• Analysts predict further iCasino growth in New Jersey.

• In +More: Spreadex–Sporting Index deal, Scandi operators set to report.

• The underperformance of Melco Resorts is the subject of shares watch.

• Startup focus is iGaming-focused marketing outfit The Tenth Man.

I just know that something good is going to happen.

iCasino on course to overtake AC

It’s coming for me through the trees: It is a question of “when, not if” iCasino revenues overtake those of Atlantic City, according to the analysts at Deutsche Bank, who pointed out that online GGR is highly likely to top $2bn this year. 

• The breaking of the $2bn barrier would be an “impressive feat” given revenues in 2019 only amounted to $483m.

Mind the gap: Looking at iCasino’s performance over the course of the 11 years it has been regulated in the state, the analysts noted the differential between iCasino GGR and B&M gaming has “tightened meaningfully” in the past four-and-a-quarter years. 

• In that time the gap between the two has come down from $2.2bn in 2019 to $900m in 2023.

• Since 2019, the CAGR for iCasino has been 41%, while growth in the last 12 months was 18% and in the quarter just gone 22% YoY.

• The DB team suggested that on the current growth run rate iCasino would be worth over $2bn in GGR in 2024.

🎯 The inexorable rise of New Jersey iCasino revenues

The big mo: The DB team suggested that “equally interesting is the strength shown in iCasino in the last 12 months. After a brief slowdown in Q123, where YoY growth dipped to 13%, it subsequently accelerated to 18% YoY, with Q124 up a robust 22% YoY.

🐢 vs. 🐇 Atlantic City vs. iCasino in the last 12 months

A share of the pie: The DB team noted that New Jersey’s decision to start publishing operator-by-operator data vs. the previous disclosures at a license holder level offers the opportunity to further examine trends within iCasino.

• As with other states, the top three have a lock on the majority of the market. The data for March showed DraftKings (25%), FanDuel (21%) and BetMGM (20%) controlled 66% market share. 

• Add in Caesars’ 10% and that becomes more than three-quarters share among just four operators.

🥧 iCasino market shares in March

Q1 iCasino market shares

Another passing maneuver: With all the iCasino data for March now in, the analysts at Jefferies noted total revenues hit $713m, a 25% advance YoY and 10% up MoM. The team also noted FanDuel overtook DraftKings on the total by operator after it achieved YoY growth of 65%.

• Jefferies pointed out FanDuel had overtaken DraftKings as the no.1 brand five months ago, but with Golden Nugget added to its tally it left DraftKings as the no. 1 operator.

• That has now changed, though, as FanDuel took 25% iCasino share in March while DraftKings and Golden Nugget combined was at 24%. BetMGM was third with 20%.

Conference plug: The Earnings+More Capital Markets Forum taking place on May 6 at the New York Stock Exchange includes a panel entitled ‘Have investors forgotten about iCasino.’ Airing their views will be David Catlin from Discerning Capital, Josh Swissman from GMA, Lauren Seiler of Global Gaming Advisors and Eric Hession, president at Caesars Digital. 

• You can buy one of the few remaining tickets via this link using the code EARNINGS100.

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+More

Spread and butter: The UK’s Competition and Markets Authority has confirmed Spreadex’s proposed acquisition of rival spread-betting operator Sporting Index will go before a four-man panel to look into monopoly concerns caused by the deal.

• The CMA found earlier in April the merger proposal “may be expected to result in a substantial lessening of competition.” 

• The deadline for a decision is October 1.

Shovel ready: Work has finally started on the $12bn high-speed rail line between Las Vegas and Southern California, according to the Las Vegas Review-Journal. The link has been spoken about for over a decade.

The week ahead

Scandi noir: The Scandi operators and providers will be front and center this week with Evolution leading the way on Wednesday alongside Kambi and Kindred, while on Friday Betsson reports. 

Regional gaming will be the focus on Wednesday and Thursday when first Churchill Downs and then Boyd Gaming report their Q1 numbers. The latter will face questions on the impact of the bad weather in January, while for Churchill Downs continued uncertainty over skill gaming is likely to feature on the call with analysts.

Career paths

The big move: Gaming affiliate FairPlay Media has made three significant hires with Niall Dore joining as CFO, Kelly Brooks, the former founder of the recently acquired Quarter4, becoming the new chief product officer and Matt Robinson taking over as CTO.

President of Wynn Las Vegas and Encore Steve Weitman is leaving the company to pursue other opportunities.

The Mohegan Tribal Gaming Authority has appointed Joseph Hasson as interim COO with current COO Jody Madigan set to leave the company as of August 1.

Strive Gaming has named former Flutter and William Hill executive Ian Smith as its new CTO.

Relax Gaming has appointed Martin Stålros as CEO. He previously served as COO for nearly 10 years. Prior to that he worked at Unibet and Ladbrokes.

Jonathan Chilton is the new MD at NeoGames’ subsidiary Aspire Global. Chilton was previously COO at GM Gaming.

PR firm Square In The Air has appointed Mark Armitage to head up its new performance marketing division.

