Bet On It: Las Vegas Sands owner dumps stock to buy Dallas Mavericks

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 RECAP: Macau’s gaming bureau reported November gross revenue from games of fortune in the region was up 435.0% year-over-year to 16.043B patacas.

Nevada reported October statewide gaming win was up 2.69% to $1.32B. Additionally, the state reported October Las Vegas Strip gaming win was up 1.23% versus last year to $714.48M

MGM Resorts (MGM) unveiled its vision to transition Empire City Casino by MGM Resorts into an entertainment destination, MGM Empire City, if awarded a commercial casino license for its historic Yonkers, New York site. Key elements of the phase one design include a comprehensive casino floor redevelopment and expansion, 5,000-capacity entertainment venue, state-of-the-art BetMGM sportsbook, food and beverage outlets by chefs, cocktail bars and lounges, technologically advanced meeting spaces and more.

In a regulatory filing, DraftKings (DKNG) disclosed that its general counsel Stanton Dodge sold 123.6K shares of common stock on November 29th in a total transaction size of $4.7M. In a separate disclosure, the company noted that its CFO Jason Park sold 141K shares of common stock on November 28th in a total transaction size of $5.3M.

The Adelson and Dumont families have entered into binding agreements to acquire majority ownership and the right to serve as Governor of the NBA’s Dallas Mavericks and are targeting a closing of the transaction by year-end, according to a statement emailed to Bloomberg. Yesterday, Las Vegas Sands Corp. announced the commencement of a proposed secondary public offering of $2B of shares of its common stock by Dr. Miriam Adelson and The Miriam Adelson Trust, noting that the company will not receive any proceeds from the sale of the shares by the selling stockholders.

Penn Entertainment (PENN) and the National Hockey League, or NHL, announced a partnership that designates Penn’s online sports betting brands, ESPN Bet in the U.S. and theScore Bet in Ontario, as Official Sports Betting Partners of the NHL. As official league partners, ESPN Bet and theScore Bet will have access to a host of entitlements, including IP rights, and media and marketing integrations across League programming and premium NHL experiences. ESPN Bet launched on November 14 in 17 states,. Penn’s entitlements will begin immediately and span the NHL regular season, Stanley Cup Playoffs, 2024 NHL Winter Classic, 2024 NHL Stadium Series and 2024 NHL All-Star Weekend. The partnership between Penn and the NHL will also include collaboration for game integrity procedures.

EXPANSION: Operators remain focused on the prospects for legalizations in new states, such as Texas, California, and Florida for online sports betting and other states for iGaming, Jefferies told investors in a research note. California is generally classified as a work-in-progress as operators build relationships in the next few months with tribal entities, with hopes for a meaningful effort by 2025. Texas also remains a potential positive for 2025, as its legislature does not convene in 2024. Florida is more legally complex, given the outstanding determination of interpretation of the Indian Gaming Regulatory Act, or IGRA, in setting a structure for the market. As for iGaming, indications are most positive for New York than others, although Ohio and New Hampshire appear to be progressing. In our view, the gross gaming revenue, or GGR, levels generated thus far without super-states California, Texas, and Florida and limited iGaming legalizations leave a bullish set-up for the next few years, according to the firm.

BOOKS GET HAMMERED: Week twelve of the NFL season brought forth a challenging series of results for operators, marking one of the most adverse outcomes, noted Canaccord. Out of the five largest underdogs, only one emerged victorious outright, and merely four underdogs managed to cover the spread overall. This past week witnessed a robust betting volume. Concurrently, college football betting volumes surged, with Michigan’s third consecutive win over Ohio State generating the second-highest handle of the season for an NCAAF game, according to Caesars (CZR). In New York, during week eleven, the total industry-wide handle soared by approximately 54% year-over-year, reaching a new weekly record of $529M. However, total gross gaming revenue, or GGR, experienced a decline of about 2% year-over-year, amounting to $41M. This decline was attributed to the industry-wide hold rate of 7.7% for the week, notably lower than the 12.0% hold rate generated during the same period in the previous year. DraftKings witnessed a dip in its handle share, decreasing to 29% last week. This decline was mainly due to significant week-over-week handle growth for FanDuel (PDYPY). However, DraftKings’ GGR share remained stable at 35%, as the company’s hold rate of 9.2% surpassed that of FanDuel for the fourth time in seven weeks, leading to a 20% year-over-year growth in total GGR. FanDuel maintained its lead in New York with a 50% handle share last week. Nevertheless, its GGR share fell short of its handle share for only the third time this season, recording a 7.0% hold for week eleven, which was approximately average for the industry.

OCTOBER MARKET SHARE: BofA estimations indicate a slight decline in DraftKings’ share to approximately 36% in October compared to 38% in September. On the other hand, FanDuel experienced a resurgence in its online sports betting share, reaching 42% in October, up from 40% in September. The firm believes this growth is influenced by an increase in promotions and the commencement of the NBA season. Based on estimates, BetMGM holds an 8% share, Caesars stands at 4%, and Penn maintains a 1% share. With an uptick in the sports calendar, BofA observes effective cross-selling strategies at play, leading DraftKings and FanDuel to collectively gain 2 percentage points of iGaming share in October compared to Q3. Although promotional activity slowed month-over-month, it continues to show a year-over-year increase in Pennsylvania and Michigan. We suspect this could be linked to competitive factors and incentives aimed at boosting iGaming cross-sales.

HOT OUT OF THE GATE: Preliminary data from ESPN Bet app downloads indicated a robust beginning, surpassing 1.2M downloads within its initial eight days, including 235,000 downloads on its inaugural full day, Jefferies told investors. This marks the highest number of downloads for a sportsbook app in a single day, overtaking DraftKings’ previous record of 210,000 downloads on Super Bowl day in 2023. Since its launch, ESPN Bet has captured a 77% share of downloads among leading apps, followed by DraftKings at 8% and FanDuel at 7%. ESPN Bet’s primary offer for new user sign-ups ($200/250 bonus bets) outshines other ongoing Thanksgiving promotions by established sportsbooks, such as FanDuel and DraftKings, which currently offer $150 bonus bets. Notably, ESPN Bet’s offer remains available until December 31.

ADDITIONAL ANALYST COMMENTARY: Goldman Sachs double downgraded Entain (GMVHF) to Sell from Buy with an 820 GBp price target. The analyst cites disappointing online growth contributing to material downward consensus earnings revisions and the BetMGM joint venture losing market share in the U.S. for the downgrade. The firm says Entain’s unattractive free cash flow yield warrant’s caution on the shares.

Argus raised the firm’s price target on DraftKings to $46 from $40 and reiterated a Buy rating on the shares. The analyst stated that the legalization of online sports betting in additional states will boost the company’s revenue to $3.2B in 2023 from $2.2B in 2022, while also noting that the declining customer acquisition costs bode well for the company’s long-term growth. Argus is narrowing its 2023 loss estimate to (96c) per share from ($1.50) and its 2024 loss estimate (20c) per share from (60c), also forecasting that DraftKings will report its first profitable year in 2025.

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).