IGT sale on the cards
IGT’s strategic review, Entain’s TAB NZ and 365Scores deals, NC’s familiar pattern, sector watch – Saudi sport +More
Good morning. On the Weekender agenda:
IGT’s strategic review sends share soaring.
Entain reveals more detail on its TAB NZ and 365Scores deals.
FanDuel and DraftKings expected to grab the lion's share of North Carolina.
Saudi Arabia’s sport snatch comes under the sector watch spotlight.
Jobsboard by BettingJobs includes marketing director, head of CRM and creative director roles.
Up for grabs
IGT says sale of its gaming and digital businesses is on the table.
Reshuffle: IGT said it was “evaluating strategic alternatives” for both its global gaming and digital gaming units including a potential sale, saying it didn’t believe the full value of the business was reflected in the share price. The shares rose over 13% on the news.
IGT will be advised by Deutsche Bank, Macquarie and Mediobanca. No timeline has been set on any move.
Background: Recall, in Q1 IGT said the gaming segment generated revenues of $381m, up 17% YoY. PlayDigital also saw revenue rise 17% to $55m, while lottery revenue fell 5% to $602m. This left total revenue up 1% to $1.1bn.
A sale would ease IGT’s debt burden. Net debt in Q1 stood at $5.1bn or 3x leveraged.
B Riley analysts estimated that ~71% of its FY23 EBITDA of $1.7bn would come from lottery, with $452m coming from gaming and $77m from digital.
Follow the leader: A splitting of the business would mirror the moves made by rival Light & Wonder, which offloaded its lottery business to Brookfield for $5.8bn in April last year.
Truist analysts noted that while IGT CEO Vince Sandusky has always “extolled the synergies” of the three elements of lottery, gaming and digital, its rival had “got over” the idea and had “extracted value”.
The team added they saw “sizable potential for value creation” from a sales process, which could “also potentially benefit” the whole sub-sector.
Jefferies said the move was “prudent and positive” despite the uncertainty of the outcome.
The team noted that the combo of lottery and gaming has “not driven value to the share price”.
B Riley said an “unpacked” IGT would be worth more than the whole.
With a ladder and some glasses: Questions immediately turn to potential buyers and price. Jefferies warned against focusing only on US buyers, saying that might be “myopic”.
“We believe the broader global gaming market could have players seeking a US presence in slots as well as potential digital suppliers pursuing omni-channel offerings,” the team added.
The B Riley team agreed. An outright sale “showcases a relatively limited field of potential buyers”, but the pool is global and “extends beyond traditional gaming suppliers, including to digital pure-plays”.
Note, the gaming supply sector has been the focus for recent M&A after Aristocrat lodged a $1.2bn bid for NeoGames.
🚀 IGT shares on the move, up 23% in last five days
LNW SciPlay bid update
SciPlay said it has formed a special committee of independent directors to review and evaluate the May 18 offer from Light & Wonder to acquire the 17% of shares it doesn’t already own.
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ICYMI
On the Gambling Files pod this week, Jon and Fintan spoke to Fitzdares CEO William Woodhams, who gave an insight into how affordability checks were having an impact on his business.
Compliance+More featured his comments that a player shift to offshore “is happening”.
In the same issue, C+M also reported on this week’s drama at the Massachusetts gaming commission hearing into Penn/Barstool’s contentious ‘Can’t Lose Parlay’ promotion.
In Earnings+More, the breaking news on Wednesday concerned the move made on 888 by an investment group led by ex-GVC execs Lee Feldman and Kenny Alexander, which sent the beleaguered firm’s shares flying.
In the second edition of LosIngresos+Mas this week, a survey reveals 25% of Brazilians have placed a sports bet online and we have a report on how unregulated gambling in Chile is facilitating money laundering and organized crime. See the English language version below:
Entain updates
Company shares more details on its recent TAB NZ and the 365Scores deals.
Keeping TABs: Entain Australia and New Zealand CEO Dean Shannon said the group expects the 25-year TAB NZ venture to be profitable in year three following an initial investment period.
Entain’s strategic partnership with TAB NZ was announced in March, with the group paying an initial NZ$160m ($97.6m) this year and another NZ$100m due in 2024.
Shannon said around 30% of the NZ$600m betting market was currently being wagered with offshore operators.
The deal is based on a 50/50 gross profit share, with Entain responsible for marketing and opex of ~NZ$150m a year and a minimum NZ$150m annual return to TAB NZ in the first five years.
TAB NZ operates 500 retail outlets, but 80% of its business is conducted online. The group recorded a turnover of NZ$2.5bn in 2022 and has 250k active digital customers.
