PointsBet US sale gets the go-ahead
Fanatics Betting & Gaming buyout waved through, streamer Kick is the subject of sector watch, Nevada’s tough comps +More
Good morning. On the Weekender agenda:
PointsBet shareholders vote in favor of the US sale.
Australian ad ban impact analyzed.
Sector watch takes a look at the emergence of the streamer Kick.
Analysts remain positive on Nevada despite tough comps.
Jobsboard by BettingJobs includes head of CRM and Cameroon country manager roles.
I wave goodbye to Mammon and smile hello to a stream.
Fanatics on point
PointsBet shareholders overwhelmingly back sale of US business to Fanatics.
All those who say aye: Shareholders at PointsBet have voted overwhelmingly in favor of the sale of its US business to Fanatics Betting & Gaming for $225m, bringing to an end the Australian company’s brief American adventure.
PointsBet launched in the US in January 2019 in New Jersey.
By the time of the sale to Fanatics it had operations in 14 states. According to the company’s H123 update, net win for the US business was A$70m ($46m), up 81% YoY.
However, losses meant PointsBet was leaking cash and the April update said the company was already in discussions over a sale of the business.
Alongside the 14 licenses FBG gets the Ireland-based Banach Technology pricing business. PointsBet bought Banach in Mar21 for $43m.
New kid in town: FBG fought off a rival offer from DraftKings, which had looked to hijack the deal with a non-binding offer of $195m that trumped Fanatics’ initial offer of $150m.
Analysts at Roth MKM said Fanatics’ higher bid “affirms its intentions on asserting meaningful market share”.
“As Fanatics looks to take market share upon launching at scale, we don't believe its balance sheet will be a constraint,” they added. “This contrasts with smaller entrants that failed to assert meaningful share.”
The team added that the sale was a positive for further potential M&A including possible deals involving Rush Street Interactive and Penn Entertainment, which they suggested could look to offload Barstool.
Commonwealth: The sale of the US operations leaves PointsBet with a rump Canadian business and its Australian operations, which were also the subject of takeover interest at the turn of the year, including from the Australian Betr and rumored interest from Entain.
Those talks reportedly valued the Australian business at ~A$250m.
The H1 update showed Australian net win at A$105m, down 2%. The Canadian business, meanwhile, generated net win of A$6.7m.
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ICYMI
In Compliance+More this week, the possibility of another push for iCasino in New York in 2024 and the rush towards a gambling ad ban in Australia dominated Thursday’s edition.
In Earnings+More this week, The Data Month featured analysis from Propus Partners of pricing in the US, which showed that market leader FanDuel doesn’t stand out with either its pricing or via low margins.
LosIngresos+Mas reported this week that the Brazilian government is set to publish online betting regulations imminently.
Oz ad ban impact
A familiar dynamic will play out if Australia goes down the gambling ad ban route.
A word from our sponsors: The news of a potential ad ban in Australia will likely be a net positive for incumbent brands, according to the analysts at Jefferies.
Proposals in the Australian parliament would see a blanket ban on advertising, promotions and sports sponsorships.
The team at Jefferies said they expected an initial negative reaction to the news but that “ultimately, any ban would be favorable to established brands”.
This would include market leader Sportsbet, owned by Flutter as well as Tabcorp, which reportedly has been lobbying in favor of the move.
Yin yang: Jefferies said the expected dynamic would be slower market growth but greater market share for the incumbents as challenger brands would struggle to get noticed without the help of above-the-line advertising.
They added that operators with a land-based footprint (i.e. Tabcorp) would be able to drive direct player recruitment.
The shares week
Well, that wasn’t meant to happen: Super Group suffered a 20% fall in its share price this week after announcing it had been admitted to the Russell 2000 Index.
“We believe that this milestone as a public company will enhance our profile with investors as we work towards optimizing our global footprint in the online sports-betting and gaming industries while maintaining our profitability,” said Neal Menashe, CEO.
🎢 Super Group has an adverse reaction to achieving Russell 2000 inclusion
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Sector watch – streaming
To circumvent streaming rules, create your own streaming platform.
The Amazon Gambling Commission: October 18 last year saw Twitch, the Amazon-owned live-streaming behemoth, tighten its terms of service to prohibit streaming of “listed sites that contain slots, roulette and dice games and aren’t licensed either in the US or other jurisdictions that offer consumer protections”.
