Wheels up! Penn’s private jet use
Penn’s private jet flights, Rank’s machine bump, Sportradar reaction, startup focus – Sharp Alpha +More
Penn Entertainment faces questions over private jet usage.
In +More: New York record-breaker.
Rank enjoys a UK machine bonus.
Sportradar gains plaudits for beat and raise.
Startup focus looks at Sharp Alpha’s new fund.
Got this 737 rocking like a G6.
Penn’s air miles
Lifestyles of the rich and famous: Penn Entertainment is likely to face questions from shareholders over the “excessive” use of private jets, as Earnings+More reveals tracking data showing its two owned aircraft made 621 flights in the past two-and-a-half years.
I am serious... and don't call me Shirley: Data from JetSpy, which tracks the usage of private jets owned by corporate entities, shows the regional casino operator owns two jets: a Learjet 45 and Bombardier Challenger 600.
Between them, the aircraft flew 294 flights in 2023 and 247 in 2022. In the year-to-date a further 80 flights have been completed.
Air miles: Penn has a dispersed empire with 43 casinos in 20 states. However, the top three airports for both planes between 2022 and year-to-date in 2024 are Reading airfield in Pennsylvania, the closest airfield to Penn’s Wyomissing base, Logan Airport in Boston and Teterboro in New Jersey, which is close to Manhattan.
Sources pointed out that CEO Jay Snowden is a resident in Boston while CFO Felicia Hendrix lives in New York.
While there are no commercial flights available to Reading, Wyomissing is just over an hour’s drive from Philadelphia.
Derby daze: The data shows that one of Penn’s jets flew between Reading and Louisville in Kentucky over the weekend of the Derby and also made a return journey to Las Vegas in February over Super Bowl weekend.
Life in the fast lane: In its 2024 proxy statement, Penn said Snowden is entitled to use company aircraft “ensuring efficient travel to our gaming facilities that are located across a wide geographic area without regular commercial flight alternatives.”
It added that this is consistent with companies in its peer group. Penn doesn’t mention anything with regard to any company aircraft entitlement for Hendrix.
As the crow flies: The proxy statement added in a footnote that Snowden’s ‘all other compensation’ of $424k in 2023 included $63,558 “representing aggregate incremental cost for use of the company’s aircraft, which is based on variable costs of operating the aircraft including fuel costs, landing costs and repairs and maintenance.”
Earnings+More contacted Penn with questions regarding the corporate jet usage but received no reply.
Is there anyone on board who knows how to fly a plane? The news of the flights comes at an awkward time for Penn given it is the subject of public agitation by activist investors. One investment source spoken to about the number of flights said it “appeared to be excessive.”
Back at the turn of the year, HG Vora emerged as a substantial shareholder in Penn with a 9.5%+ stake. It went public with fears that Penn’s current management might squander the ESPN Bet opportunity.
More recently, a further activist Shapiro Capital Management has appeared on the Penn register with a 6%+ stake. Neither fund was willing to comment to E+M.
Further pressure came from David Einhorn’s Greenlight Capital, which published an open letter in late April that said “after the Barstool fiasco, investors have serious doubts about the company’s strategy and management’s competency to execute.”
Eight miles high: Sources suggested the activists are unhappy with the levels of management compensation at Penn. In particular, there are questions around Snowden receiving a payout under the company’s short-term incentive plan of $4.37m on top of his $1.8m salary.
According to the proxy statement, this was achieved after the company altered the terms of the STIP to remove the interactive losses from the calculations.
One source who opted for anonymity said that, while taken in isolation the STIP payment and the news of the corporate jet usage weren’t “unheard of”, “taken together they suggest a lack of accountability.”
Coming in too low: Penn said in its recent Q1 earnings that ESPN Bet continued to underperform, with the company saying average spend per user came in below forecast. A recent note from the analysts at Bank of America suggested ESPN Bet’s revenues were coming in too low for a cost structure that was too high.
Read across: Recall, it was newspaper revelations of the use of private jets that were deemed a contributory factor in Jette Nygaard-Andersen leaving her post as CEO at Entain in December.
In tomorrow’s edition of the newsletter, E+M takes a deeper dive into Penn and its activist shareholders.
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+More
Clairvest and ECL Entertainment have teamed up to buy Wyoming Downs, a licensed live horseracing and off-track betting operator for an undisclosed sum. ECL is an owner-operator of multiple historical horseracing gaming assets in Kentucky.
By the numbers
New York OSB GGR hit a record in the second week of May at $70.9m, helped by a rise in handle (3rd highest since launch) and margin that came in at 13.3% vs. the 8.7% long-term average. The team at Jefferies said the performance was likely helped along by substantial recycling of winnings from the previous week when margin was exceptionally low at 4.8%.
DraftKings fared best with margins at 15.8% and GGR share of 51% while FanDuel was on 38%.
The North Carolina State Lottery Commission said handle since launch in mid-March to the end of April hit $1.31bn including promos, while GGR for the period came in at $172m. In Pennsylvania, brick & mortar GGR was down 4.5% YoY to $284m while iCasino GGR rose 26% to $173m. Mobile-sports-betting GGR increased 17% to $57.6m. In Illinois, sports-betting GGR was up 2% to $99.4m on handle that rose 18% to $1.27bn.
What we’re reading
A feud good men: The Fertittas and the Santinis might soon be fighting over the same territory in the Nevada taverns business.
Career paths
The big move: Joel Simkins has announced the formation of a new advisory firm called XST Capital, which will focus on serving rapidly growing companies across the digital gaming industry, offering M&A advice, capital raising solutions and strategy.
Simkins was previously a managing director at Houlihan Lokey and before that headed up the gaming and leisure team at Truist.
