Good morning. On the agenda today:

• Flutter says it is taking market share in the US and elsewhere.

• Caesars proclaims digital sustainability as losses are hacked back.

• VICI remains calm amid fraught markets.

• Kambi repays Kindred’s convertible loan.

• Analyst takes: Penn and MGM.

I'm everlastin’, I can go on for days and days.

Flutter out ahead

Flutter said it is seeing market share gains across the business.

Catch us if you can: Flutter’s strength in the US and in other core markets was extolled by CEO Peter Jackson who suggested the company was benefiting from the continued focus on product improvements. “I wouldn’t want to be trying to catch up with us as we continue to race ahead,” he said as the company reported 46% growth in revenues in constant currency to £2.41bn.

• Noting the 50% market share achieved by FanDuel in US sports-betting, Jackson said the growth in existing states had “almost doubled” over the quarter.

• On grabbing poll position in Massachusetts, he said FanDuel has done a “tremendous job of refining the new state playbook”.

• Q1 US revenues were up 92% with sportsbook revenue up 147%.

• iCasino was up 47% and Jackson said most of the market share gains have come from direct iCasino acquisition channels. 

• “I’m confident the business will continue to take share,” he added.

• Jackson said there is “a lot of confidence in making a profit this year” but more significantly he was optimistic about the trajectory of the business.

Atlantic crossing: Last week, Flutter received overwhelming support from shareholders for the dual listing in the US. Without commenting any further, Jackson reiterated the move would take place by the end of this year.

Responsible leadership: In the UK and Ireland, where revenues rose 17% to £608m, Jackson made mention of last week’s White Paper and said Flutter had “already taken leadership in responsible gambling.” “Our customer base is now far more recreational,” he added.  

• “We are really, really pleased with the UK and Ireland business, we’re taking share,” he said. “We have made a lot of product improvements.”

• He added that it was hard to separate out the impact of those improvements from the extent to which competitors ate “trying to catch up with us on responsible gambling”.

Fuel: Internationally, the company said the 85% rise in revenues was driven by the Sisal business in Italy. In the increasingly competitive Australian market, where revenues were down 4% in constant currency terms, Jackson said some further headwinds would come from the upcoming credit card ban.

• Talking about potential bolt-on M&A, new CFO Paul Edgecliffe-Johnson said there is “plenty of fuel in the business” for M&A. “There are opportunities and Sisal is a great example of what we can do.”

Analyst takes: The team at Jefferies said Flutter was delivering solid revenue growth ex-US, helped by a “benign White Paper”.

• Regulus said Flutter’s ability to use a “strong central platform and local businesses with sufficient scale and flexibility to differentiate is not just paying off, it is changing the nature of the competitive landscape in regulated markets”.

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Caesars pays it back

Caesars proclaims its digital sustainability while Las Vegas strength helps towards debt repayment.

Goodbye to all that: CEO Tom Reeg said he was “cautiously optimistic” that the digital business has seen its last negative adj. EBITDA quarter after it saw losses curtailed to just $4m in Q1 from the half-a-billion levels of last year.

• Despite Ohio and Massachusetts launches and a Super Bowl that “didn’t hold very well for us”, Reeg said that “year-to-date” the business was EBITDA profitable. 

• “We think we'll do considerably better than where we thought we were even 90 days ago,” he added.

• He said the “chief driver” of the improvements had been the pullback in marketing and promos which he said was “dramatically lower” than the peer group.

• “Our cost of acquisition has come down considerably,” he added. Noting Ohio only three months in was EBITDA positive.

The good life: Caesars achieved digital net revenues of $238m vs. negative revenues of $53m in Q122. CFO Bret Yunker noted the digital business is now “fully self-funded”. Reeg admitted it would be a “coin flip” whether Q3 would be positive or negative. 

• On the question of the reliance on Nevada, Reeg was adamant that more than 80% of the digital business was non-Nevada. 

• In the coming months, Caesars will be launching a standalone iCasino app. “What we’re missing is the core slot customer,” Reeg suggested.

• He hinted the iCasino business could be under multiple brands. Notably, Caesars launched a Tropicana-branded iCasino app in Pennsylvania last week.

• Asked about potential M&A in terms of game developers, Reeg said Caesars was a “builder not a buyer”.

Target the best: In Vegas, Reeg said the business was benefitting from a “virtuous circle” of “extraordinary demand” and “high dollar” group business. He said the company felt “very good” about Q2 despite tough comps.

