Welcome to this week’s Igaming Focus newsletter. We lead with NFL data: U.S. sportsbook margins were hit during Q3, but the year is likely to end strongly. ESPN Bet is performing strongly in terms of betting app downloads, while BetMGM may need more investment if it is to hit its market share target of 25%.
- NFL data points – Week13: The Jefferies team says weak Q3 margins should be offset by a strong end to 2023 for U.S. sportsbooks.
- ESPN Bet launch: Penn and ESPN betting brand leads app downloads charts.
- No more cash (hopefully): BetMGM aims to be self-funding after 2024.
- News shorts
NFL data points – Week 13
Lucky-ish: It’s Week 13 of the NFL season and the Jefferies team noted that while the third quarter of 2023 was characterized by strong growth in handle and gross gaming revenues, the figures were offset by weak sports margins that were the result of tough comps and unfavorable sporting results during the period.
- Q4 high: However, the analysts also noted that “the signs from October and initial November data points continue to reveal a more promising outlook for Q4”, with nine out of 14 reporting states recording “all-time high monthly handle, while six have also set new GGR records”.
- Jefferies’ quarterly data tracked up to 26 November and showed that daily handle per day was “tracking up 57% vs. the full third quarter of 2023” and was up 27% on Q4 2022.
- New York driver: Wagering volumes Big Apple have been the main engine behind this growth.
- Jefferies said that since legalizing sports betting in January 2022, the state “has seen weekly handle eclipse $500m on just four occasions” but “three of these have now come in Q4 2023, with two in the last two weeks (ending 19/11 and 26/11)”.
- Hold it: Meanwhile, the Macquarie team has estimated that U.S. sports betting hold averaged 9% across all sports for the week of 27 Nov-3 Dec and that Q4 hold levels were trending at 7.8%, while “trailing 4-week handle growth stands at +35% YoY (+20% weekly)”, added the analysts.
- Single-game NFL hold levels were as follows: spread 14%, moneyline 11%, over/under -12% and primetime games (Monday, Thursday and Sunday nights accounted for 44% of total NFL betting.
New kid on the block: ESPN Bet’s launch and marketing and promo drives since going live on 14 November have seen Penn Entertainment and ESPN’s new betting brand record 1.7 million downloads during its first 16 days of operation.
- Jefferies notes that since launching, “ESPN Bet holds 65% share of downloads among leading apps, followed by FanDuel with 14% and DraftKings with 11%”.
- Sports day: Thanksgiving Day was “sports-heavy” and saw ESPN Bet enjoy a 56% share of app downloads, with its new user sign-up bonus of $200-$250 slightly ahead of FanDuel’s and DraftKings’ $150 bonus.
- JMP noted that betting app downloads in the U.S. increased 42% year-on-year to 810,000 during Week 13 of the NFL season and that ESPN Bet recorded more downloads since its launch in mid-November than its previous betting brand Barstool Sportsbook has managed since 2022.
- Sustainable challenge? ESPN Bet’s daily downloads were down from the 200,000+ it recorded in its first three days to around 35,000 in the last few days, but “this run-rate is still greater than daily downloads for FanDuel and DraftKings combined (c29k)”, noted Jefferies.
- With three NFL matches on Thursday and the first ever Black Friday match during this year’s Thanksgiving, average TV viewership for the three Thursday matches reached 34.1 million, “the highest for any Thanksgiving on record”.
- Flow-through rate: The viewership seemed to flow through to sportsbooks, with New York data showing handle was up 20% on last year’s Thanksgiving week to $517m. But with many favorites winning, margins were low at 4.2% vs. the 8.6% long-term average for New York.
No more cash (hopefully): BetMGM aims to be self-funding after 2024
No mas: During its investor day held on Monday this week, BetMGM said it had set its sights on being sustainable as soon as possible and was aiming to generate $500m EBITDA by 2026, with CFO Gary Deutsch saying it would not be taking any more cash to fund its activities from the JV’s parent companies MGM Resorts and Entain.
- As previewed, BetMGM forecast full year revenues to be at the upper end of its $1.8bn-$2bn guidance, which would represent a 39% rise on 2022 numbers.
- Wells Fargo estimated that BetMGM’s same-state sports betting growth was at +18% and had outperformed that of its iCasino products.
- Promo spend drop: The group is expecting to be EBITDA positive in 2023 and Wells Fargo added that the company’s promotional spend as a proportion of its gross revenues had dropped to around 27% in the year to date vs. 39% in 2022.
- Deutsche Bank noted that the 2026 EBITDA target compared with its own “forecast of $406m, of which MGM garners 50%” and said it expects BetMGM to record losses of $100m-$200m in 2024.
- Keep the taps flowing: Deutsche Bank added that BetMGM’s market share was around 17% currently and its 2026 forecast was based on sports betting and iCasino market share of 20-25%; “it would appear investment is necessary”, the DB team added.
- Key projects for the group will be the full integration of the betting data and analysis provider Angstrom, a single account-single wallet that will help with multi-state players, “who are far more active” and have “higher lifetime values than single-state players”, said Deutsche Bank, and ongoing tech improvements like speed times and parlay mix.
- Long jump: The analysts at JMP said BetMGM was “taking one step back to develop its online app to take two steps forward to grow the business for the long term”.
- Next year will be another year of investment and with the brand having received $1.26bn in capital from MGM and Entain, 2024 and beyond is expected to be “self funding” for the group.
- Meanwhile, as Entain’s senior leaders go through a delicate time with investors, MGM is unlikely to approach the group with a view to acquire it and will instead wait for the right time to move for the 50% of BetMGM that the UK group holds.
News shorts
California voters can expect more sports betting lobbying as another group of stakeholders hopes to put sports betting on the ballot in the Golden State, despite opposition from California tribal leaders. Eagle1 Acquisitions Corp has submitted amendments to its Sports Wagering Regulation and Tribal Gaming Protection Act to the state’s Attorney General Rob Bonta. Their plan is to take the issue to voters in 2024.
DraftKings has launched Pick6, a peer-to-peer daily fantasy sports game offering players the chance to pick a combination of different professional athletes to go over or under a given statistic. The game is live in six states as part of an “iterative” launch, the group said.
According to the Eilers & Krejcik US Online Casino Monitor, annual revenues from regulated U.S. online casinos to the end October were up 24% to $6.3bn. Pennsylvania was the fastest-growing individual state market with 29% year-on-year growth in iCasino.
The sports betting exchange Mojo Sportsbook has laid off 20% of its 95-person workforce and will shift to a daily fantasy sports betting model. The company launched in 2020 with a model enabling players to buy and sell shares of NFL players, akin to trading in a stock market. The company secured $100m with notable investors including Alex Rodriguez, billionaire Marc Lore, and entities like the NFL Players Association.
Games supplier Bragg Gaming will supply its online casino content and third-party titles to Cirsa’s Sportium brand in Spain and is expected to go live with Sportium in Mexico and Colombia in the near future.
