Take me to the Rivers
Rush Street impresses investors with beat and raise
RSI lauds its iCasino and LatAm progress.
MGM Resorts said Entain’s recent CEO appointment is “comforting.”
In +More: Stake’s Italian buyout, Nevada June numbers.
Bally’s says the UK is on the up.
Caesars enjoys a post-earnings share price boost.
And it gets bigger, baby, and heaven knows.
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Rivers deep
Harder, better, faster, stronger: Rush Street Interactive shares are up nearly 15% in post-close trading as the CEO Richard Schwartz proclaimed its “approach is working” after another quarter of beating analyst expectations.
Q2 revenue rose 34% YoY to $220m while adj. EBITDA more decidedly moved into positive territory at $21.4m vs. a $1.2m profitability toehold this time last year.
Schwartz said Rush Street was adding new players to the platform faster, doing it more efficiently and maintaining high player values.
RSI raised its 2024 guidance to $880m at midpoint, up $45m on the prior outlook while the adj. EBITDA outcome is now expected to be 24% better at midpoint at $68m.
👀 Rush Street shares up nearly 15% AMC
Nine of the above: Schwartz noted that RSI saw 50%+ growth in nine separate markets. Not coincidentally, he said nine of RSI’s 19 markets globally featured iCasino.
He called out the strength in Delaware, where RSI is the sole operator, and noted that attempts to open out the market to more participants had been shut down in the legislature.
Slicing and dicing: CFO Kyle Sauers noted the advances came despite marketing costs declining 10% YoY and expenditure as a percentage of revenue falling to 16% from 24% in Q223. But he noted marketing spend would increase again in H2.
Pushing back on stories this week about cutting gaming affiliate relationships, Sauers said this was only in “some markets” with flexibility being sought to spend more with affiliates in other markets and channels.
No IL effects: Sauers said the new graduated tax structure in Illinois was “better” for RSI with the impact being less than feared at less than $2m of annual impact. He noted he believed the “competitive intensity” in the state would decline in response.
LatAm TAM: Revenue from Latin America was up 79% YoY, with the “vast majority” coming from Colombia, helped by the country’s recent appearance in the final of the Copa America tournament.
Schwartz noted Rush Street is now live in Peru, its third country in the region after Mexico. He said an “evaluation” of Brazil was ongoing but noted that gray market operators would have a head start.
Tell me what’s your flavor? Asked whether RSI would look at buying more elements of its tech stack, Schwartz pointed out it already owns “almost all” of its back end.
In sports it “gets the bread and butter” from Kambi and then “adds flavor” while he added that in iCasino RSI had developed its own jackpot system.
“Other companies have gone out and bought entire companies to have a jackpot system,” he added. “We built it in-house.”
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No pressure, Gav
Comfort blanket: CEO Bill Hornbuckle said the appointment of Gavin Isaacs as CEO at BetMGM JV partner Entain was “comforting,” adding he would “do wonders for that business and ultimately the market.”
Asked about the potential for even closer links with Entain, including a merger, Hornbuckle continued with his previous non-committal stance.
“I get the longer-term question, I'm just not in a position to want to answer it right now,” he said.
Keep the faith: Referring to Monday’s somewhat disappointing trading update from BetMGM, he said the company had previously stated 2024 would be an “investment year” and that the company had recognized it had lost share in OSB and that was impacting the position in iCasino where market share is “precious.”
BetMGM had “rightfully decided to invest heavily” into the sports product customer acquisitions for iCasino.
He added that its efforts this coming fall would be “pivotal to the business” and the ability to regain market share.
Asked whether BetMGM might pivot away from OSB entirely to concentrate on iCasino, Hornbuckle said: “I would never say never.”
But he added despite having invested ~$1.5bn “all-in,” MGM was “not giving up on digital by any stretch. We still believe. We are going to be patient with it for a while.”
Cinemascope: “Big picture, we love what BetMGM has done for our brand,” he added. “We love the long-term prospects.”
“We enjoy having a partner during this development stage that is equally focused on the business,” he added.
Rooms with a view: CFO Jonathan Halkyard opened proceedings with the analysts by pointing to the contribution made by the partnership with Marriott, which he said brought in 410k of room bookings in the YTD.
“The future for hotel bookings in Las Vegas is bright,” he added, noting that room rates are up for every month of Q3.
Off grid: Hornbuckle noted “some softness” later in the year with Formula 1, saying MGM is “hoping and believing that this race will continue to pace up.”
“We're concerned enough to make a point of distinction between this year versus last,” he added.
“Last year, I think we did an amazing job scaring the hell out of people in terms of traffic.”
By the numbers: Revenues for the quarter came in up 10% to $4.33bn helped by a 37% improvement at MGM China. Adj. EBITDA was up 4.8% to $1.17bn. Hornbuckle said MGM’s Macau operations were trending above the 80% recovery seen in the market generally.
+More
Stake.com has made a move into the regulated Italian market with the acquisition of Baldo Line, the company behind IdealBet. Stake said the deal was “pivotal” as the company pushes further into the regulated space following the acquisition of the Betfair Colombia license in Nov23.
