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: Nevada reported September statewide gaming win was up 7.87% to $1.25B. Reports Las Vegas Strip gaming win was up 8.25% versus last year to $692.97M. The state collected $80.31M in percentage fees during the month of October 2022, based upon the taxable revenues generated in September 2022. This represents a 10.11%, or $7,376,871, increase compared to the prior year’s October, when percentage fee collections were $72,930,142.
Caesars (CZR) announced that Caesars Sportsbook is live on desktop and the Caesars Sportsbook app is available for download in Ohio on iOS and Android. "Sports fans in Ohio can now register and deposit funds with a special early registration offer so they can place their first wagers as soon as legalized sports betting starts on January 1, 2023," the company stated.
Sportradar (SRAD) and FanDuel Group (PDYPY) announced the signing of a new partnership for official NBA data through the end of the 2030-31 season. Under terms of the agreement, Sportradar will supply FanDuel with official NBA data and supplementary betting services for its sportsbook platform. In addition, FanDuel has also agreed to extend its original August 2021 main data agreement with Sportradar through September 2031, which continues Sportradar's designation as the preferred data and odds supplier to FanDuel. Additionally, FanDuel's U.S. teams will begin to utilize Sportradar's proprietary Live Channel Trading product. "FanDuel's top priority is to provide a superior product experience to our customers. As we forged this deal, it was critically important that our commitment to NBA basketball and its official data be tied to substantial reinvestment in product innovation and enhancements that will ensure FanDuel retains a market leading NBA offering," said Christian Genetski, president, FanDuel Group. "We're excited to continue our long-term relationship with Sportradar, as their comprehensive data is a critical element to a successful customer experience, and one we now have long-term stability with moving forward."
Sportradar also announced that Ben Burdsall, the company's CTO since January 2019, has decided to pursue other endeavors and his last day as CTO will be January 19, 2023. The company's engineering unit will thereafter be managed by Ian Poland, the company's chief information officer since 2019.
Macau's casino stocks have had their gains cut after the city detected its first new COVID infection in two months, hurting optimism that the enclave would start welcoming back tour groups from mainland China, Jinshan Hong of Bloomberg reported. After rising 3.6% Wednesday morning due to a local media news source reporting that Macau had given guidelines to travel agents on resuming tours from mainland China, the stocks closed only 0.3% higher as concerns spread over COVID dampening the reopening bets. Macau rolled out mass testing Wednesday afternoon. Health officials have said the positive patient had recently traveled between Macau and a neighboring city several times and had not moved around the enclave much, so there is a lower risk of local transmission. Macau's adherence to COVID Zero means even one new infection puts reopening efforts at risk.
Elys Game Technology (ELYS) announced that the company and its partner, Wright Bet, have surpassed 100 host locations signed up for the company's land-based sportsbook services in the state of Ohio. The company's expected January 2023 launch of sports wagering in the state of Ohio is subject to regulatory approval, and all required licenses must be approved by the Ohio Casino Control Commission.
Genius Sports (GENI) has clinched a long-term extension of its official data partnership with bet365. Genius Sports will provide bet365 with its exclusive portfolio of official data rights including the Premier League, NFL, CFL, AHL, NASCAR and more. In addition, as the official data partner to the Mid-American Conference, Genius Sports will provide bet365 with the first and only official data feed for betting on NCAA sports. In another first, Genius Sports and bet365 will explore the implementation of Genius' unique suite of ground-breaking betting products powered by its Second Spectrum tracking and augmentation technology.
In conjunction with the start of the 2022-23 National Hockey League, or NHL, season, Sportradar and the NHL introduced a refreshed NHL.TV, the league's direct-to-consumer international OTT subscription service, available to hockey fans in certain countries and territories outside of the U.S. and Canada, to provide an engaging and fan-friendly viewing experience of live and on-demand NHL games. NHL.TV will be available on connected TV applications including Android and Fire TV and is also deployed on the Foxxum Operating System.
NFL UPDATE: According to Canaccord analyst Michael Graham, Week 7 of the NFL season provided solid results for sportsbook operators, with two of the five largest underdogs winning outright Several underdogs that were supported by the public, including the Giants and Seahawks, also won outright, and underdogs covered the spread in half of the 14 games this week, bringing the percentage of games they have covered this season to 57%. New York had $37M of gross gaming revenue generated from $323M of wagers placed during NFL Week 6. The industry-wide hold rate of 11.5% represented the third highest weekly hold of the season and was well above the historical average of 7%. FanDuel (PDYPY) led with 39% of total handle and the company's 16% hold rate helped it generate 54% of total gross gaming revenue, or GGR, in Week 6. DraftKings (DKNG) was responsible for 35% of total handle in Week 5 and while its 9% hold rate was second to only FanDuel, the significant gap contributed to its share of GGR falling to 27%.
