Penn readies ESPN Bet ‘promo intensity’ button

Penn G2E feedback, CEOs take to the G2E stage, IGT and Caesars analyst takes +More

Earnings+More

Oct 13, 2023

Good morning. On the Weekender agenda:

Penn will be ‘more aggressive’ with ESPN Bet, say analysts.
US OSB market isn’t done and dusted, say DraftKings, FanDuel CEOs.
IGT and Caesars feature in the G2E analyst takes.
BettingJobs’ Jobsboard features product manager and MD roles.

(Don't hold back) 'cause there's a party over here.

Penn take

With ESPN’s VP of betting in the room, Penn’s G2E meetings concentrated on its upcoming OSB relaunch.

Look who’s coming to dinner: An ever-present in Penn Entertainment's meetings with analysts this week was Mike Morrison, VP of sports betting and fantasy sports at ESPN, hence unsurprisingly the conversation turned towards the prospects for ESPN Bet ahead of its November launch.

The Deutsche Bank team noted that Penn has already made it clear it will be taking a “more aggressive promotional strategy” than it ever attempted with Barstool.
But while the analysts reported that Penn “does not expect to be atop the promotional aggression pyramid”, they believed it would “likely be among the best available”.
Jefferies reported that Penn’s long-term goal is 200m users per month.

Station to station: DB suggested the market is currently “overlooking” the interoperability of the ESPN app and the ESPN Bet app. “Importantly, the ESPN app will link out directly to ESPN Bet, with a bet builder included in the ESPN app,” they added.

This will enable users to “do some actual basic research on a game and place a wager without flipping between multiple apps”, they said.
“Additionally, the ESPN app, much like the Score app today, will have what is known as a ‘Bet Mode’, in which the user can incorporate more betting content on the traditional ESPN app, should they want it.”
Jefferies said “product level will be a key determinant of success” given its correlation with share and profit levels.

Crossover: The DB team went on to note the similarity between the situation with ESPN, with 12m fantasy customers in its ecosystem, and that faced by the formerly DFS-focused DraftKings and FanDuel at the point of legalization in many new states.

Still, they remained skeptical of laying too much emphasis on the analogy.
While it might be helpful, the same quantum of flow-through is unlikely “in any way to mirror’ the DK and FD experience given the lag since launch in most states.
DB also reported management as suggesting hold percentages for ESPN Bet are “unlikely to be as high as peers early on”, saying there will be more limited parlay options.

** SPONSOR’S MESSAGE ** 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.

CEO chatter pt. 2

The OSB market is far from being sewn up, says DraftKings’ Robins and FanDuel’s Howe.

This thing ain’t over: The US sports-betting market competitive landscape is far from being completely settled and new entrants have the opportunity to establish themselves in the top tier, DraftKings’ CEO Jason Robins told the audience at G2E on Wednesday.

Speaking to interrogator Contessa Brewer, along with Amy Howe from FanDuel, Robins said the company was operating in “one of the most competitive markets in the world”.
“Anyone who thinks it is over in the first inning, that is just foolish,” he added.
“It will always be competitive and I think that’s great. I feel like we are constantly seeing new competitors.”
“There are already dozens of competitors in the market and I expect that will always continue.”

Faint heart never won fair lady: Howe noted, however, that the market “wasn’t for the faint-hearted” and suggested that some within the market were constantly having to assess “whether the economics make sense”. But she pointed out that, with 50% of the potential US OSB TAM yet to be tapped, there is a “tremendous amount of runway we haven't gone close to capturing”.

Both leaders noted how the product was quickly developing, with Robins saying the early leaders “solved for” the initial challenge of getting serviceable products up and running in a short space of time.
“There was a base thing people wanted and that was what we have built out,” he added.
“But now it is about how you innovate and bring in new players.”

FanDuel analyst take: Jefferies came out of their own one-on-one with Howe saying it was the “standout meeting of G2E”, with an “upbeat commentary around FanDuel's competitive positioning”.

They noted that a US listing for parent Flutter “potentially makes a significant difference in the war for talent” and will help with placing Flutter and FanDuel “more prominently in the news cycle”.

Further reading: See Thursday’s issue of Compliance+More for what Howe and Robins had to say about the current pick’em controversy as well as the potential for future iCasino legislation.

Quote of the week: Chris Grove fromm Acies Investments spoke about the problems faced by suppliers to the sportsbooks hoping to get their product on operators’ roadmaps

“You can build a better mousetrap but if you can’t get an operator to actually integrate that mousetrap then the mice are safe and have nothing to fear.”

ICYMI

The Gambling Files this week featured a two-part interview with the one and only CEO at the UK Gambling Commission Andrew Rhodes. In Part 1, Rhodes discusses his views on the use and misuse of data (and chooses his favorite dinosaur, this is The Gambling Files after all), while in part 2 he tackles the thorny issue of financial risk checks.

The main event this week was G2E in Las Vegas and E+M reported on the opening day’s set of keynote interviews, with Entain’s Jette Nygaard-Andersen and MGM’s Bill Hornbuckle both opting for reassuring words over their continued joint custody of BetMGM.

