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: Bally’s (BALY) announced that it has entered into a labor neutrality agreement with the International Union of Operating Engineers concerning its Tropicana Las Vegas property. Pursuant to the agreement, the parties will take a neutral approach to organizing campaigns, which will enable every Tropicana Las Vegas employee to make an informed decision regarding their union representation.
Penn Entertainment (PENN) announced its board authorized a new $750M share repurchase program. The new authorization expires on December 31, 2025 and is in addition to the company’s existing $750M share repurchase program authorized on February 1. The company plans to utilize the remaining capacity under this repurchase plan prior to effecting any repurchases under the new $750M repurchase program."
Bally’s announced that Kim Barker Lee has joined the company as executive VP, chief legal officer. In that capacity, Lee will oversee Bally’s legal and public affairs teams, supporting the company’s global strategic initiatives. She brings more than 25 years of legal and business expertise to Bally’s, including knowledge of lottery, gaming, and governmental law, as well as experience with public private partnerships, public finance transactions, corporate governance, and regulatory matters. Lee most recently served as International Game Technology’s inaugural global VP of diversity and inclusion.
The National Football League, or NFL, and Genius Sports (GENI) announced an expansion of their partnership to connect fans with live, select NFL games through major U.S. sports betting platforms. As part of this expanded agreement and as an added benefit of its standing as an official sports betting partner and the first official casino sponsor of the NFL, Caesars Entertainment (CZR), will become the first sportsbook operator to provide its U.S. customers with live Watch & Bet video streams for select NFL games on their mobile phones or tablets via the Caesars Sportsbook app. Genius Sports will leverage its machine learning and live streaming technologies to power enhanced viewing experiences for NFL fans through Watch & Bet, and the development of its augmented live video betting products. The NFL appointed Genius Sports in April 2021 as its exclusive worldwide distributor of real-time official play-by-play statistics, proprietary Next Gen Stats data, and the League’s official sports betting data feed to media companies and sportsbooks in regulated markets. This partnership included the rights for Genius Sports to distribute low latency video feeds to sportsbooks in key international markets, which has now been expanded to include the U.S. As a first of its kind in the U.S., Caesars Sportsbook will offer official data-driven in-game betting opportunities and player props alongside live video streams of NFL games to give their customers access to in-play NFL betting experience available for mobile and tablets. In addition, Caesars Sportsbook will utilize official NFL league and team marks and logos to help promote their live premium content through a Watch & Bet live wagering experience.
Roc Nation will be the official entertainment partner of SL Green (SLG) and Caesars Entertainment in their bid for a new, gaming facility at 1515 Broadway in Times Square. The partnership brings together three organizations – New York’s largest owner of office properties, a gaming company and an entertainment company – to deliver a plan for the top tourist destination. As a partner in the project, Roc Nation will aim to revitalize Times Square by partnering with neighborhood organizations to re-imagine programming in the district’s famous "bow tie." Caesars Palace Times Square will not only provide billions in tax revenue to New York City and State, it will also accelerate New York’s economic recovery through strategic partnerships with area businesses utilizing its loyalty program Caesars Rewards, home to more than 65M members. Caesars Rewards members will be able to use credits at Broadway shows, local hotels, restaurants, retail stores, comedy clubs, entertainment venues, and more, driving more tourists and New Yorkers to area businesses and creating thousands of direct and indirect jobs in and around Times Square.
The twists and turns of the FIFA World Cup, including the U.S. team’s nail-biting win against Iran and Saudi Arabia’s stunning victory over Argentina, were good news for sports betting giants. British sports betting and gaming group Entain (GMVHF) is one of those set to benefit from the most-watched global sporting event, Callum Keown wrote in this week’s edition of Barron’s. It owns a number of brands, including Ladbrokes, Coral and PartyCasino, and has a joint venture – BetMGM – with MGM Resorts International (MGM). And the growth opportunity in the U.S. – one of the host nations of the next World Cup, in 2026 – can keep the momentum going, the author argues.
NFL DATA: GeoComply data for NFL Week 13 weekend showed US GeoComply volumes, the number of pings to confirm bettors’ locations, increased 100% year-over-year, according to Morgan Stanley analyst. Ste[hen Grambling Week 13 volumes increased 70% year-over-year. The top-five states Week 13 absolute volumes increased 1% sequentially and were up 92% year-over-year. New Jersey accelerated week-over-week and was up 25% year-over-year despite New York launching online sports betting this year. The remaining states were up 112%.
