at between $300m-$360m.

• CFO Jonathan Hill also reiterated Flutter expected FanDuel to be EBITDA positive next year, including the costs of new state launches and with share-based payment taken into account.

• Get you: “So it is a proper EBITDA measurement,” Hill added. “It is for the FY as opposed to a month, quarter or a third Thursday in November.”

Live long and prosper: Internationally, Flutter saw ex-US revenues rise 6%, helped by two months of figures from the Sisal acquisition and what it now terms its “consolidate and invest” markets. In the UK & Ireland, sports revenue was down 11%, impacted in part by a slower start to the soccer season, while gaming rose 29%.

• Revenues in Australia declined by 21%, hurt by lower levels of engagement vs. the lockdown period last year. On the call, Jackson also noted the new entrant Betr (Australian version).

• Jackson stressed that Flutter has seen no discernible pressure on the recreational customer base from the economic backdrop. 

• Talking at one point about largely UK-focused Tombola, he said its customer base would be “the canary in the coalmine” for the health of the consumer.

Diary date: FanDuel will conduct a Capital Markets Day in New York next week, Nov 16.

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A ‘no’ in California

Breaking: NBC in Los Angeles is predicting Prop. 27 to allow online sports-betting will be rejected by a wide margin. A long shot going by recent polling, the early voting suggests a margin of 85/15 against with ~40% of votes counted.

• The retail-only tribal measure is also set to lose, albeit by a slightly better margin of 70/30 against.

Further reading: “We thank the voters of California for overwhelmingly rejecting Prop 27,” Agua Caliente tribal chairman Reid Milanovich tells LegalSportsReport.com.

FTX’s near-collapse

The crypto exchange has been acquired by rival Binance after a surge in withdrawals from nervous customers.

In a surprise move that initially played out on Twitter, the CEO of Binance, Changpeng “CZ” Zhao, said Sam Bankman-Fried’s FTX “asked for our help” after suffering a liquidity crunch. The latest reports this morning suggest investors in FTX fear a wipeout.

• Key quote: “For now, crypto is consolidating into the hands of a few very wealthy people,” according to Bloomberg.

• Recall, FTX is a sometime – and presumably still – investor in Australian betting concern PlayUp, which is looking to go public via a $350m merger with the IG Acquisition Corp SPAC.

GiG working 

An aggressive approach to media buying helps GiG revenues to rise 35% to €22.9m, while adj. EBITDA was up 47% to €8.5m.

Double take: CEO Richard Brown said the decision to “double down” on media investments paid off during the quarter, with affiliate division revenues rising 35% to €15.1m. He added that the company had taken advantage of low media prices during the period.  

• Paid media drove most of the unit’s growth while, in the US, Brown said the group would “ramp up” its US investments gradually and continue to push for revenue-share agreements whenever possible. 

• B2B growth was driven by Sportnco and PAM provider Tecnalis, where revenues increased 36% to €7.8m and adj. EBITDA jumped 183% to €1.7m. 

• Current trading: paid media was up 77% and publishing rose 22% in October, with “record” FTDs, 95% of them on revenue share.    

Temp casino, permanent boost

Ahead of the opening of the Temporary at Waukegan, Full House Resorts reports revenues falling 12.3% to $41.4m, with adj. EBITDA tumbling 42.6% to $7.8m.

Crossing the tees: Cost increases, competition in Louisiana, construction disruption at its Bronco Billy’s casino in Colorado and tough comps due to stimulus checks last year were all pinned as being behind the fall in adj. EBITDA. 

• But CEO Dan Lee was keen to stress a brighter tomorrow with the Temporary in Illinois set to open in three months and the Chamonix project in Colorado set to open mid-2023. “It’s coming,” he said of the Temporary.

• A salty dog: Of the Louisiana competition, Lee said he believed customers would return “when they realize that the new place is a dark airplane hanger that sells hot dogs off the cart in the back”.

IGT feeling good 

Lottery and gaming supplier praises lower leverage as revenues rise 8% YoY to $1.1bn, but adj. EBITDA drops by 1% to $402m.

Cut and shut: CFO Max Chiara noted IGT’s debt levels of 3.1x were now the lowest in the company’s history, while global lottery – where in the US a single ticket won the $2.04bn Powerball this week – saw above-consensus revenue of $603m, up 3% on a same-store basis. 

