Wynn calls online retreat
Wynn calls online retreat
WynnBet downsized, 888 leads the week ahead, Portnoy shares exit, startup focus – Inside The Pocket‘s survivor game +More
Good morning. On today’s agenda:
WynnBet calls it quits in eight states, makes online staff redundant.
New 888 boss Per Widerström faces the analysts for the first time.
News of a potential Portnoy shares exit hits Penn.
Analyst takes on Inspired, Everi and DoubleDown.
Startup focus looks at Inside The Pocket’s $100k F2P gamble.
Say I'm there for you, but I'm out of time.
WynnBet downsized
WynnBet cuts its online footprint to just four states – for now.
Pulling out: Wynn Resorts has sent out redundancy notices to the majority of WynnBet staff and fired its interactive president Ian Williams as it announced it had ceased operations in eight states with immediate effect. According to multiple sources, letters were sent out via email late on Friday.
The states affected are New Jersey, Arizona, Colorado, Indiana, Louisiana, Tennessee, Virginia and West Virginia.
Wynn said its operations in Nevada and Massachusetts – both home to its US land-based casinos – would continue unaffected while its New York and Michigan operations remain under review.
The company only relaunched its single-signup WynnBet app in six states on August 4.
Blame it on the promo: Blaming the need for “outsized” marketing and promotional spend, Julie Cameron-Doe, CFO of Wynn Resorts, said there were “higher and better uses of capital deployment” for the company’s shareholders.
In part the decision was driven by the “dearth” of iCasino legislation.
But Cameron-Doe added that the numerous other investment opportunities open to Wynn Resorts globally meant it would “curtail” its capital investment in the online business.
It will now “focus primarily on states where it maintained a physical presence”.
On the earnings call last week, Cameron-Doe gave little away about Wynn’s plans.
She said sports betting was “a tough business” and that the company was “very focused” on managing the business and has a “very long-term shareholder-friendly view on it”.
Beat the retreat: Recall, back in Nov21 Wynn first began to pull back from a full-throated online effort after deciding the EBITDA burn was too rich for its tastes. The pullback meant WynnBet struggled to gain anything other than (very) low single-digit shares in either OSB or iCasino.
Jefferies noted that WynnBet’s adj. EBITDA losses in the YTD hit $36m after it reported a loss of $15m in Q2.
Looking on the bright side, JMP suggested the news was positive for the rest of the sector with “one less competitor and existing operators having the ability to acquire a more VIP-centric, higher-spending customer from Wynn”.
“This provides another example that even with 13m Wynn Reward members to cross-sell, product and technology are vital to retaining players in a highly competitive industry.”
One door opens: Staying open in New York advertises the potential for another operator in that state (ie, ESPN Bet). The team at JMP believe the NY license will be a target for Penn Entertainment, “but it would come at a cost”.
Collateral damage: GAN and White Hat Gaming were the main providers to WynnBet.
The digital pullback could cause particular trouble for GAN, which just last week reported a 30% decline in its B2B revenues.
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The week ahead
The market will better understand the task ahead for 888’s CEO Per Widerström when it reports on Tuesday. After the initial disappointment of the failure of the white-knight approach from FS Gaming to install ex-Entain CEO Kenny Alexander, subsequent events will likely have them feeling the company dodged a bullet.
Ahead of the H1 results, analysts at Peel Hunt said “dull would be very reassuring”.
Meanwhile, the debt load of ~£1.8bn is also likely to be the subject of analyst questioning. Peel Hunt noted it “will not fall materially” this time out but they “expect the strength of the operating cash flow to signal the potential for re-equitisation”.
Another company that is facing questions with regard to its US strategy is Super Group, which said at the time of its Q1 earnings that its Betway and Spin operations were “easily funded” despite the US operations producing adj. EBITDA losses of €16.5m.
Another issue is the performance in Ontario, where it has apparently struggled to translate its previous gray market share into the regulated realm.
Also reporting this week, UK bingo-to-casino operator Rank, sports backend to affiliate provider GiG and purely gaming affiliates Playmaker, Raketech and Gambling.com.
Calendar
Aug 14: Playmaker (e)
Aug 15: 888, FansUnite, Playmaker (call)
Aug 16: GiG
Aug 17: Rank, Gambling.com, Super Group
Shares watch
Bad news Dave: Penn suffered a 6% drop on Friday after it issued an SEC prospectus for the sale of up to 1.25m shares in the company owned by Dave Portnoy. The prospectus says he has a window of opportunity until August 17, this coming Thursday, to offload the shares. At the current price, a sale would net him ~$31m.
Recall, Portnoy bought back the entirety of Barstool Sports last week for a dollar after Penn consummated a deal with ESPN to launch a sports channel-branded offering to replace Barstool Sportsbook.
💰 Back where we started: Penn suffers on potential Portnoy disposal news
Earnings in brief
Mohegan Sun: Lower slot play volumes at the flagship property in Connecticut and at the Pennsylvania property were offset largely by boosted digital revenues in the company’s financial year Q3. Revenues were near static at $415m with the 2%+ land-based declines offset by a 57% digital improvement to $416.7m.
