Good morning. On today’s busy agenda:

• 888 and Caesars revise the terms of the William Hill buyout.

• Entain up for the quarter on retail but online takes a dive.

• Fanatics’ new funding round values the company at $27bn.

Sale of the century. We’re still free. Click below.

888 revises William Hill terms

• The price paid to Caesars Entertainment falls to £584.9m ($785m) from £834.9m.

• Enterprise value reduced from £2.2bn to between £1.95bn-£2.05bn.

• Deferred consideration of £100m will be payable in 2024 in either cash or shares.

• Caesars provides indemnity regarding outcome of pending UKGC licensing review.

• 888 announces 70.8m share placing or 19% of the share capital.

Sticker shock: The macroeconomic environment and the UK’s pending regulatory overhaul were pinned as the reasons for the drop in value of William Hill’s interactional operations. The value of the cash consideration falls by £250m. The new terms represent a multiple of 7.5x normalized EBITDA and 5.7x post-synergies.

• 888 has also announced the share placing which replaces the original £500m capital raise plans. 

• The pricing of the new shares will be confirmed at the end of the book building process.

Double indemnity: The deal includes an indemnity regarding an “ongoing license review” being undertaken by the UK Gambling Commission of William Hill. This relates to failings on the part of subsidiary Mr Green.

• The total indemnity for any license suspension is set at £152m.

• The indemnity for any licensing conditions imposed is £78m.

• Following any license suspension, Caesars will make a one-off payment not exceeding £150m.

Support: The share placing has the su[port of 888’s largest shareholder, the Dalia Shaked Trust, which controls 23% of the company’s shares.

Trading updates: 

• 888 said revenue for Q1 would be in the range of between $222m-$226m which is either flat or 2% up QoQ. 

• William Hill FY21 revenues came in at £1.24bn with adj. EBITDA of £164.4m. Normalizing for 2021’s retail closures, 888 said it believes revenues would have been £1.4bn with adj. EBITDA of £260.

I’m a believer: 888 said it “continues to believe the acquisition has highly compelling strategic and financial benefits” despite the worsening macroeconomic uncertainty and the change to the  “regulatory environment” including the actions taken as part of an ongoing review by the UKGC. 

** Sponsor’s message: Venture capital firm Yolo Investments is home to €350m of equity in more than 50 of the most exciting companies across fintech, gaming and blockchain. It continues to build one of gaming’s most dynamic portfolios as it eyes up seed and A-stage opportunities across the sector. Its dedicated 28-company, €135m AUM gaming fund already houses holdings in fast-growing suppliers and operators, including Kalamba Games, SimWin and ThriveFantasy. Yolo Investments is also on the lookout for LPs as it looks to scale new concepts, including its high-roller live casino brand, Bombay Club.

As a proud sponsor of Earnings+More from Wagers.com, Yolo Investments wants to hear from readers of this newsletter. Get in touch with your pitch, or for a chat.

Entain Q1

• Group NGR up 31% YoY helped by retail return.

• Online NGR down 8% vs. strong comparatives; sports down 7%, gaming off by 10%.

• BetMGM “goes from strength-to-strength”.

Apples and pears: The strong comparatives from last year are what did for Entain’s record of double-digit online NGR growth in Q1. CFO Rob Wood noted the quarter was lapping 32% growth in Q121 and pointed out that the two-year CAGR was 12%.

• UK datapoints: Actives grew 22% over the past two years and CEO Jette Nygaard-Andersen said actives during the recent Cheltenham Festival were up 40% on 2020.

• UK NGR in Q1 was down 15%, lapping 41% growth in Q121.

Nygaard-Andersen on the macro environment in the UK: “Not something that plays a big part when we do our forecasting. (Gambling spend) is not the first thing that impacts households but of course we follow these things closely.”

Open all hours: Wood said customers had returned “in volume” to the UK retail estate. “Retail trading remains at around 5-10% off from pre-Covid levels and now the challenge is to find like-for-like growth from here,” Wood said.

Medium cool: In the US, Nygaard-Andersen said they had seen a “cooling-off” in the promotional environment but she noted that CPAs were likely to remain at ”elevated levels” as the sector approaches the “next cycle of the NFL”. She added that it was ”good to see a dialing-down” in promotional spend from BetMGM’s rivals.

Nygaard-Andersen on M&A: “As always we are working with an M&A pipeline. There is nothing at the moment that we think we couldn’t pursue if we wanted to.”

Fanatics funding round

Fantastic creatures: The NFL is among a number of sports league and player associations to take part in the Fanatics’ latest $1.5bn funding round which values the sports apparel company at $27bn. 

• Fanatics has previously excited much comment after previously stating its intention to enter the sports-betting market. Ex-FanDuel CEO Matt King is heading up the initiative.

• Last year Fanatics launched Candy Digital which sells NFTs. It also acquired Topps trading cards for $500m.

Genius: According to Sportico, the NFL is now the largest US shareholder in sports-data provider Genius Sports and the fourth largest shareholder overall with a 7.7% stake. 

• The enhanced stake came after a further 4.25m warrants vested this week. The NFL is set to receive a further 2m warrants in April next year and has the right to acquire 4m should it extend its deal for a further two years.

• If the contract extension is taken up, the NFL will own 22.5m shares.

• In its last Q4 earnings, Genius said stock-based compensation hit $485.9m for the year.

• Meanwhile, the NHL has exercised $10m in stock options in Sportradar, according to an SEC announcement. 

Wells Fargo betting report

Hold me now: Summing up the trend from February, the Wells Fargo teams suggest that lower hold rates than the long-term average can be attributed to a number of factors.

