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CJ, I pay zero attention to Ian Dumbbum-Smith and his parliamentary committee. They're a bunch of killjoys who believe we should all be restricted to a maximum bet of 50 pence each-way for our two permitted annual bets on the Derby & Grand National. Yes, there's a problem with the very small percentage of gambling addicts, just as there is with booze, nicotine & people who never come home from work. The bookies have taken enormous steps to protect compulsive-gamblers from themselves & they advertise these facilities widely to their customers.
Against that you have the Treasury which anticipates the receipt of billions in taxes every year, & whose own addiction to these tax receipts becomes ever stronger as Boris wildly spends ever more money. I can't see a situation where the Treasury would permit IDS & his committee to hobble the goose that lays their golden eggs. They simply can't afford it. The 97% of us who aren't addicted are too important for Rishi at 11 Downing Street to kiss goodbye to.
Meantime, us PI's are in the quiet period; no results expected until February, so no good news to take the spotlight off the killjoys. However, for those of us who are learning where to look there is actually lots of good news. The US states each have an obligation to publish their monthly gambling tax receipts. One of the earliest to legalise & one of the largest is New Jersey.
I read their monthly report ( https://www.njoag.gov/about/divisions-and-offices/division-of-gaming-enforcement-home/financial-and-statistical-information/monthly-press-releases-and-statistical-summaries/ ) & it shows nothing but great news; viz. In September, online sports betting was $82m, up 83% from $45m last year. October was likewise up 44% at $84m, compared to $59m last year.
The year-to-date totals to 31/10 are $642m wagered in total, up 128% compared to $282m to 31/10/2020. So the market is growing in exactly the way we all hoped, with a 6% to 8% profit margin on all those bets. BTW, the UK bookies have heavily marketed the accumulator in the US, known there as a 'parlay'. Their profits on these bets are a humungous 40%.
NJ taxes online bets at 15%. New York, which is just opening, has announced a 51% rate. I heartily recommend binging "Laffer Curve" for anyone interested in the efficiency of differing tax rates. This graph shows the amount of money raised compared to rates between 0% and 100%. Natch, those two rates raise nothing. No-one is daft enough to pay 100%, but where the curve goes between them is most interesting.
That was why Geoffrey Howe actually raised more income tax in the year he cut the top rates from 83% and 98% down to 40%. The big drop encouraged more people to work harder & earn more, because they'd keep a lot more.
I imagine that NY will look hard in a couple of years at how much tax they're getting per head, compared to their near neighbour, to the west side of the Hudson River &, if necessary, drop their rate.
Share price can't seem to find a bottom atm, the fundamentals weren't changed massively with only slightly lowered guidance, seems like a huge overreaction?
If they weren't themselves contantly adding, i would put these in buyout territory, with U.S firms seemingly desperate to get hold of anything they can. Either way, SP is dirt cheap rn, way under its 2y MA.
I've added today, too much potential to pass on.
It’s a good question. This news today which is ridiculous and continues this nanny like state is certainly only going to pile downward pressure on the share price. I read also that one of the states in US were taxing gambling companies profits at 50%. This sports betting and gambling sector is massive but the gambling companies are experiencing obstacles all of the time. I see very little appeal buying back into Flutter at present even at these levels.
The share chart reminds me of the same projectory line as a betting slip in the bookies been thrown to the floor. Gla
Shareholders would have though
that Mr Jackson had enough to do in managing Flutter rather than double jobbing with Deliveroo
Ours is a rapididly changing industry, now under so many pressures that we need a full time Manager at the wheel
Mr Jackson should review his acceptance of new appointment immediately
Below is the latest update from the Jefferies analyst.
Any body has any idea what "... debate over the bookmaking company continues" refers to specifically?
I was intending to average down if share prices drop below 1200p, but will now instead take a position in Entain, as I agree with Gewillia that the latter is still a potential target for takeover.
.......................................................................................
Flutter Entertainment is defended by Jefferies with 60% upside called out
Nov. 17, 2021 7:33 AM ET Flutter Entertainment plc (PDYPY)By: Clark Schultz, SA News Editor
Jefferies sticks with a Buy rating on Flutter Entertainment (OTCPK:PDYPY) even as debate over the bookmaking company continues.
