2 new developments from Digitain

South Korean foreigner-only gaming operators Grand Korea Leisure Co Ltd (GKL) and Lotte Tour Development recorded a decline in their April sales compared to the previous month. This decline reflects ongoing challenges faced by the industry despite improvements.  

, a subsidiary of the Korea Tourism Organization, experienced a 28.9 percent decrease in net sales in April compared to the same period last year. Table game sales dropped by 21.2 percent month-on-month, while machine game sales remained relatively stable. However, total sales for the first four months of 2024 declined by 17.7 percent compared to the previous year, without a specified reason for the decrease.  

Although the casino's table drop remained steady compared to March, it showed a notable increase of 7.8 percent from April 2023. The cumulative casino drop for the first four months of the year also demonstrated a significant rise of 17.6 percent compared to the same period last year.  

Meanwhile, Lotte Tour Development, operator of the Jeju Dream Tower casino resort, reported an 8.1 percent decrease in casino sales in April compared to the previous month. However, sales surged by 104.8 percent compared to April last year. Table game sales decreased by 7.7 percent month-on-month but showed a significant increase of 114.6 percent year-on-year.  

Lotte Tour's casino table drop for April witnessed a notable rise of 5.2 percent compared to March and a significant increase of 32.6 percent year-on-year.  

Despite fluctuations in sales and table drops, casino operators in continue to navigate challenges in the gaming industry. While some indicators show improvement compared to last year, the overall trend highlights the need for sustained efforts to bolster the sector in the face of ongoing uncertainties.  

Upcoming SiGMA event: SiGMA Asia 2024, 2 – 5 June. Find all the details .

s financial results for the first quarter of 2024 reveal a challenging period for the company. The operator reported a total revenue of $1.61 billion and an adjusted EBITDAR of $256.2 million, marking a decline of 3.9 percent and 46.4 percent year-on-year respectively. This downturn was not limited to these metrics alone; net income also took a hit, plummeting from $514.4 million in Q1 2023 to a loss of $114.9 million in Q1 2024.

Operating income followed a similar trend, dropping from $199.1 million to a loss of $21.4 million. Total operating expenses, on the other hand, grew by 10.5 percent to $1.63 billion. A significant portion of these increased expenses can be attributed to ESPN Bet, which was launched in August last year following the reselling of Barstool to its Founder, Dave Portnoy, for $1 –o acquire it in February 2023.

At a property level, Penn generated $1.4 billion in revenue, with an adjusted EBITDAR of $479 million. However, Penn Interactive/ESPN Bet reported an adjusted EBITDA loss of $196 million among other factors, resulting in a total adjusted EBITDAR of $256.2 million.

The northeast segment, which includes properties such as Ameristar East Chicago, Hollywood Casino at Greektown, and Plainridge Park Casino, made $684.7 million in revenue and $202.6 million in adjusted EBITDAR, down 2.3 percent and 4.8 percent year-on-year respectively.

The south segment, with properties including Boomtown Biloxi, Hollywood Casino Gulf Coast, and Margaritaville Resort Casino, generated $298.5 million, down $16.3 million from last year, while adjusted EBITDAR fell by $10.1 million to $113.5 million. The mid-west segment came slightly behind the south segment at $291.2 million, down 1.4 percent year-on-year. Adjusted EBITDAR was also down, falling 6.8 percent annually.

Lastly, the west segment, with properties including Ameristar Black Hawk, M Resort, and Zia Park Casino, saw a marginal revenue decline, down $0.9 million to $128.8 million, while adjusted EBITDAR fell 6.5 percent to $45.9 million. The other segment, which includes stand-alone racing operations and overhead costs, made $6 million in revenue – the only segment to see any annual growth, up $0.2 million.

Penn Interactive, which includes all online and retail sports betting (ESPN Bet), online casino, and social gaming operations, reported a revenue of $207.7 million, down 11 percent year-on-year. Adjusted EBITDAR went from a loss of $5.7 million to a loss of $196 million – a significant increase.

ESPN Bet was expected to result in a loss in its early days, especially considering that operators such as DraftKings have yet to report an overall profit from operations, having made an overall loss from operations of $43.8 million in Q4 2023. However, with revenue down across the board and the operator still recovering from the financial loss accrued from acquiring Barstool, the operator may struggle to compete if investments on ESPN Bet do not begin turning around soon.

