Jan 18: Achievable aims: NeoGames buys Aspire

NeoGames buys Aspire Global, 888 trading update, Truist sports-betting survey, Ontario tax objections, +More

Wagers.com Earnings+More

Jan 18

Good morning. Today’s headliners:

NeoGames acquires Aspire Global for $480m.
888 trading update
Truist announces the results of its sports betting survey.

You can get it if you really want. Click below:

NeoGames buys Aspire Global

The top line

Recommended offer from online lottery provider sees Stockholm-listed Aspire Global snapped up for $480m (SEK4.3bn) in cash and shares.
$293m cash portion funded by debt financing from Blackstone Alternative Credit Advisors.
Deal expected to close in H122.

Reach for the top: Aspire Global CEO Tsachi Maimon said his company had been on an “amazing journey” and one which involved the company transforming into a solely B2B provider of sports betting and igaming backends. This followed the sale of Aspire’s B2C operations to Esports technologies for €65m ($74m) in October last year. Aspire’s operation consists of BtoBet and PariPlay. Moti Malul, CEO at NeoGames, said the acquisition would “significantly increase” his company’s addressable market opportunities.

Multiple differential: In Q3, Aspire’s B2B operations saw revenues rise 40.5% to €42.6m with EBITDA rising 45.4% to €8m, CAGR for the B2B business between 2017-20 was 35.7%. Aspire said that over two-thirds of its shareholders will accept the full settlement in shares and that the LTM EBITDA multiple on this basis was 16.8x; the multiple for those accepting cash and shares is 13.6x.

Two tribes: NeoGames said its positioning as a leading provider to lotteries in the U.S. would “accelerate” Aspire’s entry into the market. Maimon had said previously Aspire was aiming at the tribal market.

Should have seen this coming: Barak Matalon, currently a director at NeoGames, is the founder of both that company and Aspire Global.

Talking point: Following the recent news on GiG buying Sportnco, it suggests the betting and gaming space is now going through a period of consolidation as much as B2C. Recall, Aspire itself acquired PariPaly in late 2019 and BtoBet the next year.

Investor call: A conference call will be hosted at 8:30am ET.

888 trading update

The top line

Q4 B2C revenues down 17% to $205m, B2B up 10% to $9m, Q4 total -16% YoY to $214m.
FY B2C revenues up 15% to $934m, B2B up 8% to $38m, total +14% to $972m.
FY B2C casino revenues were up 24% but sports-betting revenues only up 4% due to new regulations and exit from Netherlands.
FY results will be published in March.

No expectations: 888 said the Q4 revenue drop was in line with expectations and reflected a “tough” comparative period and the impact of regulatory changes, including its Netherlands exit and marketing investments in Colorado following the launch of the SI Sportsbook. The impact of new regulations in Germany was “partially offset” by strong FY growth (+74%) in regulated markets such as the UK, Italy, Romania and Portugal.

Progress update: Highlights included the sale of 888’s bingo business for $50m, the launch of 888Sport in Germany and the $500m cash raise 888 is undertaking to close the acquisition of William Hill in Q222. CEO Itai Pazner said 2021 had been “a year of outstanding strategic progress” and the sale of its bingo business would enable 888 to focus on its “B2C and US growth plans”.

Truist sports-betting survey

Bonus culture: A survey of 500 adults across four states undertaken on behalf of the analyst team at Truist found that sign-on bonuses and ongoing customer benefits remained a “very important factor” for prospective sports betting and igaming customers.

“This supports our somewhat cautious view around profitability in this developing space,” the Truist team added.

Survey highlights:

20% of digital players frequently visited casinos.
27% said the availability of online gaming would make them less likely to visit a casino.
In sports, 20% said bonuses was the reason for choosing an app versus 48% who chose due to recognisable brand.
The bonuses figure was 38% and 38% also said that less competitive bonuses would make them change their brand.
51% of OSB players and 52% of igaming players said large bonuses would be the key determinant for which brand to switch over to.

Stuck on you: The survey found that FanDuel had the greatest stickiness in sports. Of the 34% of the total respondents who said they were happy with their primary app, 43% of FanDuel primary users said they wouldn’t switch. That percentage was 30% for DraftKings.

I’m with Dave: The survey found that of the 51% of respondents who were familiar with Dave Portnoy at Barstool, 65% either strongly or mildly liked him while 10% said they disliked him. A majority of 53% of all respondents said their opinion of him would not affect whether they used the Barstool app while 25% said it would. Of the respondents who used Barstool as their primary app, 83% were favorable to Portnoy and 8% held an unfavorable view of him.

Ontario update

Taxing issues: A report by Great Canadian Gaming, Ontario's largest brick-and-mortar casino operator, has claimed the province could lose C$2.8bn in revenues over the next five years because of players visiting newly-regulated online casinos. The tax rate for online operators has not been announced yet, but it is believed that it will be around 20%, compared with 55% for GCG. The group said the province could lose out on CA$550m in annual tax revenues as a result.

Datalines

New Jersey 2021: Land-based casinos, sports betting and online wagering operators generated revenues of $4.7bn in 2021. Revenues for the state’s nine physical casinos were up $1bn vs. 2020 to $2.55bn, but this was a drop from the $2.68bn recorded in 2019. Internet gambling brought in $1.3bn, Resorts Digital was the top online casino with $450m GGR; followed by Golden Nugget Online Gaming at $380m and Caesars Interactive with $112m. Online sportsbooks recorded $816m in GGR over LTM, from a handle of ~$11bn and average margins of 7.1%.

Newslines

Empire building: BetMGM went live in New York yesterday. The launch comes nine days after the first wave of legal online sportsbooks debuted in the State.

Top five: The PGA Tour’s VP for gaming told Golf Week that he hopes that golf will be among the “top four of five” sports bet-on by 2025.

Too Shay: The former CEO at Entain Shay Segev has become the sole CEO at DAZN after having previously shared the role with the sports streaming company's founder James Rushton since he joined the business at the start of last year.