Think Globo
BetMGM to partner with media giant for Brazil venture
MGM Resorts announces the next international move for its digital venture.
Brazil was a topic of comment across the sector’s recent Q2 earnings call.
In +More: Eccles continues the FanDuel founders fight.
Gambling.com says Google moves “sort the wheat from the chaff.”
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All the world is football-shaped: MGM Resorts has announced a partnership with Brazilian media giant Globo to form a joint venture to seek a license to run the BetMGM brand once the country’s new regulatory regime is up and running in early 2025.
The JV will operate under the umbrella of MGM’s existing digital business with its LeoVegas business providing the tech.
BetMGM Brazil will be based in São Paulo with a leadership team drawn from both parents.
The hope is to tap into the customer bases of both MGM and Globo.
Baby steps: On MGM’s Q2 earnings call, CEO Bill Hornbuckle had more than hinted that Brazil was a likely target for BetMGM’s international expansion. On LinkedIn yesterday he posted that BetMGM would “enter the market quickly and at scale,” establishing an “early foothold” in a market predicted to shortly be worth $3bn.
Brazil will be the second BetMGM adventure outside of North America and the JV with Entain. The site launched last year in the UK using the Kambi platform via LeoVegas.
MGM has since bought the platform behind Tipico US but it is not known whether that will power the Brazilian site.
The melting pot: BetMGM will face strong competition in Brazil, including from Entain with its Sportingbet and Betboo brands. (see ‘Earnings word cloud – Brazil’ below)
Other market leaders include Kaizen’s Betano, likely to be the current market leader, bet365 and local hero Betnacional, which is currently the subject of speculation surrounding an approach from Flutter.
The analysts at JMP noted that when a jurisdiction goes “from gray to green” the size of the TAM increases substantially.
They added that MGM’s “increasing global scale and improving product outside the US position it to dislodge market share from the existing companies already in the gray market.”
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Earnings word cloud – Brazil
The other half: MGM was far from being the only company to give mention to Brazil in its Q2 earnings call, with prominent mentions coming not least from its co-partner in the US BetMGM venture.
Entain’s Brazilian operations have been struggling operationally during the long and drawn-out regulatory process.
Yet, in H1 it said it had seen a return to double-digit growth, which CFO Rob Wood suggested was the “biggest story” for the half.
Glide path: Sameer Deen, CCO, said “driving a smooth transition into a regulated Brazil remains top of mind,” with the company having just refreshed the Sportingbet brand and now utilizing its in-house 365Scores app to drive FTDs.
But he also noted the competition both from domestic and international players and “a lot of people looking to come into the market post-regulation.”
The rush to market is understandable given the size of the opportunity. Topping Hornbuckle’s $3bn estimate, Sportradar CEO Carsten Koerl said on his company’s call the market would be worth $5bn in the next three to four years.
Yes, but: A word of caution was injected by Charles Gillespie, CEO at affiliate provider Gambling.com, who said yesterday that “when Brazil fully regulates and people start paying taxes, the people with businesses in Brazil are going to be dealing with very different customer lifetime values.”
Floating points: More moves are expected before the January launch. That includes Flutter, which currently runs the Betfair and PokerStars brands in the country and as noted above was linked this week with a bid for local brand Betnacional.
While sidestepping questions on the specifics, and ahead of the news of the talks with Playtech over buying Snai, CEO Peter Jackson said “the company would “work out” its Brazilian positioning.
“When we have made a decision, we’ll let the market know if there's something to say.”
Definitely maybe: DraftKings CEO Jason Robins, meanwhile, gave Brazil an oblique reference on the Q2 call. When asked about the potential in Latin America, he said the company would “probably not do it organically” if it were to enter any of the markets.
“It would be through M&A,” he said before reiterating the company’s focus on the US right now.
+More
Stop the steal: Nigel Eccles, the ex-founder of FanDuel, and over 100 former employees and investors have expanded their suit in New York against former private equity investors Shamrock and KKR, claiming they “secured for themselves and other preferred shareholders 100% of FanDuel’s equity in the new merged company along with the massive return it represented.”
At the time of the sale of FanDuel to what is now Flutter Entertainment, the FanDuel shareholders received $559m for 61% of the company.
The plaintiff’s claim this was an artificially low price designed to curb the profits of the early shareholders. They are seeking a jury trial and unspecified punitive damages alongside the “disgorgement of the defendants’ ill-gotten gains.”
The claim was initially dismissed in 2022 by an appellate court before the New York Court of Appeals ruled in May that the suit could proceed.
“Standing up against the likes of KKR is not easy, but I’m determined that the team of 100+ amazing people who spent years building FanDuel from the ground up will get back what was stolen from them in 2018,” Eccles wrote on LinkedIn.
Hero Group and GeoComply have announced the completion of the buyout of Betting Hero from FansUnite for $37.5m. After distributing the proceeds to shareholders, the latter will now exist as a cash shell with $500k at its disposal.
Read across
In The Token Word this week the continuing arguments over prediction markets in the US has seen Coinbase and Gemini enter the fray, arguing that Congressional efforts to shut down political betting is economically unsound as well as threatening to stifle innovation.
Meanwhile, in Compliance+More, the argument in Australia over the rights and wrongs of attempting to ban gambling ads continues to rage, roping in all and sundry including ex-prime ministers and sports bodies.
