Good morning. On today’s agenda:

• FanDuel makes the point that size matters in the US.

• MaximBet announces it is quitting the US.

• The Department of Trust raises $3m in Seed from Tekkorp and others.

• Affiliate giants Better Collective and Catena Media report earnings.

Number one song in heaven.

FanDuel flaunts its scale

FanDuel made much of its market domination during an investor presentation in New York.

Leader of the pack: Scale advantage was the major theme as FanDuel CEO Amy Howe and Flutter CEO Peter Jackson took the opportunity of a Capital Markets Day to impress upon analysts what Howe termed as FanDuel’s “dominant market position”.

• “We are America's No.1 sportsbook,” Howe said. “We have the scale of a leader, the mindset of a challenger.”

• Jackson said Flutter had “never set market share targets”. “We’ve never constrained the business and we’ve just taken as much share as we can,” he added.

• This wheel’s on fire: “The flywheel benefits allow you to escape from the pack,” Jackson said. “We are in a very strong position.”

• Leadership matter: Looking across other sectors such as digital music, ride-sharing and streaming, Jackson showed market leaders tended to have 2x relative market share. 

• A later slide highlighted how FanDuel has 42% share of US OSB versus 24% for DraftKings and 15% for BetMGM.

• FanDuel’s TAM projection for 2030 is $40.5bn, of which OSB will be $22.6bn and iGaming $17.8bn. Analysts at Jefferies suggested this pointed to a £4bn EBITDA opportunity for FanDuel

• Recall, in its Q3 trading statement, Flutter upgraded its FanDuel forecasts, with revenues for 2022 expected at between $2.95bn and $3.2bn while adj. EBITDA losses remained at between $300m and $360m.

A Flutter flier: The recent FOX arbitration tribunal decision was seen as clearing the way for an IPO of FanDuel but, asked whether a direct listing for Flutter in the US was also a possibility, Jackson said it was “clearly one of the things we have to ask ourselves”.

A major advantage: FanDuel CFO David Jennings noted that the company’s cost of sales as a percentage of NGR was 47.5%-52.5% and pointed out that the tax burden was worth around 2/3rds of the total.

• E+M’s Due Diligence edition this week showed that DraftKings’ cost of revenue for the last 12 months stood at 67% of revenue, up from 61% in the previous 12-month period.

Any given Sunday: Howe pointed out the speed with which the FanDuel business has grown from NFL season to season. “It wasn't all that long ago that we were talking about how the Super Bowl would be the single biggest sports-betting event at that point and now we do 20% more business every NFL Sunday.”

• She also recognised that for all its success in sports betting, FanDuel was somewhat behind in igaming, but suggested this wasn’t down to a lack of brand resonance with igaming-first customers.

• She said the company would “keep making investments” and working on the slots product but said later the market was “likely to be more fragmented”.

• When asked about M&A to acquire a greater igaming share, she said: “Candidly, if you look at the market, we think it is an expensive way to acquire a database.”

I hear Laurel Canyon is full of famous stars: Christian Genetski, president in charge of government affairs at FanDuel, was unapologetic about the recent failed Prop. 27 effort in California. Achieving mobile in this year’s vote would have been “audaciously ahead of schedule,” he said.

• “It wasn’t always a fait accompli that the tribal casinos would oppose OSB,” he suggested. “They opposed it at the cost of their own retail Proposition.”

• Prop. 27 failed in a big way last week gaining only 17% votes in favor.

** SPONSOR’S MESSAGE: BettingJobs is the leading global recruitment solutions provider to the iGaming, Sports Betting and Lotteries sectors. Boasting a 19-year track record supporting the iGaming industry, and with a team of experts and world-class knowledge, it’s no surprise BettingJobs is experiencing rapid growth with outstanding results.

Our industry-recognised recruiters will be attending SiGMA Malta, from 14th - 18th November 2022. Contact info@bettingjobs.com to arrange a meeting with our consultants during the event, who will be delighted to discuss any queries you may have.

MaximBet quits

The Nikki Minaj-fronted brand has shuttered its US operation with immediate effect.

Maxed out: The partnership between Carousel and the men’s magazine Maxim has announced it is calling a halt to its operations in Colorado and Indiana. MaximBet launched in 2012 and had plans to launch in New Jersey, Pennsylvania, Ohio and Ontario.

• In a statement, Carousel CEO Daniel Graetzer said it was with “sincere anguish” that the decision had been taken in light of the “current macroeconomic conditions”.

