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   Technology StocksDraftKings, Inc. / Online Gambling


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From: Glenn Petersen4/19/2021 1:27:23 PM
   of 235
 
EBET is trading at $19,77 this morning, down $5.88.

HOW MUCH DID ESPORTS BETTING COMPANY JUMP AFTER NASDAQ IPO?

POSTED ON APRIL 19, 2021
BY BRAD ALLEN
Legal Sports Report

Esports betting platform EBet Technologies jumped 700% following its IPO on the Nasdaq on Thursday, demonstrating a growing market appetite for both betting and esports.

$EBET debuted Thursday at $6 per share, aiming to raise $14.4 million.

However by pre-market trading Friday, it was up to $46 a share. That’s equivalent to a $585 million market cap.

That is a significant premium to its current financials. Revenue for the fiscal year to September 30, 2020 was $196,000. Net income was -$573,000.

What is EBet?

EBet provides a platform for betting on esports titles like Counter-Strike: GO and League of Legends.

It operates a B2C site called Gogawi, focused on Asia and Latin America.

It also offers its technology as a B2B product.

Esports betting in the US?C

EO Aaron Speach said the company was “in the process” of getting into the US but not rushing because of the current regulatory environment.

Esports betting is still tiny in the US. Nevada allows wagers on approved events, while New Jersey could be close to widespread legalization.

EBet recently added Dennis Neilander, former chairman of the Nevada State Gaming Control Board, to its board to help its US ambitions.

Out with the old …Speach said the long-term market was potentially enormous.

“There were 500 million esports viewers in 2020,” he said. “Meanwhile the NFL has an audience of 160 million and they generated $64 billion in legal wagers. So you can see how big the opportunity is.”

Esports bettors are also a much younger demographic than traditional bettors. As a result, EBet sees an opportunity to acquire customers without having to compete directly with heavyweights like FanDuel and DraftKings.

Instead, Speach pointed to companies like GG.Bet and Esports Entertainment Group ($GMBL) as more direct competitors.

“There’s tons of growth ahead, “ Speach predicted. “We’re really excited to bring esports to the forefront and we’re going to crush it in 2021.”

Story Link

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From: Glenn Petersen4/21/2021 4:47:39 PM
   of 235
 
The dMY Technology Group (DMYD)/Genius Sports Group (GENI) deal closed yesterday.

DMYD closed at $16.21 yesterday. GENI closed at $19.78 today, up $3.57.

The press release: GSG-Galileo-De-Spac-Close-Press-Release-4.19.2021.pdf (dmytechnology.com)

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From: Glenn Petersen4/26/2021 10:45:10 AM
   of 235
 
Another online sports gaming company is going public. Sports Entertainment Acquisition Corp. (stock symbol: SEAH), a SPAC that raised $450 million when it went public in October 2020, has agreed to merge Super Group, "...the holding company for global online sports betting and gaming businesses Betway, an online sports betting business, and Spin, a multi-brand online casino offering."

Blank Check IPOs (SPACS) Message Board - Msg: 33296729 (siliconinvestor.com)

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From: Glenn Petersen5/1/2021 8:57:41 AM
   of 235
 
FLUTTER TO EXCLUDE ‘STRUGGLING’ FOX BET FROM POTENTIAL FANDUAL IPO

POSTED ON APRIL 29, 2021 - LAST UPDATED ON APRIL 30, 2021
BY BRAD ALLEN
Legal Sports Report

A potential FanDuel US public listing would not include Fox Bet and PokerStars, Flutter announced Thursday.

It is another sign Flutter is not backing down from its ongoing dispute with Fox.

The two companies are about to start an arbitration process over the value of a 2021 option that allows Fox to buy an 18.6% stake in FanDuel.

What is the beef between Fox and FanDuel?

In short, Fox thinks it can exercise the option at a cheaper price, while Flutter has said the valuation will be based on “fair market value.”

Flutter said the appointment of the arbitrator was almost finalized, suggesting the process will start soon.

As part of the pre-arb maneuvering, Fox threatened to remove FanDuel ads from its networks. It also threatened to withhold the Fox Bet/PokerStars assets from a potential FanDuel IPO.

Relative strength ahead of FanDuel IPO

But Flutter dismissed the impact of that in its Q1 earnings call on Thursday.

Firstly, it published the FanDuel/Fox Bet splits for the first time, reflecting the relative strength of the two businesses. FanDuel Group accounted for 91.6% of Flutter US revenues in Q1. Fox Bet and PokerStars came in at 8.4%.

