Chatty rat
Someone is talking about potential bet365 corporate moves
Rumors gather steam with reports of bet365 sale or partial US float discussions.
Robinhood’s Tenev talks up early sports prediction market success.
Analysts take comfort from calming earnings words of Las Vegas market leaders.
Earnings edit: Rush Street Interactive, Evolution, Kambi.
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Springing a leak
The gossip: While not exactly Signalgate, yesterday’s headlines about bet365 lining up advisors with the intention of either seeking an outright buyer, looking at a partial sale or even considering a partial listing in the US set tongues wagging about where the leak might have come from.
The Guardian story cited unnamed sources as suggesting the Stoke-on-Trent firm has held talks with bankers and advisors in recent weeks.
According to the paper’s mole, a full or partial sale and a US listing idea are all on the table, including selling a stake in the business to private equity.
Rumor mill: Chatter about bet365’s future increased in March when news emerged that it was shuttering its Chinese-facing dotcom business, with sources suggesting it represented a clearing of the decks should the owning Coates family be looking for an exit.
Speculation then was that a sale would be far more likely than an IPO – and that there was a very short list of potential acquirers, headed by DraftKings.
The price tag in The Guardian story of £9bn chimes with previous estimates based on the same multiple of price/earnings as Flutter.
Is she really going out with him? But sources spoken to by E+M suggested a leak such as yesterday’s news report could act to “rustle up some other buyers” and at the very least alert them to the potential for substantive discussions.
There’s something going on around here: “This could come from either side,” said one source. “It could come from the banking side – they are notorious gossips – or it could even come from Stoke.”
Handing over the reins: All of the potential options discussed in the article would suggest some level of change of control from the current structure, with ownership so closely held between Denise Coates and her brother John.
As with other founder-led businesses, it is often one thing to sell a large part of the business but it is quite another to relinquish control.
“You can’t pilot the plane with someone else telling you how to fly,” said one investment source. “You have to jump out of the plane and use a parachute.”
The end of an era? An online industry without Denise Coates at the head of bet365 would mark a sea change. “Who’s everyone going to copy,” one industry wit told E+M.
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Noise from the ’hood
A billion between friends: Vlad Tenev, CEO at Robinhood, said just under half of the more than 1 billion prediction market contracts were sports based, as the company’s active trading operation “keeps getting more disruptive.”
“And that’s March Madness, but we also had the Masters, and now there’s NHL and NBA contracts as well,” he added.
“So, the plan is to still continue making the product better.”
Find and seek: Tenev said now that Robinhood featured so many contracts, “discoverability and organization is something that the team is looking at,” adding the prediction markets were an “incredibly powerful, nascent asset class.”
He predicted there would be “more and more contracts and a wide variety of contracts over time.”
“We love what we’re seeing, and it’s so early that the potential of this is vast.”
Customer differentials: Tenev noted the prediction markets offering appealed to a broad range of customers, and that those who were there for the economic markets weren’t the same as those looking for sports.
“We actually see very, very different behaviors even within prediction markets when you talk about different contracts,” he said.
“The group of customers that engages with the economic prediction markets is not the same group of customers that engages with the Masters, for instance.”
For more see yesterday’s Earnings Extra edition (PRO subscribers only).
World in motion: Robinhood provides its customers with prediction market trading via a deal with Kalshi, whose CEO Tarek Mansour said on LinkedIn yesterday that it is one of the launch apps on Sam Altman’s World network, alongside Stripe, Visa and Tinder.
“The global financial system is accelerating and prediction markets will be at its center,” said Mansour.
Trading places: Separately, Sporttrade announced it has petitioned the Commodity Futures Trading Commission with a letter asking permission to offer its product nationwide so it can avoid the “irreparable harm” of a competitive disadvantage, according to Sportico.
Coming up: An interview with Sporttrade CEO and founder Alex Kane will feature in Monday’s edition of E+M.
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Ainsworth investor Kanen Wealth Management has written to the board to complain that Novomatic’s proposed A$1 (64¢) a share offer for the 47% of the company it doesn’t already own undervalues the business. Kanen owns a 2.5% stake in Ainsworth and claims the offer doesn’t account for A$100m in real estate owned by the supplier.
Earnings in brief: Star Entertainment said Q325 revenue fell by 35% YoY to A$271m ($174m) while adj. EBITDA tumbled to a loss of A$21m. The company said the implementation of mandatory carded play at its Sydney property was the cause of a 17% decline in sequential revenues.
EveryMatrix: Q1 revenue rose 39% to €54m while EBITDA was up 27% to €28m, leaving the TTM figure at €107m. iCasino supply was the largest contributor, up 44% to €28.6m with EBITDA up 29% to €18.6m, while sports revenue rose 50% to €15.8m with EBITDA of €9.7m, up 51%.
Playtech has completed the sale of its subsidiary Snaitech to Flutter Entertainment for €2.4bn, and announced it would be distributing €1.8bn of that to investors. It has also repaid the remainder of a €350m bond.
