Good morning. More news on the corporate front this morning with big moves involving two of the gaming giants.

• Bally Corp. has received a takeout offer from major shareholder Standard General

• Wynn Resorts has signed  a deal to bring a gaming IR to the UAE.

• Playtech has issued a statement noting recent takeover speculation.

• There is more data overnight from Arizona

Midnight at the oasis! Get more here:

Standard General offer for Bally’s Corporation  

• The offer was pitched at $30 a share or a 30% premium to the previous day’s closing price.

• Standard General is a 20% shareholder in Bally; its CEO/managing partner Soo Kim is also Bally’s chairman.

• The deal would give Bally an enterprise value of $5.7bn. It represents a 9.5x 2023E EV/EBITDAR multiple.

Risk-off: The opportunistic bid from Standard General, a New York-based hedge fund, would take advantage of the 60%+ fall in Bally’s share from their 52-week highs. The hedge fund said the bid was attractive when “viewed against the operational risks inherent in the company's business and the market risks inherent in remaining a public company”.

What’s the plan Stan? Standard General’s central proposition is to effect a sale and leaseback of Bally’s properties, which analysts at Wells Fargo estimate could bring in ~$1.4bn. Bally still owns most of its regional gaming properties.

Waterworld: Truist noted that the offer is some way below their price target of $55 a share and “would likely leave several minority shareholders underwater”. One part of the original buyout offer for Gamesys included the option of taking Bally shares.

“We note Gamesys shareholders who elected stock consideration in October 2022 received Bally shares at $66 a share,” they wrote. “While it’s unclear to us if a deal gets done at $38, we see this as an opportunistic move by Standard General given the market continues to re-rate lower.”

Digital disconnect: The Jefferies team highlighted that the market is “not pricing in” the U.S. digital opportunity and as per its own modeling, the offer “reflects the current value of the land-based business and the Gamesys earnings stream”.

“The market has grown increasingly competitive among larger operators with considerable resources and Bally would be entering a partially formed landscape, which suggests our $16 per share in future digital value is longer term in nature than some peers,” they added.

Bally Bet 2.0: In a note issued before the Standard General announcement, the analysts at Truist reported back from management meetings with Bally. Suggesting the rollout of the ‘next-gen’ Bally bet sportsbook would follow "in the coming months", they added that Bally Bet 3.0 was also in the pipeline and will include a watch-and-play product to sync with partner Sinclair Broadcasting's media capabilities.

Gamesys update: Also notable was the information on Gamesys' non-US operations where Truist reported the business has seen lower than expected volumes of new sign-ups and lower-than-expected margins (3.9% vs. usual 4.6%).

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Wynn Resorts IR in UAE 

Island life: Wynn Resorts will break new ground by building the first integrated resort in the United Arab Emirates. The 1000-room resort and casino will be built on Al Marjan island in the emirate of Ras Al Khaimah with the opening scheduled for 2026. Analysts at Wells Fargo suggested the project would be akin to the Boston Encore in size and scope. Wynn’s stake in the project will be between 25-40%. Wells Fargo estimated at completion the project would drive ~$300m in EBITDA of which Wynn would get a sizeable slice.

The gamble: Ras Al Khaimah’s Tourism Development Authority (RAKTDA) has formed a new division to regulate gambling. It told Bloomberg its priority “is to create a robust framework that will ensure responsible gaming at all levels.” Analysts at CBRE said the formation of RAKTDA suggested gaming areas would be included in any IR developments, “though gaming has not yet been clearly defined”. Wells Fargo noted that 90% of UAE residents were ex-pats and “presumably” permitted to gamble.

Sheikh your moneymaker: The UAE development comes days after news emerged that Wynn was looking to sell WynnBet for a knockdown $500m. Recall, WynnBet was valued at $3bn+ when it was to merge with the Austerlitz SPAC in May 2021. CRBE noted that the rumored sale of Wynn Interactive “could be a logical source of capital for the Marjan project” and said the U.S. OSB space was ”ripe for further and substantial consolidation”. 

“With access to NY mobile sports betting, Wynn Interactive offers some unique value to strategic buyers in addition to access to a number of other states, a well-known brand, and possibly a casino database,” the CBRE team noted. 

“The potential for Wynn to divest non-core business like Interactive is intriguing to us, and although the rumored price of $500mm is a far cry from the SPAC-implied value last year, the liquidity infusion would be viewed positively.”

Seventh avenue: Yesterday, WynnBet announced it would be live in New York, Louisiana and Iowa "in the coming weeks". In New York, it would be the seventh book to go live after PointsBet became the sixth on Monday night.

Further reading: The $500m consolidation in sports betting.

Huddle Up

The $500 Million Consolidation In Sports Betting

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21 hours ago · 12 likes · Joseph Pompliano

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Victor Rocha @VictorRocha1

I guess Utah is next, right? UAE inks deal with casino giant Wynn as Gulf state eyes gamblingHotel and casino operator Wynn Resorts will build a luxury resort in Ras Al Khaimah in the United Arab Emirates with a “gaming area”, it said on Tuesday, potentially paving the way for gambling to be allowed in the Muslim Gulf state.reuters.com

January 25th 2022

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Playtech takeover speculation

Nuclear option: Sky News has reported that Playtech is considering a break-up if shareholders vote down the 680p offer from Aristocrat. Playtech has acknowledged the “speculation on the company’s future strategy” and said it reiterates its recommendation of the offer from Aristocrat as the best route for delivering “longer-term value”. The break-up plan would involve the separate sales of the B2B arm and the Snaitech business.