Across the full FY20, FanDuel Group did $800 million in revenue vs $96 million for the Fox Bet assets.

Meanwhile FanDuel did $-148 million EBITDA compared to $-71 million for Fox Bet. Those economics strongly favor FanDuel Sportsbook.

Scale is king“

FanDuel creates tremendous embedded value,” Flutter CEO Peter Jackson said. “The customer acquisition costs compared to lifetime value are very good. We get better operating leverage as we push more volume.

“Contrast that to Fox Bet, which is struggling. The product is not as good because we still have to use the legacy Stars Group sports betting platform. Customer acquisition is lower on the sports side. Fixed costs are higher. As a result, we don’t get the same benefit from operating leverage.

Jackson added: “It gives us visibility to what it’s like for smaller competitors chasing us down in the states. It’s hard.”

Plenty more advertising partners in the sea

Flutter also played down the importance of losing Fox as an advertising partner.

CFO Jonathan Hill said: “Fox is not a huge component of marketing spend for FanDuel. FanDuel was successful before the merger when Fox became a partner. While we are highly supportive of Fox, FanDuel is not overly reliant on that channel for marketing.”

In short, it seems Flutter is willing to fight its corner in arbitration and risk losing Fox as a partner in the future.

FanDuel IPO is a huge prize

That is an easier risk to take given the size of the spoils. A public FanDuel could be worth around $30 billion, analysts think.

”The clear message is Fox Bet needs FanDuel, not the other way around,” said one London analyst, who asked not to be named.

To be clear, the FanDuel IPO is still not certain. Flutter said the listing of a “small part” of FanDuel Group was still under consideration and no final decision had been made.

Fox sees it differently

Of course, the picture is different from Fox’s point of view. Sources close to the company said a FanDuel valuation would be signicantly harmed by the legal overhang of the arbitration.

It’s also worth noting Fox Bet is still a $100 million revenue brand despite its current inferior product. That would bolster any valuation. And PokerStars and Fox Super 6 are the leading products in their respective fields.

“They would be IPO’ing a significantly weakened business without the Fox assets,” the source said.

FanDuel still going full speed in US

Elsewhere, the Q1 results painted a positive picture for Flutter’s US division.

Revenues grew 135% to $396 million. The company added 900,000 new customers in the quarter, taking average monthly players to 1.6 million. FanDuel/Fox Bet combined recorded a 36% share of the online sportsbook market during Q1.

Flutter’s share price was relatively unchanged following the update.

Flutter To Exclude 'Struggling' Fox Bet From Potential FanDuel IPO (legalsportsreport.com)

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To: Glenn Petersen who wrote (185)5/3/2021 10:16:45 AM
From: Glenn Petersen
   of 235
 
GENIUS SPORTS REVENUES CLIMB 30% BUT REAL TEST YET TO COME

POSTED ON APRIL 29, 2021
BY BRAD ALLEN
Legal Sports Report

Genius Sports posted this week its first financial report since becoming a public company.

The figures paint a positive picture, with a 30% rise in FY20 revenue to $150 million. Growth accelerated throughout the year, with a third of FY20 revenue generated in Q4.

Elsewhere, group EBITDA flipped positive, from -$6.2 million in 2019 to $17.5 million in 2020. The Genius SPAC transaction officially closed last week, with the company now trading on the NYSE under ticker $GENI.

Analyst firm Regulus Partners noted the underlying business was essentially cash flow-neutral, thanks to capital expenditures of $1.5 million and capitalized development of $15.9 million.

Great momentum for Genius SportsGroup

CEO Mark Locke hailed a landmark year for the business despite the coronavirus pandemic:

“We have entered 2021 with great momentum, bolstered by our recently-completed merger with dMY II and NYSE listing, as well as our exclusive partnership with the NFL,” said Locke.

“I am more confident than ever about the opportunities ahead as we continue to leverage our unique technology and scale to grow alongside the rapidly expanding global sports, betting and media ecosystem.”

2021 a huge year for Genius

The Genius financials are going to look dramatically different in 2021 thanks to the company’s official NFL data deal.

Genius is thought to be paying around $120 million a year for those data rights over six years. Half of that will be paid in equity.

Those costs will need to be covered by increased fees from operator partners. In turn, those fees could make NFL betting a loss leader at some US sportsbooks if they take the official feed.

“The extent to which US-facing operators are able to make room for this additional cost and whether they will be tempted to take ‘open source’ data … is a significant value question for Genius,” Regulus said in a note.

