Good morning. Short and sweet today:

• The latest from Entain’s FY21 trading update.

• Reaction from the analysts to BetMGM’s FY21 update.

You can’t always get what you want, but get what you need here:

Entain FY21 trading update

The top line

• Group NGR up 7%; online NGR up 12%, retail down 3%. Including BetMGM half-share, group NGR up 14%.

• FY21 sports-betting NGR up 21%, gaming up 4%.

• FY group EBITDA expected to be between £875m-£885m.

• Q4 online NGR down 9% YoY (sport -14%, gaming -4%); retail up 60%, group up 4%.

Name check: CFO Rob Wood was keen to point out that the fourth quarter had been against a very strong comparative for the online business and warned that the first half of 2022 would be similarly challenged. “Q2 should improve (on Q1) but it is still up against very strong margins (from last year), he said.

“Then the second half, hopefully we’ll have the Netherlands back and some form of normality,” Wood added. “And normality for Entain means double-digit growth, touch wood.”

Thorn in the side: Entain said that without the drag of the performance in Germany, FY21 online growth would have been up 18%. Wood suggested the toleration period for the new regulatory regime was now “being lapped”. However, the company still has no visibility on the licensing of gaming. “We’re still suffering from a lack of enforcement in gaming,” said Wood.

Hunting unicorns: Following the acquisition of Unikrn last summer, Entain will be launching esports in “handpicked” markets this year. Answering questions about the £25m that has been allocated to the launch, Wood said these were effectively startup losses.

“It’s akin to the US at the moment,” Wood added. “There may well be a curve before the first launch territories become profitable. If it goes fantastically well from the beginning, we might accelerate. It’s really too early to tell.”

Full stretch: Asked about further M&A plans, Wood said the balance sheet “remains healthy” and that it has capacity for more buyouts this year having completed four deals in 2021. “There might be potentially bigger deals in 2022,” he added. Asked about the company’s leverage (current around 2.5x) he suggested the company “would look” at expanding that to over 3x should a deal demand it.

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BetMGM analyst reaction 

Profit takeaway: The key takeaway from the group’s trading update was the positive profit contribution from New Jersey and Michigan, two states where operators can offer online sports betting and casino and “are large enough to offer scale,” said John Decree of CBRE. 

“BetMGM’s two other iGaming states, Pennsylvania and West Virginia, one with a higher tax rate and the other with more limited population, were not cited as being profit contribution positive,” Decree noted. 

Casino core: BetMGM CEO Adam Greenblatt said yesterday that single game parlays were generating margins of 30%, but CBRE noted that iCasino remains a “core component in the path to profitability” and Michigan and New Jersey were examples for other states “to seriously consider” legislating for igaming. Touching on the issue of the marketing environment, the team at Truist said they “remain somewhat cautious” around profitability because of the bonus orientation of the marketing.

I’m so excited: Peel Hunt said the key line from yesterday’s statement came from MGM resorts CEO Bill Hornbuckle who said he was “beyond excitement” about the omni-channel integration potential with BetMGM. This “confirms” that BetMGM has a relevance to MGM beyond its sports-betting and online-gaming revenue potential. 

“Full extraction of that potential, in our view, would require MGM to buy 50% of BetMGM from Entain, or to buy Entain,” the Peel Hunt team added. “Just because it makes sense doesn’t mean it will happen, but it underpins our positive stance on Entain.”

On social: A different take.

Rich Greenfield, LightShed 🔦 @RichLightShed

The power of giving away as much "free" money as you can... #sportsbetting

Matt Rybaltowski @MattRybaltowski

BetMGM CEO Adam Greenblatt is "delighted," w its NY online sportsbook launch, noting that @BetMGM broke "all of its records," for registrations, deposits and handle on a state-by-state basis. Moreover, NY ranked 1st in a key metric known as "registration to deposit conversion." https://t.co/3cUteQ2ivx

January 19th 2022

1 Retweet10 Likes

New York casinos

Three is the magic number: New York Gov. Kathy Hochul’s proposed 2022 budget includes plans for three more casinos in the state. The proposals would speed up the timeline and remove the penalties downstate New York operators would have to pay to the upstate casinos if they moved forward with plans for casinos. Likely beneficiaries of the move are MGM Resorts’ Empire City at Yonkers and Genting’s Resorts World Aqueduct which already have slot licenses while there is speculation on a third license.

Newslines

Tulalip mania: DraftKings will operate two retail sportsbooks for the Tulalip Tribes in  Washington state. Opening dates were not revealed, the deal means DraftKings will launch the state’s first two retail betting outlets at the Tulalip Resort Casino and Quil Ceda Creek Casino, both located 30 minutes north of Seattle. 

One in the Buckeye: Ohio’s Casino Control Commission has released an updated draft of sports-betting rules for public comment and feedback as the state moves closer to launching regulated sports-betting. Ohio's sports-betting bill calls for a statewide launch no later than Jan 1 2023 and the latest draft moves the state closer to going live.

Kick it to the curb: German supporters have called on the country’s football clubs and Parliament to ban ​sports-betting advertising in stadiums and sports media and forbid operators from striking partnerships with athletes, officials or other public figures. The supporters’ group Unsere Kurve (‘Our Curve’) said problem gambling was widespread among football fans and called on the country’s authorities to “finally accept responsibility through political regulation and voluntary commitments in football”.

What we’re reading

Fail Caesars: A warning to Caesars Sportsbook to get its act together in New York.

Partner support: With friends like these… 

Calendar

• Jan 24: Endeavor @Jefferies Winter Summit

• Jan 26: Las Vegas Sands Q4

• Jan 27: Rank H1, Genius Sports investor day

Contact us

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com