Jan 27: LVS plays a waiting game on NY, digital
Las Vegas Sands Q4, Rank H1, Bally chairman TV comments, DraftKings analyst update +More
Good morning. The Q4 earnings momentum starts to pick up steam.
Las Vegas Sands says it will be patient over land-based and digital opportunities.
Rank returns to profit.
The CEO at Standard General (and chair at Bally) states the case for going private.
DraftKings gets a boost from Morgan Stanley who tip it as an OSB winner.
I got a feeling? Click here:
Las Vegas Sands Q4
Net revenue was $1.01 billion, a decrease of 0.7%
Adj. property EBITDA was $251m up 31.4% YoY.
FY21 operating losses down 50% to $698m.
Waiting for my man: COO Patrick Dumont said LVS was “always interested in digital” when asked about the company’s sports-betting and B23B plans. With recent stories linking LVS to 888 and more recently Evolution, Goldstein said LVS was considering all markets and “not just looking at sports betting”. “There are a variety of opportunities and we are looking at long-term ROI that can blossom into something meaningful.”
“We will wait patiently,” said Goldstein. “It hasn’t been a bad idea to wait for the last six months to eight months to see how this shakes out and there’s been a lot of blood spilt.”
New York I love you: With three casino licenses up for grabs in New York, Goldstein said the group was in the process of applying.
“I wouldn’t want to overplay our hand,” Goldstein said. But it’s a massive market underserved by the current product (and) we are deep into it.”
Position A: Deutsche Bank said LVS was “very focused on a New York license, one we think the company is well-positioned to obtain”. LVS has the cashflow for cap-ex expansion; Credit Suisse noted it has $2bn of cash on the balance sheet, and is expecting $6bn more when the sale of the Las Vegas assets complete.
Asian contagion: In Macau, the team at Wells Fargo said LVS was well-positioned to capture a ”significant proportion” of direct VIP/premium mass business. Grant Chum, COO of Sands China, said the group was“very bullish about Macau, despite the last 24 months” and the current focus was on Chinese New Year and the Beijing Winter Olympics.
“Everybody is cautious in terms of travel, and beyond these events, as things improve in terms of cases, we can look forward to positive returns in terms of travel,” said Chum.
Singapore sling: Deutsche Bank noted the previously flagged upcoming $1bn renovation project at the Singapore Marina Bay Sands, which they said would “further accelerate the property’s higher-end business over time”. CEO Rob Goldstein said hopes that the jurisdiction would reopen in H122 were “crushed by Omicron”.
“It’s a shame,” Goldstein said. “But the important source markets are opening up, Japan, Korea, Indonesia, Malaysia, all improving. So we have a lot of hope to see a big bounce in Singapore.”
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Bally chairman CNBC comments
Cheap trick: Soo Kim, chairman at Bally Corp and the CEO at Standard General which on Tuesday made a $38-a-share bid for the company, made an appearance on CNBC yesterday to put the case for why he believes Bally has been left undervalued by the public markets.
“We disagree with the market and want to put our money where our mouth is,” Kim told CNBC interviewer Contessa Brewer.
Up for grabs: He added that Standard General was willing to take the risk that by bidding for the 80% of the shares it does not already own, it might ignite a bidding battle. “If we make an offer, the shareholders will have a view,” he added. “In a situation like that, if someone wants to pay more, it is possible we are then in play.”
Roll me over: As analysts at Truist noted yesterday, the offer is pitched some way below the $66-a-share level that Gamesys investors will have bought in when it was bought last year. Kim acknowledged their plight and suggested they would be invited to “roll with us”. “I’m doing this because we think we’re right, and the market is wrong and if other investors want to join us (they can),” said Kim.
A song for insane times: Brewer then asked about New York and Bally’s plans to launch its sportsbook. “It’s insanity,” Kim said of the current promotional environment, suggesting the “current version” of sports betting is “not a great business”.
“It’s a fine business but not a great business,” he said. “There’ll be a wave of consolidation which will rationalize promotions but more importantly, people will stop competing with free money and will start competing with the product.”
DraftKings analyst update
Too big to fail: DraftKings got a vote of confidence from the analysts at Morgan Stanley yesterday who suggested it will be “one of the winners” in a very large U.S. betting and gaming market.
“Though there is a lot of negative written about the levels of marketing and promotional spending, this has driven a very concentrated market that only players of scale can really compete in,” said the Morgan Stanley team.
Event horizon: The DraftKings share price has been one of the clearest losers from the market fears about OSB profitability. But the MS team points out that in Pennsylvania, it has been “better than the market” at rationalizing promotional spend without seeing a deterioration in market share.
“Our deep dive of state-by-state marketing and profitability suggests DraftKings’ losses should be lower in 2023 than 2022 (and 2021), which we believe could be a major positive catalyst for the stock (though admittedly ~1 year away).”
Price sensitive: The MS note helped boost the share price by almost 20% in early trading in New York before settling with a 5%+ rise on the day to $20.33. This came after the price fell as low at $17.63 in intra-day trading on Monday. Morgan Stanley’s price target remains at $31.
Deutsche Bank sports-betting tally
Rack ‘em: Looking at the states reporting already on Dec21, and making assumptions on those yet to report, the analysts at Deutsche Bank suggest GGR across all sports-betting states will hit ~$395m which would represent a c46% fall on Nov21 but a c45% YoY rise. They also calculate that FY21 sports-betting will come in at ~$4.35bn.
