|From: Glenn Petersen||12/29/2020 7:09:17 PM|
|CLOSING TIME: FLUTTER AND CAESARS SECURE KEY APPROVALS FOR US SPORTS BETTING ACQUISITIONS|
POSTED ON DECEMBER 29, 2020
BY BRAD ALLEN
Legal Sports Report
Two of the biggest deals in US sports betting are almost complete.
Flutter will close its acquisition of the remaining shares of FanDuel on Wednesday 30 December, the company announced this week.
Around 99.99% of Flutter shareholders voted to approve the deal.
Meanwhile, Caesars announced on Tuesday it had cleared antitrust measures for its acquisition of William Hill.
It also secured approval for the deal from state gaming regulators in West Virginia and Mississippi.
The tie-up still needs rubber-stamping by other state gaming commissions including Nevada, New Jersey and Pennsylvania.
The English High Court must also approve the deal, but Caesars said it expected to close in March 2021.
What does it all mean for US sports betting?
It’s not surprising that Flutter shareholders supported the $4.2 billion deal to buy up a further 37% stake in FanDuel Group.
The price gave FanDuel an enterprise value of $11.2 billion; a discount of over 40% compared to the $20.3 billion value of DraftKings.
There are several reasons the previous private equity owners agreed to sell for that discount. For starters, a minority stake without operational control is simply worth less. Plus they got the cash immediately rather than waiting until 2023.
But for FanDuel users, not a whole lot will change. Perhaps the company will be even more aggressive on bonusing now it owns 100% of the upside. But that’s not yet clear.
Closer tie-in between Caesars and William HillAs for the $3.7 billion Caesars/William Hill deal, customers might notice a bit more of a change.
Caesars said the merger would help its product in several ways including:
-- A unified wallet and customer experience across William Hill online sportsbooks and Caesars online casinos.
-- The chance for William Hill to cross-sell to 60 million customers in Caesars’ rewards database.
Of course, the tie-up may not end the M&A party for Caesars.
Some analysts think the company will spin out the combined online betting and gaming business and list it in the US. Such a company could generate $600-$700 million in pro forma net revenue in FY2021.
And given the valuation multiple assigned to peers like DraftKings and Penn National Gaming, a spin-off could be very valuable indeed.
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|From: Glenn Petersen||1/6/2021 12:25:55 PM|
DraftKings — Shares popped more than 6% after the New York Daily News reported Gov. Andrew Cuomo is expected to make mobile sports betting a key part of his policy proposals in his State of the State address.
More from Legal Sports Report:
GOVERNOR CUOMO TO PUSH MOBILE NY SPORTS BETTING IN EMPIRE STATE SHOCKER
POSTED ON JANUARY 6, 2021
BY ADAM CANDEE
Check the thermometer in hell: Gov. Andrew Cuomo is ready to bring NY sports betting into the modern era.
Cuomo will include mobile New York sports betting in his 2021 policy proposals for the state, according to a report from the NY Daily News. The governor consistently opposed mobile wagering in past years and contended the state needed a constitutional amendment to legalize it.
It appears a multibillion-dollar budget deficit fueled by the pandemic softened Cuomo’s opposition — and not a moment too soon for a state bleeding sports betting handle to neighboring New Jersey.
“At a time when New York faces a historic budget deficit due to the COVID-19 pandemic, the current online sports wagering structure incentivizes a large segment of New York residents to travel out of state to make online sports wagers or continue to patronize black markets,” Cuomo said in the report.
While the news might stun longtime industry observers, Cuomo indicated in December that he would consider mobile sports betting and legal marijuana as potential bandages for the state budget crisis.
How big could New York sports betting be?
Mobile wagering in the Empire State could become the country’s crown jewel in the nascent US sports betting market. An Eilers & Krejcik Gaming report in February 2020 estimated New Yorkers wagered $837 million in New Jersey in 2019.
