Jay Snowden: Well, we don’t €“ we actually have synergies kind of working against us in €˜23, like I have said, because we have got redundancy on third-party cost platform costs that really carries through the end of the year, while we continue to ramp up building out our own product and engineering team. So, it’s certainly less synergy, and it’s a lot more us growing the business and us having improved retention results, cross-sell from sports betting into iCasino results the second half of the year. Those are the factors. And of course, we also highlighted in one of our slides that we are seeing the benefit of increased hold percentage. So, if you look at in the U.S., I think we are the lowest average hold percentage of all of the top six players.
We think that, that will start to reverse itself once we are on our own tech stack and our own player account management, and then control more of the trading services. We have great partners, third-party partners today. But I think what you are seeing when you have control of the product roadmap and you can put more of those offerings front and center for the consumer that you can start to move the whole percentage in the right way with €“ especially with the retail masses that are betting mostly on parlays. We are still sitting at right around 20% of total wagers in the U.S. on parlays. I think that’s a lot lower than most of our competitors. So, we look forward to that. I think those are the enhancements, but it’s going to be for 2023 profitability much more around growth and synergies.
I think 2024, you will hear a lot more from us on the cost synergy side as some of those third-party costs start to roll off.
Bernie McTernan: Understood. And when the complete buying of Barstool happens in two weeks, is there anything that we should expect? I know we should get guidance on a later time. But operationally or anything to call out that once you have 100% control of it, it could be acting differently.
Jay Snowden: I think certainly, more deeply integrated cross-sell opportunities. We have got all sorts of things. We actually €“ we are just in Miami for an executive retreat and spend a lot of time on this as an executive team along with Erica. And so I think more to come. We will spend some time on this in May on our Q1 call. Erica will join us on the call, and we are happy to €“ we will probably have a few slides on that. Happy to answer questions about it, but rather not get into it today until after we have closed on the full acquisition.
Operator: Our next question comes from Brandt Montour with Barclays. Please proceed.
Brandt Montour: Hey everybody. Good morning. Thanks for taking my questions. So, I wanted to actually follow-up on one of those points, Jay, the parlay mix in Ontario and the parlay mix in the U.S. If you look at the Slide 16, you guys talk about whole outperformance in Ontario. I assume that’s because of the parlay mix there that you are able to get from being on your own tech stack. Is that the extent of the upside for the U.S.? And maybe another way of asking it is the Ontario parlay mix up to, let’s say, the market leader where you see it there? Is there more to go essentially?
Jay Snowden: Yes. I think there is more to go, Brandt, even though we are seeing that delta between full performance in Ontario versus the U.S., I would say that we are still in the very early innings in Ontario as it relates to our parlay offerings. So, if you compare to what we are doing in Ontario to what €“ some of the top players in the U.S. are doing, there is still a pretty significant delta. And I think you can see that even our hold percentage in Ontario being higher than it is in the U.S., that whole percentage still trails where the top three or four players are in the U.S. So, I would say there is probably a couple of hundred to 300 basis point opportunity longer term for us to improve our hold percentage given where we are currently run rating here in the U.S. versus where we ultimately anticipate being.
Brandt Montour: Okay. Great. Thanks. That’s helpful. And then a follow-up on your comments about the second half of this year and getting louder. And I don’t €“ I know you probably don’t want to give out any competitive information, but what does that really entail? Is it something we should be considering in terms of increased marketing spend? Is it more organic, the type of marketing that you guys have tended to do? Anything that you can provide there would be helpful. Thank you.
Jay Snowden: Yes. I would say both. We are €“ you will see us, I think a little more aggressive. You shouldn’t expect to see us running TV commercials every weekend, anything like that. But I think you will see us be more aggressive on paid media, probably more of a focus on digital than anything else there, a lot more heavy leaning in on the organic and cross-sell opportunities and user acquisition. Our partners at theScore and Barstool, I think being even louder, knowing that we have a great platform to showcase to our audience. So, you should expect us to just be more aggressive. But we are going to do it in a way where we still think we can drive profitability in the fourth quarter and then obviously, have some real momentum going into 2024, where we are picking up some market share. We are doing it in a profitable way and take those learnings into €˜24 and beyond.
Operator: Our next question comes from John DeCree with CBRE. Please proceed.
