8 Sep: Sports data takes the stage
Sportradar IPO, Genius Sports Q2, M&A round-up, Entain analyst note, Jefferies sports-betting survey, Fitch Asian gaming forecasts +More
Good afternoon. It has already been a very busy week for the suppliers of sports data and other services to the gambling sector. First, yesterday Sportradar announced further details of its IPO which will raise up to $612m and value the firm at around $8.3bn. Then we have the latest quarterly numbers from rival Genius Sports where the earnings call focused on the metrics of the NFL deal. Meanwhile, the news yesterday that 888 is now almost certain to win the race to buy the international business of William Hill gets some positive analyst reaction and there is news from this afternoon of a sports-betting backend acquisition from Underdog Fantasy.
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The top line
Sportradar hopes to raise up to $612m via the sale of nearly 22 million shares at between $25-28 which at mid-point would value the business at $8.3bn.
In 2020, revenues rose 6.4% to €404.9m ($477.8m) while in H121 revenue rose 42% to €272.1m.
Revenues from the U.S. segment grew over 50% to €34.4m but the majority of Sportradar’s revenues come from the RoW betting segment at €235m and RoW AV at €105.9m.
On the radar: It was announced yesterday that the long-awaited Sportradar float will hit the Nasdaq boards (using the ticker SRAD) in the coming days with the company undertaking an investor roadshow this week in New York. In a filing with the SEC yesterday, Sportradar noted that it collects over 1.2bn data points per year and covers over 600,000 events; in AV it offers content from over 200,000 events a year. The filing noted the company is “not dependent on any single sport data right.” As of the end of December 2020 it said it had over 1,600 customers of which sports-betting customers made up over 900. The company noted that revenues were affected in H120 by the impact of the Covid pandemic and that historically it has achieved a CAGR of 25%.
Boehly-d over: The share offering is underwritten by JP Morgan, Morgan Stanley and Citigroup among others. Founder Carsten Koerl will retain an 81.8% controlling stake. Todd Boehly, who helms the Horizon Acquisition SPAC which was recently knocked back in its merger attempt with Sportradar, has taken up a slug of the shares available via his Eldridge Industries holding company.
The top line
Revenue rose 108% YoY to $55.8m and a 3.9% improvement QoQ. However, net losses hit $464.1m due to the impact of stock-based compensation. Adjusted EBITDA rose to $5.2m.
Betting tech revenue rose to $40.7m, up 121.6% while sports technology rose 105% to $7.2m and media tech rose 61.7% to $8m. However, it was down 17.5% sequentially.
During the quarter the company raised $435m via a public offering. It said the proceeds would be used for general corporate purposes.
Hyperinflation: Those worried about rights inflation affecting the betting sector best not look at the figures from Genius Sports. The spiralling losses are due in part to the cost of the six-year data deal with the NFL. Looking at the balance sheet, the company said the first tranche of over 11m warrants due to the NFL cost circa $200m. Meanwhile the winding up of a previous long-term incentive scheme brought the shares-based compensation to $414.5m, driving the net losses.
Get with the program: CFO Nick Taylor said the company remained confident of “generating profitability” over the course of the six-year NFL deal and “broadly” breakeven this year. Genius announced this week it had completed data and programmatic advertising partnerships with Caesars Entertainment, WynnBET as well as extending its current relationship with 888 to cover the SI Sportsbook. CEO Mark Locke said operators were “trending” towards embracing official data.
“Overall the official data strategy is working exactly as planned” Locke said but he added that it was “very difficult to break out the ROI of the NFL or any particular sport on its own. As a business we tend to add services on a much broader basis. That is the basis of the deals we are doing.”
It’s official: Pressed on how many operators had signed up to NFL data, Locke said Genius was “announcing partnerships as we go”. Taylor said the deals done had been completed “almost exactly in line with what we had been anticipating.” Locke added that the official data strategy was working “exactly as planned.” The key component to the NFL deals hinges around the provision of in-play data and Locke was very bullish on the future percentage of in-play. Referencing bet365’s in-play percentage of 79% he said U.S in-play would be “in excess of that.”
COO Jack Davison added that Genius “really wants to find operator partners that buy into (the official data strategy) top to bottom. We’re not interested in operator partnerships which pick and choose.”