The report indicates about 20% of New Jersey sports wagering comes from New York City. Consider the increase in NJ sports betting handle from 2019 to 2020:
2019: $4.5 billion
2020: $5 billion** First 11 months
New Jersey will approach $6 billion in handle for 2020, with no March Madness betting and four months with no major professional or college sports. Now imagine a more convenient legal option for the roughly 8.4 million people in the boroughs and New York’s potential becomes obvious.
“New York has the potential to be the largest sports wagering market in the United States, and by legalizing online sports betting we aim to keep millions of dollars in tax revenue here at home, which will only strengthen our ability to rebuild from the COVID-19 crisis,” Cuomo said in a statement to the Daily News.
What mobile NY sports betting might look like
The Daily News report indicates Cuomo will ask legislators to require mobile operators to tether to an existing casino. Current law allows sports betting in New York only in-person at existing casinos.
Those include both commercial and tribal operations:
Rivers Sportsbook (Schenectady)
FanDuel Sportsbook (Tioga Downs)
DraftKings Sportsbook (del Lago Resort Casino)
Turning Stone (Syracuse)
Point Place (Bridgeport)
Yellow Brick Road Casino (Chittenango)
Resorts World Catskills (Monticello)
Akwesasne Mohawk Casino (Hogansburg; pending launch)
The initial proposal does not appear to include a suggested tax rate or licensing fee. To compete with the NJ sports betting market, New York might need to align closely with the Garden State’s 13% levy on mobile revenue.
Previous attempts stalled at multiple stops
Cuomo’s support does not guarantee that mobile sports betting will come to New York. State legislators still need to pass a bill and that proved perilous in past years, although two pre-filed bills already existed prior to Cuomo’s statement.
Sen. Joe Addabbo and Assemblyman Gary Pretlow play Sisyphus in their chambers year after year, After legislators backed a 2013 law for retail sports betting at just four existing casinos, Addabbo and Pretlow failed in multiple tries to add mobile wagering in proceeding years.
Issues including a reluctant Speaker of the Assembly, potential tribal exclusivity claims, and the definition of where mobile bets actually occur complicated efforts. But no roadblock stood as tall as Cuomo’s veto pen.
Just a year ago, Cuomo called potential new forms of gaming revenue “irresponsible” in dismissing the idea of mobile betting:
“There’s no gimmicks. There’s no new casino revenue. … This is not the time to come up with creative although irresponsible revenue sources to solve a problem which doesn’t really exist.”
It appears 2021 might just be the time to solve a problem that exists.
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|From: Glenn Petersen||2/6/2021 4:12:25 AM|
|DraftKings Jumps as Cathie Wood’s ARK Adds Stock to ETF|
By Connor Smith
Feb. 2, 2021 7:31 pm ET
The logo for DraftKings is displayed on a laptop computerGabby Jones/Bloomberg
DraftKings stock popped on Tuesday after Cathie Wood ‘s ARK Next Generation Internet exchange-traded fund disclosed it added the online sports-betting stock.
As of Feb. 1, the ETF (ticker: ARKW) owned 620,300 DraftKings shares worth about $33.9 million. As Barron’s previously noted, the stock jumped in after-hours trading on Monday despite an absence of company-specific news. ARK Investment’s exchange-traded funds have been hugely popular in recent months. Five of ARK’s actively managed ETFs trounced the broader market in 2020 thanks to bets on disrupters such as Tesla (TSLA). Even plans of a space-themed ETF from ARK Invest sent stocks in the sector rising.
DraftKings stock has soared 238% since going public via a merger with a special purpose acquisition company in April.
Shares were up 8.5% to $59.31 on Tuesday, while the S&P 500 index was up 1.4%.
In a note on Tuesday, Morgan Stanley analyst Thomas Allen wrote that he believes FanDuel and DraftKings continue to lead in app download market share, with DraftKings doing well in new states that have launched online sports betting. He cites preliminary app download data from Sensortower that showed U.S. sports betting app downloads increased 299% year-over-year in January, with DraftKings on FanDuel’s heels with 32% share, compared to the latter’s 34% share of downloads. FanDuel is owned by Flutter Entertainment.
