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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)