Bun fight
Brazil could be be a market opening like no other
The rush to market in Brazil is set to be an epic war of attrition.
In +More: DraftKings in Wisconsin, Hard Rock in Illinois.
Promo spend increase outpaces GGR in July.
Startup focus is gambling-focused social media provider Betboard.
Upwards to the vanguard, where the pressure is too high.
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Pie slice and dice
Race for the prize: The newsrooms of the trade press will have been relieved that few operators followed the lead of Golden Matrix subsidiary MeridianBet which went to the trouble of issuing a press release to announce it had applied for a sports betting and iCasino license in Brazil.
In total 113 operators have submitted applications to the Brazilian authorities including all of the big names that are expected to dominate the regulated market when it launches in January.
Melee: The widespread assumption has been that the final tally is likely to be much shorter. However, the analysts at Regulus point out that while 113 “sounds like a lot,” it potentially isn’t given the size of the “relatively mature” Brazilian market which the team estimates has a run-rate of over $3bn.
“The mean revenue per licensee is likely to be ~$25m, which is enough to give the long-tail hope for a long time,” they add.
There are caveats: regulation “might actually cool the market” and Entain’s recent struggles – now in turnaround – show that “this isn't an easy emerging market to grow in.”
“Brazil's online gambling revenue per capita is already $14 – which is 50% higher than Colombia's regulated market and already 70% of the UK on a GDP-adjusted basis.”
Who’s who: The Regulus team “confidently” predicts the top five licensees will get ~70% market share. Among the names like to be fighting it out for the top five berths are bet365, Betano, Superbet, Entain’s Sportingbet and other local brands including Aposta Ganha and Betnacional while, MGM Resorts has teamed up with media giant Globo for the launch of BetMGM in the country.
“But with so few fully localized offers it would be very dangerous to assume we know who those top five are now or whether early success translates into defensible market share,” the analysts add.
“Brazil is not the US, it is far more like Europe in product mix and competitive dynamics.”
You chose… poorly: Sources suggest the guesswork around which local hero might yet emerge means that any potential M&A could be fraught with the potential of “picking the wrong horse.”.
Recent news suggest that Betnacional is being touted around – with Flutter being mentioned as a buyer – is yet to bear fruit.
Meanwhile, another source suggested KTO is being “dragged through every puddle” by its advisors as it seeks a buyer ahead of the market opening.
Compliance+More: The Regulus team points out that whether all 113 applicants get a license will depend on what type of regime is constructed by the Brazilian regulator. “If it focuses on rubber-stamp licensing with the view that compliance and probity can be dealt with from within, then we can expect the market to start highly competitive,” the team writes.
But if it gets “bogged down in bureaucracy,” then knowing how to fill in forms “and who to pester “will “become a competitive advantage.”
Frustrations are likely to abound; if it takes compliance seriously as a gateway, then it might take a long time for hopefuls to get licensed, with many more 'entrepreneurial' businesses being forced to give up.”
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+More
Kambi and Rush Street Interactive have agreed to an unspecified “multi-year” extension to their supply agreement, the second extension since the partnership began in 2018.
DraftKings has agreed with the Lac du Flambeau Band of Chippewa Indians to open a retail sportsbook at Lake of the Torches Resort Casino in Wisconsin today, August 28, pending regulatory approval.
Meanwhile, Hard Rock Bet has launched OSB operations in Illinois. The company plans to open its in-person sportsbook at its Rockford Casino on Thursday, August 29.
Deconstruction time again: The date has been set for the demolition of the Tropicana on the Las Vegas Strip with the planned explosion on October 9 following a drone and firework show set for Oct 8. Construction for the new A's MLB stadium is set to begin in the spring.
Lottery product provider Pollard Banknote has announced it will provide a full turnkey iLottery solution for the Kansas Lottery.
Light & Wonder and Penn Entertainment have launched Greektown-branded live dealer operations via the Hollywood Casino app in Michigan.
What we’re reading
Staring into the abyss: The Defector on the experience of watching ESPN Bet on TV. “What I saw was an hour-long advertisement that made thin, watery attempts to justify itself as programming, which it is not.”
Promo splurge
Ahead of the curve (ball): The rate of increase in promotional spend during July far exceeded the growth in GGR in the four states which break out the data, according to the analyst at Deutsche Bank.
Promotional spending in Pennsylvania, Michigan, Connecticut and Kansas was up between 79% and 100% YoY or 94% across the four states vs. a GGR increase of 37%.
Promo spend as a percentage of GGR stood at 31% for the month, up from 22% in Jul23.
