Good morning. The global betting and gaming sector has had a phenomenal year so it is not surprising it should be the subject of much rumor with many of the biggest names involved in countless bid rumors. The latest one doing the rounds revolves around LVS and what its options are should it opt to buy its way to online prominence. Sources may be steering us away from the potential for a bid for 888 but this won't stop the gossip elsewhere. Indeed, such is the interest in the sector, it is no surprise that DraftKings should have been included in the portfolio of stocks behind Roundhill’s MEME stock ETF.

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Las Vegas Sands-888 rumors 

Line in the sand: Is a Las Vegas Sands bid for 888 imminent? Not according to sources close to LVS who suggest that while the cash-rich casino giant remains, as previously stated, on the lookout for potential online acquisition targets, it is focused more on B2B opportunities and is “not actively pursuing B2C opportunities”.

Moving parts: Recall, following the sale of the Venetian, the now Asian-focused casino operator has ~$1.6bn of cash on the balance sheet and a further $6.25bn of proceeds from the sale of the Venetian to come when that deal completes in Q122. 888 currently has a market cap of circa £1.2bn and net cash of £114m, although a £500m equity raise is due in the new year to help pay for the recent William Hill international deal. Analysts at Peel Hunt note the recent weakness in the 888 share price is likely due to concerns over the regulatory backdrop in the UK, there may also be some overhang from the WH acquisition that is set to complete in Q1,  but rumors of a bid from the US might perk them up a bit.

Target practice: LVS is thought to have been in discussions with a variety of potential targets over recent months but none have reached beyond the informal stage. The source suggests that the recent news in the US OSB sector around the high costs of marketing are acting as a discouragement to any thoughts of entering the arena. Moreover, 888’s US positioning is best described as “nascent” given the SI Sportsbook JV with Sports Illustrated has only launched in two states so far.

Talking point: Bid speculation is rife at present and in the current atmosphere, any deal can be made to look attractive. Hence the rumors around LVS and 888 as well as other potential combinations including continued chatter around Entain and a renewed bid from MGM. This is unlikely to subside in 2022.

Maryland is live

Bet now: Retail betting is now up-and-running in Maryland with Gov. Larry Hogan having the ceremonial first bet. Now taking bets are BetMGM at MGM National Harbor, Caesars Sportsbook at the Horseshoe Casino and FanDuel Sportsbook at Live! Casino. Barstool Sportsbook at Hollywood Perryville and Twin Spires at Ocean Downs have received certification.

On Wagers.com: PointsBet has agreed an official sports-betting partnership with the University of Maryland, the first such deal between a betting operator and a member of the Big Ten Conference. “We are looking forward to raising awareness and educating our student-athlete and University community about responsible gambling,” said Maryland Executive Associate Athletic Director and Chief Strategy Officer Brian Ullmann.

**Sponsor's message: Spotlight Sports Group (owned by Exponent Private Equity) is a leading technology, content and media business specialising in sports betting. Evolved from the Racing Post Group, Spotlight Sports Group has decades of experience in powering growth and conversion for the world’s biggest sportsbooks and media companies, delivering best-in-class technology and expert scalable content in more than 70 languages. From integrated solutions such as Superfeed to full turnkey publishing solutions, Spotlight Sports Group has all the tools to help customers go above and beyond the odds.

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DraftKings inclusion in MEME ETF

The company you keep: DraftKings has been included as one of 25 stocks in ETF provider Roundhill Investments' new meme stock ETF. The appropriately-tickered MEME is the first to explicitly target the performance of stocks that attract what Roundhill terms as “elevated social media activity” as well as having a high degree of short interest. DraftKings is in the company of well-known r/wallstreetbets crowd favorites such as Gamestop and AMC as well as trading app provider Robinhood and the Trump-led SPAC Digital World Acquisition Corp. Note, DraftKings also features in Roundhill’s sports-betting ETF which goes by the ticker BETZ.

Further reading: DraftKings is the most fascinating company in sports. But Cathie Wood’s Ark ETF - which also includes a big bet on DraftKings - has hit the skids.

We got the groove: Meanwhile, DraftKings has announced a new partnership with the NFL Players Association to launch gamified NFT collections during the next NFL season. DraftKings licensing rights for active NFL players include the authentic use of name, image and likeness. Beth Beiriger, SVP of product operations for DraftKings Marketplace said gamified NFTs represented “the future of fandom”. 

Further listening: Jason Robins on the airwaves and on pitch-deck rejections, “VCs will take any meeting, we have to fill out our days with meetings,” he was told.

