Entain puts £585m aside for HMRC fine
Entain’s Turkish hit, Penn’s ESPN Bet hopes, Wynn’s blowout, Fox happy with Super 6, Sportradar talks tennis +More.
Good morning. On today’s agenda:
Entain provisions £585m to pay for HMRC agreement.
Penn says it can break the media sponsorship mold with ESPN Bet.
Wynn Resorts comes in with a blowout quarter.
Just super 6: Fox says it is pleased with the terms of the Fox Bet divorce.
Sportradar talks up its tennis and LatAm soccer credentials.
Until we never say goodbye then I will keep the sun for you.
Entain overshadowed
Entain’s first-half figures are overshadowed by news of a £585m provision against a settlement with HMRC.
Legacy issues: Entain’s earnings were dominated by the news of a £585m provision related to its ongoing deferred prosecution agreement (DPA) negotiations with HMRC over its legacy business in Turkey.
It wasn’t me: Chairman Barry Gibson said Entain was “making good progress towards drawing a line under this historical issue”.
He said the group today “bears no resemblance to the GVC of yesterday, which had a different management team, a different strategy, and to be blunt, different standards”.
The full terms of the DPA are “subject to judicial approval”, which is scheduled for Q4.
Further reading: For more on the HMRC update see Compliance+More.
You’re still thinking about the bad news: Group NGR was up 14% YoY to £2.4bn and underlying EBITDA rose 6% to £499m in the first six months of the year, with FY23 EBITDA expected to come in at £1bn-£1.05bn. Group EBITDA was up 6% to £499m.
Online NGR was up 15% while retail rose 12%.
ESPN who? On the potential for new competition in the US, CEO Jette Nygaard-Andersen said the market is “becoming more and more consolidated” and is “more and more difficult” to build market share.
“It’s all about technology, product and experience and muscle,” she added.
“It’s exciting what’s going on but this won’t change the trajectory for BetMGM.”
Look busy: The company had had a busy first half or more, buying Polish market leader STS for £750m as well as 365Scores for $160m and most recently sports-betting odds provider Angstrom for up to £202m.
On Angstrom, Nygaard-Andersen said the reason for bringing it in-house was margin improvement. “We will leverage its capabilities outside the US but for now the focus right now is the US.”
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Penn aims high
Penn CEO says the deal with ESPN is “not a typical media sportsbook commercial agreement”.
Mr 20%: CEO Jay Snowden said the ESPN partnership announced on Wednesday would “redefine the sports-betting landscape” as the partnership aimed “for the top” with a long-term OSB target of 20% market share.
Regardless of the poor track record of media/sportsbook partnerships, Snowden said comparisons were “apples to eggplants”.
In terms of media brands, “there’s no comparison with ESPN in the world,” he added.
A lot of brands: “You’re talking about a brand that everybody in the world knows about. It's not an old brand, it's not a young brand, it's an everything brand. There's a lot of affinity for that brand.”
Despite the $150m a year for 10 years pledged marketing spend and the $500m of Penn share warrants gifted to ESPN, he claimed this was “not a bet-the-company” transaction.
Still, Snowden said Penn and ESPN were “ready to compete on scale”. He noted Penn was likely to spend a further $150m a year on marketing outside of ESPN.
Notably, however, the launch of the ESPN Bet app won’t take place until November, after the start of the NFL.
“I actually think the timing of our launch in November is good,” he added.
”The beginning of a football season is so noisy, everybody's spending like crazy on the acquisition side. I like how this plays out.”
Take it to the limit: He noted that the new online commitment would push Penn’s leverage to 4.7x-5x EBITDA over the next few quarters. The agreement includes a three-year opt-out clause should the market share targets not be reached.
Penn forecasts long-term 20% in OSB and 16% in iCasino market share, with a long-term aim of generating $500m-$1bn in interactive EBITDA.
“We’re not doing this deal to be at 3-4% share,” Snowden said.
Penn will not be “cheap” in its approach. “We don’t want to have regrets about how we launch the brand”, he added.
He noted that talk about the shape of the markets in OSB and iCasino as being already fixed was “crazy talk”.
Everything but the earnings: Snowden said Q2 had been ”stable” with revenues up 3% to $1.67bn, but adj. EBITDA was down 5.5% to $477m. Interactive revenues were up 66% to $258m, with EBITDA losses dropping 38% to $13m caused by the relaunch of the Barstool app on its proprietary platform.
Wynn flying high
Wynn Resorts is firing on all cylinders.
