30 April: Pointing the way +More
PointsBet Q3s, VIVI and GLP Q1s, Denmark Q1 data
Welcome to the last E+M newsletter of the week and we have the latest from the overnight release from PointsBet as well as the news from the REITS VICI and Gaming and Leisure Properties. Finally, there is the first quarter data from Denmark rounding off a busy week.
PointsBet Q321
The top line
Gross win rose nearly fourfold to A$100.5m (US$78.2m) while net win rose in lockstep to A$64.9m. Net win margin rose by 20bps to 7.2%. Active clients across the business rose from 106k to 286k.
US expansion led the way with gross win rising from A$5.6m to A$45.8m. Australia gross win more than doubled to A$54.8m. US actives soared to 128k from 22.7k. Sequentially US actives doubled QoQ.
On point: The US business is now active in six states – New Jersey, Illinois, Indiana, Iowa, Colorado and Michigan – and handle bumped up significantly to A$482m from A$90.7m in the prior year period. In the year to date gross win hit $63.5m while net win stood at $24.7m. The company claimed market shares across these states at an average of 5.3%, with its best performance in Illinois where it stood at 7.5%. On the earnings call, CEO Sam Swanell said on a seriously buffered (or was that just us) earnings call that PointsBet had achieved over 8% market share in Illinois in February. Talking about the potential end of in-person registration in Illinois, PointsBet noted that its flagship sportsbook at the Hawthorne Race Course was “ideally placed”, just 13kms from downtown Chicago.
Market share and market access: The company reiterated its goal of hitting 10% market share in every US state that it enters. The company is planning to be live in 18 states by the end of 2022. In late March, it agreed market access deals for Pennsylvania and Mississippi with Penn National.
Customer acquisition costs analysis: Looking at the results, analysts at Deutsche Bank suggested the marketing spend (US$33.3m) increased the client base by circa 127,500, implying a CAC of around US$594. This compares with US$625 and US$644 in the prior two quarters. That is only one layer of the customer acquisition expense, the DB team says, and “the true cost is likely to be higher.”
“We believe that operators with large legacy databases will have an advantage in that they are able to blend the costs of acquiring new clients with old. We think the PBH report and the heavy customer acquisition spend speaks to the value of having the legacy daily fantasy databases.” A further complication was that it is far too early to make any assumptions about lifetime values. “We believe, at this point, long-term values are merely a guess.”
Taking tech to the US: A new iGaming platform will be launched in Michigan imminently to be followed by New Jersey. Talking about the recent $43m Banach Technology acquisition, CFO Andrew Mellor said it would accelerate PointsBet’s in-play push in the US. He said integration between the teams had already begun. The company predicted that in three years’ time in-play would be worth 75% of total US handle. It based this on current estimates of the European in-play market. Swanell said that it was excited to be finally launching iGaming, as it had up to now been operating with “one hand tied behind our backs” in those states where gaming is legal.
Australia: Turnover rose from A$128.4m to A$423.2m. Net win margin rose by 40bps to 9%. Active clients rose to 158k. This is against the generally positive backdrop in the US. Yesterday, Flutter said Australian revenues at its market-leading Sportsbet business rose 59%.
VICI and GLPI Q1s
The top line
Results from VICI Properties and Gaming and Leisure Properties were robust. VICI saw revenues rise 46.6% to $374.3m, funds from operators (FFO) was $269.8m and cash dividend of ¢0.33 was declared.
Merchanting Venice: M&A activity in the first quarter for both companies was significant. VICI acquired the Venetian and Sands Expo and Convention Centre (home of G2E) for $4bn, which it claimed was one of the most economically productive commercial real estate assets in the US. The deal will generate rent of over $250m a year. Recall, as part of the deal, casino operations have been sold to affiliates of Apollo Global Management for a further $2.25bn. As part of that transaction VICI offered a stock offering in March which raised $2bn. VICI is guiding towards revenues of over $1bn for 2021. Edward Pitoniak, CEO of VICI Properties, said: “We believe US gaming, after showing its resilience as a consumer leisure sector throughout the worst periods of the Covid-19 pandemic, will demonstrate continuing leadership as America fully reopens from the crisis."
‘Kings and Queen: At GLP, the company announced earlier in April the expansion of a deal with Bally Corporation which has seen the company buy properties in Rock Island, Illinois and Black Hawk, Colorado for $150m. As part of the deal, GLP also has the right of first refusal to fund the real property acquisition or development project costs associated with all potential future transactions in Michigan, Maryland, New York and Virginia. As part of that deal, Bally will also take over operations at the Tropicana on the Las Vegas Strip. Meanwhile, the two companies have also negotiated a potential $500m commitment to help fund Bally's acquisition of Gamesys. It is at GLP's discretion whether that will be funded in the form of equity, additional prepaid sale-leaseback transactions or secured loans. Meanwhile, in December GLP also announced the sale and leaseback of the Hollywood Casino Baton Rouge to Casino Queen for $28.2 million to DraftKings. Also in December, Penn exercised its option to acquire the operations of Hollywood Casino Perryville for $31.1 million in cash. As of March 31, 2021, GLPI's portfolio consisted of interests in 48 gaming and related facilities. Peter Carlino, chairman and CEO of GLPI, said: "Our tenant roster features management teams with proven track records in highly-competitive markets which has enabled our tenants to successfully reopen their properties thereby increasing the longer-term visibility of our rental receipts."
Denmark Q1s
The top line
Gambling spend across all verticals and channels fell 15.3% in the first quarter to DKK1.3bn (£152.3m/€175.5m) due to the closures of all land-based gambling venues until 5 April.
iCasino record: The complete drop in offline revenues was partly offset by a record annual rise of 28.7% in online casino gross gaming revenues (GGR) to DKK717m (€96.4m/£83.8m). The total was the highest ever recorded and follows the player’s gambling patterns since the regulation of the online gambling market in 2012.
Nul points: Gaming machines and land-based casinos recorded zero revenues during the quarter. The closure of all physical venues clearly played a role in moving players to online channels, but the DGA did not draw definitive conclusions because “the increase does not counterbalance the fall of the land-based market in the same period.”
Sports betting GGR was down 7.5% to DKK588m (£68.7m/€79m), with all land-based venues closed during the period the figure is assumed to be online-only.
First drop since 2012: Denmark’s gambling market saw its first revenue decline last year since 2012 to DKK6bn (£701m/€807m), compared with DKK6.5bn (£760m/€874m) in 2019 due to lockdown restrictions.
National lotteries made up 35% of all GGR in 2020 at DKK3.2bn, sports betting 25% at DKK2.3bn, online casino share of activity was 27% to DKK2.4bn, land-based casinos 2% at DKK239m and gaming machines 11% at DKK986m.
Newslines
Slot survey: The Q1 Eilers-Fantini North American slot survey (covering 36% of installed base) has been released, implying modest 10%-20% market shipment growth this year on depressed 2020 levels. Deutsche Bank said expectations remain for a second-half inflection and suggest Q1 earnings commentary will be closely watched for any signals.
Earnings calendar
30 April: MGM Growth Properties Q121
4 May: Red Rock Resorts Q121
5 May: Aspire Global Q121, Bet-at-home Q121, Golden Entertainment Q121
6 May: LeoVegas Q121, Penn National Q121, AGS Q121
7 May: DraftKings Q121, Century Casinos Q121
Contact us
Scott Longley scott@clearconcisemedia.com
Jake Pollard jake@openmediaservices.com