Rebels rattle Penn
Rebels rattle Penn
Penn Entertainment investors revolt over pay, DB’s Las Vegas road trip, startup focus – Baricata +More
Less than half of eligible votes are cast in favor of Penn CEO pay package.
Deutsche Bank notes the “halo of newsflow” around operator M&A.
By the numbers: margins stabilize in April.
Startup focus is games provider Baricata.
People getting ready for the news.
Penn’s investor revolt
Solidarity: Over a third of investors rejected Penn Entertainment’s executive compensation plans and over a quarter voted against the re-election of board chair David Handler at the company’s AGM, suggesting support is building for the ongoing activist investor campaign.
In an SEC filing on Friday, Penn announced that 34% of eligible shareholders had voted against the pay package for CEO Jay Snowden and CFO Felicia Hendrix.
This came after hedge fund Donerail went public over the CEO’s “exorbitant” pay package of over $6.1m in 2023.
No, no, no: In the votes on board re-election, Handler saw 27% of shareholders vote against his remaining, while the same amount voted against the reappointment of Vimla Black-Gupta. Board member Anuj Dhanda received a 16% no vote.
One investment insider suggested the votes were “pretty dismal results” for the company “particularly as no one has put forward a dissident slate of directors.”
They noted that when the 17% broker non-votes are taken into account, of those that actively voted 42% voted yes on the pay package and 49% voted in favor of Handler.
Rebel alliance: The known dissident investors include Donerail, HG Vora, which went public with its concerns in January and controls 9% of the shares, and Greenlight Capital, which also has made public its dissatisfaction with the direction of travel at Penn.
The art of persuasion: The investment insider who opted to speak in an anonymous capacity said they believed other shareholders “have been persuaded” to vote with the activists.
“The Donerail letter actually came a bit late in the process to have influenced many because a huge number of shareholders will have already cast their votes by the time that was published,” the souce said.
“But still, their objections as laid out will have influenced some and definitely have an impact on the debate.”
You are here: It’s not clear what the next steps are for the activists or the business, with the potential for a sale of the company still a possible scenario. Bids remain a possibility but they will start with informal approaches, suggested the investment insider.
“Next steps might include the company embarking on a strategic review or with the board calling for more time to see how ESPN Bet plays out with the NFL season.”
Look who’s coming to dinner: Meanwhile, after a “well-attended dinner” in New York, the analysts at JP Morgan said Penn management “continues to be focused” on ESPN Bet’s top-of-funnel efforts and reiterated the company’s “lazer focus” on product improvements and integrations with the wider ESPN ecosystem.
🙊 The JPM team noted that “unsurprisingly” the management team made no comment on recent investor activism. However, sources suggested CEO Snowden was “quite dismissive” of Donerail.
“What I hear is that the management team are unrepentant,” said the investment insider.
“They are saying, ‘just wait until September’, but they have been saying ‘just wait’ for almost a year now."
🍿JPM also reported that Penn plans to host an investor day in October.
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Better Collective has completed its €2.4m share buyback program related to the AceOdds acquisition.
William Hill is the new official title sponsor and betting partner of Scotland’s four professional football leagues.
Kambi’s esports division Abios has partnered with Rei do Pitaco, a leading Brazilian daily fantasy sports operator, to power its fantasy esoccer product.
Career paths
Bragg Gaming has appointed Robbie Bressler as interim chief financial officer, effective July 1. Andreas Reimblad is stepping down from his role as director of sportsbook at Kindred. Fincore has appointed Dominic Le Garsmeur as chief product officer. Kaizen Gaming COO Aris Dimarakis will now also assume the role of deputy CEO, while Christos Tzalavras has been promoted to chief product officer. GiG has named Phil Richards as CFO of Platform and Sportsbook. FanDuel has appointed Karolina Pelc as VP of BeyondPlay, following the completion of its acquisition of the jackpot and multiplayer supplier. Innovation Capital has appointed Sue Fuller as managing director.
