Good morning. On today’s agenda:

• Entain could be ripe for another MGM bid, suggest analysts.

• Kindred’s regulatory woes multiply.

• Super Group says FY22 revenues will be at the lower end of expectations.

• GAN loses its CFO with immediate effect.

Almost Thanksgiving day.

Entain ‘ripe’ for MGM approach

Analysts suggest the backdrop for MGM to make a bid for Entain has “ripened”.

Seesaw: The team at Macquarie noted that Entain’s share price fall from its peak of 2,400p has left the company trading at the same level as when MGM made its original takeover bid in Jan21, while MGM’s own shares have risen ~12% over the same period. Additionally, sterling has fallen ~14% against the dollar.

• Apple bobbing: The team believed this sets up the potential for MGM to take “another bite of the apple”.

• “MGM has executed impressively on cleaning up its structure (MGP, CityCenter, Cosmo) and, with cash outflow for Japan likely to be years away, we think the company could get more aggressive in the digital market given its cash position,” they suggested.

• Meanwhile, the prospects for a global recession could “change the calculus” for Entain shareholders.

• Upside: Macquarie suggested an MGM offer could be priced at a 50% premium to the current Entain share price of 1,395p or ~2,090p.

The most recent edition of Deal Talk suggested the tug of war over the future of ownership of BetMGM might run for a while. MGM is regarded as the ‘natural’ buyer for Entain, but there are question marks over both the debt and equity elements of any prospective deal.

CEE for miles

Entain has completed its €600m deal to buy Croatian operator SuperSport via its Entain CEE JV. The company also recently arranged a €1bn term loan to pay for the deal.

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Kindred’s regulatory woes

Kindred is fined by the Swedish authorities over AML failures and is reported to be the subject of a legal suit in Poland over accepting gray market players.

Lovin’ spoonful: Kindred’s Swedish subsidiary Spooniker has been slapped with a SEK10.9m fine by the Swedish regulator for AML failures between Feb2019 and Feb22. Alongside ATG and PinBet, Spelinspektionen found “serious shortcomings” in its customer interactions.

• Regulatory experts at Nordic Gaming said they expect similar decisions from Spelinspektionen regarding both AML and RG.

• Pole-axed: Separately, EGR says Kindred is being sued by Polish operator STS over allegations of accepting customers from Poland despite not being licensed.

• Recall, Kindred said earlier this week it intends to challenge what it termed as a “coercive fine” levied in Norway by the regulator Lotteritilsynet.

• The Swedish parliament has this week passed new regulations that will beef up actions against unlicensed gambling sites and introduce B2B licensing.

GAN CFO departure

The operator/supplier has embarked on a search for a CFO after the surprise departure of current finance chief Karen Flores with immediate effect.

No flowers: GAN has placed Brian Chang, previously corporate controller, in charge of its finances on an interim basis after it announced that its incumbent CFO has left the company as of today, November 25. The shares fell over 12% initially on the news before recovering some ground to end down 5% on the week.

🚴GAN shares slump on news of CFO departure

• Recall, GAN’s Q3 reading disappointed and led to CEO Dermot Smurfit saying he “took ownership” of the movie to withdraw full-year guidance.

Woe Canada for Super Group

Adj. EBITDA swooned in Q3, down 26% to €56.1m on revenues that fell by 2% to €307.8m; FY22 guidance now at the lower end of expectations, at €1.15bn.

Dig for victory: On the earnings call, CEO Neal Menashe said the move towards licensed activities in Ontario has been aided by an “excavation and engagement of historic Ontario customers” with the newly licensed operation. Menashe said that “overall” Canada “remains profitable for us”.

• Still, on the casino side, the disruption caused by the Ontario migration, alongside “inflationary pressures” in APAC and the rest of Canada, contributed to a 4% fall in revenue. Sportsbook revenue rose 14% over the period.

• “Obviously, switching to a regulated market has its cost in the short term,” said Menashe.

• Talking of the regulatory picture, Menashe said “it’s a game, it’s navigating it” that was crucial.

• In the US, the acquisition of Digital Gaming Corporation is expected to slide in January. Betway is currently live in seven states and will add Ohio and Louisiana to the list in Q123.

Sector watch – ESPN

The future of ESPN and its involvement in sports betting is up for grabs following the re-appointment of former CEO Bob Iger to replace Bob Chapek at Disney.

