Good morning. On today’s agenda:

• Flutter eyes long-term gains as business sports record profits.

• Rush Street cuts its market share cloth to suit marketing spend. 

• Light & Wonder is firing on all cylinders.

• Bet365 makes something of a move in Ohio.

Jumping fences.

Flutter wows

Revenues for the year leapt 27% to £7.69bn, helped by US revenues coming in at the top end of expectations.

Eyes on the prize: Talking about FanDuel’s prospective move into positive EBITDA territory for this year, Flutter CEO Peter Jackson said it was necessary not to “focus just on getting across the line” on profitability. In 2022, the US business recorded adj. EBITDA losses of £250m on revenue of £2.6bn.

• He said Flutter was looking at sizable profit gains in 2024 and 2025. “What that actually means for the group is fundamental,” he said.

• “We're compounding the advantages we have in the market,” he noted.

• Jackson added that Flutter had “never targeted” profitability for FanDuel at any point but that it was the “resultant outcome” of the effort it put into the business.

• He noted that, with the recent launch in Ohio, FanDuel had “clearly leveraged” its DFS standing in the state and had signed up ~65% of that database in the first month.

• The presentation noted that FanDuel is the no.1 sportsbook in 15 of 18 states.

• Analysts at Regulus said FanDuel looks “operationally unassailable, at least in the short term”. 

• “The big question going forward is whether competitors can close the product gap and whether this grows the market or erodes FanDuel’s position,” they said.

The going gets tough: Asked about the future of Fox Bet he said the outlook for sub-scale brands in the US was bleak. “I think these sub-scale operators will find it very difficult to make money,” he said. 

• He noted Fox Bet was “”struggling” and added the company would “review what we do with the business at the appropriate time”.

• Recall, Fox Bet was the focus of a legal tussle between Flutter and Fox Corporation over the valuation of FanDuel. 

White paper/white heat: Jackson noted he had been talking about a pending white paper for a number of earnings calls now and repeated the message that for the good of the sector, the government should get on with publishing.

• “We've made massive strides forward,” he said, in pursuing responsible gambling initiatives. “We’re really focused on doing the right thing.”

• In the face of the uncertainty, though, Jackson said Flutter’s UK and Ireland business had “got our mojo back” after it showed FY revenue up 4% to £2.14bn and adj. EBITDA up 6% to £654m.

In Australia, CFO Jonathan Hill said the company had noted the “big pick up in competitive intensity” from new entrants in the market. He said it had prompted the Flutter-owned Sportsbet to “amp up the generosity”. 

• “We decided to invest some of the margin we had to ensure we remained properly positioned,” he added.

• The Australian market is in flux following the launch of the Australian Betr late last year. Yesterday, PointsBet also noted the increased competition.

Duality: Regarding the potential joint listing in the US, Jackson said the consultation process with shareholders was continuing but added nothing more than to say the initial feedback was “very supportive”.

Analyst takes: Regulus said, overall, Flutter is “clearly showing that a strong central investment in product and technology can drive revenue synergies as well as cost synergies”. The team at Jefferies said it sees a secondary listing in the US as a “precursor to a primary listing”.

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Rush and a push 

Rush Street says it has made “great strides” towards profitability.

All the way: CEO Richard Schwartz said that with $180m of cash in hand and no debt, the company behind the BetRivers brand was “fully funded to reach sustained profitability”. He noted that top-line revenue growth of 27% to $165.5m was “not growth at all costs” and that the company would be EBITDA positive by H223. 

• Q4 EBITDA losses fell 45% YoY to $17.3m but losses for the year increased 41% to $92m.

• The company initiated FY23 revenue guidance of between $630m and $700m

Get what you pay for: Schwartz noted that with recent new launches in Maryland and Ohio the company had “evolved” its approach by investing less in market share. “We expect this level of investment to be reflected in our market share,” he added. 

• CFO Kyle Sauers said the headwinds from new market launches were decreasing.

• Evidence of this approach comes from Ohio where BetRivers managed less than a tenth of a percentage point of GGR share. (See Ohio analysis below)

• Where’s the cavalry? Noting the low single-digit market share in New York, Sauers said that share could be tripled if iCasino was on the menu. 

• Schwartz said there was “clear movement” on iCasino legislation, though he admitted any moves were ”not going to happen overnight”. 

