Kindred provisions for £7.1m UK fine
Kindred sets aside funds for UK regulatory settlement, UK ministerial reshuffle uncertainty, Red Rock looks to Durango completion +More
Good morning. On today’s agenda:
Kindred admitted today it has a pending UK regulatory settlement.
The news of the UK government reshuffle causes consternation at ICE.
Red Rock says the Durango project will be completed by the end of the year.
Super Group to sell its B2B arm to Games Global.
Kindred’s UK provision
The operator has set aside £7.1m in provisions against a pending UK regulatory settlement.
Set back: The news of the provision in the accounts comes as the company said it has embarked upon immediate action to improve profitability after its mid-January profit warning. Total regulatory sanctions provisions of £8m also include £900k of fines from the Swedish regulator related to AML failures.
Profitability was helped, however, by a reassessment of the fair value of Relax Gaming of £38.4m. Revenues there rose 64% YoY to £11.3m.
Provision against market closures in the US cost £1.9m.
As pre-announced, revenues came in below expectations at £305.5m, while pre-tax profit fell 34% to £51.9m.
The company reiterated that underlying EBITDA for 2023 would come in at £200m.
In current trading, it said average daily gross win revenues were up 36%.
In terms of cost-cutting plans, CEO Henrik Tjärnström said “we’re looking across the P&L very closely”.
World cup willies: Despite the World Cup exceeding Euro 2020 in terms of turnover, Tjärnström again noted the event “did not meet our high expectations”. World Cup turnover hit £220.8m (16% of total Q4 turnover) and total gross win came in at £30.8m. Bet Builder was worth 10% of total WC turnover.
US under water: Underlying EBITDA for the US came in at a negative £14.9m. Gross win revenue for North America declined from £7.1m to £4.4m. Within that, the US fell from £6.9m to £2.9m.
Tjärnström maintained the company was “still committed” to being a top ten operator in the US.
He added the company would ”absolutely” look at exiting further states having exited in Iowa in December. “We’re always evaluating,” he added.
Record-breaker: Mattress Mack’s World Series win saw Kindred make the biggest payout in its history, costing it £4.4m in negative revenue contribution.
Western Europe saw 43% gross win revenue growth YoY; the Nordics was up 4%, with Sweden and Denmark offsetting the decline caused by the regulatory situation in Norway.
In the Netherlands, Tjärnström said it continued to exceed expectations. “We have now reached a top three position,” he added.
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ICE – heard on the floor
😱 There was widespread dismay as news emerged during the day of the UK government reshuffle, which has seen another change of gambling minister, with Paul Scully moving on and an as-yet-unnamed successor. The White Paper once again appears to have been kicked into the long grass.
Lucy Frazer is the new secretary of state of the rejigged Department of Culture, Media and Sport.
“It certainly sends out a message that the government does not consider reform of the gambling market to be a priority,” commented Dan Waugh from Regulus.
More reaction to the news in tomorrow’s Compliance+More.
On social: Scully responds to a query.
Alien landscape: Recent events at 888 are the subject of much gossip. “It’s like Alien,” suggested one source. “888 thought it had swallowed William Hill and now William Hill has just burst out of the host’s body.”
The price is right: Meanwhile, rumors on the size of the record regulatory settlement being faced by William Hill keep escalating. Estimates last week indicated mid-£20m. “It’s more than that,” suggested one well-placed source.
Rock solid
After the best year in the history of the company, Red Rock Resorts says the trends have remained “stable and consistent” into the new year.
The shape of things to come: CEO Frank Fertitta said the balance sheet was in good shape as it moves towards the opening of the $750m Durango project in Q423. Scott Kreeger, Red Rock’s president, said the company expected it to ramp up over a two-year period. “We do find that we grow markets,” he added.
Fettitta said Red Rock’s business had been built on “location, location, location, convenience, value and service”.
Q4 revenues were down 0.2% to $419.6m while adj. EBITDA was down 0.9% to $206.9m against a very strong comparative.
FY22 revenues rose 2.8% to $1.66bn, while FYT adj. EBITDA rose 0.4% to $743.9m.
The analysts noted adj. EBITDA margins were about 45% for the tenth successive quarter. “Red Rock’s stability appears stronger than its peers,” suggested the team at Macquarie.
They noted that management believes it can double its portfolio by 2030 via new developments.
JMP noted the business has “ample liquidity” to fund these plans, including cash from sales of excess parcels of land.
