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FANTINI’S FINANCE
Go American When gaming companies go public, they go to the U.S. and list on the Wall Street exchanges
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ne of the obvious but little-discussed trends in the past couple of years is for international gaming companies to publicly list in the United States. The most recent case is Allwyn Entertainment, the European lottery operator formerly known as SAZKA. The operator of lotteries in Austria, Czech Republic, Greece, Italy and elsewhere has its eye, like so many others, on iGaming, sports betting and lottery growth in the U.S. It will go public on the New York Stock Exchange through Cohn Robbins Holdings Corp., itself publicly traded as CRHC, which will own 83 percent of the company that expects to generate $810 million in EBITDA on $1.7 billion in revenue this year. Allwyn follows a long line that includes games providers like Bragg, sports betting data companies like SportRadar and Genius Sports, and iLottery operator NeoGames in either dual listing or going public in U.S. markets.
By Frank Fantini
mer CEO of a multibillion-dollar international conglomerate has not relocated from his native Austria to the Mojave Desert just to run a penny-stock outpost. Ainsworth has been executing on a growth plan that hasn’t drawn much attention because of its small size and Australian home base. That strategy has focused on broadening its product line, growing its games library, becoming more assertive in putting games online, and building its leading position in the fast-growing but little-followed world of historical horse racing machines in the U.S. Again, it takes capital to grow and it makes more sense for Ainsworth to tap the U.S. capital markets than for a now Austrian-owned and U.S.-headquartered company to continue to list solely in Australia. The stock sells for under $1 a share, but do a reverse split of the 330 million-plus shares, combine it with some other Novomatic assets in the U.S. and, voila, you have the makings of a substantial U.S.listed gaming technology company.
Go Go Local Catena and Ainsworth Next? So, who’s next? Two candidates come to mind: Catena Media and Ainsworth Game Technology. Catena is a betting affiliate that gets around 60 percent of its revenues from casino and most of the rest from sports betting. A decade-old Swedish company that trades in Stockholm, Catena calls the U.S. an unparalleled opportunity. It has been capitalizing on that opportunity by introducing publications in states that have legalized sports betting and iGaming under brands such as Play USA and Legal Sports Report. Capitalizing on opportunities takes capital, and there is no bigger source of funding than the home of the unparalleled opportunity, the U.S. Perhaps a hint: last year Catena appointed an American, gaming industry veteran Michael Daly, as CEO. And he’s based in the U.S., not Sweden. The tip that Ainsworth has big U.S. ambitions came when the company hired Harald Neumann as CEO and based him in its expansive Las Vegas facility. Neumann was CEO of parent company Novomatic for many years. It makes sense that the for12
Global Gaming Business MARCH 2022
As the economy returns to normal in shaking off the effects of the Covid pandemic, it is becoming clear that regional casinos focused on local players are recovering fast. The clearest examples have come from the most focused locals operators, those who cater to the residents of the Las Vegas Valley. Red Rock Resorts and Boyd Gaming reported fourth quarter performances that show the Nevada locals casino business is back. A good portion of Red Rock’s outlook is company specific, such as focus on high-end locals, ownership of eight properties that can be sold or developed, and development of a $750 million casino on Durango Boulevard, which is surrounded by twice the number of adults per gaming position as its highly successful Green Valley Ranch and Red Rock Resort casinos. Red Rock’s leaders also boast of a balance sheet with debt at just 3.5 times EBITDA and an average 3.5 percent interest rate, which allow for both investment in growth and returning capital to shareholders. The company recently has done that to the tune
of $700 million in share repurchases and a special dividend. Likewise, Boyd’s locals EBITDAR soared 76 percent and produced margins of 52.3 percent compared to the upper 30s in Downtown Las Vegas and at its regional casinos. These kinds of results have been reported by locally focused casino operators around the country. Destination resorts will take a while longer to fully return, especially the Las Vegas Strip, where group and convention business recovery will lag. But the trends are clear—the impact of Covid on the U.S. casino industry will soon be in the rearview mirror.
Wanna Buy A Planet? Caesars’ announcement that it will transform Bally’s Las Vegas into a Horseshoe gives another hint that Planet Hollywood will be the Las Vegas property that it sells sometime this year. Planet Hollywood has several characteristics that make it the likely sale candidate: 1) It’s the only property on the east side of the Strip physically separate from the other Caesars resorts; 2) it’s the furthest from Caesars’ Forum convention center; 3) it’s an odd property with its surrounding shopping mall and long trek to the parking garage on the other side of the retail center; and, 4) its well-known brand name and upscale qualities should be able to fetch a good per-square-foot or per-hotel-room price. The other Caesars properties are in a line, from south to north: Paris, Bally’s (which shares a garage with Paris), Cromwell, Flamingo, LINQ, and Harrah’s, with Caesars Palace just across the street from Flamingo. Flamingo and LINQ share the LINQ entertainment and restaurant promenade, the High Roller observation wheel and proximity to the Forum convention center. CEO Tom Reeg might pull a surprise, or might have an offer that he can’t refuse, and that would give Caesars a new strategy for the Strip, but at this point, it would appear Planet Hollywood is likely to leave the Caesars orbit. Frank Fantini is principal at Fantini Advisors, investors and consultants with a focus on gaming.
