Bet On It: Horse betting takes center stage ahead of football 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: Nevada reported June statewide gaming win was down 2.5% to $1.25B. June Las Vegas Strip gaming win was down 1.01% to $727.33M versus last year. 

MGM Resorts (MGM) announced the appointment of Daniel Yang as chief customer and innovation officer. In this newly constituted role, Yang will lead and advance the company’s global consumer success strategy at the intersection of digital technology and the guest experience. Yang joins MGM Resorts from Aristocrat Leisure where he served as the company’s chief strategy officer responsible for driving corporate strategy, long-range planning, and corporate development.

Elys Game Technology (ELYS) has been granted a Class III Contractor license by the Three Affiliated Tribes Gaming Commission to provide goods and services to the 4 Bears Casino & Lodge, situated at 202 Frontage Rd, in New Town, North Dakota. The company’s subsidiary Elys Gameboard Technologies, LLC is providing sports betting technology and bookmaking services to 4 Bears and represents the Company’s plans to continue expansion of its Elys America brand and leading-edge sportsbook products throughout the U.S. and Canada.

Churchill Downs (CHDN) announced a renovation project that will update and refresh the Jockey Club Suites at Churchill Downs Racetrack. The $14M renovation will modernize what is considered one of the original luxury and full-service hospitality experiences at the legendary Racetrack. The project is scheduled to be completed in advance of the 150th Kentucky Derby in May 2024. The renovation plans will enhance all aspects of the 61 suites, common spaces, dining rooms and restrooms located on the fourth, fifth, and sixth floors in a tower directly adjacent to the historic Twin Spires along the homestretch at Churchill Downs. Originally constructed in 2004, the Jockey Club Suites seat approximately 2,500 guests which, in addition to private suites, includes the Triple Crown Ballroom, Grand Foyer, Derby and Oaks meeting rooms and the new Triple Crown Balcony and also serves as a premium rentable space for special events throughout the year. “The Jockey Club Suites are a core premium hospitality product,” said Mike Anderson, President of Churchill Downs. “This renovation project will ensure existing and future suite holders are provided the entertainment experience Churchill Downs is known for and our guests have come to expect for Kentucky Derby Week and all other racing events.”

S&P Global raised its issuer credit ratings on Las Vegas Sands (LVS) and its subsidiaries, including Sands China, to “BBB-” from “BB+”. The firm also raised its issue-level rating on Sands China’s unsecured debt to “BBB-“. The ratings agency says an accelerating recovery in Macao’s cash flow combined with solid performance in Singapore should “support more rapid deleveraging” for Las Vegas Sands. Macao’s gaming revenue recovery has continued to accelerate, S&P said in a statement.

Bragg Gaming (BRAG) announced the signing of a new global distribution agreement with 888 Holdings (EIHDF), The new agreement furthers the companies’ existing collaboration. Under the new agreement, Bragg’s exclusive content is expected to roll out with William Hill in the UK, Mr Green in Italy, Sweden and Denmark, and 888casino in Italy for the first time, following launches with the operator in the UK, Spain and Ontario over the course of the last year. This collaboration further enhances the distribution of Bragg’s proprietary and exclusive content in multiple regulated markets, offering a wide array of exclusive and popular titles from Bragg Studios brands such as Atomic Slot Lab and Indigo Magic, as well as from its Powered by Bragg partners.

Elys Game Technology (ELYS) announced the opening of the Sports Book at Santa Claran Casino Resort situated at 460 N Riverside Dr, in Espanola, New Mexico. The Company’s subsidiary Elys Gameboard Technologies is providing betting technology and bookmaking services to Santa Claran. The opening of this sportsbook represents continuous expansion of Elys’ footprint in regulated U.S. markets and one of the first Elys America branding initiatives.

Elys also announced the launch of the company’s Elys America logo and platform as part of our continuing brand advancement in North America. Along with a unique logo to differentiate North America facing operations from Newgioco origins in Europe, the company is launching a new brand identity, corporate website, color schemes, and typography that expresses the development of the all-new U.S. and Canadian facing sports betting platform for retail and mobile markets in North America. “To boost our new Elys America brand forward, we created this new identity to emphasize disciplines that are central to our operations and symbolize trust, stability, and positive progression wrapped in a diverse range of advanced betting technology and products while maintaining parallels with our original corporate culture,” stated Michele Ciavarella, Executive Chairman of Elys Game Technology, Corp. “After extensive analysis and consultation, we selected our Elys America brand logo to represent both a legacy of enterprise expertise with a modern new look that captures our objective of achieving and bringing comprehensive growth to the Company while also representing a strong and trustworthy sports betting operator to patrons throughout Canada and the U.S.”

