Good afternoon, welcome to your weekender. In this edition:

• Genius Sports talks automation.

• Six go to post in Massachusetts.

• More negatives than positives for DraftKings coming out of March Madness.

• Sector watch catches up with what’s happening with fan tokens. 

• This week’s Jobsboard includes a finance controller and a product manager.

We're charging our battery and now we're full of energy.

Tracking and field

Genius announces a deal with the NBA to build an automated player-tracking platform ahead of its earnings showing it notched up a small adj. EBITDA profit.

Second sight: Subsidiary Second Spectrum is set to develop a next-generation platform for tracking basketball data points in select NBA arenas. Genius has also become an official NBA team basketball analytics partner.

• On the call with analysts, CEO Mark Locke said the company’s “fundamental goal is to develop technology to help leagues attract and engage the next generation of fans”.

• Locke said Second Spectrum was the “sports equivalent of ChatGPT” and was building on a decade of computer vision”.

• “Every  fan, bettor, player and coach will be able to watch the game in a fully personalized way,” he added.

• He said Second Spectrum offered the opportunity to collect “much richer data”.

• “It begins a binary shift in the type of data required by bookmakers and media,” he added. “It gives us a huge moat.”

Trim trail: The news came ahead of Genius’s Q4s, which saw it move into positive adj. EBITDA territory with a $2.7m profit compared with a $12.5m loss in the prior-year period. Revenues came in at $105m, up 25%, but they were outpaced by net losses, which were up 140% to $128m.

• The adj. EBITDA numbers were helped by the paring back of share awards, which were $11m compared to $38m in Q421. 

• Stock-based compensation for 2022 as a whole was $90m vs. $489m in 2021. CFO Nick Taylor said that would decline to $25m this year.

• Locke said Genius would “approach profitability in the US” next year. The company is forecasting adj. EBITDA of $41m in 2023 on revenues of $391m.

• Taylor said 2023 would be the “year of inflection”. “This is proof of the operational leverage in the business,” he added. 

• “Our cost base is highly predictable and we don’t expect it to materially increase in order to achieve our revenue and adj. EBITDA expectations.” 

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New market opening klaxon

📣 Critical Mass: The Massachusetts online sports-betting market opens today with six competitors coming out of the gate, including FanDuel, DraftKings, BetMGM, WynnBet, Caesars and Barstool.

No slam dunk

There are more negative catalysts than positives coming down the track for DraftKings, according to Roth MKM.

Always look on the bright side: The team at Roth MKM pointed to the relatively empty sporting calendar post-March Madness for their pessimism. The team highlighted that DraftKings’ share price – in its short lifespan as a listed entity – tends to underperform during the tournament itself.

• Going soft: They offered as explanation investors buying into the stock ahead of the event but selling ahead of the seasonally softer months of April to August. 

• Further, they suggested that lacking new state momentum, operators will struggle to hit their 2023-24 EBITDA targets.

• Roth was particularly cautious on DraftKings, which the team has as a Sell.

• “We don't believe industry revenues will reach the scale needed for DraftKings to generate meaningful operating leverage, particularly with underlying growth rates slowing and few new states legalizing OSB and/or iGaming,” they added.

• Fanatics rumor: Noting the launch delay, the team suggested Fanatics will announce a market access partnership with a “major regional gaming operator such as Penn”.

Stripped out

The recent “considerable strength” on the Las Vegas Strip is set to continue into February and March, say analysts.

Red rag: The combination of multiple basketball conference tournaments, a construction expo, a UFC event and a NASCAR race is set to drive “outsized demand”, suggested Deutsche Bank, adding: “The bull case remains firmly intact.”

• But the team cautioned that Q2 and Q3 are both set to be more challenging, from a YoY perspective, before F1 in November bumps up Q4.

• One highlighted trend is the higher level of room nights taken up by casino customers vs. group bookings.

• Casino mix stood at 32% in 2022 with group at 12% vs. 26% and 18% respectively in 2019.

🐂 Bull: Las Vegas Strip in the past year, YoY % GGR change

ICYMI

In Compliance+More on Thursday the big story was a piece looking into the news this week about PokerStars’ legacy bribery issues in Russia as uncovered by the SEC. The article asked whether the revelations would have any impact on Flutter’s recently announced consultation around a dual US listing.

