May 10: Circa gains Illinois access via Full House

IGT Q1, Full House Resorts Q1, Gaming Innovation Group Q1, FanDuel analyst update +More

Earnings+More

May 10, 2022

On today’s agenda:

Full House signs an agreement with Circa for sports betting in Illinois.
IGT reaffirms 2022 targets and returns $80m to shareholders.
Gaming Innovation Group sees affiliate benefit.
Fox Corp CEO on FanDuel arbitration.

Crab day. Sign up below:

Full House Q1

Revenue down 1.9% to $41.4m, adj. EBITDA down 22% to $8.4m.
Deal signed with Circa Sports for market access in Illinois and a retail sportsbook at American Place.

Place your bets: Full House gave some details on the multi-year market access and retail sportsbook agreement for the company’s Fall launch ‘The Temporary at American Place’ casino in Waukegan.

The agreement involves $5m market access payment plus revenue share with a $5m minimum guarantee per year. The initial eight-year term will be followed by two one-year renewal options.
Full House noted the exit of Churchill Downs from OSB operations and said it is in discussions for the two freed up market access licenses in Colorado and Indiana.
Those will be handed back in mid-May and as CEO Dan Lee said, Churchill Downs doesn’t get back the money from its original commitment.

Bells and whistles: Lee said Full House was “excited to be working with Circa” and said the aim - once the permanent American Place is built - is to have “a really kickass sportsbook”.

Storm warning: Talking to the revenue declines in Q1, Lee said that a large factor was the stimulus checks that started to be sent out during the same period last year.

“It's not like everybody got a stimulus check and went to a casino. Some people went to a stimulus check and went to a casino,” said Lee.

Storm warning: After telling an anecdote about the USS Enterprise and a Canadian lighthouse - worth listening to the call just for that - Lee suggested recessionary worries would be more a Las Vegas thing than for regionals.

“A big part of Las Vegas is a convention business, as in fact there, when you have a recession the companies tighten up on who can go to conventions and so on.”

Crabshack: Looking at specific property issues, at the Silver Slipper in Mississippi, Lee blamed the shortfall partly on sports-betting competition from neighboring Louisiana and on the price of crab which has risen from $8 a pound to $17.

Do these sound like the actions of a man who had all he can eat? “

Dan Lee: “The average person per buffet eats two pounds of crab,. At $17 a pound, that's $34 with the crab, before you get to steaks or any other cost of food, let alone the payroll. So if somebody really does eat two pounds of crab, and on average they do, we are upside down on the buffet.”

Foodie: Staying with food, Lee also said that after visiting China Polbano at the Cosmopolitan in Las Vegas recently, Full House will mimic this Mexican/Asian fusion at the Temporary in Waukegan.

Dan Lee: “We actually have trademarked the name Senora Wong, and we're going to have Senora Wong, which will be Asian and Mexican. And so you start running into stuff like that.”

**Sponsor's message: Spotlight Sports Group (owned by Exponent Private Equity) is a leading technology, content and media business specialising in sports betting. Its industry-leading Superfeed is used by the biggest betting brands in the world including bet365, Flutter and Entain. The content engine powers on-site engagement by delivering impartial expert betting insight for 20 sports in 70 languages.

For more information visit: spotlightsportsgroup.com

Fox Corp Q1 call notes

Summertime blues: During Fox Corp.’s Q1 earnings call, CEO Lachlan Murdoch said the group was in arbitration with FanDuel parent Flutter over the value of Fox’s 18.6% stake.

“We expect it to be resolved in the summer, if not sooner,” he said.
“There is not much more we can say, it has been a long and sometimes arduous process. The most important thing to remember is the value of the business we have created with the Fox Bet Supersix.”

Keep moving forward: Murdoch pointed out that the SuperSix free-to-play game had millions of registered players and had performed incredibly well, “especially in the current quieter period” when there is no NFL.

“It is driving wagering customers to paying games: we’re incredibly pleased on the operational delivery on our side of the partnership and look forward to the end of arbitration and moving forward with our sports betting strategy.“

IGT Q1

Revenue up 4% YoY to $1.1bn, adj. EBITDA flat at $433m.
Returned $80m to shareholders via cash dividend and share repurchases for second consecutive quarter.
Reaffirming full-year 2022 revenue and profit outlook.

Digital dreams: Highlighting the $170m acquisition of icasino content develop and aggregator iSoftBet, CEO Vince Sadusky said the London-based group would enable IGT to develop its online revenues even further.

“The acquisition of iSoftbet was part of a desire to accelerate the product suite and capabilities in the digital space. We’re excited about prospects and our early icasino leadership in the US…
… and in Europe: “Europe is less established (for IGT), with a different set of dynamics and digital-first companies have always been very strong there. iSoftbet has been very competitive there for many years, it gives us the competency and helps us fill a niche and become an online leader as we are in land-based.”
Low-end leverage: CFO Max Chiara praised the company for reducing its debt ratio to 3.5x leverage, “at the low end of our forecasts”, adding that the group would continue to focus on reaching the 2.5x target it set out in Q421.

He also highlighted iSoftbet as an example of how the group had carried out a significant transaction while maintaining its focus on leverage and backing strong capital allocation to fulfill corporate goals.

Lower-income offset: With concerns over lower-income players feeling the pressure on their disposable income, Sadusky said any decrease from that had been offset by older and mid-to-high income players.

Vince Sandusky: ”The yields in premium games have seen a nice increase in the US and international, even if they have been slower than in the US due to more (COVID) restrictions.”

