29 April: FanDuel outpaces Fox at Flutter +More
Flutter trading statement, MGM, Monarch, Betsson Q1s, Genius FY20, CO and TN March data
Good morning and welcome to today’s packed newsletter. There are quarterly earnings from Flutter, MGM Resorts International, Monarch Casino and Resort and Betsson and the debut full-year statement from data provider Genius Sports, plus March sports-betting data from Tennessee and Colorado. But we start with Flutter’s first-quarter trading statement.
Flutter trading update
The top line
Revenue up 33% in constant currency terms, sports up 41%, gaming up 22%. UK & Ireland up 35%, Australia up 59%, international up 7% and US up 135%, maintaining number 1 position in the market. Note, this was without almost any land-based contribution as the shops in the UK and Ireland remained closed for the entire period.
In the US, Michigan and Virginia performed strongly on acquisition with more than 900,000 new customers and gaming revenue increased 146% to £99m ($137m).
Company said Q2 will see accelerated sports growth, but casino will come up against tough comparatives from prior year period.
Fox hole: US revenues up 135% to £288m ($396m) in the quarter, FanDuel generated 91.6% of the total (vs. 89.1% FY 2020), FOX Bet (including PokerStars US) accounted for 8.4%. When asked about the performance of FanDuel and FOX Bet brands and the latter’s higher operating and acquisition costs, group CEO Peter Jackson said FanDuel benefits “from TVG and fantasy verticals contributing strongly, as well and really high volumes of FTDs (first time depositors) coming through.”
FOX Bet’s technology is also not as good as FanDuel’s, “it operates on a legacy platform that means customer acquisition doesn’t perform as well and we don’t get the same returns from it. Fixed costs are higher and lifetime values are lower.”
Leave it to arbitration: Flutter wouldn’t discuss how much disruption the lawsuit initiated by Fox Bet could cause its US business. The arbitration process both companies entered into is confidential. “It’s standard procedure in the US and we understand that’s how it’s done. FOX Bet is a very important partner and we’re delighted with how both brands are performing.” The group didn’t provide further comment on a possible US listing for FanDuel.
National share rise: Online betting market share hit 36% in Q1 with sportsbook revenues 227% higher, TVG horse racing and daily fantasy sports verticals grew 51% with stakes up 235%. The group is now live in 10 states compared to four in Q1 2020, mature player cohorts in states like New Jersey were very encouraging with staking growth of 93% in Q1.
German hit: Flutter’s international revenue grew 7% in the quarter, but the regulatory changes in Germany ahead of the introduction of the Inter-State Gambling Treaty this Summer “remained significant and would cost £20m in EBITDA” going forward.
No Oz certainty: Australia operated in a “near normal” trading environment during the quarter. However, the group cautioned against using the market as a “lead indicator for how markets might perform as lockdown restrictions lift.” Sportsbet benefited from strong growth in monthly customer activity (+43%) and strong levels of staking (+46%). This “volume-led growth, and a 100 basis points expansion in net revenue margin to 11.4%, resulted in a net revenue increase of 59%,” the group said.
Early days in UK & ROI: The UK’s first step towards reopening were also too early to make any assumptions and “it was difficult to draw comparisons, but the market performed well in Q1, especially Cheltenham and the Grand National.” Some impact to volume is expected due to consumers “being out and about” in the warmer weather, “but we’ve got resilient brands in sports and casino. It stressed there remained much uncertainty and it was difficult to base UK forecasts on Australia’s activity levels.
“There are many factors: the effects of re-openings, Brexit will also have an impact on the UK economy, that will influence customer patterns and how they consolidate.”
Migration to online channels continued, Sky Bet revenues grew 35% and Paddy Power Betfair online 36%. Gaming revenues grew 41% thanks to improved live casino content, including the roll out of Sky Bet’s live dealer proposition “Sky Vegas Live”.
MGM Resorts International
The top line
Net revenues decreased 27% for the period to $1.6bn, operating losses came in at $247m, down from a profit of $1.3bn in the prior year period. Consolidated adjusted EBITDAR hit $218m.
Las Vegas Strip was down 52% to $545m, regional operations down 2% to $711m, MGM China up 9% to $296m.
Cash and cash equivalent on the balance sheet stood at $6.2bn including $4.9bn of cash. The company said it would be revisiting its share buyback programme halted in March last year.
Lights out for the Strip: Strip revenues more than halved over the period to $545m caused by lower business and travel volume. In gaming the biggest drop came in table games with win down 35% to $127m while slots win fell 8% to $212m. The big hole was hotel revenue - off by 60% on the prior year with occupancy down at 46% vs 88% in Q120. There was a clear split between midweek occupancy (39%) compared to relatively busy weekends at 62%. Better news comes from April with current occupancy in the month to date at 73%.
“It’s great to see Vegas come alive again,” said CEO Bill Hornbuckle, “the ultimate goal is to get our city back open by June 1.”
