Bally’s activist has mountain to climb
K&F move faces skepticism, Juroszek’s GiG share buying, startup focus – Caerus Risk Solutions +More
Questions emerge over the likelihood of Bally’s investor success.
In +More: Spreadex’s adverse CMA decision.
Former STS founder ups stake in GiG.
Startup focus is predictive analytics firm Caerus Risk Solutions.
Any way you say it, the charade goes on.
Skepticism over Bally’s activist
Talk to the hand: Sources have expressed skepticism over whether activist investor K&F will have any success in persuading Bally’s investors to rally to their cause of stymying Standard General’s plans to take the company private.
Bargain shopping: Recall, last week the activist fund fronted by Ed King and Dan Fetters, both partners at gaming-endemic VC Acies Investments, went public with its complaints about major Bally’s shareholder Standard General attempting to acquire the 74% of the shares it doesn’t already own “on the cheap.”
Do the math: K&F has not said what percentage of Bally’s it owns but a well-informed source argued it was unlikely to be a high percentage “or they would have publicized it.”
Asked by E+M, King said the percentage ownership was below the 5% threshold for public filings. He didn't answer whether the company had received any response so far from Standard General.
Hand in glove: Between Standard General and Noel Hayden, the former founder of Gamesys who owns 12% of Bally’s, the pair control ~38% of Bally’s shares. “There aren’t many disinterested investors at scale,” said the source.
“So those still there likely have a relationship with Standard General. It is a very close knit shareholder group.”
Dysfunctional: One investment source pointed out that K&F’s central complaints about Standard General attempting to gain control of Bally’s “at a fraction of its fair value” doesn’t hold up given the travails of Bally’s share price. “It is all well and good for shareholders to complain about a bid at $15 a share,” they argued.
“But the reality is Standard General offered $38 in 2022, after which shareholders turned it down, only for shares to fall to below $10 shortly before this bid and $8 six months ago.”
Standard General is “proving” it is a long-term shareholder and “aligned to the future of Bally’s.”
⛰️ Up the hill and down the slope: Bally’s five-year share price
Japanese breakfast: Another analyst also questioned part of K&F’s prescription for Bally’s, suggesting the call for the company to divest itself of the international interactive segment due in large part to its involvement in the Japanese-facing gray/illegal market was naïve.
K&F said last week a US public company “should not be in the business of supplying gaming equipment and operations to the Japanese market under the country’s current regulatory framework.”
However, the analysts suggested the Japanese-facing Vera & John business ran on a standalone platform and could “easily be sold” as a separate entity.
“Bally’s wouldn't need to sell the whole thing, it could just spin off V&J.”
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Spread the word: The UK’s Competition and Markets Authority’s Phase 1 decision regarding Spreadex’s proposed acquisition of rival spread-betting operator Sporting Index said it “may have created a monopoly” and could “substantially lessen competition” in the spread-betting space.
“It is important that customers can rely on competition in the market to keep odds competitive,” said the CMA’s Naomi Burgoyne.
Spreadex must respond early this week with a “meaningful solution.” If they are unable to do so, the merger will be referred to a more in-depth investigation.
Better off out of it: Kindred has told customers of its Unibet operations in New Jersey it will be shuttering the site in mid-May, while those playing with the Pennsylvania site have been told the site will close in June. Recall, the company – which is subject to a $2.8bn bid from FDJ – announced its US exit in November last year.
Churchill Downs has announced the opening of its $290m Terre Haute Casino Resort in Indiana, which includes a casino floor with 1k slot machines, 36 table games and a state-of-the-art sportsbook.
Las Vegas Sands will begin work on the expansion of its Marina Bay Sands resort casino in Singapore in July with the development including a new hotel tower, the complex’s fourth. The work will take five years.
Earnings in brief
Rivalry: The esports-led operator said FY23 revenue rose 34% YoY to C$35.7m ($26.2m), helped by a 92% rise in iCasino revenues to C$6.4m. However, Q4 revenue declined 32% to C$6.5m, which the company blamed on less favorable sports results. Net losses for the quarter were reduced to C$9m from C$12.3m while yearly losses fell by 32% to $24.3m.
Career paths
PrizePicks said it could create up to 1,000 new jobs in the next seven years after it announced it was expanding its DFS HQ in Atlanta, Georgia, by relocating to a new $25m building complex.
Catena Media has appointed Michael Gerrow as CFO with a start date of April 15.
Technology supplier GR8 Tech has promoted Yevhen Krazhan to chief business development officer.
A rolling stone: Ex-bet365 international head honcho Jon Moss has joined the board at gaming affiliate Raketech.
The marketing chief at Matchbook, Eric Hegarty, has left his post to become a consultant.
Bragg Gaming CFO Ronen Kannor is set to leave the company on June 3 to pursue other business opportunities. The company has begun the search for his replacement.
Gaming affiliate provider QiH Group has appointed David Murphy as the company's first-ever CMO and promoted Andrew Lee to the newly created role of COO.
Juroszek’s GiG stake
A family affair: The family of former STS founder and now chair Mateusz Juroszek now controls 15% of Gaming Innovation Group after it was announced his MJ Foundation Fundacja Rodzinna entity had bought a 3.8% stake.
