Weekend Edition #89

Betr’s expanded offering, Light & Wonder dual track, Sportradar analyst reaction, New Jersey February +More

Earnings+More

Mar 17, 2023

Good morning. Welcome to this week’s weekender. In today’s edition:

Betr’s CEO says micro thesis has been proved; adds standard markets.
Light & Wonder seeks to emulate rival’s fat multiple with Oz dual listing.
Sportradar share price fall “punitive”, say analysts.
New Jersey handle declines charted.
Sector watch takes a look at the Diamond Sports RSN bankruptcy.
Jobsboard includes data scientist and product manager positions.

I'm goin' to walk on up to the waterfront.

Betr’s expanded waterfront

The microbetting operator has announced it is adding more standard bet types to its offering.

Keeping up with the Joneses: Betr launched a suite of core markets including pre-match and in-play options this week ahead of March Madness in the hope of reaching “product parity” with its competitors.

The move comes less than three months after Betr debuted in Ohio in January.
MIA in MA: Betr missed the launch in Massachusetts last week, saying it will launch in the coming weeks.

Keeping tabs: Speaking to E+M, Joey Levy, CEO, stated the startup was “still focused” on microbetting after what he said was a “highly successful” launch that had beat internal forecasts. He said the average user has bet over 31 times, while >15% have placed at least 50 bets.

He said that users are showing “stronger engagement relative to microbetting markets on other apps”, betting 17% more per game on NBA, 41% more per game on College Football and 63% more per game on NFL.
“We will still operate the same playbook focused on a differentiated and intuitive user experience,” he added.
“We have also validated our thesis that users want a simplified sports-betting experience, as many users who were previously intimidated by complex terminology (e.g. -350) bet for the first time on Betr.”
Levy added that Betr had converted a stronger-than-expected number of its social media followers, which highlighted the strength of the Jake Paul-fronted media business.

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LNW chasing multiples

Light & Wonder eyes rival Aristocrat’s better multiple.

Grass is greener: Analysts say the consultation launched this week to consider a dual listing of LNW’s shares in Sydney is an attempt to bridge a valuation gap between the Las Vegas-based firm and its Australia-based rival.

The company said this week it would consult shareholders on a dual listing on the Australian Securities Exchange (ASX), saying it saw “substantial benefits” from having a secondary listing.

Background: Analysts at Truist noted substantial elements of the board and management previously worked at Aristocrat and are familiar with the Australian investment landscape. “We think a potential secondary listing there is largely about multiple arbitrage,” they added.

Aristocrat currently trades on a 2024 EBITDA to free cash flow yield multiple of 11x vs. 6.5x for LNW.
The Truist team noted Aristocrat also benefits from the fact that several large investment funds are specifically mandated to invest in Australian listed companies.
They also pointed out that prior to the sale of the lottery arm, the then Scientific Games was considering a dual listing for that business, which it ultimately sold to Brookfield for $6bn.

Analyst takes – Sportradar

The share price falls this week are being viewed as an overreaction.

Overdone: The post-results 13% fall in the share price was “punitive”, especially in light of what was a relatively modest 3% reduction in forecasted 2023 EBITDA, according to Deutsche Bank. The team pointed out “as a reminder” that Sportradar is “already profitable”, has a strong balance sheet (having paid off $220m of outstanding debt) and part of its investments are in AI, which is currently an investor favorite.

Ping: The team at Jefferies said the revenue and EBITDA forecasts for this year “should be taken positively”, though they noted FX risk to the bottom line.
Pong: They also noted the launch of Sportadar’s Computer Vision technology, which is currently being applied to table tennis.

Churchill Downs

The team at JMP said the news that Kentucky has finally moved to outlaw unregulated gaming machines is an unalloyed positive for Churchill Downs, which runs historical racing machines in the state.

“The elimination will shift the consumer wallet into the nine HRM facilities within the state,” they added.

WC margins hit Betclic

Betclic parent FL Entertainment enjoys strong Q4 thanks to the World Cup.

Core margins: The World Cup enabled Betclic to record a 34% YoY rise in revenues to €244m with adj. EBITDA rising 39% to €52m in Q4, but CEO François Riahi said margins were “not so high” due to France reaching the final.

The World Cup saw player signups rise 25% and Riahi said this will pay off in 2023 and beyond.

On a full-year basis, OSB revenues rose 13% to €835m and GGR was up 15% to €203m, in line with guidance.
Group level revenues were up 16% to €4bn and adj. EBITDA was up 10% to €670m, driven by FL’s TV production division Banijay.

Earnings in brief

OPAP: The Greek operator’s instant games and lottery revenues were up 15% and 5.5% respectively and sports betting was down 3% to €161m in Q4. Online casino revenues increased 29% to €61m.

