Earnings+More - Due Diligence #3
Due Diligence #3New entrants enter the OSB fray, Kindred serial warnings, recent analyst takes +MoreWelcome to issue #3 of Due Diligence, our monthly deep dive into the sector’s shifting currents.
What’s that coming over the hill? Seconds outThe US sports-betting market is set to get a whole lot more competitive this year. Objects in the rear view mirror: The latest and perhaps the most serious challenge to the supremacy at the top end of the US sports-betting market is almost upon us. Within the next week, BetFanatics will launch operations in Maryland, first via a retail outlet at the Washington Commanders’ FedEx Field and, within weeks, online.
A sighter: Last week’s online presentation to the MGC by Fanatics Betting & Gaming CEO Matt King gave greater insight than before into its plans to be live in the majority of online states by September 2023. Despite its admitted second-mover status, King said FBG would “play the role of innovator”.
I’ll follow the sun: Noting Wright’s previous experience, King said Sky Bet was “very analogous” to Fanatics. “They did in the UK what we will do in the US, which is really be a second mover in the category,” he told the commissioners.
Own it: The MGC meeting was the first confirmation of FBG’s use of a core code base bought from Amelco. CPO Scott McClintic said the company was “Fanatasizing, if you will” the course code. King noted that 70% of the business was dedicated towards product development, with a “particular focus on loyalty”.
Base jump: Fanatics has made much of its 94m-strong US customer database and noted that in Massachusetts it has 2m customers’ details on file. In a recent Washington Post interview, Fanatics CEO Michael Rubin said he wanted to build the “greatest cross-loyalty program in sports”.
** SPONSOR’S MESSAGE** GiG is a leading gaming platform and sportsbook provider for online and land-based operators with digital aspirations. We deliver a full end-to-end solution through our award-winning iGaming and sportsbook solutions. Built for regulated markets and a top-class customer experience, GiG is pioneering the multi-platform era. If you are looking to expand your operations into new, profitable markets, our strategy is the solution. Find out more at sales@gig.com. Team of rivalsYou’ve got company: FBG isn’t alone in hoping it can break into the top tier of OSB operators. The betting public in Ohio got the first sighting of micro-betting startup betr when the market launched, while EKG pointed out in a recent report that European “sleeping giants” bet365 and Tipico were ramping up their efforts in various states.
Firepower: Fanatics has the cash to sustain a prolonged push. Since 2021 it has added $2.8bn in new funding with the latest raise of $700m valuing the business at $31bn. The company said at the time the new money would be used for M&A either in collectibles or gambling.
Me, worry? Where might the introduction of Fanatics cause the most consternation? As one source put it, it has the money, it has hired a top-notch team and it has the tech, albeit with unknowns around previous US deployments of the Amelco codebase. “I think it is a smart mass-market play but execution will be paramount,” the source added.
Bottom line: This year will be a huge test for the status quo of the US online market as it developed post-2018. As one source put it, “so much of the success of FanDuel and DraftKings is down to having first-mover advantage”. “It should never be underestimated,” they added. “It’s absolutely massive.” Kindred’s woesInvestors at Kindred must think Punxsutawney Phil has taken over as CEO. It doesn’t have to be this way: Analysts at Regulus pointed out that Q4 was “meant to be a soft comparable” compared to a pandemic-affected quarter in 2021 and with the added benefit of the World Cup. But that turned out not to be the case with Kindred, which last Friday issued a further profit warning. Recall, late last year it warned around the time of its enforced Netherlands exit.
Remedial: Tjärnström appeared sanguine over the “one-offs” of Belgium and Norway. In the first instance, he pointed to a similar downturn when previous measures were introduced in Belgium, particularly with higher-value customers. “It took a couple of quarters and then we saw Belgium growing strongly,” he claimed.
Hand me that wrench: In the US, Tjärnström appeared to suggest the company was cutting back further on its marketing despite the plan to launch on its own backend in New Jersey within weeks. He noted this would be “an important milestone”, giving the local team an “improved toolbox”.
