PointsBet plunges on widening losses
PointsBet half-year results disappoint, Australian Betr raises cash, Ohio debut numbers, Las Vegas highs +More
Good morning. On today’s agenda:
PointsBet slumps on widening first-half losses.
The future of Australian Betr is clouded as News Corp loses faith.
FanDuel and DraftKings pay the price for Ohio leadership.
Las Vegas bounds onwards in January.
IGT, Endeavor, Accel, Playtika and Codere all report.
Shares in PointsBet slumped over a quarter at one point on Tuesday as investors took fright at steepening losses.
Point break: CEO Sam Swanell insisted the North America strategy was working, even as total H123 EBITDA losses rose 25% to A$163m on total revenues that rose 28% to $178m. Swanell said losses for H2 would be pared back to A$77m-A$82m.
Swanell added the company has A$321m on the balance sheet with no debt.
He said the “third-party strategic interest” shown recently in PointsBet “demonstrates we have built a very valuable business”.
A Betr bet: The most recent M&A rumors surround a A$250m bid for the Australian trading arm from Betr.
The Australian Financial Review suggested that deal is likely to progress despite Betr backer News Corp’s worries over escalating costs. See below for more on this story.
😱 Pointsbet slumped over 10% on Tuesday
The postman: US net win rose 81% while marketing expense was trimmed by 17% and Swanel said the focus on the super-user was “really delivering”. He added that “targeting these customers better” led to a 63% increase in US sportsbook revenue.
He noted PointsBet was executing a “locally focused” US marketing strategy.
Recall, in its January trading update PointsBet said it had realigned its deal with NBC to extend its marketing commitment over a longer period.
No mas: Swanell said Massacusetts was “one step too far” and it was the “prudent and balanced” decision not to enter the state despite having gone through the licensing process.
“We’re not launching at this time, but that doesn’t mean that we can’t launch into Massachusetts at a future time,” he added.
“We need to prove the unit economics and the path to profitability.”
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A Betr option
Betr has secured A$250m of funding for its bid for PointsBet’s Australian operations, according to reports.
Tripp the light fantastic: As per the AFR, it is reported that Betr, which launched late last year, has secured funding for a bid for PointsBet with the help of advisory firm Barrenjoey. The paper reported that Betr founder Matthew Tripp was in London last week to discuss progress with stakeholders.
Among Betr’s backers is News Corp, which the AFR says will not be adding any additional cash as part of any new funding raise.
News Corp said in its own recent filing that losses due to affiliated companies, which includes Betr, totalled US$33m in the six months to December,.
Also on the Betr ticket are Tekkorp and Betmakers Technology, which itself reported extended losses last week after investments in its own NextGen platform, which powers Betr.
Andrew Menz, Betr CEO, told the AFR the company hadn’t hidden its growth ambitions.
“There’s great momentum in the business already and we’ll continue to look for step-change opportunities to win share in the Australian wagering market,” he said.
Bally closes MKF
Bally’s DFS operation Monkey Knife Fight has pulled down the shutters.
Monkey gone to heaven: Monkey Knife Fight has told its players it has closed the operation as of yesterday, February 28, after five years of operations. In a Twitter posting, the company quoted Yogi Berra’s saying that the “future ain’t what it used to be”.
The news comes two weeks after E+M disclosed that Bally’s was seeking buyers for the business, which it bought for $90m in 2021.
Last week, Bally’s wrote down the value of MKF as well as the Bet.Works platform it bought at around the same time as MKF for $125m.
Bally’s has recently trimmed its sports-betting ambitions and said last week it would be seeking third-party technology partners for its sports-betting operations going forward.
Datalines – Ohio
FanDuel and DraftKings early market share dominance comes at a price.
The two of us: FanDuel grabbed 50% market share and DraftKings 27% in Ohio’s first full month of OSB operations in January, as the top two quickly raced into the lead in another new state. Add in BetMGM’s 8.5% of GGR and the top three secured 85.5% of the market.
