Happy Monday, everyone. We enter the week with one less sport to bet on as the NBA wrapped up its season on Sunday, but news of positive sports betting results is expected to continue.
The most recent LSR Podcast remained focused on the saga of 5 Dimes, which continues moving toward an intended switch from offshore operator to legally-regulated sportsbook.
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Top sports betting news: Another DraftKings cash raise
At this point, it might seem like the LSR team is reading the filings incorrectly. But, amazingly, there was yet another stock offering last week that raised $1 billion in cash.
This time, it was DraftKings tapping the public markets once again. After raising more than $600 million from a similar-sized offering in June, DraftKings added another $1 billoion to its balance sheet through a 20.8 million share offering last week.
The first priority for the cash likely remains customer acquisition, according to Chad Beynon of Macquarie. It’ll stay that way as long as the customers acquired continue to return six to 10 times their acquisition costs, he added.
DraftKings spent $200 million on sales and marketing during the third quarter. That was more than four times what was spent in the second quarter, though that makes sense considering the return of sports and the beginning of NFL betting season.
DraftKings could also be thinking about an acquisition in an adjacent market, Beynon added. Having that much cash on the balance sheet gives DraftKings a chance to be in any conversation.
Midwest states report strong sports betting results
Sports betting is alive and well in the Midwest with new markets ramping and existing markets hitting new records.
First, sports betting in Illinois showed the state could quickly become a top US market thanks to the governor’s in-person registration suspension. Bettors placed $140 million in bets during August, the vast majority of which came from BetRivers. That’s because of the significant first-mover advantage BetRivers got after launching first in June.
We’ll keep an eye on Illinois throughout the week. That in-person registration suspension ends Saturday and there’s no guarantee of renewal.
It’s not just new markets seeing success, though. Both Indiana and Iowa saw new records in September.
There was $207 million in handle from IN sports betting, topping the $200 million mark for the first time. Iowa sports betting, meanwhile, had $72.4 million in handle. The state still has its in-person registration requirement through the end of the year.
What’s next for 5Dimes?
Even though 5Dimes paid its $47 million settlement stemming from an investigation into illegal gambling activity, wire fraud and money laundering, there’s no guarantee it’ll ever take a legal US sports bet.
It looks like 5Dimes will try to enter the US as an operator, which means it’ll need to be found suitable by state gaming regulators. 5Dimes is currently talking to regulators in New Jersey to find a pathway to a license, its attorney Jeff Ifrah said.
It’s unclear if settling with the US government will be an option in the future for other offshore betting operators. LSR looked at four previous offshore crackdowns to put 5Dimes’ settlement into perspective.
GVC: Losing more, but business is better
GVC raised its expected loss in the US to $77.4 million this year, but that’s actually a positive for how BetMGM is doing, GVC CEO Shay Segev said.
The raised guidance from a $52 million loss is from spending more on marketing than anticipated, Segev said. BetMGM signed five team sponsorship deals in the third quarter alone.
BetMGM will account for $150 million to $160 million in net revenue this year. It will spend a similar amount on marketing.
One negative was Segev’s less bullish take on the integration with Yahoo Sports. The agreement was announced 11 months ago but Segev called the integration “a journey” and noted it was too early to talk numbers.