Activists pile pressure on 888
Activist investor ups 888 stake, Betsson acquires betFIRST, Entain’s share drop, sector watch – sports streaming +More
Good morning. On the agenda this weekend:
More activist investors rock up at 888.
Betsson joins the local hero party with Belgian buy.
Entain sheds value on back of £600m rights issue.
Sports streaming is the subject of this week’s sector watch.
Jobsboard by BettingJobs features marketing director, legal counsel and iGaming consultant roles.
888’s high stakes
Hedge fund HG Vora is the latest activist investor to turn up on the 888 shareholder register.
Buses: A second activist investor has unveiled a stake in 888 a week after it emerged that a group of senior gaming executives led by ex-GVC chair and CEO Lee Feldman and Kenny Alexander had amassed a 6%+ holding in the struggling operator.
In a stock exchange update on Wednesday, HG Vora Capital Management said its holding had risen to 5.5%, which took it above the disclosure threshold.
HG Vora already held a minor stake in the business but added to its holding in the wake of the news from Feldman and Alexander’s FS Gaming Investments.
Sources suggested HG Vora is backing the attempt by FS Gaming to get Alexander installed as CEO, Feldman as chair and another industry figure Stephen Morana as CFO.
Form guide: The New York-based HG Vora is run by former Goldman Sachs banker Parag Vora. It has previously appeared as an investor in the sector at Penn Entertainment (Penn National as was) and William Hill, where it revealed a 5% stake a matter of a fortnight before the company was bought by Caesars Entertainment.
In the wake of the news regarding the new stake, the 888 share price continued its recent climb, now up nearly 79% since June 5.
King Kenny: E+M revealed on Monday this week that the new investors had plans to wrest control of 888 from the present board.
🚀 888 on a tear with activist vigor, up ~47% in past month
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ICYMI
M&A dominated the headlines this week as Earnings+More led with the news on Wednesday that Entain has offered £750m for Polish bookmakers STS. The bid came via the Entain CEE JV with EMMA Capital and saw Entain raise £600m via a rights issue.
Also this week, the latest edition of Deal Talk looked into the potential for a regtech roll-up as interest in compliance service providers within the space ramps up.
Compliance+More this week debuted its new monthly edition The Token Word, which will be covering developments in the crypto space. Issue 1 dealt with the news of the SEC’s recent moves against both Binance and Coinbase.
Also this week, North Carolina and Vermont got the necessary signatures from their respective Governors for OSB, while Rhode Island edged close to iCasino.
LosIngresos+Mas this week reported, in both English and Spanish, that Entain expects 365Scores EBITDA to grow by up to 50% by 2025.
While the discussion about gambling regulation in Brazil could affect the industry throughout LatAm.
Betsson’s Belgian buy
Operator is the latest to snap up a local hero with €120m acquisition of Belgium's betFIRST.
Premier position: The Stockholm-listed Betsson has bought out the Belgium-based betFIRST, the operator of both online and retail betting in the country. The deal constitutes €117m in upfront cash and a €3m earnout, and represents a multiple of 10x betFIRST’s estimated 2023 EBITDA.
In 2022 betFIRST generated NGR of €51.2m and adj. EBITDA of €10m.
The company was established in 2011 and consists of an OSB and dice games proposition along with 450 points of sale in Belgium and one gaming arcade.
Completion of the deal is slated for early July.
Touché: Concurrently, Betsson has announced a market access partnership for Belgium with France-based casino operator Partouche. The terms of the deal were not disclosed.
Partouche holds a land-based casino license in Belgium, which can be extended into the online realm.
Partouche earnings in brief
GGR was up 14% in the company's Q2 (Feb-Apr) to €169.1m YoY, continuing the rebound seen in Q1. In France, attendance rose 18%, helping to push a 14% rise in revenue to €152m.
DK holds Mass. lead
DraftKings extends its home state dominance.
Home field advantage: DraftKings marginally extended its leadership in Massachusetts in May, grabbing 51% of GGR vs. the 48% share it controlled in April. Rival FanDuel lost ground in its chase of the market leader, down to 33% from 36% the month previous.
BetMGM also gained some marginal ground, up 1% MoM to 9%, while WynnBet managed to get itself on the board with a 2% share after posting a dismal <1% in April.
The debuts for betr and Fanatics – both with only a partial month of operation – saw them make negligible returns.
Total GGR was $62m, up slightly on the $60m in April, helped by improved hold (~13% vs ~10%).
