Good morning. In today’s newsletter;

• Analysts respond to Boyd Gaming’s Q422 earnings.

• The weekly New York data throw up a monthly U.S. handle record.

• PointsBet enjoys a good week as its app gains plaudits.

• The Startup Focus this week looks at Low6.

Signup early, sign up often.

Boyd Gaming analyst reaction

Labor pains: The regionals operator was keen to stress that despite 2021 performance setting a high bar, and despite Dec21 and Jan22 being affected by Omicron and bad weather, it believes it has entered 2022 from a “position of strength”. But the company did warn on staffing:

Kevin Smith, CEO: “We are unable to fully accommodate the demand from our customers due to labor constraints”.

Smith’s comments chimed with commentary given on an expert call hosted by the leisure and gaming team at Jefferies with Dan Kesic, CEO of Hospitality Services Group, who said labor constraints and elevated costs would weigh on the leisure sector for a number of years.

Return to sender: Noting the predicted ~$500m return to shareholders (buybacks + divi) in 2022, Truist said Boyd was “emerging as a return of capital story”. Wells Fargo’s analysts said they would have a “hard time imagining the company anticipates a significant deterioration in fundamentals” given its returns largesse.

The one less traveled by: While CFO Josh Hirschberg said Boyd wouldn’t “do something crazy” in terms of M&A, he did emphasize that the company wanted to “grow our online presence”. 

Josh Hirschberg, CFO Boyd Gaming: “It's a regional strategy. It's not a strategy that many of our peers have chosen to pursue.”

Quiet as a mouse: However, Jefferies hinted that Boyd would suffer in comparison to its peers because of a timidness when it comes to online. 

• The combination of a “relatively stable, cash-generative” casino business with a “modest, formative” online arm meant it delivered solid returns. Yet, “while the thesis here remains uncomplicated, we believe the growth profile is incrementally less than peers”.

**Sponsor's message: Spotlight Sports Group (owned by Exponent Private Equity) is a leading technology, content and media business specialising in sports betting. Evolved from the Racing Post Group, Spotlight Sports Group has decades of experience in powering growth and conversion for the world’s biggest sportsbooks and media companies, delivering best-in-class technology and expert scalable content in more than 70 languages. From integrated solutions such as Superfeed to full turnkey publishing solutions, Spotlight Sports Group has all the tools to help customers go above and beyond the odds.

For more information visit: spotlightsportsgroup.com  

New York, week 4

Record breaker: Handle of $1.63bn in January smashed the previous highest-ever monthly total of $1.3bn achieved in New Jersey in Oct21. GGR from the first three-and-a-bit weeks came in at $113m, just shy of the record monthly GGR of $114.8m in NJ in Nov21.

Understatedly, Wells Fargo add: “We acknowledge that this early performance reflects the significant contribution from promotional activity and the busy sports schedule (NFL playoffs, NBA season, etc.)”

• 👍 Caesars achieved a 65.5% share of GGR, up from 44.1% in week 3.

• 👎 Caesars handle fell 44% to $128.1m or 28.5%, down from 40.1% in week 3.

Snap verdict: EKG analysts noted the handle “nosedive” and pointed out it corresponded with a “dramatic decrease (-41%) in weekly televised ad impressions as tracked by iSpotTV. Jefferies also noted that Caesars’ $3,000 promo offer had come to an end.

Making a point: PointsBet will likely be pleased with its debut, grabbing 6.6% of handle ($29.5m) and 10.8% of GGR or $2.3m. Recall, its stated aim for market share in each state it enters is 10%.

Illinois Dec21

Mixed month: Aggregate handle rose 60.6% to $790m while aggregate GGR rose 41.1% YoY to $33.7m, representing a 50% sequential decline driven by hold falling 590bps to 4.3%. Mobile contributed 97% of total GGR. 

