NorthStar set for Toronto switch
NorthStar sets seal on reverse takeover, FanDuel's MLB deal, GAN loses coverage, the week in shares, startup focus – Grin Gaming +More
Good morning. On today’s agenda:
NorthStar achieves reverse takeover and is set to float in Toronto.
FanDuel signs official betting partner deal with MLB.
GAN loses analyst coverage.
The Street loves the Strip: MGM and Caesars on the up.
Colorado’s low sports-betting tax take.
Our startup focus is micro-betting provider Grin Gaming.
NorthStar completes reverse
The Canadian gaming group achieves reverse takeover and will shortly move its listing to Toronto.
NorthStar Gaming is set to take its place on the Toronto Stock Exchange after completing its reverse into Baden Resources. The company, jointly owned by the Torstar media group and Playtech, operates under the NorthStar Bets name and will trade under the symbol BET.
Who owns what: Torstar will be the major shareholder at float with 23% of the company, with the potential to raise that to 26% via conversion warrants.
Strategic partner Playech will own 15% with an option to increase its percentage holding to 31% via two tranches of separately priced warrant options.
Private equity groups Tevir Capital and Rivet Capital together own a further 23%.
Linchpin: Playtech bought C$12.3m of convertible debentures in December. NorthStar is another one of its “structured agreements” whereby it takes a financial stake in key partners. Another is CaliPlay, a JV with Caliente in Mexico, which is currently subject to a legal dispute over an ownership option.
Playtech’s CFO Chris McGinnis will take a seat on NorthStar’s board.
Diary date: Playtech will report its FY22 earnings on 22 March when it will also hold an investor day.
** SPONSOR’S MESSAGE ** Founded in 2013, Metric Gaming is based in Las Vegas and London and developed the industry’s first truly multi-tenant sportsbook platform, purpose-built to support operators across multiple territories, regions or States. Metric is proud to be partnered with both Racebook HQ and Lacerta Sports (powered by Starlizard) and will roll out innovative MTS solutions for both racing and sports in 2023, including soccer and four main US sports.
To find out more, please visit www.metricgaming.com
FanDuel MLB partnership
FanDuel and Major League Baseball have this morning announced a multi-year co-exclusive official betting partner deal across sports betting and DFS.
As part of the new extended partnership, FanDuel will get to use official MLB branding and category designations. Further, the deal also sees FanDuel gain rights to stream MLB.TV’s free game of the day through the FanDuel app and its OTT platform FanDuel+.
It will also gain access to highlights and other original programming for FanDuel TV.
The partnership also extends to responsible gambling efforts.
“These key priorities of unique fan engagement and responsible gambling align with our focus from the league level,” said Kenny Gersh, MLB EVP.
GAN loses coverage
Jefferies drops coverage of the B2C/B2B operator/supplier.
The sports-betting operator and supplier of backend tech has lost coverage from brokers at Jefferies, which said late last week it would no longer provide analysis of the firm due to a “reallocation of resources”.
Jefferies last note on GAN came in November last year when it revised its rating on the company to a Hold.
It said at the time the move was undertaken because of a “shift in risk tolerance” over the past year and a lack of near-terms growth opportunities.
In its Q3 earnings GAN withdrew guidance for FY22, which CEO Dermot Smurfit claimed was down to currency fluctuations and uncertainty around the then-upcoming World Cup.
The CFO Karen Flores subsequently resigned with immediate effect in late November.
In December, GAN announced it had signed WynnBet as a client to its sports-betting platform.
Regionals canary
A predicted rise in February GGR masks a downward trend, suggests Wells Fargo.
Analyzing visitation data, the team at Wells Fargo estimates the pace of growth in GGR slowed in February to 4.6% YoY from the 12%+ growth seen in January. The team viewed this ~5% growth rate as a more “normalized pace” given the ‘clean’ calendar comparison.
But Wells Fargo cautioned that historically February GGR increases mid-single-digits vs. January, despite fewer days and hence “implying worse-than-average seasonality this month”.
The week in shares
MGM and Caesars enjoy a good week as investors warm to the Vegas story.
Riding the wave: Shares in the main Las Vegas Strip operators MGM Resorts and Caesars Entertainment benefitted with a 7% rise last week, helped by the continuing good news on revenues and visitation in Nevada.
🎉 All smiles: Caesars and MGM enjoy the share price boost
Supplier boost
IGT and Light & Wonder enjoy a positive start to the year.
Supply side: The major gaming machine and online suppliers both reported positive earnings last week and were rewarded with each rising 5% over the week. The move helped cement a good start to the year for their shares, particularly IGT, which is up nearly 21% in the YTD, while LNW is up over 11%.
