Good morning. On today’s agenda:

• The latest data shows FanDuel extending New York lead

• Rush Street Interactive acquires RIO Poker.

• Hall and Weizer open up to the FT about Playtech bid.

When they kick at your front door, how you gonna come?

New York Wk8

FanDuel on top: The immediate news from the Empire State is that FanDuel has extended its lead in both handle terms (~38%) and GGR (~41%) and has become the first operator to hit over $1bn in turnover since launch.

Datapoints: GGR in the first 8 weeks was $204.7m off a handle of $3.16bn.

Apple pie in the sky hopes: Sen. Joseph Addabbo’s proposed bill to legalize icasino in New York would be the proverbial “game-changer” for US online gambling if it became law, said the team at Regulus Partners. 

• If regulated, icasino in the Empire State would add c$2bn in net revenue to the addressable market and “make the overall ecosystem viable, given only c. US$200m post-tax contribution from betting”. 

Problem solved: Taxed at the proposed rate of 25% of GGR, online casino’s $2bn in TAM would be added to the predicted post-bonuses c$500m NGR for OSB. Regulus added that it could also solve many of the financial difficulties New York’s OSB market currently faces as the industry’s “net contribution would increase to c$1.4bn”.  

Regulus: “The sheer scale of online gaming vs online betting would also add a sustainable c$800m in tax revenues, whereas NY’s current sportsbetting tax yield is not sustainable because it is based on heavy bonusing.”        

Sliding scales: In an attempt to address the high OSB tax rate, Sen. Addabbo has introduced a new bill that would see the state increase the number of licensed operators in the next two years and the rate drop accordingly. 

• The current 51% rate would drop to:

  • 50% for 10-12 operators,

  • 35% for 13-14 operators, 

  • 25% for 15+ operators.

Problem not solved: As WE+M wrote on Friday, the state budget is due on April 1 and with the midterms looming, the chances of the icasino bill passing this year are not high. Regulus noted that the levels of advertising in NY state have also already led to criticism and concerns over labeling of advertisements for adult audiences. With that in mind, NY regulators may hold off regulation in case it is “too much, too soon,” Regulus suggest.   

Further reading:

• Flutter’s earnings highlight FanDuel advantage.

• New York and the need for stronger advertising regulations.

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RSI acquires RIO Poker

The big reveal: Phil Galfond’s plans for Run It Once Poker to pivot towards the US have been rewarded with a buyout from Rush Street Interactive which has snapped the business up for Rush Street $3.2m in cash and a further $2.5m in stock. 

On social 

Phil Galfond @PhilGalfond

When I mentioned that @RunItOncePoker was headed down a path towards the US market, I told you that I’d have more details to share with you in the near future. Today is the future! 👇🏻

March 3rd 2022

21 Retweets475 Likes

Pivot move: Galfond announced in January that RIO Poker was pivoting away from its international offering and would be concentrating on the US. On Twitter he said the deal with RSI answered the question of scale.

Phil Galfond on Twitter: “Now we are bigger - much bigger. And now we add to our existing tech team the expertise and experience of those who have built huge poker platforms in the past.”

Playtech takeover update

Last gang in town: Speaking to the FT over the weekend, Tom Hall and Mor Weizer, former and current CEOs at Playtech, hit out at critics who suggested Hall was somehow in league with the Asian-based investors on the Playtech shareholder register regarding the recent failed Aristocrat bid.

• “As I explained to the Takeover Panel, I said I had never heard of, spoken to these people or their advisers,” Hall told the paper.

Brand new cadillac: Hall contacted TTB in the wake of the Aristocrat failure and then went on to get Weizer on board in mid-February. A key component of the TTB effort will be to further push Playtech’s claims in the US market.

Career opportunities: For his part, Weizer said that if the bid being put together by TTB Bond Partners failed, he would effectively find himself out of a job having thrown his weight behind the effort.

Mor Weizer, CEO Playtech: “I understand the consequences and I understand they are also quite dire if it doesn’t happen but . . . at least I tried to do what is best for everyone involved.”

Watch this space: Hall and Weizer said a bid would emerge “shortly”.

Entain analyst update 

Tuff Gong: The team at CBRE said it was “encouraged to find no surprises” with Entain’s FY results announced last week, but revised its FY22 EBITDA estimates downwards to £986m (from £1.05bn) on the back of tough online comparatives in H122 and an expected rise in operational costs. Deutsche Bank forecast 2022 EBITDA of £1.01bn, £1.13bn in 2023 and £1.19bn in 2024.

M&A driver: Entain has allocated £225m to invest in BetMGM in 2022 with the JV is forecast to generate net revenues of £1.3bn.