+More careers
Career assessment: The team at Truist met up with Penn’s new CTO Aaron LaBerge this week and came away impressed with “what he can bring to the table.” LaBerge comes from Disney where, as the team noted, he was “critical” in ESPN’s search for a sports-betting partner.
LaBerge told the team that ESPN Bet’s efforts to close the gap on the leaders were akin to Disney chasing Netflix in streaming.
“Netflix had a ten-year and many-millions subscribers head start though Disney was able to compete in time as its product became increasingly sophisticated,” said Truist.
“LaBerge sees content, merchandising and personalization as being the key differentiators in the OSB market,” the team added.
The big moves: As noted this week from its Q2 earnings, a brand new top team has taken over at gaming affiliate Catena Media in the hope they can collectively turn the ship around. New CEO Manuel Stan started in post on July 1 and he has been joined by new CFO Mike Gerrow.
Former interim CEO Pierre Cadena, meanwhile, is now the COO and Edward Midolo is the new CTO.
They will soon be joined by an as yet unnamed general counsel.
Stan said he was a “strong believer that the success of a business is predicated by having a strong team with high energy levels and great motivation.”
The big appointment: On Sportradar’s call this week, CEO Carsten Koerl bigged up new hire Behshad Behzadi who comes from Google and is now leading the company’s AI efforts.
He said Behzadi’s appointment was a “clear statement of our ambition in this important area” and would enhance Sportradar’s AI capabilities to “develop products that transform the way sports are consumed in our sports platform.”
Gavin Issacs has resigned from the board of directors at Galaxy Gaming ahead of taking his role as CEO of Entain. Galaxy will fill the position in the coming months.
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Gambling.com earnings
I’m alright Jack: The deprioritization on the part of the Google algorithm of media partnership content was a key theme from earlier this year, but CEO Charles Gillespie began his Q2 review by praising Gambling.com’s ability to respond immediately to the changed circumstances.
Not only were the effects of the changes less pronounced than originally feared, the contribution from media partnerships in Q2 was itself higher than had been guided.
This success might not be replicated elsewhere, he added. “The wheat has been separated from the chaff, big time,” he said.
By the numbers: Revenue was up 18% to $30.5m while adj. EBITDA was also on the rise, up 19% to $11.2m. The share price responded with a 23%+ leap yesterday.
Still got it: Despite talk of marketing spend in the North American markets being cut back or moderated, Gillespie said there had been “no meaningful change with the way they deal with affiliates.”
“They know that works because they can track it,” he said. “They have the attribution. It's black and white. So there’s absolutely no reason that they would back off on that.”
Still, he noted that North American revenues were not expected to grow overall in 2024 though he hoped Gambling.com would take “meaningful market share.”
Take your pick: M&A remains high on the agenda. “We also remain as active as ever in evaluating M&A opportunities and will not hesitate to pursue the right targets,” said Gillespie.
“We continue to have a lot of great conversations, but we remain as famously picky as we've ever been.”
During the quarter the company completed the acquisition of Freebets.com and related assets from rival XLMedia for $20m in cash and potentially a further $22.5m in earnouts.
Earnings in brief
SharpLink Gaming: The gaming affiliate said revenues for Q2 stood at $981k, a 27% decline YoY as the company continued to work on strengthening its balance sheet, achieved via the sale of SportsHub for $22.5m in cash in January this year.
Scout Gaming said revenues rose 16% in Q2 to SEK11.1m ($1m) while it all but broke even at an EBITDA level. The company said that in May it restarted marketing efforts around its B2C offering FanTeam.
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Bingo gives Rank wings
Bang in the drum: An aging audience, competition from online and then the pandemic were thought at one point to spell the end for the UK’s B&M bingo sector but instead Rank’s FY24 earnings show its Mecca bingo halls business has found a new lease of life.
Instead of being carted off to a care home for past-it products, the business is showing distinct signs of life with a return to profitability.
Operating profit came in at £3.9m vs. a loss of £5.6m in the previous year while NGR rose 8% to £139m, with mainstage bingo up 11% YoY and gaming machine NGR up 9%.
Tweak of the thumb: CEO John O’Reilly noted the rationalization of the estate was now all but complete with 51 venues. “Growth is a consequence of stronger liquidity, busy venues driving bigger prize boards of which in turn attract more customers,” he added.
Anyone but England: O’Reilly also noted the success Mecca enjoyed despite suffering in England when the team was playing.
“North of the border on those big England nights we had bumper days,” he added. “The last thing the Scottish fans wanted to do was to stay at home and watch England.”
Keir’s den: The next leg of the rebound should come from further land-based gambling reform, though this depends on the new Labour administration picking up where the last Conservative government left off.
Analyst takes
Evoke: The team at Deutsche Numis provided a neat summary of what went wrong for Evoke in H1 and why they think 2024 is still “reassuringly on track.”
The team pointed out that having “chased volume over value,” the marketing efforts have now pivoted towards “core mid-value customers.”
In retail, meanwhile, the analysts noted William Hill’s efforts to pursue an in-house gaming solution have come to an end, with the company recently signing an agreement with Inspired to roll out new cabinets in Q4.
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Calendar
Aug 21: Better Collective (earnings)
Aug 22: Better Collective (call)
Aug 28: Gaming Innovation Group
Sep 25: Flutter investor day
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