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00:00Welcome back to Newswire here on SportsGrid.
00:05Great to have Matthew Waters from Legal Sports Report back in the house as we discuss a number
00:09of topics including DraftKings and a little bit on FanDuel, although their parent company
00:13is Flutter, so we'll hit on that as well.
00:15Matt, thanks for coming back here on the show.
00:17And let's start off with a company, an upstart company that has performed very well called
00:22Camby, which is responsible for a lot of the different operations in different sportsbooks
00:27and technology.
00:28What is the story here, Matt, though?
00:29They have changed a little bit of their projections for the future.
00:33Why make this announcement, by the way?
00:34Is that just happens on stock calls?
00:37Yes.
00:38So, first of all, Craig, they made this call at the beginning of 2023 to talk about, to
00:44forecast what they would earn in 2027, basically.
00:47They said, you know, upwards of 500 million euros in revenue and more than 150 million
00:53in EBIT.
00:54That's your earnings before interest and taxes.
00:57It was kind of interesting to see that they would announce, you know, four years out like
01:00that.
01:01But I think it was necessary at the time for Camby.
01:04Camby was coming off of a 2022 where they lost DraftKings as a customer and they knew
01:10going into 2023 that they were going to lose Penn Entertainment as a customer who was partnered
01:15with Barstool, now with ESPN bet.
01:19And so I think they wanted to give some support to the stock and throw some certainty and
01:26security behind the stock by saying, look, you know, this is what we still expect.
01:30There's still a lot of big markets out there to legalize.
01:33And, you know, the company is going to be just fine, even if we have to go with smaller,
01:38smaller guys. Well, they don't think that anymore.
01:40They said that basically California, Texas, other states, it's just happening too slowly
01:46at this point for them to reach those targets by 2027.
01:51And they have to do that, Craig.
01:52When you say that you have forecasts, when those forecasts change materially, you have
01:58to let the stock market know Camby is traded in Stockholm.
02:01And so that basically is why they had to come out and say this.
02:05It wasn't a huge hit for the stock.
02:07It felt like six and a half percent that day, made a little bit back up on Friday.
02:12This was announced last Thursday.
02:14Look, Camby is an interesting name for sports betting customers in the U.S.
02:19to be aware of.
02:21Camby, like I said at the beginning, they were kind of setting partners with everybody
02:26because they were their European based sports betting technology company that knows what
02:31they're doing, frankly.
02:32But it turns out that it is cheaper in the long run for these sports betting companies to
02:39get their own technology, whether they have to build it out and invest in the, you know,
02:45the development of that or they just go out and buy their own.
02:50Eventually, those numbers are going to be positive for them on owning their own technology
02:55instead of paying these monthly fees and the revenue share and everything that comes with
02:59having a third party partner like that.
03:03So Camby is it is interesting because you think about they signed a big deal with the
03:09Choctaw Nation to be in not just Oklahoma.
03:13They have a presence in Texas.
03:14If they signed it as a nationwide deal, you think about all of the tribes in California,
03:19whenever California sports betting does kick off, they don't necessarily want to be in
03:23bed with the big boys because it costs too much.
03:25That's where it can be.
03:26You can come in and say, hey, you know, throw your brand on this.
03:30We have the technology.
03:31Just have some people to run it.
03:34So I don't think anybody knows exactly what Camby is going to be in twenty twenty seven
03:39at this point. But it became evident to them that they had to throw those numbers out and
03:44give the market a reset.
03:46Yeah, no, I think Camby is an interesting company to watch again, being involved with some
03:50of the others now, as far as the parent company of FanDuel, their name is Flutter, and
03:55this is what I'll need some explanation on here, because you guys have a story about how
04:00they could potentially be interested in this, again, potential merger between Penn
04:04Entertainment Gaming and Boyd.
04:07So what would they be interested in?
04:10What are the assets that they would want to purchase in a deal like this?
04:15Yeah, you know, this Penn story about being sold is messy for a whole bunch of reasons,
04:20simply because Penn is such a big company.
04:23We had an investor.
04:25They say they're not activist investors.
04:27They had an investor come out at the end of May, write this whole story about how Penn
04:32just lost all this money in Interactive.
