Month: August 2023

Wynn will cease operations in Arizona, Colorado, Indiana, Louisiana, New Jersey, Tennessee, Virginia and West Virgina as soon as possible. 

Operations in New York and Michigan remain under review. Only Nevada and Massachusetts operations are guaranteed to continue, states where it operates land-based properties. 

‘Better uses of capital deployment’

There are better uses of capital deployment for Wynn shareholders than the high levels of marketing spend required for online sports betting, chief financial officer Julie Cameron-Doe explained.

“While we believe in the long-term prospects of igaming, the dearth of igaming legislation and the presence of numerous other investment opportunities available to us around the globe have led us to the decision to curtail our capital investment in WynnBet to focus primarily on those states where we maintain a physical presence,” she said.

‘Sports betting’s a tough business’

Speaking earlier this week on the operator’s H1 earnings call, Cameron-Doe said Wynn Interactive reduced its EBITDAR burn rate to $15m in Q2.

CEO Craig Billings denied any commitment to break even by the fourth quarter of 2023, instead saying Wynn was instead focused on reducing cash burn quarter-over-quarter.

“Sports betting’s a tough business. It’s about the game of commodity,” Cameron-Doe said on the call. “[we’re] very focused on managing this business. We’ve got a very long-term shareholder-friendly view on it. So that’s our focus.”

As market leaders such as DraftKings and FanDuel turn-EBITDA positive for sports betting, competition is set to ramp up rapidly. Fanatics Betting and Gaming and Penn Entertainment’s ESPN Bet are both preparing for major pushes across the US.

WynnBet’s history

WynnBet, Wynn Interactive’s lead brand, may ultimately be rolled back to just two states. Of the two, only Massachusetts publishes operator-level market figures.

In Massachusetts, players staked $69.9m on the WynnBet app since the state’s mobile betting market launched in March. Amounts wagered via market leader DraftKings, in contrast, stand at $930.5m.

Moving to Michigan, WynnBet’s year-to-date handle is just $12.3m, for adjusted gross revenue of $537,533. It fares better in igaming, generating revenue of $28.2m from $30.2m in stakes. In New York, handle for 2023 so far stands at $31.4m for revenue of $1.9m.

In 2021, the operator was preparing to spin off its interactive arm as a separate business, through a combination with special purpose acquisition company Austerlitz Acquisition Corporation I.

Wynn scrapped these plans after Wynn Interactive CEO and group CFO Craig Billings took over as CEO.

Wynn’s big UAE opportunity

Among the other investment opportunities Cameron-Doe cites is a pioneering project in the Middle East. In the United Arab Emirates, Wynn is on track to open the region’s first integrated resort.

The Wynn Resorts property will be located on the man-made Al Marjan Island in the Emirate of Ras Al-Khaimah and will cost approximately $3.90bn.

The venue is not due to open until early 2027. Construction partners were appointed in March, followed by property renderings, while Thomas Schoen heads up the development as project president.

When looking at the April to June period, which includes the Grand National and the end of the football season, GB online gambling revenue rose 5% to £1.3bn compared to the 2022 period.

The Gambling Commission said growth in real event betting drove the increase, which rose 12% to £538m.

The Commission highlighted the total number of bets and spins rose 6% during the three-month period. This was reflected in the number of average monthly active accounts, which grew 5%.

Meanwhile slot GGY expanded 3% to £583m. The segment also saw the number of spins rise 7% to 20 billion, with the number of average monthly active accounts increasing 12% to four million.

On a monthly basis, revenue fell 15.8% from the £462.9m reported by the industry in May. However, this may reflect seasonal factors and not indicate a general downturn in business.

GB online gross gambling yield rose 5.3% in June to £389.7m, driven by increases in the largest revenue segment, slots.  

Figures do not account for total market

The GB gambling market data is based on reports from the UK’s largest operators, covering approximately 80% of the total gambling market.

As such, the figures do not account for GGY generated by smaller gaming businesses and should not be understood as an account of the whole market.

Steady progress on safer gambling

While dramatic progress was not achieved, safer gambling indicators indicated slightly healthier gaming activity during the period.

