Good morning. On today’s agenda:

• Kindred initiates a strategic review with all options being considered.

• Bet365 appears to be making major moves in Denver.

• Boyd is boosted by a booming Las Vegas Locals market.

• Partnership renewals in US and Colombia boost Kambi.

• Yahoo snaps up Wagr.

When the sale comes first and the truth comes second.

Kindred considers

All options on the table as Kindred hires a panel of advisers to look at strategic options.

Everything must go: A sale or a breakup are potential outcomes after Kindred initiated a “strategic review of alternatives” as it seeks to “maximize the value” of its assets. 

• It has hired bankers at PJT Partners, Morgan Stanley and Canaccord Genuity for an open-ended process after the board “unanimously decided to initiate a process.

• The statement said there could be “no assurance” of the outcome of the review.

Deal Talk instants: Sources noted a strategic review is “just code for up for sale” and suggested discussions have likely already taken place with potential PE buyers, with rumors that Blackstone and Apollo have “both looked and passed” within the last 12 months.

• Blockers: Obstacles to a deal include Kindred's continuing – and forever unresolved – exposure in unregulated Norway as well as its failure to make any headway in the US.

• Kindred said today that regulated revenue remained at 81%.

• Still, it remains debt-free and as such might remain attractive to those such as Lottomatica (currently on the verge of listing in Milan) or Tipico.

🍆 Kindred shares up nearly 14% on strategic review news

No noise from the Scandi boys: Prefacing the Q1 earnings call, CEO Henrik Tjärnström said he wouldn’t comment on the news. The earnings statement showed the company shrugging off its World Cup-related troubles in Q4, with revenues up 24% YoY to £306.4m and underlying EBITDA rising over 100% to £49m. 

• Tjärnström said in the Netherlands Kindred was on track to be the market leader later this year. In Q1, revenues from the country came in at £57m.

• He added that Norway was “headwind”. “We have complied with the regulations and we have a feeling others haven’t,” he added.

• Notably, the Relax business saw revenues rose 89% to £12m with B2B operations at £9m.

• Q2 has started strongly, with average daily revenue up 38%.

Jersey sure: In the US, Kindred announced 10 days ago it had received approval for the deployment of its proprietary platform in New Jersey with go-live penciled in for mid-May. US revenues rose 8% YoY and 87% QoQ to £8m as it rebounded from the Mattress Mack/Astros hit in Q4.

• Tjärnström said the hope was to launch in Pennsylvania in H223, with “gradual” launches in other targeted states.

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Rocky mountain hires

Bet365 might be laying down roots in Denver with an 800-head hiring spree.

Take me home: The Stoke-based giant is the most likely candidate for the UK sports-betting and gaming company that the Denver Post says is planning to create 807 jobs as part of a $400m investment in the state.

• The report says the company in question currently employs ~6,000 people.

• In bet365’s annual report published with Companies House in January, the company said it had employees as of Mar22 of 6,085.

Scaling up: The company is seeking roles across the board, including senior leadership, software developers, data engineers, product and customer service managers, fraud and risk supervisors and traders.

• Analysts at EKG said the move in Denver represents a “clear statement” that bet365 is “giving the US OSB market a proper run”.

• The team added that until now the US was “nice-to-have rather than a must-have” for bet365, with an operational hub in New Jersey as well as being live in Colorado and Virginia.

• But its most aggressive launch to date came with the launch in Ohio where, as EKG pointed out, it captured 5% market share.

• “Ohio is the only US market (so far) where bet365 has been a first mover.” they added.

About a Boyd

Las Vegas Locals and Downtown operations hit record highs.

Riding the wave: As with its Strip brethren, Boyd Gaming said it continued to benefit from the tailwinds in Las Vegas, including returning convention business and a “strong lineup” of entertainment and sporting events. “There was a lot of business in town,” CEO Kevin Smith said of Q1.

• Revenue rose 12% to $964m while adj. EBITDA was up 8% to $367m. However, the south and midwest region was down <1% YoY to $512m.

• Boyd broke out its online segment for the first time, showing revenues and EBITDA more than doubling to $122m and $21m respectively. 

• The bounce was driven by launches by partner FanDuel in Ohio and Maryland and the addition of Boyd Interactive.

