Igaming Focus: Bid for Bally’s, North Carolina sports betting, Entain’s big sale

March 14, 2024 8:00 AM
  • Jake Pollard, CDC Gaming Reports
March 14, 2024 8:00 AM
  • Jake Pollard, CDC Gaming Reports

Hello and welcome to this week’s Igaming Focus newsletter.

We have a stacked newsletter this week:

  • Standard General bids again for Bally’s Corp
  • As North Carolina launches sports betting, parlays show their worth
  • NY iCasino bill not in state budget
  • Entain’s big sale
  • FanDuel in DC, Alabama and Maryland, news shorts

Standard General bids again for Bally’s Corp

Lowball: Bally’s largest shareholder Standard General has once again bid for the 77% of the group it doesn’t own in a deal that is worth less than half what it bid for the casino operator two years ago. As part of its new bid, Standard General valued Bally’s at $15 a share, a 40% premium on the $10 the shares were worth at the end of last week. At the time of writing, Bally’s shares were worth $13.70.

  • The new offer values Bally’s at around $685m and Standard General said it expects the company to form a special committee to consider the proposal and wouldn’t proceed without the committee approving the bid and a majority vote of the remaining shareholders.
  • Uncertain smile: The reduced offer is a reflection of a number of uncertainties pertaining to the group, the main one being “the polarizing issue”, in the words of Macquarie analysts, of its Chicago casino project.
  • Meanwhile, online the group has canned its ambitious BallyBet project and is now operating sports betting on the Kambi platform, although iCasino generates revenues of around $330m, “compared to UK-traded peers with $200m”, noted Macquarie.
  • Further negativity could come from a bid for one of the New York casino licenses, plans for a Tropicana rebuild in Las Vegas and the ongoing need to find funds for the Chicago casino build will continue to weigh on the group.

Parlays demonstrate their worth (again)

With North Carolina becoming the 35th state to regulate sports betting and as U.S. bettors wait impatiently for March Madness to tee-off, it’s worth recapping how important parlays (same game or otherwise) are to sportsbooks’ fortunes. On an individual state basis, Sports Handle ran a good breakdown on the influence those bets have on Illinois operators.

  • Headline: The important number is the average hold level of 18% that parlays generated for Illinois operators in 2023. This compares with average margins of 4.9% generated by single-event bets. More than 324 million wagers were placed in 2023 and nearly 150 million of them were parlays.
  • FanDuel recorded over 106 million of them out of the 154.5 million bets it took in Illinois in 2023, while its nearest challenger DraftKings took 64.5 million parlay bets and was the only other mobile book for whom parlays accounted for more than 50% of the bets it recorded.
  • Parlay first: For FanDuel, the numbers show how important being a first-mover on the product has been to its U.S. fortunes and as the graphic below shows, it was far ahead of its competitors with margins of 21% in the Land of Lincoln.

Making the difference: As I reported last week, product is the key differentiator in online sports betting and the operators “that have the best parlay products will generate the best margins, which will drive their revenues and EBITDA figures”.

  • The team at Deutsche Bank said parlays made up 41.4% of handle in Jan24 compared to 25% the previous year, although it also noted that Illinois likely had some “reporting issues”. But the visual below once again illustrates the margins parlays generate compared with single bets.

NY State Senator Joseph Addabbo

No iCasino in New York in 2024

Online casino will not be included in the New York budget as the state’s Senate released its official budget proposal at the start of the week. The previous week, Senator Joseph Addabbo had already told Play USA that that would be the case, but added “that doesn’t mean we cannot resume that conversation in June or December. It can materialize at any point”.

  • Out (for now): Along with iCasino, the iLottery vertical was also not included in the state’s latest budget proposals.
  • In: Season-long prop bets on award futures and measures to direct 1% of online sports betting revenue towards treatment of problem gambling and addictions were included.
  • The news that online casino had not been included in the state’s budget is not a surprise. In January, NY Assemblyman Gary Pretlow had already said it would not be included in final budget discussions.
  • Strong opposition to online regulation has also come from the New York Hotel and Gaming Trades Council, which fears it would lead to job losses at brick-and-mortar casinos.
  • Addabbo said he included a $25m fund for casino workers as part of his legislative proposal and that he wouldn’t give up on the project. He added that if it doesn’t happen in 2024, he would urge State Governor Kathy Hochul to include it in her January 2025 executive budget.

A big Entain sell-off seems nailed on

Sale of the century: Having discarded Jette Nygaard-Andersen as CEO in December and initiated a group-wide strategic review, the consensus is that the UK gambling giant Entain, a 50% shareholder in the BetMGM joint venture with MGM Resorts, is set to sell off many of the brands in its portfolio.

  • On the block, potentially, could be major names like land-based giants Coral and Ladbrokes and what were once online behemoths like Sportingbet, PartyPoker or bwin, as well as some of the (many) companies acquired during what the UK Times described as Nygaard-Andersen’s “scattergun” approach to M&A.
  • U.S. distraction: During the group’s results call with analysts last week, Entain’s interim CEO Stella David commented that BetMGM’s “performance quite rightly is a key focus, but being fully transparent (…) delivering product and tech solutions for BetMGM at the pace that we have had to has meant there has been some considerable cost in our other markets”.
  • Basic feed: David added that Entain had laid the groundwork to ensure it had the capacity “to feed BetMGM with what it needs”, but also had to “prioritize getting our products right in the key markets, particularly the UK and Brazil”. For the time being, the key was “delivering and executing on brilliant basics”.
  • For MGM, meanwhile, a trimmer Entain where it would only acquire the outstanding 50% the UK group holds in BetMGM could prove an ideal scenario.
  • As speculation around a new CEO continues, current BetMGM boss Adam Greenblatt is an outside bet, while SkyBet ex-CEO Richard Flint is seen as a strong candidate.
  • In 2023, Entain’s revenues including BetMGM were up 14% to nearly £4.8bn and group EBITDA was up 4% to £857. In the U.S., BetMGM’s net revenues were up 36% and “at the top end of expectations” at nearly $2bn.
  • However, the group also posted post-tax losses of £879m caused by the deferred prosecution agreement it entered into with the UK government over historic activities in Turkey, while key markets like the UK (-6%), Brazil (-14%) and Germany (-26%) were down due to adverse regulations which it said would cost it “approximately £40m” in FY24 EBITDA. Positives were Central and Eastern Europe (+13%) and Italy (+3%).

