• Caesars extols iCasino as digital produces adj. EBITDA profit for 2023.

• In +More: Pennsylvania and Michigan data, FanDuel snaps up BeyondPlay.

• Kambi hopes for “material” growth in 2024 after a patchy Q4.

• The AGA shows sports-betting and iCasino outpacing B&M growth rate.

• And there’s news about tickets – and a discount available – for the Earnings+More Capital Markets Forum in New York during SBC’s Summit North America week in May.

Double chins and bowling pins.

Caesars’ Michigan move and Q4 earnings

Say yes! To M!ch!gan! Caesars Entertainment has announced it has bought WynnBet’s Michigan OSB and iCasino operation and has, alongside that, extended the market access agreement with the Sault Ste. Marie Tribe of Chippewa Indians.

• As part of the arrangement with the tribe, Caesars gains access to its three skins allowing it to operate multiple brands within the state.

• Existing WynnBet customers will be transitioned later this year to an as yet unspecified “very well known” Caesars gaming brand. 

• On the earnings call, which accompanied the news, Eric Hession, president of Caesars Digital, said WynnBet had been averaging ~$3m a month in revenue. He added that the existing customer base was slot-centric and at a slightly higher end.

The family silver: This is the second instance of WynnBet selling on market access within the space of a week after it sold its New York license to Penn for $25m. The company also recently announced it intended to shutter its operation in Massachusetts.

A bit of leg: The Michigan news came with Caesars’ Q4 earnings, which as were pre-announced in January showed the Las Vegas operation encountering “several one-time headwinds” as revenues dipped 5.5% to $1.09bn. Regionals was up 0.5% to $1.36bn while digital rose 28% to $304m.

• Total revenue was up 4% to $2.83bn while adj. EBITDA came in down 2.8% at $930m.

• For the FY23 digital saw revenue rise 77% to $973m, producing $38m of adj. EBITDA.

If it wasn’t for you pesky kids: Hession said, on a hold-adjusted basis, the digital business would have produced “close to” $60m in adj. EBITDA. He also noted the percentage of customers taking up parlays “continues to improve.”

• He added that the “core iCasino slot customers responded positively to our significantly improved offering.” CEO Tom Reeg suggested iCasino was “ramping very quickly.” 

• He said the 2023 performance “keeps [Caesars] on the path” to $500m in adj. EBITDA.

Tune in, turn off: Reeg noted the growth in online generally, in mature markets as well as debuting states, “consistently exceeded our expectations” and “continue to grow at steady clips.” He added that, at a company-specific level, the news of the Penn-ESPN tie-up had been a bonus as it allowed Caesars to “terminate an agreement that wasn’t profitable for us.”

High-octane misfire: In Las Vegas, Reeg noted the patchy performance during F1, with the high-end properties doing well but ”less so” for the rest of the Strip. “As with anything of that scale where you launch, you learn,” he added, noting that the lowest-end ticket was “pricey by any definition.”

• “Everybody is aware that if only a few buildings in the market benefit from this it’s not going to be a super long-term event,” he added.

Here’s Tom with the weather: Reeg said January had been a  “debacle” for the regionals business due to inclement weather, but added the business “remained firm.” He noted that in various markets, including Chicago. the company was now lapping new competition.

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Tickets are now available for the Earnings+More: Capital Markets Forum taking place at the New York Stock Exchange on the afternoon of Monday, May 6.

Consisting of six panels discussing various pivotal topics impacting the North American betting and gaming sector from corporate development to M&A and investor relations, the event features speakers from:

• Caesars, Moelis, PJT Partners, Blackstone, MGM Resorts, Macquarie, Duane Morris, Tekkorp, Citi, Truist, Discerning Capital, GMA, Innovation Capital, CBRE, Houlihan Lokey, Sharp Alpha, Bettor Capital and more.

Follow this link for more information on how to obtain your ticket. Use the code EARNINGS100 for a $100 discount available to E+M subscribers.

+More

BeyondPlay has been bought by FanDuel for an undisclosed sum, with the jackpot management system provider to be incorporated into the operator’s iCasino operation. BeyondPlay was formed in 2021 by Karolina Pelc who said on LinkedIn today “this is the dream.”

AML regtech provider Kinectify has announced it has received an unspecified “incremental” investment from Aristocrat. Existing investors including Acies Investments, the Eastern Band of the Cherokee Indians and Eilers & Krejcik Gaming have also contributed additional capital.

Game over: Esports Entertainment will voluntarily delist from the Nasdaq today, Wednesday. Its shares will be quoted on the OTC Pink Market with plans to be subsequently listed on the OTCQB Venture Market.

By the numbers

Pennsylvania: B&M gaming declined 12% in January to $252m – see above on the weather issues – but overall GGR rose 3% to $505m, helped by a 49% rise in sports betting to $98m on handle that rose 11% to $858m. iCasino was up 12% to $150m.