While a direct connection is hard to draw from the data alone, this may be related to UK operators’ ongoing self-imposed implementation of safer gambling checks in the wake of the Gambling Act review white paper.

The number of online slots sessions lasting longer than an hour fell 0.2% year-on-year to 8.4 million, the Commission said. This came as the number of total sessions increased by 5.8% during the period, with 6.3% of those sessions being over an hour.

The GC also highlighted a decline in the average session length to 16 minutes, the first time this has occurred in the dataset.

The number of customer interactions during the quarter also fell 13% to 2.9 million, with the majority remaining automated in nature.  

Aristocrat in May agreed to pay $1.20bn (£921.2m/€1.07bn) to take ownership of all shares in the provider. NeoGames’ board has unanimously approved the deal, while the provider’s shareholders last month overwhelmingly voted in favour of the acquisition.

The deal remains subject to satisfaction of certain closing conditions but is expected to close in H1 of fiscal 2024.

Speaking as NeoGames posted its Q2 results, CEO Malul said this completion date is very much still on the cards. He added that the acquisition presents NeoGames, and indeed the combined business, with exciting opportunities.

“We are very pleased with the achievements and partnerships that defined and drove our Q2 results,” Malul said. “Our continued commitment to innovation and excellence has paved the way for expansion across various global markets, with progress during the second quarter of 2023 across all business lines including BtoBet, Pariplay, Aspire Core, as well as NeoPollard Interactive (NPI).

“We are excited about the future and the potential it holds for our company’s continued success. We continue taking steps towards completing our merger with Aristocrat Gaming, which we expect to be completed during the first half of fiscal year 2024.

“In the meantime, we remain dedicated to elevating the igaming landscape, capitalising on opportunities and executing on our strategic goals for all stakeholders.”

Q2 Revenue – with or without NeoPollard Interactive

The total revenue figure comprised net gaming revenue plus the provider’s revenue share from the NPI joint venture with Pollard Banknote. Without this contribution, revenue was 122.8% higher year-on-year at $47.9m.

Breaking this down, igaming revenue amounted to $34.2m, a 312.1% increase on last year’s total. NeoGames said this reflected accounting for the majority of Aspire Core revenue on a net basis compared to historical figures prepared on a gross basis. 

This it said, was prompted by new commercial terms in certain Aspire Core contracts which went into effect in January. NeoGames completed its acquisition of Aspire Global in June 2022.

Key developments for the Aspire business included securing its first igaming deal in the US with PlayLive! Online Casino in Pennsylvania. It also picked up its official igaming licence for slot games in Germany.

If igaming revenues were accounted for on a gross basis for Aspire Core, igaming revenue would have been $56.8m for igaming. This, NeoGames said, would have reflected 7.5% year-over-year growth when measured in reporting currency.

Turning to ilottery, revenue climbed 7.8% to $13.8m. In addition to this was the separate NPI share at $14.1m, up 37.9% year-on-year. Combined revenue in this segment was $27.9m, a rise of 21.2%.

Net loss remains but reduces

Alongside the revenue increase was a rise in operating costs. For Q2, spending amounted to $57.0m, a 60.1% rise on last year, with the main outgoing being distribution expenses at $24.1m.

Finance expenses hit $5.8m while its share in joint venture profits amounted to $8.1m. This left a pre-tax loss of $6.8m, an improvement on $12.3m last year.

NeoGames paid $979,000 in income tax, leaving a $7.8m net loss, less than $12.9m in 2022. In addition, adjusted EBITDA jumped 74.8% to $18.0m.

H1 revenue rockets 184.0%

The situation also improved during the first half. Revenue in the six months to 30 June was $97.4m, up 184.0% on the previous year.

Revenue from igaming hit $69.3m and ilottery $28.2m, with an additional $28.9m from the NPI venture.

Operating costs more than doubled from $51.0m to $109.1m but $11.1m of finance costs were more than offset by $16.5m profit share from NPI.

Income tax payments totalled $2.1m, leaving a net loss for the half of $8.6m, compared to $13.8m in 2022. Adjusted EBITDA also improved by 103.2% to $38.2m.

The provider launched the review in Q1, looking at a “range of strategic alternatives” to improve value for GAN shareholders. The review is ongoing with a special committee on non-executive directors evaluating options for the business.

