Feb 10: MGM: ‘We're just getting rolling’

MGM Resorts International Q4, Betsson Q4, bet-at-home 2022 forecast, earnings in brief, Jefferies’ sports-betting customer survey +More

Earnings+More

Feb 10, 2022

Good morning. Heading up today’s roster:

MGM Resorts ended 2021 on a high but faced January headwinds.
Betsson gets defensive over its Q4 performance.
Bet-at-home issues much diminished 2022 forecasts and there are earnings in brief from Monarch, Mohegan Sun and Esports Technologies.
We have the findings from Jefferies’ latest sports-betting customer survey

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MGM Resorts Q4

Q4 net revenues of $3.1bn up 105% YoY; consolidated adj. EBITDA of $821m. FY up 88% to $9.7bn and adj. EBITDA at $2.4bn.
Las Vegas Strip revenues up 277% to $1.8bn, 26% up on Q419; adj. Property EBITDA up 1,200% to $699m.
Regional revenues were up 51% to $900m with adj. EBITDA rising 95% to $309m.
MGM China revenues up 3% YoY to $315m but 57% down on Q419.
BetMGM share of losses $57m in Q4, $211m in the full year.

Current trading: While December in Las Vegas was “great”, CEO Bill Hornbuckle warned that January had seen “significant headwinds” due to a lack of group/convention business. CES, for instance, was 70% down on visitation. But weekends remain strong.

Instant takes: Jefferies noted MGM had “multiple upside drivers”. The Wells Fargo team said they had a “high degree of confidence in LV fundamentals remaining solid” with the key debate being margin sustainability. Macquarie said potential growth areas included the potential casino license in New York, developments in Japan, BetMGM and the new rewards program.

I’m not your stepping stone: Jonathan Halkyard, CFO, said it would be an “understatement” to say the BetMGM team was busy. The remodeling of the loyalty program to MGM rewards was in part about making more of the omni-channel potential (see Hornbuckle below). Corey Sanders, COO, said the current sign-up process for MetMGM customers was “a little clunky”. “There's a 2-step process that we want to see go away,” he added.

Datapoint: Hornbuckle said BetMGM had a million-strong database

Wanna play football for the coach: Noting that Las Vegas hosted the NHL All-Star game and the Pro Bowl last weekend, will have the NFL Draft event in April and, of course, the Super Bowl in 2024, Hornbuckle said “we’ve become America’s most popular sports destination”.

“Because it isn't just a three-hour game, it's a three-day event.”

What Hornbuckle said:

On whether the record margin improvement can be sustained:

“When you think about entertainment and you think about Bruno Mars and you think about Lady Gaga, they're taking large chunks of the revenue out of the building right away. Luxury comes with some additional expense and additional service.”

On the benefits of omnichannel:

“The best omnichannel example we have is Michigan. And we have seen a lot of cross-play. And what has been proven - and this shouldn't be a surprise - but it's proven out to be the case is that an omnichannel customer literally is worth 2x, 2.5x a regular customer.”

On the potential for the heavy promo environment in sports-betting to infect land-based:

“God, I hope it doesn't transition over. It's an overly aggressive market. We all know it. I think we've been one of the more disciplined. I know what we spend versus the competitive set. The spend is about two-to-one, yet we maintain the market share that we have.”

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Betsson Q4

Q4 revenue down 10% to SEK1.5bn, sportsbook revenues were down 11% due to unfavorable results, Netherlands exit and Germany regulations. Sports margins were 6% (vs. 7.3% average).
Casino revenue was down 9%,Q4 EBIT was down 34% to SEK210.6m.
FY revenues up 4% to SEK6.6bn while FY EBIT was up 6% to SEK1.2bn.

We’ll let you know when we get there: Punter-friendly sporting results and ongoing regulatory impacts from Germany and the Netherlands led to a 56.7% drop in Western European revenues to SEK200.1m. The ever-cheerful CEO Pontus Lindwall said the group was “on track to file” its Dutch license application but didn’t provide a timeframe for market entry. “We’ll see when we get the license,” Lindwall added.

Keeping the lights on: The Western European downturn had been offset by growth in Latin America and the CEECA region. With regard to the latter, Lindwall said B2B revenues from Turkey remained strong through the quarter despite the Turkish Lira losing 40% of its value vs. SEK. The currency fluctuations “were not helpful”, but Betson’s B2B partner was “keeping momentum high and running healthy operations from impressive volumes,” he said.

B2B mining: Betsson is set to launch its Colorado sportsbook by end of Q1 and will then prospect for B2B partners in the U.S. using its B2C offering as a showcase. The launch, however, will be lowkey.