Handle was up 29% YoY across the four states, which when combined with the average 94% promos increase implies their percentage of handle was 3.7% vs. 2.5% in Jul23.
Pump and dump: The Deutsche Bank team suggested the “influx” of promotional spend across the four states is partly down to operators “priming the pump” ahead of a clutch of “considerably more challenging” comps in the months ahead.
The DB team pointed out that in Jul23 handle increased 11% YoY after a flat H1.
But there was a “meaningful acceleration” from August last year onwards with 21% growth followed by 33% in Sep23.
On message: Deutsche Bank said it will be “interesting” to see how the industry approaches a setup with tougher handle comparisons and hold tailwinds that are “likely to be more modest, relative to this time last year.”
At the same time, it is “attempting to put forth a message of more discipline around same-store promotional spend.”
Earnings in brief
SJM: The last of the six Macau concessionaires to report, the operator behind the Grand Lisboa said H1 NGR came in at HK$12.9bn ($1.65bn), up 48% YoY while adj. EBITDA more than tripled to HK$1.73bn.
However, despite the improvement in Grand Lisboa revenues, the analysts at Seaport said the Q2 performance remained “weak” despite the recent ramp up.
The property achieved a market share of only 2.5%, “and this was aptly helped by higher VIP hold.”
“The return on the investment remains abysmally low and unlikely to achieve anything approaching positive value creation vs. cost of investment in the foreseeable future, if at all,” the team added.
Ainsworth: Revenue fell 15% to A$121m in H1 but EBITDA doubled to A$28.2m with the company blaming the poor economic backdrop in Argentina and importation restrictions in Mexico for the revenue shortfall.
GiG: The soon-to-be-separated gaming affiliate business, now renamed Gentoo Media, enjoyed record revenues of €30.3m, up 39% YoY with organic growth up 18%. Segment EBITDA rose 435 to €14.8m.
The company said the split is set to be completed in September with the platform and sportsbook provision business continuing as the listed GiG entity.
That business saw revenues drop 21% to €7.3m while the business also fell to an EBITDA loss of €1.6m.
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SBC First Pitch
Pasteis de nata fight: The six participants to the SBC Summit Lisbon First Pitch competition have been announced. Set to duke it out in front of the judges on September 26 are:
Recent startup focus XGenia which is developing modular and versatile AI solutions that encompass all components of an online casino. CEO is Adam Davis.
Match Hype is a Czechia-based is a short-form sports video content provider and is ked b y CEO Radek Psurny.
Berlin-based Savagetech says it has created the world’s first true gamified retention engine for the gambling industry. The founder is Tom Lemke.
StatX Sports provides essential odds and data products to sports leagues, teams, betting operators, and media companies, supporting critical decision-making across the sports industry. Fronting up for the company is CEO Shawn Tucker.
Random State is a Sweden-based immersive iLottery and bingo games provider. It is led by CEO Mattias Westholm.
Startup focus – BetBoard
Who are you? Frustrated with the lack of credibility on traditional social media platforms, the idea for BetBoard was created by CEO Ross Lindemann, along with fellow co-founders Paul Anderson, CTO, and David Stewart, CRO.
What’s the big idea? “BetBoard is a digital platform that brings together sports enthusiasts who enjoy betting on sporting events,” explains Lindemann. “It provides a space for users to connect, share their betting experiences, exchange tips and strategies, and discuss upcoming and live sporting events. With live lines populating, you can also place bets with your preferred OSB.”
A “successful” beta phase launched during March Madness showed there is a “burning demand” for sports bettors to share ideas and stories on a dedicated platform.
What they say: “The landscape of how people watch sports is changing quickly,” says Lindemann. “We plan to lead the charge on how sports enthusiasts communicate. Our technology allows fans and sports bettors to go into specific events to remove the clutteredness of irrelevant content… The days of mindlessly scrolling traditional social media sites are over.”
Funding backgrounder: Outside of investments from the co-founding team, BetBoard has strategically raised $75k in a pre-seed friends and family round of fundraising.
Growth company news
Sparket has gone live with Penn Entertainment, delivering its social betting technology to Penn Play Casino offering.
Verse Fantasy CEO and founder Daniel Zimmerman told the BettingStartups podcast that his company has raised $1.1m in pre-Seed funding from Frontstage Ventures.
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Events calendar
Sep 2-4: Sigma East Europe, Budapest
Sep 24-26: SBC Summit, Lisbon
Oct 7-10: G2E, Las Vegas
Oct 21-24: World Lottery Summit, Paris
Nov 5: Gaming in Germany, Berlin
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