Among these options are potential sales of parts of or the entire GAN business. During Q2, the provider said it spoke to several interested parties, although it has not yet reached any sort of agreement.

GAN added it will continue to consider its options as the review continues, with no timetable for this having been set.

“We have received indications of interest from prospective bidders interested in acquiring all or part of our business,” GAN CEO Dermot Smurfit said. “A special committee of our board of directors, comprised of non-executive directors, is evaluating those alternatives. 

“The indications of interest are non-binding; no definitive agreements for a strategic transaction have been reached at this time. There is no assurance that a transaction will take place and no timetable for completion of any transaction.”

B2B decline pushes revenue down in Q2

The review has been taking place throughout GAN’s Q2, during which revenue fell 3.4% to $33.8m.

This decline was due to a drop in B2B revenue, with this falling 30.3% to $9.9m. B2B revenue comprised $7.2m in platform and content licence fees and $2.7m of development services and other sources.

GAN put this fall down to contractual revenue rates, in line with an agreement regarding an exclusivity period with an unnamed B2B customer.

In contrast, B2C revenue increased 14.9% year-on-year to $23.9m. GAN said this was driven by growth in its European and Latin American operations, helped by higher sports and casino hold percentages.

Net loss reduced with impairment charges absent

Operating costs for the quarter reached $42.3m, which was 41.6% lower than the previous year. This was mainly due to last year’s figure including $28.9m in impairment charges, with such costs not appearing in Q2 this year.

GAN also noted $8.4m in other loss and $905,000 worth of interest expense. In turn, this left a pre-tax loss of $18.4m, a significant improvement on $38.6m in 2022.

The provider paid $585,000 in tax, meaning Q2 next loss was $18.4m, compared to $38.3m last year. However, adjusted EBITDA slipped from a positive of $1.3m to a $2.0m loss on the back of the B2B decline.

H1 net loss lower than Q2

As for the first half, figures for the six months to 30 June made for similar reading. Revenue was 5.0% down year-on-year to $68.9m. 

B2B revenue slipped 22.1% to $21.2m but B2C revenue increased 5.5% to $47.7m.

Cost-wise, operating expenses fell 27.1% to $83.4m, again due to last year’s impairment charges. A further $2.6m was reported in interest expense, but some of this was recouped with $934,000 in other income.

As such, pre-tax loss reached $16.2m, compared to $42.7m last year. GAN paid $659,000 in tax, with net loss at $16.9m, an improvement on $42.8m in 2022. However, adjusted EBITDA followed a similar path to Q2, turning from a plus of $4.3m to a loss of $2.0m.

“Our second quarter saw solid execution and progression of our business plan. We continued to see strength in international markets for B2C, expanded our roll-out of GAN Sports and made significant progress on the new GameSTACK 2.0 version of our technology platform,” Smurfit said.

“With GAN Sports now live in nine US states and the encouraging momentum we are seeing in our international markets, we would expect our top-line performance to improve over the coming quarters and into 2024.”

This comes off the back of an eventful morning for Entain. As well as publishing its results for the year to 30 June – in which it recorded £2.40bn in revenue for H1 – Entain announced that it would take on a £585m (€677m/$745m) provision in relation to negotiations with the Crown Prosecution Service (CPS).

Looking ahead, CEO Andersen discussed the opportunity for the business in LatAm, in the wake of regulatory progress in the contintent’s largest market.

Entain expecting regulated Brazil launch in 2024

With Nygaard-Andersen paying particular close focus to LatAm, it was clear that Brazil was going to crop up.

Brazil’s president Luiz Inácio Lula da Silva signed Provisional Measure No 1,182 into law last month.

Entain operates the Sportingbet and Betboo brands in LatAm, although Brazil proved tricky in H1. Net gaming revenue missed expectations by 14% on a constant currency basis. Sportingbet aims to compete using the quality of its product and online actives did grow during the six-month period.

“We are pleased to see that regulations have been passed in Brazil, which should allow licensed operators to commence early next year, subject to a pathway proposed by the regulators,” she said.

Entain is “ready for the market going live”, “hopefully at the beginning of next year”.

