GiG goes for a split
GiG strategic review, Flutter’s US listing idea, Caesars admits to Nevada app outage, Betty raises $5m +More
Good morning. In today’s edition:
GiG says it will look to split its affiliate business from its platform arm.
Analysts applaud Flutter listing but news gets a muted shareholder reception.
Caesars admits to its Nevada apps going down during the Super Bowl.
Female-focused Betty achieves a $5m fundraise.
If you don’t slow down, you’re gonna crash.
GiG’s strategic split
Group initiates strategic review to split its affiliate and platform divisions into distinct businesses as it reports “stellar” Q4 numbers.
Fix up, look sharp: The group said the split will form two publicly listed “industry leading businesses” and will “sharpen their focus” by enabling them to grow faster and optimize their “distinctive business models”.
Media Services includes all the group’s affiliate operations.
Platform and Sportsbook includes the group’s platform, front-end development and managed services operations.
GIG’s record Q4 numbers were led by its media division, but CEO Richard Brown also pointed to the growth trends that have been underpinning progress over recent months. The platform and sportsbook division performed strongly thanks to progress in Latin America, and Brown pointed to upcoming US launches and an upcoming client launch in Ontario.
The group has signed a heads of terms agreement with a land-based operator in the province.
In the UK, GiG Media has gone live with News International and Brown said the group will look to diversify revenues from the market. “The UK is still one of the largest markets in the world and we see good opportunities there,” he said.
Record breakers: The strategic review came as GiG reported a 44% YoY rise in Q4 revenues to €26m, while adj. EBITDA was up 71% to €10.8m. The company said media revenues rose 40% to €17.8m, with adj. EBITDA up 50% to €8.9m. Platform revenues increased 54% (35% organic) to €8.2m and adj. EBITDA shot up 350% to €1.8m.
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Flutter US listing
Analysts suggest the potential dual-listing for Flutter makes sense even though the news receives a lukewarm reaction from investors.
Fan-Dual: The team at Jefferies noted that with US revenues likely to be three times that of the rest of the world by 2030, the move to potentially seek a secondary listing in the US was logical. They noted that such a move, which would come with the optionality of making the US the primary listing, “contrasts with the previously proposed FanDuel IPO”.
The team added that Flutter would likely “command a premium” valuation multiple in the US.
Jefferies added that the arbitration ruling in New York in November implied Flutter’s US business was worth ~$22bn.
JMP analysts suggested the timing made sense with overhangs having recently been removed.
“Listing in the US will give the company better access to retail investors, capital markets and help support higher trading levels on the stock,” they added.
Yeehah: In a wider sense, the JMP team added that having Flutter listed in the US would “improve trading levels” for US online gaming stocks. “Flutter’s global reach, technological capabilities, balance sheet, earnings diversification and improved liquidity will be well-received by US investors,” JMP added.
🥱 Investors show a muted reaction to the US dual listing news
Nevada ’Bowl cuts
The William Hill app crashing during the Super Bowl might help account for the near 15% fall in wagering activity for the Super Bowl.
Crash landing: The total amount wagered on Sunday’s game in Nevada fell 14.8% to $153.2m while the win was down 26% to $11.3m, which wasn’t helped by margins dropping to 7.4% from 8.6% last year.
A likely contributory factor was the fact that the Caesars-owned William Hill app was down for most of the game. Caesars has ~50% of the Nevada sports-betting market.
A Caesars spokesperson told LSR it had “pinpointed the cause of the system failure and are now working through the resolution with all of our available resources”.
Earnings in brief
Monarch Casino: Q4 revenue rose 8.5% to $120.5m while adj. EBITDA was up 6.6% to $41.6m, a result that CEO John Farahi said demonstrated “healthy underlying trends”. Macquarie analysts said that in Black Hawk, Monarch “continues to gain share, especially among the market’s more valuable customers”.
SkyCity: The New Zealand-based casino operator expects FY22 EBITDA to come in at NZ$305-NZ$320m. It added that January is trading in line with the first half, with no indications of macro impact.
Betsson-lite
CEO Pontus Lindwall reveals very little during the company’s Q4 analyst call.
No comment: With a Q&A that lasted barely a few minutes and was less than insightful, CEO Pontus Lindwall offered very little color to what was in the report yesterday, which showed central Europe – Turkey in particular – and LatAm to be its growth regions.
Asked about a cease-and-desist letter sent to Betsson by the Norwegian regulators, he said: “We have made changes to our offering and are in a good dialogue with the Norwegian authorities, but we can’t comment on specific markets.”
On potential regulatory developments in Brazil, Lindwall said he couldn’t “comment specifically” but “this is a focus area for Betsson, the size of the market is huge”.
Analyst takes
DraftKings: Ahead of tomorrow’s earnings announcement (call on Friday), Wells Fargo has upped their estimates for the company based on the latest state level data. The team now believe DraftKings’ Q4 revenues will be $828m, up 5% on their previous estimate, with EBITDA losses now pegged at $100m vs. $117m previously.
They believe DraftKings has been “subtly tightening its purse strings for months” as a possible precursor to a “more substantial cost reduction effort” to come.
But they caution that it remains early in the year and that any “substantive” improvement in guidance would come with the Q1s in May.
Inspired Entertainment: The team at Roth MKM noted that Entain’s recent upbeat news on UK high-street retail sports-betting trading provided “important read-throughs” for the gaming machine supplier. In particular, commentary around newer machines outperforming bodes well for Inspired’s new Vantage cabinet.
Startup fundraise – Betty
The betting startup sits at the intersection of iCasino and casual gaming and aims to provide a “safe and inclusive space” for women and LGBTQIA+ players.
Ooh Betty: Real money and casual mobile gaming operator Betty has raised $5m in a seed round led by Karlani Capital. The group obtained a license to operate in Ontario in January and the funds will be used to finance its launch in the province later this month.
Also participating in the round were CEAS Investments, Courtside Ventures, Gaingels, OCA Ventures, Subversive Capital and Simplebet founder and CEO Joey Levy’s 305 Ventures.
Betty had previously raised $1.8m in pre-seed funding in March 2022.
Gaingels, a LGBTQIA+/Allies investment syndicate that took part in the round, commented: “Sports betting and casinos have historically been marketed to men. In reality, women make up more than half of the market. We love Betty’s mission to make the category more inclusive."
The group said women slot players in particular had been “underserved by existing brands, which, at their core, are sportsbooks”.
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Newslines
Evolution has announced a supply agreement for its live casino products with Futter’s Sky Betting & Gaming.
IGT has expanded sports-betting operations in Mississippi via a deal with the Treasure Bay Casino in Biloxi.
Mohegan Tribal Gaming Authority has extended the maturity of its existing credit agreement to November 1, 2025.
Incentive Games has launched its free-to-play game Live Score 6 on LiveScore’s mobile app.
What we’re reading
What Musk wants, Musk gets: CEO juices the algorithm to boost his tweets.
Pannik stations: The lawyer leading the fight for Man City.
On social
Calendar
Feb 16: DraftKings earnings
Feb 17: DraftKings analyst call
Feb 21: Due Diligence
Feb 22: Catena Media
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