Welcome. As detailed in our analysis of recent venture capital fundraising, there is now more money than ever searching for innovative startups and growth companies working in and around the betting and gaming sector. It’s not hard to see that the US opportunity is the driver; when it comes to venture capital generally, the US is way ahead of Europe and the interest in sports-betting is, as the LA Times says, now in bubble territory. Eyes will turn, of course, to outcomes and we foresee various potential results to all this deployed investment: 

• The sector could be entering a period of phenomenal innovation. 

• A further wave of M&A could be triggered as the most promising ideas are hoovered up by aggressively expansionist operators and suppliers. 

• Good ideas will never find it easier in getting funded. 

• Likewise bad ones.

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Rank trading update

The top line

• Group GGR was up 69% YoY to £163.1m with Grosvenor venues up 209% YoY to £79.2m, Mecca venues up 41% to £34m and the Spanish Enracha business up 20% to £6.5m.

• UK digital returned to growth, up 4% to £38.2m while international digital was up 11% to £5.2m.

• FY22 group LFL NGR expected to be in the range £700m-£750m and EBIT between £50m-£75m.

Zimmer Zimmer, chicken dinner: The Grosvenor casinos Q1 result was still 20% below the comparative period in 2019 with Rank blaming a lack of tourists in the capital. Outside of London, the regional casinos were now “running at close to pre-pandemic levels”. Mecca venues were also sluggish compared to Q119, down 22% with the company suggesting that older customers had been slower to return than other cohorts.

Going blank again: Grosvenor digital was up 12% helped by the broader return of omni-channel customers and Mecca online was up 6%. The bingo business was dragged down overall, however, by the other bingo brands (presumably the Stride brands) culminating in a 6% NGR decline. Rank hopes to launch its bingo operations on the RIDE platform in Jan22.

Esports Entertainment Q4

The top line

• Revenue of $8.8m up 63% QoQ, the total for FY21 hit $16.8m and FY22 guidance remains the same at between $100m-$105m.

• Pre-tax losses nearly tripled to $30.2m.

Long and the short of it: A list of recent operational highlights that was longer than some entire results statements still failed to mention the company taking one esports bet. While awaiting a New Jersey launch, it relies for revenues on regular betting and gaming, including Swedish-facing Bethard acquisition since July. One of the drivers CEO Grant Johnson spoke about on the earnings call is a (distinctly regulator-unfriendly) pay-to-play offering in the unregulated Finnish market.

More heat than light: While it is still caught up in the weeds of New Jersey regulation, Johnson said on the call with investors the company was keen to expand the potential esports-betting footprint in Ohio, Ontario and other states. In the interim, it also has apparently moved into crypto-mining via its GGcircuit LAN center management infrastructure. To counter recent negative stock-group gossip, Johnson was keen to reassure over the company’s cash position.

Startup funding watch

Sharp elbows: The obvious corollary between the booming betting and gaming space, investment cash looking for a home and a whirl of entrepreneurs with sports-betting and related business ideas means the sector’s growth company scene has never been busier. After recent news from SeventySix Capital and Bettor Capital, Sharp Alpha has announced the closing of an over-subscribed $10m Sharp Alpha Fund I. It will be targeting allocations of an average $250k for seed and Series A financings.

Bettor days: This follows the fundraisings from SeventySix Capital, now with its second fund of at least $50m, and Bettor Capital which has also raised $50m from a projected $120m for its Fund I. 

Disrupt: Sports-betting remains the focus. SeventySix said it is looking for disruptive companies to “capitalize on the growing legal sports betting industry”. Previous investments include VSiN, sold to DraftKings, and Vigtory which was snapped up by Fubo TV. Bettor Capital, meanwhile, said it was looking at early-stage investment opportunities in software and technology facilitating real-money online gaming operations. The amount of money now available to be deployed is unprecedented for the betting and gaming space.

Talking point: Taken together, the recent fundraisings on the part of SeventySix Capital, Bettor Capital and Sharp Alpha means there is a potential ~$160m looking for a home in the betting-and-gaming startup space

Share Wagers.com Earnings+More

Name game: SeventySix is led by Wayne Kimmel, Jon Powell and Chad Stender and brings on board investors and strategic partners such as Robert Nutting, chairman of the board at the Pittsburgh Pirates and Arthur Blank’s AMBSE Ventures. Bettor Capital is run by David VanEgmond, previously at FanDuel and Barstool Sports, and Jake Kleiner, previously an investment professional at Vista Equity Partners. The Sharp Alpha fund is run by Lloyd Danzig, managing partner, and is backed by Great Elm Group and the Dutch Sport Tech Fund, as well as a number of other VC funds, family offices and private equity groups.  