At launch, Stake.com, Rollbit.com, Duelbits.com and Roobet.com were the sites identified as prohibited.
H122 saw 244 million hours of slots and poker content consumed on Twitch (pre aforementioned change).
Stake.com took its affiliates and created its own streaming platform.
Chutzpah: Stake’s huge influencer, celebrity and premier sport-led advertising campaigns have turbocharged the company’s growth. An investigation by the FT earlier this year suggested it generated $2.6bn in GGR in 2022.
Just last week, CEO and founder Ed Craven appeared on a Gamers Update podcast and claimed Stake would be making a “very big move into the USA with a very big acquisition”.
Stake was also at the center of a controversy when it emerged it was in discussions with Chelsea to be its new shirt sponsor.
It is already the sponsor at EPL side Everton and prior to that Watford.
Kickabout: Stake shares some ownership – including Craven – with self-dubbed “industry disruptor” Kick.com, a streaming platform similar to Twitch. The platform has a few notable big name streamers, Tyler ‘Trainwreckstv’ Niknam and Aidin Ross, two of the largest gambling streamers by viewers.
Most recently, it paid $100m to Felix xQc Lengel for a two-year non-exclusive deal, completing the most notorious trio of Twitch slot gamblers.
“Kick is already becoming a competitor to Twitch,” Craven told Gamers Update.
Further listening: Ollie Ring from Esprouts talks to Jon & Fintan from the Gambling Files this week.
Nevada data
Analysts predicted May would prove a tough comp and so it proved.
Tough comp: Strip revenues were down 2% YoY to $716m (+1% QTD) and slot revenues were flat YoY (+4% QTD). Downtown revenues were down 7% YoY, but up 7% YTD. Despite the expected slippage, JMP noted that Q2 was the slowest quarter of the year, but the improved handle “highlights the continued demand in the Nevada gaming market”.
Visitation numbers were up 1.5% to nearly 3.5m and convention visitors +16% during the month as air passenger numbers increased 8%.
Local heroes: Locals up 4% YoY compared favorably against regionals, which were down 2% in May. “We are encouraged [by] the long-term population and job creation trends as the valley continues to expand,” added JMP.
Bull case: The Macquarie team upped its forecast for Q2 from -2% to flat YoY and said events such as the Las Vegas Knights’ Stanley Cup run could boost non-gaming revenues.
The team was also bullish on further Vegas growth thanks to the return of conventions and a strong sports/event calendar over the next 24 months.
A slowdown in consumer or leisure spend was a risk, but Macquarie said it expected to see FY23 Strip GGR rise 1% to $8.4bn.
Icon for sale: CBRE added that Blackstone could be looking to sell its stake in the Bellagio and that despite “tight credit markets and higher rates”, its iconic status means “any real estate investor with the financial means would likely be at the table”.
So solid: Blackstone paid $4.25bn for its stake in the Bellagio in 2019 and CBRE said its solid performance and scarcity of such assets could lead to positive returns.
Datalines
Spain: GGR in Q123 shot up 51% YoY to €305m, with sports betting up over 100% to €131m or just under 43% of the total. iCasino remains the largest segment, however, up 29% to €143m or 47% of the total.
Earnings in brief
Groupe Partouche said H123 GGR came in at €341m, up 18% YoY, while operating profit rose 100% to €19m, with the increase ascribed to a post-pandemic rebound across its land-based properties.
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Newslines
Playtech has closed a €300m bond issue announced earlier in June. The new money will go to redeeming previous outstanding bonds and revolving credit facilities.
Meanwhile, Playtech has announced it will strengthen NorthStar Gaming’s subsidiary NorthStar Ontario by financing marketing and player acquisition in H223 with an initial C$1.5m contribution, which could be increased to up to C$4m.
IGT and FDJ’s B2B division FDJ Gaming Solutions have signed a cross-licensing agreement enabling them to access each other's full suite of eInstant games.
Rank has sold the Grosvenor Casino in Leicester to an undisclosed family office buyer for $11m.
Calendar
Jul 27: Churchill Downs (earnings), VICI (earnings)
Jul 28: Churchill Downs (call), VICI (call)
Aug 2: MGM Resorts
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