Jul 1: Weekend Edition #53

OpenBet price cut, Nevada May, Macau June, offshore crackdown call, sector watch - tokens +More

Jul 01, 2022

The news after market close yesterday that Light & Wonder had agreed to slash its asking price for OpenBet by a third will do nothing to calm the nerves over market stresses right now. This is the second significant renegotiation seen in the sector this year after 888 managed to snip £250m off the price it paid for William Hill in April. The official explanation talks about the “current market”. Which is to say, this now appears to be a buyer’s market and prices are now negotiable after the handshake.

The price you pay (it must be wearing off). Click below:

OpenBet price cut

Bargain hunt: Light & Wonder and Endeavor have agreed a new price of $800m for OpenBet, representing a 33% discount off the original $1.2bn. The deal now involves $750m in cash and $50m in Endeavor shares after previously consisting of $1bn of cash and $200m of shares. LNW is also waiving the condition of the deal requiring regulatory approval by the Nevada Gaming Control Board.

Hurry up Ari: Barry Cottle, CEO at Light & Wonder, said the amended agreement “increases speed and certainty by creating a simplified path to closing the transaction”.
Everything counts in large amounts: He added that OpenBet “demonstrates continued momentum across their key markets”, adding that the new price provided “strong value for the business”.
Pay it back: Cottle added that LNW would still be able to pay off $700m of its debt with its after-tax proceeds. The deal is expected to close in Q3 this year.

No surprises: Truist said the news was half expected “given depressed sports-betting valuations”. Said Jefferies: “Given the announcement was expected and the overall valuation compression in the market, it is therefore likely to be neutral for shares.”

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Datalines - Nevada

Strip GGR rose 11.6% YoY to $731.5m and up 41.4% on May19.
Total revenue up 5.7% to $1.3bn.
Sports-betting handle was up 17.4% to $561.3m and GGR was flat at $27m.

Strip on a tear: May was the 15th consecutive month of revenues of $1bn+ and ahead of analyst estimates with the Strip leading the way. Strip slot revenue of $391.1m was up 9.2% and 36% up on May19 while table games win was up 15% YoY to $332.4m.

Boom time on the Strip helped mask a downturn elsewhere with locals GGR down 1.4% to $254.9m.
Wells Fargo analyst said net, the results were solid”. Deutsche Bank estimates that Q2 total GGR will be 11% ahead YoY but suggests there will be pullbacks of 14.3% in Q3 and 13.3% in Q4.

Take that to the bank: Analysts at CBRE said the Strip “continues to print money”. While recognizing the risks posed by persistent inflation, they pointed out that the continued recovery in both international tourism and convention business could act as a “potential offset to any moderate erosion in leisure spending”.

Conference time again: Statistics from the Las Vegas visitors authority showed convention attendance in May up over 300% on May21 though it was still down 255 on May19.
Powell dancing: They added that “if the Fed can engineer a softer landing and avoid a sharp spike in unemployment, Las Vegas could avoid a significant demand drawdown”.

Datalines - Macau

GGR in June was down 62.1% to $307m. This is the lowest monthly total since Sep20.
For the first six months of the year, GGR was 46.4% to $3.26bn.

Covid update: As of Friday, 638 cases of Covid have been reported in Macau making this the largest outbreak since the start of the onset of the pandemic in early 2020. The government has ordered a near full shutdown with only 10% of workers at casinos allowed to report for work.

US May OSB estimates

May rising: The analysts at Deutsche Bank have estimated May’s OSB GGR to be ~$560m, excluding some states yet to report including Arizona. This is up ~13% on Apr22 and ~105% ahead YoY, reflecting the impact of revenue from new states and particularly New York.

Hold up: The DB team says the MoM improvement is down entirely to May hold being ~180 bps above the April figure at 8.8%.

Scout Gaming financing

Unknown pleasures: After discovering “previously unknown financial commitments” which would impact cashflow to the tune of SEK17m, Scout Gaming has arranged a bridging loan of SEK20m from major shareholders to add to the previous SEK20m bridging loan arranged in May.

Best of luck with that one: The company added that as previously disclosed it will be attempting a SEK100m rights issue “during the summer”. Back in May it said it had only SEK15m of cash left at the end of Q1.
Careful with that axe, Eugene: The company also announced a significant restructuring with half its staff of 131. A new management group has also been organized.
Not helping: The company noted that many of the redundancies would be at its Lviv, Ukraine office. “It is with great sadness that this happens but is unfortunately necessary to ensure the company's continued existence,” the company noted.

UK National Lottery license award

License is go: The UK Gambling Commission has been given the go-ahead to formally award the UK national lottery license to Allwyn after the High Court lifted the suspension imposed on the Commission as part of legal proceedings brought against it by Camelot in relation to the bidding process for the next UK National Lottery license.