Scores on the doors: Entain CSO Sameer Deen explained that 365Scores’ strong presence in Mexico and Colombia will complement the company’s operations in Brazil. 365Scores’ audience has grown fourfold in the last three years to 18m MAUs and is among the top three live score apps in the LatAm region.
Entain paid £120m for 365Scores and expects it to deliver £15m-£20m in EBITDA in 2024. That figure is expected to grow by ~50% in 2025, which would bring down the acquisition multiple from 6-8x to 4-5x.
Same old, same old
North Carolina is likely to reproduce the familiar pattern.
The old one-two: With existing DFS databases in the state, FanDuel and DraftKings are likely to grab the lion’s share of North Carolina, which passed OSB legislation this week. According to the analysts at JMP, with no commercial land-based casinos in the state below the two, market shares for the mid-tier will be consistent with their respective US shares.
The team noted that an incremental 7% of the population is set to go live between now and North Carolina’s projected opening next June, including Kentucky, Nebraska and Vermont.
The timing of the go-live dates and the smaller size of the states in question will likely “smooth out the investment period” for the operators.
“Recent state launches highlight the discipline around go-to-market strategies,” the team added.
Not so straight A’s
The faltering attempt to bring Major League Baseball to Las Vegas will now depend on the outcome of a second special session of the state legislature.
Bottom of the ninth: The future of the A’s attempt to get Nevada to stump up $380m towards their new home is hanging in the balance after the opening day of the second special session of the state legislature was inconclusive.
Opposition was voiced from the Senate floor. “Can you explain to me why we need to provide hundreds of millions of dollars for a billionaire team to come to the Las Vegas Strip, on some of the most valuable property in the world, if we can’t provide funding for critical resources?” asked State Senator Rochelle Nguyen.
“The people that we represent don’t expect us to come here and rubber stamp [this],” Democrat Sen. Pat Spearman added.
The session will reconvene on Monday.
PointsBet nod
8 out of 10 cats: Eight of the top 10 investors in PointsBet have given their approval for the sale of the US division to Fanatics for $150m, absent any superior proposal. The eight represent 45% of the company’s share capital. The final vote will take place at the EGM scheduled for June 30.
Sector watch – Saudi sport
Saudi Arabia dominates the sporting headlines.
Just stop oil: The bombshell news that the PGA has caved in its battle for supremacy with LIV comes in the same week that control of Saudi Arabia’s top four soccer clubs was transferred to a sovereign wealth fund.
In a surprise statement, the PGA and DP World Tour said they would merge their commercial rights with the Saudi-backed rival.
In return the Saudi Public Investment Fund (PIF) will invest a rumored $3bn in the venture.
As Sportico put it, “it’s not a stretch to say that the Saudis have bought themselves a significant equity stake in professional golf”.
Different ball game: The news came in the same week that it was announced the four biggest soccer clubs in the Saudi Pro League are to be handed over to the control of PIF and state oil company Aramco as part of efforts to further boost the domestic league.
Custard tart: The clubs include Al-Nassr where Cristiano Ronaldo now plies his trade as well as Al-Ittihad, Al-Ahli and Al-Hilal.
By divesting its stakes in the clubs, the Saudi government hopes to further its ambitions to make the league one of the top 10 in the soccer world.
Silly money: The Saudi domestic league will soon see the addition of a further high-profile superstar bauble as Real Madrid’s Karim Benzema is reported to have signed a deal worth €100m a year with Al-Ittihad.
However, Lionel Messi appears to have spurned a rumored move to Al-Hilal for as much as $400m a year.
According to Bloomberg, the government apparently believes it can quadruple the money generated by its domestic soccer league to $480m.
Name that Toon: PIF is also part of the consortium that owns English Premier League club Newcastle United.
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Newslines
GB factors: The UK’s largest operators recorded a 5% YoY rise in GGY to £1.3bn in Q123. The period included the Cheltenham Festival and the UKGC noted that real-event betting GGY increased 13% to £555m, with retail betting GGY up 6% to £585m.
Slots GGY was up 2% to £552m, with the number of spins up 9% and monthly active accounts up 15% to 3.9 million during the period.
Maverick Gaming has sold Palace and Chips Casino in Lakewood, Washington, to Oak Street Real Estate Capital for $27m. Maverick purchased the property in 2016 for $4.5m.
BetMGM launched its mobile sports betting app in Puerto Rico in partnership with Casino del Mar at La Concha Resort. It is the first mobile sportsbook to launch in the US territory.
Parimatch: A petition with more than 25k signatures to lift sanctions against the bookmaker will be reviewed by Ukrainian President Volodymyr Zelenskyy. Zelenskyy penned an executive order in March that instructed betting companies, including Parimatch, to cease operations.
Calendar
Jun 13-15: Canadian Gaming Summit
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