On the spot
Flutter CEO defends US TAM assumptions
Peter Jackson faces questions during debut G2E appearance.
In +More: Caesars Horseshoe brand launch.
Penn professes progress with ESPN Bet at investor day.
Sporttrade’s Kane on expansion plans, new investment.
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Jackson in the spotlight
If they could see me now: For his first ever visit to G2E, Flutter Entertainment CEO Peter Jackson got the VIP treatment and an interview with CNBC’s Contessa Brewer as he faced gentle questioning about his company’s recent North American TAM assumptions.
Hey, look at where I am: As was unveiled at the recent investor event in New York, Flutter now sees US and Canadian OSB and iCasino TAM at $70bn by 2030, a 75% increase on its previous estimate from just two years ago.
Questioned on this notable increase, Jackson said: “I always tell my children, everything is big in America, and so it has proved.”
He said the “biggest change” in the forecasts from a sports-betting perspective was the value of the customers.
“We don’t build hope into our forecasts,” he added.
In iCasino, meanwhile, Flutter has seen higher penetration rates among the general populations in each state where it is live.
I want what she’s having: On top of the effect of inflation over the course of the next five years, Jackson said Flutter would also be the major beneficiary from increased parlay take-up. “Our competitors don’t have the benefit of our parlay penetration,” he said.
“We’re getting very, very high levels of parlay penetration. Put the factors together, and it leads to these numbers.”
TAM lines: Following the investor day, analysts at EKG questioned the underpinning for Flutter’s numbers, especially when it comes to iCasino expansion and the implied GGR per adult.
This week, the team at Regulus weighed into the argument, suggesting the Flutter estimate represented 16% CAGR between 2024 and 2030.
This “does not sound all that demanding given the recent development of the US market, and it is certainly not impossible,” the team argued.
Still, the team also suggested that some of Flutter’s assumptions on the TAM build, particularly on addressable population, were “pretty punchy,” with the company needing at least one of California or Texas to regulate sports betting plus a combination of other likely states including Missouri and Georgia.
See Compliance+More later this week for more on Regulus’s thoughts on regulatory progress.
What we’re reading: Hard Rock’s Jim Allen “opens the door” to a partnership with either FanDuel and DraftKings in Florida.
“I would say whether it’s FanDuel or whether it's DraftKings, we've actually developed a great relationship with them,” he told Brewer on CNBC.
Hornbuckle up
Top of the bill: MGM CEO Bill Hornbuckle once again faced questions about the company’s relationship with BetMGM JV partner Entain. After a year in which Entain has lost its CEO and gone through a protracted recruitment process to find successor Gavin Isaacs, Hornbuckle was honest over how the relationship somewhat broke down.
“When this relationship started there was a belief in Entain that the product worked worldwide, and that wasn’t the case,” he told Brewer.
But he added there had been a “change in mindset” alongside the personnel changes. “So we look forward to a much more productive relationship.”
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+More
Caesars Entertainment has launched Horseshoe Online Casino, its latest iCasino brand, in Michigan via the market access partnership with the Sault Ste. Marie Tribe of Chippewa Indians. The company said it has plans to expand into other states over time.
After meeting with management this week, the Deutsche Bank analysts noted the launch was expected to “accelerate growth” as it eyes a 10% iCasino market share.
Macau: Visitation for the Golden Week just gone beat the pre-pandemic 2019 total by 2%, according to figures from the government tourism office. The city welcomed 993,917 visitors in 2024 compared to 974,337 in 2019.
Analysts at Seaport said this Golden Week had been a “test case for Macau resilience,” one which the industry had passed delivering “better than expected” revenues.
Bet365 has launched operations in Peru.
Checkd International, part of award-winning gaming affiliate provider Checkd, has strengthened its presence in the American market with a new and improved app called SmartPicks.
Penn investor day
The impressionists: Penn Entertainment’s management “has not wavered in confidence” that it can make ESPN Bet work, reported the Deutsche Bank analysts after the company’s investor event on Monday in Las Vegas and its pre-released Q3 earnings.
Penn put forward new Q3 interactive loss guidance that was $30m better than previously indicated, at $90m-$100m.
It also added some “encouraging color” around ESPN Bet’s September performance, with GGR up 151% YoY and monthly users up 161%.
In iCasino, the Hollywood Casino brand enjoyed 53% GGR growth while theScore in Ontario saw LTM growth to September up 30% and gross profit up 54%.
Less “explicit color” was offered on the New York launch, with DB noting the commentary suggested it had been “measured.”
Connections: ESPN Bet has been rolling out a raft of sportsbook improvements since the start of the NFL season, but a “key milestone” noted both by DB and the team at Truist was the ESPN account linking now slated for November.
Tip top: In the retail business, revenues were “softer than expected” with adj. EBITDA at $465m-$475m, but with management reporting a “healthy” consumer segment.
Playtech attack
Word salad: In writing an open letter to Anna Massion, chair of Playtech’s remuneration committee, Jeremy Raper from the eponymous hedge fund made a deep dive into the thesaurus to express his anger at CEO Mor Weizer’s recent incentive award from the sale of Snaitech to Flutter for €2.3bn.