Analyst James Wheatcroft says Flutter's weak share price does not reflect the underlying performance of the business or the embedded value. Wheatcroft thinks the modest short-term regulatory and sports margin-related downgrades distract from the bigger picture of Flutter being a online market leader in the UK, Australia and the US. He thinks a basic sum-of-the-parts shows 60% upside to £200 for Flutter shares.
And there was me thinking you only paid tax in the USA if you ask Twitter and let them decide if you pay the tax or not
The 51% tax rate will likely make it unprofitable for most, if not all, the operators for years to come.
D'oh! as Homa Simpson would say!
By Katherine Sayre
Updated Nov. 8, 2021 4:36 pm ET
New York state gambling regulators approved online sports-betting licenses Monday for nine operators including FanDuel Group, DraftKings Inc. DKNG 2.66% and BetMGM to operate in the new market.
The companies’ sports-betting revenue would be taxed at 51%, one of the highest among states where sports wagering is legal, said regulators. Still, New York’s huge population represents a potentially lucrative mobile betting market for gambling companies. New York has estimated that mobile gambling will eventually generate about $482 million in annual tax revenue from a $1 billion sports wagering market.
The New York State Gaming Commission voted on Monday to approve two groups of betting operators for 10-year licenses. In one group, FanDuel organized with DraftKings, the online division of Bally’s Corp. and BetMGM, a partnership of MGM Resorts International MGM -3.63% and Entain PLC.
The other group includes Rush Street Interactive Inc., RSI 0.10% Caesars Entertainment Inc., CZR -1.11% the online division of Wynn Resorts Ltd. WYNN -2.14% , PointsBet New York LLC and Empire Resorts Inc. doing business as Resorts World. The group also includes Kambi Group KAMBI 0.44% PLC providing some betting technology.
The approvals mean that New Yorkers will be able to make bets on their mobile phones; the state had previously limited sports betting to wagers made in person at casinos. Betting operators are in control of when they want to launch, regulators said.
New York is “vital to ensuring nationwide leadership in sports betting and iGaming over time,” BetMGM Chief Executive Adam Greenblatt said in a statement.
Among the companies rejected by New York state were Fanatics Inc., the sports-merchandise retailer looking to move into sports gambling, and Penn National Gaming Inc., which operates the Barstool Sports app.
DraftKings shares were up 2.4% on Monday, while Caesars shares ticked down 1.1% and MGM Resorts fell 3.6%. Penn National shares were down 4.5%
The prospect of operators turning over more than half of their profits after paying out winning bets may make the financial calculus for operating in New York more challenging than it is in other states with lower tax rates, gambling executives say.
In New Jersey, one of the biggest sports-betting markets, about 90% of wagers were placed online rather than inside a casino, this year through September, according to the state’s Division of Gaming Enforcement. Online sports wagering revenues are taxed at 14.25% in New Jersey.
Sports-betting tax rates in other states vary, including 6.75% in Iowa and 36% in Pennsylvania, according to the industry trade group American Gaming Association.
Thirty-two states and the District of Columbia have legalized sports betting, though not every state has embraced online gambling. Mobile wagering is operational in at least 18 states and D.C
That’s with paddy power
Hello BilboMultiBaggin, thanks for your reply. Was that customer support for Paddy Power's apps in Europe or was that for the FanDuel apps in the USA? No matter which one it was, it was an awful experience.
So you didn't even have a chance to try out the apps' user experience, and now they lost you as a customer, and a shareholder. That doesn't auger well for the company's long term prospect, given the amount of competition out there vying for punters' money.
I was looking at this earlier on in the year. After doing some basic research I decided to download the app and checkout the user experience..
After downloading the app and funding the account, 3hours later my account was suspended for some unknown reason. After contacting support they asked me to prove that I am me. Asking for photos of passports driving licences, bank statements and a whole load of other stuff . Which I supplied, and was told that my account would be re activated within a couple of days…
That was 6 weeks ago….
When I contact support now. All I get told is that They have my details and I have to wait for there security procedures,and will hear from them in due course
6weeks so far and still nothing from them
With my money frozen for so long . And the company’s idleness and incompetence to do anything.
