NFL’s week one betting bounce
NFL bounce, DraftKings ‘jacked’, Penn’s short-term play, sector watch – Robinhood’s UK plans +More
Good morning. On the Weekender agenda:
The opening week of the NFL drives betting activity boost.
Breaking news: Apollo ‘mulling a $5bn move’ for IGT’s gaming units.
DraftKings tells analysts it has the product pipeline to surpass FanDuel.
Sector watch this week looks at Robinhood’s UK expansion plans.
Head of VIP and casino manager jobs are up for grabs on the JobsBoard.
It's like I flicked the switch and now I'm feeling good.
NFL week one
New betting states enjoy an account-opening boost as data shows a 56% increase in transactions.
Sign me up: The opening week of the football season saw 1.1 million new accounts created, a 40% leap on the same period in 2022, according to data from geolocation provider GeoComply.
In states enjoying their first full week of the NFL season, GeoComply said it saw 133k new accounts created in Ohio, 61k account openings in Maryland and a further 59k in Massachusetts.
The number of geolocation transactions across the US in week one increased to over 242 million.
The company said it saw a “massive” spike in traffic after the first touchdown of the season with 4.2k transactions per second immediately following the score, the highest volume of activity it has ever seen over an opening weekend.
Pique viewing: The Jefferies team noted that NBC also reported viewership up 24% for the opening game vs 2022, making it the most-watched program across the US since the Super Bowl. The team suggests that with the NFL more open than in previous years, it could increase interest.
On the download side, JMP’s analysts reported a 15% increase YoY to 972k across ~95% of the market. Downloads on Monday were up 77%.
In terms of share, Fanatics appeared to have had some success with both its own sportsbook and the newly acquired PointsBet. Between them, they grabbed 12% combined share.
This put Fanatics ahead of all but FanDuel (34%) and DraftKings (33%). BetMGM saw 11% share while the remainder were in single figures including bet365 on 3% (but operating in only in a handful of states).
The only fly in the ointment from week one was the hold, which the team from Macquarie estimated was at 8% for the week Sep 4-10, below the long-term average of 9%.
The analysts also estimated that College accounted for ~30% of all football betting over the past weekend with the top 10 games accounting for over 52% of all College football bets.
Also this week: While DraftKings faced social media opprobrium for an ill-conceived out 9/11 parlay promotion, FanDuel was similarly under the cosh over its failure to pay out on the first touchdown due to the wording of its offer. Dustin Gouker at the Closing Line was not impressed.
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Apollo/IGT bid rumors
The private equity giant is reported to be in discussions over a $4bn-$5bn bid for IGT’s gaming assets.
Giant leap: Apollo is mulling over an offer for IGT’s land-based and online gaming assets, according to a report from Bloomberg. In early summer, IGT announced a strategic review with a potential sale of the gaming business as one possible outcome.
At the time of IGT’s Q2 earnings, CEO Vince Sadusky said the goal of the review was to “unlock the full value of IGT's market-leading assets, which we don't believe is accurately reflected in the share price”.
In Q2, the machine business generated revenues of $373m, up 13% YoY, while the digital unit saw revenues rise 38% to $59m.
Together, the two units produced adj. EBITDA of $134m or $263m in H1. Crudely gross up to a FY of ~$520m, it would suggest a multiple of less than 10x.
Bloomberg said both companies declined to comment for the piece. It noted that Apollo previously bought the Lottomatica assets from IGT.
The share price jumped over 10% on the news.
🚀 IGT gets an Apollo bid boost
ICYMI
On the attack: The big news this week in Las Vegas is the cyberattack on MGM Resorts and the reported ransom paid by Caesars Entertainment a matter of weeks before to apparently avoid the same fate.
Compliance+More covered the news ahead of Caesars’ SEC notification yesterday that a hacker had gained access to a copy of its loyalty program database. See analyst takes below for more on the story.
Also in Compliance+More this week, there was news from Brazil that iCasino has been included in the amended sports-betting legislation that passed the lower house on Wednesday.
Coffers: In Straight To The Point this week, Steve Ruddock wrote about the success New York state has enjoyed when it comes to the collection of sports-betting tax revenues, but suggests the industry shouldn’t get its hopes up that it could lead to a rate reduction.
“That will still be a tough sell to the legislature, which is more than happy to put the additional tax revenue to use,” he writes.
Safety first: On the Gambling Files this week, Jon and Fintan talked to Sarah Ramanauskas about her new project The Game Safety Institute.
DraftKings ‘totally jacked’
DraftKings says it has an 18-month product pipeline that could see it surpass FanDuel.
Wired: DraftKings told the analysts at Wells Fargo it has a robust product roadmap including a new single wallet and fresh features such as parlay leg tracking, dynamic odds, in-house NBA same-game parlays and a broadened MLB offering that could “put it at parity, if not above” major rival FanDuel.
The analysts also reported DraftKings as “not being overly concerned” about the arrival in November of Penn’s ESPN Bet.
The team said DraftKings expects a “short-lived pop” in handle and share for ESPN Bet and a “subsequent fade”, citing the example of Caesars’ initial few months in New York.
On the hold gap with FanDuel, DraftKings said it was “watching the data” and prioritizing player retention. Wells Fargo noted that DraftKings' hold of ~9% in Q2, while improved, still lags FanDuel’s 11%.
The team suggested that lower latency could drive more high-hold in-play betting while parlay mix and greater levels of parlay penetration should also help close the gap.
About that ‘pop’
While admitting the ESPN Bet bounce might be short-lived, analysts at Deutsche Bank suggest Penn Entertainment should benefit from the attention.
Just like my dreams, they fade and die: The launch of ESPN bet in November will drive “healthy” handle and GGR OSB market share gains in the short term, suggested analysts at Deutsche Bank. But they caution the longer-term success of the project “will remain ambiguous” for this year at least.
