• Entain sees departure of chair as hunt for a new CEO continues.

• In +More: Las Vegas Sands $1.5bn of new debt, Kaizen UK launch.

• FanDuel’s regret on player acquisition spending.

• Esports publishers want more sponsorship, says sector watch.

We’ve already said, goodbye

Entain succession saga

Barnacles off the boat: The resignation of Entain chair Barry Gibson might be the prerequisite for a new CEO to take up the currently vacant post, according to multiple sources. He will be replaced by Stella David, who is currently filling in as interim CEO.

But then, who ends up being King Potato? The company said yesterday Gibson would be leaving his post at the end of September, or before should the company succeed in finally finding a permanent replacement for departed boss Jette Nygaard-Andersen who resigned in December.

• “The board might have been told, lose the chairman,” said one sector onlooker of the influence of institutional shareholders.

• Others suspected the hand of new board member Ricky Sandler from activist investor Eminence Capital.

• “Pressure has maybe come from that direction,” said another well-informed source.

Departure lounge: Gibson joined the board at Entain in 2019 and became chair in February 2020, replacing Lee Feldman. He was instrumental in the hiring of Nygaard-Andersen, who succeeded Shay Segev in January 2021, and who herself left under a cloud after press reports alleging corporate expenses excesses.

• News of his September departure was welcomed by company insiders, who previously told Earnings+More they were worried about Gibson having a say over the choice of the next CEO.

• They said at the time that employees found it “very unsettling” that he was at the head of the process.

The well-informed source, who chose anonymity when talking to E+M, said that while the Gibson departure “may” have some influence on the identity of the next CEO his removal from the picture might also spark further M&A interest. 

• “It’s interesting that he was seen by many as the reason the previous bids were rejected,” the source added. 

• “And with him now exiting this could signal a different stance going forward.”

Sales forecast: Recall, apparently under the influence of Sandler and Eminence – which before being appointed to the board went public with its worries over the company’s M&A strategy – it is thought Entain’s previous policy of bolt-on acquisition has gone into reverse.

• At the behest of Eminence, Entain has appointed investment bank Moelis to advise on the potential sale of elements of the business.

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+More

Promises, promises: Disney CEO Bob Iger has told CNBC the forthcoming standalone ESPN streaming service will allow viewers to “bet on sports basically right off the app” and will include fantasy sport features. He added that such features would differentiate the app from the combined sports-streaming offering that Disney is working on with Warner Bros. and Fox.

Churchill Downs is bidding for Pimlico Race Course, home of the Preakness Stakes, after making what has been described as an “overture”, according to local media.

Las Vegas Sands has shaken hands on a new $1.5bn revolving credit facility that matures in April 2029. The facility includes $150m of sub-facility letters of credit. The company said the proceeds would be used for general corporate purposes. 

Fanatics Betting & Gaming said it has finally completed its $225m acquisition of PointsBet US after taking over the Illinois license. This week the company also launched in Arizona, its 18th state, through a partnership with the Tonto Apache Tribe.

Kaizen Gaming has partnered with BVGroup to launch the Betano brand in the UK, according to SBC News. BV will supply proprietary technology as well as customer support functions.

Dan will be pleased: A federal judge has dismissed a lawsuit that challenged Waukegan’s selection of Full House Resorts, which was filed by the Potawatomi Tribe of Wisconsin. The company said previously it expected the suit to be dismissed.

By the numbers

New Jersey: The Division of Gaming Enforcement has announced the state will change the way it presents revenue reports for online casinos in New Jersey and NJ sportsbooks to “increase transparency”, with revenue broken down by each individual operator's skin rather than by license holder.

Read across

In Compliance+More this week, after the boom the OSB backlash gains momentum. Meanwhile, a conference panel suggested UK racing will suffer should its betting audience seek out offshore options.

What we’re reading

“Malta isn’t exactly a blank slate.” The Malta Biennale is attempting to lure art lovers to the island. 

• CRM Manager – Toronto

• Sales Manager – North America / Remote 

• Senior Affiliate Manager – Remote 

Flutter takes

If we only knew: Admitting that 20/20 hindsight is a wonderful thing, the CFO at FanDuel, David Jennings, told the analysts at JMP that the company feels it would have spent even more money on player acquisition in 2021 and 2022 now that it knows the level of rewards it is reaping from those customer cohorts.

