14 Jul: theScore looks to northern exposure

Score Media & Gaming Q3s, Oddschecker sale, Indiana and Missouri June GGR +More

Jul 14, 2021

Good morning and welcome to today’s newsletter. First up, we have the FYQ3 results from Score Media & Gaming which is wishing the summer away and looking forward to a sports-betting launch in Ontario in December. We also have the latest data from Indiana and Missouri, some analysis of the sale of Oddschecker to Bruin Capital and among the newslines, we have the news on Bally Corporation going all the way with Beach Volleyball.

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Score Media & Gaming FYQ3

The top line

Betting handle was C$73m, down from C$81.9m in Q2 due to sports seasonality. Betting GGR was -40k, NGR losses were C$2.4m. EBITDA losses were C$21.1m from -C$8m in Q320 with C$5m of IPO costs contributing to the worsening metric.

Media revenues came in at C$8.9m, up 270% YoY and 5% up on Q319, theScore said it has enjoyed record media revenues of C$27m so far in 2021.

Jay walking: Management emphasised the ongoing plan of bringing all its betting technology and player account management (PAM) system in-house. CEO John Levy said “the core strategy from the outset has been to own and develop our own platform.” Score will roll out its PAM and promotional engine from next month, which will be a “major step” in the streamlining process to execute a “complete migration” and “vertical integration” in the next 12 months. That project will be led by Patrick Jay (previously at Ladbrokes and then CEO at HKJC but last seen helming failed Gibraltar-based startup MoPlay) who will be joining the group from the Fall as head of sportsbook and tasked with developing a risk and trading team for the group.

Swings, no roundabouts: Asked when theScore would be profitable, COO Benji Levy reiterated that it wouldn’t be drawn on when a specific handle number would convert into profitability. “At scale we’re starting to see (the betting activity) normalise, there will be some swings but we’re going slow and steady and it’s not about us buying scale through marketing. And in Ontario we think we can do it on our own terms and fully in-house.” Score is currently live in four states, icasino is set to go live in New Jersey in the Fall and the group is readying for Virginia, Tennessee and Maryland. “Over the next 12 months we anticipate our footprint to double and are well-positioned to execute on that,” said Benji Levy.

It’s beginning to look a lot like Christmas: The upcoming launch of online betting and gaming in theScore’s home province of Ontario in December is “a major milestone” and “very exciting”, added Levy.

“Not just because we have a tremendous user base and brand legacy, our presence allows us to attack the market in a different way to the US, which is mainly conversion-based and through selected digital options,” said Levy. “Because the audience knows us (in Canada) we can do lots more from a marketing perspective and the brand can generate much stronger ROI because there is no need to educate the audience.”

Analysts at Macquarie said Canada would be a “major catalyst” for theScore and argued that US market share goals “become slightly less important.” “We conservatively estimate that SCR can generate 6.5% share in Canada, and we expect a launch/ramp in the next few months.”

Set the controls: Having control over its tech stack is a “critical” aspect of group strategy, John Levy added, allowing it to provide an integrated and uniform offering. “It touches on every aspect of our work: marketing, offering, market access and increased penetration.” CFO Alvin Lobo added that control over margins was a side benefit and that “having an integrated media and gaming approach is about the whole experience, and what it looks like from the user‘s perspective: not just acquisition, but retention and engagement” across the group’s 3.7 million monthly active users and how many of these can be converted into sports bettors.

Macau analyst update

Restriction constriction: The good news for Macau is that GGR is on the rise with channel checks from the analysts at Jefferies suggesting VIP columns were up 25% in June while mass volumes were uop between 26=28% MoM in June. The better news is that as of July 10 travelers from Guangdong are permitted to enter Macau. However, the authorities have indicated that more time will be needed to to consider easing travel restrictions between Macau and Hong Kong. Hong Kong has recently seen a local case related to one imported case. Jefferies note that the Macau authorities have previously indicated plans to lift the 14-day quarantine requirement if Hong Kong records zero new cases for 28 consecutive days.

Oddschecker sale

Something’s Bruin: The £140m (c$190m) deal for Oddschecker announced on Monday marks a further step in the evolution of the gaming affiliate space. The buyer Bruin Capital - which only recently changed its name from Bruin Sports Capital - is new to the gaming affiliate space but holds investments across a wide range of other sectors including entertainment, technology, media and finance as well as its original home in sports. In line with other recent deals, including in the affiliate space Better Collective’s recent acquisition of The Action Network and in the wider arena DraftKings VSin buyout,, it appears to hold out the potential for further convergence between sports, sports media and sports-betting. Bruin Capital founder George Pyne was clear that the US potential was foremost among the strategic reasons for the acquisition.