Morgan Stanley analyst Ed Young noted that volumes were at the highest level seen through this season. Week 7 volumes increased 34% year-over-year excluding New York. Betting volumes in Illionois, Pennsylvania and Michigan were up 53%, 22%, and 18% respectively). The top five states (New Jersey, Pennsylvania, Illinois, Michigan and New York) Week 7 absolute volumes increased 11% sequentially and were up 70% year-over-year.
EARNINGS RECAP/PREVIEW: Churchill Downs (CHDN) reported third quarter earnings on Wednesday. The company experienced record Q3 adjusted EBITDA of $163.2M compared to $156.1M in third quarter 2021. Additionally, the company's board approved an annual cash dividend on the company's common stock of 71.4c per outstanding share, a 7% increase over the prior year. The dividend is payable on January 6 to shareholders of record as of the close of business on December 2 with the aggregate cash dividend paid to each shareholder rounded to the nearest whole cent.
Boyd Gaming (BYD) beat analyst expectations in its Q3 report with total adjusted EBITDAR of $337.7M. The company also noted that in the Las Vegas Locals segment, revenue trends remained consistent with recent quarters as play from core customers continued to grow. Keith Smith, president and CEO of Boyd Gaming, said: “This quarter was another solid performance by our Company, as we achieved third-quarter EBITDAR that was second only to last year’s record quarterly performance. These results were driven by our continued focus on core customers and sustained efficiencies throughout our business, as our operating model is successfully meeting today’s challenges and delivering consistent results. Our strong operating performance is producing robust free cash flow, allowing us to return nearly $500 million in capital to our shareholders so far this year. Overall, we are encouraged by the resiliency of our business, and remain confident in our strategy and our ability to deliver consistent results in the current economic environment.” As of September 30, 2022, Boyd Gaming had cash on hand of $252.3M, and total debt of $2.91B.
DraftKings reports earnings on November 4 and BofA analyst Shaun Kelley expects upside to its Q3 estimates plus a first look at 2023 revenue guidance. The analyst modeled $429M of revenue, but sees roughly $30M-$50M upside given sector wide online sports betting hold. Kelley sees and EBITDA tailwind of $15M-$30 on a potential revenue beat. Overall Q3 digital GGR is tracking up 12% compared to the company's guide of 8% quarter-over-quarter. The analyst told investors in a research note that DraftKings will flow through a Q3 beat but not raise its core Q4 revenue guide. He modeled 2023 revenues of approximately $2.5B for existing states and $2.65B including new states.. In conclusion, he expects a beat and raise quarter for DraftKings, though much of the variance will be powered by hold during the first 3 weeks of NFL season.
WHATS THE RUSH?: On Thursday, 10 sportsbooks received streamlined consideration for online sports betting licenses, Pat Evans of Legal Sports Report reported. In a lengthy meeting Thursday, the Maryland Lottery and Gaming Control Commission applied alternative licensing standards to 10 online sports betting licenses. Those 10 head to the Sports Wagering Application Review Commission, which could award the licenses at its next meeting on November. 21. “We are pleased that we advanced the process today, but of course the work continues,” Maryland Lottery and Gaming Director John Martin said in a release. “There is still a flurry of activity ahead of us over the next couple of weeks, but we’re going to see the first mobile wagers placed in Maryland soon.” A November approval may set the online sportsbooks up for launch in December. The licenses approved Thursday include:
- Bingo World (RSI)
- BetMGM Maryland Sports (MGM)
- Crown Maryland Gaming (DKNG)
- CZR Maryland Mobile Opportunity (CZR)
- Greenmount Station (Parx Interactive)
- Live Casino! and Hotel (PDYPY)
- Long Shot’s (Betfred)
- Maryland Stadium Sub (Fanatics Sportsbook)
- Penn Maryland OSB/Hollywood Casino (PENN)
- Riverboat on the Potomac (PBTHF)
ANALYST COMMENTARY: Susquehanna analyst Joseph Stauff raised the firm's price target on Boyd Gaming to $72 from $68 and keeps a Positive rating on the shares. The analyst said results were higher than expectations and called them a disciplined free cash flow generator at an attractive valuation.
Truist analyst Barry Jonas lowered the firm's price target on DraftKings to $15 from $20 and maintained a Hold rating on the shares as part of a broader research note previewing the Q3 reporting season for Gaming names. He also lowered price target for Bally's (BALY), Caesars, Penn Entertainment and Boyd Gaming. The sector continues to balance "steady fundamentals" against "macro uncertainty", and the results from Monarch Casino (MCRI) last week suggest that while more upside is coming, some stock selectivity is warranted, the analyst tells investors in a research note. Jonas adds that he prefers more "disciplined operators" that are concentrated in favorable markets with strong balance sheets, free cash flow generation and capital returns, further noting that he is also turning incrementally positive on Las Vegas names despite the destination risks in a bear case scenario.
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 Entertainment (PENN), Rush Street Interactive (RSI) and Wynn Resorts (WYNN).