Prophet-able business: Among Sharp Alpha’s current portfolio of companies is the US-based peer-to-peer betting exchange Prophet and this week it announced a pre-registration crowdfunded consumer campaign allowing early adopters to a deposit match bonus that will increase by $25 for each 500 new registrations.

Startup shoutouts: Any companies seeking funding, announcing successful funding rounds or wanting a mention for a press release in the Wagers.com Earnings+More newsletter, just get in touch with Scott and Jake at scott@clearconcisemedia.com or jake@openmediaservices.com.

Sportradar market cap confusion

Vote early, vote often: A month after floating in New York and there appears to be some lingering confusion on social media over the market cap of Sportradar. Is it $7.98bn or closer to $25bn? Sources suggest the error of the higher figure, as currently repeated by the likes of Yahoo, Google Finance and Marketwatch, comes down to a misunderstanding of the class of shares. As it was explained to WE+M the company offered over 205m Class A shares worth $5.54bn at the time of the float and 904m Class B shares but these shares were worth only 1/10th of the Class A shares, or $2.44bn. Not, as some have repeated, $24bn. All clear? Good, now carry on.

MGM analyst upgrade

Feel the love: Liking what they see of the newly-transformed MGM, Credit Suisse analysts have upgraded their recommendation suggesting MGM now has a ”cleaner” structure, is likely to outperform predicted FY23 results and will benefit from improved sentiment around the company generally. The CS team suggested the street consensus on 2023 EBITDAR is due in part to mis-modeling and improved margins in the regional business alongside an “underappreciated” sports-betting platform.

Entain analyst reaction

Conservatively speaking: Talking of the BetMGM platform, analysts at Wells Fargo suggested the guidance of $200m in Q321 revenue offered by Entain at the start of this week could imply that the $1bn in revenue in 2022 “may be conservative”. Recall, BetMGM is now live in 16 states and should be up-and-running in 20 by the end of Q122.

Caesars analyst update

Summo quattuor: Analysts at Deutsche Bank said they were bullish ahead of Caesars Entertainment’s Q3s but lowered their adjusted EBITDAR estimates by $72.7m to £896.7m due to an expected rise in marketing spend and the effect of Hurricane Ida in the New Orleans market and New Jersey flooding impacting the group’s regional outlets. On the digital side, DB said they believe Caesars will perform strongly in Arizona and should emerge as a top-four market share player domestically”. They predict a market share of ~12.5% in all addressable markets.

Scientific Games analyst update

Float on: Near-term expectations for Scientific Games will be impacted by the rapid, if uneven, recovery from the pandemic, say the analysts at Jefferies. Seasonality and an economic slowdown have led Jefferies to reduce SG FY21 revenues and EBITDA by 5-15%. Of immediate importance is whether the SG Lottery unit is sold or floats on the Australian Stock Exchange for around A$5bn. That depends on whether SG wants the cash or opts for the longer-term potential of partial ownership via an ASX float.

Datalines

Michigan

The ninety-nine (point nine) percenters: Entain may have spoken earlier this week about promotional spend abating, but not before operators in Michigan combined to give away 99.9% of sports-betting GGR in bonuses and free bets in September. In other words, $27.1m of mobile GGR was reduced to just 17k of net revenue. Promotions also accounted for 6.7% of mobile handle of $354.3m (up 84.2% MoM). The main culprits: DraftKings with 256% of GGR on promos and Caesars with 294%.

MGM on top: MGM’s combined sports/igaming market share was 39.2%. In sports-betting it achieved 24.6% of handle and 37.3% of pre-bonus GGR. Next up was Flutter with an overall market share of 18.4%, then DraftKings with 14.3% and Penn with 5%. Expect articles in the coming days talking about the rise of MGM starting… now.

Bricks and clicks: Land-based casinos totted up $106.9m in GGR, down 4.8% on Sep19 and also down 4.7% MoM. iCasino GGR was up 5.3% sequentially to $102.4m with Grand Detroit. BetMGM taking the lion’s share at 39.7%, Bay Mills/DraftKings at 15.1% and FanDuel at 15%.