Weizer and the top team at Playtech will get to share ~€100m from the deal as well as benefit from 10% of the value of any further asset sales.
A sham of a mockery: The new management reward scheme justification was “particularly absurd,” the plans are “egregious” and “exemplify crony capitalism at its absolute worst,” with a “gargantuan,” “brazen” and “rapacious” increase in compensation, Raper opined.
If implemented, the plan would be a “complete failure” of corporate governance and an “epic disaster” for shareholders.
He added he had “never seen so naked an attempt to siphon value” into the “pockets of management.”
A mockery of a sham: Detailing what he saw as specific breaches of the code of good governance for UK-listed companies, Raper said there has been “zero transparency” and the board was trying ot push through an “entirely new and hitherto not contemplated” arrangement.
“It is both retroactive and ad hoc,” he added. It is simultaneously “open-ended” and tied to any future asset sale management may push through “irrespective” of the value of any deal.
“Management is thus incentivized under the new plans to pull the trigger on any future deal, no matter how destructive to the company, and collect their 10% take.”
Up with this I will not put: As well as publishing the letter, Raper also sent it onto the Financial Conduct Authority as a formal complaint.
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Wynn investor meeting
Shop window: Coming away from an investor meeting with Wynn Resorts in Las Vegas yesterday, the team at Deutsche Bank noted that if the aim was to put the UAE development “firmly in the purview of investors,” then it was a success.
They noted that with the Al Marjan project added to the revenue mix it means the future cash flow forecast will be much more balanced and less reliant on Macau.
They added that they saw the forecast property EBITDA range of $500m-$800m as being “credible.”
“For starters, Wynn has a history of meaningfully outperforming peers on an EBITDA per hotel room basis, as evidenced in Las Vegas.”
Pay to play: Wynn will own 40% of the $5.1bn project and, as it stands, it has ~$900m of its $1.08bn portion of the costs yet to be spent. DB said that given the company assumptions around projected EBITDA, the cash flow for Wynn would annualize at maturity at between $190m and $370m.
The casino should be open by 2027, depending on overruns.
Venture playground
Inside the raise
Tip of the hat: The betting exchange Sporttrade was able to announce a significant new name to its cap table late last week with SIG Sports Investments, an offshoot of the Susquehanna financial group, becoming a strategic investor in the company.
Alex Kane, founder and CEO, notes the investment comes at an important time for the company as it prepares to launch in its fifth state, Virginia, later this month.
“Expanding will always be a priority for us,” he says. “Five states feels like a solid foundation and a sizable TAM.”
Think differently: Kane points out he didn’t build Sporttrade to be “viewed as a low-cost sportsbook” used only by sharp or price-sensitive players. Instead, he says, it should be viewed as a marketplace. “There are things you can do with our venue that you can’t do anywhere else.”
“To build a massive business, we have to build a platform that allows hundreds of thousands of players to think about sports betting in an entirely different way,” he adds.
“We have to continue to build something different.”
Notably, exchange startup rivals Prophet Exchange and Novig have recently opted out of regulated sports betting and have instead launched sports-betting and exchange-based sweepstakes offerings.
“The cost of getting into markets can be significant, and regulatory capture has thwarted innovation,” Kane argues.
But still, sweepstakes wasn’t a route that Sporttrade contemplated because, he says, “adoption can be achieved within the regulated market.”
That also “carries the benefit of creating a large moat in the medium to long term.”
Startup focus – Match Hype
Who are you? Established a year ago, the Czechia-based Match Hype was co-founded by Radek Pšurný (CEO), Filip Koubek (CMO) and Vojtěch Mádr (CTO). Each has extensive experience in dynamic video technology.
What's the big idea? TikTok users spend an average of 52 minutes per day watching videos, and sports videos on Instagram receive 23% more engagement than any other content, notes Koubek. “Despite this, most sportsbooks still do not utilize video due to the high costs and the practical challenges of covering all events,” he says. “Until now.”
Match Hype offers the capability to cover any sport, league and game, creating thousands of videos daily, focussing primarily on football, basketball, tennis, American football and horse racing.
It supports over 30 languages and content includes pre-game previews, halftime updates and post-game summaries,
Funding backgrounder: Currently bootstrapped, Match Hype has recently launched potential seed round discussions.
Growth company news
The no-code provider Flows has announced a deal to supply its platform to Amelco. ODDSworks has launched its online casino games with Novibet in Mexico. Emerging sports data provider ALT Sports Data has announced a multi-year partnership for the distribution of sports-betting data for Athletes Unlimited’s roster of women’s sports.
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Events calendar
Event highlight: GGL co-chair Ronald Benter will be the headline speaker at the 2024 Gaming in Germany Conference on Tuesday, November 5, 2024, at the five-star Hotel Adlon Kempinski in Berlin. In addition to the main stage program, the event will feature several highly practical breakout sessions on topics such as KYC, AML, limit increase and marketing compliance.
Oct 21-24: World Lottery Summit, Paris
Nov 5: Gaming in Germany, Berlin
Nov 11-14: Sigma Europe, Malta
Dec 2-4: Thai Entertainment Complex Summit, Bangkok
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