Keep calm and carrion
Picking over the bones of Penn Entertainment
The activist investors in Penn might seek a break up of the company.
In +More: Sportradar reported to have renewed MLB deal.
Earnings TL;DR: Boyd Gaming and Betsson.
Investors in Better Collective grasp at some good news.
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Vulture club
Carrion gaming: With activist investors now knocking at the boardroom door, pressure is likely to build for Penn Entertainment to seek solutions either before or – with a greater degree of certainty – after the AGM vote in the summer, which could lead to a break up of the company.
Sold for parts: Sources suggested any move is unlikely to see a bidder for the whole company.
Instead, separate buyers for the regional B&M casino business and the online operation could be expected.
A note from the team at Jefferies said recently that “when stocks underperform, voices get louder.”
If you were the only Boyd in the world: Recall, last year in the wake of the emergence of hedge funds HG Vora and Donerail as investors in Penn, a Reuters report claimed that Boyd Gaming had made an approach over a potential buyout.
The approach was never acknowledged by either party and was presumably rebuffed.
Boyd management largely kept schtum on yesterday’s earnings call but said any M&A would have to be a “good strategic fit.”
Vora-cious appetite: Sources suggested Boyd might well return with another approach, given recent developments with HG Vora going public with its attempt to get its choice of board nominations when three seats come up for a vote in the summer.
I’ve lost control again: One investment banking source who chose anonymity suggested the Penn board and management has “zero chance” of winning the board seats vote and may look to pre-empt the potential loss of control of the boardroom by exploring its M&A options.
“I think they could proactively say ‘everything is on the table and we’re open to exploring options’,” added the source.
American pickers: A sale of Penn might involve multiple companies looking at different parts of the company. “Boyd is the natural buyer of the land-based casinos, but not so much the online business,” said an industry source.
There would be some overlap in terms of competitive positioning in certain states, which sources suggested would likely mean Boyd would have to dispose of around a dozen properties.
Boyd could, in turn, “easily find buyers for these,” said the investment source, who noted Golden Entertainment might be “in the market to expand.”
Non-score: There is less certainty over who might bid for which parts of Penn’s online portfolio. Much of the attack from the activists centered on what HG Vora said was Penn’s “reckless spending” in pursuit of its online strategy.
This includes current assets theScore in Ontario, which was bought for $2bn in August 2021; ESPN Bet, which it runs under license from ESPN owner Disney; and its own recently launched Hollywood iCasino brand.
I bid you not: A host of names could be interested in bidding for some or all of the online businesses. One is Rush Street Interactive, which sources suggested was previously an underbidder in the ESPN deal.
However, another source with knowledge of the thinking at RSI suggested it was unlikely it would look again at ESPN Bet, given its own stated iCasino focus, even if Disney was willing to negotiate a lower price.
“I’m not sure it makes sense for them to spend all that money on a big sports-betting brand given its public messaging about gaming,” said the source.
Butterfly effect: Another option is Flutter, which could yet be central to any Penn break-up. On the one hand, it might well help Boyd find the cash for any buyout of its larger regional casino rival via purchase of the 5% stake Boyd owns in FanDuel.
Meanwhile, it could also see the potential of picking up what is thought to be a podium position brand in Ontario via a purchase of theScore.
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+More
Sportradar has renewed its data deal with MLB for another eight years, according to an X posting from Mike Mazzeo, a Sports Business Journal reporter.
Analysts at JMP said the eight-year agreement secures all of Sportradar’s major US rights portfolio beyond the end of the decade.
This provides “more certainty” around Sportradar’s revenue and rights stream “for the foreseeable future.”
Wynn Resorts has announced that Wynn Al Marjan Island has secured $2.4bn of debt to fund the construction of the facility from a consortium of banks led by Abu Dhabi Commercial Bank and Deutsche Bank.
Wynn said the “landmark transaction” represents the largest hospitality financing transaction in the history of the United Arab Emirates.
Snake eyes on a plane: DraftKings has said it will provide F2P casino style and sports prediction games to Delta SkyMiles members as part of its partnership with the airline.