• CEO Vince Sadusky said IGT would likely benefit by around $20m via extra Powerball sales, though he warned against post-jackpot “fatigue”.

• In land-based gaming, Sadusky noted IGT had “not seen or heard any indication of anticipated slowdown in investment in their (casino) slot floor”. 

• “Our greatest struggles through the third quarter of 2022 and going into the fourth quarter has been keeping up with demand,” he added. 

• In online, revenues rose 27% to $54m, helped by the €160m acquisition of iSoftBet.

• Analysts at Credit Suisse noted gaming trends were “accelerating”, including globally in LatAm, while Jefferies said IGT was well-placed in lottery should there be a global slowdown.

Earnings in brief

AGS: Revenue was up 16% to $78.3m and adj. EBITDA was up 8% to $34.5m, led by growth in the global EGM segment of 50%, with sales topping 1,000 units in the quarter. Analysts at Credit Suisse noted management was confident on sales remaining strong in Q4.

• Jefferies said AGS had made progress in “repositioning” their land-based gaming.

Everi: Revenues rose 21% to $204.3m, while adj. EBITDA was up 7% to $96.6m. The games segment saw revenues rise 17% to $112.5m and fintech segment revenues were up 27% to $91.8m. Of the latter, CEO Randy Taylor said on the earnings call that demand for cashless solutions “remains high among tribal, commercial and regional customers alike”.

• As cashless interests continue to evolve and grow within the gaming space, we are steadily pulling away from the competition,” he added.

• On any signs of a downturn, CFO Mark Labay said “we haven't seen much creep into our numbers yet”.

Accel: Revenues rose 25% to $267m, with adj. EBITDA up 12% to $41m, which analysts at Deutsche Bank said were “essentially” in line, but noted that the core Illinois business was down 3% YoY. As with others in the sector, management said they had not seen any recessionary impact to date.

AGTech: Revenues for the Asia-based lottery supplier to electronic payments provider rose 71% TO HK$247.6m. Operating losses came in at HK$112.5m.

Casual games providers

• Playtika revenues rose 1.9% to $647.8m, while adj. EBITDA was down 7% to $230.7m.

• DoubleDown revenue decreased 9% to $78.8m, while adj. EBITDA dropped by 17% to $25m.

• Playstudios saw revenues rise 2% to $72.1m, with adj. EBITDA flat at $9.8m.

Datalines

Illinois: Land-based casino GGR was up 6.3% and +1.7% on a same-store basis to $116m for October. Rivers Properties led with 40% market share.  

Maryland: Land-based casino GGR was up 37.4% YoY to $212.9m, Wells Fargo said MGM’s National Harbor – 54% market leader – enjoyed an “abnormally high” table GGR of $73m.

Ohio: GGR of $192.1m was -0.3% down YoY and 21.3% above 2019. Penn’s Ohio properties reported October GGR of $68.2m or 35.5% of the market.

Newslines

Crown Resorts has been fined US$78m for responsible gambling failings at Crown Melbourne.

The state of Western Australia has terminated the sale of WA TAB, which will now be retained by the government.

Hard Rock will take over the reins at the Mirage from MGM Resorts by year-end pending regulatory approval, according to reports.

DraftKings opened its first retail sportsbook in Michigan at the Bay Mills Casino.

The affiliate KaFe Rocks announced that CEO Simon Pilkington is leaving the company.

The B2B sports-betting and iGaming software supplier start-up PlayEngine has appointed former PlayUp boss Laila Mintas as CEO.

Kambi will provide its sports-betting solution to Puerto Rico’s Liberman Media Group to operate the ApuestaPR sportsbook brand. 

What we’re reading

Knife edge.

On social

Tony Strom🅱️oli @TheTonyPrince

Prop 27 not passing in California is weird to me. Like it’s a decently straightforward state Wanna smoke weed? Sure Don’t want to? Not a problem Need an abortion? No biggie Online gambling?? Go to fucking hell

5:17 AM ∙ Nov 9, 2022

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Calendar

• Nov 9: Light & Wonder, NeoGames

• Nov 10: Genius Sports, Acroud, Endeavor

Contact

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com