3 Sep: Weekend Edition, no.12
Broadcast news, US gaming analyst view, Flutter Entertainment analyst update, Asian gaming review, sector watch - financial trading +More
Good morning and welcome to the latest Wagers.com E+M Weekend Edition. What to make of Facebook’s fantasy games launch? On the one hand, this is just another entrant in the fantasy space and free-to-play space in the U.S. On the other hand, this is Facebook we are talking about and any move into the sector is sure to get nerves jangling. These might have been ameliorated by the comment from Rob Shaw, director of sports media and league partnerships at Facebook: “Our intent is not to put payments attached to this. We want it to be free, to be broad, and casual.” Yet, as one #GamblingTwitter habitué said, “all you affiliates may as well go out of business today. You’re fixin to get owned.”
With that, on to this week’s news.
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Broadcast news
The magnificent seven: The news that BetMGM, FOX Bet, PointsBet and WynnBet joining Caesars Entertainment, DraftKings and FanDuel as official NFL sports-betting partners inevitably means the upcoming season is likely to be accompanied by a soundtrack of incessant betting advertising campaigns. Certainly, if sports-betting follows the DFS playbook from 2015 then the possibility of avoiding some big spending campaigns is slim; witness the launch this week of a $100m advertising blitz by WynnBET with an ad featuring Shaq O'Neal and Ben Affleck. For Sam Swanell, CEO of Pointsbet, operators must “get the brand out there” to acquire players and the companies not “advertising around those assets and getting access to those clients will suffer for it.”
Zero loyalty: In May, Jay Snowden, CEO of Barstool Sportsbook’s parent company Penn National Gaming, criticized the “all day, every day” nature of betting adverts and said the levels of advertising were “overwhelming” and created “zero loyalty.” Barstool believes it has a different way of reaching the public via its social media presence (and the exclusive broadcast rights to this year’s NCAA Arizona Bowl) and will add to that via TheScore, for which the group shelled out $2bn.
Media overload: Industry-watchers won’t be the only ones keeping a close eye on the advertising output, not just during NFL coverage but also surrounding much other sports programming. In this regard, the lesson from the UK market experience is instructive where bet365 arguably reached its dominant position thanks in no small part to its all-pervasive Ray Winstone, bet “in play now” campaigns. Such was the Stoke firm’s success, however, that the prevalence of gambling ads generally became the focus of attacks from critics and contributed to a large extent in the anti-gambling backlash experienced in recent years.
US gaming update
Arrival: The team at Truist have welcomed the upcoming football season with a note pointing to how critical the next six months will be for the sports-betting sector. They estimate the football accounted for between $560-580m in GGR last term on handle of up to $8bn and that doesn’t include football’s share of parlay handle which they estimate to have been worth a further $560-580m.
Money, money, money: The ad spend noted above will come on top of the seasonal high promotional spend. They note some generous offers: DraftKings will be giving away $50 max bets on Dallas to win on Thursday while Barstool Sportsbook is offering FTDs a free $100 Super Bowl future on a team of their choosing. Caesars is also offering a $50 Super Bowl futures bet as well as $5 for every regular season game that team wins plus a $150 NFL gift card for every $100 bet on the NFL.
The name of the game: Estimating that 23 out of 32 NFL teams now have sports-betting partnerships deals, Truist cites estimates from the Washington Post and others that the NFL will earn $270m from such deals this season alone. The analysts also noted the marginal impact of the increase to a 17-game season, which is a 6% increase in the total amount of games and adds one more week of betting volume.
Flutter Entertainment analyst update
Double bubble: Turning their attention to the US market leader, the team at Jefferies pointed out that Flutter Entertainment generated more than 50% more U.S. revenue than its nearest competitor yet trades at a 50% discount. Jefferies predict that with nine further states opening up to mobile sports-betting by the end of 2022, they estimate the doubling of the market. The analysts pointed to the “compelling US customer metrics” spoken about by Flutter in its H121 results of average CPAs of $291 and payback of 1.2x in the first 12 months.
Asian gaming update
Short, sharp shock: The Macau gaming sector suffered a reverse in early August after the first Covid Case in 500 days was reported in the gaming enclave, causing a sell-off in Macau-related stocks. It led the authorities to impose new restrictions on travel into Macau with the latest data suggesting a 47% MoM slump in August GGR, down to MOP4.4bn ($550m) and 82% down on Aug19. As was pointed out by Jefferies, while this was the lowest level since September it was also a 234% YoY increase and actually ahead of estimates. In fact, August had been a “month of two halves” with both visitation and GGR improving as the month went on and with no local infections for five out of the last 11 days of the month. The team expect a further continuing recovery into September with it peaking during October's Golden Week. They remain of the view, however, that normalized activity in Macau might have to wait until next year and it will be “heavily dependent” on any future potential Covid outbreaks.
You’re Sha Tin me: Across the other side of the Greater Bay area, the Hong Kong Jockey Club released its annual report showing that despite the challenges of the last year or more, turnover had hit a record HK$279.7bn ($36bn) in the 12 months to June. Racing turnover rose 12.5% to HK$136.1bn while soccer betting rose 51.4% to HK$140.2bn. The report noted that though restrictions were imposed on admittance and on OTB outlets, racing continued throughout the pandemic. The report noted some online developments including a new football betting app and the introduction of an ewallet to facilitate off-course betting. In fact, the report said that online and mobile contributed 90% of wagering turnover.
