21 Jul: Evolution gives it 100%
E+M joins Wagers.com, Evolution Q2, Bet-at-home profit warning, NJ, PA, MI June GGR, Newslines +More
Good morning. So first to our news: Earnings+More has joined the Wagers.com family, the new betting and gaming news venture launched by multi-portfolio’d Chris Grove. The aim remains the same: to provide the news and reaction to the latest results from the global gaming sector with an emphasis on the US betting and gaming sector. And with the resources of Wagers.com at our disposal, we will expand on our ideas for the newsletter and our coverage of what is affecting sentiment in the sector. These are exciting times for the sector and for Earnings+More, we hope you stick around to see how this develops. But for now, back to the day job and the latest from Evolution Gaming’s second quarter numbers, showing the company’s live casino offering continuing to sweep all before it.
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Evolution Q2
The top line
Revenue rose 100% YoY to €256.7m while EBITDA was up 115% to €174.7m corresponding to margins of 68% (up from 63.2% Q220). H121 revenues up 102% to €492.5m. Cashflow from operating activities amounted to €125.3 in Q2, €227.21m in H1.
Live casino organic growth up 59% to €203.7m, up 10.9% QoQ; RNG down 2% to €53m, flat QoQ. Big Time gaming acquisition was completed by the end of June and its numbers will be incorporated from Q3 onwards.
Ready for the close up: Evolution’s new studio in Michigan is set to go live tomorrow (Thursday). Growth in the US business more than tripled YoY to €27.2m and there is more to come with a studio in Connecticut “a fair assumption,” according to CEO Martin Carlesund.
About Evolution’s appetite for growth, Carlesund added the company was “ramping up as much and as fast, everywhere, as we can.
On RNG, Carlesund said the continued effort to “reshape the roadmap” continued twitch the release of Starburstxxxtreme, the “strongest release in NetEnt history.” The company also spoke about its partnership with Scientific Games to bring its Lightning Roulette product to lands-based casinos worldwide. Talking about the effect of the ongoing pandemic, CEO Martin Carlesund said it continued to “hamper growth.”
Old world problems: The QoQ geographical tale of the tape provides some interesting indicators for Evolution watchers. The UK was down - the only negative throughout the report - by 7% to €19.8m while Nordics (€16.4m) and the rest of Europe (€104m) were both flat. None of this is surprising given the regulatory backdrop across Europe. Growth came from Asia (up 23% to €65.7m), the US (up 26% to €27.2m) and other markets (up 23% to €23.5m). The company avoided any further comment on what was happening within geographic regions and said nothing about any effect from Germany.
Bet-at-home profit warning
The top line
BAH is now expecting EBITDA of between €8-10m compared to previous estimates of €18-22m while GGR is also forecast to fall short of previous forecast at between €100m-110m compared to €106m-118m.
The eastern affront: Bet-at-home has slashed its forecast EBITDA for the second quarter after suffering a deterioration in Germany and following a somewhat voluntary exit from the Polish market.
The company said that in Germany the implementation of the new licensing requirements in Feb21 (ahead of the introduction of the new regulatory regime at the start of July) meant it had failed to capture all existing customers and “player activity has not yet been able to match previous financial years.” That’s not the worst of it; the new cross-product monthly betting limits meant further losses were expected in the coming months.
Meanwhile, online gaming “has so far developed below expectations, despite compliance with all necessary regulatory requirements.” Recall, Germany was worth circa 36% of Bet-at-home’s NGR mix in Q1. In Poland, meanwhile, where Bet-at-home doesn’t have a license, the actions of the authorities stretching back to 2017 have finally convinced the company to exit the market.
New Jersey June GGR
The top line
Casino GGR was down 9.1% vs. Jun19 but iGaming was up 26% YoY (-1% MoM) to $107.1m. Online revenue was up 29.1% MoM to $62.2m and land-based revenue grew 91.3% MoM to $9.1m.