• Unsustainable: He noted that as an early-stage company, MaximBet didn’t have the ability to compete in a market “where operating costs far exceed revenue, even among the top operators”.

• “Our priority now, in consultation with state regulators, is to wind down operations and help active customers in Colorado and Indiana withdraw their funds and close their accounts,” he added.

Follow the loser: MaximBet joins Fubo in pulling the plug on its US operations this NFL season, after FuboTV axed its gaming operation last month. Since then, Kindred said its Unibet brand would be exiting the Iowa market, while Esports Entertainment has closed its Vie.gg operation in New Jersey.

• E+M’s Deal Talk in October suggested this was likely to be the last NFL season for a  number of tier 2 and 3 brands.

Stock watch

Flying high: Sportradar saw its shares rise over 15% after it released positive earnings yesterday. Recall, it said revenues rose 31% to $178.8m, while it also reported a first-time profit in the US.

🚀Sportradar gets a 15% bump after yesterday’s earnings

Dept. of Trust fundraising

The financial KYC specialist has secured $3m of Seed funding led by Tekkorp Capital.

Know your investors: The provider of a KYC platform designed for scalable and compliant affordability, AML, fraud and vulnerability checks has received backing from investors including Tekkorp, former PartyGmaing CEO Jim Ryan, Jaymin Patel and Jonathan Rosham, co-founder of Cygnet Capital.

• The Department of Trust offering includes the financial self-awareness app BetBudget, which facilitates frictionless affordability and financial due diligence checks using Open Banking and other financial technologies. 

• Matt Davey from Tekkorp said, “uniquely, DoTrust recognises the importance of both the player and the operator in solving these very challenging problems for the industry”. 

• DoTrust was the subject of a startup focus in February.

BC’s rev-share impact

Q3 revenues rose 32% to €60m, EBITDA was up 7% to €15m, but a move to revenue share in the US will cause €10m hit to FY EBITDA. 

Moving costs: CEO Jesper Sogaard said the move to revenue share was in the “dampening part” of the US business, which otherwise saw revenues grow 17% to €15m and EBITDA €700k versus a €1.8m loss in Q2. 

• Sogaard added that the group could have signed €1m worth of CPA deals with operators during September, but that would have been “the easy choice”.

• “We took the long-term view that revenue share will provide more constant revenues,” he added.

• CFO Flemming Pedersen said revenue share reduced seasonality impacts or the reliance on new state launches.

• Better Collective announced a new finance agreement totalling €319m, but Pedersen and Sogaard said M&A was not on the cards due to current market conditions.

Catena’s struggles continue

The affiliate said Q3 revenues dropped 2% to €32.3m, while adj. EBITDA slumped by 29% despite an 11% rise in North American revenues.

Sold a pup: Ahead of the completion of the strategic review expected in Q4, where the company is expected to offload its AskGamblers and financial trading businesses, CEO Michael Daly said the paid media assets sold to Acroud for €5.1m were the “lowest margin business within the company”. 

• “It made little sense to be part of the business going forward,” he added, suggesting it will “only shrink in value”.

• Daly reiterated that Catena’s focus was now on its North American business. “Every euro spent anywhere else in the business is valued against the potential of spending the same euro in the US,” he noted.

• In October, North American revenues were up 20% but group revenues were down 1%.

• Calena’s shares dropped 16% in early trading.

Earnings in brief

Elys Game Technology: NGR rose in Q3 to €8.9m, up 33% YoY. The company recently signed up 100 locations in Ohio for its sports-betting kiosks and commenced operations at its second location in Washington DC.

Allied Esports: Revenues fell 7% in Q3, with the company falling to a net loss of $1.6m compared to a net profit of $74.3m, boosted by the $80.4m it received from the sale of World Poker Tour. Ex-WPT proceeds, net losses in the prior-year period amounted to $3.2m.

Newslines

Caesars said its sports-betting app is now live in Maryland and taking in customers, offering $100 sign-ups. Maryland is reported to have approved its first 10 operators and could go live by the end of the month.

Micro-betting startup betr has announced it has received its first license to operate in Ohio.

Rivalry announced the expansion of its casino offering with the launch of iGaming platform Casino.exe, featuring four new games.

Spotlight Sports Group promoted Mark Renshaw to CEO from COO, succeeding Alan Byrne who is stepping down to serve as an advisor.

What we’re reading

Ivan the terrible: Toney charged with 232 breaches of betting rules.

Calendar

• Nov 17: Gambling.com

Contact

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com