Full House Illinois casino win 

Bigg project: The Illinois Gaming Board has awarded Full House Resorts the license to build a casino in the city of Waukegan to the north of Chicago. The selection process took more than two years due to delays related to the pandemic, although a legal challenge could be launched by the Forest County Potawatomi Community, which said the process was “rigged” to favor a bid backed by former state Sen. Michael Bond. Full House’s new $400m casino will cater to high rollers and will be called American Place. The group expects to have a temporary venue open in the coming weeks, the full opening is slated for mid-2022. 

New skin: Analysts at Macquarie noted the new casino also gives Full House access to an online skin. ‘We would expect Full House to give the skin away for market access fees,” they added. Recall, Full House already has market access agreements with the likes of WynnBet, Twin Spires and Smarkets in Colorado and Indiana.

Six into one: Another license was awarded to Alabama-based group Wind Creek Hospitality to build a casino that will be situated between the towns of Homewood and East Hazel Crest the south of the Windy City. Gov. J.B. Pritzker authorized six new casino licenses in 2019. Of those six only the Hard Rock in Rockford has completed.

Endeavor update 

The full stack: Jason Lublin, CFO at Endeavor, spoke this week in a digital fireside chat at Barclays’ global TMT conference and reiterated his message that the company sees the potential of presenting its full gaming stack, including both the OpenBet acquisition and its existing IMG Arena sports data and streaming arm, to sports bodies and federations. “It puts us in a great position to really leverage those relationships,” he said. 

Bring on the minor leagues: Separately this week, Endeavor announced it had the creation of a new organization aimed at the promotion of baseball called Diamond Baseball Holdings as well as the acquisition of nine MLB Professional Development League (PDL) Clubs minor league affiliates of the Chicago Cubs, St. Louis Cardinals, New York Yankees, and San Francisco Giants.

Meanwhile Down Under: OpenBet has signed a contract renewal with Flutter for backend provision for its Sportsbet offering in Australia.

CBRE sector coverage

Better days: As noted earlier this week, CBRE has resumed its gaming coverage following the acquisition of gaming specialist shop Union Gaming. Among the sectoral themes identified are that there is more to come from the Las Vegas Strip. Pointing out that the second and third waves of recovery are yet to come with international travel and trade show business likely to add a further 30% to the visitation figures as and when they both return.

“Relative to regional or local markets, these two customer segments will provide Las Vegas with a very long tail to its recovery, creating an attractive long-term fundamental earnings growth story.”

The greatest: The CBRE team suggest the rise of online sports-betting and igaming is “categorically the greatest growth opportunity” in global gaming since the de-monopolization of Macau. CBRE put the long-term TAM for both products in the US at $31.4bn.

“The bigger picture is that the gaming industry, given the strict regulatory oversight, has lagged the broader consumer discretionary sector in terms of digitalization and mobile adoption.”

A song for Europe: CBRE suggests the companies best placed to take advantage are Entain and Flutter which they suggest are the “only global large-cap public gaming companies with the technology, infrastructure, and scale to compete globally in regulated online gaming markets.” They add that both are in podium positions in the US. For those looking for pure exposure to the US market, they recommend Caesars which they suggest is now “equipped” to be a top player and is “on the path” to $1bn of normalized online revenue.

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Macau review

Send in the clowns: As part of their sector note, the CBRE analysts suggest Macau is all but uninvestable for now “until there is greater clarity” on the pandemic, the concession process and the future of VIPs following the Chau arrest. A similarly downbeat message comes from a webinar hosted yesterday by Asia Gaming Brief with Alidad Tash, managing director at the 2NT8 consultancy, saying that the speed at which the junket business will decline will be “mind-bogglingly fast”.

There will be blood: In a worst-case scenario, Tash suggested Macau GGR might decline by up to 36% from $36.1bn in 2019. Even his base-case forecast put GGR down at $26.8bn and as he suggested, with the Chinese authorities flexing their muscles it was almost certain there would be “more blood” in the months to come on the whole system of money transfers in and out of Macau.

Further reading: Fitch on the outlook for Macau.

GiG IR talks to Symmetry Invest

Don’t let me be misunderstood: Hessi Mocca, the new head of IR at Gaming Innovation Group (GiG) spoke with Andreas Aean, the CEO at the Danish investment firm Symmetry Invest (which is invested in GiG) this week and said the dilemma the company faced was whether it was a media affiliate business with a gaming platform attached or vice versa. Pointing to others in the Scandinavian gaming orbit such as Evolution, Kambi and Better Collective, he said what was needed was “focus, focus and more focus”.

Don’t stand me down: Mocca hinted that with the media/affiliate arm and the platform and sportsbook services being so separate that a formal split might be on the cards. “Whatever the board decides, I think they are targeting bringing as much shareholder value as possible,” he said. “I think the board has been keeping the company as a conglomerate to let the platform (business) find and stand on its own two feet,” he added.

