NFI’d
Regional casinos on the sidelines as Americans gamble elsewhere
Excitement elsewhere leaves US regional gaming looking anaemic.
NorthStar Gaming secures a C$43.5m credit line.
Analyst takes: there is good news and bad from Brazil.
Venture playground: Kero on its Caesars deal + Pixiu Gaming in focus.
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Wallflowers
It’s my party and I’ll cry if I want to: Only the relatively new B&M gaming states of Ohio and Maryland have managed any inflation-adjusted growth in the past 10 years, while states with iCasino have seen their land casinos suffer hefty same-store declines.
These conclusions come from a report by the analysts at Deutsche Bank of state-by-state same-store data for 80 properties across 11 states.
Among the findings, the DB team showed the subset “meaningfully underperformed” inflation, with same-store growth of 6.9% between 2015 and 2024 vs. inflation of 32%.
Basket case: The DB team pointed out that iCasino adoption in Pennsylvania, Michigan and West Virginia “hampered” B&M same-store performance. Across the 10 years, aggregated same-store casino GGR was down 9.7% for the 11 properties in those three states included in DB’s data.
When the DB team excluded Ohio and the iCasino states, same-store GGR for the remaining 58 properties was up 4.5% in 2024 vs. 2015.
I second that emotion: The data chimes with the findings from the team at Macquarie, which, as E+M reported last week, showed average land-based GGR per capita decreased $14 or -4% vs. 2019 while B&M-only states saw GGR per capita rise $49 or 17%.
But the Macquarie team added that when combining B&M and iCasino there was a $219 increase in GGR per capita in 2024 vs. 2019.
“Put another way, we estimate iGaming causes ~15% cannibalization to land casinos in the initial years, but after ~3-4 years the combined GGR will be ~40% higher,” the team said.
Blurred lines: The Macquarie team added that such data points “support the idea” that states would be incentivized to look at regulating iCasino. But, as the analysts also suggested, whether such moves are to the benefit of B&M casinos is “still up for debate.”
They noted the outcome of any debate would largely be “dependent on favorable legislation in the form of exclusive skins to casinos and other retail gaming operations.”
We can work it out: Speaking to E+M, Chris Grove from EKG said it was “not inevitable” that B&M casinos would be the comparative losers from digital’s advance.
“But they will need to work harder, invest more and take on a risk-forward posture to avoid being left behind by companies with a purer digital DNA,” he added.
The poor B&M performance comes at the same time as sweepstakes continue to thrive and as prediction markets providers are offering sports-based events markets in 50 states.
Sale of the Century: Central to the near-term prospects for the regional operators will be the scale of operations, suggested the team at JMP, who noted the bigger regional operators – Caesars Entertainment, Boyd Gaming and Penn Entertainment, for instance – are likely to beat Q4 expectations.
But companies with less scale, such as Full House, Century Casinos and Golden Entertainment, “should fare worse” because customer trends and market-related factors are ongoing headwinds.
The team argued that Century, in particular, “could be the subject of a takeover or merger in the coming year.”
Lacking iron: Short term, the analysts expect the regional casinos to have fared OK in Q4, with the team at Bank of America suggesting the sector will see 1% growth in GGR over the last three months vs. a 1% contraction in Q3.
In a note earlier this week looking at Penn’s prospects, JP Morgan’s analysts said they expected the company to see “stronger-than-expected” GGR data, indicating “solid demand” post election.
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Kalshi is reported to have attracted $1.3m of bets on its ‘who wins the Super Bowl’ prediction market, according to Covers.
In separate news, the CFTC has said prediction markets will be among the subjects of a series of public roundtables on “evolving trends and innovation in market structure” announced by new acting chair Caroline Pham. See tomorrow’s Compliance+More.
Golf stream: The PGA Tour, Penn Entertainment and ESPN have struck a deal to launch a live betting stream on ESPN+. The ESPN Bet-branded stream will provide live betting analysis during the coverage of six FedExCup events in the upcoming PGA Tour season.
