• DraftKings and FanDuel duopoly is the ”real battle” for investors.

• In +More: Ohtani interpreter guilty plea, BettingJobs’ Jobsboard.

• BlueBet plans merger with Oz Betr, triggers US review.

• Parlay analysis shows punters adding more legs to their multis.

• In sector watch, Fanatics launches Woodstock for collectibles.

You and me, chasing paper.

Duo duke it out

Just the two of us: The dynamics of the duopoly between DraftKings and FanDuel is the “real battle royale”, while investor fears over the impact of new competition from ESPN Bet and Fanatics have faded, according to analysis from Morgan Stanley.

• Instead, investors are now more focused on the new debate regarding the top-line to EBITDA flow-through differential between the two market leaders. 

• Flutter said during its recent debut earnings as a joint-listed company that it expected its US vision to generate ~30% flow-through, while DraftKings is forecasting 55%.

We got questions: The MS analysis chimes with recent commentary from the team at Jefferies, who said that in their recent interactions with investors the cost of sales and marketing was among their top concerns, along with the questions around stock-based compensation.

• The MS team ascribed the difference between the two as being due to DraftKings’ lower win-rate and less efficient marketing as well as Flutter’s “conservatism.”

Regardless of the flow-through handicap, MS still forecasts DraftKings as producing positive adj. EBITDA for Q1 of ~$35m vs. guidance of breakeven and consensus estimates of ~$4m. The team said QTD data showed better-than-expected handle with structural hold of ~10%.

• DraftKings’ promos as a percentage of handle/GGR has been “reasonable” while iCasino revenues across the sector are “remarkably resilient”, up 26% YoY.

• This will be the sixth consecutive quarter of 20%+ growth in iCasino.

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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.

+More

MGM Resorts has completed the previously announced $750m notes issuance. The company will use the proceeds to repay existing indebtedness.

Melco Resorts has also priced up $750m of new senior notes, which it will use to partially repay an outstanding revolving credit facility with the rest to be used for general corporate purposes.

Inspired Entertainment will regain its Nasdaq listing status when it publishes its FY23 earnings on April 15, having previously failed to publish by the March deadline.

Caesars has launched a retail sportsbook at its Harrah’s Gulf Coast property in Mississippi.

Read across

In Compliance+More this week, the gaming sector in Spain notched up a rare victory as the Supreme Court overturned a number of the advertising restrictions. Not such good news in Maryland, however, as the iCasino proposal dies in the state Senate.

In Earnings+More earlier this week we ran an interview with David Briggs of GeoComply who spoke about the Challenger event in New York. Click here for ticket enquiries.

What we’re reading

Guilty plea: Ohtani’s interpreter said to be negotiating a guilty plea. From The New York Times.

I think I’ll pass: Richard Flint has ruled himself out of the Entain CEO job, says Sky News.

• Director of Account Management & Growth Strategy – North America / Remote 

• Chief Technology Officer – Dubai 

• Head of Sportsbook – London or Malta 

BlueBet buys Oz Betr

Better days: BlueBet has announced an all-share merger with the Matthew Tripp-helmed Australian Betr (not to be confused with the US Betr led by Joey Levy) alongside a A$20m ($13m) equity raise, which it said will fund growth initiatives.

• Updating the Australian stock exchange, BlueBet said it hoped the deal would propel the business to monthly EBITDA profitability in H125 with the expectation of full-year profits by the end of that financial year.

The company noted it was adding a customer database of ~341k and active accounts of ~112k, which it said would add “significantly enhanced scale” to its existing ~67k audience. Unaudited pro-forma net win for the combined businesses in H224 came in at A$66.2m.

• BlueBet added it had identified A$11m of immediate synergies from the A$14m that it hopes to realize by the end of 2025.

You trip me up: Betr founder Tripp, who previously sold Sportsbet to Flutter, will be joining the BlueBet board. He launched Betr in late 2022 with the backing of News Corp, which severed ties last year having pumped an estimated A$75m into the business.

Another one bites the dust: BlueBet said the Australian market would now be the primary focus for the combined entity with its less-than-nascent US business ClutchBet to be placed under a strategic review once the merger is completed.

• It added that no further US B2C operations would be launched from this point. 

• It is currently operational in four states: Colorado, Iowa, Indiana and Louisiana. In none of them has it troubled the scorers.

BetMakers buys Racelab

Lab-grown: Separately, Australian-listed BetMakers Technology has announced the acquisition of pricing and trading technology provider Racelab for A$1.5m, which the company said would add race form, preview and statistics tech to its ecosystem.

• BetMakers noted client Betr’s merger with BlueBet and said it would mark the end of its platform provision deal with the company.