Online gambling will be more social, engaged and targeted

Future tense: Speaking at the iGaming Next New York conference last week, industry experts predicted a shift in online gambling toward enhanced social interaction, personalized engagement, and targeted experiences for players. Panelists emphasized the need for innovation to cater to evolving player preferences, including increased social media integration and tailored experiences.

  • Examples included Seth Schorr’s launch of a Latino-themed social casino and Justin Park’s focus on catering to women through Betty.ca, while Karolina Pelc, CEO of BeyondPlay, advocated for multiplayer features to stress community aspects and shared experiences in online gambling.
  • Oliver Bartlett, VP of Gaming Product & Content at BetMGM, highlighted the challenge of navigating vast game selections, suggesting the potential role of algorithms or AI in doing so.

FanDuel to replace Intralot as Gambet DC app platform

FanDuel will replace GambetDC as the new betting app for players in the District of Columbia and in the process will become Intralot’s new contractor for sports wagering in the jurisdiction.

  • The U.S. market leader for OSB will take over from Gambet DC as the official brand of DC’s Office of Lottery and Gaming (OLG). The main contract will continue to be run by Intralot.
  • FanDuel’s takeover relieves the OLG from yearly operating expenses of $2m-$4m; the group will also handle payment processing, marketing and replace GambetDC with FanDuel at 63 lottery outlets.
  • Despite concerns about the lack of a competitive bid process, the move should boost revenue as FanDuel already holds a significant market share in neighboring Delaware, Maryland and Virginia (‘DMV region’). The move aims to revitalize DC’s sports betting landscape and drive regional growth.
  • The Gambet DC app has come in for strong criticism in recent years and FanDuel has projected that it will generate $119m in tax revenues for the jurisdiction over the next five years.

Maryland voters unenthusiastic about iCasino as state bans college prop bets

Curbing it: A recent survey conducted by Public Policy Polling on behalf of the Maryland Retailers Alliance has shown little enthusiasm for legalizing online casino gambling in Maryland. Of 570 voters, 64% of respondents were against online casinos, with 23% in favor and 13% undecided.

  • Concerns about underage gambling resonated with respondents, with 69% finding it convincing, while 37% found the financial argument for funding education through internet gambling convincing.
  • Maryland AFL-CIO President Donna Edwards said internet gaming is a risky bet in Maryland, which could lead to job losses, unstable revenue, and damage to public health.
  • The Old Line State also joined Ohio to become the second state to ban prop bets on college athletes. The MD Lottery and Gaming Control Agency said operators might lose a small chunk of revenue from the ban, but it was worth it to protect student athletes from harassment.
  • Following Maryland’s action, the number of jurisdictions permitting college player prop wagers now stands at four, including Kansas, Michigan, Louisiana, and Washington, D.C.

Alabama Senate passes watered down gaming bill

Off the scale: The Alabama Senate has passed a scaled-back version of the expanded gaming bill approved by the House. The version of the bill passed by the Senate legalizes a state lottery, pari-mutuel wagering, and historic horse racing at seven locations, including the state’s four greyhound tracks and in counties that previously had electronic bingo facilities.

    • It also instructs Governor Kay Ivey to negotiate with the Poarch Creek Indians, which could lead to the expansion of their three casinos to full-fledged facilities with table games.
    • The amended bill now heads back to the House for approval, with Rep. Chris Blackshear, sponsor of the original House Bill, saying he will review it over the legislature’s spring recess next week.
  • Senate Minority Leader Bobby Singleton is aiming for a conference committee to negotiate the House and Senate versions to devise a compromise. If approved, gaming expansion would then have to be given the green light by voters via a special referendum on September 10.

News shorts

Caesars Entertainment has renewed its sponsorship as the official U.S. sports betting and gaming partner of the National Hockey League. This multi-year deal includes providing Caesars Digital access to NHL intellectual property for creating NHL-branded iCasino games.

Vancouver-based player account management (PAM) platform Strive Gaming has secured funding for U.S. expansion from sports betting supplier OpenBet. The investment allows OpenBet to market its platform and services with Strive’s PAM platform.

The Temple men’s basketball team, under scrutiny for irregular betting activity before its game against Alabama-Birmingham, had at least three other games this season with similar patterns, reports The Athletic. While no one has been publicly accused of wrongdoing, such betting trends are monitored closely by regulators.

With Representative George Dunbar sponsoring House Bill 2078, Pennsylvania poker players are one step closer to joining the Multi-State Internet Gaming Agreement (MSIGA). If approved, PA will join MSIGA states Nevada, Delaware, Michigan, New Jersey and West Virginia and its players will be able to enjoy larger poker liquidities .

What we’re reading

Contradictions abound: An interesting write-up of a survey on U.S. attitudes to gambling

On social