Fanatics’ SVP of trading, Andy Wright, has left the company after two years.
Anthony Marnell will step down from the board at Golden Entertainment with immediate effect to pursue other opportunities.
Patrick Miller has been appointed president and CEO of the Rio Hotel & Casino in Las Vegas.
Rank’s UK machine bonus
Every little helps: The casino to bingo operator enjoyed a share price bump of nearly 4% on Friday after the UK government finally announced the plans for casinos to be permitted more gaming machines.
Among the proposals, so-called 1968 Act casinos will be permitted up to 80 machines vs. the previous limit of 20, meaning Rank’s Grosvenor estate could double its machine total to over 2,600.
They will also be allowed to offer sports betting, while the ratio of more popular B2 machines in bingo halls will also rise.
Cold cases: The team at Peel Hunt suggested that after some reinvestment in reconfiguring its sites, Rank can hope to deliver ~$25m of incremental operating profit and “materially more” should it revive some “cold” licenses on bigger sites.
Sportradar analyst takes
Getting into the swing: Noting this was the third consecutive quarter in which the data and sports-betting services provider has raised its guidance, the team at JMP said Sportradar is benefitting from recent investments toward “value-enhancing technology”, allowing the company to expand deeper with its team and league partnerships.
Jefferies said the Q1 numbers demonstrated how Sportradar was a “productive participant in the global OSB value chain
More takes
Gaming & Leisure Properties: GLP’s $110m sale-and-leaseback deal with Strategic Gaming Management for three properties in Nevada and South Dakota is “modestly accretive”, said the team at Deutsche Bank, but comes with some “additional perks.”
Among these is a new tenant name, further geographical exposure in North Dakota and the right of first refusal on SGM’s other properties.
Taken with GLP’s deal for Tioga Downs, CBRE’s analysts said the transactions indicated casino M&A is “beginning to thaw, at least for small portfolios or single assets.”
Noting the right of first refusal option, the team said it “suggests more M&A could be on the horizon.”
GLP is “slowly but strategically building its pipeline of high-quality tenants to participate in the next wave of casino consolidation,” the team concluded.
The week ahead
Ace face: On Tuesday, Better Collective will publish its Q1 earnings, with the call with analysts scheduled for the following day. Following the news of the €42m AceOdds acquisition late last week, the leading betting and gaming affiliate has already upped its guidance for 2024.
Revenues are now expected to come in at €410m at midpoint with adj. EBITDA estimated to reach €135m.
BC said that AceOdds generated EBIT of €10.5m in the last 12 months and added that it would be reinvesting a portion of this profitability into the product and UX.
The team at Jefferies said BC will look to apply AceOdds’ betting tools and odds calculators across its global network and leverage the zero and first-party data within its in-house adtech platform.
On X: ”Hat tip to the guys who built a site that was nothing more than a bet calculator, got it to rank no. 1 organically on Google and sold it for €42m.”.
Gambling.com takes
A mere flesh wound: Looking at what the company said about the effect of Google content policy changes on the company’s media partnerships, the team at Macquarie noted management was hopeful the changes won’t affect its wholly owned properties. which may also ultimately see more traffic..
Run that by me again? On the same theme, B Riley’s analysts suggested Gambling.com could benefit from the opportunity to “capture revenue lost by competitors, many of which have more advertising partnerships” than Gambling.com.
Recall, Gambling.com has deals with The Independent, McClatchy and Gannett.
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Startup roundup
Prediction markets fundraise
Poly tunnel: Crypto-based prediction market provider Polymarket has raised $45m in a Series B round led by Peter Thiel’s Founders Fund. The company has now raised $70m in total. See last week’s The Token Word for more on recent prediction markets’ moves, including Socios’ partnership with on-chain prediction markets liquidity provider Azuro.
Startup focus – Sharp Alpha raise
Look sharp: One of the more significant pieces of news for the betting and gaming growth company sector came last week with the announcement from sector-endemic fund Sharp Alpha, which said it has closed an oversubscribed $25m venture fund.
Lloyd Danzig, principal at Sharp Alpha, said the enthusiasm shown by investors for the new fund was a positive for sector funding generally.
“We are entering the most favorable period in the last 15 years to bet on great founders.”
The Sharp Alpha Fund II already has existing investments in C15 Studio, which recently emerged out of stealth mode as the operator of F1’s new streaming channel. Sharp Alpha Fund I invested in a range of companies in and around the betting space, including Almost Friday Media, Jackpot.com and Betcha, which was snapped up by Vivid Seats for $25m in late 2021.
Danzig said that alongside the money received from Sharp Alpha, investee companies also received a suite of resources ranging from brand awareness to commercial and product development.
Co-driver: Fund II will target investments in the range of $1m-$2m. Sharp Alpha also operates a co-investment vehicle that provides limited partners with the ability to invest additional capital in select deals alongside the fund.
Sharp Alpha said the money for Fund II comes from US financial institutions, pro sports team owners, family offices and venture capitalists among others.
Danzig said the success in raising the new money showed the extent to which there was undeniable enthusiasm for innovators working in the intersection of sports, gaming, media and tech.
Helping hands: Among Sharp Alpha’s advisors are Keith Horn, the founder of Loring Capital Advisors; Emanuel Pearlman, former chair at Empire Resorts; Daniel Bernard, founder and chair at Redwood International Sports; and Don Kornstein, vice-chair at Caesars.
Growth company news
Alt Sports Data has announced a partnership with the NHRA drag racing series to become the sole distributor of sports-betting data.
Calendar
May 21: Better Collective (earnings)
May 22: Better Collective (call)
Jun 6: Gaming in Holland
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