Good morning. We start today with the analyst reaction to the termination of the Wynn Interactive merger with the Austerlitz Acquisition Corp. SPAC. Disney CEO Bob Chapek sets many hares running with his comments on sports-betting and we have a weekly preview of what’s in store from Better Collective, Catena Media, IGT and Sportradar.

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Wynn Interactive analyst reaction

Non-stick SPAC: The news that Wynn Resorts and the Austerlitz SPAC vehicle had mutually agreed to terminate their merger didn’t come as too much of a shock for the analysts following the comments earlier in the week from Wynn’s results call. The deal announced in May would have valued Wynn Interactive at $3.2bn but Wynn appeared to pull the rug under its own plans by suggesting, in the words of departing CEO Matt Maddox, that the current economics of online sports-betting didn’t stack up at present. 

Reading the runes: As Deutsche Bank suggested, while “somewhat surprising” the news will not have been completely out of the blue for anyone reading the tea leaves, particularly with the announcement that interactive CEO Craig Billings was taking over as Wynn Resorts CEO from Matt Maddox. Billings was keen to reiterate Wynn’s continued commitment to WynnBet, but he said on Friday that it was now pivoting to a “more targeted ROI-focused strategy” which would be “less capital intensive” as of Q122. “WynnBet’s best days lie ahead of us,” he said. But the analysts at Jefferies were not so sure.

“The growth strategy for Wynn Interactive remains less defined than some of its peers,” the Jefferies team added.

Corporate Yoga: Returning from a recent Las Vegas visit, the Wells Fargo team suggested there was some empathy among rival management teams for the “difficult position” Wynn finds itself in. Views are now split, with some thinking this is a “natural step in the evolution of the industry where the big get bigger and smaller operators have a tougher path to profitability/scale.”

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Disney earnings call sports-betting comments

Isolationist: Asked about sports-betting on last week’s quarterly earnings call with analysts, Disney CEO Bob Chapek was clear in suggesting the majority-owner of ESPN believed that getting involved wouldn’t contaminate its family-friendly brand image. “Gambling does not have the cache now that it had, say, 10 or 20 years ago,” Chapek said. He added that having undertaken research, the company’s previous concerns around contamination were now unfounded.

“We have done substantial research in terms of the impact, not only to the ESPN brand, but the Disney brand in terms of consumers changing perceptions of the acceptability of gambling, and what we're finding is that there's a very significant isolation,” said Chapek.

The hard sell: Recall, previous reports have suggested Disney is interested in ‘leasing’ the ESPN brand to a sports-betting operator for a fee of up to $3bn. Chapek was understandably keen to promote ESPN as the “perfect platform” for any sports-betting operation. “To go after that demographic opportunity plus the, of course, not insignificant revenue implications, that is something that we're keenly interested in and are pursuing aggressively,” Chapek said.

Wells Fargo Las Vegas visit

Fundamentally sound: The Wells Fargo analyst team returned from a road trip to Las Vegas (see above their industry consensus views on Wynn) with a broadly positive outlook driven mainly by good visibility on the fortunes of the Las Vegas Strip. The team said they saw at first hand how casinos became “materially more crowded” into the weekend with occupancy “likely at/near” capacity.

Eastern issues: Macau remains complicated for the Vegas operators. The Wells Fargo team suggested the outlook remains uncertain although most see the fact that the concession schedule remains on track as a positive. “Our understanding is that concessionaires have been closely involved in the process,” the team added. They noted, though, that the proposal to constrain dividends would have a “direct economic impact” as the dividend was the way by which operators both serviced the debt and repatriated profits.

Earnings in brief

Codere: Revenue of €233m was 63.1% up YoY and represented a 67.6% sequential rise. Adjusted EBITDA of €32.8m, up from €4.6m in Q320 and an 81.1% rise sequentially. Revenues from Mexico stood at €42.6m, Argentina at €40.1m, Spain at €37.9m and Italy at €65.3m. Others (Uruguay, Panama and Colombia) stood at €23.8m. Codere Online, which achieved revenues of €19.1m (up 7.8% YoY) is seeking a listing via a merger with the DD3 Acquisition Corp. II. That deal will be voted on this coming Wednesday, 18 Nov, and completed next week

The week ahead

The gaming affiliates take center stage this week with the third-quarter results from the giants of the sector, Catena Media and Better Collective. All eyes will be on what they have to say about trading in the US. For Catena, revenues from its North American-facing sites accounted for 41% of total revenues of €30.4m in Q2 or ~€12.5m. Better Collective is slightly behind its rival in the US, with Q2 revenues of €6.95m but with a full quarter of revenues from the Action Network to be included for the first time, that total should be substantially extended. Later in the week, Gambling.com Group will also report and the analysts will be hoping for some news on the M&A front. On Wednesday there will also be the debut earnings call from recently-listed data and streaming provider Sportradar, meanwhile, tomorrow (16th Nov), IGT will be hosting its much-anticipated investor day.

Newslines

Up their sleeves: Aspire Global’s gaming arm Pariplay has launched a new in-house studio unit called Wizard Games. It will operate as a distinct business unit and is set to offer over 120 titles.

Now we are 10: Fun88 has renewed its Asian and Latin American-facing betting partnership with Tottenham Hotspur, marking the 10th year of the association between the two.

AI overlay: FuboTV has acquired the artificial intelligence startup Edisn.ai for an undisclosed sum. Fubo will use Edisn’s technology, which tracks athletes and corporate logos to allow broadcasters to overlay graphics and data, to complement its free-to-play and real money betting products.

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Calendar

• 16 Nov: IGT investor day

• 17 Nov: Sportradar, Catena Media, Better Collective Q3s

• 18 Nov: Gambling.com Q3s

Contact us

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com