Aristocrat talks up online
Aristocrat talks up online
Aristocrat’s H1 numbers, rudderless Kindred, VICI/Century deal, no fear DraftKings +More
Good morning. On the Weekender agenda:
Aristocrat talks up its online capability.
Kindred CEO steps down.
DraftKings says it holds no fears over Fanatics.
VICI does another Canadian casino sale-and-leaseback with Century.
Sector watch looks at the Phoenix Suns’ bid for broadcasting independence.
Jobsboard by BettingJobs includes media buyer and head of sales roles.
'Cause I dance like an aristocrat.
Nouveau riche
On the verge of a transformational acquisition, Aristocrat talks up its online prospects.
Splashing out: Speaking during the H1 earnings call with analysts, CEO Trevor Croker said the $1.2bn NeoGames deal will “truly be transformational” for Aristocrat’s online business. “RMG is a logical and complementary growth and diversification opportunity,” he added.
Croker noted that Aristocrat’s existing Anaxi online RMG business signed content agreements with BetMGM, Caesars and Penn over the period and post-close it has signed up with FanDuel.
He said Aristocrat now had 55% coverage of the US iCasino market by GGR, with the aim to reach 70% within the next five years.
Croker suggested it was still effectively a startup business and that Anaxi is a “building strategy”, and it will require some investment to actually generate long-term revenues.
He said that in the lead-up to the NeoGames completion in 12 months time, the focus would be on integrating Roxor (which only closed in January).
Position of strength: Aristocrat saw gaming revenues rise 23% while profits rose 17% in the half, with the Americas segment revenues and profits up 17% and 12% respectively. Total revenues came in at A$3.1bn, up 12%, while pre-tax profit rose 16% to A$817m.
Its gaming operation footprint now stands at 61k units with Croker saying the performance of the gaming business exceeded all Aristocrat’s major competitors.
“We are continuing to take share and that’s coming from product innovation and hardware innovation,” Croker told the analysts.
“It’s not just about all boats are rising and we’re getting a bit of that,” he added. “We’re actually taking share at the same time.”
Mr Brightside: Americas CEO Hector Fernandez noted that market sentiment remained “incredibly positive”. “We’re definitely seeing resilience,” he said of the consumer environment.
He noted that Aristocrat’s upcoming NFL-based game was the “most anticipated” by customers, noting that it would likely appeal most strongly to a younger demographic.
In the Pixel business, social casino showed continued strength, but was dragged down by casual games and RPG strategy downturn.
Pixel United remains the number one in social slots.
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Angstrom/Entain M&A rumor
M&Angst: Sources have confirmed social media rumors suggesting Entain is considering a buyout of UK-based pricing and analytics startup Angstrom for up to €200m. Entain told E+M it doesn’t comment on market rumors while Angstrom was uncontactable for comment.
The move would be in line with Entain’s recent strategy of pursuing bolt-on acquisitions.
Most recently, it snapped up live score app 365Scores for $160m and before that it added esports-betting odds provider Sportsflare for $13m.
A recent note from EKG said an acquisition of Angstrom by Entain would “provide a welcome boost” to BetMGM’s SGP and pricing capabilities and would “also take Angstrom off the market and away from rivals”.
EKG said they understood that DraftKings and Penn/theScore had looked at Angstrom but “ultimately balked at the price tag”.
ICYMI
In Compliance+More this week, the news that a committee of UK MPs has decided that crypto trading is gambling stirred up all sorts of reaction among the cryptoland faithful. Needless to say, the UK Gambling Commission, perhaps wisely, offered no comment.
In Earnings+More, the news was dominated this week by the two big M&A deals announced on Monday, with Fanatics finally confirming the long-rumored deal to buy PointsBet and, as aforementioned, Aristocrat’s acquisition of NeoGames.
In Sharpr this week, the big news was that Valve, publisher of popular esports titles including Counter-Strike and Dota 2, has seemingly taken aim against skin gambling in a recent update to its online code of conduct.
Meanwhile, in the Gambling Files podcast this week, Fintan and Jon interviewed Light & Wonder's Kimberly Cohn, who chatted about what makes games a success.
Kindred all at sea
CEO Henrik Tjärnström’s resignation, following on the heels of the CFO’s departure, leaves the company rudderless at a crucial time.
The importance of being earnest: The news that Kindred CEO Henrik Tjärnström has resigned with immediate effect, to be replaced by Nils Andén on an interim basis, has opened up questions about the company’s future given the ongoing strategic review process.
The resignation, with immediate effect, comes a matter of days after it was announced CFO Johan Wilsby will be leaving the company.
It ignited speculation about the progress of the ongoing strategic review, with commentators speculating about the implications of the departures on a process that remains clouded.
Strom warning: Sources were split over whether or not Tjärnström has lost favor with Unibet founder Anders Ström with whom he was known to be close.
Tjärnström’s departure at the very least signals some disagreement at the highest levels over the way forward.
One source suggested that activist shareholder Corvex was not “calling the shots”.
🚧 Investors are unsure over impact of Kindred CEO departure
SciPlay time
Majority shareholder Light & Wonder makes another bid to control the social gaming operator.
