• Boom to continue "relatively unfettered,” says Macquarie.

• In +More: Videoslots becomes Immense.

• Super Group says 2024 profit outcome will be better than expected.

• Growth company focus is Unabated Sports.

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Sweeping all before it

Deep and wide: Threading a fine line between social casinos and iCasino, social sweepstakes real-money operators in the US are on their way to generating up to $2.1bn in net revenue by 2025, a comprehensive report on the sector from the analysts at Macquarie has suggested.

• This compares with $1.3bn this year and a mere $138m as recently as 2019.

• Macquarie’s numbers are built on previous estimates from EKG, which estimated the gross revenue, including the value of prizes paid out, at $4.2bn for 2023.

• Macquarie noted the stripped out figure of $1.3bn compares with $7bn for social casino and $6.5bn for iCasino.

Sweepstakes net revenues US 2019-2025 ($m)

Acid remarks: The report comes against a backdrop of an increasingly acrimonious debate over the legitimacy of sweepstakes, which went mainstream at this year’s G2E and has continued largely via social media in the subsequent months.

• As per Compliance+More last week, sweepstakes operators have been the subject of cease-and-desist letters in a handful of states including Michigan (see below).

Dearth or glory: Nevertheless, the Macquarie team noted sweepstakes casino operators can “credibly advertise” themselves as the only legal way to win real-money in most US states.

• The team suggested that, as a result, the rapid growth of sweepstakes represents “latent demand” for legal iCasino but also the “dearth of states offering legal options.”

• They added that, given the sweepstakes model is “relatively unfettered” on the regulatory and licensing front, growth can be achieved far more easily “operationally and financially.”

Bang the drum: Speaking during a recent private equity roundtable hosted by XST Capital, Davis Catlin from Discerning Capital said the rise of sweepstakes would be “phenomenal” due to the lack of restrictions on investors.

• “I think that will likely drum up interest in that category and likely pull investment dollars from the regulated industry,” he added.

• In Monday’s E+M, corporate advisors speculated that VGW and other high-profile sweepstakes operators might seek IPOs this year, depending on investor risk appetites.

Tasting menu: Despite the similarities between sweepstakes real-money operations and iCasino, the Macquarie team said they saw “little evidence” of cannibalization.

• Instead, they believed the emergence of sweepstakes “could actually be a positive” for future iCasino legislation.

Similarly dismissing the likelihood of sweepstakes being detrimental to iCasino, the team at EKG issued their Q3 Social Sweepstakes Gaming Monitor on Monday addressing the subject.

• Looking at data from Michigan where the regulator moved earlier this year to force sweepstakes operators out of the state, EKG said the iCasino market saw no benefit from their departure late last year.

• Michigan’s 25% growth in 2024 YTD is below that of the average for all iCasino states excluding Delaware of 38%.

Somebody’s been eating my porridge: However, the Macquarie team believed it more likely sweepstakes was cannibalizing social casino, suggesting the latter format contains a significant cohort that plays because of the lack of legal iCasino options.

• Looking at social casino depleted user numbers since the pandemic peak, the Macquarie team suggested they have still been unable to “replenish” their user bases.

• Sweepstakes offerings, they said, are “likely peeling away users.”

Incubus: Not a lot has been said by the social casino operators on the rise of sweepstakes, except for PlayStudios, which Macquarie said had been “most explicit” about calling out the sweepstakes headwind on its own business.

• On its Q3 call in October, the company said it would “incubate” its own sweepstakes solution.

• The emergence of sweepstakes as a “promotional mechanic and a driver of monetization is proving to be significant,” CEO Andre Pascal told analysts at the time.

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+More

Gaming REIT VICI Properties has announced a public offer for $750m of new senior unsecured notes priced at 5.125%.

Big news: Videoslots has changed its name to Immense, to better reflect its status as a multi-brand iCasino operator. The company has also appointed Jesper Kärrbrink as CEO.

Earnings in brief: Groupe Partouche said it saw Q4 revenue rise to €186m while NGR was up slightly at €79.7m.

By the numbers: Sports-betting GGR in Maryland in November soared nearly 270% to $78.7m on handle that was up 15% to $640m. FanDuel led the market on 51%, followed by DraftKings on 30%.

