• Flutter promises FanDuel profits will “transform” the business.

• DraftKings narrowly avoids getting caught up in 888 shenanigans. 

• MGM Resorts survives and thrives after cyber attack.

• Earnings in brief from Full House, NeoGames, DoubleDown…

• … Everi, Acroud, Century and Zeal.

Grab that cash with both hands and make a stash.

FanDuel standing tall

Keep your hands off of my stack: Batting back any suggestion that FanDuel is under pressure at the top of the US OSB market, Flutter CEO Peter Jackson was keen to stress how the US was on track to “transform the earnings profile of the group”.

• Jackson was speaking after Flutter confirmed in its Q3 trading update that the US operations would deliver revenues of ~£3.75bn ($4.7bn).

• Adj. EBITDA profit will come in at ~£140m. Both metrics are in the midpoint of previous guidance.

• CFO Paul Edgecliffe-Johnson noted this will represent a 50% YoY revenue increase and a near £500m profitability swing.

Don’t take a slice of my pie: Edgecliffe-Johnson said the “profitability ramp” would continue into 2024 and beyond, “driven by significant topline growth and material expansion of our profit margins”. Noting the continued competitive intensity in the US, Jackson said Flutter didn’t anticipate next year “being any different”.

• He said FanDuel would continue to “acquire as much business as we possibly can”, though he did feel that on marketing and promos the market was “becoming more rational”. 

• “I think that's actually a positive thing for all participants,” he said.

I think I need a Lear jet: When asked about FanDuel’s attempts at innovation, Jackson said he could “speak for a long time about the long list of advantages that we have in the market”. “We have always had a leadership position from a product perspective.”

• “We’re still pushing hard on innovation and we’re investing right across the stack,” he added.

Still good, mate: Elsewhere globally, Flutter is under more pressure in Australia where revenue at Sportsbet was down 7% due to weakness in its racing wagering product. However, with the UK up 11% in revenue terms and with international revenues rising by 15%, it meant Q3 revenues were up 8% YoY to £2.04bn.

• Edgecliffe-Johnson said this showed the benefits of a diversified portfolio.

• He said the Australian business was “still a good business for us”. 

• “It’s still well ahead of where it was back in 2019 but it is going to be a profit headwind in 2023, and then continuing into 2024.”

The UK edge: In the UK & Ireland, Jackson said it was clear the business was taking market share having “led the race to the top” in terms of complying with the new regulations that were contained in the White Paper.

• “We got ahead of the changes from a white paper, effective early last year,” he said.

• “But we’re also making some very considerable product enhancements,” he added. 

• “We’ve also seen very significant growth in gaming in the UK and a lot of that is driven through their product changes.”

Won’t get fooled again: In Brazil, Jackson noted that he wouldn’t “get caught out again” trying to forecast what changes will be introduced and when, but said the business was performing well having seen double-digit growth in Q3.

• “There are some exciting developments across Latin America, which, of course, we’re watching,” he added.

On the move: On the corporate side, Flutter confirmed its NYSE dual listing would come into effect in Q124 and added that it will simultaneously delist from its legacy Euronext Dublin listing.

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DraftKings’ narrow escape

There but for the grace of God: DraftKings was in talks with the FS Gaming group of shareholders about potentially funding the attempt to install former Entain chief Kenny Alexander as CEO in the summer, according to the FT.

• The report suggested DraftKings’ CEO Jason Robins held talks with Lee Feldman, the ex-GVC chair, who was leading the FS Gaming group.

• The bid fell apart when 888 said the Gambling Commission had instigated a licensing review due to Alexander’s involvement in the bid.

• The UKGC told 888 that Alexander’s involvement in the ongoing HMRC investigation into his former company would put the 888 license in jeopardy.

Broaden your horizons: The FT story noted that despite the 888 interest coming to nothing, DraftKings’ interest in international expansion remains. On the Q3 call last week, Robins said his company was “aware of the global gaming market”. 

• “I think, in the long term, there’s a lot of upside for us there,” he added. 

• “We believe that the product and technology investments and other operational infrastructure, marketing infrastructure we’re building will be very portable throughout the globe.” 

• But he added that what had helped DraftKings was its singular focus on the US. 

• “It's really important that we always keep that in mind and continue to make sure that the focus is here.”

MGM full throttle

Come out fighting: Despite the disruption caused by September’s cyber attack, CEO Bill Hornbuckle hailed a “fantastic” quarter and said MGM was seeing  “incredible resilience in our business to start the fourth quarter”. 

• He added that the company was continuing its negotiations with the Culinary unions with the goal of “reaching agreement on new record contracts that work for everyone”.

• He said the deal “when announced” would be the “largest pay increase in the history of our negotiations” with the union.

• Recall, MGM said post-attack that EBITDA in its Las Vegas and Regional business would take a ~$100m hit.

Fountains of pain: Asked about chatter from the Red Rock earnings call the day previous of expectations around F1 being pulled back by a certain operator, Hornbuckle remained effusive. “We’ve sold over 10,000 tickets to F1,” he said. “We've sold out a really cool experience with the Bellagio Fountain Club.” 

• Hornbuckle noted the company would be making ~$60m of incremental hotel revenue over the weekend.

• He also noted the challenges posed by holding the event on the Strip. “Believe me, I’m a local, I get the traffic. I understand it.”

• But he added the event was going to be an “incredible opportunity for the company and ultimately for the city long term”.

