Good morning. Welcome to the latest weekender:

• Boyd is buoyant on nevada and online

• Mixed reaction on Penn Q4 earnings, although some reasons for optimism.

• The ANJ says French sports bettors staked record amounts on the World Cup.

• Sector watch looks at the recent Premier League deal for Sorare.

No finer place for sure.

Boyd’s local act

The Nevada Downtown and Locals markets were every bit as effervescent as the Strip.

Beats by Boyd: The booming Las Vegas market in the last three months of the year was “clearly benefiting” Boyd Gaming’s properties, particularly from the returning conventions business, according to CEO Kevin Smith.

• Boyd’s Q4 EBITDAR rose 3.7% to $360.1m on revenues that were up 4.9% to $922.9m. The buoyant performance came despite early-quarter softness in the Midwest and South regions.

• Asked about M&A, Smith said Boyd wouldn’t be looking at joining the rush towards sale-and-leasebacks to REITs, suggesting there were “cheaper forms of financing available”. “From an M&A perspective, it’s kind of quiet out there,” he added.

• CFO Josh Hirsberg said Boyd was “not taking big bets” on investing in the business. 

• “We're not committing the company to a large amount of capital in the current environment that we find ourselves,” he added.

Smith said the online partnership with FanDuel continued to deliver “impressive” results, generating $17m in EBITDAR during the quarter, while the recently completed Pala Interactive business also made a debut contribution.

• Boyd will be switching its own iCasino operations to the Pala platform in the next few months and Smith admitted it might be disruptive. 

• “With any transition, there'll be some breakage as we start to move people over to our platform,” he told analysts. 

• OSB generated ~$40m in EBITDAR for the whole of 2022.

Analyst takes: Macquarie said Boyd has developed several growth drivers, including online and the management contract at Sky River Casino in California that, the team suggested, would “help offset potential consumer pressure”.

• JMP said they “applaud management” for turning around the balance sheet; leverage is now at 2.8x. Truist noted Boyd has bought back $622m of shares since Oct21.

• Animal spirits: The JMP team added that high-return growth projects or M&A “could get us more constructive” on the company.

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Penn analyst takes

Penn’s share price decline of over 5% suggests some disappointment with its Q4 earnings.

Don’t bring me down: The team at CBRE suggested regional gaming should hold up better than other consumer sectors in 2023 unless there is a severe recession, but they noted that investors’ expectations ahead of the earnings was for a “more upbeat outlook”.

• “While we believe it is prudent to remain conservative given the economic uncertainty, there could be a few sources of upside,” the team added.

• Deutsche Bank suggested Penn was also suffering from meaningful new supply competition in key markets.

While some analysts saw encouragement from Penn’s online performance in Ontario, Credit Suisse expressed skepticism of Penn’s online outlook, believing the Score brand in Canada “simply resonates more than Barstool does in the US”. 

• “We are surprised Penn has not used brands outside of Barstool, especially for their core iGaming customer,” they added. 

• “Utilizing Penn Entertainment or Hollywood seems like an easy incremental benefit. 

🛑 Penn suffers a 5%+ fall after earnings ‘disappointment’

World Cup betting – France 

French players staked record amounts during the Qatar World Cup, but post-Covid the activity levels were also a market corrective. 

Record stakes: Data from France’s gambling regulator ANJ has revealed that the World Cup generated record OSB stakes of €597m and GGR of €70m. The stakes were 56% higher than for the 2018 World Cup and 37% higher than for Euro 2020. 

• Data from land-based monopoly FDJ is not yet available, but ANJ said online and retail stakes could have exceeded €900m during the event.

• However, the figures should be seen in a context where online sports-betting growth slowed to 2.5% in 2022 vs. the post-Covid 44% recorded in 2021 and 7% in 2020. 

• World Cup stakes represented 7.2% of total stakes placed in 2022 vs. 10% in 2018. 

• On Monday E+M will look at the World Cup records of leading operators such as Entain and Kindred.  

Player profiles: The main reason for the drop was fewer players opening accounts in 2022 (177k) than in 2018 (232k). Twice as many women aged 18-24 were recruited than during a regular season and the same age group accounted for 53% of new players.  

Ad break: Prior to the tournament ANJ set the objective of “de-intensifying advertising pressure” from sportsbooks and said a “change in tone was observed”.

