BetMGM slashes promo spend
BetMGM’s promo slowdown, Betsson’s Q2 pre-announcement, shares week, sector watch – affiliates +More
Good morning. On the Weekender agenda:
BetMGM does the opposite of the rest of the market in May.
The evidence suggests Turkey boosted Betsson’s Q2 numbers.
DraftKings outpaces Flutter on YTD share price performance.
Affiliate media partnerships are under the spotlight in sector watch.
Jobsboard by BettingJobs features head of monetization and head of casino roles.
Against the grain, that's where I’ll stay.
BetMGM’s promo pullback
Analysis from Michigan, Pennsylvania and Maryland suggests BetMGM has significantly cut back on promotional spend.
Wot, no bonus? On the evidence from three of the states where data is made available on promo spend, BetMGM cut back on its bonuses and promotional spend in May by up to 40%+ as the so-called shoulder season of relatively little sports-betting activity got underway.
BetMGM’s pullback appears to have gone against the grain for the rest of the market, which contrary to recent commentary regarding a pullback in promotions actually upped spending in the three states in May.
In Michigan, total market promo spend rose by 19% YoY; in Pennsylvania it went up by 28% and in Maryland there was a 21% MoM increase.
The biggest increases in each market came from DraftKings, which has headed in the opposite direction to BetMGM and hugely increased its spend in the three states.
In Michigan, DraftKings upped its promo spend by 117% YoY, in Pennsylvania it soared by 226% YoY and in Maryland its spend rose by 81% MoM.
FanDuel also increased its promo spend in May, up by 40% YoY in Michigan, 26% in Pennsylvania and 13% MoM in Maryland.
The evidence of an unseasonal increase in promotions runs counter to the wider narrative of operators cutting spend as they collectively home in on adj. EBITDA profitability later this year and into 2024.
“We were surprised to see May spend tick up, both on a YoY and MoM basis in mature states,” said the team at Wells Fargo.
“Even in newer states such as Maryland and Ohio, promotional spend was up MoM, which was surprising given we are in the shoulder season period.”
💰 Promo spend in Pennsylvania and Michigan on the rise
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ICYMI
Dustin Gouker’s The Closing Line was this week added to the +More Media stable. This week’s edition looks at the penalties that have been handed out for athletes and suggests that some of them have been “disconnected from reality”
In Compliance+More, we reported on the news that Kentucky would be pressing the fast-forward button on its sports-betting plans with the aim of being up and running by the start of the NFL season.
In Earnings+More on Tuesday, our transaction tracker showed that $2.8bn of deals were announced in Q2, somewhat allaying fears over what macro squeeze might mean for raising capital.
Betsson pre-announces
Betsson kicks off the Q2 earnings season with above-consensus profits.
Not talking Turkey: Significant increases in central and eastern European and central Asian revenues as well as B2B earnings suggest Betsson’s boosted pre-announcement figures for Q2 are likely down to a resurgent Turkish market.
In the second quarter, revenue from B2B – which includes Betsson’s relationship with Turkish-facing, Malta-based Realm – was worth ~27% of the expected revenues of €235.5m-€237.5m. This compares with 17% this time last year.
Meanwhile, CEECA revenues were worth 43% of total revenues or ~€102m. Again this is a significant increase in share of revenues from the 33% seen in Q222.
At the same time, revenues from Norway – where Betsson is under pressure from the authorities over what they regard as illegal operations – fell back to 22% of total revenues from 27% in Q222.
Scale model: The predicted revenues represent a ~27% increase YoY, while predicted EBIT of €53.5m-€55m will mark an 88% increase. Betsson claimed its “scalable business model” helped contribute to the record profits.
Earnings in brief
STS: The Polish bookmaker recently swallowed by Entain and EMMA Capital in a deal worth £750m in June said Q2 NGR rose 26% to PLN170m (£32.7m), while GGR rose 14% to PLN298m (£57.3m), excluding discontinued operations in the UK and Estonia.
The company said new registrations over the period fell 17% to 52k while actives fell 14% to 301k.
Also this week, Entain said it had received antitrust approval from the Polish authorities for its takeover.
The shares week
A compare and contrast on YTD share price performance shows DraftKings far outpacing rival Flutter.
The market is up, DraftKings is up more: The move to New York for Flutter’s shareholders likely can’t come soon enough given the extent to which the shares of rival DraftKings have outperformed in the year-to-date.
While the UK-listed Flutter is up a respectable 40% in 2023, DraftKings has soared 175%.