Canaccord analyst Michael Graham noted that the public probably had one of their best weeks of the NFL season in Week 13, with only one favorite losing outright and five failing to cover the spread. This was the third week in a row in which none of the five largest underdogs won a game, and the prime time slate was also somewhat unfavorable for sportsbooks. Eight of the fifteen games in Week 13 went under the projected total, with the year-to-date wining percentage for unders holding steady at 57%. New York provides weekly operator-level data, with $35M of gross gaming revenue, or GGR, generated from $429M of wagers placed during NFL Week 12. The 25% sequential increase in handle was likely driven by the start of the World Cup and the two additional stand alone NFL games on Thanksgiving, complemented by an active calendar from other sports over the holiday weekend. The industry-wide hold rate of 8.1% was the second lowest of the season but again above the historical average of 7%, with mixed NFL outcomes last week compounded by heightened promotional activity to drive engagement with the World Cup, particularly around the USA’s matches. FanDuel (PDYPY) led with 42% of handle, and its share of GGR remained strong at 50%, although this marked the lowest level in six weeks. DraftKings’ (DKNG) share of handle remained steady at 31% last week, although its share of GGR rebounded to 32%.
REEVALUATING ONLINE SPORTS BETTING: Momentum for online sports betting has has slowed, Eric Lipton and Emily Steel of The New York Times reported. In New York, a state lawmaker introduced legislation to restrict some promotions that operators use to bring in new bettors. In Kansas, the governor said she was now seeking to revisit aspects of the law, citing its “unintended consequences.” In Massachusetts, gambling regulators paused consideration of an application for a gambling license by Penn Entertainment because of concerns about its partnership wit Barstool Sports. Additionally, at some universities, administrators and students brought up concerns about deals the universities had struck to promote sports betting on campus. The Times’ article said, "The sentiment shifted after The New York Times published a series of articles last month that examined the explosion of sports betting nationwide since the Supreme Court overturned a federal law in 2018 that blocked most states from permitting such gambling."
ANALYST COMMENTARY: Morgan Stanley analyst Praveen Choudhary prefers Melco Resorts & Entertainment (MLCO) the most among the Macau names for better valuation and positive catalysts in 2023, calling it the firm’s "Macau Top Pick." Choudhary has an Overweight rating and $13.50 price target on U.S.-listed Melco Resorts shares.
JPMorgan analyst Omer Sander initiated coverage of Churchill Downs (CHDN) with a Neutral rating and $243 price target. The analyst thinks Churchill "possesses ample growth potential" in the historical racing machine space across Kentucky and Virginia, which he says should complement projects at Churchill Downs Racetrack coming online through 2024 and offsetting potentially softer same-store revenues. However, his 2023 estimates are below consensus, as he assumes a high-single-digit same store revenue decline taking into account a "downbeat" macro environment. As such, Sander sees better value elsewhere in gaming and looks at the stock as fairly valued.
Stifel analyst Steven Wieczynski raised the firm’s price target on Las Vegas Sands (LVS) to $55 from $50 and reiterated a Buy rating on the shares. to $109 from $85 and keeps a Buy rating on the shares. He believes Macau-centric stocks such as Wynn Resorts (WYNN) and Las Vegas Sands could present investors with "an interesting way to play the China reopening story" moving into 2023, Wieczynski said.
Wieczynski also raised the firm’s price target on Wynn Resorts (WYNN) to $109 from $85 and maintained a Buy rating on the shares, citing his continued belief that Wynn "represents one of the most compelling ideas under our coverage given the massive underperformance over the last 24 months coupled with benign investor expectations." He believes Macau-centric stocks such as Wynn and Las Vegas Sands (LVS) could present investors with "an interesting way to play the China reopening story" moving into 2023, Wieczynski said.
Truist analyst Barry Jonas upgraded MGM Resorts to Buy from Hold with a price target of $50, up from $40. The analyst stated that he had historically been more cautions with bear-case macro risks related to the Strip and destination markets, but he also expects relative outperformance in 2023 on the Strip’s strong event calendar and returning midweek business travel. Jonas adds that valuation on MGM Resorts is "compelling" as non-Macau entity is trading at a 1-times turn discount relative to the regionals.
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) and Wynn Resorts (WYNN).
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Read More on BALY:
- Bally’s, IUOE enter labor neutrality agreement for Tropicana Las Vegas
- Bally’s names Kim Barker Lee as EVP, Chief Legal Officer
- Bally’s management to meet with JMP Securities
- Bet On It: Churchill Downs pact brings betting on horse racing to DraftKings
- Bet On It: Propositions to legalize sports betting in California fall short
