Welcome to The Fly's latest edition of "Bet On It," where we look at news and activity in the sports betting and iGaming space.

SECTOR NEWS: Bally's (BALY) and Sinclair Broadcast (SBGI) announced that they have entered into agreements for a long-term strategic partnership that combines Bally's sports betting technology and market access footprint with Sinclair's portfolio of local broadcast stations and live regional sports networks, its Tennis Channel and digital and over-the-air television network Stadium. Over the 10-year term, Sinclair's RSN portfolio will receive annual naming rights fees and committed percentage of Bally's Interactive's marketing spend. The transaction includes Sinclair receiving warrants and options, subject to regulatory approval and other conditions, to own a minority stake in Bally's. Sinclair will receive penny warrants to acquire 14.9% of Bally's common shares as well as warrants to purchase up to a total of an additional 10% of Bally's common shares contingent on the achievement of various performance metrics. Sinclair will also receive options to purchase 5% of Bally's common shares in four tranches with purchase prices starting at $30 per share and escalating to $45 per share, exercisable after four years.  

Piper Sandler recently launched coverage of the sports betting and iGaming vertical. Analyst Yung Kim initiated coverage of Penn National (PENN) with an Overweight rating and $84 price target. Kim believes Penn can leverage its investment in Barstool Sports to create a new revenue stream as the analyst "conservatively" estimates the U.S. sports betting market can grow to about $11B at about 65% of the U.S. population with access and that iGaming can be a market valued at an additional $7B overall. Penn currently operates 41 casinos in 19 states, which Kim called "an important competitive advantage" as real-money, online and mobile sports betting and iGaming scales. Kim initiated coverage of DraftKings (DKNG) with an Overweight rating as well and a $58 price target. DraftKings can take "significant share of the still nascent" sports betting market by leveraging a brand it has built up over the past eight years, Kim told investors in a research note. The analyst looks for the company to transition the over 4M paying users in its database of daily fantasy sports players to both sports betting and internet gaming. Kim sees sports betting growing from $3B to over $18B and potentially over $40B. Piper Sandler estimated that 65% of the U.S. population is using legal mobile betting apps and that the iGaming market can potentially balloon to $7B.

STATE SPOTLIGHT: Jeffries noted that October was another record month for both sports betting handle and gross gaming yield, or GGY, in New Jersey. The firm noted that New Jersey is a useful indicator for future trends in more recently legalized states. Licensees from the Meadowlands venue - mostly Flutter's (PDYPY) FanDuel business - had command with a 51% market share. William Hill's (CZR) share of net revenue was flat at 13%, with GVC's overall online market share at 18%. New Jersey posted record handle in October at $803M and GGY at $58.7M. The October handle was at least $300M more than the previous year. By channel, 94% of GGY came through online. 

Ohio, on the other hand, is experiencing some obstacles in trying to advance its sports betting bill. According to Jill Dorson of SportsHandle, sports betting appeared on the Senate General Government and Agency Review Committee agenda in Ohio on Wednesday, but the third hearing on SB 111 netted little in terms of advancing the bill. Representatives from Boyd Gaming (BYD), MGM (MGM), DraftKings, FanDuel and Penn National gave written testimony during the hearing. According to the bill, operators with digital platforms must be connected with brick-and-mortar casinos, and each retail location is entitled to two mobile platforms. Previously, the bill allowed for three per location. The licensing and application fees are $100,000, and a license fee is valid for three years. A controversial mandate, which requires sportsbooks to purchase data to settle wagers directly from the professional leagues or their representatives, has been discussed in Ohio. Although the mandate appears in other legal sports betting states, sportsbook operators have worries that mandates will give the professional sports leagues a monopoly on data.

MassLive reported that there is also no sports betting bill on the governor’s desk in Massachusetts. Consequently, a coalition of Massachusetts sports teams and gaming operators are urging lawmakers to pass a bill to create a legal sports betting market. A group consisting of The Boston Red Sox, New England Patriots, New England Revolution, DraftKings, MGM Springfield, FanDuel and the PGA Tour sent a letter to the conference committee negotiating the final terms of the jobs bill. The lawmakers have reportedly been working on that bill since July. “Passing sports betting will protect and create jobs here in Massachusetts at a time when many companies have been forced to shrink their workforce. Massachusetts has already lost jobs that could have been housed here by not acting sooner on sports betting,” the letter noted.

PUBLICLY TRADED COMPANIES IN THE SPACE INCLUDE: Bally's (BALY) Boyd Gaming (BYD), Caesars (CZR), Churchill Downs (CHDN), DraftKings (DKNG), Flutter Entertainment (PDYPY), Gan Limited (GAN), Las Vegas Sands (LVS), MGM Resorts (MGM), Penn National (PENN), William Hill (WIMHY) and Wynn Resorts (WYNN).