Compliance+More

Flutter's Russia fluster cluck

Good morning. On today’s agenda: Flutter says Russian bribery affair won’t impact US listing plans. Kentucky and Oklahoma sports-betting bills advance. New York State Sen. Joseph Addabbo attempts to rustle up action on iCasino. The Netherlands authorities extend duty-of-care study…

Read more

a day ago · Compliance+More

• Also this week, sports-betting bills make progress in Kentucky and Oklahoma.

• The Brazilian finance minister also gives sports betting a nudge.

In Earnings+More this week:

• Entain’s CEO says it was ”very diligent” in choosing recent market exits.

• In the Startup Month, Prophet Exchange’s CEO speaks about recent staff cutbacks.

• On Monday, NorthStar achieved its switch to the Toronto exchange.

In Sharpr this week:

• FIFA loot boxes are deemed illegal by Austrian courts.

Jobsboard

Josboard reminder: See down the page for positions in finance control, affiliate management and product development.

Earnings in brief 

AGS: CEO David Lopez said the “premium business was really in its infancy” in 2019 and had come a long way since, after the company reported higher yields from premium machines that drove a 16% rise in both Q4 revenue and adj. EBITDA to $82m and $38m respectively. 

• Premium base: The group said its installed premium base rose 500 bps to 15% during the period and helped it achieve its FY22 leverage target of -4x.

• Lopez added that AGS would accelerate the flow of brick-and-mortar casino content into the online channel and also deliver some of it online first. 

Century Casinos: The operator said revenue fell 3% to $104m while adj. EBITDA was off by 13% at $22m, due largely to disruption at its Mississippi property. The company noted the Nevada authorities had approved its acquisition of the Nugget Casino in Reno-Sparks.

Playstudios: CEO Andrew Pascal said the focus will be on further integration of the Brainium library into its playAWARDS program as the group saw revenues rise 10% to $79m in Q4 with adj. EBITDA flat at $12m. 

Payments earnings in brief 

Paysafe: A softness in European gaming saw revenues at the digital wallet segment drop by 4%, though much of it was caused by currency fluctuations. Total revenues rose 3% to $384m in Q4, adj. EBITDA was up 2% to $106m.

Nuvei: New business activity away from the volatile cryptocurrency market rose 23% YoY, helped by new enterprise agreements including, within the gaming sector, DraftKings, Holland Casino and Unibet Italy. Total revenue rose 4% to $220m, dragged down by crypto.

Sector watch – fan tokens

Lab incubator: Chiliz, the blockchain platform that powers the Socios fan token ecosystem, has announced a $50m incubator program called Chiliz Labs. The program is backed by Jump Crypto and will focus on Web3 projects in the sports and entertainment fields. 

• As of 2021 Chiliz had raised $66m in funding as part of the project and in February rolled out a new Layer 1 blockchain. 

• Platform switch: Chiliz’ new blockchain also welcomed the athlete NFT platform Blockasset, which also received an undisclosed equity investment from Chiliz. 

Regulatory process: In the UK, the government has issued a call for evidence on crypto assets following concerns that fan tokens could act as a gateway for unsophisticated investors to enter into speculative cryptocurrency investments. 

• In the US, a recent Manhattan court ruling that Dapper Labs’ NBA Top Shot NFTs could be viewed as unregistered securities could also pave the way for further US regulatory scrutiny. 

• Commenting on the issue, Nicolas Julia, CEO of Sorare, told Decrypt the group had been in discussions with US and EU regulators “to help build an appropriate framework because Sorare’s products were neither OSB or DFS products”. 

• Recall, the French gambling regulator ANJ is set to provide an update on the company’s efforts to “strengthen free access” to its NFT-based fantasy tournaments at the end of the month. 

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Newslines

FSB: After three months as interim CEO, Adam Smith has been appointed permanently, replacing David McDowell who is now chairman.

Calendar

• Mar 14: Super Group  

• Mar 15: Sportradar  

• Mar 16: FL Entertainment 

• Mar 17: DraftKings investor day 

• Financial Controller – (North America) 

• Affiliate Manager – US – (UK / North America)

• Chief Product Officer – (Remote)

An +More Media publication. 

For sponsorship inquiries email scott@andmore.media.