Good morning. On today’s agenda:

• Gambling.com sees revenues soar 94%.

• Lottomatica hopes to cement Italian market presence with BetFlag acquisition.

• Analysts liked what they heard from FanDuel this week.

• Kero Gaming raises $3m in a Seed funding round led by Happyhour.io.

• Sector watch takes a look at the latest earnings news from the payments sector 

Flag day.

Gambling.com at the double

The affiliate provider sees revenues climb 94% to $19.6m while adj. EBITDA rose 32% to $6.4m, helped by a 300% rise in North American revenue to $9.1m.

Swimming with sharks: On the North American situation, CEO Charles Gillespie was adamant that the focus on reaching profitability and the increased focus on the ROI of marketing was “great” for Gambling.com. 

• If the US landscape “improves its profitability,” he said, then it “creates warmer waters for operators in the US”.

• “There have been exits and that is due to the incredible amount of non-performance marketing in the last few years,” he added. 

• “The market will, dare I say, move in a more European direction. Everyone’s bottom lines will improve and the attractiveness of the entire endeavor will improve.”

Supersonic: Over the period, Gambling.com completed the acquisition of what Gillespie termed a “superstar domain” with Casinos.com, which he said the company would hope to replicate its success with its Gambling.com site but “do it faster and with more lazer-focus”.

• “We couldn’t think of a better domain name than that,” he added. “When the opportunity arose to buy it, we didn’t hesitate.”

• Further M&A remained a possibility but Gillespie noted the bars to any deal were now higher.

• “We continue to have lots of conversations, but for us to pull the trigger on something we would have to be extremely comfortable with the deal,” he said.

Allwyn debt raise

The lottery operator has pulled together €1.6bn of new credit facilities via a combination of term loans and cash revolvers.

The payback: Allwyn said the new debt would cover off previous loans as well as provide funds for the upfront costs of preparing for its UK National Lottery takeover in April 2024. The terms of the debt, including interest rates, were not divulged.

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Lottomatica acquires BetFlag 

Lottomatica intends to acquire 100% of Italian-facing sports-betting and iCasino operator BetFlag for €310m.  

Salute! The deal comes at a multiple of just under 10x LTM EBITDA of €36m, with Lottomatica saying BetFlag will remain as a separate autonomous brand. Lottomatica runs the GoldBet operation as well as its eponymous land-based and retail betting operation. 

• To finance the deal, Lottomatica will use the €350m loan it secured in September at 9.7% interest and a further €75m from its balance sheet. It hopes to complete the deal in the upcoming days.

• We’re all waving flags now: Lottomatica posted strong H1 results in August, with CFO Laurence Van Lancker at the time discounting North American M&A, before adding: “There are some very interesting targets in Europe”. 

Stock watch

Ask a stupid question: Catena Media saw its shares lose over 24% yesterday as investors digested its disappointing quarterly numbers and the lack of news on the sale of its AskGamblers and financial trading businesses. The shares are down over 60% this year.

🚑Catena Media shares slump in Stockholm

Flutter analyst takes

Flutter and FanDuel can count their investor day on Wednesday as a success, as analysts came away with an “increased appreciation” of its success.

Trifecta: Wells Fargo suggested they came away from the Capital Markets Day with the teams from Flutter and FanDuel with a better understanding of the drivers of the business, namely customer acquisition efficiency, longer client retention and the growth of customer values over time.

• Biblical: “These factors have resulted in a flywheel effect, with scale begetting scale,” they said.

• They pointed out FanDuel’s EBITDA margin assumptions of 25%-30% are conservative compared to peers, but Flutter’s track record makes these claims “more credible”.

• The team at CBRE noted Flutter’s point that its EBITDA assumptions take account of stock-based compensation, something that DraftKings, for instance, excludes.

• Adjusting for that, the EBITDA margin assumptions would be “more in line” with the competition at 30%-35%.

• They also expected FanDuel’s cost of sales – of around 50% – to contract over time, though they noted FanDuel’s point about the unknowability of tax rates.

Further reading: The EKG Line suggests BetMGM is FanDuel’s biggest threat.

Analyst takes 2

Chicagoland: The team at CBRE pointed out the Chicagoland market is “already one of the largest gaming markets” in the US and it is “poised” to get even bigger with the addition of Full House’s The Temporary at Waukegan in Q123, the Wind Creek Chicago Southland at the end of 2023 and Bally’s temporary downtown Chicago property mid-2023. 