Despite this, ESPN Bet has remained active. In March, the sportsbook was added to North Carolina’s online sports betting market following its legalisation, while in April, the sportsbook opened its first retail location in Detroit at Hollywood Casino in Greektown.

Penn Entertainment’s Q1 2024 results reveal a challenging period for the company, with declines in revenue and adjusted EBITDAR, and significant losses from ESPN Bet. The company will need to navigate these challenges carefully to ensure future growth and profitability.

Penn Entertainment’s future seems to be a blend of potential hurdles and opportunities, according to various market analyst projections and predictions.

Projections for financial growth: Market analysts predict that Penn Entertainment’s earnings and revenue will see an annual growth of 61.9 percent and 6.1 percent respectively. The Earnings Per Share (EPS) is projected to see an annual growth of 63.3 percent. The return on equity is expected to be 8.4 percent in the next three years.

Forecast for stock price: The average price target set by analysts for Penn Entertainment Inc (PENN) stock for the upcoming 30 days is $27.58, indicating a potential increase of +59.60 percent from the current price of $17.28. The highest price target set by analysts is $28.93, and the lowest is $26.23.

Long-term outlook: Based on financial reports and historical earnings data, Penn Entertainment Inc (PENN) stock could potentially reach $35.50 by 2030, $56.34 by 2040, and $90.13 by 2050.

Expectations for earnings: Earnings for Penn Entertainment are anticipated to grow in the coming year, moving from ($0.90) to $0.80 per share. Penn Entertainment has confirmed that its next quarterly earnings report will be released by the end of this week. It’s crucial to remember that these are merely forecasts and the actual results may differ. The company’s performance could be affected by a range of factors, including market conditions, regulatory changes, and the overall economic climate. Therefore, investors should consider these forecasts as part of a wider set of information when making investment decisions.

Following the opening in July 2023, the first Integrated Resort in Europe, where SiGMA CIS/Balkans held its event in September 2023, Melco announced that it had partnered with John Keells Holdings PLC (JKH) to develop the ‘City of Dreams Sri Lanka’, a ground-breaking integrated resort set to redefine luxury hospitality and entertainment in the region.

The partnership between Melco and John Keells brings a $125 million investment for the fit-out and equipping of the gaming space, transforming the former 'Cinnamon Life Integrated Resort' into the 'City of Dreams Sri Lanka.'

'City of Dreams Sri Lanka' will feature a 687-key hotel, branded as 'Cinnamon Life,' equipped with ballrooms, banquet facilities, and an exhibition centre capable of hosting events for up to 5,000 guests. Additionally, a 113-key exclusive hotel and a vast 500,000 square foot shopping and entertainment complex, including gaming operations, will further enhance the resort's appeal.

Mr. Lawrence Ho, Chairman and Chief Executive Officer of Melco, said, “We are thrilled to be part of this landmark development in Sri Lanka and to be in partnership with John Keells. We believe Sri Lanka has immense potential and this opportunity complements our existing portfolio of properties.

“Furthermore, City of Dreams Sri Lanka is expected to serve as a catalyst for stimulating tourism demand and promoting economic growth in Sri Lanka, drawing inspiration from the successful examples set by similar integrated resorts in other jurisdictions. We will continue to work closely with our esteemed partners and the Sri Lankan Government to ensure the success of this venture, and we expect to make a significant and positive impact on the local community and economy.”

With plans for casino operations to begin in mid-2025 and ongoing discussions for potential expansions, 'City of Dreams Sri Lanka' stands poised to become a premier destination in South Asia, offering a blend of luxury, entertainment, and unparalleled experiences.

The City of Dreams Mediterranean faced turmoil with following challenges since it opened its doors four months prior. Issues like construction delays, pandemic disruptions, and geopolitical conflicts all played a part in hindering the success of the mega project. The resort grappled with declining casino traffic, prompting tough decisions to ensure project viability. Despite efforts to adapt marketing strategies and attract diverse clientele, Melco faced persistent concerns about working conditions.

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Flutter Entertainment's decision to relocate its primary listing from London to New York has been backed by an overwhelming 98 percent of shareholders at its annual meeting. The move to the New York Stock Exchange is expected to be effective by the end of this month and it reflects the company’s growth trajectory and the changing dynamics of the global financial markets. It remains to be seen how this move will impact Flutter’s future growth and the London Stock Exchange’s standing as an international financial centre.