I can safely say I won’t be investing into this one
Hello Eighteen, Sain@vision, Gewillia, Yes, the results are very disappointing indeed. Having said that, it’s in the nature of gambling business that every so often the punters will have a run of good luck at the house’s expense, but in the long run, the house always wins as long as it manages its risk/odds with professional efficiency. Put it another way, a punter who wins today will more likely than not wager some more tomorrow until he loses all the winning eventually back to the house – that is how this thing goes.
This is how Jackson puts it:
“Bookmakers generally suffer when favourites win and chief executive Peter Jackson said this happened across the board last month, including Liverpool's Premier League hammering of Manchester United and world boxing heavyweight champion Tyson Fury's latest victory.
The run hit EBITDA by around £60m and Jackson said Flutter avoided another "bloodbath" overnight when short-priced favourite Incentivise came second in the Melbourne Cup horse race.
"It's what happens, occasionally you have a run of bad luck and it's not unhelpful for our punters that they get to see a winning streak," Jackson told reporters.”
The thing which I’m not aware of is, until you raised the issue, their poor execution and user experience with their apps, as I’m not a user of any gambling apps.
I would like to ask you this: the most important apps as far as Flutter is concerned for now is their Fan Duel apps, what is the general opinion of user experience like in the USA?
Just new to investing here and Wondering what if any effect does yesterday's ruling have for shareholders
Why also , if Flutter is bringing Fan Duel to USA market, are they only releasing 5 %or 7% of the the equity
Eighteen I agree Putting my punter's hat on their in play betting is woeful, the graphics ,updating often late in starting beting on events even with televised events .They are way behind Bet 365 .Just voted with my feet
Glad to see flutter is doing awful...
They have been very poor book makers to use this past year myself and my friends have all deleted our accounts...
Cukkas, If only you & I could go out for a beer. I agree with you that, due to the JV paperwork, MGM seems the only realistic bidder, but they're riddled with debt thanks to the Eldorado takeover. I'm not an accountant, but I do understand debt and property companies and MGM recently sold the freehold of several casinos. This deal closes next March and will then give them over $4 billion in net cash. Whether that gives them enough cash to mount an acceptable bid, via a highly leveraged cash & shares offer, who knows?. I'll get a copy of MGM's accounts and see if I can understand them.
Ah, Fan Duel - now that should be very interesting. The new CEO is in place and seems a competent, well-qualified, woman. Thus, we can reasonably expect a small float of, say, 5% of the equity in New York in 2022, unless, of course, the board change their mind. A small float should keep the issue price high, due to strong investor demand, but I very much doubt they'll be capitalised at 17 times "the handle" as Draft King currently is. Given that US bookies/casinos generally make a net profit of c.7% on turnover, the idea that any sane market will value $7 of net revenue at $1,700 is surely nuts?
DKNG, of course, is presently unprofitable, the market is new, somewhat unpredictable, and growing fast, so potty valuations are to be expected from over-ambitious PI's (Witness DWAC), but quite how potty DKNG's current price is, is difficult to say. Just this week I was looking at New Jersey's official numbers for last month; NJ has seen an 83% increase this September in the total amount wagered compared to Sept. 2020 and the annual total wagered to date is up 150% in 2021 at $557 million, compared to $223 million to the same date last year. You only have to factor in three or four more years of 100+% increases in turnover and suddenly $7 of net revenue on just $400 of SP becomes a lot more believable. That's the reason I'm a convinced optimist that this is a once-in-a-lifetime opportunity to get in close to the ground floor, on a lift that is, I hope, going to the penthouse suite.
Maybe. Maybe not, but so far the ride is profitable and very enjoyable. You never know, some financial outfit, like Apollo, with the firepower to bid cash for FLTR, might well decide in 2 to 4 years time, once the mature size of the market is much more accurately defined, to take a run at the steady cash-flow. Likewise, they might very well not. It's a gamble, but one in which the odds favour us. I like that.
Hello Gewillia, you may well be right about Entain’s prospect, but I didn’t buy into Entain today though.
Realistically, I see the only bidder for Entain is MGM because of the contractual agreements in their US joint venture which is the jewel in the crown.
It appears to me MGM’s original bid for Entain early this year was an attempt to replicate how Caesars bought William Hill on the cheap - take full control of BetMGM and its technology stack, and sell the non-US online business which is slowing down materially.
MGM didn’t reckon that Entain’s management called their low offer bluff, unlike the William Hill management who simply rolled over at Caesar’s opening bid.
