PMU joins AFJEL as lobby focus sharpens

PMU joins French online trade body, Genius results-Sporting Solutions update, Super Group Q4s and US questions, NIBS

Jake Pollard

Mar 07, 2024

Hello, on Gaming&Co today:

Big moment: PMU joining trade body AFJEL is a big deal for French operators as FDJ’s aggressive corporate moves zoom into focus.
Genius Sports enjoys strong Q4s and is company most often mentioned as acquirer of Sporting Solutions.
Super Group publishes strong results but questions continue on US future.
888’s costly US exit
NIBS: Codere Online, Catena Media, Light & Wonder

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PMU joins AFJEL to fight “unfair competition” and illegal market

The land-based tote operator and online gambling group joins French trade body to lobby on two key topics.

Unity is strength: The French tote operator Pari Mutuel Urbain has joined the country’s online gambling trade body AFJEL as part of a move to strengthen lobbying efforts by the industry on two key topics: online casino and the potential shape any regulation of the sector would take and the search for balance between the country’s gambling verticals to avoid unfair competition.

PMU operates the country’s land-based tote monopoly and since the market opened to competition in 2010 has run an online tote, fixed-odds book and poker site, but until now had decided against joining AFJEL.
Strength is unity: The move by a major French stakeholder like PMU to join AFJEL is a major coup for the pure players as it will add the lobbying power of one of France’s historic operators. In the process PMU CEO Emmanuelle Malecase-Doublet was named AFJEL Vice-President and Betclic CEO Nicolas Béraud was reelected as President of the trade body.
The move should also be seen in the context of Francaise des Jeux’s highly aggressive M&A policy since it was privatised in 2019. In the past year it has acquired Premier Lotteries Ireland, ZETurf and recently put forward a €2.6bn offer for Unibet parent company Kindred Group.
Active on all fronts: FDJ is also the only French operator that is allowed to be active across all gambling verticals in both online and offline settings, something AFJEL has for many years pointed to as unfair competition.
Béraud recently told La Tribune that FDJ’s reach and scope made it very “complicated for smaller operators to exist and make money” and asked the authorities to establish a “fair balance between all operators and that (competition) distortions are corrected”.
Vigilance abounds: Malecase-Doublet told Les Echos this week that AFJEL will be “vigilant to avoid any unfair competition” in the context of “a consolidating market”.
The PMU boss’s mention of market consolidation was seen as a clear reference to FDJ’s offer for Kindred Group, which, if approved, would make it the clear number 3 in French OSB and a major pan-European operator, while its ZETurf acquisition made it the number 2 in online horse racing tote.
Tough call: Les Echos added that according to sources close to AFJEL, the syndicate is worried that if FDJ’s bid for Kindred is approved, the group will use its 35,000-strong lottery and offline betting monopoly outlets “to crush the online competition”. But AFJEL was also reluctant to ask the country’s competition authorities to look into the case… because Kindred is a current member of the trade body.
In addition, Béraud has also often made the point that FDJ currently is not required to split its online and offline customer databases, something PMU was forced to do by the authorities nearly 10 years ago.
Playing monopoly: Online casino regulation is a recurring and highly sensitive topic in France. Stakeholders have been calling for regulation for many years and in December Gaming&Co revealed that FDJ was in exclusive talks with the French government with a view to obtaining an exclusive iCasino monopoly in the country.
Good timing: At the time we also noted that should the information be accurate, “events are likely to unfold from February 2024 when the European Commission is expected to have reviewed France’s online digital bill”.
When asked if PMU joining AFJEL could be seen within the context of FDJ pushing for the exclusive iCasino licence, one legal source commented: “It’s certainly worth a shot (for FDJ) considering what's at stake.”

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Strong Q4s for Genius Sports, group is favourite for Sporting acquisition

Genius Sports has been the most often cited name as the potential acquirer of FDJ’s B2B division Sporting Solutions.

Odds-on: As betting data provider Genius Sports enjoyed a 21% YoY rise in Q4 revenues to $127m and adj. EBITDA shot up 349% to $12m, it has also been the company most often mentioned as the most likely acquirer of FDJ’s B2B division Sporting Solutions.

A number of contacts have told Gaming&Co that the deal had been all but agreed, however when asked to confirm it would be acquiring the UK group, Genius issued a hard denial.
Add-ons: According to sources close to the situation, the rationale for a Genius takeover would see the group take on Sporting Solutions’ exciting contracts, integrate them into its feeds and data structures and add its betting, media and tech product portfolio to them.
Not so fast: However, additional industry contacts also told Gaming&Co that negotiations with a number of interested parties were ongoing, “but no formal offer had yet been made”.
FDJ acquired Sporting Solutions in 2019 and the move to sell the group is part of its plan to focus on core B2C activities.
Genius Sports’ FY23 results showed that the group’s revenues rose 21% to $413m, adj. EBITDA was up 238% to $53m and net losses were down 53% to $85m.
Macquarie analysts were positive, saying 2024 momentum would come from more states legalising and margins improving and “a faster transition to more live betting”.
“In-play represented ~20% of NFL GGR with margins improving ~400bps vs 2021” noted Macquarie, even though “the runway remains long as mature OSB markets have up to ~80% of GGR coming from in-play”.