• The top three in the market - DraftKings, FanDuel and BetRivers - grabbed ~85% of the market. Behind them, PointsBet enjoyed a good month with a GGR share of 12.3% off a handle market share of 6.4%.

PointsBet’s good week

Driving the news: The data from New York and Illinois will be welcome for PointsBet which - as per its recent earnings presentation - has been struggling to maintain its market share in the eight states in which it operated in the fourth quarter.

Silver machine: The Illinois data, in particular, potentially backs up the findings of the recent EKG product analysis of sports-betting apps that found the brand had “crashed the podium” in its latest app testing analysis. It was second behind FanDuel and ahead of DraftKings which slipped two places.

EKG report: “PointsBet reaped the rewards of a well-regarded suite of features and some minor improvements to its UX and Betting Interface scores. PointsBet’s Features category performance is especially noteworthy, where it had the second-largest score increase (+29% vs. 3Q21) among the top 10.”

Zero-sum games: Notably, PointsBet also tested running with zero suspensions on key in-play markets during the Raiders-Bengals Wild Card game. The company claimed it was a first for NFL betting.

• However, sources note that the experiment was for only one match and zero suspensions weren’t trialed for either of the Championship games nor will it be in operation for next weekend’s Super Bowl.

(Further) Penn National analyst reaction

Floor filler: Analysts at CBRE upgraded Penn to a Buy and raised their price target saying the company’s 2022 land-based revenue and margin forecasts put a floor on the share price while the $750m share buyback program added further support.

• The team also said the sports-betting and igaming trends were positive and upped their revenue forecasts to $705m for 2022 and $952m for 2023.

Old grey whistle test: Less positive were the team at Roth Capital who were more cautious on the Canadian opportunity, noting that Penn’s Score brand might struggle against grey market operators switching to the legal space.

MSGS Q4 earnings call

Garden party: If anyone is looking for the definite winners from the recent New York launch, then a good place to start would be Madison Square Gardens Sports. The owner of the Rangers and the Knicks said on its Q2 earnings call last week its marketing partnership momentum has accelerated over the quarter. Sponsorship, the company noted, was at “record levels”.

Will MSGS add more sponsors? MSGS has partnerships with Caesars Entertainment and BetMGM and CEO Andy Lustgarten said there was “space to add another at the right time”.

Andy Lustgarten, CEO: “With mobile sports gaming now live in New York state, our partners have hit the ground running and are already seeing the value we provide in helping to drive their business.”

Are we nearly there yet? Lustgarten went on to say that sports betting was “fabulous” for fan engagement. “There's upside here,” he said of a sponsorship category that “has the potential to be our largest category and might be there already”.

Startup focus - Low6

Who, what, where, when: UK-based Low6 is a sports-gamification specialist that was formed by CEO Jamie Mitchell and gambling industry veteran Wayne Stevenson in 2017. The company produces free-to-play pick ‘em and fantasy games and works largely with sports teams and leagues including UFC, the Detroit Pistons, the EPL’s Everton FC and Rangers FC in the Scottish Premiership.

Funding backgrounder: The company has raised £24m ($32.5m) since launch with an extra $5m raised this month from a pre-listing funding round. The company hasn’t disclosed the names of its backers.

So what’s new? A float is set for the coming months after the group has signed a letter of agreement with investment bank 735 BC to list on the TSX Venture Exchange. It is also set to announce a “game-changing” partnership with a major global operator and the aim is to go from 300K mainly-North American users to more than 1 million by the end of the year. 

The longer pitch: Low6’s long-term goal is “to be a billion-pound market-cap company”, says Mitchell. Trust between the group and its partners will also be key in enabling it to achieve this growth. 

Jamie Mitchell, CEO: “We’ve been trusted to work with brands such as UFC, PGA Tour and NFL and NBA franchises. I think trust is developed thanks to the very honest approach to the way we do business and to our reputation for excellence and truly collaborating with our partners.” 

