Welcome to Las Vegas
G2E preview, Kindred’s Norwegian defense, AGA CEO survey, Startup Focus – OrbitalBet +More
Good morning. On today’s agenda:
G2E gets underway in Las Vegas later today.
Kindred says it will take a passive approach in Norway.
Our startup focus is UK-based sportsbook platform solution provider OrbitalBet.
A keynote triple header involving Amy Howe and Jason Robins discussing digital are among the highlights this coming week.
Top of the bill: The keynotes on Tuesday feature a series of three double-headers taking place in the Venetian Ballroom, starting from 8.55am. Of particular note, Jason Robins from DraftKings will no doubt be avoiding questions about the rumors of a partnership with ESPN when he takes to the stage in the company of Amy Howe, CEO at rival FanDuel.
Craig Billings, CEO at Wynn Resorts, and Derek Stevens, CEO at Circa Resort & Casino, will discuss the trends and future of Las Vegas.
Bally Corporation chairman Soo Kim and Penn Entertainment CEO Jay Snowden will cover all things regional.
Third up is potentially the most interesting as the CEOs of FanDuel and DraftKings, Amy Howe and Jason Robins, give their views on where next for OSB and iCasino.
On Wednesday at 9am, Erika Nardini, CEO at Barstool, will be (gently) grilled by the AGA’s Bill Miller. Miller will also be in conversation during the same session with Sandra Douglass Morgan, president at the Las Vegas Raiders.
The best of the panels:
On Monday, Adam Krejcik from Eilers & Krejcik will be among those discussing whether the current sports-betting model is sustainable (9am, Titian 2203).
Later that day, Chris Grove and Lloyd Danzig will be looking at where the value resides for investors (1.30pm, Titian 2205).
Meanwhile, Andrew Zarnett, head of gaming investment at Jefferies, will be on a panel discussing the current gaming outlook (3.30pm, Titian 2205)
On Tuesday, those wishing to pick over the bones of the apparently doomed sports-betting efforts in California can get some tribal insight with James Siva, vice-chair for the Morongo Band of Mission Indians (11.40am, Titian 2301).
The importance of regtech in gaming will be up for discussion with Wayne Kimmel from SeventySix Capital on Wednesday morning (10.15, Innovation Lab, Booth 5320)
Analyst view: Jefferies said it is expecting a strong turnout this year, with discussion set to revolve around the buoyancy of the Strip and digital strategies at the likes of Wynn and Caesars.
For the online operators, Jefferies said investors will be seeking early observations on the NFL so far and expectations for profitability.
“With sentiment on anything digital largely still bearish today, companies need to provide a clear reason for success,” it added.
E+M sponsors at G2E:
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Kindred’s Norwegian defense
Operator will “passively accept” Norwegian players while it appeals an Oslo district court ruling that it operates illegally in Norway.
Passive aggressive: Kindred has said it will continue to “passively accept customers residing in Norway” and maintained that it can legally operate in the market through its Malta-licensed subsidiary Trannel offering gambling services in the EU/EEA area.
Crossed wires: Kindred’s statement followed a press release issued by the Norwegian Gambling Authority on Friday that suspended the €120K daily fine it imposed on the group in mid-September “because (Kindred’s) Unibet wants to withdraw from Norway”.
The Nordic region represented 32% of Kindred’s Q2 GGR of €233.5m.
Daily appeal: Kindred’s Unibet, Maria Casino, Storspiller and Bingo.com brands all operate in Norway. The group has appealed against the daily fines and the court ruling, and said it “disagrees with the NGA’s statement”. The NGA said it had suspended the fines until Kindred’s appeal had been processed. For the suspension to be maintained Kindred must abide by the following conditions:
Stop all Norwegian-language marketing and providing “any form of information to customers on how they can circumvent the Norwegian ban on payment processing”.
The NGA “expects Trannel to inform its customers that the NGA and the appeal bodies have decided that Trannel’s gambling offer in Norway is illegal”.
“The penalty can still be quickly activated if they do not meet the conditions we have given in the decision,” the regulator added.