“One way or another, the sports data landscape will be changing beyond recognition in the near future.”

That battle over official league data versus open-source data could even spill over to the courts, as it has in the UK.

Following the results announcement, Genius share price climbed 0.7% to $21. That equates to a market cap of around $3 billion, or 20x trailing 12-month revenues.

NFL Data Move Holds Key To Genius Sports Future After Solid 2020 (legalsportsreport.com)

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From: Glenn Petersen5/7/2021 8:06:16 AM
   of 235
 
DraftKings raises full-year guidance, expecting a return in sports


PUBLISHED FRI, MAY 7 20217:20 AM EDT
Jessica Bursztynsky @JBURSZ
CNBC.com

KEY POINTS

-- DraftKings reported first quarter results Friday morning.

-- The sports-betting company said it had 1.5 million million monthly unique paying customers.

-- The company also raised its fiscal year 2021 revenue guidance to a range of $1.05 billion to $1.15 billion from a range of $900 million to $1 billion.

Sports-betting company DraftKings reported better-than-expected loss per share and revenue for its first quarter, and raised its full-year revenue guidance.

Shares were down more than 1% in the premarket after an initial pop on the report.

Here are the key numbers:

Loss per share: 36 cents vs 42 cents expected, according to a Refinitiv survey of analysts


Revenue: $312 million vs $236.2 million expected, per Refinitiv

DraftKings said it has 1.5 million million monthly unique paying customers as of its first quarter, holding on to the gains in made in its fourth quarter. It was expected to report 1.31 million, according to Factset.

Average revenue per monthly unique paying customer came in at $61 in the first quarter, representing a 48% increase versus the same period in 2020. The company said that was boosted by increased engagement with its iGaming and mobile sports betting product offerings, as well as cross-selling.

The company also raised its fiscal year 2021 revenue guidance to a range of $1.05 billion to $1.15 billion from a range of $900 million to $1 billion, which equates to year-over-year growth of 63% to 79%. DraftKings credited the expected return of normal sports seasons for the increase in guidance.

“The increase reflects solid performance in the first quarter of 2021, continued strong user activation due to the effectiveness of our marketing spend, well-executed launches of mobile sports betting and iGaming in Michigan and mobile sports betting in Virginia, and a modest contribution from our recently completed acquisitions,” the company said. “This guidance also assumes that all professional and college sports calendars that have been announced come to fruition and that we continue to operate in states in which we are live today.”

Friday’s report marks the company’s first full year as a publicly traded company, since it went public last April via a SPAC. The company has been able to ride growing sports betting legalization across the United States, helping expand its market reach. DraftKings is live with online sports betting in 12 states.

Currently, 21 states, plus Washington, D.C., allow online sports betting, up from 20 this past quarter. Six states legalized sports wagering but are not yet operational, and 13 states are working on legislation.

DraftKings (DKNG): Q1 2021 earnings (cnbc.com)

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From: Glenn Petersen5/17/2021 1:28:06 PM
   of 235
 
HOW BARSTOOL SPORTSBOOK MODELED ITSELF AFTER UK GIANT SKY BET

POSTED ON MAY 17, 2021
BY BRAD ALLEN
Legal Sports Report

Barstool Sportsbook has been better than others at turning bets into revenue across its young life.

According to recent figures from Penn National, Barstool Sportsbook has taken $660 million in handle in the seven months since it launched.

It turned those wagers into $61 million in gaming revenue, good for a 9.2% hold.

That is well clear of the average 7.2% hold across all states since the repeal of PASPA.


Outpacing DraftKings and FanDuel

A 2% difference might not sound much, but on that $660 million in handle, it is worth $13.2 million.

The hold rate is also well clear of the big two in US sports betting.

DraftKings is at 6.3% hold according to state by state data for 2020/21. FanDuel is at 7.5%.

Interestingly FanDuel recently talked up their hold rate at their recent Q1 results, pointing to the strength of their Same Game Parlay product.

What’s driving high hold for Barstool Sportsbook?

Penn gave some clues about the reasons for the high hold at its Q1 results:

High adoption among casual bettors
Custom parlays like the Dave Day Night Parlay
Exclusive and “boosted’ bets
Overindexing in younger bettors
The Sky Bet model

Interestingly, Penn CEO Jay Snowden said the operator was modeling itself after UK sportsbook Sky Bet, which also boasts a high hold rate.

Sky uses boosted odds and parlays, although it is perhaps best-known its wildly popular RequestABets.

