Brief encounter
Robinhood caves to CFTC on sports events markets
Not so merry men: Robinhood cans Super Bowl market after one day.
In +More: BlueBet raises cash for acquisition, White Hat rumors.
Earnings TL;DR looks at yesterday’s positive results from BetMGM.
Venture playground: Edge Markets in focus.
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Non event
Life comes at you fast: Robinhood’s venture into sports-based events contracts, via a partnership with Kalshi, might yet be one of the shorter-lived of the company’s adventures after it moved to pull the markets under pressure from the Commodity Futures Trading Commission.
The CFTC made a formal request for Robinhood to stop offering a market on the outcome of the Super Bowl on Tuesday, one day after it was launched.
This came after Bloomberg reported on Monday that the CFTC had launched a probe into provider Kalshi and Crypto.com’s self-certification of sports-based events contracts.
Live each day as if it’s your last: Via a posting on X, Robinhood said that “while we continue to work with the CFTC to understand their concerns, we are suspending the rollout of the Pro Football Championship market.”
The company added it was “disappointed by this outcome, especially given that we had been in regular communication with the CFTC about our intent and plans to offer this product.”
May – or may not – fly: Robinhood initially announced on Monday it was to offer sports-based event trading ahead of Sunday’s Super Bowl. Proclaiming the news on X, Kalshi CEO Tarek Mansour said “25 million more people now have exposure to our prediction markets.”
The normally prolific X poster is yet to comment on Robinhood’s reversal.
Crypto.com continues to offer its own Super Bowl market despite having received a similar request from the CFTC to cease doing so.
The Singapore-based business told Sports Betting Dime that it “remain(s) committed” to working with the CFTC but added it would continue to offer “sports title event contracts” in all 50 states without interruption.
Après moi: Robinhood had said on Monday that event markets were an “emerging asset class” and an “opportunity to better serve our customers as their interests converge across the markets, news, sports and entertainment.”
If Kalshi, Crypto.com and Robinhood successfully established regulated sports futures, it “could pave the way for other major players to enter this space,” Chris Gerlacher, senior political analyst at Prediction News, told Compliance+More.
The voice of unreason: The AGA has also waded into the debate, saying in a statement it was “concerned” about sports events offerings, which appeared to skirt state regulatory frameworks.
In line with the CFTC intervention, the AGA said it “urges these companies to cease offering sports event contracts during the CFTC’s review period.”
On the BetMGM earnings call yesterday (see Earnings TL;DR below), CEO Adam Greenblatt noted the discrepancy of prediction market operators being able to offer across all 50 states under the cover of a CFTC license.
“So, something that is allowed under a different set of rules should also be allowed for us, if you see what I mean,” he told the analysts.
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+More
A kind of blue: Australian challenger brand BlueBet – which recently completed the purchase of the Australian Betr and which will soon rebrand under the latter name – has raised A$15m ($9.4m) via an institutional placement to acquire fellow minor TopSport.
The Australian Financial Review said the presentation deck for the deal suggested BlueBet/Betr believes the acquisition is a key step towards hitting 10% market share.
TopSport reported NGR for the six months to December of A$5.2m.
Blue all over: Sources suggest the likeliest buyer for White Hat Studios is Gauselmann, the owner of Blueprint Gaming, which sold an RGS and a set of games to White Hat in 2021.
One source said Gaulsemann likely has the right of first refusal.
They added that the business might fetch a price in the region of $100m for the business, which has enjoyed success selling its games in the US.
Blackstone Star bid: Back in Australia, The Australian is reporting that the current owner of the Crown Resorts casino business, Blackstone, is in the process of snapping up stricken fellow casino group Star Entertainment.
The paper suggested Blackstone may wait in the wings until the financially challenged Star enters administration.
Recall, despite a recent cash injection from the sale of the Star Sydney Event Centre, the company is still thought to be running out of cash.
Definitely not suffering the same fate is VICI Properties, which has secured a new $2.5bn unsecured revolving credit facility due in 2029. The new facility replaces VICI’s old credit agreement of the same amount, which is now terminated, and extends the maturity date.
Earnings TL;DR – BetMGM
Juggernaut: CEO Adam Greenblatt said BetMGM exited 2024 a “materially different business” compared to the start of the year, as the company promised positive EBITDA in 2025 from forecasted revenues of $2.4bn-$2.5bn.
Put a ring on it: In FY24, BetMGM generated $2.1bn of net revenue and an EBITDA loss of $244m, and Greenblatt said BetMGM was “on the path” to $500m of EBITDA, but he didn’t put a date on the forecast.
Weighing me down: iCasino contributed a profit of $424m but OSB losses meant the total EBITDA loss came in at $244m.
Flying the nest: The company has recently secured a $150m revolving credit facility, as yet undrawn, and said it expected “no further capital” from its parents, Entain and MGM Resorts. Banking sources suggested this was an example of how the inflection towards profitability greased the wheels for raising debt.
This debt facility is “likely to be used to support normal operations in the near term.”
“But the availability of debt financing will have a big impact on the ability to execute large-scale M&A in the future,” the source added.
In this, the online sector was now following the path of the B&M casino sector with a "select group” of operators able to borrow at attractive rates.
For more on BetMGM, see yesterday’s Earnings Extra (paid subscribers only).
BetMGM analyst takes
Running up that hill: The team at Truist said the market “isn’t ascribing much credit to BetMGM,” due to the lack of progress on iCasino legislation and the “uphill challenge” being faced by those hoping to take the fight to the top two.