Slots GGR was down 8.4% vs. Jun19 and down 2.3% MoM to $154.1m. Slots handle dropped 10.9% vs. 2019 but hold increased c.25bps over the same period. Table games GGR (excl. poker) were down 11% to $58.6m vs. 2019 and up 9.5% MoM.
Sports betting GGR was up 34.7% MoM to $71.3m despite 5.8% lower sequential handle of $767m (vs. handle of $165m in COVID-impacted Jun20).
My people hold on: Hold for June was 9.3%, explaining the monthly revenue growth despite the handle contraction. May sports betting hold was 6.5%, to-date hold in New Jersey has been c.6.9%, although so far this year hold stands at 7.4%. In terms of monthly and LTM market share Pointsbet/FanDuel are leaders in mobile and FanDuel is also leader in retail betting. For online/mobile DraftKings and BetMGM complete the podium and likewise for Borgata and William Hill for retail, although they are neck and neck on a 12-monthly basis.
No change: iCasino market share remained unchanged, although Borgata with 32.1% share increased its lead slightly over Golden Nugget (25.8%) and to a lesser extent Resorts (21%). Recall, in May Borgata enjoyed 30.3% share, with Golden Nugget just behind at 28.7% and Resorts in third at 19.9%.
Michigan June GGR
The top line
Sports betting GGR of $27.2m, nearly $25m of that total generated from mobile. Retail outlets generated c.$2.3m in GGR from a betting handle of c.$24.5m.
iCasino GGR was down 5.9% MoM to $89.2m and dropped 2.8% on a daily basis vs. May. Land-based casino GGR was down 10% vs. Jun19, -2% MoM and up 1.3% on a daily basis MoM.
Monthly/six-monthly share: BetMGM is iCasino market share leader for June with 37.8%, DraftKings is second with 17.3% and FanDuel is third with 16.6%. On a six-monthly basis, BetMGM is overall leader with 36.3% share, FanDuel is second with 18.4%, DraftKings is third with 17.5% and WynnBet (4.1%) and Barstool (3.9%) complete the top five.
Got to hold and give: With the sports calendar in its slower period, operators have reduced promotional spend as a percentage of handle and GGR. This has led to higher margins and despite a 1% drop in handle to $235.1m mobile hold came in at 10.6%. FanDuel continues to lead mobile betting market share with 32.9% (vs. 30% in May), DraftKings is second with 24% (vs. 28.1% in May) and BetMGM is third with 22.2% (vs. 21.7% in May). FanDuel accounted for around 41% of mobile GGR, BetMGM c.25% and DraftKings generated around 20%.
Pennsylvania GGR June
The top line
Sports betting GGR was up 13.6% MoM to $42.5m ($34.2m net of promotional spend). Monthly handle dropped 6.1% to $420.2m, mobile handle was down 6.9% MoM to $379.3m.
Hold was up 170bps MoM to 10.1% (9.9% for mobile, 12.1% for retail), since launch hold has averaged around 7.7%. iCasino GGR rose 77.6% to $88.9m YoY, but was down 12.2% MoM.
DraftKings and FanDuel’s combined market share was up 1.5% MoM to 65.5% of mobile handle, BetMGM overtook Barstool to third spot with 9.9% handle share. Barstool slipped to fourth with 8.4%, down 230 bps MoM, its lowest share of handle since launch.
Promo drop: In common with other states, PA operators lowered their promo spend in June to 22% of mobile GGR vs. 30.1% in May. Promotions as a percentage of mobile handle were 2.2% vs. 2.4% in May. Since January Barstool and BetMGM have spent 4.6% and 5.0% of their respective handles on promotions. For FanDuel and DraftKings the respective figures are 2.2% and 1.4%.
Run-rate slowdown: With regard to iCasino, Deutsche Bank commented that “current run-rate GGR is likely to result in growth rates slowing from current levels (>75% y/y) as we move into the 4Q21 period”. In addition, market shares are uncertain because they are “lumped by the property license”, but with DraftKings and BetMGM accounting for “roughly 83% of the Penn skin revenue”, the analysts estimated that Rivers was market leader with 26.2% share in June (-40 bps MoM), followed by DraftKings at 22.9% (-90 bps MoM) and FanDuel at 16.8% (+70 bps MoM).
