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: DraftKings (DKNG) announced plans to launch its online sportsbook in Ohio on January 1, 2023, pending licensure and regulatory approvals. Home to several professional and college sports teams, DraftKings will offer eligible customers in Ohio the opportunity, beginning on New Year’s Day, to place legal and regulated bets on DraftKings Sportsbook across several sporting events, including the 2023 College Football Playoff National Championship and professional sports leagues, including the NFL, NHL, NBA, MLB, MLS and more. Separately, Cathie Wood’s ARK Investment bought 137K shares of DraftKings yesterday.
Nevada reported November statewide gaming win was down 7.62% to $1.22B. The state also reported that Las Vegas Strip gaming win was down 11.33% versus last year to $669.48M.
Elys Game Technology (ELYS) issued a letter to shareholders. The letter, signed by Michele Ciavarella, executive chairman, began: "Dear Shareholders, As we approach the conclusion of another year of formative developments for Elys, I would like to take this opportunity to highlight several positive accomplishments and assuage any concern in light of the recent turmoil in both global and U.S. markets and the negative impact it has had on the gaming sector, particularly on our stock price, and to further discuss the sustainability of the Company and dedication of our founders and senior management with the upcoming annual meeting of shareholders." Highlights included information regarding the company’s road-map, the transition from expansion to profits; scaling up U.S. retail operations; mobile segment strategy; and shareholder value.
BetMGM, a joint venture between MGM Resorts (MGM) and Entain (GMVHF), announced last week that the company has learned that certain BetMGM patron records were obtained in an unauthorized manner. The issue affected personal information of some patrons such as name, postal address, email address, telephone number, date of birth, hashed Social Security number, account identifiers and information related to transactions with BetMGM. The affected information varied by patron. BetMGM launched an investigation after learning of the matter and has been working with leading security experts to determine the nature and scope of the issue. The company became aware of the matter on November 28 and believes the issue occurred in May. BetMGM currently has no evidence that patron passwords or account funds were accessed in connection with this issue. BetMGM’s online operations were not compromised. BetMGM is coordinating with law enforcement and taking steps to further enhance its security.
Elys Game Technology and the Cloakbook announced the grant by the District of Columbia’s Office of Lottery and Gaming, DCOLG, of a Standard Class B Joint Venture Sports Wagering Operator License to commence sportsbook operations. A soft launch is expected ahead of the busy New Year’s Eve sports weekend with first wagers planned at the Cloakroom and Over Under Sportsbook Rooftop Lounge at 4:00 P.M. on Thursday, December 29, 2022. "We are delighted to have been granted the first joint venture license with our partners at Cloakbook to commence sports wagering services within the Cloakroom Gentlemen’s Club and the Over Under rooftop lounge, our second small business sportsbook installation in Washington, D.C.," stated Michele Ciavarella, Executive Chairman of Elys Game Technology. "Elys firmly believes that this segment of retail sports betting within neighborhood establishments could become a key driver for local employment and economic recovery at the community level throughout the United States and Canada. This retail distribution model offers an alternative to mobile betting that has not commonly existed in the United States other than very limited access in a few grandfathered states prior to the repeal of PASPA in 2018. We are very grateful for the patience and determination of our partners at Cloakbook and the detailed oversight of the Department of Small and Local Business Development and DCOLG, and along with our experiences at Grand Central Restaurant and Sportsbook that helped us identify areas of improvement needed to maintain compliance, public safety and provide an effective end-to-end sportsbook solution for our small business partners. We look forward to scaling our U.S. expansion through ongoing collaborations with these partnerships to foster the viable and long-lasting economic advancement of the small and local business community."
DATA DISCOVERED: GeoComply data for NFL Week 16 weekend show US GeoComply volumes increased 104% year-over-year, according to Morgan Stanley analyst Stephen Grambling. Week 16 volumes increased 53% y/y excluding New York and year to-date without New York is at 51%. According to Grambling, major market growth was all sequentially weaker w/w as betting volumes were impacted by the holiday season with Illinois/Pennsylvania/Michigan up 62%/25%/23% y/y. The top-five states Week 16 absolute volumes decreased 11% sequentially, but were up 89% y/y, noted the analyst. New Jersey growth decelerated w/w to up 12% y/y, which remains "solid" in Grambling’s view despite New York launching online sports betting this year. The remaining states were up 93% y/y.
Week 16 marked the final full slate of NFL action that will impact Q4. Canaccord analyst Michael Graham told investors in a research note that it was a relatively mixed week for operators, as none of the five largest underdogs won outright, although six underdogs did manage to win this week, with eight covering the spread. He also noted that ten games went under the projected total, raising the YTD winning percentage for unders back to 56%, and the standalone games also contained favorable outcome for the house, with five of the six games going under the total and four of six underdogs covering the spread. While outcomes over recent months were not quite as favorable for sportsbooks as those in September, the industry has still generated a 9% hold rate in New York over the first 12 of 13 weeks that fall in Q4, likely signaling another quarter of solid revenue performance relative to expectations, Graham told investors.. New York had a season-low $10M of gross gaming revenue, or GGR, generated from $360M of wagers placed during NFL Week 15. Industry-wide hold rate of 2.8% marked just the second time this season it has been below the historical average of 7% and was the lowest weekly hold since online sorts betting launched in January, primarily driven by an adverse outcome in the World Cup Final. FanDuel’s (PDYPY) share of handle remained at 40%, although its share of GGR was also 40%, the first time this season its share of GGR did not outperform is share of handle. DraftKings’ share of handle ticked up to 34% and its share of GGR was 30% despite a season-low 2.4% hold rate.
According to Benchmark analyst Mike Hickey, 2022 World Cup broke betting records, in part to U.S. growth. Betting across the 2022 Fifa World Cup increased by 13% from 2018’s tournament according to OpenBet, while GeoComply noted the final was surpassed only by the SuperBowl in the US.
ADDITIONAL ANALYST COMMENTARY: H.C. Wainwright analyst Scott Buck reiterated a Buy rating on Elys Game Technology with a $2 price target after the company announced a second gaming license for partner Cloakroom Gentlemen’s Club in Washington D.C. Given results at the company’s first D.C. location, Grand Central, the Cloakroom could potentially generate as much as $1.0M annually in gaming revenue, Buck told investors in a research note. He believes Elys continues to make "meaningful progress" both in the U.S. and Europe. "This should manifest itself in better operating results beginning in 2023," Buck tells investors in a research note.
After the National Health Commission of China announced that inbound travelers will no longer be subject to a 5-day quarantine plus 3-day home isolation requirement upon arrival as of January 8, UBS analyst Angus Chan noted that a nucleic acid test requirement remains in place for inbound visitors to Macau but said he believes gross gaming revenue, or GGR, could be lifted "significantly" from early 2023 after the "effective removal" of quarantine requirements in Greater China.
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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