Hornbuckle tips his hat to tuck-ins
MGM numbers, RSI sale rumors, Bally’s mixed bag, earnings in brief - VICI, Raketech +More
MGM Resorts CEO says company is ‘thinking about’ online tuck-ins.
In +More: Flutter US approval, Token Word launches.
Rush Street Interactive CEO fails to deny sale speculation.
UK props up weak Q1 for Bally’s international online business.
Break up to make up, that's all we do.
MGM keeps quiet on tuck-ins
You say bolt-on, I say tuck-in, let’s call the whole thing off: Asked by analysts about MGM Resorts’ thinking on tuck-in acquisitions for the company’s online operation and the lack of commentary earlier on during the Q1 earnings call, CEO Bill Hornbuckle said he didn’t make any comment “on purpose.”
Thinking cap: “There are some contemplated tuck-ins coming down the road,” Hornbuckle added, before repeating previous comments that the company was “anxious to solidify something in sports” while also looking at content and live-dealer casino.
“None of that's changed,” he added. “I think you'll see us, over the course of time here, do things that will further solidify that strategy and get us deeper into those objectives.”
Recall, E+M reported on Monday that MGM was one potential buyer for Tipico's rumored-to-be-for-sale standalone US-focused platform.
By the numbers: Hornbuckle was speaking after MGM produced well-received numbers, helped by a 78% increase in EBITDA at MGM China and continued strength in Las Vegas. Group revenues rose 13% YoY to $4.38bn while adj. EBITDA rose 11% to $1.23bn.
Las Vegas revenues rose 1% to $2.26bn while adj. EBITDA was down 1% to $836m and regional revenues were down 4% on bad weather issues, pushing segment adj. EBITDA down 12% to $274m.
MGM China revenue nearly doubled to $1.06bn while adj. EBITDA hit $301m.
To-do list: CFO Johnathan Halkyard said MGM would soon be generating cash flows of $1bn domestically, which would “fund future growth” and he noted the “enviable” pipeline of projects including New York, Japan and the United Arab Emirates. Excess cash “beyond paying for these projects” would be returned to shareholders via buybacks, he noted.
“In Vegas our strength continues, particularly at the high end,” Hornbuckle added.
He said the loyalty program deal with Marriott was “off to a great start” and had exceeded expectations. “They do know a lot of folks,” he said.
Lion sleeps tonight: MGM’s share of operating losses at BetMGM more than halved YoY to $32.6m. LeoVegas numbers weren’t broken out in the company’s 10-Q but Hornbuckle said revenues were “on the rebound” after encountering regulatory headwinds in Sweden.
This week MGM launched BetMGM in the Netherlands via the LeoVegas/Kambi platform and Hornbuckle suggested further extensions of the brand footprint would be forthcoming.
Making up is better than breaking up: Hornbuckle was at pains to suggest the relationship with BetMGM JV partner Entain was on the mend and said interim CEO Stella David was a “breath of fresh air.” “She’s been extremely transparent,” he added.
“Everyone's agreeing to the roadmap,” he said. “It’s extensive and it’s going to take some time, energy and some investment particularly on Entain’s behalf and they’re fully supportive of that. And so I think things have changed.”
I am a wallet: Hornbuckle also refined his message about not having to put more cash into BetMGM, suggesting that might change should one of the big states such as California, Texas or even Georgia pop up in the regulatory wheel.
“Obviously, not that California is going to happen anytime soon, but if California were [to happen], other large markets, Texas, Georgia could probably be another one you could put into this boat,” he said.
“We would be aggressive there like I think all others would be. And so we would never say never to be clear.”
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+More
Flutter Entertainment has received approval from its shareholders for moving its primary listing from London to New York after an AGM vote yesterday. The move will be completed by the end of this month.
Kambi has extended its partnership with Mohegan to include on-property sports betting at two locations in Pennsylvania.
The Token Word
The debut edition of the newsletter covering key aspects of the crypto world, including the rise of token ETFs, the crypto exchanges, the emerging regulatory structures, fan tokens and crypto-based betting and gaming was sent yesterday. Sign up here.
Rush Street earnings recap
Bunt: Rush Street Interactive CEO Richard Schwartz failed to deny rumors, first raised in Bloomberg, that the company is exploring a sale, with DraftKings a possible buyer. While refusing to respond directly to the speculation, Schwartz did say the management team are substantial shareholders themselves and “fully aligned with the [other] shareholders.”