Newslines
Liquidity top ups: Flutter Entertainment has announced a basket of debt refinancing transactions that not only provides the company with additional liquidity but also saves the company around £50m ($69m) in interest payments per year, with the cost of its debt falling from 4.2% to 2.5%. The series of upsized and repriced debt will leave the company with circa £250m of extra liquidity which it says will go towards general corporate purposes. Similarly, rival Entain also announced a new £1.1bn first lien term loan that will pay off an existing term loan and leave the company with a further $351m of additional funds “to support corporate development and M&A.”
Waterloo sunset: SuperBet Group, the largely Eastern European-facing sports-betting and gaming operator, has embarked on a foray into western Europe after it completed the acquisition of Belgium’s Napoleon Sports & Casino for an undisclosed sum. SuperBet said the target is a top three player in the Belgium digital market. Among SuperBet’s shareholders is private equity group Blackstone, which put €175m into the company in 2019 for a minority stake. Napoleon was owned for the last six years by Waterland Private Equity Investments.
An open relationship: Scientific Games and Playtech have announced a global partnership that has significant undertones given the repositioning in the online gaming supply space right now. The deal will see each company’s gaming content made available on each other’s open platforms and given the differing geographic strengths - SciGames in the US, Playtech in Europe and LatAm - the deal makes a lot of sense. However, sources suggest rumours of a more significant tie-up might be wide of the mark.
Aiming for net zero: Kindred’s share of revenue from harmful gambling increased to 4.3% in Q2 from 3.9% in Q1. Revenue from social players has risen c.10% YoY, and dropped c.50% from medium-risk players YoY, but those from high-risk customers have remained steady. CEO Henrik Tjärnström said publishing the data ensured dialogue was open and fact-based and the group remained “dedicated and focused on our journey towards zero” revenues from harmful gambling.
Big sky country: IGT will supply its retail sportsbook to the Ute Mountain Casino in Colorado and will roll out its PlaySports platform, self-service PlaySports Kiosks and turnkey services. Rick Scheer, Ute Mountain casino general manager, said the group “has big plans for our sportsbooks scheduled to open (at the) end of August”.
Zonal marking: Sports streaming company DAZN is reported to be seeking a UK listing in the fall. The company is also reported to be in the hunt to buy BT Sport which controls some Premier League rights in the UK. DAZN recently won the race to own the rights to Serie A and has a deal with Matchroom to stream at least 16 fights a year to UK subscribers. Also related to streaming, FuboTV has announced Alison Sternberg will be the company’s new head of investor relations reporting directly to CEO David Gandler. Sternberg joins from SmileDirectClub.
Out of sight: Aristocrat and Sightline Payments have announced a partnership to deliver cashless gaming through the gaming supplier’s Oasis 360 casino management system, extending the reach of Sightline's Play+ payment solution. The solution was initially launched with several Boyd Gaming properties in Indiana, Nevada, Pennsylvania and Ohio. Adoption by additional properties are in development. Staying cashless, IGT has announced a new strategic partnership with Marker Trax for its digital marker system, making it available via IGT’s casino management system.
Ambulance chasing blues: Engine Media has doubled down on its patent infringement claim, now adding a suit against FanDuel to its previously-announced action against DraftKings. The company claimed the new filing was the “continuation of our efforts to enforce our extensive portfolio of patents, many of which relate to mobile sports betting and online gaming technologies.” Meanwhile, a class action lawsuit against Score Media & Gaming has been launched by consumer litigation outfit Scott+Scott Attorneys, “investigating” whether the company violated US securities law when it floated in the US in February this year.
Earnings calendar
21 Jul: Las Vegas Sands Q2
22 Jul: Betsson Q2
23 Jul: Kindred Q2
28 Jul: Churchill Downs Q2, Red Rock Resorts Q2, VICI Properties Q2
29 Jul: PointsBet Q4 & FY, GLP Q2,
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