Good morning. On today’s agenda:

• Kindred blames disappointing World Cup for earnings miss.

• 888 says Q4 and FY revenue was in line, down 5% and 15% respectively.

• MeridianBet achieves $298.5m reverse into Nasdaq-listed Golden Matrix.

• DoubleDown buys SuprNation, the operator behind Duelz.com.

• Lottomatica eyes a €5bn IPO in Rome.

The penalty.

Kindred’s warning

The operator blames a worse-than-expected World Cup and problems in Belgium and Norway for the impact on profitability.

World in demotion: Kindred said revenues would be below expectations at £305m and underlying EBITDA would come in at a disappointing £39m after a World Cup that “contrary to expectations” failed to ignite the customer base. “We underestimated the disruptions of the first winter World Cup,” said CEO Henrik Tjärnström.

• Asked whether there were specific geographies that suffered, Tjärnström noted the performance in France had been impacted by the country’s success in getting to the final.

• Combined with the disruption caused to the sporting calendar and lower-than-average margin, it led to a “negative impact”.

• The company said FY22 underlying EBITDA would be at least £200m. This compares with underlying EBITDA in FY21 of £332.1m.

Blame the Belgians: Meanwhile, the company also blamed responsible gaming measures introduced in Belgium and the disruption in Norway caused by Kindred’s dispute with the authorities over its activities in the country.

• Blame the Mack: North American operations were particularly hit by Mattress Mack’s World Series win with the company paying out £5.3m in Q3, leading to a negative revenue contribution of £4m. 

• The negative underlying EBITDA contribution was ~£15m.

Remedial work: Kindred said in response to the earnings disappointment it would be decreasing its US marketing spend, re-assessing investment to “free up capacity” for key strategic initiatives, and reducing costs and operating expenses. Tjärnström said “no cost-cutting measures were off the table”.

• Tjärnström said the pullback in the US was “meaningful” and suggested the losses in North America would “bottom out” in 2022 before improving this year. Kindred will be migrating to its own platform in the US “within weeks”.

• Tjärnström stood by the 2025 targets, as laid out during its September investor day, of revenues hitting £1.6bn.

Serial warnings: Kindred’s previous warnings came late last year following the forced exit from the Netherlands. The company has since re-entered the market and Tjärnström said it generated £53m of GGR in Q4. 

• He said that, six months in, the operation was still “ramping up”.

• “We remain fully confident in regaining market leadership in 2023,” he added.

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888 trading update

Revenue for Q4 and FY22 of £458m and £1.85bn were in line with expectations, as the company announced the departure of its CFO.

Act responsible: 888 said online revenues fell 5% in Q4 to £326m and was down 15% over the year to £1.33bn, due to the impact of continued player responsible-gaming measures in the UK offsetting growth elsewhere and a 54% increase in FY William Hill retail revenue to £519m.

• Contrary to Kindred, 888 said the World Cup contributed to a “successful” Q4, with online player days up 22% vs. the Euros in 2021.

• 888 ended the year with debt at the equivalent of £1.8bn.

• Recall, 888 issued a profit warning in Q3 and said in November that the interest rate it was paying on its debt load was “unsustainable”. It subsequently issued $347m of new debt.

• Lookout/outlook: Revenue for 2023 will again be negative by “low single digits” and within an adj. EBITDA margin of “at least” 20%.

Moving on: The company said CFO Yariv Dafna had resigned and will leave the company at the end of March after the publication of its FY22 results.

MeridianBet reverses into Golden Matrix

Largely Serbia-facing MeridianBet has arrived at a $298.5m cash and shares deal with Nasdaq-listed operator and supplier Golden Matrix.

Red pill: In what is effectively a reverse takeover, the owners of Balkans-facing MeridianBet (Aleksandar Milovanovic, Zoran Milosevic and Snezana Bozovic) will receive $70m in cash with the remainder of the buyout being settled in Golden Matrix shares. 

• Blue pill: Nasdaq-listed Golden Matrix runs an online casino site, some B2B operations and UK-based competition provider R Kings. 

• In the year to October, it achieved revenues of $34m. Yesterday’s press release suggested pro forma revenues for the combined companies would be over $100m with EBITDA of >$22m.

• The deal will close in H2 subject to Golden Matrix raising the $50m, the completion of due diligence and shareholder approval.

