25 Nov: Weekend Edition no.24

The WE+M Q321 Golden Alarm Clock Awards, OPAP, Rivalry Q3s, Evolution allegations response, American Affiliate/FanUnite news +More

Nov 26

Good morning and welcome to the Weekend Edition. Today, we unveil our not entirely serious Q3 awards list, the Golden Alarm Clocks, dedicated to all those analysts who put in the hours following the global betting and gaming sector. We also have news of Rivalry and OPAP’s Q3 figures, a look at the Genius Sports share price crash, a response from Evolution to recent allegations and some corporate news about the Wagers.com Earnings+More parent company American Affiliate.

If you were forwarded this newsletter and would like to subscribe, click here:

The Wagers E+M Golden Alarm Clock Awards

The beats, beefs and boasts of Q3

Beef of the quarter: Deutsche Bank vs. Dave Portnoy
As if Dave Portnoy didn’t have enough to worry about this past quarter, he also found himself the subject of an ad hominem attack via a Deutsche Bank analyst note. Wrote the DB team: “At present, we believe Penn, the Company we covered since 2011, and recommended as a Buy from 2011 through January of 2020, is just a sideshow, a sideshow to a wildly volatile, incredibly libelous, and misleading social media frontman.” The DB team and Portnoy have form; previously the Barstool head honcho posted highly contentious comments in June 2020 after the analysts slapped a Sell recommendation on Penn National’s shares. The irony was probably lost on Portnoy’s social media defenders, but the new change in recommendation was technically an upgrade from a Sell to a Hold.

Plain-speaking CEO award

Winner: Full House CEO Daniel Lee on temporary casino structures

Talking about the need for a temporary ‘sprung’ construction should it win its Illinois casino license bid, Full House CEO Daniel Lee showed he was fully on top of the details: “Turns out there is a company called Sprung Structures owned by a family whose last name is Sprung: who knew?”

Runner-up: Aspire Global CEO Tsachi Maimon’s sales technique

Aspire Global CEO Tsachi Maimon’s was notably candid on his company’s Q3 call when he claimed that the US B2B market beyond the top brands - and notably among the tribal groups - would be very fruitful for Aspire because they “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,” he added, perhaps rather hopefully.

A reverse ferret to…

Incoming CEO at Wynn Resorts, Craig Billings, who called a halt both to the merger transaction with Austerlitz Acquisition Corp. and the marketing spending spree. “The current combination of large-scale brand spend, performance marketing spend, and customer bonuses that we see in the marketplace does not drive unit economics that meet our return requirements,” he said.

The overused analogy award

Winner: Flywheel effect. We're looking at you Entain, Fubo.
Runner-up: One-stop-shop. As employed by GAN, Endeavor, Sportradar.

The memorial CEO desk tidy award goes to:

Richard Carter, CEO at Bragg Gaming, when the games provider released its results on November 8 showing revenues rising 9.9%. He was gone less than a week later, when the company said its “continued strong growth has yet to be reflected in the company's public market performance, and the Board has determined that a search for a new CEO is required.”

The ‘surprise, surprise’ regulatory hurdle of the quarter award:

Joint winners: the new regulatory regimes in Germany and Holland. See the results from Catena Media, Better Collective, LeoVegas, Kindred et al.

The wannabe Elon replica SpaceX rocket award goes to:

Jason ‘it’s not about the money’ Robins at DraftKings for this tweet.

A Bugsy Malone ‘you give a little love’ splurge gun goes to:

MGM boss Bill Hornbuckle who told analysts "we want to be bigger, we want to be global, we want to be a lot of things.”

The misted-up crystal ball award goes to:

Winner: Betsson which said the rule that the Dutch authorities approach towards providers “who do not actively target the Dutch market without a license but who do serve Dutch players” was “a novel rule” and was somehow an ”unforeseeable break with established policy”.

A Grandpa Simpson perpetual GIF NFT:

Not unrelated, perhaps, this gong goes to Pontus Lindwall, CEO at Betsson, then not CEO at Betsson, now once again CEO at Betsson.

‘Pretty In Pink’ soundtrack LP winner:

Jack Davison, the CCO at Genius Sports who gave off strong ‘not that into her’ vibes with his comment about losing out to Sportradar on the NBA exclusive data deal. “We (would have been) thrilled to have the NBA as part of our portfolio that hasn’t happened, but it’s also true that our betting revenues for the NBA at the moment are extremely limited. And so the impact of not winning that deal on our business is very, very small at this point.”

The inaugural Golden Alarm Clock award goes to:

Joe Stauff, who took one for the team at Susquehanna and got on the Oct 12 earnings call with Entain at 4am EST. He asked a question about UK takeover rules and, after being congratulated for getting up so early by Entain CEO Jette Nygaard-Andersen, got the reply “we are really not going to talk about the DraftKings proposal.” Nothing to see here, Joe, nothing to see here.