The High Court is still to rule on the lawsuit but the Commission said it “remains resolute that our evaluation has been carried out fairly and lawfully in accordance with our statutory duties”.

Offshore crackdown call

Target practice: Nearly 30 members of the US Congress have addressed a letter to the Attorney General Merrick Garland calling on the DoJ to crack down on unregulated sportsbooks targeting US players.

Offshore operators undermine “the efforts of 35 states and the District of Columbia to collect tax revenue from their legal sports betting operations”, the politicians wrote.
Get to work: The Congressmen asked the Attorney General to work with the industry and sports leagues to stop offshore operators from targeting the US.

Going off alarming: The AGA, which issued a similar call to the DoJ in April, said the letter showed political leaders were “appropriately alarmed by the prevalence of offshore sportsbooks and law enforcement must act to identify the worst actors, investigate and prosecute them”.

Sector watch - tokens

Top trump: Soccer superstar Kylian Mbappé and NFT-fantasy sports platform Sorare have announced a partnership that will see PSG’s star striker become an ambassador for Sorare and an investor in the business.

Mbappé joins other superstar athletes such as Serena Williams, Antoine Griezmann and Gerard Piqué in investing in Sorare, which in return will provide tech and educational support to Mbappé’s Inspired By KM (IBKM) charity.
Sorare has raised nearly $740m in four funding rounds, the latest taking place in Sept21.

Partnerships galore: In common with other fan token providers, Sorare says it has signed more than 250 partnerships with major European and US sports leagues, although it is not the official fan token provider of Mbappé’s club (Socios is).

CR7 collection: Meanwhile, Cristiano Ronaldo has signed a sponsorship deal with Binance that will see the crypto exchange and fan token provider create a collection of exclusive Ronaldo-themed NFTs.

Questions of viability: Deals between sports clubs and players and crypto exchanges, NFT or fan token providers have attracted much criticism from supporters’ groups and media outlets such as the Athletic, who have questioned the viability of the crypto and fan token ecosystems.

Ongoing deals: The Athletic has produced a run-through of the English Premier League clubs that have ongoing crypto sponsorship deals. “Cryptocurrency companies love sponsoring football clubs because it is the cheapest way to find new customers — especially young men,” the article suggests.

Earnings in brief

Allied Esports Entertainment: Q1 revenues increased 381% YoY to $2.4m while adjusted EBITDA loss dropped 24% to $2.5m. The group said the improved figures were the result of increased foot traffic brought on by more events held at its HyperX Arena in Las Vegas. It said it was exploring potential M&A targets and would update the market in due course.

Getting shirty

More than 20,000 people have signed an online petition calling on Everton to drop online casino operator Stake.com as its shirt sponsor from next season. The club announced a deal worth £10m a year two weeks ago, but fans and campaigners have criticized the club’s decision. Meanwhile, AFC Bournemouth has signed a two-year shirt sponsorship deal with Asia-focused bookmaker Dafabet.

Further reading: The UK government is in disarray over the gambling paper and the issue of shirt sponsorship. And The Times reveals Philip Davies MP has received £25,000 in free tickets for race days.

Newslines

Spotlight Sports Group has published the second edition of its BetTech Ecosystem report, which looks at the technology and business ecosystem surrounding sports betting and gaming. Split into three chapters, the report examines how all the different suppliers in the industry contribute to its development and helps those less familiar with the industry gain a better understanding of it.

ParlayBay, the subject of a recent startup focus, has reached a content-integration agreement with platform and services supplier Finnplay.

Gaming Innovation Group has signed an agreement to provide its gaming and sportsbook platform to Caravel Entertainment, which operates the Moosh.pt brand in Portugal. GIG also announced a three-year deal with an unnamed retail operator in Spain.

Kambi has agreed on a contract extension with Greenwood Gaming and Entertainment, the company behind the Parx Casino and its online sports-betting brand betPARX.

Caesars: Harrah’s Las Vegas has reopened its Caesars Sportsbook on the Strip. The Caesars group operates in-person betting outlets in 24 jurisdictions, the most retail sportsbooks in the US.

BetMakers secured the rights to distribute Penn National’s race streaming outside of the US and Canada for use in fixed odds, booked and exchange betting.

BlueBet has signed a 10-year market access deal with Caesars’ Horseshoe Hammond in Indiana to provide online sports-betting via its ClutchBet brand.

Paysafe has entered the Arkansas mobile sports-betting market through a partnership with BetSaracen, the sportsbook app from Saracen Casino Resort in Pine Bluff, Arkansas.

Flutter has announced that PokerStars has received approval to launch online poker, casino and sports betting in Ontario.