Jul 22: LVS hopes for $6bn-plus Asian rebound

Las Vegas Sands Q2, DraftKings NFT initiative, Betsson Q2 +More

Jul 22, 2021

Good morning. Today’s newsletter focuses on the results from after market close yesterday from the now somewhat misnamed Las Vegas Sands, where the focus was on the slower pace of Asian recovery relative to the US. Meanwhile, DraftKings announced a foray into the world of NFTs with the launch of a Marketplace product. We also have news from this morning’s Q2 results from Betsson, the group announced a delay in its US market entry strategy; its planned Colorado launch will now be in the first half of next year as opposed to the second half of 2021, meaning it will miss the start of the NFL season. And finally, a big thank you to all the kind comments on social media to our news yesterday. We really appreciate it.

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Las Vegas Sands

The top line

Net revenue came in at $1.17bn compared to $62m in the Covid-hit prior-year period. Operating losses were trimmed to $139m vs. $757m in Q220.

Consolidated EBITDA came in at $244m, flat QoQ but less than a quarter of the $1.11bn in Q219. Macau operation adjusted property EBITDA contributed $132m, Singapore $112m.

The $6.25bn sale of Las Vegas assets due to complete in Q421.

No angels: Questioned over its newly announced digital strategy, COO Patrick Dumont said any acquisition was unlikely to be “transformational.” “I don’t think we provide some value at the angel stage. From our standpoint, if we can get in early stage and mid-stage, that’s where we can be really effective. We aren’t just going to buy our way into a business, we will develop our way in.” He also spoke about what LVS sees as limited potential for conflicts from buying a company that worked with any competitors.

“Interestingly our company has seen a lot of changes and one of the things we thought about is we really aren’t conflicted,” Dumont said. “So it's a limited universe who are our competitive set. We are a little bit neutral. In a lot of the markets we might want to target we don’t have any B2C operations.”

We can rebuild it: CEO Rob Goldstein was keen to stress that the cash from the Vegas assets disposal would be best put to use investing in LVS’s existing operations.

“Our best opportunities are to reinvest in Macau and Singapore. Frankly, they remain our biggest focus because they are so extraordinary and difficult to replicate in the rest of the world,” Goldstein said. “And we want to invest heavily in both places because that’s our route to $8-9bn EBITDA.”

Jefferies analysts said the company was now a “primarily a play on the very gradual recovery and investments in Asia.” The Macquarie team noted that the Macau recovery was “now more of a 2022 story.” They noted that with the combined $2bn of cash at hand combined with the proceeds from the Vegas disposal positioned it well for growth projects in both Macau and Singapore. Credit Suisse noted, though, that details on what the expansion plans might entail were sparse.

Bubble gum: Goldstein noted that the Covid-related issues in Macau and Singapore made the timing of a recovery there doubtful but that the outcome of fully re-engaged markets remained a certainty. Giving some insight into the short-term picture, Sands China COO Grant Chung noted the pace of vaccinations in China remained high at over 10m doses a day and increasing by 10% every 25 days. “We’re quite confident that if China continues at that rate, when you come to winter 80/90% will be vaccinated,” said Chung. “Then the travel bubble between China, Hong Kong and Macau is really possible.”

DraftKings NFT initiative

Fun with non-fungibles: DraftKings has announced its intention to enter the digital collectibles market via DraftKings Marketplace, which will offer “curated NFT drops” via a relationship with the Autograph platform. DraftKings players will be able to buy, sell or trade via their existing account. DraftKings insisted this is about more than jumping on any passing bandwagon. “The NFT boom has reinvented the collectibles industry and driven excitement to early-adopting audiences worldwide - including the DraftKings community,” said Matt Kalish, co-founder and president. “DraftKings Marketplace will sit at the center of this technological and cultural phenomenon, providing our immense existing customer base with an easily accessible experience that rivals all legacy marketplaces.”

Betsson

The top line

Q2 revenue rose 14% YoY to SEK1.7bn/$195.5m, gross profit was up 22% to SEK1.1bn/$126.5m, EBITDA was up 55% to SEK472.3m/$54.3m.

Casino revenue dropped 5% to SEK1.5bn/$172.5m, sports-betting revenues increased 125% to SEK510m/$58.6m, margins were up to 8.5% vs. 6.9%.

Jan-June21 revenue increased 13% SEK3.3bn/$380m, gross profit was up 16% to SEK2.2bn/$253.1m, EBITDA was up 27%% to SEK834.1bn/$96m.

PAM pilot: Betsson has pushed back its B2C launch in Colorado from H221/start of the NFL season to Q122 because of the need for its player account management (PAM) platform Strive to be tested and certified and which can only happen after all components are fully developed. Asked about the delay, CEO Pontus Lindwall said: “We had to delay the planned opening but find ourselves in a good position and the only change is we open in Q122.” Recall, Betsson announced a 35% strategic investment in Strive in April. Elsewhere, as per its previous Q2 update earlier in July, Betsson made much of its Latin American successes via the sponsorship of the recent Copa America tournament.

Habit forming: The gradual reopenings seen in Europe had not had a major impact on Betsson’s European casino activities, CFO Martin Ohman said. Lindwall added that the pandemic had led to a “digitization of gaming habits”. In common with other EU operators, the drop in casino revenues was driven by the introduction of new regulations in Germany. Lindwall commented that it was “hard to tell how (Germany) is going to play out.”

“There are strong restrictions on casino. We’ll give that market a go but there are hard regulations and that has an impact on payer preferences,” said Lindwall. “VIPs will not want to play with regulated sites because it’s not an interesting product for them.”

Newslines

Fire in the hole: The Potawatomi-owned Firekeepers Casino in Michigan has gone live with its own-branded online casino and sports-betting offering. The backends to both products are provided by Scientific Games. The Battle Creek property first opened in 2009.

Pizza the action: Microgame has announced that Italian investment firm Piomo has snapped up a controlling 90%-plus stake in the Italian-focused betting and gaming supplier. Current Microgame management will remain in place. It’s partners include Admiral, GoldBet and Merkur. This is the latest slice of M&A in the Italian space following the sale of IGT’s Italian business to the Apollo-backed Gamenet for €950m. Gamenet owns the aforementioned GoldBet.

Rake it ‘til you make it: Raketech has wasted no time in using its new debt facility after it announced the acquisition of Latin-speaking and Spain-based affiliate marketing firm Infinileads. The total €4.5m deal gives the largely Scandi-facing Raketech further exposure in the core markets of Spain, Italy and Portugal as well as Argentina, Mexico and Peru. Recall, Raketech finalised a one-year €15m revolving debt facility earlier this month.

BOA on arrival: Esports betting supplier Sportsflare has announced a strategic partnership with Malta-based Bet On Action Gaming (BOA Gaming). Sportsflare will now supply BOA with betting markets and statistics for CS:GO, Dota 2, and League of Legends.