Good morning. The busiest day of the current earnings season so far yesterday, with MGM Resorts leading the way with record EBITDA figures and boosted margins. A similar story came from Golden Entertainment. which also hit record revenues. Aspire Global’s B2B business is going strong, even in the UK. Earnings in brief come from Everi, Accel and Rivalry. Elsewhere, there has been some stake-building at Playtech and Scientific Games has made a live casino acquisition.

NOTE: Look out for an afternoon newsletter from us later today covering Penn National Gaming’s Q3 earnings call.

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MGM Resorts International Q3

The top line

• Revenue up 140% YoY to $2.7bn and consolidated adj. EBITDAR of $765m, 

• Las Vegas revenues up 187% YoY to $1.4bn but down 8% on Q319. Adj. EBITDAR up to $535m from $15m in Q320 and up 21% on Q319. Margin up 943 bps on Q219.

• Regional revenues to $925m up 66% YoY but down 1% on Q319 and adjusted EBITDAR up 139% to $348m.

• MGM China saw revenues up 517% to $289m and adj. EBITDAR back in positive territory at $7m vs. $96m loss in Q320.

• BetMGM revenues at $227m and MGM share of losses stood at $49m. Estimates for revenues in FY21 remain at $800m+ and the company will issue new guidance for next year at the time of the Q122 results.

Empire building: On the back of the news of the likely winning bids for New York mobile sports-betting, CEO Bill Hornbuckle all but confirmed BetMGM was part of one of the winning consortia. Acknowledging the less-than-ideal likely tax rate of 50%, he added that MGM was “happy we have a property there” with the Empire Casino in Yonkers.

“But I will tell you it is the largest market we will have launched in to date with the MLife database,” Hornbuckle said. “Time will tell with sports how much money is to be made. Again, for us, it's an omni -channel play. It's a brand play and we're going to have a huge presence there. And hopefully someday we get to online, icasino, but that's something for well down the road.”

View to a kill: As an ‘insider’ to the failed DraftKings/Entain negotiations, Hornbuckle said that at one point “it looked like we would walk away with the technology”.

“For now though we are content and happy with our business and how it is progressing but we wouldn't do it without the technology platform,” Hornbuckle added. “I still like where we are. We want to be bigger, we want to be global, we want to be a lot of things.”

Just an illusion: Back in Las Vegas, MGM announced that the negotiations were underway for the sale of the Mirage which analysts estimated will fetch between $500-600m. “It’s a storied property with great brand recognition,” said Hornbuckle, adding that he agreed with the comments from Tom Reeg at Caesars yesterday that “this might be the opportune time to sell an asset in Las Vegas”. There was no hint about the identity of any potential purchasers.

Priority: Having completed transactions involving shares in MGM Properties and the City Center transactions, MGM now has liquidity of $9.8bn, but CFO Jonathan Halkyard noted that the company’s first priority was share buybacks. “I do believe that returning cash to shareholders is the case to beat when it comes to making growth capital investments,” he added.

Fat of the land: Noting the record margin performance both in Las Vegas and regionally, CFO Jonathan Halkyard said “we’ve learned a lot about doing business in the last nine months and we don't intend to backtrack” on the margin improvements. Analysts at Truist noted that the Las Vegas recovery had been “quicker and stronger than we expected”.

Talking point: Hornbuckle echoed the comments from Flutter earlier in the week that suggested the fierce marketing environment had abated as the football season had progressed. “We are encouraged to see a more rational environment as the season progresses,” he said.

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Golden Entertainment Q3 

The top line 

• Record revenues of $282.4m up 37.6% YoY. Adj.EBITDA $73.4m was up 60% on Q320. 

Paying dues: Golden Entertainment CEO Blake Sartini and CFO Charles Protell said their group valuation did not reflect the value of the business. “We’re a Nevada business that owns its properties,” they suggested, adding that the company will use the $50m share buyback scheme it has at its disposal to return cash to shareholders.

Margin call: In common with the rest of the casino industry, Sartini said there had been some labor and wage pressures, but the group had “dealt with them in June and early July” by modifying its amenities. “We right-sized in July and with volumes increasing in August and September: we’ve adapted to it rather than there being long term pressures on margins.”

Asset Strip: With MGM putting its Mirage property up for sale, management was asked if they would consider putting their Stratosphere property on the market. “Valuations are enhancing and real estate ownership has significant embedded value for our portfolio of assets and products, but we will continue to own it,” said Sartini. Analysts at Macquarie noted the company remained “focused on deleveraging” after paying back a further $50m of debt during the quarter.

Aspire Global

The top line

• Revenues up 46% to €58.6m, EBITDA up 38% to €9.1m, B2B revenues grew 40.5% YoY,  organic growth 31.2%

Chain control: With Aspire Global selling its B2C business units (its Karamba brand) to Esports Technologies for €70m, CEO Tsachi Maimon said the group would focus on being able to offer a complete product portfolio with all B2B verticals. 

The group passed on Authentic Gaming (see SG news below) but the group is looking to acquire a “live dealer and bingo products so that it can control everything in the value chain”. “It will enable us to control the roadmap and increase royalties by up to three times from operators,” Maimon said. 

