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: Macquarie analyst Jordan Bender upgraded Accel Entertainment (ACEL) to Outperform from Neutral with a price target of $17, up from $15. The shares now trade at 6.4 times estimated 2023 EBITDA, a valuation that does not reflect Accel's "stable fundamentals and near-term potential catalysts," Bender told investors in a research note. The analyst believes that outside of state-imposed closures, distributed gaming could be one of the safest ways to play the gaming industry in 2022. Gaming has "proved to be one of the healthiest Covid sectors," but within this, video gaming terminals in Illinois "have been the shining star," said Bender.
Churchill Downs (CHDN) is exploring options for TwinSpires Racing, including a sale, Gillian Tan and Christopher Palmeri of Bloomberg reported, citing people with knowledge of the matter. TwinSpires is reportedly valued at approximately $1.5B in any transaction. Despite potential retention of TwinSpires Racing by Churchill Downs and no comment from the company, shares rose following initial reports that a sale could be in the works.
In an interview on CNBC, Jim Chanos, president and founder of Kynikos Associates, mentioned online sports betting operators, including DraftKings (DKNG), in a negative light, after which the shares moved lower in afternoon trading. Chanos has previously mentioned before that he is not a believer in the investment thesis for online sport betting operators, citing competition in the space and high promotional spending. On Friday, DraftKings CEO Jason Robins appeared on CNBC's "Squawk Box" to react to the criticism from Chanos over the sports betting company's marketing spending.
CNBC's Jess Golden said in a tweet that, "Breaking: @contessabrewer reports that the [Oakland A's] are looking at the Tropicana in Las Vegas to build a stadium. It's owned by Bally's (BALY). Other sites under consideration are owned by Wynn (WYNN) and Caesars (CZR).
Scientific Games (SGMS) has announced the acquisition of ELK Studios, a European games developer. Dylan Slaney, CEO iGaming at Scientific Games, said, "We have had a strategic partnership with ELK Studios for a number of years and its games have performed brilliantly across the OpenGaming platform. ELK is one of the most innovative, and top-ranked studios in iGaming. Their passion and enthusiasm for producing games of stand-out quality is infectious. They will play a pivotal role in helping us continue to provide players with even more immersive and engaging experiences."
Gan Limited (GAN) announced the deployment of Ainsworth Game online gaming content occurred via the company's SuperRGS content aggregation platform to Churchill Downs online wagering platform, TwinSpires, in Michigan. In May of this year, Gan announced it had reached an agreement with Ainsworth to obtain the exclusive online rights to all current and future Ainsworth online games for an undisclosed amount. For Gan, this marks the first deployment of exclusive Ainsworth online gaming content via SuperRGS in Michigan. Gan also announced this week that its board of directors has authorized a share repurchase program which permits the company to purchase up to an aggregate of $5M of its ordinary shares on the Nasdaq Capital Market. Share repurchases under the new authorization may begin immediately and the program will expire on May 31, 2022. The shares will be repurchased with cash on hand and cash from operations. Any shares repurchased will be returned to treasury for cancellation. The price which the Company will pay for any such shares will be the prevailing market price at the time of acquisition, subject to certain limitations imposed by applicable securities laws. The actual timing, manner, and number of shares repurchased under the program will be determined by management at its discretion, together with further discussions with the board, the company noted.
Genius Sports (GENI) announced the purchase of common stock on the open market by individual members of the company's board of directors, as follows. Chairman of the board of directors and independent director, David Levy bought 25,000 shares. CEO and executive director Mark Locke purchased 50,000 shares. Director, Daniel Burns, acting as beneficial owner of Carbon Group purchased 7,480 shares. Independent director, Niccolo de Masi and Harry You bought 100,000 shares.
Nevada reported October statewide gaming win was up 48.54% from last year to $1.22B and that Las Vegas Strip gaming win was up 86.88% compared to 2020 to $702.19M
MACAU LATEST: Macau's gaming bureau reported November gross revenue from games of fortune in the region was up 0.01% year-over-year to 6.749B patacas. Earlier this week, Alvin Chau Cheok-wa, the head of Suncity, and 10 others have been arrested over alleged ties to illegal gambling and a money-laundering group, Ng Kang-chung and Jeffie Lam of South China Morning Post reported. The city's judiciary police said in a press conference that they had detained a group of nine men and two women as part of an investigation beginning in August 2019 into the creation of gambling platforms outside Macau and the luring of mainland Chinese into betting illegally online. Police described Chau as the leader of the syndicate.
