• Poor initial data and missed New York launch don’t bode well for ESPN Bet.

• Playtech shares up as it ends its Mexican standoff.

• Flutter’s attempt to grab a podium position in Brazil is assessed.

• By the numbers: signs of early success for BetMGM in New York.

I see trouble on the way.

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ESPN Bet’s bad moon 

Beware the ides of, er, September: A missed launch in New York, adverse media coverage and less than convincing download data from the first weekend of NFL action suggest ESPN Bet’s debut start to an NFL season isn’t going to plan.

Show me the money: And now, to add to the tale of woe, sources who have seen the transactional data from last weekend confirmed it points to ESPN Bet failing to gain any ground on the market leaders.

• People who have seen the data on ACH and credit and debit card transactions said it paints a picture of FanDuel and DraftKings having “hit the accelerator.” 

• At the same time, ESPN Bet has “not improved” its position and, in fact, its market share is “slightly down.” 

Is this it? This data comes on top of the download data from the first weekend that showed while ESPN Bet had picked up its share vs. Q2 to 5% from 2%, its total week 1 downloads of 69k were still way below the levels of the market leaders, FanDuel (426k) and DraftKings (324k).

New York blues: At the same time, the ESPN Bet mood music has not been helped by its failure to launch in New York in time for the kickoff last weekend. Despite confident assertions from Penn management of a NFL season curtain raiser opening, it has now emerged it won’t even have its licensing hearing until September 23 at the earliest.

• The upside, according to investment sources, is the delay means Penn won’t have the presumed losses accrued from a NY launch in its Q3 numbers.

• In Q3 ESPN Bet’s revenue “ought to be up a lot” because it stopped spending any money on the Barstool brand in the prior-year period, said one investment insider, who opted for anonymity.

• “But one quarter of GGR growth will not be a compelling story,” they added.

Background noise: The indications that all is not well with ESPN Bet come against the backdrop of continued rumblings around the potential of a bid (or bids) for Penn Entertainment. 

• The investment insider said their “best guess” was Penn did receive expressions of interest.

• But they added it was likely the company told the bidders they weren’t attributing enough value to ESPN Bet.

• “So, I think the bidder said, ‘OK, prove it’,” the source added.

👀Meanwhile, analysts at Jefferies noted their inbound calls last week were “focused on two names,” Rush Street Interactive, up over 10% on the week, and Penn, which rose 9%.

• On RSI, the team said “it is not clear to us exactly why it outperformed,” but they believed there were “likely multiple factors.”

• With Penn, the team said they expected the initial data points for ESPN Bet to be “positive.”

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Hands full: Bally’s has pulled the plug on its involvement in the $130m casino project joint venture with SC Gaming in College Township, Pennsylvania. Three years on from striking the original deal, Bally’s said its “strategic priorities have shifted elsewhere.”

• Bally’s is currently in the process of developing a permanent casino in Chicago with partner GLP and is also hoping to build a casino as part of the A’s MLB stadium plans in Las Vegas.

• Deutsche Bank analysts estimated Bally’s will save ~$120m of investment from pulling out.

• Get along without you now: SC Gaming said the project will continue without Bally’s involvement.

• SC is owned by Ira Lubert, who previously developed the Valley Forge Casino Resort and ran it for 10 years before selling out to Boyd Gaming in 2018.

Caesars has launched in-person sports betting in Maine at a venue called Oddsfellahs in partnership with First Tracks Investment. It is the first operator in the state to do so. Caesars launched online in Maine in November last year.

The French competition authorities have given their conditional approval to FDJ’s acquisition of Kindred, with the caveat that FDJ commits to a clear brand separation strategy post-acquisition.

Hours after launching US election prediction markets Kalshi was forced to temporarily suspend operations after a last-minute appeals court ruling. See The Token Word later this week on the CFTC’s attempt to stop election betting.

Inget sätt: Betway is to pull out of Sweden by October 1 it has warned its customers in the country.

Guns down 

Peace in our time: Playtech has reached an out-of-court settlement with Caliente with regard to its strategic agreement over the Caliplay online business in Mexico, which will see it retain a 31% stake in a US-domiciled holding company called Caliente Interactive. The news sent its shares up 8% in early trading.

• As part of the agreement, Playtech will receive $140m in instalments to be paid over the next four years. 

• Caliente has also resumed the payment of $150m in previously accrued fees with ~80% having now been received by Playtech. 

• The balance will be paid at the latest by the end of 2025.

