Good morning. On today’s agenda:

• BetMGM heads the list of companies reporting this week.

• Churchill Downs, Boyd Gaming and the REITs are also scheduled.

• DB suggests GGR will struggle to grow in Q3.

• Analyst takes on the new Barstool app and Gambling.com.

• The startup focus is gamification provider Scrimmage.

I've now such lots of money, I'm a gent.

The week ahead

BetMGM, which reports on Thursday, will be a key beneficiary of Entain's recent Angstrom acquisition.

Friends with benefits: Analysts might well still view the 50/50 joint-venture structure of BetMGM as being, in the words of the team at Truist last week, “sub-optimal”, but it nonetheless continues to enjoy the fruits of what each half brings to the party.

• Monte Carlo or bust: Adding Angstrom’s pricing and analytics offering will bolster BetMGM’s capability in the key battleground of parlays.

• Recall, last week E+M reported sources suggesting the £203m deal compared favorably with Banach, which was initially bought by PointsBet in 2021 for $43m and was recently included within the $225m Fanatics deal for PointsBet’s US business.

• This comes as analysts noted a recent “deceleration” in market share trends for BetMGM. 

• “Product enhancement remains a key point of discussion,” said Jefferies in a recent note on MGM Resorts.

You are what you eat: Still, the impact of owning Angstrom on the product offering won’t be immediate; the deal doesn’t close until later in the current quarter. 

• Also, as analysts at Peel Hunt noted, Entain is currently digesting £2.4bn of M&A since 2021, and the latest deals – including the £750m paid for STS, the deal with the New Zealand TAB and the 365Scores acquisition – “will take a while to pay off”.

It’s been a while: The last BetMGM trading update came in January when it said revenues for 2022 came in at $1.44bn, ahead of prior guidance. EBITDA losses came in at $440m. It predicted at the time revenues of $1.8bn-$2bn for 2023.

• Key to the reaction on Wednesday will be what the company says about its projections for EBITDA positivity in H2.

• Recall, in mid-July E+M wrote about how BetMGM was markedly pulling back on promo spend even as the rest of the market actually spent more in May. 

A deeper dive: In tomorrow’s edition of the Data Month, E+M delves into the recent market share performance of BetMGM.

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Further lookouts

Happy shoppers: A temperature check on the health of the regional gaming consumer will feature later this week with Churchill Downs (call) and Boyd Gaming reporting Thursday. 

• The team at Wells Fargo have noted recent softness in the Q2 state-by-state numbers, though any downward pressure on Boyd may be aided by Strip strength spillover in its Las Vegas downtown operations.

• While a regional downturn is also a risk for Churchill Downs’ HHR operations, the Macquarie team noted it stands out due to its 12 expansion projects and the ongoing benefits from the PPE acquisition.

Primed properties: The broader economic climate is weighing heavily on the prospects of the leading gaming REITs VICI and Gaming & Leisure Properties, according to analysts at Deutsche Bank who say they are perplexed at valuations holding up well despite interest rate rises.

• Meanwhile, M&A is becoming harder to source as financing costs, more competition and fewer portfolios of scale available have forced the REITs to be “more resourceful when seeing deals”.

• It has led to what DB said is “more tempered accretion” in recent transactions.

• “At this juncture, we struggle to see how this changes materially in the near term, given the current landscape,” the team added.

Also in the spotlight this week: Kindred will be hoping to avoid any more earnings pratfalls on Tuesday when updating on its ongoing strategic review and management, while OSB supplier Kambi is up on Wednesday and Lottomatica on Friday.

Calendar

• Jul 25: Kindred

• Jul 26: Kambi, BetMGM, Churchill Downs (e), VICI (e)

• Jul 27: Churchill Downs (call), VICI (call), Boyd Gaming, GLP (e)

• Jul 28: PointsBet, GLP (call), Lottomatica

OSB outlook for H2

Deutsche Bank predicts a reversal in GGR fortunes in the second half of the year.

Pales in comparison: With the paint barely dry on the state-by-state numbers from the first half, the analysts at Deutsche Bank suggested there will be a “notable GGE deceleration” in the US OSB market in H2 as operators lap easy hold comps from last year.

• The team pointed out that growth across eight key markets that they have tracked is likely to come in at ~35% in H1.

• But they suggested the growth has been “entirely hold driven” as handle across the eight has been negative.

• The analysts showed that, across the eight, handle through May stood at $24bn while GGR was ~$2bn, implying 9% hold.

• Compared to the same period in 2022, handle was down ~3% but GGR was up ~31%. The rise is therefore explained by a 223 bps improvement in margins.

• But hold margins “stiffen markedly” in H223

🚧 OSB hold comps gets tougher in the second half

Analyst takes

Barstool: The team at EKG have provided some instant analysis of Penn Entertainment's new Barstool app and suggested the move from the Kambi/White Hat combo is a “slight upgrade” on previous efforts.