Delta said it currently has no plans to offer real money gambling options on airlines, as gambling is currently illegal in flight under US federal laws.
BlueBet has confirmed the purchase of Queensland-based bookie TopSport from Merlehan Booking for A$15m ($9.4m), with the cash coming from an institutional placement.
CEO Andrew Menz said the deal would act as a “blueprint” for further M&A as the company attempts to build towards and beyond 10% market share.
In H125 TopSport recorded net win of A$11.8m
XLMedia shareholders have approved the tender offer for distribution of £16m following the sale of the North American publishing business to Sportradar. A further payout will come in Q2.
What we’re reading: How Caesars exploited a loophole to win the naming rights to the Superdome in New Orleans.
+More careers
The big move: DFS+ operator PrizePicks has appointed Mike Quigley as its new CMO reporting directly to CEO Mike Ybarra. Quigley will be responsible for further overseeing the company’s brand vision, go-to-market strategy, campaign development and overall marketing efforts across the company.
Quigley most recently served as the CMO at Niantic where he led global marketing efforts for the company’s real-world augmented reality games, including Pokémon GO.
Prior to Niantic, he was director of consumer marketing at Google/YouTube.
Tracy Cohen has left her role as director of marketing with the casino equipment maker TCSJohnHuxley after over three decades with the company.
Rob Brown is the new B2B growth director at Spotlight Sports. He posted on LinkedIn that he would be “developing products on behalf of our partners across the racing, betting and media landscape.”
Director of Payments – Remote
Brazil Country Manager – Dubai
CRM Director – Remote
Earnings TL;DR
Boyd Gaming: The regionals and Las Vegas locals casino operator generated over $1bn of revenue in a quarter for the first time, with CEO Keith Smith saying the company was delivering a “high level of performance.”
Full employment: Notably, Las Vegas employment has grown for 40 months straight with average wage growth of 6% outpacing the national picture.
Howdy pardner: The online business, largely constituting the partnership with FanDuel, generated $76m of EBITDAR while the 5% equity interest in FanDuel represents “significant value.”
Liquid diet: CFO Josh Hirsberg said it had “ample borrowing capacity” under its current credit agreement. But he added that any M&A opportunity would have to be a “compelling opportunity relative to either investing in our portfolio or buying back shares.”
See this morning’s Earnings Extra (paywall) for more.
Betsson: LatAm, Italy and B2B were the standout performers as Betsson posted “best-ever” earnings, showing revenue up 22% to €306.8m while EBITDA rose 20% to €86.4m. The only negative comes from the Nordics, down 14%.
Norwegian would: The company confirmed it exited Norway in December under pressure from the authorities.
Rolling the dice: iCasino – now worth 69% of total revenue – came in up 17% YoY to €214m. Sportsbook revenues were up 36% to €91.3m, helped by margins of 9.8%, fully 2 ppts above the long-term average.
See yesterday’s Earnings Extra (paywall).
Earnings in brief
🐦🔥Gaming affiliate Better Collective gave its suffering shareholders a fillip on Thursday after saying it had been too pessimistic with its previous profit warning. The shares rose 13% on the day.
In a brief update, it said that revenue of €371m would be at the top end of its revised 2024 guidance of between €355m and €375m.
EBITDA before special items of €113m was ahead of the adjusted target of €100m-€110m.
Crash, bang, wallop: Recall, Better Collective’s shares crashed over 35% in late October when it said it would miss its forecast for EBITDA of €130m-€140m, while revenue was cut back from a previous target of €395m-€425m.
At the time, the company blamed the downturn on lower revenues from the US and what it said was a “continued slowdown” in the Brazilian market.
In the wake of the October warning, the company embarked on a €50m cost-cutting program involving ~300 redundancies or ~15% of the workforce.
The team at Jefferies said the improved EBITDA was due to the cost savings “landing early.”