The decision by Flutter, formerly known as Paddy Power Betfair, is not an isolated incident. It is part of a growing trend of public companies moving their primary listings from London, thereby weakening the London’s standing. This trend has been fuelled by the allure of higher valuations and executive pay in the US market. One thing is certain, however - the global financial landscape is in flux, and companies are strategically positioning themselves to navigate this changing terrain.

Flutter's transatlantic leap has several implications for its investors. New York will enhance Flutter's profile in the US, its largest market by revenue. This increased visibility will attract a large pool of investors and subsequently increase the company's market cap. US markets are recognised for their depth and liquidity therefore Flutter will gain access to deeper capital markets which will provide greater liquidity for its shares.

Flutter's New York listing may lead to an increase in Flutter's share price benefitting its investors. The move to a primary US listing will give Flutter the opportunity to pursue inclusion in major US indices and this will increase the company's visibility resulting in a demand for its shares.

Flutter's primary listing relocation to NYSE is not an isolated incident. Several other companies have also chosen to make a similar transition. Earlier this year, Anglo-German travel company Tui and building materials company CRH made similar moves. Indivior, a pharmaceutical company, and Ocado, an online grocery retailer, are also reportedly considering a shift to the US. This exodus from the London Stock Exchange is indicative of a broader shift in the global financial landscape.

The decision by Flutter comes at a time when the company is anticipating to generate more than 40 percent of its revenues from the US market this year. This growth has been largely driven by the success of FanDuel, one of the country’s biggest online betting and fantasy sports platforms. The popularity of FanDuel has surged following the relaxation of online betting restrictions in the US in recent years. Sales in the country have risen from 10 percent of revenues five years ago, to 40 percent last year, making it the largest market by revenue for Flutter.

On the flip side, Flutter's move obviously means that it will be removed from London's FTSE indices. This may lead to selling pressure from index funds and other institutional investors that tract these indices.

It is also widely recognized that the recruitment and retention of talent in the United States typically necessitates a more substantial investment. As a result of Flutter Entertainment’s move, the company will be better positioned to recruit and retain US talent however this will increase staff costs and hiring expenses. Despite these potential higher costs, the ability to attract and retain talent in the US could significantly contribute to the company’s long-term growth and success.

The move to the US was first mooted in February 2023 when Flutter consulted shareholders over plans to gain a secondary listing in New York as part of its wider growth plans in the country. The company referred to the New York Stock Exchange as its “natural home” prior to the US listing in January.

The implications of this move are significant. It not only reflects the changing dynamics of the global financial markets but also underscores the strategic importance of the US market for companies like Flutter. As more companies follow suit, the shift could potentially reshape the global financial landscape, with New York emerging as the preferred destination for primary listings.

The market reception to this decision has been overwhelmingly positive, with 98 percent of shareholders backing the move. The company expects the primary listing to become effective imminently. As one analyst put it, “The strong shareholder support underscores the confidence in Flutter’s strategic direction.”

The move aligns with a broader trend of companies favouring U.S. markets, driven by potential valuation advantages. This strategic alignment reflects concerns about London’s attractiveness for IPOs and listed firms in the post-Brexit landscape. An industry observer noted, “Flutter’s move is emblematic of the shifting global financial landscape, with the U.S. increasingly seen as a more attractive market.”

Russell Pointon, Head of Consumer and Media markets at investment research firm Edison Group, highlighted the potential for increased influence. He noted that the NYSE listing might increase Flutter’s influence on investor perceptions of UK gambling PLCs.

However, the move is not without potential risks. Some analysts have expressed concerns about the move. For instance, an article in The Guardian suggested that UK shareholders should vote against Flutter’s flight to the US. This highlights the need for Flutter to carefully manage its stakeholder communications during this transition.

Flutter’s CEO, Peter Jackson, has stated that the group’s focus remains on the US, with liquidity pools there described as “much greater” than in any other markets. He also mentioned that the company sees itself as going home – the US is their natural home. This statement underscores the strategic importance of the U.S. market for Flutter’s future growth.

While there is a general consensus on the strategic benefits of the move, some analysts have also highlighted potential risks. As one financial commentator aptly put it, “Flutter’s move is a bold strategic play, but like all plays, it carries both potential rewards and risks.” It’s clear that this decision has sparked a significant discussion in the financial community.