Jefferies winter summit review

Coming out of hibernation: Jefferies have reported back on their virtual winter summit which took place earlier this week, suggesting the presenting companies (MGM, Scientific games, Golden Entertainment and Everi) were “generally exiting Covid with considerably improved capital positions, which raises discussion on uses of cash.” Of note, they pointed out that Scientific Games was now less than three times leveraged following recent divestitures, while MGM was “progressing toward” having ~$9bn of cash “without clear needs”.

Earnings in brief 

Australian-listed pari-mutuel technology provider BetMakers saw Q2 revenues rise 17% QoQ and 521% YoY to AU$24.6m and generated AU$2.8m in operating cash flow during the quarter. The group has AU$110.9m in cash at period end. Over the period, the company signed a deal to provide tote and horse racing markets for Caesars’ retail sportsbook in Nevada and extended its agreement to be the exclusive provider of fixed-odds horse racing data to Monmouth Park racetrack and the New Jersey Thoroughbred Horseman Association (NJTHA).

UK-listed Mobile games developer Gaming Realms enjoyed a 27% YoY rise in FY21 revenues to £14.5m and a 70% rise in adj.EBITDA to £5.6m. The growth was driven by the group’s games going live in Michigan and Pennsylvania and with 35 new international partners in the Netherlands, Romania and most recently in Spain with Gamesys. 

Synalogik funding round

Every little helps: The gambling regtech platform provider has raised #3m in a Series A funding round backed by Bill Currie, founder of retail, e-commerce and tech investment fund the William Currie Group and Sir Terry Leahy, former CEO of Tesco. Gambling Industry veteran Mark Blandford also increased his existing stake. Synalogik said it will use the money raised to scale its AML and affordability customer profiling platform across more territories and fund additional products in data aggregation, risk identification and “decision intelligence”.

Macau update

On the nod: Macau’s legislators have approved the first reading of the draft gaming bill that includes provisions for six concessions, each with a maximum 10-year term and a possible three-year extension. Concerns were raised by legislators over the fate of the satellite casinos which are currently controlled by independent investors and now could be tied to the gaming concessions.

Datalines 

Arizona Nov21: Betting handle was down 4% MoM to $466.7m, retail and online GGR was up 37% to $51.4m, with mobile making up $50.7m of the aggregate figure. Hold was up to 11% on Oct21’s 7.7%. Net revenue, excluding federal handle tax, was $32.4m, meaning promotions were ~$18 mm or 36% of mobile GGR, down from 70% in October. DraftKings led in market share handle with 32.4%, FanDuel was second with 24.7%, BetMGM third with 20.3%, Caesars fourth with 13.8%, Barstool fifth with 3.9% and WynnBet was sixth with 3.9%. 

Tennessee Dec21: Betting handle was down to $341.8m vs. ​​$365.7m in Nov21, revenue dropped to $24.6m vs. c$40m in Nov21. Sportsbooks’ hold was 7.2%, some way off the 10% mandatory minimum required in Tennessee. Operators will likely pay a “true-up” payment to make up the shortfall in the state’s tax revenues.

Italy Dec21: GGR for dot it operators rose to €312m vs. €304.2m Nov21, but was down 13% on the record €359m recorded in Dec20. Online casino GGR rose to €165.5m, its highest ever total, with Playtech-owned Snai leading on market share of 9.1%, Flutter’s Sisal was second with 8.5%, Pokerstars third with 8.2% and Lottomatica fourth with 7.5%. Sports betting GGR was down MoM and YoY to €204.8m, OSB recorded GGR of €125.1m and retail €79.7m. FY21 revenues for OSB and icasino were up 46.1% YoY to €3.46bn. 

Newslines 

In-person removal: Nevada’s in-person registration requirement could be gone within a month, according to ex-Nevada Gaming Control chair A.G. Burnett.  Currently, Nevada and Illinois are the only two states requiring in-person registration for online sports-betting accounts. The measure will be rescinded in Illinois in March.

Double Dutch: Aspire Global will provide its full turnkey betting and gaming solution to online operator BoyleSports for the Netherlands market. The online sportsbook and casino is set to apply for a Dutch license and will go live once it has received it. 

Esports pioneer: Esports Entertainment has received a transactional waiver from the New Jersey Division of Gaming Enforcement and will launch its VIE.gg website this weekend. The site, which soft-launched on Monday, was the first operator to gain a license for esports betting in May 2021.

Entry on payment: Paysafe has announced it has entered the New York market and is now processing online deposits and payouts for New York players. It added that its Income Access affiliate services provider was also now operational with “several brands” in the market.

DRF 18th: Affinity Interactive’s launch of its DRF Sports website makes it the 18th online sportsbook to go live in Iowa. The state is number 3 when it comes to the number of active operators, after Colorado and New Jersey. DRF’s platform is supplied by Kambi. 

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• Jan 26: Las Vegas Sands Q4,

• Jan 27: Rank H1, Genius Sports investor day

• Jan 27: PointsBet Q4

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