Lottomatica’s big splash
SKS365 buyout, Entain takes a hit, Seminole launch, Bally’s tumble, slim-fit Sportradar, RSI profits +More
Lottomatica wins the race to buy SKS365, valuing the business at €639m.
Entain confirms revenue downturn and reveals cost-saving program.
The Seminole announces plans to launch retail betting in Florida.
Bally’s shares take a hit as company revises FY23 forecasts.
Sportradar announces slimmed global workforce plan despite rise in EBITDA.
Rush Street now expects 2023 full-year profitability.
I’m gonna send him to outer space.
Another Planet
Lottomatica has reached an agreement to buy the operator behind PlanetWin365.
Bolt on and on: The operator, which just this week claimed market leadership with its collection of online brands in Italy, has added a further name to its portfolio in a deal that values SKS365 at €639m. It will pay for the move using cash at hand and an already pre-arranged bridging loan of €500m.
Lottomatica said the Malta-based SKS365 controls 9.6% of the Italian OSB market and 6.4% of iCasino.
It said it is expected to generate EBITDA of €74m in 2023, suggesting a pre-synergies multiple of 8.7x. Post-synergies, that is predicted to fall to 5.2x.
Lottomatica said it anticipated being able to extract €60m of cost synergies and at least €5m of revenue synergies by 2026.
The deal is expected to be completed in early 2024.
Winning the race: Lottomatica emerged as the winner after rival Playtech – which owns the Snai brands in Italy – had previously confirmed rumors it was “participating in a process” to buy SKS.
Analysts at Goodbody said at the time of the news that the Italian online market was “particularly attractive given the low online penetration and structural tailwind as this penetration increases”.
Recall, earlier in the week, Lottomatica saw Q3 revenues rise 6% to €375m.
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Remedial measures
Downturn train: Entain has confirmed the previously announced revenue downturn and has revealed a £100m cost-saving program in the hope of driving EBITDA margins back to 30% by 2028. But it said poor sports margins in October would mean an ~£45m hit to EBITDA.
Pro forma NGR fell by 5% in the quarter, with sports NGR falling on the same basis by 15%, gaming managing a 1% increase and retail down by 4%.
Q3 performance “tracked to” EBITDA guidance of £1bn-£1.05bn as stated at the time of the revenue warning.
The company said BetMGM saw an 8% rise in revenue or 15% in constant currency. In the YTD, BetMGM is up 41%.
Pre-op: The company will be hosting a meeting with analysts later today where, as the team at Peel Hunt suggested, it will need to produce a “big rabbit” to satisfy nervy investors.
The company outlined what is on the agenda, suggesting that over the past three years it has “undergone a significant strategic transformation”.
For the future it will be “optimizing organic growth” in a “focused market portfolio” or core and high-growth markets and exits from unspecified “non-core operations”.
E+M will report on the analyst call in tomorrow’s Weekender.
Seminole Florida launch
Launch date: The Seminole tribe has announced it will launch retail betting across all its six properties in Florida in early December, starting with the Seminole Hard Rock Hotel & Casino Hollywood, the Seminole Classic Casino Hollywood and the Seminole Casino Coconut Creek in south Florida.
They will be followed by the Seminole Hard Rock Hotel & Casino Tampa, the Seminole Casino Hotel Immokalee and Seminole Casino Brighton.
As per the 2021 compact agreement, the tribe will also add craps and roulette to its properties’ offerings.
The release doesn’t mention OSB operations.
However, a post on X from Fox Sports talk show host Andy Slater suggested that launch could come prior to retail, within two to three weeks.
History makers: "With the expansion of the new scope, we are creating over 1,000 new jobs made possible by the Compact," Jim Allen, CEO of Seminole Gaming and chairman of Hard Rock International, said in a press release. "This is a historic milestone that immediately puts Florida in the same league with the world's great gaming destinations."
The launch comes despite the ongoing lawsuit over the legality of the compact, which is currently in front of the US Supreme Court.
Axios reported Nova Southeastern University law professor Bob Jarvis as saying "there really never was any dispute over the tribe's right to have in-person sports betting”.
“The tribe is unlikely to start mobile sports betting until all the pending litigation, in both federal and state court, is over,” he told the news site.
Bally’s tumble
Headwindy city: Bally’s share price fell 18% at one point on Wednesday after the company lowered its revenues and adj. EBITDA guidance for the year, blaming the delayed opening in Chicago and issues around the A’s stadium/Tropicana development in Las Vegas. The shares ended the day down nearly 15%.
On the latter issue, president George Papanier said the next news would come from the MLB meeting in November.
That will determine whether the A’s will be given league permission to switch from Oakland to Vegas.
