Kindred talks up independent streak in sportsbook
Kindred’s Q4 recovery, DraftKings’ court action, Evolution deal, BC updates +More
Soon-to-be-acquired Kindred talks up proprietary sportsbook hopes.
In +More: GLP Tioga Downs deal, AGS debt deal completion.
DraftKings alleges head of VIP stole confidential information prior to joining Fanatics.
Evolution captures Livespins for an initial €5m in cash.
Better Collective completes Playmaker deal, upgrades targets.
I buy my own diamonds and I buy my own rings.
Kindred’s independence streak
State of independence: Progress has continued with Kindred’s in-house sportsbook, which the company hopes will be live in one test market by the end of Q1. But Nils Andén, newly installed as the permanent CEO after a spell in an interim role, said full rollout would take three years.
Asked about what customers could expect of the product, Andén noted the early version wouldn’t be the “bells and whistles” final version.
“There is still a fair amount of development needed to be done to ensure it's really top of class,” he added.
Keep schtum: Andén opted to stick to the limited script with regard to the $2.8bn bid from FDJ, which is not expected to complete until Q4. Asked about what regulatory clearances would be needed, he said the only concern would be antitrust issues in France.
Anglo-Dutch alliance: Kindred’s two biggest markets, the UK and the Netherlands, performed strongly during the quarter, rising by 17% and 19% YoY respectively. However the Nordics was down 7% – which Kindred ascribed to Swedish RG measures – while Belgium also suffered from a harsher regulatory regime.
Norway got a mention where Kindred saw an impact despite only “passively accepting” Norwegian custom. Recall, as part of the FDJ acquisition, Kindred will exit Norway and all other black/gray markets.
The Relax B2B arm continued to impress, with revenues up 33% and the underlying EBITDA contribution up 72% at £7.4m.
Group revenues were up 2% to £313m while underlying EBITDA was up 45% to £56.8m. For FY23, revenue rose 13% to £1.21bn while underlying EBITDA was up 58% to £205m.
On current trading, which is down 3% YoY, Andén said the numbers were “a short snapshot.”
Orderly retreat: He said the previously announced exit from North America was going “according to plan” and would be completed on an operational basis by the end of Q2.
The company will take a £15m one-off hit to cash flow once the process is completed.
Memory foam: The US operation generated GGR of £7.7m in Q4 as it recovered from the one-off hit from Mattress Mack’s World Series bet in the prior year period.
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Gaming and Leisure Properties has acquired the real estate assets of Tioga Downs Casino Resort in Nichols, New York, from American Racing & Entertainment for $175m.
Simultaneous with the acquisition, GLPI and American Racing entered into a triple-net master lease agreement for an initial 30-year term.
The initial annual rent is $14.5m, representing an 8.3% cap rate.
Inspired Entertainment has had its plans to refile its restated Q1, Q2 and Q3 earnings reports no later than the end of this month accepted by Nasdaq.
AGS has completed its new repriced loan credit agreement and repaid $15m of outstanding debt. The move is expected to save AGS $3m a year.
BetMGM has relaunched OSB in Nevada.
And then there were nine: Bet365 has opened up operations in Arizona, its ninth state launch.
Everi Digital is to launch its iCasino content in the UK via a deal with Jumpman Gaming.
On the peninsula: The casino at Mohegan’s Inspire Entertainment Resort in South Korea opened Saturday with 150 table games, 390 slots and 160 electronic table games.
DraftKings VIP court action
It’s a steal: DraftKings has accused its head of VIP operations of a year-long effort to steal confidential information from its client base and taking it with him to his new job at Fanatics.
In a court filing in the US District Court for the District of Massachusetts, DraftKings claims ex-employee Michael Hermalyn took the final steps in his deception in the days leading up to this weekend’s Super Bowl.
Hermalyn left the company last Thursday.
Secret squirrel: According to a story in Front Office Sports, DraftKings alleges Hermalyn “stole many of DraftKings’ most commercially sensitive documents. It claims he “knows DraftKings’ playbook on how to engage and retain VIP clients” and, in concert with Fanatics, “timed his departure and theft of information” to coincide with the Super Bowl.
The court filing further suggests Hermalyn met “clandestinely” with Fanatics CEO Michael Rubin.
The filing also makes allegations of sexual misconduct in the workplace on the part of Hermalyn.
Whine connoisseurs: Fanatics said in a statement to Front Office Sports the lawsuit was “sour grapes.” The statement added that an “understandably upset” DraftKings was trying to “drum up ridiculous allegations” against a “well-respected” exec.
Evolution M&A
Play along: Evolution has branched out into the live streaming arena with the acquisition of Livespins for €5m in cash. Livespins is a social streaming game provider that gives operators the ability to offer customers the chance to bet alongside streamers and influencers.
The initial €5m will be followed by an unspecified earnout due depending on performance in 2026.
Sharing is caring: Evolution said Livespins represents a “whole new way” to play online slots.
It integrates into an operator’s casino lobby via API, allowing multiple players to place a bet to team up and ‘bet behind’ the streamer. If the streamer wins, the players win too, in what is an exciting shared experience.
Flattered: CEO of the Malta-based Livespins Chris Scicluna said that, as a startup, the company had reached an “unprecedented milestone” and he “couldn’t be happier” with joining Evolution.
