• Analysts downgrade Caesars as digital provides a mixed bag.

• Star revenues and shares down as Bell hearings open.

• In the week ahead, Entain is forecast to suffer more online negatives.

• Our startup focus is lottery content provider EQL Games.

I can't swim the ocean like this forever.

Caesars’ analyst downgrade

You win some, you lose some: Caesars’ online performance in the first quarter has likely been derailed by a poor hold performance in sports-betting and despite “solid traction” in iCasino, according to the analysts at Deutsche Bank.

• The analysts estimated the sports-betting unit will see anemic same-store GGR growth of ~1% YoY while absolute GGR growth will come in at ~6%.

• At the same time, the team indicated iCasino GGR was up ~40% YoY through February.

One step beyond: The DB analysts suggested hold will be below the company’s target of 7.5%, “hindered” by a “less-than-stellar” Super Bowl outcome and more recently by hold-related issues during March Madness. They added that UConn’s National Title win “likely” got the seasonally slower Q2 off to a “challenging start” for the sector.

Didn’t happen in Vegas: Meanwhile, the team said they did not feel the need to “overly emphasize” the headwinds Caesars has faced in Las Vegas in Q1, including lower-than-normal table hold, high-end weakness in March due in part to Adele’s canceled shows and a “continued malaise” at the lower end. 

• Add in the transfer of operations at the Rio Casino, which switched to new owner Dreamscape in late 2023, and DB forecasted a same-store high- to mid-single digit YoY decline when adjusted for hold.

• While regional performance is likely in line with consensus, it still left DB downgrading its EBITDA forecasts for Q1 to $857m vs. its previous estimate of $943m.

Market share update

On the march: With about half the states having reported for March, the team at JMP pointed out that by GGR Caesars improved to 7% share vs. 4% in Q1 as a whole, helped by a 100 bps improvement in hold in March vs. the rest of the quarter. 

• More strikingly, at the top, FanDuel saw its share of GGR rise to 46% in both March and the quarter as a whole vs. 41% in Q423.

• DraftKings stood at 34% in March vs. 36% in Q1 as a whole and 37% in Q423.

• Ex-New York, ESPN Bet achieved 3% GGR share (5% share of handle).

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Bally Bet plans to launch online sports betting in Massachusetts by the end of June.

Affiliate provider Raketech has signed a three-year media partnership deal with Danske Spil.

What we’re reading

Switchblade: EKG said the success of sweepstakes is a double-edged sword, bringing both the potential for M&A as operators look to diversify into adjacent sectors – but also the threat of further regulatory scrutiny.

AMHell: That article from 404media.com.

Career paths

Sportingtech has appointed Claire Bailiss as chief people officer. Bailiss previously worked at GAN and Ask.com.

The Curling Group, a curling investment venture, has appointed ex-PointsBet Canada chief commercial officer Nic Sulsky as CEO.

Andrew Gradwell has moved up to be FanDuel’s senior VP of product. Meanwhile, Flutter UK & Ireland has appointed Cheryl Bosi as its new chief people officer. She joins from HSBC.

Star earnings update

Catch a falling Star: The troubled operator of the Star Sydney, Star Gold Coast and Treasury Brisbane said revenues for Q323 were down 4.6% to A$440m ($285.5m) while normalized EBITDA fell by 11.5% to A$42.9m, with high-end play substantially down across its three properties.

• The downturn comes as the company has embarked upon a remediation plan for Queensland following a review into serious AML failures. It has also been threatened with losing its license in Sydney.

For whom the bell tolls: The second Bell inquiry’s public hearings began today, Monday, with the Sydney Star’s regulator-appointed manager, Nicholas Weeks, saying internal messages suggested management was willing to “go to war” with the authorities.

• "The company still has some distance to travel in terms of setting up structures and governance arrangements to do that in the absence of the manager," said Weeks. See tomorrow’s Compliance+More.

• Recall, CEO Robbie Cooke recently stepped down after he deemed it unlikely the company would retain its New South Wales license if he remained in situ.

🌠Star fall: Star shares down nearly 10% in last five days

Crown London Aspinalls worries

Crown’s slip: The London high-end casino property has warned there is a “material uncertainty” over its ability to continue trading should its Australian parent company, Crown Resorts, lose its license in Australia.

• Figures lodged with Companies House in the UK show the property continues to be loss-making despite efforts to pare back expenses. 

• It lost £2m in the year to June 2023 vs. £6m the year previously, although revenues rose 61% to £312.2m. 

