Into the mixer
Prediction markets promise a shakeup of the OSB landscape
Robinhood tipped for predictions market win by Morgan Stanley.
In +More: Gaming stocks take another tumble, Churchill Downs raises debt.
Earnings: Century Casinos comes under attack from shareholders.
The long take: Lottomatica’s positioning in Italy is examined.
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Shaken, maybe stirred
Disruptive influence: The emergence of prediction markets could provide the biggest shakeup to the US sports-betting market since the repeal of PASPA in 2018 – and could see Robinhood emerge as a major player.
Breaking down the potential opportunity, the analysts at Morgan Stanley argued that a ‘straight bet’ NGR TAM of upwards of $1.7bn might become available, depending on the path towards regulation.
That ‘straight bet’ market consists of a $900m TAM in current sports-betting states plus $800m from non-sports betting states, including California, Florida and Texas.
Vanilla fudge: Like betting exchanges, prediction markets can be viewed, as per Flutter CEO Peter Jackson’s comments on the recent earnings call, as “lacking the richness” of full-offering sportsbooks.
Pointing to the experience with exchanges in Europe and the US, the MS team said there “may be a path for prediction markets to create synthetic parlay contracts.”
But they added that multiples remain “highly challenging, given variable buckets of liquidity available across different potential selections.”
That, the MS team noted, all but requires a sportsbook trading and risk management capability. “The more complex the bet, the higher the requirement for a trading and risk function,” they said.
This is particularly the case for same game parlays and betbuilder products, which “require careful application of margin and risk management, given contingent probabilities at play.”
Enter the ’hood: Nevertheless, the MS team suggested the impact of the TAM expansion presented by the rise of sports-based events prediction markets would represent a tailwind for the OSB market leaders – DraftKings and FanDuel – that would outweigh the risks of entering the space.
But the team also argued Robinhood could be the big winner from the emergence of prediction markets.
It could be the making of you: With 25m+ account holders, a platform that appeals to active traders and a “proven track record in creating engaging user experiences,” the analysts suggested it could “become a leader.”
Indeed, the size of its user base “coupled with their impressive marketing and promotional execution could materially popularize event contracts,” the team said.
The new business line, they argued, would amplify the Robinhood ecosystem, expand its wallet share and add new customers.
Other players in the prediction space include Kalshi, Crypto.com, PredictIt and the offshore and blockchain-based Polymarket.
Catalyst: The Commodity Futures Trading Commission will host its roundtable on the subject of prediction markets either later this month or in April. It will be a “key gauge” of the likely stance of the regulator, said the MS team.
Caution, approach with care: If the CFTC makes it clear it is minded to permit such markets, “expect state politicians to strongly fight against allowing sports-event contracts,” they added.
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Rinse and repeat: Rush Street was down 8.5%, DraftKings was off by 4%, MGM Resorts and Caesars were both down by over 2.5% and Flutter was off by 1% after the markets turned to a sea of red once again yesterday. The wider market is now in so-called correction territory with the S&P 500 having fallen more than 10% in recent weeks.
Nervous: The tricky market conditions are reported to have caused Blackstone to rethink its plans to pursue an IPO for Cirsa after the Easter holidays. The PE company was seeking a partial float of 25% of the gaming company and hoping to raise €700m-€1bn, but now reports suggest the plans are on ice until the current macro instability recedes.
No doom in rooms: Q1 Las Vegas Strip room rates were solid, according to the data from the regular survey undertaken by the analysts at Truist, overcoming the tough comp vs. the 2024 Super Bowl. The analysts also noted forward rates for April were up YoY. “While recession fears have risen in the past few weeks, our survey is not yet showing any fundamental change,” the team added.
Churchill Downs has announced its board has approved a new $500m share repurchase program. This replaces the previous $500m repurchase authorization dating back to 2021 and which had $126m of unused authorization, which will be included in the new purchase authority.
No vacancies: A lack of available land for development could “strangle” the Las Vegas real estate market, according to panelists at a recent Meet the Builders event. Nicole Bloom, division president for housebuilding company Richmond American, was quoted by the Las Vegas Review-Journal as saying there was as little as 25,000 acres left to build on and it was “very hard to develop right now with the limited availability of land.”
A seaside town they forgot to close down: Metropolitan Gaming has temporarily closed its Rendezvous Casino in Brighton, saying it will remain closed while the long-term sustainability of the business is assessed.
Read across
Happy AMPers: E+M PRO’s Mining the 10-K this week looked at the data on Flutter’s reported total of 13.9 million average monthly players or AMPs in 2024 across all its divisions, representing a 13% YoY increase. Unsurprisingly, the US and international divisions were the primary drivers. Meanwhile, the edition also assessed what the international business might look like next year once Snai is incorporated.
Investor conference focus: The E+M PRO edition being sent later today will report on MGM Resorts’ comments from a JP Morgan investor conference on its digital focus. “If there’s any single thing this year that will stand out, make a difference, and I think where the company is highly focused, it’s in our digital presence and the inflection in that business,” said CEO Bill Hornbuckle.
Switcheroo: Compliance+More yesterday reported on a new bill in the New Jersey Legislature that aims to ban sweepstakes casinos outright. The bill sponsored by Rep. Clinton Calabrese, would prohibit sweepstakes platforms that allow users to purchase virtual currency redeemable for cash prizes and marks a switch from earlier proposals from Calabrese to regulate rather than ban the industry.
