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May 6: Weekend Edition #45

FuboTV, Golden Entertainment Q1s, AGS Q421, Bally and Penn analyst reaction, sector watch - financial trading +More

Good morning, on today’s agenda:

  • Analysts react to Bally Corporation and Penn National Gaming Q1s

  • FuboTV and Golden Entertainment publish their Q1s and AGS Q421

  • Sector Watch - Financial trading

The listed betting and gaming sector cannot be divorced from the ebbs and flows of the wider market, hence the widespread falls in sector stocks yesterday should be viewed in light of the Nasdaq catching a flat. But as was evidenced this week by the persistent earnings call questions about consumers and what one analyst termed the “macro pick your poison” uncertainties, neither will gaming be immune to any wider economic shocks. The first quarter has been good so far; the outlook for the rest of the year, however, is far more uncertain.

This email is still free, though. Click below if you haven’t already: Earning+More podcast #7

This week, Scott and Jake discuss the latest earnings news from Caesars Entertainment, the trading statement and call from Flutter Entertainment as well as the news from Monday of MGM Resorts’ offer for LeoVegas.

Earnings extra: Keep an eye out on your emails for our afternoon coverage of DraftKings Q1s this afternoon.  

Bally analyst reaction

Tough sledding: The analysts at Truist maintained their positive view on Bally’s prospects, despite the Q1 earnings miss and the very little color the management team was able to offer on the Standard General rebuff or the shares Dutch auction.

  • Show me the money: The team at Jefferies were more uncertain. They suggested it is “critical” that Bally provides more detail on funding for the Downtown Chicago license win announced yesterday. 

  • They add that Bally needs to give a clearer idea of how it intends to capture digital gaming customers in states where it is a late entrant. 

In the kitchen at parties: On that point, Bally launched OSB operations in Arizona this past Wednesday, is “on track” to launch in New York (the last licensee to do so) before Q2 quarter end and will go live in Ontario in the summer.

No picnic at overhanging rock: The UK also remains - at least temporarily - a cloudy picture. The government white paper is due imminently, but as with peers, moves by the company to tighten up its compliance procedures have already had an impact while the company said there was also some impact from the worsening economic situation in the UK.

  • Truist noted Bally believes that as a player of scale in the UK, it will benefit from smaller players exiting the market under the pressure of further regulatory change.

** Sponsor’s message: Venture capital firm Yolo Investments is home to €551m of equity in more than 70 of the most exciting companies across fintech, gaming and blockchain. It continues to build one of gaming’s most dynamic portfolios as it eyes up seed and A-stage opportunities across the sector. Its dedicated 29-company, €183m AUM gaming fund already houses holdings in fast-growing suppliers and operators, including Kalamba Games, SimWin and ThriveFantasy. Yolo Investments is also on the lookout for LPs as it looks to scale new concepts, including its high roller live casino brand, Bombay Club.

Penn analyst reaction

Dramarama: Truist noted that without any further Portnoy drama, it is clear to see that Penn National has momentum on both the land-based and digital side. They noted that management said it had seen “little recognized slowdown from inflation”.

Not buying it: The team at Deutsche Bank remain unconvinced, however, suggesting too much of Penn’s valuation rests on “too much value” being ascribed to a digital business which is “subscale and poses further risk”.

Low-end theory: Adding to commentary provided earlier in the week from Red Rock Resorts regarding macro impacts on the low-end segment, DB pointed out there are differing definition of low end from operator to operator.

  • If the ‘low end’ definition includes the bottom 30% of players, and the 15-30% sub-segment is strong, the low end could remain firm.

  • But, perhaps the 0-15% sub-segment could in fact be fading “making each of the operators' comments genuine”.

  • “We believe it is likely that some of this is happening, as, objectively, it is hard to imagine the lower-end patrons' financial circumstances are improving in real time, given the macroeconomic dynamics.”

Golden Entertainment Q1 

  • Revenue up 14% to $273.6m, adj. EBITDA up 13% to $67.3m.  

  • Nevada resorts saw revenue rise 62% YoY to $105m and EBITDA was up 145% to $37m.

Break out: CFO Charles Protell said all the group’s key segments and venues in Nevada, Maryland and distributed gaming were up. Its flagship venue the STRAT saw occupancy rates average 90% vs. 67% in 2021 and record revenue and EBITDA. 

White space: With the group capturing a lot of “super hyper local” custom as part of its Nevada-centric model, CEO Blake Sartini said there could be future growth opportunities in leveraging assets in the state. 

  • “We have some white space up in Northern Nevada that particularly in a route could possibly be a growth opportunity for us.

Do the REIT thing: Asked about current high valuations for Nevada real estate - “arguably your land is worth around your market cap”, one analyst commented - Sartini said the issue was “top of mind for everyone in the business recently as recent transactions have provided some pretty solid valuation metrics”. 

  • “At this time, we're not considering anything other than maintaining our current real estate portfolio as it is. But that underlying value, I think, is significant, and I think it's getting more valuable as time goes on.”

The big picture: Sartini was positive on the macro backdrop, suggesting that as volume spick up, costs are added back in. Protell noted that pre-pandemic, Golden Entertainment has 8,300 employees, and now it was down to 6,000 while the company was producing more revenue and EBITDA.

Blake Sartini:I'll steal a line from someone I forgot who said it, but we're not on a diet here. We made a lifestyle change.”

Fubo TV Q1 

  • North America revenues up 98% YoY to record $236.7m, advertising revenue up 81% to $22.8m, total paid subscribers up 81% to 1 million. 

Ill communication: The group was refused a sports-betting license in Illinois, CEO David Gandler said the reasons were unclear and the group was in discussions with the Illinois Gaming Board about it. 

