Eminence in charge: Entain’s Moelis hire an activist win
Eminence in charge: Entain’s Moelis hire an activist win
Investment bank’s Entain review role, Penn’s blame game, IGT earnings review +More
Moelis appointed to review potential disposals at Entain.
In More: Tabcorp CEO departure, North Carolina download data.
Lack of ESPN Bet integrations with broadcaster “on them,” says Penn CEO.
IGT delivers perfunctory pre-spinoff statement.
BettingJobs’ Jobsboard features CTO and head of sportsbook roles.
You got it tough, I've seen the toughest around.
Entain sales process appointment
When I say jump: Entain’s appointment of Moelis as an adviser to look at the potential sale of a host of global assets is at the behest of activist investor Eminence Capital, whose CEO/CIO Ricky Sandler sits on the operator’s board.
One source with knowledge of the thinking within Entain said the hiring of Moelis was a “direct” intervention by the activist investor.
It is thought Moelis has been hired alongside Bank of America and Morgan Stanely to advise the board.
Bolt-on wonderers: The news that the investment bank has been given a remit to oversee a long list of potential sales came yesterday in the FT. As E+M wrote when it broke the news that Entain was looking to sell the PartyPoker business, the previous bolt-on strategy has now gone into reverse and many of the relatively recent acquisitions might now be up for sale.
ITMA: Sky News has subsequently reported this week that Oakvale Capital has been appointed to oversee the PartyPoker sale.
Up for grabs: There was some surprise at the brand names mentioned as being part of the review by the bankers. Prominent among them was BetCity, the Netherlands-facing operator bought for €450m in January 2023, while Baltic-facing Enlabs, Georgian-facing Crystalbet and the Australian-based Ladbrokes offshoot are also apparently in the frame.
None of the potential disposals have been integrated on the Entain platform and hence would be easier to sell.
Yet, as one source put it, while these business units are the “easy bits to sell” they are also performing well and “providing the best margins” for the group.
“The other Entain shareholders would be up in arms if they were selling these businesses on the cheap,” the source added.
Under the influence: Multiple sources suggested the news of the Moelis appointment, in particular, indicated the extent of the influence of Eminence and Sandler. “It looks like the Entain board is bending over backwards and doing everything it can to not upset the activist shareholders,” said one insider.
Wag the dog: The suspicion is the tail is now wagging the dog at a time when – without a permanent CEO – the board “lacks credibility and is bruised.”
Digestive system: A further theory mentioned by multiple sources is that any sale of the “odds and sods” leaves a streamlined Entain as a more easily digestible target for MGM Resorts, which has long been identified as the most obvious buyer for the entire business given its stated goal of at some point owning 100% of BetMGM.
“If the business is simpler, then maybe that is what MGM wants,” said one insider.
“Does it want to be a global force or is the most important thing to get hold of BetMGM and the tech stack?” they added. “It’s easy to understand if that is the case – changing tech stacks is brutal.”
Buy, buy baby: Regardless of who is pulling the strings, equally important as a motivated seller is a willing buyer and here the picture is cloudy. “It’s easy to say they can sell all this stuff, but there aren't many buyers,” said one insider.
Potential names are limited with Entain likely reluctant to sell to rival Flutter and others such as Lottomatica being unlikely to pay top dollar.
“Although M&A is getting more interesting, I don’t think the multiples are there today that would justify Entain selling much of this stuff,” said the insider.
Nothing to see here: It is thought that disposals won’t necessarily be the end result of the review and that the aim is to assess “how best to maximize value,” in the words of one source close to the company.
MGM fireside chat
Fessing up: Bill Hornbuckle yesterday gave MGM’s first official comment since Entain’s interim CEO Stella David admitted last week to misjudgments in its efforts to help BetMGM. Speaking at a JP Morgan conference in Las Vegas, he noted the “transparency,” adding that “you have to recognize a problem to solve a problem.”
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+More
Effing off: The CEO of Tabcorp has resigned with immediate effect after the board “became aware of inappropriate and offensive language” used by Adam Rytenskild in the workplace. In a statement, the company said the board “considered the language to be inconsistent” with Rytenskild staying in the job. It has embarked on a search process to find a replacement.
Bally’s has announced the formation of a special committee of “independent and disinterested” directors to consider the $15-a-share proposal from its largest shareholder, Standard General, to take the firm private. The company said the committee would also consider strategic alternatives.
By the numbers
North Carolina: The early download data as reported by the analysts at JMP from the first three days of the market opening in North Carolina shows FanDuel grabbing 35%, DraftKings on 24% and BetMGM at 11%. ESPN Bet achieved 8%.
Read across
In Compliance+More, the Maryland iCasino bill stumbles on but prospects don’t look great. Meanwhile, the debate over the UK Gambling Commission’s new official statistics rumbles on.
Penn’s ESPN gee up
TV burp: Penn Entertainment CEO Jay Snowden laid the blame for ESPN Bet’s lack of integrations with ESPN squarely on the broadcaster itself and said the work on getting up to speed was “on them” with regard to engineering and product.
Speaking at the JP Morgan conference, he said: “They have to get work done within their media app, within their fantasy app and the Bracketology.”
“That’s on ESPN to get these integrations going faster.”
Get it right next time: Still, Snowden admitted that for its part Penn had to get better on SGPs where the product “wasn’t competitive” at launch, and during the football season that was a “really big deal.” He said the top of funnel metrics continued to be “very, very strong,” but admitted the time on device and spend metrics were not so impressive.