It’s only me: Nearly two years on from its last attempt to gain full control over the company where it already owns 83% of the shares and 98% of the voting rights, Light & Wonder has returned with a better offer valuing the rest of the shares it doesn’t own at $422m.
The company said the move would “unify” LNW’s businesses and enable “seamless collaboration” with SciPlay, which would add further momentum to the “already robust” cross-platform strategy.
It added that the combination would provide “flexibility” to invest cash across the enterprise.
Analyst takes: Truist welcomed the move, suggesting it was a “clearly superior” offer to the last time LNW came knocking and was consistent with comparable transactions in the market, including Sony’s bid for Rovio.
Deutsche Bank said the offer was “considerably more compelling” than the prior offer due to the larger equity premium (29% versus 11% in the 2021 bid), its all-cash nature and the “modestly higher” adj. EBITDA valuation.
Sale of the Century
VICI has expanded its Canadian footprint via another deal with Century.
100 club: VICI has acquired the real estate assets of four of Century’s Canadian casinos for $165m on a sale-and-leaseback basis and in return for $13m of annual rent. The deal is VICI’s second in Canada following the deal for four Pure Canadian Gaming properties in January.
The new arrangement is also the fourth deal with Century, meaning VICI now collects annual rents of $56m from the company.
Century said it will use the proceeds from the sale to refurbish its Nugget property in Reno and potentially pay down debt.
Putting the case: The team at CBRE said the deal highlighted how VICI could grow long-term relationships from initially one-off deals. Plus, it is also a “perfect example” of how VICI and REITs generally, can “help casino companies grow more efficiently and quickly when conventional forms of financing may be unavailable, insufficient or too expensive”.
No fear DraftKings
DraftKings says the imminent entry of Fanatics is no reason to worry.
Magimix: Asked during a Needham tech and media conference about Fanatics’ acquisition of PointsBet, DraftKings CFO Jason Park said “we're always ready for new competition”, but that the “tables were pretty set” with FanDuel and DraftKings accounting for 70-75% of the market.
“It’s no coincidence those top two players are vertically integrated,” he added. “They’re in most states, can deploy national marketing (and) have the daily fantasy database, which provides a real cross-sell competitive advantage.”
During a separate call with MoffettNathanson, CEO Jason Robins said that as “promotional intensity” was coming down, revenues were going up.
He added that it was still growing in longstanding states such as New Jersey. “We expect many years of robust growth, even without new state launches,” he added.
Park said the group’s management of customer cohorts was “the single most misunderstood part of the business model”
“Customer cohorts within that first year (of launch) are now paying back faster and the state turns cash flow positive much faster”.
Earnings in brief
Gambling.com: The gaming affiliate said it had exceeded internal forecasts after reporting a 36% rise in Q1 revenues to $27m and a 49% leap in adj. EBITDA to $10.7m. Alongside the growth in North America, where revenue rose 33% to $14m, it said it had seen particular strength in iCasino globally.
The company raised its 2023 revenue target to $95m-$99m and prospective adj. EBITDA went up to $33m-$37m.
Sector watch – streaming
Diamond days: News that the Phoenix Suns NBA franchise had seen its move to set up a free-to-air streaming service outside of its agreement with Diamond Sports Group blocked by a bankruptcy court has brought the spotlight back onto regional sports networks and the prospects of Bally Sports, the RSN the casino group operates through DSG.
The Suns and its Women’s NBA team the Phoenix Mercury became the first US franchises to terminate their RSN contracts when they announced deals with Gray Television and the streaming tech provider Kiswe in late April.
Setting sun: The move followed the expiration of their contract with Bally Sports Arizona, but DSG said it had the right to negotiate a contract extension and sued the Suns, with the court finding in favor of DSG.
The Suns said the decision to end the DSG contracts would cause a short-term financial hit, but team owner Mat Ishbia said the new arrangement would boost viewership figures from 800k to 2.8 million households per game.
"We're not focusing on money. We're focusing on winning, success and taking care of fans, taking care of the community,” he told ESPN.
As the largest RSN operator in the US, DSG has for many years been able to charge consumers high prices for cable bundles.
Untying the knot: But with increasing numbers of those households cutting the cord and opting for cheaper and more flexible streaming packages, RSNs and channels such as Bally Sports are left highly exposed to those market changes as they face potential shortages of content and viewers.
Recall, Sinclair Broadcast Group subsidiary DSG paid $10bn for the networks in 2019 and operates 19 RSNs under the Bally Sports brand.
Network effect: Meanwhile, DraftKings co-founder Matt Kalish announced the launch of the group’s streaming service DraftKing Network, which it described as its “own 24/7 FAST channel dedicated to sports fans” on Samsung TV Plus. The service will feature sports and betting content presented by personalities such as Dan Le Batard and Ross Tucker.
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What we’re reading
The shame of it: Football should be ashamed about Ivan Toney’s ban, says The Athletic.
Newslines
Light & Wonder has received approval for a secondary listing in Australia.
Lottomatica has issued two new tranches of debt totalling €1.11bn, which will go towards retiring existing debt.
Galaxy Gaming and Evolution have signed a 10-year table games content deal.
Calendar
May 24: Super Group, Rivalry
Jun 8: Gaming in Holland
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