Mist opportunity
Californian potential is tantalizingly out of reach – for now
Tribal complexity complicates an otherwise highly profitable prospect.
In +More: New York hold falls to just 1.6% in the last week of March.
Markets watch: The tariff terror continues.
The teardown: Playtech’s failure to match Evolution’s live casino margins.
Hard Rock Bet is gearing up for 2025 with a focus on amplifying brand and product engagement. With a powerful, custom-built bonusing system and an ambition to redefine traditional CRM, we’re seeking leaders who are driven to challenge the status quo:
And other amazing positions here
The prize
Gold in them thar hills: The skeleton plan that emerged last week from the Sports Betting Alliance for a regulated sports-betting market in California offered a tantalizing glimpse of how a deal with the tribes could unlock the biggest opportunity yet for the online operators.
The plan was immediately shot down by the California Nations Indian Gaming Association and the Tribal Alliance of Sovereign Indian Nations.
They said they were “offended” by the SBA inviting a journalist into the room when discussions took place last week at the Indian Gaming event in San Diego.
Slide away: Notwithstanding noses being put out of joint, the evident discussions – and the limited information contained with the one slide of a presentation deck that slipped out of the meeting in question – did suggest a potential structure for a tribal-licensed market.
This would likely involve some form of revenue share with the tribes as well as potential state taxes.
“There are a lot of questions, one being what the operators will pay the tribes and then whether the operators will also have to pay the state,” said Jordan Bender, analyst at Citizens.
Think of a number, then halve it: Using the yardstick of New York’s per capita GGR of $129 and multiplying that by the population of California, the analysts at Jefferies came up with an at-maturity market worth ~$3.7bn in annual GGR.
Applying a hypothetical 65/35% split between the tribes and the operators, the team suggested California would be worth ~$1.3bn to the operators.
Such calculations lessen the attractiveness, they argued, and would suggest “only a modest positive” for the operators.
The cost of doing business: Speaking to E+M, Bender pointed out that with an unspecified percentage likely having to go to the state, it is questionable whether California would eventually look “no better than the New York situation” when it comes to profitability.
“If that’s the case, New York has taught us that you can run it profitably if you have enough market share,” he added.
In other words, only DraftKings and FanDuel are profitable in NY “as a standalone state.”
The spanner in the works: The calculus over California, as with other yet-to-regulate OSB markets, has been altered dramatically, however, by the sudden emergence of sports-based prediction markets.
As it stands, it is Kalshi, Robinhood and Crypto.com that have made the first moves.
As night follows day, they are also the names subject to the seemingly rolling series of cease-and-desist letters from state regulators.
But should the upcoming Commodity Futures Trading Commission roundtable on prediction markets fall the right way for Kalshi et al – as it is being presumed right now might be the case – then DraftKings in particular seems ready to enter the space with FanDuel unlikely to be far behind.
Recent analysis from Morgan Stanley on prediction markets suggested a ‘straight bet’ TAM for 50-state sport prediction markets could be upwards of ~$1.7bn annually.
Of that, the team estimated $800m would come from unregulated states including California, alongside Texas and Florida.
Risk and reward: The Jefferies team argued the rise of prediction markets could become a “prominent factor” in the Californian debate. “Our impression is that OSB operators would potentially pursue these markets assuming they are legal, but at significant cost,” said the team.
They pointed out that Futures Commission Merchant licenses come with an estimated price tag of ~$100m before any marketing and promotions.
The team added that “all-in” the prediction markets are both “an opportunity and a risk” for the OSB operators.
Push comes to shove: Bender suggested there was potential in California and elsewhere to use prediction markets as a bargaining chip. “One thought we have is whether prediction markets are in a way being pushed by the industry to bring states or tribes to the negotiation table,” he said.
“Are tribes looking at this, saying 'OK, Kalshi are here, DraftKings could be'?” he added.
“Maybe this forces them to come to the table because otherwise they might lose out on a revenue opportunity.”
EDGE Boost is a dedicated bank account for bettors with a daily debit limit of $250,000 and 100% approval for all gaming activity. Money movement in gaming has never been a payments problem, it's been a banking problem. With no integration (Runs on VISA rails) and no costs, EDGE can impact Operator margin by lowering processings costs and reducing chargebacks while growing revenue through increased cash access and a 1% rebate on all transactions.
To find out more, go to www.edgeboost.bet
+More
More storms: Hold in New York in the week to March 30 – the final week of Q1 – came in at just 1.6%, producing a mere $8.4m of GGR on handle of $522m due to the favorites progressing to the finals of the NCAA Championships. The team at Jefferies noted the numbers might cause further estimate reductions ahead of Q1 earnings reporting. The analysts added that the numbers raise the “longer-term question of how operators evolve product mix and execution to manage hold volatility over time.”