Funding news

Get a Griiip: An Israel-based motorsport data technology company, announced the completion of a seed funding round with Sharp Alpha Advisors and Porsche Ventures among the backers. The undisclosed new funding will help the company further develop its cloud-based data platform which makes real-time racing data available to motorsport fans, media and the gaming ecosystem. 

Aspire Global Q4 preview 

Analysts at Redeye expect Aspire to announce revenues of €42.5m and EBITDA of €7.7m when the group publishes its earnings on Feb 17. The results will be the first time Aspire Global updates the markets as a B2B-only company in the space, having sold its B2C titles to Esports Technologies in November. In its forecast, Redeye includes B2C revenues from Oct-Nov21 of €12.8m and EBITDA of €1.4m in its forecast. Note: Aspire was bought by NeoGames for €480m in mid-January.

The week ahead 

This week’s results will have a strong Scandi flavor with Evolution and Kindred reporting Q4s on Wednesday. Evolution published strong Q3s in October and was subject to M&A rumors in recent weeks, but short-sellers will continue monitoring its percentage of revenues from regulated markets. For Kindred, all eyes will be on how strong the hit has been from its withdrawal from the Netherlands. Later on Wednesday, MGM reports with investors wanting to hear what it has to say on Las Vegas in light of the Omicron scare and the prospects for conventions. Betsson (Thur), LeoVegas and Kambi (both Fri) round off the week.

The shares week

Boyd Gaming enjoyed a decent week with its results on Thursday being well-received. It ended the week up over 8% as investors took to its message of growth across regional and online gaming.

Also in the plus column was Gambling.com which last week announced its latest significant acquisition with the NDC Media buyout. Its shares were up over 10% on the week.

Super Bowl buildup

Being boring: According to some Bored Apes Yacht Club NFT owners, BAYC characters will feature at some point in the halftime show at the Super Bowl.

Related: The company behind BAYC is planning a funding round which will value it at between $4bn-$5bn and will bring on board (sorry) Andreessen Horowitz.

Smoove operator: Back with the game on Sunday, Caesars said it will air a 30-second Caesars Sportsbook commercial featuring actor JB Smoove, actress Halle Berry and the Manning family during the Super Bowl.

Newslines

Here comes Santa claws: Kindred said the percentage of revenue it gained from harmful gaming rose QoQ from 3.3% to 4%. The operator behind Kindred and other brands said the rise was seasonal. “Historically, the fourth quarter of the year sees an increase in high-risk gambling.”

Ultimate sponsorship: UFC and bet365 have extended their partnership following a successful collaboration in 2021. As part of the agreement, bet365 will sponsor a show on UFC’s YouTube show ‘One on One’.

Gaucho: Betsson has launched in the province and city of Buenos Aires, Argentina, having been granted a license with land-based operator Casino de Victoria.

White elephant news: A crane has been spotted on the sire of the Fontainebleau in North Las Vegas signaling that work has restarted. The Las Vegas Review-Journal said the property, which first began before the Great Financial Crisis, is slated to open in Q423.

Newsletters

Truther: Alun Bowden pulls apart the way the sector looks at data.

Voice command: The WaterhouseVC newsletter looks at its recent investment in Voxbet.

What we’re reading

Startup chops: Can Zuckerberg do it again?

Paper review

All-out: Allwyn vies for the UK lottery contract 

Mayday: Proposals for UK reform of gambling laws delayed until May.

On social

sardinesoups.eth @soupsranjan

1/ During an earnings call this week, @PayPal admitted that 4.5 million of its account sign-ups were fraudulent. If you ever needed proof that FinTech fraud is out of control, this was it. Following the call, PayPal’s stock dropped 25 percent. 🧵on Fintech fraud

February 4th 2022

315 Retweets1,550 Likes

Calendar

• Feb 8: Evolution online event

• Feb 9: Kindred Q4, MGM Resorts International

• Feb 10: Betsson Q4,

• Feb 11: Kambi Q4, LeoVegas Q4

Contact us

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com