Happy New Year! 

• We start with an exit; the surprise announcement just before the old year was out that Greg Carlin, co-founder at Rush Street Gaming and executive chairman at the Nasdaq-listed online arm, has left the company with immediate effect. 

• There is debut data from Arizona plus November figures from Nevada.

• Run It Once Poker has announced it will be focusing solely on the U.S. 

• And we have the first of our regular Monday Startup Focus features.

If you don’t already got this, then get it here:

Rush Street co-founder quits

Nothing to see here: The co-founder of Rush Street Gaming and executive chairman at Rush Street Interactive quit the company the day before New Year’s Eve. In a filing with the SEC, RSI said Carlin’s departure was “not the result of any disagreement with the board… on any matter relating to its operations, policies or practices”. 

Goodbye to all that: Alongside current CEO Richard Schwartz and Neil Bluhm, Carlin co-founded Rush Street Gaming in 2012 and acted as CEO up until last August when he took on the executive chairman role and handed the CEO reins over to Schwartz. RSI went public via a merger with the dMY Technology SPAC in January last year. His LinkedIn profile shows that prior to founding Rush Street, Carlin worked as an investment advisor for nearly 20 years.

It’s a lock-in: The surprise lies in the suddenness of the departure although it was prefigured by the move in August. According to the SEC filing, Carlin’s lock-up will apply to his 12% stake in RSI for one year. 

Backgrounder: Rush Street Gaming owns casinos in Illinois, Pennsylvania and New York and RSI recently launched online in Arizona and Connecticut. At the time of its Q321 results, it forecast FY21 revenue of between $480-$500m.

Also at the departure gate: Yaniv Sherman, 888’s head of ops in the US, announced on LinkedIn that he has left the post.

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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.

Datalines

Arizona

Give it all back: The delayed data from the first two months of sports-betting in Arizona shows that operators handed back 100% of GGR in bonuses in September and over 70% in October. As a percentage of handle, promotions were 11% and 5.4% respectively.

A familiar storyline: Arizona went live just ahead of the start of the NFL season with eight operators (nine by October). Handle in the first month hit $292.1m on 11% hold, rising to $486.1m in October (7.7% hold) while GGR went from $32.3m (>98% mobile mix) to $37.5m. Across the two months, DraftKings claimed 32.5% share of handle, FanDuel 22.7%, BetMGM 19.7% and Caesars 14.5%. Then came Barstool (5.1%) and WynnBet (5%) with Twin Spires, Rush Street and Unibet between them managing less than 1%.

Nevada

Nine-month run: GGR topped $1bn for the ninth consecutive month in November and was up 11.9% vs. 2019. Strip GGR was up 8% MoM and up 46% vs. 2019 to $755m. On a QTD basis, Strip GGR was up 37.9% versus 2019, said the team at Deutsche Bank. Locals GGR rose 19% MoM and 45% vs. 2019 to $263.5m, with slots benefiting from three weekend days in October 2021 counted in November. Sports-betting handle also had a record November, up +9% MoM and +140% vs. 2019 at $1bn, the first time ever that the state’s sportsbooks have reached that level for two consecutive months. Betting gross win of $29m was up 47% MoM and +118% vs. 2019.  

Variant lag: Visitation rates were down 8% MoM and -11.3% vs. 2019, occupancy rates were down to 77.6% from 81.6% in October. Analysts at Truist said it was too early to determine what impact the Omicron COVID variant might have and “any hit would likely start in December”.

Run It Once Poker pivot

Run that by me again: Run It Once (RIO) Poker will be seeking to enter the regulated U.S. online poker market according to an online announcement from founder Phil Galfond late last week. The site will cease all rest-of-world operations today Jan 3 in an effort to focus on a US launch. In an online posting, Galfond said that after struggling to build the necessary liquidity in the past two years, he had decided a change of direction was needed.

“If we wanted Run It Once Poker to survive so that it could hopefully, one day, thrive, we needed to do something differently,” Galfond wrote. “I hear that in business, they call this a pivot.”

Dream, baby, dream: The decision to close operations in the rest of the world to concentrate on the U.S. opportunity is believed to be a first for the online poker world. “This has been a dream of mine since well before we first launched,” he told followers. “I didn’t initially think it would be an option for us for another half-decade, so I’m very excited to be on our way to achieving it.” 

Wish you were here: In an honest appraisal of where RIO went wrong, Galfond said he “underestimated just how sticky players would be when it came to playing on new sites”. “Had I not made the mistakes I did, perhaps we’d have been able to grow large enough to stay in the rest of world markets and head towards the U.S.,” he admitted.

On social. Some food for thought.

Entain/Sisal analyst reaction

Guns and ammo: Looking ahead to what Flutter might do next after its pre-Christmas Sisal deal, analysts at CBRE said the company still has “plenty of dry powder” to fund further global deals, with the potential for it to harvest some proceeds from the sale of a stake in FanDuel.

“Even after the recent contraction in US digital gaming valuations, we believe Flutter could IPO a minority stake in FanDuel at a very attractive multiple of revenue and recycle that capital to acquire cash flow accretive businesses like Sisal and Tombola at much lower multiples,” the CBRE team added.

