Hot copy: Stories that caught our eye this week from around the sector
Plenty at stake for Stake in $400m lawsuit
The founders of infamous crypto casino operator Stake.com are being sued in the US for a whopping $400m by a former friend and business associate who claims he was cut out of the picture after recommending the company move into the cryptocurrency space.
As detailed by The Sydney Morning Herald, Florida-based Christopher Freeman has launched civil court action in New York against Stake.com founders Bijan Tehrani and Ed Craven, the latter of which recently bought the most expensive pad in Melbourne.
Freeman is seeking punitive damages for his initial investment in a precursor company to Stake.com called Primedice.
According to Freeman’s explosive allegations, he first raised the idea of a crypto casino in 2016, only to be rebuffed by Craven and Tehrani due to regulatory concerns (lol) and their preference for fiat currencies.
Cut to 2022 and Stake.com is the biggest crypto gambling operator in the world. It has an ambassador partnership with Drake and is estimated to be worth in excess of $1bn.
No wonder Freeman wants his piece of the pie, right? However, Stake.com’s crack-team of lawyers have described his claims as “a desperate attempt to spread false information” and insisted the allegations are not only frivolous, but provably false.
Breaking Bad spin-off Better Call Saul concluded in August after six exceptional seasons. For those starved of courtroom drama, perhaps Stake.com will step in to fill the void.
Bearish money manager remains bullish on DraftKings
News Corp-owned financial news leader Barron’s published a fascinating interview with Satori Fund manager Dan Niles this week.
Niles, a Stanford University–trained electrical engineer who has focused on tech stocks for more than 30 years, initially as a sell-side analyst at Robertson Stephens and Lehman Brothers, revealed plenty of investment advice in the long-form Q&A.
At the end of last year, Niles told Barron’s his top pick was cash. His attitude has grown increasingly bearish since then, driven by a belief that the stock market is headed even lower than the depths reached so far this year.
There were plenty of pointers on stocks, however. Niles is bullish on large-cap retail giants Walmart and Amazon, but fears for digital advertising platforms such as Meta and Snap ahead of a potential ad recession and relentless competition from TikTok.
Notably, Niles is also bullish on the gambling sector, and his fund has bought into both Penn Entertainment and DraftKings.
“In the last recession, revenue from the Las Vegas strip fell 20%,” Niles told Barron’s. “But Penn Entertainment, which owns regional casinos and race tracks, was down only 5% in that period. I expect them to hang in a lot better.
“We own DraftKings because of online sports betting. About 20 states have legalised online betting, and we think California will follow. Both companies are down about 75% from their highs. DraftKings should grow revenue this year by 60%, and compound at 40% over the next three years. It is one of the last markets to go digital,” he rationalised.
Double defeat looms for California’s rival sports betting bills
From one bearish prediction to another! We aren’t exactly the bearers of good news this week, I’m afraid. Our good friends at Eilers & Krejcik Gaming (EKG) believe both of California’s sports betting bills for the November ballot could be set to fail.
We’ve written plenty in recent months about the increasingly intense battle between online iGaming operators and local tribes as they campaign respectively for Proposition 26 or 27, and so this week has The Nevada Independent.
Neither proposition will garner the 50% support it needs for vote of passage, forecasts EKG in a research report released last week.
“Two competing sports betting measures occurring consecutively on the same ballot is unprecedented in US sports betting’s political history, which complicates efforts to predict its outcome,” wrote EKG analysts Becca Giden, Chris Krafcik and Adam Krejcik.
“The political power and deep pockets of interests with dogs in this hunt … have us leaning negative on California’s sports betting legalisation prospects this fall.”
Ah well. There is always next year to recognise California’s potential $2.8bn annual revenue opportunity for online sports betting – and the tax benefits alongside it.