Piecing it together: According to a filing with the Oslo Stock Exchange, where GiG is listed, the 15% ownership comes from a series of stakes owned by various entities controlled by the Juroszek family, including Betplay Capital, Juroszek Holding, MJ Investments and now MJ Foundation.
It makes Juroszek the largest shareholder at GiG ahead of SkyCity Entertainment, which owns just under 11%, which bought into the company at the time of the Sportnco acquisition.
Juroszek first declared an interest in GiG last summer when it was announced his family interests had acquired an 11% stake in a company that he said at the time was “undervalued.”
A tease: Juroszek and his father Zbigniew sold their 70% stake in STS to Entain in a deal worth €750m in June last year. Juroszek hinted on social media there would be more news forthcoming, posting on X “wait for more.”
He was responding to a posting from Danish hedge fund Symmetry Invest, which suggested the Juroszek family have “endless pockets” having “delivered a home-run for shareholders in STS.” Symmetry owns 3% of GiG’s shares.
Breaking up: Recall, GiG is in the process of splitting the gaming affiliate business from the sports and iCasino backend supply business into separate listed entities. It hopes to effect the move later this year. To this end, this morning the company announced the make up of the boards for the two entities.
Mateusz Juroszek will join the board of the GiG Media business, which will continue under current corporate structure and retain the current listing.
Also joining the GiG Media board is ex-Entain M&A chief Nick Batram.
Among those joining the board of the GiG Platform will be Tomasz Juroszek, chief investment officer at the family’s Betplay investments arm.
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Analyst takes – IGT
A lotto to like: In resuming coverage of the soon-to-be-split up IGT, the team at B Riley argued that fears over the lottery unit losing out on the Italian lotto renewal are overblown with “displacement highly unlikely.”
“Displacing any entire central system, particularly the size of Italy’s Lotto, would be highly disruptive,” the team said.
Further, the size of the upfront fee “narrows the field to just a few competitors and a move from any of them would be “irrational.”
The team also noted one of the IGT consortium is a significant retailer of Italian Lotto.
A numbers game: More generally, the analysts said growth visibility for lottery has been on the increase, driven by additional draws, higher denomination tickets, high-growth iLottery, larger jackpots and increased convenience access points.
They noted that in 2023 US lottery sales increased ~5% to $109bn, suggesting the pandemic-era new player augmentation has been maintained.
More takes
Everi: At the same time as resuming on IGT, the B Riley team have also resumed coverage of Everi, which will merge with the gaming elements of IGT. The team said welding IGT’s systems to Everi’s payments business would create a “modernization catapult” for the gaming sector.
Red Rock Resorts: Following meetings with management, the team at Jefferies noted Red Rock’s plans for future developments have narrowed down to two options: further expansion at the recently opened Durango and the development of the Inspirada land parcel.
The first option includes a needed parking garage, high-limit poker tables, additional slot machines and more hotel rooms.
But the Jefferies team added that the Inspirada project would provide Red Rock with an “opportunity to expand into an under-penetrated and unplayed market.”
The team also noted management’s plans to expand its “compelling” taverns business, which skews towards a younger, male- and sports-betting-oriented demographic.
Startup focus – Caerus Risk Solutions
Who, where, when, what: Co-founded in June 2020 by Michael Adams, ex-FanDuel and bet365, and CTO Harsha Srinivas, ex-Facebook and Google, Caerus provides predictive analytics for global sporting markets, covering more than 100 football (soccer) leagues around the world. Caerus’ HQ is in the UK, with its tech team run out of New York.
The company has added a B2B function delivering pricing and risk management in football markets to sports-betting operators, as well as predictive models and insights to football clubs.
It has recently inked its first partnership with a leading club in Italy.
Funding background: Caerus is 100% bootstrapped, with the two founders retaining full ownership of the business.
The pitch: Caerus’ pricing solutions for football markets have been developed by specialist risk and trading professionals, using “cutting-edge” proprietary models and machine learning algorithms that have been “tried and tested in the market for four years,” says Adams.
“In the sporting domain, the successes of [English Premier League clubs] Brighton and Brentford tell us the power that unique data and models can have in attaining a competitive edge,” he adds.
Following a positive initial reaction, “we will reveal a series of partnerships over the spring and summer.”
“Growth regions like LatAm and Eastern Europe are particularly interesting.”
What will success look like? Adams splits this into two parts. In B2B sports betting, it is “to become the go-to pricing solution for operators and localized sports-betting operators” that “want an edge in the market”, In sports analytics, the aim is “to add a number of soccer clubs to the roster.”
Funding news
Zeal Ventures, the VC arm of the German-listed lottery reseller, has led a €1m funding round for UK-based prize gaming operator Daymade, valuing the business at €12m. Zeal has been invested in Daymade since 2019 when it put €500k into its seed round.
Growth company news
Alt Sports Data has appointed Tom Chapman as EVP of operations and finance. Most recently he was a member of the Lumen Learning executive team.
Calendar
Apr 17: Entain
Apr 18: Rank
Apr 24: Evolution, Kambi
Apr 26: Betsson
May 1: MGM Resorts
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