** Sponsor’s message: Venture capital firm Yolo Investments is home to €350m of equity in more than 50 of the most exciting companies across fintech, gaming and blockchain. It continues to build one of gaming’s most dynamic portfolios as it eyes up seed and A-stage opportunities across the sector. Its dedicated 28-company, €135m AUM gaming fund already houses holdings in fast-growing suppliers and operators, including Kalamba Games, SimWin and ThriveFantasy. Yolo Investments is also on the lookout for LPs as it looks to scale new concepts, including its high-roller live casino brand, Bombay Club.

As a proud sponsor of Earnings+More from Wagers.com, Yolo Investments wants to hear from readers of this newsletter. Get in touch with your pitch, or for a chat.

Rivalry Q3

The top line

Revenue rose to C$3.2m from C$.5m YoY with handle up 141%. As of Sept 30. The company had cash on the balance sheet of $41.3m and no debt.
Post-close, handle reached an all-time high in October at $12.8m exceeding the previous high by 40%.

Cultural revolution: On his company’s debut earning call, CEO Stepehn Salz made the case for why Rivalry was embedded with its target audience in a way that more traditional sports-betting operators weren’t and why that will count. “The Gen Z and younger Millennials are the largest generational cohort in history,” he suggested and Rivalry was “already interwoven into that community, even at a personal level”.

“We are looking ahead to where the culture is going and believe our peers operating in the old world of sports-betting will struggle to adapt to this generational tidal wave that is beginning to hit their shores,” Salz said.

Talking ‘bout my generation: According to Salz, this generation is “less inclined” to play traditional slots games and more willing to take up new forms of gaming such as its recently launched Rushlane, a Massively Multiplayer Online Gambling Games (MMOGG) game that it says represent a new category of online game. “We have a playbook that works,” Salz claimed “We want to keep pushing what makes Rivalry, Rivalry.”

Earnings in brief

Opap: Q3 revenue was up 20.3% to €470.2m despite a drop in retail revenues due to continued Covid restrictions. EBITDA rose 66.1% to €175m. Growth came from the online operation where revenue rose to €97m in the quarter, helped by the full consolidation of the Stoiximan business (€83m vs. €14m for OPAP.com). Online mix was 54% sports, 42% casino and 4% lottery. In VLTs, the company said GGR (at €84m) were gradually returning to pre-Covid levels though management noted on the call that continued Covid measures are more of an issue there than in the betting shops..

Scout Gaming: Q3 revenues were down 19% to SEK12.2m, EBITDA loss dropped to SEK6.3m vs. -SEK11.6m YoY. The group issued ~2m shares during the period, raising SEK54m in the process. Highlights included the launch of Brazil-focused Betano (part of Kaizen Gaming) and US agreements with the Masters Cup Series, Skylands Events and University Sports & Entertainment for the baseball league Frontier League and eFangage with Backal Hospitality Group to develop the product in sports bars and restaurants.

Evolution denial

Anonymous briefing: Evolution has denied allegations that it knowingly accepted bets from countries that are on the US sanctions lists such as Iran and Syria. CEO Martin Carlesund said the anonymous allegations were part of a predetermined plan to “discredit Evolution” and countered claims that the group’s products were accessible to players from banned countries by saying, “this is not possible without sophisticated technical manipulation.”

Private matters: Carlesund said the manipulation came down to tricking Evolution’s geo-blocking technology with VPNs and banned-country IP addresses being replaced with legit IP addresses. "This is a deliberate course of action to circumvent a broadly accepted and well-established process to check users’ geographical location, with the purpose of discrediting Evolution," he said. He added that Evolution was purely a supplier, “doesn’t handle players or their money” and it was up to those companies to “comply with regulations and which markets to focus on”.

Get Shorty: The group’s share price was down ~16.5% at pixel time and it is in discussions with the New Jersey Division of Gaming Enforcement about the issue. As for the originator of the report, it could be a rival supplier or a short-selling hedge fund, but with Evolution taking just 38% of its revenues from regulated markets, it may not be the last such report that is published.

Genius Sports share price collapse

Thanksgiving turkey: There is no disguising the disaster that has befallen the Genius Sports share price in the past week. It is down 50% from its debut price of $20.18 in May and off by over 60% from its high point in early June of $24.93. Genius might have hoped for more from its results which showed revenues rising 70% YoY to $69.1m. But the widening losses - rising to $70.4m before tax - told a different story.

The price of rights 1: Likely to have spooked investors was the news that the much-trumpeted deal for exclusive data rights with the NFL would only be “cash breakeven” this year. With a large slice of that fee due in shares, it left CFO Nick Taylor explaining why, “like a lot of rights deals, not just in our industry, in any industry, some of those rights deals means investing ahead of the revenue curve.”

“But we will only do so on right deals that we think have a long-term value for the business,” Taylor added. As for the NFL rights, however, he added that it would be “increasingly difficult” to separate out the economics of that deal.