Missed opportunity: Chris Grove was quoted in a Business Insider article on Bob Chapek’s tenure at Disney suggesting that the departing CEO represented an “expensive stasis” on ESPN’s potential involvement in sports betting.

• "You could argue that Disney lost out on hundreds of millions, if not billions, in sports-betting dollars thanks to Chapek's strategy," he told the magazine.

• He suggested Iger could look to “some quick wins” if he is able to link sports betting to Disney’s streaming efforts.

• “That dynamic could generate enough momentum to get past whatever has kept Disney stuck to date on striking a big sports-betting deal,” he added.

In the EKG Line this week, the team pointed out that Chapek had talked a good game around sports betting without actually delivering. Back in September, Chapek certainly appeared to walk back from the potential of ESPN ‘being the book’ by suggesting the organization would be seeking a partner to further ESPN’s ambitions.

• EKG suggested Iger could “change all that”, but added that the most likely route was the type of partnership mooted with DraftKings in early October.

• But, as they noted, that deal is yet to materialize and they speculated a proposed price tag for a year might be unaffordable for DraftKings.

• Deal Talk: This chimes with a suggestion put to E+M that BetMGM might now be in discussions.

Further reading: Analyst suggests spinning out ESPN would be the “dumbest thing ever”.

Earnings in brief

Camelot UK: H1 sales topped £4bn for the first time helped by strong growth in draw games, up 7.5% to £2.39bn, driven by the Euromillions rollovers. Online sales grew 13% to £1.84bn. Recall, Allwyn – already set to become the next UK National Lottery provider – announced this week it would be acquiring Camelot UK for a rumored £100m.

• Further reading: UK Gambling Commission rebuked for ‘poorly managed’ lottery competition process. 

Genting Malaysia: Revenue for Q3 rose 174% to RM2.27bn, while losses narrowed to RM8.3m from RM307m in the prior-year period. The company noted the ramp up of its Resorts World NYC operation continued to be a “key focus”.

CIRSA: Revenues rose 39.4% YoY to €466.8m with EBITDA up 47.5% to €147.5m, with operations at “practically 100%” following the lifting of pandemic restrictions. Digital increased 115% to €66.8m, enhanced by its recently acquired Italian operator E-Play.

OPAP: Q3 revenues were up 6% to €499m following the full return of the group's retail operations, “resilient” consumer demand and “strong online momentum”. EBITDA was up 13% to €197.6m.

Analyst takes

Sportradar: Deutsche Bank noted Sportradar’s FY23 preliminary guidance was ahead of the analysts’ own forecasts. The mid-20% growth rate would imply revenues of close to ~€901m compared to a consensus of $824m.

Playtech: Peel Hunt suggested a takeover or break-up of Playtech “has only been put on hold” and added that “once capital markets stabilize, we expect it to participate in value-creating transactions”. 

Maryland goes live with OSB

Promotional offers were on full display as the Maryland market went live yesterday.

Magnificent seven: Seven sportsbooks went live on the first day yesterday, including Barstool, BetMGM, BetRivers, Caesars Sportsbook, DraftKings, FanDuel and PointsBet. Caesars had the most eye-catching offer with $1,500 of free bets on offer, followed by BetMGM with $1,000 first-bet insurance. 

• Also in the promotional hunt were DraftKings with $300 of sign-up bonuses and FanDuel with a ‘bet $5, get $200 in free bets’ offer.

• Betfred, PARX Interactive and Fanatics Sportsbook are set to launch in 2023 and another 11 are waiting to be approved. 

• Since December 2021 eight retail betting outlets have been active in Maryland and generated nearly $280m in GGR. 

Newslines

Lottery lifeline: Lottery.com’s subsidiary Sports.com has tied up a multi-year content partnership with Berlin-based Data Sports Group.

Elys Game Technology has been granted conditional approval for sports gaming licensure from the Ohio Casino Control Commission for a period of five years, effective January 1, 2023. 

Gaming Innovation Group has signed a five-year agreement to supply its PAM to the casino operator Strike Games. 

What we’re reading

You can’t always get what you want: “Christian Pulisic the playmaker. It’s what the U.S. want, but is it what they need?” 

On social

Heartfelt.

David Sargeant @smallprophet

Why is @Twitter suddenly sending me live score alerts for every single football match? (Not just WC) #spoilers

8:19 PM ∙ Nov 24, 2022

Calendar

Nov 29: Rivalry Q3

Dec 6: The Startup Month #5

Dec 13: Deal Talk #5

Dec 20: Due Diligence #2

Contact

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com