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|From: Glenn Petersen||3/2/2021 6:18:47 AM|
|DRAFTKINGS STOCK STEADY ON IMPROVED REVENUE GUIDANCE DESPITE MASSIVE Q4 LOSSES|
POSTED ON FEBRUARY 26, 2021
BY BRAD ALLEN
Legal Sports Report
DraftKings stock climbed 4% on Friday following a strong Q4 earnings report and upgraded outlook for 2021.
The company posted Q4 revenue of $332 million, up 98% on a pro-forma basis and ahead of analyst estimates.
CEO Jason Robins said the revenue beat was driven by:
-- Good hold rates, especially on NFL
-- More college sports than initially projected
-- Remote registration in Ilinois
-- A strong launch in Tennessee, where the market saw over $300 million in handle in its first two months
-- People stuck at home with more time and money for betting
New guidance affects DraftKings stock
As a result, DraftKings raised its FY21 revenue outlook from $750-850 million to $900 million – $1 billion.
Robins said the improved outlook reflected “the outperformance of our core business and newly launched states that were not included in our previous guidance.”
There was also growth in existing states, with New Jersey handle up 103% year-on-year. DK said it was profitable in New Jersey in its second full year of operation there.
Elsewhere, monthly unique players increased 44% to 1.5 million, while average revenue per player increased 55% to $65.
Big costs for DraftKings
However, the growth came at a high cost. Net loss for the quarter was $266 million. Adjusted EBITDA was negative $88 million.
Much of the difference between the two numbers was driven by stock compensation during the quarter, which was $149 million.
As for costs, sales and marketing spend ramped up year-on-year to $192 million. However, it was down slightly on a sequential basis from $203 million in Q3. That’s because of the marketing ramp-up around NFL betting at the end of Q3.
The operator declined to share an EBITA outlook for 2021, based on the variance in new state launches. Investors remained largely unfazed by the company’s sizable spend, as DraftKings stock opened Friday at $60 and sat art $59.50 as of publication.
What next for DK?
Going forward, the company said the migration to its in-house SBTech platform should be complete by the end of Q3 2021. That will give it greater control over product development and boost margins, Robins said.
Other key takeaways:
DraftKings said it was the largest iGaming operator in the US by GGR in Q4
DraftKings registered more customers in Iowa in five days via mobile registration than through the entirety of 2020.
The company will host an investor day on March 9.
What do investors think?
Gaming investor Jason Ader played down the losses, saying the company was right to pursue growth while the sector was still early-stage.
“I’m not saying its a value stock, obviously it’s trading on a very high multiple,” Ader said. “But from a business perspective, they are executing at a very high level.”
He said DraftKings would be smart to make the most of its lofty valuation and issue equity to make an acquisition.
“Their stock is good currency right now and they should use that to strengthen their business,” Ader said.
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|From: Glenn Petersen||3/12/2021 7:45:24 PM|
|Sports betting company Flutter considers spinning out FanDuel to boost value|
PUBLISHED FRI, MAR 12 20216:14 PM EST
UPDATED FRI, MAR 12 20216:19 PM EST
Alex Sherman @SHERMAN4949
-- Some Flutter investors are pushing for the U.K.-based owner of FanDuel to spin out the company because it trades at a discount to DraftKings.
-- A spin isn’t imminent or assured, according to sources.
-- Simplifying Fox’s future ownership in Flutter and FanDuel is one complicating factor to a spin.
Flutter, the U.K.-based mobile gaming company that owns 95% of FanDuel, is considering spinning out FanDuel as a separately traded company to trade on a U.S. exchange, according to people familiar with the matter.
A separation of FanDuel isn’t assured or imminent, said the people, who asked not to be named because the discussions are private. FanDuel is Flutter’s crown jewel, which may spur Flutter CEO Peter Jackson to keep it.
Fox Sports, which owns 2.5% of Flutter, has an option to buy an additional 18.5% stake in FanDuel in July. Fox also has a 10-year option to buy half of the Stars Group’s US business, another asset owned by Flutter. (Stars Group owns Fox Bet.) Clearing up Fox’s FanDuel ownership is a complicating factor that may delay a spinout, said the people.