• The business saw its share price rise 6% in Friday trading.

The shares week

Golden Matrix has finally completed the acquisition of Meridianbet in a cash, debt and stock transaction. The deal, originally struck in January 2023, valued Meridianbet at $300m and was due to complete in the first half of 2023.

• The terms were subsequently amended in July 2023 with the cash to be paid on closing falling to $30m from $50m.

• Golden Matrix CEO Brian Goodman said the completion of the deal was a “momentous occasion” that would result in a “fundamental” change for the company, which he expected to deliver “significant increases” in both revenues and profitability. 

• The share price fell immediately on closing, off by over 13% on Wednesday.

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Parlay takes

A leg up: The average number of legs added to parlay bets in the US has increased steadily in the past two years or more, rising from 4.2 to 5, according to data cited by the analysts at JMP. Looking at player figures provided by Juice Reel, the team noted the “steady increase in the number of legs supported gaming margin expansion and has brought on a noticeable difference in consumer behavior.”

• They added that they believe US bettors with a “background in long-shot lottery odds” are opting for longer-legged parlays, with a noticeable uptick in 10+ leg parlays in recent years.

Survival of the fittest: JMP also noted the evolution of the parlay product in the last few years – it now includes multi-game, same-game and, more recently, progressive parlay options – which the team said “coincides” with the operators’ ability to offer the end-user different variations within a betting category.

• “The betting types within parlays are another factor to consider and watch in the gaming margin expansion story,” they added.

They pointed out that both DraftKings and FanDuel have said multi-game parlays are losing mix share compared to their same-game offering. This is a “structural tailwind for gaming margins”, with more margin “baked into bets” given that SGPs are more player-prop-oriented with less certainty around player performance for the operators.

• JMP added that FanDuel and DraftKings have worked to “clean up lines, pricing and other areas of risk management.”

• The factors affecting parlays are another reason why scale is important, the team added.

Snow business: FanDuel's ability to increase gaming margins “creates a snowball effect, whereby higher levels of revenue flowing through to contribution profit can be reinvested back into its player base to strengthen customer loyalty and improve the long-term value of its customers. 

More takes

888: The team at Jefferies suggested the new “credible” action plan and new financial targets announced in late March has increased investor confidence. “Delivery is now the focus,” the team added, suggesting an improved performance would offer the prospect of reducing the company’s leverage.

• “After a tough comp in Q124 and guidance implying double-digit growth through the rest of 2024, execution is the focus,” the team said.

• They suggested there would be incremental marketing spend in H1, notably around the Cheltenham Festival, this weekend’s Grand National meeting and the upcoming soccer Euros.

Regionals: The team at Deutsche Bank said the regional casino market is suffering a “slow bleed lower” in GGR with new supply being the primary source of growth, if there is any, and suggested confidence in easier comps later in the year might be “misplaced.”

• While comps will “ease” in Q224, the DB team said they “don't necessarily expect” nor model a return to growth, as they see moderating declines, though still negative comparisons.

Sector watch – sports collectibles

Nerdstock: Via the medium of X, Fanatics CEO Michael Rubin announced the launch of the company’s Fanatics Fest NYC, which he said was a “first of its kind” festival for the sports collectibles market.

• “Ever been to Comic Con? Or SXSW? What about a music festival?? We need this in sports,” Rubin argued. 

We are stardust, we are golden: In a press release announcing the news, Fanatics said the three-day event will take place at the Javits Center in Manhattan in mid-August and will feature multiple stages and theaters, exclusive merchandise and “products drops.”

• But life is for learning: Also part of the event will be an all-day “trading pit,” including a ‘Collectors 101’ for collecting newbies.

Take it from the top: Recall, Fanatics bought the Topps trading card business in January 2022 for ~$500m. Rubin said at the time that collectibles would be a “significant pillar” of the business as a whole. The previous summer, Fanatics outbid Topps for the exclusive license to produce baseball cards from Major League Baseball and the MLB Players Association.

• Fanatics Events, which counts Endeavor as a minority partner, was conceived only last July.

• Its first venture was WWE World at WrestleMania, a five-day festival that took place from April 4-8 in Philadelphia.

Clck and cllct: Doubtless getting very excited about Fanatics Fest will be Darren Rovell, who announced he has launched a new website for the collectibles market. Cllct has raised $4m from the likes of Bolt Venture, Tallwoods Capital, Eberg Capital, Amity Supply and Phoenix Capital Ventures.

Calendar

• Apr 15: Inspired Entertainment

• Apr 17: Entain, Las Vegas Sands, Monarch

• Apr 18: Rank

• Apr 24: Evolution, Kambi, PointsBet

• Apr 26: Betsson

• May 1: MGM Resorts

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