Good morning. On today’s agenda:

• Entain issues a warning on Q3 and FY revenues.

• New York handle is up for the first three weeks of the NFL season.

• Playtech buys a further slug of NorthStar Gaming.

• Betr’s good news/bad news week.

• Startup focus looks at GeoComply’s G2E Challenger event.

I hope you’re happy now.

Entain’s warning

The company says NGR will be down on a pro-forma basis for the full year.

The kitchen sink: Entain blamed, variously, adverse sporting results, persistent headwinds from the implementation of safer gambling measures in the UK and slower growth in Australia and Italy for a likely “high single-digit” fall in predicted pro forma revenue in Q3. 

• It means FY23 group NGR will be down by “low single digits” while absolute NGR, including the additional revenues from acquisitions, will be up by a low single digit.

• The company reiterated FY23 EBITDA to be in the range of £1bn-£1.05bn.

• On the plus side, it said BetMGM “continued to perform well” and remained on track to produce “positive EBITDA” for FY23.

• Elsewhere, it saw “good underlying growth” online with strong performances from recent acquisitions, particularly SuperSport in Croatia.

• Entain added that it saw a “robust performance” in retail.

Remedial classes: The company said “ongoing actions to accelerate operational performance and drive shareholder value” were in progress. CEO Jette Nygaard-Andersen said Entain had made “significant changes” to the group over the last three years. 

• “Our focus now is on accelerating the actions we are taking to drive sustainable organic growth, expand our margins, capitalize on the US opportunity and deliver long-term returns for our shareholders,” she added.

File under ‘you don’t say’: The shares were down nearly 5% in early trading. Jefferies said “we sense confidence around the prop of a further MGM approach has ebbed in recent weeks”. 

Key date: Entain will report a Q3 trading update on November 2.

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NFL’s leading indicators

Handle receives boost in first three weeks of the NFL season.

That’s the way I like it: Handle in New York rose 26% in the first full week of the NFL season to $416m and in the second full week it was up 35% to $416m. In the pre-season boosted partial week to September 3 it was up 28% to $313m.

• In GGR terms, the picture was more mixed with the first full week up 74% to $56.6m but the second full week down 29% to $28.4m.

• Analysts at Jefferies suggested the handle figures pointed to a “strong start” and that the early signs across the market showed there was increased player engagement and activity.

Two against the field: The team also noted a further concentration of market share between FanDuel and DraftKings. FanDuel’s share of handle hit 41% over the first two full weeks, up 3ppts YoY, while DraftKings's 39% was up 4ppts YoY. 

• This came at the expense of Caesars, which dropped 3ppts YoY to 10%, and BetMGM, off by 2ppts to 6%.

• In GGR, meanwhile, FanDuel (51%) and DraftKings (35%) held an even firmer grip of the market.

🏈 First three weeks of the NFL season in New York

Updraft: Paying a visit to DraftKings HQ, the team at JMP suggested they “get the sense” the revenue for the company is trending “well above” the implied guidance of $655m for the quarter, leading them to increase their own Q3 estimate to $701m. “Street estimates could prove conservative,” the team added. 

• JMP noted there have been “large swings across game and player outcomes” from both NFL and College ball betting. 

• “Player props have become an important driver of bet mix, speaking to the product evolution compared to years past,” the team said. 

Penn’s priority

The imminent launch of ESPN Bet is a “priority” for both partners, suggests Wells Fargo.

Mission statement: Penn management is expecting ESPN Bet to grab an “elevated” market share in its initial November launch period before stabilizing at “high double-digit level”, according to the analysts at Wells Fargo. The analysts also reported Penn as saying that “being in New York is critical”.

• Following meetings during its annual conference in California, the team said the key launch focus will be on New Jersey, Pennsylvania and Michigan, i.e. key iCasino states and not necessarily ones where Penn has a physical presence.

• The team added the “biggest unknown” is the product/platform. 

• “Penn is adamant that ESPN Bet will be deeply integrated via all things ESPN,” the analysts said. 

• But ESPN Bet’s success will “come down to its product, which management is confident can be competitive”.

• It acknowledges customers will “take ‘free money’ from promotions, but keeping customers will depend on product and user experience”.

Apple core: On the potential for gaining entry to New York, the team suggested that, while the high tax rates make the economics tricky, Penn “thinks it could likely be breakeven or better with double-digital share”. 

• Penn doesn’t currently have a license in New York (blame Portnoy) but there is the potential for taking over the license of departing players such as WynnBet.

• “Two or three licenses could be up for grabs,” suggested Wells Fargo.

• Meanwhile, ESPN’s home state of Connecticut could also be targeted after Rush Street recently exited its deal with the lottery.

• While a replacement agreement is “likely in the late stages” of negotiation, Penn “didn’t rule out the eventual possibility of a fourth operator there” alongside incumbents DraftKings and FanDuel.

M&A notebook

Playtech agrees to buy a further C$10m of NorthStar Gaming shares.

Fuel injection: The deal for C$10m of securities includes warrants fixed at various price levels and a C$5m convertible debenture price at a payable-in-kind interest rate of 8%. The company said the new cash would partly go towards potential further acquisitions as well as general working capital purposes. 

• Alongside the Playtech money, the current management team will also chip in a further C$250k, half for shares and half as a similarly structured convertible debenture.

