• Bet365 above pre-pandemic revenues for the first time.

• +More: Nylén resignation at Kambi, Macau junkets, NFL rating dominance.

• New York hits a GGR record in December.

• Year ahead outlooks from Jefferies, Wells Fargo.

• Startup focus is the Game Safety Institute.

To make records with a mobile, yeah.

Bet365 bounceback

UK’s leading online betting and gaming firm sees revenues surpass pre-pandemic levels for the first time.

Back, back, back: Bet365 saw revenues from betting and gaming rise 19% in the year to March 2023, to £3.39bn, and above pre-pandemic levels for the first time. Without splitting them out, the company said OSB revenues were up 15% while iCasino was up 31% and active customers globally rose 29%.

• However, admin expenses rose £585m to £2.89bn, representing a 24% increase and meaning the sports and gaming segment made a pre-tax loss of £60.2m vs. a profit of £76.1m the year previously. Notably, headcount increased 15% to 7.6k.

• EBITDA before director’s salaries and Stoke FC losses was down 15% YoY to £322m.

💪 Bet365 back above pre-pandemic revenue levels

Getting better all the time: The company also noted it has invested “significantly” in product development over the period, making mention of enhancements to its Bet Builder and Bet Boost offerings ahead of the 2022 World Cup. 

• In gaming, it said drivers included improved localization in key markets and the integration of content from best-in-class providers as well as optimization of in-house content.

• It said the iCasino growth was “largely driven” by its live offering.

🇺🇲+ 🇨🇦: The comments on North America were brief, merely noting a “significant” investment in the platform and the recent launches in Iowa, Kentucky and Louisiana. Alongside Colorado, Ohio and Virginia, this makes it six states to date. It also noted the “new business launch” in Ontario.

Friction factory: Regulatory developments in the UK were foregrounded, with the company saying it “welcomed the proposals” including stake limits on slots and financial risk checks, adding it was in favor of finding a “workable solution” that would allow for “frictionless checks.”

Quick take: Analysts at Regulus said bet365 “has clearly shrugged off the difficult comps caused by UK compliance issues and is likely to have delivered strong growth in the UK over the period, contrary to most larger licensees.”

• But they noted costs are “likely to increase faster than revenue from now on.”

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+More

Kambi has announced the resignation of CEO and co-founder  Kristian Nylén, who will step down at some point this year to spend more time with his family. Nylén has been nominated for a board position.

• Joining him on the board will be industry veteran and longstanding growth company investor Benjie Cherniak.

FanDuel has bought a slice of real estate in Beverly Hills for $71m, according to the Commercial Observer, which reported the price paid of $1,410 per square foot is more than four times the average office sale price in Southern California.

Giddy up: Caesars has launched its Racebook product offering in Illinois, its 21st state.

Junk status: The number of junket providers given a license by the authorities to operate in Macau fell to just 18, half the number from last year and 92% down on the figure at the height of the pre-pandemic market.

🏈 Stranglehold: NFL games contributed 93 of the top 100 broadcasts in the US in 2023, while three College football games were among the most-watched, according to the figures from Nielsen. The 93 in ’23 compares with 82 in 2022 and 75 in 2021. The top game was the Super Bowl with 115m viewers, with the Championship games in 2nd (AFC, 53m) and 3rd (NFC, 48m).

The week ahead

Tomorrow in The Startup Month, E+M looks at the plummeting sums invested in growth companies in 2023 and identifies the startups to watch for in the year ahead.

Career paths

NeoGames subsidiary Wizard Games has appointed Dimitar Panteleev as director of games technology. Panteleev was previously CTO at The Better Platform.

Michail Koutsoukos, formerly of Kaizen Gaming and Kindred Group, has been appointed as the new head of customer engagement at BoyleSports.

New York by the numbers

2023 in the can: An all-time record GGR of $188m in December helped towards a 24% rise in OSB revenues in 2023 to $1.69bn, leading to a tax take for the state of just shy of $900m. The December total represented a 32% rise YoY. 

• Net revenues for operators for the year came in at $828m. 

• By operator, FanDuel made $399m in net revenue while DraftKings accumulated $280m.

• Net revenues for the whole market rose 25%, while the tax take was up 29% to $896m.

🗽 New York’s OSB skyscrapers getting taller

Tiers get in your eyes: In terms of market share for the year, FanDuel maintained its NY  leadership at 48%, followed by DraftKings on 34%, then Caesars (8.5%) and BetMGM (5.5%), with the rest of the market – Resorts World, Bally’s, WynnBet, Rush Street and PointsBet – splitting the scraps of 4% share between them.

🍕 New York slice by slice

Nothing to write home about: When it comes to the also-rans, WynnBet – which would provide the easiest route into the market for ESPN Bet were it to sell on its license – generated just $4m of GGR in 2023.

