Financial Insights and Industry Updates in Sports Betting

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00:00 (upbeat music)

00:02 - Thanks for coming on Newswire.

00:06 And I guess, you know, anticipation

00:08 for this sort of week is important

00:10 because one of the bigger companies gives access

00:13 to some of their financial dealings

00:15 and that's Flutter who owns Fandle.

00:17 Thanks again for coming on the show.

00:18 I guess that's, is that the bigger story of the week?

00:21 - Yeah, you know, every time that you can hear

00:24 from the company who is either one or two

00:27 when they announced today, they are one

00:29 in sports betting in the US.

00:30 You gotta pay attention, Craig.

00:32 And Fandle is interesting because we knew,

00:36 they gave us an update back in March

00:38 that only left the last two weeks of March up in the air.

00:41 And we didn't know what their results were going to look

00:44 like because they gave through March 17th,

00:47 results were pretty strong.

00:48 Well, that last two weeks in March,

00:50 obviously March Madness, all customer-friendly results.

00:54 So that actually hit them $76 million worth,

00:58 just that two weeks, but they still wound up being positive

01:01 on the quarter, that's great.

01:02 It was a $79 million improvement

01:05 from the first quarter of last year to this year.

01:08 And that's what you wanna see with a company like Flutter

01:11 because Flutter is still, they're still acquiring customers

01:15 at the highest clip in the industry, it seems like.

01:19 Flutter is going to keep bringing customers on board

01:23 as long as it stays profitable to them

01:25 in their return guidelines.

01:27 And that means as long as customers are basically paying

01:30 back what it costs to acquire them within two years,

01:33 Fandle is gonna go out and acquire those customers.

01:35 And that, those economics have been the same

01:38 for a while now, and so they're still churning.

01:40 So to see them still spending in old states,

01:43 spending big in new states,

01:44 they had a great launch in North Carolina

01:47 where they say they took the highest handle.

01:48 We don't get operator specific data from North Carolina,

01:51 so we can't say exactly what that is.

01:54 And Fandle didn't break it out either,

01:55 but they say they're leading in North Carolina.

01:58 One in 20 adults in North Carolina

02:01 are now Fandle customers within a 45 day period

02:06 at the end of March 31st.

02:09 That's pretty impressive too.

02:11 So to see that Fandle is gaining the kind of scale

02:16 that it is, still seeing a lot of costs going out

02:20 to acquire customers, but hitting that positive EBITDA mark

02:24 and being able to survive a $76 million swing

02:28 in sports betting results, that's all very positive

02:31 for the sports betting market in general.

02:34 Now, is it positive for bettors?

02:37 That's a little hard to say

02:38 because Fandle is obviously doing this

02:40 by putting more parlays out there

02:43 and improving that product.

02:45 We didn't get a whole lot of information

02:47 on current trading right now for April and May,

02:50 but we did hear that for its MLB product,

02:54 Fandle started to unroll some new, deeper products

02:59 for MLB at the beginning of the season.

03:01 And that has improved the mix of same game parlay

03:06 and in terms of total handle,

03:08 it's up four percentage points compared to last year

03:10 over the first three weeks of the season.

03:12 So we see that what Fandle is doing here

03:16 to deepen its products, to give people more options,

03:20 we see that it's working, that it's paying off

03:23 and that they are able to get to a scale

03:26 when even when you have a huge hit

03:28 like March Madness or the Super Bowl

03:30 or something like that, they're gonna be able to withstand it.

03:33 They're gonna be able to show earnings

03:36 for their shareholders,

03:37 which is the most important thing to them, right?

03:39 So Fandle is doing very well.

03:42 Flutter as an entire company is doing very well.

03:45 They have a massive international business as well,

03:48 but the prospects for Fandle look great right now.

03:51 They said that they are first in sports betting.

03:54 They are first in iGaming

03:56 and they plan to keep spending to get those customers

03:58 that are gonna keep them at those leadership levels.

04:02 Yeah, more parlays it sounds like.

04:03 That's what we need around here.

04:05 Basically. More parlays.

04:08 Same game five player parlay.

04:10 Yeah, it sounds like a winner to me.

04:12 Anyway, okay, now let's move over to,

04:15 so that was the bright side of sports betting.

04:17 Maybe this is not so much, but not surprising here, I guess.

04:20 Maybe from a technology point of view,

04:22 I did not expect to read this story

04:24 over on Legal Sports Report about ESPN bet.

04:27 And in terms of some of the technology,

04:30 as far as how they're being run,

04:31 not ranked particularly high,

04:33 especially among sports books that are run

04:35 by a company called Canby that's extremely popular

04:37 and by all accounts doing very well.