Mountain to climb: 888 near enough confirmed it will win the race to buy William Hill’s international business from Caesars Entertainment after it released a statement confirming it was in “advanced talks”. This came after the Times said yesterday that it had outbid its last remaining rival, private equity house Apollo, with an offer of over £2bn. Recall, Caesars paid c. £2.9bn for the whole of William Hill. The news caused much speculation on social media as to the task facing 888 in executing the integration.
Meritocracy: Jefferies analysts said there was “strategic merit” in the deal from product and geography, cross-sell scope, material cost savings from leveraging 888’s proprietary tech, efficient balance sheet and with scope for a re-rating post deal due to scale and growth advantages. Peel Hunt also welcomed the news: “If 888 is about to execute its first material M&A for many years it comes with execution risks, but we would expect management to make a good case for enhancing the online business and extracting at least marketing value from retail.”
Underdog Fantasy acquires Goat Gaming
Feed the goat: DFS operator Underdog Fantasy has acquired the sports-betting platform Goat Gaming for an undisclosed amount, as part of its plans to launch a B2C offering in the coming weeks. Goat Gaming CEO Stephen Taylor-Matthews has held positions with Amelco, Stats Perform and Genius Sports and will become GM sports betting at Underdog. Co-founder Jeremy Levine said the acquisition will enable the group to launch innovative betting products to drive engagement and volumes. Levine said Underdog had been growing strongly since launching 13 months ago, recording 50,000 active players in August. “Fantasy was just the start for Underdog,” he added, suggesting the sports-betting sector has been “terrible” at acquisition. “Almost all the products are the same, built on the same third-party technologies,” he added.
Entain analyst note
Stamina: Having sat through the two-and-a-quarter hour Entain Capital Markets Day presentation last month, the team at Jefferies suggest that the “long runway of growth” mapped out by management should now be “more confident,” though they note that the efforts outlined could make an MGM bid “more difficult.” The team noted that while the chat about new market opportunities - including the acquisition of esports-betting provider Unikrn - doesn’t move the dial on consensus estimates, it does provide a boost to confidence around future growth opportunities.
Immersion therapy: Recall, Entertain suggested it sees its own TAM hitting $160m over time. That includes US and Canada sports-betting growing to $32bn from around $6bn today, other existing markets moving to $70bn from circa $40bn, newly regulated markets contributing c. $40m and new interactive opportunities such as esports chipping in another c. $20bn. Jefferies suggested “tech differentiation” including immersive products will be central to Entain’s hopes of taking advantage.
Jefferies sports-betting survey
Easy does it: Ease-of-use is emerging as the most important factor when it comes to consumer choice in sports-betting according to the latest survey from Jefferies. The survey found that 52% of respondents see it as the most important factor, up from 42% when the question was last asked in March. The survey also found that DraftKings and FanDuel came top on the ease-of-use question, both some way ahead of the rest of the field. Promos and free play slipped back to 40% from 52% previously.
“The survey results support our view that DraftKings and Flutter Entertainment remain best positioned for this football season given first-mover advantage and superior technology,” the Jefferies team added.
Push the button: Other findings show that NFL remains by far the most popular sport, with 58% saying they intended to bet on it within the next 12 months while College Football was the third most popular at 28%. The NBA split them with 33%. Meanwhile, the recent newsflow on single-game parlay and micro-wagering suggests it will be rewarded with greater spend: 59% of respondents said they would increase their sports wagering budget if in-play options were more available.
Fitch Asian gaming outlook
Slow boats: Ratings house Fitch is predicting Macau gaming revenues for 2021 to come in at nearly 65% below 2019 levels, it expects 2022 to still be 35% below 2019 and doesn't expect a full recovery until 2024. It predicts Singapore will have slightly better recovery metrics with revenues being 50% down in 2021 and 20% below 2019 levels in 2023. This is due to the island state’s higher vaccination rate, strong local demand and the re-opening of transport links with other high-vaccinated countries. This was in a note on the debt at Las Vegas Sands which affirmed its negative outlook rating.
Ohio August: GGR hit $194.3m in August, up both against the Aug20 and Aug19 numbers by 12.9% and 18.2% respectively. It was down sequentially by 8% but as was noted by Deiutsche bank, August featured eight weekend days vs. 10 in July. DB said the results were in line with expectations. Slot handle was up 18.7% and slot revenue up 18.3%; table drop increased 11.6% and table revenue up 17.6%.