Gaming Innovation Group Q1

Revenues of €19.1m up 27% YoY, EBITDA up 32% to €6.5m.
Media revenues up 40% to €14.1m, with EBITDA of €6.8m.
Platform services down 4% to €5m, EBITDA loss of €300k.
April revenues up 42% YoY, 28% organic.

Media works: GIG’s media and affiliate division was the stand-out performer during Q1 with North America revenues up 200% and Europe and Nordics revenues up 36%. Richard Brown, CEO, said there were “significant upsides in Latin America and the US” as well as Europe.

“We believe we have a huge runway in front of us in North America. We’re building slowly and organically to scale it up.”

Brown remained non-committal on the potential for splitting out the media business. Noting that a separate listing, M&A or other strategic routes were still open to it.

On ramp: GIG renewed its B2B contract with Betsson until 2025, but its exit from the Netherlands also contributed to GIG’s Q1 EBITDA losses. Brown said he believed there would be more opportunities in the market.

“Not with the same client necessarily, as they’ll have to rebuild, but there are opportunities in the sales pipeline.
“There is a low number of active brands there and we can now continue to invest in it and ramp up over time.”

New name: GIG said it has signed a tier 1 UK operator for managed trading services. Brown said the new client was a land-based casino operator.

Question of sport: The group is currently focused on integrating its newly-acquired sportsbook platform Sportnco, whose PAM is set to be integrated into GIG’s structure in the next six months. As a result, timings for client launches were not yet clear and the focus was on integration efforts, and “quality of client launches, rather than pure numbers”.

Brown said GIG is set to announce two US online casino launches this year in New Jersey and Pennsylvania.
“From an online casino perspective they are two of the strongest (US) markets and we are actively pursuing RFPs with sports betting propositions.”

Extraction: GIG expects to generate synergies of €8m once the tech stacks of Sportnco and its PAM division Tecnalis are fully integrated into GIG.

“Tech stacks enable us to be more efficient in a number of new markets and provide more scale thanks to strong compliance, broad structure execution with more force than anticipated and find more upside as we go through integration,” Brown said.

FanDuel analyst update

Tweakers: Looking at the evidence from FanDuel’s recent launches in Arizona, New York and possibly Ontario, the team at Wells Fargo suggest it is possible to discern a “tweak” to its strategy.

They suggest FanDuel is now steadily building market share over time via its superior product while becoming more promotional once the initial marketing blitz of competitors has subsided.
In Arizona, Wells Fargo point out FanDuel gradually increased its share from ~21% in September to ~25-27% in recent months.
In New York, FanDuel has gradually increased its share from 31% in January to 43.1% in April.
In Ontario, meanwhile, app DAUs have also gradually increased to 40k.

The reverse: Looking at older launches, in Virginia FanDuel went from an initial 53% share in Q121 to 36% in Q421 while in Michigan a similar tale of the tape applies with FanDuel falling back from ~30% in H121 to the mid-20% level in H221.

WF note that for 1Q22, FanDuel’s share in both Michigan and Virginia increased sequentially.

Earnings in brief

Everi revenues were up 26% to $175.6m while adj. EBITDA rose 19% to $89.6m. CEO Randy Taylor praised the record figures saying they were driven by growth in its high-margin recurring revenue stream. Everi recently announced its Intuicode acquisition which sees it enter the historical racing machine market.

Datalines

Illinois Mar22: Sports betting handle was up 53.3% YoY to $971.3m, with $278.4m bet on March Madness. Sports betting was up 60% YoY and up 155.6% MoM to $79.4m. The state collected $9.8m in taxes.

Online betting accounted for 95.5% ($927.5m) of all handle, March was the first month that followed the removal of the state’s in-person registration requirement. FanDuel recorded $310.7m in online wagers and retail wagers of $5m. DraftKings was second with $289.2m in handle.

Ohio Apr22: Casino and racino GGR was down 0.7% YoY to $215.6m, but up 34.6% on 2019. Apr22 had 10 weekend days vs eight in 2019 and nine in Apr21.

Newslines

Ways to pay: Paysafe and Playtech have formed what they call a “global payments partnership” with operators now able to access Paysafe payments solutions through the Playtech iGaming PAM and IMS.

Alpha wave: Flutter’s innovation community Alpha Hub says it is on the search for startups to help “shape the future of retail betitng”. They are looking for ideas involving data and analytics, in-store experiences and the future of SSBTs.

AllSported, the company formed originally by Racing Post, Banach and TXODDS, has received an unspecified investment from the latter in order to fund an “aggressive growth strategy”. The streamlined ownership “significantly increases agility” for the platform in its aim to lower the barriers to entry to UK and Irish racing for bookmakers.

Betmakers has launched its fixed-odds horse racing wagering site in New Jersey. The group went live with the website and mobile betting app thanks to its agreement with Darby Development, the parent company of Monmouth Park racetrack, and the New Jersey Thoroughbred Horsemen’s Association. Betmakers will also provide fixed-odds horse racing betting services to other operators in the state.

XL Media will provide exclusive sports-betting content to the US publisher Advance Local’s Ohio news and information website cleveland.com. The site attracts an average of 9.9 million monthly unique users.

Tracker deal: Genius Sports has signed its first tracking data and broadcast partnership with Benfica. The Portuguese football club will use Genius Sports technology to track on-field player performance levels and enhance live broadcast overlays through the club’s Benfica TV and Benfica Play outlets.

Elys Game Technology has reached agreements with its own Multigioco subsidiary as well as other unnamed partners for the distribution of its virtual sports product within 5.000 retail outlets in Italy.

Rivalry, the esports and traditional sport-betting operator, has launched in Australia under a Northern Territories license.