Star Entertainment has reportedly agreed to hand control of the casino group to Bally’s in a A$300m ($180m) deal, which will stave off financial collapse. According to the Australian Financial Review, Bally’s will stump up A$250m while billionaire Bruce Mathieson will pitch in an additional A$50m. Star is expected to receive some of this money before the end of the week, allowing it to meet its near-term financial obligations.
Markets watch
There is no bottom: The battering of global markets caused by President Trump’s tariff announcement on Wednesday continued on Friday, with the leading gaming stocks once again falling heavily as fears of trade wars and recession dominated the headlines.
The roll call of decimated stock prices was familiar from Thursday’s rout: Full House Resorts was down 8.5%, Penn Entertainment fell -7.5%, Flutter was down 5%.
Does this count as a win: Still, an afternoon rally of sorts saved the sector further pain, with MGM down nearly 4%, Boyd Gaming down 2.5%, Caesars down 2.5% and DraftKings down just over 2%.
Not feeling it: However, early trading in Hong Kong suggested the chances of a rally were slim, with Sands China, Wynn Macau and Galaxy Entertainment all down over 12%.
I never promised you a rose garden: It is worth emphasizing the extent of the fall from grace from when the market peaked in mid-February. To take the largest stock in the sector as an example, Flutter saw its shares touch $299 on February 14; as of Friday’s close in New York they were at $206.
It means they have fallen 31% peak-to-trough in a month and a half while its valuation has gone from just over $50bn to $36.5bn.
💥 American nightmare: Flutter YTD
In the doldrums
Debtholders in Evoke will be nervously eyeing the company’s share price performance in the weeks since its FY24 earnings. The slide continued last week, down 15% as the world’s stock markets shook to the Trump tariffs news.
🚑 Not healthy: Evoke needs a lifeline
The continued slide, down over 40% since it reported in late March, leaves the market cap at less than £200m.
It’s quite the decline bearing in mind the then 888 bought William Hill at a valuation of £1.95bn less than three years ago.
Comes with baggage: Neither Evoke nor Entain and Flutter would have been helped by a report from the analysts at Deutsche Bank suggesting UK consumer demand for betting and gaming in Q1 was down both sequentially and YoY.
The team said Q1 was “somewhat bailed out” by a stronger March, with January and February having been “much weaker” on a YoY basis.
The note said spending intentions over the next six months appear “more favourable,” with UK gamblers saying they expect to spend more in the coming months.
We Rebuilt The Bet Builder
Faster speeds. Deeper market coverage. Zero downtime. Billions of combinations — all in one place.
Try the NEW OpticOdds Bet Builder now ⚡
The teardown – Playtech live casino
Sputtering: Live casino is central to Playtech’s renewed B2B focus yet what will be worrying for the company is the apparent stalling out of the business in 2024 after making reasonable progress since 2018.
Segment revenue for the year came in barely above the 2023 figure at €179m vs. €177m while EBITDA fell back to €50m, a 6% decline.
Margin for error: Analysts at Deutsche Bank pointed out how poorly Playtech’s live operation matches up to the market leader Evolution in terms of margins.
The 28% margin compares with Evolution’s 65%+ for its whole business (it doesn’t break out live from slots).
The DB team noted that Playtech is in the process of building out its live casino offering with new studios in Brazil, Czechia and Slovakia.
Indeed, Playtech’s FY24 presentation showed costs rising to €118m for the year, up 23% YoY.
Same as it ever was: Bearing in mind the rising costs, it is worth noting that Playtech’s live casino offering has historically been behind its main competitor in margin terms.
In its investor presentation in 2023 the company showed its live casino margins reached a peak in 2020 of 40%, still less than two-thirds those achieved at Evolution.
The DB team said that “conceivably” margins could double from the 28% achieved in 2024. But that seems unlikely given the unit’s previous history suggests 40% is its margin limit.
Moving on: Notably, late last week it was announced that long-term Playtech live casino CEO Edo Haitin is to leave the company to pursue outside opportunities.
He will be replaced by Marat Koss, who has been with the group since 2016, most recently as the VP of interactive gaming.
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.
Upcoming earnings
Apr 23: Churchill Downs (earnings)
Apr 24: Churchill Downs (call), Boyd Gaming
April 25: Gaming & Leisure Properties
Apr 29: Caesars Entertainment
Apr 30: MGM Resorts
May 1: VICI Properties
GeoComply's international solutions are unlocking compliance and security for the global market, so players everywhere can enjoy seamless, worry-free gaming experiences.
GeoComply’s Brazilian solution is designed specifically for the local market, offering seamless geolocation compliance (without requiring a companion app), robust anti-fraud measures, and streamlined licensing support—all while minimizing customer friction.
Book a meeting with the GeoComply team at SIGMA Americas and learn how our advanced geolocation, identity, and fraud solutions safeguard your platform from account takeovers, fraudulent chargebacks, promotion abuse, and more!
Learn more
An +More Media publication.
For sponsorship inquiries email scott@andmore.media.