On social

Dave VanEgmond @Dave_VanEgmond

In real-money gaming, the iGaming business is vastly underappreciated. MI in Sept is the best example: -Retail: Casino - $107M, Sports - $4M -Online: Casino - $102M, Sports - $24M My biggest takeaway is that in 9 months, online casino is now just as big as retail #amazonmoment

October 14th 2021

1 Retweet18 Likes

Indiana: Indiana’s September handle of $355.4m was a record for the state and a 64.8% increase MoM, as was revenue of $33.8m (+99.4m MoM) recorded by the licensed sportsbooks in the state. DraftKings-Ameristar East in Chicago enjoyed the largest share of the handle with $138.5m. FanDuel and its Blue Chip Casino sportsbook was second with $78.1m, followed by Hollywood Lawrenceburg with $38.6m.

Delaware: Online gambling revenue in Delaware was down 5.4% YoY and -16% MoM to $794,644, despite player spend rising 19.8% MoM to $26m. 

Missouri: September GGR came in at $152m, up 17.6% YoY and an 8.7% increase on Sep19; or the 3Q21, Missouri GGR was $471.6m, up 20.0% vs. 3Q20 and 8.3% above 3Q19.

Virginia: Sports-betting revenue dropped 31.5% MoM to $8.7m in August, its lowest total since the first month of legal sports wagering in January this year. Player spend was up 12.7% MoM to $182.4m.

What we’re promoting

Reputation Matters: UK Gambling’s Future At Stake will be taking place on Tuesday 2 November at the Ironmongers’ Hall in the City of London. The event will consist of panels discussing the sector’s positioning as it enters a crucial phase of the Gambling Act review process. The event is headlined by John O’Reilly, Rank chief executive, who will provide the keynote. For ticket information, visit the Eventbrite page.

Newslines

Gambling fudge: Fantasy football game-digital collectibles platform Sorare has denied it is a gambling business following the news that the UK Gambling Commission (UKGC) was notifying players that the company was not licensed by UKGC and that it would be investigating its business model. The company said that although there is an exchange element to its platform, players can only take part in its fantasy products by purchasing fixed-price player cards. Sorare announced a Softbank-led funding round of $680m at the start of October valuing the firm at £4.3bn.

Open era: OpenBet has gone live with Golden Nugget Online Gaming in West Virginia. The partnership will see GNOG utilize OpenBet’s sports-betting solution as well as its gaming content aggregation platform Open Gaming. 

North country launch: Rush Street Interactive has launched its social casino and sportsbook Casino4Fun in Ontario in anticipation of the province regulating and RSI launching real-money casino and betting under its BetRivers brand in the coming weeks. 

Crown court: Crown Resorts will know its fate by the end of October after the Royal Commission delivers the results of its probe into the company’s licensing fitness to the Victorian government later today. The state government said it will consider the findings and recommendations and then take whatever action it deems necessary.

Mark the score: Score Media and Gaming shareholders have approved almost unanimously in favor of the $2bn Penn National Gaming takeover.

Unlucky for some: 13 out of 20 Louisiana casinos have applied for sports-betting licenses with the other seven likely to apply before January. The licensees are now awaiting approval from the state police.

Betting partnerships

DraftKings has signed a commercial partnership with the NHL for sports-betting and DFS in a deal that will also see the company become the new exclusive sportsbook partner of Turner TV’s hockey coverage; Fubo Sportsbook has been announced as an authorized gaming partner of NASCAR; PointsBet has become the official sports-betting partner for Curling Canada; and Super Group’s Betway is the new partner with the NBA’s Dallas mavericks.

What we’re reading

Through the hoops: The NBA will be heading to Vegas. Soon.

Fierce: the profit-less sports-betting boom.

‘Handcuffed to a lunatic’: Competing against Jason Robins. Via Bloomberg.

What we’re listening to

Multiple problems with the Single Customer View: The Gambling Files podcast tackles the UK Gambling Commission’s ideas on SGV with Melanie Ellis of Northridge speaking to Jon Bruford and Fintan Costello.

Calendar

• Oct 15: GAN investor event

• 19 Oct: 888 Q3 trading statement

• 20-21 Oct: iGamingNEXT conference

• 25 Oct: Gaming in Germany conference

• 27 Oct: Kindred Q3

• 28 Oct: Churchill Downs Q2, VICI Properties Q3

Contact us

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com