“We see opportunities for continued growth, and particularly in America,” Pyne said. “There are strong links between Oddschecker's U.K. development and its opportunity in the U.S., where the marketplace is very fragmented, and discovery and customer acquisition experts will be highly sought-after."

But what’s it really worth? A harder question revolves around the underlying metrics of Oddschecker. Though somewhat handicapped under the ownership of Flutter (competing brands were increasingly opting out of the odds comparison tables), it is still a hugely successful brand with a number of other sub-brands including WhoScored, which it acquired in 2019. The buyout price dwarfs most deals in the affiliate space though it is slightly less than BC’s TAN deal ($240m) but that deal was also short on metrics. The next biggest deal also involved BC when it bought Atemi for up to €44m ($52m) and which brought with it 160,000 NDCs a year in the paid media arena and revenues in 2020 of around £40m.

Indiana June GGR

Bar presence? Casino slots and tables GGR was up 13% vs. Jun19 at $204.9m. According to Deutsche Bank, the Indiana Gaming Commission double counted a property and overstated casino revenues by c$25.9m. Sports betting GGR came in at $25.5m, a rise of 35.1% MoM, while handle dropped 3.2% to $246.6mm, -3.2% MoM. Hold was 10.3% vs. 8.2% to date average. Indiana spend per adult players is tracking at c.$49. DraftKings was the leading mobile sportsbook with 35% share of handle. FanDuel was second with 29% and BetMGM was third with 13%. PointsBet was fourth with 7% and Barstool sixth with a 5% share, “though GGR was just $33K on weak hold,” said Deutsche Bank. DraftKings leads market share on an annual basis with 39%, FanDuel and BetMGM are on 32% and 15% respectively. Penn National’s two land-based venues generated $34.9m in GGR, up 10.2% vs Jun19 and down 15.3% MoM. Boyd properties generated $19.2m in GGR, -12.1% vs. Jun19 and down 10.3% sequentially. Caesars properties generated $48m in GGR, a rise of 10.7% vs. Jun19 and down 8.4% MoM.

Missouri June GGR

Meet me in St Louis: GGR was up +8.8% vs. Jun19 and down 10.1% MoM and -7.1% on a daily GGR basis at $155.8m across Missouri’s casinos and racinos in June. Visitation numbers were down 16.7% vs. Jun19 and down 8% MoM, but spend per visitor was up 30.6%. Venues around St. Louis, including Missouri and Illinois casinos, generated $85.9m in GGR, a rise of 2.6% on Jun19 and down 7.9% MoM. Casinos in the Kansas City market generated $56.9m in revenue, up 9.6% versus Jun19 and -13.8% on a sequential basis.

Newslines

Beach balls: Why merely sign a sports-betting official partnership with a sport when you can buy the sport? This must have been the conversation with Bally Corporation after it announced the acquisition of the Association of Volleyball Professionals for an undisclosed sum. Although partly a content deal for Bally Sports’ regional sports networks, the company said it also hoped to “gamify” the sport in order to help drive traffic to its sports-betting and gaming platforms.

It’s a small world: Kindred has announced that Capital Group’s SMALLCAP World Fund has snapped up a 5.15% or circa $3.9m stake in the firm, helping to push the shares up nearly 3% on the day. Capital group is a LA-based investment firm and the fund has a reputation for investing in high-growth and innovative companies.

Credit where credit's due: Affiliate Raketech has followed up its acquisition from last last week with the news of a new €15m credit facility which it hopes will enable the company to grow via further acquisitions as well as facilitate other working capital and corporate purposes. The arrangement with Avida Finans comes with an interest rate of 4.25% plus an upfront annual commitment fee and replaces a previous €10m facility from Swedbank. Last week, Raketech completed the acquisition of P&P Vegas Group Inc in the US and the cricket betting affiliate QM Media AB for €16m payable in cash and new shares.

Brush up your investor deck: Las Vegas Sands has announced it intends to be a "strategic investor" in B2B companies working in the digital gaming technology space. To lead this effort it has hired Davis Catlin to head an investment team and previously worked for 14 years at the coincidentally-named Sands Capital Management. Robert Goldstein, chairman and CEO, signaled the company would be going down the patient capital route. “Just as our integrated resorts were not built in a day, by being patient and investing for the long-term, we believe these investments in digital gaming technology will deliver significant returns for the company and its shareholders,” he said.

SPs at the ready: Gambling.com will price 5.25m of its shares at $11-$13 and is set to raise $63M in the process. The group announced it would list on Nasdaq at the end of June. Existing stockholders are also selling 2.25m of their shares. Gambling.com recorded CAGR of 35% in 2020 with revenues of $28m vs. $11m in 2017, AEBITDA of $14.6m and net income of $15.1m in FY 2020.