The MGM boss noted that the Conor McGregor UFC fight in July saw all tickets sold out in 22 minutes. However, larger conference and group business will have to wait until 2022 for a return. “The pent-up demand is incredible.” Analysts at Macquarie said the consumers were “returning to the lion’s den. “We remain positive on a LV recovery and believe MGM’s margin improvement story will continue to exceed expectations,” they added. Their room rate survey data suggest that the upcoming World of Concrete show in June (normally held in January) is helping to push Average Daily rates up 19% compared to the same month in 2019. Q3 rates are up 1% on the 2019 figure. Deutsche Bank said MGM had delivered a “strong beat.”
Regional gaming: Casino revenue in the regional properties rose 11% with table games win up 6% to $173m and slots win up 7% to $526m. Hornbuckle said the company was pleased with the efforts at cost-cutting. Full EBITDAR recovery in regionals is expected this year. Part of the benefit in regional gaming came from the stimulus checks as well as the lack of other entertainment options. Sentiment has changed “dramatically”, leading to the demand improvement.
MGM China: Gaming somewhat hit its stride in Macau with main floor table games win up 23% on prior year at $230m though VIP win was down 28% at $78m. This is still down on 2019 of course, the company said the demand environment remains challenging. On the upside, MGM China’s market share for Q1 stood at 11.5%, still above its long-term average and Hornbuckle said the strength in premium mass positions MGM China well as the market turns a corner.
BetMGM in three-horse race: The company disclosed estimated BetMGM Q1 revenues of $163m. MGM’s share of consolidated losses at BetMGM rose nearly six-fold to $59.2m and investment in BetMGM from both partners is expected to hit $450m this year.
“We’re investing in our digital journey,” said Hornbuckle. “We’re incredibly excited about its trajectory. We see this as a three-horse race.”
The company estimates BetMGM is now overall number 2 in igaming and sports-betting, ahead of DraftKings and behind FanDuel.
New horizons: Hornbuckle said “not much has really changed” with regard to progress in Japan. A deadline submission is looming for an RFP for the Osaka opportunity where he said MGM stood as the lone entrant. “It’s tenuous in some respect and we intend to apply in July if that happens.” Turning to US opportunities, in New York - where MGM is looking to open a casino - Hornbuckle said “nothing is simple,” Texas would “of course” be interesting, Florida is “complicated as you know” and Chicago is “just as complicated.” “The tax (rate) and integrated resorts at scale simply don’t match up,” Hornbuckle said.
Betsson
The top line
Betsson revenues were up 12% to SEK1.59bn, organic growth was up 2% (17% before FX effects). Casino (74% mix) was up 16%, sportsbook (25% mix) only up 2% after margin dropped 130bps to 7.2%. Sportsbook turnover up 28%. EBIT up 6% to SEK276.1m. EBIT margin 17.3%. Actives up 39% to 948,109.
Sequentially, Q1 was down 9.6% on Q4 as were player numbers and player deposits. CFO Martin Öhman, said the company was not alarmed by the falls in player numbers and player deposits in Q1 and suggested this was in line with the pattern from previous years.
Regional variations showed Western Europe down 6% at SEK383.6m, Nordics was stable at SEK487m, Central and Eastern Europe rose 27% to SEK541.1 and RoW rose 75% to SEK181.1m.
Second quarter average daily revenue in the first 25 days of April was 12% higher than the prior year period.
A European home: Betsson said it had closed down a number of (unnamed) brands in the German market due to the restrictions introduced ahead of the new Treaty coming into force in July, including the mandatory slot stakes spin speed measures. In March, the company received a license for sports-betting from the authorities in Darmstadt. It said it expects the licensing process to be delayed in Germany due to issues with establishing a new regulator and expects the transitional regime to be in force in the meantime. Betsson also said it had issues in Norway with payments providers. It said it was “managing the situation.” The company said operations in the Netherlands “continue as before” ahead of the licensing process. Given the 33 month cooling-off period demanded by the Dutch regulator, the company said the earliest it will be able to apply for a license is February 2022. CEO Pontus Lindwall on the earnings call the company had stopped marketing in the country but was maintaining its player database.
Not talking Turkey: As with recent results documents and earnings calls presentations, Betsson made no mention of Turkey (revenues contained within the central European bucket) or the third-party relationship in that market with Realm.
Viva Americas: Betsson has targeted Colorado as its US entry point (see below for latest data) via a deal with Dostal Alley Casino and said it was preparing a B2B product for the market. It said it has 120 staff working on the US launch. With the Colorado launch (in the latter half of this year), Betsson will deploy on the TG Lab PAM as announced in Q4. Betsson has since spent $6.5m acquiring a 35% stake in TG Lab’s Strive platform via its Betsson Perch Investments subsidiary. “We believe in the technology,” said Lindwall. In Latin America, meanwhile, it has established an office in Bogota, Colombia, and is carrying out “brand strengthening exercises” in Brazil ahead of forthcoming sports-betting regulation. Betsson has also signed an agreement with Mexican-facing casino Big Bola. Lindwall said generally the company was “putting seeds in the ground” for future growth. The company is discussing internally whether to break out LatAm revenues in future quarterly reports.
