Ruffling feathers: Corvex buys Entain stake
Entain fall out, ESPN Bet figures, XL Media shortcomings, analyst takes +More
Corvex throws the cat among the pigeons with Entain stake.
ESPN Bet establishes low double-digit market share by handle, boosted by promos, say analysts.
Meanwhile the launch comes too late to help XL Media’s North American revenues.
BettingJobs’ Jobsboard includes CMO and head of compliance roles
You're scheming on a thing that's a mirage.
Corvex investment
Hedge fund with an interest in Kindred and a previous investor in MGM Resorts emerges as the latest activist on the shareholder register at embattled Entain.
Cor-blimey: Suggesting that Entain’s recent performance has been “unacceptable”, the activist hedge fund announced yesterday it had recently snapped up 28 million shares representing a 4.4% stake in the company. Following this week’s departure of CEO Jette Nygaard-Andersen, Corvex added in a press release that Entain was at a “critical juncture”.
It said the company could benefit from the “constructive engagement of a well-informed shareholder with substantial industry and company-specific experience and expertise”.
The hedge fund said it intended to “immediately engage” with Entain chair Barry Gibson and interim CEO Stella David.
Who are you? Corvex has form in the betting and gaming space. It is currently the largest shareholder in Kindred with a 15% stake. It has similarly been lobbying for strategic changes there and, in partner James Gemmell, has a representative on the board.
New York-based Corvex was founded by Keith Meister. It is also currently a 1.5% stakeholder in MGM Resorts, while Meister sits on the board.
Back in February 2022, it sold a 4.5 million chunk of shares worth $405m in MGM Resorts itself and media mogul Barry Diller’s IAC.
The BetMGM JV is central to any potential M&A involving Entain.
Activists assemble: The list of activist funds now known to be invested in Entain stretches to four. The first to emerge in the summer was Eminence Capital, which made its presence known following the £750m STS acquisition, which it categorised as “perplexing”.
Subsequently, a report in the FT said two further funds – Sachem Head Capital Management and Dendur Capital – had established stakes in the business since 2021.
Jamaica? Despite having steered Entain through a deferred prosecution agreement deal with the UK’s tax authorities, the hedge funds made it plain they were unhappy with Nygaard-Andersen’s stewardship.
The discontent leaked into recent press coverage, which featured both external and internal criticism of the management and its M&A strategy.
Within a week Nygaard-Andersen would resign, saying Entain was “now safe, stable and sustainable”.
🍆 The share price rose nearly 9% yesterday following the disclosure of the shareholding. This followed the 5% rise on Wednesday after Nygaard-Andersen’s resignation. Sources said the chatter now is about whether – and for how long – Entain remains as an independent entity.
✈️ Taking off: Entain shares up over 14% on the week
I've got more action than my man, John Woo: “If MGM is going to make a run at Entain at any point in the next three years, it feels like it should happen while they don’t have a CEO,” one source said of the M&A conjecture now surrounding Entain. “It feels like their best shot here.”
Other sources suggested a more likely move would be for MGM to buy Kindred. One added they had “long thought that Corvex was going to push for a sale of Kindred to MGM”.
But they said Entain now also “makes sense” following Nygaard-Andersen’s departure.
Venture capital firm Yolo Investments manages in excess of €500m in capital across 100 exciting fintech, gaming and blockchain companies. The Yolo Investments' Gaming fund, regulated by the Guernsey Financial Services Commission, has taken positions in fast-growth suppliers and operators, including Dabble and Enteractive. Yolo Investments (yolo.io) wants to hear from readers of this newsletter. Get in touch with your pitch, or for a chat about innovative products which can plug into our investment ecosystem.
+More
Penn Entertainment has broken ground on the second hotel tower at its M Resort in Las Vegas. The $206m build will add 384 rooms, bringing the total to 774.
PokerStars’ share of the 90-day moving average of cash game traffic in Michigan rose 18.7% YoY, from 262 seats to 311, according to the latest data from Pokerfuse. Traffic soared 46.1%, from 128 seats to 187.
Kambi has announced an online and retail sportsbook partnership with Netherlands-based Bingoal for both the Netherlands and Belgium markets.
Relax Gaming will launch its slots on BetMGM in New Jersey. This is the Malta-HQ’d provider’s first foray into the US.
ICYMI
E+M’s Startup Month discussed how growth companies look at making their first hires.
On social
ESPN Bet’s early numbers
On the beach: ESPN Bet is increasing the market in terms of handle while establishing a low-to-mid single-digit bridgehead, according to the analysts at JMP. Looking at the data from Maryland, Kansas, Indiana and Iowa, the team showed ESPN Bet had 6% market share or 5% excluding promos.
JMP said that normalizing for the whole month (ESPN Bet launched mid-month), the market share by handle figure was low double-digit.
The analysts at Stifel suggested the market share by handle might be “overstated” due to the levels of promos.
JMP noted ESPN Bet accounted for 46% of promos across the four states.
The team also noted ESPN Bet’s entry was accompanied by a 15% increase in handle across the four states combined, saying they believed it is “increasing the size of the market and reactivating dormant players”.
FanDuel and DraftKings saw differing outcomes from the initial entry of their new rival. While FanDuel saw an increase in share between October and November of 1 ppt to 37%, DraftKings was down 4 ppts MoM to 36%. BetMGM was down 1 ppt to 7%.
The team at JMP suggested focusing on handle – and particularly handle minus promo spend – in the early data is the “more accurate metric until win margin normalizes over time”.
Given the promo landscape, JMP said they believed Penn’s revenue estimate of $229m for the quarter “is going to be aggressive”.
XL’s profit warning
It’s too late, baby: In a trading update, gaming affiliate provider XL Media said despite the ESPN Bet launch providing an “anticipated uplift” in revenues, it wouldn’t make up the shortfall seen in the latter part of the year as the old Barstool brand halted all activity, and means North American revenues will be below forecast.
The company said revenues for the full year are now expected to be in the range of $50m-$52m while adj. EBITDA is expected to be in the range of $12m-$14m.
EveryMatrix delivers iGaming software, solutions, content and services for casino, sports betting, payments, and affiliate/agent management to 300+ global Tier-1 operators and newer brands. The platform is modular, scalable, and compliant, allowing operators to choose the optimal solution depending on their needs.
EveryMatrix empowers clients to unleash bold ideas and deliver outstanding player experiences in regulated markets.
Earnings in brief
Mohegan Sun: Revenues for Q4 rose 7.6% to $444m but adj. EBITDA fell by 12% to $88m, hurt by tough comps in the same period last year and low table hold at the Mohegan Sun property. Revenues for the year came in at $1.67bn. The company said it held a soft opening for the Inspire property in South Korea in late November.
Analyst takes
Las Vegas: Following on from a recent consumer conference, the team at Morgan Stanley said they were “even more confident” of the strength in the Strip, with MGM suggesting it has been in part driven by higher-end customers.
Want to unlock new revenue using sports-betting tools engineered by an experienced team of data scientists?
With our technology you can.
Our real-time API provides accurate predictions & actionable insights at your fingertips, covering more than 15 sports and in excess of 20,000 events each year, each of which is simulated over 10,000 times.
For more information, visit: dime.rs/business
Calendar
Jan 18: Flutter trading statement
Feb 6-8: ICE London
Chief Marketing Officer – Johannesburg / UK
Head of Compliance – Abu Dhabi
VP of Software Engineering – UK / Malta / Poland / Bulgaria
An +More Media publication.
For sponsorship inquiries email scott@andmore.media.