Further improvements in the region are coming, she continued. The $150.0m acquisition of local sports media leader 365scores aided a strong start to the second half of 2023.

“So we are well placed to drive further growth in newly regulated markets,” Nygaard-Andersen added.

Entain around the world

Entain’s global expansion strategy is powered by “local hero” acquisitions, snapping up regional market-leaders to expand its footprint. These deals typically bake in earn-out agreements to incentivise the existing management to continue pushing the operations forward. 

This approach accelerated its Netherlands’ igaming entry through BetCity, which performed in line with expectations in H1, Entain said. It was down by a single-digit percentage, after pre-regulation market leader Kindred returned to the market in July 2022.

Performance at the Entain CEE business, a joint venture with private equity firm Emma Capital, was stronger. Online NGR for Croatia’s SuperSport was up 31% in constant currency, on a pro forma basis. 

Entain CEE’s presence will grow further thanks to the £750m acquisition of Polish market leader STS. “This positions us well to further leverage the opportunity that the $8.6bn CEE market offers,” the operator noted. 

Lack of enforcement weighs on German performance

While Germany finally gave federal regulator Glücksspielbehörde full control of the market in January this year, Entain suggested it is yet to ramp up enforcement against illegal activity. 

“Therefore, the challenges of an uneven operating landscape continue to overshadow those operators adhering to licensing obligations, particularly following the implementation of new deposit limits for sports customers from July 2022,” it explained. 

Online NGR was down year-on-year as a result, while higher-spending customers shifted to non-compliant operators. 

“However, we remain positive on the long-term prospects for the German market as regulatory oversight is enforced,” Entain explained. “Bwin is a leading brand across Germany and globally, underpinned by the quality of our products and offer as well as great partnerships with UEFA Europa League offering exclusive fan experiences for Bwin customers.”

Georgia and Baltics reports strong growth

Entain’s Georgian market leader, Cystalbet, meanwhile withstood the country’s tighter regulatory and tax regime introduced early in 2022. NGR rose 7% year-on-year for the country. 

Revenue in the Baltics, via Enlabs, also grew 7%. “Enlabs’ growth is coupled with improved contribution and our offering continues to attract a broader audience, benefiting from Entain’s sports and gaming products, with actives up [more than] 22% year on year.”

Entain Down Under

During the first half, Entain entered into a long-term strategic partnership with Tab NZ, New Zealand’s sole betting licence holder. Nygaard-Andersen said that Entain’s presence in New Zealand “adds an exciting new market to the Australian business”.

“We look forward to growing in the region in the years ahead.”

Mohegan Digital expanded into Ontario in Canada during Q3, while the operator also highlighted growth in Connecticut. 

Digital was the shining star for Mohegan which reported a revenue decline in a number of other segments, namely its flagship Mohegan Sun land-based casino, also in Connecticut.

Chief executive Ray Pineault singled out digital when reflecting on the quarter, saying the operator is very much focused on growth within this area.

Gaming suffers as revenue falls in Q3

Net operating revenue for the three months to 30 June was down 0.4% year-on-year. 

The largest area of decline was gaming, where revenue fell 4.1% to $281.9m. However, it remained by far Mohegan’s largest source of revenue.

In contrast, food and beverage revenue climbed 12.6% to $40.1m, while hotel revenue was also up 0.3% to $30.4m. Mohegan also noted a 10.1% rise in retail entertainment and other revenue during the quarter.

No digital dilemma for Mohegan 

Looking at each segment, revenue at Mohegan Sun slipped 2.5% year-on-year to $230.7m due to lower slot and table games volumes. The operator said strong non-gaming growth driven by food, beverage, entertainment and hotel revenues, partially offset a decline in gaming revenue.

Revenue at Mohegan Pennsylvania was also down 2.3% to $65.2m as a result of lower gaming volumes. However, again, the operator said this was partially offset by strong food, beverage and hotel revenue.

There was better news from Niagara Resorts, with revenue edging up 1.8% to $81.2m. This was driven by a continued ramp of non-gaming amenities, including the new OLG Stage entertainment venue. However, gaming revenue fell $5.2m due to lower slot volumes.

Amid declines in the land-based market, digital revenue was 56.6% higher at $16.7m. This came on the back of the Ontario launch and growth in Connecticut.

