Good morning. Sportradar leads with strong debut results and the announcement of an extension on its exclusive deal with the NBA. Flutter splashes out over £400m in cash to buy UK-based bingo operation Tombola. Aristocrat publishes full-year results as newcomer JKO Play enters the Playtech bidding fray. Nigel Eccles marks his return to the betting and gaming universe with the largest-ever seed funding round for a UK-based company. And there is a lot to digest from the Pennsylvania and New Jersey figures for October.

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Sportradar Q3

The top line

• Revenue up 30% YoY to $158.7m (€136.8m) and adj. EBITDA up 21% to $24.2m (€20.9m).

• During the period, Sportradar completed its Nasdaq listing raising $546m.

• FY21 revenues expected at between $641-644m, adj. EBITDA at $115.4-117.7m.

• US revenues up 119% to €19.6m, RoW betting up 24% to €78.6m and RoW AV up 13% to €29m.

• New NBA deal announced extending the existing exclusive arrangement for another eight years.

Slam dunk: The early extension of Sportradar’s exclusive data deal with the NBA was warmly welcomed by the analysts who suggested it removed a potential stock overhang. The new arrangement means Sportradar has exclusivity on US and global distribution for the NBA for the next 10 years and will see the NBA take a 3% stake in Sportradar.

“We believe the new deal removes a potential overhang, with the previous deal set to expire in 2023, and reinforces SRAD's commitment to the US market,” said the analysts at Deutsche Bank.

Think global: On the call with analysts, CEO Carsten Koerl pointed to the NBA’s global appeal with an audience of ~2bn. “The opportunities with this partnership with the NBA are really endless,” he said. The Jefferies team were similarly impressed, suggesting the partnership “should provide incremental visibility into the US growth trajectory over the medium term”. 

Full court press: The NBA’s importance to the US betting ecosystem was emphasized by Koerl, who pointed out that at around 21% of handle (NFL on 19%), it was the most bet sport pre-match and the leading in-play sport with 25% (NFL 14%). “The NBA is undoubtedly a better live betting sport than the NFL is,” he added.

“NBA is clearly a betting sport for in-play,” Koerl said. “We believe that in-play gets more and more market shares. We believe that this is a trend which follows very strongly what we saw in the international, especially the European market, for the last 10 years. And as you might know, in the European markets in-play is more than 70% of the revenues.”

Different ball game: Equally significant for the group is the recent exclusive data deal with UEFA, the first such deal for European soccer’s governing body and the organizer of all UEFA competitions including the Champions League and the European Championships. Koerl was keen to point to soccer’s pre-eminence as a betting medium globally. “Soccer is the most bet on sport in the world with a handle of €850bn each year, far exceeding the handle of American sports, such as the NFL, which is €41.8bn annually,” he said.

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Aristocrat FY21 and Playtech bid news

The top line

• Revenue up 14% to A$4.74bn while EBITDA rose 43% to A$1.54bn.

• Operating cash flow stood at A$1.33bn and net debt to EBITDA ratio stood at 0.5x.

• Mobile gaming unit Pixel United global leader in social slots and second in social casino

Meanwhile, back in the data room: Aristocrat’s results were overtaken by news on a new bidder in the race to buy Playtech. The company recently completed an equity raise of A$1.3bn to fund its bid with what it said was a “strong take-up” from shareholders. The company reiterated this morning that its recommended offer provides both a “compelling strategic rationale” and certainty for Playtech shareholders and employees.

JKO-r in the pack: The news that F1’s Eddie Jordan and ex-Scientific Games executive Keith O’Loughlin have teamed up for a bid for Aristocrat was not so surprising given the pair were rumored to be in the bidding for OpenBet (eventually snapped up by Endeavor for $1.2bn). Playtech said this morning the pair were in talks with CenterBridge (and others) over raising the money needed to outbid Aristocrat. JKO Play has been granted access to due diligence. Playtech noted that “no financing commitment has been provided by CenterBridge and that other sources of debt finance are “also being considered”.

Three’s a crowd: The news on JKO means that the data room is somewhat crowded with Gopher Investments already pouring over Playtech’s numbers with an eye on another rival bid. It is now up to the takeover panel to decide on what put-up-or-shut-up deadlines will be placed on both Gopher and JKO Play. 

Messrs Micawber: Analysts at Peel Hunt said they were “tempted to conclude” that either these bids or even another would produce an offer ahead of Aristocrat’s 680p per share bid. 

However, “in the absence of clarity we recommend that shareholders sit tight and see what emerges,” the Peel Hunt team added.

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Flutter buys Tombola

The top line

• Flutter has bought Tombola with £402m of cash.

• Tombola’s player base is 100% regulated with over 80% of players from the UK and 16% from Italy and Spain.

• In the year to Apr21, Tombola generated £164m in revenue and EBITDA of £38.5m. It has achieved 25% revenue CAGR over the past five years.

• Transaction will complete in Q122.

Balls Out! Jefferies said it diversified Flutter’s product range, even if at a multiple of 10.4x EV/EBITDA “(it) looks relatively full” for a single-product UK-focused gaming asset. The team at Peel Hunt were positive, pointing to Tombola’s leadership in responsible gambling practices. However, Jefferies said the timing “looks a little odd” coming ahead of any online slot staking limits from the upcoming UK Gambling Act review. “We assume that Flutter must expect that the typically low-staking bingo customers will be largely unaffected by any limits imposed.”