• EKG noted that Penn had somewhat scapegoated its poor Barstool performance on what the company called a “really substandard” OSB product.

• The new app is based on the same tech as utilized recently by theScore in Ontario.

• According to EKG’s tester, the new app was “aesthetically pleasing and easier to navigate”, with a wide range of props and markets. 

• But they added that “the real test” will come as the platform “takes the strain” from 16 US states and NFL Week One, which will provide a “major test of stability”.

Gambling.com: In initiating coverage the team at B Riley said major US operators had confirmed their plans to diversify “from broader marketing channels to more direct customer acquisition strategies” such as affiliate marketing. 

• This more targeted strategy signified the “beginning of a maturation process” to profitability and noted that operators’ affiliate spend in the UK was 3x that of the US.

Lottery.com saga

The company lives on with an unspecified funding agreement and more boardroom hopscotch.

United we stand: The troubled lottery reseller says it has reached a funding deal with a backer called United Capital Investments London for a sum that will be publicized once a definitive agreement is reached.

• United Capital is run by Mark Battles, a Scottish angel investor who has been a board member at Lottery.com since November last year.

• The company also announced another top table reshuffle: CEO Mark Gustavson’s contract having been terminated, he has been replaced by chair Matthew McGahan.

• A new CFO Robert Stubblefield has also been appointed. 

Going, going…

Following the closure in New Jersey, PlayUp has now pulled operations in Colorado.

And now the time is near: PlayUp’s US adventure appears to have come to a close after the company asked the Colorado state regulator to put operations in the state into “maintenance mode”, according to comment from CEO Daniel Simic to LegalSportsReport.com.

• This follows last week’s closure of the New Jersey operations by the regulator, which wrote to PlayUp late last week to request more information on its finances including claims for unpaid wages.

• Denial is a river in Egypt: Simic continues to maintain that PlayUp will relaunch in the US at an unspecified point in the future. He insisted to iGB late last week that the sale of the US business “remains on track”.

Startup focus – Scrimmage

Hut! It’s not often that a startup owes its origins to a hedge fund, but such is the case with Scrimmage, which was borne out of Gibraltar-based Fremont Capital Partners. Founder Dan Taren says that while the hedge fund had some success, he and co-founder Matt Dever were “constrained by regulation” and rethought the model.

Funding backgrounder: The company has raised ~$750k from Eberg Capital, IA Sports Ventures and the Techstars Sports Accelerator.

So what’s the big idea? Scrimmage builds “gamified loyalty programs” for operators that integrate directly. Taren’s emphasis is on the gamified element.

• “Scrimmage fills a gap by creating a loyalty game that allows bettors to be creative, to customize their experience, to progress, to be challenged, to share in the experience with other bettors, and so on,” he says.

• Having tested the product in a B2C environment – and seen good results – the founders turned the tech into a white-label product.

• “Subsequently, we have had six letters of intent signed from different types of iGaming operators, with integrations set to begin this summer,” he adds.  

Stick it on the mantelpiece: Scrimmage recently won the SBC First Pitch competition in May. Next moves include allowing more operators to integrate easily and providing more flexibility for bespoke requests.

• “Our technology is flexible, scalable and can be tweaked to work for a significant number of industries. If we can execute that plan successfully, we will have a lot of different options,” Taren adds.

Growth company news

Glitnor has announced its intention to acquire a 37.5% stake in PlayStar Gaming. PlayStar was founded by Joel Wikell and is headed by CEO Per Hellberg.

Scout Gaming has launched an exclusive fantasy soccer game for the current Premier League season in partnership with bet365.

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Career paths

Moves are afoot at 888 where the company remains without a permanent CEO. The company has appointed Alexis Zamboglou to be managing director for its UK and Irish operations. He was previously UK marketing director at William Hill. 

• Meanwhile, Yariv Lavi is stepping down as director of business development, a position he’d held since November 2009.

• Lastly, the company announced that Andria Vidler will resign from the board of directors effective September 30 after landing the role of UK CEO at Allwyn Entertainment.

Codere has appointed Luis Villalba as CFO. He previously served as the FD at Deoleo. The company has also hired Sonia Carabante as corporate director of commercial strategy and business projects.

At IGT, CEO Vincent Sadusky will assume the additional responsibilities of CEO of the company’s global lottery segment formerly held by the late Fabio Cairoli.

Sam Allanson is the new CFO of Rank Interactive. He previously worked as the commercial FD for Entain.

Bede Gaming has a new CTO in Dan Whiteley, who previously held senior leadership positions at Jugo, CTS, and Flutter.

Newslines

Demolition derby: Bally’s is waiting on the Oakland A’s to finalize the design process for its new stadium before sending in the demolition crew, according to chairman Soo Kim speaking to the Las Vegas Review-Journal.

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