Dec 7: GLP makes $1.81bn Live! splash

GLP’s deal for Cordish Companies, Bullpen Parlay SPAC news, Intralot earnings call, CBRE resumption of coverage +More

Dec 7

Good morning. Gaming & Leisure Partners has made a splash with its acquisition (and leaseback) of the Cordish Companies three Live! casino properties for $1.81bn. There is another gaming and betting-targeted SPAC called Bullpen Parlay from Paul Martino and David VanEgmond. Then there is the latest comment from Intralot’s nine-month earnings call.

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GLP and Cordish Companies

Live and direct: Gaming & Leisure Properties (GLP) and the Cordish Companies have agreed a $1.81bn deal which involves a sale and leaseback of Cordish’s three Live! Casino properties in Maryland, Philadelphia and Pittsburgh. The deal will be financed via a mix of debt, cash and $323m of new shares (operating partnership units) and also involves a new strategic partnership for future casino developments as well as other non-gaming real estate assets.

Hot steppa’: Analysts at Truist noted the terms of the deal, with an implied cap rate (the net annual operating income divided by the purchase price) of 6.9%, represented a new regional record. Jefferies said the deal was a “step in the right direction”. “While it's challenging to quantify the accretive or dilutive effect of the transaction without further detail on funding, we believe that acquisitions remain pivotal to GLP's long-term growth and stock upside, and that this transaction should bring incremental upside to the company's strategic focus,” they added.

Rent support: A note yesterday from the analysts at Macquarie pointed out that while REITs don’t have a direct exposure to online gaming, several of their tenants do. “Although this won’t benefit REIT financials, it will improve underlying rent coverages and strengthen the corporate guarantee for the assets in the leases,” they added.

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Bullpen Parlay SPAC

Bullish: A new SPAC headed by Paul Martino from Bullpen Capital, and David VanEgmond, founder and CEO at Bettor Capital, aims to raise $200m to fund a merger in the online betting and gaming space. According to the prospectus, Bullpen Parlay will be looking for targets with a competitive advantage, a large addressable market and a strong management team. They also hope to effect a deal at a “reasonable entry valuation”.

Track record: Martino’s Bullpen Capital previously invested in FanDuel (pre-Flutter), Swish Analytics and Jackpocket. His most recent investment is Bankroll, a next generation sports-betting lounge in Philadelphia which makes its money from in-person affiliate sign-ups. VanEgmond’s Bettor Capital recently raised $50m to fund startups in the gaming space. He was previously an executive at FanDuel and Barstool Sports.

Resumption of coverage

Back in the game: CBRE analyst John Decree has resumed coverage of the gaming sector following the acquisition of Union Gaming and the resumption comes at an opportune time, he suggests. “The recent selloff in global gaming equities created a number of great opportunities to get involved in the sector at some of the most attractive levels in months.”

“We also remain optimistic on the global digital gaming industry, with a strong emphasis on the US sports-betting and igaming opportunity,” Decree writes. “While we appreciate the sharp correction in valuation multiples in recent weeks, we believe there is still significant underappreciated value in Caesars Entertainment, MGM, Entain and Flutter.”

WE+M will report more on DeCree’s thoughts in this Friday’s Weekend Edition.

Intralot 9m analyst call

No sale: US revenues were up 22.9% YoY (+€21.5m) and driven mainly by its lottery operations, but management did not expand on a potential sale or listing of its US business. With regard to US sports-betting, chairman and CEO Sokratis Kokkalis said he viewed partnerships as the most likely route to growth, with a focus on state contract wins. Recall, when questioned about “underwhelming” US sports-betting numbers in Q3, with revenues of ~$1.3m vs. $4m forecast for its DC and Montana units, the group said “everything in the sports betting area in the US is happening with a delay” and there was “uncertainty on how this is going to play out”.

On Wagers.com

Sales pitch: Scott Longley analyzes the comments from Jason Robins at DraftKings on the pros and cons of profitable players. “First, it should be understood which audience Robins was speaking to. Companies don’t use investment bank fireside chats to open up a dialogue with the players or, indeed, the media and particularly its social wing. This was a sales pitch to investors.”

Datalines

Illinois: Casino GGR was down 10.2% vs. Nov19 and down 13.8% on a same-store basis to $104m. The figure represented a 4.7% drop MoM and -8.5 on a same store basis. On an annual basis however the revenues total was a 186.3% rise. The Nov21 calendar was unfavorable with eight weekend days vs. 10 in 2019, creating a ~5% drag in the trading period, said Deutsche Bank.

Maryland: GGR was up 13.9%vs. 2019 and up 3.5% MoM at $160.4m. With an unfavorable calendar, DB estimates a 5% drag Nov21 vs. Nov19 but added that table hold comparisons at some larger properties likely curbed October GGR results for the market. Maryland Live (~36% of market share) generated $58.2m in GGR, a rise of 10% vs. 2019, but down 4.3% MoM.

Rhode Island: October sports betting handle hit a record $60.2m, a 46.1% on the previous record set in September and a 73.5% rise YoY. Mobile apps recorded $31.1m of the wagers, with the Twin Rivers casino recording a total of $21.3m in bets, ahead of sister property Tiverton Casino with $7.7m. GGR however was down 18.2% to $3.6m MoM for the month, with retail revenue at $2m and mobile revenue at $1.6m.

Newslines

Ohio high: The regulatory deadlock could be at an end in Ohio, with Senate President Matt Huffman allegedly signing off on a new sports betting proposal. The text for the new bill could be finalized by the middle of next week, but regulation would not happen until next year. The state’s Gaming Committee filed a bill that was passed in March, but has been held up following disagreement with the House.

Tribes launch: The Stillaguamish and Kalispel Tribes have launched retail sportsbooks at their respective casinos in the state of Washington. The Snoqualmie Tribe launched its own sportsbook in September and with a total of 16 Washington tribes having been granted sports betting licences more are expected soon.

Eastern front: STS has raised PZ1.08bn ($266m) from an IPO on the Warsaw stock exchange with the founding Jurasek family selling a 30% stake. STS claims to control 50% of the Polish online sports-betting market.

Good gig: Gaming Innovation Group has issued SEK450m floating rate bonds which it said previously would help fund the expansion of its affiliate marketing arm.