14 Jun: OSB and iCasino combo ‘packs powerful punch’ say Macquarie
Sazka Q1s, Macquarie ups online gaming estimates, SBC Digital North America conference recap +More
Welcome to today’s newsletter. This morning we bring news from Sazka’s Q1 statement as well as the latest analysis from the gaming team at Macquarie looking at sports-betting and iCasino developments. Plus, we take a look back at a couple of sessions from last week’s SBC Digital North America conference including some interesting comments on the tribal backdrop. Finally, this coming Friday look out for the first E+M Weekend Edition newsletter providing a summary of the key news and discussions from the past week.
Sazka Q1s
The top line
Consolidated gross gaming revenues increased 30% YoY to €526m, operating EBITDA was up 20% YoY to €133m, adjusted EBITDA excluding one-off items increased 4% YoY to €144m, generating margins of 51%. Post-tax profits were up 44% YoY to €35m. On a pro-rata basis LTM adjusted EBITDA was €360m.
Making the call: Sazka exercised its call on acquiring a further 4.31% shareholding in Casino Austria in January, taking its share in the group to 59.8%. It also increased its shareholding in OPAP by 0.99% through open market purchases, taking its stake in the Greek group to 44.11% and its economic interest to 37.08%. Funds advised by Apollo Management completed finalised their €500m investment into Sazka.
Online growth in key markets: As outlined in its annual results, Sazka’s online channels continued to trade strongly. However, GGR in Greece was down 47% and operating EBITDA dropped 29% as a result of OPAP stores and PLAY gaming halls being closed in January and March (40% of the venues opened in February). Online performed well, albeit “from a relatively low base” and market leader Stoiximan’s GGR was up 61% to €103m and EBITDA reached €28m. In Italy iGaming GGR grew 875% to €106m and with retail networks operational throughout Q1 “trading was particularly strong”. Lottery GGR increased 29% to €278m, instant lottery GGR rose 109% to €48m and sports-betting GGR was up 2% to €92m. However, casino and VLT GGR dropped 98% to €1m.
Faster than planned: In a company statement Group CEO Robert Chvatal confirmed Sazka’s ongoing strategic focus on online:
“COVID-19 has allowed us to increase our user base faster than would have otherwise been the case, with significant increases in registrations and active users. Importantly, we have maintained this strong momentum as restrictions have eased.”
Sazka has continued to push in-house capabilities around “first-party data as a source of value and for player protection” and said it was “pleased” to have launched Stoiximan’s in-house sports betting platform.
Macquarie online gaming analysis
Happy birthday to you: On the third anniversary of the fall of PASPA, the gaming team at Macquarie have issued new analysis which puts forward a new estimate for spend per adult of $60 in mature states rather than the previous estimate of $50. Why does this matter? According to Macquarie’s modelling it means the market will be worth $10.5bn by 2025 and $15bn by 2030. Meanwhile, they also estimate spend per head in states where iGaming is regulated to be $150 per head. The OSB/iCasino combination “packs a powerful punch,” they suggest.
Great barrier grief: That said, due to the “every snowflake is different” regulatory patchwork, whether that is limitations on the number of skins available, variable tax rates or the complications caused by tribal involvements (see below), it means no state is the same. “As a result, we believe the varying regulatory landscape raises the barriers to entry for multi-state operators.”
Tiers are not enough: An interesting table put together by Macquarie shows the prominent sports-betting brands have high-end market share targets that total 155% of the market. Even at the lower end of their combined market share figures they would claim 111% of the market. Clearly something has to give - particularly given that in most states these leading brands are far from being the whole market - but that something is unlikely at least at present to be marketing spend. As the Macquarie team pointed out, with operators expecting “healthy” expected LTVs “it is safe to say ‘wallets are open’.” This will lead to losses for the largest operators of as much as $100m-$300m in H221.
SBC Digital North America conference recap
Wow factor: On a panel discussing the developments of tribal attitudes to sports-betting in various states, Sheila Morago, executive director at the Oklahoma Indian Gaming Association (OIGA) paid due respect to the recent deal cut by the Seminoles in Florida.
“The first thing here is ‘wow’,” Morago said. “Let’s give some kudos to the tribe. I've never seen a tribe have that much political swing to do what they did. That compact might not all come to fruition, it's a pretty big stick. But even if at worst, they have so much proprietary exclusivity on all things sports-betting. They were able to shut out all the sports teams in Florida.”
All-in wrestling: The panel was generally supportive of the approach being taken by the Pechanga-led tribal group in California to get retail sports-betting on to the ballot in November 2022, with most suggesting that the move to digital and mobile was merely a step forestalled rather than being a long-term block. But Richard Schuetz, gaming lawyer, issued a word of warning over how the card clubs are likely to act in the coming ballot battle. “The interaction between the California card rooms and the tribes is a full contact sport,” he said. “It is extraordinarily contentious. I think you will see a (lobbying) spend-a-thon of monumental proportions.”
Newslines
Pack it in: Crown Resorts has received a renewed offer of funding from Oaktree Capital to the tune of AUS$3.1bn which would be used to buy back the 37% stake in the company held by James Packer’s Consolidated Press Holdings, a touch above the previous A$3bn offer. The package consists of a A$2bn term loan and A$1.1bn of convertible loan shares which when converted would equate to a near 10% ownership stake. The statement said the Crown board has yet to take a view on the offer. Recall, Star Entertainment mounted at A$9.5bn bid for Crown in May. Crown has also rejected a subsequent buyout proposal from Blackstone worth A$8.4bn. The corporate activity is the washout from the recent damning New South Wales license suitability probe.
Jumer’s Illinois entry point: Bally’s Corporation has completed the acquisition of Jumer's Casino & Hotel from Delaware North Companies Gaming & Entertainment for a total purchase price of $120m. The group used funds available through its revolver facility and expects the transaction to “be immediately accretive to earnings” thanks to Jumer’s strong trading since reopening. The deal provides Bally’s with the opportunity to convert “several lucrative sports betting opportunities” and expand its “geographic footprint into the growing Illinois gaming market”.
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Calendar
15 jun: Credit Suisse Virtual Communications Conference/sports-betting panel
16 Jun: New Jersey May data
22-23 June: Macquarie Technology Summit
24 Jun: Jefferies Digital Gaming Summit
Contact us
Scott Longley scott@clearconcisemedia.com
Jake Pollard jake@openmediaservices.com