04:35They're losing money now because people are worried more about Interactive than the brick
04:38and mortar business. And so they were linked to being sold.
04:43And Boyd is linked to buying them at this point.
04:47Now, Boyd can't just buy all of it, right?
04:49They are competitors in the market.
04:51They'll have some casinos that need to be sold.
04:53And Boyd also doesn't necessarily want to buy the Interactive business.
04:57And that's where Flutter is saying that they could come in.
05:00We have these unconfirmed anonymous reports from this website called The Deal.
05:06It's a subscription only website, so couldn't even get your hands on the report.
05:10But they're saying that Flutter would be interested in buying the Interactive assets.
05:14And you have to wonder why.
05:17I don't know exactly.
05:19We know after the Barstool deal failed and Jay Snowden kind of went on and gave us some
05:25details from that, that they didn't do very well with Barstool in terms of building up a
05:31database and this and that.
05:33They had the ESPN bet now, and that's great.
05:35Maybe they have something a little more lucrative that a FanDuel could buy.
05:41But Flutter and Boyd actually already have a business relationship.
05:46Boyd and FanDuel in 2018, they agreed on a market access agreement.
05:51So Boyd actually owns 5% of FanDuel.
05:54That's worth a lot, as you can assume, I'm sure.
05:58So it's interesting to see that these two could be working together to get a pen deal
06:02done. They are not the only ones that would need to work on this, though.
06:05Like I said, there would need to be some casino operators that step in to buy some of
06:10the jointly owned casinos by this merged company that would need to be gotten rid of
06:16for competitive purposes, frankly, Craig.
06:20There'd be a lot of regulators with their hands in this.
06:24But yeah, certainly interesting report.
06:27It was another report that saw the Penn share price jump up.
06:31So really interesting to see what these the stock is going to do going into earning
06:37season. I don't know that we'll hear anything from Flutter directly on this or Boyd or
06:42Penn, frankly, with how many moving parts there are.
06:46But interesting report to see that maybe Flutter would buy it just to, I don't know,
06:53kick somebody else out of the market maybe.
06:55Who knows what they would do with that Disney deal?
06:57But it's definitely something we're watching.
06:59Yeah, no, I think so.
07:01And then finally, as we close it out, what's really fascinating to me is seeing all these
07:05reports, Matt, state by state that a lot of the numbers are down in sports wagering this
07:11summer. I don't know why this should come as any surprise.
07:13I mean, the primary sport, of course, is football.
07:16The secondary sport is basketball and maybe hockey and some others.
07:19I mean, is it simply the reason why DraftKings estimates are down as well?
07:24I mean, this isn't really time to panic in the summer, is it?
07:27No, I think when we reported on a note from Deutsche Bank on DraftKings, they lowered
07:34EBITDA estimates for the second quarter.
07:37A lot of that is coming from the increased Illinois tax, Craig.
07:41There's a lot of flow through from that.
07:44The other part of it is that they think maybe the hold is going to be down and that
07:49DraftKings just got beat again.
07:51Now, remember, DraftKings is saying they expect a structural hold of ten and a half
07:56percent for the full year, and that's because they're baking in all of these
08:00advantages from the parlays, the same game parlays, all these products that they're
08:05pushing that give them better margins.
08:08But yeah, so it's interesting.
08:10The other thing about being worried about the handle dropping in the states, Craig, is
08:15with these states, we have what, maybe 13 U.S.
08:20jurisdictions left that can really legalize sports betting.
08:23And with them now not picking up at the same clip that we saw, we want to see these older
08:29states still growing what they're doing for a DraftKings and a FanDuel and the players
08:35that have been in the market for a while.
08:37And DraftKings has proven that they've done that.
08:39So I certainly think that's going to be something that DraftKings hits hard in their
08:44upcoming earnings call at the beginning of August.
08:46I think they're going to want to point out that they still have these legacy states that
08:50are doing well and they're going to try to tell everybody that they're mitigating these
08:54tax revenue increases as well as they can.
08:58Yeah, agreed. All right.
08:59Well, Matt, great stuff as always.
09:01And thanks again for coming on.
09:03We'll catch up with you next week here on Newswire.
09:05Thanks, sir. Appreciate it.