Spokespeople for FanDuel and Fox Sports declined to comment.
Several investors in Flutter have expressed frustration that Flutter is trading at a discount to DraftKings despite FanDuel’s status as the largest U.S. player, said the people, who asked not to be named because discussions are private. When Flutter announced it was acquiring another 37.2% stake in FanDuel in December for $4.5 billion, part of the logic behind the transaction was to allow for an eventual spin of FanDuel, the people said.
DraftKings’ market capitalization is more than $28 billion. The company booked $644 million in revenue in 2020, and predicts it will have $900 million to $1 billion in revenue for 2021.
Flutter, which trades on the London Stock Exchange, has a market capitalization of £27.7 billion (about U.S. $39 billion), which is less than 40% higher, even though FanDuel alone reported $967 million in revenue in 2020, which is 50% higher -- and that doesn’t include Flutter’s other assets. Moreover, FanDuel claims to be the market leader in U.S. sports gambling, with 40% market share.
A potential spinout could happen at a crucial time for mobile sports betting in the U.S., as 19 states are set to vote this year on whether to legalize it, including Texas and New York, the second- and third-most populous states.
Flutter is a holding company for betting sites, such as Paddy Power, Betfair, Fox Bet, PokerStars and TVG. The other assets, with lower growth profiles, may be weighing down FanDuel’s value. FastBall Holdings, a consortium of venture capital firms CapitalG (the late stage investing arm of Google parent company Alphabet), Comcast Ventures, KKR, Verizon Ventures, NBC Sports Group, and Shamrock Capital, owns 7% of Flutter after the December FanDuel acquisition.
Disclosures: Comcast Ventures is the venture capital arm of Comcast, which owns NBCUniversal, the parent company of both NBC Sports Group and CNBC.
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|From: Glenn Petersen||3/27/2021 5:55:56 AM|
|SCR closed at $30.93 on Friday. Probably a potential acquisition candidate. |
TheScore, valued at $1 billion, is playing underdog in U.S. sports gambling and public markets
PUBLISHED THU, MAR 25 202110:15 AM EDT
UPDATED THU, MAR 25 20212:16 PM EDT
Jabari Young @JABARIJYOUNG
-- Canada-based gaming and media company theScore is worth $1 billion and wants to gain market share in U.S. online sports betting.
Build it slow.
That’s how media company theScore wants to establish its gambling asset as the Canada-based company is now fully active on the U.S sports betting and public markets landscape.
“That’s how we built our success with our TV network in Canada, and that’s how we built our success with the app,” said John Levy, the company’s CEO.
TheScore is a sports gaming and media company that is betting its mobile app user base will be critical in its growth plan to carve out its sports betting business. Levy knows it’ll be a challenge, as theScore trails top firms like FanDuel and Barstool Sports. But he’s welcoming the competition.
“It’s all about who wins in the marketplace and who’s has got the best product and who’s got the best ideas,” Levy said.
The underdog role
Levy, 65, spoke about his company when discussing theScore with CNBC last September. He envisioned the day when Canada will expand its sports gambling and also embraced theScore’s longshot status in the sector altogether.
“We’re an underdog,” Levy said. “We’re the most popular, least-known brand in the U.S. But in six months, a year, or 18 months from now, that isn’t going to be the case.”
TheScore transitioned into its role as a digital-based outlet in 2012 when Levy sold theScore’s broadcast business to Rogers Communications for $167 million. He said then that unloading the network would allow theScore to “focus 100% on our digital products” and grow the mobile app.
The Score is listed on the Toronto Stock Exchange and this year launched in the U.S. on the Nasdaq under the ticker “ SCR” after its IPO raised $183.6 million. The firm currently has a market capitalization of $1.3 billion.
Its mobile app has roughly 3.9 million monthly users and delivers live scores, stats and news to users. TheScore makes money from sponsorship and digital ads and from the app, and launched its theScore Bet app for mobile wagers in 2019. It’s trying to grow awareness around the betting app Levy labeled as “undervalued” while competitors spend millions on brand building.