Still, pointing to the commentary on Q4 exit rates, Truist said this demonstrates “marketing optimization and growing operational leverage.”
Material gains: The team at JMP was more clearly positive. “We walk away believing the long-term potential of the business is understated, and the story will continue to materialize in the coming years,” they said.
The analysts noted the outlook for EBITDA profitability in 2025 but, with no date put on it, reaching the long-term $500m of profitability “appears conservative but will take some time.”
“Moving past the higher levels of investment, pushing out positive EBITDA, now brings back the conversation of the true earnings potential of the business,” they added.
Put it on the map: The team at Investec noted that, from Entain’s point of view, their DCF-based estimate suggested a valuation of $4.4bn for BetMGM or ~9.6x FY27 EBITDA. This translates into a valuation for Entain’s 50% of ~£1.7bn.
“We still believe that Entain could benefit from selling its stake in BetMGM to MGM and utilise the cash to improve platform efficiency and operations in other geographies," they added.
More takes
Trading blows: Tariffs are a “new dynamic to weigh on the market real-time,” said the Truist team, which noted the “potentially more impactful” indirect implications would be weighed up during the Q4 earnings calls.
They added that the administration’s “DOGE strategy” could have some impact on government-related group business in Las Vegas and play levels in DC and Maryland area regional markets.
DraftKings: With the hold issues in Q4 now “well understood,” the team at Bank of America believe the focus when DraftKings reports in a week will be on what the company says about OSB volume growth.
The analysts noted handle growth of 32% in the first nine months of 2024 moderated to “just” 15% in Q4.
Variously, they said this was due to weak NBA viewership, the lapping of the launch of ESPN Bet and what they believe was a “potential pullback” in promo levels given the low hold.
Bowl betting: Macquarie has put a number on expected total handle for Super Bowl LIX from regulated US betting this Sunday, saying it will increase 11% YoY to $1.7bn with around 11% of adults betting an average of $100 on the game.
They noted bets on the over/under points total were at present skewed to overs by 83%, representing the biggest liability for the operators. Therefore, a low-scoring game could see hold hit 22%.
“We think books will look to reduce their liability with most betting occurring closer to Sunday’s kickoff,” the team added.
Go Chiefs: The team added that, based on current trends from VSIN, the best-case scenario for sportsbooks is a Chiefs win and an under total.
But they added that, “while material” to Q1 earnings, the “more important opportunity” rests in customer acquisition through campaigns such as FanDuel’s Kick of Destiny 3.
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Earnings in brief
Gaming Realms: In a pre-close trading update, the provider of Slingo-branded games said FY24 revenue would come in at ~£28.5m, which represents a 22% YoY increase, while EBITDA would be up 30% at ~£13m.
During FY24, Gaming Realms launched its Slingo portfolio with 44 new partners globally and successfully introduced its games in its fifth US state, West Virginia.
It said the start to 2025 had been “encouraging” and announced a five-year extension to the licensing agreement with Scientific Games for the Slingo brand.
Raketech: The affiliate provider pre-announced its Q4 revenues and said it would be taking a €48.5m non-cash impairment against an acquisition made prior to the company PO in 2018.
The company said Q4 revenues were expected to have almost halved YoY at €12.3m while adj. EBITDA would tumble to €3.2m from €6m.
The latter figure is slightly ahead of Q3 and in line with previously updated guidance.
The writedown followed last year’s operational review.
Raketech will report its year-end earnings for 2024 on February 19.
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Venture playground
In focus – Edge Markets
Who are you? Edge Markets is a banking-as-a-service layer built from the ground up to reduce friction in the legal, US gaming market. To users it offers $250k per day in debit deposits, unlimited withdrawals and cash back on sports betting, DFS, sweeps and prediction markets activity.
It promises 100% approval for all legal, US gaming activity alongside financial segmentation for discretion and responsible gaming, plus no minimums or mandatory usage costs.
Operators, meanwhile, will see a 1% rebate on all transactions, increased cash access and a reduction in chargebacks.
There is no technology as it works on Visa rails – Edge generates its revenues from Visa interchange fees.
What’s the big idea? “We want to consolidate users’ financial data in a neutral account to implement truly effective responsible gaming controls by reducing payment friction and aligning the objectives of operators, regulators and players,” says founder and CEO Seni Thomas.
The KPIs: The offering was officially launched for the NFL season in mid-September and in January it processed $100m+ in transactions. The company hopes to be cash flow positive this month.
Funding backgrounder: $13m in funding from Bullpen Capital, StepStone, Suro Capital, Indicator Ventures, Impulsum Ventures, Mantis and a “number of strategics.”
Growth company news
A leader in sports betting and iCasino product design The Unit has invested €500k to launch its own marketing agency, tentenseven. The Unit’s director of strategic marketing, Feargal Byrne, is set to lead the spin-off as its director of iGaming, ecommerce and fintech.
Byrne said that as both product and design, and development and market evolved, “it just made sense” to separate the two in order to “better serve” its clients both old and new.
“I’m happy to report that client feedback has been excellent and immediate,” he added.
“Since the change, the depth and scope of all our marketing offerings are now much clearer.”
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Earnings calendar
Feb 6: Betsson, Boyd Gaming
Feb 11: Catena Media, Red Rock Resorts
Feb 12: MGM Resorts
Feb 13: DraftKings, Wynn Resorts
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