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: Elys Game Technology (ELYS) announced that the company has entered into an agreement with T & L Hospitality to operate a sportsbook at a venue which could in the future be repurposed as a sportsbook within a hotel situated at 2700 New York Avenue NE in Washington, DC. "We are thrilled to partner with T & L Hospitality to operate this exciting new venue in Washington, DC, and being situated along the border of DC and MD, makes this venue accessible to players from both states. We look forward to continuing our sportsbook expansion within restaurants and bars in DC and neighboring states over the coming months," commented Michele Ciavarella, Elys executive chairman.
THE BIG GAME: A record 50.4M American adults are expected to bet on Super Bowl LVII, a 61% increase from the record set in 2022, according to a the latest American Gaming Association, or AGA, survey. Bettors plan to wager an estimated $16B on this year’s championship game, more than double last year’s estimates. With the expansion of legal sports betting, traditional Super Bowl wagers are expected to pass casual wagers for the first time ever:
- 30M American adults plan to place a traditional sports wager online, at a retail sportsbook or with a bookie, up 66 percent from 2022.
- 28M plan to bet casually with friends or as part of a pool or squares contest, up 50% from 2022.
- Over a third of NFL fans say that the expansion of legal sports betting has made watching an NFL game more exciting.
“Every year, the Super Bowl serves to highlight the benefits of legal sports betting: bettors are transitioning to the protections of the regulated market, leagues and sports media are seeing increased engagement, and legal operators are driving needed tax revenue to states across the country,” said AGA president and CEO Bill Miller.
The AGA also emphasized the need for responsible gabling. “As interest in legal sports betting continues to expand, the gaming industry remains committed to responsibly delivering world class entertainment, educating consumers about how to bet responsibly, and combating illegal gambling as we work to build a safe, competitive and sustainable legal market for all,” Miller continued.
Bettors are evenly split on the outcome of the game with 44% each planning to bet on the Philadelphia Eagles and Kansas City Chiefs. As it stand, 33 states and Washington, D.C have live, legal sports betting markets, with three additional legal markets awaiting launch
DraftKings (DKNG), FanDuel (PDYPY) and the other legal online sports betting platforms will all being looking to get their growing share of this pie as more casual bettors test the waters in states with new legalized options, Michael Nathanson of MoffettNathanson told investors in a research note. The firm added that the NFL is still the "dominant" media rights in the broader media universe as well as the "driving force" for newer growing industries.
EARNINGS RECAP: Both Wynn Resorts (WYNN) and MGM Resorts (MGM) reported fourth quarter earnings on Wednesday. Wynn highlighted the company’s record North America adjusted property EBITDA in its Q4 release. "Our teams at Wynn Las Vegas and Encore Boston Harbor delivered a new fourth-quarter record for Adjusted Property EBITDAR at our combined North American properties. For the full year of 2022, these properties generated $1.04 billion of Adjusted Property EBITDAR, a record for us by a wide margin. These impressive results are a testament to 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 both Las Vegas and Massachusetts," said Craig Billings, CEO of Wynn Resorts. "In Macau, we were honored to be awarded with a new 10-year gaming concession during the quarter and were pleased to experience a meaningful return of visitation and demand during the recent Chinese New Year holiday period. We believe we are well-positioned for success in Macau’s next phase of growth."
Credit Suisse analyst Benjamin Chaiken raised the firm’s price target on Wynn Resorts to $138 from $117 and maintained an Outperform rating on the shares following quarterly results. The firm highlighted that Wynn reported Q4 Vegas EBITDA of $219M compared to its $202M and Street’s $186M. Boston results were better-than-expected, generating EBITDA of $63M versus Credit Suisse’s $59M, and management noted trends are continuing, with EBITDA per day in Q1 consistent with trends seen in the past few quarters. Wynn Interactive reported EBITDA loss of $28M but adjusting for the payout on the World Series bet, management noted burn rate was roughly flat with Q3, the firm adds.
MGM noted a new $2B share repurchase program within its quarterly results. Additionally the company touted "strong" momentum in the business and produced its own record adjusted property EBITDAR on the Las Vegas Strip. "We achieved our fifth consecutive quarter of record-breaking Las Vegas Strip Resorts Adjusted Property EBITDAR in the fourth quarter," said Bill Hornbuckle, CEO and President of MGM Resorts. "What we accomplished in 2022 is nothing short of remarkable, and is a testament to our strategic plan, scale, brand strength, talented team, loyalty program, and the diverse geographies and channels in which we operate. We believe that there is strong momentum in our business and our 2023 outlook remains bright, driven by a robust events calendar domestically, MGM China’s rapid year-to-date return to profitability and BetMGM’s ongoing improvement in 2023." "We achieved exceptional results in the fourth quarter and remain optimistic in our outlook for this year. We are also focused on free cash flow and believe our company presents a compelling yield, especially when taking into account the value in our share price for excess cash, our ownership value of MGM China and BetMGM," said Jonathan Halkyard, CFO and Treasurer of MGM Resorts. "Our share buyback program continues to return capital to shareholders as we have already repurchased 4 million shares for $164 million year-to-date, adding to the 76 million shares we repurchased in 2022 and totaling approximately $4.7 billion since 2021. Beyond this, our Board of Directors authorized an additional $2 billion for share buybacks." Hornbuckle also touched on the potential for a second bid to buy Entain (GMVHF) on the company’s earnings conference call. Bill Hornbuckle’s response to a question regarding a future second buyout offer: “The simple answer is ‘no’, we’ve moved on.”
Deutsche Bank analyst Carlo Santarelli raised the firm’s price target on MGM Resorts to $53 from $49 and reiterated a Buy rating on the shares. After strong Las Vegas strip gaming / revenue per available room metrics for Q4 and strong peer reports over the past few weeks, expectation’s for MGM Resorts’ strip performance were elevated and the company "easily surpassed the elevated bar," the analyst told investors.
ADDITIONAL ANALYST COMMENTARY: Roth MKM analyst Edward Engel downgraded DraftKings to Sell from Neutral with a $15 price target as the firm expects first half of 2023 EBITDA losses greater than consensus and reduce investor conviction in the company’s profitability narrative. During Q4 results, Roth MKM expects management to signal disappointing Q1 2023 EBITDA as new state launches require more up-front investment than Street forecasts imply. The firm further expects Fanatics to launch OSB by Q1 2023 and reinvigorate concerns over an intensifying promotional environment.
Truist analyst Barry Jonas raised the firm’s price target on MGM Resorts to $54 from $50 and kept a Buy rating on the shares after its Q4 EBITDAR topped expectations. The company’s Las Vegas operations continue to outperform ahead of a robust 2023 event calendar, while Macau offers substantial upside based on the year-to-date trends, 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 (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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