Iowa by the numbers

The first data for December that includes ESPN Bet is also in, from Iowa – where it can be seen the monthly handle for Penn’s latest OSB venture came in at 7.3%. DraftKings held its lead at 37%, followed by FanDuel on 26%, Caesars on 14% and BetMGM with 6% 

• In GGR terms, ESPN Bet collared the same percentage, while DraftKings and FanDuel were better at 42% and 30% respectively.

ESPN Bet analyst take

Minor threat: In their 2024 outlook (see below) the analysts at Well Fargo pointed out that while it remains early days for ESPN Bet they don’t expect the dominance of the top two to change in the near term.

• Over at Macquarie, the analysts estimated it will take a further three to six months’ worth of data to get a “better depiction of normalized hold.”

Analyst takes for 2024

The big cats: The performance differential for online between Caesars and MGM on one side and Penn and Bally’s on the other will become clearer in 2024, according to the team at Jefferies. They pointed out the first two will be moving towards adj. EBITDA profitability this year and next while the latter pair are forecasted to suffer further losses.

• On Penn, Jefferies noted it has already invested ~$4.5bn and that if as expected it gains a license in New York (see above) it would “prospectively increase its already considerably large” investment.

• Similarly, the team added that Bally’s will “continue seeing” negative EBITDA in North American interactive until FY25.

Las Vegas: The problem facing assessments of the prospects for the year ahead is just how well the Las Vegas Strip, in particular, fared last year. Jefferies noted that revenues for the large operators are expected to “remain relatively flat” given the tough comps.

• What do you mean by tough comps? The Wells Fargo team pointed out that Strip GGR in 2023 was 7% up YoY and a whopping 33% up vs. 2019.

• Moreover, twice in the last 12 months the Strip “cleared” $800m of GGR – pre-pandemic the record was $696m, in Feb. 2013.

• Looking forward to: Wells Fargo pointed out the Super Bowl next month will be the highlight of Q1, similar to November’s F1 event when it comes to high-end play. 

• That will occur again next November and in between times Jefferies noted Vegas hosts Copa America soccer and local sports events.

Macau: The recovery is expected to continue, albeit somewhat threatened by the deteriorating economic backdrop in China. Jefferies noted December’s GGR of $2.3bn was the highest since the market emerged from the pandemic-era restrictions.

• The Wells Fargo team noted there was a “bifurcation” between the premium mass recovery vs. the base mass.

• The split is highlighted geographically, with Cotai recovering in Q3 to 78% of 2019 levels while the Peninsular was only at 53%.

888: The analysts at Peel Hunt suggested that “down a microscope” 888 is a small-cap with too much debt. But “through the telescope” it is one of the largest companies in the gaming sub-sector, with a $2bn enterprise value and the opportunity to extract more synergies from the William Hill acquisition.

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Startup focus – GSI

Who, what, where and when: The Game Safety Institute – GSI for short – was founded by UK-based Sarah Ramanauskas and Simo Dragicevic in late 2023. Both are well known in the industry: Ramanauskas as a former Betfair and William Hill executive and compliance and player protection advisor to major operators globally; Dragicevic as the founder of BetBuddy and former MD at Playtech.

Funding backgrounder: The company is pre-seed and currently funded by its founders.

The pitch: GSI contends that across the industry, consumers are being presented with games that are unsuitable for their entertainment needs such as with slots where, while many have similar RTPs and are marketed alongside one another in the lobby with no product differentiation, the player experience will vary significantly.

• “This is not good from both a player experience and consumer protection perspective,” says Dragicevic.

Apples with apples: He adds that regulators are taking a much closer look at products as player-centric consumer protection initiatives plateau, for example in the UK and the Netherlands. However, existing product risk methodologies, such as ASTERIG, compare verticals with one another e.g., slots vs. lottery products.

• “We don’t think this is optimal, for example, as every online slot is considered high or very high risk, regardless of the significant variation within slots,” Dragicevic adds.

What’s the news? GSI is launching its first product, a slots SaaS intelligence platform, in Q124.  Early discussions with operators have been “encouraging” and GSI expects to sign up customers throughout the year.

• “We want stakeholders to understand the nuances around theme, math and mechanics, for example, and build strategies to ensure the product positioning and marketing is optimized from a player safety perspective,” Dragicevic says.

• GSI plans to do the same with sports betting, table games and instant win games later in 2024 and is also planning on publishing its methodologies over the next one to two years. 

What will success look like? “Success will be to help the industry and regulators to take a more data-driven approach to product safety and develop the evidence base on what strategies actually work,” Dragicevic explains. 

• The company is building assets and expertise in product intelligence, data, software and safer gambling. 

• “It’s early days and the founders are passionate about the need to fill this gap and are focused on solutions that add value to a wide range of industry stakeholders.”

Growth company news

Exchange operator Novig has launched in Colorado.

WhoScored.com and gamification specialists Low6 have teamed up to provide WhoScored Ultimate Fan, giving fantasy football fans the chance to win cash prizes.

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