Jan 7: Weekend Edition no.28
New York launch, Playtech takeover delay, Inspired analyst reaction, single game parlay analysis, startup funding news, Sector watch - affiliates +More
Welcome to the first Weekend Edition of the year. The news this week from Arizona was long-awaited and predictions from only two months’ worth of data come with a huge health warning. But still, the performance from Caesars is notable. Market share across both September and October of 14.5% of handle firmly places it in the top four contenders and suggests its marketing and promotions efforts - including leveraging the Caesars Rewards database - are paying off. Attention now turns to New York, as four licensees given permission to launch tomorrow, Sat 8.
Further reading: On Wagers.com, a look at what Arizona says about Caesars’ ambitions.
If you ain’t got this, then get it here:
New York launch
When Saturday comes: The moment has arrived for those New Yorkers too lazy to drive across the Hudson River to New Jersey to bet via their mobile device in their home state. Four licensees will be up-and-running first thing tomorrow - DraftKings, FanDuel, Caesars and BetRivers. There is no word on the launch dates for the other licensees.
"I give a lot of credit to the (NYS Gaming) Commission because they had to weather the storm from one governor to the other. They are slightly ahead of schedule (for the launch of legal online sports betting)," said NY Sen. Joe Addabbo.
Playtech takeover delay
Slow cooker: Playtech’s takeover saga looks set to last at least until early February but the delay announced this week won’t derail the well-advanced plans that would see Caliente’s online offering - where Playtech has a 49% call option - merge with the Tekkorp SPAC led by Matt Davey. The time extension granted to potential bidder JKO will give shareholders more time to get “clarity” on the value of the deal, suggested analysts at Peel Hunt.
Tu apuesta: As has been previously reported, the merger will see Caliente’s CaliPlay online arm launch in the US with a specific focus on the Hispanic demographic helped by a partnership with the Spanish language media group Univision.
Documents released by Playtech in November said the company was “pursuing an opportunity to allow it to enter selected U.S. states on an accelerated basis in conjunction with Caliente and Caliplay (and others).”
Appreciating asset: The speculation over the deal has seen the value of Playtech’s call option on CaliPlay soar from $339m at the time of the first-half results to $720m in the November document. Moreover, Peel Hunt estimated that the figures given in the Sky News story late last year suggest the call option is now worth closer to $900m.
“Playtech shareholders will want to see the potential value of its stake in Caliplay reflected in any offer price,” the Peel Hunt team added. “This could be achieved by the offeror (JKO, Aristocrat or another) including a contingent value right in the structure.”
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Inspired’s lotteries acquisition
The top line
Inspired has acquired Sportech Lotteries for $12.5m, rising to $14.5m if projected revenues are hit.
The agreement includes the lottery contract for the Dominican Republic (LEIDSA), which has been extended to 2035.
Quantum leap: The agreement was viewed positively by the analysts at Truist. They said the deal would be "highly accretive" to Inspired which will fund the deal out of $37m of cash balances and was carried out at a low multiple (4x adj, LTM EBITDA). It also provided portfolio and geographical diversification and the ability to offer full turnkey lottery/iGaming to additional customers, including Sportech's Quantum system for LEIDSA which supports 2,100+ land-based outlets.
OSB boost: The team at Peel Hunt said the cash injection would enable Sportech to end FY21 with £20m in cash pro forma. After allowing for tax and a return to shareholders, they suggested Sportech’s pari-mutuel business in Connecticut should benefit from some of the cash as well as from the recent introduction of sports-betting in its 10 venues, although a recent spike in COVID cases “may suppress footfall” in the short term, said Peel Hunt.
Fanatics buys Topps
Topps shop: Having gazumped Topps over the deal for Major League Baseball, Fanatics has now snapped up its erstwhile rival for $500m. Fanatics was set to become the exclusive trading card provider in 2025 but the deal means these plans can be fast-forwarded.
