Welcome to the latest edition of "Bet On It," where The Fly looks at news and activity in the sports betting and iGaming space.
SECTOR NEWS: Betr Holdings, the world's first microbetting focused app, announced it has officially launched its real money gaming product in Massachusetts, its second real money state. Betr's app is available on both the iOS and Android stores with plans to launch its real money gaming product in additional states over the coming months.
Earlier this week, Dave Portnoy of Barstool Sports (PENN) tweeted: "I bought 2 million in $penn stock yesterday and I already own a ton of it. Thanks for asking."
Bragg Gaming (BRAG) announced that it has launched its new content and technology with Rush Street Interactive (RSI) in Pennsylvania. This launch, which builds on the company's Spin Games content that is already live in the state, introduces the company's new, proprietary Bragg Studios content to a large and growing U.S. jurisdiction. This demonstrates continued progress with the Company's North American expansion as RSI is one of the leading iGaming operators in the U.S., Canada and Latin America.
Bally's Corporation (BALY) announced that it has confidentially submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission that relates to the proposed initial public offering of ownership interests of Bally's Chicago, Bally's planned resort and casino in Chicago, Illinois. The ownership interests would be offered to residents of the City of Chicago that satisfy the qualification requirements in the Host Community Agreement between Bally's Chicago and the City of Chicago, the company noted. "The number of ownership interests to be offered, the terms thereof and the price range for the proposed offering have not yet been determined. The initial public offering is expected to occur after the SEC completes its review process, subject to market and other conditions," Bally's stated.
Separately, Bally's announced that Marcus Glover has been appointed as Bally's executive VP and CFO. Bobby Lavan, Bally's current CFO, will be leaving the company to pursue another opportunity. He will be available to management, as needed, to ensure a transition. Glover's appointment is subject to receipt of customary regulatory approvals. Most recently, Glover served as chief strategy officer for QPSI.
Gan Limited (GAN) filed to sell 1.25M ordinary shares for holders
RUN FOR THE ROSES: Seven horses at Churchill Downs (CHDN) have died in the lead-up to the 2023 Kentucky Derby, with four horses being scratched due to veterinarian's concerns regarding health, The New York Times' Joe Drape reported, citing the company and the Horseracing Integrity and Safety Authority. "While each incident reported has been unique, it is important to note that there has been no discernible pattern detected in the injuries sustained," Churchill Downs said in its statement. "Our track surfaces are closely monitored by industry experts to ensure their integrity."
Churchill Downs reported that wagering from all sources was the highest all-time for the Kentucky Derby race, the Kentucky Derby Day program, and Kentucky Derby Week races. BofA told investors that the company expects Kentucky Derby week to reflect a new record with $14-$16M of EBITDA growth vs. last year, up slightly from prior guidance of $10-$15M. Maintain Buy & our $325 PO on Churchill Downs' unique growth profile.
Uniquely, this year FanDuel (PDYPY) and DraftKings (DKNG) offered their own apps with Churchill Downs serving as the technology partner and providing racing content. While this assists Churchill Downs' B2B business, it also marked an important customer acquisition period for sports betting operators, according to BofA. DK Horse app was the top free sports app ahead of this year’s Derby. This bodes well for the 150th Kentucky Derby next year when online sports betting in Kentucky is expected to be operational, BofA told investors in a research note.
FANATICAL: Fanatics Sportsbook has entered advanced negotiations with PointsBet (PBTHF) on a transaction that would include the the latter's "PointsBetting" apparatus, Matt Rybaltowski of SportsHandle reports, citing "two high-level industry sources." A deal could be announced as early as next week, sources told the website. If completed by Labor Day, the deal may satisfy Fanatics' goal of accepting sports wagers in the U.S. by the opening week of the NFL season, SportsHandle added.
EARNINGS RECAP: Several companies in the space reported quarterly results this past week. Firstly, Gan Limited (GAN) reported results on Wednesday. Total revenue of $35.1 million decreased 6% compared to the prior year quarter. "Our first quarter showed another strong quarter of underlying KPIs for both our B2B and B2C businesses and B2B GOR and active customers, deposits, and turnover in B2C remain very encouraging. We also expect our deliberate efforts to reallocate capital and other resources toward our highest return opportunities to yield improved financial results in 2023 as we lean into GAN Sports in the U.S. and select international markets for B2C where we are best positioned and see reasonably attainable paths to profitability. We are also progressing in our strategic alternatives review to evaluate the opportunities available to us maximize shareholder value. Our recent announcement and term loan transaction bolstered our financial position and allowed us to modify the conditions of our term loan, significantly reduce our interest expense, and strengthen our balance sheet. To be clear, this transaction should be viewed as a key step in the broader review process, but important one that allows us to evaluate the options available to us from a stronger position. Overall, we have been pleased with the nature of the strategic review up to this point, and we will provide updates as appropriate as the process unfolds. At present, there is no timetable for the completion of that process."
