Business By The Books: DraftKings Estimates Cut On Sports Betting Tax Increase

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Carlo Santarelli of Deutsche Bank lowered quarterly estimates for sports betting operator DraftKings in a Tuesday note.

Santarelli’s second quarter adjusted EBITDA forecast was trimmed to $134 million compared to a previous forecast of $175 million and DraftKings‘ guided ~$150 million.

He expects gross margins to fall on higher customer acquisition costs, lower than expected online sportsbook hold and growing revenue from states with higher taxes. He remained hold rated with a $35 target.

DraftKings should report its Q2 earnings around the beginning of August.

Sports betting hold likely down

DraftKings said it expects structural hold of 10.5% for the year. That implies hold hitting higher than that mark for the final three quarters of the year, though Santarelli does not expect that for the second quarter.

Baseball favorites and the US Open will be “scapegoats for the shortfall,” he said.

That leaves the second half needing hold of better than 11% to hit the annual structural guidance.

NC sports betting acquisitions costly

Santarelli also said new customer signups from North Carolina, which are costlier than reactivations, means monthly unique customer growth will outpace the growth of the average monthly revenue for those customers.

DraftKings is doing a “better job” of slowing promotions, with promotions in Ohio and Maryland starting to slow.

The operator saw a decrease in some share during the second quarter compared to the first quarter, though that could go hand-in-hand with lower promo spending, Santarelli said.

Betting platform provider gets new CEO

Kambi announced Monday it would hire former Sportradar executive Werner Becher to lead the sports betting tech supplier.

Becher led the EMEA and LATAM business for Sportradar. Prior to that he was CEO of Interwetten.

Becher will formally take over for Kristian Nylén on July 25, the day after Kambi’s Q2 report is published.

Flutter appoints new directors

Flutter appointed Robert Bennet and Christine McCarthy as non-executive directors to the FanDuel parent effective July 30.

Bennet is the managing director of investment company Hilltop Investments.

McCarthy most recently served as executive VP and CFO of Disney until June 2023 when she transitioned to a strategic advisor.

GeoComply buys stake in sports betting affiliate

GeoComply is buying 40% of the parent company of Betting Hero following a sale by FansUnite.

FansUnite agreed to sell all issued shares of FansUS, which operates Betting Hero, for $37.5 million.

The other 60% will still be owned by co-founders Jai Maw and Jeremy Jakary. GeoComply’s investment will support operation and growth of the business.

Betting Hero is in more than 20 legal betting states and has converted more than 500,000 users into online sports betting and iGaming customers.

Churchill appoints online horse leader

Churchill Downs appointed Michael Lilly as the president of TwinSpires Horse Racing.

He was promoted from the VP of finance and operations for the segment. He will now be responsible for the overall strategy and operation of the segment.

MGM to stream live dealers from Vegas

Playtech and MGM Resorts will stream roulette and baccarat games from the floors at Bellagio and MGM Grand for as part of a larger international iGaming partnership.

MGM started its international push with BetMGM last year. US-based customers will not get the games involving those streams as there is no streaming of live casino content across state lines and Nevada only allows online poker.

The companies expect to add more products including Playtech games, branded TV shows and “one-of-a-kind entertainment experiences for which Las Vegas and MGM Resorts are known.”

BetMGM did sign another deal that will have a US impact as it is now an exclusive partner of Brian Christopher Slots. His social channels reach 8 million unique monthly viewers.

Bally’s joins responsible gaming association

Bally’s joined the Responsible Online Gaming Association, a trade association focused on responsible gaming initiatives and best practices.

ROGA launched in March and was formed by some of the largest operators in the US.

“At Bally’s, we are committed to promoting responsible gaming and empowering our customers to make informed decisions about their online play,” CEO Robeson Reeves said. “By collaborating with ROGA and its members, we can enhance responsible gaming initiatives, fund research, develop best practices, and educate consumers.”

Caesars closes iGaming acquisition

Caesars closed the acquisition of WynnBET‘s iGaming operations in Michigan.

The company also secured a long-term extension with the Sault Ste. Marie Tribe of Chippewa Indians.

Caesars is already live in Michigan with its Caesars Palace brand. It will launch a new online casino brand and transition the operations to Caesars’ platform in the second half of 2024.

Sports betting supplier has new chair

Ken Kay is taking over as the chairman of Genius Sports‘ board, replacing David Levy. Kay is a former CFO of MGM Resorts.

Levy, the former president at Turner Broadcasting, remains a strategic advisor to Genius.

Claire Valoti will take Kay’s spot as an independent director. She is a co-founder of investment vehicle Haylo Ventures.

PrizePicks partners with Atlanta arena

Atlanta-based PrizePicks signed a partnership with Atlanta’s State Farm Arena.

The deal includes “highly visible in-arena signage” for every concert, comedy show and sporting event.

The brand will also get rotating full-day exposure in the Atlanta Sports and Entertainment District.

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