Earnings were boosted in the quarter by the results from Macau where revenue soared from $87.5m in Q322 to $813m in the quarter just gone, countering the damage caused by the attacks and helping group revenue to a 16% rise to $3.97bn. 

• In comparison, Las Vegas was down 8.5% to $2.11bn and Regionals was off by 5% to $925m.

• Adj. EBITDA was up by 21% to $1.15bn.

• “In Macau, it is clearly evident that business is booming,” Hornbuckle said.

• “Results have been outstanding because of the ingenuity and execution of the team at the MGM China.”

The commitments: Asked about the leverage levels – currently around 3.5x – CFO Jonathan Halkyard said that this was around a “full turn” below what the company would consider to be a leverage cap. “So a full turn on EBITDAR for us is over $4bn,” he added, opening up the path to borrow more in order to perform more share buybacks.

• “Now we have to be mindful, of course, of some of the investments that we have coming up in 2024, including in Japan, potentially New York, depending upon timing,” he added.

Small beer: During Entain’s strategy update last week, CEO Jette Nygaard-Andersen said the company was willing to invest more in BetMGM in the year ahead. However, Hornbuckle said any further investment “won’t be large”. “It's not like where we've been,” he added.

• “But if somebody said you need to invest another $50m to make sure your long-term value is there? I'm shooting for the end of 2025 as a goal.”

• “We’ll continue to invest accordingly and appropriately and purposefully with these guys,” he added. “Look, we’re still number 3 [but] we’re number 1 in gaming.”

• “We’ve got a very big position we want to protect and we’ll continue to do so.”

Tanks on lawns: Asked directly whether the share repurchases was a “sign” that MGM was “less interested in making an acquisition in iGaming internationally”, Hornbuckle said the company’s position with regard to its JV partner had “not changed”.

• Noting the launch of BetMGM in the UK, he added that MGM was looking to take the brand to “other places”. 

• “We’re looking at Brazil closely,” he added. “We’re looking at other European countries closely. We’ll continue to look to expand internationally. 

Join the dots: Hornbuckle noted the long-term drivers for the business of progress in Japan, the potential for gaining one of the downstate casinos in New York and the international online initiative with LeoVegas.

• Hornbuckle added that “when you connect each of these prospects for cash flow generation together,” the future free cash flow was “tremendous”.

M&A newslines

Spreadex: The UK-based spread-betting operator has bought rival Sporting Index from Française des Jeux . According to the Racing Post, the seller is “keeping tight lipped” on the deal.

• Sporting Index was one of the originators of sports spread betting having been formed in 1992.

• Sporting Solutions, which was originally spun out of the Sporting Index business, will remain with FDJ.

• Spreadex told the Post: "We plan for both brands to continue and we’ve already put some extra product features in place for the Sporting Index brand, which we hope the customers will enjoy."

LiveScore has announced the acquisition of South Africa-based software development specialists Wonderlabz for an undisclosed sum. The company said the deal adds “significant scale” and will accelerate product development. 

Earnings in brief

Full House Resorts: The promised benefits of the Temporary casino facility in Waukegan were evident in the 73% leap in Q3 revenues to $71.5m, while adj. EBITDA soared 166% to $20.6m. QoQ the Temporary revenues were up 18% to $24m.

• The next uptick will come from the Chamonix project in Cripple Creek, Colorado, which is set to open on Dec 26.

• CEO Dan Lee said the whole casino would be ready, except the speakeasy bar.

• “That will not be ready, but it’s a speakeasy, so nobody will know it’s there anyway.”

Century Casinos: Revenues of $161m were up 43% YoY, while adj. EBITDA of $33.3m was up 19%. The company noted these were record results driven by the acquisitions of the Nugget Casino Resort and Rocky Gap Casino.

Everi: Revenues rose 1% to $207m, with the fintech segment seeing a 4% increase to $95.1m but with the games segment down 1% to $112m caused by a 12% decline in gaming equipment and systems sales. Adj. EBITDA was flat at $96.2m.

NeoGames: Revenues of $63m were up 12% YoY, while EBITDA of $20m represented a 13% YoY increase. Within that, iLottery revenues came in at $14m and NeoPollard Interactive revenues hit $17m, up 55%. iGaming revs were $32m.

• CEO Moti Malul said the company continues to work towards finalising its merger with Aristocrat Leisure, with completion expected in H124. 

DoubleDown Interactive: Revenues were down 7% to $73m, but adj. EBITDA rose 16% to $29.7m in Q3 due to lower sales and marketing expenses. The company completed the acquisition of SuprNation at the end of October, marking its launch into the real-money iCasino space.

Zeal: the Germany-based lottery reseller said revenue rose 16% to €86m, while EBITDA was up 5% to €23.2m. The company noted an expansion in its game offerings over the period.

Acroud: The affiliate said revenue rose 48% to €9.9m, but adj. EBITDA was down 21% YoY to €1.2m after what is noted was a “challenging” but “expected” quarter. 

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Newslines

Not earnings in brief: Inspired Entertainment said it needs more time to file its Q3 earnings and to “restate certain previous financial statements from 2021”. The company said its new auditors had “identified certain accounting errors” in connection with accounting policies for capitalizing software development costs. The shares were down nearly 7% in post-market trading.

⚠️ Inspired ships 7% on accounting error news

Calendar

• Nov 9: Bragg Gaming, Super Group, Light & Wonder, Wynn Resorts

• Nov 13: Genius Sports

• Nov 14: DraftKings investor day

• Nov 15: Codere Online, Better Collective (e), FansUnite, Gambling.com Group

• Nov 16: Better Collective (call)

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