Michigan: FanDuel increased its market share across sports betting and iCasino to 31%, followed by BetMGM on 23% and DraftKings (21%). GGR across both products rose 23% to $212m.

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Kambi hopes for ‘material’ growth

Out of shape: Kambi was “not satisfied” with the earnings from Q4 with soon-to-depart CEO Kristian Nylén laying the blame largely on the performance of Shape Games. The company recently agreed an early settlement with the former owners and Nylén said Kambi would quickly move forward with full integration.

Cold water: Nylén said the forecasts for the business were under review, in part due to a recognition that sports-betting regulation in California was now “very unlikely to happen” before 2028.

• Kambi was also negative on Brazil, pointing out that the new framework likely wouldn’t be operational before Q3 and that new operators will face “tough competition” from mature gray market incumbents.

• Nylén also appeared to signal a potential change of heart at Kambi with regard to only dealing with operators in fully regulated markets. “It’s definitely something we are reviewing,” he said.

Out of tune: Revenue fell by 23% YoY in Q4, but excluding the one-off termination payment from Penn in the prior-year period the revenue decline was cut to 2%. The €12.6m Penn fee also distorted the EBITDA line, which was down 38% YoY to €17m.

• Big 10: Kambi achieved 10 new client signings in 2023, with two additions in Q4: the Dutch online casino 711 and another low countries operator, Bingoal. 

• The company said its “pivotal” deals came in Q3 when it signed LiveScore and Svenska Spel.

• CFO David Kenyon said he hopes 2024 revenues would come in at between €170m and €180m compared with €173m in 2023.

Moving on: Nylén pointed out that Kambi would be due a minimum guarantee of €55m from Kindred over the next three years under its new agreement. Recall, Kindred is hoping to move to its own proprietary sportsbook over the course of the next three years, albeit with skepticism being expressed recently over the pace of the move.

Analyst takes – DraftKings

The same old routine: DraftKings will likely resume its standard practice of under-promising and over-delivering in 2024, barring any disastrous sporting results, suggested the team at JMP. They indicated the guidance is “conservative” and will lead “upside to estimates throughout the year.”

• The team added that with the company now “harvesting cash” more M&A to acquire “value-enhancing” assets such as Jackpocket can be expected.

Gold in them there hills: They noted the bearish position on Jackpocket – that it is a company losing cash and needing investment – was similar to the beef around the Golden Nugget deal. 

• “It acquired an attractive database/product, invested in the product and leveraged the DraftKings scale, which is now seen as the most successful acquisition in US online gaming,” the team stated.

• “The regulatory pressures appear minimal with the necessary state sign offs, and the anemic pace of iLottery legislation does not pose a risk to the company for potentially decades.”

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AGA commercial gaming review

Anatomy of a boom: The growth rates for sports-betting and iCasino outpaced those of B&M gaming by some margin in 2023 and in Q4, according to the American Gaming Association’s review of commercial gaming in 2023.

• Sports betting saw GGR rise 44.5% YoY to $10.9bn, while iCasino was up 23% to $6.17bn.

• In comparison, B&M gaming rose 3.3% to $49.4bn.

Topping out: Nine separate gaming markets garnered GGR of over $1bn, headed by the Las Vegas Strip, which brought in $8.83bn, up 7.2% YoY. It was followed by Atlantic City with $2.86bn and the Chicagoland market where GGR hit $2.19bn, both up 25% YoY. The smallest of the billion-dollar club was Detroit at $1.24bn.

10 to follow: The top 10 sports-betting markets generated GGR between them of $7.86bn. The list was headed by New York, which enjoyed a 24% YoY rise to $1.7bn, followed by New Jersey, which saw GGR rise by 32% to $1.01bn.

🎉 The top 10 sports-betting markets in 2023

Earnings in brief

The Lottery Corporation: Weaker trading due to the economic backdrop and a move to increase the probability of larger jackpots in its main Oz Lotto game meant revenues dipped by 4% in H124 to A$1.84bn ($1.21bn). EBITDA was down by 2.5% to A$399m.

Raketech: Success in the sub-affiliation segment helped push Q4 revenues up 45% to €22.8m but EBITDA dropped slightly to €6m due, the company said, to softer trends in Sweden. The company also issued FY24 guidance for expected EBITDA of €24m-€26m.

Calendar

• Feb 21: Churchill Downs (e)

• Feb 22: Acroud, Better Collective, Churchill Downs (call), VICI (e)

• Feb 23: VICI (call)

• Feb 27: Light & Wonder, Gaming and Leisure Properties (e)

• Feb 28: Gaming and Leisure Properties (call), Accel

• Feb 29: Codere Online, Golden Entertainment

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