Reign over
DraftKings pulls the plug on its NFT experiment
Citing legal issues, DraftKings calls a halt on Reignmakers, Marketplace.
Vegas and digital ‘drive the upside’ for Caesars Entertainment.
In +More: Amelco, Metric and Kambi celebrate OSB supply successes.
IGT talks about losing the conglomerate discount.
Lottomatica continues to grab market share in Italy.
The end of our elaborate plans.
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Shuttered
Shut down: DraftKings has shuttered its Reignmakers and Marketplace NFT offering with immediate effect citing recent legal developments. The company said in a notice to its NFT customers that “this decision was not made lightly and we believe it is the right course of action.”
The legal development is a class action brought in Massachusetts, which argues the NFTs sold via Marketplace are a security. A judge earlier this month refused the company’s request to dismiss the case.
DraftKings said yesterday that holders of Reignmakers digital game pieces would be given the opportunity to relinquish them in exchange for cash.
Sold as seen: The legal action brought by plaintiff Justin Dufoe claims DraftKings knew the NFTs they advertised and sold were securities under federal and state securities laws but failed to register them.
DraftKings Marketplace has been charged with violating the Securities Act of 1933, the Securities Exchange Act of 1934 and two Massachusetts general laws.
Let’s never speak of this again: DraftKings launched the Reignmakers and Marketplace offerings at the height of the mania around NFTs in the summer of 2021 by offering “curated NFT drops” via a relationship with the Autograph platform.
Despite the boom-era timing, DraftKings insisted the move wasn’t jumping on a bandwagon. “DraftKings Marketplace will sit at the center of this technological and cultural phenomenon,” said co-founder and president Matt Kalish at the time.
Later that year, CEO Jason Robins said Marketplace was a good way for DraftKings to reach new customer segments.
Quietly buried: The last mention of the product came over two years ago when Robins said the company now had a “proprietary end-to-end in-house NFT factory.”
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Caesars cranks it up
Ahead of the game: Caesars Entertainment shares enjoyed a post-close bump of over 5% after releasing well-received Q2 earnings helped by forecast-busting digital results and a better-than-expected outcome in Las Vegas.
Total group revenue was down less than 2% at $2.83bn while adj. EBITDA came in dead on $1bn, down less than 1%.
A game of horseshoes: The digital improvement was driven by iCasino, which saw revenue growth of 50% for the second consecutive quarter. Sports-betting revenue rose 19% YoY. Total digital revenue was up 28% to $276m while adj. EBITDA nearly quadrupled to $40m.
The next iCasino brand to be utilized was Horseshoe, which will be launched initially in Michigan in September and rolled out across the remaining states by year end.
CEO Tom Reeg noted that the Caesars Palace iCasino app was “accelerating at faster than 50%.” Horseshoe “will be incremental to that,” he added.
Low-fat spread: Talking about the effectively flat handle but increased hold, president of digital Eric Hession said Caesars had changed from a “peanut butter spread approach,” which had caused the business to invest in the lower end of the database.
“We’ve reduced that,” he said. “The volumes have dropped off, but the profitability has gone up.”
Hession said ZeroFlucs – bought in early July for an undisclosed sum – was already contributing to product innovation.
April skies: Regionally, Reeg said the business suffered a “terrible” April, accounting for 100% of the declines in that business where revenues were off by 5% YoY to $1.39bn. Adj. EBITDA for the segment was down nearly 8% at $469m.
Coming in Haute: The company in part blamed construction disruption in New Orleans and competition from Churchill Downs in Terre Haute.
“We feel good about 2025 in regional,” Reeg added.
Beating the spread: He was also optimistic about Vegas for the rest of this year. In Q2, revenue fell over 2% YoY to $1.1bn while adj. EBITDA was flat at $514m. “Expect Vegas to post growth,” said Reeg.
“I know that's not what's been reflected in estimates, but we feel very good about the rest of the year into 2025,” he added.
+More
Rush Street Interactive has said it will be closing its affiliate program as of September 1, according to a letter sent to its affiliate partners seen by Gambling911.
Gaming & Leisure Properties has priced up $1.2bn of senior secured notes, which will be offered in two tranches with $800m with rates of 5.6% and the second $400m at 6.25%.
