Good morning. When this newsletter launched in April, it was based on the hunch that the global betting and gaming sector was generating so much news, particularly during quarterly results seasons, that it is hard to keep track. We feel the decision to press ahead has been vindicated by the events of the last nine months. With companies as diverse as Disney, Fanatics, FTX (see below) and Waystar Royco (er…) all eyeing opportunities in the space, the newsflow is only likely to intensify in the year ahead. A big thank you to all our subscribers for their continued support and we wish you all happy (and safe) holidays.

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

Sector watch: crypto exchanges

Risk analysis: The PlayUp blowup has denied FTX the chance to be the first major cryptocurrency exchange to enter the US online sports-betting space for now. FTX’s next target might now be MaximBet, SBK or even Pointsbet, according to the analysts at Eilers & Krejcik, who point to the similarities across sports-betting and crypto trading. “Both business segments, after all, target a demographic with a clear interest in risking time, money, or both on uncertain outcomes,” the team said in a note this week.

“We doubt we’ve heard the last of FTX and U.S. sports betting,” said the E&K team. “If PlayUp was FTX’s first target, perhaps its next will be MaximBet, SBK, or even PointsBet. All have long been associated with sale rumors and would come with two critical components: market access agreements and in-house technology.”

Rocket from the crypto: Tim Heath, partner at the gaming investment fund Yolo, says crypto firms are currently “focused on driving acquisition of new customers through mass-market marketing”. Recent deals include Crypto.com’s $700m sponsorship of the Staples Centre in LA, a 10-year $175m kit sponsorship deal with UFC and being the official crypto partner of Lionel Messi’s new club Paris Saint-Germain. FTX meanwhile raised $420m in October for a valuation of $25bn and bagged the naming rights to the Miami Heat arena, it is also the MLB’s official crypto partner. Binance and Bitci are two more exchanges with major expansion plans.

Hitting the mainstream: A broader regulatory crypto clash might also be on the cards. In 2019 New Jersey regulator David Rebuck said "bitcoin is not going to happen” in NJ and there is a fair deal of head-scratching going on among regulators about what to do with crypto casinos, sportsbooks and where (and how) the line can be drawn between financial investment and gambling. In the UK this is compounded by recent regulatory failures over binary options and firms such as Football Index. Notably, the UK’s Advertising Standards Authority has also issued rulings against seven crypto trading platforms for dubious promotions.

Chiller cabinet: Meanwhile, PSG’s fan token sponsor Socios, which sponsors more than 100 teams in Europe, US and Latin America, has of late received skeptical coverage for portraying itself as a fan engagement product when its most sophisticated users seem to trade in the tokens, paid for with the Chiliz cryptocurrency that is part of Socios group, as a way to make money.  

Further reading: The UK’s FCA will need to play a greater role with crypto.

More further reading: US group eyes English Football League club with crypto/NFT and moneyball model.

** 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.

Wells Fargo sector note

Pull up to the bumper: Despite the recent pullback among online betting and gaming stocks, Wells Fargo says it has “created some interesting opportunities” and highlight Caesars Entertainment and Flutter as their picks.

“We remain constructive on sports-betting/igaming’s long-term secular growth story but acknowledge that growing concerns over the industry’s path to profitability are unlikely to go away in the near term as EBITDA losses probably get worse before they get better,” the Wells Fargo team suggest.

Street cred: The team adds that while they believe both Caesars and Flutter have “the credibility and track records” to forge a path to profitability, they are less convinced by DraftKings, noting that market share trends are “inconsistent”. But they add that the recent 44% share price decline has “mitigated a lot of valuation concerns”.

Sazka/Allwyn Q3

• GGR was up 14% YoY to a record €876.2m. Adj.EBITDA up 40% to €285.1m, pre-tax profits up 182.1% to €197.5m. 

• Online GGR more than doubled to €101.5m

• Lottery GGR -1.4% to €371.1m, VLT and casino up 13.1% to €194.6m, sports betting rose 32.4% to €148.5m. 

Online odyssey: Group CEO Robert Chvatal said the group’s online progress was strong across all key markets, with Austria (+35%), Czech Republic (+ 154.7%) and Greece and Cyprus (+76.3%) all performing strongly. The latter two were the group’s largest markets: Greece GGR was up 20.3% to €470.4m thanks to Sazka/Allwyn increasing its stake in sports betting leader Stoiximan to 84% last year. 