• “We’re going to be very pleased if we match what we did last year.”

• Asked whether the market was seeing ‘peak Vegas’, Reeg said the city  had “done a good job of continuing to add events” such as F1 and the Super Bowl.

• “You get better by up-tiering the average customer that is coming to the market,” he added.

• Forget the rest: “You're bringing in higher-value customers and we're already full, so you're kicking out the lowest end. I see no reason that needs to stop or would stop.”

• Asked about what could disrupt the big picture improvements, Reeg said that “from what we can see, if there’s a slowdown, it should be shallow.”

Under cover: Las Vegas revenues rose 24% to $1.13bn with adj. EBITDA up 33% to $533m while regional was up 2% to $1.39bn with adj. EBITDA down 2% to $448m. The regional business was impacted by bad weather in northern Nevada – “six feet of snow” – during the period.

Reduction deduction: Total revenues rose 24% to $2.83bn while adj. EBITDA was up 236% to $958m. Net losses were hacked back to $136m from $680m this time last year. On the debt front, Yunker said the company would target a third consecutive year of $1bn in debt reduction. Reeg said he expected 2024 and 2025 to “look the same”.

VICI call review

With “visibility low and uncertainty high”, VICI made the case for its stable outlook.

My perfect Saturday: After extolling the delights of spending each Saturday morning reading the Financial Times weekend edition and drinking multiple espressos, CEO Ed Pitoniak said the paper’s esteemed commentators were attempting to “formulate a rational response” to the current state of the markets.

• In commercial real estate, asset pricing was “murky” with “not a whole lot of trading going on”.

• The VICI response to this was to continue growing, allocating $1.6bn of incremental capital in Q1 to “compelling and accretive experiential property and lending investments”.

• “We're going to continue to see both enhanced credit opportunities and enhanced real estate acquisition opportunities because of the tightening for credit,” he added.

Soccerball: Citing Ted Lasso, COO John Payne said “the harder you work, the luckier you get”. “We are laying the groundwork for VICI's next phase of expansion domestically and globally across gaming and many other experiential sectors,” he added.

• Recall, in Q1 VICI made its first international foray into Canada. “The Canadian gaming industry presents a great opportunity for VICI as it is an established industry with many similarities to the US gaming industry,” Payne said.

Kambi repays Kindred bond 

Paid in full: Kambi has repaid the €7.5m convertible bond that had been issued by Kindred when the betting solution provider was established as a spinoff of the Swedish bookmaker in 2014. 

• Free at last: In a statement, Kambi said the repayment “eliminates the prospect of Kindred converting the bond into shares, which would have given it a controlling influence” over Kambi dealings.

• The repayment has no impact on the OSB supply partnership between the two groups which is set to run until 2026. The group also announced a share buyback programme of up to €7.2m that will run until May 2023.

• For Kambi the positive news follows the announcement of its major supply agreement with Bally’s Corp and gives it carte blanche to pursue potential M&A activities.

Analyst takes

Penn Entertainment: Ahead of tomorrow’s earnings, the team at Roth MKM said Penn’s digital activities had been underwhelming as Barstool Sports’ OSB/iGaming Q1 share in key markets was nearly half of Q421. 

• While the trend has been countered by theScoreBet’s strong showing in Ontario, the team “doesn’t believe Penn is willing to incur the level of investment needed for taking meaningful US market share”. 

• Digital exit? Penn leadership “will eventually resort to strategic alternatives” rather than “sit on high-value Barstool/Score assets”. 

• “A transaction could value digital segments at $3.3bn” and “proceeds could be used for deleveraging Penn's 4.4x net debt to EBITDAR”, the analysts added.

MGM Resorts: Jefferies said the better-than-expected results “should be taken positively” with MGM demonstrating “strong execution against the growth opportunities in Las Vegas, Macau and in digital. The team noted the resulting cash flow generation was “driving outsized capital returns”.

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Newslines

Clairvest and ECL Entertainment have acquired historical racing machines licensing in New Hampshire. ECL owns and operates multiple HHR facilities in Kentucky.

Content provider Tallysight will supply its betting tips and picks to Sportradar, which the latter will distribute to its clients via its APIs and Insights platforms. 

Calendar

• May 3: Rush Street Interactive

• May 4: Penn Entertainment (E+M PM edition), Red Rock Resorts, DraftKings (earnings)

• May 5: DraftKings (call) – E+M Earnings Extra

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