The Unit has announced the appointment of Adam Noble as CCO

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Analyst takes

Bally’s: With the future of the company’s ownership in flux, uncertainties persisting over the financing of the Chicago project, the delays in New York licensing and weather-affected trading, it is clear the company will have a full agenda when it reports on May 1.

• Ahead of that, the team at Jefferies have taken out their collective pencil and revised their estimates for the quarter, with revenue down to $628m from $639m and with adj. EBITDA cut to $149m from $153m. 

• Maintaining their Hold recommendation, Jefferies said they continue to focus on Bally’s “elevated leverage, forthcoming capital needs and uncertainties surrounding capital-intensive projects.”

Penn Entertainment: Similarly seeing its estimates chopped was Penn, where Jefferies have cut their revenue predictions to $685m and adj. EBITDA to $200m from $695m and $206m respectively. The damage is largely down to the bad weather at the start of the quarter but the focus on the call will be on the progress being made at ESPN Bet.

888: Speaking to the analysts at Peel Hunt, Per Widerström, CEO, said the 888Africa joint venture was an example of how the company could grow scale but with low capital investment. “We believe these markets will have the opportunity to become core markets,” he suggested.

Shares watch – Melco Resorts

Discount tents: Macau exposure appears to be a big negative with investors at present, with Melco Resorts’ share price in the year to date being a case in point, suggested the analysts. Noting the 33% fall YTD, the team at CBRE pointed out the share hit a 52-week low last week.

• The shares are now trading at ~6.5x FY25 adj. EBITDA vs. an average of 8.8x for their Macau-listed peers.

Turning round the tanker: The CBRE team argued that in the immediate post-pandemic trading environment Melco was too enthusiastic in cutting service levels and has been too slow to bring them up to the level of the competition in the premium mass segment.

• “The good news is management has a plan to right the ship,” they added of various key hires at the company’s City of Dreams.

• Meanwhile, Melco’s Studio City property is “beginning to catch its stride.”

The company also got the nod in a sector initiation note from the analysts at Seaport Research Partners, who highlighted Melco as the turnaround story with “the most upside” if management can fix its issues.

• The “critical drivers” for the next one to two years, the Seaport team added, will be whether the company can take premium market share and ramp up Studio City.

• They noted Melco has relatively high leverage of 5x, hence the company’s likely focus on debt management.

Funding news

Show me DeMoney: DeGaming, an online gaming provider that envisions the facilitation of platform community ownership of gambling, has raised €3.5m from a Dubai-based fund called XVC Tech. 

• Co-founder and CEO Emil Ahmed said the vision for DeGaming is for liquidity providers to “effectively become part of the house, earning yields and contributing to our ecosystem's growth."

Spin cycle: The online gaming provider Softswiss has taken a stake in Germany-based social gaming operator Ously Games, the company behind SpinArena.net. As part of the new arrangement, Softswiss has committed to overhauling the Ously tech architecture.

Startup focus –  The Tenth Man

Who, what, where and when: The Tenth Man is a global marketing agency founded in 2018 by Ken Robertson, formerly advertising director and ‘head of mischief’ at Paddy Power. Working alongside him are CCO Richard Seabrooke, group MD Ailbhe Beirne and UK MD Gethin Evans. 

• “Our primary aim has been to provoke, challenge and cut through the sameness,” says Roberston.

• “Our name takes the lead from military strategy, where a ‘Tenth Man’ is appointed to challenge every perception and ultimately combat ‘group-think’.”

Funding backgrounder: The business has grown organically and remains wholly owned by Robertson. “We have refused many investment offers in the last few years,” he says, which has  “allowed us to keep a laser focus on the culture of the business.”

Ten men went to mow: “We’re famous for solving the problem – not just the brief – and have built teams in-house that allow us to do that,” Robertson claims. “We know the network agencies cannot and will not replicate this model.”

• A key USP, he says, is that the company is led by former chief marketing officers. “We’ve sat in their shoes and that doesn’t really exist in the market. We know the frustrations of choosing and working with agencies, specifically in regulated sectors.”

The macro shifts in the regulatory landscape will “catch a lot of businesses out”, Roberston says, adding that the task of reaching audiences effectively gets harder over time. 

• Tenth Man’s approach means embracing contrarian thinking. “We apply this outlook to sports betting across the world,” he says.

• The company counts Fanatics Sportsbook in the US, PointsBet in Australia and Superbet in Central Europe & Brazil among its clients.

• “A pertinent example of how we can put our own twist on things would be when we worked on PointsBet’s campaign with Shaquille O’Neal.” 

What will success look like?  Since launch, Tenth Man has recorded strong double-digit growth every year. “Our job is to continue to steepen the growth curve in the coming years,” says Robertson.  

• “Long-term we aspire to be among the top 10 global independent agencies by 2030.” 

Calendar

• Apr 24: Evolution, Kambi, Kindred, Churchill Downs

• Apr 25: Boyd Gaming

• Apr 26: Betsson, Gaming & Leisure Partners

• Apr 30: Caesars Entertainment

• May 1: MGM Resorts, Bally’s

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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