The week ahead

Entain 

The still leaderless Entain will report its Q1 numbers on Wednesday, with analysts at Jefferies forecasting a mid-single-digit YoY decline in the online business in line with the Q4 performance. Notably, looking at app data, the team suggested Entain has continued to lose ground in the UK and Ireland, noting monthly active users across key brands was down 8% in Q124.

• This is despite an improvement in March where the YoY user decline narrowed to 5% vs. 11% and 9% in January and February respectively.

• Worse news came from Australia where monthly active users were down 17% in Q1.

• Lastly, in Italy, GGR data suggested a 6% decline for Entain, with a 21% decline in sports betting only partly offset by a 7% increase in iCasino.

The catalyst: The analysts argued that a CEO appointment could provide a boost. “With a heavy activist presence on the shareholder register, we anticipate a credible candidate with an online execution track record,” the team added.

• Note, just last week ex-Sky Bet CEO Richard Flint ruled himself out of the race via the medium of Sky News.

Las Vegas Sands

Expansions: The latest news from LVS is that the company will be spending ~$3.3bn on expanding the Marina Bay Sands property, with a new hotel tower due to be completed in 2029. Analysts from Morgan Stanley said last week LVS was “well-positioned for growth” from the recent $750m refit at the property.

Also this week: The conditions for UK casino and bingo will be the focus as Grosvenor and Mecca operator Rank reports on Thursday.

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Analyst takes – Bally’s

Coin flip: The credit team at CBRE suggested they saw a less-than 50% chance of Standard General succeeding in its efforts to snap up the nearly three-quarters of the business the fund doesn’t already own, adding it would be hard for the board to justify accepting the“substantially lower” equity valuation.

• The analysts pointed out the offer “creates more noise and may distract” from the ongoing efforts to raise the $800m in financing needed to complete the $1.1bn Chicago facility.

Not even first base: Another uncertainty comes from the tribulations that surround the now-closed Tropicana and the plan for the MLB stadium and new casino complex. Bearing in mind the casino build likely won’t come until the stadium is complete, CBRE suggested a “credit-friendly” option would be a sale of the land to “bolster liquidity or fund other investment.”

• CBRE noted that, on the Q3 earnings call, Bally’s management expressed a willingness to sell at the “right price.”

More takes

VICI: The gaming REIT story “remains intact” despite the rise of base rates, suggested the team at CBRE, who said VICI is insulated by its moderate net leverage, financial sound tenants and a healthy growth pipeline.

• The analysts noted concerns expressed in recent coverage from the credit agencies over VICI’s reliance on Caesars and MGM Resorts.

• But they suggested such fears are “overblown” given the healthy credit profiles for the pair.

Startup focus – EQL Games

Who, what, where and when: Founded in Louisville, Kentucky in 2010 by Brad Cummings (co-founder of horse racing news site Paulick Report), EQL Games has evolved into a full-service content and licensing supplier to US and international lotteries. 

• All the technology has been developed from scratch by CTO Austin Mayberry (formerly Deutsche Bank, Invesco), giving EQL “one of the few non-legacy tech stacks currently operating in the lottery industry,” says Cummings.

Funding backgrounder: Parlay Capital led the most recent equity financing round in September 2023. EQL has also enjoyed a strong relationship with the local investor community in Louisville. 

• “Future capital raises will likely include more institutional investors looking to leverage the current interest in the lottery industry,” reckons Cummings.

The pitch: “Our lottery-only aggregator, a first of its kind product, has exceeded our expectations in lottery acceptance and results,” says Cummings, who adds that lotteries are looking for digital content that is different from the content currently dominating the market. 

• “Bringing some of the best iGaming studios in the world into the lottery industry allows EQL to help answer that call,” he says. 

• The company expects to be live in seven iLotteries by the end of 2024.

• This includes the Virginia Lottery, which is currently the largest iLottery in the US in terms of both overall revenue and per capita sales.

Growth company news

KiX in the craw: A football trading website with remarkable similarities to the failed Football Index, launched by a former employee of the company and apparently backed by the ex-Football Index CEO Adam Cole has hit the headlines.

• According to The Times, KiX was launched by Abdullah Suleyman, former head of trading at Football Index.

• The pitch deck reportedly cites Football Index as a “proof of concept’ despite that business having gone into administration owing at least £90m in virtual football shares to users.

• A spokesman for KiX told the paper that Cole was an investor and adviser to the company but said he did not have “executive input at operational or board level.”

Calendar

• Apr 17: Entain

• Apr 18: Rank

• Apr 24: Evolution, Kambi

• Apr 26: Betsson

• May 1: MGM Resorts

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For more info, go to www.kambi.com

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