De-anonymize this: The group is competing against Camelot for the UK National Lottery license and Chvatal said this was part of a broader plan to leverage Sazka’s “brands, website and app traffic from lottery players”. The group’s push to “de-anonymize our physical retail customer base allows us to realize benefits similar to data on online users,” he said. And with retail sales continuing to perform strongly, “this once again demonstrated that online growth does not cannibalize physical retail sales,” added Chvatal.

Earnings in brief

EveryMatrix: The games, sports-betting and platform provider’s Q321 revenues rose 15% to €21.6m (flat sequentially) while EBITDA was up 12% to €4.4m. LTM EBITDA stands at €20.5m. The casino business was hit by issues in Germany (now 24% of casino revenue mix vs. 50% in Q320). Geographic splits saw 47% of revenue from Eastern Europe, 34% western Europe and 10% RoW. During the quarter, the company extended its US operations via relationships with Kindred and Resorts Digital Gaming and it announced this week it is now also licensed in West Virginia and Michigan.

Breaking News - 888Sport makes way for SI Sportsbook in NJ

SI into New Jersey: 888 has withdrawn its 888Sport brand from the New Jersey market ahead of the arrival of the Sports Illustrated sportsbook it will be operating in its place. John Atkinson, 888 director of business development US, commented: “As part of our strategic partnership with Sports Illustrated, we can confirm that we have closed 888sport.com in New Jersey as we prepare for SI Sportsbook’s launch in the market.”

Second skin: New Jersey will be the second state in which the SI-branded sportsbook will be launched after Colorado, 888 is “now focused on launching SI Sportsbook in other states and are excited to share more details in the coming weeks and months,” added Atkinson. Customers can withdraw any funds they might have in their betting accounts or use them on the 888poker and 888casino sites as the move does not impact 888’s other products in the state.

On the ticket: Separately, 888 has appointed Jefferies International Limited to act as joint corporate broker with immediate effect. Separately, the company has confirmed its relocation to the UK from Gibraltar for tax purposes while clarifying its continued commitment to Gibraltar as its “primary licensing jurisdiction”.

Datalines

New Jersey November

Hold me now: A “very strong” hold of 9.1% (vs. 5.4% in Oct) helped to push GGR up over 127% YoY and 36.4% sequentially to $114.8m and confirmed the recovery in margins reported in other states. Handle was up 35.1% YoY but down 3.5% MoM to $1.28bn. Wells Fargo said FanDuel extended its market leadership to 54% (up from 50% in Oct) with DraftKings (18%) and the rest in single figures including BetMGM which saw its share drop from 10% in Oct to 7%. Barstool similarly fell back from 9% to 7%. Caesars was also steady at 7%.

The ebb tide: In igaming, GGR of $118m was up 28% YoY but down 7% MoM. BetMGM retained leadership with 29%, DraftKings was 18%, FanDuel at 15% and Caesars was at 13%. In land-based, GGR was up 41.2% YoY to $205.2m but down 7.4% on Nov19. On the two-year comparative, only the Hard Rock and Ocean Resort managed a GGR uplift.

Michigan November

Holding company: A record-high sports-betting GGR of $58.8m (double its previous best month) was driven again by above-average hold of 11.7% with handle of $500.5m only 2% up MoM. Wells Fargo noted that after promotions of $19.7m, adjusted gross sports-betting revenue was $39.1m. OSB was worth 92% of total GGR with retail of $4.6m chipping in the remainder. E&K noted that FanDuel, DraftKings and BetMGM took over 80% of the market share. Caesars also notably improved to 6.4% GGR share in Nov from 4.3% in Oct.

Down draft: Casino “cooled” according to E&K though they point out that the calendar meant fewer weekend days in November vs. October and hence the 1.3% rise in the day-adjusted number was “particularly impressive”. Again Caesars was seen by E&K as making “incremental” GGR gains, at 2.3% in Nov up from 1.6% in Oct. But DraftKings dropped to 15.9% from 18.3% in Oct. “We note the up/down nature of DraftKings’ casino GGR share mirrors-ish the up/down nature of its online sports betting promotional spending,” said the E&K team. Deutsche Bank noted that in land-based, the $103.9m of GGR in November was down 16.4% versus Nov19 and down 6.8% MoM.

