Specialist
Former divisional head at Barstool Sports Inc
Agenda
- Key trends and developments in the US online sports betting and iGaming industry
- Penn's (NASDAQ: PENN) investment in Barstool Sports and implications for its gaming revenue stream
- Competitive dynamics, including Barstool Sports, DraftKings (NASDAQ: DKNG) and FanDuel (LON: FLTR)
- Near-to-long-term outlook
Questions
1.
Could you share your expectations for the online sports betting and iGaming industry in 2021?
2.
You shared your estimates for each part of the market for 2021. Some industry estimates from late November predict the iGaming opportunity potentially reaching USD 4.6bn by 2025 and online sports betting reaching USD 7.6bn. Yet, other recent figures indicate a combined total market opportunity of around USD 40bn. What are your assumptions concerning this hypergrowth outlook across these markets? What are your expectations for iGaming and online sports betting through 2025 or 2026?
3.
What do you believe is a realistic handle and revenue per online customer per year for sports book vs general?
4.
Could you outline Penn National Gaming’s rationale for acquiring a stake in Barstool Sports in January 2020? What has changed for Penn and Barstool? Who do you think is a clear net winner from this transaction?
5.
DraftKings merged with SBTech before going public in April 2020, where we could assume DraftKings is the public marketing face while SBTech runs the technology platform. Could you use this example to outline the merits and drawbacks of a vertically integrated model vs a partnership?
6.
Would you say anything sets apart the Penn platform from a technology standpoint? Are all Kambi powered sites relatively similar in layout and function? How is Penn able to work with Kambi or other providers to customise its platform?
7.
What structural differences within Penn’s cost profile as a casino operator might position the Penn Barstool online sports business to drive higher margins than other operators?
8.
When do you think Penn’s online sports betting business could achieve profitability? How might management think about the profitability timeline? Would you say management is willing to gain market share at the expense of losing money? If so, for how long?
9.
To what degree do you think a database of terrestrial customer relationships helps with acquiring and retaining likely online customers, especially in sports betting? I gather from your earlier comments that online customers tend to be young males, rather than older females, who often patronise physical casinos.
10.
Penn-Barstool lacks a meaningful iGaming presence – how could synergies from Penn’s mychoice loyalty members help to boost its positioning here?
11.
Could you elaborate on Penn’s presence in Pennsylvania? You mentioned potential market share declines in the region, and the press has also quoted this as a potential negative for the company. What might be underlying that?
12.
What data points do you monitor around implied CACs [customer acquisition costs] and lifetime values for online gaming customers, sports or non-sports?
13.
How could Penn compete with Caesars, DraftKings or FanDuel in a more cost-efficient way around spend and implied CAC?
14.
Could you highlight any unique aspects of Barstool’s customer acquisition channels?
15.
How many betting apps do you think a Penn-Barstool online player uses, on average?
16.
How much line shopping occurs in the betting and iGaming markets? Would you say users are focused on finding the best value, or is some brand loyalty beginning to take shape, given your earlier comments?
17.
How might Penn-Barstool typically approach promotion levels when it first enters a market? How do those costs normalise as markets ramp? When would you expect the power of the Barstool brand to take hold in a market?
18.
What are your thoughts on the power behind the media partnerships? Could you quantify the value of Caesars’ link-out deals with ESPN and CBS Sports, as an example?
19.
What should we fundamentally understand about the structure of Barstool’s media partnerships? The company’s partnerships with personalities such as Logan Paul and Nickmercs clearly demonstrate its interest in internet influencers over traditional sports personalities as a route to acquiring betters. What portion of those influencers’ audiences do you think are of legal betting age now? How could these partnerships take shape in the future as some of these betters come of age?
20.
What portion of the future iGaming and online sports betting TAM do you think Penn is likely to capture vs peers such as Caesars and DraftKings? What underlies your assumptions around this?
21.
What are your thoughts on Golden Nugget’s online gaming business?
22.
Could you rank the 3-4 brands or operators that you think are best-positioned in the online casino business?
23.
Could you comment on MGM and its potential bid for Entain?
24.
What could be the implications of Bally’s acquisition of Bet.Works in November 2020, which was followed by a media partnership with Sinclair Broadcast?
25.
How far away do you think we are from in-game betting? I think we have to overcome the latency issue, but this has been done in the EU – why not in the US?
26.
What will you monitor over the next few months in the online sports betting and iGaming markets? Could you highlight any catalysts for growth, beyond the hyper growth opportunities you quoted earlier?
27.
iGaming proliferation is imminent as states seek to fill the hole caused by bricks-and-mortar setbacks over the past few months. Do you think customers who used to visit their local casinos might not return post pandemic, given the convenience of iGaming? Could this trend outlive the pandemic?
