Oct 3: Endeavor boosts its entourage
Endeavor completes OpenBet acquisition, GeoComply sues XPoint, gaming debt analysis, Startup focus – TopProp Fantasy +More
Good morning. On today’s agenda:
Endeavor completes the acquisition of OpenBet from Light & Wonder.
Deutsche Bank supplies some timely interest rate sensitivity analysis.
Our startup focus is fantasy sports operator TopProp Fantasy.
And Earnings+More is on Telegram…
I ain’t no square with my corkscrew hair.
Endeavor completes OpenBet deal
The $800m deal for the sports-betting backend provider was formally completed on Friday.
Over the finish line: After one price renegotiation, which knocked $200m off the price tag, Endeavor finally completed the deal to buy Light & Wonder’s sports-betting backend provider OpenBet for $750m in cash and $50m in stock options.
Lock and key: Ari Emanuel, CEO at Endeavor, said the deal would help its newly augmented IMG Arena division “unlock meaningful value” for its rights-holder partners as well as its sportsbook customers.
Hallelujah: Jordan Levin, CEO at OpenBet, said his company had been “awaiting the day” to bring the offerings together and “lean into” the Endeavor network.
The two businesses will now form a combined sports data and tech revenue stream for Endeavor.
Slimline tonic: For its part, Light & Wonder said the sale was the final step in its strategic process of streamlining, with the cash raised helping towards the aim of moving towards a leverage ratio target range of 2.5x-3.5x. Jefferies estimated year-end leverage of 3.1x moving to 2.6x by the end of FY23.
The team added that the focus would move towards iCasino growth, land-based market share gains and share buybacks. They expect “meaningful” cash-flow generation.
Truist suggested the only outstanding matter is whether interim CEO Matt Wilson will now get the permanent gig.
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GeoComply sues XPoint
GeoComply files patent infringement suit against rival XPoint.
X marks the spot: Geolocation market leader GeoComply has filed a complaint alleging that startup rival Xpoint has infringed its US patent. GeoComply said it has resorted to legal action in order to protect its proprietary technology. XPoint said the move was meritless.
In a statement, GeoComply said it welcomed competition, “new ideas in the marketplace” and the “ability to distinguish” its proposition from other providers.
But it added that it also expected others to “respect the valuable intellectual property that companies like ours spend a lot of time, effort and money developing”.
“We are confident in the merits of our case,” the statement added.
XPoint background: Formed in 2019 and officially launched at G2E last year. It is operational with clients in New Jersey and Ontario. Just last week it announced a new funding round led by Acies Investments and Bettor Capital.
Gaming debt analysis
Crunch: The impact of rising Fed rates on the debt situations across gaming is examined in a note issued late last week from Deutsche Bank, with the analysts identifying the firms where the impact will be most felt on discretionary cash flows.
Those where free cash flows will be most affected are Caesars Entertainment, Light & Wonder, Red Rock, AGS, Golden Entertainment, Wynn and Penn Entertainment.
Deutsche Bank shows that Caesars has 46% of its total debt subject to floating rates vs. only 13% at MGM, for instance.
Meanwhile, Red Rock has 58% of its total debt subject to floating interest rates, Golden 65% and Penn 66%.
Reassuringly, though, they suggest capital structures are a net positive across the sector with none of the 17 companies covered having bond maturities in 2023/24.
Of those with near-term maturities, such as MGM with $21bn of bond maturing this year and next, they view the likely increase in the cost of capital as “relatively digestible” with some able to use cash in lieu of refinancing.
Datalines
Revenue for September in Macau was down 49.6% YoY but the highest figure since May.
Slight return: Ahead of Golden Week this coming month, Macau showed signs of emerging out of its summer doldrums with GGR hitting $371m for the month. The figure was a 35.3% sequential improvement but was down by 86.6% on Sep19.
At the end of the month, the Chinese authorities relaxed the immigration restrictions around eVisas and group visitors.
However, visitor levels in September remained well down on pre-pandemic levels at 20,000 a day.
Netherlands
Channel checks: According to the Netherlands Online Gambling Association, channelization in the Netherlands is estimated to have hit 85%, as the Dutch regulator released its H1 data showing GGR hit €486.1m.
Since the beginning of the year, average monthly GGR has hit €81.4m. On an annualized basis, the market is worth just shy of €1bn.
Since the market regulated in Oct21, the number of licensed operators has risen from 10 to 22.
As of July 2022, the KSA recorded 563,000 active player accounts.