Penn analyst update
The road less traveled: Analysts at Macquarie upgraded Penn National to a Buy suggesting the current share price gives “little or no value” to the online business. They note that Penn is building an online business in a “massively different way” than its peers. They note that as opposed to the “hundred of millions” of losses being racked up by Caesars, MGM and FanDuel, Penn is expecting a loss of under $100m in 2022 before hitting profitability in 2023.
Wave count: Still, they also stated that while “mindful” of the potential for a second wave of new entrants, they expect the sector heavyweights - the above-named plus DraftKings - to generate 70% of market share. “In addition, we expect strong iGaming trends will benefit MGM/Rush Street Interactive and could lead to future legislative approval,” they added.
Louisiana OSB launch
The Geaux team: Five operators have been given the go-ahead by the Louisiana Gaming Control Board for the launch of mobile betting tomorrow, Jan 28. DraftKings said it will begin operation in the permitted parishes as of 8am, CT. Recall, there are nine parishes where mobile sports-betting will still not be allowed. Wynnbet on Tuesday confirmed it was taking pre-registrations while Barstool, Caesars, BetMGM and FanDuel are tipped for a Friday launch.
Some Louisiana history: Cajun origins.
Rank H1
Revenues up 90% to £333.5m while underlying operating profit back into positive territory at £24.1m.
Venues NGR up 168% to £241.4m while digital NGR up 7% to £92.1m.
Soft machine: Rank’s casino and bingo estates were open throughout the second half of 2021 but trading continued to be impacted by Covid measures and trading in the first three weeks of January was “soft” due to winter restrictions. Trading at the Grosvenor casinos is predicted to pick up with more inbound tourism in London but the Mecca bingo business will be slower. The company said the online business was trading in line with expectations.
Earnings in brief
Scientific Games Q4: Scientific Games released Q4 earnings for the lottery unit that it is offloading to Brookfield. It said revenues would be between $265-$275m, a YoY increase at the top end of 7%. Operating income will come in at between $110m-$115m, up 16% at the top end of estimates.
Groupe Partouche FY: The French casino group said FY GGR fell 33.4% to €350.2m, slots were down 41.8% and table games down 10.2%. EBITDA fell 74% to €13m. The company said there had been signs of a recovery in H2.
Arizona Nov21
Chart-toppers: DraftKings maintained its market share lead by handle with 31.9% of the total $466.7m while FanDuel was second with 25.3%. The positions were reversed when it came to GGR with FanDual on top with 31.9%, with DraftKings second on 24.9% followed by BetMGM (18.9%), Caesars (14.8%) and Penn/Barstool (4.2%) and WynnBet (4.1%). The handful total was down MoM by 4.2%. The analysts at EKG suggest the combined picture for the top four represents a “more balanced race out of the gate” than has been seen in other states.
Newslines
One for luck: Caesars Entertainment has rebranded the Bally’s Casino in Las Vegas as the Horseshoe, bringing a famous name back to the Strip. The casino will be the new home of the World Series of Poker with the next tournament taking place in May.
Slot luck: PointsBet has launched a proprietary online casino product in West Virginia. It is PointsBet’s third igaming state following Michigan and New Jersey which both launched last year.
Raking it in: Sponsorship firm IEG said that betting and gaming operators contributed the second biggest total behind tech firms to a record $1.8bn NFL sponsorship haul for the 2021-22 season. The total represented a 12% increase on 2020-21.
Sea here now: Elys has submitted its sports-betting platform for certification from the New Jersey DGE and applied for a transactional waiver. The company said the move was a ”vital step” towards being able to fulfill its partnership with the Ocean Casino Resort in Atlantic City. Separately, the company has also agreed on a supply deal with Lottomatica for a U.S.-focused sportsbook.
Moving on: Fortuna CEO Per Widerström will step down at the end of next month to take up new career opportunities. He is to be replaced by David Vaněk as interim CEO. Vaněk was previously general manager of Fortuna’s Czech subsidiary Fortuna Game.
New ticker: Betway owner Super Group is likely to begin trading on the NYSE under ticker SGHC on Friday after Sports Entertainment Acquisition shareholders approved the de-SPAC merger.
Wild card: Australian-listed minnow BlueBet has announced its second market access agreement, this time in Colorado with the Wild Card Saloon & Casino. The company also has an agreement in Iowa that is expected to go live in late March.
Bond, outstanding bond: Gaming Innovation Group has completed a SEK100m/$10m bond issue under its current senior secured bond that will be used to finance the acquisition of the sportsbook platform Sportnco Gaming Group announced last month and other corporate expenses. The new bond brings the total of the group’s outstanding bond to SEK550m/$55m.
Dutch reopening: Land-based casinos and slot machines have reopened in the Netherlands following the lifting of Covid-related restrictions. Face masks will be mandatory and all visitors will be required to show proof of vaccination or recovery and a negative test.
What we’re reading
Spot luck: Why people bet on bookings.
Brexit benefit: UK government’s Future Fund invests in betting startup.
On social
What’s the worst bit of gambling advice you’ve ever been given?
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Calendar
Jan 27: Genius Sports investor day, PointsBet Q4
Fed 2: red Rock Resorts Q4
Feb 3: Penn National, Boyd Gaming Q4
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