Their names aren’t household words. They don’t bombard the airwaves with loud and brash advertisements. Their executives often speak with Danish or Swedish accents.
Yet, for American gaming investors, they might present one of the best ways to play the proliferation of online sports betting and iCasino.
They are affiliates, or in today’s evolving parlance, performance digital media companies. That term is a way of saying they help online sports betting and iCasino operators make money.
The best known in America are Gambling.com, Better Collective and Catena Media.
They just reported second-quarter earnings. Gambling.com and Better Collective boomed, and they raised their revenue and profit guidance. Catena had a tough top and bottom line period, but said it is moving assertively towards positive territory.
Gambling.com, which trades on Nasdaq under the symbol GAMB, projects EBITDA this year of $36 million to $40 million, a 58 percent growth at mid-point on a 33 percent rise in revenues.
Stockholm-listed Better Collective reported quarterly revenue up 39 percent (29 percent factoring out acquisitions) to 78 million euro and EBITDA up 137 percent to 29 million euro.
Stockholm-listed Catena has an American CEO and is focused on North American growth, forecasting 12 percent annual increases in American revenues to $125 million by 2025.
Their business models are simple. They attract customers through a variety of media (Catena, for example, publishes Play Michigan and Play New Jersey among other websites with similar names) and/or sign content agreements with existing publishers (Better Collective and The Sporting News as an example). In so doing, they attract as readers a large number of prospective gamblers who they deliver in a variety of ways to gaming operators. They are paid by gamblers delivered or by a share of the revenue those gamblers generate or a combination of both.
They are riding the waves of legalized sports betting and iGaming proliferation in the U.S., Latin America and elsewhere.
But their opportunity goes beyond that growing market. They intend to grow faster than the market because of two trends that can vex and threaten the better-known operators: 1) The high cost of customer acquisition that is forcing operators to look for more cost effective ways to market and 2) the growing threat of severe government regulation in the face of betting scandals, like at the University of Iowa, forcing operators away from ostentatious and controversial advertising toward targeted marketing.
They are ambitious. Better Collective, for example, has the avowed goal of becoming the world’s leading digital sports media company. In other words, while many investors focus on mainstream media getting into sports betting and iGaming, these companies aim for dominance by coming from the digital direction.
YEAH, WHAT DO THEY KNOW?
Full House Resorts stock has been tanking. It is down more than 25 percent since announcing disappointing earnings on August 8, and has lost almost two-thirds of its value since peaking over $12 a share in late 2021.
The main reason for the plunge has been lousy results at its new Temporary casino in Waukegan, Illinois, and some concern that a lawsuit by a former applicant for the license could derail plans for the more ambitious $400 million permanent casino there.
As mentioned in this space previously, some simple back-of-the-envelope scenarios come up with a stock price double or triple today’s level after Full House’s new $250 million Cripple, Creek, Colorado, opens in December. And, despite start-up troubles and concerns about financing the permanent property in Waukegan, there is little to no question that a casino there will be a significant cash flow generator. It is also doubtful that the suit, which involves accusations against the city of Waukegan and neither the Illinois Gaming Board nor Full House, will scuttle the project.
But let’s put numbers and scenarios aside for a moment and focus on something really simple—insiders have been buying during the sell-off.
CFO Lewis Fanger has purchased 9,500 shares at $4.73 each (the price as of this writing is $4.59) to raise his stake to 191,533 shares.
Director Eric Green, who as chief investment officer at Penn Capital has a successful history of investing in gaming companies, bought 12,500 shares at $4.80 apiece. Director Michael Hartmeier boosted his holdings 22 percent, adding 15,000 shares, also at $4.80 each.
A cynic might discount Fanger’s purchase saying as an executive he has a reason to send a message by buying the stock.
But when independent directors reach into their pockets to buy shares, it says just one thing—people who know the company best think the stock is going higher.
