• Sector watchers have been waiting for corporate activity to come alive.

• In +More: Gambling.com’s blowout quarter, Mohegan’s Bain spat.

• Earnings TL;DR: Churchill Downs, Tabcorp and Better Collective.

• The long take: Lottomatica’s leading role in Italy.

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Signs of life

It’s about time: Light & Wonder’s acquisition of Grover Gaming this week – a deal that could be worth over $1bn depending on the earnout – might be the spark needed to bring to life a moribund start to the year for M&A activity.

• In buying Grover, Light & Wonder is paying a multiple of 7.1x the EBITDA run rate, which as one banking source suggested was “comfortably” inside L&W’s own multiple of 9x estimated 2025 EBITDA.

• When the earnout is included, it pushes the multiple out to 9.5x.

• “The fact that the market reacted well to this is a big positive for additional activity in the space,” suggested the banking source.

No Trump bump: Much of the chatter at the turn of the year among companies and their advisers was that corporate activity would flourish under the business-friendly Trump administration.

• This was encouraged by a report from JP Morgan, which suggested that across the corporate world companies had been waiting in the wings to announce deals following the change at the White House.

World turned upside down: “Everyone was very bullish on 2025 at the turn of the year,” said another investment bank corporate advisor. “The Trump policies will be fairly favorable for business, particularly with change at the top of the Federal Trade Commission,” they added. “These factors are all really positive.”

• However, the source went on to add that the “snow globe has since been shaken up” by the news of tariffs, AI and interest rates, among other factors. “So a lot is up in the air.”

• Yet, as one corporate lawyer suggested, there remains “pent-up demand” for corporate action, due in part to the levels of activity in the recent past.

• “There were a lot of deals in 2020 to 2021 and then it just really fell off,” they added.

Supply demand: But as Christopher Lynch, head of gaming and leisure investment banking at Citizens, said: it is within the gaming supply space where there has been a “ton of activity” over the past year or two.

• Those deals include the $6.3bn all-cash deal announced last July for IGT and Everi from private equity giant Apollo.

• This was preceded by the $1.1bn deal for AGS launched by another private equity outfit, Brightstar.

• A year before that, Aristocrat announced its acquisition of NeoGames for $1.2bn.

More to come: “I would expect there to be continued focus from buyers and sellers across the landscape on this area of the gaming industry,” said Lynch.

• “There is a pretty dramatic shift to the landscape occurring right now.”

Over the line: Notably, a deal for Ainsworth on the part of Novomatic appears to be back on the agenda, at least according to a report earlier this month in the Australian Financial Review.

• Novomatic is already the majority shareholder at Ainsworth with over 53% of the shares.

• The paper reported the two companies held informal discussions about a potential takeover.

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• Blowout performance: Gambling.com has pre-announced its Q4 and FY24 earnings, showing quarterly revenue and adj. EBITDA that surpassed expectations at $35.2m and $14.7m respectively, while for the full year revenue will come in at ~$127m and adj. EBITDA at ~$48.5m. The company also introduced 2025 guidance, with revenue forecast at $170m-$174m and adj. EBITDA at $67m-$69m.
  Diary date: Gambling.com will report BMO on March 20.

• A difference of opinion: The Mohegan Tribal Gaming Authority has hit back at private equity outfit Bain in the dispute over a reported missed payment on the debt taken out to construct the Inspire resort in South Korea. Bain was reported to have taken control of the property earlier this week, but Mohegan responded that while it “did not satisfy certain financial covenant tests” it has not missed a payment.

• Pennsylvania in January saw B&M gaming up 3.7% YoY to $262m, while iCasino soared 40.5% to $210m and sports-betting GGR fell just shy of 13% to $82m. Promos as a percentage of GGR rose to 40% from less than 30% this time last year, leaving NGR down by 25.5% to $49.1m.

• Aristocrat is to redistribute the $600m from the sale of its Plarium social gaming assets to shareholders via a A$750m ($479m) share buyback. The company will also use some of the proceeds to pay off a $250m term loan, while CEO Trevor Croker said the company would also continue to consider “strategic investments."

Read across

• Flying ducks: The AGA and the sweeps sector exchanged words this week. After AGA CEO Bill Miller accused sweeps operators of attempting to “bypass or circumvent” state gaming regulations, the Social and Promotional Games Association hit back, accusing him of resorting to “many of the same tired canards.” In Compliance+More.

+More careers

• The big move: There have been more departures at Entain, this time from the company’s Australasian businesses, with Lachlan Fitt, deputy CEO and CFO of Entain Australia, and Cameron Rodger, MD of Entain New Zealand, leaving the company. Recall, CEO Gavin Isaacs resigned unexpectedly earlier this month. Also note, Entain Australia is currently the subject of an investigation on the part of Australia’s money-laundering watchdog.

• Super Group has appointed Merrick Wolman to the board, effective this week. Wolman is the CEO of global finance company Bellerive Finance and has worked closely with the Super Group executive team for over two decades. New Jersey challenger brand PlayStar has put together a new advisory board to help with its decision-making. The names joining the business include John Finamore, Jai Maw, Carl Sottosanti, Alison Digges, Richard St. Jean and Terrence Gray.

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Earnings TL;DR

Churchill Downs

Fables of the reconstruction: “We want to do expansion and growth projects for the Kentucky Derby for generations to come,” said CEO Bill Carstanjen after the company unveiled a multi-year series of hospitality construction projects at its home track.

• The $900m planned expenditure will be spread across four specific projects, including the estimated $455m-$465m reconstruction and expansion of the Skye Terrace.