Best solution: In its statement, Kindred said a Norwegian licensing system “compliant with EU/EEA law” was the best solution and pointed to its actions in the Netherlands, where it “proactively decided to make changes to its international offer”.
Recall, Kindred exited the Netherlands on the eve of local regulations coming into force in Oct21. The group re-entered the market in July this year and said it was now market leader for OSB and number 2 for iCasino.
American CEO survey
AGA study points to cautious optimism despite macroeconomic pressures.
Caution ahead: Corporate leaders in the US gambling industry remain cautiously optimistic about the future of the sector although macroeconomic factors continue to dampen expectations, a survey carried out by the AGA and Fitch Ratings has found.
Key findings from the survey revealed that:
Supply chain issues have eased from earlier in the year, but 65% of the CEOs said those factors continued to limit operations.
Inflation and interest rates were ongoing concerns for 62% of the respondents, but “a significant deterioration in the credit environment” was offset by healthy balance sheets.
50% said ongoing economic uncertainty and labor shortages were still acting as brakes on growth, nearly 70% found the present business situation good and 92% expect those conditions to continue in the near term.
Future customer activity remains “a major question mark” for operators, with “expectations evenly split between expansion and contraction”.
50% of the gaming suppliers expect unit sales to increase, none expected a decrease in sales.
On an annualized basis, the growth rate is estimated at 4.9% over the last three quarters and 4.7% for the next six months.
Juice Reel data
September data from Juice Reel illustrates the rise of parlays and underdog impact on margins.
Bet count rise: The latest data from the bet tracking and analytics app Juice Reel revealed that although parlays have modestly decreased as a percentage of handle (18% in Sep21 vs. 16% in Sep22), they have “notably increased” as a percentage of bet count, going from 26% in Sep21 to 31% this year.
The team at Truist said the rise was due to a high number of small-dollar parlays being placed, “most likely by new bettors to the space” and sportsbooks successfully directing players to pre-made parlays.
Average amounts bet on parlays dropped from $35.40 in Sep21 to $32.26 this year, likely due to “the influx of new bettors experimenting with low-dollar amount parlays”.
Ontario ramp: Average bet size grew +131% MoM from $17.46 in Aug22 to $40.33 in September.
Handle and average bet size for players who bet in both Sep21 and ’22 grew 26%, but overall bet numbers were flat at ~110.3K.
Sample size: Juice Reel has 26K+ downloads to date and more than 1,800 daily users, Truist said.
Startup focus – OrbitalBet
Who, what, where and when: UK-based OrbitalBet was founded in 2021 by CEO Matt Howard who has spent the last decade helping numerous companies develop their B2B and B2C platforms. The company’s aim is to enable operators to utilize scalable, high-functioning tech via selling codebase IP.
Funding backgrounder: OrbitalBet is self-financed with a two-year development plan and, according to Howard, it “intends to remain this way for as long as this is realistic”.
The pitch: The company’s aim is to enable operators to utilize scalable, high-functioning tech via selling codebase IP to each operator, in turn allowing them to “truly own their development roadmap and to build a platform which supports and promotes their brand to their customers”.
“We think the opportunity in the industry is potentially huge,” says Howard, who suggests operators previously constrained by legacy tech will see barriers to improvements removed.
Reaction to date has been positive. “We’ve had numerous enquiries into the roadmap,” he adds.
OrbitalBet is not focused on any single market. “The nature of selling codebase IP is that each client can take their version and use it in whichever jurisdiction they want and develop it to suit.”
What will success look like? Howard says the aim is to “genuinely be able to help the industry move forwards and to serve the customers better”.
“The key is that the operator owns the code and therefore all decisions made on the development path are their own.”
“Within two years we will have a core platform that will be competitive in multiple regions, which then allows our clients to build upon to best service their individual goals.”
Dabble: A recent startup focus subject Dabble has announced a A$33m (US$21m) investment from Tabcorp, which values the company at $165m. As part of the deal, Tabcorp will also appoint a director to the board of the Twitter-meets-Sportsbet business.
In the ASX announcement, Tabcorp said Dabble, which was formed in 2020, had achieved $47m of annualized revenue by June.
