• New CTO at Penn has an ESPN Bet-sized opportunity ahead.

• Asia dominates Evolution’s story as growth markets lag behind.

• Kindred in holding pattern ahead of FDJ takeout.

• Pluses and minuses for Kambi in Q1.

• In earnings in brief: PointsBet, Svenska Spel.

Just because you don't believe that I wanna dance.

Penn’s ESPN Bet upside

A new career in a new town: ESPN Bet has a shot at establishing itself as the number three operator in US OSB, according to new analysis, which comes with the news that Penn Entertainment has appointed a new tech chief to oversee its online efforts.

• Aaron LaBerge joins as CTO after spending 20 years at Disney Entertainment in two stints, separated by a five-year period as a tech entrepreneur.

• The JMP team noted Penn Interactive, including its ESPN Bet operations, has been left leaderless since the departure of the Levy family, the former founders of theScore. 

No pressure: LaBerge joins at a “pivotal moment” for Penn’s online ambitions as it prepares for ESPN Bet’s first football season in September, and his appointment could be the “catalyst to determine if the venture will work.”

Your task should you accept: A note from the analysts at Truist this week laid out what the team suggested is the “upside case” for Penn’s online ambitions, saying that although it remains early days ESPN Bet is “already making a splash.”

• ESPN Bet has been a top-four player since launch with handle shares of ~8%, they pointed out, and promo spend is already down “meaningfully.”

💰and 👛 ESPN Bet handle market share vs. promos as % of handle

We’re not alone: The Truist team suggested that, after the top two in the market, they see “plenty of white space” for a third-place competitor to emerge. ESPN Bet has “already achieved its standing with relatively nascent tech compared to Penn’s ultimate vision for the product,” they added.

• The team said that if wagering via ‘Bet Mode’ on the ESPN app “proves as seamless as it could be”, then they foresee Penn’s market share “catapulting” about 10%.

• A “credible top three could be formed in the OSB landscape.”

The price is right: Recall, yesterday E+M published findings from HoldCrunch that suggested there was room for a Tier 2 operator to grab profitable market share behind FanDuel and DraftKings in US OSB. That research suggested the winner would be determined by price.

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Crown heights: As noted yesterday in Compliance+More, Crown Resorts will keep its license to operate in New South Wales following an investigation by the authorities into AML violations. The NSW Independent Casino Commission said the company had turned around its business culture.

The UK Tote Group and Singapore Pools have agreed a commingling deal that will see both organizations combine liquidity, with customers of Singapore Pools betting into the UK Tote’s pools on British racing meetings. 

By the numbers

France: GGR in 2023 rose 3.5% YoY to €13.4bn, according to the regulator L'Autorité Nationale des Jeux, which said online players rose to a record 3.6m uniques.

Evo’s Asian domination

The Asian (double) century: Asia continues to dominate Evolution’s growth story, with revenue from the region up 28% YoY to €198m in Q1 compared to growth rates of less than 10% elsewhere. “The pace of growth is coming down as our size is increasing. But it's still a market with vast potential,” commented CEO Martin Carlesund.

A plea for patience: The company’s North America business has been more sluggish, with revenue up just 8% to €62.1m. Carlesund hailed the addition of Fanatics to its client portfolio, a launch in Delaware and a new studio in New Jersey, and claimed the live business is “growing in line with the market.” 

• However, with Q124 iGaming revenue up 22% in New Jersey, for example, this was questioned by one analyst, who got a flat bat response.

• “Our share of the live is fairly low in North America,” Carelsund admitted. “It takes time. We are still not anywhere near where we want to be with RNG.”

By the numbers: The slow growth of RNG is a factor across the business, with revenue from slots and other RNG games up just 0.8% to €70.1m, while live casino revenue increased 20% to €431m during Q1.

• Overall, Q1 revenues increased by 17% to €502m while EBITDA was up 15% to €346m.

• Shareholders are set to receive a dividend of €2.65 per share, accounting for 52.2% of net profit. A total of €559m will be distributed. 

Playing the waiting game: Latin America was similarly disappointing to North America, with revenue up 10% to just €33m. Carlesund believed operators in Brazil are quiet as they wait for the launch of the regulated market.

