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: After hosting investor meetings with the senior management of DraftKings (DKNG), Jefferies analyst David Katz said the meetings were supportive of his view that the bear case of external capital needs is "not a likely outcome" and he continues to expect a sentiment shift on the shares. The near-term focus will be on performance in existing markets, coupled with new market entries this year, and the prospects for California passage and the positive structure suggest the "most positive market opportunity remaining," said Katz, who reiterated a Buy rating and $33 price target on DraftKings shares. California's online sports betting market "could be among the most productive thus far given the size and model," and legalization there could serve as a catalyst should it pass this November, added Katz.
FanDuel (PDYPY) announced that it has appointed Andrew Sheh as chief technology officer. Sheh will be responsible for oversight of FanDuel Group's customer facing engineering and platform development teams, as well as all IT architecture and personnel. Sheh joins FanDuel Group most recently from Compass. FanDuel Group is a subsidiary of Flutter Entertainment.
The Colorado Division of Gaming released their April monthly sports betting figures. According to Benchmark analyst Mike Hickey, total online handle and gross gaming revenue in April were up 61% year-over-year and 27%year-over-year, respectively. The total online handle for April was down 22% month-over-month. The total online gross gaming revenue reported was $22.2M vs. $28.1M in March. Total online handle and gross gaming revenue both made up over 99% of the total wagers placed in April, with a total online win percentage of 5.70%.
NOT SO SUPER GROUP: Super Group (SGHC) reported Q1 earnings per share of (EUR 0.33) compared to EUR 0.08 last year as well as revenue of EUR 334.5M vs. EUR 311.8M last year. Loss after tax of EUR 163.2M includes EUR 201.5M of costs and changes in fair values associated with the business combination and listing as a public company as Super Group completed a business combination on January 27 with Sports Entertainment Acquisition Corp., as a result of which all of the shareholders of SGHC Limited also exchanged their shares for shares of Super Group in a pre-closing reorganization. Neal Menashe, CEO of Super Group, commented: "During the first quarter of 2022, Super Group began operating as a U.S. publicly listed company and continued to expand in both existing and new markets in line with our growth strategy." Menashe continued, "Our team has become accustomed to navigating the business through changing and challenging environments, and we believe the strategies that we are executing on will enable us to continue doing so as we take Super Group from strength to strength." Alinda van Wyk, CFO of Super Group added, "The results for the first quarter of 2022 reflected revenue growth and strong cash generation but were challenged on a period over period comparative basis due to industry and economic headwinds and costs related to our business combination and listing as a public company in January. Despite tough period over period comparisons, Super Group experienced revenue growth and a period over period 39% increase in cash and cash equivalents."
Hickey downgraded Super Group to Hold from Buy and removed his price target after the company reported "disappointing" Q1 results this morning and abandoned their previous FY22 guidance that had been issued in April. The analyst, who thinks that the company's new guidance may be "substantially lower," cites the results and the lack of visibility for his downgrade.
Needham analyst Bernie McTernan lowered the firm's price target on Super Group to $8 from $12 and reiterated a Buy rating on the shares. The analyst cites the company's lower than expected Q1 results and its pulled FY22 guidance, though he remains positive on Super Group as an incumbent operator in Canada and given its valuation of 9-times expected FY23 EBITDA estimate.
NOT SO FAST: According to Alberta Gaming Liquor and Cannabis, or AGLC, advertisements introducing viewers to new, online sports betting services. are illegal in the province, Taylor Simmons of CBC News reported. "It's illegal for somebody to be offering bets to Albertans that are not regulated," said Steve Lautischer, vice-president of gaming with the commission. "The only legal sports bets in the province of Alberta today are either found through what we offer on PlayAlberta.ca or what is offered on Western Canada Lottery Sport Select brand... It appears that the illegal providers see the Canadian landscape on a whole as ripe for the taking to offer bets, even though they are not legal bets." Notably, some of the ads feature prominent celebrates and athletes and have been shown to have a greater influence on consumers.
DOWN ON LUCK: Nevada reported April Las Vegas Strip gaming win up 22.78% verses last year to $593.46M. Sports betting in Nevada saw a similar dip in activity as the rest of the U.S. in April with the sports calendar starting to slow, Matthew Waters of Legal Sports Report wrote.. This month was the first time since August 2021 that Nevada sportsbooks reported less than $700M in handle. Reportedly, the dip shows just how important NFL betting, college football betting and March Madness betting are to the overall industry.
HERE WE GO AGAIN: The Minnesota Senate declined to take up a bill passed by the House that would have legalized online and retail sports betting under the reign of Minnesota’s 11 native tribes, of Action reported. Legalization efforts have now fell short for three consecutive years, as the two chambers could not agree on giving tribes exclusive control of the business. The bill would have included a 10% tax on gaming revenue, which would have raised $5.6M in 2024 and $12.8M in 2025, according to a fiscal note. Before adjourning, the Senate Finance Committee amended the House bill to allow racetracks and professional sports teams apply for betting licenses alongside the tribes. Tribes responded by pulling their support for the bill. “HF 778 is based on the recognition that tribal gaming has an unblemished reputation and expertise in conducting gambling and thus entrusts tribes to exclusively operate as sports betting license holders,” Andy Platto, executive director of the Minnesota Indian Gaming Association, said in a letter to the Senate Finance Committee. “But to be clear, MIGA has consistently opposed the expansion of non-tribal commercial gaming and will continue to do so.“ Minnesota lawmakers will probably refocus their efforts on next year, though unless they get 100% control, tribes are expected to continue blocking any efforts to legalize sports betting.
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) and Wynn Resorts (WYNN).