Reinventing the retail wheel: On the Sisal deal itself, CBRE said it had a “compelling” strategic rationale, something the uber-bears at Regulus somewhat agreed with (Sisal is a “high-quality” digital business) despite suggesting the figures given for FY21 were ”almost completely meaningless” from an underlying trading perspective due to the disruptions caused by Covid. Regulus warned, moreover, on the chances of there being an absolute reduction in Italian online GGR next year as retail rebounds. 

“With c. €10bn of ‘legacy’ retail revenue coming back on-stream in Italy, Europe’s second largest gambling market faces (the question of reinventing retail) to a much greater extent than Northern neighbors,” they added. “Flutter has been able to duck the ‘legacy omnichannel’ trap in the UK (but) duck or cover is not an option for a mature estate in Italy.”

Macau update

And breathe: The Macau operators breathed a sigh of relief just before Christmas when the Macanese authorities released the results of its gaming law public consultation which showed there was support for the continuation of the granting of six concessions. As Deutsche Bank noted, this suggested the sub-licensing system should be replaced by the granting of more full concessions. Morgan Stanely said their interpretation was that there would be the status quo on the number of licenses and duration (between 10 and 20 years), tax at the same level as before and dividends being allowed. “Yet, there will be increased oversight on operation and investment in non-gaming could be return-dilutive,” they added.

December data: GGR for the month hit $991.1m, up 1.8% on Dec20 and 18% ahead of Nov21. Total GGR for 2021 was $10.8bn, up 43.7%.

Startup Focus: SharpRank 

Pulling rank: According to Chris Adams, CEO of SharpRank - a joint winner at the recent Wagers.com sponsored First Pitch competition at SBC Summit North America - the company is aiming to raise the standard for transparency and eventually enable sports-betting to become an asset class. With the US sports-betting market booming, “oversubscribed demand has been met with a flood supply on the content side, merging two industries: media/content and sports betting – which is a major differentiator to more mature markets like Europe,” he says. 

Transparency international: It is the quality of transparency that Adams believes is lacking. Being able to compress reams of betting data into easily digestible formats will be critical, because it expands the total addressable market in two major ways. First, it allows participants to use deep information/research without being taken advantage of, he says. “And, it allows for sports-betting to become an asset class – the key differentiator between this industry and some other newer industries like cannabis.” 

“It has inherent characteristics that make it a prime candidate: infinite quantity, (...) portfolio diversification and is primed to solve the liquidity issue other markets have struggled with, because the new US infrastructures are being constructed with market makers and required transparency as part of the original blueprints,” Adams said. 

Plans for ‘22: SharpRank has raised $1.4m in pre-seed funding from Maryland’s TEDCO and hopes to sign more licensing agreements, affiliate partnerships and expand its coverage of sports and bet types the year ahead. 

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Weekly preview

It is a big week for Las Vegas as CES opens but optimism is patchy; looking ahead, Macquarie noted that companies were already pulling out due to virus fears including Amazon, Alphabet and Intel. Meanwhile, New Year’s Eve travel was hit by 1,300 flight cancellations. Gaming stocks will be sensitive also to the latest data from Macau affecting the prospects for Las Vegas Sands, MGM and Wynn Resorts.

Chart of the week

Legendary: Roundhill’s most-watched esports tournaments of 2021.

Newslines

To affinity and beyond: Kambi and Affinity Interactive have signed a multi-state agreement for the provision of a sports-betting backend to DRF Sports, Affinity’s online and retail sportsbook. The first launch is penciled in for Iowa in Q1 before launching in Missouri and Nevada later in the year. Affinity Interactive operates casino properties in those three states and is the parent company of the Daily Racing Form, a horse racing-focused, data and tips publisher.

Self-raising: 888 said it expects to publish a prospectus for the previously announced £500m capital raise during Q222 with a shareholder vote to follow. The money will go towards the completion of the William Hill International acquisition.

Go with the flow: Wind Creek Hospitality, the trading name of the Poarch Band of Creek Indians in Alabama, has acquired Seattle-based FlowPlay, the developer behind mobile free-to-play experiences such as Vegas World, Casino World and Live Game Night Poker. The transaction does not include any real-money gaming operations.

Garden life: Fan token and engagement platform Socios has signed a multi-year marketing partnership with the New York Knicks and New York Rangers franchises. Socios has signed more than 100 such deals with sports teams worldwide, but has also attracted criticism. In the UK, the advertising Standards Authority recently ruled that an Arsenal FC post promoting crypto-based fan tokens broke advertising rules and "failed to illustrate the risk of the investment".

On Wagers.com

Scott Longley on the future for the European betting and gaming giants and also taking a look at the other end of the U.S. market share scale. Ryan Butler on the plans for sports-betting in Arkansas and the lack of sportsbook support.

What we’re reading

Rolling in it: How lucrative would the Tribes’ mobile betting plans be in California.

The women’s vote: FanDuel’s Howe seeks to appeal to more women bettors.

Moving to Las Vegas: “I had to kill a lot of rodents in my time in New York”.

Contact us

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com