Bought and sold: However FanDuel gave away 165% of GGR in promotions while DraftKings’ toll was 131% of GGR. BetMGM’s ratio was 105.5%.
Barstool was near enough level while Caesars, at 96%, managed (just) to bring in more than it gave away.
🧐 Promotional spend outweighed GGR in Ohio
Weighing machine: Total GGR was $206m, but this was outweighed by $320m of free bets and giveaways leading to negative NGR of $114m. The promo spend helped push handle (including retail) to $1.13bn, with online worth 98% of the total.
The other 15: The remaining 14.5% of online GGR was shared between 13 operators, with big names such as Barstool on 2.5% and Caesars on 2%.
By handle, FanDuel was worth 45%, followed by DraftKings (31.5%) and BetMGM (7.5%).
Comparison shop: Wells Fargo suggested the handle per resident per day metric of $2.98 was consistent with recent launches in Maryland ($3.77) and New York ($3.44).
I feel good: The juggernaut of joy continued into the New Year as the Strip enjoyed a record-breaking January with GGR up 26% to $713m, albeit up against an easy comp. Downtown and Locals ($273m) were also up, 25% and 15% respectively.
The analysts were suitably upbeat, with Truist suggesting the numbers were even better than recent results commentary had suggested.
“We see more upside ahead on the strong event calendar,” the team added.
Visitation was up 32%, with convention attendance up 68%.
Sports-betting GGR of $50m came from handle of $936m and was split 62% mobile, 38% retail.
Happy days: The recent improvement in the mood music in Macau was confirmed as the authorities said GGR climbed 33% YoY in February to $1.28bn. The total was lower than January, though that benefited from the Chinese New Year, and was 44% below the pre-pandemic levels of Feb19.
The total exceeded analyst expectations, which were pegged at ~$1.17bn.
Earnings in brief
IGT enjoyed a 7% same-store rise in global revenues to $1.1bn in Q4 and noted the 21% increase in gaming revenues and record contribution from PlayDigital. CEO Vince Sadusky said gaming sales had benefited from supply chain issues being “much better than in the first half of the year” and that IGT now had “good momentum” with the icasino studio iSoftBet.
Lottery was down 7% YoY to $639m due to tough comparatives, but gaming rose 21% to $389m, while online revenues at PlayDigital increased 55% to $65m.
Sadusky added that net debt had been reduced to $771m in Q4 and group leverage of 3.1x EBITDA.
Endeavor: Ahead of splitting out revenues from the sports-betting supply segment as of Q123 onwards, CFO Jason Lublin said on the Q4 call that the combined IMG Arena and OpenBet business would see double-digit top-line growth in 2023. But he added that revenue and EBITDA would be “back-end loaded”.
Accel: The hyper-local gaming machine operator ended 2022 with a 39% uplift in terminal locations to over 3.5k and a 70% increase in machines to over 23k, as it reported revenues up 44% to $278m and adj. EBITDA up 30% to $43m.
Codere Online: CFO Oscar Iglesias said the group expects to be EBITDA positive in 2024 as Q422 revenue rose 70% YoY to €35.6m but with net losses coming in at €17.4m. Iglesias restated 2023 NGR guidance of €140m-€150m and reduced adj. EBITDA of €20m-€30m.
Playtika: Q4 revenues were down 3% to $631m but adj. EBITDA of $229m was ahead of expectations after what the company said was a “challenging year” for the mobile-games sector.
BlueBet: The Australian-based bookmaker said H123 EBITDA plunged into the red at A$10.5m while net win dropped 5% to A$27m due to “mix shift” and a tougher promotional environment. The company’s ClutchBet launched in Iowa in August and will go live in Colorado imminently.
Scout: Q4 revenues were down 4% to SEK8m driven by a 45% decline in B2C revenue, but B2B was up 70% to SEK5m after a reorganization.
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