Pontus Lindwall CEO: “The big investment has already happened and has gone into product development and setting up the business. We want to start slowly and build up over time.”

Unsafe harbor: Betsson’s Betsafe brand has been active in Ontario for some time, but Lindwall said it would not be present when the province’s regulated market launch goes live in early April. The Betsson boss didn’t expand on the reasons and said the group “will hand in our application soon and we'll see when we can get our operations going in (Ontario’s) licensed environment”.

Bet-at-home 2022 forecast

I fought the law: Struggling against various regulatory and legal headwinds, Austrian-listed Bet-at-home said revenues in 2022 would come in at between €50m-€60m while EBITDA would be between a loss-making -€2m up to €2m in profit.

In 2020 the company achieved revenues of €126.9m and in its last reported figure for Q321 it said revenues for the 9m to Sep21 came in at €79.6m.

The company has yet to report its Q421 numbers after having to shut down its Austrian-facing business in the face of an adverse legal judgment.

Profit warning: In mid-September, it issued a profit warning saying EBITDA losses for the year would be between €10m-€14m. After losing its legal case against compensating customers while operating without an Austrian license, it faced a one-off expense of €24.6m.

Earnings in brief

Monarch Casino recorded a 90.3% YoY rise in net revenue to $111m in Q4, Adj. EBITDA was up 180.7% to $39m. FY net revenue was up 114.4% to $395.3m and adj. EBITDA was up 218% to $137.2m. CEO John Farahi said the renovations at the Black Hawk Casino, Colorado, were now complete and the group had opened a new sportsbook lounge and additional restaurant capacity during the quarter while trading at the Atlantis, Nevada, continued to be “robust”.

Esports Technologies confirmed FY22 guidance of $70m and announced Q122 revenues of c$7.1m and gross profits of c.$2.5m with “substantially all” the revenues generated in Dec21. 2022 forecasts included 10 months of contribution from Aspire Global’s B2C brands acquired in October. The company said it was continuing to work on its esports odds-modeling technology and a patent-pending browser extension to allow live wagering within streaming environments.

Mohegan Sun Q122 showed revenues rising 74.2% to $401.9m while adj, EBITDA was up 141% to $97.4m. The flagship property in Connecticut saw a 20% EBITDA rise on Q419 while the overall profit picture was improved by both the performance of the Mohegan Las vegas and the digital operation. The company noted the sports-betting partnership with FanDuel in Connecticut generated $150m in handle and $9,.2m in revenue. Online casino generated $16m in revenue. Mohegan Sun will soft launch the FanDuel co-branded retail sportsbook today (Feb 10th) in Connecticut.

Jefferies sports-betting customer survey

Sticky fingers: Ahead of the Super Bowl, the Jefferies team said the evidence from a commissioned player survey of a ‘stickiness’ around preferred apps might go towards justifying the recent heavy promo spend.

Of the 531 respondents who had wagered in the last 12 months, a combined 78% are very likely or likely to bet with their current accounts.

Jefferies: “When further pressed, roughly 37% are inclined to stay with their current sports books even if promotions are decreased, while 10% indicated indifference. We believe these elements provide bullish context for the stocks, given their weakness over the past several months.”

Other key numbers:

45% only bet on major sporting events while 27% bet consistently through the major league seasons.
DraftKings came top on apps that have been used in the last 12 months with 52%, followed by FanDuel (34%), Caesars (18%), Barstool (17%), BetMGM and Pointsbet (both 16%).
48% say pricing matters always or usually.
Friends’ referral is the most important lead source with 40%; TV and billboard ads only 5%; referral websites (affiliates) 15%.
53% said incentives were important (28% or very important (25%).

Newslines

Mask no more: Gov. Steve Sisolak is expected to lift Nevada’s mask mandate amid a nationwide decrease in Covid cases according to the Nevada Independent. A virtual press conference is to be held later today, Thursday, where an announcement is expected.

Integrity mission: The International Betting Integrity Association announced the launch of its integrity and monitoring service in the U.S. and Canada with endorsements coming from FanDuel and DraftKings. The IBIA also has secured licenses in Arizona, Colorado, Indiana, Michigan, New Jersey, New York, and Wyoming. Further states are pending.

Lounge rider: Fubo Sportsbook will open a mobile betting lounge at the Rocket Mortgage FieldHouse, the home stadium of the Cleveland Cavaliers, as part of the Fubo-Cavaliers partnership that was announced in October. The lounge will not offer retail betting, the Cavs can partner with another bookmaker for a retail offering. Regulated sports betting is set to launch in Ohio by the end of year.

A land down under: Endemic esports operator Rivalry has been awarded a sports-betting operator license by the Northern Territory Racing Commission.