Sep 20: German regulator’s 100% channelization goal

Gaming in Germany Day 1, SBC Summit Barcelona preview, California tribal gaming analysis +More

Earnings+More

Sep 20, 2022

Good morning. On today’s agenda:

A German regulator representative makes 100% claim for channelization.
E+M previews what’s taking place at the SBC Summit in Barcelona this week.
Tribal gaming in California gets some timely analysis.

100% endurance.

Gaming in Germany Day 1

Enforcement head at the German regulator says the aim is 100% channelization.

All or nothing: Nadja Wierzejewski, the head of regulatory enforcement at the Gemeinsamen Glücksspielbehörde der Länder (GGL), the new German regulator, suggested that the body’s aim was “simple”. “It’s 100% legal and 0% illegal,” she suggested.

Defensive strength: Along with fees and fines, the new regulator also had “new tools” at its disposal including IP and payment blocking.
“If we use these tools then we can achieve quite a lot,” Wierzejewski added.
“The market is there for those that want to play by the rules.”

Neighborly advice: Speaking at the same event, the head of the Netherlands gambling authority, the Kansspelautoriteit or KSA, René Jansen noted it would be “interesting” to see how such measures as the €1k-a-month deposit limits work in practice and “whether it has an effect in channelisation and whether it works in terms of limiting gambling harms”.

At a gallop: He added, though, that gambling “does not have a rosy image right now” particularly in matters of public trust. “Trust arrives on foot and leaves on horseback,” he said.
He noted the issue of gambling advertising that had raised hackles in the Netherlands in the short time since the market opened up to online in October last year.
The quantity of advertising – he described it as a “bombardment” – had “caused a stir”.
“Strictly speaking the operators were doing nothing wrong,” he noted, before suggesting that further parliamentary moves were now likely inevitable.

Sympathy for the devil: Back with Germany and Joerg Hoffmann, head of gaming and betting at the law firm Melchers, suggested the sector’s frustrations on the pace of regulation should be tempered, indicating the new gambling authority was “working very hard”.

Still, as noted by Mathias Dahms, president of the German Sports Betting Association, there is still work to do with the level of public understanding in Germany.
“Customers still don’t know there is a legal market,” he added. “They have never heard of a white list.”
Meanwhile, issues around the €1k deposit limits also need to be resolved. “For someone unemployed it is too much, for a millionaire it is too little,” Dahms suggested.

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SBC Summit preview

Keynote talks come from Shay Segev, DAZN, and Carsten Koerl, Sportradar

Shay Segev: Kicking off Day 1 at 10am in Conference Room 1, the CEO at sports streamer DAZN, talks at a key moment in his company’s history after it launched DAZN Bet in the UK in August to, it must be said, a mixed reaction on Gambling Twitter.

Keep it simple: DAZN has had some success with its boxing coverage of late, garnering some of its best viewing figures for the recent fight between ‘YouTube icon’ KSI and rapper Swarmz. The fight pulled in nearly 500k pay-per-views.
Debt-able: Questions remain about DAZN’s future given it recorded losses of $1.3bn in 2020, though billionaire owner Len Blavatnik agreed to a $4.3bn recapitalization that has left the company debt-free.
Panel: Segev will also be discussing the topic of sports and sports-betting convergence with LiveScore CEO Sam Sadi and WSC Sports CEO Daniel Schichman later on Wednesday at 12.30pm.

Carsten Koerl: Sportradar’s CEO takes to the stage on Thursday at 10am in Conference Room 1 for a fireside chat. In the company’s most recent earnings, revenues were up 23% to €177.2m but adj. EBITDA was down 13% to €27.6m.

Prospects in the US have dominated discussions around Sportradar, with Koerl telling analysts during the Q2 call that the rise of in-play in the US was “unstoppable”.

Session highlights

Sports gamification – Weds 11.30am, Conference Room 3 w/ Morten Pedersen Tonnesen, CCO of the recently acquired Shape Games and Richard Leask, marketing director of LiveScore, which recently announced a £50m investment from Ringier.
UK Re-wired – Weds 3.30pm, Conference Room 7 w/ Guy Harding, CCO at Oddschecker and Sophie Platts from Entain on White Paper watch. Read what it likely contains via our exclusive in July.
Emerging tech and blockchain – Thurs 12.30pm, Conference Room 2 w/ Tom Waterhouse from Waterhouse VC and David VanEgmond at Bettor Capital.

First Pitch

Prize fight: Previous E+M startup focus subjects Network Gaming, which provides sports prediction games, and white-label micro-gaming platform Kero Gaming – featured as Rush Sports – are taking part in the First Pitch competition at 11.30am on Thursday in Conference Room 2.

Also in the hunt:

🎾AI sports betting data capture provider OSAI.

🔮Pari-mutuel betting protocol Paradox.

💾Skill-based PvP gaming provider Pow Gaming.