Tough regs impact Entain in 2023

UK operator says US was over-prioritised in 2023 as UK, Germany, Brazil and Holland under-perform.

Distracted: Regulatory headwinds in the UK and Germany continued to impact Entain’s online NGR in 2023, but the group said its BetMGM venture in the US had performed strongly in the past 12 months even if it had taken much of its distracted it from other important markets.

With CEO Jette Nygaard-Andersen pressured into leaving her position in December and the announcement of a strategic review by the group, Entain said its focus would be on synergies of £70m to 2025 and “driving organic growth, expanding online margins and increasing US market share”.
In the UK (-6% YoY), the group said it looked forward to “stake caps on online slot games” although these could lead to “continued player disruption over the short term”. It may address these by investing “in marketing to grow market share”.
Germany was down 26%, a “predictable” outcome “given the dysfunctionality of the market” and bwin’s lack of localisation, “unlike the market leader Tipico”, the Regulus Partners team said.
Brazil was down 14% and in Holland (-12% YoY), tighter deposit limits could come in from Q2 and the return of Unibet in the market could presage tough conditions.
In total, all those factors could impact FY24 EBITDA “by approximately £40m”, the group said. On the positive side, Central and Eastern Europe was up 13% and Italy +3%.
Entain said the deferred prosecution agreements entered into with the UK government over the group’s historic activities in Turkey had led to post-tax group losses of £879m, to which were added impairment charges in Australia linked to point of consumption tax rises.
Total group revenues including BetMGM were up 14% YoY to nearly £4.8bn and group EBITDA was up 4% to £857m. Highlighting the impact of affordability checks in the UK and strict regulations in Germany, digital NGR was down 3% (+3% ex-regulations).
In the US, BetMGM NGR was up 36% YoY and “at the top end of expectations” at nearly $2bn, with the group achieving combined OSB and iCasino share of 14% (+2% YoY), positive-EBITDA status in H2 and rolling out a single wallet for US players.

Questions on US future dominate Super Group results

Future tense: As Betway and Spin parent company Super Group reported strong Q4 and FY23 results yesterday and highlighted good performances in Africa, Asia and the UK, Spain and Italy, the focus of analysts’ questions centred on the group’s future in the US.

With US exits by operators like 888 and Kindred Group in the news recently, Super Group COO Richard Hasson said: “It's becoming clear the US is proving tough and we are constantly evaluating how we can get to a profitable, sustainable business.”
iCasino-only: Hasson said there were a range of options such as “relooking at our current geographic footprint to potentially looking just at casino states” and “ of course, any possibility of M&A”.
Super Group is active in nine states and recorded net EBITDA losses of €18m for Q4, having invested €57m in the US in 2023. It also paid an impairment charge of €36m related to the sale of US vehicle DGC’s sale of its B2B division to Games Global.
The group recorded its “highest ever” revenues in Q4 to €359m (+9% YoY) and FY23 revenues of €1.4bn, with ex-US EBITDA up 28% to €54m in Q4 and to €254m for 2023. The US-related charges led to Q4 losses of €45m and pre-tax profits of €17m in 2023 vs. €216m in 2022.

888 ends Sports Illustrated agreement and looks to US exit

No more SI sportsbook: William Hill parent company 888 announced yesterday that it would not be running the Sports Illustrated-branded sportsbook it runs as a B2B contract for the magazine’s publisher Authentic Brands Group.

Costly exit: As part of terminating the agreement, 888 will pay $25m and a further $25m between 2027 and 2029 to Authentic Brands. It said the new arrangement will bring operational savings of $6m-$7m per year in 2024-25.
In common with other European groups that have struggled to gain share in the US, 888 said it was evaluating an exit or sale of its US B2C business.

News shorts

Codere Online’s NGR grew 33% to €50m and its net loss fell from more than €17m in Q422 to just €1m in Q423. Net revenue for FY23 was €172m and adj. EBITDA losses were -€12m, compared with original estimates of -€20m to €30m. The group said it expected to be EBITDA positive in 2024.

Catena Media has named Manuel Stan as its new CEO following the deprature pof Michael Daly last week. Stan was previously SVP and GM North America for Kindred.

Light & Wonder is set to make its entry into Argentina in the province of Buenos Aires following the supply agreements the group announced with Betsson.

Calendar

7-8 March: Betclic

20 March: Kindred RG day

Contact

Contact Jake Pollard to find out more about Gaming and Co: jake@gamingandco.info

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