• On the road: After a road trip, the team said the Wind Creek is likely delayed, which they added is likely a positive for current nearby operators.

Kero Gaming raises $2m

Micro-betting specialist secures $2m Seed 2 fundraise led by Happyhour.io. 

Happy days: Founder and CEO Tomash Devenishek said the new funds will enable Kero Gaming to continue developing RMG micro-betting products for sportsbooks. Kero previously raised $1m from a pre-Seed round involving Acies Investments, Sharp Alpha Fund, iGaming Ideas, Avenue H Capital and Cardinal Sports Capital.   

• Let me entertain you: The round was led by Happyhour, the VC fund set up by the former GiG boss Robin Reed, who commented that  Kero has a “deep understanding of the customer and how they want to be entertained”. 

Sector watch – payments 

FTX WTF:  With the FTX bankruptcy dominating headlines, Paysafe CEO Bruce Lowthers was asked about Paysafe’s partnership with Binance that was launched in 2012. “Binance is a great customer (and) we don't really see a lot of exposure from that relationship,” he said.

• CFO Izzy Dawood said the crypto business represented less than 3% of overall revenue and the recent increase in volatility “had a small, short-term benefit”. 

• On iGaming, Lowthers e-wallets had always been “geared at the iGaming vertical” and he noted that online gambling was worth 45% of Paysafe’s Q3 revenue growth of 4% to $336m. Adj. EBITDA was down 10% to $95.5m.

Line of sight: Having agreed a $300m investment project with Acres Manufacturing to implement cashless gaming across 250k slot machines in the US and brought in JP Morgan Payments as a strategic investor in late October, Sightline Payments launched its loyalty platform at the Talking Stick Resort and Casino in Arizona last week. 

• Sightline is Nevada’s first homegrown unicorn, following last summer’s fundraise that valued the group at $1bn.

• Cashless payments continue to come on stream in land-based casinos, this time in the UK with London’s Hippodrome Casino signing Trust Payments as its cashless mobile payment solution. 

• The rollout is set to go live in December, with the payments being processed by Trust Payments’ own payments gateway. 

Nu deal: Payments platform provider Nuvei, which has signed Lottomatica and Kindred in recent months, has launched a payment-platform-as-a-service (PPaaS) solution that allows merchants to embed its payment options as a third-party provider or white label. 

Earnings in brief

Scout Gaming: The free-to-play games provider saw revenues in Q3 come in at SEK6.6m, flat YoY, although within that B2B revenues rose 113% to SEK4.7m. EBITDA losses climbed 61% to SEK10.2m.

Datalines

New Jersey: Sports-betting GGR of $78m in October was up 7% YoY and handle of $1.07bn, down 18% YoY. Wells Fargo noted this was the sixth straight month of mid-teens handle YoY declines in New Jersey, which they attributed to cannibalization from New York. 

• iGaming GGR was up 16% YoY to $147m, while land-based casino was up 7% YoY to $219m.

• OSB leaders by GGR: Wells Fargo estimated FanDuel led OSB with 56%, followed by DraftKings (2o%), BetMGM (12%) and Caesars (4%).

• iCasino leaders by GGR: BetMGM led with 28% followed by DraftKings (21%), FanDuel (20%) and Caesars (9%). 

Michigan: Land-based gaming was up 2.4% to $1.16bn YoY, while sports betting was up 24% to $191.3m and iGaming rose 21.5% to $412.6m.

• iGaming leaders by GGR: BetMGM led with 37%, followed by FanDuel with 16.3% and DraftKings on 16%. FOX/Flutter was fourth with 6.5%

Pennsylvania: Land-based GGR rose 5.7% YoY to $471m. Sports-betting GGR rose 45.5% to $61.5m, while iGaming was up 21% to $124.5m.

Newslines 

Barstool Sportsbook has been granted an online sports-betting license in Maryland and could start taking bets in the state as early as next week.  

Colorcast, the Austin-based fan engagement company, has launched a sports-betting platform and has officially rebranded as Outlier.

Not so lucky now: The Swedish regulator has ordered unlicensed crypto casino LuckyCrypto to exit the market.

Française des Jeux has completed the €175m acquisition of French online-betting operator ZEturf.

What we’re reading

Secrets and lies: SBF tries to explain himself.

On social

Colm O'Regan New Book out Oct 13 @colmoregan

SHOW HIS FACE COWARDS

8:51 PM ∙ Nov 17, 2022

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