Deutsche Bank still has Penn Entertainment as a Hold due to that ambiguity.
But the team said in its note it didn’t believe in the near-term there will be anything by way of anecdotal evidence to confirm or disprove “what already appears to be a somber outlook for the venture”.
As such, they suggested Penn could enjoy a short-term share price boost as the launch garners attention, not least from the mainstream financial press.
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Norway exits
Regulator says Kindred, Betsson and bet365 are among those exiting the market.
Norwegian wouldn’t: The Norwegian regulator Lotteritilsynet said yesterday that the biggest names in the gray market including Kindred, Betsson, bet365 and ComeOn “are in the process of withdrawing after we carried out inspections against them”.
The regulator went on to claim the enforcement of a ban on gambling advertising on TV and payment processing blocking measures had meant the Norwegian market was “not as lucrative as it was before”.
“It has become much more difficult for the illegal companies to operate in Norway,” the regulator added in a statement.
Leaving on a jet plane: The move from the regulator will bring to an end a legal battle stretching back over a decade. In June, Kindred lost its case in the court of appeal, which ordered the cessation of Kindred’s marketing into the country.
Back in November, the regulator reinstated “coercive fines” against Kindred’s Norwegian entity Trannel.
Analyst takes
MGM Resorts and Caesars Entertainment: The assumption in the Bloomberg story that Caesars paid a ransom while MGM did not “may not be correct”, according to the analysts at Jefferies who have spoken to both managements.
The team suggested there will be more impact at MGM than its rival with the business remaining operable, albeit on a manual basis with more transactions cash-based than usual.
The team estimated the business could be impacted near-term by ~10-20% per day as long as the current conditions exist.
The Wall Street Journal has reported Caesars paid $30m or half what was demanded.
Earnings in brief
Allwyn: The addition of the Camelot business in the UK and Illinois in the US from February this year had a “significant impact” on net revenues at lottery provider Allwyn, which rose 51% to €907m. GGR before the distributions to good causes rose 115% to €2.05bn while adj. EBITDA rose 35% to €381m.
Sportech: The predominantly retail betting operator is throwing in the towel on being listed and is planning to take the company private citing the high costs for maintaining an AIM presence given the size of the company and increasing market volatility. In H1, adj. EBITDA more than doubled to £900k on revenues that rose 7% to £13.5m.
Gaming Realms: Launching with 25 partners in H1, including Betway, LeoVegas and Pokerstars, helped the Slingo-branded games provider notch up a 36% rise in revenue to £11.5m. Adj. EBITDA, meanwhile, rose 41% to £4.8m.
The company said it had secured brand licensing agreements for Tetris and Taito’s Space Invaders with both expected to launch in H223.
The company said revenues from North America were up 37% and now accounted for 45% of content licensing revenue.
The shares week
Genius Sports has a minor tumble as shareholder Apax sold down $121m worth of shares.
Pax it in: The sports data company saw its shares fall over 6% yesterday after former owner Apax sold a 20 million slug of shares. The private equity house recently saw a two-year lock-in from the time of the float in New York expire.
Still, in the year to date, the shares are up 66%.
On Wednesday, Genius Sports launched augmented reality Snapchat lenses featuring live NFL scores and updates on the social media app.
🏈 Genius Sports’ 2023 share price journey
Sector watch – financial trading
Robinhood is having a second attempt at cracking the UK.
Steal from the rich: Robinhood is coming home, or at least the share trading platform named after the mythical medieval hero is set to have another go at launching into the UK as the firm seeks international expansion opportunities.
Speaking during a Goldman Sachs technology conference at the end of last week, CEO Vlad Tenev admitted it was a “little bit of a contrarian time” to be branching out internationally.
He noted at the height of the lockdown-driven meme stock frenzy – to which Robinhood was central – when “commission-free trading was all the rage” then competitors were “popping up worldwide”.
“Now that's sort of died down a little bit, that creates an opportunity for us to come in as a profitable company from a position of strength,” he said.
The last time Robinhood looked across the Atlantic was during the mania in 2020 when it attracted 250,000 people to a wait list, but deemed the effort to be too difficult at a time when it was dealing with extraordinary levels of activity back in the US.
In the intervening years, a number of UK-based offerings have flourished including Freetrade, which itself launched in 2018.
Ahead of the official announcement of its renewed UK plans, Robinhood poached Freetrade’s Europe MD Jordan Sinclair.
Another firm already launched in the UK is public.com, a New York-based startup.
First we take Manhattan: Tenev noted the expansion plans would be very capital-efficient, extending the vertically integrated platform used in the US and would “make sure we plan not just for the UK but expanding all over the world”.
“You'll start to see the benefits of that once we're in dozens of countries in the world,” he added.
“We'll be able to do it without stapling platforms, without having to acquire companies in order to serve markets, although we might do that opportunistically, of course.”
What we’re reading
The House of Mouse: Disney’s travails have been front-and-center this week. Although it has managed to cut a deal with Charter that now includes streaming services as part of its package to the bale provider, this article from LightShed Partners makes the point that the percentage of ESPN’s viewers who can be classed as dedicated is a mere 1%.
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Newslines
Golden Entertainment completed the previously announced sale of its distributed gaming operations in Montana for $109m to J&J Ventures Gaming.
Lottery.com regained Nasdaq compliance after executing a 1-for-20 reverse stock split last month.
Tabcorp will get a A$83m refund in the settlement of a tax dispute with the Australian Taxation Office.
Stake.com is being sued by an Australia-based stock trading platform also called Stake. The Australian trading platform wants to prevent Stake.com from using the “Stake” name because it could create the impression that a partnership exists between the two entities.
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