Las Vegas Sands’ London connection

LVS continues its Macau push, LeoVegas retreats, DraftKings’ execs cash in, analyst takes +More

Earnings+More

May 30, 2023

Good morning. On today’s agenda:

LVS opens the Londoner and pledges more Macau investment.
LeoVegas revenue droops on gray market exits.
DraftKings insiders sell into share price rally.
iCasino operator Betty is the startup focus.

Come out of the cupboard, you boys and girls.

Londoner calling

Las Vegas Sands unveils its latest mega property in Macau.

Maybe it’s because I’m a Londoner: Las Vegas Sands has opened up its $2bn British-themed Londoner Casino on the Cotai Strip, with CEO Robert Goldstein asserting that LVS’s investment in Macau is likely to far outstrip what was pledged as part of the recent concession process.

Talking to CNBC, Goldstein pointed out that the $3bn-$4bn of pledged investment was “irrelevant”.
“We’re going to spend much more than that,” he told the channel. “We are going to spend a lot more than that in Macau if we are able to.”
“Our actions speak very loudly,” he added.

The old bull and bush: Recall, Goldstein said at the time of LVS’s Q1 earnings that the company was “raging bulls” on the prospects in Macau. Revenues from the gambling enclave rose 132% YoY to $1.28bn, while Macau property EBITDA bounced back to profit at $398m from a $11m loss this time last year.

He told analysts the recovery in Macau “wasn’t even at the first tee yet”.

HP sauce: The Londoner includes five hotels, nearly 6k rooms and a replica Big Ben and House of Parliament, as well as a ‘changing of the guard entertainment extravaganza’.

Jazz hands: David Beckham was among the guests of honor at a gala dinner who were serenaded by Brit-jazz piano-keys botherer Jamie Cullum.

Analyst take: The team at Wells Fargo noted investors are “frustrated” with the Macau story where the market has moved swiftly from reacting positively to the merest sniff of a recovery at the start of 2023 to “shrugging off a GGR recovery that is surpassing expectations”.

Instead, investor concerns now center on China macro worries, a slowing luxury retail market and the potential for new virus variants.
“We revert back to the US reopening playbook where travel/leisure demand remained robust despite short-lived bouts of uncertainty,” the analysts added.

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LeoVegas decline

Exits from gray markets take their toll.

Squeak like a mouse: A retreat from some unspecified unregulated markets caused a 4% fall in the MGM Resorts-owned operator’s revenues, while the company blamed worsening economic conditions in Sweden for a drop-off in its home market.

Revenue came in at €95m, which ex-closed markets and on a constant currency basis represented a 5% rise YoY.
The company registered a loss of €3.1m at an EBITDA level compared to a profit of €14.1m the year previous.

Norway knowhow: LeoVegas does not specify which gray markets it has exited but a big question revolves around whether it is still involved in the Norwegian market. The company rarely made mention of Norway in its pre-MGM financial reporting but did say it operated in the Nordics.

The other signal came in Aug20 when it announced it had joined the Norwegian Industry Association for Online Gaming.
Norway takes on a greater importance with what is assumed to be MGM/LeoVegas’s next target of Kindred, which has a more explicitly stated Norwegian market presence.

Tales of the expected: More explicitly, after quarter-end, LeoVegas relaunched operations under the Expekt brand in Denmark.The pre-MGM LeoVegas bought the brand in Mar21 for €5m from Betclic.

During Q1, via LeoVegas, MGM Resorts completed the acquisition of Push Gaming for an undisclosed sum.

Cash flow: The company noted its outstanding bond of €34m would be paid off by Dec23. It should be noted it is the bond that accounts for LeoVegas having to issue separate earnings statements. These statements will cease following the bond repayment.

DraftKings insider sales

Top executives have taken advantage of the share price rally.

Cashing in: Founders Matt Kalish, Paul Liberman alongside CFO Jason Park are among the founders and executives at DraftKings to have taken advantage of this year’s rally in the company’s share price and bank multi-million dollar profits on the sale of part of their holdings.

According to SEC filings, Kalish sold $9m of shares in the week to May 12, Liberman over $2m worth and Park nearly $3m.

As good as it gets: As of close on Friday, DraftKings’ share price was up nearly 112% YTD, although the recent swathe of sales saw it clipped by 6% last week.

🦅 DraftKings’ share price has soared this year

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Analyst takes

Aristocrat: The team at Macquarie believe Aristocrat’s move for NeoGames will be a knockout bid and will easily achieve the needed 67% approval from shareholders. Given the 100% premium represented by the $1.2bn offered and the “healthy” multiples, the analysts “don’t believe there is much risk of another bid coming in”.

