Gambling’s relief at SVB rescue act
Gambling’s relief at SVB rescue act
Gambling’s limited exposure to SVB collapse, Sportradar’s ATP deal, six launch in Mass, startup focus – ALT Sports Data +More
Good morning, welcome to the start of your week. On today’s agenda:
Sector startups will breathe easier following the SVB backstop news.
Sportradar announces it is in exclusive negotiations with the ATP.
Just six make the most of the launch of OSB in Massachusetts.
Startup focus is alternative sports data provider and affiliate ALT Sports Data.
Won’t you come on down to my rescue.
Rescue act
The news that the US government is stepping in to protect depositors at the collapsed Silicon Valley Bank brings relief for any affected sector startups.
Collateral damage: The unveiling on Sunday of the US government’s plan to fully protect depositors at the failed SVB will bring some welcome relief to any gambling sector startups connected with the bank.
Sources point out that the “hardcore tech VCs didn’t really go big” on the sector, whose bank of choice in the US is reportedly Virginia-based MVB Bank.
But ahead of Sunday’s news, Chris Grove from Acies Investments had warned that, while gambling “won’t see the same direct exposure”, the “ripple effects” from a complete collapse could have been “tremendous”.
He added that it would “all come down to how much of this is contained”.
Relief: Containment appears to have been achieved. Lloyd Danzig, principal at Sharp Alpha, said after the news of the government rescue came through that it had been a “hectic weekend” for startup founders with exposure to SVB.
“They spent the last 48 hours on calls with investors, vendors and employees seeking solutions for making payroll and keeping the lights on until the liquidity situation is resolved,” he said.
He noted the historic difficulties faced by gambling accessing new business banking accounts.
“There are also startups in the sector that were expecting wire transfers from investors last week, but did not receive those wires because they were funded by capital call lines of credit at SVB.”
Backgrounder: In the space of just a couple of days at the end of last week, SVB went from making a cash call to being the first bank failure since 2008, with the US authorities having to step in on Friday.
Reports suggested the bank got into trouble after its bet on US Treasuries soured. As of the end of last year, the bank had $209bn of assets.
Initially, depositors are only guaranteed to get $250k of their cash back under the terms of the Federal Deposit Insurance regulations but, with the new backstop announced, depositors can be assured of being made whole.
On social
Y Combinator’s Gerry Tan had warned over the weekend that SVB’s collapse could be an “extinction level event” for startups.
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Sportradar’s smash and grab
Sportradar is in exclusive negotiations over a six-year data, streaming and integrity deal with the ATP to take over from Endeavor’s IMG Arena.
Game, set, match: The talks between the supplier and the ATP’s Tennis Data Innovations could see the ATP switch just three years into a six-year deal signed in 2020. The ATP has reportedly taken advantage of a three-year break clause to switch providers.
Sportradar said today that the RFP process was initiated by TDI in January and saw five bidders submit detailed proposals for a six-year rights cycle beginning in 2024.
A final deal would see Sportradar take over management of all data and betting streaming products for the ATP Tour and ATP Challenger Tour.
The financials for the prospective final deal have not been disclosed.
TDI is based in London and manages live betting streams for more than 14,500 matches annually across the ATP and ATP Challenger tours. The group’s CEO David Lampitt spent nearly a decade at Sportradar before taking the job.
The successful conclusion of a deal would add another blue-chip sports league to Sportradar’s roster, which includes the NBA, the NHL, MLB and UEFA.
Sportradar said its capabilities in advanced technologies, such as computer vision and AI, and its commitment to integrity services were “key considerations in the selection process”.
Any deal with the ATP would give Sportradar the strongest position in tennis, which remains the second-most bet on sport globally after soccer.
Note: Sportradar reports on Wednesday. In November the company said it expected revenues for FY22 of €718m-€723m and adj. EBITDA of €124m-€127m.
Mass lift
The Massachusetts OSB market launched on Friday but without some key names.
The joy of six: The six names that opened for business in Massachusetts – FanDuel, DraftKings, BetMGM, Caesars, WynnBet and Barstool – should have been more but for key initial no-shows.
Notably, despite gaining licences from the Massachusetts Gaming Commission, PointsBet and bet365 opted not to take up the opportunity, while Fanatics is yet to launch in the US and Betway said it will wait until next year to enter the state.
Expectations management: The team at JMP noted after meeting with FanDuel management it will “stick to the strategy of trusting its technology to acquire players for a 12- to 18-month payback”.
“We have seen the more disciplined approach result in lower initial market share in a new state, but an acceleration as the months progress,” the team added.
