Good morning. On the Weekender agenda:

• Codere Online says Brazil is a no-go for now.

• Shares watch takes a look at GAN’s post-earnings slump.

• Sector watch looks at the earnings from social gaming.

• Analyst takes features NeoGames, Golden, Inspired and AGS.

• Jobsboard by BettingJobs includes CMO and Digital Marketing Manager roles.

Na-a-da, na-ah, na-a-da, No, no, no, no.

Breaking 

Brazil’s Ministry of Finance has confirmed that the sports-betting tax rate will be set at 16% of GGR, with 2.5% of the taxes earmarked to fight match-fixing and money laundering. The news was published yesterday as the country finalizes its OSB regulatory framework. The income tax on players’ winnings will be 30%, with all fees and taxes allocated to “public safety, education, sports clubs and social actions”.

Codere’s Brazil doubt

Codere is unlikely to take advantage of the opportunity in Brazil, at least for this year.

Pastéis de nada: Executive chairman Moshe Edree said that while the likelihood of sports betting in Brazil was an “obvious opportunity” for Codere, the company didn’t have any brand presence in the market. “It’s like a separate continent,” he added,

• “On the one hand, we have the set-up that would allow us to build a proxy in Brazil,” Edree said.

• But Codere is “not a well-known brand like [in] Mexico or Colombia”.

• “To start from scratch would require tens of millions, so for us it is not a priority. So, I don’t see any real movement [for Codere] in Brazil in 2023.”

• Spain remains the company’s biggest market with revenues of over €18m, up 40% YoY out of total revenues of €40m.

• CFO Oscar Iglesias said the ad restrictions in Spain were helping incumbents. 

• Net losses came in at €1m vs €10m this time last year.

Duking it out: The company is seeing more progress in Mexico, which is closing in on being the company’s biggest market with revenues for the year of €18m, up 75% YoY and 8% up QoQ. “Our biggest competitor is still ruling the market with heavy investment everywhere,” said Edree. “We are trying to compete as hard as we can.”

• In terms of market share, he said the company was able to increase its share YoY and even QoQ. “But the competitor landscape is very harsh,” he added. 

• Still, Codere’s “infrastructure is very solid” and the brand is “growing very strongly”, he said. “We’re only a year in on our brand building,” Iglesias added. “We are seeing the momentum.”

Rumpus in the pampas: While Codere Online has successfully applied for and received a license in the Mendoza province in Argentina, and continues to pursue a license in the province of Buenos Aires, the company said it has formally withdrawn from the tender process in Cordoba. 

• CEO Aviv Sher said this was due to the “lack of a viable tax structure”.

• The company is also pulling back from the Columbia market, which Iglesias suggested was sub-scale with revenues flat at just over €2m. 

• “Given the substantial opportunities we are seeing in other core markets, we have decided to reduce marketing spend in this market in an effort to reduce losses,” he said.

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ICYMI

In Earnings+More this week, we reported on Fanatics Betting & Gaming CEO Matt King’s suggestion that the company would benefit from a second-mover advantage as it moves towards its debut OSB launch.

Fanatics prepares to challenge

Earnings+More · May 11

Good afternoon. On today’s agenda: Fanatics has the ‘luxury’ of being a second-mover, says CEO Matt King. Sportradar points to potentially transformational AI investments. GAN shies away from giving forecasts in shadow of ongoing review. NeoGames talks up iLottery advances.

Read full story

Also this week, Deal Talk suggested Entain and MGM were now engaged in a competitive pissing match of M&A deals.

In Compliance+More this week, it looks likely that Vermont will make it a clean sweep for OSB states in the northeast. Also, the phantom that is New York iCasino was once again revived by Sen. Joseph Addabbo during SBC’s North America Summit, who said it was a “when not if” situation.

Shares watch – GAN

You’re still thinking about the bad news aren’t you? No matter that CEO Dermot Smurfit was able to open the call with analysts talking about an extended deal with FanDuel, the company still saw its shares take a further tumble yesterday, down nearly 8%.

• Smurfit said on the call that the strategic review was continuing.

😬 GAN down post-earnings

Earnings in brief 

Renewed Zeal: Revenues rose 6.3% for German lottery group Zeal to €27m in Q1 and adj. EBITDA was up 4.2% to €9m. During the period co-founder Marc Peters stepped down from the company’s board to join Circl Gaming, a games start-up that is part of the Zeal investment portfolio, and its online casino subsidiary Lotto24 AG was approved for a slot license by the gambling regulator GGL. 

