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Bet On It: Visitation drives improved results in Macau
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Bet On It: Visitation drives improved results in Macau

Caesars relaunches Tropicana Online Casino in New Jersey, Maryland targets college sports betting pacts and other notable stories in the sports betting and iGaming space.

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: Argus maintained a Buy rating and $22 price target on DraftKings (DKNG) while noting that the firm expects the company’s revenue to reach $3.1B in FY23, up from $323M in FY19, thanks to the legalization of online sports betting in additional states. The company last guided FY23 revenue at $2.95B at the midpoint of its range while consensus stands at $3B. Declining customer acquisition costs also bode well for DraftKings’ long-term growth, and the company should turn in its first profitable quarter in Q3 of FY24, with a subsequent 5-year earnings growth rate forecasted at 25%, the firm told investors in a research note. Separately, Cathie Wood’s ARK Investment sold 293K shares of DraftKings yesterday.

Caesars (CZR) announced the relaunch of Tropicana Online Casino in the state of New Jersey. The new iCasino app and online casino experience offers customers enhanced functionality with a catalog of industry-leading casino games and an improved integration with the industry-leading loyalty program, Caesars Rewards.

Macau’s gaming bureau reported March gross revenue from games of fortune in the region was up 246.9% year-over-year to 12.74B patacas. March GGR 16% ahead of BofA expectations for 11B patacas. The firm believes that "strong" month end visitation drove the better results. Macau’s Q1 gross gaming revenue, or  GGR, was approximately $4.33B. After Wynn Resorts’ (WYNN) pre-announced Jan/Feb results, BofA’s Q1 & FY ’23 est. are well ahead of consensus and the firm’s anticipates "positive" estimate revisions in the weeks ahead. However, BofA’s 2024 estimates are in line with consensus, making revisions to 2024 estimates more challenging. The firm told investors in a research note that it refined Macau estimates on revised market share assumptions and reiterated a Neutral rating on Las Vegas Sands (LVS), MGM Resorts (MGM) and Wynn on solid recovery trends, but balanced risk-reward at current levels.

Over in the Silver State, February Las Vegas results largely followed seasonal patterns as Strip RevPAR and Locals GGR were down sequentially while Strip GGR was flattish month-over-month, according to BofA. Through two months, Q1 Strip GGR is tracking up 4% sequentially and up 22% year-over-year, RevPAR is pacing 11% sequentially and 58% year-over-year, and Locals GGR is trending up 1% sequentially and up 10% year-over-year. March could be one of the best months ever in Las Vegas, but year-over-year comps get meaningfully more difficult as mask mandates rolled off at the start of March ’22, the firm told investors. BofA adjusted its strip estimates for Caesars, MGM Resorts and Wynn and Locals estimates for Boyd Gaming (BYD) and Red Rock Resorts (RRR), putting BofA’s Q1 estimates roughly 3% ahead of consensus for both the Strip & Locals. The firm reiterated a Buy rating on Boyd on programmatic capital return, Neutral on Caesars on stable trends but a balanced risk-reward at current levels and Underperform on Red Rock Resorts on relative valuation.

COLLEGE TIDES MAY BE TURNING: In Maryland, college sports betting partnerships could soon be limited by law, Sam McQuillan of Legal Sports Report reported. Bill S.B. 620, which has cleared the House, passed the Senate unanimously and now heads to Governor Wes Moore’s desk for his signature, would require Maryland schools to disclose the full details of any partnership with a sports betting company and prevent them from commission-based compensation per new user. Maryland would become the first state with such a law, despite momentum to address college sports betting partnerships gaining traction in Washington D.C. and a handful of states across the country. The bill is sponsored by Senator Shelly Hettleman and targets the University of Maryland‘s partnership with PointsBet (PBTHF). The sponsorship involves advertising in and around the university’s various sports arenas, as well as on-campus QR codes. “Online gambling is new in Maryland, so reading that New York Times piece and finding out in Colorado they profited every time a student signed up for an app, I wanted to make sure that wasn’t happening in our state,” Hettleman said.

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).

Keywords: online sports betting, GGR, New Jersey, Tropicana, ARK Investment, Macau, visitation, Maryland, college sports betting partnerships

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