• Online competition could explain B&M underperformance, says Wells Fargo.

• Dickensian: Entain haunted by the ghost of M&A past in Australia.

• Rude health: New Jersey, Pennsylvania and Michigan’s November numbers.

• The last growth company focus of the year is Bragr AI.

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The rising

Separate tables: The stark differential in growth rates between online and land-based gaming in the US points to a sea change in investor attitudes towards the sector, with the team at Wells Fargo saying they now have an "increasing preference” for the leading online gaming names.

• In 2024, online gaming in the US has grown at a rate of 29% YoY vs. flat growth for land-based gaming.

• This follows online growth of 39% in 2023 vs. 3% growth for land-based.

Bifurcation nation: The Wells Fargo team suggested US digital gaming will be worth $21bn in 2024 vs. B&M regional commercial gaming, which will be post $34bn of GGR for the year. The Las Vegas Strip will be worth $9bn for the year, which will also be flat YoY.

• Notably, online gaming has grown 17-fold in the past five years while the percentage GGR spend on regional gaming has fallen from 36% to 27%.

• There has also been a decline in tribal gaming, down to 35% from 41%.

• The Wells Fargo team noted the GGR gap between digital and regional gaming will close further in the coming years as digital growth “far outpaces” B&M.

US gaming GGR % 2019-24

The supremes: In terms of US listed gaming entities, Wells Fargo’s preferred online choices Flutter and DraftKings are #1 and #3 in the sector, worth as of yesterday’s close $49bn and $19.9bn respectively, with Las Vegas Sands splitting them on $36.6bn.

• On Monday, E+M reported how Macquarie suggested Flutter could more than double its value in the next four years.

• In the YTD, Flutter has seen its share price rise by 57% while rival DraftKings is up over 21%.

A sea of red: In comparison, the leading listed regional gaming entities have had a mixed year. Penn Entertainment is down 24% YTD, Red Rock Resorts is down 9%, Golden Entertainment is off by 17% and Full House has fallen 19%.

• Buoyed up: The only stock to buck the trend is Boyd, up 14.5%, helped ironically enough by its 5% stake in market access partner FanDuel.

• In the meantime, Bally’s has been taken private by its majority shareholder Standard General.

Goodbye to all that: The Wells Fargo team believes there have been, and “likely will continue” to be, “challenging competitive pressures on land-based, regional gaming.” Moreover, there is no sign that previous post-pandemic valuations will be revisited any time soon.

• The team said they are “beginning to consider the possibility” that regional GGR growth may be constrained in the plus/minus 2% YoY range for the foreseeable future.

• “In this scenario, valuations may not recover back to historical levels,” the team added.

While online has its problems, largely around ongoing regulatory and tax risks, Wells Fargo argued that the headwinds of competition are worse.

• With digital, secular growth should “help offset” potentially rising tax rates and/or regulations.

• “But it’s harder to identify an obvious catalyst for land-based gaming growth to inflect,” the team added.

Trump bump

Always look on the bright side: Taking a more positive tack on regional gaming, the analysts at Truist said the feedback from their investor conference last week was that the regional gamers had a “little more optimism” for the year ahead.

• The team said participants put forward the potential for a potentially healthier post-election consumer.

• Add in lower prices at the pump and generally better performances in November and December, and it means the “slightly down to flat” EBITDA from the Q3s could turn to “flat or slightly up.”

• Still, Truist also said the trends in digital “continue to impress.”

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Bally’s Interactive has announced the launch of the Bally Bet Sportsbook & Casino app in Ontario, Canada.

Meanwhile, Bally’s and Gaming & Leisure Properties have closed on the previously announced $395m sale lease-back of Bally’s Kansas City and Bally’s Shreveport.

Ontario-facing NorthStar Gaming has issued a short-term $3.5m unsecured promissory note. The cash will go towards supporting growth amid an “improving” financial backdrop.

Fanatics COO Scot McClintic has said the company “definitely” wants to launch sports-betting and iCasino operations in Canada.

The ghost of M&A past

You boy, whose player base is this? The news earlier this week that the Australian financial authorities have charged Entain’s two brands in the country, Ladbrokes and Neds, with accepting wagers from 17 high-risk individuals who have “suspected criminal profiles and associations” once again throws the spotlight on the company’s M&A record.