Light & Wonder: The company’s dual listing became operational last week but brought with it little apparent upside. Indeed, as Jefferies noted, the share price fell 5% last week. Also noting the move on NeoGames by Aristocrat, the Jefferies team suggested it showed how difficult it might be for LNW to achieve its stated aim of $1.4bn in EBITDA by 2024.

Earnings in brief

Genting: Revenue for the operator behind Resorts World Sentosa was up 38% to RM5.8bn ($1.26bn), while EBITDA rose 41% to RM1.8bn off the back of the continued perkiness in Singapore. There was also a strong performance from Resorts World New York and its sister casino in Las Vegas.

Separately, Genting Malaysia, which operates the Resorts World Malaysia property, saw group revenue rise 33% to RM2.3bn while EBITDA was up 43% to RM593m.

Camelot: Now owned by Allwyn, the operator behind the UK National Lottery, said sales for the FY23 came in at £8.9bn

Startup focus – Betty

Who, what, where and when: Betty is a New York-based iCasino operator founded by Justin Park, Jordan Tuch, Vlad Pavlov and Chavdar Dimitov. Park and Tuch both previously worked at QL Gaming before it was acquired by Audacy in 2020.

Undiscovered country: Pavlov says the opportunity for Betty lies in iCasino’s relative obscurity. “Thirty-plus states have legalized sports betting, but only six states have done so for iCasino,” he points out.

“Despite iCasino’s share of real-money gaming, it is overshadowed by sports betting and seldom discussed,” he adds. “Therein lies the opportunity.”
Having raised $1.8m in pre-seed funding in March 2022, the group closed a seed round of $5m in February.
Backers include Karlani Capital, CEAS Investments, Courtside Ventures, Gaingels, OCA Ventures, Subversive Capital, 305 Ventures, Velo Partners and are complemented by a syndicate of 20+ angel investors such as Benjie Cherniak and Sandford Loudon.

Modern times: iCasino is an “afterthought”, suggests Pavlov, due to it being a “fundamentally different” audience to sports betting. "The North American gaming market is focused on young sports bettors,” he adds.

“iCasino is an afterthought and a cross-sell opportunity at best and we are introducing a modern casino product that super serves the online casino enthusiast.”
Betty says it has identified a large casual audience of particularly women slot players, who are “underserved by existing brands, which, at their core, are sportsbooks”.
Investor response was very strong and “despite the challenging market conditions, we had high investment interest", says Park.
Betty is set to launch in Ontario this quarter and has initiated conversations for potential market access deals in the US.

Tiers of a clown: The plan is to “establish top-tier unit economics” in Ontario and build the brand up as a North American casino over the next 12 months.

Growth company news

Simplebet has signed a micro-betting provision deal with Hard Rock Digital for NBA, MLB, NFL, College Football and College Basketball short-form markets.

Fantasy sports and OSB operator Underdog has signed up with geolocation provider GeoComply.

Note, in November last year Underdog previously announced an exclusive partnership with rival geolocation service provider Xpoint.

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Career paths

GiG: Following the splitting of the business as part of the recent strategic review, CEO Richard Brown has announced his intention to quit at the end of the year.

GiG said the leadership of the media arm will move to the current management team led by Jonas Warrer, while a new CEO will be sought for the platform business.

Jonas Engwall has left the Evolution board with immediate effect.

Ruby Yam will join the Playtech board as a NED in June and John Krumins will be stepping down in September.

Chris Reid has been promoted to account director at gaming content provider 1X2 Network.

Newslines

The hopes of the Oakland A’s to effect their switch to Las Vegas hang on an upcoming vote in the Nevada legislature. A bill allowing for $380m of state funding is before the Senate but only 11 days of the session remain.

Gaming affiliate XLMedia has disposed of its personal finance assets including Investor Junkie and Young & Thrifty for $1.3m. The cash generated will go towards day-to-day expenses.

Recall, last Friday XL issued a warning that revenues in H1 would “inevitably” be below the levels achieved last year.

EveryMatrix will power the new online casino offering for KingMaker’s sports-betting brand BetKing in Nigeria.

What we’re reading

“Goalkeeping was a particular issue, with Danny Ward struggling, and for Leicester’s third concession in this game, he dropped a cross at the feet of Jesus.” The Athletic’s season summary.

Calendar

May 30: Intralot

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