Sega Sammy, meanwhile, has completed the acquisition of Netherlands-based Stakelogic for ~€125m despite the buyer having concerns over the supplier’s alleged links to black market operations into Japan and Turkey.
Data points: Macau GGR in April of $2.35bn represented a 1.7% YoY increase but a 4.1% decrease sequentially. Analysts at Seaport noted this was better than consensus estimates.
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The big move: Better Collective has announced that co-founder Christian Kirk Rasmussen is to become co-CEO alongside Jesper Søgaard, having previously fulfilled the role of COO. Søgaard said Rasmussen’s new role would free up time for him to have a stronger focus on innovation, product development and future growth opportunities.
Gentoo Media has announced the departures of chief sales officer Gioacchino Morsicato and CTO Vadim Jefimenko as part of a strategic reorganization. Mathew Ellis has resigned as chief financial officer of Accel Entertainment, effective May 9, with Mark Phelan stepping in as acting CFO during the search for a permanent replacement. Bragg Gaming has appointed Holly Gagnon as chair.
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Soothe operators
Everything’s going to be OK: Both MGM Resorts and Caesars Entertainment this week sought to reassure investors about the health of the Las Vegas market despite the deteriorating macro situation.
MGM was perhaps the less voluble as it said on Wednesday that April had been a record month for its hotels. (See Earnings Extra, PRO subscribers only).
The day previous, Caesars was more insistent, suggesting the company was simply not seeing anything of the consumer softness that investors “seem to be worried about.”
Comfort inn: Looking at the two earnings statements, the team at Bank of America noted both companies provided Las Vegas and regional beats, adding that “overall it sounds like management teams aren't seeing material consumer softness.”
Meanwhile, the team at CBRE said the strong group and convention outlook “provides additional comfort for earnings stability in the near and medium term.”
More reassurance over the health of the gaming consumer – and in particular in Vegas itself – came from Red Rock Resorts overnight, which reported its highest-ever Q1 revenues and adj. EBITDA. See this morning’s Earnings Extra.
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Earnings edit
Rush Street Interactive
That’s entertainment: Affordability and convenience will see the US online sector through any potential economic downturn, claimed CEO Richard Schwartz, as the company continued on its growth path.
iCasino growth rates continued to outshine OSB by 25% to 11% YoY, with Schwartz claiming RSI was getting ever more efficient at acquiring quality customers.
Notably, the percentage of revenue spent on marketing declined to 15% during the quarter as revenue outpaced spend.
Mexico continued to improve and, while there have been some local difficulties with a player tax in Colombia, the LatAm segment continued to grow.
See Thursday’s Earnings Extra edition (PRO subscribers only).
Evolution
The paranoid style: Having previously been something of a money-printing machine, the leading live casino provider all of a sudden appears to have run into a number of obstacles, from cyberattacks in Asia to ring-fencing in the UK to the effects of industrial action in Georgia.
Despite the evidence of slowing YoY revenue and profit growth, and substantial sequential declines, CEO Martin Carlesund remained upbeat.
He argued that everything the company has done in the past quarter was done to “support the mission to increase the gap to competition,” he told analysts.
“That is the bottom line: we are more paranoid than ever. We have no time to waste.”
Hitting the skids: Needless to say, investors were not impressed and sent the shares down 19% on the day.
See Wednesday’s Earnings Extra edition (PRO subscribers only).
Kambi
Bait and switches: With Q1 revenues showing the after-effects of the departure of Penn Entertainment this time last year, Kambi CEO Werner Becher stressed how the sportsbook supplier was keen on diversifying its customer base away from a reliance on a few big names.
In this instance, revenues were down due to the one-off transition fees this time last year. Ex-this, revenues rose 7%.
Conversely, the company is aiming for big names when it comes to the lottery space after it secured a sportsbook partnership with the Ontario Lottery and Gaming Corporation in Q1.
It also saw the launch of new clients BetMGM and Stake in Brazil in Q1.
I’m hearing only bad news: However, investors were less than impressed with the falling headline numbers, sending the shares down 10% on the day.
See Wednesday’s Earnings Extra edition (PRO subscribers only).
Connections
The big deal: MGM Resorts has announced it will launch a live dealer studio at MGM Grand in Las Vegas through its partnership with Playtech in June. Initially, it will only be available to online international players in selected markets, pending regulatory approval.
Meanwhile, Hard Rock Digital and Playtech have launched a live trivia experience on Hard Rock Bet’s online casino platform in New Jersey.
Stake has launched its remote gaming server, called Stake Engine. Aviatrix has received regulatory clearance to offer its online casino games in Brazil. 7777 Gaming has received a license to offer its portfolio of online casino games in Colombia. Caesars is to add Pennsylvania to its cross-state poker pools on its World Series of Poker Online platform, joining Michigan, Nevada and New Jersey.
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Upcoming earnings
May 5: Accel Entertainment
May 6: Genius Sports, Wynn Resorts
May 7: Flutter Entertainment, Raketech, Light & Wonder
May 8: Super Group, Penn Entertainment, Inspired Entertainment, DraftKings (earnings), Full House, Golden Entertainment
May 9: DraftKings (call)
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