🐢 vs. 🐇 DraftKings storms ahead of FanDuel on share price performance
DraftKings was given a boost on Wednesday by a note from analysts at the Bank of America saying they saw the potential for revenues to hit $5bn by 2025.
It said costs had also reached an inflection with the cost of revenue and marketing having “peaked”.
In the past five days, DraftKings’ shares are up over 21%.
PlayUp rumors
The troubled life of the Australian and US-facing operator might be drawing to a close.
Sell up: The CEO of PlayUp, Daniel Simic, has told LegalSportsReport that the fledgling US arm of the business is set to be sold to a listed entity and only up to seven of its staff will make the switch to new ownership.
PlayUp was at the center of a legal dispute with former US CEO Laila Mintas over a failed attempt to sell the business to now defunct crypto exchange FTX.
Subsequently, it was the subject of a failed $350m SPAC merger plan that imploded late last year.
Simic told LSR that PlayUp’s US operations had been set up in the expectation that the business would receive significant funding, initially from FTX. However, since its collapse “we’ve had to go back and rethink our strategy”.
LSR also reported that a former employee indicated they had not been paid since mid-June.
The article added that an internal email suggested operations in the US would be terminated if new funding didn’t arrive by June 30.
Sector watch – affiliates
Independence day: The latest media deal in the affiliate space came earlier this week when Gambling.com announced it had hooked up with The Independent in the UK, marking the affiliate’s first international partnership.
This makes it three deals for Gambling.com after similar partnerships with US publishing groups McClatchy, publisher of the Miami Herald, and Gannett (USA Today).
The deal involves the usual slate of betting tips and casino content, which will be aimed at enticing the publisher’s 20+m monthly uniques via a separate section of the website.
Charles Gilespie, CEO at Gambling.com, said all the company’s media partnerships were a “proven recipe for success”.
Walk the plank: Better Collective has also made much of its own media partnerships, which it sees as a main plank of its attempt to refashion itself as a digital sports media play. The reasoning is that it can extend its reach; in its capital markets day presentation last year it noted monthly visits could be doubled from 150m to 300m with the help of partnerships.
BC has deals with, among others, the New York Post, the Chicago Tribune and The Daily Telegraph in the UK.
Catena Media, meanwhile, has also jumped on the bandwagon, inheriting a relationship with NJ.com from BC.
Looking at the Indy deal, analysts at Roth MKM (which initiated on Gambling.com this week) said the increased reach from partnerships brought incremental revenue at a reasonable margin.
But partnerships also provide SEO benefits, the analysts suggested.
These improvements could yield “even greater benefits” by making websites “even more relevant within search results when popular media websites link in”.
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What we’re reading
We don’t need to talk about Dave: Erika Ayers tells the New York Post that Dave Portnoy will make the decision about whether he stays with Barstool. “He’ll figure that out. I don’t think he knows. Maybe he stays and does this.” Also, “the regulatory landscape is serious”.
Sphere of influence: Howard Stutz writes how the launch of MSG’s new Sphere made for a memorable July 4.
Newslines
LIV and let live: Micro-betting specialist provider Simplebet is to be LIV golf’s ‘official sports-betting innovation partner’ and as part of the deal will distribute data to betting operators and media. Chris Bevilacqua, CEO at Simplebet, said the deal was a “transcendent moment” for the sport.
Simplebet said it would soon be offering in-play betting on LIV tournament action.
Bally’s has announced a strategic partnership with live dealer provider Stakelogic, specifically aimed at offering the product into the Rhode Island market.
The Oakland A’s have applied for formal permission from the MLB to move to Las Vegas. The organization will need approval from 75% of team owners.
Kindred has launched its proprietary betting platform for its Unibet operations in Pennsylvania, the second state for launch after New Jersey.
Gateway Casinos, which operates 14 casinos in Ontario, has reached an affiliate marketing agreement with the Ontario Lottery and Gaming Corporation to promote the latter’s online offering to its customers.
RAW iGaming has purchased FunFair Games’ multiplayer arcade game portfolio for an undisclosed sum.
Eyas Gaming has chosen Kambi to provide a sportsbook platform for the launch of the Lance! Betting sportsbook in Brazil.
Calendar
Jul 20: Betsson
Jul 21: Evolution
Jul 26: Kambi, VICI (e), Churchill Downs (e)
Jul 27: Churchill Downs (call), VICI (call), Boyd Gaming, GLP (e)
Jul 28: GLP (call)
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