• ESPN Bet market share marooned; promos the only draw.

• Playtech sets the date for vote on £100m management remuneration.

• Codere Online suffers from Nasdaq and peso angst.

• Sector watch looks at the M&A prospects in social gaming.

As the water gets warmer, my iceberg gets smaller.

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Failure at a cost

I’ve been weighing on you: ESPN Bet is yet to see any big improvement in market share since the start of the NFL season while the data from a recent player survey suggests that what share it has comes at the expense of its promotional activity.

• A note last week from Truist pointed out that the Penn Entertainment-owned sportsbook was “still waiting on an inflection” in market share.

• The data from October shows it marooned at 4% of GGR despite efforts to reinvigorate the parlay product and the launch in New York.

Giving it all away: Meanwhile, the annual survey of sports bettors undertaken on behalf of Morgan Stanley suggests there is “concern” that ESPN Bet is attracting players due to the levels of promotions.

• The survey showed that ESPN Bet had the second-highest poll numbers for those using the app because of its promos at ~52% vs. 48% for the market leaders behind Fanatics.

• The MS team said this would be a "concern" if ESPN Bet’s NGR numbers showed any improvement.

Stubborn mule: But that seems a way off given its gross numbers remain poor. As detailed by Truist, since ESPN Bet hit 7%-8% share in the weeks following the launch last November, it dropped back to 4% in May this year and has not budged since.

• “Given continued product improvements, we had hoped to see some translations to share gains in state-reported data by year-end,” noted the Truist team.

• “We continue to wait,” they added.

🧐 ESPN Bet: bumping along the bottom

ESPN Bet GGR marekt share % (ex-NY)

Gap analysis: The Truist team went on to suggest there were “key core product gaps” vs. the market leaders and indeed, the MS survey showed ESPN Bet scoring among the lowest for its range of betting and best odds as reasons why consumers picked the brand.

• The survey suggests that ease of use of the app is the top reason for consumers choosing to use any particular brand.

• While ESPN Bet is not the worst by this metric – Bet365 and BetMGM score lower – at ~47% it is still some way behind the leaders DraftKings (57%) and FanDuel (55%).

Still believe: The Truist team insisted the end game with ESPN Bet will be worth the prolonged wait but they argued that patience would be a virtue. “We do still believe in the longer-term value proposition that ESPN Bet offers in leveraging the ESPN ecosystem, especially the cross-link from the ESPN media app,” they suggested.

• “This will be a slow and iterative process requiring further investment in ESPN Bet if PENN wants to secure a place on the OSB podium.”

• They added that their discussions with both Penn and Disney suggested that “progress to date is in line with both company management expectations.”

No noise from the Disney boys: However, ESPN Bet only got one oblique reference during the Walt Disney Q3 call with analysts with CEO Bob Iger talking about “fully integrated” betting as part of the standalone ESPN streaming offering.

Throwing shade: During its investor day in October, Penn management insisted it “has not wavered in confidence” that it can make ESPN Bet work and that OSB profitability can be achieved at just 6% market share.

• However, this claim has been dismissed by market watchers who have spoken to E+M.

• In Q3, Penn’s interactive division produced an adj. EBITDA loss of $90m, an 81% increase YoY from revenues that rose 24% to $245m.

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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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Las Vegas Sands plans to split the $9bn loan it is seeking to fund the IR2 stage of development at Marina Bay Sands in Singapore will be split into three tranches.

• According to Bloomberg, the majority will be a delayed-draw term financing with a further term loan and revolving credit lie making up the remainder.

Off to a flyer: Flutter’s PokerStars is partnering with the NHL’s Philadelphia Flyers, the franchise’s first deal with a poker brand.

Read across

Safe from harm: The UK government has announced its plans for a statutory levy to raise up to £100m go towards the funding of the treatment and prevention of gambling harms. It was accompanied by the confirmation of the introduction of the new stake limits for slots players. In Compliance+More.

• Squeal of fortune: Also this week in C+M, Meta has purged more than 2 million accounts connected to pig butchering scams conducted from Asia and the UAE.

A raising ape: A new crypto-based iCasino operator has raised $30m from a Series A round led by Pantera Capital while this week has also seen the launch this week of “gasless betting” via the decentralized crypto casino DexWin. In The Token Word.

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Massion accomplished: Anna Massion has informed Playtech she intends to step down as a non-executive director of the company as of February 28, to pursue other opportunities. She was the head of the remuneration committee.

Christmas presents; At the same time, Playtech has announced it will be holding a shareholder vote on December 19 regarding the company’s remuneration policy as it relates to the sale of Snaitech and the distribution of £100m to Playtech management and the departing board of Snai.