Background: The Malta-based MeridianBet, whose major markets are Serbia, Bosnia and Herzogovina and Montenegro, saw revenues grow 38% in 2022. It employs over 1,100 people. The company also operates in LatAm and Africa and has plans to enter the US. 

• Industry veteran William Scott will become chairman of the combined group, with Golden Matrix’s Brian Goodman remaining as CEO.

DoubleDown’s SuprNation buy

The casual gaming giant has completed its first foray into real-money gambling with the acquisition of the Swedish-led operator for $35m.

Duelz purpose: With nine-months to September revenues of $18.3m, analysts have estimated the deal for the Malta-domiciled company behind the flagship Duelz.com game has been completed at a multiple of ~1.5x sales and gives DDI the potential to expand into the adjacent vertical of online gambling.

• The team at B Riley suggested the deal for SuprNation could create “potential transformational opportunities” for DDI.

• They added that it is in the process of applying for online gambling licenses in a number of European jurisdictions and could ultimately look at US licensing.

• Synergies will come from contributing DDI’s expertise in areas such as user acquisition, engineering and slot content.

• The gamification is in-house, but Duelz sits on the GiG platform.

Lottomatica IPO

The operator behind GoldBet is reported to be eyeing an €1bn IPO in Italy.

That’s amore: According to Bloomberg, Lottomatica will seek a listing in Rome that could value the company at over €5bn including debt. The company is working with its banks, including lead UniCredit, on a float in Q2. It has yet to set a price on its shares, the report suggested.

• The company is owned by PE house Apollo.

• It recently bid €310m to buy rival Italian online operator BetFlag.

Compliance+More launch

Brand new: Our sister publication will cover global gambling regulatory developments as well as related news around sports integrity, payments, tokens, esports and crypto. It will be put together by E+M’s Scott Longley alongside Mark Taylor and Steve Ruddock and will be published twice a week on Tuesdays and Thursdays. The debut issue will be sent on January 24 – sign up below:

Compliance+More All things regulation in gambling By Scott Longley

Catena hires Carnegie

Carnegie will help the affiliate giant assess potential sale options.

Carnegie call: Following the sale of AskGamblers to GiG, Catena Media said this week it had received approaches from third parties about buying all or part of the business. In response, it has appointed Carnegie as a financial adviser to assess its strategic options.

• Speaking to E+M, CEO Michael Daly said “there are currently no bids for the company or our US assets”. He noted that, as previously announced, it is “considering divesting more of our European assets”.

• Catena also recently sold its paid media division to Acroud for €5.1m.

• Separately, the company said it had recorded its strongest ever launch in Ohio with an all-time high revenue from new player registrations.

• In the first two days it notched up more transactions than in any other previous state, including New York.

🚀 Catena Media up 30% this week

Macau roundup

Getting there: The tourism office said visitation over the course of the Chinese New Year will still be somewhat subdued, with reservations running at between 30-50% of capacity. Still, analysts at S&P suggested GGR will recover ground in 2023, predicting a return to between 60-70% of 2019 levels. 

• This follows a report from JP Morgan analysts that suggested average daily GGR in January to date was running at more than double the Q4 run rate.

Sector watch – crypto

Troubled crypto brokerage Genesis Global may be the latest digital domino to fall from the FTX contagion.

The other Genesis: The trading unit of Bitcoin kingpin Barry Silbert’s Digital Currency Group has shed 30% of its workforce in a second round of layoffs as bankruptcy looms amid claims it owes billions. Prior to its wobble, Genesis had an unblemished reputation as a sophisticated, trustworthy crypto business overseen by an icon of the sector.

• On Friday, Genesis was charged with offering unregistered securities to retail investors with a company it has been involved in a public spat with.

• It was the crypto market’s largest lender and a jewel in the crown of Silbert’s empire alongside various crypto finance offerings and the news service CoinDesk.

• Genesis’s two largest clients are now bankrupt: hedge fund Three Arrows Capital and Alameda Research, FTX founder Sam Bankman-Fried’s notorious trading platform.

• 3AC’s demise left Genesis with a $1.2bn loss, causing the firm to freeze withdrawals in November citing “unprecedented market turmoil” following FTX’s demise.

• Prosecutors are probing how close DCG is with Genesis, given how the latter was undone by 3AC’s margin call while apparently having a DCG-shaped safety net.

