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: PointsBet (PBTHF) announced that through an exclusive partnership agreement with Penn National Gaming (PENN) and subsequent joint application for licensure, its wholly-owned subsidiary PointsBet Pennsylvania has been awarded sports wagering and interactive gaming operator licenses by the Pennsylvania Gaming Control Board to offer online sports betting and online casino products in Pennsylvania. PointsBet USA CEO Johnny Aitken said: "With Pennsylvania ranking among the top five sports betting states in the nation, PointsBet is thrilled to be able to soon establish its presence in this lucrative market, and we are appreciative of the support we've received from the state of Pennsylvania and the great people at the Gaming Control Board. We ultimately seek to provide customers in Pennsylvania with the best-in-class sports betting and online casino experience."
BetMGM, which is jointly owned by MGM Resorts International (MGM) and Entain plc (GMVHF), provided an update on performance and its outlook for 2022, stating that BetMGM is "achieving market share in line with its long-term target of 20% - 25% in U.S. sports betting and iGaming." BetMGM is the number two operator for sports betting and iGaming across the markets in which it operates, with a 24% market share for the three months to November 2021, and remains market leader in iGaming with 30% market share for the three months to November 2021 in the markets in which it operates, the company said. BetMGM is live in 19 jurisdictions, including four iGaming and 19 sports betting, and expects to reach approximately 40% of the U.S. adult population with two further jurisdiction launches as well as launch in Canada and Puerto Rico in the coming months. For FY21, net revenue from operations expected to be approximately $850M, ahead of management expectations and up nearly 5 times from prior year; same-state growth in net revenue from operations up 140% from prior year; EBITDA loss expected to be in the range of $420M-$440M, in line with expectations. For FY22, net revenue from operations is expected to be over $1.3B. BetMGM anticipates reaching positive EBITDA in 2023, based on its current assumption of future live markets. The company said: "We have achieved positive contribution in several states, some within one year of launch, driven by our prudent, data-driven marketing strategy and by leveraging our omni-channel offering. Wholly supportive of BetMGM's continuing success, strong performance and market leadership, the investment by MGM Resorts and Entain is expected to be approximately $450M in 2022."
Elys Game Technology (ELYS) announced that results in the company's first U.S. small business location at Grand Central Restaurant and Sportsbook in Washington D.C. accelerated expansion plans to increase the number of player terminals within the establishment.
DraftKings (DKNG) and the Tulalip Tribes of Washington announced an exclusive market access partnership that will bring the DraftKings retail sportsbook experience to the state of Washington. Plans are underway to open DraftKings retail sportsbook locations at Tulalip Resort Casino and Quil Ceda Creek Casino, both located just 30-minutes north of Seattle in Tulalip, WA. Initial design plans for the DraftKings Sportsbook at Tulalip Resort Casino, pending licensure and regulatory approvals, will feature a 5,000 square-foot space with a 50-foot video wall and more than two dozen kiosks and eight ticket windows. The design of the DraftKings Sportsbook at Quil Ceda Creek Casino is still early in the planning phase but is expected to feature state of the art technology and share the same world-class betting experience found across all DraftKings branded retail sportsbooks.
Genius Sports (GENI) has secured a major expansion of its long-term partnership with bet365. As one of the first sportsbooks to implement Genius Sports' live streaming service, bet365 has now agreed to a major uplift in the company's premium video content including low latency broadcasts from several top tier global soccer competitions and the NFL to bet365 customers outside the U.S. Genius Sports' expanded streaming solution will deliver unique new content to help enhance bet placement and customer retention for bet365. All streaming content will be combined with Genius Sports' leading portfolio of official data across thousands of events per year, including UK football and the NFL. This includes access to the fastest, most accurate data on the English Premier League as well as the NFL's real-time statistics through its proprietary Next Gen Stats. To further enhance bet365's marketing and player engagement strategy, Genius Sports will deliver its official data-driven marketing campaigns, driving deeper engagement and lower cost of acquisition across display, video and connected TV.