🎯Sports-betting and iCasino blockchain platform provider XRBet.

Where we’re speaking

E+M’s Scott Longley moderates a panel on Wednesday at 11.30 in Conference Room 7 debating whether the era of market liberlization is over.

Hard times: Operators in the UK, Germany, the Netherlands, Spain and the rest are facing up to tougher regulatory climates.
Discussing the prospects are EGBA’s Maarten Haijer, Morten Ronde from Nordic Gambling and David Foster from Entain among others.

CA tribal gaming analysis

Analysts point to “amazing” depth and size of the southern Californian tribal market.

Fresh princes: After visiting six casinos between LA and San Diego, including the Agua Caliente and Pechanga resorts, the team at Truist suggested the properties had “fresher, more diverse” slot floors compared with comparable regional market properties. They indicated the tribes look to refresh 10-25% of the slot floor annually versus 5-10% for commercial casinos.

Feeling the heat: In common with commercial operators, the state of the economy is hitting the low end of the customer base, with the analysts noting an increasing correlation with gas prices once they broke the $5/gallon level.
GGR and margins are “likely to feel pressure” vs. 2021, but will still be up meaningfully on 2019.

Keeping control: On the tribal sports-betting Props 26, the tribes noted financial expectations were “modest” but the wider issue flies around tribal sovereignty. In particular, the online industry’s Prop 27 would lead “inevitably” to iCasino whereas Prop 26 would enable the tribes total control of the process.

But Truist came away believing the blanket ads around the measures may cause confusion among the voters, with both failing to gather enough votes.

Regional gaming analysis

As comparatives ease into the new year, analysts note higher-spending growth continues.

While visitation may have stalled at around 80% of the levels from last summer, the team at JMP said they are “encouraged” by evidence of a 5% rise in spend per head in August and noted that there has yet to be a decline in this metric since the onset of the pandemic.

“The gaming consumer has proven YTD that pressure to the wallet does not deter land-based gaming,” they argued.

I eat cannibals: JMP suggested there is some evidence of cannibalization in iCasino states. This is a trend to watch, the analysts noted. “But we believe land-based operators with online apps can leverage their databases to cross-sell their digital product and brick and mortar casinos,” they added.

👀GGR growth in iCasino states versus all US gaming

Earnings in brief

EveryMatrix: Revenue increased 41% YoY in Q2 to €30.1m while EBITDA was flat at €5.2m. Regulatory changes continued to impact iCasino activities in Germany, but the group said it still managed to grow 11% YoY in the market.

Jump around: It also announced a supply deal with Bet-at-home for OSB and iCasino completed the acquisition of the Croatia-based retail sports-betting supplier Leapbit.

Analysts in brief

Genius Sports: Noting the recent news around Amazon’s Thursday Night Football programming, including the sponsorship with DraftKings, the team at B Riley also noted Genius Sports’ involvement (as revealed in an SEC filing last week) to provide augmented video technology and data-related services in connection with an alternate feed.

Bridge and funnel: The analysts suggest Genius not only gets paid directly for providing these services, but such broadcast offerings “should also funnel back to accelerate the overall betting handle and handle mix to in-play, in our view”.

Datalines

Pennsylvania: Sports-betting GGR for August increased 66.6% YoY to $42.2m, while net of promotions it was up 88.6% to $34m. Handle was up 7.9% MoM to $363m. iCasino GGR was up 20.8% YoY and 8.7% MoM to $107.2m. Land-based casino GGR was down 5.5% to $279.7m.

Leaders: FanDuel at 39.3% and DraftKings at 27.2% accounted for ~67% of mobile handle. BetMGM maintained third spot with 11.7%, while Barstool was fourth with 6.9%.
Deutsche Bank estimates that BetRivers is iCasino market leader with 25%, followed by DraftKings (20.5%) and FanDuel (16.6%).

🥧Pennsylvania OSB and iCasino market shares Aug22

Connecticut: GGR for August rose 37.9% YoY to $102.6m; while in sports-betting, GGR rose MoM to $8.9m on handle, which was static at $73m. iCasino rose 6.4% MoM to $17.7m.

Tennessee: GGR for August soared by 141% MoM to $24.4m on handle that rose 42.5% to $205.9m.

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Newslines

Redemption song: IGT will be redeeming $600m of its outstanding secured notes, up from the $500m previously communicated.

FansUnite has tapped Centurion Financial Trust for a senior term loan worth up to C$12.3m. The cash will go towards restructuring the earn-out obligations from its acquisition of American Affiliate and eliminating $43m in contingent liability.

Lottomatica has received a B1 rating from Moody’s for its proposed €350m senior secured notes, which the analysts say reflects the strong current trading performance including high single-digit online growth and a return to pre-pandemic levels in retail.

The trial of Alvin Chau, the former CEO at junket operator Suncity, began on Monday. Recall, Chau was arrested in November last year by the Chinese authorities.