Snowden explained:

“The lion’s share of bettors in our ecosystem are under 30. So we see a lower average bet size but higher hold rates. They are betting a lot of parlays, and recreational wagers. That’s what Sky Bet has been doing for a long time.

“Sky Bet also overindexes on hold. It’s still early, but life to date, our hold is higher than the competition and I think that’s because we have a younger, more casual bettor. And think about lifetime value. I’d rather have bettors under 25.”

Big NFL push for Barstool Sportsbook

Elsewhere, Snowden pledged to ramp up marketing ahead of this football season, with Barstool Sportsbook expected to be live in eight states.

However, he said that marketing spend would be concentrated on media outlets and “influencers” like Barstool, rather than TV and radio.

“I’ve been in PA all week and every TV commercial is sports betting,” Snowden said. “It’s overwhelming, you don’t even know who is advertising to you.

“We’re not going to play that game. That’s a very low ROI and you get customers with no loyalty.”

Dry marketing powder

Snowden said Barstool Sportsbook cost per acquisition (CPA) was under $100 in its three states so far, giving the company “dry powder” to spend this football season. For one comparison, PointsBet said this week it was satisfied with $500 CPAs.

Snowden was also asked about some of the concerning trends in monthly state-by-state data, but warned analysts not to read into those figures too much, especially out of football season.

“Dave Portnoy and Big Cat, their best sport is NFL which was coming to an end as we launched in Michigan,” Snowden said.

He promised better results come September, with increased marketing spend and learnings from the first season.

How Barstool Sportsbook Modeled Itself After UK Giant Sky Bet (legalsportsreport.com)

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From: Glenn Petersen5/23/2021 8:12:03 AM
   of 235
 
GENI closed at $20.26 on Friday.

GENIUS SPORTS STOCK JUMPS ON STRONG Q1, UPGRADED GUIDANCE

POSTED ON MAY 20, 2021
BY BRAD ALLEN
Legal Sports Report

Sports shares jumped nearly 10% on Thursday as the company posted strong Q1 results and upgraded its revenue guidance for 2021.

The data company reported Q1 revenue growth of 52% year-over-year to $53.7 million.

Adjusted EBITDA rose 414% to $9.3 million, up from a net loss of $5.3 million last year.

“We delivered superb results in the first quarter of 2022,” said Genius CEO Mark Locke.

Upgraded outlook for Genius Sports

The company raised its FY2021 revenue guidance from $190 million to $250-$260 million.

“Our strategy of powering the global sports data ecosystem has supported our growth in the quarter,” said Locke.

“We are confident in our ability to continuously improve our end-to-end solution and deliver on our increased guidance for the year.”

EBITDA guidance for the core business was also raised from $35 million to $35-45 million.

More details on NFL data deal

The company also held its first earnings call since becoming a public company on Thursday.

Analyst questions centered around the company’s NFL data deal, worth an estimated $120 million a year over six years. Half of that will be paid in equity.

However, Genius said the deal would be cash breakeven for 2021, i.e. excluding the equity consideration.

The company said it would then be cash positive in 2022 and profitable over the lifetime of the deal.

CEO Mark Locke referenced a similar deal for official UK soccer data. He said that agreement allowed Genius to package up other services and ultimately secure a higher share of operators’ B2B spend.

Official vs unofficial data

Of course, it means operators are going to have to pay up, and $120 million is a lot to take out of the NFL betting market each year. In fact, US operators made only made $278 million in NFL betting revenues in 2020, according to state-by-state data.

Genius, however, dismissed concerns that US sportsbooks might not pay up for the official data feed.

The official product is more than just data, and includes advertising and engagement tools to find and keep players, Genius said.

Focus now on execution for Genius Sports

Analyst firm Regulus Partners said the key question now was whether Genius could add enough value from those areas to justify “premium pricing.”

Regulus added: “Genius will sink or swim on commercial drivers, technical competence and operational execution – not daydreaming about what the size of the US market might be in five year's time."

Genius Sports Stock Jumps On Strong Q1, Upgraded Guidance (legalsportsreport.com)

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From: Glenn Petersen5/26/2021 6:23:00 AM
   of 235
 
ANALYSIS: HURDLES IN FRONT OF FANDUEL IPO IN US STACKING UP

POSTED ON MAY 25, 2021
BY BRAD ALLEN
Legal Sports Report

Flutter is facing a growing number of problems as it considers an IPO of a portion of its FanDuel asset in the US.

FanDuel CEO Matt King announced his sudden departure from the company this month, surprising investors and analysts alike.

