|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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|From: Julius Wong||3/29/2021 9:24:52 AM|
|DraftKings to become an Official Gaming Partner of WWE|
Mar. 29, 2021 8:47 AM ET World Wrestling Entertainment, Inc. (WWE) By: Niloofer Shaikh, SA News Editor 5 Comments
DraftKings (NASDAQ: DKNG) will become an Official Gaming Partner of WWE (NYSE: WWE), subject to regulatory approval in all applicable jurisdictions.
WWE fans and DraftKings customers will be able to participate in free-to-play pools contests.
The collaboration will launch an inaugural free-to-play pool at WWE’s two-night pop culture extravaganza, WrestleMania, on April 10 and 11.
DraftKings will receive an exclusive license to media assets and in-game branding for WWE pay-per-view events.
“We’re excited to enter this new agreement that makes DraftKings WWE’s first-ever free to play gaming partner,” said Stephanie McMahon, WWE Chief Brand Officer. “This collaboration marks a significant step in deepening engagement with our passionate fans and will provide DraftKings the opportunity to leverage the massive appeal and reach of the WWE brand.”
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|From: Glenn Petersen||3/30/2021 11:19:51 PM|
|WHAT DOES DRAFTKINGS WANT OUT OF VSIN ACQUISITION?|
POSTED ON MARCH 30, 2021
BY BRAD ALLEN
Legal Sports Report
DraftKings has acquired Vegas Sports Information Network, Inc. (VSiN) in a bid to build out its content capabilities.
No specific financial details were disclosed, but the deal was worth around $100 million, LSR understands.
DraftKings stock was up slightly in early trading.
What is VSiN?
The Las Vegas-based VSiN was founded in 2017 and produces up to 18 hours of live linear sports betting content a day.
It is broadcast through a variety of video and audio channels including Comcast Xfinity, Sling TV, fuboTV, iHeartRadio and TuneIn.
Current VSiN CEO Brian Musburger and his exec team will continue to manage day-to-day operations and maintain editorial independence.
VSiN employees will also be integrated into the DraftKings workforce. Both companies have offices in Vegas.
Adding to DK Sportsbook brand equity
DraftKings CEO Jason Robins said VSiN created “authentic and credible content” for sports bettors at every level.
Robins added: “In addition to its brand equity among sports bettors and engaging talent roster, VSiN also has an established infrastructure that DraftKings can immediately help expand, in the hopes of adding value to consumers who are looking to become more knowledgeable about sports betting.”
DraftKings is ramping up its content creation
DraftKings has been relatively forthcoming about its desire to ramp up its own content creation. Robins hinted at an investment in the area during the company’s recent investor day.
“We think [media] could be a great route for us,” Robins said. “We’re considering whether or not to ramp up in our own content creation.”
And the VSiN deal might not be the last strand of that plan. Last month DK raised $1 billion in new debt to finance potential acquisitions.
That means the company still has a lot of dry powder for further M&A.
What next for VSiN?
VSiN CEO Brian Musberger said:
“We created VSiN as a destination for sports bettors to find the most credible content to help inform their wagering decisions. Harnessing the power and network of the DraftKings brand will help us reach an even wider audience with our unique content.”
The company now has some tricky waters to navigate, however. Firstly, the network has a subscriber base that may balk at paying for betting information from a network owned by a bookmaker.
Secondly, key VSiN on-air talent like Gill Alexander has been loudly critical of the Euro-style bookmaking tactics that DraftKings employs. How will that talent feel about working directly for a bookmaker?
VSiN also has studios at Southpoint and Circa. How will those casinos feel, having invested in those studios, only to see them now owned by a rival operator? It’s also interesting to note that DraftKings doesn’t operate currently in Nevada.
Finally, VSiN has multiple ongoing advertising contracts with DK Sportsbook competitors like BetMGM, BetRivers and PointsBet. What happens to those contracts if a BetMGM ad read comes from a DraftKings-branded studio?
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|From: Glenn Petersen||4/7/2021 3:51:48 PM|
|ANALYSIS: HAS BARSTOOL SPORTSBOOK ALREADY HIT A CEILING?|
POSTED ON APRIL 7, 2021
BY BRAD ALLEN
Legal Sports Report
Barstool Sportsbook has always been pitched as a contender for a podium position in US sports betting.
In February, Penn National CEO Jay Snowden told analysts:
“You should assume we are going to be top three. We said that before we ever launched and we’re delivering on that. We’re going to be profitable faster than anyone else, and we’re delivering on that.”
The latest state figures suggest Barstool actually might not be delivering on that just yet.
Now, in full disclosure: trying to tease out true insight from monthly reports is tricky. Revenue and handle can be quite variable from month to month.
But there are some interesting trends to pick out, starting with the PA sports betting market.
Barstool Sportsbook has steady share in PA
The February state report marked the fifth full month of the Barstool Sportsbook in the first market where it launched.
In those months, online handle share essentially hovered in a low-teens range:
Barstool Sportsbook PA online handle share
Bonusing rising in kind
But at the same time, the company significantly ramped up the amount of bonuses it dishes out:
In December, for example, promotional credits equalled 1.1% of handle. By February that was up to 8.8%.
In other words, the company’s market share is flat despite a massive increase in bonusing.
As Loop Capital analyst Daniel Adam said in a recent note:
“The surge we saw in Penn’s promotional spend last month to win a few points of share in PA seems to contradict the company’s messaging. Clearly, ‘just relying on the Barstool Media partnership’ is not enough for PENN to ‘generate meaningful market share.'”
A similar story in Michigan sports betting?
Over in Michigan, Barstool share of handle slipped from 23.9% in the first ten days of the market to 13.3% in February. That’s despite a broadly similar level of bonusing on a per-day basis.
So what’s going on?
One answer is the Dave Portnoy effect. The Barstool Sportsbook cast of characters were in Pennsylvania for the launch of the app there. More recently, they were Michigan for the opening of that market.
With Portnoy alone betting $50,000 a pop at his own shop, it is not unreasonable to think the Barstool squad could have a material effect on handle.
Of course, they recently were in Illinois betting March Madness so expect Barstool’s debut in the Land of Lincoln to be pretty strong. But the April data from Illinois will likely offer the more pertinent information.
Based on PA and MI then, a reasonable expectation for the Barstool Sportsbook seems to be fourth in the US betting market with a low-teens share behind FanDuel, DraftKings, and BetMGM.
That is not quite the podium position that Snowden promised, and it is taking an uptick in bonusing to hold even that level. That means the pledge of “unmatched profitability” might also be in jeopardy.
As a result, Penn’s massive stock run-up over the last year looks a little harder to justify.
Detached from fundamentals
Following Penn’s earnings call in February, Deutsche Bank analyst Carlo Santarelli estimated the betting/igaming part of the business was being valued by the market at $12.5 to $14.2 billion.
He calculated that by subtracting the value of the retail business – easier to project and value – from the overall market cap.
And Santarelli was far from impressed with that valuation.
He wrote: “We continue to believe the Penn stonk is completely detached from fundamentals and trades primarily on momentum, social media hype, and a long term story that we doubt ever materializes.”
Back to reality for Penn
Of course, Santorelli is a well-known Penn bear, and his notes show just how tiring that has been over the past year. Here he is after the last earnings call:
“What is there to actually analyze in a market/stock where apparently nothing is discounted and valuation is a combination of yesterday’s closing price plus today’s news or memes.”
But the market might have changed its tune. At the time of writing, Penn stock is down some 25% from its recent high.
There are plenty of factors at play of course. But the market may also be noticing that Barstool Sportsbook is not yet living up to its hype
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