Welcome to the new edition of Igaming Focus, now weekly. The in-depth commentaries will continue on a biweekly basis now supplemented by a conversational breakdown of the week’s igaming news. In this week’s issue:
- NFL Data points Week 7: numbers look strong
- We look ahead to Q3 results season
- Supply and demand: JMP gives an iCasino lowdown on suppliers
- Company and state numbers: Boyd Gaming, PA and LA
- News shorts
Data points – NFL Week 7
The 2023-24 NFL season is going into its seventh week and the signs are encouraging for the sportsbooks “with high engagement and betting activity”, according to Jefferies, while Macquarie says NFL hold levels were 17% for the week October 16-22.
Quoting data from H2 Gambling Capital, the Jefferies analysts said stakes on NFL games came to $1.35bn during Week Six, up 48% ahead on last season, taking the estimated handle for the season to date to $7.16bn, up 37% on last season.
- For September, H2 Gambling Capital currently expects the market to generate $1.1bn of gross win on $11.8bn of handle, which would be “a record month for both metrics”.
- With 11 states reporting, online handle was up 46% vs. Sept22 to $5.2bn and gross win increased 16% to $481m.
- Margins were 9.2%, “facing a tough comp in the form of the highest ever recorded monthly margins in September 2022 at 11.6%,” said Jefferies.
- Top spots: FanDuel led in gross win with 41% share from 10 states, followed by DraftKings with 40% from 11 states. BetMGM had 7% and Caesars 5%, both from 8 states.
- Across respective live states, September GGR by operator was +11% for FanDuel, +50% for DraftKings, +1% for BetMGM and -33% for Caesars.
- Margin call: The Macquarie team said hold levels across all sports was 14% and for NFL games, margins reached 17% for the week 16-22 Oct, “well above our long term average hold target of 9%” the analysts noted with classic understatement.
- Primetime NFL games totaled 40% of all NFL bets and estimated single-game hold levels were as follows: spread 11%, Moneyline 11% and Over/under 18%, with 62% of NFL games going Under on the total, “which is positive for SGP hold rates this week”, added Macquarie.
Heads or tails: As Q3 results season gets underway, the Deutsche Bank team is predicting that new state launches (KS, MD sports betting, MA, OH, and KY) will provide the tailwinds for strong “aggregate growth” in Q3.
- However, it added that annual negative comparisons will likely “outpace those experiencing growth” when “additional September results come out”.
- Hot stuff: The team adds that industry growth came mainly during the month of July, “where hold comparisons were easier, relative to August and September”.
- Combining existing September data and projections for that month, the Deutsche Bank team said it anticipates the “6.9% growth for the states that have reported to migrate lower as the additional states provide September results”.
- It also pointed to the “outsized impact(s)” of New York and New Jersey on aggregate GGR comparisons in the current quarter, with both states improving “aggregate comparisons by 6-10% points in each month”.
- Promo fomo: Deutsche Bank added that being able to quantify promo spend will also play a key role in industry figures.
- States that report operators’ promo expenditure (PA, MI, CT, AZ) were showing far lower GGR growth (-0.3% YoY) than those that don’t (NY, NJ, Il, CO, +21% YoY GGR growth).
- The inference being that GGR in the latter four states is considerably inflated by promos.
In a round up note on the industry’s main players, the JMP team noted that hold levels for U.S. betting groups were “now exceeding 8.5%”, far above the industry’s “historical 7% range” thanks to the emergence and popularity of parlay bets.
- Jet lag: However, after removing promotions, net gaming revenues “still lag international markets” at around 7% “compared to international markets’ 10-12%, which should lead to “upside to revenue estimates”, added JMP.
- Tri-fecta: Online casino hold rates are lower than sports betting at 3%-3.5%. This is due to three factors: allowing players to win more enhances their long-term value “given the fast velocity of online play” and operators “do not want users to think the games are rigged”, while “the online demographic is generally sharper and spends more time on games with lower hold rates”.
- The low hold means suppliers need to produce regular, quality content to keep players on the device for longer periods of time.
- Give and take: The fees between suppliers and operators are a closely-held secret that depend on factors like delivery method, returns, payouts and bonusing features. The fees generally range from 5% to 12% of GGR, depending on those factors.
Company and state numbers
Boyd Gaming reported Q3 revenues of $903.2m, a 3% rise on Q2, but net income was down 14% to $135.2m. Total adj. EBITDAR was down 5% YoY to $320.8m, with property margins at 40%.
- Core-customer play, hotel and food & beverage revenues were all up, but these were offset by softness in retail, the group said.
- Boyd’s online segment, however, benefited from strong results from FanDuel’s operations and the addition of Boyd Interactive and was on track to deliver $60m -$65m in FY23 EBITDAR.
- Macquarie noted that Boyd’s slight miss on consensus EBITDAR of $326m was partially offset “by better than expected online results”.
Pennsylvania’s report for September showed operators generated $476m in revenue for the Keystone State. The figures represented a 6.2% rise on Sept22, with $156m of the revenue coming from the online operators, a monthly record and a 41.5% annual increase.
Louisiana’s sports betting operators generated more than $43m in GGR for September, an all-time high in the state, and was 33.7% higher than in 2022. Handle was second-highest ever at $280m and GGR margins were 15.4%. The state recouped $5.3m in taxes.
- Light and Wonder has completed its acquisition of the remaining 17% of SciPlay it didn’t already own for $22.95 per share. CEO Matt Wilson said completing the acquisition will accelerate its cross-platform strategy to deploy games across digital and land-based platforms.
- Acres Technology has appointed the long-time industry analyst David Bain as its new Chief Financial Officer. Acres founder and CEO John Acres said “having someone of (Bain’s) caliber join our team as CFO is a powerful vote of confidence in our vision and our future.”
- EveryMatrix’s casino subsidiary SlotMatrix will provide a multistate content aggregation deal to betPARX for the states of New Jersey, Michigan and Pennsylvania.
- Qu’est-ce-que Kelce: With pop superstar Taylor Swift and Kansas City Chiefs tight end Travis Kelce officially dating, BetMGM, DraftKings and FanDuel all reported 7x increases in betting activity on Kelce over the past four weeks.
- And finally, it’s a no no from BroThrow.