Got your money: Genesis had around $2.8bn in active loans on its books at the end of Q3, with hundreds of millions locked up in FTX, but also held nearly $1bn of capital lent by 340,000 users of the Gemini exchange as part of a yielding tie-up between the companies, which promised 8% returns.

• Please don’t stop the music: The wider crypto bloodbath shows no signs of slowing; Coinbase is laying off 30% of its staff as rival Huobi ditches 20% in response to tanking markets.

What’s in a name? It’s been a rough time for companies named Genesis Global. The Maltese online casino operator of the same moniker surrendered its UK licenses in early December, months after copping a £3.8m fine for multiple compliance failings. 

• E+M understands there is no connection between the gambling firm and the crypto brokerage beyond their name and unfortunate circumstances. 

Earnings in brief  

FL Entertainment: The Betclic parent company said trading had been positive in 2022 and confirmed FY guidance for revenue of €800m and €220m in EBITDA helped (contrary to Kindred) by World Cup-boosted growth in stakes and actives. 

• The company also said it was assessing a potential convertible bond financing, which would see existing shareholders selling stock with the expiry of the first lockup period.

M&A in brief

Entain has completed the acquisition of Netherlands-based online sports betting and casino operator BetCity for total consideration of up to €850m.

Lion Gaming: The Calgary-based online gaming platform and white label supplier has bought 1Click Games for an undisclosed sum.

Funding in brief

Jackpot.com has secured a tranche of $7m in new cash from investors, including Aurum Partners, Detroit Venture Partners and Bettor Capital. It follows on from a $35m Series A funding round in June last year.

Market access

At the double: Furthering its US ambitions, Bet365 has announced a brace of market access deals this week. First, it will enter the Pennsylvania market via Churchill Downs, which the latter said was consistent with its US online exit strategy. Second, the company has done a deal with the Cleveland Guardians to enter Ohio.

• Meanwhile, Tipico – which was the subject of EKG Line this week – said it has received approval to launch in Iowa, its fourth state.

Datalines

Maryland: FanDuel has taken no time in asserting its online dominance in Maryland, according to the figures for December. It led by GGR with 55%, followed by DraftKings with 32% and BetMGM with 7%.

Arizona: Sports-betting GGR rose 32.2% YoY to $48m in December, while handle was up 27% at $617.5m. 

• Leaders by GGR: FanDuel led with 41.5%, with DraftKings second (23.4%). 

Indiana: Casino GGR rose 3% to $229.8m in December, while sports-betting GGR increased 65.7% YoY to $42.7m despite a drop in handle of 6.8% to $431.4m.  

• Leaders by GGR: FanDuel led with 49%, followed by DraftKings (29.7%) and BetMGM (11.8%).

Ohio racino revenue was down 2.7% to $109.1m in December. Illinois casino GGR rose 4.2% YoY to $114.4 in December and visitation levels were also up by 5.9%, although spend per visitor was down 1.6%, said Deutsche Bank. Missouri casino revenue was down 3.4% to $157.6m in December.

Newslines

DraftKings defeats the trolls: A New York court has ruled that investors in DraftKings can’t proceed with claims it failed to disclose when it listed that SBTech had a history of illegal operations that exposed it to liability, as per a report from short sellers Hindenburg.

VICI has announced an upsized share offering that could raise up to $1bn. The cash will go towards funding future acquisitions.

Las Vegas Sands has announced plans to pursue a New York casino license with a multi-billion Nassau County, Long Island, project.

NeoGames and Pollard Banknote have formalized their NeoPollard Interactive JV in relation to supplying iLottery products in North America, allowing each to pursue future iLottery opportunities in the North American market as part of the joint venture partnership or independently. 

Super Group’s board has authorized a $25m share buyback program, which will run through to year end.

Kambi has announced a deal to provide retail sportsbook technology to Miami Valley Gaming in Ohio.

Mansion has quit the UK entirely and surrendered its license after previously shuttering its UK-facing sportsbook.

On social

How to hire talent.

Meanwhile, in west London:

Fulham Football Club @FulhamFC

Match-winners v Chelsea. 💥 2006: Luis Boa Morte. 🐍 2023: Carlos Vinicius. 🙅‍♂️

10:31 PM ∙ Jan 12, 2023

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Calendar

Jan 17: Due Diligence #3

Jan 26: Rank FY results

Contact

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com