’Hood’s wink
Robinhood suggests it is “keenly” looking at sports betting
The trading app considers broadening out from election betting.
In +More: Bitcoin hits $100k.
Tabcorp slashes staff, new CEO seeks to right size.
Sector watch: Financial trader CMC writes off blockchain investment.
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🧐 Trading app Robinhood is “keenly looking” into offering sports betting after a successful foray into event betting and prediction markets during the recent presidential election, according to CEO Vlad Tenev.
Leaning in: Speaking during an investor presentation hosted by the company yesterday, Tenev said Robinhood’s customer base over-indexed on the millennial and Gen Z consumers who were “interested in sports in general.”
“So we’re keenly looking into that space,” he added. “Nothing to announce just yet, but it’s so important to our customers and in culture that we’re excited about it.”
“We’re definitely thinking about it.”
Trumped up: Robinhood’s entry into election betting came within the last weeks of the presidential election campaign when it started offering contracts on the winner of the vote via a deal with ForecastEx, a futures commission merchant regulated under the CFTC.
The markets were to US citizens only, and Robinhood specified that anyone attached to the US presidential election or politics was forbidden from participating in the market.
Additionally, each bettor had to be approved by Robinhood Derivatives in order to participate.
Against the clock: Reacting to the news, the analysts at JMP wrote that “building out a sports-betting product requires a checklist of costly and time-consuming initiatives.”
“The sector has proven it can take years (if not decades) to properly build an end-to-end app with product and technology,” the team added.
Notably, on the Q3 call with analysts in October, Tenev praised his team for getting the election product up-and-running in “less than” 30 days.
“We really moved quickly to make it available to customers ahead of the election."
Well fed: Tenev pointed out that any offering via the same federally regulated route would be “fundamentally different” to sports betting as regulated by the states, noting that any offering would also be regulated by the CFTC.
“That’s federal licensure,” he added. “So very, very different.”
“That said, we are interested in exploring all kinds of events and a lot of people have been talking about the potential for sports event contracts and taking that into the regulated space.”
Don’t stop thinking about tomorrow: In the wake of the launch of Robinhood’s betting markets, Chris Grove, partner at EKG, said on LinkedIn that “as of this week, Robinhood is a betting site.”
“Some might argue that it’s always been a betting site, but the launch of election markets moves it firmly into territory historically occupied by sportsbooks,” he added.
“The borders of the other betting markets Robinhood could offer are ambiguous and subject to revision,” Grove added.
“It’s not evident that Robinhood will be subject to state-based gambling regulation or taxation.”
The only route in: JMP’s analysts suggested Robinhood “would still need technology and product” and would “need to look at M&A.”
“The acquisition of a sub-scale operator would still require massive investment and time, while mid-scale companies remain limited,” they added.
Meme generation: Robinhood rose to prominence during the meme stock frenzy during the pandemic with what amounts to the gamification of financial trading.
In its recent Q3 earnings, the company said revenue climbed 36% YoY to $637m while adj. EBITDA soared 96% to $268m.
It said funded customers rose by over 1 million to 24.3 million.
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Milestone: Bitcoin passed the $100,000 mark overnight as the post-presidential election wave of enthusiasm for cryptocurrencies continues.
What we’re reading: meme coin fever turns gags to riches.
TG Lab has announced it has acquired Brazil-based gambling software provider SysGaming for an undisclosed sum. TG Lab said the deal was in line with its strategic ambitions in the LatAm region.
EveryMatrix has gone live with its first omnichannel turnkey platform with Arena Casino in Croatia.
Gaming and Leisure Properties has increased its revolving credit facility from $1.75bn to $2.09bn while also extending the maturity date to 2028.
Earnings in brief: High Roller Technologies reported its debut earnings with Q3 revenue of $7.5m, up 30% QoQ. EBITDA was $40k, an improvement from the $1m EBITDA loss in Q2.
Read across
Going nuclear: In Compliance+More today, the news is that sweepstakes heavyweight VGW is facing RICO charges in a federal court in a case that also accuses Google and Apple of allowing illegal gambling.
Going for brokerage: The Token Word talks this week to BetDEX CEO Varun Sudhakar about the company’s launch of a brokerage service, which he says will handle bets worth $50k-plus in a wide range of cryptocurrencies
+More careers
The big move: Star Sports has hired ex-Conservative MP and vocal gambling industry supporter Philip Davies as the bookmaker’s new chair. He replaces Russ Wiseman.