Let that be the end of it: The new deal includes an eight-year software and services agreement. As part of the agreement, Playtech will be entitled to appoint one director to the board and will receive dividends from the business.

• The legal proceedings between the companies will now be brought to a halt.

• Recall, the dispute centred around a call option that enabled Caliente to buy Playtech’s 49% share in the Caliplay joint venture. 

• Caliente brought an action in Mexico that sought an annulment of the relationship between the two companies.

Gimme Mor: Playtech CEO Mor Weizer said the resolution to the dispute and “revised arrangements mark the beginning of an exciting new chapter,” while his counterpart at Caliente, Emilio Hank, said the new agreement “shows the inherent strength of the strategic relationship.”

• Analysts at Investec said the sale removed an “overhang” for the Playtech shares.

• They noted the “additional catalyst” of the potential sale of Snai to Flutter. Sources have told E+M that an announcement could be imminent.

On the up: In a trading update accompanying the news, Playtech said 2024 adj. EBITDA was ahead of current expectations, driven by improving B2B metrics including revenue growth in the Americas and tighter cost control.

Flutter reaction

Chasing down a medal: Jefferies noted that Flutter’s deal to buy a majority share in NSX, the operator behind a small host of Brazilian brands including Betnacional, and wrap it up with its existing operations in Brazil “secures a podium position” in a “highly attractive” market.

• JMP added that the $350m purchase multiple was high – 18x EBITDA – but said there was a “clear path to drive synergies.”

• Jefferies noted Flutter is guiding to a low single-digit cut to consensus FY25 EBITDA to “factor in customer acquisition investment around market launch.”

• But it sees a “path to accelerated growth” in a market that is expected to be worth $3bn from launch in January.

Emerging: JMP added the Brazilian market is now the “most attractive outside the US through the end of the decade.” By injecting capital, the team said Flutter will hope to drive revenue and scale.

• Moreover, the team added that by improving margins their “back of the envelope” calculations suggested the multiple will fall in line with historical multiples for Flutter acquisitions of between 8x-10x.

• Wells Fargo analysts suggested US operators are likely to seek similar moves given MGM’s recently announced Globo deal.

Shares week

Catch that wave: US gaming stocks enjoyed a good end to the week, with RSI and Penn (as mentioned above) in the vanguard alongside Caesars Entertainment (+5%), Light & Wonder (+6%) and to a lesser extent MGM Resorts (+3%) and Boyd Gaming (+2%) enjoying the rising tide.

• Enthusiasm for sports-betting stocks Down Under continues to light a fire under key stocks, with both PointsBet (+13%) and BlueBet (+20%) posting substantial gains on the week. 

Gaming Realms might have hoped for a more enthusiastic reception for its positive recent H1 earnings, with the shares down 2% on the week. Investec analysts said in the wake of the results that the markets “significantly underestimate the strength of the business.”

• Peel Hunt said the low valuation “ignores the long-term growth potential.”

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Earnings in brief

Loto-Québec: The provincial lottery to gaming monopoly operator saw revenue drop 3% YoY to C$690m ($508m) while net income fell by over 8% to C$350m in its FY25 Q1, with the falls attributed to the calendar lacking two extra weekend days.

• Lottery revenue came in at C$219m, casino and gaming hall income stood at C$275m and gaming establishment revenues hit C$201m.

By the numbers – New York

With a little help from our friends: While it is only one week’s worth of data, BetMGM will be celebrating what appears to be the early signs of what a now Angstrom-enabled betting offer can bring.

• FanDuel maintained its GGR dominance with 46% market share vs. DraftKings 31% and BetMGM’s 9%.

• However, FanDuel’s margins were down over 8ppts to 8.2% vs. a particularly tough comp of 16.5%. 

• DraftKings saw its margin drop similarly, down 6ppts to 5.5%.

But BetMGM’s margin held up much better, falling only 2ppts to an equal market-leading 8.2%, meaning it enjoyed GGR growth of 24% vs. the declines for its rivals.

• The team at Jefferies noted that historically BetMGM’s margin in New York has underperformed the market by nearly 2ppts and underperformed against FanDuel by 3.5ppts.

• While it remains early to draw conclusions, the team warned, the timing of BetMGM’s inflection in GGR and handle “could reflect a step-up in product quality courtesy of new Angstrom capabilities.”

😯 BetMGM on the rise

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Calendar

• Sep 25: Flutter investor day

• Sep 30: Playtech

• Oct 17: Entain

• Oct 24: Betsson, Evolution

• Oct 25: Kindred

An +More Media publication. 

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