• DraftKings appears to be the early loser from ESPN Bet market entry.

• Activist investor ‘has been offered an Entain board seat’.

• XLMedia downsized as company says outright sale no longer on the cards. 

• Startup focus looks at GMA’s involvement in the UNLV incubator program.

Give me just a little more time.

By the numbers – ESPN Bet

Encouragement for ESPN Bet from the early data comes with warning signals for DraftKings and BetMGM.

🎯 New Jersey and Massachusetts are the latest states to confirm that ESPN Bet has had some success in corralling mid-single-digit market share as measured by both handle and high-single-digit to low-double-digit share by GGR. 

• In New Jersey, the analysts at Wells Fargo estimated it achieved 5% share of GGR.

• In Massachusetts handle share came in at 6% while GGR share was at 11.6%. 

Scorecard: Looking across four of the states to have reported November data so far, the Deutsche Bank team suggested ESPN Bet’s gains appear to have come at the expense of, largely, DraftKings and, to a lesser extent, BetMGM and Caesars.

• In Maryland, where ESPN Bet grabbed 6.3% share of handle, FanDuel held its ground on 45% (flat MoM) but DraftKings fell back to 30% share vs 33% in October, while BetMGM was down to 7.6% vs. 9.1% and Caesars was static.

• In Iowa, ESPN Bet grew to 7% handle vs. 4% in Oct while FanDuel grew 1 ppt to 27%, but DraftKings was down 2 ppts to 35%, BetMGM was static and Caesars was down 1 ppt to 14%.

• In Indiana, ESPN Bet doubled to 6%, FanDuel was flat at 34%, DraftKings was down 3 ppts to 37%, Caesars was flat at 9% and BetMGM was down 1 ppt to 7%.

• Finally, in Massachusetts, ESPN Bet rose 3.5 ppts to 6.1% share while DraftKings slipped 4.5 ppts to 50%, with FanDuel and BetMGM static at 28% and 6% respectively.

🍕 Market shares by handle in MD, KS, IA, IN

Source: JMP

As the DB team stated, though ESPN Bet was only live for half the month of November, the share shifts “appear straightforward with winners and losers largely similar across each state”.

• As noted in Friday’s E+M, the team at JMP suggested that until the promo environment normalizes post-ESPN Bet launch they believe focusing on handle over GGR is the “more accurate metric”.

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New Jersey: Sports betting in November was up 19% YoY to $96m on handle that rose 46% YoY to $1.63bn. FanDual led with 57%, followed by DraftKings (20%), BetMGM (9%) and ESPN Bet on 6%.

• iCasino rose 17% YoY to $172m, just over $40m behind the B&M total of $213m, which was static.

• Both iCasino and sports-betting GGR totals were record figures.

• DraftKings led with 28% share, followed by BetMGM on 22% and FanDuel on 19%, with ESPN Bet on 2%.

🍒🍒🍒 New Jersey iCasino GGR Nov. 2023

Career paths

Oliver Chow has been appointed as CFO at Light & Wonder where he has served on an interim basis since August.

• Analyst take: The team at Macquarie said Chow’s appointment “provides organizational continuity and greater clarity on the path forward”. 

• “We believe this was a wise choice given his experience with gaming and his time at Aristocrat,” the team added.

Boyd Gaming has made a bunch of internal appointments including making Ted Bogich COO.

GIG has hired Matthew Saxon as CTO for platform and sportsbook. Saxon joins from Sportradar where he was SVP of technology strategy and architecture.

Gaming affiliate Finixio has appointed Sacha Kinser as its head of gambling content.

Entain’s boardroom concession

Eminem: Activist investor Eminence Capital is to be given a seat on the Entain board to placate investors worried about the company’s strategic direction. The hedge fund’s founder Ricky Sandler is set to be given a directorship before the end of the year, according to The Sunday Times.

• Eminence went public during the summer with its concerns over Entain’s M&A strategy after the £750m deal to buy Poland’s STS.

• In an open letter Eminence described that deal as being “perplexing on many levels”.

• It has since emerged that three more activist investors have built up stakes in the company, including just last week news of Corvex grabbing a 4.4% holding.

Is there anyone on board who knows how to fly a plane? Entain is currently somewhat rudderless after CEO Jette Nygaard-Andersen resigned with immediate effect last week, leaving previous NED Stella David temporarily in control. This came after caustic remarks over her leadership were aired in an FT article, including accusations of corporate wastefulness.

