Good morning. On today’s agenda:

• Realty Income buys a stake in MGM’s Bellagio from Blackstone.

• PointsBet features in the week ahead.

• Flutter and Better Collective are the subject of analyst takes.

• Startup focus is challenger exchange Novig.

I can't go for that, no, no, no can do.

Bellagio sale

Realty Income takes on Blackstone’s 22% stake in the Bellagio.

I came, I saw, I passed: Gaming REIT VICI has passed on the opportunity to grab a share of MGM Resorts’ Las Vegas flagship Bellagio while Realty Income has bought a 22% stake that values the property at $5.1bn.

• Blackstone’s own Real Estate Income Trust (BREIT) will retain a 73% stake.

• The sale of the minority stake has been occasioned by investor redemptions at BREIT last year. 

• The fund has sold $12bn of assets so far this year, prompting rumors of a Bellagio sale.

• Blackstone bought the Bellagio for $4.25bn in 2019 in what former CEO Jim Murren described as an “historic” transaction.

VICI poured cold water on the potential for it to get involved in a part-ownership of the Bellagio at the time of its Q2 earnings call at the end of July. CEO Ed Pitoniak suggested VICI was less interested in joint ventures compared to owning outright.

• “We’re not absolutely dogmatic, but it is our preference,” he told the analysts.

• He also pointed to VICI’s January deal for the 49% of the MGM Grand and Mandalay Bay, which it bought from BREIT for $1.27bn.

• “Our most recent deal in Las Vegas was the consolidation of what had been a joint venture, not the creation of a new joint venture,” Pitoniak told the analysts in July.

If the cap fits: Analysts at CBRE noted the Bellagio deal highlighted the “desirability and long-term underlying value of casino real estate assets”. They said the implied cap rate – the measure of the risk-reward in commercial real estate – from the deal is 5.3% compared to 5.8% when the original deal was done in 2019.

• The compression comes despite the pressures on the commercial real estate sector and rising interest rates.

• The team added that VICI’s non-involvement pointed to the REIT’s “disciplined approach to capital allocation and its long-term strategic priorities”. 

• They added that VICI “doesn’t necessarily need” more Vegas exposure while the “moderate accretion” from owning less than a quarter of the Bellagio was “probably outweighed” by the opportunity cost of keeping dry powder to explore more accretive or strategic opportunities.

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The week ahead

PointsBet has already given the market a sighter of what life after the US will look like when it reported its preliminary year-end numbers at the backend of July. The company said full-year net win for its continuing operations rose 7% to A$230m.

• The company will likely say more about its tech capability given it will keep a copy of its code post the sale of the US operations and Banach Technology to Fanatics for $225m in June.

Also reporting this week from Australia is games supplier Ainsworth, while on the same day Toronto-listed esports-led operator Rivalry updates.

Calendar

• Aug 29: Rivalry, Ainsworth

• Aug 31: PointsBet

• Sep 7: Playtech

Earnings in brief

Jumbo Interactive: The Australian-listed lottery platform provider noted that jackpot volatility had affected the business significantly with a record Q2 for ticket sales sandwiched between sluggish numbers in Q1 and Q3.

• Revenue for the full year rose 14% to A$119m while underlying EBITDA was up 7% to $59.9m.

• CEO Mike Veverka said player metrics remained “robust” despite the unfavorable jackpot backdrop.

Analyst takes

Flutter: Looking at the UK-listed firm’s plans to seek a dual listing in the US by Q1 next year at the latest, the analysts at CBRE said it will likely improve the US profile for Flutter and FanDuel, enhance recruitment and retention of US talent and provide access to deeper capital markets and new investors. The team noted that a possible primary listing would “pave the way for improved valuation”.

Better Collective: The team at Redeye said the superaffiliate’s earnings last week were “clearly above forecasts” with revenue of €78m some 12% up and EBITDA of €29.2m some 50% ahead of where Redeye had its own numbers. 

• It has left the team to raise their estimate for the year to the top end of Better Collective’s own estimates.

Startup focus – Novig

Who, what, where and when: Founded by recent Harvard grads Jacob Fortinsky, CEO, and Kelechi Ukah, CTO, Novig says it is the first “high-frequency, commission-free” sports-betting exchange. It is set to make its debut in Colorado in October via a market access agreement with Full House.

Funding backgrounder: Novig has just this month raised $6.4m in seed funding led by Lux Capital and Y Combinator. Participation also came from Paul Graham, Joe Montana, Soma Capital, Innospark Ventures, Rebel Fund, Bayhouse Capital and others.

Haunted house: Fortinsky says everyone betting against the house is “just a pawn” in the game of the sportsbooks. He says that given the amounts being bet in the US, there exists a “huge opportunity to provide a fairer, more efficient platform for casual bettors, sharps and institutional traders”.

• Novig says the betting sector has “not seen serious technological or product innovation in years”. 

Show me the money: Novig’s revenue will come from charging institutional traders, data monetization and internal market making, says Fortinsky. “By shifting away from the exploitative business model that dominates the industry, we seek to build a platform where winners are welcome and all players have a realistic chance of making money,” he adds.

• From A to beta: It has formed a proprietary quant research team that has developed “extensive methodology to simulate sporting events”.

• It will be offering money lines, totals and spreads as well as more exotic derivatives such as halftime markets, player props and even same-game parlays.

A long-term play: Fortinsky believes that over time there will be trillions of dollars wagered on “fair, efficient, technology-enabled exchanges” as opposed to on standard sportsbooks. “We want to position ourselves to capture the lion’s share of that liquidity,” he adds.

Growth company news

GeoComply has announced initial details for its Challenger Series event taking place ahead of G2E in Las Vegas on October 8. Following on from a successful event in New York in May, the event will once again provide a unique networking opportunity to learn from US iGaming founders and entrepreneurs.

Former ESPN fantasy analyst Matthew Berry has raised $2m in seed round fundraising for a media company called Fantasy Life focused on fantasy sports and sports betting. 

• Investors include Buffalo Bills quarterback Josh Allen, Jacksonville Jaguars owner Tony Khan and LRMR Ventures, the family office of LeBron James and Maverick Carter.

Mooir Gaming has signed up with Gig to provide the gaming backend to its upcoming W6 online casino brand launch that is due in early 2024.

NASCAR has reached a multi-year partnership with nVenue, a Dallas-based startup that will develop in-race micro betting markets and predictive content.

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Career paths

Allwyn Entertainment has promoted Martin Novák as data director of Allwyn UK for the National Lottery. Novák previously served as senior manager.

The Alcohol and Gaming Commission of Ontario appointed Karin Schnarr as its CEO and registrar. Schnarr will replace Tom Mungham, who is retiring September 18

Yggdrasil has announced that Bjorn Krantz is to step down as its CEO. He will be replaced by James Curwen.

Churchill Downs has promoted Betsy Janes to senior VP of government relations and Justin Paul to senior VP of operations.

Newslines

The Nevada Gaming Commission approved Fertitta Entertainment’s acquisition of Hard Rock Lake Tahoe Casino Resort.

The Pennsylvania Gaming Control Board approved Fanatics’ acquisition of PointsBet Pennsylvania, clearing the way for Fanatics Sportsbook to launch.

Exchange wagering platform Sporttrade has received its Colorado sports-betting operator license.

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