Bet On It: Sin City Super Bowl a record breaker

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: BetMGM (MGM) announced a strategic partnership with X, becoming the social media platform’s exclusive Live Odds Sports Betting partner. The first-of-its-kind partnership between a social media brand and a sports betting operator will integrate BetMGM’s odds and branding into X, with each game linking to BetMGM’s website and app. X users in the United States can explore BetMGM’s latest betting odds on pro football, with each of the major professional and college sports expected to follow in the coming weeks. The odds interface provides an easy clickthrough for each game to BetMGM’s app or website The integration will continue to evolve and grow in its functionality over the coming months.

Churchill Downs (CHDN) announced a multi-year agreement naming SAP (SAP) an official signature partner of Churchill Downs Racetrack. SAP will be the first official technology partner serving Churchill Downs Racetrack, the Kentucky Derby, and Kentucky Oaks. The partnership also includes naming rights for the SAP Starting Gate Suites, a tower of premium, exclusive suites, and designation as the presenting partner of the Kentucky Derby and Churchill Downs mobile applications.

BetMGM’s newly designed mobile sports betting app is now live in Las Vegas. Powered by Entain (GMVHF), the newly designed BetMGM Nevada app offers sports fans significant enhancements to the mobile sports betting experience including an exponential increase in prop and parlay wager options, live streaming capabilities, digital deposits and withdrawals.

SUPER BOWL LVIII IN LAS VEGAS: A record 67.8M American adults, or 26%, are expected to bet on Super Bowl LVIII, a 35% increase from 2023, according to a new American Gaming Association survey. Bettors plan to wager an estimated $23.1B on this year’s Big Game, up from $16B last year. With the expansion of legal sports betting, traditional Super Bowl wagers are expected to pass casual wagers for a second consecutive year: Approximately, 42.7M American adults plan to place a traditional sports wager online, at a retail sportsbook or with a bookie, up 41% from 2023. Additionally, 36.5M plan to bet casually with friends or as part of a pool or squares contest, up 32 percent from 2023. Americans continue to migrate to the legal market: 28.7M adults, or 11%, intend to place online wagers using a legal U.S. sportsbook. “As the Super Bowl comes to Las Vegas for the first time, this year’s record interest in wagering marks a full circle moment for the U.S. gaming industry,” said AGA President and CEO Bill Miller. “Our priority remains getting this opportunity right by providing the consumer protections only a regulated market can guarantee and investing in responsible gambling tools, safeguards and education.” Bettors are nearly split on the outcome of the game with 47% planning to bet on the Kansas City Chiefs and 44% planning to bet on the San Francisco 49ers.

The Super Bowl is taking place at Allegiant Stadium in Las Vegas. The significance of the event for sportsbooks is heightened by the game being played in Las Vegas and the compelling storylines surrounding Taylor Swift and Travis Kelce, BofA told investors in a research note. Beyond the game’s outcome, the firm believes that hosting its inaugural Super Bowl and the burgeoning sports betting industry position Las Vegas to emerge as a winner. DraftKings (DKNG) and FanDuel (FLUT) are expected to experience significant gains. While promotions from other tier two operators appear reasonable, BofA contends BetMGM is taking a bold approach by introducing new advertisements featuring Tom Brady and Wayne Gretzky to rejuvenate their brand after recent app enhancements. The firm’s estimations indicate that the event contributes approximately 12% to the February online sports betting gross gaming revenue, but only 0.8% for the entire year. Generally, growth for “tent pole” events tends to be lower than industry averages due to their history of attracting substantial volumes in previous years. All indicators point towards an exceptional weekend for Las Vegas, according to BofA. The average ticket price has surged by 27% year-over-year to $9,014, and the Wynn (WYNN) has been fully booked since late December, commanding rates that are 250% higher than last year. In comparison to Formula 1, the Big Game appears to have a more extensive appeal, evident in room rate increases for Caesars (CZR) and MGM, surpassing Formula 1 levels. Potentially influencing the elevated ticket prices and anticipated viewership and betting activity is the incorporation of Taylor Swift-themed prop bets by sportsbooks, according to the firm. These bets are predominantly linked to Travis Kelce’s performance. ESPN Bet stands out as a contender for attracting a larger proportion of female bettors compared to other sportsbooks, potentially positioning it as an unexpected beneficiary as Swifties tune in for the Big Game, BofA told investors.

