BetMGM hits profitability in Q2
BetMGM’s milestone achievement, Kambi’s parting shot, Raketech earnings in brief +More
Good afternoon. On today’s agenda:
BetMGM says it hit profitability in Q2 with revenues in line.
Kambi takes a parting swipe at unambitious Penn.
Raketech ups its guidance for the year.
And it looks like we might have made it.
BetMGM profits
The second quarter brings EBITDA positivity as H1 revenues near a billion.
On the good ship lollipop: Adam Greenblatt, CEO at BetMGM, said the company was on track to build a “scalable, sustainable” business after announcing it had hit EBITDA profitability in the second quarter, adding that it will be “self-sustainable” from the second half onwards.
This comes despite the unplanned investments in launches in Kentucky and North Carolina that were not originally planned for 2023.
It said that each annual cohort of players acquired between 2019-22 had delivered positive contribution profit in Q2.
By the numbers: BetMGM achieved revenues of $944m in H1, up 25% YoY, meaning it is on track to at least hit the year’s target of between $1.8bn and $2bn. Looking at the example from last year, analysts at Jefferies suggested the weighting towards H2 would see revenues come in at $2.2bn.
Revenues in H1 were split almost equally across each quarter at $470m and $474m respectively.
BetMGM said overall market share across the 26 states in which it has operations, including Ontario in Canada, was 18%. In iCasino, market share stood at 27%.
As per yesterday’s E+M Data Month, both figures are down on the Q422 number; overall, it was 19% in Q4 while iCasino stood at 30%.
It said its OSB share was at 11%, although data from Wells Fargo suggested it is actually at 8% share of US GGR.
“As observed in state data, BetMGM’s market share slipped a bit,” commented the analysts at Wells Fargo.
Bank of Mum and Dad: The statement noted there will be no need for any more investment from the joint venture partners MGM Resorts and Entain, other than the previously announced $150m cash injection.
It added that recent corporate moves from its parents, including Entain’s acquisition of Angstrom and MGM Resorts’ tie-up with Marriott, saying that combined they would “accelerate” BetMGM’s “product evolution and its access to players”.
The company noted it was “on track” with the rollout of its single account, single wallet.
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A lover spurned
Even as Kambi extolled its new deal with Bally’s, it offered a parting blow to Penn.
Don’t let the door hit you on the way out: Kambi would appear to be still smarting from Penn Entertainment’s departure as a client, which was completed earlier this month. Pointing to state-by-state data showing Barstool’s market share declines, Kambi claimed the operation “did not keep pace” with the competition.
It said that was in part due to a decision not to adopt product improvements and because of the previously communicated reduction in marketing spend.
Recall, Penn moved Barstool to its in-house platform for which Kambi will receive early termination fees of €15m.
The company noted that the €15m will be recognized over the next five quarters.
Shape shift: CFO David Kenyon said Penn was worth 10-15% of revenues and that in the final quarters that had trended toward the bottom end of the range. Revenues rose 24% to €42.9m but more than half the growth was due to the addition of Shape, acquired in September last year and which contributed €3.2m of the €8.2m YoY uplift.
Adj. EBITDA rose 11% to €12.9m, operating profit dropped by 25% to €3.7m.
Cash balances fell back €17m to €57m as the company paid back the €7.5m convertible bond previously held by former parent Kindred and completed €7.2m of share buybacks.
Out with the old, in with the new: Moving in the opposite direction to Penn is Bally’s which opted to can its in-house OSB proposition in May and move to Kambi. It said it hopes to roll-out a new Kambi-powered sportsbook in seven states by the end of the year.
CEO Kristian Nylén said it was a “major signing”. He noted that Bally’s has the option in the future to acquire a version of Kambi’s source code.
He noted that as part of the agreement, Kambi had agreed to development work that would “take up quite a lot of our resources”.
Over the period, Kambi also extended deals with BetPlay, Paf and LeoVegas and since close has signed up with Eyas Gaming for the Brazilian market.
Earnings in brief
Raketech: The affiliate pre-announced its Q2 revenues and upped its guidance for the year after seeing stronger than forecast results from its sub-affiliate network, with revenues expected to come in at €17.5m, a 54% YoY rise, while EBITDA is set to come in 42% up at €5.4m.
The increases mean the company has upped its guidance for the full year to €65m-€70m from €60m-€65 in revenues and €23m-€26m in EBITDA, up from €20m-€24m.
Datalines
Michigan: The trend of increased GGR even while handle continues to fall was in evidence once again in the latest data from Michigan. In June, total sports-betting GGR was up 13% YoY to $17.9m on handle that fell 19% to $236m.
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Newslines
Fanatics has announced plans to open a retail sports book in Columbus, Ohio’s Arena District, in partnership with the Columbus Blue Jackets in late August. The sportsbook will be adjacent to Nationwide Arena.
PAGCOR is to open an online casino under the Casino Filipino brand as early as the first quarter of next year.
Bragg Gaming has signed a new global distribution agreement with 888, which will see content rolled out with William Hill in the UK, Mr Green in Italy, Sweden and Denmark, and 888casino in Italy for the first time.
EveryMatrix has announced it will provide its CasinoEngine integration platform to WynnBet in New Jersey, with planned expansion into other US states.
Calendar
Jul 26: Churchill Downs (e), VICI (e)
Jul 27: Churchill Downs (call), VICI (call), Boyd Gaming, GLP (e)
Jul 28: PointsBet, GLP (call), Lottomatica
Jul 31: Golden Entertainment
Aug 1: Caesars Entertainment, IGT
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