• Such comments, allied to the data from new state launches showing higher levels of user penetration in the early months, led the JMP team to believe that promotional levels in March would have been “elevated.”

Split the difference: Separately, Jefferies argued this week that the differential in EBITDA flow-through between Flutter US, at ~30% for FY24, vs. DraftKings, which is forecasting 55%, was down to “differing approaches” to marketing.

• While DraftKings has guided to a “modest decline,” the team wrote, Flutter’s FY24 and medium-term outlook suggested a 10% increase.

Death and taxes: Answering questions around the news about the potential rises in OSB tax rates in New Jersey and Illinois, JMP reported Jennings as suggesting such developments were a “theme that has historically occurred across gaming globally.” 

• On the college player prop debate, Jennings was reported to be sanguine with JMP, saying they should have “no material impact” on the business.

• Jefferies argued Flutter was in a “relatively better position” to weather the current storms affecting the sector, from tax to college prop bans and VIP scheme scrutiny. 

Pay the ferryman: JMP made a point in its note about the levels of fee US operators pay to payments processing firms, where it was impressed upon the analysts that, as with its peer Draftkings, FanDuel pays ~12% of revenue, which is a “multiple” of the percentage Flutter pays in the rest of its business.

• Both firms are, however, “on a path to 8% in the medium term”, which, JMP argued, could provide a “significant opportunity” to increase gross margins. 

Markets+More

Codere: The Spain and LatAm-facing operator once again enjoyed a decent week on the markets, with its share price rising 9% on Wednesday before slipping back 6% the following day. Still, it leaves the share price up over 135% in the year to date.

👀 Codere Online’s good start to 2024

Earnings in brief

NagaCorp: The Cambodian casino operator saw GGR rise 24% in Q1 to $145m off the back of higher levels of international visitation, which hit 18%, according to the government. Premium mass table games revenue was a key driver, up 51% YoY. EBITDA rose 30% to $80.3m.

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Sector watch – esports

I predict a Riot: When in search of increased sponsorship revenue, who you gonna call? The gambling industry. A report from industry source, The Esports Advocate, suggested League of Legends and Valorant publisher Riot Games is exploring new sponsorship categories to open previously closed revenue streams to top-tier teams. 

• Explicitly mentioned, but previously prohibited categories, include beer and wine, cannabidiol (CBD) products and government-affiliated entities.

• It’s understood that gambling continues to be under consideration, but navigating the regulatory landscape given the global nature of competition is a barrier. 

Caution is the better part of: Riot Games’ first-person shooter title Valorant is one of the fastest-growing esports in wagering and viewership. The global circuit houses over 10,000 teams across a multitude of regional leagues, with top-tier competition split between the Americas, EMEA, Pacific and China. 

• League of Legends, the world’s biggest esport by viewership, has top-tier franchise leagues in Korea, China, EMEA, North America, Southeast Asia, Vietnam, Brazil and LatAm.  

Opening gambling sponsorship in specific regions, with careful due diligence relating to player age and broadcast, is far from impossible. Counter-Strike: 2 continues to drive the bulk of esports wagering revenue and has always permitted gambling sponsorship. The sponsorship breakdown in the ongoing Counter-Strike major are as follows:

• 19 out of 24 (79%) of competing teams have a gambling sponsor

• Six of 19 gambling sponsorships have spanned longer than two years

The biggest stumbling block, should Riot decide to permit gambling sponsorship, is the prevalence of gray-market operators and cryptocasinos in the esports marketing landscape.

Tournament sponsorship is dominated by companies such as 1XBet and GG.Bet, after Entain shuttered £50m acquisition Unikrn’s B2C arm following a botched multi-million sponsorship at the last Counter-Strike major in Brazil. 

• League of Legends’ gambling sponsorship opening could be the dangling carrot that tempts tier-one operators back into the esports realm. 

London calling: The culmination of the 2024 season will take place on 2 November at London’s O2 Arena. It promises to be the biggest yet, and should the doors swing open to gambling sponsorship, there’s opportunity aplenty.

Calendar

• Apr 17: Entain

• Apr 18: Rank

• Apr 24: Evolution, Kambi

• Apr 26: Betsson

• Apr 30: Caesars Entertainment

• May 1: MGM Resorts

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.

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