No point: Meanwhile, a New York Post story on the deal suggests that a year ago Fanatics looked at acquiring PointsBet but passed after founder Michael Rubin apparently decided to go the organic route and build a sports-betting business from scratch. The company subsequently hired ex-FanDuel CEO Matt King to lead that effort. The story added that the $10bn valued Fanatics had been surprised by its failure to gain a license in New York after having believed it would be a “cinch” with partner Jay-Z on board.
Loss leader: In further sports-betting adjacent news, subscription sports news site the Athletic has been bought by the New York Times for $550m. The loss-making site, which has a betting partnership with BetMGM dating back to last January, has been up for sale for much of the past year with rumored buyers including DraftKings. Still, the NYT could have could gone a cheaper route.
Odds On funding round
Frank and cents: Odds On Compliance, the US-focused regulatory services provider founded by former Stars group compliance officer Eric Frank, has announced a new funding round led by SeventySix Capital and with the participation of Tekkorp Capital, the new venture capital arm led by Matt Davey. The amount of money involved was not disclosed. Tekkorp Capital’s Robin Chhabra will act as a strategic advisor. The company launched in March last year.
OpenSea valuation
All at sea: DraftKings’ digital collectibles initiative received some validation yesterday when it was announced that a new $300m funding round from leading NFT marketplace OpenSea valued the company at $13.3bn post-money. DraftKings CEO Jason Robins said at the time of its Q3 results DraftKings Marketplace was expected to generate revenues of $70m+ this year. Meanwhile. Meme stock darling Gamestop said yesterday it also planned to launch an NFT marketplace for gamers. Its share price predictably shot up.
Same-game parlay analysis
Parlay games: Deutsche Bank’s latest note on single game parlays illustrates how important the product has become in a very short space of time. Crunching the data from New Jersey, Colorado, Mississippi and Illinois, DB shows that over the last 12 months hold levels for parlay wagers vs. non-parlay wagers stood at 17.7% vs. hold of 4.8% on all other wagers.
Mix and match: Analysing DraftKings and FanDuel activities in Illinois, DB points out that both operators account for 65-70% of OSB handle in the state and their aggregate share of parlay handle is 80-85%. But FanDuel's parlay mix as a percentage of its handle is 30.7% in the past year vs. 23.1% for DKNG. This had narrowed to 32.1% vs. 28.8% of handle since the start of the NFL season, DB attributes this to the hold percentage FanDuel generates from parlay bets.
You've got to hold and give: FanDuel's hold rate on parlays is 20.9% vs. 13% for DraftKings, but aggregate hold for FanDuel is also markedly higher at 9.7% vs. 3.9% for DraftKings LTM, which could be down to better trading and risk management plus the result of first-mover advantage for FanDuel's in-house same game parlay product (launched Dec19), pricing hiccups within DraftKings' third-party parlay product or how promotions and bonusing are used to "skew hold percentages higher when used with greater frequency", the team at DB said.
On Wagers.com: a breakdown of the SGP numbers and how they affected FanDuel and DraftKings in Illinois.
Sector watch - affiliates
Piff, paff, poof: The title of a piece of research from the analysts at Peel Hunt late on in December said 2021 was the year when the world of gaming affiliates "suddenly became a sector” after floats involving Gambling.com Group and Playmaker and FansUnite's merger with American Affiliate (owner of WE+M). The Scandinavian-listed giants Catena Media and Better Collective - not to mention UK-listed XLMedia - might question the 'discovery' given their histories as listed entities. But the rise of the U.S. betting and gaming has made the sector more of interest than previously.
A little lost: Peel Hunt made the point that the small-cap status of the listed affiliates meant they were "somewhat orphaned" on the public markets. The largest market cap as it stands is Better Collective at just over $1bn with Catena Media some way back at ~$430m, Gambling.com at ~$343m and then XLMedia at ~$136m and the rest below the $100m level. Yet, with U.S. investor interest in betting and gaming stocks still at elevated levels, it is likely the larger entities are viewing Gambling.com’s Nasdaq listing with some envy.
Dual controls: The potential for joint listings was addressed by Catena Media CEO Michael Daly during his company's third-quarter earnings call. "I think this is one of our most common questions," he told analysts.