Analyst takes 

NeoGames: Analysts at Macquarie said that while iLottery legalization in the US has been slower than most expected, the team believes NeoGames remains “primely positioned for new states as they arise, given the strength of its tech and its leadership in nearly every iLottery KPI”. 

• “Additionally, the Aspire platform provides geographical diversification and opportunities to win deals that NGMS could not pursue alone,” they added.

Golden Entertainment: The disruption caused by the ongoing renovations at the Strat were a near-term headwind, suggested the team at JMP. While similar disruptions will have continued in Q2, looking into the back half of the year the team believe these headwinds will subside.

Inspired: The analysts at B Riley believe Inspired’s business mix “should carry a premium versus brick-and-mortar weighted supplier peers”. The team added that they believe Inspired “remains in close discussions” with existing and multiple new lottery customers about its NFL virtual sports license.

AGS: Credit Suisse said that there continues to be a disconnect with AGS shares vs its peers but the team added that until the economic picture becomes clearer that is likely to persist. “It may be difficult for shares to re-rate until the macro is more certain,” they said.

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Sector watch – social gaming 

Beats all round for the leading social casino operators in Q1. 

The Macquarie team noted that Playtika reducing staff numbers by 15% since December had “not meaningfully affected core operations, at least for now”.  

• Playtika revenues were down 3% to $656m in Q1 but still beat forecasts by 12%, while adj. EBITDA increased 13% to $223m. The group’s balance sheet showed a credit of $768m at March end. 

• Social casino was down YoY but up QoQ and revenues were driven by casual gaming products such as Bingo Blitz and Solitaire. 

• FY guidance was maintained for group revenues at $2.57bn-$2.62bn and EBITDA at $805m-$830m. Macquarie added that “margins should benefit from the addition of two more games to the direct-to-consumer platform”. 

Despite Double Down Interactive’s Q1 revenues dropping 9% to $78m and adj. EBITDA being down 6% to $25m, the team at B Riley said the group had produced its “best EBITDA margins in six quarters” at 33% and noted that it had more than $100m in “uncommitted capital” .

• CEO In Keuk Kim said the figures were “solid” and included “the first quarterly sequential revenue increase in eight quarters”. The group will allocate capital to integrate SuprNation, which it agreed to purchase in January for $35m. 

• Near-term catalysts included continued FCF, while SuprNation was “a unique, highly synergistic acquisition” because of DDI’s ability to produce new slot content on a near-weekly basis, added B Riley. 

Macquarie noted “another quarterly beat” for SciPlay as revenues rose 18% to $186m and adj. EBITDA was up 21% to $53m in Q1. The group continues to deliver “strong growth and take share while peers struggle”, the analysts added.

• Even though costs should rise this year due to increased headcount “to support long-term growth”, SciPlay focuses “on ROI and data-driven decision making”. 

• “We think this speaks to [its] growth, strong balance sheet [$358m net cash] and FCF generation,” added Macquarie.  

At PlayStudios, CEO Andrew Pascal said the growth of the group’s portfolio now included titles such as Tetris, myVEGAS Bingo and MGM Slots Live and had enabled it to gain footholds with new players and partners in Q1, while established products performed as expected in the period. 

• As revenues grew 13% to $80m in Q1, adj. EBITDA nearly doubled to $18m and net losses were trimmed back to $3m vs. $25m in Q122. The group upped FY guidance to $305m-$325m (vs. $300m-$320m) and EBITDA of $50m-$60m (vs. $47m-$52m). 

• Macquarie noted “management’s confidence” while the group’s use of “generative AI for the prepared remarks” on the analyst call highlighted its embrace of technology.

What we’re reading

Five from five: EKG’s look back on five years since PASPA’s repeal.

Newslines

Kindred, Betsson, Mr Green, Danske Spil and online casino group CEGO A/S have committed DKK12m ($1.8m) to establish the Danish Gambling Committee and fund research into addiction and problem gambling. 

On social 

PointsBet CEO’s no show

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Calendar

• May 16: Better Collective, Due Diligence #7

• May 17: Catena Media, Acroud 

• May 18: Aristocrat

• CMO  – Remote (Chinese Speaking) 

• Digital Marketing Manager – Australia & New Zealand 

• CMO  – Remote

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