The regulator questioned the channelization figures, suggesting it overstated the rate due to limiting the number of unlicensed operators contained in the survey to 22.
The week ahead
The startup month: The latest startup month will be sent on Tuesday. In this issue we produce a roundup of fundraisings in the quarter, including blockbuster raises from betr and Underdog Fantasy.
Also, we look at one of the major talking points in startup land right now, looking at whether companies are default alive or default dead. Plus we have a startup (re)focus on Sporttrade, which recently launched in New Jersey.
In pod we trust: Later in the week the podcast will return, where we will take a look ahead to the upcoming G2E as well as discuss the recent slew of events in Europe.
The month ahead: E+M will be at G2E next week. We will bring you our preview of the best of the keynotes and panels to come in next Monday morning’s newsletter.
The week in shares
Investors were left cold by XLMedia’s half-year earnings last week, sending the shares down nearly 38%.
Unconvincing: Despite posting a 38%+ rise in revenues in the first half, the discussion around the shift away from volume-led casino affiliation towards brand-led growth in the US and Europe didn’t reassure the market.
An almost-new management team is still struggling with the finance division, which it admitted would be loss-making for the full year to the tune of $1m-$2m.
🚨XLMedia was punished despite posting a rise in first-half earnings
E+M+Telegram
Narrowcast news: As Earnings+More continue to explore new ways to communicate with our subscribers we have opened up a Telegram channel, which everyone can sign up to. We can be found @Earnings+More. Join us, read us, shout back at us.
Startup focus – TopProp Fantasy
Who, what, where and when: TopProp Fantasy is a Boston, Massachusetts-based DFS and next-gen social operator, formed by Michael Zavagno, Griffin Kurzius and Matthew Freedman with the aim of simplifying the DFS experience with head-to-head contests and a “revolutionary swipe-based interface”.
Funding backgrounder: The company has raised $500k with a pre-seed round from strategic angels in the fantasy sports and eCommerce industry.
The pitch: Zavagno says TopProp set out to be the easiest way to play daily fantasy sports “to ever hit the industry”, suggesting that with the recent release of its swipe-based mobile app on both the Apple and Google Play stores, it has “met that standard”.
“The way people consume sports is changing as younger, more casual fans fervently follow their favorite players rather than their hometown teams,” he adds.
Second screen: Zavagno says such sports consumers are more likely LeBron fans rather than Lakers fans, hence TopProp saw an opportunity to be the second-screen experience for this generation of fans. “Now, Patrick Mahomes fans can swipe to take him over Tom Brady in seconds, check out his best plays on TikTok and know whether they won cash on TopProp.”
“Other offerings in the market have not iterated to meet Gen Z consumers where they are,” Zavagno adds.
“Rather than fostering a community where everyone has a chance to win, these sites entrench their most loyal players and fail to provide the next generation with the social experience they crave.”
“Unsurprisingly, over 60 million Americans play traditional fantasy sports – an inherently social experience – while only 15 million play daily fantasy sports.”
With Gen Z, Zavagno says “the next generation of sports fans is here”.
What we’re supporting
Ringside: The SBC Charity Boxing Championship is taking place on November 11. We’re reliably informed that tickets are selling fast to see some of the industry's most well-known faces get pummeled in aid of good causes.
🥊 If you haven’t secured a ticket, you can do so by following this link.
Newslines
The MLB and the American Gaming Association will run responsible gambling public service announcements across the MLB’s media channels from the end of the 2022 season.
Abelson Info will supply its pricing and settlement of football goalscorer markets to French bookmaker Zebet, the sports betting brand of pari-mutuel horse racing operator Zeturf.
The Carousel-owned MaximBet has launched in Indiana, its second live state after Colorado. The company also has plans to launch in Iowa, New Jersey, Pennsylvania, Ohio and Ontario.
What we’re writing
The truth hurts: Scott Longley writes for EGR on how the public health lobby is distorting the facts over gambling harms to suit their prohibitionist agenda.
What we’re reading
Calling it: LegalSportsReport.com suggests it is all over in California. “It seems like both are going to meet the same fate,” the piece quotes one industry insider about Props 26 and 27.
On social
Great Dane: The greatest public transport ad ever made.
Calendar
Oct 4: E+M startup month
Oct 6: E+M podcast
Oct 10-13: E+M@G2E
Contact us
Scott Longley scott@clearconcisemedia.com
Jake Pollard jake@openmediaservices.com