Selling B2B sports: Asked whether the company would consider divesting the B2B sportsbook, Lindwall said it was a question they were asked every day. “No decision has been made but it can, of course, happen.”.
Monarch Casino and Resort
The top line
Net revenue for the Colorado tribal operator rose 46.9% to $75m, adjusted EBITDA soared 181.6% to $22.8m. Both were all-time company highs.
Capacity issues: The newly transformed Black Hawk casino resort helped drive revenues despite state-imposed capacity constraints. However, this mainly affected F&B. The company said another key challenge came in staffing. “While labor shortage is a real threat, MCRI has faced this challenge in its markets for some time and noted investment in technology as an offset,” said the analyst at Truist Securities.
Attracting high rollers: Colorado is days away from the implementation of the new Amendment 77 to allow unlimited single bets and new casino games. On May 1, the company said it plans to immediately lift betting limits to be in line with those of its Reno property, and launch Baccarat. Poker and Keno will also be introduced before the end of May. Analysts at Macquarie suggested the expanded offer could staunch the flow of higher spending patrons to Las Vegas. “A new 4-star hotel, spa, restaurants and gaming floor will give patrons a reason to stay overnight in the market, addressing the core problem the market has struggled with for years,” they added.
Genius Sports FY20
The top line
The debut figures from the newly NYSE-listed data supplier contained little that was new from the prospectus of the SPAC merger.
Revenues for the year were up 31% to $149.7m (constant current 30%) while operating losses narrowed to $21m from $36m. Net losses came in at $30.3m compared to $40.4m in 2019. Betting tech and content revenues rose 25.2% to $110.6m, sports technology by 11.8% to $16.1m and media tech, content and services was up 94% to $23.1m.
In Q4, revenue rose 27.6% to $47m and operating losses narrowed to $7m from $10.4m.
Soccer not football: The revenue rise in 2020 was driven by the deal to provide exclusive data services to the English and Scottish football leagues. That helped drive not only revenues but expenses - costs rose in lockstep with revenues and were up nearly 28% to $114m. The company noted that the drop in sales and marketing expenses in the year of Covid (down 25% to $13.2m) somewhat offset the increased data costs.
Football not soccer: Genius will hope the next step up in revenues will come through its new exclusive deal with the NFL. The company gave no further detail on the cost of that deal (rumoured to be up to $120m plus Genius equity) but FanDuel, DraftKings and Caesars have already signed a ‘tri-exclusive’ deal to be official betting partners with the NFL. Now the question remains whether any other operators will sign up to separate - and presumably non-exclusive - deals.
Colorado and Tennessee sports-betting GGR on the rise
The top line
In Colorado March handle recovered to $301m after a slight drop in February and GGR nearly doubled to $20.4m. Basketball was the top sport during the month, but table tennis dropped out of the top five (after its time in the sun). Tennessee’s online-only handle also rose to its second best level in March.
Rocky patch over: Colorado’s sports-betting operators recorded revenues of $301m in March and have recorded more than $2bn in handle since the state regulated sports-betting in May last year. The March handle did not surpass the record $326.9m wagered in January, but was a return to growth on the state’s first monthly dip in handle recorded in February ($266.5m).
Operators recorded $20.4m in GGR in March, with margins of 6.7%. The GGR level was nearly double the $10.4m recorded in February. Colorado collected $1m in taxes during March.
98% of bets were placed via online, representing $295.2m of handle. Retail betting outlets in the state lost $1m after paying out $6.8m in winnings but only taking in $5.8m.
Ping ponging out of top 5: With the football season over, basketball was the top sport with $107m. March Madness the driver $71m. Soccer (or football) just pipped table tennis as one of the top five sports in March with $8.9m in bets. Table tennis wagers dropped to $8.8m ($13m in prior month).
Strong March handle in Tennessee: Tennessee recorded strong betting activity in March as handle reached $205.9m, second only to January’s $211.3m. Margins for operators were 7.8% meaning GGR came in at $16m. The state recorded $3.2m in taxes. Total handle for Tennessee has reached $905.8m since launch five months ago.
State regulator the Tennessee Education Lottery suspended the sportsbook Action 24/7 last month for debit card fraud offences. That suspension was overturned due to procedural irregularities, but new bills going through state congress could change the rules on which committee bodies have regulatory power to impose fines and suspensions.
Quote of the day
“First and foremost this is not a sports-betting deal. I think this was a brilliant piece of showmanship to make it look like a sports-betting deal. To frame it in this manner made sense. But this is a casino deal. This is what (the Seminoles) want - they want stability. So now they have it.”
Florida-based gaming consultant Matt Para, speaking on a Deutsche Bank conference call yesterday about the new deal between the state and the Seminole tribe in Florida.
Earnings calendar
30 April: MGM Growth Properties Q121
5 May: Aspire Global Q121, Bet-at-home Q121, Golden Entertainment Q121, MGM Resorts International Q121
7 May: LeoVegas Q121, Penn National Q121, AGS Q121
Contact us
Scott Longley scott@clearconcisemedia.com
Jake Pollard jake@openmediaservices.com