Asked about whether Red Rock would go the route of a sale-and-leaseback on its properties, CFO Stephen Cootey said “we like owning the real estate”.
Viva Las Vegas: Following on from Boyd Gaming last week, the team at JMP also noted that commentary around the Las Vegas local market remained positive.
Earnings in brief
Double Down Interactive: Revenues fell 11.7% to $76.2m, while adj. EBITDA was off by 4.3% to $24.7m. The company expects the SuprNation acquisition to close in the second quarter, allowing it to enter the real-money iCasino market.
The team at Macquarie noted a decline on social casino DAUs, but added they were not “overly concerned” given the industry-wide focus on monetization.
YoY average monthly revenue per player increased 3.7% to $226.
FansUnite pre-announced its Q4 and full-year numbers saying revenues would come in at C$5.9m-C$7.2m and C$26m-C$27.3m respectively, up at least 99% and 364% year-on-year.
Real Luck: January revenue increased 110% and the number of total FTDs jumped 182% vs. December. Handle reached C$1.6m.
Super Group to sell B2B division
Betway and Spin parent Super Group is selling its non-core B2B assets to Games Global.
The amount of the transaction was not disclosed and is set to complete in the second half once regulatory approval has been granted. Super Group’s non-core (ex-US) B2B activities formed part of its acquisition of Digital Gaming Corporation, which operates the Betway and Spin brands in the US.
The Isle of man-based Games Global is a supplier of online gambling products and is headed by ex-IGT CEO Walter Bugno.
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Analyst takes – Macau
Rabbit, run: Despite an apparent fallback post-CNY, GGR remains at “higher than anticipated” levels, according to the team at Jefferies, who suggested channel checks are pointing to flat mass-market revenues in the first five days of February and VIP down 10%.
Meanwhile, they noted that group tours have also been reinstated, which accounted for almost a quarter of visitation in 2019.
Earnings calls from MGM and Wynn this week will be scoured for discussion about the “revenue recovery mix”, they added.
Super Bowl survey
Survey finds “more player loyalty than stocks imply”, as industry nears “inflection point” in 2023.
Sunday casuals: The team at Jefferies surveyed 500 online sports bettors ahead of the Super Bowl on Sunday and found that nearly two-thirds were casual players, with 69% betting $100 or less in the past 12 months and 41% betting only on major sporting events.
Sticky fingers: Jefferies found customer loyalty and stickiness to be “better than expected”, with 83% of respondents saying they were likely or very likely to continue betting with their current accounts.
Ease-of-use was more important than promotions for 58% of respondents (vs. 51% in 2022), DraftKings was the favored interface (51%), with FanDuel in second (41%).
Most improved player: Jefferies said BetMGM saw the most improvement and noted that it seemed to “skew toward more serious bettors”.
Analyst takes – Playtech
Mexican standoff: The team at Peel Hunt suggested the news that Playtech is going to court to establish that its option for its partner in the CaliPlay JV, Caliente, to buy out part of Playtech‘s interest in the Mexican business has expired.
The Peel Hunt team said this “infers” that Playtech’s partner “would prefer not to share the upside” of the JV.
The planned (and now abandoned) SPAC exit implied a face value of $720m for Playtech’s interest in Caliente, “although this was never market tested,” the analysts noted.
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On Sharpr
OpTic Gaming is backing a new betting venture seeking to raise money as a founding partner.
Datalines
Maryland GGR rose 8.8% YoY to $167.3m in January. Maryland Live generated $58.2m of the total and accounted for 35% share of market.
Casino GGR increased 28.3% YoY to $112.6m in Illinois during January, with visitation levels up 35.8% and spend per visitor down 5.5%. Ohio racinos saw revenue rise 15.8% to $110.7m.
Growth company newslines
Games developer Jelly has licensed the Megaways mechanic from Big Time Gaming.
Newslines
Macau’s Government Tourism Office is considering subsidizing package tours to encourage longer stays.
Fitzdares has received its bookmaker’s license from the Alcohol and Gaming Commission of Ontario and will launch in the province in the coming weeks.
Sightline launched VIP select, which allows customers to have up to $1m in their Play+ account. Gaming operators can offer VIP select via invitation only.
Betting solutions provider EBET has raised $6.5m from a 6.3m share issue.
What we’re reading
City limits: The financialization of soccer is already a done deal.
Calendar
Feb 6-9: ICE London
Feb 8: MGM Resorts, Wynn Resorts
Feb 14: Deal Talk, Betsson
Feb 17: DraftKings
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