Bet365 taking US share

Bet365 on the march, DraftKings profit prediction, Betfred’s 2022 bounce, Gambling.com and Genius Sports analyst takes +More

Earnings+More

Jul 10, 2023

Good morning. On today’s agenda:

Bet365 is taking US market share but at a cost.
DraftKings could post first-ever profit in Q2, say analysts.
Betfred bounces back after pandemic.
Analyst takes for Gambling.com and Genius Sports.
Startup focus is sports-betting media platform SoBet.

You gotta turn it on and then you gotta put it out.

Raiding party

Bet365 is taking US market share but at a cost of heavy promos.

Stoked: The analysts at JMP say that download data for June showed a notable increase for bet365 with 8% share, holding on to a mid-single digit share in the YTD.

This compares with 29% share for FanDuel against a long-term average of 33%, and 23% share for DraftKings against its long-term average of 28%.
The 8% share puts bet365 fourth, behind FanDuel, DraftKings and BetMGM (19%), and ahead of Caesars (7%), Rush Street (5%) and Barstool (3%).
Bet365 recently launched in Iowa, its fifth state after New Jersey, Colorado, Virginia and Ohio.

Keeping up with the Joneses: Analysts at EKG, meanwhile, have pointed out bet365 is achieving the highest hold in Ohio at 18.5%, 100 bps ahead of FanDuel. “The lofty hold rate suggests bet365 is enjoying some success with its same-game parlay product,” the team said.

“Of course it’s just a five-month sample and the figure is likely inflated by people being willing to throw bonus money at big-price SGPs,” they added.
JMP said bet365 has been aggressive on free play in Ohio, but GGR and handle market share have declined off its March highs after pulling back on promotions.
The team added that bet365 had 38% of the promo credit share in Ohio during March (13% GGR share) vs. 16% in May as GGR share declined to 7.9%.

Promo slomo: JMP also noted that the seasonal sporting lull has given operators an opportunity to cut back on promos. The team said March, April and May promos as a percentage of GGR were 26% to 28%, which equates to “levels comparable to mature markets”.

DraftKings and FanDuel were in the mid-20% range, which should be a driving factor to positive EBITDA for both in Q223.

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Inflection projections

DraftKings could post its first-ever profit in Q2, according to analysts.

Profits ahoy: In a note covering stocks that are reaching inflection points, the team at Jefferies said the forthcoming Q2 earnings should reflect “approximately break-even EBITDA”, but with some bulls on the stock expecting meaningful profits for the first time in DraftKings’ history.

Meanwhile, noting recent “meaningful” market share gains, the team at Deutsche Bank said they believe DraftKings is likely to grow market share from here.
From a low point in Q2 last year of just over 20%, DraftKings has moved up to over 30% in the quarter just past.

🚀 DraftKings increasing OSB market share

New York datalines

Fly in the ointment: Having established itself a leading position by handle in New York through June, DraftKings has once more ceded top spot to rival FanDuel in the week to July 2.

For the week, DraftKings garnered handle of $73.8m vs. FanDuel’s $88m.
In June, DraftKings grabbed $489m of handle vs. FanDuel’s $418m.
However, FanDuel still led by GGR with $47m vs. DraftKings’ $37m.

’Fred again

There is life yet in Betfred’s UK retail betting estate.

Actual life: Betfred’s UK betting shop estate of 1,400+ outlets bounced back strongly from the pandemic, according to its latest annual results released to Companies House. GGR for the business as a whole in the year to Sep22 was up 38% to £723m, while EBITDA soared 46% to £68m.

The company said the improvements were due to a bounceback from the previous year when much of the retail estate was closed for long periods due to pandemic restrictions.
The company ended the year with 1,413 shops having closed 51 premises over the period.
US losses were not broken out, although the company said it had launched in three more states over the course of the year.
The report also made mention of the company’s move in South Africa, which includes the acquisitions of Sepels Best Bets and Sepels Sportsbet Guatang as well as a 51% stake in Lottostar.

