• Factors other than pricing lie behind differing margin outcomes.

• In +More careers: Underdog’s hiring spree. 

• Tilman Fertitta ups Wynn stake, adds criticism to the mix.

• Better Collective steadies the ship, Gambling.com sails on.

I hope that you'll understand there's a reason why.

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Little white lies

Oh no-no, you can't disguise: Flutter CEO Peter Jackson’s comments on Tuesday that FanDuel’s advantage over the competition during the recent run of punter-friendly NFL results came down to the expertise of the trading team has subsequently come in for some scrutiny.

• In a blog posted yesterday, Regulus Partners said FanDuel “might price better than lots of minnows.”

• “But it cannot price better than the market – the market is the pricing mechanism,” the team added.

The price you pay: In its Q3 numbers, FanDuel admitted the bad run of NFL results running through October and into the first week of November meant the company had to lower its FY24 adj. EBITDA by 4% at midpoint.

• This compares favorably, however, with DraftKings, which said a week previous that unlucky October was the cause of a 30% cut to FY24 adj. EBITDA guidance at midpoint.

• The contrast prompted Jackson to claim on Tuesday that pricing was “driving the material differential.” 

Two steps to heaven: Sources pointed out that DraftKings has via its acquisitions of Sports IQ and Simplebet effectively admitted it has a deficiency when it comes to its trading operation. “They know they are weak on the trading side, so that’s why they bought them,” said one industry insider.

• But the sources agreed the trading bolt-ons are more about bolstering its SGP, player prop and in-play capabilities.

• The difference in outcomes for October’s NFL results, then, is not pricing but, as another insider suggested, “more likely due to DraftKings’ higher mix of higher-staking customers.”

Secret sauce: The Regulus team pointed out margins are “not set by pricing so much as where they are on a spectrum of product and customer mix,” an aspect that applies to all bookmakers. Therefore, “optimizing pricing” usually means combining three “more subtle” ingredients.

• Factoring VIPs so they can’t bend the book out of shape with large bets.

• Adding additional margin into parlays because they are opaque.

• And spreading risk by offering more markets.

Smash ’n’ grab: To do all three, the Regulus team suggested, means a sportsbook needs scale so as not to be dependent on VIPs, a parlay product that is sufficiently competitive and a “dominant liquidity position.”

• “At the moment, those three attributes only apply to FanDuel in the US market, which is why FanDuel is smashing margin and smashing market share,” the Regulus team argued.

Moment of truth: Meanwhile, one source on the trading side said a key moment for DraftKings would come in H1 when they have completed the integration of their new capabilities. 

• “If it is still getting the same results, then I’m sure the analysts will have questions,” the source added. 

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+More

Everi shareholders have approved the acquisition by Apollo as part of the transaction that will see it merged with IGT. 

Evolution has signed a three-year contract extension with FanDuel for the provision of live casino.

Read across

Someone’s knocking at the door: Compliance+More reported yesterday on the news that federal agents raided the Manhattan apartment of Polymarket CEO Shayne Coplan early Wednesday morning, demanding his phone and other electronic devices.

Does your dog bite? Polymarket also dominated the news earlier in the week when it emerged that the prominent role of a pseudonymous French trader betting via the Polymarket prediction market on Donald Trump’s chances of regaining the presidency had aroused the suspicions of France’s gambling regulator. In The Token Word, 

+More careers

The big moves: Underdog has had a busy couple of months on the hiring front. As per EKG, it recently added Will Twinn, the former VP of trading at FanDuel, as its SVP for pricing and trading.

• Meanwhile, the analysts at JMP noted the company also hired Greg Roseberry from Google as its new SVP of finance.

• This is on top of further hires including SVP of operations Jake Williams, who joined the company from PointsBet US, and Dillon Borgida, ex-FanDuel and DraftKings, who is the VP of VIP.

• The JMP team noted the “rapid success” of Underdog, pointing out it has grown from 12 employees in 2021 to >450. 

• Chief Commercial Officer – Warsaw 

• Corporate Communications Director – São Paulo 

• Senior Horse Racing Trading Manager – Remote 

Could do better

Fertitta ye not: The recent poor performance of the Wynn Resorts share price has proved to be too much for shareholder Tilman Fertitta, who has upped his stake in the business to 9.9%.

• At the same time, a report from Bloomberg suggested Fertitta had let it be known he was unhappy with the performance of the management team.