Melco Resorts and Entertainment's (MLCO) results surpassed last years in terms of revenue and earnings per share. The company noted the increase in total operating revenues was primarily attributable to the improved performance in all gaming segments primarily due to the relaxation of COVID-19 related restrictions in Macau during the quarter. Lawrence Ho, chairman and CEO, commented, "We have seen a very encouraging start to the recovery in Macau during the first quarter of 2023, following the relaxation of border restrictions in early January. We continued to see improving momentum into April and Golden Week in May, with mass market table games drop and mass gross gaming revenue during the Golden Week period exceeding the same period in 2019. "We launched some exciting new initiatives in April. We started Macau's first ever residency concert series at Studio City and opened Studio City Phase 2, starting with our Epic hotel tower and the indoor water park. These initiatives reinforce our long-standing commitment to bring unique, world class entertainment and hotel offerings to Macau. We have a diverse range of events that are being planned for the future that, we believe, will continue to drive international tourism and position Macau as a leading destination for leisure and entertainment."
In a similar vein, Bragg Gaming (BRAG) also beat out last year's mark in the same two earnings categories. Wagering revenue generated by customers of $5.7B increased from $4.2B last year. "We extended our momentum in the first quarter with the strong growth reflecting the continued success of our initiatives to diversify the business towards being a content-driven iGaming solutions provider in a growing number of North American and European markets," said Yaniv Sherman, Chief Executive Officer for Bragg. "We generated record first quarter revenue of EUR 22.9 million, gross profit of EUR EUR 12.2 million (USD $13.4 million), and Adjusted EBITDA of EUR 3.9 million, marking gains of 18%, 22% and 28%, respectively, over 1Q22 levels. These results include the benefit of growing contributions from higher margin proprietary and exclusive third-party games, and platform solutions which helped drive a 170-basis point year-over-year improvement in our gross profit margin to 53.5%."
In Sportradar's (SRAD) first quarter report, the company reported that its U.S. segment increased 55% driven by higher sales of betting products as well as the company’s digital advertising product. Also the company expects FY23 revenue of $983.2M-$1.003B. Carsten Koerl, CEO of Sportradar said: "We started fiscal 2023 on solid footing, as we continued to deliver strong top line growth, predominately by growing our value add products such as MBS and Live Odds in the Rest of World business, and strong, profitable growth in our U.S. segment. We are also demonstrating operational leverage as we continue to focus on cost discipline across the organization and invest prudently to grow our top line. We are confident that our ongoing product innovation in AI and computer vision will enable us to remain a market leader and increase shareholder value for our investors."
Wynn Resorts (WYNN) fell just short of analyst EPS expectations in Q1, but beat consensus on revenue. The company also resumed its quarterly dividend program. "For the first time in over three years, each of our resorts is generating strong financial results, which is once again a testament to our team's relentless focus on delivering five-star hospitality and experiences to our guests," said Craig Billings, CEO of Wynn Resorts, Limited. "In the U.S., Wynn Las Vegas and Encore Boston Harbor are firing on all cylinders, generating a new all-time record for Adjusted Property EBITDAR at our combined North American properties during the quarter. In Macau, after several challenging years, we were pleased to experience a meaningful return of visitation and demand, particularly in our mass gaming and retail businesses. We believe we are well-positioned for success in Macau's next phase of growth." Stifel increased the firm's price target on Wynn to $137 from $127 and kept a Buy rating on the shares. Due to recent forward demand in Macau and Vegas, Wynn Resorts has reinstated their dividend, which is an "excellent signal" to investors that the company's cash flow generation should be overly sufficient, the analyst told investors. While Wynn shares have had a "nice move" off the bottom, Stifel believes there is more to come.
Genius Sports (GENI) also reported first quarter results on Tuesday. "Following a strong year of execution in 2022, we are pleased to continue our momentum to start the new year, with the first quarter of 2023 marking another period of outperformance relative to our guidance," said Mark Locke, Genius Sports co-founder and CEO. "2023 is the year in which Genius expects to significantly accelerate Group Adj. EBITDA profitability and rapidly expand margins. Our first quarter results demonstrate the operating leverage of our business model, built to benefit from positive industry trends and support sustainable, profitable growth. As a result, I have a greater sense of confidence in our ability to achieve full-year financial targets beyond our initial expectations, leading us to raise our 2023 outlook."
Additionally, Bally's (BALY) results came out on Tuesday and the company surpassed expectations. CEO Robeson Reeves said, "We are pleased to have achieved strong results across all three of our segments, Casinos & Resorts, International Interactive and North America Interactive. Notably, our Casinos & Resorts segment saw continued momentum across the portfolio, generating record Q1 revenues of $328.8M and Adjusted EBITDAR of $105.1M, despite the impact of severe weather conditions that occurred in Lake Tahoe throughout the quarter and in Evansville in late March. International Interactive revenue also remained strong, increasing 7.2% overall, primarily driven by increased revenue activity in the UK totaling 9.6% on a constant currency basis...Overall, our iGaming business is generating positive returns and we are very optimistic about the future of this business. We are also excited about our recently announced partnerships with Kambi and White Hat Gaming to support our relaunch of Bally Bet, our online sports betting platform, fulfilling our promise to partner with best-in-class technology providers to get this business back up and running in an effective and efficient manner."
PUBLICLY TRADED COMPANIES IN THE SPACE INCLUDE: Accel Entertainment (ACEL), Bally's (BALY), Boyd Gaming (BYD), Caesars (CZR), Churchill Downs (CHDN), DraftKings (DKNG), Flutter Entertainment (PDYPY), Gan Limited (GAN), Genius Sports (GENI), Las Vegas Sands (LVS), MGM Resorts (MGM), Penn Entertainment (PENN), Rush Street Interactive (RSI), Super Group (SGHC) and Wynn Resorts (WYNN).