BetDEX fundraise

Turning on a ‘digm: Ex-FanDuel founder Nigel Eccles’ “decentralized sports-betting protocol” has secured the largest ever seed funding round for a UK startup pulling in $21m from crypto investment firm Paradigm and cryptocurrency exchange FTX. The previously announced BetDEX sees Eccles team up with ex-FanDuel-ers Varun Sudhakar, CEO, and Stuart Tonner at CTO. The company is based in Scotland and will be combining blockchain technology with sports betting in order to “transform the consumer sports betting experience”. 

Piece of cake: Built on the Solana public blockchain, BetDEX hopes to offer “extremely fast and low-cost trades, while eliminating counterparty risk”. “The protocol will be fully decentralized and open-sourced, allowing third parties to build their own applications and innovate on top of the platform,” according to the release.

New Jersey Oct21

Doctor beat: Sportsbooks once again recorded more than $1bn in handle in October at  $1.3bn, a rise of  28.9% on the previous September record; betting revenue of $84.2m (6.5% margins) was also a record for books in the Garden State. Fanduel was GGR share leader at 46% and with DraftKings and BetMGM account for 77% of GGR share. 

Boardwalk Empire: The calendar was also favorable to the industry with five Friday-to-Sunday weekends and NFL handle hit a record $499m during the month. The increased availability of single-game parlays led to record volumes of $317m on parlays, said the analysts at Eilers & Krejcik. They also noted the $124m handle recorded by retail sportsbooks vs. $92m in September, reflecting “broader recovery in the retail gaming sector, peak sports seasonality, and perhaps even some high-roller action”. Unfavorable sporting results led to “flat-ish MoM growth in GGR,” the team at EKG added, with NFL hold rate of “2.5% well below its historical average of 4.1%”. 

Cross-sell traffic: Online casino GGR was up 37% YoY to a record $124.5m, despite retail casinos operating at full capacity compared with Oct20. BetMGM, including the Borgata and Party Casino brands, recorded ~47% of icasino GGR. EKG also pointed to the impact of seasonality, with “sports-first brands, driven by cross-sell and aggressive advertising capturing 64% of online casino GGR (vs.59% YTD)”. Caesars however is yet to flex its marketing muscle, its casino GGR was down 11% MoM.

Pennsylvania Oct21

Red October: Sportsbooks generated a record $776.3m in handle (+34.1% MoM) and $23.5m in revenue in October, with mobile sportsbooks recording 92% of the handle. Online casino was up 5.2% to $102.9m in revenue, land-based casinos recorded $292.4m in revenue for the month. In total, the state’s gambling operators generated $425.9m in revenue and $172.3m in tax revenues. 

Bonus boost: Top two market leaders were unchanged in sports betting. FanDuel took 46.8% of total handle at $275.4m and DraftKings recorded $201.7m, good for 28.2% share. But with promotions, bonuses and state taxes dominating much industry talk, it was notable that the big riser in October was Barstool Sportsbook. Dave Portnoy’s group was third with 10% share and $71.5m in handle, but this was thanks to promotional and bonus spend that led to a loss of $1.2m. Caesars, TwinSpires, Betfred and Betway also recorded losses. BetMGM was fourth with $65.9m in handle and avoided a loss for the month with $346K in taxable revenues.

Datalines 

Tennessee: Sportsbooks handle was up 45.9% to $375.3m in October, GGR was down 9% to $23.3m. The state took $3.4m in tax revenues. Tennessee’s lifetime handle rose to $2.3bn in October, making it the fifth-fastest state to reach the $2bn landmark.

Washington, D.C.: Sports betting handle reached $26.3m in the US capital, but the headline figure was the drop in margin from 18.8% in September to less than 6% in October. GGR was also down, to $1.6m compared with $3.9m in September. Caesars-William Hill continues to lead the market with $19.1m (72.6%) of overall handle ahead of the state lottery brand GambetDC at $5.5m (8.9% hold rate). Of note was new brand Grand Central’s $207.3K in handle, which amounted to 20.7% margins. 

New York: Casino and sports betting  GGR was up 54% YoY to $60.4m in October (flat MoM). Resorts World Catskills was casino GGR leader with $19.6m, Schenectady’s Rivers Resort & Casino was second with $16.7m and Del Lago Resort and Casino was third with $15.6m. Slots and table games handle increased 51% YoY to $627.5m. Sports betting handle was $25.5m and GGR was down 37% YoY to $1.7m. The Rivers Casino sportsbook led with GGR of $949K, DraftKings (Del Lago) was second with $503K, Resorts World was third with $222K.

Newslines

Cliff edge: IGT has expanded its sports-betting footprint in Arizona with a multi-year deal for retail trading services at the Cliff Castle Casino in Camp Verde.

Churchill gets the nod: The Indiana Gaming Commission has awarded the Terra Haute casino license to Churchill Downs and its proposed $240m facility of 1,000 slots and 50 table games. It beat out competition from Full House, Hard Rock and Premier Gaming.

Here we go again: Land-based casinos and gaming arcades in the Netherlands will be closing their doors at 6pm after the Dutch government announced a partial lockdown to combat rising COVID case numbers and hospitalizations. The new measures are set to last until at least 3 December and all visitors to gambling venues will be required to present a valid COVID pass. 

What we’re reading

Billions at stake in California battle. The Hill.

What we’re listening to

A free-play webinar from Chalkline.

On social

Quant @QuantCappers

@gamblinglamb $PENN is the most obvious short in the entire gaming space (well maybe after $DKNG). $2B for $0.02B of revenue and a tech stack that is only a PAM at this point. Lol.

November 17th 2021

Calendar

• 18 Nov: Gambling.com Group, Lottomatica Q3s

• 22 Nov: Elys Technology

• 23: Genius Sports

Contact us

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com