Tabcorp said the investment gave it exposure to an innovative product capability, which appealed to a younger demographic.
Betsala: The Chilean-facing betting operator has raised an undisclosed amount from Happyhour.io to accelerate growth. Betsala has been in operation since 2020 and is fronted by Chilean soccer star Marcelo Salas.
Verse Gaming: The P2P fantasy sports provider has completed a $585k pre-seed funding round led by RallyCry Ventures. The Brooklyn-based Verse was founded in July 2020 by Syracuse University alums David Rosen and Dan Zimmermann.
Sixes and sevens: The lottery.com implosion continues unabated. Despite the appointment of two new independent directors, the company saw its auditor Armanino throw in the towel late last week. This came after the auditor warned about the unreliability of Lottery.com’s account in late July.
The board appointments were an effort to steady the ship after all bar one of its previous board resigned en masse in September.
Those were replaced last week by Vladimir Klechtchev, a UK-based accountant, and Amer Rustom from the Platinum Group.
Analysts in brief
New York: Delving into recent data from New York, the analysts at Roth Capital suggested the lower handle seen in the first three weeks of the NFL season is an indicator of less bonusing. They noted that daily average handle has been between 15-20% lower at the start of the NFL compared with handle levels in the first three months of 2022.
Caesars: Jefferies suggested last week’s $3bn debt deal removes one overhang for Caesars, with the uncertainty over the impact of rate rises removed. It leaves just the potential sale of a Strip property as the remaining concern for investors. While they believed there are multiple interested parties, the valuation could be impacted by the less-supportive debt market.
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The week ahead
Team of rivals: On Wednesday, esports-focused bookmaker Rivalry will host an investor day. Then on Thursday, Q3 season kicks off with Entain publishing its quarterly trading update.
Macau: GGR in the third quarter was down 92% vs. 2019 and -70% YoY at MOP5.5bn due to casino closures in July. Sep22 was down 87% vs. 2019 and -50% YoY at MOP3bn. The Macquarie team said “demand remains hampered by strict travel restrictions”, but there was “light at the end of the tunnel” with the recent announcement that from next month China will reinstate package tours and eVisas under the Individual Visit Scheme (IVS).
The analysts added that “IVS travelers accounted for nearly half of pre-pandemic Macau visits”.
Macquarie forecasts Q422 GGR will be -74% and FY22 GGR -83% vs. 2019 at ~US$6.3bn and a further improvement in 2023 with GGR -37% vs. 2019.
Clarity: The 2023 outlook could get clearer following the Chinese Communist Party Congress on Oct 16, Macquarie added, with the medium term helped by Macau being a “coiled spring” with significant pent-up demand.
Macquarie pointed to Las Vegas Sands’ Q2 results in Singapore recovering to 90% of pre-Covid mass-market as a sign that “pent-up demand in Asia may be even larger than in the US”.
On the concession process, Macquarie said the most likely scenario would involve some form of upfront payment and mandates for further non-gaming investments totaling $1.5bn.
Iowa: Casino GGR in September was up 5% YoY at $146.7m. Sports-betting GGR was up 76.3% MoM and +128.3% YoY at $25.4m. Handle was up 63.4% MoM but down 7.4% YoY to $200.2m, the first time handle has declined YoY in Iowa, Deutsche Bank noted.
Ohio: Casino GGR for the month rose 1.8% YoY to $188.6m. GGR at market leader Penn Entertainment’s properties was up 2.8% YoY to $64.4m.
Illinois: GGR came in at $113.8m for the month of September, up 7.1% YoY overall and up 2.7% on a same-store basis. Compared to 2019, Illinois September GGR was up 2.0%.
Betting content provider and affiliate Tallysight has extended its partnership with Gannett Publishing and will offer its services across Gannett’s network of more than 200 local media outlets.
Previous Startup Focus subject the Gaming Society has signed FanDuel as its first official sportsbook partner, sponsoring an NFL-focused newsletter.
What we’re listening to
Huddle Up: Why 14 Americans could break the Premier League.
Oct 10-13: E+M@G2E
Oct 13: Entain Q3
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