Good morning. On today’s agenda:

• Flutter has acquired a controlling stake in MaxBet for €141m.

• GAN loses its CEO amid ongoing strategic review.

• Genius unveils its streaming plus betting odds proposition.

• NFL hold, downloads and handle examined by the analysts.

Luck has left me standing so tall.

Flutter’s golden bolt-on

Flutter has snapped up a 51% stake in the Serbian bookmaker MaxBet for €141m.

Stepping up to the podium: Flutter said the purchase of the majority stake in Serbia’s number two operator gave it a “podium position” in a market that it says has a CAGR of 25% for the past five years. 

• As part of the deal, Flutter will be able to buy the remaining 49% in 2029. 

• It added that an unspecified further payment would be made in 2023 if the company exceeds its expected financial performance this year.

• In the LTM MaxBet generated pro forma revenues of €145m, of which 55% was from its retail operations and 45% online. 

• Adj. EBITDA was €32m and Jefferies said the multiple was 8.6x EV/EBITDA, which “looks reasonable compared to other sector deals”.

Balkanization: Flutter said that the online operation controlled ~20% of a market that was worth ~€700m in 2022 and is growing at a CAGR of ~15%. The company also operates ~400 retail outlets and employs 2,400 staff.

• 89% of revenues come from Serbia, while the company also operates in Bosnia, Montenegro and has a retail-only footprint in North Macedonia.

Nice to have: Flutter CEO Peter Jackson said the addition of MaxBet continued the company’s aim for its international division to “buy and build podium positions in regulated markets”.

• Last week at the SBC Summit in Barcelona, Flutter International CEO Daniel Taylor said bolt-on M&A provided a “useful platform for growth”.

• “We aim for the gold medals,” he told the audience. “Fundamentally we believe that it is important to have leadership positions in the markets we care about.”

• “We are believers that striving for scale allows investment and high-revenue growth, drives greater operational leverage back into the business, drives more scale and that repeats.”

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Smurfit resigns

GAN sees its CEO and major shareholder resign with immediate effect.

Hospital pass: Dermot Smurfit is handing over the reins at the OSB platform provider to non-executive chairman Seamus McGill in the midst of an ongoing strategic review and with the company having lost a large customer after WynnBET shuttered the majority of its operations.

• McGill has served on the GAN board since 2014. He was recently CEO at mobile software outfit JOINGO and prior to that spent five years at Aristocrat.

• The company said it was “evaluating” a consulting arrangement with Smurfit, who founded the company and led it through to a Nasdaq IPO in May 2020.

Pointing out the obvious: Analysts at Macquarie said uncertainty over the future of the company “remains high”. While noting that McGill’s appointment might steady the ship, the team pointed to the share price performance as suggesting any remaining investors have lost faith.

• The team added that GAN has still not launched its sports-betting products with Station Casinos (Red Rock Resorts) in Nevada almost two years after the deal announcement, which raises more questions.

• On announcing a strategic review in March, Smurfit said the company would focus on areas where it could “truly win” including with its LatAm-focused B2C Coolbet operation.

• The company said at the time of its Q2 earnings it had received “indications of interest” from bidders to acquire all or some of the business.

• Macquarie said its hopes “completely rest” on the company’s ability to “create near-term and long-term value during the imminent strategic review decision”. 

😱 GAN shares are down over 90% on their float price

Vision on

Genius unveils its streaming plus betting odds proposition.

I can see clearly now: Data and betting supplier Genius Sports has unveiled its BetVision product, which combines live streaming, real-time augmentations and integrated bet slips on the one screen. The offering will go live first with the Caesars and Fanatics sportsbooks.

• The company said each operator will stream nationally distributed and local, regionalized live NFL games each week. 

• Over the course of the 2023 NFL season, additional features and functionality will be added. 

• Analysts at JMP suggested more operators would follow.

• “In-play betting and the capability to watch matches from a mobile device have been a proven driver of gaming revenue across international markets for decades,” the team added.

• Despite the “slight headwinds” of low latency and the high levels of stoppage of play, they see the in-play shift as occurring “over time”.

Datalines

Best yet: Week 3 of the NFL season was “the best week of the season” in terms of hold, on the back of three of the biggest underdogs in the outright markets winning, according to the team at JMP. “Season to date, we believe handle and hold are trending well above expectations,” the team added.

• The team at Macquarie has calculated NFL hold for the week Sept 8-14 as coming in at 12%, above the long-term average of 9%.

• They estimated the NFL was worth 67% of all football betting over the week.

Surprise! Deutsche Bank analysts have suggested the handle numbers from the early stage of the football season have shown a “sudden acceleration” YoY. However, despite this “meaningful uptick”, GGR growth is “slowing considerably in the Q3 to date,” they added.

• Delving deeper into the numbers, DB suggested one possible explanation for the handle uplift is the “promotional influence”. 

• From the states where promo activity is measurable, the team noted there has been an uptick.

• 🧐 In Pennsylvania, Michigan and Connecticut, they indicated a correlation between the 7% rise in promotions since May and the YoY handle improvement.

Downloads

Everything must go: The team at JMP suggested that download data appeared to be accelerating, with app downloads for week 3 of the NFL season rising 35% YoY. The team added that FanDuel led the way with 31% share, with DraftKings on 30%. 

• They also noted a sharp WoW slowdown in Fanatics/PointsBet share, which they attributed to the $150 promotional credit for the Fanatics store ending in the prior week. 

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Analyst takes – Kindred

The recent hike in Swedish tax rates is a headwind Kindred could have done without.

Regulatory pile up: The rise of the Swedish tax rate from 18% to 22% announced last week adds a further incremental headwind to a lengthening list of regulatory headaches for Kindred,  including the exit from Norway and issues in Belgium, suggested the team at Jefferies.

• In response, the analysts have trimmed their estimates for Q3 while they await the outcome of the ongoing strategic review. The team estimates FY23 EBITDA of £202m vs. company forecasts of “at least £200m” and consensus of £208m.

Why we fell in love: The Jefferies team pointed to the “reasons to like Kindred”, including its scale in Europe, its regaining of top spot in the Netherlands and its growth in the UK. 

• But they are also keen to hear whether the launch of the proprietary platform in New Jersey has had any impact.

More analyst takes

Entain: the team at CBRE said that while Entain didn’t specifically cite consumer weakness as a reason for the revenue warning on Monday, the 13% decline in the share price suggested it “seemingly struck that chord with investors”.

• “After a flurry of M&A activity, an untimely equity raise, an unfavorable settlement related to the HMRC investigation and now a reduction in guidance, investors are showing signs of frustration,” the team added. 

• Still, they suggested the shares are now oversold.

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Newslines

Star Entertainment: The Australian casino operator has launched a A$750m ($478m) cash call. According to the Australian Financial Review, included in the restructure is a A$450m debt package backed by Barclays and Westpac.

Las Vegas Sands: Almost 90% of Sands China’s hotel rooms are booked for Golden Week in Macau but gaming revenue is still expected to fall short of pre-pandemic levels, according to Sands China president Wilfred Wong in Hong Kong’s Sing Tao Daily.

Everi says its fintech subsidiary says it has won its patent dispute with Sightline.

Everything coming up Rosies: Churchill Downs has opened its newest Rosie’s Gaming Emporium in Virginia.

Galaxy Gaming will provide its Galaxy Operating System to more than 50 Carnival Corp cruise ships.

Calendar

• Sep 28: XLMedia

• Oct 8: GeoComply Challenger event, Las Vegas

• Oct 9-12: G2E, Las Vegas

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