Good morning. On today’s agenda:

• One week on from SVB’s collapse, the banking crisis is far from over.

• Analysts see evidence of local heroes making advances in Spain.

• Pennsylvania data shows the cost of keeping up with market leaders.

• Startup focus is esports skill-based gaming operator Grilla.

If I’m gonna worry, I’m gonna worry with you.

MVB hit as bank shares tank

Bank of choice for US sportsbooks suffers as the banking crisis widens.

Not out of the woods: The favorite bank of the US sports-betting and gaming sector, West Virginia-based MVB Bank, suffered an 8% share price fall against a wider sector rout as fears over more potential banking failures gripped investors. The S&P Banks index was down over 5% on Friday.

• MVB specializes as a lender to gaming and fintech operators, dealing with deposits and payments.

• Among MVB’s gambling customers are DraftKings, FanDuel and BetMGM, as well as a host of other B2C names alongside their suppliers.

• Its Q4 earnings presentation dedicated five slides to online gaming.

• It said off-balance sheet deposits, including gaming and banking as a service relationship, total $724m.

😱 Horror show: MVB investors suffer the fear on Friday

Jittery: Investors are nervous after a week of banking trauma that kicked off with the collapse of SVB, which saw the US authorities step in to protect all deposits. By the end of the week, California-based First Republic received $30bn of support from the major US banks to shore up its finances.

• There is no suggestion of any troubles specific to MVB; rather the shares are suffering due to wider fears over the health of the US banking sector.

• In its Q4 earnings, the company spoke about its capital strength and sound asset quality.

• It also said it had sold up its Bitcoin mining loan portfolio, which represented the entirety of its crypto exposure.

• Short interest in MVB remains low at less than 2%.

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Analyst takes – Spain and Sweden

Regulus suggests there is evidence of local heroes developing in Spain as has already happened in Sweden.

Home grown: The market share being grabbed by domestic brands in Spain has more than doubled between 2014 and 2022, effectively following the pattern evident in Sweden. An operator group that includes Sportium, Codere, Orenes, Comar, Casino Gran Madrid, Casino Barcelona, Enracha, RETAbet, Luckia and Kirolbet increased its share of the market to 31% in 2022 vs 14% six years earlier. The 2022 figure for the group was €315m.

Dotcom dominance: The team pointed out that this matches the experience in Sweden where a number of the large dotcom operators are also local brands, including Kindred, Betsson, LeoVegas, PAF and ComeOn.

• “With local heroes growing almost tenfold in less than a decade, there is now an opportunity to develop Spain’s gambling market for Spanish consumers, rather than giving them fairly standardized dotcom products,” Regulus said.

• Even in open markets, the team added, localized products often supported by a land-based connection are winning.

The odds one out: The main name that bucks the localized trend in Sweden and Spain is bet365, which Regulus suggested is the leading sports-betting operator in both markets, excluding horseracing and pools betting in Sweden.

• “However, dominating in-play sports is both relatively niche and increasingly competitive. As online growth accelerates in less mature markets, it is also likely to fragment,” they added.

Datalines – Pennsylvania

Promo spend data shows the cost of keeping up with the market leaders.

Pressure point: The data from February showed the extent to which the pressure of FanDuel’s oversized market share is placing on the market pretenders. In sports-betting GGR, it achieved 52% share, while DraftKings was at 23%.

• The rest trailed behind but, as can be seen from the percentage of GGR, this wasn’t for the want of trying.

• Caesars gave out 137% of sports-betting GGR as promos, tipping its NGR market share to minus 0.5%, while BetMGM handed out 74% of GGR as promos, netting it NGR market share of 2.4%.

💰 Bonus balls: Pennsylvania’s promo spend in February

More analyst takes

Genius Sports: The team at JMP suggested the combination of data rights and tech assets is a high barrier to entry, noting the latter allows its end-users to add value through specialized offerings. 

• They indicated Genius’ Second Spectrum business gives Genius and its customers the data to send targeted advertisements, thus becoming a more effective way to market a brand.

The week ahead

On Thursday, affiliates are once again in the spotlight as Gambling.com delivers its Q4 results BMO in the US and, before that, Better Collective presents its investor event. 

• Recall, in Q3 Gambling.com saw revenue nearly double, helped by a tripling of US revenues.

Tomorrow the latest issue of Due Diligence is released, which this month focuses on what the largest operators have to say about same-game parlays and examines the key supplier relationship.

Startup focus – Grilla

Who, what, where and when: The Miami-based esports skill-based gaming platform was founded by Evan Kaylin, formerly at Kantar Media and part of the BD team at Faceit, alongside software engineers with 33 years of coding experience combined across multiple industries.

Funding backgrounder: Anchor investor is Tusk Venture Partners, who were early investors in FanDuel. Bradley Tusk sits on the Grilla board.

The pitch: Kaylin says that until now there hasn’t been a skill-games platform that allows non-professionals to monetize their skills to their full potential. “We're developing proprietary real-money features to increase the earning potential for competitors of all skill levels across more skill-based games,” he says.

• The company is also introducing new concepts to gamers based on their existing behaviors, such as fractionalized entry fees and the payout of prize pools. 

• With this feature fans of popular gamers can contribute to entry fees in exchange for a portion of the prize pool, unlocking massive prize pools created through the community. 

• Grilla recently launched out of Beta with 20k users and over 1,200 user-generated competitions created with no digital advertising to date, “so growth has been pretty organic”. 

What will success look like? The mid-term goal, says Kaylin, is to increase the funds flowing through video-game competitions by integrating real-money features into the experience that are authentic to the nature of games. 

• “Long term, we want to digitally transform how in-person competitions are managed and wagered on,” he adds.

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Newslines

Playtech has renewed its retail partnership with the UK bookmaker Betfred. 

The number of Macau visitors rose 143% YoY and 14% MoM to 1.6 million visitors in February, according to the Macau Statistics and Census Service. 

Spiffbet has arranged a SEK39.6m loan from its founders to keep the business afloat.

GAN has confirmed the closure of its Coolbet operation in Ontario, which it said was due to intense competition, according to the Toronto Sun.

Calendar

• Mar 21: Due Diligence

• Mar 23: Better Collective CMD; Gambling.com Q4

• Mar 28: The Data Month; 888 Investor Day

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