Earnings+More - 888 VIP compliance scandal, CEO sacked
888 VIP compliance scandal, CEO sacked888 admits to VIP failures, Ontario’s success, Grilla funding round, datalines – New York, the week ahead, the shares week, startup focus – humbl.ai +MoreGood morning. On today’s agenda:
One touch gives me chills and we ain't even close yet. 888’s compliance scandalCEO goes as company says Middle Eastern VIP suspensions will cost it 3% of group revenues. Scandal! 888 has immediately suspended VIP customers from the Middle East region after an internal compliance review uncovered AML and KYC failures. The company said “best practices have not been followed” but claimed the deficiencies were “isolated to this region only”.
Question time: The news leaves it open as to which jurisdiction the transactions with the VIPs would have fallen under. Whichever licensing authority it is will be unlikely to look kindly on events, suggested sources.
Possibly not unrelated: 888 has laid off dozens of staff at its 590-strong office in Tel Aviv, Israel, according to reports from a news site called CTech. Analysts at Regulus said this “may also be relevant”. Situations vacant: “888 now has the problem of finding a CEO who wants to take on an operational turnaround, intense regulatory scrutiny, high debt, UK retail exposure and gambling reputational risk,” said Regulus.
Compliance+More: Tomorrow’s newsletter will have more on the story. Sign up here. Catch a falling knife: Shares fell over 20% in early trading this morning. **Sponsor’s message** Venture capital firm Yolo Investments manages €550m in capital across 80 of the most exciting companies in fintech, gaming & blockchain. The Gaming Fund, regulated by the Guernsey Financial Services Commission, a dedicated 29-company, €183m AUM portfolio has invested in fast-growth assets including Dabble, Kalamba, SimWin & ThriveFantasy. Yolo Investments has just opened its fund to new investors as it looks to scale new cutting-edge concepts, including its exclusive high-roller land and live casino brand, Bombay Club, global banking network & OTC desk Aims Group. Ontario’s channeling successThe new regulated market is hitting the mark in terms of minimizing gray market activity. GGR in the three months to December rose 71% QoQ to C$457m from handle that soared 91% to C$11.5bn in what the analysts at Regulus said was an “extraordinary pace of growth”. iGaming Ontario noted the number of operators rose 50% over the period to 36; the number of sites rose to 68, a 62% increase.
Regulus pointed out that Ontario Lottery and Gaming’s online revenue has “not been distorted” by having to compete with commercial operators. OLG’s revenues have grown by a CAGR of ~65% to C$430m between 2019-20 and now, and ~20% market share.
One unhappy punter: Not everyone is quite so enthusiastic about Ontario’s success in converting gray market operators to regulated entities. On the BetMGM investor call last week, CEO Adam Greenblatt bemoaned the tough competitive environment in the province.
Datalines – New YorkWells Fargo says the second full week of YoY comparisons shows promotions are now more targeted. What dreams are made of: The second full week of year-on-year comparisons offer some insight into the evolving New York market, suggested the team at Wells Fargo. They pointed out that with GGR rising 33% in the week to January 22, but with handle off by over 21%, it indicated last year’s handle was “buoyed by promotions”.
All about the football: Handle is likely to continue to decline by the YoY metric, they added. This contrasts with other states that have seen handle growth. Michigan, for instance, was up 30% in its first YoY, Virginia 51% and Arizona 27%.
Analyst takesCaesars: The combined $4bn of news notes and credit facility raised by Caesars last week – both elements of which were upsized – could be a “catalyst” for the sector, suggested Jefferies. The team noted the raise looks to have been “catalyzed” by the expectation that the Fed is finished with raising rates.
Grilla raiseThe Miami-based esports and skill games platform has raised $3m and gone live with a beta offering. Just tell me that you want me: After receiving funding from well-known VC Tusk Venture Partners, the all-in-one platform provider has already attracted 20,000 registered users. The platform allows users to wager on any type of video game or skill-based competition.
In it to win it: Evan Kaylin, CEO and founder, said Grilla was “founded on the principle that you don't have to be a pro to compete like one”. Who’s Tusk? Tusk Venture Partners was previously invested in FanDuel and Coinbase. It is run by Bradley Tusk out of New York. The week aheadPointsBet will be updating the market late on Tuesday, ET. Of interest will be any further news on the reported A$250m bid made by NTD, the company behind the Australian Betr business.
On Wednesday morning, Entain will provide a Q4 trading update. Last week’s update from BetMGM gave an insight into how the US joint venture was faring, news that was accompanied by the usual analyst chatter over whether MGM would come back with a bid for its partner. On Thursday, live gaming and iCasino supply giant Evolution will produce its Q4 earnings. Analysts will be hoping to hear more about whether the company has managed to turn things around with its RNG offering.
A busy week will also see an Earnings Extra released on Thursday afternoon as Penn Entertainment hits the wires. When the company last reported in Q3 it told the market that losses in its online business had widened. The next issue of Compliance+More will be released on Tuesday including reaction to UK gambling minister Paul Scully’s generally well-received speech at the Betting and Gaming Council AGM. The shares weekThe listed data providers enjoyed a good week with both Sportradar and Genius Sports seeing double-digit surges. It’s just the sun rising: Both the listed suppliers will be hoping the tide has turned for investor interest in their stocks after each suffered along with other key betting and gaming stocks in the latter half of 2022. 🔥 Sportradar and Genius Sports sitting in a tree Startup focus – humbl.aiWho, what, where and when: Humbl.ai was established by Alen Kojadinovic, who was previously head of casino at the affiliate firm Acroud.
Funding backgrounder: Humbl’s last funding round was in December when Leo Ventures invested €250k for 25% of the company with the option to increase its ownership. The pitch: Kojadinovic says his goal is to see the “real adoption of AI and automation tools within the iGaming industry” and across all geographies. The reaction from industry stakeholders has so far been “overwhelmingly positive”.
What will success look like? Kojadinovic says it is too early – “hopefully a decade away” – to think of exits or selling up.
Rokker’s Business Design services deliver global gaming clients with research and insight alongside actionable strategy, clarity and alignment. We research, analyse and ideate to address the challenges and opportunities that affect our client’s product, proposition, people and process. Our work aligns clients’ boards and teams in building businesses people love. To find out more visit: https://www.rokker.co.uk/ Affiliate M&AThe somewhat mysterious transaction that E+M wrote about late last year that saw Acroud snap up Catena Media’s paid media business also saw former SBAT founder Gary Gillies switch with the business. He has gone on social media to say that he is the third-biggest shareholder in the company with 11% – and had been foiled in his attempt to grab more. NewslinesDraftKings and beer giant Molson Coors Beverage Co. are reported to be teaming up for an ad to be run during the Super Bowl. Red Rock Resorts will open the Wildfire Casino in downtown Las Vegas on February 10, according to reports. MGM and the NFL Players Association will collaborate on creating new content and fan experiences with current and retired NFL players. Calendar
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Weekend Edition #82
Friday, January 27, 2023
BetMGM update, LVS analyst reaction, Houlihan Lokey's digital outlook, Caesars analyst takes, sector watch +More
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