Total Q4 revenues rose 5.5% to €541m and EBITDA was up 19% to €203m in Q4, while FY revenues rose 26% to €1.9bn with EBITDA rising 34% to €736m.

Golden Matrix said its reverse takeover of MeridianBet is expected to complete in H1 as it reported FYQ1 revenue up 21%.

Lottomatica’s FY22 revenue rose 17% to €1.4bn, with gaming up 93% to €725m and sports betting up 122% to €341m. Online revenues rose 17.5% to €329m, thanks to the acquisition of Betflag, and group revenues reached €281m in January and February, the group said in a trading update.

Guidance for FY23 will be in the range of €1.57bn-€1.67bn, with EBITDA at €550m-€570m. Lottomatica is understood to have hired UniCredit to work on an IPO valuing the firm at €5bn.

Datalines – New Jersey

Hold up: Sports-betting GGR rose 77% YoY to $55m in February as operators benefited from sharply increased hold, up to 7.2% from 6.5% in the prior-year period. Handle, however, was down YoY for the 10th straight month to $854m.

🤿 New Jersey’s handle continues to suffer the New York effect

In iCasino, GGR was up 10% YoY to $143m, with BetMGM on 28%, DraftKings 22% and FanDuel 17%.
Land-based GGR rose 1.3% to $213m.

More datalines

Massachusetts: The state went live with regulated mobile betting on March 10 and GeoComply said it processed 8 million geolocation transactions and 406k account openings during the weekend of March 10-12 .

Retail betting GGR came to $26m in February in its first month of operation, with Wynn’s Encore Boston leading on $17m, Penn’s Plainridge Park Casino with $7m and MGM Springfield recording $2m.

Illinois: Sports-betting GGR reached $96m and handle exceeded $1bn for the fourth consecutive month in January. FanDuel grabbed just over half the GGR at $46m.

The importance of parlays: 62% of the state’s GGR total came from SGPs with $29m of FanDuel’s GGR total coming from the product, generating margins of 21.5%.
DraftKings was second overall on $25m GGR with $13.3m coming from SGPs.

ICYMI

On Sharpr this week, the big news was that Riot Games is exploring potential betting partnerships for Valorant. Though an official statement from Riot said there was no change imminent to its policy of not allowing betting partners, it was evaluating opportunities.

Sharpr

Report: Riot Games exploring betting partnerships for Valorant

Hi everyone, Cody here. A big rumor began swirling yesterday that Riot Games, one of the world’s biggest esports publishers, would reportedly permit betting partnerships in one of its flagship esports leagues–a first for the company. These stories are the reason I decided to start this newsletter, so I was excited to jump on the topic this morning with so…

2 years ago · 2 likes · 2 comments · Cody Luongo

In Compliance+More this week, yesterday’s newsletter brought news of Barstool’s climbdown on its ‘Can’t Lose Parlay’.

Earlier in the week, headlines were made by Flutter and 888 holding back on court-mandated customer refunds.

In Earnings+More this week, the sector breathed a sigh of relief over the SVB collapse.

The latest edition of Deal Talk discussed the ramifications of Flutter’s dual listing consultation for London’s fading attraction as a listings hub for gambling entities.

Words in your ear: In other news, +More Media announced it was now the publisher of the Gambling Files podcast with Jon Bruford and Fintan Costello. The latest episode sees Jon and Fintan chat casino collectibles with David Spragg.

Sector watch – sports TV

The long-predicted Chapter 11 bankruptcy of Diamond Sports throws the future of its Bally Sports-branded RSNs into doubt.

The pre-pack Chapter 11 proceedings entered into by the Sinclair-owned Diamond Sports doesn’t mean its broadcasts go off the air, according to a statement from David Preschlack, CEO of the indebted Diamond Sports.

Diamond has been weighed down with $9bn of debt loaded up at the time of the acquisition of the RSN rights in 2019.
The timing was poor given the trend since then for cord cutting in the US, which has left the Regional Sports Networks stranded with declining viewership.

Whatever doesn’t kill you: Preschlack promised a swift return for Diamond Sports once it has negotiated a restructuring with its creditor, saying it will emerge from the restructuring process as a “stronger company”.

However, in the short-term, the NBA said in February ahead of a potential bankruptcy that it will step in and stream games while it continues to negotiate the next long-term deal.
MLB, meanwhile, has also staffed up a local broadcast division to start covering games as of the start of the season on March 30.

Channel switch: Should Diamond Sports not survive the Chapter 11 process, these efforts might be the precursor to the leagues taking over more ownership, although the rights might also move back to local affiliates stations as was the situation before the emergence of RSNs.

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