Speaking to iGB earlier this week Mohegan Digital president Rich Roberts explained igaming would look to support the brick-and-mortar properties.

“We won’t be spreading rapidly across the US and looking to compete in every state,” Roberts said. “Mohegan Digital supports the Mohegan brand as an extension of the properties.”

Higher spending nudges net profit down

Operating costs for the quarter were 1.8% higher at $333.0m. Mohegan also noted $29.5m in finance-related costs, leaving $52.8m in pre-tax profit, down 16.3% on last year.

The operator paid $2.2m in tax and also took off $64,000 in profit attributable to its non-controlling assets. As such, net profit amounted to $50.6m, down 14.8%.

Adjusted EBITDA also slipped 9.5% to $108.7m – although Mohegan said this was still the third-highest quarterly total in its 26-year history.

The cost reductions are in addition to the €2.8m decrease in the annual cost base directly attributable to the sale of its UK and Australian businesses to Moneta Communications for €6.0m.

It is expected that about 90% of the cost reductions in this programme will be realised by the end of 2023. The affiliate expects to achieve this through “streamlining support functions” from its European operations.

Strategic review

This forms part of its strategic review from May 2022. This was to consider selling off certain assets to focus on the North American market.

The strategic review was expanded from certain assets to cover all European online betting and casino businesses. After this, Carnegie Investment Bank was appointed as financial advisor to assist in potential sales.

This news comes on the back of the announcement that Per Widerström has stepped down as a non-executive director. The move came after he accepted a new role as CEO of 888 Holdings.

Zeal reported €54.8m for revenue in H1 2023, an 11% rise from the €49.4m the company reported in the same period the previous year.

The Lotto24 operator highlighted the impact of a series of successful marketing campaigns in high jackpot phases as driving the business’ customer acquisition and subsequent revenue during the period.

“The growth of our transaction volume in the second quarter of 2023 was near record-breaking and a whopping 18.8% higher than in the second quarter of 2022 – in this respect, we even recorded the second-best quarter in the company’s history,” said Zeal CFO Jonas Mattsson.

“Strategic growth in the ecommerce environment is becoming increasingly difficult, but with our attractive products and diverse marketing campaigns, we are confident that we will continue to impress in the market,” he added.

Increased acquisition costs per customer

In the first half of 2023 Zeal reported 349,000 new customers, a 20% year-on-year increase. However, the business recorded increased acquisition costs per registered new customer, reflecting higher media costs due to a competitive business environment.   

As such, the operator said marketing expenses stood 44% higher than 2022 at €20.0m, compared to €13.9m in 2022.

We pursue a focused marketing strategy and invest disproportionately in high-jackpot phases,” said Mattsson. “The short-term decline in earnings at high jackpot phases is a perfectly normal development that will settle down again in the further course of the fiscal year.” 

The business’ other operating expenses also rose significantly, increasing 29% to €31.6m.

Rising costs eat into profits

Due to rising costs, which Zeal said resulted from increased investments in customer growth, the business’ earnings before interest, tax, depreciation or amortisation (EBITDA) fell to €13.8m, compared to €16.4m the previous year.

Zeal’s profit also fell sharply during the period, dropping 40% from €9.4m to €5.6m.

The business’ guidance for FY23 remained stable, with Zeal expecting revenue for the year to be in the €110m-120m range.

The operator said it plans to invest “significantly more” in new customer acquisitions than in 2022, and expects total marketing expenses to range between €34m and €39m for the year.

According to Iger, Disney has been engaged in discussions with many different entities over a long period of time about how ESPN should enter sports betting.

The licensing agreement will work to significantly grow engagement with ESPN consumers, particular younger viewers, he argued.

“And Penn, why Penn? Because Penn stepped up in a very aggressive way and made an offer to us that was better than any of the competitive offers by far,” said Iger.

“We like the fact that Penn is going to use this as a growth engine for their business. And we actually believe and trust in their ability to – in this partnership – to grow their business nicely while we grow ours.”

Disney interim CFO Kevin Landberry also ruled out the business foregoing advertising revenue from other gaming operators because of the deal.