“They don’t know us in the media or the betting business as of yet. And nobody knows us in the financial markets yet,” said Levy. “But those who do are going to be rewarded tremendously.”
The Score’s strategy
The company declined to discuss theScore Bet users, but the app is live in four U.S states, including New Jersey and Colorado. Levy said the company would take “a gradual approach to building the user base, giving people what they want and going after longevity of what this business is going to propose.”
But again, theScore is behind on the U.S. scene. Firms like the Penn National-backed Barstool Sports app are ahead in the space and available in states including Pennsylvania and Illinois. Penn National Gaming CEO Jay Snowden told CNBC’s “ Squawk Box” that additional states including Indiana and New Jersey will launch in the next few months. New York is also in sight.
Others, including Fox Corp.’s Fox Bet and MGM’s BetMGM app, have also gained traction in U.S. mobile sports gambling. TheScore needs to compete against those bigger firms and endure the politics of getting more U.S. states to grant the company a gambling license.
It has help coming from Canada, though. A bill ( C-218) to legalize single-event sports wagering is approaching the final stages, with Prime Minister Justin Trudeau in favor of the legislation. TheScore believes its home market has the potential to grow to $5.4 billion and estimates the Ontario market alone could reach $2.1 billion by 2025.
Canadians place over $7 billion in illegal wagers as sporting gambling in the country is mainly limited to horse racing, according to Bloomberg.
TheScore says it achieved an all-time record quarter for its media revenue, generating $10.6 million in the first quarter of 2021. As for its stock, Chad Beynon, an analyst at Macquarie Securities, labeled it outperform. He said theScore plans to own its sportsbook tech and that could help with long-term revenue growth.
“We believe this is important, particularly for a company like [theScore], which is able to curate the content, offer unique bets and deliver on in-play betting, which only accounts for 15% of the U.S. current market vs 75% in the UK,” wrote Beynon. “In addition, this strategy would also result in lower platform fees (15% of revenue), which should allow for faster margin ramp.”
Chris Lencheski, chairman of private equity consulting company Phoenicia, said he likes theScore’s position, especially if Canada comes online. Lencheski acknowledged gambling companies are spending millions on branding as they fight for future market share, but added, “I like the fact [theScore] hasn’t put a big obligation in front of them only because they felt the outside pressure to look like something else.
“Often times [companies] say, ’We’ll look just like another company, and we’ll do it bigger and spend more money,” he added, using Quibi as an example. “How many billions of dollars did they throw into that thing? And it was done before it started. TheScore has got themselves a nice niche.”
John Levy, CEO of Score Media and Gaming Rings the Opening Bell at the Nasdaq on March 16th, 2021.
Having some lunch
But eventually, theScore will need to decide what it wants to be in the sports gambling space and how it will grow.
Properties like BetMGM will have the advantage of its hotel properties to lure and keep online gamblers. Meanwhile, digital firms like FanDuel and PointsBet are aligning with sports teams to grow their brand and entice users. And Caesars, which purchased William Hill for $3.7 billion, is pushing its brand, too.
But Lencheski said firms that grow their niche by offering speed around user experience and accurate betting odds would be among the top players. He said peer-to-peer sports gambling could excel, and firms like theScore could benefit from its user base.
But Lencheski warned the dollar average to acquire a new customer, and the handle that customer brings will begin to weigh on firms with little capital. He projected mergers and acquisitions among sports gambling companies would occur over the next 24 to 48 months.
“When it’s less expensive to consolidate and win, then it will be to spend,” Lencheski said. “In other words, when it costs more money to go get the next one customer than it would be to participate in someone else’s offer.”
TheScore has already been mentioned among early candidates for a potential acquisition. The company told CNBC it doesn’t comment on rumors or speculation when asked about acquisition rumors.
Again, Levy said months ago this was the plan: to grow slowly. But theScore is now on the clock, and it’s playing the sports betting game as the underdog.
“We’re thinking about becoming one of the leaders in the industry and positioning ourselves to do that,” Levy said. “We love being the underdog because they don’t see us coming. We’re going to crush them. We’ll nibble away at them first, and then we’re going to eat their lunch.”
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