Jul 18: MGM’s Genting Singapore approach rebuffed

MGM/Genting Singapore rebuff, JKO/Playtech rumors, PlayUp strategic review, New Jersey data, startup focus - Cipher Sports +More

Earnings+More

Jul 18, 2022

Good morning. On today’s agenda:

Genting Singapore attracts bidders as MGM Resorts approach is rebuffed.
JKO is reported to be back in the race for Playtech.
Our startup focus for this week is Cipher Sports Technology which recently raised $5m.

We sail tonight for Singapore.

MGM/Genting Singapore

The controlling family behind Genting Singapore has rebuffed an approach from MGM Resorts.

Out on a Lim: The owner of the Resorts World Sentosa casino has knocked back an approach from MGM Resorts with regard to a potential takeover, according to Bloomberg. Other suitors are now said also to be in discussions with the Lim family which holds a controlling 53% stake in the business.

Calling a halt: Genting Singapore requested a halt in the trading of its shares in Singapore after they soared 9% on the rumors.

Right of refusal: The Bloomberg report said the Sinaporean government would have the right of approval on any transaction.

The bold and the beautiful: The team at Jefferies noted that given the likely level of expense of any deal and with the cost of debt now rising rapidly, “only a handful of large-cap operators or financial sponsors would have the means to pursue a deal”.

Results recap: Genting Singapore’s most recent quarterly figures in May said the company was “cautiously optimistic of the recovery trajectory”. Revenue rose 13% YoY to S$315.5m buy adj. EBITDA was down 3% to S$124.8m.

Taking advantage: Jefferies noted that Singapore might benefit from the continued Covid problems in Macau. “With VIP/junket business in Macau under pressure, the market should be well positioned to capture those high-end customers,” the team wrote.

Macau update: On this note, the authorities in Macau have extended the casino shutdown for a further five days.

Diary date: Genting Singapore is scheduled to release its H1 results on 12 August AMC in Singapore.

**Sponsor's message: Spotlight Sports Group (owned by Exponent Private Equity) is a leading technology, content and media business specialising in sports betting. The company has released its second annual sports betting industry research report. The 2022 edition of ‘BetTech Ecosystem’ has been expanded by more than 60% with the visual now containing seven new sub-segments and 127 new suppliers.

Click here to download the full research report and visual.

For more information visit: spotlightsportsgroup.com

Playtech/JKO rumor

The Eddie Jordan-backed JKO is “mulling” another bid approach for Playtech, according to yesterday’s Sunday Times.

Neverending story: The news comes after the latest twist in the long-running saga when TTB Partners pulled out of talks last Thursday. It prompted a sharp fall in the Playtech share price which was down over 22% on the week.

Playtech share price last week

Recall, last November JKO put together an offer worth 750p a share or around £3bn. That bid came to an end after, like TTB, being granted an extension by the London Stock Exchange.

FanDuel analyst call

The analysts at Jefferies hosted a fireside chat with FanDuel CEO Amy Howe last week.

A Howe-to guide: The team reported that the discussion focused around the path to profitability which they added depends on the referendum outcome in California in November this year, as well as the specifics of its marketing strategy.

Howe to be number 1: Jefferies report Howe as saying the promo and marketing intensity in NY has settled down in recent months, and the company is seeing a “better return on CAC and better unit economics”.
This is while maintaining the number one market share in OSB GGR overall in the country.

The flywheel watch returns: In addition, the company will continue to “improve its flywheel model” while looking to better integrate and cross-sell between OSB, iGaming, and horseracing products.

PlayUp strategic review

The Australian-based PlayUp has said it is undergoing a strategic review which will consider a “full range of alternatives”.

Play as you go: The review would look at various alternatives for the business including strategic partnerships, a sale of the company or other possible transactions. The company has appointed Innovation Capital to assist with the process.

Best practice: The news came with an announcement that the company had received certification for its Betting, Entertainment and Sports Technology Platform and was “closing in” on a US launch. PlayUp operates at present in Colorado and New Jersey.

Recall: In January, PlayUp announced a $35m investment from Crypto exchange FTX. The news of the investment came after news broke of a legal fracas involving the company and its former US CEO Laila Mintas which centered on a dispute surrounding a potential outright acquisition by FTX.

Datalines

New Jersey: Sports-betting GGR fell 45% YoY to $39.2m and also down 36.6% MoM. Mobile GGR was down 42.3% YoY while retail was off by 62.6%. Sports-betting hold was below average at 6.2% vs. 9.3% in Jun21.

Leaders: In sports-betting, Wells Fargo estimated FanDuel on 52% and suggested BetMGM has taken the second spot with 12% while DraftKings and Caesars were on 11% each. Penn/Barstool had 5%.

iCasino was up 24.4% YoY and down 2.1% sequentially. Borgata (BetMGM) remained the leader with 30.5% followed by Golden Nugget (26.8%), Resorts (21.1%), Caesars AC (7%), Tropicana (5.2%), Hard Rock (4.5%), Bally’s (3.1%) and Ocean Resort (1.8%).