• The company estimates online will generate $50m in 2023.

Softness: CFO Josh Hirsberg suggested the performance in Mississippi and Louisiana might be “economically impacted”, while Smith said the promotional environment remained stable. “We’re not doing anything crazy,” he added.

Las Vegas in March

A slot to like: The Las Vegas Strip saw revenues fall 3% YoY to $725m, dragged down by a comp-challenged baccarat hold. Macquarie estimated that hold-normalized GGR would have been up 8%. Q1 Strip revenue rose 12% to $2.15bn. 

• March statewide revenue was also down 3% to $1.25bn, although Q1 GGR was up 8% YoY to $3.8bn.

• CBRE analysts said the “bigger story” in March was the continued return of conventions.

• Visitation increased 10% YoY in March to 3.7m or within 1% of March 2019, while convention attendance was up 56%. 

Kambi climbs

Key client renewals in US and Colombia among quarter highlights.

Dotted line: CEO Kristian Nylen highlighted Kambi’s partnership renewals with Rush Street Interactive and BetPlay parent Corredor Empresarial in Colombia as it continues to focus on Latin America. The two groups contribute 50% of Kambi’s GGR in the Americas, Nylen said. 

• Revenues rose 19% YoY to €44m in Q1 while EBITA was down 25% to €6m due to FX and one-off efficiency costs. 

• CFO David Kenyon said the cost increases, from €29.5m to €39.5m during the quarter, related to P&L changes and the acquisition of Shape Games in Q422, which incurred €3.6m of additional costs in total, while FX movements cost €1.3m. 

Kenyon added that its trading margins were flat at ~8% and had been impacted by Penn Entertainment’s market share dropping in PA, MI and Illinois, as it “moved focus away from customer acquisition”.

Yahoo bets on Wagr

Yahoo has bought P2P betting startup Wagr for an undisclosed amount.

Buyr’s market: The startup launched just under four years ago has been snapped up to bolster Yahoo’s daily fantasy and gaming business. Jim Lanzone, CEO of Yahoo, said in the press release that Wagr “stands out for their innovative emphasis on community and social engagement in sports gaming”.

• The acquisition represents an exit for Wagr’s investors, including the Kraft Group, Harris Blitzer Sports & Entertainment, Greycroft and Reddit co-founder Alexis Ohanian’s Seven Seven Six.

• Wagr was founded in 2019 by Mario Malave and Eliana Eskinazi. Its latest funding news came in Jan22, when it raised $12m in a Series A round.

AGA CEO survey

Gaming bosses remain positive despite macroeconomic clouds.

Sunny side up: The vast majority of the top brass in the gaming sector characterized the current business environment as good or satisfactory, according to the AGA’s gaming industry outlook for 2023.

• But the optimism runs out when looking ahead, with only 20% believing future conditions will be better than today while 64% believe conditions will remain broadly the same.

• Still, more executives expect to see capital investment over the next three to six months compared to those who don’t (21% net positive).

• Gaming machine manufacturers were particularly positive, with a net positive of 88% expecting more replacement sales.

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Earnings in brief 

Gambling.com: The affiliate has pre-released Q123 earnings estimates due to the numbers exceeding internal forecasts. It said revenues would come in up ~36% YoY at $26m-$27m, while adj. EBITDA will be up ~46% at $10.3m-$10.8m.

Newslines

Churchill Downs has announced a 2-for-1 stock split.

BlueBet’s B2C brand ClutchBet has gone live in Colorado. The group launched in Iowa in August 2022 and has market access agreements for Louisiana and Indiana. 

NorthStar Gaming has acquired the sports-betting and casino affiliate Slapshot Media for C$1.8m. 

Penn Entertainment will replace its loyalty rewards program mychoice with Penn Play and has also introduced a loyalty currency called PennCash. 

Codere has received approval from its bondholders to pursue a €100m cash injection to fund a five-year recovery program to reorganize and refinance the company.

Endeavor has agreed to sell its IMG Academy sports education institution business to EQT in an all-cash deal worth $1.25bn. 

Calendar

• Apr 26: Rivalry, Churchill Downs earnings

• Apr 27: Churchill Downs call, Evolution, Betsson, GLP

• Apr 28: E+M Weekender, GLP call

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