• The company also has the right to issue a further C$250k of shares and C$250k of convertible debentures to “arm’s length particles”.

• The new financing is expected to be completed by Oct23.

Recall, NorthStar issued a going concern notice at the time of its Q2 earnings in August. It said at the time it was pursuing a private placement for at least C$10m. Playtech subsequently said it was in talks about further investment. It previously converted a loan of C$12.4m into a 16% shareholding in NorthStar.

Betr days

It’s a good news, bad news combination for the Florida-based challenger brand.

Betr to be talked about: Days before receiving a cease-and-desist letter from the authorities in its home state of Florida, the micro-betting-to-DFS operator snapped up the player base of No House Advantage.

• CEO Joey Levy said on LinkedIn of the NHA transaction that it came as its Betr Picks business, launched at the start of August, had “quickly established itself as a leading fantasy sports operator in record time”.

• No House Advantage had been up for sale for some time, with what one advisor told LegalSportsReport.com was a “laughable” price tag of $10m-$15m.

You’re still thinking about the bad news: However, the NHA news was overshadowed by developments in its home state where the Florida Gaming Control Commission has issued cease-and-desist letters to at least three DFS operators.

• The letter says that Underdog Fantasy, Prize Picks and Betr Picks have been “offering or accepting illegal bets or wagers from Florida residents”.

Analyst takes

Evolution: While the live casino giant is likely to hit its consensus estimates for Q3 revenue of €465m and adj. EBITDA of €326m, the team at Jefferies suggested there is no expectation of any “materially improved” trends in RNG while the subdued US growth will likely persist as “growth lags investment”.

• Still, the team suggested there will be “no material competition” in the US, with Playtech as the only competitor in terms of live casino studios.

• “Competitive activity may step up in H2 with the arrival and ramp-up of a third competitor (Light & Wonder’s Authentic Gaming), although we have seen no sign of any material change,” they added.

• M&A “could be a possibility” as could a share buyback as the cash pile continues to grow. As of the end of June, Evolution had cash on hand of €542m.

Key date: Evolution will report its Q3 earnings on October 26.

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Shares watch

MGM Resorts hits a losing streak.

Shot by both sides: MGM Resorts will doubtless be hoping it is over the worst after its cyberattack a fortnight ago, and the same will go for shareholders. But the 10% fall last week was a signal that there is still unease about the company’s vulnerabilities and about the potential for long-term harm to the brand.

🥷 MGM Resorts slips over 10% following hack

Startup focus – GeoComply Challenger Summit

The second Challenger Series Summit, in partnership with Citi, is to be held in Las Vegas on Sunday October 8.

Gather round people: Following on from its inaugural event in New York in May, GeoComply and Citi have pitched together once more with a pre-G2E version of the Challenger series, bringing together sector founders and entrepreneurs to share their knowledge.

• Participants for this edition include Paul Liberman, one of the founders at DraftKings, and Lesley Eccles, currently in charge at HelloRelish and formerly co-founder with Nigel Eccles of FanDuel.

• Also taking to the stage will be Joey Levy, CEO at the in-the-news Betr (see above); Nik Robinson, founder at Big Time Gaming; Nan Wang, founder at Sleeper; Matt Davey, CEO at Tekkorp Capital, Anna Sainsbury, CEO at GeoComply; David Briggs, co-founder of GeoComply; and Andrew Fabian from Citi.

Briggs said the feedback from the New York event had been “exceedingly positive”, adding that being able to bring some of gaming’s top founders and entrepreneurs into one room to discuss future challenges in the North American market was “invaluable for all emerging business owners”.

• The Las Vegas version will cover topics such as dealing with hyper-growth, payments, product innovation, marketing and post-exit strategy.

E+M@GeoComply’s Challenger event: Scott Longley from Earnings+More will be posing the questions to Eccles and Wang during a panel entitled ‘Navigating the Marketing Maze’.

• The event takes place at the Bellagio between 2pm and 6pm on the 8th. Those wishing to attend should click here.

Growth company news

The Betting Startups newsletter provides a guide to startup founders on how to survive and thrive at G2E.

Simplebet launched micro-betting markets at the LIV Golf Chicago tournament this past weekend with Hard Rock Bet.

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Career paths

The big move: Jonas Warrer has taken over as temporary CEO at GiG after current boss Richard Brown resigned ahead of his due departure date. Warrer was due to take over as the CEO of GiG’s media division when it splits from the sportsbook and iCasino backend provision business later this year.

• Brown is set to join Glitnor later this year.

• Meanwhile, Richard Carter, ex-CEO at SBTech and Bragg Gaming, is set to join as CEO of the backend provision business at the end of the year.

Bally’s has appointed Tammi Barlow to the newly created position of VP of global responsibility and social impact, and Don Westcott as SVP, global chief compliance officer. 

Kostas Antonetsis is the new CFO at Intralot.

Newslines

Barstool glitch: Sharps apparently took advantage of a technical slip up last Sunday (Sep 17) during the NFL game between the New York Giants and the Arizona Cardinals. According to Sports Handle, technical issues during the game prevented several player prop bets from updating.

Calendar

• Sep 28: XLMedia

• Oct 8: GeoComply Challenger event, Las Vegas

• Oct 9-12: G2E, Las Vegas

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