Share Wagers.com Earnings+More

Disney’s sports programming spend

The price of rights 2: Coincidentally, on Wednesday Disney issued a filing with the SEC which detailed exactly how much it will be laying out over the next five-plus years on sports programming. It totals $70.4bn, of which $42.9bn is payable over the next five years. That number helps explain, perhaps, Disney’s recent embrace of the sports-betting opportunity with ESPN. A brand new revenue stream might be just the thing for a broadcasting behemoth when viewer and subscriber numbers are on a downward curve.

Further reading: How Disney’s streaming pipeline got clogged.

American Affiliate/Betting Hero & FansUnite

United we stand: FanUnite has acquired the businesses and brands of American Affiliate, including Props.com, BetPrep.com, Wagers.com. American Affiliate brings with it Betting Hero, the live activation company, and LTM revenues of $13.1m as well as partnerships with a number of top-tier sportsbooks. The company says it will be the only at-scale pure-play US affiliate provider.

"The acquisition of American Affiliate represents the most significant milestone for FansUnite to date," said Scott Burton, CEO of FansUnite Entertainment. "This transformative transaction will provide us further access to the lucrative U.S. regulated sports betting and online gambling market while generating accretive, high-margin revenue, expanding our leadership team, and accelerating the growth of our company's footprint in the global gambling market."

Added Chris Grove, CEO at American Affiliate:

"Legal U.S. sportsbooks and online casinos are spending billions of dollars to acquire and retain customers," said Grove. "Our brands, team, and technology allow us to capture a meaningful share of that marketing spend today while producing some of the highest margins in the U.S. online betting ecosystem."

Note: American Affiliate is the parent company to Wagers.com Earnings+More.

Startup Shoutouts

Growth ‘spert: Betsperts has closed the acquisition of premium sports betting and fantasy football subscription service 4for4.com. Betsperts said the deal will provide its Fantasy Life App and Betsperts app customers with an immediate increase in premium content. The news follows the closing of a $6m Series A funding round led by HBSE Ventures and Verance Capital.

Datalines

Sweden: Q3 turnover (stakes minus winnings) were up 4.7% to SEK6.3bn YoY (€622.1m/$699.6m), down 3% QoQ. Commercial online revenues made up SEK3.9bn or 61.8% of the total, up 5.4% YoY. State lottery and offline slot machine revenue was down 5.7% to SEK1.4bn. Around 65,000 consumers had self-excluded through the government’s Spelpaus program by quarter-end.

Portugal: Online betting and casino revenues were down 14.9% QoQ, but up 38.5% YoY to €114.2m ($129.3m) in Q3. Online sports betting revenue was up 16% YoY to €49.3m, handle rose 33.2% to €296.9m. Digital casino generated revenues of €64.8m, up 55.3% QoQ, total casino stakes came to €1.78bn, a 50.8% rise YoY. The Portuguese authorities recorded taxes of €40.0m, an annual rise of 41.3%.

Newslines

Florida shutout: Google Ads has shut down all betting ads within Florida as of Wednesday, citing existing policy on only allowing “state-licensed entities in certain states” to advertise themselves. This follows the news that a Florida judge has rejected the Seminole Tribe’s request for a temporary hold on the District of Columbia ruling earlier this week.

Taking up the reins: Ian Williams has been appointed the new president of Wynn Interactive, taking over from Craig Billings who has taken the top job at Wynn Resorts.

On point: PointsBet has been awarded a sports betting license in Virginia through its exclusive partnership with Colonial Downs Group in what is Pointsbet’s first “lottery-regulated market license award,” said CEO Johnny Aitken. The group said it will leverage its betting partnership with NBC Sports to reach bettors in Virginia.

Brazil nuts: FanDuel is to offer daily fantasy and sports-betting products in Brazil through a multi-year partnership with media group Grupo Global’s recently-launched DFS venture Cartola Express. The partnership will be powered by Aspire Global’s BtoBet platform. Separately, BtoBet has agreed a mobile and retail platform supply deal with Poland’s BestBet24.

Hacked off: Hacksaw Gaming will supply its slots games portfolio to Swedish state operator Svenska Spel as part of the latest deal signed by the Malta-based games developer.

Chalked off: Chalkline has renewed its partnership with Hollywoodbets and will provide the UK, South Africa and Ireland-licensed sportsbook with additional gaming content. Under the new agreement, Hollywoodbets will license Chalkline’s BettorGames platform to launch additional free-play and real-money gaming products.

Dream baby dream: Dream Sports, the parent company of Indian fantasy sports group Dream11, said it has raised $840m in a funding round, giving it a valuation of $8bn. The fundraising was led by Falcon Edge, DST Global, D1 Capital, RedBird Capital and Tiger Global.

What we’re reading

Free trade hall: The UK-based financial trading app Freetrade is seeking a £650m valuation via crowdfunding offer as it plans a push into crypto. Meanwhile, ex-Barcelona maestro Andres Iniesta gets into hot water over a Binance tweet.

Women’s soccer reaches a turning point.

RIP Mr. Goxx, the crypto trading hamster that outperformed the S&P500.