• The European business was more robust, with a 10% growth rate to €191m more significant. Other markets (mainly Africa) grew 22% to €17.8m.

People power: “One of the biggest challenges is to keep up with demand. Few companies are privileged enough to exist in this reality but it also raises the bar on us as an employer, an innovator, game creator and a market leader. We need to work even harder to step up to this challenge,” noted Carlesund.

• To this end, he was pleased to announce the company had increased headcount by 18.5% this year to 20,537 staff.

• With four new studios being built in 2024, that number will continue to grow.

Kindred earnings review

No drama: Compared to previous updates, when profit warnings, market exits and M&A news was to the fore, Kindred managed to produce a ‘steady as she goes’ quarterly update ahead of any further news on the FDJ takeout.

• CEO Nils Andén noted the plus points in the Netherlands and the UK, with growth of 24% and 20% respectively.

• Less impressive were the numbers from the Nordic region, which fell 15%, led by a 20% YoY drop in Sweden.

Bovvered: Andén played down fears over moves in the Dutch parliament that could see online slot games banned, suggesting the party that will most likely form the next government voted against the measure. See Compliance+More tomorrow for more.

By the numbers: Revenue was flat at £308m while adj. EBITDA was up 20% to £59.3m, helped by the company’s cost-cutting and reduction efforts. Excluding the US, revenues rose 4% in constant currency terms.

• CFO Patrick Kortman said the cost reductions were helped by improved terms with suppliers and payment providers.

• The company reiterated its EBITDA target of £250m.

Leaving Dodge: Talking of the US, Kindred has to date closed three states, and Andén said the business was on track to complete its exit by the end of Q2. He added the company had been able to “drastically reduce” its spending in the market.

A new hope: Andén said Kindred had now taken its first bet on the new proprietary platform, adding that the project remained “firmly on track.”

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Kambi earnings review

Puts and takes: The company saw the addition of new customers during the quarter, including Bally’s and LiveScore, but it also saw the exit of the Napoleon sportsbook, which was bought by Superbet in 2021.

• LiveScore is “one of the most important signings” from last year, said CEO Kristian Nylén. He noted the launch in Nigeria in Q1, with a Netherlands launch in Q2 and the UK to come.

• Asked about the impact of M&A on its customer base, Nylén said the only insurance Kambi had was to have “as long a contract as possible.” 

Modular living: Nylén added that it would not stop Kambi from seeking Tier 1 customers as much as Tier 2 and 3. “It’s always a risk and that is one of the reasons why we launched modular services,” he added.

• On that point, yesterday, Kambi’s AI-assisted Tzeract division announced it would be providing Kwiff with a bet builder product ahead of the Euro 24 tournament.

• Nylén added he “wouldn’t rule out” Kambi being involved in M&A itself, with a PAM being of particular interest.

By the numbers: Revenue was down slightly at €43.2m while EBITDA rose 10% to €14.1m.

Earnings in brief

PointsBet: The company said it has received its final installment of US$50m from the sale of the US operations to Fanatics as the rump Australian and Canadian operations delivered a 24% YoY revenue increase to A$70.6m (US$45.9m).

• Within that, Australian net win rose 20% to A$60.8m while OSB and iCasino in Canada were up 62% to A$9.9m.

• Noting the first positive cash flow quarter in the company’s history of A$2m, it said it expects to be cash flow positive for FY24.

• Subsequent to receiving the last installment from Fanatics, the company will make its second return of A$127m to shareholders.

Svenska Spel: Online provided the bright spot with a 5.8% YoY revenue rise to SEK1.09bn ($100.3m) as the state-owned operator suffered an overall 1% YoY decline in revenues in Q1 to SEK1.96bn, while net profits slumped by nearly a quarter to SEK294m. 

• The company said the decline was due in part to the restructuring of the B&M gaming business, which included the shuttering of two casinos in Malmö and Gothenburg.

Calendar

• Apr 24: Churchill Downs

• Apr 25: Boyd Gaming

• Apr 26: Betsson, Gaming & Leisure Partners

• Apr 30: Caesars Entertainment

• May 1: MGM Resorts, Bally’s

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