M&A updates
Alarm call: Spotlight Sports Group has acquired the operator and supplier of DFS content and technology Alarm Sports Network (ASN) for an undisclosed amount. The acquisition is part of SSG’s plans to grow its US daily fantasy and sports betting consumer and B2B activities in the US, where ASN supplies content and technology to media brands including Yahoo, FTN Network and SiriusXM. ASN’s consumer brands include Fantasy Alarm, Wager Alarm and Fantasy Rundown. These will join SSG’s existing US affiliate Pickswise as part of a new B2C platform. ASN co-founders Dan and Al Williams and senior management will remain with the group.
When Saturday Comes: Gaming and betting affiliate XLMedia has acquired college football specialist publisher Saturday Football Inc. for $23m (£16.8m) in cash with $11m paid up front and the remainder payable over three years. The deal includes the popular Southeastern Conference and Big 10 sites saturdaydownsouth.com and saturdaytradtion.com which together generate around 10m site visits per month. The deal was funded via XLMedia’s cash reserves. XLMedia and Saturday Football previously worked in an agency partnership arrangement. XLMedia said Saturday Football generated revenue of $2.5m in the 121 month to July and EBITDA of $606,000.
Morris dancing: Canadian-listed gaming affiliate Playmaker has bought up UK-based online gaming and betting ad-widgets to data visualisation and native content specialists Two-Up Digital for up to $5.75m, including $750,000 in cash and the rest in shares and earnout. Two-Up’s founder Robbie Morris will join the Playmaker leadership team. Playmaker CEO Jordan Gnat said Two-Up brought with it “deep relevance, credibility and unrivalled connections within the online gaming world.”
Sector watch - financial trading
Hood wink: In late August, the SEC issued a request for comment on the gamification of stock trading as practiced by the likes of Robinhood. SEC chair Gary Gansler said that the apps such as Robinhood promoted trading - the infamous glitter bombs when a punter completes a trade - in a manner that appeared to encourage them to trade more. The possibility is that following this process the SEC might opt for stricter controls on trading apps which have come to the fore during the various meme-stock frenzies.
Break a buck: Such interventions are unlikely to dent the enthusiasm in the financial trading space, at least going by the news this week that DriveWealth, a company which provides the tech behind competitors to Robinhood, has raised $450m in a new funding round. The investment was led by Insight Partners and Accel and included SoftBank’s Vision fund as well as Steven Cohen’s Point72 Asset Management’s venture arm. DriveWealth is now valued at around $2.85bn. The technology developed by DriveWealth allows for fractional trading allowing ‘investors’ to buy a portion of stock for as little as $1.
Using a familiar ‘early innings’ analogy, Bob Cortright, founder and CEO of DriveWealth said the financial world was on the verge of a “worldwide retail investing revolution.” Meanwhile, Matt Weigand, from Accel said the “future of investing is mobile, transactional and fractional.”
Backing up such comments it was reported this week that PayPal was exploring the potential of launching a stock-trading platform. According to a LinkedIn profile, brokerage veteran Rich Hagen is now the CEO of a division called Invest at PayPal.
Pull back: But if it is a trading revolution in the US, something would appear to have been lost in translation back in the UK where one of the big CFD and spread-betting trading houses, CMC Markets, issued a profit warning yesterday. The company pulled a rug from under its own shareholders after saying that net revenues would be materially lower than forecast just a month previously. The stock promptly lost $300m in market cap. Warning that net operating income for the year to March would likely be in the range of £250-280m vs. £330m, CMC seemed to signal that the invest-from-home trend had petered out as the lockdown measures came to an end with trading in July and August subdued.
Newslines
Oneida line: IGT and the Oneida Nation have announced a sports-betting supply partnership for the tribe’s property in Green Bay, Wisconsin. The Oneida Nation is the first tribe in Wisconsin to receive approval from the State government to operate sports-betting at a casino.
Call my Bluff: Kindred Group’s flagship sportsbook Unibet has launched in Iowa as part of its multi-state access partnership with Caesars Entertainment. The Unibet mobile sportsbook went live with Caesars’ Harrah’s Council Bluffs Casino and is now live in five states. The Kindred-Caesars agreement is set to last for 10 years, with options to extend.
What’s the rush? Connecticut approved emergency betting regulations on Tuesday in an effort to have its regulatory framework ready for as close to the start of the NFL season as possible. Federal approval is still needed before the Rush Street Interactive-powered Connecticut Lottery, DraftKings and FanDuel sportsbooks can go live in the state. The process has been criticized by some local pols. “This whole rushing to meet the opening of the football season. I’d rather walk instead of run. We’re behind other states as it is. I’d rather get it right,” Senator John Kissel commented.
Central bets: Elys Game Technology and the Grand Central restaurant and bar group have obtained their sports-betting license to operate a sportsbook in Grand Central’s venue in the Adams Morgan neighborhood area of Washington, D.C. Elys will provide Grand Central its retail-betting solution, kiosk hardware and managed services and is set to launch in October.
Fubo 1-2: Following its mobile betting license approval in Iowa earlier this week, Fubo TV has been granted its second remote betting license in Arizona through the market access agreement it has with the Ak-Chin Indian Community. The group said the Q4 launch of its mobile sportsbook was on track.
What we’re reading
Authentic hopes: Some background on the SI Sportsbook launch.
What we’re writing
Swings and roundabouts: Scott Longley on Rank’s recent good news/bad news month. For ICE 365.
Calendar
8 Sep: Genius Sports Q2
16 Sep: New Jersey August GGR
22-23 Sep: SBC Summit
Contact us
Scott Longley scott@clearconcisemedia.com
Jake Pollard jake@openmediaservices.com