Flutter stock dropped 5% following the announcement as the company admitted the departure would “affect the timing of any potential US listing.” Flutter kicked off a search for King’s replacement, but there is not a huge pool of candidates qualified for such a job.

Changing environment for FanDuel IPO

That uncertainty is far from the only hurdle for a FanDuel IPO to overcome.

For starters, the wider market is not what it was when the IPO was first mooted back in March. DraftKings and Penn are both down around 40% from their highs at time of writing.

Applying a similar discount to FanDuel drops the suggested $35 billion valuation to around $21 billion.

What’s more: simply by listing, FanDuel increases the supply of sports betting companies in the stock market, potentially driving prices down further.

No Fox assets in FanDuel IPO

It is important to remember too that initial valuations were built around the entire FanDuel Group, including Fox Bet and PokerStars.

We since learned that Fox would not allow those assets to be included in the IPO, thanks to an ongoing dispute with Flutter.

That could knock off another chunk of value as the dispute between Fox and Flutter continues.

What is Fox Bet worth?

Flutter executives downplayed the importance of those assets in a recent earnings call, saying Fox Bet was “struggling.” It also pointed out that 90% of US revenues came from FanDuel and the TVG horse racing brand.

But of course, Flutter is incentivized to minimize those assets. So what do the numbers say?

Industry analyst Chris Grove said DraftKings was a “reasonable comp” for establishing a Fox Bet valuation. The two operators both have a mainstream brand with national reach and a number of unique assets, Grove said.

Of course ,Fox Bet has less scale than DraftKings, but it has the market-leading poker brand in PokerStars. It might not have a DFS customer database, but it does have 5 million users of the free-to-play Super 6 prediction game.

The math of the potential deal

Fox Bet/PokerStars had just under $100 million in revenue in 2020. DraftKings is trading around 20x its trailing-12-month revenues, so applying that multiple to Fox/PokerStars gives an approximate $2 billion valuation.

But the Fox assets go beyond the gambling brands. Fox has also threatened to stop advertising the FanDuel brand across its networks, so what is that worth? Flutter again played down the importance of that at its Q1 results, but we can get an approximate value from similar deals.

The PointsBet deal with NBC, for instance, was worth around $500 million over five years. The announcement also added around $1 billion to PointsBet market cap.

Additionally, Fox controls the Super 6 game. Given Action Network and its 1.5 million customer database just sold for $240 million, Super 6 alone could be worth potentially $1 billion.

Taken altogether, the Fox assets that would be excluded from a FanDuel IPO could reasonably be worth $3+ billion.

What next for Flutter?

Bringing it full circle, that mooted $35 billion FanDuel valuation from March could well be half of that now. So is the juice still worth the squeeze?

“I can’t believe they will push ahead with this,” said Simon French, a gaming consultant at Bixteth Partners “They need a period of consolidation, calm markets, and a new CEO.”

Flutter declined to comment further on its IPO plans when contacted by LSR. But for now at least, the best move might be no move at all.

Analysis: FanDuel IPO Seeing More Hurdles In Front Than Before (legalsportsreport.com)

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From: Glenn Petersen5/28/2021 5:32:12 AM
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Inevitable:

Consolidation is perhaps inevitable, especially as share prices dip and it is no longer so easy to raise free capital.


LEAN DREGS AND TAM: WHY THE ADDRESSABLE US SPORTS BETTING MARKET IS BLEEDING

POSTED ON MAY 27, 2021
BY BRAD ALLEN
Legal Sports Report

It has not been a great month for US sports betting operators.

The leading publicly listed companies have seen their market caps cut almost in half. And a key concern for investors is a shrinking total addressable market (TAM) in the country.

Here’s a quick rundown of some negative news in recent weeks:

-- New York demands at least 50% of GGR for anyone wanting to operate mobile sports betting in the state. That figure could make it nearly impossible for the winning bidders to deliver profit.

-- Florida gives the Seminole Tribe control of the FL sports betting market. Online operators might be allowed in, but only as brands on Hard Rock technology and only with significant revenue-share payments.

-- California tribes say they want retail betting for 5-10 years before mobile.

-- Texas sports betting will not happen until at least 2023.Those four states account for a third of the US population. All now look like tough — perhaps impossible — places to make money in the near-term.
US sports betting TAM ain’t what it used to be

BetMGM recently called for a “long-term” US sports betting TAM of $14 billion. DraftKings called for a mature market TAM of $22 billion.

Yet these projections do not come with specifics about which states will legalize. And it is hard to reach those numbers without the ‘big four’ states.