Venture capital firm Yolo Investments manages in excess of €500m in capital across 100 exciting fintech, gaming and blockchain companies. The Yolo Investments' Gaming fund, regulated by the Guernsey Financial Services Commission, has taken positions in fast-growth suppliers and operators, including Dabble and Enteractive. Yolo Investments (yolo.io) wants to hear from readers of this newsletter. Get in touch with your pitch, or for a chat about innovative products which can plug into our investment ecosystem.
Analyst takes – BetMGM
Not feeling it: While BetMGM gained decent coverage for FY24 numbers published earlier this week (paywall), the analysts at CBRE made the point that, as it stands, neither parent is truly seeing the benefit in terms of shareholder appreciation.
“The value of BetMGM isn’t reflected in the shares of either MGM Resorts or Entain currently,” the team noted.
But they added that this could be poised to change with BetMGM’s “continued momentum and impending inflection to profitability.”
More of the same: Their counterparts at Seaport argued much the same point about valuation of the business, estimating that less than $5 of MGM’s current share price of ~$34 is incorporated.
“The 50/50 ownership structure is a significant deterrent in unlocking greater value,” the team wrote.
Hence, in order to unlock value, an acquisition of the 50% stake held by Entain or an acquisition of Entain by MGM “would be transformative for the company and unlock long-term value.”
The analysts at Jefferies said they maintained their long-held view that MGM acquiring control of the entire entity at some point would “drive execution and value capture.”
More takes
Not so happy new year: The advent of the year of the snake has turned out to be less than auspicious for the Macau market, with analysts at Jefferies saying daily gaming revenue for the first five days of the Chinese New Year “missed expectations.”
Combined with the poor data from January, the team argued it points to the Chinese economy remaining a “drag on visitation and spending,” as evidenced by greater pressure on mass vs. VIP.
The team at Seaport have done the math and estimate the CNY period will be 1% down on the same period last year and 8% off the 2019 total.
Connections
The big deal: EveryMatrix has signed a deal with MGM Resorts subsidiary LeoVegas for the provision of its OddsMatrix odds feed technology. EveryMatrix said LeoVegas will utilize OddsMatrix’s tools to create optimized pricing, improve efficiency on uptime and enhance user experience.
Erik Nyman, president of EveryMatrix Americas, said the OddsMatrix odds feed has “consistently proven to be a valuable addition for tier-1 operators, and we’re committed to doing exactly that with LeoVegas.”
Scientific Games’ SciQ retail lottery technology is now available in Europe via a partnership deal with Allwyn, which debuted the sale of UK National Lottery scratchcards via the system at an Asda store in Manchester.
The Monumental Sports Network is adding a betting option to its streaming app for Washington Capitals and Washington Wizards games via a partnership with Play Anywhere and BetMGM. Tipico has signed a three-year sponsorship extension with German soccer league Deutsche Fußball Liga for Bundesliga and Bundesliga 2.
Musburger Media’s VSIN has launched a radio station in Las Vegas in partnership with Lotus Las Vegas. The 24/7 sports-betting network 1230 The Game will air its show from the first floor at Circa Resort and Casino in Las Vegas.
Playtech is providing its poker network services and content to French operator PMU under a new strategic partnership. Yggdrasil’s online games are now available on iGP’s online gaming aggregation platform. The Bulgarian fan engagement and gamification platform Fans United will supply its interactive engagement tools to Yolo’s online sports technology and betting platform Sportsbet.io.
EveryMatrix delivers iGaming software, solutions, content and services for casino, sports betting, payments, and affiliate/agent management to 300+ global Tier-1 operators and newer brands. The platform is modular, scalable, and compliant, allowing operators to choose the optimal solution depending on their needs.
EveryMatrix empowers clients to unleash bold ideas and deliver outstanding player experiences in regulated markets.
Earnings calendar
Feb 11: Catena Media, Red Rock Resorts, DoubleDown Interactive
Feb 12: MGM Resorts
Feb13: DraftKings (earnings), Wynn Resorts, Mohegan
Feb 14: DraftKings (call)
Feb 18: Gentoo, GiG Software
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