Caesars high on Vegas supply
Caesars high on Vegas supply
Caesars confirms buoyant results, the super affiliates report, BetMGM remains on top in Michigan +More
Good morning. In today’s edition:
Caesars Entertainment CEO says Las Vegas “feels fantastic”.
It’s Big Wednesday for affiliates with Better Collective, Catena Media and Raketech all reporting.
Kambi, Tabcorp and Genting Singapore weigh in.
Michigan data shows BetMGM on top.
We're going to a place where everybody kick it.
Caesars’ crowd pleaser
Caesars trumpets strength in Vegas, regional resiliency and future online profit hopes.
Captain fantastic: “It’s hard to express how strong Vegas is right now,” CEO Tom Reeg said after its Strip casinos saw an 11% leap in Q4 revenues to $1.15bn while FY22 revenues rose over 25% to $4.29bn. “The business feels fantastic,” he added.
March madness: He noted that Q1 was also off to a “particularly strong start” and said March was shaping up to be “one of the best months we’ve ever had”.
Group business was now trending in excess of 2019 numbers for the first time, he added.
Off the grid: Looking ahead, he noted that F1 in November would bring “Super Bowl level activity, if not stronger” in what was traditionally one of the softest periods of the year.
The commentary came with Caesars pre-announced Q4 earnings, which confirmed revenue rose 7.7% to $2.8bn with same-store adj. EBITDA up 65% to $957m.
Regional revenues were essentially flat at $1.36bn, while online produced a $5m EBITDA loss, down from a loss of $305m in Q421.
Modesty permits: Reeg said the online business would register another “modest loss” in Q1 due to the costs associated with the launch in Ohio but, looking further out, the company expects the business will be an EBITDA contributor for 2024 as a whole across both sports betting and iCasino.
He noted that cumulative losses for the online arm would total ~$1.1bn but that the payback would be ~$550m in annualized EBITDA profits at maturity.
He said that on a run-rate basis that level of EBITDA profitability would be achieved by Q2 2024.
No show: Reeg said Caesars had switched “out of advertising in a big way” and noted it didn’t advertise around the Super Bowl.
“Granular changes in individual marketing have slowed dramatically,” he added.
He indicated Caesars had a “significant advantage” in terms of margins due to owning all its licenses and via its customer database.
Hill to die on: Asked about the recent Super Bowl outage of the William Hill app in Nevada, Reeg noted the app was working (not working) on “old technology” and that it would be on the new Liberty platform by the next football season.
Rear window: “That’s not something we enjoyed, but it’s in the rear-view mirror at this point.”
Stand and deliver: Eric Hession, president of Caesars online, noted the improvements to come in the iCasino operation with a new dedicated app and proper customer segmentation. Reeg said that, with online generally, Caesars was “leaning on” its Rewards database more and more.
Asked about the “jump” to sizable profits in 2025, Reeg said iCasino would provide a “significant ramp” from H223 onwards.
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Affiliates Big Wednesday
Super affiliates Better Collective and Catena Media report strong earnings.
Just super: Better Collective said its long-term aim of being regarded as a digital sports media group was “starting to materialize” after it saw Q4 revenues soar 63% to €86.1m, while rival Catena Media – where BC is a now a 5% shareholder – said its Q4 revenues were up 15% to €27.4m.
North America was the driver for both: at BC its US revenues rose 81% to €34m, while Catena Media North America revenues were up 31% to €21.5m.
Catena’s total revenues increased 15% to €27.4m, while adj. EBITDA was up 14% to €12.3m.
Better Collective noted its own earnings leap came despite a move towards revenue share agreements in the US versus CPAs.
CEO Jesper Søgaard said BC was working with six partners on revenue share versus four this time last year.
Conversely, at Catena, CEO Michael Daly noted that rev share was less important than CPAs, but he expected more operators to move towards rev share as they focus on profitability.
🥊 Better Collective accelerates away from Catena Media
Oh-Ohio: January revenue at BC continued the growth trend, up >40% to €37m, though Søgaard warned that the quarter had been boosted by the launch in Ohio and was “not something that should just be extrapolated into the rest of the year”. Indeed, at Catena, January revenues fell 4% YoY on “tough comparatives”, including the New York launch last year.
Amazeballs: Søgaard was also keen to praise BC’s Atemi paid-media division, which was acquired in October 2020 for €44m and which he said had “turned out to be a great financial investment”.
No comment: Asked about the investment in Catena Media, the head of IR said the company “didn’t have any comments”. At the end of last year, Catena Media divested itself of the Ask Gamblers business amid rumors that the entire business was now up for sale.
Raketech chips in
Raketech expects revenues, excluding potential further acquisitions, to hit between €60m and €65m after it announced revenue growth of 33% in Q4 to €15.7m. The company said it had “identified significant growth initiatives”. US revenues increased 130% to €2.3m following the acquisition of ATS in 2021.
Datalines – Michigan
Combination play: BetMGM continued to lead in combined OSB-iCasino share of GGR at 31.1%, with the group recording 34.3% of the state’s iCasino GGR. iCasino GGR was up 26.7% to $154.6m, while OSB was down 7% to $33.6m and NGR was down 6.9% to $17.8m.
FanDuel was second in combined GGR at 24.7%, but was far ahead of the OSB field with 59% share of mobile GGR and was second in iCasino with 18.8%.
MIBets noted the iCasino figure was a new national record.
Earnings in brief
Kambi: A €12.6m termination fee from Penn Entertainment helped boost revenues over the period to €57.8m, up 66%. Operating profits rose 167% to €18.7m. The group noted that even without the termination fee a strong operational performance led to a 30% revenue increase.
The company recently signed a retail sports-betting provision deal with the del Lago Resort & Casino in New York.
Tabcorp said it had achieved 25% online market share for the first time since 2019, with its share of the total sports-betting market standing at just under 35%, after it announced H123 revenues of AU$1.2bn with EBITDA up 24% to AU$197m.
Genting Singapore said the reopening of travel routes and return of tourists and international visitors in the second half of the year had been the main driver behind the rise as the company’s H2 adj. EBITDA rose 194% to $505.4m. Revenues rose 62% in FY22 to $1.72bn, while adj. EBITDA rose 73% to $774m.
Analyst takes
DraftKings: Despite evidence of an accelerated path to profitability, Roth MKM said its long-term pessimism remains as it doesn’t believe DraftKings can drive enough operating leverage for EBITDA margins “to even reach 20%”.
The team added that high fixed costs and “sticky” gross costs could limit DraftKings’ long-term forecast EBITDA to $500m-$1bn.
Everi: Jefferies said fintech and gaming supplier Everi’s recent announcement that it will provide its real-money gaming content to Caesars has the potential to become a “meaningful earnings driver over time”.
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Newslines
Esports Entertainment Group performed a reverse stock split of one for 100 shares in order to regain compliance with the Nasdaq’s $1 minimum bid price requirement. The group also announced the sale of its Bethard sportsbook for €9.5m. EEG will bank €1.65m of the proceeds, while €6.5m will be used to pay off the debt raised to finance the acquisition in 2021.
William Hill will be the official betting partner of the Grand National and will sponsor three races during the Festival.
Betsson’s Betsafe brand has been granted a license in Ontario.
On social
Calendar
Feb 22: Churchill Downs
Feb 23: Bally’s, VICI
Feb 28: The Data Month, IGT, Codere, Endeavor
March 1: Light & Wonder, Golden Entertainment, Rush Street
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