• Taking to X, Playtech critic and hedge fund manager Jeremy Raper said Playtech had made “no attempt to benchmark the plan versus peer companies at all.”

• He added there was “no imprimatur” from an external compensation consultant or law firm.

• “Instead the chair of the Remuneration Committee is resigning. Oh and all the NEDs are getting paid 300k per annum for two years.”

• Head of Games – Limassol or Warsaw

• Business Development Director – Remote

• Head of Customer Support (German Speaking) – Limassol

Stealth activity

Buying power: Via a small platoon of mandatory notifications within the past month, Gentoo Media (formerly GiG Media) chair Mateusz Juroszek is amassing an ever bigger stake in their business but by small increments.

Brick by brick: After seven such notices in the past month, each saying that a number of shares in the low thousands have been snapped up, the latest tally for Mateusz Juroszek holding in the company stands at 24.2 million shares or 17% of the business.

• This compares with a holding of 13% as of the end of September.

• Meanwhile, Juroszek’s father holds a further 8% via his ZJ Foundation and the Juroszek family-owned Betplay Capital controls a further 5%.

Poles dancing: The Juroszek family were the founders of Polish bookmaker STS which was bought by Entain in the summer of 2023 for £750m.

• Mateusz Juroszek first declared an interest in the then GiG last year when it was announced his family interests had acquired an 11% stake in a company that he said at the time was “undervalued.”

Peso the action

Ill trade winds: The 12% fall in the value of the Mexican peso against the euro since the June Presidential election caused a headwind of ~€3.5m in Q3 vs. last year and meant revenue would have come in up 32% at €55m vs. the actual increase 20% to €51.7m.

• Revenues from the Mexican business rose 27% to €27m, the largest contributor ahead of Spain where revenues came in up 11% to €21m.

• Adj. EBITDA came in at €1.5m from breakeven in the prior year period.

• CFO Oscar Iglesias said further headwinds would be evident in Q4 with the slide having continued following the comments on trade tariffs from President-elect Trump.

Codere has said previously it was de-emphasizing all markets other than Spain and Mexico, including Colombia but CEO Aviv Sher said the company would still maintain its licensing presence in the country regardless of recent inactivity.

• He said the company looked at all its licenses as “assets.” Besides, he added, Colombia had started to turn “a little bit positive” in EBITDA.

• “I don't think that we can disregard this market,” he added.

Chop chop: Earlier in November, the company was threatened with having its share delisted from Nasdaq over the failure to file its 2023 annual report. Codere Online said this week that it has had a request for an appeal hearing accepted and will present its case in mid-January.

• Sher said the company was “working night and day” to get the annual report together.

• Iglesias said the company was doing everything it would to complete the audit process.

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Earnings in brief

Ainsworth: In conjunction with a trading update, the Australian gaming machine manufacturer disclosed a cybersecurity incident that is currently under investigation. Despite minor disruptions, the company said it wouldn’t affect H2 profits which are projected at between A$8m-A$10m.

NorthStar Gaming: The Ontario operator said GGR grew 58% YoY to CA$8.4m in Q3 from total handle which was up 69% to CA$234m. YTD revenue was up 56% at CA$24.1m. The company said it is outpacing overall market growth in the province.

• Pre-tax losses came in at C$3.1m, an improvement on $4.2m loss in the prior year period.

• The company said it will be setting out its plans for additional financing in the next few weeks.

Sector watch – social gaming

Recovery mode: The recent uptick in M&A in the social gaming space suggests operators are now leveraging deals to achieve growth following the period of adjustment to the implementation of app tracking in 2023, say the analysts at social gaming consultancy Naavik.

• Those taking advantage have been Playtika, Scopely and PE firms, the team wrote this week.

• “However, deals remain structured with caution, often incorporating conservative earnouts tied to financial performance,” the team added.

Wide open space: The outlook for 2025 is optimistic given the “gradual resurgence” of M&A activity in the gaming industry this year which was a “welcome sight after two years of challenging performance and widespread layoffs.”

• Indeed, Naavik said activity will accelerate with acquirers now having the “confidence” to underwrite deals with greater certainty.

• “Valuations have found their footing after ballooning in 2020-2021 and then collapsing under the weight of higher interest rates, slower growth, and margin pressures,” they add.

Pay the man: PE will almost certainly play a role with the Naavik team noting that financial buyers are “increasingly willing to pay premiums for gaming assets that offer scalability, recurring revenue streams, and operational efficiencies.”

• “This suggests a maturing, more rational market where operational expertise, rather than top-line growth at any cost, is recognized as a critical driver of value,” they add.

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Earnings calendar

• Nov 29: Rivalry

• Dec 9: Allwyn

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