I’m staying with Flutter for now, even though there is unlikely to be any realistic bidder in the near horizon. However, I believe the catalyst to propel its share price higher will come from the listing of FanDuel, which have about half of the sports book market in the US. The potential IPO has been publicly intimated on several occasions by the management.
And Caesar's will be giving their 3rd Q results the same day at c.9.30 pm, Cukkas, so we should get a good picture of two of the four biggest US online bookies, covering the first month of the NFL season. A long day, hopefully very worthwhile and long-term profitable.
BTW, now that Draft Kings have done a runner today, I reckon that Entain is a good medium-term buying opportunity, if the SP goes under £20. MGM are saying they now have only 12% of the online market. So, with the Big 3 having between 19 -27% each, I see MGM's online operations as a surefire takeover target for one of them, looking to consolidate, which means a buyer needs ENT onside as well.
Notice of Q3 2021 Trading Update
Wed, 20th Oct 2021 12:00
RNS Number : 6664P
Flutter Entertainment PLC
20 October 2021
20 October 2021
Flutter Entertainment plc (the "Company")Notice of Q3 2021 Trading Update
The Company will release its Q3 2021 Trading Update for the three-month period ended 30 September 2021 on Tuesday 2nd November 2021 at 7.00am (GMT). The Company will host a conference call for institutional investors and analysts on the same date at 9.00am (GMT).
Hello Cukkas. Well, what a fun afternoon and morning we're having! The ENT bid is now £28 and presumably rising as competitors (Leon Black's Apollo?) arrive. The reason yesterday that I suggested a Caesar's buyer might want to sell the US Casinos & Hotels is because the corporate debt level is high and these bricks & mortar casinos require a shed-load of cash to build and maintain. The MGM hotel in Macau alone costing over $1 billion to build. But you make a good argument for holding onto them.
Don't worry about missing out on ENT. Caesars & FLTR have a long way to go yet. I backed all three UK bookies in 2018 in the hope that one would do me proud by cleaning up in the US. So far all of them are doing well. Hills was a real disappointment when the board caved in to the first bidder, but a quick transfer into CZR at $69 has proved equally profitable. I reckon it will be c.2025 before we see the real size of the US SportsBet market and by then today's SP's will look laughably historic. Possibly sooner.
Hello Gewillia, you no doubt have seen the report below from CNBC just a few hours ago.
Draftking needs to constanly making acqusitons via new stocks and debts to make their precarious business model exciting.
The Caesars model of combining huge casino assets all over USA, but not in Macau, with the William Hill sportsbook business is in a much better position than others at present.
The convention business will be the jewel in the crown, and punters will pour in drove in staycations, just as soon as they all have their booster shots for covid-19.
I sold my holding in Draftking a while back to put them all in Caesars and Flutter, but unfortunately missed out on Entain.
https://www.cnbc.com/2021/09/21/draftkings-makes-20-billion-offer-for-uk-sports-betting-company-entain-sources-say.html
DraftKings is making a $20 billion offer to acquire U.K. online sports betting company Entain, people familiar with the matter told CNBC’s David Faber on Tuesday.
The offer is largely in DraftKings stock, along with cash, according to the sources.
The U.K. gaming company rejected an all-stock offer from MGM Resorts earlier this year worth $11 billion at the time. Entain said the deal significantly undervalued the company.
MGM and Entain maintain an online sports betting partnership in the U.S. called BetMGM.
Entain has not returned CNBC’s request for comment.
I've been ruminating on your questions for weeks, Cukkas, and can't come up with any potential bidders who wouldn't immediately run into problems with the UK Competition & Markets Authority.
However, I've come up with a wacky idea: FLTR is capitalised at £25 billion and has the #1 position in the US market at roughly 25%. Caesars has the #2 position at roughly 18% and is capped at £16 billion, but that includes a raft of bricks & mortar casinos. What if FLTR successfully bid for CZR and then sold off the casinos? Leaving it with over 40% of the US sports betting and online casino gambling market?
The US competition authorities are notoriously slower to act than the UK. Just an idle thought on a damp Tuesday.
I read Bryce Elder's article, but no mention of who the potential bidders are. Any ideas?
The FT sets out five reasons why the SP is currently undervalued and makes it a takeover target:
https://www.ft.com/content/4583e2bb-e215-4ce4-a711-abe346f8285b