Maryland August: GGR was up 9.2% vs. Aug19, +12.6% YoY, but down 6.5% MoM at $168.5m. The August calendar had eight weekend days compared with 10 in both 2019 and MoM. Maryland Live continued to lead in the state with 35.3% share of market.
Illinois August: GGR was down 8.4% vs. Aug19 and down 10.2% MoM at $107.9m, but rose 23.5% YoY. As per Maryland, the August calendar was not favorable in terms of weekend days. Rivers continues to be the lead operator in the state with 38% share and $41.4m in GGR during August.
Nothing you can't do: Sports broadcaster and sportsbook operator Fubo has signed its first NFL sponsorship agreement with the New York Jets as it readies for the Q4 launch of its mobile sportsbook. The partnership will feature a Fubo Sportsbook Lounge at the Jets’ MetLife Stadium and will be the first authorized, mobile sports betting lounge in the stadium. Fubo will also act as the presenting partner of the Jets Mobile App and will leverage the new advertising data partnership the team signed with Sportradar.
Out of the blue: Australian-listed bookmaker BlueBet said on Monday it had withdrawn its license application in Virginia after regulator, the Virginia Lottery, informed the company it would not be eligible. BlueBet said it was told that licenses would only be granted to operators which had experience in other states and have an equity interest owned by minority individuals or are minority-owned business. BlueBet recently gained a license in Iowa and is pursuing further opportunities in CO, TN and MD.
Tapped out: BetMGM has announced a partnership with TAPPP to make BetMGM gift cards available in over 6,000 retail locations in eight states. The card will be valued in $25 and $50 denominations. Speaking of the deal, Maria Tomlinson, head of payments at BetMGM, said the cards would answer customer feedback about wanting “a simple and convenient way to fund their accounts” without being in danger of a deposit failure.
Wynning move: Ian Williams, the recently-departed president of online gaming at Churchill Downs Incorporated, is set to join Wynn Interactive as chief operating officer at the start of October, E+M understands. Williams joined CDI in 2014 as VP marketing of TwinSpires before his promotion to president of igaming in 2018. He will be joining the new interactive gambling division of Wynn Resorts that listed in May as part of a $3.2bn merger with the Austerlitz SPAC run by investor Bill Foley.
Juiced: Blackstone is seeking buyers for the Cosmopolitan and are asking for $5bn, according to Bloomberg. Apollo (again) is reportedly “exploring an offer” while MGM (currently cash-rich) is another potential bidder. Blackstone tried to offload the property two years ago for circa $3bn but asset prices for the Las Vegas Strip have since risen significantly. Blackstone recently bought the CityCenter properties from MGM in a sale-and-leaseback deal.
By the numbers: The rise in the number of regulated states from 18 at the start of the 2020 NFL seasons to 26, plus Washington D.C. and five other states set to go live before the end of year, will mean a record 45.2 million Americans will place a wager on NFL in the upcoming season, according to research published by the American Gaming Association. The increase in the amount of players represents a 31% YoY rise in the number of adults or 7m in total planning to wager on the NFL.
New money: NeoGames has announced an underwritten share offering that at the current share price will raise circa $153m. NeoGames shares fell 3% in after-hours trading. In its recent Q2 results, the company saw total revenue rise 47% to $21.4m and adjusted EBITDA rose 6.6% to $8.3m.
Re-shuffle: IGT has announced a reorganisation of its business in order to split out its online gaming and sports-betting services business into a new digital and betting division. The unit will be headed up by Enrico Drago who previously was in charge of IGT’s gaming business. IGT now has three divisions with the global lottery and global gaming businesses making up the other two. IGT has also announced its investor day has been moved online and will take place on 16 November.
Get it on: EDF compliance has been renamed Odds On Compliance with Eric Weiss joining founder of EDF Eric Frank as the VP of technical compliance. Frank was previously group compliance officer at Stars Group. Weiss recently retired from the New Jersey Department of Gaming Enforcement where he served as deputy executive director for technical services.
What we’re reading
Blowing our own trumpet: Scott from the Wagers.com Earnings+More team quoted in the Las Vegas Review Journal talking about the recent second quarter earnings season.
Track and trace 1: The New York Times delves into what a gambling app knows about the finances of its customers.
Track and trace 2: The NFL has a database of over 120m names.
All at sea: When a cruise ship is turned into a floating crypto-community.
9 Sep: Sazka H1
13/14 Sep: iDEA/GeoComply seminars
16 Sep: New Jersey August GGR
22-23 Sep: SBC Summit
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