Kerching: “Well, what a quarter,” said CEO Craig Billings. “We saw strength all over the place: the casino, the hotel, the restaurants, retail, you name it, all supported by a consumer that seems more than willing to continue spending on unique luxury experiences.”
🚀 Wynn obliterated street estimates with 76% revenue growth to $1.6bn YoY. The casino giant ran $2.2bn of EBITDA in Q2. Context: peak annual EBITDA for the entire company in 2018 was $2bn.
Las Vegas delivered $224m of adj. EBITDA, nearly double that of 2018. Operating income rose across the board at Wynn Palace (+$409.7m), Wynn Macau (+$243m) LV Ops (+$17m) Encore Boston Harbor (+$11.8m), and Wynn Interactive (+$5.5m).
China and Macau are recovering, and analysts believe the company is clawing back its VIP junket play, with one eye on the forthcoming UAE launch and ground broken on Wynn Al Marjan Island.
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Fox tales
Lachlan Murdoch says Fox is pleased with the outcome of the Fox Bet divorce and sees opportunities in working with other operators.
I'm free to do what I want, any old time: Noting that the Fox Bet joint venture, which was nixed at the end of July, was “entirely funded by Flutter”, CEO Lachlan Murdoch said his company had “derived significant value” from the deal.
Specifically, he namechecked the Super 6 product, which he said was “one of the remaining elements of value coming out of Fox Bet”.
He added it was the “most successful free-to-play wagering business” in the US, which “offers a tremendous funnel for wagering sites going forward”.
“This is a brand and an operation that we will continue to operate,” he added, before noting Fox was also now free to work with other operators.
“Many of them have reached out to us already,” he said.
Still got it: Murdoch noted Fox still has the right to acquire 18.6% of FanDuel. “Some people have put that value of our option in FanDuel at up to $2bn,” he added, glossing over the gambling licensing hoops Fox would need to jump through to become an owner of that large a stake.
On the radar
New rights to ATP and Latin American soccer are the highlights for Sportradar’s Q2.
By the numbers: CEO Carsten Koerl noted at one point during the call with analysts that Sportradar is now working with 900 betting operators globally, along with 350 sports bodies and 500 media companies.
“We lead on breadth and events coverage for sport data and odds, and offer the largest volume of data in the world,” he added.
New CFO Gerard Griffin said Sportsradar was hoping to move its customer base up the value chain.
Revenues rose 22% YoY to $216m, with MTS and live odds and data up 19% YoY and rest of world streaming services up 25%, helped by the recent rights deal for CONMEBOL. The US elements of the business generated revenues of $38m, up 31% and producing an adj. EBITDA of $5.4m.
Total adj. EBITDA rose 46% YoY to $40m.
New balls please: On top of the LatAm soccer rights, Sportradar also signed a deal for ATP tennis over the period, which Koerl described as a “game changer”. “Next year when this starts, we want to launch multiple new products driven by deep data,” he added.
AI is a continuing theme for Sportradar, working across its live odds service, its trading and risk management operations and programmatic advertising.
“The more data points you analyze, the more connections you have, the better that will be.”
Earnings in brief
Inspired Entertainment: Revenues were up 13% YoY to $80m while adj. EBITDA was flat at $26m, which the group said included the impact of equipment sales and expenses shifting ~$2m of adj. EBITDA to the second half of the year.
NeoGames: Revenues came in at $62m, double last year, reflecting the benefit from the acquisition of Aspire Global. Lottery revenues rose 7.9% to $14m, while the share in NeoPollard Interactive was also $14m, up 38% YoY.
Everi: Gaming segment Q2 revenues rose 1% YoY to $113m, with a 5% rise in gaming operations largely offset by an 8% decline in gaming equipment and systems sales. The fintech segment grew by 13% to $96m, meaning total revenue was up 6% to $209m.
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Newslines
Light & Wonder followed up its earnings yesterday with a $550m bond issue dated 2031 in order to redeem the same dollar amount of notes due in 2025.
Media and affiliate Playmaker has acquired Quebec-based sports media outlet La Poche Bleue for C$8.8m.
Hacksaw Gaming has signed a distribution deal with Rush Street Interactive for the supplier’s debut in the US.
Stats Perform has agreed an extension of its exclusive rights deal with Football DataCo, which manages data for the English Premier League and other major British sports leagues. Its Opta brand will continue to collect extensive data from all major English and Scottish soccer leagues under terms of the deal, which runs through the 2024 and 2025 seasons.
Calendar
Aug 10: Entain, Acroud, Bragg Gaming
Aug 14: Playmaker
Aug 15: 888
Aug 17: Rank, Raketech, Gambling.com, Super Group
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