04:39 So let's dive into this.

04:40 What's going on here?

04:41 Yeah, so a little bit of background on this, Craig.

04:44 If you remember Penn last year,

04:46 when they were still partnered with Barstool,

04:49 they migrated their tech from Canby,

04:51 a third party tech supplier,

04:53 to their own in-house tech over the MLB All-Star break.

04:56 And they said that this was going just to be overall better

05:00 in the long run for Penn and Barstool at the time.

05:04 They then shifted not too long after that to ESPN bet,

05:07 and they kind of restarted the whole process here.

05:10 And we have Eilers and Krajic.

05:12 They are a analysis firm in the gaming industry

05:15 that they do a fantastic job.

05:17 Their research is very expensive to get your hands on,

05:20 but it's worth it.

05:21 And they have a team of testers

05:23 that look at all of the apps.

05:24 And this was their first half rankings.

05:27 And ESPN bet came in at number 11th.

05:31 And that's kind of a kick in the rear

05:34 when you consider that BetRivers at number eight

05:37 uses Canby and BetJack.

05:40 It's a localized Ohio brand on Canby.

05:44 They both performed better than ESPN bet.

05:48 That is not great for Penn Entertainment right now.

05:52 More not great news has come out.

05:55 They've been downgraded to neutral instead of lie

05:59 from Bank of America today based on ESPN bet.

06:04 And how it is dragging down the earnings

06:06 of the overall company.

06:08 Penn has a fantastic retail sports,

06:12 excuse me, casino business across the US.

06:15 These regional casinos do great business for them.

06:18 But the overhang for years now has been sports betting

06:22 and their interactive investments.

06:25 And there's just no,

06:29 we don't see that ending for ESPN bet right now.

06:32 They're going to have to invest more

06:34 to get more customers to hit those marks

06:37 that Disney wants to see to keep the partnership going.

06:40 And I thought it was telling this morning

06:43 from FanDuel CEO, Flutter CEO, Peter Jackson,

06:48 talking about the promotional activity in the US

06:51 and whether it's rational or people are outspending.

06:53 And he said, quote,

06:54 "We're not seeing people spend ridiculous amounts of money

06:57 trying to persuade customers to try out a product

07:00 which isn't very good."

07:02 That felt pretty targeted at ESPN bet.

07:07 And so we're just going to have to see what Penn does

07:09 moving forward to get ESPN bet up to speed.

07:13 We know that they're working on parlays.

07:15 We know that they want that parlay product

07:17 to be deeper overall.

07:20 They feel like that's where they're losing out

07:21 the customers because they,

07:22 CEO, Jay Snowden of Penn Entertainment is saying,

07:27 the customers are there,

07:28 we're just not getting enough of their wallet share.

07:30 We're just not doing this or doing that.

07:32 And at the end of the day,

07:33 he's putting it all on better parlay depth

07:37 to get the product similar to what DraftKings

07:39 and FanDuel have.

07:41 And also getting the integration working with the ESPN app

07:45 and seeing what that can do there.

07:47 Because remember, we've seen surveys showing that people

07:50 that frequent the ESPN app would switch to ESPN bet

07:55 as their primary sports book

07:57 if they can get that integration correct.

07:59 So, you know, a lot of moving parts still,

08:02 but not a great look for Penn right now.

08:05 - No, no.

08:05 And again, you know, things will change.

08:07 And, you know, certainly the hope is,

08:08 is that they are early on in this process

08:11 and can get better as it goes.

08:13 A lot of success, by the way,

08:14 as Bett Rivers has previously reported,

08:16 they are not in every state,

08:18 but one of the states that they are exclusively in

08:21 is Delaware.

08:22 And they're looking for more exclusivity.

08:24 Is that what's happening here, Matt?

08:26 - What's happening, Craig,

08:27 is the Delaware legislature is proposing

08:29 opening up the market

08:31 right after Bett Rivers signed an exclusive agreement.

08:34 So they are emailing customers.

08:37 They are emailing customers saying,

08:39 "Reach out to your legislators."

08:40 And Craig, I don't know if this was approved or not,

08:42 but I live in Delaware.

08:43 I live in Dover.

08:44 And I saw a gray sedan with two Bett Rivers t-shirts

08:48 strung up in the back, held up by the window.

08:50 I don't know if that's official or not,

08:52 but they're doing what they can do

08:54 to get the brand name out there.

08:56 - Understood.

08:56 Great stuff, Matthew.

08:57 Thanks for coming on.

08:59 - Thank you.

09:00 (upbeat music)

09:02 (bells chiming)

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