Digital couldn’t save the adj. EBITDA, however, which fell 9.5% to $109m.
The company provided an update on its Inspire Casino project in South Korea, which it said was now 89% complete. It continues to target a Q423 opening.
It also noted that it has partnered with Soloviev Group for a casino bid in New York.
Golden Matrix: The company said it has made progress securing the finance for its reverse merger with Meridianbet with shareholder approval likely to be sought by the end of the month. In June, the terms of the merger were renegotiated with the cash required by Golden Matrix at closing reduced to $30m from $50m.
The company's existing operations generated FYQ3 revenues of $11m including a contribution from the MexPlay online operation, which saw revenues more than quadruple to $5.8m.
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Analyst takes
Everi: The analysts at Roth MKM suggested the gaming supplier “hit an air pocket” in H1 as market share dropped but they said the losses won’t be permanent with a recent uptick in R&D preceding an “array of product releases” in the next year.
The team at B Riley, meanwhile, suggested Everi’s fintech business is set to benefit from the somewhat elongated transition to cashless gaming.
They added the “ongoing casino fintech digital transition” will multiply Everi’s potential fintech TAM.
Inspired Entertainment: B Riley was also on the case with Inspired’s virtual sports operation, which they suggested is on the cusp of realizing a “deeper acceptance” in North America. Inspired’s NFL game is set to launch in September and the analysts say channel checks suggest all major operators will be going live with the product at launch.
DoubleDown Interactive: Macquarie said the “most important” near-term catalyst for DoubleDown is the pending acquisition of online gaming operator SuprNation, due to close later in the year.
The ever-busy team at B Riley noted the most successful online slot operators are “constantly churning” content.
With SuprNation currently licensing most content, DDI’s “arsenal” of in-house games and near weekly schedule of new releases “should generate additional SuprNation revenue while also lowering royalty costs”.
Startup focus – Inside The Pocket
I’m a survivor: Free-to-play games provider Inside The Pocket is set to launch its $100k NFL survivor game – $50k to the winner, $50k to the charity of their choice – that, as CEO Hussain Naqi says, will “reinforce the versatility of the free-to-play space”.
“While we have fun, interesting content, we match that with the most robust group of content providers in the industry,” he adds.
“The game is aimed at professionals at the intersection of sports business and betting, alongside the wider ecosystem from leagues to hospitality or restaurants.”
The game is “sticky, super easy to play and to sign up”, Naqi says. “It keeps you hooked each game day, but requires little in terms of time and commitment from the player.”
Strategy games: One of the challenges for Inside The Pocket is that the definition of free-to-play games is at present very broad and seeking differentiation in the area can be difficult. “We see free-to-play as a strategy, not a tactic,” he says.
“You would never say, if you chose one affiliate channel that didn't work, that affiliates don't work generally,” he adds. “You test, you learn.”
“That's what Inside The Pocket allows you to do. You can put various products side by side, look at the data and see what is an engaging product and what's not an engaging product.”
Pick a winner: Naqi suggests the success of the Super 6 format in the UK and now in the US has somewhat blinded people to the spectrum of F2P products that are available. “Our biggest challenge is to make people understand that variety is really important,” he adds.
“You can’t just back one horse,” he says. “Companies need to be rolling out a variety of different products.”
Case in point: DAZN CEO Shay Segev late last week announced on LinkedIn the launch of its new NFL game ‘6 to win’.
The takeaway: “I would love for people to understand the Survivor game is a pretty cool free-to-play product that gets people coming back each week. It has that repeat engagement characteristic.”
Growth company news
AI-based provider Epoxy.ai has secured a new investment round led by Andover Ventures and including SeventySix Capital and further unnamed investment funds.
BeyondPlay has seen its games go live with ComeOn Group’s Hajper Casino. The company said it is anticipating more launches with ComeOn brands.
Odds On Compliance has announced a partnership with independent evaluator of sports-betting content and advertising SharpRank. The two will collaborate to offer clients streamlined, efficient access to relevant compliance, audit, monitoring and other needs.
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What we’re reading
Best of luck with that: Entain floats potential for clawing back bonuses from former management team over Turkey troubles.
While my guitar gently weeps: Hard Rock’s plans for a 600-ft-tall guitar-shaped hotel to replace the Mirage goes before the Clark County Commissioners on Tuesday, according to local media.
Career paths
Better Collective has appointed René Schrøder as its new editor-in-chief for Europe. Schrøder joins from Danish sports media outlet Bold.dk.
Mark Harper is the new managing director of the Rank Group’s flagship casino group Grosvenor Casinos. Harper was previously a partner with Pears Partnership Capital with responsibility for the private equity fund’s leisure and hospitality portfolio.
888 CEO Per Widerström has stepped down from Catena Media’s board ahead of starting his new role in October.
The head of brand and sponsorship at Kindred, Mateusz Samolyk, has stepped down from his position.
Jacob Felländer has joined the affiliate group Raketech as its new head of IR.
Newslines
Rank and Kambi have renewed and extended their partnership for sportsbook backend provision, which now covers the YoSports and Enracha brands in Spain as well as Grosvenor Sport in the UK.
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