Mar 29: Boyd agrees $170m Pala deal

Boyd Gaming’s Pala Interactive buyout, New York data, XLMedia FY, 888's African JV +More

Earnings+More

Mar 29, 2022

Good morning. On the agenda today:

Boyd Gaming agrees $170m Pala Interactive buyout
XLMedia pushes its US sports-betting story but talks of European “managed decline“.
888 agrees new African joint venture.

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Boyd Gaming’s Pala Interactive buyout

Boyd Gaming has reached a “definitive agreement” to buy Pala Interactive for $170m cash.
Pala generated $5m EBITDA in 2021.
Transaction expected to close Q123.

Own the tech: The buyout of the B2B and B2C provider/operator bolsters Boyd Gaming’s digital ambitions. Pala comes with its own player account management system and casino, poker and social gaming platforms.

Pala is licensed for B2B services in eight states and is consumer-facing in New Jersey and Canada. Its most prominent client is Kindred.

Kevin Smith, CEO: “Given our nationwide geographic distribution, significant database and established loyalty program, it makes sense for us to pursue a direct approach with our iGaming operations.”

‘Duel commitment: Smith was keen to emphasize this didn't affect Boyd’s “commitment” to its sports-betting partnership with FanDuel. “We remain fully committed,” he said. In return for market access, Boyd Gaming has a 5% stake in FanDuel.

We are Stardust: However, Boyd does plan to migrate its current Stardust gaming operation to the Pala platform from FanDuel and will integrate its B Connected loyalty program.

Jefferies noted that Boyd indicated that its current digital operations, which include mobile sports-betting in six states, iGaming in PA and NJ and social gaming, generated $24m in EBITDAR in FY21 and should exceed $30m in FY22.

Overripe: Jefferies suggested the deal might set the scene for a further round of M&A. “Our view is that conditions and valuations in the market are ripe for more acquisitions of digital names. In this regard, BYD's acquisition could look increasingly attractive over time.”

Ryan’s express: Pala Interactive was funded by the Pala Band of Mission Indians back in 2013 and is headed by ex-PartyGaming boss Jim Ryan.

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New York data

Mad hatter: Handle for the first week of March Madness rose to $428m, up 5% WoW, but GGR was down 29% to $26.1m. FanDuel continued its market share march, holding top spot by both metrics at 29% of GGR and 56% of handle. Second with handle was DraftKings at 26% while Caesars took the second spot by revenue with 17%.

XLMedia FY

Revenues up 21% to $66.5m, Adj.EBITDA up 47% to $17.9m.
Revenues derived from US sports-betting sites grew 178% to $31.4m, personal finance revenues flat at $8.7m, casino revenues were down 26.8% to $23.2m.

Pinning foundations: The group’s FY presentation said its OSB-focused growth was underpinned by its recent US acquisitions of Sports Betting Dime and Saturday Inc., which complemented that of CBWG in 2020.

The focus on “high growth, regulated markets” and diversification away from casino to sports betting had enabled it to “outperform expectations”, said interim CFO Rowan Ellis.

Penalty clause: The group has been fined by Google for the poor quality of its casino sites and will continue the “managed decline” of its European casino assets as part of its strategic redirect.

Ellis on XL Media’s casino vertical: “Casino assets are still profitable, but will come under pressure as tail revenues decline, this is anticipated by the group.”

Ops highlights: XL moved much of its workforce to the UK offices of Blueclaw, the SEO agency it acquired in Sept21, while its personal finance assets will be “re-platformed” in the US during 2022. It also recently appointed Caroline Ackroyd as its new CFO.

Startup funding news

Me generation: Mobile messaging and CRM platform 2mee has raised £500K in its latest funding round. It will use the cash to grow its commercial team and develop more partnerships with online sportsbooks and casinos.

2mee’s platform focuses on customer engagement by sending human hologram messages to players, it is currently live with BetFred and Sportsbet.io.

Life of Riley: CEO James Riley said the cash would allow the company to “drive greater awareness of the 2mee product and to work with more operators and brands than ever before”, particularly in the sportsbook and online casino sectors.

888 African venture

I hear the drums echoing tonight: 888 has announced a joint venture with a group of European industry veterans to launch the 888 brand in selected regional markets in Africa. The company has a minority stake in 888Africa.

Former stars: 888Africa is led by Christopher Coyne, former CMO the Stars Group alongside Andy Lee, chairman of Voxbet; Alex Rutherford, former CPO at Editec Online; Ian Marmion, former sportsbook trading director at the Stars Group; and Helen Scott-Allen, former CFO of Premier Bet.

Under the terms of the agreement, 888Africa will pay a brand license fee to use and operate 888’s online betting and gaming brands in selected regulated markets in Africa. The brands will operate via a third- party technology platform.
Initially, 888Africa expects (subject to licensing) to launch in four markets this year.

What we’re reading

On Wagers.com: Steve Ruddock looks at Michigan’s impact on multi-state online poker.

Earnings in brief

Elys Game Technology said it expects revenues to increase 22% to ~$45.5m for 2021 and online GGR to rise 74% to ~$54.9m. The company said its recent entry into the US B2B market had a “very positive effect” though revenues for the segment remain small at ~$1.

Regulatory roundup

Georgia legislators revived sports-betting efforts and passed legislation through a House committee. The House Economic and Tourism Committee's hearing Monday restarts hopes Georgia could have legal sports betting by 2022 but the bill must pass the full House before going back to the Senate. The AGA has sent a letter to the Kentucky Senate in support of a bill that would ban unregulated skill games in the state.

Newslines

DFS out: FanDuel will close down its DFS site in Ontario from April 1. The province is set to go live with regulated sports-betting on April 4 and DFS would come under the same regulations as online betting, casino or poker. According to press reports, FanDuel would be required to geofence its DFS platform to Ontario-only players.

Colorado shop window: Betsson has launched its Betsafe online sportsbook in Colorado under a market access deal with Dostal Alley Casino. It is the group’s first B2C offering in the US. Betsson has said it does not plan to invest or compete in a major way in the B2C space and will use the site as a display of its B2B capabilities.

Lights out: Star Entertainment CEO Matt Bekier resigned amid the investigation into the company over possible breaches of anti-money laundering and counter-terrorism at its casinos.

Fake fan: Fanatics further expanded its digital presence, announcing a partnership with World Wrestling Entertainment on Monday. The deal comes as Fanatics continues to pursue entry into the legal online sports-betting space.