• Work around: ANJ noted there was still “a need to go further” with regard to advertising, while some operators circumvented the restrictions with “massive recourse to sponsorship of sports programmes and (social media) influence(rs), which are particularly invasive and popular with young people”. 

Sector watch – fan tokens

Premier in: Ethereum-based fantasy football league operator and French tech unicorn Sorare confirmed this week that it had signed a multi-year sponsorship agreement with the English Premier League.

• The agreement has been trailed for some time and will see Sorare promote EPL-based fantasy tournaments to players in the UK and across the world.  

• It did not disclose how much it paid to be able to use images of Premier League stars, but in October Sky News reported that it was on par to sign a £30m per year deal with the EPL. 

• Sorare started out in 2018 and is now valued at $4.2bn. However, it has also attracted the attention of the French gambling regulator ANJ due to its business model and whether it amounts to sports betting.     

• As part of its dealings with ANJ it has vowed to promote its free-play features, these will be reviewed in March. Checks on the Gambling Commission website showed that Sorare does not hold a UK bookmaker’s license.  

Balls: Rival fan token provider Socios has also signed deals to list on secondary markets such as Binance and Mexc and in South Korea with the exchange Upbit. It recently unveiled a feature that enabled fans to win blockchain-authenticated ‘goal balls’ from the Italian Super Cup matchup between AC Milan and Inter Milan.

• Winter’s tale: The drop in the value of cryptocurrencies over recent months has led to warnings that ‘winter is coming’ for the sector and is coinciding with a wave of job cuts in the tech sector. 

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Slot survey data 

Broad positive: Macquarie welcomed Eilers-Fantini data showing ~20k slot replacement units were purchased in Q4 in North America. The analysts said the figures were 10% above pre-Covid levels and were “broadly positive” for a sector currently trading “well below historical averages”.

• Aristocrat and IGT would likely be near-term winners while Everi and Interblock had also enjoyed strong quarters, the analysts added. 

• Supplier picks included AGS, which should benefit from “premium installed placements”, and Inspired Entertainment, which saw its Q322 virtual sports segment grow 63%.  

IGT debt rating

Fitch has initiated on IGT’s debt with a stable outlook, reflecting IGT’s “conservative leverage”, which they say has “improved meaningfully” from pre-pandemic levels. “This has been funded by non-core asset sale proceeds and strong FCF generation,” Fitch added.

ICYMI

In Earnings+More this week:

• PointsBet has realigned its deal with NBC.

• DraftKings has hit the layoffs button.

• Entain is still waiting on UK White Paper clarity.

• Massachusetts cuts the ribbon on sports betting.

In Compliance+More this week:

• 888 ‘can expect’ further regulator action over its VIP shambles.

• US lawmakers have shown themselves willing to rethink gaming legislation.

• Canadians don’t like gambling ads.

• The UK crime bill has implications for casinos.

On Sharpr this week:

• Former Esports Entertainment exec set to launch crypto casino.

• Pennsylvania lawmaker pushes for esports betting.

Newlines 

Slot manufacturer Aruze Gaming has filed for bankruptcy in Nevada. The group said it would continue operating under Chapter 11 rules; the filing was part of its efforts to restructure its finances following a recent garnishment judgment against it. 

EBET is hoping to raise $6.5m from investors through a sale of shares and warrants.

GiG had finalized its agreement to provide its platform, sportsbook and omni-channel solution to Ontario-based operator Casino Time. 

Narrativa and Quarter 4 will provide their AI-generated sports-betting content and data to the Associated Press news agency. 

ODDSworks has partnered with Rush Street Interactive to launch its BETguard remote gaming server with the group’s BetRivers and PlaySugarHouse online portals in Pennsylvania, which will soon be followed by a New Jersey launch.

Odds On Compliance and U.S. Integrity have established the joint venture ProhiBet to monitor and maintain prohibitions on athletes, coaches and league officials.

What we’re reading

Tangy: The murky world of Worcestershire sauce.

Chelsea shopping spree: Panic buys or strategic nous? (Who cares? An SW6 Ed. I do! An SW6 Sub-Ed).

Calendar

• Feb 2: Boyd Gaming

• Feb 6-9: ICE London

• Feb 7: The startup month, Red Rock Resorts

• Feb 8: Kindred, MGM Resorts

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