Something for the weekend - 23 February 2024

With earnings season now in full swing and spring arriving in London, there’s certainly been plenty to be bright about. Unless you were the one creating the earnings reports, of course.?

So, what do we have for you this week? We’ve got earnings reports aplenty to update you on, Betsson popping on its €27.5m clogs to go to Holland and an excellent write up on DraftKing’s acquisition of JackPocket last Friday.

Oh, and some big news out of the UK today: stake limits have now been introduced for slots. More on that later.

For those who might have missed some equally big news yesterday, iGB’s parent company announced the acquisition of Las Vegas-based Global Gaming Business. As part of our multimillion-pound investment into the industry, we’ll be using the deal to enhance our North American focus with a US-based news team, as well greatly expanding our data and product services.?

We’ll be sure to keep you updated as we put that into action! First though, let’s look at what caught the Diary’s eye this week.

iGB Diary: No money mo’ problems and Staking it easy

Happy Friday igamers! This week a cash-obsessed Diary ponders what it must feel like to “lose” $340m on the lottery and blow ￡3,500 an hour on the slots.

No money mo’ problems

The Diary cannot even imagine what it would do if it found out it had won $340m in the lottery. Probably be slightly confused that it’s in dollars and not pounds, but the point still stands.

We can be absolutely sure that we would stop whatever we’re doing and get the win confirmed ASAP, before clicking “buy now” on that brand new car/house/solid-gold typewriter.

That’s exactly what a man called John Cheeks from Washington DC did when he realised the winning Powerball numbers matched his ticket in January 2023. But in a shock to the system, his claim was denied.

The Office of Lottery and Gaming (OLG) claimed the numbers had been posted on its website by mistake during a quality assurance test. Yes really, we’re not kidding. And the numbers stayed online for THREE DAYS.

Cheeks is now suing on eight counts, spanning breach of contract, fraud and infliction of emotional distress. And we don’t blame him. “Emotional distress” is probably a much nicer way of describing what we’d be experiencing if someone denied us $340m.

Staking it easy?

The resulting tailspin of the UK’s gambling industry caused by the white paper’s April 2023 release took another twist on Friday as the government announced new maximum stake limits for online slots.

￡5 will now be the upper limit for most adults on a digital fruity, while those aged between 18 and 24 will have their reins tightened even further as they’ll only be able to spend ￡2 per spin.

It does beg the question who exactly is spending fiver after fiver per spin hoping three cherries align in this current climate of rising prices.?

Indeed, the Diary crunched the maths on this. Even with a ￡5 limit, five seconds per spin means ￡60 can vanish in the space of a minute.?

Extend that over an hour, and the potential loss amounts to a stinging ￡3,600. Even with the ￡2 cap for the young adults among us, an hour’s play could mean a ￡1,440 hit.

So, while there’s certainly plenty to debate about on the white paper when it comes to aspects such as sports betting and the horse racing levy, this one is certainly less contentious and should perhaps even be welcomed by the industry.

After all, if you’re staking upwards of ￡3,500 per hour on slots, it might be time for a rethink on where that money could be better spent.

That’s your lot! Same time, same place, next week!

This week on iGB

So, back to our earnings-filled news. Where do we start? Let’s start with earnings.?

The big headline figures this week came from Bally’s, Caesars, Better Collective and Kambi. ?

Starting with Caesars Entertainment, and this year’s digital success was tempered by a wider stagnation for the company. While digital pushed revenue up 6.5% year-on-year, hitting $11.53bn, Julius’ namesake also returned to profit. Despite the group’s optimism, though, Caesars only managed 0.1% revenue growth in Q4, with that stagnation to end the year perhaps marking an indicator of what is to come. The momentum of the company has taken a hit, with Caesars’ FY2022 and FY2023 failing to keep up with the impressive growth seen in the two years prior. The market did not react kindly to the news, and at market close on Tuesday, Caesars Entertainment was trading at $41.65 per share, down 2.02% on the previous day.

Big brand competitor Bally’s fared nowt too well either. While interactive growth pushed revenue up 8.6% to $2.45bn at Bally’s, the balance sheet was still as red as the company’s logo. Taking a look at 2023, gaming revenue was 7.9% higher at $1.99bn and non-gaming revenue climbed 11.7% to $457.0m. However, if we turn to spending, total operating costs fell 8.7% to $2.34bn for the year. After including $289.7m in other expenses, this left a pre-tax loss of $167.6m. An improvement on a $454.5m loss in 2022, but still some way to go.?

Kambi also hasn’t been a 2023 winning ticket, with Kambi Group CEO and co-founder Kristian Nylén saying he was “not satisfied” with the sports betting supplier’s financial performance in 2023. Despite posting a year-on-year increase in revenue, net profit was lower year-on-year, EBITDA fell 10.7% to €56.6m and margin reduced from 38.2% to 32.7%. Still, Kambi is in profit – and ahead of Nylen’s upcoming departure, he’s leaving the company in good stead.?

Better Collective, on the other hand, has fared much better, and following our insightful look into Catena’s woeful performance last week, is definitely in a much better place than its erstwhile rival. BC’s 2023 revenue was up 21% year-on-year, on top of the 52% growth recorded the previous year. This exceeded the target of €315m-€325m that it revealed in its 2022 earnings. Recurring revenue stood at €189m, again up 47%. EBITDA margin was 34%, fitting with the group’s target of 30%-40% that it set out in its 2022 report. Founder and CEO Jesper S?gaard was understandably happy. “2023 stands out as a year where we made significant progress towards our vision of becoming the leading digital sports media group,” he said.

Staying on this week’s winners, and industry behemoth Betsson announced its re-entry into Holland with its €27.5m acquisition of Holland Gaming giving the company a much-coveted Dutch licence. The deal will be funded entirely in cash, which makes sense given its earnings report last week, with EBITDA up 50%, as well as revenue up by 22% to €948.2m during the year to 31 December 2023.

Before we go, back to our grey and mossy island, and the big news out of the UK today is that the white paper’s recommended stake limits are now official for slots. In a move that no one saw coming (we jest), those aged 18-24 will be limited to ￡2 per spin and over-25s to ￡5. Effective from September, the measures mark the first time maximum stakes have been introduced for online slots in the UK. We’ll bring you an even more detailed focus early next week.?

Last but not least, we’ll leave you with an excellently written piece by our senior reporter Marese O’ Hagan, who teamed up with our favourite analyst Ed Birkin, of H2 Gambling Capital, to analyse DraftKings’ latest goings-on and what the mammoth $750m JackPocket deal could mean for the future. For Birkin, the acquisition certainly adds another string to DraftKings’ bow. “I think it could be viewed as a positive acquisition, providing diversification, scope for significant market growth and another customer acquisition channel,” he said. But price tag and market scope aside, there’s also the basic question of how lottery products are currently faring in the US. Sound interesting? Do take a look to find our more.?

That’s all from us for this week, folks! With rain forecast for the weekend, we’ll be doing the British thing and spending all of it outside while complaining about the weather. We’ll see you on Monday with even more of the industry’s best news, data and analysis!