SPORTS BETTING ABROAD: Optimism persists for the European Gaming sector for several reasons, Jefferies contended. The growth of the online channel and heightened online penetration act as safeguards against macroeconomic trends. Regulatory challenges are expected to diminish. The profitability ascent in the U.S. is commencing. Mergers and acquisitions continue to evolve dynamically – recent transactions underscore a valuation disparity compared to public markets, particularly in Europe, according to the firm. Significantly elevated advantages are associated with online market leadership, with Flutter being the firm’s top choice. Additionally, the “undervalued” Lottomatica holds Jefferies’ preference as the top small and medium enterprise pick.

EARNINGS RECAP: Boyd Gaming (BYD) shares were up 5% on Thursday following its fourth quarter earnings report in which the company surpasses analyst expectations. Keith Smith, President and CEO of Boyd Gaming, said: “The fourth quarter’s strong performance was a fitting conclusion to another record year for our Company. Our fourth-quarter and full-year results were driven by our diversified portfolio, consistent core customer trends and solid returns from our recent property investments. Our management teams continued to demonstrate their ability to efficiently manage the business, achieving property-level operating margins above 40% for both the fourth quarter and full year. And as part of our balanced approach to capital allocation, we returned more than $475M to our shareholders in 2023 while investing in our properties and maintaining the strongest balance sheet in our company’s history. Looking ahead, we remain confident in our ability to continue delivering profitable growth and creating long-term shareholder value.” BofA raised the firm’s price target on Boyd to $80 from $70 and reiterated a Buy rating on the shares. The firm, which thinks this quarter’s results demonstrate Boyd’s ability to execute and manage costs effectively, raised its 2024 EBITDA estimate by 1%.

Wynn Resorts came out ahead of consensus estimates in its Q4 report as well. “The strong momentum we built throughout 2023 continued during the fourth quarter with Adjusted Property EBITDAR reaching a new all-time record. These impressive results highlight our team’s relentless focus on delivering five-star hospitality, which continues to elevate our properties above our peers as the destinations of choice for luxury guests in Las Vegas, Boston and Macau,” said Craig Billings, CEO of Wynn Resorts, Limited. “On the development front, construction of Wynn Al Marjan Island continues, with much of the hotel tower and podium foundation complete, and preparations underway to start vertical construction of the hotel tower. We are confident the resort will be a ‘must see’ tourism destination in the UAE. We are excited about the outlook for the Company, and we will continue to focus on driving long-term returns for shareholders.” Shares were up nearly 3% in after-hours trading on Wednesday. Susquehanna increased its price target on Wynn Resorts to $115 from $105 and kept a Positive rating on the shares. The firm said they posted a strong beat but thinks the stock is most sensitive to its Macau-based operations as there is still significant skepticism on the Macau-based outlook/recovery versus a Las Vegas outlook that is likely to peak in Q1.

BetMGM posted FY23 results. Net revenue from operations grew 36% year over year to $1.96 B, at the upper-end of $1.8B-$2B guidance range. Same-state growth in net revenue from digital operations of 14%. Key metrics across both iGaming and Online Sports Betting improved year over year, including average monthly actives, FTDs, hold percentages, bonus levels, NGR per active, and CPAs. EBITDA positive in the second half of 2023 with expected FY23 EBITDA loss of approximately $67M. The operator is reiterating guidance from December 2023 business update of targeting approximately $500M of EBITDA in 2026.

ADDITIONAL ANALYST COMMENTARY: Barclays downgraded Entain to Equal Weight from Overweight with a price target of 1,070 GBp, down from 1,120 GBp. For the stock to work it needs online to return to market growth rates or better and U.S. share to stabilize, and “neither are a given,” the analyst noted. The firm said the stock appears cheap but the risk/reward is fairly balanced.

Macquarie raised the firm’s price target on Wynn to $128 from $122 and maintained an Outperform rating on the shares. The company reported record results in Q4 with a 13% EBITDA beat led by Vegas and Macau, the analyst told investors. The firm thinks Wynn will continue to gain share, especially as the recovery moves beyond base mass.

Barclays raised the firm’s price target on Boyd Gaming to $70 from $67 and backed an Equal Weight rating on the shares. The company reported a beat across the board in Q4 and 2024E EBITDA estimates are moving up, the analyst tells investors in a research note.

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 (FLUT), 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).