Analyst takes
Halo effect: After a trip to Las Vegas, the team at Deutsche Bank suggested the “halo of newsflow” about potential M&A (see Penn above) will “likely be positive” for the gaming operators.
But the analysts added they are “yet to hear or identify a credible solution” to the lingering issues involving potential transactions.
Get creative: DB said any large-scale M&A would be “challenging, especially if it involves multiple partners and business lines.” While the team expected “proposed suitors to emerge, their level of interest is likely to vary.”
“We think creative structures are likely to be necessary in the current environment.”
Solid as a rock: On current trading, the analysts reported operators as suggesting the high-end business “remains firm” and continues to outperform the low-end of the market. One area of contention remains F1 with this year’s Grand Prix looming in November.
DB said the discussions revolve around what the city can do to “improve the experience for a broader spectrum of operators.”
But they didn’t think any major changes have been instituted to date.
“We believe the potential for single-day ticket sales would potentially help, and this is something that is being discussed.”
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By the numbers
With 26 states having reported April OSB data, the team at Jefferies pointed out that margins have stabilized following a weak March. Handle across the 26 was up 34% YoY while GGR rose 42% with margins at 10.2%, which represents a 2.3 ppt sequential improvement.
The data showed that new states added 16 ppts to headline GGR growth. Excluding them, April handle was +24% YoY and GGR +26%.
The duopoly continues: FanDuel remained at the head of the pack in April with combined OSB and iCasino growth of 45% in April across the 26 states. This was ahead of DraftKings on 30% and a growth rate of 34% for the market overall.
👀 BetMGM suffered a poor April in comparison with overall growth a mere 2%.
💥 Ain’t no stopping us now: FanDuel powers on
Startup focus – Baricata
Who, what, where, and when: Founded by CEO Shiraishi Kensei, games provider Baricata is headquartered in Malta and has a Cyprus subsidiary that holds a B2B Curaçao license. “We offer a new genre of live casino games that combine VTubers (real-time animated character streamers) with video games like roulette and baccarat,” says Kensei.
Funding backgrounder: The company has trousered €1.1m in equity funding, completing its last round in July 2023; backers include the CEO and four angel investors.
The pitch: Kensei believes the big opportunity lies in “bringing the wave of VTubers and AI casino dealer technology from Asia to the European online casino market.” The innovation, he says, enables animated character streamers to host live casino games, creating “unique casino experiences for operators.”
“Additionally, our AI casino dealers can focus on VIPs and provide exceptional customer service, significantly impacting retention rates.”
Young guns: The tech saw strong interest at SiGMA Asia from more than 10 casino operators. “Many commented positively on the innovative nature of our games tailored for younger generations and are eager to proceed with implementation,” says Kensai.
As for markets, he adds: “We are particularly interested in the intersection of the iGaming, VTuber and AI streaming industries.”
Last month, Baricata announced a strategic partnership with Raketech to develop AI casino dealers, which are based on ChatGPT technology.
July will see the launch of its Jackpot Baccarat game.
What does success look like? Within the next three years, the aim is to “achieve a monthly GGR of €1m, operate in 10 countries and collaborate with 100 casinos,” says Kensei.
Long term, the company envisions listing on the Stockholm Stock Exchange.
No more heroes: “Ultimately, our success is defined by realizing our philosophy of ‘Making the ice pick for the new generation’s brain’.”
Growth company news
Playbook Fusion: The former CCO of Inspired Entertainment, Steve Rogers, has launched a new games studio with “never-before-seen” sports gaming content.
Online gaming aggregator Dot Connections has partnered with ParlayBay to offer the latter’s sports microbetting product via its ACE platform.
What we’re reading
The Pelosi tracker: Autopilot is an investment app that lets users copy the trades of the likes of Nancy Pelosi’s husband, Warren Buffet or Bill Ackman. In The New Yorker.
Calendar
Jun 18-20: Canadian Gaming Summit
Jul 17-20: National Council of Legislators from Gaming States, Pittsburgh
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