Super Group update

Superlatives: The owner of the Betway and Spin online brands has issued a trading update saying 2024 adj. EBITDA is set to come in ahead of forecast, hitting at least $360m vs. the previous forecast of $345m.

• At the same time, revenue guidance has been raised from $1.55bn to $1.6bn.

• The company cited a “strong performance" in the first two months of Q4 for the upgrades. It also announced a special Q4 dividend of 15 cents a share.

• The company also announced the departure of long-time CCO Richard Hasson, who leaves after 13 years at the firm.

Let’s get this party started: The good news on trading has been anticipated by the share price, which is up 31% in the past month and 128% YTD. The shares rose a further 5.5% on the news yesterday.

🥳 Super Group doing just super

Bragging rights

On the up and up: Also enjoying a share price bump yesterday after issuing an update was Bragg Gaming, which saw a 14% increase after it reiterated its guidance for next year. The update was accompanied by news of “significant” share purchases by the management team.

Would like to meet: Noting the recently completed strategic review, which failed to come up with a suitable offer for the business, CEO Matevž Mazij said it had nevertheless provided “invaluable insights” into what any potential acquirers would need to see in order to put in a bid.

• These include stronger cash generation, increased revenue diversification, accelerated proprietary content growth and enhanced margins.

Analyst takes

All smiles: Looking ahead to 2025, the team at Bank of America pointed out North American online gambling remains the “main idiosyncratic” story in the wider gaming sector.

• The analysts suggested top-line growth in the year ahead would hit 25%, while they predicted a “huge” leap of 48% in sector-wide EBITDA.

• They added that “competitive concerns” for both Caesars and MGM Resorts are now “waning.”

All frowns: The analysts were less hopeful over US land-based gaming, saying that Las Vegas came up against tough comps at the start of the year, largely due to the lapping of last year’s Super Bowl.

• The sector faces “still high fixed costs, above peak margins and elevated capex,” the team added.

Trade offs: In regional, meanwhile, “sentiment” and the prospect of tax cuts may improve the consumer backdrop. But the possibility of oversupply and competition in some key markets remain as headwinds while margins are “above peak.”

• The analysts argued that the market leaders would have to trade off the potential for more promos and capex to defend share vs. holding on to those margins.

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Venture playground

Funding round

Social gamification provider Lucra Sports has raised $10m in new capital led by 7GC, SeventySix Capital, Steve Kuhn and NBA MVP Giannis Antetokounmpo.

• Since launch in 2022, Lucra has grown into a customizable B2B solution, helping clients retain customers, track funds and enhance loyalty programs with white-label social gaming features.

Growth company news

Pikkit: The bet tracking app said its platform followed a record 323 million bets in 2024, 48% ahead of the previous year and amounting to over $10.6bn of wagers.

• Among Pikkit’s 600k+ users, NBA was the most popular sport with 34% of all wagers tracked, followed by MLB at 22% and NFL at 19%.

• Parlays amounted to 50% of all wagers with nearly half of those being same-game parlays.

Growth company focus – Unabated Sports

Who are you? Founded in 2021, Unabated’s team includes Action Network/Fantasy Labs alums Matt Snyder, CEO; Bill Monighetti, COO; Kevin Cassata, CTO; and Dan Fabrizio, president; along with industry experts Jack Andrews, Peter Jennings and Rufus Peabody.

What's the big idea? “The betting landscape is fraught with poor-quality information, misleading tips and a lack of reliable resources,” says Snyder. “This misinformation not only leads to losses but also diminishes the pool of engaged bettors.”

• Unabated’s mission is to “cut through the noise” by providing tools and resources to bettors to allow them to “bet smarter, profit more and lose less.”

• As such, the company uses proprietary data science and the knowledge of experienced professional bettors to provide a suite of tech tools.

• These include an NBA tool suite that combines breaking news and current market lines to provide player prop projections; NFL and CFB future simulators to help users find value; and DFS pick’em tools for Underdog, PrizePicks, Splash and DraftKings’ Pick6.

Funding backgrounder: Unabated’s last raise closed in Feb 2023. Since then it has been cash flow positive.

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Events

• Jan 20-23: iGB Affiliate, Barcelona

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• Feb 23-25: SIGMA, Eurasia Summit, Dubai

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• Mar 12-13: Next: NYC 25, New York

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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