“It’s becoming increasingly clear that the basis for many of the more optimistic TAMs is questionable,” said Regulus Partners analyst Paul Leyland in a recent note. “New York and now Florida present far more problems than opportunities for the queue of US digital stakeholders”.

Worst to come for US sports betting TAM?

It could get worse too. Deutsche Bank warned clients recently that other states might mimic the NY model if it proves to be good for the state’s tax take.

Similarly, Florida could be a template for California and other tribal states looking to legalize sports betting.

As gaming consultancy Eilers & Krejcik put it in a newsletter:

“Past in US sports betting policy (e.g. the New Jersey model) is no longer prologue.”

Too many mouths to feed

A shrinking TAM is not the only problem for operators. The recent legislative movements highlight another issue facing firms: everyone wants a slice of the pie.

New York wants its 50% cut, the Seminole Tribe wants a 40% cut, and the NFL is getting $120 million a year for its official league data rights. Then sportsbooks must pay market-access fees and fund giant advertising deals with networks like CBS and NBC.

Those costs help explain why regulated sportsbooks are not laying $20,000 a pop on golf matchups like their offshore counterparts.

“The market is going to be huge but there are so many people looking for a slice of the same pie,” said Gavin Kelleher, a gaming analyst at stockbroker Goodbody. “If we look at the market over the next 10 years, I question the sustainability of being in one or a handful of states. It’s so hard to compete without pan-national scale.”

The importance of scale

The importance of scale is not new. But it is only becoming more important as costs rise and opportunities shrink.

For example; a well-capitalized giant can afford to bid 50% of GGR for a license in New York and lose money for five years. But many can’t afford to subsidize the future like that.

Similarly with market-access fees: every casino in Michigan (for example) wants to work with FanDuel or DraftKings, and is willing to take a smaller cut of revenue to do so.

It is the same with marketing. DraftKings has said previously it is three times more cost-efficient to advertise nationally than locally. As a result, smaller firms are finding it hard to cut through the marketing firewall put up by the big operators.

Not easy being sub-scale

This is the case even in theoretically wide-open markets.

Colorado sports betting, for instance, recently reached 20 operators. But only the usual suspects are making an impact.

Eilers noted:

“According to our proprietary tracking, the Colorado market remains top-heavy as none of the smaller brands have been able to capture meaningful share.”

Over in Michigan, the top four firms had an 84% share of handle in April. The remaining eight operators split 16% among them.

A route forward in US sports betting market?

So what next?

Consolidation is perhaps inevitable, especially as share prices dip and it is no longer so easy to raise free capital.

The current environment might favor the US casino chains like Caesars, Penn, MGM and Bally’s, who all see cash flow from their retail properties.

No white knights on the horizon

There is also not much help coming from online casino.

Returning to those operator TAM estimates, BetMGM called for $13.4 billion in annual iGaming revenue at maturity. DraftKings called for $40 billion from iGaming when including Canada.

Those projections, as much as anything, helped drive massive valuations for US operators. But the iGaming momentum has not materialized as many envisaged during COVID.

“Other than Michigan, no state has legalized iCasino in the aftermath of the pandemic,” said Deutsche analyst Carlo Santaralli in a note this week. “And Michigan was approved for iCasino prior to the pandemic.”

Online cannibalization?

Santarelli’s research found that the brick-and-mortar casinos in Pennsylvania and New Jersey have been slower to rebound than other regions.

A regional subset of casino properties tallied by Deutsche grew GGR by 19% in April 2021, compared to 2019. But properties in NJ and PA actually declined.

To Santarelli, that suggested some cannibalization from online gaming.



After all, PA online casino has been generating $65 million per month over the last 13 months. That is a huge amount of money to be entirely new gambling spend, though the pandemic’s limiting effect on the overall economy cannot be dismissed.

“As such, we think the rollout of iCasino is likely to be a lot more challenging than most expect,” Santarelli wrote. “We think there is some merit to cannibalization of traditional casino operations, which would thereby lessen the desire of certain casino operators to push for legalization.”

More TAM trimming

Subsequently, Deutsche called for a 2027 iCasino TAM of $4.9 billion, including $3.3 billion from currently legalized states. That’s a far cry from the operator-generated projections.

To sum up then: the online betting and gaming pie now looks smaller than many hoped. And it is being divided into many pieces beyond operators themselves.

Small wonder, then, that valuations are coming down across the board.

Lean Dregs And TAM: Why Addressable US Sports Betting Market Shrank (legalsportsreport.com)

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