Good morning. On today’s agenda:

• GiG has bought AskGamblers and other assets for a total of €45m.

• XLMedia says it is exploring the potential sale of its personal finance division.

• Bally’s receives critical Chicago municipal support.

• Inspired gets a boost from Paddy Power gaming machines deal.

The great gig in the sky

GiG buys AskGamblers

GiG has augmented its gaming affiliates business via the purchase of AskGamblers and other European-facing assets from Catena Media for €45m.

The deal for AskGamblers.com, JohnSlots.com, NewCasinos.com and other “smaller” domains resolves Catena Media’s strategic review overhang and sees Gaming Innovation Group substantially bolster its gaming affiliate revenues.

• In the nine months to September, the acquired assets generated revenues of €12.9m and an EBITDA of €8.4m. The assets are expected to generate ~53,000 first-time depositors in 2022.

• In the LTM, GiG’s media division generated revenues of €56.8m and EBITDA of €26.3m.

• Catena Media bought AskGamblers in 2016 for €15m when its quarterly sales were running at <€1m. Catena said the divested assets had a book value of €27.2m as of October 1.

The nuts and bolts: GiG will pay €20m in cash on closing, with a further €10m coming after 12 months and a final €15m tranche after two years. The deal is expected to close in Q123. GiG will take on ~90 staff as well as two of Catena’s companies in Serbia and Malta.

• The deal will be financed out of cash and via an existing revolving credit facility as well as a share issue.

What they say: Morten Hillestad, director of business development at GiG Media, said “the time was ripe to act” when the opportunity to buy AskGamblers emerged earlier this year. 

• Michael Daly, CEO of Catena, said the sale of the business marked a “major step” as the company focuses on OSB and iCasino affiliation in high-growth, regulated markets in the Americas.

• He added that, post-sale, Catena Media would be in an “even stronger” financial position.

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XLMedia explores slimming potential

The largely gaming-focused affiliate provider says it is “exploring” the potential sale of its personal finance division.

Slimfast: XLMedia said it is restructuring its personal finance division and is already in the process of looking for a buyer for the business. It added that it is “engaging with a number of potentially interested parties”. 

• Get your priorities right: It added that this was a part of its efforts to “prioritize resource allocation” towards its “core activities” in the the North America OSB and iCasino markets while also “rebuilding” its European-facing igaming business.

• It added that it will be hosting an investor event on February 1.

Inspired’s machine win

Analysts applaud Inspired Entertainment’s extended deal with Paddy Power in the UK to provide 1,400 new Vantage gaming machines. 

The view from here: The team at Roth suggested the new capital-lite Vantage gaming machine supply deal with Paddy Power will improve Inspired’s free cash flow. The deal is similar to another recent announcement to supply Betfred with the same machines.

• New model: The team at Roth noted that, under the terms of these deals, Inspired provides the machines at cost but receives more in terms of high-margin profit participation fees.

• Previously, Inspired had provided machines under a more capital-intensive model of leasing an installed base.

• Inspired now supplies ~6,500 machines under this capital-lite model or ~20% of its installed base.

• Roth added that Inspired’s UK retail footprint had proven to be “remarkably resilient” in 2022.

Bally’s Chicago vote

Bally's Corporation says it has achieved a “major victory” after Chicago's City Council voted to approve zoning for its planned casino in the city.

Bally’s has received authorization for its flagship Bally’s Chicago Casino following a planning meeting earlier this week. The first phase of this project will include the 1 million square foot casino building, a 500-room hotel and a 3,000-person event space.

• Recall, in late November Bally’s said it had secured $500m of funding from an unnamed private equity real estate investor to go towards the construction of the $1.7bn property.

Gaming Realms’ Bally’s debt repayment

Every little helps: Separately, Gaming Realms has paid back Bally’s Corporation £3.4m in cash in respect of the £3.5m secured convertible loan notes borrowed from the then independent Gamesys in 2017. The loan has now been repaid in full. 

• Gaming Realms said its cash position post-payment “remains strong”, with bet cash as of the end of this year expected to be approximately £3m.   

Datalines 

Maryland: Sports-betting GGR for the first eight days following launch on November 23rd was $25.9m, with handle at $186.1m. Retail handle was $33m, with GGR of $4.8m. Margins were high at 13.9% and promo spend totalled $63.8m. This resulted in NGR losses of $38.3m for the books. 

• There are seven regulated books in the state, with FanDuel, DraftKings and BetMGM making up around 95% of handle, GGR and promo share, the team at Wells Fargo said.  

• FanDuel again led in GGR share at 42.6%, DraftKings was second at 37% and BetMGM third with 15%.   

• In terms of launch periods, Maryland bettor spend per day was $3.77, which compared favorably with New York at $3.05 and Arizona at $1.83.  

• The team at JMP said Maryland has enjoyed a “strong start”, with the New York comparison “impressive considering the substantial promotional intensity” in that state post-launch.

Denmark: GGR was up 12% YoY to DK595.5m in October, with online casino GGR rising 2.5% to DK245m and sports betting up 62.6% to DK210.3m. Land-based casino GGR was down 23.6% to DK28m. 

Analyst takes

Churchill Downs: The team at Wells Fargo have tweaked their estimates to reflect more fully the integration of the recently acquired Peninsular Pacific HRM assets. However, the team added that they view the company as a “tweener” because investors see it as relatively less attractive in a potential downturn.

Downloads: According to JMP, app downloads were up 112% in week 14 of the NFL Season at 424k for the operators that control 90% of the market, helped by the World Cup and Maryland’s OSB launch. Morgan Stanley reported that bet365 leads the November charts in Ontario.

Newslines

Flutter has confirmed that Paul Edgecliffe-Johnson will replace Jonathan Hill as CFO effective 20 March 2023, with Hill taking up the position of COO as of the same date.

The Ohio Casino Control Commission is assessing whether to fine Barstool Sportsbook $250k for advertising near a college campus and potentially targeting under age customers.

David McDowell, CEO and co-founder of sports-betting solutions provider FSB Technology, is stepping down from his role to join the group’s board of directors.

What we’re saying

Rhodes to nowhere: Scott Longley on whether the UK Gambling Commission will take a more conciliatory tone with the sector. For EGR.

Calendar

Dec 20: Due Diligence #2

Contact

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com