Gaming GGR for the month came in at $227.6m, up 6.8% YoY but down 2.8% vs. Jun19. Lots revenue was up 11% YoY but table games were down 3.7% YoY. Q2 GGR was up 4.6% vs. Q219.

Massachusetts: GGR came in at $93.2m for June, up 10.8% YoY down 1.1% on a same-store basis vs. Jun19. The Wynn Encore generated GGT of $60.1m, up 14.3% YoY. The Penn Plainridge Park at $12m was up 5.7% YoY and the MGM Springfield at $21.1m was up 4.6% YoY.

New York wk to Jul10: Sports-betting GGR was up 6.8% to $27m though handle was down 10.3% WoW to $190.1m,

Leaders: FanDuel GGR share was 50.7% followed by DraftKings (22.6%), Caesars (13.3%) and BetMGM (7.7%).

Illinois VGT Jun22: Revenue was up +1.7% YoY at $216.7m while turnover was up 7.4% but win per day was down 5.3%. The Deutsche Bank team estimates Accel Entertainment generated ~$62.3m in VGT revenue in June, a rise of c4% YoY and ~$199.5m in VGT revenue for Q2, up c4.9% YoY.

Startup focus - Cipher Sports

Who, what, where and when The Melbourne-based affiliate and B2B firm was founded by Adam Fiske, Nick Slade, Katie Prowd and Darryl Woodford who pooled resources earlier this year. Fiske and Slade previously worked at iRival Media while Prowd and Woodford had previously founded predictive analytics firm Hypometer Technologies.

Funding backgrounder: Cipher recently completed a $5m Series A led by Cygnet Capital. Cygnet was co-founded by Jonathan Rosham and has made several other investments in the global wagering industry.

So what's new? The company also recently opened an office in New York and is growing its team both there and back in Australia. In terms of product, it is focused on the upcoming football seasons in the US and Australia as well as working on some upcoming media partnerships. "Despite being an Australian company almost all of our efforts are being directed towards this opportunity in the US," says CEO Fiske.

The longer pitch: CEO Fiske says the opportunity in the US is “obviously huge” but adds that Cipher will be “attacking it a little differently to others” suggesting Cipher can make sports “ we more ‘bettable’” with a focus on entertainment, education and engagement.

Distance learning: "Early on, there was a lot of curiosity from the industry around who we were and what we were doing which allowed us to build a great network here in the US, all while stuck in Australia during the pandemic.”
Groundwork: Now with a team on the ground and meeting people face-to-face once again, the network of contacts is “constantly evolving, which is fantastic”. “While we have always believed in our strategy and approach, this gives us great confidence that we were building a great company for both the US and international markets,” Fiske says.

Dimers: Flagship site Dimers was only launched in mid-2020 and Fiske says the founders are “immensely proud” of their achievements. In particular, he added the company is excited about the media partnerships it has signed which he says are the “ultimate win-win”.

Share Earnings+More

The week ahead

The ongoing issues in Macau will be front and center when Las Vegas Sands reports on Wednesday. The company recently made a $1bn term loan to its majority-owned Sands China subsidiary.

On Thursday Evolution and Betsson issue their earnings while on Friday Kindred takes its second quarter bow. The Netherlands is likely to feature high on the list of topics. Recall, Kindred received its license in early June after exiting the market just before regulation in Oct21. Betsson meanwhile is still to obtain its license for the Dutch market.

Newslines

Legal lottery: The process to transfer the UK National Lottery from Camelot to Allwyn has been suspended once again after the UK Court of Appeal agreed to hearing Camelot’s arguments that the lifting of the handover process should be halted.

NFL revenue for the 2021 season topped $11bn for the 2021 season with each team receiving ~$345m in national revenue, according to Sportico. The national total was a record and 12% ahead of 2020. Meanwhile, NBA revenue for the 2021-22 season topped $10bn for the first time.

Red Rock Resorts is set to permanently close three casinos that have remained shuttered since the start of the pandemic. The Texas Station and the Fiesta Rancho in North Las Vegas and the Fiesta Henderson properties will all be demolished with the land sold to developers. Recall, Red Rock previously sold the Palms Casino to the San Manuel Indian Tribe for $650m.

Champion Gaming is to raise C$800k via a non-brokered private placement of secured convertible promissory notes that comes with an interest rate of 15% and mature in two years. The company said the proceeds will be used for general working capital purposes.

Thunderbite has partnered with free-to-play content aggregation platform Inside The Pocket to broaden its distribution and reach.

CRM specialist Optimove has acquired the real time cloud-based personalisation platform Graphyte for an undisclosed amount.

What we’re reading

Hanging out in the Hamptons: VCs take a break from deal-making. “Hanging up the proverbial out-of-office sign is also a tidy excuse to sit out a teetering market.”

Crypto winter, ocean-going edition: OpenSea lays off 20% of its staff.