EU travails: In Europe, Germany would be positive in the long term, Maimon said. “Because of all the changes and technical requirements we are seeing very nice traction from operators looking for new suppliers” that are able to help them generate profits in this new setting.” With other operators (see Flutter this week) predicting gloomy times in the UK, Maimon was asked about Aspire Global’s regulatory setup and how it had managed to record 151% growth to €22.7m in a market where all its peers were either flat or losing revenues. 

“That’s a question for them. If we look at regulated markets, when we struggled in 2019 and decreased (activity) in the UK, it was important to meet new requirements. We already knew we wanted to tackle those (challenges): others waited for regulatory letters or fines and we didn’t want to be at that point. We did everything to be  regulated, even if it hit short term profitability.”

Tribal gathering: In the US, the group’s appointment of Quincy Raven as US managing director has meant Aspire is now in the running in three RFIs, Maimon said. He reiterated his point that the US market is much larger than just tier 1 brands and was clear about where client wins would come from. “Most (retail) casino GGR comes from tribal revenues, who don’t have a clue how to operate digital. The tribal casinos, tiers 2, 3 or 4, in a few years from now Aspire Global will be their biggest supplier.” 

Earnings in brief

Accel Entertainment: Revenue was up 43% YoY to $193.4m and adj. EBITDA rose 63% to $37.6m. Q321 ended with installs at 2,549 locations, up 8% YoY and 13,384 video gaming terminals, up 15% YoY. It represented the strongest quarterly growth since the pandemic began. The company hopes to complete the Century Gaming acquisition in H122 but pro forma it said revenues for 2022 were likely to be in the $820-870m range while adj, EBITDA would be between $160-170m. The guidance for the transformative Century acquisition is pro forma revenues of between $1.07-1.18bn.

Everi: The gaming machine to fintech operator and supplier saw revenues rise 25% on Q319 to $168.3m while adj. EBITDA rose 40% on a two-year comparison to $90.6m. Gaming revenues contributed $95.8m while fintech was worth $72.4m. FY212 revenues are now expected to hit between $645-653m and adj. EBITDA of between $342-346m. CEO Michael Rumbolz said Q3 showed “substantial ongoing momentum”. Analysts at Jefferies suggested the momentum represented a “pivot to more proactive growth”. The Macquarie team noted Everi’s strong position in the cashless gaming sector.

Rivalry: The recently Toronto-listed esports to regular sports-betting and gaming operators released a trading update saying handle in October came in at C$12.8m, the highest monthly figure to date. Active monthly bettors were up 80%, though the company failed to reveal the absolute number. It also issued a clarification over its Ontario application, saying it will seek a commercial agreement with the Alcohol and Gaming Commission of Ontario subsidiary, iGaming Ontario. It said the successful completion of this process could result in Rivalry commencing esports, sports betting, and igaming operations in Ontario within the first half of 2022.

Playtech stake-buying

Making a move: Subsequent to the offer from Aristocrat pitched at 680p, there has been what can be described as “material” share buying by Paul Suen, the owner of UK soccer team Birmingham City FC and Les Ambassadeurs casino in London. Recent transactions as notified to the London Stock Exchange show that Suen has been snapping up shares close to the offer price. The most recent purchase came yesterday when Suen added a further 855,000 shares to take his total holding to nearly 10m shares or ~3.2% of the company.

Scientific Games acquisition

Provenance: Scientific Games has made its debut in the field of live casino provision with the acquisition of Malta-based provider Authentic Gaming for an undisclosed sum. Authentic currently provides live roulette offerings with over 30 European operators including Entain, 888 and Betway. Scigames said it had “strong ambitions” to extend Authentic's product offering to the US market, including the building of new US-based studios.

Newslines

Hawkeye: Fubo has made its sportsbook debut with a mobile offering now available in Iowa featuring what the company says is a unique Watching Now product that allows players to “instantly view wagering content based upon what they are streaming”. President Scott Butera said it was “increasingly important to meet sports fans’ growing demand for personalized and immersive experiences”.

North by northwest: WynnBET has partnered with gaming and hospitality operator Delaware North for market access in West Virginia, representing the 18th jurisdiction where WynnBET now has access. Delaware North owns two casinos in the state at Wheeling and Nitro, near Charleston. Delaware North already operates its Betly mobile app in the state.

Drama queen: UK-listed affiliate XLMedia has announced former Coral CFO Caroline Ackroyd as its new finance chief, a move which CEO Stuart Simms said comes as a response to the “dramatic progress” the company is making in the US. 

Racing leopards: The Racing Post has extended its sponsorship agreement with the Leopardstown racecourse in Ireland for another four years. The newspaper will continue its title and race sponsorship of day one of the Leopardstown Christmas Festival, which will continue to be called Racing Post Day and feature the Racing Post Novice Chase as race of the day. 

On social

Captain Jack Andrews @capjack2000

NJ rejecting wagering on in-state college teams should be a warning sign to the betting industry. The public equates more sports betting with more sports betting advertisements - and they've had enough of the constant bombardment of ads. You guys are killing the golden goose.

November 3rd 2021

6 Retweets99 Likes

Calendar

• 4 Nov: Penn National Gaming

• 8 Nov: Bet-at-home, Full House Resorts

• 9 Nov: IGT, Scientific Games

• 10 Nov: Raketech, Rush Street Interactive, NeoGames

• 10-11 Nov: WE+M@Betting on Sports Europe

Contact us

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com