Starved: Extolling the virtues of the affiliate business, he pointed out it had grown impressively even while being starved of capital. “They have really been the heroes,” he said of the media unit management team. Asked why GiG had yet to look at buying US affiliate assets, he said “honestly speaking, we didn't have the cash”.

“Therefore we didn’t look at the US market because we didn’t have the economic tools to buy anything in the US,” Mocca added. “But the honest truth is everyone is buying into the US at high multiples and forgetting the European market.”

GAN acquires Silverback Gaming 

Gorillas in the mist: GAN has acquired the casino games studio Silverback Gaming for an undisclosed sum and rights to all Silverback content including up to 50 new slot titles in the next three years. These will be added to GAN's SuperRGS gaming offering that launched in the US last month. GAN said the deal is part of its strategy to increase its “take rate” on existing B2B relationships. 

On-trend: share buybacks

Better Collective has embarked on a €10m share buyback program which it says will cover future payments relating to completed acquisitions and already established staff incentive plans. Rival Catena Media, meanwhile, has announced the completion of its own buyback of over 2m shares. It now owns 2.3% of the total shares outstanding. Earlier this week, Bally Corporation announced a $300m share buyback offer. Evolution announced late last week it has been authorized to buy up to €200m of its own shares. GAN also announced a $5m buyback at the very end of November.

Datalines

​​Illinois: Sports-betting handle in October was $840.4m, up 40.7% MoM and nearly double YoY. Gross win of $52.5m meant margins of 6.2% and $7.9m in tax revenues for the state. In handle, DraftKings was market leader at $310.5m or ~40% of all online wagers; FanDuel was second with $236.4m and ~30% share; BetRivers was third with $119.3m. On GGR leadership was reversed; Fanduel led with $23.2m, DraftKings was second with $12.9m and BetRivers third with $7.8m. 

Virginia: Sports-betting handle was up 45.4% in October to $427.3m, pushing total handle to $2.4bn since launch in January. GGR was $30.2m on margins of 7.1%. Taxes of $1.7m were accrued. Operators paid out $15.8m of GGR in bonuses and promos and added to ~$4.6 million in further deductions, it meant adj. GGR was $9.8m. 

Oregon: The state’s DraftKings-powered sportsbook Scoreboard generated a record $4.4m in gross win in November, a 46.5% rise MoM and +7.6% YoY. Betting handle was $32.6m, down 13.2% MoM but up 30.5% YoY. 

Newslines

Wave goodbye: Bet-at-home has announced it is letting go 65 employees as part of a restructuring plan caused by the closure of its Austrian-facing operation. Recall, Bet-at-home issued a profit warning in October related to the Austrian business and has yet to issue its Q3 earnings.

Duel launch: Alongside Maryland, FanDuel also unveiled another retail sportsbook in Louisiana yesterday, at the Delta Downs Racetrack Casino & Hotel in Vinton, LA.

Five-year plan: Sportradar and Kambi have agreed on a five-year extension to their partnership for the supply of exclusive NBA, NHL, MLB, and college sports data in the US market. Under the terms of the new deal, Sportradar will continue to provide Kambi its pre-match score data and now it will also supply its live-score data and content including Live Match Trackers for major US sports.

Off the radar: Meanwhile, it has been announced that David Lampitt, Sportradar’s managing director of sports content and partnerships, is leaving to join Tennis Data Innovations (TDI), a joint venture by tennis authority ATP and ATP Media. TDI was formed last year to manage the data and streaming rights to ATP Tour and ATP Challenger Tour match data. Lampitt joins TDI from Sportradar where he was managing director of sports content and partnerships.

Migration completion: Aspire Global has completed its migration of all partner brands to its own BtoBet proprietary sportsbook platform which it says is an “important step” to achieving the planned synergies. The group previously worked with SBTech for its B2B betting solutions.

Take the Doe: Wynn Resorts has announced the appointment of Julie Cameron-Doe as its CFO, effective in the Q222. Cameron-Doe will succeed Craig Billings, who will become CEO early next year.

What we’re reading

Vergüenza: “We as a society are corrupt,” Fortaleza head coach Nelson Flores comments on Colombian football’s latest scandal, with online sportsbook advertising in the background.

Pull cord: betting is the next battleground in streaming.

A16x founders’ retirement homes: Ben Horovitz holes up in Las Vegas.

On social

M&A is brutal

Kara Nortman @karanortman

M&A is brutal. It's a full time job, emotionally taxing and mixed with subjective feedback. So how do you know if potential M&A is worth your time? Here’s a cheat sheet I share with founders:

December 10th 2021

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Calendar

• Dec 14: Sazka Q3 (earnings call the following day)

• Dec 16: New Jersey monthly statistics

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