Penn sports betting: Take two

On Tuesday, Penn announced its sportsbook would be relaunching as ESPN Bet in a $1.5bn deal.

The new agreement represents a major overhaul of the business’ US online sports betting strategy – but one where Penn sticks with its previous path of media-led gaming.

The move is planned for November, with the operator arguing the agreement will increase its long-term adjusted EBITDA potential for its interactive segment by between $500m and $1.0bn.

The announcement also saw the operator divest itself of Barstool Sports, the media brand Penn paid $551m to acquire as its vehicle to launch in the US sports betting market. Penn returned the media brand to controversial founder Dave Portnoy for $1.

In a recent interview with Variety, Portnoy suggested Penn missed out on gaming licences and its share price took a hit from his involvement. Ultimately, he argued the regulated gambling industry is not a good fit for Barstool Sports.

Disney’s long flirtation with sports betting

Rumours have long swirled about Disney, through ESPN, entering the sports betting space, due to it being the most popular sports media brand in the United States.

The years since the repeal of PASPA in 2018 have seen several other sports media properties acquired to enter the gaming space, notably theScore and Barstool Sports, both of which were acquired by Penn. Fox Bet, another media-betting joint venture between The Stars Group and Fox Sports, descended into legal action before it was wound down.

Penn opted to use Barstool for its vehicle to enter the US, and theScore for Canada after the regulation of the Ontario market.

In September 2020, ESPN entered an agreement to showcase odds with Caesars-owned William Hill and Daily Fantasy Sports information from DraftKings, representing Disney’s first foray into the space.

The next year then-CEO Bob Chapek said the company would be pushing for a greater presence in sports betting, highlighting ESPN as the “perfect” platform to achieve it.

Last September, Chapek reiterated the company’s interest in sports betting. At that time he said work on the potential launch of an ESPN betting app was ongoing and revealed the business had received up to 100 enquiries from businesses about it.

Players spent $962.1m (£758.6m/€875.7m) betting on sports online in July. This was the first time New York’s monthly handle has fallen below $1.00bn since August last year.

The total was 20.1% ahead of $800.8m in July last year but 17.5% behind June’s $1.17bn handle.

Gross gaming revenue (GGR) from online betting during the month reached $105.1m. This was up 43.4% from $73.3m last year and 1.3% ahead of $103.8m in June.

FanDuel versus DraftKings – the battle for New York crown

In revenue terms, there was very little between FanDuel and DraftKings. FanDuel has been the frontrunner in New York for some time but DraftKings has steadily closed the gap over recent months.

Flutter Entertainment-owned FanDuel remained marginally ahead with $40.9m in revenue for July. The operator also took $384.6m in online sports bets.

In comparison, DraftKings’ revenue amounted to $41.08m, just a mere $8,655 behind long-time rival FanDuel. In terms of handle, DraftKings processed $340.4m in wagers, still some way short of FanDuel’s total.

Best of the rest 

Caesars headed the chasing pack with $10.6m in revenue from a $111.1m handle. BetMGM was next with revenue of $6.8m off $65.1m in total wagers.

Rush Street Interactive posted $3.2m in revenue from a $35.7m handle, while PointsBet hit $1.3m in revenue off $14.4m in bets. PointsBet is due to rebrand under the Fanatics brand after the latter agreed to purchase its US business for $225.0m. However, any such move will be subject to regulatory approval in New York and other states where PointsBet is currently active. 

As for other operators in New York, Wynn Interactive posted $517,872 in total revenue from $6.7m in online wagers. This was narrowly ahead of Resorts World, which reported revenue of $496,793 and a $4.2m handle.

BallyBet pauses in New York amid sports betting upgrade

The state’s other licensed online sports betting operator, BallyBet, paused activities in New York prior to July.

In May, Bally’s Corporation announced that it was to outsource its tech stack, in reference to online and land-based sports betting.

Sports betting supplier Kambi and PAM platform solution provider White Hat Gaming have picked up the responsibility. The pair will supply technological capabilities for wagering and support the relaunch of the Bally Bet online betting platform.

As such, Bally halted all online betting activity in New York on 30 June, meaning it was not able to process wagers in July. The operator has not yet said when it expects to relaunch in the state.