Bet On It: BetMGM expands to the United Kingdom

Welcome to the latest edition of “Bet On It,” where The Fly looks at news and activity in the sports betting and iGaming space.

SECTOR NEWS: Caesars Entertainment (CZR) announced that its horse racing account wagering app, Caesars Racebook, is now live in New York State. Horse racing fans in the Empire State can now enjoy pari-mutuel wagering on premier horse racing content from more than 300 tracks around the world, all tied to Caesars Rewards. Caesars Racebook’s debut in New York builds on the recent launches in sixteen states, including California, Colorado, Florida, Indiana, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Montana, North Dakota, Ohio, Oregon, Pennsylvania, Washington, and Wyoming. Powered by NYRA Bets, Caesars Racebook provides bettors with a platform that allows customers to watch and wager on the horse racing. Caesars Racebook is now available in New York on iOS, Android and desktop.

MGM Resorts International (MGM) announced the launch of its BetMGM iGaming and online sports betting brand in the United Kingdom, kicking off MGM Resorts’ strategy of expanding the BetMGM brand into international markets. The new international BetMGM-branded offering leverages the technology and platform of LeoVegas, the Swedish-based gaming company acquired by MGM Resorts last year. The BetMGM UK online offering provides customers with new product features such as large-scale jackpots, loyalty rewards, sports promotions and exclusive slots. The new sports and casino experience utilizes the BetMGM brand and MGM Resorts’ entertainment in Las Vegas to deliver an online experience in the UK. The product is available now on desktop and mobile web with further functional development, including mobile applications, planned before a national media launch in mid-September.

Caesars Entertainment unveiled Caesars Palace Online Casino, an online casino app and desktop platform that ties online gaming to Caesars’ customer loyalty program, Caesars Rewards, and leverages the entire network of more than 50 Caesars destinations throughout the United States and Canada. Those 21 and older in New Jersey, Pennsylvania, Michigan, West Virginia, and Ontario can now download the Caesars Palace Online Casino app on iOS and Android or visit caesarspalaceonline.com to enjoy an t experience with player rewards, exclusive games, and promotions.

John Paulson’s Paulson & Co. disclosed in an SEC filing that the fund exited its position in Bally’s (BALY). Similarly, TD Cowen analyst Lance Vitanza lowered the firm’s price target on Bally’s to $30 from $35 and held an Outperform rating on the shares. The firm said the outlook remains favorable with encouraging domestic trends as well as the pending implementation of the UK Gaming White Paper which positions Bally’s to continue improving market share.

FLORIDA IN FLUX: The Seminole Tribe reintroducing Florida sports betting via Hard Rock Bet by the kickoff of NFL season on September 7 could be in jeopardy., Mike Mazzeo of Legal Sports Report noted. The D.C. District Court of Appeals requested a response regarding the petition filed by West Flagler Associates for a rehearing in front of all the judges on the court. The Department of the Interior has until August 31, to respond. As for another significant sports betting event, a resolution is not likely before the Florida State Seminoles’ NCAA football season opener against LSU on September 3.

EARNINGS RECAP: Gambling.com (GAMB) surpassed expectations in EPS and revenue in its second quarter report. Notably, the company grew North American revenue 115% to $13.4 M…Charles Gillespie, CEO and co-founder of Gambling.com Group, commented, “The business performed phenomenally in the second quarter with record operating results reflecting another quarter of significant organic revenue growth and strong Free Cash Flow generation. The growth highlights our success in scaling our North American operations as well as continued growth in our more established markets. New depositing customers rose 60% year-over-year to over 91,000, which helped drive a 63% revenue increase to $26.0 million, 161% growth in Adjusted EBITDA to $9.4 million, and $8.5 million of Free Cash Flow. “Despite North America already being our largest reporting market, it still represents a significant growth opportunity for Gambling.com Group and we remain very confident in our ability to continue to increase market share in existing states as they continue to grow. This expected growth will be complemented by an overall expansion of the addressable market as new states such as North Carolina and Kentucky come online with sports betting, and iGaming is authorized in additional states. As we continue to scale our North American operations, Gambling.com Group will benefit from other attractive near- and long-term growth drivers, including valuable media partnerships with leading domestic digital media publishers, McClatchy and Gannett, and the significant long-term global opportunity provided by the recently launched Casinos.com. In addition, we are well positioned to continue growing in our more established markets where we continue to take market share and have signed our first international media partnership with The Independent for the U.K. market. “With each quarter of consistent profitable organic growth delivered by Gambling.com Group, we are demonstrating the benefits of what we believe to be the most attractive business model in the industry as we leverage our many growth drivers and capital efficiency. Our excellence in SEO and proprietary data science allows us to consistently generate top-line growth, Adjusted EBITDA margins that exceed 30%, and strong Free Cash Flow conversion. As a result, we are confident Gambling.com Group will continue to create added value for our shareholders, clients and our valued team members.” In addition, the company raised full-year guidance for both revenue and adjusted EBITDA. Gambling.com did note that its outlook assumes Kentucky goes live on September 28th with online sports betting.