Here comes Mr Brightside: The only upside from the call was the Netherlands, where Tjärnström said Kindred was currently third in the market with hopes of regaining the top spot this year. Known knowns: Regulus wasn’t impressed by the excuses. “Even with these headwinds, the result is relatively lackluster,” the team noted. “While the company blames fewer major football matches for the weak performance, this was a known variable when guidance was provided.”
DoubleDown’s SuprNation dealThe $35m deal for the operator behind the Duelz.com site marks a strategic shift for the social gaming operator. Sanity check: Macquarie analysts suggested the ‘sensible’ multiple of ~1.5x sales provides a “positive readthrough” for further sector M&A after a period in which deals have been stymied by “lofty private market seller expectations”. They added that the chatter is of valuations “starting to become more reasonable”.
Branching out: Sources suggested it is logical for social and casual gaming operators to look at adding real-money gaming functionality. “As iGaming (eventually) happens, the risk to the social platform is significant if they don’t have a strategy,” the source said.
Analyst takes
CalendarJan 19: Kambi Capital Markets Day Jan 26: Rank FY ContactThis is a +More Media publication. For sponsorship inquiries email scott@andmore.media. |
Key phrases
Older messages
Entain exits unregulated markets
Friday, January 20, 2023
Entain says NGR/EBITDA impact will be small, Macau junket operator ordered to pay $831m fine, Macquarie's 2023 outlook, New Jersey December, analyst takes +More
Deal Talk #6
Tuesday, January 10, 2023
PointsBet's Oz sale, sector-related M&A deals in 2022 worth $10bn, IGAC SPAC downs PlayUp merger, gaming affiliate M&A is back (sort of) +More
Exclusive – Simplebet scouting NCAA games
Monday, January 9, 2023
Micro-betting supplier goes in-stadia for data, November sees OSB declines across majority of states, startup focus – Outlier +More
Weekend Edition #79
Friday, January 6, 2023
Bet365's year, Caesars vote of confidence, Fanatics' Candy talk, Genius/BetConstruct settlement, sector watch – Italian cash access +More
The Startup Month #6
Tuesday, January 3, 2023
The growth company funding environment for the year ahead, a look back to the funding achieved in 2022 +More
You Might Also Like
The best weekend of the year
Friday, April 19, 2024
Fri, April 19th, 2024
The Verge Trolls Google...Again!
Friday, April 19, 2024
What happens when a major publication like the Verge openly mocks Google? Well, Google ranks their mocking article #1 for "best printers" of course! That's right, the Verge wrote an
LUC #50 [Special Edition]: The Most Popular Issues of the LUC Newsletter
Friday, April 19, 2024
Top picks and an invitation to shape our future editions!
Binance Converts Bitcoin Fund to USDC
Friday, April 19, 2024
Plus Avi Eisenberg Convicted in Mango Markets Case
Networking for Value vs Breadth
Friday, April 19, 2024
Today's Guide to the Marketing Jungle from Social Media Examiner... Presented by Social Media Marketing World logo It's Rice Ball Day, Reader! Here's looking at you, arancini 😋. In
Influence Weekly #333 - Creators Cash In: Paid User-Generated Content Offering Explodes 93% In 2023
Friday, April 19, 2024
All You Need To Know About Snapchat's New Generative AI Watermarking | Inside Taylor Swift's Surprise Return to TikTok
Overview of Today's Bitcoin Halving
Friday, April 19, 2024
Listen now (4 mins) | To investors The bitcoin halving is scheduled to happen later today. I asked Meta's new AI model to explain what the halving was and here is the output: “The Bitcoin Halving
🚀 350,000 Pageviews a Month in Under a Year
Friday, April 19, 2024
I thought content sites were dead?
Weekly Dose of Optimism #90
Friday, April 19, 2024
Geothermal Energy Matters, Bacterial Motors, Cancer AI, Natural Disasters AI, Zuckaissance, America ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
The world's top startup cities
Friday, April 19, 2024
VC's growing opportunities in AI; how VC combats digital threats; who wants to be an AI millionaire? Read online | Don't want to receive these emails? Manage your subscription. Log in The Daily