Handle across land-based and OSB came in at $454m, down 22% MoM.
👑 DraftKings extends home advantage
The shares week
The discounted rights issue saw Entain’s share shed over 6% this week.
Entain managed to get its £600m rights issue away in order to pay its share for the acquisition of STS but at the cost of investor faith in the company’s strategy. The new shares were issued via a combined retail and institutional offer at a discount of 6.9%, but the shares fell by 8.7% on the day of the announcement.
Sources pointed out the STS acquisition was completed at a higher multiple than Entain currently trades on.
The £750m for STS represented a multiple of 11x 2024 EV/EBITDA. Entain currently trades on a multiple by the same measure of ~9.4x.
Jefferies said the negative share price reaction was caused by the “unexpected” share issue, exacerbated by the over-funding.
Entain said $150m of the total raised would go towards unspecified M&A.
🙃 Not impressed: share price reaction suggests investor disappointment
Sector watch – sports streaming
Swedish-based streaming service Viaplay issues a midnite profit warning.
Alarm call: The self-styled competitor to Netflix gave the market a rude awakening in early June when it issued a press release in the dead of night – 2am local time in Stockholm – saying it would miss its revenue targets and that CEO Anders Jensen had been ousted as a result.
Instead of producing a promised operating profit in Q2 of ~SEK350m ($33m), the financial update said the company would instead be posting a loss of SEK700m.
Explaining the worsening prospects, the company said its cost-cutting efforts had failed to keep pace with the slowdown in revenues.
Among its sports properties, Viaplay has exclusive live rights to La Liga in Spain, the Scottish League Cup, Elite Ice Hockey League, and European rights to NHL and NASCAR and Irish rights to some EPL games.
The great switch off: The company blamed the cost-of-living crisis for its woes, suggesting it was seeing higher churn levels and falling subscriptions.
Meanwhile, the FT also reported this week that Italy’s Serie A is in talks with private equity firms over a potential sale of a stake in its own future media rights. The league is working with advisers at the investment bank Lazard, which would see PE take a 10-20% stake.
However, a stake sale will only progress if Serie A doesn’t manage to raise what it considers to be a fair value for its rights.
The next rights deal will start in 2024. The current rights are shared jointly by Sky Italia and DAZN.
Earnings in brief
Allwyn’s CEO Robert Chvátal said a mix of organic and M&A-led growth had enabled the group to enjoy an 80% YoY rise in preliminary Q1 revenues to €1.6bn, while adj. EBITDA was up 28% to €347m.
The company finalized the acquisitions of Camelot’s UK and US lottery operations, with the Q1 figures reflecting “continued progress in our inorganic growth strategy”, said Chvátal.
Danske Spil: Q1 revenue rose 8% to €163m while operating profit was up 10% to €119m in Q1. The company confirmed prior guidance for FY revenues of €671m-€698m and net profit of €228m-€241m.
Paf: The monopoly operator – which this week completed the acquisition of 888’s Latvian business – saw FY revenues rise 23% to €166m, while profit was up 29% to €44m.
Golden Matrix: The online platform provider said Q2 revenues rose 21% to $10m, while net losses for the quarter were pinched slightly to minus $550k.
The company said it has agreed to extend the date and amend the terms of the agreement to buy Meridianbet announced in January.
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What we’re reading
By the buy: The EKG Line looks at the potential buyers of any up-for-sale IGT assets.
Newslines
A’s get the nod: The Nevada Senate and Assembly have both given their approval to a bill that authorizes $380m of public funding to go towards building a stadium for Major League Baseball’s A’s franchise. Gov. Joe Lombardo signed the bill yesterday.
The site of the stadium is owned by the GLP REIT, which will also contribute $175m to the build.
Churchill Downs has announced it has entered into an agreement with the city of Richmond, Virginia, for a $562m resort casino. The agreement is subject to a local referendum and certification by the state lottery department.
Gambling.com shareholders including chair Mark Blandford have downsized their holdings via the placement of 4m shares this week. The three sellers, which include Edison Partners and Gerard Hall, remain as substantial shareholders. The shares fell over 12% on the day.
EveryMatrix’s CasinoEngine platform exceeded €4bn in monthly handle while GGR surpassed €150m.
LeoVegas has initiated an early redemption of an outstanding $65m in floating rate bonds.
BetVictor has become BVGroup as part of a corporate rebrand.
Lottery.com is once again trading on Nasdaq. The company was delisted earlier this year over reporting failures.
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