Weekend Edition #77
Rank’s worsening backdrop, Simplebet’s Caesars deal, Super Group’s anti-dilution measures, sector watch – crypto exchanges +More
Good morning. On today’s agenda:
Rank issues warning as players’ spend metrics worsen.
Simplebet adds Caesars to its roster of micro-betting clients.
Super Group acts to prevent dilution of shareholders.
Sector watch surveys the ruins of what FTX leaves behind.
Rank’s cold front
The UK-listed casino to bingo operator has once again warned on trading, saying operating profits for FY23 will fall to between £10m and £20m.
Goodbye Mr Chips: Having told the market in October that it was seeing the impact of a consumer downturn, Rank said today that continued weak spending had led to a “tougher than expected trading environment”. It warned that the year-to-date performance at its Mecca bingo business “created downside risk” for the FY.
Mecca NGR for the five months was “in line with Q1” but the business had seen a “recent weakening” in weekly NGR due to lower visitor numbers, impacted by the World Cup, colder weather and the cost-of-living crisis.
Meanwhile, in the Grosvenor Casinos business, an expected Q2 improvement had failed to materialize, with the company seeing lower spend per visit.
The warning: Rank said the “main variable” affecting FY23 profits would be the performance of Grosvenor venues. “Due to the high operating leverage within Grosvenor, and its relative importance to the Group as a whole, movements in its NGR will have a significant impact on the Group's operating profit for the year,” the company added.
John O’Reilly, CEO, said the company expected the challenging operating environment to “impact our recovery” into the second half of Rank’s financial year.
“We have implemented a series of measures to deliver incremental cost savings and to drive revenues,” he added.
Analysts at Peel Hunt said the news represented “a delay not a defeat”.
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Caesars’ micro-betting deal
Provider Simplebet has announced a multi-year agreement with Caesars Sportsbook to provide micro-betting.
Little victories: Simplebet CEO Chris Bevilacqua said the deal with Caesars “accentuates” micro-betting appeal as an “emerging feature” for sportsbooks. He added that it was “transforming” the way consumers, operators and media companies view live sporting events.
Under the terms of the deal, Simplebet will provide micro markets for the NFL, NBA, college football and basketball as well as MLB as of next season.
Speaking to E+M in September, Bevilacqua said micro-betting provided “instant gratification”.
Simplebet is also behind the micro-betting offering at DraftKings. That deal was signed in August last year.
A betr bet: It is also the main tech provider to the Joey Levy and Jake Paul-backed betr, which is set to open in Ohio when that market launches.
Betr is also using FansUnite as its PAM supplier, which announced just this week it had secured a license in Ohio.
Super Group’s anti-dilution
The company behind the Betway and Spin brands has undertaken a share simplification to protect current shareholders against future dilution.
Got your back: Super Group this week underwent a warrant exchange while canceling a tranche of private warrants and introducing an earnout waiver, which together removes an overhang of around 79m shares or 13.6% of the share count.
Neal Menashe, CEO, said the moves would “reduce the prospect of future potential dilution” for current shareholders, including the management team.
Supplier and operator GAN saw its shares climb 16% on Tuesday.
Bounce: The sports-betting operator to iGaming and OSB PAM supplier enjoyed a decent start to the week, with two consecutive up days helping it to a near 45% rise over the course of the last five days.
Perspective: Zoom out, however, and it can be seen the rally didn’t do an awful lot to alter what has been a disastrous year for the stock, which is down 80% YTD.
👀 GAN’s decent week doesn’t alter long-term trajectory
Earnings in brief
Real Luck: The Toronto-listed esports betting operator said the growth in real-money players was up 97% MoM in November, while handle rose 70% over the same period. The company said it indicated a “very encouraging” Q4. In November, the company said it had signed a letter of intent to buy an unnamed Asia-focused iGaming platform in an all-shares deal.
PlayStar funding round
Not that MGM: The online gaming startup has received a letter of intent with Meyer Global Management that outlines a potential $15m investment designed to support the iCasino operator’s US expansion plans. PlayStar is already up and running in New Jersey.
Show of faith: Per Hellberg, CEO at PlayStar, said the cash commitment was a vote of confidence in the PlayStar business “in a time of such economic uncertainty”.
Sector watch – crypto exchanges
The news couldn’t be more dramatic as FTX’s disgraced ex-CEO Sam Bankman-Fried faces DoJ accusations of an epic fraud.
SBWTF: Financial frauds don’t come much bigger than that allegedly perpetrated by Sam Bankman-Fried, who is currently in police custody in the Bahamas awaiting his extradition to the US and a potential 150-year prison sentence. The obvious fallout from the scandal comes with its rivals, notably Binance led by the SBF-baiting CEO Changpeng Zhao.
Investors pulled over $1bn of net withdrawals from Binance on Tuesday this week as fears about contagion spread.
On Twitter, Changpeng Zhao said this was “business as usual for us”.
This followed reports on Monday that Binance itself was facing a criminal investigation in the US over its handling of AML and sanctions laws.
That story suggested the DoJ has discussed possible plea deals with Binance's attorneys.
Contagion: Of the remaining rivals, Coinbase is also going through its own stress test in the arena of the bond market, where its own bond prices have plummeted. The company’s Q3 results reflected the uncertainty in the wider market.
Trading volumes were down more than 50% YoY to $159bn, pushing the company to pre-tax losses of $545m.
Meanwhile, there were ructions lower down the trading scale as a group called Amber – which runs the WhaleFin app – raised only half of its planned $100m funding round. WhaleFin is a sponsor of football clubs including Chelsea and Atletico Madrid.
This week on E+M
Earlier this week we sent out the latest edition of Deal Talk looking into the rise and fall of SPACs and the gaming sector’s de-SPAC hits and misses.
Massachusetts: Casino GGR rose 5.75% YoY to $92.8m.
Connecticut: Casino GGR rose 2.4% to $108.8m, while sports-betting GGR rose 12.1% to $16.1m on handle that rose less than 1% to $154.5m. iCasino rose 22.6% to $26.8m.
Kansas: Sports-betting GGR in October hit $8m on handle that rose 1.9% to $186.4m.
Tennessee: Sports betting was up 52.5% to $45.2m on handle that rose 20% to $439.5m.
Sportradar is supplying integrity services and a universal fraud detection system to the International Ski and Snowboard Federation.
Parx has launched cashless payments through Sightline’s Play+ software and Light & Wonder’s casino management system.
Kindred has extended the €216.7m revolving credit facility it signed in November 2021 until 2025 and increased it by €40m.
IGT has extended its lottery contract with Loterie Romande in Switzerland and will add its iLottery solution to the operator’s product range.
What we’re saying
Scott Longley appears on the Gambling Files podcast talking about earnings calls and startups.
Sorare so precious: Jake Pollard reports for iGB on Sorare’s promise to focus on free play following recent dealings with gambling regulator ANJ.
Dec 20: Due Diligence #2
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