Spike island: The news of the new shares purchase caused the Wynn share price to spike nearly 9%. The share price has suffered in the past month on the back of worries over the company’s Macau operation and despite the news of the granting of a license in the UAE.

🎢 Fertitta buying spree revives the Wynn Resorts share price 

Fertitta became a substantial shareholder in Wynn in October 2022 when he first established a 6% stake.

• Fertitta owns the Landry’s restaurant company and the Golden Nugget casinos. 

• He previously sold the Golden Nugget Online Gaming business to DraftKings in 2021 for stock worth $700m at the time.

• Deutsche Bank analysts suggested Fertitta was likely to remain a passive investor in Wynn – until he wasn’t, with M&A further down the road a distinct possibility.

Collective responsibility

Pride and fall: The CEO of gaming affiliate behemoth Better Collective addressed the company’s recent profit warning head-on during the company’s Q3 call with analysts, by pointing out it was the first financial setback since the company IPO’d in 2018.

• “We have always taken pride in meeting our financial targets, so this is not something we are taking lightly and certainly not something we plan for,” said Jesper Søgaard.

Better Collective took a 35%+ hit to its share price earlier this month when it issued the downgraded forecasts, and on Wednesday the company confirmed the new EBITDA target of €100m-€110m, or 25% at midpoint below the previous guidance.

At the risk of repeating myself: The company said this week that Q3 revenue rose 8% YoY to €81m, but that organic growth declined by 6%. EBITDA before special items was up 14% to €22m while net debt to EBITDA remained at 2x.

• Management reiterated that it blamed the FY24 downgrade on issues with the US market and Brazil.

• In response, the company confirmed today that it had already laid off 300+ people as part of a €50m cost-saving program.

😬 Asked whether the warning on FY24 profits and the introduction of the cost-cutting plan was related to the loss of any “specific client,” Søgaard repeated it was driven by “global commercial activity that we are experiencing,” with the timing down to “the start of the NFL.”

Keep on truckin’: Søgaard said the setback would not mean a "structural shift” in the company’s strategy and insisted M&A remained a focus. “Timing just needs to be right.”

• Søgaard went on to say M&A had been “completely instrumental” to the company and was a “big part of the growth we have achieved and nothing has changed there.”

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Alive and kicking

Showing their class: Giving more of a boost to listed gaming affiliate share prices yesterday was rival Gambling.com, which enjoyed a 20%-plus boost after the company reported Q3 revenues up 37% to $32.1m while adj. EBITDA more than doubled to $12.6m.

• CEO Charles Gillespie said “showcase” brands such as Gambling.com itself and Bookies.com had “showed their strength,” while Casinos.com would put further clear blue water between the company and its competition.

The long-term target remained $100m of annual adj. EBITDA and Gillespie said he was “confident” that, with the right M&A, the target might be reached earlier than planned. He noted the Freebets acquisition from XLMedia had been "fantastic." 

• The guidance for FY24 was also upgraded, with adj. EBITDA now expected at $46.5m-$48.5m on revenue of $126m at midpoint.

Throwing shade: Asked about comparison with Better Collective, Gillespie said there were “no sector-specific headwinds” and that the global gaming affiliate space was “alive and well.”

• “I think the biggest difference between us and some of our peers is that we are an organic growth strategy,” he added.

+More earnings

Nothing to shout about: In March online gaming supplier Bragg Gaming set up a committee to explore its strategic options. Yesterday, after discussions with over 70 parties and NDAs signed with 25 potential counterparties, CEO and chair Matevž Mazij pulled the plug 

• “None of the proposals received reflect the company’s intrinsic value or current and projected financial performance,” he said.

• The share price collapsed 30% on the news, with analysts at JMP noting the likely exodus of “event-driven investors.”

• Q3 revenues were up 16% to €26.2m while adj. EBIDA rose 7% to €4.1m.

Raketech: Revenue was down 40% to €12.9m while adj. EBITDA tumbled by 45% to €3.1m, with CEO Johan Per Svensson saying it now “looks difficult” for the company to hit the lower end of its FY24 adj. EBITDA guidance of €17m-€19m.

• He said visibility was limited due to “ongoing operational challenges” within the company’s affiliation network.

Scout Gaming: Revenues climbed 87% to SEK11.8m ($1.1m) while the company achieved adj. EBITDA profitability – just – over a loss last year. Post-quarter end, the company signed an extension on its deal for the provision of F2P games to bet365 ex-North America.

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Events calendar

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• Jan 20-22: ICE, Barcelona

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