Hornbuckle at ICE
Who is a leader in live dealer game shows? Talking of Evolution, the potential for producing game shows from the Las Vegas floor has great appeal to MGM Resorts, according to CEO Bill Hornbuckle. Speaking at ICE this week, he said the concept of omnichannel was one where MGM potentially held the advantage “above and beyond” all its competitors.
Noting Evolution’s lead in the game show/live dealer space, Hornbuckle said “if you think about Las Vegas, we want to be a part of that [game shows].”
“Over time I would like to see the same games on casino floors in our bricks and mortar,” he added.
He pointed to the acquisition of Push Gaming last year and repeated that MGM wanted to “make games for ourselves, for LeoVegas and BetMGM primarily.”
Desert storm: Talking about the UAE, he said MGM’s plans at present were non-gaming in Dubai with Bellagio but “someday we hope to have gaming there”. “We will take a look at Abu Dhabi, and Thailand has re-emerged and seems to want to offer gaming,” he added.
“If it is regulated the right way, hopefully we will find our way there.”
Better Collective updates
Done deal: Better Collective has officially completed the €176m cash-and-shares deal to buy Playmaker Capital, the affiliate giant’s second-largest transaction in its history. The two largest shareholders in Playmaker, CEO and founder Jordan Gnat and investor Relay Ventures have opted to roll their portion of Playmaker shares into Better Collective stock.
CEO Jesper Søgaard repeated his previous comments about Playmaker marking a significant step towards the company’s aim of becoming the “leading digital sports media group.”
Narrow-minded: Better Collective also updated its long-term financial forecasts in light of the acquisition, saying the deal increased the company’s confidence in its 2027 financial targets. Namely, it said CAGR and net debt to EBITDA would remain unchanged.
But the EBITDA margin was narrowed to 35%-40% from 30%-40% due to synergies in moving revenues from advertising towards performance marketing, which will increase margins towards 2027.
Gamification, mobile gaming, AI, UX enhancements and design and responsible gambling are just some of the trends that are set to dominate the iGaming industry in 2024 as it seeks to harness those new technologies and their benefits to millions of consumers across regulated markets worldwide.
Read the Sof2Bet feature and let us know your thoughts on what we should look out for in 2024!
Analyst outlook on Europe
Slice of the pie: Flutter and Lottomatica head the Buy list for the European gaming team at Jefferies. Both companies are likely to be on the receiving end of “outsized benefits” that come from online market leadership as the “global theme of migration” from offline to online continues to drive momentum.
For Flutter, Jefferies said the move to a dual-listing in the US has highlighted the “material disconnect” between it and its US-listed high-growth, digital peers.
In the case of Lottomatica, the Italian OSB and iCasino market leader is likely to see a re-rating as profits soon “skew to online.”
Pays your money, takes your choice: For the rest of the market, Jefferies said there were a range of investment opportunities among the European midcaps.
For those eying management change or a debt-to-equity value transfer there is 888.
Those looking for balance sheet optionality can take on Playtech.
Anyone looking for an earnings trajectory inflection point based upon a growing line-up of new contracts should look no further than Kambi.
Lastly, an operator-agnostic play on the offline to online migration theme via affiliate marketing should see investors looking in the direction of Better Collective.
Bally’s debt analysis
Cap in hand: After meeting with Greg Roselli, long-time fixed income analyst and founder of Roselli Advisory, the team at Truist noted the company’s significant development pipeline – including casinos in Chicago, New York and with the Tropicana in Las Vegas – created a “near-term need” to tap the capital markets.
My kind of debt: Looking at Chicago, where Bally’s said previously it had $1.2bn of financing remaining, Truist reported Roselli as suggesting that with ~7x gross leverage at the parent level and an unsecured note trading north of 11% “financing the project on-balance sheet with incremental bank/bonds may be prohibitive.”
Roselli suggested Bally’s could either “explore creative outlets” for incremental project-level financing, though “costs may also be prohibitive.”
Or it could raise additional capital at the parent level by selling the development rights for the Trop LV, utilizing ~$500m of revolver capacity, selling non-core assets or raising additional REIT capital under its master lease.
Short take-off and landing: The bulk of the capex will come in 2025/26 meaning Bally’s has some limited runway to cover 2024 work with existing funds and continue the ramp at the temporary facility.
Assuming the Chicago financing is resolved in a way so as not to add “material risk” to the balance sheet, Roselli expects a positive reaction in the secondary debt markets.
Truist added this would also bring “meaningful upside to the equity.”
Let’s go to a (smaller) ball game: With the Trop, meanwhile, Truist said Roselli believed the redevelopment may be attractive to other Strip operators with lower costs of capital looking to expand their database with the A’s relationship and mitigate the impact of new supply.
He believed the A's stadium would get funded “one way or another,” either through more public support, syndicated/private deals or potentially a “smaller scoped project if necessary.”
Calendar
Feb 7-8: ICE, London
Feb 7: Disney, Red Rock, Wynn
Feb 8: Boyd Gaming
Feb 13: MGM Resorts International
Feb 15: Betsson, Penn, DraftKings (earnings)
Feb 16: DraftKings (call)
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