Bet On It: Competition for new customers kicks off with start of NFL season

Welcome to the latest edition of “Bet On It,” where The Fly looks at news and activity in the sports betting and iGaming space.

SECTOR NEWS: Unions for Las Vegas Strip workers have decided workers will vote on a citywide strike on September 26 and, if approved, could lead to over 50,000 housekeepers, bartenders, and other staff walking off the job, Ginger Otis of The Wall Street Journal reported. Workers want lighter workloads, an increase in on-the-job security protection, and are bargaining for a wage increase, the unions said. Affected properties include casino-resorts that are handled or owned by Caesars Entertainment (CZR), Wynn Resorts (WYNN), and MGM Resorts International (MGM) as well as hotels such as Trump Hotel Las Vegas and the Waldorf Astoria.

Caesars (CZR), in partnership with Keeneland and Red Mile Gaming & Racing, celebrated the grand opening of Caesars Sportsbook at Red Mile earlier. The more than 4,600-square-foot sportsbook in Lexington is the only retail sportsbook in Central Kentucky. Governor Andy Beshear placed the ceremonial first bet alongside chairman Jonathan Rabinowitz of the Kentucky Horse Racing Commission, Caesars, Keeneland, and Red Mile representatives.

EYES ON THE PRIZE: Jefferies noted 2023 should be a pivotal year for digital wagering companies, as most are expected to turn profitable this year. A newcomer, ESPN Bet, will launch mid-season after striking a deal with Penn Entertainment (PENN). According to the firm’s survey, 53% of respondents indicated they are willing to try the app while 57% and 38% indicated that promotional offers with familiarity and engagement with ESPN content were the main drivers for trying the app. Notably, ease-of-use is a slightly more important factor than promotions, as 62% of the respondents indicated the former as an important to very important factor as compared to 58% for the latter. In addition, 45% chose DraftKings, and 34% chose FanDuel on which of the operators had the best user interface, reflecting the lead the legacy DFS operators have on land-based operators, though Barstool and PointsBet (PBTHF) made some improvements. overall, more people are betting than prior, with 44% saying they have bet within the past 12 months vs. 37% in January. NFL football remains the most popular, but more bettors intend to continue betting on various sports throughout the year. In terms of loyalty, 89% of respondents indicated they are likely/very likely to continue betting with their current accounts, versus 83% in January. also of note, 33% of the respondents indicating intent to maintain just one account and 39% intend to have two, while those intending to keep three accounts grew to 20% from 15% in the last survey.

RETURN OF THE NFL: As the National Football League, or NFL, season begins, FanDuel (PDYPY) and DraftKings (DKNG) are dishing out more incentives in an effort to pull in new customers, Benchmark told investors in a research note. FanDuel has raised its sign-up bonus to $200 for a $5 bet, up from $150 last year, and is offering $100 discounts on YouTube’s NFL Sunday Ticket subscriptions. DraftKings is maintaining a $200 bonus for new customers after reporting its first profitable quarter with about $73M in adjusted EBITDA. FanDuel generated $100M in adjusted EBITDA for H1 2023 and expects this to rise to between $120M and $240M by year-end. Newcomers like ESPN Bet and Fanatics are entering the market as companies are striving to balance customer acquisition costs with profitability pressures.

OKLAHOMA HURDLES: Despite the NFL season kicking off yesterday, residents of Oklahoma still cannot legally place a bet on the game as sports betting legislation is stalled at the state Capitol, Andy Weber of KOCO News wrote. State Senator Bill Coleman, has been one of the authors of the Oklahoma sports betting bills. He said he thinks he can get the bill out of the Capitol this session, but he said relations between the governor and tribes also need to improve. “I could see money going across our borders into other states that do have sports betting. Specifically for me up here in Kansas, where I can make a sports bet in person in just under an hour,” Coleman said. If House Bill 1027 passes, the bill would allow tribal casinos to offer mobile or in-person sports betting. “It did make it through the process in the House, whereas the previous did not,” Coleman said. “It did move a little bit farther this year, making it through the House, and it came over to the Senate, assigned it to a committee and that’s kind of where it stayed this session.” Coleman said getting the bill out of committee could be contingent on whether the governor and the largest tribes are able to improve their rapport. “The governor and the tribes need to have a serious conversation about sports betting in Oklahoma. They don’t have to bring up anything else,” Coleman said. If the tribes and Gov. Kevin Stitt fail to come to the table over compacts, state Senate leaders said they are ready to take negotiating powers back and enter into their own agreements.

ADDITIONAL ANALYST COMMENTARY: Barclays raised the firm’s price target on DraftKings to $31 from $30 and kept an Equal Weight rating on the shares. The analyst reassessed the U.S. internet gaming competitive landscape through the lens of content. The firm believes DraftKings’ table-game offering plus online sports betting growth will drive share gains.

Barclays also raised its price target on Caesars to $75 from $74 and maintained an Overweight rating on the shares. The analyst reassessed the U.S. internet gaming competitive landscape through the lens of content. The firm says the new Caesars app is a “key catalyst to build share.” Against low expectations and overall equity valuation, Caesars remains the firm’s most favored gaming name.

JMP Securities initiated coverage of Sportradar (SRAD) with a Market Perform rating and no price target. The analyst awaits more clarity on the company’s EBITDA growth profile before applying a premium multiple that is more in line with the firm’s long-term view of the space. As such, it finds the shares fairly valued.

PUBLICLY TRADED COMPANIES IN THE SPACE INCLUDE: Accel Entertainment (ACEL), Bally’s (BALY), Boyd Gaming (BYD), Caesars (CZR), Churchill Downs (CHDN), DraftKings (DKNG), Flutter Entertainment (PDYPY), Gambling.com (GAMB), Gan Limited (GAN), Genius Sports (GENI), Las Vegas Sands (LVS), MGM Resorts (MGM), Penn Entertainment (PENN), Rush Street Interactive (RSI), Super Group (SGHC) and Wynn Resorts (WYNN).