• Hold in the last three months has come in at 4.9% (Dec21), 6.5% (Jan22) and now 4.8% in Feb22.

• “We believe this low hold reflects a combination of elevated promotional activity (new state launches, NFL playoffs, etc.) often in the form of odds boosts, which reduce hold, and sport event outcomes/ choppiness from fewer NFL games that can skew overall monthly results.”

• The Wells Fargo team suggest this is surprising given the rise of “high hold” parlay bets.

Game for a laugh: As the peak sports season unwinds, the team adds that igaming will now come to the fore, and operators with more gaming-centric operators will possibly grab a greater share of GGR.

Light & Wonder lottery sale

Light, camera, action: Light & Wonder, the former Scientific Games, formally completed the divestiture of its lottery division to Brookfield Business Partners for $5.8bn or $5bn after tax. 

• The news was a “major milestone” in the transformation of the company’s business and its balance sheet.

• The company said its three priorities were now debt reduction, share buybacks and investment in key growth opportunities in gaming.

“The company will prioritize using its capital for buy-backs, debt reduction and organic investments unless convinced that M&A activity will deliver greater long-term shareholder value than other uses of the company’s capital.”

Inspired analyst update

More lottery: The team at Truist said the acquisition of Sportech Lotteries is a “natural evolution” for the company, The team maintained their Buy rating and said they remain positive on the gaming and leisure business recoveries. Truist forecasts EBITDA of $100m for 2022 and $107.1m 2023.

Gaming Society seed funding

The great society: The community platform designed to educate and inform around sports-betting has announced a seed funding round co-led TLI Bedrock and Acies Investments. Gaming Society was founded in 2021 by Jaymee Messler, co-founder of The Players’ Tribune, and NBA Hall of Famer Kevin Garnett.

• The cash raised - amount undisclosed - will go towards increasing the company;’s investment in its gamification products and media content.

• The Gaming Society says it is focusing on underserved fan audiences and is prioritizing betting education and creating the “fun and social benefits of betitng”.

Jayme Messler: “We created Gaming Society to be the vehicle for introducing the majority of sports fans to now-legal sports betting in an immersive and responsible way: underscoring education, women’s sports, athlete perspective and relatable product offerings.”

What we’re saying

Episode 4 of the Earnings+More pod is available now. This week, Scott is joined by Ryan Butler from Wagers.com. A separate newsletter will be sent later today.

Partnerships

Caesars Sportsbook has been named as an official sports-betting partner with the New York Mets. The partnership includes a 13,000-square-foot mobile sportsbook lounge and advertising space at Citi Field. 

Newslines

Chalk one up: GAN and Chalkline have teamed up to provide a free-to-play games offering to the provider’s clients. GAN will roll out Chalkline’s BettorGames free-play platform. 

Lines of sight: GTG Network has extended its deal with Penn national and Barstool Sportsbook for the provision of its iSport Genius data insights and sports content.

Weights and measures: Sports-betting supplier Metric Gaming has appointed Marc Thomas as its new chief commercial officer. Thomas has recently been providing consultancy and advisory services and prior to that held senior roles at William Hill, Betfair, 888, Sportingbet and SiS.    

Workers playtime: Affiliate marketer Playmaker has appointed Adam Seaborn as its new head of partnerships for North America. Seaborn joins from performance marketing agency Kingstar Media where he was director for sales and media operations. 

VIE as a kite: Esports Entertainment launched New Jersey's first full-service esports-betting platform when its VIE.com went live on Monday. It is the first licensed esports-focused betting site to go live in North America.

Be brave: Derek Schiller, the CEO of the Atlanta Braves, said he was "incredibly disappointed" Georgia failed to pass legislation legalizing sports-betting, saying it was time sports-betting moved “out of the shadows”.

On the radar: Sportradar has received a supplier registration for the igaming market of Ontario and Sportradar Integrity Services has launched the Sportradar Integrity Exchange to help combat suspicious betting activity.

Striptease: A new casino might be coming to the Las Vegas Strip after real estate development firm The Siegel Group announced it had acquired 10 acres of land across from Resorts World Las Vegas for $75m. Founder Stephen Siegel told the Las Vegas Review-Journal this was “the last great piece of land available on the north Strip”.

Platform for growth: Elys Game Technology has announced it will supply its online sportsbook platform to Lottomatica in the US and Canada.  

A new realm: Gaming Realms has announced its content is available in Ontario with Rush Street Interactive, Kindred and BetMGM. The company also has agreements to go live with several other leading operators.

Better intelligence: Performance marketing and analytics platform provider Intelitics has announced a partnership with Better Collective.

iGaming NEXT New York 

The iGaming NEXT New York conference will take place on May 12-13 and will bring together the leading OSB/iGaming executives, institutional investors and leaders in the Web3.0 space. The event is supported by the likes of Morgan Stanley, Playtech, Spectrum Gaming and Evolution and is limited to 700 high-level delegates.

To register with a special 10% discount, use the code: 10UNL050.

Conference agenda, ticket purchases and registration details: www.igamingnext.com/nyc22

What we’re reading

Oh Elon: Matt Levine in superlative form writing about Elon Musk and his Twitter purchase.

“He bought 9.2% of Twitter because he has money, and wants to spend some of it on being more annoying on Twitter.”

Share Wagers.com Earnings+More

On social

Dave Lee @davelee1968

I once spent a week on the Isle of Wight. Can I claim non-dom status?

April 7th 2022

1 Like

Calendar

• Apr 7-8: All American Sports Betting Summit, New York

• Apr 12-14: ICE, London

Contact us

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com