STATE STATS: According to Benchmark analyst Mike Hickey, Michigan commercial and tribal operators reported $156.5M total online gross gaming receipts in December, a 3% decline from November results. Online casino and online sports betting contributed 78% and 22%, respectively, of the total gross receipts reported in December. Online sports betting handle of $484.6M surpassed the previous monthly record in November of $473.8M. Michigan market share leaders include, DraftKings, FanDuel (PDYPY) and BetMGM. Michigan reported December OSB handle of $484.6M and GGR of $34.7M.
Hickey also noted, New Jersey reported total online sports betting gross gaming revenue, or GGR, of just over $59M and online casinos generated $133.2M in GGR. Of the $59M in total December sportsbook revenue, $55M of the total GGR was generated from online sports betting operators and $3.8M was generated through retail bettors. December online sports betting GGR was down 48% month-over-month from $107M reported in November and down 6% year-over-year from $58M in December of 2020. New Meadowlands (FanDuel, Pointsbet, NJSuperbook), continues to control the market with 50% online market share. Online GGR was a reported $27.6M, down 53% month-over-month.
LOUISIANA IN LIMBO: A launch for mobile sports betting in Louisiana is still in limbo, according to Legal Sports Report's Pat Evans. The Louisiana Gaming Control Board met Thursday, mostly to listen to revenue reports and an update on an the DiamondJacks Casino & Resort, one of 20 casinos looking to claim a sports betting license in the state. Despite no updates at the meeting, LGCB chairman Ronnie Johns reportedly still hopes to launch mobile sports betting in the Bayou State by the Super Bowl on February 13, according to a Wednesday interview with The Advocate. However, the meeting revealed the December figures. The 11 retail sportsbooks open in December took $39.5M in bets. The operators generated $4.38M in revenue, an 11.1% hold. The state collected $438,000 in taxes. In November, Louisiana sportsbooks handled $27.6M in wagers after the state’s first sportsbook opened October 31.
ANALYST COMMENTARY: While 2021 a year of expansion for the sector, 2022 will bring new challenges and opportunities. Jefferies analyst David Katz believes casino stocks sits at a "favorable level" and he is bullish on the orientation.. He told investors that he attempts to mitigate risk in the stocks with a more conservative stance on Q4 and Q1, with updates to digital value assumptions and reflection of other events such as the concession progress in Macau. In the near term the analyst sees the group more favorably than most other aspects of coverage on fundamentals and valuation. Katz noted that the current circumstances warrant a review of estimates from three perspectives. He said, "First, the volatility in GGR trends in November and what we expect in December leaves some markets considerably stronger than others. Second, the advent of Omicron in late December and into January warrants estimate revisions. Third, current trends and the evolving Street perspective on digital gaming requires a review of our value assumptions where relevant. Finally, progress toward a benign concession process in Macau warrants value changes for relevant operators, despite continued low estimate visibility." The analyst raised price targets on Wynn Resorts (WYNN), Las Vegas Sands, while he lowered price targets on Caesars (CZR) and Bally's (BALY).
Morgan Stanley analyst Thomas Allen believes there are three question marks that need to be answered as the year rolls on. He told investors that the three key debates for 2022 are:
- Can online sports betting/iGaming companies prove they can be profitable?
- Who will take/lose online sports betting/iGaming share
- How will brick and mortar results perform?
The analyst noted he sees outcomes skewed negative, so he prefers value stocks like Boyd Gaming (BYD), Caesars, Gaming and Leisure Properties (GLPI) and Wynn Resorts,. Additionally, Allen downgraded Sportsradar to Equal Weight citing mostly valuation.
Berenberg analyst Keegan Carl initiated coverage of Gaming and Leisure Properties with a Buy rating and $54 price target. The company's focus on the regional gaming space offers less-volatile exposure to the gaming industry compared to destination locations, contends Carl, who also argues that performance of its largest tenant, Penn National, will be beneficial long-term. In addition, the performance of regional assets throughout the pandemic gives him confidence in Gaming and Leisure's business model, the analyst said.
PUBLICLY TRADED COMPANIES IN THE SPACE INCLUDE: Accel Entertainment (ACEL), Bally's, Boyd Gaming, Caesars, Churchill Downs (CHDN), DraftKings, Flutter Entertainment, Gan Limited (GAN), Genius Sports, Las Vegas Sands (LVS), MGM Resorts, Penn National, Rush Street Interactive (RSI), Scientific Games (SGMS), Score Media (SCR) and Wynn Resorts.