Stake will now establish an office in Italy while IdealBet continues to operate under its own name.
WynnBet has stopped taking bets in New York, paving the way for the transition to ESPN Bet, according to PlayNY. Penn said previously it hoped to launch in the state by fall after it bought the license in February.
By the numbers
Las Vegas: Strip GGR rose 4% YoY in June to $759m, helping Q2 revenue to a 5% increase. Locals revenue was up 6%. The analyst at Truist said the results were “encouraging as Vegas continues to power through any broader macro weakness.” Visitor volume was up 1.2% YoY.
Macau: Revenue rose 11.6% YoY to $2.31bn in July, a 5% sequential increase. The figure is 24% down on the pre-pandemic numbers.
Bally’s true Brit
Brit on the side: Bally’s international interactive unit was propped up by 9% growth in the UK business but this failed to offset what analysts at Macquarie said were “strong declines” in Japan and other markets, which meant the segment saw 7% decline overall to $229m.
CEO Robeson Reeves said the UK was benefitting from the measures it rolled out ahead of the White Paper and noted the BallyBet UK launch during the quarter.
He said the company had been spending more on brand advertising, “really trying to get the brand out there.”
By the numbers: Total revenues rose 2.5% to $622m while adj. EBITDA was static at $130m. B&M gaming rose 3% to $343m while North America online revenues nearly doubled to $49.2m.
In Asia, meanwhile, he said that despite signs of a stabilization, “it now appears likely that challenges will remain for the foreseeable future.”
Flag day: Following the recent deal with GLP to fund the development of the permanent casino in Chicago, Reeves said Bally’s was “fully ready to plant our flag in the heart of the city.”
Low-end theory: Talking of the B&M business generally, president George Papanier said Bally’s was “watching the lower end closely as we are seeing some signs of spending fatigue.”
Blow up: Reeves insisted Bally’s was on track to hand over the site of the Tropicana to the A’s MLB team to begin construction of a stadium in 2025. The Hotel tower is set to be imploded in October.
Papanier said the company “continues to evaluate” its plans for the rest of the site.
Standard response: Reeves said the agreement reached with Standard General last week “provides a clear path to increased revenue, cash flow and value accretion.”
Earnings in brief
VICI: Total revenues for the gaming REIT rose 6.6% YoY to $957m while AFFO increased 10% to $592m. Ed Pitoniak, CEO, noted that the company had invested $950m over the quarter, including $700m into a reinvestment program at the Apollo-owned Venetian in Las Vegas. VICI will conduct its earnings call later today, Thursday.
Codere Online: This year will be a pivotal one for Codere Online, according to CEO Aviv Sher, with the company revising its outlook for adj. EBITDA profitability of between €2.5m-€7.5m from revenues, which it expects to be 22% ahead of previous guidance at a midpoint of €210m.
Revenue for the quarter came in up 39% to €54.4m with Mexican revenues up 57% despite the competitive landscape getting “tougher and tougher.”
Bluebet: Following the completion of its merger with Betr as of the start of July, the company said it will be creating a “profitable, leading Australian wagering operator” as it showed net win up 19% to A$17.7m. The US business continues to be under strategic review.
Venture capital firm Yolo Investments manages in excess of €500m in capital across 100 exciting fintech, gaming and blockchain companies. The Yolo Investments' Gaming fund, regulated by the Guernsey Financial Services Commission, has taken positions in fast-growth suppliers and operators, including Dabble and Enteractive. Yolo Investments (yolo.io) wants to hear from readers of this newsletter. Get in touch with your pitch, or for a chat about innovative products which can plug into our investment ecosystem.
Caesars rewarded
The morning after: Caesars enjoyed an 8%+ share price bump on Wednesday after what the analyst at CBRE termed a “clean beat” on consensus adj. EBITDA estimates that had the scribes purring at the Las Vegas and digital performances.
“After two rocky quarters, impacted by bad luck, labor accruals, and other one-offs, Caesars bounced back,” the analysts added.
The adj. EBITDA figure of $1bn was ahead of consensus forecast by $35m.
“For the first time in some time, Caesars delivered a report that was better than both expectations and our estimates,” said the Deutsche Bank team.
JMP analysts noted that the Caesars share price has been “weighed down” since late 2021 when it reached the heady heights of $119 vs. the current share price of nearer $42 by an iffy balance sheet, a poor B&M performance and the scale of the digital investment.
It is the digital side which showed the most improvement with digital revenue up 28% YoY to $276m while adj. EBITDA rose nearly four times to $40m.
The team at Macquarie said 2024 should now be considered “an inflection point” while Deutsche Bank suggested the segment showed “unheralded” improvements.
🚀 Caesars up nearly 17% in the past week
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Calendar
Aug 1: DraftKings (earnings), VICI
Aug 2: DraftKings (call)
Aug 5: Playstudios
Aug 6: Genius Sports, Full House
Aug 7: Super Group, Light & Wonder
Aug 8: Entain, Bragg, Penn Entertainment, Golden
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