• Entain is seeking a buyer for its much-diminished PartyPoker business.

• In +More: Caesars takes first bets in NC, the reporting week ahead.

• IGT/Everi merger reaction is muted despite long-term potential.

• Golden confirms off-Strip second-class status for F1.

• Startup focus is New York game developer Supremeland.

Russian roulette is not the same without a gun.

PartyPoker up for sale

Selling club: Entain is seeking buyers for its PartyPoker business, which is now deemed to be non-core, according to multiple sources. The price is likely to be at a tiny fraction of the value of the business when it floated in 2005 given Party’s paltry current player base. A spokesperson for Entain offered no comment when contacted by E+M.

• Speaking on condition of anonymity, one source with knowledge of the Entain business said the move “made sense” and reflected the apparent recent change in the company’s focus.

Bolt-on, bolt-off: Entain is thought to have become a seller having junked its previous bolt-on strategy in the wake of the departure of previous CEO Jette Nygaard-Andersen and the appointment of an activist investor to the board. A full-time replacement is yet to be named, with interim CEO Stella David still in place.

Everything must go: Another well-placed adviser suggested Entain would be willing to listen to offers for a raft of assets that “aren’t easily integrated.”

• This could include Foxy, Eurobet, Crystalbet, Enlabs, the SuperSport business bought as part of the Entain CEE deal and “even Coral,” the source added. “You have to ask what’s not for sale?" 

Hold me closer, tiny chancer: It is not known what price the business might fetch although it will certainly be a fraction of the value of PartyGaming, as the company was known as when it floated in London in 2005 when it was valued at £4.6bn.

I used to be something in this town: Founded in 2001 by Ruth Parasol, PartyPoker was at the forefront of the poker boom of the early noughties. Following a much-hyped float in 2005 it quickly rose to be valued at nearer £10bn.

• However, the passage of UIGEA in October 2006 dealt a hammer blow and saw the company exit the US. Three years later it reached a non-prosecution agreement with the US DoJ that saw it pay a penalty of $105m.

• PartyGaming merged with Bwin in 2010 and it was then subsequently subsumed within GVC (the precursor to Entain) in 2015.

The mighty fallen: PartyPoker is now a shadow of the business it once was and currently sits outside the top 10 of global poker sites, as ranked by PokerScout, with a seven-day average player base of 600.

• One adviser source pointed out it was hard to identify a natural buyer and hence even put an estimate on a price tag.

Undue influence: The apparent reversal of the previous bolt-on strategy comes after activist investor Eminence Capital gained a seat on the board for its co-founder Ricky Sandler. Eminence previously criticized Entain’s M&A strategy when it bought STS last summer. Sandler has also gained a place on Entain’s ‘purse strings’ committee.

The bottom line: Sources note a slimmed-down Entain would likely be more attractive to MGM Resorts, enabling it to gain 100% control of the BetMGM JV without some of the bells and whistles.

• Date in the diary: Entain reports its FY23 numbers on Thursday.

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Jump the gun: Caesars Sportsbook has taken the first legalized bet in North Carolina via its partnership with the Eastern Band of Cherokee Indians and under the auspices of the Indian Gaming Regulatory Act. The app is accepting bets at two tribal properties in the state and on surrounding tribal land. 

• Meanwhile, registrations have started with the rest of the market ahead of opening on March 11.

The week ahead

Entain aside, also reporting this week will be Full House Resorts (and the ever entertaining Dan Lee) on Tuesday, alongside AGS. Genius Sports, Super Group and Rush Street Interactive are on Wednesday and, finally, on Thursday IGT will be adding further gloss to its Everi merger news (see below).

In Compliance+More tomorrow we report on UK Gambling Commission CEO Andrew Rhodes’ reluctance at a meeting last week to confirm whether the regulator believed its own statistics on problem gambling rates are reliable. Meanwhile, in LosIngrereos+Mas, there is analysis of the Q4 earnings from Codere Online.

By the numbers

New York: The weekly data from New York shows continued high engagement in the two weeks following the  post-Super Bowl with handle at 85% of the level in the week of the game, according to the analysts at Jefferies. This compares with follow-on handle at 75% and 82% in 2022 and 2023 respectively.

Career paths

Aristocrat has appointed Matthew Primmer as chief product officer.

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IGT/Everi merger reaction

Ever fallen in love with someone: Execution risk is the major worry for the team at Truist, which noted investors are going to have to be patient with regard to the IGT/Everi merger announced on Thursday with the deal likely to take over a year to close.

• The team has downgraded both companies to Hold due to the uncertainties around integration and synergies.

• They also noted the Italian lottery renewal overhang, which remains a risk for what will be the continuing standalone lottery business.