• “You’re starting to see a lot of lobbying dollars being applied,” he added.

Global ramp: Internationally, Schwartz claimed success in Colombia but noted the competitive picture in Ontario, while in Mexico the company remained “very deliberate and measured in our ramp”.

Light & Wonder(ful) world

All was sweetness and light as the provider saw double-digit revenue and profit growth.

All cylinders: After what new CEO Matt Wilson said was a “pivotal” year during which Light & Wonder offloaded its lottery and sports-betting businesses and changed its name, the company saw revenues rise 17.5% to €682m while adj. EBITDA rose 23% to €265m.

• “The dashboard [is] lit up green across all our KPIs,” Wilson said, adding that the company was ”not delusional” in not seeing any impact from the macro environment at present.

• CFO Connie James said the gaming machine business had seen “substantial progress” driven by robust product sales.

• Online GGR rose for the ninth consecutive quarter to $62m, up 15%. Wilson said the company would be doubling down on cross-platform content.

• He noted the company would be launching live casino in Michigan soon. “We’re ready to compete,” he added.

• Noting the success of SciPlay – which itself reported record revenues of $182.1m for the Q4 – Wilson said the business continued to grow market share.

Analyst takes – Ohio

Bet365 makes progress in a targeted US state for the first time.

Bet now: The team at EKG suggested bet365 has “splashed down” in Ohio in a way that it hasn’t done previously in any other US state. Looking at the January data, they pointed out bet365’s 4% GGR share and 3% handle share, adding that bet365 sees Ohio as a “market in which it can assess its potential when operating as a first mover”.

• In a market where FanDuel (50% of GGR) and DraftKings (27%) bought their way to market dominance from the off, others have notably fared badly.

• Tipico only achieved <1% GGR share despite also targeting the state.

• The micro-betting app betr also struggled, with less than a tenth of a percent of handle.

• They also noted that ‘local hero’ Hard Rock achieved 2% handle/GGR market share but that betJACK struggled with a fifth of a percentage point of market share.

IGT analyst takes

IGT’s product suite fits a consumer move from goods to experiences.

Had to be there: The team at Truist said the consumer move towards `’experiential” spending over goods spelled good news for IGT, where its main segments are lottery, gaming and digital. 

• Jefferies said the “fundamental stability” of the business remained intact while the cash position is improving. 

• Net debt is at a record low of 3.1x “with the potential to progress lower”.

Earnings in brief

Golden Entertainment: Q4 revenues fell 1% to $280m while adj. EBITDA fell 6% to $64m, but the company again exceeded $1bn in revenues in 2022 for the second consecutive year. It expects the sale of the Rocky Gap casino to close in Q2, which will provide “meaningful liquidity.

Melco Resorts: CEO Lawrence Ho said the company was “encouraged” by the situation in Macau, even as the colony reported Q4 revenue down 30% YoY to $337m caused by the travel restrictions during the quarter. Operating losses nearly doubled YoY to $200m.

Everi: A 25% surge in revenues from the fintech segment helped Everi register a 14% increase in revenues to $205m. Gaming segment revenues were up 7%. Adj. EBITDA came in at $93m, up 5%. FY22 revenues were up 18% to $783m.

Lottomatica: The company could be listed as early as next month after shareholders approved its move to the Euronext exchange in Milan. This came after the company said FY22 revenues hit €1.4bn, while EBITDA came in at €460m. 

Zeal: Revenues for the German-facing lotto operator rose 21% YoY to €105m off the back of a 29% YoY leap in new customers driven by high jackpots. Despite a high marketing spend, EBITDA for the year rose 14% to €32m. It issued 2023 forecasts with revenue expected at €110m-€120m and EBITDA in a range of €30m-€35m.

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Newslines

Big Unit: Betting and iCasino product and marketing developer The Unit has appointed Tekkorp’s Andy Clerkson as a strategic advisor.

BetMGM has announced a five-year extension with the British Columbia Lottery’s responsible gaming program GameSense.

Tabcorp has made 130 employees redundant, according to The Sydney Morning Herald.

Better Collective has launched a global media partnership with digital soccer platform Goal.

Calendar

• Mar 7: Startup Month, Full House

• Mar 8: AGS

• Mar 10: Genius Sports

• Mar 14: Deal Talk, Super Group

• Mar 15: Sportrader

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