Asked why the company hadn’t instigated a formal process on strategic alternatives or a sale, Schwartz said he “can’t respond to that question in this public setting.”
By the numbers: A strong quarter helped CFO Kyle Sauers to raise adj. EBITDA guidance up 38% to $50m-$60m, with revenue guidance increased 4% to $810m-$860m. Q1 revenue was up 34% to $217m, while adj. EBITDA was $17.1m compared to a loss of $8.7m in the prior-year period.
Michigan, New Jersey and Pennsylvania recorded the highest year-over-year revenue growth rates in the past two years.
In Delaware, where the company took a monopoly from 888 in December, Schwartz said the company had experienced a “dramatic improvement” on the prior performance.
He said March revenue was four times that of 888 and that annual revenue from the state was expected to be nearly $70m, up $10m on previous guidance.
Something wild: In Latin America, revenue was up 84% in Q1, with a summer launch in Peru imminent. It’s “growing wildly”, said Sauers. The company’s June launch in Mexico has grown at twice the rate that RSI grew in Colombia following its launch and reached profitability during the quarter.
Schwartz acknowledged Playtech’s dispute with Caliente. “It’s a complicated market. They are declining in share and companies like us are slowly growing share.”
Bally’s mixed bag
Part of the Union: The UK was the standout for Bally’s international operations, growing 7% in constant currency terms and helping to prop up an otherwise weak quarter for the international online business where revenues fell by 4%.
CEO Robeson Reeves said Bally’s “proactive strategic measures” in anticipation of the white paper implementation continues to yield positive results. “We’ve got excellent customer attention,” he added.
He noted Bally’s would soon be launching an OSB operation in the UK, while in Asia – i.e. Japan – he said there were signs the market was “beginning to stabilize.”
Bounce: In North American online Bally’s has enjoyed success with its iCasino operation, with Reeves saying it has gained incremental market share in New Jersey and Pennsylvania and via the recent launch in Rhode Island.
He added that the company was happy with progress made by the relaunched Bally Bet operation via the Kambi and White Hat platform combination.
In Las Vegas, following the demolition of the Tropicana to make way for the A’s MLB stadium, Reeves said Bally’s was “actively assessing” its options with the adjacent “highly valuable” parcel of land. Regionally, president George Papanier said Bally’s “navigated a few challenges”
He reiterated that the permanent Chicago project remained on track, noting there was ~$1bn on “hard construction costs” still to go.
By the numbers: Revenues rose 3% to $619m, with casinos and resorts up 4.1% to $343m and international interactive down 4% at $235m. North American interactive was up 70% to $41.5m. Adj. EBITDA was up 4% to $148m.
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Earnings in brief – VICI
The gaming REIT has announced up to $700m of new financing for the Apollo-owned Venetian Resorts, including $400m that can be drawn down this year and a further $300m should it be needed before November 2026.
Changing rooms: The cash will go towards hotel room renovations and gaming floor optimization as well as other enhancement projects.
Annual rent for the property will increase in step with the financing drawdown.
VICI said the new money would be funded from cash and forward equity sales.
By the numbers: The news came with the gaming REIT’s Q1 earnings, which showed revenues rising over 8% YoY to $952m. AFFO increased 10% YoY to $583m. The company ended the quarter with cash and cash equivalents of $514.9m and $683m of estimated forward sale equity proceeds.
The company will host a call with analysts later today, Thursday.
Raketech profit warning
Don’t Google it: The gaming affiliate said the latest change to the Google algorithm, which was finalized in April, has caused a “negative impact” to its Casumba operation and meant that FY24 EBITDA would now come in at ~€20m vs. previous estimates of €24m-€26m.
It reassured investors that the Casumba team was “intact”, with the original founders remaining at the company and running and overseeing the ongoing strategy.
Q1 revenues are expected to come in up 19% YoY to €19m, however, EBITDA will drop by 16% to €5.1m.
Raketech added it had implemented efficiency measures following a review of its operating model.
Calendar
May 2: Penn Entertainment, VICI (call), DraftKings (earnings)
May 3: DraftKings (call)
May 6: E+M Capital Markets Forum, NYSE
May 7: GeoComply Challenger event, NYC
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