Analyst takes

Gamblimg.com: While the affiliate space remains fragmented, the analysts at Macquarie said Gambling.com has the combo of “unique offering, media assets and partnerships”. In initiating coverage, the team is forecasting three-year revenue and EBITDA CAGR of 22% and 32% respectively, outpacing projections for B2B suppliers and other adtech entities.

Furthermore, the team suggested its estimates “may be conservative” given that a ~5% spend on affiliate marketing in a North American market worth ~$50bn would amount to a TAM for US-facing affiliates of $1bn-$3bn.

Genius Sports: The 25% share price rise following the announcement of the extension of Genius Sports’ deal with the NFL demonstrated the extent to which a renewal had weighed on the minds of investors, suggested analysts at B Riley.

The team noted how the agreement secures the two-year option from the original deal and adds a further one-year extension.
Similar to the deal with Football DataCo for UK soccer rights, the team said they believe there was “no competitive bidding process”.

The week ahead

Today in Compliance+More, the latest edition of Career Paths asks experts in the field of public affairs what are the rewards and how is success measured in one of the most important roles within any gambling business.

In Earnings+More tomorrow, the latest edition of Deal Talk takes the temperature of the dealmakers at the half-year stage.
In the Gambling Files this week, Jon and Fintan speak to Michelle Hembury from Melchers about all things German regulation.

Calendar

Jul 20: Betsson
Jul 25: Kindred
Jul 26: Kambi, VICI (e), Churchill Downs (e)
Jul 27: Churchill Downs (call), VICI (call), Boyd Gaming, GLP (e)
Jul 28: GLP (call)

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Startup focus – SoBet

Founded in 2022 by Cooper Lycan as a sports-betting media platform for next-gen sports bettors, SoBet hosts short-form betting content that is “fit for the social age” by leveraging content from influencers and creators”

Funding backgrounder: The company closed a pre-seed funding round in June 2022 of over $1m and is in the process of closing another funding round this summer.

Time is right: The growing fragmentation of the social media landscape presents two big opportunities: potential new gamblers and demand from SoBet’s target demographic of older Gen-Zs and younger millennials.

“This segment is rapidly growing, with 58% of 18-22 year-olds having engaged in at least one sports-betting activity, according to a recent NCAA study and roughly a third placing bets via mobile apps,” Lycan claims.

Feeling fresh: The response from the industry has been “extremely encouraging”, he says, with traditional operators as well as ticket companies and leagues having reached out. “This is a great proof of concept,” he adds.

The long-term goal is profitability in 2024 while the current focus is on North America and ensuring a successful app launch “to make sure we get the product and offering right and can pave the way for scale”.

Career paths

Light & Wonder: The departure of CFO Connie James has added “an element of uncertainty” to the group’s shares, according to the Jefferies team. James has played a key role in the group’s restructure over the past 24 months and news of her leaving has come as the group upped its 2025 EBITDA guidance to $1.4bn.

The leadership team can achieve its targets but a change of CFO “adds to the debate” with the question being whether an incoming CFO will review the guidance.

NeoGames has appointed Steve Capp as a non-executive director and chair of the audit committee, meaning the company is now in compliance with Nasdaq listing rules.

GeoComply has announced the appointment of two seasoned executives to its leadership team. Lindsey Drake has been appointed as CFO and Kelly Schaefer joins as chief human resources officer.

Shai Tabibian is stepping down as 888’s senior VP and head of B2C.

The Malta-based gaming operator Rootz has appointed Sam Brown as CEO.

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Newslines

The 2023 World Series of Poker Main Event has broken attendance records with over 10,034 entrants, beating the 2006 record of 8,773.

The Oakland A’s may be able to access more land for its $1.5bn stadium if needed, according to Bally’s chair Soo Kim. Kim told the Las Vegas Review-Journal there are four acres of shared space that might be reallocated.

Merkur Casino has announced the opening of its first UK-casino in Aberdeen.

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