  • Fubo’s online sportsbook is active in Iowa and Arizona and expects to launch in a couple more states in 2022. Gandler said  “we will probably start to see some OSB revenue in 2023.” 

  • It said wagering remained “a key pillar” of its strategy, but it was taking “a measured approach” to the sportsbook rollout due to the increasing cost of capital. 

On social 

VICI Q1 earnings call

Are you experienced? On the call, CFO John Payne said VICI would continue to pursue gaming opportunities wherever possible and that there were “a lot of companies that have noticed what we've done in the experiential space”. This has led the group to explore opportunities outside of gaming: 

  • CEO Ed Pitoniak said": “Owning assets like Caesars Palace Las Vegas is very helpful and gives us greater top-of-mind status when people think about who they'll call.” 

  • “We are learning every day to help people understand that our capital and the cost of it should not be compared simply to the cost of their debt, but to their blended cost of capital (debt and equity).” 

  • “Even before we saw the recent widening of credit spreads and before the recent multiple contraction of many operators across experiential in both gaming and non-gaming, our cost of capital versus their blended cost of capital is already very attractive. It's only grown more attractive in the last couple of months.”

Earnings in brief

  • AGS revenues were up 31.6% to $72.8m and adj. EBITDA rose 24.5% to $32.7m. The group totaled 815 unit sales during the period, up 20% QoQ and 3x Q420 volumes. CEO David Lopez said there had been no clear signals that casino customers were impacted by current macro or geopolitical issues. The group did not issue FY22 EBITDA guidance, CFO Kimo Akiona said AGS preferred “to guide as we move forward with the business”. On supply chain issues, the group was cautiously optimistic. 

  • Melco Resorts said Q1 revenue fell 8% to $474.9m while adj. Property EBITDA fell 86% to $56m. The company unsurprisingly blamed border restrictions caused by the ongoing Covid crisis in China. CEO Lawrence Ho noted that March GGR fell more than  50% from February as new restrictions were imposed. He added that “disciplined liquidity management” remains a key area of focus. Total debt increased by $1.3billion YoY.

  • The free-to-play games and rewards programme provider Playstudios said revenues fell 4.9% to $70.1m suggesting the YoY comparison reflected the impact of stimulus checks last year compared to this. The company notched up a net lss fo $25.2m compared to a profit of $5.9m last year. CEO Andrew Pascal said the firm’s “strategic priorities remain unchanged”. 

Sector watch - financial trading

Meme generation: “One model of investing is that it is a video game that you play on your phone and the bad guys are short sellers,” said Bloomberg columnist Matt Levine this week. It’s a description which fits the meme stock craze of 2021, a craze which sent the share prices of the likes of Gamestop and AMC sky high.

Boys ‘n the ‘hood: A clear beneficiary from those heady days was commission-free trading app Robinhood. Surfing the wave of pandemic-era stock speculation, the app came to epitomize what was viewed as the democratization of the markets. Alongside the reddit thread w/wallstreetbets, it came to symbolize a moment in time.

Poison arrow: Yet, even at the height of the frenzy Robinhood and its CEO Vlad Tenev were controversial. The practice of stock lending to high-frequency trading firms was contentious. Meanwhile, day-traders were taking to social media denouncing Robinhood restricting trading on some key meme stocks. 

  • The company even attracted the ire of Dave “Davie Daytrader’ Portnoy who at one point in January last year pronounced Robinhood to be “dead’ for not enabling trades.

Boom to bust: One year later and Robinhood is dealing with more than just a noisy social-media irritant. In late April the company released its Q1 earnings showing revenues dropping 44% to $299m, well short of estimates.

  • Customer numbers grew by 0.4%; the number of monthly actives fell by 8%.

  • Equity transactions fell by 73% YoY to $36m while crypto trading was down 39% to $54m. Losses rached $400m. 

Losing ground: Robinhood said it was suffering due to the current economic uncertainty which was particularly affecting customers with smaller balances. Yet, strikingly the rest of the trading app sector isn’t suffering to the same - or indeed any - extent.

  • Charles Schwab said it had seen 1.2m new accounts opened in the quarter. The number of active brokerage accounts also rose sequentially by 1% to 33.6mn. 

Burn, baby, burn: A recent Bloomberg podcast linked the memestock craze to the wider currents of society discontent. 

“Where bubbles of the past were often powered by optimism about the future, many of today’s bubbles feel much more pessimistic and much more mercenary,” the Odd Lots team wrote.

One of their contributors came up with the analogy of “financial nihilism,” an extraordinary idea and one which upends most ideas around trading and investing. Previous generations of investors might have pondered ‘where are the customers’ yachts?’ Memestock-ers would rather burn down the marina.


Pink ‘un: Bloomberg reports the Las Vegas Strip sale the company has acknowledged it is pursuing is the Flamingo. The story quotes sources as suggesting Caesars hopes to get over $1bn for the property. However, the story noted that some interested parties have already passed. Reeg told analysts on Tuesday’s earnings call that a sale would be announced in the summer.

Poker in Vegas: BetMGM will hold the inaugural BetMGM Poker Championship on June 23-26 at Aria Resort in Las Vegas. 

Landing strip: Marketing compliance software provider Compliable is partnering with igaming licensing provider Rightlander to combine their services and support operators and affiliates. 

What we’re reading

What does a billionaire’s henchman do all day? Musk’s fixer.

US horse racing: adapt or die 

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May 9: Full House Q1

May 10: GIG, IGT, Everi, Light & Wonder, Wynn Resorts, Inspired, SciPlay Q1s

May 11: Raketech, NeoGames, Inspired Q1 call, BetMGM investor day

May 12-13: iGaming Next New York 2022

May 12: Genius Sports, Endeavor Q1, NeoGames Q1 call

May 13: Codere Online

Contact us

  • Scott Longley

  • Jake Pollard