PIECE OF CHEESE: Bettors can now legally place wagers in Wisconsin from a casino in Ashwaubenon, Doug Schneider of Green Bay Press-Gazette reported. The Oneida Nation opened its sportsbook on Tuesday in the tribe's casino near Green Bay Austin Straubel International Airport. It is the first location in Wisconsin where people can legally wager on professional and college sporting events, excluding Wisconsin-based colleges. "Sports betting is nothing new in the state of Wisconsin," Oneida Vice Chairman Brandon Stevens said Tuesday morning. "But legal sports gambling is." While the Oneida operation is currently the only party in town, other tribes are expected to request permission as well. The Potawatomi Nation, which has a hotel and casino in Milwaukee, said it has an interest. "The Potawatomi look forward to bringing sports betting to Milwaukee in the future," the tribe said in a recent statement, though no date was mentioned.. The Ho-Chunk Nation, which operates casinos in multiple Wisconsin locations including Wisconsin Dells, Madison, Tomah and Nekoosa, said Tuesday it plans to offer sports betting at multiple gaming sites. "We are going to do it. It’s just a matter of when," spokesman Ken Luchterhand said. "It will be a very quick turn-around. We’re going to hit the ground running." Oneida once hoped to open the sportsbook before the National Football League began the 2021 season in September, but supply-chain issues for equipment thwarted those plans.
A FEDERAL SUGGESTION: As the case for Florida sports betting heads to appeals court following the invalidation of the Seminole gaming compact by a federal judge, the Hard Rock Sportsbook app remains up and bets continue to be placed, according to Jordan Bowen of Fox 13 Tampa Bay. Legal experts say they don't think much will change despite the ongoing court battle in which a panel of three judges get to decide whether to overturn the ruling. One source with knowledge of the matter told FOX 13 there is still potential for legal online sports betting in Florida, but probably through the current compact with the Seminole Tribe. "If the D.C. Circuit denies their motion for a stay, that sets up an interesting battle as to what the parties are going to do about it," Attorney Daniel Wallach told Fox 13. Reportedly, Magic City Casino and Bonita Springs Poker Room could request an injunction from the judge requiring the Department of the Interior to forcably put an end to the Seminole Tribe's sports betting app. "You cannot shoehorn mobile sports betting into a compact. The judge's ruling makes that crystal clear. There are two other pathways to bring online sports betting to the public," Wallach said. Wallach noted the most viable way forward for the tribe would be through a ballot measure. The group Florida Education Champions is currently obtaining signatures for a petition seeking a ballot measure to be added in 2022 to legalize mobile sports betting statewide. If passed, it would bring in competitors like Draft Kings and Fan Duel (PDYPY). "The advantage, I think, to having the initiative rather than the compact provide online sports betting is it's the difference between a monopoly with just one provider versus a competitive marketplace," Wallach said. However, through this method bet will most likely be placed starting in 2023. A decision from the appeals court is expected shortly.
PATENT INFRINGEMENT SUIT: A patent infringement lawsuit has been filed against DraftKings over its use of cash-out, Brad Allen of Legal Sports report reported. The suit was filed Wednesday in a Delaware District Court by UK-based Colossus Bets. Colossus Bets mostly deals in betting pools. Colossus alleges DraftKings infringed seven patents covering products with a cash-out feature. Colossus believes its patents apply to all accepted U.S. bets with a cash-out feature since the repeal of PASPA. Damages could reportedly be more than $1B from DraftKings alone. “We take our intellectual property very seriously,” said Colossus Bets founder Bernard Marantelli in a press release. “This is the next step towards protecting our rights and income across the industry in the US.” DraftKings had not yet commented on the matter. Although, this is not the first time the company has beem accused of patent infringement. DraftKings is also being sued by EngineMedia, over alleged infringements of two more patents around the mechanics of sports betting. Q3 filings additionally show ongoing patent disputes with Arrow Gaming and Interactive Games.
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 National (PENN), Rush Street Interactive (RSI), Scientific Games (SGMS), Score Media (SCR) and Wynn Resorts (WYNN).