“We’re just not getting our fair share of handle and spend per user,” he added.
He suggested the SGP product was ”all there” but it was “not merchandised in a way that it needs to be to be competitive.”
“We're just scratching the surface of what's to come,” he promised.
Conversion therapy: On iCasino, Snowden noted Penn had “messy messaging” on the omnichannel side. “If you're at one of our Hollywood-branded casinos in Pennsylvania or Hollywood, Greektown in Detroit, our messaging to you is download ESPN Bet to play slots with us,” he said.
“Understandably, that conversion from the land-based database to our iCasino offering isn't where it needs to be yet,” he added.
IGT earnings review
Read my lips: There will be no redundancies (or very few) as a result of Everi’s merger with IGT’s gaming and digital businesses, as IGT CEO Vince Sadusky said the two businesses share complementary skill sets with very little overlap.
“Everi has got expertise in several areas that IGT doesn’t, in particular fintech, and we’ve got good international experience,” said Sadusky.
“Both companies have retention plans in place for their top talent.”
Analysts from Jefferies noted that “ongoing execution while the deal is pending is critical.”
By the numbers: This will be the last IGT statement that does not bundle Global Gaming and PlayDigital together in the same basket, so that future updates can give everyone a taste of the company Spinco will become. Q4 revenue was up 3% to $1.1bn, while adj. EBITDA was up 9% to $454m.
Global Gaming revenue was stagnant at $390m, as higher terminal product sales revenue and increased intellectual property revenue were offset by lower systems sales
PlayDigital revenue was down 9% to $59m, due to a one-time benefit related to jackpot expense in the prior year and lower sports-betting volumes and hold rates in Rhode Island in the current year.
FY23 revenue was up 2% to $4.3bn, while adj. EBITDA rose 7% to $1.8bn. Lottery was down 2% to $2.5bn, gaming revenue rose 9% to $1.6bn and PlayDigital revenue rose 9% to $228m.
Lotto to like: In Q4 global lottery revenue was up 7% to $681m, driven by strong product sales and Italy same-store sales growth. The company noted the RFP or the terms of the new lottery contract was yet to be officially announced, though they believed the new nine-year concession could come with a hefty €1bn license fee.
Innovation sits at the heart of everything we do at Soft2Bet so it was highly rewarding to win the In-House Innovation of the Year prize at the EGR Nordics Awards 2024. Motivational Engineering Gaming Application (MEGA), the industry-leading gamification system we unveiled at ICE London 2024 was recognised by the EGR judges. Congratulations to all our teams for making this product a reality!
Sector watch – financial trading
Moving on: Ex-Paddy Power Betfair chef exec Breon Corcoran appears to be wielding the scalpel in his new role as CEO at retail financial trading house IG, after the company announced the departures of CFO Charlie Rozes and COO Jon Noble. The latter had been with IG for 24 years.
The news came alongside IG’s Q3 trading update, which showed revenue near enough static at £240m but with YTD revenue down 6% at £713m.
The company said FY24 revenue and profit would be in line with expectations when the figures are released in July.
Bull market: Elsewhere in the sector, the CEO of retail-trading platform eToro told the FT this week the company was weighing its listing options as it hoped to float at a valuation of over $3.5bn. The founder of the Israeli-based but largely UK-facing provider, Yoni Assia, told the paper the company was yet to decide between New York and London.
“We see that UK clients might trade also UK shares, but very few of our global clients would trade UK shares,” he said.
“Something in the US market creates a pool of both deep liquidity and deep awareness for those assets that are trading in the US.”
We go again: At its last funding round, eToro raised $250m from investors including SoftBank and market data company Ion Group. The last time the company eyed a listing, it was valued at $10.4bn when it lined up a SPAC deal at the height of that particular frenzy in 2021. That deal was abandoned in 2022.
Earnings in brief
Century Casinos: Macquarie said Century was in a “transitional period” after the company reported Q4 revenue rose 39% to $141m while adj. EBITDA was up 17% to $25.4m. Century noted the severe weather in January had hampered operations but said customer trends had rebounded since.
Opap: A “strong” online performance and “solid” retail results saw Opap generate revenues of €2.08bn for FY23. Lottery was up 3% to €730m while sports betting rose 7% to €646m and VLTs were up 8% to €345m.
Groupe Partouche: The French regional casino operator’s Q124 GGR rose marginally YoY to €172m, with slots GGR up 1.4% to €121 but table games down 5% to €32.5m.
GAN: Q4 revenues at $30.7m missed estimates and represented a 17% YoY decline while EBITDA losses worsened to a negative $3.9m vs. minus $0.4m in Q422. The company, which is in the process of being sold to Sega Sammy, blamed the decline on the expiration of an exclusivity period with Ainsworth.
GAN said it still expected the merger to complete in Q4 this year or early in 2025.
FansUnite: The affiliate marketing provider said revenue for 2023 would come in at $23.4m-$23.9m, with gross margins at between 61% and 65%. It said the strategic divestment of its iGaming assets resulted in annualized cash savings of $7.8m. Q4 revenue will be in the range of $6.2m-$6.7m.
Golden Matrix: Revenues rose 10% to $12m with adj. EBITDA of just over $1m. The company said it continued to make “significant progress” towards closing the Meridianbet merger transaction but gave no further information on timings.
Calendar
Mar 20: Sportradar, Zeal
Mar 26: Flutter, Bragg Gaming
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