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: Gambling.com Group (GAMB) announced it has been issued a sports wagering registration by the Massachusetts Gaming Commission, MGC, and is set to provide marketing services to licensed online sports betting operators in the Commonwealth of Massachusetts with the commencement of legal online sports betting on Friday, March 10. The Group launched BetMassachusetts.com in March 2022 ahead of the legal online sports betting market in Massachusetts going live to help sports bettors find information on sports betting and legislative updates in the Bay State. With seven approved online sportsbook operators available on day one — and three more expected at a later date — access to comparison websites like BetMassachusetts.com enables consumers to read reviews of legal sportsbooks in the state to help them choose their option.
New Jersey Division of Gaming Enforcement announced February total gaming revenue results yesterday. Based upon filings with the Division of Gaming Enforcement, casino win for the nine casino hotel properties was $215M for February, reflecting a 1.2% increase compared to $212.4M for February 2022. Year-to-date casino win for the nine casino hotel properties was $426.6M, reflecting growth of 7.7% compared to $396.1M for the prior period. For the month of February, internet gaming win reported by casinos and their partners was $142.6M, reflecting growth of 9.7% compared to $130M for the prior period. For the year-to-date period, internet gaming win reported by casinos and their partners was $295.5M, reflecting growth of 10.3% compared to $267.8M for the prior year-to-date period. Sports wagering gross revenue reported by casinos, racetracks, and their partners was $54.6M for February, reflecting a 76.9% increase when compared to $30.9M in the prior period. Sports wagering gross revenue reported by casinos, racetracks, and their partners was $127M for the year-to-date, reflecting a 39.4% increase when compared to $91.1M for the prior period. Total gaming revenue reported by casinos, racetracks, and their partners was $412.2M for February, reflecting a 10.4% increase from $373.3M reported in February 2022. For year-to-date, total gaming revenue reported by casinos, racetracks, and their partners was $849.1M reflecting a 12.5% increase from $755M reported in the prior period.
Across the border, New York online sports betting skins posted total handle of $442.7M in week 10, an 8% sequential increase and up 1% from week 10 last year, according to Benchmark. The spike in handle is due to the opening rounds of the NCAA March Madness Tournament, an event the American Gaming Association projected $15.5B in wagers on. Statewide gross gaming revenue, or GGR, also had a nice week, increasing 56% sequentially to $40.4M, the firm told investors. Week 10 GGR was also up 10% from last year. Weekly hold finished at 9%, up 300 basis points from week 9 and 1% above the weekly average. DraftKings (DKNG), FanDuel (PDYPY), Caesars (CZR) and BetMGM (MGM) currently control the market in New York, combining for 95% of handle and 97% of GGR, Benchmark concluded.
EARNINGS RECAP: Bragg Gaming (BRAG) noted its fourth quarter revenue was EUR 23.7M in its report to investors. This compares to the EUR 15.8M in revenue from Q4 of last year. "Bragg concluded a transformational 2022 with another quarter of record results, as fourth quarter revenue, gross profit and Adjusted EBITDA grew significantly compared to the fourth quarter of 2021 and exceeded our prior expectations," said Yaniv Sherman, CEO for Bragg. "In the fourth quarter of 2022, we generated year over year revenue growth of 50.3% to EUR 23.7 million (US $25.5 million), a 61.6% increase in gross profit to EUR 13.0 million (US $14.0 million), a 390-basis point improvement in gross profit margin to 54.9%, and a 128.3% increase in Adjusted EBITDA to EUR 3.6 million (US $3.9 million). These record results highlight Bragg’s ongoing substantial momentum as we continue to successfully diversify our operations from serving primarily central-European iGaming markets to become a global, content-led, iGaming solutions provider with extensive distribution across North America and Europe. Our successful execution on our operating priorities is also evident in our record full year results, as revenue, gross profit and Adjusted EBITDA grew 45.3%, 59.2% and 64.0%, respectively, over the 2021 full year period."
BEST BET: Shares of FanDuel parent Flutter Entertainment are beginning to find momentum after the company started exploring a U.S. listing, but it’s not too late to bet on the stock, Callum Keown wrote in this week’s edition of Barron’s. There’s no doubting FanDuel’s strength in the U.S. sports betting market. It reached a 50% share of the online sportsbook market in the fourth quarter, according to Flutter, citing data from the 17 states within which the brand operates.
GROWTH VS. REGIONAL: After a stellar start to the year for the group, which saw nearly universal outperformance vs. the S&P 500,gaming stocks have pulled back some of the upside amidst increasing macro fears, according to Morgan Stanley. The most negatively impacted stocks with the credit crunch have been Caesars and Penn Entertainment (PENN), which the firm attributes to higher combined operating/financial leverage and less of a recovery story given trends plateaued in regional casinos. On the other hand, investors have shown greater willingness to stick with "recovery" stories, though the luster of Vegas is shifting to Macau, Morgan Stanley contended.
ADDITIONAL ANALYST COMMENTARY: Susquehanna raised the firm’s price target on DraftKings to $28 from $26 and maintained a Positive rating on the shares. The firm said we’ve observed increased signs of accelerating user growth, and when combined with our thesis, our conviction level is very high, and this will translate into market share gains in 1H23 and likely through 2023.
BTIG initiated coverage of Genius Sports (GENI) with a Buy rating and $6 price target. Data has been the backbone of the Genius operation but the more compelling long-term value creation opportunities lie with the Media and Sports/Second Spectrum businesses, the analyst tells investors in a research note. The firm believes Genius and its league partners’ interests are aligned in chasing those opportunities. Additionally, JMP Securities initiated coverage of the stock with an Outperform rating and $7 price target. The company’s starting point is data rights for sports leagues, but it also has tech assets that provide customers with curated solutions in the online betting industry, the analyst tells investors in a research note. The firm says Genius’s advanced technology creates a high barrier to entry as others look to compete for data rights.
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), 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).
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