CBRE: “Entain is off to a fast start in 2022 with four transactions already, including Avid Gaming, which deepens the company’s presence in Canada. Management attributed 3ppts of online NGR growth to M&A in 2021.”   

Startup focus - WSC Sports

Who, what, where and when: The WSC platform uses AI to create customized short-form videos in real-time for sports and media rights holders. WSC Sports is a scale-up; it was founded in 2011.  

Funding backgrounder: A $100m Series D fundraise was announced last week, its first funding round for three years, it brings the total raised by WSC to $149m. The round was led by ION Crossover Partners (ICP) while existing investors Intel Capital, O.G. Tech and Detroit Venture Partners also participated. 

So what's new? WSC has signed new clients in the US, such as Indycar, and in Europe and Asia. It has also started working with Italy’s Serie A TimVision league, the highest level of women’s football in Italy. In the OSB field, it has been working with FanDuel and Sportradar for the past year. 

The longer pitch: Yuval Benyamini, head of sports betting at WSC Sports, says the platform addresses “the betting market’s need for content convergence by providing video highlights solutions” that help operators acquire players and enhance engagement from existing users. For obvious reasons, North America is of key interest currently and “we are seeing highly positive reactions to our products, starting with the video powered push notification,” says Benyamini. 

Yuval Benyamini, head of sports-betting at WSC Sports: “Audiences nowadays have a relatively short attention span. This is why the live video notification is so important from an engagement and retention point of view.” 

The shares week

Woe is me: DraftKings saw its share price slip 10% after its investor day last week, suggesting investors were expecting more than the expanded TAM estimates. Meanwhile, as the team at Jefferies noted, RSI suffered a worse week with the shares off 20% following its earnings call midweek. 

Eat my shorts: DraftKings and RSI remain favorites with the shorts at 12.5% and 18.7% of short interest respectively.

Catalysts: The team noted that while the narratives around online had shifted “drastically”, there were potential near-term catalysts that might disrupt the negativity. One would be evidence of an accelerated path to profitability while the other is consolidation.

Jefferies: “(This) is probable in our view as smaller operators and B2B providers are challenged to maintain market share given the scale of required spending. In addition, large media companies remain interested in potential entry to or involvement in the digital wagering landscape.”

The week ahead

MGM is taking part in the JP Morgan leisure conference later today, while Century Casinos and Full House Resorts publish their Q4s tomorrow. Accel Entertainment, NeoGames and PlayAGS announce their results on Wednesday and Thursday and many industry observers will be watching out for Genius Sports’ Q4s on Friday and whether further detail will be provided on the group’s NFL official data deal. 

• Back in November, CEO Marc Locke said it was “very difficult to break out (ROI) because of the way we add services on a much broader basis. It’s the combination of all those things that is the basis on which the deals are being done.”

Datalines

Colorado Jan22: Sports-betting handle was up 75.5% YoY and 24.3% MoM to a record $573.7m, GGR was up 49.7% YoY and 40% MoM to $34.6m. Mobile betting represented $567.1m of the total handle. The NBA recorded most bets at $163.6m, NFL betting totaled $144m, college basketball $63m, NHL $24.7m and tennis $20m.

Newslines 

Losing gambit: The D.C. Lottery’s mobile betting app GambetDC announced losses of $4m and revenues of $1.5m after one year of operation, well short of the $20m it had forecast at the outset. 

Sponsor drive: NFL teams recorded $600m in sponsorship revenues in 2021, a 57% rise YoY and +14% vs. 2019. According to a report by Sponsor United, OSB saw an 83%+ increase in sponsorship and media deals, the largest expansion for the second year in a row. 

Tri-launch: Inspired Entertainment’s online gaming content went live with DraftKings in Connecticut. For Inspired this marks the third state in which its online gaming portfolio has launched.

White gold: White Hat Studios has signed a content deal with Golden Nugget Online Gaming to supply slots, jackpots, full house and more in several US states. This follows the asset purchase of Blueprint Gaming’s catalog of games for the US market last year.

Big footprint: Games developer 4ThePlayer has signed a deal with Superbet for distribution into the Romanian market. The first game to be released in Romania is 9k Yeti.

What we’re reading

Part-time punks: “They were just kind of there to see the spectacle.” Sotheby’s NFT auction doesn’t go as planned.

Covid didn’t end the tech backlash. Could Putin?

Stamford Bridge is falling down: The inside story of what’s going on at Chelsea.

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Calendar

• Mar 9: Accel Entertainment Q4

• Mar 10: AGS Q4, Neogames Q4

• Mar 11: Genius Sports Q4

• Mar 11-14: WE+M@SXSW

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