Partnerships news
Metric Gaming has announced a partnership with Betzone to launch the brand’s new UK sportsbook venture. The deal has been done in tandem with GiG, which announced it was collaborating with Betzone last week. Amelco has announced it is to provide the UK Tote with fixed-odds sports-betting services. Kambi has announced it has transitioned LiveScore’s VirginBet brand to the platform. Oddsjam’s Optic Odds has struck a new partnership deal with Dabble, which will see it integrate its advanced odds API and trading solutions.
Lottery just the ticket for IGT
You can go your own way: After revealing a “simple straightforward” transaction last week with the sale of the IGT gaming and digital assets, alongside the Everi business, to Apollo for $6.3bn, IGT management was left to talk up the benefits of having a standalone lottery business as its continuing operations.
“Lottery is a large, consistently growing and resilient industry with recession proof characteristics and significant tailwinds from potential iLottery adoption, especially in the US” said CEO Vince Sandusky.
Lottery numbers: IGT said the lottery business generated Q2 revenues of $613m, down 2% YoY while lottery adj. EBITDA was down by 6%. In comparison the gaming and digital arm saw revenues move up 1% to $436m while adj. EBITDA climbed 16% to $103m.
Overall revenue stood at $1.05bn and adj. EBITDA down 5% to $420m after central corporate costs.
The digital and gaming business will be classified as discontinued operations as of Q3.
Sandusky said the “driving force” behind the transaction is that both sides of the business are “terrifically undervalued” with the company hampered by the “conglomerate discount” that had been applied by investors.
Analysts had previously complained that IGT was “not one thing or another,” he added.
Prego: Asked about the upcoming lottery renewal in Italy, Sandusky said IGT was very hopeful it would see its concession renewed. He said the €1bn+ upfront fee and significant capital investment meant it would be “difficult” for an unproven competitor to enter the race.
“It’s a big bet,” he noted. “For us, we've got the experience and we do have the confidence.”
“We think we can maintain a good ROI on this business despite the fact the fee has increased over the previous renewal.”
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Lottomatica
Risorgimento: As Lottomatica’s small squadron of Italian-facing brands pushes on towards claiming nearly 30% of the total online market, the company raised its FY24 adj. EBITDA forecasts by €25m at midpoint.
H1 revenue came in up 14% to €932m while Q2 revenue hit €492m, up 24%. Within this, online was up 37% to €338m, the franchised retail estate revenue rose 4% to €214m and the B&M gaming halls increased by 3% to €380m.
Adj. EBITDA for H1 was up 6% to €317m though the company said that with normalized margins it would have been 21% better.
Having augmented its brand roster most recently with the addition of SKS Gaming, total market share for the online business stood at just over 29% in Q2 while OSB operations were 300 basis points shy of 30%. iCasino market share stood at 29.5%. The average increase of the three metrics over Q123 was 2 ppts.
Earnings in brief
Gaming Realms: The core licensing business continued to be the driver at Gaming Realms with the launch of the Slingo portfolio with FanDuel in Pennsylvania and Connecticut, and also Fanatics in Pennsylvania, New Jersey and Michigan, helping push total revenues up 18% to £13.5m. Adj. EBITDA rose 21% to £5.8m.
XLMedia: The slide at the gaming affiliate business is yet to abate after the company said revenues from the continuing operation fell back by 38% to $10.4m. The company said the decline was in line with expectations given the challenging comp with the Ohio opening in H123.
The statement added that it had seen a further seasonal dip in Q3.
It added that adj. EBITDA is expected to come in at $5m for the year.
Accel: Revenue rose 6% YoY in Q2 to $309m while adj. EBITDA was up 6.5% to $49.7m with both the number of gaming locations and terminals up 4.7% over the period. Recall, Accel recently closed a deal to acquire Fairmount Holdings, the owner of FanDuel Sportsbook and Horse Racing in Illinois for ~$35m in an all-shares deal.
Calendar
Jul 31: MGM Resorts, Rush Street, Codere Online, Bally’s
Aug 1: DraftKings (earnings), VICI
Aug 2: DraftKings (call)
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