Meanwhile, Bally’s finally got permission to open the Medinah temporary casino facility in Chicago in October after a three-month regulatory delay..
🤮 Unhappy Bally’s
By the numbers: Helped by the eventual temporary property opening in Chicago, casino revenues rose 9% to $359m, while international interactive was up 7% to $244m and a relaunched North American interactive division saw a 34% leap to $29.6m. Adj. EBITDA fell 6% to $142m.
However, losses continued at the North American interactive business, at $17.6m, down from $19.7m the year previous.
The new Bally Bet app has been launched in four states so far with seven more planned by year-end.
The bright spot was international interactive where adj. EBITDA rose 12% to $85.5m, helped by a 13% rise in UK revenues.
Colossus of Rhodes: CEO Robeson Reeves said “all hands were on deck” for the launch of iGaming in Rhode Island where Bally’s will be the sole provider. With online, Reeves said the company was “committed to growing our Bally Bet OSB business with prudent financial approaches and disciplined marketing investments”.
He said the division was now annualizing at $100m in revenue. “We have the experience to take share in mature markets,” he added.
Killing me softly: Papanier said Bally’s was seeing “softness overall” across its regional estate, remarks that were likely taken badly by investors. Analysts at Deutsche Bank also noted the claim that followed about taking market share in 10 out of 13 markets.
“We believe Bally’s was fairly aggressive with its marketing and promotions in the period,” they argued.
“It has been our experience, over time, that drive to market share gains are generally a sign of promotional flare ups, more so than anything else.”
Rush Street profitability
Head above water: Ahead of plan, Rush Street expects to be profitable at an adj. EBITDA level for the full year this year after producing its second consecutive quarter of profitability, at $4.1m, compared with a loss of $12.5m in 2022.
“In today’s landscape, we are unique,” said CEO Richard Schwartz. “A digital-first operator with an iCasino and customer-centric approach.”
“Consumers are being more discerning and deciding where they want to play based on product and user experience,” he added.
He said that Rush Street’s iCasino market shares in New Jersey and Michigan were higher than at any time in the past year, with “similar” trends visible in eight of its OSB markets.
At the same time, marketing spend fell by nearly a quarter to $34m.
LatAm remained a focus, with Colombia continuing to expand “at a rapid pace” and with the Mexico ramp continuing on schedule, with the business being more aggressive in the past quarter with 90% sequential growth.
Schwartz added that the approach in Mexico “takes the playbook from Colombia” with localization of the platform and “creating a great player experience that consistently improves”.
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Sportradar’s slim fit
Pruning season: Asked about the reasons for shrinking the global workforce by 10% despite a healthy top-line Q3 revenue improvement, CEO Carsten Koerl said it was about ensuring the company was fit for the future. “We are looking to allocate our resources on the right products, to focus on those which are driving growth,” he added.
He said the product roadmap included micro betting, virtual stadium, mixed reality, augmented virtuality and real-time stats and insights.
The next dance: The NBA deal, which kicked off with the recent tip-off, has seen Sportradar sign up its US client base to new content deals, including DraftKings, BetMGM, bet365, FanDuel and Caesars.
Koerl said the company was “incredibly pleased with the positive engagement for this premium content offering” internationally.
“We are just at the beginning of our journey with this great franchise that will be an important innovation and growth catalyst for the company,” he added.
Revenues were up 12% to $201m but, with lower than expected MTS revenues, the company said FY23 revenue would be slightly lower than previously forecast at between $870m and $880m, which at mid-point still represents a 20% YoY increase.
Adj. EBITDA was up 38% YoY to $50m and cash in hand was up 10% YoY to $290m.
CFO Gerard Griffin said that, given the “strong” liquidity position, the company was “considering its options with regard delivering long-term shareholder value”.
Analyst takes
Caesars: Looking at the lackluster investor reaction to Caesars’ earnings – down just over 1% yesterday – the team at Deutsche Bank suggested what had been a bullish story about F1 and the Super Bowl in Vegas, regionals growth and improvements to online had become one of “concerns around the impact of a looming recession and a deteriorating US consumer”.
Macau: The team at Macquarie said the October GGR numbers were “particularly significant” due to mass revenues “clearly surpassing” 2019 levels but with VIP remaining well below previous peaks. The team noted all operators have said they can reach pre-pandemic profitability levels without reaching pre-pandemic revenues.
This is due to lower labor costs and the shift toward base/premium mass.
Datalines
UK: Online GGY increased 0.6% YoY to £1.2bn in Q3, while retail betting GGY decreased by 0.4% to £539m.
Newslines
DoubleDown Interactive has completed its purchase of Nordic-facing iCasino operator SuprNation for $36.5m. The acquisition marks DoubleDown’s diversification into the real-money gaming market.
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