Sharpr from Cody Luongo this week looked into the news that Entain was pulling back on the B2C activities of its esports-focused Unikrn business. “Unikrn’s undoing was equally as puzzling as it was sudden,” Cody wrote.

In Steve Ruddock’s Straight To The Point this week, he discussed the market in Ontario, which, as he pointed out, is off to a strong start. But will that necessarily lead to legalization in other provinces?

G2E analyst takes

IGT: Whether the big operators will be committing to a step up – or a step down – in capex on machines in the year ahead will soon become evident post-G2E, suggested the team at Wells Fargo in their assessment of the prospects for IGT.

The team added that IGT is the only one of the major providers to offer omni-channel gaming into iGaming, a fact the company says is a key differentiator.
The analysts were quiet on the progress being made with regard to the strategic review and the potential for splitting the gaming side from the lottery supply business.
In separate news, IGT has signed a seven-year extension for the provision of lottery services to the California Lottery, the second-largest lottery in the US.
The agreement is now expected to run through to Oct33 and includes an additional five, one-year extension options.

Union trouble: The team at Deutsche Bank came away from their meeting with Caesars with confidence that the chances of a strike by the culinary unions are “negligible”. “Based on several conversations, we believe [the upcoming] F1 serves at the outer range for an agreement,” the team added.

On an individual company level, DB said the annual impact of a deal on Caesars will be between $40m and $60m a year.
“We believe the union contracts are likely to allow the operators opportunities for some mitigation, relative to the salary and benefit cost increases,” they added.

Caesars iCasino: Looking into its online operations, DB reported the feedback on the standalone Caesars Palace iCasino app has been “strong”, even though the company is yet to embark on a full marketing program. They added that they expected Caesars to deploy additional skins in certain iCasino states for further brand rollouts.

DoubleDown Interactive: Nestled among an analysis of seven underappreciated gaming stocks, the team at B Riley identified the “overlooked and underappreciated” addition of SuprNation to DDI’s portfolio of products as a reason to look again at the company’s prospects.

“We believe that SuprNation creates a unique revenue and EBITDA growth combination given key content/top line and cost synergies within the high-valuation real-money B2C category,” the team wrote.

Overdone sell-off: Generally, B Riley suggested the gaming sector has unfairly been sunk into the doldrums on the back of unfounded fears of an earnings deterioration as experienced during the Great Financial Crisis. The team pointed out this is despite evidence of gaming’s resiliency during periods of economic distress.

Wynn Resorts: Fighting against a “largely negative” tone of commentary from Macau, the DB team reported that Wynn management provided a “relatively upbeat and constructive narrative” driven by premium mass outperformance.

To back up their optimism, management told the analyst team that “like-for-like premium mass customers are spending” more than in 2019.

** SPONSOR’S MESSAGE ** Calling all sportsbooks! Are you:

Forced to limit customer stakes due to market liability?
Suffering one-sided markets?
Caught out by stale prices?
Turning away large staking players?

Stop falling behind your competitors! Matchbook pricing and brokerage service is your connection to the sharpest pricing and global liquidity, helping you to manage risk and fortify your margins. Matchbook pricing is proven to be resistant to market changes. Matchbook B2B, because the best price is for everyone.

Find out more at http://www.matchbook.com/promo/b2b or email b2b@matchbook.com

The shares week

Bally’s shares continued their recent slide, down over 7% on Thursday despite (or because of) little by way of any news on the company. The shares are now down nearly 45% in the YTD.

🤔 Bally’s down nearly 45% YTD

Datalines – Indiana

Neck and neck: DraftKings has closed the gap on FanDuel in Indiana, with each operator controlling 37% share of September’s AGR. DraftKings was up 11% YoY while FanDuel dropped 10%. For BetMGM, AGR was down 31%, leaving it with 9% share, while Caesars was down over 41% and achieved 8% share.

What we’re reading

Howard Stutz in The Nevada Independent: Will Las Vegas land an NBA team?

Newslines

Quantum Leap Solutions and Pythia Sports have combined to provide the service for content from 37 British racecourses, via Racecourse Media Group (RMG), on Playtech’s SSBT terminals.

The plan is for the new content to offer in-play betting, which is currently not available OTC.

Elys has launched its new US-focused online and mobile sportsbook brand, www.SportBet.com.

** SPONSOR’S MESSAGE ** The American Gambling Awards, the first awards program dedicated exclusively to the online gambling market in the United States, is produced by Gambling.com Group (Nasdaq: GAMB), a leading performance marketing company for the regulated global online gambling industry.

The Group champions the development of a responsibly regulated, competitive online gambling market in the U.S. and the Awards help bring positive attention to the leaders making this a reality.

A full list of the 2023 American Gambling Awards winners is now available at: www.gambling.com/us/awards.

Calendar

Oct 18: Las Vegas Sands
Oct 24: Boyd Gaming
Oct 25: Churchill Downs (e), VICI (e)
Oct 26: Evolution, Churchill Downs (call), VICI (call), Reputation Matters, London