Betr off: Also absent on Friday was micro-betting specialist Betr. Speaking to Earnings+More, CEO Joey Levy said the company planned to launch in the state “some time over the next month”.
He denied the company had encountered any technical issue but said that, as a startup, it was being cautious about launching in what will be only its second state to date after Ohio.
“We are simply a startup with a lean, mean team launching our second state, and this comes with additional complexities,” he added.
“We want to ensure we have all of our ducks in a row before going live to ensure the best possible experience for our prospective customers.”
Analyst takes
Genius Sports: Credit Suisse said that the “appealing part” of the Genius story is its potential ability to leverage fixed costs. “But it feels as if data rights are eating into the ability to generate operating leverage,” the team added.
While they admit there is some noise caused by FX issues, the team still believes the drop down to the bottom line was lower than expected.
The team at Regulus agreed that the key to revenue scale and profitability remains “the more effective exploitation of sports rights”.
Operators have been forced to pay more due to a better leveraging of the underlying IP, which powers in-play multiples especially. But there is a “limit to how much more the ecosystem can take”.
🛑 Genius Sports investors react badly to its Q4 earnings
Macau: Following a property tour in Macau and Singapore, the team at Jefferies said their confidence in a recovery is now higher.
Flutter: The US listing would be a “natural progression”, according to the team, who noted Flutter would seek approval from shareholders at the AGM in April before seeking a listing at the end of this year, with a primary US listing needing further approval in 2024.
The team at JMP, meanwhile, said the company “views it as likely” it will get 75% of shareholder votes in favor.
AGS: With the supplier having been approved to sell its EGM products in Colorado, Minnesota and Missouri, this could lead to an additional TAM of 40,000 units for the group, suggested Jefferies, giving AGS a “long runway of growth”.
Datalines – Iowa
’Kings gambit: Iowa remains one of the few markets where FanDuel isn’t the market leader. Instead, major rival DraftKings managed not only to extend its handle share in February, from 32% to 36%, but also grabbed the lead by NGR with 42%, up from 29%.
Over the course of 2022, DraftKings led FanDuel in handle by 28% to 24%, but FanDuel led NGR 31% to 28%.
Notably, while others, including Barstool and WynnBet, grabbed 16% of handle, it led to a mere 3% of NGR.
👑 DraftKings’ NGR and handle leadership in February in Iowa
Startup focus – ALT Sports Data
Who, what, where and when: Founded by Todd Ballard and Joe Dunnigan, alumni of GoPro, the Carlsbad, California-based company was launched at the start of 2022 with the aim of bringing odds pricing and affiliate marketing into the realm of alternative sports.
Funding backgrounder: The company closed a $2m seed round in July of 2022 from backers including the founder and CEO of GoPro Nicholas Woodman, Trinity West Ventures, Eberg Capital and IA Ventures.
The pitch: Ballard says ALT Sports’ approach is to not only bring odds and pricing data and trading services for new sports in the action, endurance, motor, outdoor and other alternative sports categories. “Our goal is to help operators access 80m-plus US new high-value and largely untapped high-frequency and high-value bettors.”
Ballard says there has been a “resoundingly positive” response. “Once Operators understand that we will not only provide the betting markets, but also cost-effectively drive and direct demand for the offerings, the commercial paradigm changes.”
The initial focus is on North America, with pending contracts with leading operators in the US and LATAM.
The company hopes to soon complete two or three integrations with tier 1 operators and affiliate deals with half-a-dozen operators.
What will success look like? “The opportunity for us to help expand their fan bases and deepen engagement is something we view as a rare opportunity, and even obligation, to give back to the sports that have given us so much,” says Ballard.
“We anticipate the future potential for a strategic exit, though we are not building this to sell,” he adds.
The week ahead
Tuesday sees Super Group report its Q4 earnings. Its last communication with the market came in late February when it announced it was selling its Digital Gaming Corp. business to Games Global.
In November, the company said FY22 revenues would come in at €1.15bn-€1.28bn, with adj. EBITDA at between €200m and €215m.
In Earnings+More this week, the latest Deal Talk looks at what FanDuel’s possible dual listing in New York says about London’s appeal as a listing hub for online gambling entities.
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Newslines
DraftKings has opened its retail sportsbook at the Boot Hill Casino in Kansas.
Elm Tree Partners, the company behind nextgen sportsbook platform SB22, has signed a strategic partnership agreement with Warner Gaming in Las Vegas.
What we’re reading
Politico: New York casino lobbying is a “petri dish for corruption”.
Calendar
Mar 14: Super Group
Mar 15: Sportradar
Mar 16: FL Entertainment
Mar 17: DraftKings investor day
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