• Sandler said in the summer Entain should consider a potential divestiture of its share of the BetMGM JV.

• Either that or Eminence warned shareholders might be forced to consider an outright sale of the company to MGM Resorts “at a materially lower price” than previously had been assumed. 

Entain analyst take

Change is gonna come: The team at Jefferies upgraded Entain to Buy, suggesting the emergence of Corvex as an investor will act as a catalyst for change, with the options including an outright sale, the sale of the 50% share in BetMGM or the sale of other assets.

• They noted that now would be an “opportune moment for MGM to re-evaluate an approach”. 

• Notably, they suggested frustration with BetMGM’s current market share trajectory as one factor that might provide extra impetus.

Ships that pass in the night: Meanwhile, they noted the declining Entain share price – and MGM’s opposite trajectory – means the differential between the implied offer price and the current share price has “never been greater”.

Dress for the job you want: The analysts added that the uncertainties surrounding Entain “may deter some CEO candidates”. But they believed “there is scope for a highly credible CEO” to articulate a plan that can drive shareholder value.

What we’re reading

The runners and riders: Star Bookmakers have drawn up a list of potential candidates for a permanent CEO, making BetVictor’s Andreas Meinrad and BetMGM’s Adam Greenblatt the favorites.

Shares watch – XLMedia

Undersized: The affiliate saw its share price lose 12% on Friday following comments from its trading update that a sale of the whole company was unlikely to create the most value despite there being interest in individual assets.

• “The board therefore does not plan to undertake the sale of the whole company at this time,” the statement added,

⛸️ Skating on thin ice: XLMedia down 18% over the week

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Startup focus – UNLV’s Black Fire accelerator

Seth Schorr, partner at GMA Consultants in Las Vegas, talks about its involvement in UNLV’s Black Fire accelerator program.

Getting involved: Being as native as anyone can be in Las Vegas, Schorr says that getting involved in the University of Nevada, Las Vegas’ accelerator program made sense on a  number of levels.

• “There is a void around entrepreneurialism in Las Vegas,” he argues. “And elsewhere in the US, the universities are often the hub – the adhesive glue – that connects all the parts.”

• “UNLV is actually a fantastic school but this is one area that just hasn't been nurtured.”

Against the grain: Schorr notes that the startup scene in Las Vegas has, to a large extent, been stymied by the highly regulated context of the Las Vegas gaming sector. He says he has recently been working with regulators to see how the pathway for new companies in the space can be smoothed somewhat.

• The emergence of OSB and iCasino in the US has also “acted like a wake-up call” in Las Vegas. 

• “DraftKings is the biggest disruptor in the gaming space, but why did that emerge in Boston and not Las Vegas?” Schorr asks.

• “There’s a lot of reasons for that, I realize, but that might be a catalyst.”

Getting hands dirty: Having worked with UNLV for a number of years, including a role as an executive in residence, Schorr said the potential to “nurture and mentor” companies meant GMA’s wider expertise could also be leveraged, including taking part in a recent pitch day.

• He sees GMA’s involvement as a win/win. “We are all people that are highly invested in the gambling industry,” he says.

• “We’ve either been or have supported entrepreneurship in the sector. We know how beneficial new ideas are to sector growth.”

• “Our business is one where we think about the long term,” he adds. “We think about what this industry will look like five or 10 years from now and see if we can help to control that narrative. It's a pretty powerful place to be.”

Into the valley: Schorr notes that from the recent pitch day, only one company was actually looking at the gaming side and he points out that part of his efforts when it comes to bringing new ideas to Las Vegas is to encourage more tech companies into the valley.

Growth company news

Locker: The Los Angeles-based gaming tech company has launched a trivia-style FS offering that allows users to compete for free against friends and other contestants across the country by answering questions in real time. The game debuted in early November.

Venture capital firm Yolo Investments manages in excess of €500m in capital across 100 exciting fintech, gaming and blockchain companies. The Yolo Investments' Gaming fund, regulated by the Guernsey Financial Services Commission, has taken positions in fast-growth suppliers and operators, including Dabble and Enteractive. Yolo Investments (yolo.io) wants to hear from readers of this newsletter. Get in touch with your pitch, or for a chat about innovative products which can plug into our investment ecosystem.

Calendar

• Jan 18: Flutter trading statement

• Feb 6-8: ICE London

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