Have I seen you somewhere before? As was pointed out by the analysts at Regulus at the time of the A$68m ($43m) Neds deal in late 2018, there are commonalities with the previous Bookmakers.com.au business, which was sold to then Ladbrokes in 2013 for A$22.3m.

• Specifically, both businesses were sold by Dean Shannon, now CEO for Entain in Australia and New Zealand.

• After selling his first business, Shannon stayed with the newly renamed Ladbrokes Australia for three years.

• He then left to form Neds, which as Regulus said at the time, “expanded rapidly” so that by the time it was acquired it was on track to generate A$100m in GGR in 2018.

The name’s familiar: Regulus added in 2018 that the Australian betting market “fairly neatly bifurcates” into mass-market and harder gambler cohorts.

• “The problem with harder gamblers is that they tend to open as many accounts as they can,” the Regulus team added.

• The team went on to suggest there was a “strong likelihood” that the then GVC had “simply bought” materially the same player base.

By the numbers – the big three

A message to you: New Jersey, Pennsylvania and Michigan have all reported their respective OSB and iCasino market to be in rude health in their latest data for November.

• In New Jersey, iCasino was up nearly 25% to $214m while sports betting rose 24% to $119m.

• Pennsylvania iCasino rose 27% to $201m while sports betting soared 110% to $97.8m.

• Michigan iCasino was up 29% to $226m while sports betting GGR leapt 72% to $58.3m.

In iCasino, the average YoY growth rates across each state over November are equally impressive. New Jersey averaged over 23% growth each month, Pennsylvania over 24% and Michigan over 25%.

NJ, PA and MI % growth rates 2024

Gain time: The analysts at JMP noted iCasino across the US was up 29% for November, following 31% growth in October and the fourth month in the last five when it has exceeded 25%.

• The team said November was a strong month for BetMGM in New Jersey where its share moved up 180 bps MoM to 22%.

• FanDuel took top spot, however, with 27%, just ahead of DraftKings on 26%.

The JMP team also noted the 2.3%+ market share gained by Fanatics, the highest gain in its relatively short history. They indicated market share gains from sports betting were now translating into iCasino.

iCasino market shares November

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Venture playground

Startup focus – Bragr AI

Who are you? Based in Denver, Colorado, Bragr AI was co-founded by Tom Jessiman and Simon Burrell. The “first Gen AI sports and betting companion” launched its prototype on November 7 this year.

What’s the big idea? Bragr AI is “a real-time conversational ‘concierge’ who delivers scores, stats, headlines, insight and predictions across multiple sports, geographies and languages,” explains Burrell. ”A kind of AI butler for both casual and serious sports fans.”

• “With bragr.ai, fans are no longer just consuming content – they are engaging in personalized conversations with their very own sports companion,” he adds.

• Asked about injuries, team schedules, matchups and anything betting related, the app can deliver summary or in-depth responses alongside betting recommendations and reasonings for its selections.

• Since launch, bragr.ai has seen 12,000+ users try the product. “Initial retention rates are strong and average site dwell times are 15+ minutes,” says Burrell.

Funding backgrounder: The company has been bootstrapped to date but is currently raising, expecting to close before the end of the year.

Investment news

VenturePapa: Levon Nikoghosyan, CEO at gaming affiliate AffPapa, said on LinkedIn his company has launched a new service connecting startups with investors. Called VenturePapa, it is a marketplace designed to connect startups, scale-ups, established companies and individuals seeking exits with investment funds, venture capital firms and solo investors.

• Companies seeking investment should post their applications on the VenturePapa website, including all required information, pitch decks and other relevant documents.

• The applications will then be forwarded to potential investors, and investors interested in any of the projects will then initiate direct discussions.

Growth company news

Huddle has announced that its full range of basketball micro-betting products are now live with Superbet, the first successful deployment of Huddle’s solutions across Superbet’s platform.

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Events calendar

• Jan 20-23: iGB Affiliate, Barcelona

• Jan 20-22: ICE, Barcelona

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

• Feb 25-27: SBC Summit, Rio de Janeiro

• Mar 12-13: Next: NYC 25, New York

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