• “While we fully expect IGT to win the renewal, we think some sort of rate contraction or license fee increase is likely and could impact returns,” the team suggested,

Soft power: The team at Jefferies also noted the long timeline involved in getting the necessary regulatory approvals but said the combination had a bright future, bringing together “soft and hard resources from both entities.”

• They added this would bring the “necessary scale” to compete with the market leaders on content and equipment.

Last man standing: Truist said the deal could put some pressure on AGS as the “last remaining small independent public manufacturer“ to look at pursuing potential deals. But they noted that AGS’ independence and strong product pipeline “could provide benefits as operators look to maintain a diversified supplier footprint.” 

Golden Entertainment earnings reaction

Taking one for the team: According to CFO Charles Protell, the Strat “didn’t see any benefit” from the F1 rescue in November with the month seeing YoY revenues decline by $800k. In comparison, the property enjoyed $1m of incremental room revenue during Super Bowl week.

• Protell said “quite frankly” he felt there were a number of aspects of the Las Vegas F1 experience that could be tweaked to broaden its appeal.

• He added there was “general acknowledgment” the event needs to appeal to more than just high-end properties on the Strip. 

Big Wednesday: Protell said the company was seeing “green shoots” in its midweek business at the Strat, noting that Q4 midweek occupancy of ~64% was some way below the ~85% in 2019. Recovering this midweek occupancy is the “single best organic growth opportunity,” said the analysts at CBRE.

Size matters: Now Nevada-centric and with net debt of less than 2x, Protell said there was the potential for M&A but only if they represented a $50m EBITDA opportunity. “We’re not going to spend a lot of time with things that are smaller,” he said.

• He added that opportunities would either be single assets or “portfolios that are in the West.”

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Analyst takes

DraftKings: Barclays suggested DraftKings’ ~30% market share is defensible, adding that the worst of the competitive threat from ESPN Bet has already passed given the latter has already cut back on promos. Barclays said it is “less concerned about further impacts.”

• The team added that DraftKings actually “remains on the offensive,” noting recent marketing tie-ups with Apple, Barstool and LeBron James.

• Meanwhile, the recent acquisition of Jackpocket “promises to be a rich acquisition channel.”

Wynn Resorts: The team at JP Morgan suggested the development-in-progress in the UAE at Marjan Island is an “underappreciated” element within the Wynn story. Recall, during the Q4 call with analysts, Wynn CEO Craig Billings said the property would be a “substantial opportunity.”

• Looking at Q124, JPM said they had their Las Vegas estimates pegged at a “not aggressive” $238m, implying 4% YoY growth. 

• The team also forecasted Macau as coming in “just” 8% up sequentially, at $313m, suggesting there is an “attractive growth trajectory” at play.

Gaming & Leisure Properties: The team at JMP suggested the gaming REIT is seeing the fruits of a multi-year plan to strengthen the balance sheet, leaving the company with low leverage and ample liquidity. They added that this should leave GLP able to access deal flow “regardless of the state of the economy or financing markets.”

Startup focus – Supremeland

Who, what, where and when: New York-based slots developer Supremeland was founded in 2022 by media and tech exec Johan Apel, CEO Rickard Öhrn, CTO Amit Sharma (formerly at Scientific Games, Bally and Aristocrat) and Peter Wasielewski, the chief creative director. 

Funding no-background: Bootstrapped, with Apel and Öhrn being the main investors.

You keep me hangin’ on: Supremeland “strongly believes” in the eventual growth trajectory promised by the US iCasino market, says Öhrn. “Being an emerging market, we believe in time-to-market and are therefore focusing all our efforts on game development and working with partnerships for market distribution.”

• “We want to bring new thinking in terms of developing games, both in terms of combining new game features and adapting to evolving market trends,” he adds. 

Come see about me: The company recently received approvals from key states, including New Jersey and Pennsylvania, and is currently planning its first product release in the US following pre-releases in selected European and LatAm markets.

• You can’t hurry love: Öhrn says the company has an “ambitious “roadmap of releasing more than one game per month in 2024, with the goal of doubling down its number of releases in the coming year. 

• “We will continue to release high-quality slot games at a constantly higher pace,” he adds. “This will be achieved by refining our production pipeline with the latest technologies and strategies, as well as adding additional studios to our portfolio through acquisitions.”  

• “We aim to become a key player in the US iGaming market.”

Growth company news

How to guide: A blog from BetStarters on how to launch an online gambling business in Malta.

Calendar

• Mar 5: Full House, AGS

• Mar 6: Genius Sports, Super Group, Rush Street

• Mar 7: Entain, IGT

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