• The sweet smell of success: The HRM segment was boosted by the opening of The Rose Gaming Resort in Dumfries, Virginia in November, boasting over 1,600 gaming machines and a 102-room hotel.

• Mole hill: The company said it remains cautiously optimistic for further HRM expansion in other states, but said the “whack-a-mole” nature of so-called gray gaming means the problem will be with the company for some time to come.

• Quick takes: Jefferies noted the slow start at The Rose, but said it would still be “productive.” While, in a landscape where regional growth is at risk, the team at Macquarie suggested Churchill Downs “stands out” due to the “iconic asset” of the Derby.

• See yesterday’s Earnings Extra: Churchill Downs for more (paywall).

Tabcorp

Gillon from accounts: CEO Gillon McLachlan emphasized Tabcorp is “getting fitter” through an increased wagering and media capability, a simpler and more cost-effective operating model and a stronger culture of accountability.

• Revenue for the half-year increased 10.1% to A$1.3bn ($830m), primarily due to the Victorian license uplift, while it also helped raise EBITDA by 12% to $190m.

• The company achieved A$19.5m in H1 cost reductions through structural efficiencies and discretionary cost controls, including the removal of 200 roles.

• The net debt/EBITDA ratio stood at 2.2x, with further deleveraging expected as Victorian license earnings continue to flow in H2.

• See yesterday’s Earnings Extra: Tabcorp for more (paywall).

Better Collective

Tales of the unexpected: CEO Jesper Søgaard kicked off the call with analysts by suggesting the company had faced “unexpected challenges shaped by significant external headwinds.” He was speaking after the company said the cost-cutting program implemented following the October profit warning was already paying off.

• FY revenue came in as was guided earlier this month at €371m while adj. EBITDA came in at €113m, up 2% YoY.

• Blot on the landscape: However, the new Brazilian regulated market was proving to be less profitable than hoped, causing a €35m-€50m hit to 2025 adj. EBITDA.

• The company also indicated a “shift” in its M&A strategy and will now concentrate on deploying excess cash via a €10m share buyback program.

• Quick takes: Jefferies said that while the valuation is low – the shares are trading at ~7.5x EV/EBITDA – “catalysts are lacking” and the “re-emergence of positives” in Brazil and the US is needed.

• See yesterday’s Earnings Extra: Better Collective for more (paywall).

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In brief

The gaming REITs: Both Gaming & Leisure Properties and VICI Properties have reported. GLP said Q4 revenue rose 5.6% YoY to $390m while AFFO grew 5.1% to $270m. VICI reported revenues up 5% YoY to $976m and AFFO up 5.4% to $601m. Earnings Extra will report on earnings calls from the REITs on Monday.

Codere Online said Q4 revenue rose 7% to an even €50m, helped by a 10% increase in Spain, while its other main market, Mexico, was down 1%. The company posted an EBITDA profit of €1.9m vs. a loss in the prior-year period of €4.1m. On the call, CEO Aviv Sher said the attempt to achieve Nasdaq compliance had “taken a lot more time and energy than we would have liked.”

Cirsa: Q4 revenue rose 14% to €586m while EBITDA was up 17% to €191m, helped largely by increases in online, which now represents 23% of total revenues, and the integration of the Apuesta Total acquisition in Peru. The company said an IPO remained an “option” but no timeline has been set.

SkyCity Entertainment: The New Zealand and Australia gaming operator saw pre-tax profits in H224 fall to just $6m largely because of its NZ$31.7m ($18.3m) settlement with the tax authorities in South Australia. Revenue for the first six months of FY25 came in down 5% at NZ$422m while EBITDA was down 22% to NZ$113m.

The Lottery Corporation: The Australian lottery operator saw H125 revenue fall 6% to A$1.78bn ($1.14bn) while EBITDA fell 7% to A$370m, due in part to below-average jackpots in the latter half of 2024. But the company said the new Friday Weekday Windfall was having a positive impact.

Jumbo Interactive: The poor jackpot backdrop in Australia was also a factor for Jumbo, which saw revenue decline 10.5% in H125 to A$66.1m ($42.2m). Underlying EBITDA fell 30% to A$30.6m.

Raketech: The gaming affiliate confirmed its pre-announced Q4 numbers, with revenue down 46% to €12.3m and EBITDA falling in sympathy, off by 50% at €3m. In response to the declining numbers, the company said its affiliate business was now effectively outsourced to four strategic partners.

The long take – Lottomatica

Cuore d'oro: The benefits of continuing to take share when the overall market is still growing can be seen in Italy with Lottomatica.

• While there has been much chat about Flutter having a podium position in the country, the team at Deutsche Bank made the point that Lottomatica is the market leader with a still growing 31% of online.

• Flutter, which augmented its position in Italy with the acquisition of Snai, has seen its share slip to 30% from 32%.

Lottomatica is “poised,” according to the DB team, for a significant step up in growth rates in 2025 with a €23m boost from the full-year contribution of the SKS acquisition.

• On top of that, the team reckoned Lottomatica would also benefit from €26m of incremental EBITDA from the SKS cost synergies.

• Add in another €30m of sports payouts reversion to the mean – and assuming 5% YoY underlying growth – DB estimates ~€850m of EBITDA for 2025.

• For 2024, however, the team has nudged down its estimate to €709m due to the impact of sports results. Lottomatica will report on March 4.

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Upcoming earnings

• Feb 21: VICI Properties, GLP (call)

• Feb 24: Playtika

• Feb 25: IGT, Super Group, Light & Wonder, Caesars

• Feb 26: Kambi, Galaxy, Star Entertainment, Rush Street

• Feb 27: GiG Software, Penn Entertainment, Golden, Accel

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