Analysts at Credit Suisse said last week IGT has “set itself up for success”, with conservative guidance for 2023 of revenue between $4.1m and $4.3bn, which CS estimate will result in EBITDA of ~$1.7bn.
Macquarie suggested LNW might be even better positioned as it reported sequential gaming revenue growth of 6%, compared to 4% for IGT and 2% at Everi.
Rocky mountain lows
Colorado received a mere $12.5m in sports-betting tax from operators in 2022.
Rounding error: As was highlighted by Gambling Twitter over the weekend, revenues for the state of Colorado from sports betting amounted to “budget dust” in the fiscal year to June 2022, according to the recently released state revenue report.
Taxes amounted to $12.5m from net sports-betting proceeds of $103m.
However, according to an article in The Colorado Sun, this amount could double in 2023 after the legislature passed new rules on how much operators can offer on bonuses.
The article also said wagering totals had been on the up in the latter half of 2022.
The latest data for Jan23 showed GGR of $36m, net win of $22.5m and a tax take of $2.6m.
🏔️ The tax take from sports betting in Colorado
Newsletters this week
In Compliance+More: Tomorrow we take a look at the news out of Brazil where the finance minister appears to have given a boost to moves to finally get sports-betting legislation through parliament.
Meanwhile, Sharpr reported last Friday that Entain’s Unikrn has signed a partnership with Team Liquid that will focus exclusively on the Brazilian esports betting market.
In Earnings+More: Tomorrow sees edition #8 of the startup month released, which features an interview with Dean Sisun from the New Jersey-based betting exchange challenger Prophet Exchange.
The edition also features an Inside the Raise with Will Hawkins from UK-based casual sports game operator Circl, which recently raised £550k from Zeal Ventures.
Quarterly review: With the earnings season starting to wrap up, Thursday sees the release of a new E+M edition looking at the significant trends and key reaction from the reporting period just gone.
Startup focus – Grin Gaming
Who, what, where and when: The LA-based micro-betting data provider was founded by Nick Bucheleres and serial entrepreneur Doug Kilponen in 2018 and launched two years later.
Funding backgrounder: To date, Grin has raised $4.5m in Seed and pre-Seed from BAM Ventures, Operate, Nanban Ventures and a group of angels that includes Lyle Berman. The last round closed in Q3 last year and raised $3m on a $16m post-valuation.
The pitch: Kilponen says the Grin idea is to bring the sophistication of high-frequency trading to sports gambling with real-time, in-play wagering, niche odds, the lowest latency and “narrative wagers to keep bettors engaged in every play”.
He notes that similar to slots players, GrinData feeds an average two-hours’ playing time and up to 1,000 wagers per game, per play.
Retention rates are also high, with 50% of bettors who utilize GrinData returning to play at least once in the next 30 days.
Kilponen says micro-betting can “significantly” increase volume from existing users while appealing to a larger demographic of fans who are not already gamblers.
“GrinData’s narrative-style question engine asks questions when they’re relevant, which creates an attention-grabbing experience,” he says.
The product is a “game within a game” akin to a slot machine appealing to sports fans who “don't see themselves as gamblers”.
Meanwhile, traditional gamblers “get the micro markets they care about, when they care about them”.
What will success look like? Kilponen believes GrinData can be a $300m business within the next three years, which would mean it is “well on our way to going public”. Medium-to-long-term goals are to continue to build out the company’s gaming catalog and expand its market presence via partnerships with leading operators.
** SPONSOR’S MESSAGE ** Venture capital firm Yolo Investments manages in excess of €600m in capital across 80 exciting fintech, gaming and blockchain companies. The Yolo Investments' Gaming fund, regulated by the Guernsey Financial Services Commission, has taken positions in fast-growth suppliers and operators, including Dabble and Enteractive. Yolo Investments (yolo.io) wants to hear from readers of this newsletter. Get in touch with your pitch, or for a chat about innovative products which can plug into our investment ecosystem.
Newslines
Kambi has signed a multi-channel and multi-year sportsbook partnership with Potawatomi Hotel & Casino, which runs casinos in Milwaukee and Carter, Wisconsin.
Australian pubs and pokies tycoon Bruce Mathieson has built up a near 10% stake in troubled casino entity Star Entertainment.
Sportradar has signed a sports-betting platform agreement with recently founded Puerto Rico-based Ballers Sportsbook.
What we’re reading
Now you see it, now you don’t: The Museum of Illusions has pushed back its Las Vegas opening to June.
Calendar
Mar 7: NeoGames, Full House Resorts
Mar 9: Playstudios, AGS
Mar 10: Genius Sports, Century Casinos
An +More Media publication.
For sponsorship inquiries email scott@andmore.media.