EARNINGS RECAP: Boyd Gaming (BYD) surpassed analyst expectations for EPS and revenue in the second quarter. In the company’s Q2 release Keith Smith, CEO, said: “During the second quarter we once again proved our ability to deliver solid results in a challenging environment, thanks to our effective operating model, strong management teams and successful growth initiatives. We maintained our focus on building loyalty among our core customers while our operating teams continued to effectively manage expenses throughout the business, achieving strong companywide margins consistent with recent quarters. Property operating results were impacted by difficult year-over-year comparisons early in the quarter, while overall results were strengthened by our key growth initiatives, including online gaming and Sky River Casino. We remain confident in the overall direction of our business and our ability to create long-term value for our shareholders.” Morgan Stanley told investors that the firm remains constructive on the company’s digital arm and solid financial position. However, Morgan Stanley is cautious on weakening regions/locals trends. The firm reiterated an Equal-weight rating and $75.00 price target. 

Churchill Downs, on the other hand, fell short of consensus in its Q2 earnings report. Although its gaming segment delivered record second quarter revenue and adjusted EBITDA, with revenue up 34% and adjusted EBITDA up 16% compared to the second quarter of 2022. In addition, Churchill Downs’ live and historical racing segment delivered all-time record revenue and adjusted EBITDA, with revenue up 48% and adjusted EBITDA up 36% compared to the second quarter of 2022  Wells Fargo lowered the firm’s price target on Churchill Downs to $139 from $150 and maintained an Overweight rating on the shares. Churchill Downs reported a Q2 EBITDA miss, reflecting 15% fewer race dates in Q2 plus softer gaming margins, the firm told investors in a research note.

BetMGM (MGM) reported a first half update on Wednesday. The company noted first half revenue of $944M and noted it is on track to deliver at the upper end of its FY23 revenue outlook of $1.8B-$2B. The operator noted that it reached positive EBITDA for Q2 and highlighted first half same-state growth of 25%.. BetMGM reported it is now live in 26 jurisdictions, including Ontario, with access to approximately 48% of the adult population in the United States. Market share across iGaming and sports betting is 18%. Adam Greenblatt, Chief Executive Officer of BetMGM, commented:

“I am pleased with the significant progress we have made during the first half of 2023 as we continue our strong growth and remain on our path to profitability. Our financial guidance for the year remains on track – we expect to deliver $1.8 to $2.0 billion in full year revenue, as well as to be EBITDA positive in the second half of 2023. In fact, we have already achieved positive EBITDA for the full second quarter of this year. Our focus remains on building a sustainable, scalable and returns focused business with leading products that our players enjoy responsibly. We look forward to the remainder of the year, buoyed by ongoing product improvements, tremendous support from our shareholders providing access to new assets and partnerships, and – above all – our extraordinary team at BetMGM.”

ONE TRICK PONY: Horse racing at Saratoga has commenced in New York and the New York Racing Association, or NYRA, intends to capitalize on the lack of US sports betting events during the summer, according to James Gazzale of Legal Sports Report. Additionally, the BYRA is hoping to take advantage of more online wagering accounts across the entire sports betting landscape than ever before. “Racing has always had a seasonality aspect to it,” NYRA president and CEO David O’Rourke told LSR. “Football is a huge product in the fall. It will be more of a headwind that time of the year. In the summer, there is (limited) gambling content, and that gives us an opportunity to take a larger share of the market.”

THE LONELIEST NUMBER: Illinois has come up with just one taker in its second attempt to hand out three online-only sports betting licenses., Robert Channick of Chicago Tribune wrote.  The Illinois Gaming Board announced that DGC IL, a subsidiary of Las Vegas-based Digital Gaming Corp., is the only qualified bidder for the online sportsbook license, which unlike other operators in the state would not be tethered to any casino, racetrack or sports venue. DGC applied for the online sports betting license during the first round of applications last year, but dropped out. It has since been acquired by Super Group (SGHC), a British online gaming holding company aiming to branch out into the U.S.. If DGC stick the process out, it will undergo a thorough vetting process by the Gaming Board and pay $20M for a licensing fee.

ADDITIONAL ANALYST COMMENTARY: Truist lowered the firm’s price target on Churchill Downs to $155 from $165 but kept a Buy rating on the shares. The stock was “down meaningfully” after the company’s Q2 earnings miss, but there isn’t anything structural or long-term thesis changing at this point, the firm noted. Churchill Downs is one of the best growth platforms in Gaming, which is also offering investors a chance to own one of the most iconic assets across sports, the firm added.

JMP Securities lowered the firm’s price target on Churchill Downs to $155 from $160 and backed an Outperform rating on the shares. Churchill Downs reported “mixed” results for Q2, featuring an “uncharacteristic” EBITDA miss, according to the firm. JMP believes several of the impacting factors are one-time that will not repeat or will abate during Q3.

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).