The deal also designates ESPN Bet as an official betting operator of the PGA Tour.
FanDuel went down in New Jersey around half-time of the Philadelphia Eagles at the Washington Commanders game on Sunday.
Only losers take the bus: MGM China is partnering with JCDecaux to launch what is being called Macau’s first ‘distinctive smart’ bus shelter outside the MGM Cotai complex.
The shelter is equipped with digital screens to display bus time arrivals, provide weather updates and deliver any important civil protection messages.
Out tomorrow: Earnings+More is delighted to announce the launch of a paid-for subscription offering, E+M PRO.
The new offering seeks to provide up to 30 or more Earnings Extra editions every quarter, looking into each listed company’s earnings and the accompanying calls in more depth.
The first Earnings Extra will be published on Thursday featuring Las Vegas Sands, quickly followed by Evolution. These will be free to all subscribers.
Subscribers who wish to then continue receiving the Earnings Extra editions can do so via this subscription page.
On tick
Life’s a Beach: NorthStar Gaming has secured a C$43.5m (~$30m) line of credit via investment from Beach Point Capital, with major shareholder Playtech agreeing to provide “credit support for certain obligations” under the terms of the deal.
The company said the first lien term loan facility represented a “significant milestone.”
“This is a pivotal moment for NorthStar,” said Michael Moskowitz, chair and CEO of the company.
The credit facility would strengthen the balance sheet and “directly support our ability to scale operations and drive the business towards profitability with a single-minded focus.”
Call the tune: Moskowitz thanked Playtech for its “steadfast partnership, which was instrumental in securing this funding.” As part of the deal, Playtech will be issued with 32m share warrants.
The new cash will be used in part to pay off a C$9.5m loan to the company from Playtech with the rest being used as working capital.
Separately, Playtech has announced that Brian Mattingly has informed the company he will be stepping down from the role of chair in the next few months.
He will remain in situ “for a few months” in order to oversee the process to appoint a new chair and ensure an orderly handover to his successor.
Analyst takes – Brazil
Half full: Contrasting snapshots of how the Brazilian market is shaping up since its transition to a regulated market have been offered by the analysts at Jefferies and JMP within the last week.
Taking the glass half-full approach, the team at Jefferies said their analysis of web traffic showed “high levels of activity and competition at launch.”
Jefferies said the Similarweb data showed that since regulating Brazilian online gambling websites had received 63.4m average daily visits, peaking at 87.3m on 18 January.
The team added that, for context, this was -45% higher than average daily web traffic to YouTube in Brazil.
The market leader received 11.8m average daily visits, while across the top 15 Brazil sites visits are tracking up >600% YoY and >400% MoM through the first month of regulation.
They added the market has become “more competitive” post-regulation, and noted that Betano appears to have retained its previous gray market lead with 19% web traffic share while bet365 has been displaced as #2 by Superbet with 14% share.
Half empty: A less positive gloss on the progress in Brazil came from the team at JMP who suggested that, from their conversations at last week’s ICE event, it was clear the regulated market was suffering from teething troubles
Comment from the first several weeks was “mixed,” the team said, with operators experiencing compliance headwinds with KYC and the onboarding of players “creating friction points.”
“Additionally, one participant in the market suggested the government has not completely turned off black market operators, thus keeping players from migrating to the legal operators,” the analysts added.
JMP said this “screens negatively” for B2C companies during Q125, with a lesser impact for the B2B suppliers. But the team added they “sensed optimism” that Brazil will move in the right direction in the coming months.
Venture capital firm Yolo Investments manages in excess of €500m in capital across 100 exciting fintech, gaming and blockchain companies. The Yolo Investments' Gaming fund, regulated by the Guernsey Financial Services Commission, has taken positions in fast-growth suppliers and operators, including Dabble and Enteractive. Yolo Investments (yolo.io) wants to hear from readers of this newsletter. Get in touch with your pitch, or for a chat about innovative products which can plug into our investment ecosystem.