Louisiana: GGR, excluding video gaming revenues, came in at $186.1m, up 22.6% up YoY but down 9.1% on Nov19 and a 4.4% decrease sequentially. Retail sports betting net revenue for November, in the first month of operation, came in at $5.7m on handle of $27.6m implying 20.6% hold.

Massachusetts: GGR hit $87.8m, a 8.5% decrease sequentially but a 12.3% rise on Nov19. On a sequential basis, the results represent a 8.5% decrease in GGR, relative to October. The Wynn Encore generated GGR of $55.2m, up 16.6% vs. 2019 and down 12.2% vs. October 2021.

France: Q3 sports-betting stakes were down 1% to €1.5bn, gross win was up 16% to €264m YoY but down from the Q2 high of €420m. The end of the Euros and Olympic games generated €520m of the total amount wagered. Horse racing pari-mutuel stakes were down 17% QoQ but up 23% vs. 2019 to €332m, gross win was -15% QoQ and up 23% vs. 2019 to €81m. Online poker stakes were 11% to €823, gross win was down 4% QoQ to €99m.

The NFL then and now

Oct 20, 2014: “If the 2014 Sports Wagering Law is not declared unlawful... the proliferation of state-sponsored and approved sports gambling in Atlantic City casinos and at New Jersey racetracks will cause immediate and irreparable harm to the sports leagues.”

Dec 14, 2021: Helllloooo Las Vegas!

Newslines

Everiday people: Everi has announced its expected management changes with Mike Rumbolz moving to become chairman with randy Taylor becoming new CEO in his place. Analysts welcome the news. “Our impression is that both executives will remain active with the company, which we expect should continue the strategic initiatives in place,” said Jefferies. “We believe the growth should continue in both the FinTech and Gaming sides of the business, both organically and through tuck-ins.”

Palms spring: The San Manuel Gaming and Hospitality Authority, an affiliate of the San Manuel Band of Mission Indians, has received approval from the Nevada Gaming Commission to run the Palms Casino Resort. With this approval, SMGHA Nevada is set to close the transaction with Red Rock Resorts and plans to reopen next year in the spring.

Ice breaker: Reports suggest event organizer Clarion is set to postpone February’s ICE show in London until April or May next year.

Hack in the game: Hacksaw Gaming says it has received certification from the Spanish gaming regulator for a range of its proprietary lot games with the rollout of 20 titles due as of this month.

Sidebet with Rosie: PointsBet says it is live in Virginia in partnership with the Colonial Downs racetrack, a subsidiary of California-based Peninsula Pacific Entertainment and also operator of two Rosie’s Gaming Emporiums in the state. It is PointsBet’s eighth state.

Willy nilly: NeoGames has agreed a deal with Sisal Şans that grants the Turkish Lottery operators access to the NeoGames portfolio of games for its premium lottery online site Milli Piyango.

Triple B: BetMGM has launched Borgata Bingo online in New Jersey, the first bingo product built exclusively for BetMGM by Entain.

United distribution: FansUnite’s B2B subsidiary Askott Games has signed up to Aspire Global’s games aggregation platform PariPlay. Separately, FansUnite has also announced that white-label partners MoneyLine Sports Inc will be launching the online sports streaming and wagering portal in Jan22. 

Raring to go: Reports suggest both DraftKings and FanDuel have license applications pending in Nevada. 

Go west: Scientific Games and the Western Canadian Lottery Corporation have launched single-game betting. WCLC now offers several betting options under the umbrella of Sport Select and there is a $100 limit on wagers.

Kill the buzz: Buzz Bingo has been slapped with a £780,000 fine for AML and social responsibility failures by the UK Gambling Commission.

What we’re reading

Meme this: Reddit is seeking a float.

Dark ages: Nevada needs to move out of the sports betting darkness.

What we’re listening to

Talking Parleh with Betting Startups.

On social

Happy holidays!

David Quantick @quantick

"U Roy - what dub is this?"

December 16th 2021

59 Retweets535 Likes

Contact us

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com