John DeCree: Hi everyone. Thanks for taking all the questions. Maybe to shift gears a little bit. Jay, there has been some more rumblings in Texas and Georgia about possible regulating of gaming and that type of stuff. I know it’s still probably a long road in both states. But curious if you have a view on what’s happening there. We usually have a pretty good sense of that type of stuff? And then maybe secondarily, any thoughts on potential additional iGaming regulation around the country?
Jay Snowden: Yes, happy to hit those. I would say, first, on the iGaming side, not a lot of momentum as we look at legislatively 2023. We are of the opinion that something will start to move probably in the Midwest, whether that’s Illinois or in Indiana or in Iowa. And once that happens, as we have seen historically in our industry, it just starts to move a lot faster by neighboring states. So, I wouldn’t know how to handicap whether or not something happens in €˜23. It’s not real active right now. Honestly, from our perspective, that’s fine. I think we are going to be a lot more prepared for iGaming generally and competitively on a platform that we feel really good about once we get to the second half of €˜23 and beyond.
So, if it’s a little bit on the slower side, no problem. But I think something will start to go, if not this year, feel pretty confident. In 2024, you will see a state or maybe a couple of states continue down that path. It’s only €“ our perspective would be it’s a matter of time for the states that have legalized and launched online sports betting, it’s natural to eventually also legalize online casino, like we have seen in Pennsylvania and New Jersey and Michigan. And so it’s just €“ we will see how that plays out. As it relates to Georgia, not a lot to say on Georgia, we don’t have any real history there. So, we are sort of reading what you are reading. We have lobbyists that keep us connected. There seems to be more of an appetite in both states, Georgia and Texas now than there has been really ever.
But take that all with a grain of salt because there really wasn’t any interest for a long time, and now there is a little interest. So, Texas is like we have a pretty good pulse on. We have been making strategic investments in horse racing in Texas for a long time over a decade now. And we are the owners. We have ownership and/or controlling positions in a number of racetracks in Texas that we think sets us up really well if and when something does happen in Texas. It’s very early in this legislative cycle for this year. As you know, Texas, the legislature only meets every 2 years. There is a lot more conversation and openness this legislative cycle than we have really ever seen. There seems to be a support on the health side and from the Governor and the Senate is really a TBD.
But we are very active. We are very engaged. I have been spending a lot of my own personal time on this in Texas because we believe it could be a real significant opportunity and exciting one for the company. And I would say stay tuned as we know more, we are happy to share, but it’s so early, and I don’t like trying to handicap outcomes, regulatory or legislative way.
Operator: Our next question comes from Joe Stauff with Susquehanna. Please proceed.
Joe Stauff: Thank you. Good morning. Jay, I wanted to ask you with respect to Ontario, it’s obviously a very important market, given the assets that you have there and pretty meager or slim information. And so can you maybe comment a little bit about just the competitive landscape, you have some pretty heavy competition from incumbents and kind of what you guys are doing that’s encouraging and is leading to some initial success.
Jay Snowden: Yes. It’s a good question. Look, Ontario is the most competitive market by far that we operate in. I can’t speak for every operator. But you have got every major U.S. and international operator in Ontario, some of which were there for many, many years when it was a great market. And so for us to be able to showcase results and momentum that we have in our slide deck on Slide 15, we are highly encouraged by that. And really, there is only two things to point to. theScore, obviously has a lot of history in the market, a lot of loyalty with a fan base to, for a long time, knew theScore more, the check scores and updates on their favorite teams and getting conversations and community features about their favorite teams and their favorite games and about betting on sports and all of that.
So, that’s theScore Media ecosystem. Certainly, it was a boost. We acquired a very strong brand in Ontario, very strong in the U.S. as well, but predominantly in Ontario. So, I think that’s a huge piece. Then of course, we talked a lot about the platform and the capabilities that we have are very different than what we have to work with here in the U.S. And so that makes us feel really good about the migration in the U.S. and being able to compete on a level playing field and be in control of what’s in your product roadmap queue, what you are prioritizing the capabilities. So, those are the two factors. And for us, it’s also been impressive in that our market share, as we calculate it based on the limited information that’s been supplied publicly by the Ontario regulators there is that our market share is holding steady despite an influx of additional operators.
As I mentioned in our prepared remarks, we saw the number of operators operating in Ontario from Q3 to Q4 grow by over 50%, and yet we held on to our market share and continue to really grow our business through football season both in online sports betting, online casino. And really excited about online casino because the cross-sell results in Ontario have been much stronger than what we have seen here in the U.S.
