Wells Fargo says the Virginia governor last night sent amendments regarding skill-based, or “gray,” games regulation back to legislators. The amendments were highly favorable to Churchill Downs (CHDN) and large gaming operators like Caesars (CZR), delaying the legalization and restricting supply, the analyst tells investors in a research note. The firm believes the amendments remove an overhang on shares of Churchill. Potential legalization of gray games in Virginia has been an overhang on the stock, “but this news is a positive development,” contends Wells. The firm has an Equal Weight on Churchill Downs with a $137 price target but believes the stock’s tactical setup is now more positive heading into next month’s Kentucky Derby.
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