More takes
Bragg Gaming: The recent deal announced with Caesars Entertainment for the provision of the supplier’s RGS and proprietary games, which saw Bragg’s share price leap 15% on the day, could be worth “millions of euros,” according to the team at JMP.
The analysts said the deal highlights how even against a backdrop of the top US players bringing key elements of their operations in-house, Bragg was able to secure a “meaningful contract” with a Tier 2 iCasino operator.
The analysts believe that “key hires” at Bragg supported the contract win and could lead to “incremental opportunities.”
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Venture playground
A big deal in miniature: The CEO of micro markets provider Kero Sports, Tomash Devenishek, said the deal announced earlier this week with Caesars Entertainment was a clear signal that other ex-Simplebet clients will be seeking new partners this year.
Recall, Simplebet was sold to DraftKings in late summer.
This left Caesars, ESPN Bet, bet365, Hard Rock, Bet99 and others potentially without a micro markets solution when their contracts run down.
“We should have more exciting news soon,” Devenishek told E+M.
Battle hardened: Kero Sports is already up and running with Caesars and is now powering its existing Firebets offering in some states. This will be augmented by Kero’s proprietary contextual micro markets in the future.
Devenishek pointed out that while Caesars was among Kero’s first US-facing clients, it has had a lot of success taking its micro market offering into international territories.
“Before the vacuum of the Simplebet deal, we had to take the international route to survive and grow,” he said. “But now the US has opened up and we have learnt so much from being live in Europe, LatAm and other places."
“We aren’t the only guys who say they can do this, but we do stand a little bit taller by virtue of having been tried and tested elsewhere.”
Growth company focus – Pixiu Gaming
Who are you? Based in Montreal, Pixiu Gaming was co-founded by Tony Plaskow and Sovanna Phan in 2016. The boutique game developer focuses on areas where it believes it “can deliver high value and has an edge,” says Plaskow.
These include Keno, branded content including former Dolphins quarterback Dan Marino, Deal or No Deal and collaborative projects where “we are developing something new or highly innovative.”
What’s the big idea? “We are looking to be the market leader for Keno in North America,” claims Plaskow, with the company set to launch “a large number of games” in the next 12 months to complement its existing suite of 10 titles already live.
Pixui is also designing four multiplayer slots in collaboration with Light & Wonder, Black Cow Technology and PlayJeux Studios. These will hit the market in Q225.
The games will allow players to share experiences that are “currently solitary and rather uninspiring,” says Plaskow.
The company is developing the “world’s first ever accessible gaming iCasino game,” also launching in Q225.
The game will enable players with a wide range of physical challenges to engage in iGaming “in a way they have never been able to… opening up an entirely unserviced demographic to iCasino.”
KPIs: In regulated Canada, Pixiu’s games “dominate” the top 10 Keno games listings, as per the Eilers Fantini reports, with Lucky 8 Keno and Lucky Lily Keno featuring high in the top games list for Loto-Québec and BCLC.
“We are looking to drive to 1 billion annual plays as soon as possible,” says Plaskow.
Funding backgrounder: Initial funding has come from the two co-founders.
Growth company news
Deep dive: High Roller Technologies has announced a partnership with data science-led player recruitment and retention provider Golden Whale.
Vibra Gaming has teamed up with PlayGreen to provide players in Ecuador access to the supplier’s content library of games. PlayGreen is a next-gen operator “created by players.”
AI-driven market analytics provider Blask has introduced three new metrics to its offering to give operators an “entirely new perspective” on the performance of their brands.
The metrics integrate data from diverse sources, including social media, search engines, affiliate links and content marketing, and are designed to offer operators a “significantly deeper understanding” of their brand’s strengths and weaknesses.
The new metrics are brand accumulator power, acquisition power score and competitive earning baseline.
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Events calendar
Feb 23-25: SIGMA, Eurasia Summit, Dubai
Feb 25-27: SBC Summit, Rio de Janeiro
Mar 12-13: Next: NYC 25, New York
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