"We are very seriously investigating how to maximize the opportunities in North America including the investment strategy," Daly added. "We recognize there is a need to grow our investor base in the U.S. We are exploring it but we haven't committed to it yet."
Pop will eat itself: Peel Hunt suggested larger-scale consolidation might also be on the cards. Suggesting valuations haven't kept up with the potential for growth, they suggest the low ratings for most of the listed sector means It is " fertile territory for consolidation".
Affiliate M&A newsline: Playmaker has added to its Brazilian market exposure with the acquisition of media and marketing services company Futmarketing for $4.1m in cash and shares. Futmarketing owns the website Antenados no Futbol, a Brazilian-focused soccer news portal.
Regulatory roundup
‘Bama ding dong: Alabama's four greyhound track operators as well as its biggest gaming tribe are pushing ads to support legalizing the state's first-ever commercial casinos. The Alabama Senate passed a 2021 bill that would allow up to six commercial casinos but it stalled in the House. Lawmakers have also considered legal sports betting and lottery proposals. Supporters will reportedly introduce a similar gaming proposal in the 2022 session.
Datalines
Maryland: Casino GGR was up 16% vs. 2019 and up 44.9% YoY to $172.9m in December, although the state’s casinos operated at 50% capacity until mid-month in 2020, which was further reduced to 25% for the remainder of the month. On a quarterly basis GGR was up 24.4% YoY and +12.5% vs. Q419. MGM’s National Harbor’s GGR was up 53.5% YoY to $74.5m (+19%vs. 2019). GGR for Caesars’ Horseshoe Baltimore was $17.1m, up 33.8% YoY (-9% vs. 2019). Penn National’s Hollywood Perryville’s GGR increased 9.4% YoY to $7.2m (+18.6% vs. 2019).
Oregon: Oregon ScoreBoard accepted $331.6m in bets during 2021, producing $30.4m in GGR with a hold percentage of 9.17% which is among the nation's highest of any state market; the national average is 7.4% since May 2018.
US horse racing: Over $12.2bn of wagering handle was generated by U.S. horse racing in 2021, nearly 12% higher than 2020 and nearly 11% up on the 2019 figure. Last year’s handle was generated from 33,567 races. Average wagering per race day was $3m. The data includes co-mingled worldwide wagering.
Newslines
Just rewards: MGM has announced a revamp of its loyalty scheme with a name change to MGM Rewards from M Life and bringing with it enhanced rewards points opportunities. Players with BetMGM can earn members digital rewards the more they play online with tier credits available and tailored MGM Resorts offers.
Video games: PointsBet has added live dealer to its expanding range of casino content. The product, supplied by Evolution Gaming, will be offered in New Jersey via PointsBet's website and mobile app.
The Crown: FOX Sports has acquired exclusive media rights to the Belmont Stakes with an eight-year deal beginning in 2023. The Triple Crown race will now be renamed the NYRA Bets Belmont Stakes.
A Halpin hand: Chris Halpin, the NFL's executive vice president and chief strategy and growth officer, will leave his position to become CFO at IAC, the company announced Wednesday. While with the NFL, Halpin oversaw the league's digital and sports betting strategies. IAC, run by Barry Diller, owns ~12% of MGM Resorts International.
Desert storm: SaharaBets, a new statewide mobile sportsbook partnered with the NHL's Arizona Coyotes, will launch Jan. 12 the company announced in a statement Wednesday. Coyotes owner Alex Meruelo also owns Sahara Las Vegas and Grand Sierra Resort in Reno, Nevada.
The Gripes of Roth: David Lee Roth canceled his shows at House of Blues at Mandalay Bay due to rising Covid cases.
What we’re reading
Homeward bound: Steve Ruddock on what New York mobile betting means for New Jersey.
Bitcoin: The race to $100k.
On social
Calendar
Jan 27: Rank H1
Apr 12-15: Rearranged dates for ICE
Contact us
Scott Longley scott@clearconcisemedia.com
Jake Pollard jake@openmediaservices.com