Truist raised the firm’s price target on Gambling.com to $17 from $14 and maintained a Buy rating on the shares. The company’s Q2 results saw a “strong beat” with record revenue and adjusted EBITDA as favorable trends continued across the business, while the management also raised guidance ahead of the launch of online sports betting in Kentucky next month, the firm told investors in a research note. The firm further cites improving fundamentals and favorable FX for Gambling.com, noting that it remains positive on its positioning in the interactive landscape and sees profitable growth continuing.

In the same vein, Super Group (SGHC) came in ahead of last years figures in terms of revenue and operational EBITDA in Q2. Alternatively, cash and cash equivalents of EUR 228.7M were down from EUR 254.8M on December 31 2022. Neal Menashe, Chief Executive Officer of Super Group, commented: “Super Group has delivered financial results that reflect our ongoing focus on both an optimized global footprint and investment in long-term growth. This quarter’s strong revenue performance has delivered enhanced economies of scale in multiple markets, resulting in significant year-over-year growth in Operational EBITDA, ex-US. We remain confident in our business model and focused in our search for future growth opportunities in the global online casino and sports betting industry.” Alinda van Wyk, Chief Financial Officer of Super Group, stated: “Our second quarter results, ex-US included record revenue and solid Operational EBITDA of EUR 82.6 million. Our monthly active customer numbers continue to show momentum reaching 3.7 million which we believe is a key driver for future growth. Achieving scale in each of our markets, combined with driving cost efficiencies throughout the business remain our focus for long-term growth and bringing us back to consistent ex-US EBITDA margin from operations of greater than 20%. With regards to the US, the business is tracking in-line with expectations and we are confident in our strategy.” Shares were up nearly 11% following the quarterly release.

Benchmark upgraded Super Group to Buy from Hold with a $4.50 price target. The firm cited the company’s continued execution of its operating strategy and an attractive current valuation relative to peers for the upgrade. Super Group reported better than expected Q2 results while updating 2023 profitability guidance, the analyst told investors in a research note. Benchmarks said the company is achieving scale and leverage.

ADDITIONAL ANALYST COMMENTARY: Craig-Hallum raised the firm’s price target on Gambling.com to $18 from $15 and kept a Buy rating on the shares. Execution remains superb, highlighted by 63% organic revenue growth, EBITDA margin expansion, and strong free cash flow conversion, the firm noted. The firm told investors that while the stock is up over 50% over the past two months, it thinks it is still a must-own small-cap given its financial profile, fundamental trends, strong balance sheet, and modest valuation.

B. Riley raised the firm’s price target on Gambling.com to $17 from $14 and backed a Buy rating on the shares. While the Q2 online sports book industry results were better than expected, Gambling.com’s results well-exceeded industry growth, illustrating that the company should outpace online gaming’s multi-year, visible total addressable market growth, the firm said in a research note.

Jefferies raised the firm’s price target on Gambling.com to $18 from $15 and reaffirmed a Buy rating on the shares. The better than expected Q2 report positions Gambling.com as a solid play on digital gaming growth in the U.S. and globally, the analyst told investors. The firm believes the company should continue to outgrow the U.S. industry overall, with continued stable profitability levels.

PUBLICLY TRADED COMPANIES IN THE SPACE INCLUDE: Accel Entertainment (ACEL), Bally’s (BALY), Boyd Gaming (BYD), Caesars (CZR), Churchill Downs (CHDN), DraftKings (DKNG), Flutter Entertainment (PDYPY), Gambling.com (GAMB), Gan Limited (GAN), Genius Sports (GENI), Las Vegas Sands (LVS), MGM Resorts (MGM), Penn Entertainment (PENN), Rush Street Interactive (RSI), Super Group (SGHC) and Wynn Resorts (WYNN).