+More careers
The big move: Full House Resorts has announced the appointment of Brandon Lenssen as GM of the Chamonix Casino Hotel in Cripple Creek, Colorado. Most recently, Lenssen served as VP and GM for Quick Custom Intelligence, and prior to that he spent five years as GM of Bally’s Black Hawk. On its Q4 call, Full House said it was replacing the management team at the refurbished Chamonix to rectify initial teething troubles.
MGM Resorts has appointed Donna Langley, chair of NBCUniversal Entertainment & Studios, to the board. Aristocrat CTO Andy Hendrickson has resigned and accepted a role at an undisclosed competitor. Yolo Entertainment has made a trio of promotions with Ashley Abela Hardy becoming CTO, Shane Anderson taking over as chief brand officer and Laura Nash assuming the newly created chief data officer role. GiG Software has appointed Andy Evers to senior VP. Marco Stotani is now the chief business officer at GeoComply. Swintt has appointed Anthony Dalla-Giacoma as CCO.
Denmark Marketing Manager – Malta
Finance & Accounting Director – Lagos
Earnings in brief
Century Casinos
Under attack: Two shareholders who took part in Century’s earnings call attacked the management team for poor performances at its Rocky Gap and Nugget properties in Maryland and Reno, Nevada, respectively, with one demanding the heads of co-CEOs Erwin Haitzmann and Peter Hoetzinger.
Calling on the company to exit its operations in Poland and Canada and “leave all the nonsense behind,” one investor said the duo at the top should be replaced by “one person who knows the North American gaming market.”
“It’s just disappointments after disappointments, quarter after quarter,” the disgruntled investor added.
Weak become zeroes: The clashes came after Century reported Q4 revenues down 4% YoY to $138m and adj. EBITDAR off by 17% YoY to $21.1m. Hoetzinger blamed the performance on “the fact that the low-end consumer is so weak.”
He also defended the company’s position in Poland and Canada saying that “for a very long time” they had a positive impact on EBITDA and cash flows.
However, in Q4 the Polish casinos produced an operating loss of $2.3m and Canadian profit fell 16% to $2.6m.
The US operations fell to an operating loss of $34.5m after the company took a non-cash goodwill impairment of $43.7m against the value of the Nugget property.
Century’s share price suffered a 21% fall on the day.
Allwyn
Numbers up: The operator of the UK National Lottery said the first full-year contribution of operation since taking over from previous incumbent Camelot helped drive a 12% increase in revenues to €8.79bn. GGR was also up 12% to €8.43bn while adj. EBITDA rose 4% to €1.55bn.
Online was also identified as a driver, with YoY revenue up 20% YoY to reach 39% of GGR or an implied €3.29bn.
Q4 revenue rose 10% to €2.4bn with GGR also up 10% to €2,29bn. Adj. EBITDA for the final three months of the year came in up 12% to €437m.
A new term: The company also announced a new €450m term loan offering and an increase of $100m to its existing dollar-dominated term loan. The proceeds will be used to repay existing indebtedness, for general corporate purposes and to pay transaction fees and expenses.
The company said the transaction will be leverage neutral.
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The long take – Lottomatica
Il preferito: The Italian market “continues to favor” omni-channel operators, given the current restrictions on marketing and advertising, according to the team at Deutsche Bank, who noted Lottomatica is still the “clear” market leader.
Looking into the market data, the team said the top three omnichannel operators have gained market share over the period from 2018 to 2024.
Conversely, the mid-tier in the top 10 have lost share while the long tail has also lost out, albeit by a smaller percentage.
Moreover, some of these are “likely to struggle” with the cost of new license concessions for online, the team noted.
For the company, the momentum into 2025 appears “robust,” albeit against soft comps from Q1 last year when sporting results were in favor of the customers.
“The shift from retail to online gaming spend is driving growth in online player numbers, spend per head and EBITDA margins and also free cash flow conversion rates,” the team added.
Furthermore, whereas other European jurisdictions are facing tax uncertainties, the new nine-year concession will provide a “high degree of regulatory visibility.”
Connections
The big deal: Delaware North and Eureka Entertainment subsidiary Universal Gaming are combining slot route operations in Illinois. The combined entity will be called Universal GEM Gaming and the transaction has been green-lighted by the Illinois Gaming Board. Universal GEM will operate ~2,500 VLTs in Illinois.
Alt Sports Data has agreed a deal with bet365 to provide its data engagement tools. Meridianbet is now officially live in Nigeria through its newly licensed local entity Masterlive Network. QTech Games has agreed a content partnership with RAW iGaming. Soft2Bet has announced it will launch its iCasino products in the US through a market access deal with Caesars Entertainment.
The Brazilian Volleyball Confederation has announced a comprehensive, multi-year partnership with Sportradar. Separately, Stats Perform has signed a 10-year agreement with Volleyball World for the rights to deliver betting streaming and data services for top-tier men’s and women’s volleyball competitions.
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Upcoming earnings
Mar 17: Inspired Entertainment
Mar 19: Opap, Sportradar
Mar 20: Gambling.com, Bragg Gaming
Mar 21: Allwyn
Mar 26: Evoke
Mar 27: Playtech
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