Star’s CEO and founder Ben Keith praised Davies’ “wealth of experience,” adding that he “is a valuable addition to our senior management team.”
Davies said: “Not many know that I started my working life in my mother’s betting shop (Marilyn Davies Bookmakers), so the industry is very much in my blood.”
Inspired Entertainment has appointed Rafael Brunacci as business development director for Latin America Virtuals. Brunacci was most recently business development manager for the Latin American region at Oddin.gg.
Aristocrat has nominated Natasha Chand as director. Chand has previously held roles at Levi Strauss, Target Australia, Amazon and McKinsey & Company.
Rank has appointed Christian Nothhaft as a non-executive director. Nothhaft has been the executive director and CEO of parent company Guoco Group since April.
Star Entertainment has officially appointed Steve McCann as the company’s CEO and managing director after passing regulatory approvals.
Catena Media has appointed Martin Zetterlund as a non-executive director. He fills the seat vacated by Øystein Engebretsen.
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Tabcorp cuts
Dead weight to me: Tabcorp CEO Gillon McLachlan has moved quickly to right size the business by slashing 200 jobs, or around 10% of the staff.
According to a report in the Australian Financial Review, the roles have been cut since the company’s annual meeting in October when McLachlan flagged he wanted to reduce operating costs this financial year.
The report suggested Tabcorp has also cut the number of consultants.
The company hopes the moves will allow it to better compete in the online arena against Flutter’s Sportsbet and Entain’s Ladbrokes.
A spokesperson told the paper that McLachlan was “creating a fitter organisation and a new cadence to move more quickly in a changing market.”
We’re halfway there: Recall, in late August McLachlan suggested the company was “only part way through a turnaround” after it said its targets for 2025 would not be met, causing its share price to crash nearly 21%.
This came after the company reported a 4% decline in FY24 revenue to A$2.34bn ($1.5bn) with group EBITDA tumbling by 19% to A$318m.
An impairment charge against its wagering assets led to a A$1.36bn after tax loss.
By the numbers – Nevada
Grid penalty: Revenue in October fell 2% YoY to $1.29bn, the fourth straight month of YoY declines. Strip GGR fell by 3% to $692m.
The team at JMP indicated the near-term comps would remain tough. “Initial commentary suggests F1 will be negative from a YoY perspective in the month of November for hotel and gaming revenue,” the team said.
However, the team at Truist were more positive, suggesting November "should be” more favorable due to an extra Friday and Saturday compared with last year’s calendar.
Analyst takes
Aristocrat: The team at Jefferies have suggested the company’s social gaming unit continues to “significantly” take share off the broader market. The team added that the sale of Plarium and impending sale of Big Fish makes the case for social casino growth clearer, with “plenty of market share runway ahead.”
Las Vegas Sands and Wynn Resorts: The team at Stifel have raised their targets for the two Macau operators, saying concerns about what the incoming Trump administration might mean for the Chinese economy are priced in at this point.
The analysts said they remained positive on the stimulus measures announced earlier this year by the Chinese authorities.
But they added that while a weaker Chinese consumer could impact lower-tier customer visitation to Macau casinos, the premium mass gaming customer is more isolated.
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Sector watch – financial trading
Struck from the record: CMC Markets insisted it still believes in blockchain solution provider StrikeX despite having written off its £2.8m investment that it made in June 2023.
Following reports of the writedown, CMC issued a statement that said the move was “purely an accounting decision” and did not reflect the company’s belief in StrikeX’s technology or potential.
“We continue to integrate StrikeX's services into our offerings and see our relationship deepening further as we collaborate on Web 3.0 developments,” the statement added.
No surprises: The news of the writedown came with the company’s H1 earnings, which showed revenue rising 45% to £177m, with the company returning to a profit for the half-year of £49.6m compared to a loss of £2m in the prior-year period.
Analysts at Deutsche Bank Numis said that having already guided to H1 revenue and PBT forecasts, the results “should not have been a surprise.”
But the “unexpected impairment” caused by the StikeX situation meant the profit figure was 2% below guidance.
More grief came from the company forecasts for an increase in the effective tax rate by 2 ppts for the FY. The DB team noted this had knocked the share price, which was down ~20% following the results.
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